the advantages of investing in organic compared to conventional agricultural production

7/15/2019 The Advantages of Investing in Organic Compared to Conventional Agricultural Production

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5th

7th

May 2011

OHRID, MACEDONIA

www.iceird.org


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Title: Proceedings of the 4th International Conference forEntrepreneurship, Innovation and Regional DevelopmentICEIRD 2011

Editors: Prof. Radmil Polenakovik, PhDBojan Jovanovski, MScTrajce Velkovski, MSc

Technical Editors: Ljupka MitrinovskaIvan Simonovski

Printing: Trimaks

Publisher: National Centre for Development of Innovation andEntrepreneurial Learning

Circulation: 300

All rights reserved. None of the parts of this book can be reproduced or transferred in any form by anymeans, electronic or technical, including photo copy, scanning and saving in information systems, withoutprevious agreement of the publisher in written form.

CIP . ,

005(062)330.34(062)338(062)330.16(062)

INTERNATIONAL conference for entrepreneurship, innovation and regional development (4th2011; Ohrid)Proceedings of the 4th International Conference for Entrepreneurship, Innovation and

Regional Development ICEIRD 2011: Ohrid, Macedonia 5th

7th

May 2011/ [Editors: RadmilPolenakovik, Bojan Jovanovski, Trajce Velkovski] Skopje: National Centre for Developmentof Innovation and Entrepreneurial Learning, 2011 - 1293 .; 30 cm

ISBN 97860865144-2-6

) - ) - - ) -COBISS.MK-ID 88092938


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CONTENT(in alphabetical order by authors last name)

Ownership, Innovation Activit ies and Firm Performance - Evidence fromMacedonian Privatized Firms , Hyrije Abazi-Alili, Hristina Cipusheva; MACEDONIA 1

How to Get Out of Crises: Crises Management and Change Management , RuthAlas; ESTONIA

9

Entrepreneurship in Developing Countries: Opportunities and Challenges: theCase of Jordan , Fuad N. Al-Shaikh; JORDAN

17

Transferability of Entrepreneurship Educational Programmes: Finland, Swedenand Norway , Bjrn Willy mo; NORWAY

24

Barriers for Industry-Academia Collaboration in Bulgaria , Karina Anguelieva, DorinaKabakchieva, Elissaveta Gourova; BULGARIA 32

Relative Efficiency of Higher Education in Slovenia and Croatia: Inter-Country Non-Parametric Approach ,Aleksander Aristovnik, Alka Obadi; SLOVENIA, CROATIA 39

Is It Necessary to Outsource Innovation? Creation and Innovation FaceObstruction , Sorin Mircea Axinte, Ileana Cernica; ROMANIA 47

The Importance of Mobility for Innovation , Vesna Babaja, Neven Dui; CROATIA 54

The Role of Portfol io Foreign Investments in the Development of Emerging CapitalMarkets , Flavia Barna, Miruna Lucia Nachescu; ROMANIA 61

Developing Internationalization Competence for Consultants and Managers of

Micro, Small and Medium Enterprises , Rupert Beinhauer, Rene Wenzel, AdrianKachelmaier; AUSTRIA 68

Entrepreneurial Process in Small and Medium Sized Organic AgriculturalHoldings in Serbia , Nemanja Berber, Vesna KoiVugdelija, Jovana urii; SERBIA 74

Cost Management and Implementation of Abc Method in Business of Enterprises ,Dragana Beli, Ivana Beli; SERBIA

82

Strategy and Methods of Forming the Price to Small and Medium Enterprises in theFunction of Results , Ivana Beli, Dragana Beli; SERBIA 89

How Candidates for Employment Prepare the mselves for the Job Interview -Analysis of the Process of Preparation of Candidate for the Job Interview inMacedonian Companies , Ranko Bezar; MACEDONIA 96

The Incitement of Entrepreneurial Behaviour of Young People in the Republic ofSerbia , Srdjan Bogeti, Dejan orevi, Dragan okalo; SERBIA 104

Copreneurship as Work-Life Balance Facilitator , Tina Bratkovi, Aniko Noemi Turi;SLOVENIA 111

The Role of Higher Education Institutes as Intermediaries in Regional EconomicEnhancement. , Valerie Brett, Bill OGorman, Nerys Fuller-Love; UK, IRELAND 118

Significant Elements of Management Style in Serbian Industrial Enterprises ,

Vesna Spasojevi

Brki, Nikola Dondur, Dragan

okalo, Milivoj Klarin; SERBIA

126


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Applying Living Lab Strategy in Real Life Conditions , Maria - MikelaChatzimichailidou, Alexander Tsigkas, Dusko Lukac, Zoran Anisic; GREECE, GERMANY,SERBIA

132

Designing a Jaw Crusher Using Value Analysis - Part I , Florin Chichernea,Alexandru Chichernea; ROMANIA 140

Redesigning and Optimisation a Jaw Crusher Using Value Analysis Part II , FlorinChichernea, Alexandru Chichernea; ROMANIA 146

Trade Fairs a Tool for the Spread of Innovation , Marcin Chodnicki, GrzegorzLeszczyski, Marek Zieliski; POLAND 151

ICT and Regional Inequality in Croatia , Mirjana iak, Marina Dabi; CROATIA 159

Innobarometer Romania 2010 , Bogdan Ciocanel, Sorin Mircea Axinte, George Bala;ROMANIA 166

The Importance of the Business Environment for the Liquidity of SMEs andEntrepreneurs Case of Serbia , Jelena iri, Danijela Graanin, Slobodan Moraa;SERBIA

172

The Supportive Role of Investment Funds and Insurance Companies toEntrepreneurship and Innovations , Jelena iri, Vladimir Njegomir; SERBIA 180

Comparison o f Innovative Two Models for Estimation Production Times andCosts , Predrag Cosic, Dragutin Lisjak, Branimir Nadih; CROATIA 188

Technology Transfer Through Spin - Off Companies - from Academic Research toCommercialization in the Life Science Sectors ,Aleksandar Cvetkovski; MACEDONIA 195

