The Impact of Corporate Income Tax on Capital Structure: Evidence from Serbian Food Industry

Research Question: The aim of this paper is to present the effect of corporate income tax on capital structure in the food industry of the Republic of Serbia. Motivation: Based on the empirical results of Moradi & Paulet (2018) and Kuc & Kalicanin (2021), the author's aim of the research conducted in this paper is to analyse the impact of corporate income tax on the capital structure in the Republic of Serbia as a developing country with an underdeveloped capital market and to support the results of this sporadically researched area of corporate finance in the Republic of Serbia. Idea: The author believes that by determining the optimal capital structure, it could be possible to reduce the burden of corporate income tax. Given that the food industry is one of the most significant and profitable industries in the Republic of Serbia, the results of this theoretical and empirical research would be of a great benefit to the local Tax Authority and to large taxpayers. Data: The research was conducted on a sample of 250 most active companies that operated within the food industry of the Republic of Serbia in the period from 2017 to 2019. The source of data for the purposes of this research are the official financial reports of companies registered with the Serbian Business Registers Agency. Tools: Elemental descriptive statistics techniques and panel regression analysis were applied throughout the data analysis. For the purpose of data processing the author used STATA statistical software. Findings: The results confirmed the existence of a negative and statistically significant relationship between tax savings based on depreciation costs and profitability on the one hand, and capital structure, on the other. Thus, the results indicate the need of profitable companies to use high depreciation costs to provide a reduced burden of corporate income tax with a capital structure shifted to accumulated own financial resources. In addition, the results of the regression model showed the absence of a statistically significant effect of tax savings based on interest costs on capital structure. Contribution: The contribution of this paper is reflected in additional support to existing discussions on impact of corporate income taxes on capital structure. Further, the paper contributes to business practice by determining how corporate income tax burden could be reduced by choosing optimal financial mix.

Innovating (a Lot) With a Little: High-Tech Innovation in Southeast Europe

Motivation: According to the European Innovation Scoreboard (EIS, 2020), Southeast-European countries are either modest or moderate innovators because they consistently innovate below the EU average. Given that innovation is a key driver of economic growth (Hasan & Tucci, 2010), this implies that Southeast Europe has been economically falling back while simultaneously politically integrating with the EU. However, the EIS categorizes countries according to the inconclusive arithmetic mean of indicators for firm-level innovation (bottom-up) and indicators for inputs and enablers of innovation at the national level (top-down). Besides, it does not separately assess innovation performance of high-technology industries although these are crucial for international competitiveness (Schwab, 2019). Consequently, this paper answers the following research question: What is innovation performance of high and medium-high technology industries in Southeast Europe in comparison to the EU average? Idea: In contrast to the EIS which merges top-down with bottom-up innovation indicators, the core idea of this paper has been to analyse only bottom-up data on comparative innovation performance of high and medium-high technology industries in Southeast Europe. Method and data: The paper methodologically draws on guidelines for collecting, reporting, and using data on innovation by Oslo Manual (OECD & Eurostat, 2018), and uses secondary data from 2010-2016 Community Innovation Surveys of enterprises to compile an own set of 140 data points. Innovation activity within an industry is defined as the ratio of innovative enterprises to the total population of enterprises while innovation performance is the ratio of innovation activity in the respective country to innovation activity of this industry in the whole EU. Tools: All data points have been arranged country-wise as unbalanced contingency panels and plotted to draw conclusions on innovation performance of high and medium-high technology industries in Southeast Europe. Findings: Although all top-down innovation inputs and enablers at the national level are far below the EU average throughout Southeast Europe, several industries in the region reach or surpass the average EU innovation performance: the pharmaceutical industry in Croatia, all medium-high technology industries in Turkey, manufacture of machinery in North Macedonia and Serbia, as well as manufacture of motor vehicles in all countries except for Romania. Contributions and limitations: This is the first known paper to benchmark innovation performance of high and medium-high technology industries throughout Southeast Europe. In addition, the paper reveals the shortcomings of the whole-country method employed by the EIS since it clearly points out that innovation performance of national industries should be assessed instead. Limitations of the paper are the exclusive focus on innovation as a process and partly restricted data availability.

