Journal of Innovations and Sustainability Vol2 N2 2016 by Journal of Innovations and Sustainability

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Journal of Innovations and Sustainability Volume 2, Number 2, 2016

Innovations and Sustainability Academy 2016

Journal of Innovations and Sustainability Volume 2, Number 2, 2016 https://sites.google.com/site/journalinsust/

Editor-in-Chief: Prof. Vesela RadoviÄ&#x2021;, Ph.D. Managing Editor: Ekaterina Arabska

ÂŠ Innovations and Sustainability Academy 1, Lotos Str., Plovdiv 4006, Bulgaria

E-mail: insustacademy@gmail.com https://sites.google.com/site/insustacademy/

2016 ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line)

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

Contents Foreword .............................................................................................. 5 Role of Foundations, Funding Research and Innovation in the Bulgarian Society Stefan E. Nikolov, Albena Nakova, Galin Gornev Institute for the Study of Societies and Knowledge (ISSK) Bulgarian Academy of Sciences.............................................................. 9 Assessment of Bulgarian Industrial Policy by International Aggregated Indеxes Rumyana Angelova Trakia University - Stara Zagora, Bulgaria ........................................... 23 Strategic Context of Project Portfolio Management Nedka Ivanova Nikolova Technical university – Varna, Bulgaria ................................................. 31 Integrative Function of Knowledge in the System of the Competitive Potential of the Company Nedka Ivanova Nikolova Technical university – Varna, Bulgaria ................................................. 45 The Cultural and Natural Heritage in the Western Part of the Republic of Macedonia and Their Impact on the Spatial Development Anita Todorova & Marija Ljakoska Ss Cyril and Methodius University, Faculty of Natural Sciences and Mathematics, Institute of Geography, Skopje, Macedonia ..................... 57

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Volume 2 Number 2 2016

Journal of Innovations and Sustainability

Foreword The papers included in this issue of the Journal of Innovations and Sustainability were successfully presented and discussed at the First International Scientific Conference “Sustainability Challenges In Modern Organizations: Knowledge & Innovation in Management & Operation” organized by Innovations and Sustainability Academy on December 12, 2015 in Plovdiv, Bulgaria. These papers were selected among those included in the conference program into the panel “Society and sustainable development” focusing on the peculiar questions of innovation and sustainability regarding stakeholders involvement, assessment approaches in sustainable development, project management, knowledge and competitiveness, human capital, cultural and natural heritage, etc. The topics are quite different but each one is related to the conference theme offering interesting and promising results from valuable scientific works. Starting from research and innovation, project, human and natural resources management till discussions on spatial development through specific examples, the coverage of the current issue of the Journal of Innovations and Sustainability makes further implications concerning knowledge development and innovation transfer. It is noteworthy to mention that knowledge management is a topic that deserves great attention in contemporary times of striving after establishment of knowledge-based economies possessing competitive potentials related to good practices and innovations. The embracement of such questions opens very broad fields of scientific and research works. On the basis of all the above-mentioned it was not a surprise that presented papers were given very good assessments considering their topicality, originality and contribution. And thus they were naturally included in the next issue of the Journal of Innovations and Sustainability devoted to social sciences discussing sustainable development, enriching available knowledge and making proposals for further research. Ekaterina Arabska Innovations and Sustainability Academy

Journal of Innovations and Sustainability

SOCIAL SCIENCES

Volume 2, Number 2, 2016

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

Role of Foundations, Funding Research and Innovation in the Bulgarian Society Stefan E. Nikolov, Albena Nakova, Galin Gornev1

Institute for the Study of Societies and Knowledge (ISSK) Bulgarian Academy of Sciences Abstract This report analyses the role of foundations, funding and/or carrying out research and innovation programs in Bulgaria supporting the development of science and scientific institutions. In particular, we examine the types of foundations; origin of their funds and main sources of funding; their investments in research and innovation; supported key research areas; their role in the sphere of research and innovation. Empirical data in the report were collected through a large-scale survey of EU foundations and NGOs, funding and/or engaged in research and innovation, where ISSK – BAS was the Bulgarian partner. The survey was funded by the European Commission and was carried out in the period 2013-2014 in all EU Member States plus Switzerland and Norway. Coordinator of the research was the Department of Social Sciences at the Free University (VU) in Amsterdam. Key words: third sector, foundation, scientific research, innovation.