The Role of Human Resources and Education in Regional Development , TatjanaCvetkovski, Ana (Langovi) Milievi, Violeta Cvetkovska Ocokolji; SERBIA 200

Conceptual Aproach on Bioleaching of Cu-Zn-Pb-Ag-Au Concentrates , VladimirCvetkovski, V. Conic, Svetlana Ivanov, Miloradirkovi, Milena Cvetkovska; SERBIA 208

The Role and Importance of Investment Banking in the Financial Industry andInnovation , Ljupco Davcev; MACEDONIA 214

Values and Innovative Behavior: Evidence from Bulgaria , Tzvetan Davidkov,Desislava Yordanova, Iya Petkova-Gurbalova, Ivanka Mihailova, Irena Mladenova,BULGARIA

219

The Regional GDP Inter-Relationships: Macedonian Regions , Branko Dimeski;MACEDONIA 225

Collaborative Production Systems Desing Through Usit Method , SvetoslavDimkow; BULGARIA 232

Innovative Methods for Development of Embedded Software Systems ,AleksandarDimov; BULGARIA 240

Marketing Research as a Resource for Innovative Activities of Enterprises , MajaDjurica, Gordana Tomic, Nina Djurica; SERBIA 247


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Knowledge and Technology Transfer in Higher Education as Support forInnovation: the Case of University of Ljubljana , Slavko Dolinek, Manca Poglajen;SLOVENIA

253

Entrepreneurial Learning f rom the Support Organizations and Associations forEntrepreneurs: a Case of Turkey , Dilek Donmez; TURKEY 261

Strategies, the Use of Information Technologies and Competitiveness ofCompanies in Serbia , Zdenka Dudi; SERBIA 270

Visual Analysis of Economical Ratios in Du Pont Model Using Topic Maps , HelenaDudycz; POLAND 277

Water Distribution Problem in the Coastal Region of A lbania. (the Improvement forStrategic Changes) - Regional Development, Possibilities and Barriers. ,Alba Dumi,Mimoza Shoto, Bajame Skenderaj; ALBANIA

285

Economic Crisis and Informatisation Strategies of Enterprises in Poland. SelectedResults of Comparative Surveys from Years 2009-2010 , Mirosaw Dyczkowski;

POLAND

289

Science-Based Incubators Linked With Universities , Irini Efthimiadou, TheologosProkopiou, Paris Kokorotsikos; GREECE 297

Entrepreneurship and Innovation in Russia: Local and International Perspective ,Artem Egorenkov; RUSSIA 304

Entrepreneurship Orientations Before and During the Global Economic Crises , TiitElenurm; ESTONIA 312

Innovation in L ifelong Learning.the Challenge of An Open Framework Accessibleto All , Laura Fantini, Simone Borsci, Maura Benedetti; ITALY 319

Reflexive Open Innovation in Central Europe , Robert Freund, Christos Chatzopoulos,Danijela Lali; GERMANY, GREECE, SERBIA 327

Quality of Employees Hotels in Novi Sad - a System of Continuing Education as aMeasure to Enhance Development , Tamara Gaji, Nina urica, Nenadoki; SERBIA 333

Product Li fecycle Management as a Bus iness Strategy , Valentina Gecevska, Franciu, Paolo Chiabert, Franco Lombardi; MACEDONIA, SLOVENIA, ITALY 341

Towards the Development of Web-Based Business Intelligence Tools : Co-CreationStrategy Components in Technology-Driven Firms , Lachezar Georgiev, Hristo

Milyakov, Petko Ruskov, Lars Eriksen; BULGARIA, DENMARK

350

Knowledge Transfer Flows in the Life Sciences ,Ani Gerbin, Mateja Drnovsek;CROATIA, SLOVENIA 356

Food Innovation- a Regional Cluster Approach , Nikos Giannoulidis; GREECE 364

Innovativeness of Enterprises in Kujawsko-Pomorskie Voivodship as An Object ofInterest of the Kujawsko-Pomorskie Regional Research Centre , WiesawaGieraczyk; POLAND

371

ICT System Re-Engineering as a Change Initiative , Ljupco Gruevski; MACEDONIA 378


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Entrepreneurship Disparities Among Regions in Syria , Majd Haddad, Ramia Ismail,Shamel Badran, Rabie Nasser; SYRIA 385

National Policy on Entrepreneurship and Innovation Serbian Case , MiroljubHadi, Petar Pavlovi; SERBIA 393

Polycentric Development in Latvia Within the Context of the Cohesion Policy ,Inese Haite; LATVIA 400

Techniques Design Modern Elevator Constructi on , Beqir Hamidi; KOSOVO 407

Regional Development Under Consideration of Companies Location PlanningDecisions , Melanie Hiller, Christopher Stehr; GERMANY 412

Administ rative Procedures in Public Administ ration as An Obstacle to theOperating of SMEs: Comparison of Eu and Selected See Countries , Barbara BradaHojnik, Miroslav Rebernik; SLOVENIA

418

Analysis of Potential Improvements in the Process of Evaluation of Scientific andResearch Results in Serbia , Ivana Horvat , Olivera Grljevi, Ana Maria Serdar; SERBIA 425

Open Innovation for the Bottom of the Pyramid , Mokter Hossain; FINLAND 432

The Role of Supply Chain Management in Fostering Regional DevelopmentThroughout Southeastern Europe , Eleftherios Iakovou, Dimitrios Vlachos, NaoumTsolakis; GREECE

438

The Link Between Intellectual Capital, Strategy and Entrepreneurship , SadudinIbraimi, Gadaf Rexhepi; MACEDONIA 446

Competitiveness of Serbian Economy in the Region and Its Prosperity , SilvanaIlic, Milorad Sakan; SERBIA 453

The Most Common Obstacles in Granting Patents for Macedonian Inventors inInternational Appl ications , Bogoljub Ilievski, Gjorgji Filipov; MACEDONIA 459

Performance Appraisal of Erp Implementation in South-East European SMEs ,Shpend Imeri, Fotios Missopoulos, Dialechti Fotopoulou; MACEDONIA, GREECE 466