Investigating Factors of Customer Loyalty Formation for Wellness Spa

Research question: The objective of this paper is to examine the level of the development of spa tourism with a special review of the wellness tourist offer of the Republic of Serbia, and also which factors of this tourist offer we should pay special attention to and improve, to achieve the highest level of tourist loyalty. Motivation: The tourism potential of the Republic of Serbia has not been sufficiently researched and that served as a basic motivational factor. Idea: Considering the tourist potential that Serbia has and partly the work of Han et al., (2017), the fact that spa tourism is the fastest-growing sector in the entire tourism industry, and that the wellness tourism offer is a very important segment of spa tourism, there is a need to identify factors that influence the visitors' loyalty formation for such tourist destinations. As the Republic of Serbia has a lot of wellness centres, it represents a very convenient location for conducting such research. Data: This research included 298 guests of wellness centres in Vrnjačka Banja: "Solaris", "Aleksandar", "Merkur", "Zepter", "Kralj", "Slatina" and "Iwa Wellness Centre". Data collection was performed during July and August 2019. Methods: The PLS-SEM method was used in this paper to test the defined research hypotheses. Factors that contribute to loyalty and revisit for the wellness and spa tourist destination were investigated, and they were measured by the appropriate number of questions: quality of wellness and spa tourism, the value of wellness and spa services, attraction of wellness and spa tourist destination and satisfaction with wellness and spa tourist destination. All attitudes were measured using a five-point Likert scale. Results: The quality and value of wellness and spa services positively impact the affection for wellness and spa tourist destination and satisfaction with wellness and spa tourist destination, while the attraction of wellness and spa tourist destination positively affects satisfaction with wellness and spa tourist destination and tendency to revisit by tourists. The existence of a positive influence of satisfaction with wellness and spa tourist destination and the desire to revisit the tourist loyalty formation was also shown. Contribution: Improving the quality, value, and effect with the Republic of Serbia as a wellness and spa tourist destination will increase the satisfaction of visitors and their desire to revisit this tourist destination, which will lead to greater loyalty in the future. This will increase the revenue generated from this type of tourism and accelerate local and regional development.

Public Health Communication: Skin Cancer Prevention Implications

Research question: What are the characteristics of the target population which public health messages should be tailored to, in order to contribute to skin cancer prevention and early detection? Motivation: The implementation of preventive behaviour is of key importance taking into account the global increase in the incidence of skin cancer over the past decades. Communication campaigns represent an effective tool in creating awareness and education of population on harmful effects of exposure to UVR and a necessity of conducting preventive measures. The basis for creating such campaigns is to examine the knowledge, behaviour and information habits of target population. Idea: To examine the knowledge and attitudes regarding harmful effects of exposure to UVR, as well as preventive practices of adult urban population and determine the main sources of information on this topic. Data: The research took place in the period March-May 2018 in Belgrade and was based on surveing of 237 adult respondents from Belgrade. The sample was acquired by using the method of convenience sampling. Tools: The questionnaire consited of close-type questions with multiple choices of answers regarding socio-demographic characteristics, knowledge about risks of UVR exposure, preventive behaviour and preferred information sources. It was distributed in paper to patients while waiting for their appointments. Obtained data were manually coded and analysed by using SPSS. Results: A majority of both women (45.6%) and men (42.9%) report that they use sunscreens regularly, but a larger percentage of men (25% vs. 11.9%), as well as older respondents did not use sunscreens at all. Women reported to spend longer hours sunbathing (41.9% vs. 33%) and using indoor tanning than men (17.6% vs. 5.2%). Youngest respondents (age 20-30) also claim to practice excessive sunbathing (52.6%) and use indoor tanning (23.2%). Older respondents consider them being at higher risk of skin cancer (68.2% of those older than 60). There is a higher level of awareness of female in comparison with male respondents regarding the importance of skin cancer screening (62.3% vs. 44.7%), as well as of university educated respondents. Television has been noted to be the most significant source of information (57.8%), followed by internet sources (43.5%) and printed media (40.5%). Contribution: Knowledge, attitudes and behaviour, as well as preferred sources of information differ by gender, age and education of respondents so targeted public health campaigns should be tailored to specific characteristics of target groups.

The Relationship between ESG and Financial Performance Indicators in the Public Sector: Empirical Evidence from the Republic of Serbia