INTRODUCTION This study is based on the assumption that civil society, or the so called “Third Sector”, is a category of great importance to the social sciences. At least the very fact that this category has a rich and long history demonstrates this, as well its explanatory potential. After decades when it was absent from the academic debate and public discourse – especially here in Bulgaria and in other countries where

Corresponding authors: Bulgarian Academy of Sciences, 13A Moskovska Str., Sofia, Bulgaria

E-mail addresses: stephnikolov@gmail.com, albena_nakova.manolova@abv.bg, galingornev@abv.bg

Journal of Innovations and Sustainability (2016) Vol. 2, No2

prevailed Marxist approach – it experienced a remarkable renaissance in recent years. Various authors attach different meanings to these terms, applying them to a wide range of targets and phenomena, various events, charging it with uncountable tasks and functions. Academic debates are increasingly critical to the concept, with voices ranging from constructive contribution to total failure. It has specific empirical referents and philosophical normative claim. Even without knowing the term, our ancestors in the 19th century created many different self-sustaining, reliable and independent units of emerging civil society. This primitive Bulgarian civil society developed separately from European trends arising from the French Enlightenment. These civic structures, adapted to the conditions of Ottoman rule, proved to be unprepared and inadequate when circumstances radically changed in the sovereign state. Required were diverse type of organization, style and even the pace of work and functioning. Nevertheless, especially during the interwar period, rise of a great number of charities and private funds marked socially life. Just as in the Western European countries, and following the same pattern (based on wealthy individuals’ endowments, or donations for purpose of many people) occurred. Most had mainly social or common good aim – such as deprived people – especially war widows’, orphans and refugees – support, erecting of public structures such as local schools, churches, orphanages, and so on. A good deal of these aimed at ventures in the field of education (grants for gifted young people to pursue studies here in Bulgaria or abroad), funding of universities and other high schools (first Bulgarian University, Sofia University, founded and built on the 10,200 sq. m donated land and 6.8 million golden Levs given by the eminent investor and merchant banker Evlogi Georgiev from Karlovo, and his brother Hristo Georgiev), supported purchase of equipment for laboratory research, scholarships for travel and participation in research teams at leading scientific centers abroad, up-to-date technology. Most charitable organizations were outlawed during the WWII as bound by “Anglo-American plutocracy” and later again, after the establishment of the communist regime, as “pro-fascist” and “agents of adversary ideology”. Right to exist under the Stalinist dictatorship had only organizations which pledged “to contribute to ultimate victory of communism”. In addition, the delayed development of civil society in Bulgaria is the result of a number of historical factors common to Southeast Europe (the Balkans). Distorted views on the “outside world” largely hinder the development of society and narrow its prospects. Under these circumstances, the concept of civil society appears to weird and incongruous, something alien and suspicious, which allows it to be monopolized

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by political and other elites. There is a clear negative trend for bureaucratization of the fragile civil society and dooming it to unfeasible parasite-type of furtherance, helplessness without external funding (see, for more details, Nikolov, 1996). Applied was coined by M. Olson and developed by the Bulgarian author D. Minev (Minev, 2011:454) notion of “distributive coalitions”2. Unlike "normal" countries, where conflicts shape mainly the distribution of income in transition and overall change of elites, in Eastern Europe, it affects the complex issue of control over material reserves, suddenly proved to be "orphan" in eliminating central planning economy. Here we encounter more complex and socially repulsive types of corruption. In the field of science and innovation we see the same kind of “distributive coalitions” as in the other fields, where money play main role, which cannot be substituted by plain enthusiasm and voluntary contribution. Science and innovation require sophisticated equipment, nothing to say about the expensive human factor – first because of the resource needed for training and maintaining of high quality experts with access to the leading achievements in their area – which also requires overheads for subscriptions, travel etc. Academic personnel is also overrepresented in most other types of nonprofits and in the civil society as a whole, incl. as originators and managers. And in its own sphere these high qualified experts, in addition to the difficult to be overcome historically propelled basis, tend to organize themselves in various forms of flexible, vigorous and well positioned teams to better address research topics, and to apply for grants and funding. Strong advantage of such teams over the restrained, stubborn, difficult to adapt to ever changing environment established scientific facilities is their readiness to rapidly form problem solving units. 2