Identifying Successful Knowledge Exchange Practices Between Academia &Industry in University-City Regions: the Case of the ssaloniki Greece , GeorgeIntzesiloglou, Christina Kakderi, Nicos Komninos, Nikos Zaharis; GREECE

472

Sdi-Edu for Regional and Urban Planning: Innovation Training and EducationTools , Karel Janecka, Katerina Sotiropoulou, Arnaud Deleurme; CZECH REPUBLIC,CYPRUS, GREECE

479

With the Right Idea to Leadership of a Regional Cluster of Suppliers ,AleksanderJane; SLOVENIA 485

The National Policy Mixes of the Republ ic of Macedonia Toward EuropeanResearch Area , Saso Josimovski, Kalina Trenevska Blagoeva, Mijalce Santa;MACEDONIA

491

Linking Strategic Decisions and Operations in An Enterprise , Bojan Jovanoski,Robert Minovski, Radmil Polenakovik; MACEDONIA 499


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Business and Financial Support to Small and Medium Enterprises in Serbia ,Slobodanka Jovin; SERBIA 505

Reengineering of Industri al Manufactur ing Imperative of Development andCompetitive Capability , Milan Jurkovic, Vlatko Dolecek, Isak Karabegovic, ZoranJurkovic; BOSNIA AND HERZEGOVINA, CROATIA

512

Innovation and Advanced Technologies for Transition Countries , Zoran Jurkovi,Milan Jurkovi, Stipo Buljan; CROATIA, BOSNIA AND HERZEGOVINA 520

ICT Diffusion and Use in Student Environment in Tetovo , Lazim Kamberi, SadriAlija, Llukan Puka; MACEDONIA, ALBANIA 528

Empowering Youth Entrepreneurship Through Online Business , Mira Kartiwi, AbuOsman; MALAYSIA 534

E-Commerce and Female Entrepreneurship Development in Urban and RuralDeveloping Countries , Mira Kartiwi; MALAYSIA 540

Professional Education and Entrepreneurship Challenge for Albania , MimozaKasimati (Skenderi), Semiha Loca; ALBANIA 547

Learning Through Entrepreneurship: Infusing Immigrant EntrepreneurialKnowledge to Entrepreneurship Education for Students and SMEs , Panayiotis H.Ketikidis, Adrian Solomon Lambros Lazuras, Carolyn Downs; GREECE, UK

555

Innovation System in a Producing Company ,Andras Kicsi; SERBIA 561

Educational Data Mining By Means of a Power Instructor S Tool , Oktay Kir, IrinaZheliazkova, Georgi Teodorov Georgiev; BULGARIA 567

Organizational Change Management in Enterpr ises in Bosnia and Herzegovina ,Zdenko Klepi, Mirela Mabi, Jelena Brki; BOSNIA AND HERZEGOVINA 575

Performance analysis of the logisti cs processes within the supply chainmanagement ,Atanas Kochov, Ana Dzaleva; MACEDONIA 583

How Micro Lending Practices Affect Entrepreneurial Activi ty , Forcim Kola, SemihaLoca, Bajram Korsita; ALBANIA 589

Regional Competitiveness and Development With the Reference to the Situation inSerbia , Suzana Kolar, Dejan ivkov; SERBIA 597

Microcredit as a Source of Future Micro and Small Entrepreneurs Growth , Olga

Komarova; RUSSIA 606

Significance of Quality and Tqm in the Process of Local and Regional Developmenton the Territory of Vojvodina , Biljana van Veghel Kondi, Hugo van Veghel; SERBIA 614

Quality Management at a Training Implement , Elmi Konjusha, Vehbi Ramaj, FadilGashi, Feim Bravo; KOSOVO 622

Investigating Corporate Entrepreneurship Within Banking Sector in Serbia , LjiljanaKontic, Jovan Kontic; SERBIA 627

Comparison of Industr ial Dynamics in Bulgaria, Romania, Greece and Turkey ,Diana Kopeva, Nikolay Shterev, Dimitar Blagoev; BULGARIA 635


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The Impact of Trade Unions on Entrepreneurship , Tanja Kosi, Bojan Nastav;SLOVENIA 643

Model for Effective Science Business Collaboration in Bu lgarian Economy , K.Kostadinov, G. Raichevski, Tsv. Yorgova; BULGARIA 652

Use of Innovative Multi-Criteria Model in Process of Investment in PublicInstitutions , Toma Kostanjevec, Metka Kostanjevec; SLOVENIA 659

Testing the Possibilit y fo r Reducing the Papadopoulos/HeslopS Pci ResearchVariables By Combined Use of Factor and Regression Analyses , Igor Kostovski;MACEDONIA

667

The Tourism and its Improvement Key Factors for Country Development: CaseStudy of The Republic of Macedonia , Kosta Koteski; MACEDONIA 676

Creating Entrepreneurial Marketing Strategies Based on Consumer Behavior , IvoKuzmanov, Gjorgji Gogo Rafajlovski; MACEDONIA 683

Entrepreneurship, LLL (3L) and Labor Market in Montenegro , Dragan Lajovic;MONTENEGRO 690

The Influence of Culture on Entrepreneurship - Special Focus on WomenEntrepreneurs ,Ana Langovi-Milievi, Tatjana Cvetkovski, Zlatko Langovi; SERBIA 696

Challenges of the Audit SystemS Innovation According to the Development of thePublic Accountancy , Judit Lehoczky, Jzsef Simon; HUNGARY 702

The Impact of Economic Internationalization on Economic Growth , Ina Lejko,tefan Bojnec; SLOVENIA 709

Linking Factual and Normative Cross-National Cultural Values WithEntrepreneurship, Miri Lerner, Amir Shoham, Ilan Alon; ISRAEL, U.S.A. 716

Engagement of Management and Employees in Enhancement of the Quality ,AfrimLoku; KOSOVO 723

Methods and Tools for Product Innovation , Mimoza Luta, Edison Luta; KOSOVO 727

The Impact of Tourism Innovation on Visitor Expen-Diture a Case Study fromEastern Finland , Teemu Makkonen, Timo J. Hokkanen; FINLAND 732

Governmental and Regional Policies on Entrepreneurship and Innovation -Partnerships Between Municipalities, Ngos and Local Government Partnership ,