Research Question: This paper investigated whether a relationship exists between environmental, social and corporate governance (ESG) performance indicators and financial performance measures in the public sector. Motivation: Performance measurement plays a significant role in public management and public policy and could be considered to be a segment of the whole performance management process. Growing awareness of climate change, human capital and corporate governance issues have imposed the necessity of introducing environmental, social and corporate governance performance indicators (ESG) in public enterprises’ annual reports. ESG performance indicators encourage investors to make socially responsible investment decisions (De Lucia, Pazienza & Bartlett, 2020). Hence, the paper is focused on the specifics of measuring performance in the public sector. Besides, it is very interesting to acquire knowledge about the correlation between ESG indicators and financial performance measures (Kalaitzoglou, Pan & Niklewski, 2020; Landau, Rochell, Klein & Zwergel, 2020). Idea: The purpose of the research is to highlight relevant performance measures in the public enterprises in the energy sector in the Republic of Serbia and to examine whether the application of the ESG indicators implies better financial performance. Data: Four large Serbian companies in the energy sector were analysed. Data were collected on the web site of the Agency for Business Registers of the Republic of Serbia. The observation period is from 2017 to 2019. The financial performance indicators are ROA, ROE and the economy ratio. Tools: Based on annual financial statements, non-financial reporting of public companies is monitored, whether companies invest in environmental and social protection, as well as whether they implement activities directed to more consistent implementation of corporate governance. The dynamics of selected financial indicators is analysed according to base and chain indices. Findings: The results show that the public enterprises in the energy sector of the Republic of Serbia mainly report on traditional financial measures in their annual financial statements. One of them applies all ESG indicators and the others do it partially. However, no direct and positive correlation between ESG indicators and financial performance measures could be found. Conversely, there is the case that ESG indicators have no linkage with the financial performance measures. Contribution: This paper contributes to the existing literature in the field of public enterprises’ sustainability.

Does the Achievement of Gender Equality in Society Reflect on Gender Issues in Corporate Governance: The Case of the West Balkan's Banking Sector?

Driven by the idea that women do not realize their full potential in society based on not being equally paid, having lower education level than men and facing discrimination based on maternity leave have been a primary motivation to do the research on the following sources of data: HDI; GDI and GII indexes published for four West Balkan countries and average data of women on boards for the same countries experienced in the most developed and female-dominated industry such as banking. This idea helps us formulate primary research questions -if a country has a better human and gender development index it should have more women that actively participle in business and have a real influence on decision making. Our findings are in line with the fact that Slovenia and Croatia are leading countries in the West Balkan region in terms of the index mentioned, therefore shaping a better place for the position of women in society. On the other hand, Serbia has the lowest value of 2 out of 3 indexes. The similarity between bank board diversity can be found between Serbia and Slovenia. In those two countries, women occupy more positions on the executive boards, but fewer on the supervisory board. The situation is different for Croatia and Montenegro where more women are included in supervisory boards. Contribution is that in Western Balkan countries it is arguable that women have no real influence on businesses and results of operations in the banking sector despite the fact that the mentioned countries have quite a good ranking in the gender development reports.

Core Competencies and Resource Allocation in the Performance of Bottled Water Industry

Research question: This paper examines the influence of core competencies, resource allocation and water sector standards on the performance of firms in the bottled water industry. Motivation: For firms in the bottled water industry to remain afloat, their performance against their targets needs to be assessed (Murugesan et al., 2016). Examining trends over time is essential since stakeholders and investors are concerned with enhanced performance. This study conceptualizes that the performance of firms dealing with bottled water are influenced by core competencies (Hirindu, 2017), resource allocation (Catherine & Lee, 2017) and that there is an intervening effect of water sector standards. Idea: The idea behind this study is to model the relationship among core competencies, resource allocation and firm performance in the bottled water industry and also to examine the moderating effect of water sector standards in explaining firm performance (Ichoroh, 2021). Data: The study used quantitative cross-sectional survey design of which the population of interest comprised of 80 licensed bottled water manufacturing firms in Kenya. Open and closed ended questionnaires were administered to managers of bottled water firms. Data on demographic characteristics, firms core competencies, resource allocation and sector standards were collected. Tools: Factor Analysis was used to scale, classify, delineate patterns and enhance hypothesis testing, while structural equation modelling was applied to infer whether the survey items matched the measured constructs. Findings: The indicators of core competences had 57% variation on firm performance and increase in core competences by a factor of 0.804% led to improvement of firm performance by 1%. The indicators for resource allocation had 17% variation on firm performance and the marginal effect was 1.738%. The water sector standards intervening effect in the relationship between core competence and firm performance was found not to be significant but the intervening effect of water sector standards on resource allocation and firm performance was significant. Contribution: The study gives indicators of repositioning strategies in the bottled water industry and provides insights to the government on policy regulations and standards.