The term distributive coalitions (Olson, 1982: esp. 74) refers to the type of interest groups that organize

to find that public decisions would further serve their interests, to preserve and secure their market positions and redistribute social wealth in their favor, both by state regulation. Some critics believe that these are organizations for collective action, predominantly oriented to the battle for the income and wealth distribution, and not to the increase in production as a whole, which retard the ability of a society to adopt new technologies and to reallocate resources in response to changing conditions, thus reducing the pace of economic growth, and that may adopt an exclusive status trying to limit rents and values diversity among its members. In his attempt to maintain continuity with his arguments from The Rise and Decline of Nations, Olson argued that powerful distributional coalitions had arisen during the communist years, in particular, in the state-owned industries. An important sign of this phenomenon was the emergence, in the more market-oriented of these economies, of the soft budget constraint (see, for more details, Olson, 1995; Kornai, 1992, Chap. 24). These coalitions were eventually not toppled after the fall of communism, but, on the contrary – they rather maintained themselves in fraudulent privatizations and rise of the underground economy. Whereas previously taking part in public sector embezzlement, they began to participate in private plundering and predation.

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Thus they may invite, for instance, needed interdisciplinary personnel from various institutions, incl. from other countries, being unobstructed from most bureaucratic regulations that are obligatory for the conventional bodies. When add to this apparent advantage undue, exceeded proximity to funding and political circles, this means obstruction of regular channels for competition, fair selection, and project allocation. When such scheme is prevailing, it favors certain groups at the expense of other ones, and ultimately produces domination of “cartels” in the academy. Outcomes may be further deepening of the crisis and retardation of the science and research, frustration and repugnance of the employees – especially younger ones at early stages of their career. A picture too familiar for us here in Bulgaria. Our conclusion is that the theory of civil society is far from exhausted as a source of explanation and theoretical debate. It must, however, be exempt from unreasonable emotions and fictions and harder to anchor in the empirical reality of individual time and space – without, indeed, rejecting the universal meaning and importance of the concept. And here we see the role of the state, which should provide favorable legislative and regulatory environment to achieve this – prompted and stimulated by active citizens and their organizations. After this brief introduction to the historical development of civil society in Bulgaria we will discuss the current state of foundations funding and/or carrying out research and innovation programs in Bulgaria.

ABOUT THE RESEARCH This article is based on the empirical data, collected through a large-scale survey of EU foundations and NGOs, funding and/or engaged in research and innovation, where ISSK – BAS was the Bulgarian partner. The survey was funded by the European Commission and was carried out in the period 2013-2014 in all EU Member States plus Switzerland and Norway. Coordinator of the research was the Department of Social Sciences at the Free University (VU) in Amsterdam. Weakness and underdevelopment of civil society in Bulgaria determine the difficulties we encountered in identifying foundations funding and/or carrying out research and innovation in Bulgarian society. After a hard work we compiled a list of about 40 organizations. After further assessing their relevance to the international survey criteria, and eliminating those of them with which no communication turned possible (i.e., supposedly inexistent, non-functional, or with an outdated contact information),

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finally a list of 18 organizations with their contacts was submitted to the main team in Amsterdam. From these, 13 filled-in the questionnaire. 5 foundations failed to do this due to various reasons. Finally, it turned out that from the remaining 13 foundations, which completed the questionnaire, in the last 5 years 10 have supported scientific research and innovation, while three have not.