Gelina (Ramolli) Maliqi, Alba Dumi; ALBANIA738

Intrapreneurship: Challenge Or New Way of Working for Existing Organization? ,Monika Markovska; MACEDONIA 742

Intrapreneurs Create a New Business Within Existing Organization , MonikaMarkovska, Todor Kralev; MACEDONIA 749

The Impact of Practical Entrepreneurship Project (Sbic) on Future EntrepreneurialIntentions: Views from the University of South Af rica Students , Violet Mashaba, EricNenzhelele, Kopano More; SOUTH AFRICA

756

Information Sharing in the Digital Enterprise: Rfid and Erp System Integration ,

Gordana Matievi, Tadija Lovri; CROATIA 764


10/22

Entrepreneurial Finance and Venture Capital Case of Italy and Slovenia , NinaMazgan, Alessia Melasecche, Andrea Di Anselmo, Jaa Jurei; SLOVENIA, ITALY 770

Market Positioning in the Process of Design of New Product , Jelena Micevska,Tashko Rizov; MACEDONIA 776

Metrics and Optimization of Technology Transfer Channels Between Universitiesand Firms , Laurent Miville, Georges Haour; SWITZERLAND 784

Insurance Companies as One of the Drivers of Entrepreneurship in DevelopingCountries , Nada Milenkovi, Dragana Ikoni, Nina Arsi; SERBIA 790

Methodology for Analyses and Selection of Best Practices in the Area ofEmbedded Systems and Industrial Informatics , Nikolay Milovanov, Antoni Slaviniski,Ivan Bogomilov; BULGARIA

797

Audit of the Information Systems (Is) as a Tool for Continuous Improvement of thePerformance of An Organization , Robert Minovski, Valentina Neshovska;MACEDONIA

803

Entrepreneurial Intentions Within Business and Non-Business Studies , RisteMishe, Jaka Vadnjal; MACEDONIA, SLOVENIA 811

Capital Budgeting a Tool for Improvement of Operations of Small and MediumEnterprises , Mirela Momilovi, Sanja VlaoviBegovi, Dajana Vindanovi; SERBIA 820

Development of Pifc in Albania- a Step on the Road to European Integration ,Hysen Muceku, Albana Gjinopulli; ALBANIA 827

2 Goals With One Shot: Promoting Entrepreneurship Among Students inSecondary School Can Beat Academic Failure and Increase Future EmploymentChances , Jordi Naval, Oscar Snchez, Paul Kidd-Hewitt, Audrey Damas ; SPAIN

836

Diffusion of Innovation By Rate of Usage of Internet , Borislav T. Nestorovski, RadmilPolenakovik, Bojan Jovanovski, Trajce Velkovski; MACEDONIA 842

Existence of Urban Canyons as the Innovative Solution for Better Quality of Lifeand Business Developing in Podgorica City ,Aleksandar Nikoli; MONTENEGRO 850

The Macedonian Labour Market and the Role of University Business Incubators ,Dimitar Nikoloski; MACEDONIA 857

PPP Experience in Macedonia , Marjan Nikolov; MACEDONIA 865

Innovative Entrepreneurship basis for getting involved in the globalization andregionalization processes , Ljubisha Nikolovski; MACEDONIA 870

Innovation Support Framework for SMEs in Serbia , Dejan Ninkovi, Igor Svetel;SERBIA 875

Composite Index for Measuring Level of Introduction of An Integrated ProductPolicy i n Countries Under Certain Circumstances , Teodora Obradovic-Grncarovska,Vladimir Dukovski; MACEDONIA

881

Industry and Academia Collaboration Towards Sustainability , Fabio Orecchini,Valeria Valitutti, Giorgio Vitali; ITALY 887


11/22

Impact of Retail on the Competitiveness of Tourism Destinations , Nataa Pavlovi,Nevena uri; SERBIA 893

Innovative Marketing Tools for Growth - Brand Extensions and Brand PortfolioStrategy , Kristijan Petkoski; MACEDONIA 899

The Entrepreneurial Spirit Within the Mission Statements of Vocational HighSchools in Republic of Macedonia , Mirjana Borota Popovska, Vasil Popovski, MarijaTopuzovska; MACEDONIA

907

Innovation as the Answer to the Quest for Regional Progress ,Amna Potonik,Matja Mulej, Simona arotar iek; SLOVENIA 913

Methodological Challenges of Measuring Intangible Capital in DevelopingCountries: the Case of Innovation Activity , Janez Pranikar, Tjaa Redek, MarijaDrenkovska; SLOVENIA

921

Entrepreneurship Challenges in Kosovo: Innovation, Research and Education ,

Gazmend Qorraj, Fatmir Stublla; KOSOVO929

Entrepreneurial Universit y Case of Montenegro , Dragana Radevi, Sandra Tinaj;MONTENEGRO 934

Assessment of Ozone Injury , Sneana Rajkovi, Miroslava Markovi, LjubinkoRakonjac, Radovan Neveni; SERBIA 942

Knowledge Networks of Universities and Other Research Institutions in South andEast Bulgaria , Stela Raleva; BULGARIA 948

Venture Capital in Macedonia - Does It Really Exist? , Veland Ramadani, ShqipeGerguri; MACEDONIA 956

Management Training and Knowledge Management and Innovation , Vehbi Ramaj,Bedri Millaku, Fadil Krasniqi, Hysen Lajqi; KOSOVO 964

The Estimation of Competentions for Veterans Included in Civile Life-SecondCarier , Zivko Ramov, Elizabeta Popova Ramova; MACEDONIA 968

The Education for Physical the rapy, Where are We Today, Possibili ties andPerspectives , Elizabeta Popova Ramova, Anastasika Poposka; MACEDONIA 975

Why International R&D Cooperation Performs Better Than National? , KarinRehatschek; AUSTRIA 981

Project Management Using Open Source Internet Tools ,Aleksandar Rikalovi,Aleksandar Pavi, Nikola Suzi, Danijela Graanin; SERBIA 987

Innovation Networks and SMEs Competitiveness , Slavica Rocheska, MarjanAngeleski, Olivera Kostoska; MACEDONIA 995