Entrepreneurial Organizational Culture During a Pandemic in a Labour-Intensive Industry: The Mediating Role of Fear of COVID-19, Psychological Distress, and Job Satisfaction in Turnover Intention

Motivation and idea: Entrepreneurial culture has been considered to have a significant positive relation with the organizational growth and self-efficacy. However, the success of entrepreneurial culture has been challenged by the COVID-19 pandemic and its influence on the well-being of employees who work in labour-intensive industries. More specifically, the level of stress among these workers is increased and that can result in physical and mental health issues, resulting in low mood and motivation, anxiety, depression, burnout, suicidal thoughts, etc. This may ultimately influence the turnover intention in these industries. Research goal: This paper investigates whether a relationship exists between entrepreneurial organizational culture and turnover intention. The goal of this study is to explore the relationship between entrepreneurial organizational culture and turnover intention in labour-intensive industries with a focus on the mediating role of fear of COVID-19, psychological distress and job satisfaction in turnover intention. Data: Quantitative research on 408 respondents has been conducted, whose results can serve as a reference for designing adequate human resource policies in labour-intensive industries. Findings: This study shows that Covid-19 challenged not only economic and financial sustainability, but also the physical and mental well-being of the people. It shows that the organizations that foster an entrepreneurial culture assist people in reducing stress, resulting in members of those organizations experiencing less tension and fear, which is an important part of one's health at such a chaotic time. Contribution: The paper is the first of its kind study and it expands existing research related to organizational culture during the pandemic, thus formulating practical suggestions to future leaders. This study has important implications for practitioners. Although no similar studies exist within the labour-intensive businesses, the analysis of these aspects will enable the leaders to assess and strengthen their connections to the company and to determine which segments of their organizational culture need to be improved so that employees should be happier and more satisfied.

Impact of Digital Technologies on Business Performance in Serbia

Research Question: The main goal of the study was to investigate the degree to which Serbian businesses accept and use digital technologies as part of the digital business transformation process. Motivation: The main aim was to research the specific determinants of the digital economy, digital technology and digital business transformation. Through an empirical analysis, digital technologies were classified as primary and secondary and the motive was to examine whether digital technologies affect revenue growth, productivity improvement, increase in market share, customer satisfaction and employee satisfaction, reduction in operating costs, development and use of digital products, digital market expansion and digital platform development. Idea: The main idea behind the study was to determine to what extent the said technologies are employed in Serbian businesses, as well as to develop a model of the impact of digital technologies on business performance, which may serve as a basis for further research. Data: The research was conducted from October 2020 to March 2021. A questionnaire was sent to over 500 email addresses of Serbian companies, and 98 questionnaires were filled in and duly returned. We displayed the most important characteristics of our sample and that way pointed out its randomness and representativeness and explained the choice of data analytics methods we use. Tools: The research instrument was a questionnaire including the general information (Part I). Part II included the question regarding the primary and secondary digital technologies used in their daily business activities. In Part III, the participants were required to state the specific outcomes their company expects to obtain as a result of digital business transformation. Findings: Mobile technologies, social networks and cloud computing were found to be dominantly employed technologies by the Serbian businesses from the sample. In percentage terms, the second class of disruptive technologies was shown to be insignificantly present in the Serbian companies. Finally, it appears that the role and importance of robotics and artificial intelligence have started to be recognised on the business scene. There is a significant impact of digital technologies on business performances, and we also give correlations between specific digital technologies and business performances, and intensity and statistical significance of impact in each case. We have also determined that some significant technologies make a latent, indirect impact on performances and shown the way that occurs. The analysis is performed after standardizing the ordinal scale values of variables making the results more accurate. Contribution: The paper provides the state of affairs regarding digital technologies use by Serbian businesses, as well as that of digital business transformation.

How Does Organisational ICT Implementation Affect E-Commerce Potential? Empirical Evidence from Serbia

Research Question: This study investigates both direct and indirect effects of employee ICT skills on business e-commerce potential, evaluated through e-commerce website functionality. Motivation: The study aims at expanding the existing knowledge regarding organisational ICT implementation by investigating the relation with e-commerce potential. Idea: The main idea of the paper is to understand how e-commerce potential can be improved by developing the digital skills of employees, mainly in the context of the implementation of cloud computing, portable technologies and e-commerce outsourcing. Data: A sample of 238 businesses from Serbia was considered. Responses were gathered by the Statistical Office of the Republic of Serbia, using EUROSTAT-based questionnaire. Tools: Confirmatory factor analysis and covariance-based structural equation modelling were employed for data analysis. Baron-Kenny approach was used for assessing the mediation effects in the model. Findings: Employee ICT skills showed no direct influence, but were found to have an indirect effect on e-commerce website functionality, which is manifested through organisational implementation of cloud computing and portable technologies. Findings to a certain extent suggest that certain differences between companies from transition and developing economies exist, especially regarding cloud technology adoption. Outsourcing of certain e-commerce activities showed no link with employee ICT skills, but was identified as the most influential factor in website e-commerce facilitation. Contribution: This study contributes to ICT use and e-commerce development literature, as it is the first one to investigate the direct and indirect relation between organisational ICT implementation and website e-commerce potential.