TYPES OF FOUNDATIONS All these foundations in Bulgaria currently actively supporting scientific investigation and innovations were (re)established in the transition period, i. e., after the “tender revolution” of 1989, although some of them inherited bodies that already existed in the pre-communist period. According to the year of their establishment, the thirteen (13) foundations investigated may be classified as follows: five (5) of them were registered in the very beginning of the transition (1990-1992); one – in the midnineties (about 1995), another five (5) – in 2000-2005, and the last two (2) – in 20102011. For the period under investigation (2005-2012) only 10 out of 13 foundations were carrying out and/or supporting research and innovation activity, while the other three didn't, despite the enlisting of this activity as their priority. A characteristic example in this respect is the “Science” Foundation, established by the Union of the Scientists in Bulgaria, whose proclaimed priority is the support of Bulgarian science, but during the last few years it has been unable to accomplish it for financial reasons. More generally, this situation is indicative for the present day financial state of affairs in the whole area of science and innovation in Bulgaria. From the 10 foundations genuinely operative in the field of science and innovation, six (6) define themselves as Operating foundations, which use their expenditures to achieve their goals by themselves, by carrying out projects within their own organization. In fact, this is the type of foundations in the field that predominates in Bulgaria. In contrast, there are only 2 foundations that define themselves as Grantmaking, i. e., which make grants to other organizations, and/or support projects carried out by other organizations. There is also one (1) foundation which is unable to define itself as either Operating or Grant-making, because, according to its opinion, they coalesce components of both categories. Another one does not ascribe itself to none of the two categories, most probably because of the fact that support of scientific

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research and innovation plays secondary role in its activity, i. e., this is only complementary to its central activity. The R&I foundations in Bulgaria are aiming typically at acquiring new applied knowledge, i. e., knowledge with particular application or use intended: in fact, 7 of them finance applied research and only two indicate that, in addition to it, are also intended for basic research, i. e., research acquiring new knowledge with no specific application or use intended. At the same time, three of the studied foundations do not indicate any support to both these research (sub)fields. This is an indication that, most probably, their activity is predominantly or even exclusively oriented to auxiliary areas aiming at the facilitation of research & innovation activities and to dissemination of their results. The balance between research and innovation activities in the foundations investigated is as follows: foundations involved exclusively in research – five (out of ten), exclusively in innovation – two, both in research and innovation – 3.

ORIGIN OF FUNDS With regard to the financial founder, the foundations in Bulgaria are most frequently established by the initiative of private individuals as is the case with seven (7) out of the ten investigated foundations. In some of these cases the private individuals' initiative was supported by a university and another non-profit organization (one foundation). In other case private individuals’ initiative was shared with an initiative by a research institute, another non-profit organization and certain public institution, especially municipality (among them, one foundation). In the remaining three cases foundation’s establishment may be considered as nonprivate in their basic character. In the first such case it was established by a common initiative of a non-profit organization and the public sector (the government). In another case the foundation's establishment was achieved as a sovereign initiative of a university. One of the foundations declined to answer this question. In terms of their total income for the financial 2012 Bulgarian R&I foundations belong to two categories: up to 100 000 Euros – three, and from 100 000 to 1 000 000 Euros – four; three (3) foundations declined to reveal their 2012 income. The frequency of the main sources of income for the R&I foundations in the country is as follows: 

Income from an endowment (interests, dividends and capital gains) –

3 foundations;

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

Donations from individuals (i. e., gifts, bequests) – 4 foundations;



Donations from for-profit corporations – 3 foundations;



Donations from other non-profit organizations – 3 foundations;



Income from government (mainly EU and to much lesser extend national, regional,

local) – 6 foundations; 

Service fees, sales, etc. – 4 foundations.

Sources of income

Amounts in Euros

Income from an endowment

101 970

Donations from individuals

1096

Donations from for-profit corporations

2556

Donations from other non-profit organizations

7669

Income from governments

295 574

Service fees, sales etc.

366 596

Unknown

1 022 954

Total income

1 798 415

EXPENDITURES According to their total expenditures for the 2012 financial year the foundations in the country may be categorized in the following two categories: 

Expenditures up to 100 000 Euros (3 of the investigated 10 foundations);



Expenditures between 100 000 and 1 000 000 Euros (another 3 foundations).