Investigation of Start-Up Modeling Frameworks , Radostina Ruseva, Petko Ruskov;BULGARIA 1001

JA-YE Graduate Student Company Strategy , Petko Ruskov, Milena Stoycheva,Caroline Jenner; BULGARIA 1009


12/22

Exploring the Collaboration Between Industry and Academia in South-EasternEurope Within the Scope of the I-Seemob Project , Dimitrios Sanopoulos, VesnaBabaja, Neven Duic; GREECE, CROATIA 1017

Strategy Europe 2020, the Concept of Know ledge Economy and GlobalCompetitiveness of Eu Economy , Slavejko Sasajkovski, Ljubica Micanovska;

MACEDONIA 1024

Some Aspects Regarding IP Stimulation and Awareness in the Field of TechnologyTransfer, Key Position in Regional Development (Part I) , Dan Svescu, Mihaela-Georgia Sima, Simona-Clara Brsan; ROMANIA

1031

Some Aspects Regarding Ip Stimulation and Awareness in the Field of TechnologyTransfer, Key Position in Regional Development (Part II) , Dan Svescu, Mihaela-Georgia Sima, Simona-Clara Brsan; ROMANIA

1039

Green Innovation - Value Oriented Design , Stefan Schmidt; GERMANY 1046

Regional Competit ivenes and Development , Nuhi Sela, Arben Oda; MACEDONIA 1054

Eportfolio Identity and Professional Development , Elena Shoikova, AnatolyPeshev, Milena Krumova; BULGARIA 1061

Valorisation of Air Transport Infrastructure in South East Europe ,Ana imecki,Nenad Nikoli, Sanja Steiner,; CROATIA,SERBIA 1069

Financing of Sustainable Development the Case of Serbia , Jelena Simi, VladimirZaki; SERBIA 1077

New Venture Creation Stimulated By Higher Education Institut ions Through

Innovation Networks , Jorge Manuel Marques Simes, Maria Jose Silva, JacintaMoreira; PORTUGAL1081

Technology Transfer and Government Policy in the Wind Energy Industry , GeraldP. W. Simons, Paul N. Isely; U.S.A. 1089

Code of Ethics as a Tool for Innovations in Ethical Practice in the Organization ,Andriana Skerlev-Cakar; MACEDONIA 1096

Use of Intelligent Agents and Rule Based Expert Systems in Everyday Logist icsOperations , Kostadin Solakov; MACEDONIA 1101

The Influence of Innovations of Working Processes on the Operational Efficiency ,

Vasil Stamboliski, Vancho Donev; MACEDONIA 1108

Innovative Employee Reward Methods Use and Its Linkage With EmployeeMotivation and Performance , Ljubica Stefanovska, Emilija Ristova; MACEDONIA 1116

Odds Ratio, Or: Calculation, Use and Interpretation in Assessing the Vulnerabilityof Network Systems , Duanka Stojanovi, Vesna AleksiMarii, Ljilja ikman; BOSNIAAND HERZEGOVINA

1124

Science, Technology and Innovation (Sti) and the Knowledge Economy:Implications for the Republic of Macedonia , Mahfouz E. Tadros; KUWAIT 1130

Macedonian Entrepreneurs and the ir Effic ient and Effective Time and StressManagement Skills ,Angelina Taneva-Veshoska, Ljubomir Drakulevski; MACEDONIA 1138


13/22

Green Innovations Within the Framework of International Cooperation: NewChallenges for New Days ,Alexander Tanichev; RUSSIA 1146

Innovative and Competitive Structure of Regional Economies in Turkey , KamilTasci, Mehmet Emin Ozsan; TURKEY 1153

How Innovative South East Europe Is? , Zeljko Tekic, Ilija Cosic, Jelena Borocki,Danijela Lalic, Bojan Jovanovski; SERBIA, MACEDONIA 1161

Pattern for Intellectual Property Rights Management of Students in HigherEducation Institutions , Yanka Todorova, Panayiotis Ketikidis, Dimitar Birov;BULGARIA, GREECE

1169

Clusters as a Driver of Regional Development , Nikolina Trajanoska; MACEDONIA 1176

Virtual Classroom for Graphic Technology , Sran Trajkovi, Zona Kosti, DraganCvetkovi, Ranko Popovi; SERBIA 1183

Global Entrepreneurship Index for Western Balkan Countries and SloveniaParticipants in the Gem 2009 Project , Bahrija Umihani, Mirela Arifovi; BOSNIA ANDHERZEGOVINA

1188

Halal Standard Chance for Producers of Food Products , Duanka Uumli, EdinKala; SERBIA 1195

Relating Technology and Social Entrepreneurship in the Context of SustainableDevelopment ,Asta Valackiene, Diana Miceviciene; LITHUANIA 1202

Entrepreneurial Alertness:Turning Innovation Into Economic Benefit , DaveValliere; CANADA 1210

Financial Sector in B-H and Microcredit Organizations in B-H , Saa Vuji, SlobodanVuji; BOSNIA AND HERZEGOVINA 1217

Decision Making on Innovation Process ,Ariana Xhemajli, Mersiha Kalac; KOSOVO 1222

Personal Values and Goals of Young Entrepreneurs in Macedonia , MarijaZarezankova-Potevska, Angelina Taneva-Veshoska; MACEDONIA 1226

Entrepreneurship and Entrepreneurial Developments With Special Emphasis to theRepublic of Macedonia , Izet Zeqiri, Brikend Aziri; MACEDONIA 1232

The Role of Universities in the Triple Helix: a Multi-Country Comparison , Qiantao

Zhang; UK1240

Innovation Triggering Factors in University Research Environment , ElizabetaZirnstein, Peter Fatur, Mitja Ruzzier; SLOVENIA 1248

Human Capital a Driv ing Force of Regional Development: Challenges andPossibilities in Latvia , Daina Znotina; LATVIA 1255

Serious games and virtual worlds in the context of enterpreneurial skill sdevelopment , Albena Antonova, Roumen Nikolov; BULGARIA 1263

Development of Accounting Regulation and its effects on Enterprise Operation inHospitality Industry , Tivadarn Rvfy, Andor Pajrok; HUNGARY 1271


14/22

The Advantages of Investing In Organic Compared To Conventional Agricul turalProduction , Jovan Njegi, Mirela Momilovi, Nemanja Berber; SERBIA 1277

Author Index 1285


15/22

Jovan Njegi

The Advantages of Investing In Organic ComparedTo Conventional Agricultural Production

1, Mirela Momilovi

2, Nemanja Berber

3

1Higher School of Professional Business Studies, Novi Sad, Republic of Serbia,[email protected]

2Higher School of Professional Business Studies, Novi Sad, Republic of Serbia,[email protected]

3Higher School of Professional Business Studies, Novi Sad, Republic of Serbia, [email protected]

The problems of malnutrition in recent years have been gaining the importance in theEuropean Union. Among others, classic type of nutrition brings many consequencesof economic nature, such as high costs of health care, reduced working capacity andthe like.

