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November 2017

November 2017

Zagreb International Review of Economics and Business
Volume XX, Number 2 (November 2017)



Drivers of Customer Centricity: Role of Environmental-level, Organization-level and Department-level Variables​        

Goran Vlašić
Emanuel Tutek

Abstract: Customer centricity is gaining importance as companies are gaining access to increasing amount and quality of individual-level data on identifiable customers. However, efforts to enhance customer centricity often face challenges as they imply organization-wide effort. This paper explores the role of environment-level factors, organization-level factors (in terms of structure, influence and culture) and department-level factors (in terms of integration, power and capabilities) in driving customer centricity of a firm. Results indicate that, while within-category competition stimulates customer centricity, the cross-category competitive intensity limits it. Moreover, marketing competences exhibit highly significant impact which even diminishes the role of inter-departmental integration. Lastly, results show that firms with high level of marketing capabilities and the right culture (in terms of tolerance for failure and availability of slack resources) are likely to exhibit higher levels of customer centricity.

Key words: customer centricity; marketing capabilities; department integration

JEL Classification: M, M3, M31


Long and Short-Term Dynamic Relationship between Macedonian and Croatian Stock Markets
Julijana Angelovska

Abstract: The aim of this study is the empirical investigation of the long-run relations and the short-term dynamics between two Balkan stock markets: Macedonian and Croatian. The presence of long run common trend between the Macedonian and Croatian stock market indices is identified by applying Johansen’s cointegration maximum eigenvalue and trace tests, while potential causal relations are examined by employing Granger’s causality tests. Data sample spans from January 3rd, 2005 to March 31st, 2017. The stock market indices were found to be co-integrated with significant relationships. A bi-directional pattern of causality is documented between the Macedonian and Croatian returns. This pattern is remarkably stable and suggests significant economic ties between the investors in Macedonian and Croatian stock markets. The findings are important for the investors meaning that they cannot gain diversification benefits of investing in the Croatian or Macedonian stock market.

Key words: integration; dynamic relationship; interdependence; Macedonian stock market; Croatian stock market

JEL Classification: G15, F36, C32

Material Well-being and Happiness in Transition Countries​
Marko Družić
Martina Majstorović

Abstract: The purpose of this paper is to further the research of the connection between material well-being and happiness in transition economies. We analyzed panel data obtained from the World Database of Happiness and Eurostat. Our results indicate that out of all the major macroeconomic variables (GDP, employment, inflation, taxes etc.), the most significant (and the only stable) predictor of changes in happiness in transition countries is the level of employment. The results are consistent with a hypothesis of a still prevalent “socialist mentality” in the analyzed sample of countries which are all formerly socialist economies that typically place high (or full) employment as the highest economic priority (as opposed to GDP growth, low inflation etc.). Our results differ from the conclusions of the few studies done on this sample of countries, which suggests additional research on the subject is likely required.

Key words: GDP; unemployment; happiness; well-being; transition

JEL Classification: I, I3, I31


Current Account Balance and Export Performances: Evidence Based on New EU Countries​
Željko Bogdan
Boris Cota
Nataša Erjavec

Abstract: In this paper, we investigate whether the differences in the current account balance and export performances for a new EU countries are a result of exchange rate policies. The analysis shows that countries with a flexible exchange rate have better export performances and the current account balance in the pre-crisis period. The obtained results show that movements in the current account balance are mainly driven by domestic variables. In the countries with a flexible exchange rate, real and nominal depreciation affects export positively although the magnitude of these effects is tiny and limited to the crisis period. These results point to a higher significance of non-price competitiveness on export which should be a future research topic.
Key words: current account balance; export; dynamic panel model; effective exchange rate; economic growth

JEL Classification: C33, F32, F41


Group Lending Model - A Panacea to Reduce Transaction Cost?​
Sudhir Sharma
Priti Singh
Kratika Singh
Bhawana Chauhan

Abstract: Microfinance institutions (MFIs) have stepped up towards commercialization and sustainability yet they face challenges in terms of transaction cost that limit their growth prospects. Transaction cost is incurred in forming the group of members, searching for the potential clients, monitoring, and administration, in providing training to the clients etc. Group lending has emerged as an effective tool in reducing this cost by transferring its burden on the group. Though the concept of group lending is not new in micro finance but in India it was introduced by NABARD in 2004-05 owing to its key advantage of income generation. This paper aims to analyze whether group lending programme has some role to play in reducing transaction cost of MFIs. It also discusses the concept of transaction cost, characteristics of group lending as well as process of forming a group. The results reveal that internal management of small and medium MFIs is not working efficiently which results in increased costs. Large MFIs do not face such problems.
Key words: Micro Finance Institutions; Transaction cost; Joint Liability Group

JEL Classification: O, O1, O10

Shadow Economy in Tourism: Some Conceptual Considerations from Croatia​
Oliver Kesar
Katarina Čuić

Abstract: Although the importance of tourism for the Croatian economy is widely recognized and well documented, the issues related to the existence of shadow economy in tourism are not yet fully investigated and resolved. In spite of many attempts to estimate the size and impacts of shadow economy in tourism, there is still much controversy regarding the scope of the research area and the appropriateness of methodological approaches used to quantify this complex phenomenon. The present study aimed to (1) summarize the existing body of empirical evidence related to the shadow economy in tourism, with special reference to the case of Croatia, and to (2) shed some more light on additional aspects and variables which have been found to be important determinants for better understanding of the nature of the shadow economy in tourism. In order to reduce the adverse impacts of the shadow economy in tourism, some policy recommendations are suggested.
Key words: shadow economy; tourism; Croatia

JEL Classification: L83, O17, Z31