The other four foundations declined to respond about their expenditures and, thus, confirmed the common tendency to avoid revealing information on the foundation’s financial matters. The different activities‘ shares of the Bulgarian R&I foundations within their total expenditures are as follows: between 20% and 80% for research, between 5% and 20% for innovation, and between 20% and 95% – for other purposes. It is quite evident that the expenditures for research and innovation do not have a leading position, giving way to the expenditures for other purposes (while the expenditures for innovation are almost negligible).

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Expenditures to

Euros

Research

266447

Innovation

142068

Other purposes

349150

Unknown

478568

Total Expenditures

1 236 235

The expenditures of the foundations solely for research have a two-component structure: first, expenditures for direct research activities, ranging from 20% to 80% of the total research expenditures, and expenditures for research related activities, varying between 20% and 100% of the total research expenditures. This structure confirms that actually a significant part of the R&I foundations in the country does not truly support research activity per se, but, more probably, predominantly research related activities, as follows: 

Organizing and carrying out scientific conferences, symposia, seminars, round

tables; 

Supporting publishing and information activity, financing publications in

scientific journals, and promotion of research results; 

Financing scientific communication, covering expenses for taking part in

scientific events.

Distribution of expenditures to research Direct vs. Research Related (in Euros) Direct Research Research Related Unknown Total expenditures to Research

92780

35%

164003

61%

9662

266 447

100%

As a share of the total foundations’ research expenditures, the expenditures on the applied research strongly outweigh their fundamental counterpart. As a rule, the foundations declaring (financial) support for fundamental research, expend for these purposes about 30% of their total expenditures, while the corresponding share of applied research expenditures varies between 30% and 100%. In addition, the total number of the foundations declaring 100% applied research expenditures (four) exceeds those with declared lesser shares (between 30% and 70%) for applied research (3 foundations).

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Distribution of expenditures to research Basic vs. Applied (in Euros) Basic Research Applied Research Unknown Total Expenditures to Research

25504

228058

86%

12883

266 447

100%

FOCUS OF SUPPORT As a research field with strongest support from the investigated R&I foundations in Bulgaria emerges the field of the social and behavioral sciences. In 2012 it was supported by 5, i. e., by half of the studied foundations. The second position in this respect is occupied by the natural sciences, which were supported in 2012 by 3 foundations. Field of engineering and technology was supported in 2012 by two foundations and, accordingly, upheld the third place of this grading. The lowest level of support by the R&I foundations was given to such disciplinary fields like medical sciences, humanities, agricultural sciences. Each of these fields was supported by a single foundation. Changing priorities of public interests’ determinants in Bulgaria (incl. of foundations) to the different disciplinary areas occur against the background of a widely recognized world-wide shift of priorities from “hard” sciences like physics, chemistry, mathematics, etc. to biology and “softer” behavioral/social sciences like law, economics, psychology, sociology, etc. Along with these global tendencies there are, indeed, specific national factors for this re-alignment of scientific priorities. Reflecting the important changes in the value system of Bulgarian society after the fall of communism, there is a rising preference toward the softer branches of science, esp. the social ones, allegedly promising better and easier to accomplish life chances in career, fame and financial terms. For instance, there is a long term expansion of social/behavioral science experts in the sphere of private (demoscopic) agencies, associations and foundations as well as in the “corridors of power”.

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Expenditures to

Amount in Euros

Natural Sciences

42 948

Engineering and Technology

No answer

Medical Sciences

No answer

Agricultural Sciences

No answer

Social and Behavioral Sciences Humanities

179 074 No answer

Unknown

44 425

Total expenditures to research

266 447

With regard to research related activities, strongest support in 2012 by the R&I foundations was given to activities connected with the dissemination of the research results – 5 out of 10 foundations. Two types of activity are on the second place – technology transfer and science communication/ education. Three types of activity, which received the support of two of the foundations, occupy the third place: research mobility and career development; infrastructure and equipment, and civic mobilization/advocacy.