This paper is based on the comparison of investments in production projects ofconventional and organic agricultural products by using methods of the net presentvalue, profitability index and internal rate of return.

These and many other reasons influenced the increase in popularity oforganic production. Our research has focused on the comparison of investments inthe production of organic crops, as compared to conventional agricultural production.Comparative analysis was conducted in order to define the efficiency of agriculturalproduction and to determine optimal way of performing this activity, which isimportant for the economic development of Serbia and other countries in the Balkanregion.

On the other hand, the paper gives

the estimation on the risks of investing in these projects.

Key words:Organic agriculture, investing process, net present value, internal rate of return, profitability index.

1. Introduction

The concept of sustainable agriculture is defined as the direction of agricultural development whichshould provide stable production of quality food and plant products for other technical purposes, whilepreserving the basic natural resources and energy, environmental protection,and the simultaneous economic efficiency profitability [1]. Organic agriculture is based on theprinciples of health, ecology, fairness and care [2].

Organic farming began to emerge after the twenties of the last century in England and Germany, whilein 1938 the organic agriculture emerged in the United States. Special role in facilitating further growthof this industry played J. I. Rodale in 1942, who founded the journal "Organic farming andgardening" which is extremely influential even today [3]. In the fifties of the twentieth century greenrevolution appeared, more or less successfully. It has enabled increased production of agriculturalproduction, while organic production was developing in the same time. In contemporary conditions theimportance of development of organic agriculture is provided by its relationship with the production ofgenetically modified food. The increasing problems of conventional production (pesticides,carcinogenic substances in fertilizers and animal feed, hormones, etc.) caused an increase in demandfor organic products worldwide.The beginning of organic production in Serbia is linked to the seventies of the twentieth century [4].The first organized practice of organic production and consumption of food in Serbia is connected tothe Association of Natural Food Terras, founded in 1990 in Subotica [5]. The aim of this association

from the foundation was to raise awareness of the need of using healthy food, the establishment of

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ecologically balanced production and sustainable development of economic entities in the field oforganic food production

.

Table 1 Organic (including in conversion) area in region 2007 2009

Year Indicator Year Indicator Year Indicator

2009 2008 2007

AGRICULTURE[ha]

AGRICULTURE[ha]

AGRICULTURE[ha]

Country organic % organic % organic %

Albania 280 0,00% 280 0,00% 77 0,01%

Bosnia andHerzegovina

580 0,03% 691 0,03% 691 0,03%

Bulgaria 16.663 0,55% 16.663 0,55% 13.646 0,45%

Croatia 14.194 1,10% 10.010 0,78% 7.561 0,63%

Hungary 140.292 3,32% 122.816 2,90% 122.270 2,89%

Macedonia,FYR

988 0,09% 3.380 0,32% 1.333 0,12%

Montenegro 4.600 0,90% 1.876 0,37% 25.051 4,87%

Romania 168.288 1,22% 140.132 1,02% 131.401 0,96%

Serbia 8.661 0,17% 4.494 0,09% 830 0,02%

Slovenia 29.388 6,01% 29.838 6,10% 29.322 6,00%

Source:(date of access 30/01/2011)[6]

http://www.organic-world.net/statistics-europe-production.html

Table 1 presents the organic area in region of Balkan, states near Serbia. According to data given in

table, it is obvious that interest in organic production is rising in this region. From 2007 until 2009 theareas in hectares in organic agriculture have increased almost in all countries, except in Bosnia andHerzegovina and Montenegro. From 2008 until 2009 there have been some changes, so it wasdeducted decrease of this area in Bosnia and Herzegovina and Macedonia. The biggest increase wasin Croatia, from 10.010 ha to 14.292 ha, Hungary from 122.816 ha to 140.292 ha, Romania from140.132 ha to 168.288 ha, Serbia from 4.494 ha to 8.661 ha. Of course, main increase was deductedin countries that are members of European Union, where organic agriculture is already implemented toa large extent.For Serbia the organic production is concept that is still in its infancy and which is unknown to manypeople, both potential manufacturers and consumers. As in other areas of production here is alsoimportant to determine the efficiency of production. Namely, for the producer who has an interest toengage himself in this kind of production it is necessary to determine the profitability and return onnecessary investment for starting the manufacturing process. According to many data [7]

organic agriculture achieves more stable and better yields, and the market of food industry has ahigher earning power through higher selling prices, and thus achieves greater economic benefit in theform of profits and long term economic benefits. Almost 90% of organic products from Serbia areaimed at the export market and the EU, USA and Japan [8]. According to NGO Terras, earnings oforganic agriculture was about 40 million Euros in 2007. As the demand on the world market increases,it can be expected that production in Serbia will affect economic strength and competitiveness ofSerbian economy.

Although some indicators such as productivity and yield (in units) worth more in conventionalproduction, yield and productivity comparisons offer a limited, narrow, and often misleading picture ofthe different production systems. Profitability and long-term economic viability would be a betterindicator for evaluating the benefits and limitations of a production system. Moreover, the multipleenvironmental benefits of organic farming, difficult to quantify in monetary terms, are essentialingredients in any comparison [9]. It is very important to pay attention to the process of production,

because it can show all the features that make some users interested for an organic productThe goal of this research was to evaluate the profitability of organic production in comparison withconventional type of production. This was made to determine whether organic type of agriculture is a

.

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development chance for Serbia. The research and analysis was conducted on domestic householdswhich are under conventional and organic types of production in region of Vojvodina.

2. Methodology and Data for Research

Methodology of the research includes dynamic methods for investment evaluatingsuch as net present

value NPV, internal rate of return IRR and benefit/cost ratio BCR.

Table 2 Dynamic indicators of production and investment efficiency

NUMINDICATOR OF

EFFICIENCYSYMBOL FORMULATION

1 Net Present Value NPV( ) ( )1 11 1

n n

t tt t

NV B CNPV I I

r r= =

= =

+ +

2 Internal Rate of Return IRR min max min( )p

p

NPVIRR r r r

NPV NPVn

= + +

3 Benefit/Cost Ratio BCR ( )1 1

n

t

t

NV

rBCR

I

= +=

Source: Krishna L P, Yasuhiro S, Naoyuki Y, Aya N, Hideyuki K, 2010:143 [10]

Table 3 Decision making framework

NUM INDICATOR ACCEPT INDIFERENCE REJECT

1 NPV NPV>0 NPV=0 NPVr, i IRR= i IRR< i

3 BCR BCR>1 BCR=1 BCR


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22 Plowing 78,95 78,95

23Preparation forsowing

39,48 30,00

24 Hoeing soil 122,32 -

25 Sowing 39,50 34,00

26 Fertilization - 145,90

27 Harvesting 92,10 89,50

28 Transport 13,15 13,15

3 Fixed costs FC 58,95 35,60

4 Total costs C 549,70 551,6

Source: Data from households and interview with the producres

Table 6 Prices and yields of organic soybean 2006 2010

YEAR MEASURE PRICE in YIELD t/ha

2006 TON 240 2,7

2007 TON 270 3,0

2008 TON 285 2,8

2009 TON 320 2,69

2010 TON 360 2,77

Source: Data from households and interview with the producres

Table 7 Prices and yields of conventional soybean 2007 2010

YEAR MEASURE PRICE in 2006 TON 214

2007 TON 241

2008 TON 348

2009 TON 295

2010 TON 286

Source: http://www.foodsecurityportal.org/api/countries/world-soybean-price(date of access16/02/2011) [12]

Table 8 Loan interest rates

ORGANIZATION TYPE OF LOAN INTEREST RATE %

Procredit Bank ProAgro Loan 9.57

Procredit Bank Subventional Loan 5.88

Source: http://www.procreditbank.rs/poljoprivrednici/krediti/proagro_krediti.65.html [13]

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3. Results of the Research

Comparison of the investments in projects of conventional and organic soybean production is done onthe basis of data gathered from the domestic household in region of Vojvodina. The household canchose weather to invest in conventional or in organic soybean production and this paper gives themrecommendation based on calculation of net present value, internal rate of return and profitability

index.

In order to calculate these investment indicators net cash flows for both organic and conventionalproduction must be found, as well as appropriate discount rate. Cash flow of the projects consist ofinitial investment, operating cash flow and salvage value at the end of project life (year 10). Since thehousehold already owns the land and necessary machinery the initial investment contains investmentin working capital and opportunity cost (lost net income of the opposite conventional/organicproduction). In order to get operating cash flows all future revenues and costs have to be projected.Projection of revenues was done on the basis of geometric average growth rates (Table 9 and Table10), since Aswath Damodaran recomends their use. On the other hand, growth rate of costs is set to be3%, which is expected inflation rate in EU. Depreciation is determined on the basis of straight linedepreciation method and initial information given by household. The salvage value at the end of theproject life contains only working capital, because the household did not have to invest in fixed assets

at the beginning of the project.

The project will be financed by the loan. In order to find appropriate discount rate, the data gatheredon agricultural loans in Serbia [14] was considered. The most suitable loans that any investor coulduse were found (Table 8). Due to the more rigorous approach taken by authors, discount rate is set on9.57% although the lowest cost of borrowed capital in Serbia is 5.88%. This was done because of highmacroeconomic, business risk and risk connected with the household production.

Table 9 Growth rates of organic soybean prices

YEAR MEASURE PRICE in GROWTH %

2006 TON 240

2007 TON 270 12.50

2008 TON 285 5.56

2009 TON 320 12.28

2010 TON 360 12.50

Aritmetic Average AA = 10.71

Geometric Average GA = 10.67

Table 10 Growth rates of conventional soybean prices

YEAR MEASURE PRICE in GROWTH %

2006 TON 214

2007 TON 241 12.62

2008 TON 348 44.38

2009 TON 295 -15.02

2010 TON 286 -3.05

Aritmetic Average AA =9,73

Geometric Average GA = 7.56

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Table 11 Investment indicators in organic soybean production

EUR ()

YEARS 0 1 2 3 4 5 6 7 8 9 10

INITIAL INVESTMENT

Investment 0.00

+ Working Cap 490.76

+ Opp. Cost 263.58

Initial Investment 754.34

OPERATING CASHFLOWSRevenues 997.20 1,103.60 1,221.36 1,351.67 1,495.90 1,655.51 1,832.15 2,027.64 2,243.99 2,483.43

-Var. Expenses 490.76 505.48 520.65 536.27 552.35 568.93 585.99 603.57 621.68 640.33

- Fixed Expenses 58.95 60.72 62.54 64.42 66.35 68.34 70.39 72.50 74.68 76.92

EBITDA 447.49 537.40 638.17 750.99 877.19 1,018.25 1,175.77 1,351.57 1,547.64 1,766.18

- Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00

EBIT 412.49 502.40 603.17 715.99 842.19 983.25 1,140.77 1,316.57 1,512.64 1,731.18

-Tax 41.25 50.24 60.32 71.60 84.22 98.32 114.08 131.66 151.26 173.12

EBIT(1-t) 371.24 452.16 542.85 644.39 757.97 884.92 1,026.69 1,184.91 1,361.37 1,558.06

+ Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00

- Work. Cap 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

SALVAGE VALUE

Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Working Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 490.76