Expenditures to

Amounts in Euros

Research Mobility and Career Development

No answer

Technology Transfer

15384

Infrastructure and Equipment

108108

Dissemination of Research

20512

Science Communication/Education

9743

Civic Mobilization/Advocacy

10256

Total Expenditures to Research Related Activities

164 003

The subjects/beneficiaries of the R&I foundations support may be arranged as follows: 

Public institutions in the higher education – they represent the biggest share –

between 10% and 90% of the grants provided for 2012; 

Research institutes – they represent up to 40% of the grants provided for 2012;



Individuals – between 10% and 20% of the grants provided for 2012;

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

Representatives of the non-profit sector – up to 20% of the grants provided for

2012; 

Government sector (excluding higher education institutions): the lowest share –

up to 10% of the grants provided for 2012.

ROLE

BULGARIAN

R&I

FOUNDATIONS

THE

SPHERE

RESEARCH AND INNOVATION AND IN THE EUROPEAN INTEGRATION Their role in the sphere of research and innovation the investigated foundations see in the following order of decreasing consent: 

Complementary to the public ones, etc. – “almost always” define their role as

such 4 out of the 7 foundations, which answered this; 

Substituting for the public ones, etc. – “almost always” define their role as such

3 out of 7 foundations; according to two of them, they perform it “from time to time” only; 

On a much lower degree foundations define their role as initiating, i. e., as

devoted toward starting a project with the expectation that its realization will be taken by other subjects – only two of them answer “almost always”; another two – “from time to time”, one – “almost never”, and two – “never”. 

On a lowest extent, the R&I foundations define their role as competitive, i. e. as

oriented toward defy with other initiatives – 4 of the foundations answer “never”; two – “almost never”, and only one sees itself in this role “always”. Thus, it is realistic to accept that the R&I foundations in Bulgaria perform most of all activity that is complementary and/or substituting the public role. To a much lesser degree they perform an initiating or competitive role in starting and enforcing

competitively

their

own

activity/initiative

over

other

actors’

activities/initiatives. Some additional indicator for their weaker role and impact on the sphere of research and innovation is also the fact that almost one third of them (3 out of 10) have serious difficulties in answering the question about the role they play in the R&I sector. Most probably, this means either that they don’t consider themselves as leading or even as an important factor in the R&I sector, or simply that for these foundations support of the research and innovation activity has only secondary, complementary to their central object of activity role. From the point of view of the Bulgarian R&I foundations their own role in the European integration is in their contributions to the: 

Integration on educational issues (e. g. to encourage and support free movement

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

Integration on research issues (e. g. to encourage and support joint research

projects within Europe) – again 5 foundations; 

Integration on social issues (e. g. the convergence on living and working

conditions) – 3 foundations; 

Integration on cultural issues (e. g. the process of one culture transmitting

ideas, technologies and products of another) – 1 foundation; 

Economic and entrepreneurial integration – 1 foundation.

It is clear that the studied Bulgarian R&I foundations all together see their contribution to the European integration as an active contribution to the integrative effort predominantly in the fields of research and education and, most rarely, in the field of culture. Geographically speaking, the activities of the Bulgarian R&I foundations in 2012 are realized mostly on the national level (3 foundations). Another two of the investigated foundations unfold their activity on both national and international levels. It is necessary to point out that here the level of the response refusals is again very high: 5 out of 10. No one of the studied foundations unfolds (financial or other) activity in the other member-states of the EU.

Geographical level National Level

Amounts in Euros 86407

International Level

248181

Unknown

73 927

Total expenditures to R&I

408 515

CONCLUSION Summing up, development of most of the Bulgarian R&I foundations seems to be limited so far by the weakness of their formal identities and the scarce socio-economic environment. Both these deficiencies reproduce their immature self-confidence and work-ethics3. What is no less notable, though plausible, is the propensity of most of the R&I foundations to simply emulate advanced European foundations practices in the field, without serious efforts to find out their own, unique and/or national specific

This was clearly visible even in their approach to the survey. With very few exceptions, the foundations

staff was reluctant to cooperate and inaccurate in delivering already taken commitments, in particular with regard to information on financial sources and expenditures.

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solutions. Against this background, perhaps the most positive achievement of the Bulgarian R&I foundational sector so far is their very historical return: elaboration of legislative and institutional framework that safeguards and stimulates continuation and viable functioning; the first steps towards its integration in the pan-European network of R&I foundations. Certainly, these developments represent an important change in the right direction, especially compared with the situation in some other post-communist European societies.