NATCF -754.34 406.24 487.16 577.85 679.39 792.97 919.92 1,061.69 1,219.91 1,396.37 1,593.06

Discount Factor 1.00 1.10 1.20 1.32 1.44 1.58 1.73 1.90 2.08 2.28 2.49

Discounted CF -754.34 370.76 405.78 439.28 471.36 502.11 531.62 559.96 587.21 613.45 835.50

INVESTMENT INDICATORS

NPV = 4,562.68

IRR = 70.69%

BCR= 7.05

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Table 12 Investment indicators in conventional soybean production

EUR ()

YEARS 0 1 2 3 4 5 6 7 8 9 10

INITIAL INVESTMENT

Investment 0.00

+ Working Cap 516.00

+ Opp. Cost 447.50

Initial Investment 963.50

OPERATING CASHFLOWSRevenues 815.18 876.81 943.09 1014.39 1091.08 1173.57 1262.29 1357.72 1460.36 1570.76

-Var. Expenses 516.00 531.48 547.42 563.85 580.76 598.19 616.13 634.61 653.65 673.26

- Fixed Expenses 35.60 36.67 37.77 38.90 40.07 41.27 42.51 43.78 45.10 46.45

EBITDA 263.58 308.66 357.90 411.64 470.25 534.11 603.65 679.32 761.61 851.05

- Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00

EBIT 228.58 273.66 322.90 376.64 435.25 499.11 568.65 644.32 726.61 816.05

-Tax 22.86 27.37 32.29 37.66 43.52 49.91 56.86 64.43 72.66 81.61

EBIT(1-t) 205.72 246.29 290.61 338.98 391.72 449.20 511.78 579.89 653.95 734.45

+ Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00

- Work. Cap 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

SALVAGE VALUE

Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Working Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 516.00

NATCF -963.50 240.72 281.29 325.61 373.98 426.72 484.20 546.78 614.89 688.95 769.45

Discount Factor 1.00 1.10 1.20 1.32 1.44 1.58 1.73 1.90 2.08 2.28 2.49

Discounted CF -963.50 219.70 234.30 247.53 259.47 270.20 279.82 288.39 295.98 302.66 515.39

INVESTMENT INDICATORS

NPV = 1,949.93

IRR = 34.88%

BCR= 3.02

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4. Discussion on the Results and Conclusion

Results obtained in this research show far greater cost effectiveness of organic production, comparingto conventional one. Although there is a slight difference in initial investment, the fact that NPVcalculated for organic production is 2.35 times higher indicates higher profitability of this type ofproduction. That conclusion is further confirmed by much higher BCR in the case of organicproduction. Although the results prove the benefit of organic production, they should be interpretedwith certainData shown in Table 5 indicate that total costs for organic and conventional production are verysimilar. Usually it is expected for organic production costs to be significantly higher; therefore thiscould be a surprising result. The main differences in structure of costs between organic andconventional production are caused by high expenses for hoeing soil in case of organic production,contrary to fertilization costs in the case of conventional production. We have to keep in mind thathoeing soil expenses are highly dependent on labour costs. Therefore, these costs can varysignificantly from country to country.

caution.

Also, empirical studies show that organic production yields can be lower. This fact must be taken intoconsideration in further research concerning profitability of organic production.Finally, we believe that serious market study should be conducted in order to gain clearer perspective

about sale of this type of products. As it is shown, organic products can sometimes have significantlyhigher price comparing to conventional products. Therefore, it would be interesting to get an insight inincomes, as well as lifestyle habits of average organic products consumer. These data could be usedfor closer identifying and targeting market segments.It is our opinion that gained results are too different in favour of organic production, but they can besignificantly influenced by mentioned factors. Therefore, we recommend that further research shouldbe focused on the effects of higher labour costs, comparison of organic towards conventionalproduction yields, as well as market research.

5. References

1 Kovaevi D. Organic farming: The concept toward environmental protection, A Periodical of

Scientific Research on Field and Vegetable Crops. Institute of Field and Vegetable Crops, NoviSad, Serbia 2004;

2 http://www.ifoam.org/about_ifoam/principles/index.html (date of access 29/01/2011).40: 353371.

3 Forrer G, Avery A, Carlisle J. Marketing & The Organic Food Industry: A history of food fears,market manipulation and misleading consumer,

4 http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Organic%20Agriculture%20in%20Serbia_Belgrade_Serbia_6-8-2009.pdf (date of access 29/01/2011).

www.igf-1-and-milkcom/PDF/organicmarketing.pdf

5 Sudarevi T, Davik S N. Marking of organic agricultural products in Serbia

6 http://www.organic-world.net/statistics-europe-production.html (date of access 29/01/2011).

, Anali Ekonomskogfakulteta u Subotici, Faculty of Economics, Subotica 2005; 14: 7986.

7 Berber N, oki N, Koi Vugdelija V. Organic agricultural production as an element of thestrategy of sustainable development in Serbia IV Scientific Conference with InternationalParticipation: Agricultural and Rural Policy in Serbia. Novi Sad: Faculty of Economics Subotica and

Serbian Association of Agricultural Economists; 1991.8 http://www.pks.rs/PrivredauSrbiji/Poljoprivreda/Organskaproizvodnja/tabid/2056/language/sr-Latn-

CS/Default.aspx (date of access 30/01/2011)9 Kilcher L. How organic agriculture contributes to sustainable development. JARTS Witzenhausen

2007; Supplement 89: 31-49.10 Krishna L P, Yasuhiro S, Naoyuki Y, Aya N, Hideyuki K. (2010): Capital Budgeting Analysis of

Organic Coffee Production in Gulmi District of Nepal. International Research Journal of Financeand Economics 2010; 43: 139148.

11 Damodaran, A. Damodaran Book on Investment Valuation, 2nd edition, McGraw-Hill, New York,chapter 11, p.3.

12 http://www.foodsecurityportal.org/api/countries/world-soybean-price (date of access16/02/2011)13 http://www.procreditbank.rs/poljoprivrednici/krediti/proagro_krediti.65.html, (date of

access16/02/2011)

14 http://www.kamatica.com/stanovnistvo-krediti/poljoprivredni-krediti_eur

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