REFERENCES Kornai, J. (1992). The Socialist System: The Political Economy of Communism. Princeton: Princeton University Press. Minev, D. (2011). Sociologia, vlast, obshtestvo (Sociology, Power and Society). Sofia: Info Vision. Nikolov, S. E. (1996). The Troubled Rebirth of a Non-Profit Sector â&#x20AC;&#x201C; Chapter XI. In J. Coenen-Huther (Ed.), Bulgaria at the Cross-Roads (pp. 209-231). NY: Nova Science Publ., Inc. Olson, M. J. (1982). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press. ISBN 9780300030792. De Odem (1995). Why the Transition from Communism is so Difficult. Eastern Economic Journal, 21, 437-61.

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

Assessment of Bulgarian Industrial Policy by International Aggregated Indะตxes Rumyana Angelova1

Trakia University - Stara Zagora, Bulgaria Abstract The aggregated indexes becomes more widespread for assessing a particular aspect of the economy. Many internationally recognized institutions commit with this task. Their aim is to perform comparative analyzes between countries and measuring their competitiveness. Which are those international synthetic indicators that can be used for assessing and monitoring of industrial policy? What is the position of our country in their rankings? These are questions the answers to which could be found in this article. Key words: industrial policy, indicators, innovation, competition.

Industrial policy is a significant factor in the development of any economy. Since the beginning of this century we are witnesses of the increased interest and attention to it by the political, economic and scientific elite. It was provoked by the increasing globalization, indications of de-industrialization and the fear of economic slowdown (especially in EU countries). Key aspects of this policy are related to the increase of innovation and investment activity of industrial entities. The aim of the study is to assess Bulgarian industrial policy by a set of international aggregate indexes. The main tasks are to present the position of our economy, in particular industry in the world economy, as well as to find suitable indicators that can be used to assess the industrial policy.

Corresponding author: Trakia University, Stara Zagora, Bulgaria

E-mail: rumi2002@abv.bg

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The modern economy is an entrepreneurial, knowledge-based, global and driven by innovation (Damyanov, 2009). Industrial policy, both internationally and nationally has the same characteristics. It is defined (Mayo, 2009) as a complex concept, which includes: a/ innovation and technology policies; b/ education and skill formation policies; c/ trade policies; d/ targeted industrial support measures; e/ sectoral competitiveness policies; f/ competition-regulation policies. This determines the complexity and diversity of indicators of industrial policy. They are dynamic values and their relevance is subject to strategies and regulations for the particular period. The European Commission (2006) defines indicators "as the measurement of an objective to be met, a resource mobilised, an effect obtained, a gauge of quality or a context variable“. Synthetic (aggregated) indexes are a collection of indicators used by international organizations and researchers to perform comparative analyzes between countries, as their purpose is mostly measuring competitiveness. They also enable to determine the level of production and technological capabilities of a country in the most appropriate way. In the selection of presented below aggregated indexes the following criteria are used: duration, scale, industry involvement and comparability with other indexes: 

Global Innovation Index - GII – The calculation of this index uses a range of

different number of indicators, depending on the objective and themes. The Global Innovation Index (GII) 2014 covers 143 economies around the world and uses 81 indicators across a range of themes, selected into two sub-indexes: „The Innovation Input Sub-Index“ and „The Innovation Output Sub- Index“ (INSEAD, WIPO, 2014) – See Fig.1. The first one includes: (1) Institutions, (2) Human capital and

research,

(3)

Infrastructure,

(4)

Market

sophistication,

(5)

Business

sophistication. The second sub-index includes: (6) Knowledge and technology outputs and (7) Creative outputs. The Global Innovation Index is the simple average of the Input and Output Sub-Indices.

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Fig. 1. Framework of the Global Innovation Index 2014

The indicators are normalized into the [0, 100] range, with higher scores representing better outcomes. 

Knowledge Economy Index - KEI – this is an aggrigate index, representing a

country’s or region’s preparedness to compete in the Knowledge Economy, based on four sub-indexes (The World Bank, 2012): (1) Economic Incentive and Institutional Regime, (2) Innovation and Technological Adoption, (3) Education and Training (4) Information and Communications Technologies (ICT) Infrastructure. The last 2012 index involved 146 countries that are sorted in ascending order. The evaluation of performance is done by a scale from 0 (poor performance) to 10 (highest performance). 

Global Competitiveness Index - WEF – The World Economic Forum (2008)

defines competitiveness „as the set of institutions, policies, and factors that determine the level of productivity of a country.“ The last 2014 – 2015 index covers 144 economies. Twelve indicators are classified into three group – basic indicators, efficiency enhancers, innovation and sophistication factors – Table 1:

Table 1. The 12 pillars of competitiveness Groups Basic indicators

Indicators - Institutions; - Infrastructure; - Macroeconomic stability; - Health and primary education

Efficiency enhancers

- Higher education and training; - Goods market efficiency; - Labor market efficiency;

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Groups

Indicators - Financial market sophistication; - Technological readiness - Market size

Innovation and sophistication

- Business sophistication;

factors

- Innovation

Source: The Global Competitiveness Report 2014–2015, World Economic Forum, Geneva, Switzerland 2014, p. 9



The Competitive Industrial Performance (CIP) index - The CIP index is a

composite index, using several individual indicators to proxy various dimensions of industrial performance. It measures “the ability of countries to produce and export manufactured goods competitively” (UNIDO, 2002). The 2012 CIP index consists of eight sub-indicators grouped along three dimensions of industrial competitiveness (UNIDO, 2013): 1) Manufacturing Value Added per capita - (MVApc); 2) Manufactured Exports per capita - (MXpc); 3) Medium- and High-tech manufacturing Value Added share in total Manufacturing Value Added - (MHVAsh); 4) Manufacturing Value Added share in total GDP - (MVAsh); 5) Medium- and High-tech manufactured Exports share in total manufactured exports- (MHXsh); 6) Manufactured Exports share in total exports - (MXsh); 7) Countries’ impact on world manufacturing value added share in World Manufacturing Value Added- (ImWMVA); 8) Countries’ impact on world manufacturing value added share in World Manufactures Trade - (ImWMT). 

The Legatum Prosperity Index - LPI – Legatum Prosperity Index prosperity

transcended the traditional understanding of the prosperity of a nation (represented only by macroeconomic indicators GDP or GDP per capita). It relies on the assumption that prosperity refers both to the availability of money and the quality of life. The index includes 8 sub-indicators, each of which has a proven effect on economic growth and individual well-being (Legatum Institute, 2015) – Fig. 2:

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Fig. 2. Legatum Prosperity Index 2015

The Legatum Prosperity Index 2015 contains data on 142 countries, that covers 96% of the worldâ&#x20AC;&#x2122;s population. The countries occupying the first 30 places receive high assesment, from 31 to 71 â&#x20AC;&#x201C; upper middle, middle - from 72 to 112 and low - over 112. Table 2 shows the position and average estimation for the cluster of group of 70 countries, by comparing the set of indicators presented above. The last colomn of the table consist the rank of each country.

Table 2. Ranking of the G70 countries based on a selection of synthetic indicators Country

GII

KEI

WEF

CIP

LPI

Average

Rank

Switzerland

4,40

United Kingdom

10,80

Sweden

6,40

Finland

7,40

Netherlands

7,40

United States

7,00

Singapore

11,00

Denmark

10,20

Luxembourg

20,60

Hong Kong

24,40

Ireland

14,40

Canada

11,40

Germany

8,40

Norway

12,40

Israel

26,20

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Country

GII

KEI

WEF

CIP

LPI

Average

Rank

Korea, Rep.

20,60

Australia

16,60

New Zealand

18,60

Iceland

28,40

Austria

18,00

Japan

13,80

France

20,20

Belgium

16,60

Estonia

31,00

Malta

37,40

Czech Republic

27,00

Spain

25,20

Slovenia

36,60

China

25,40

Cyprus

50,00

Italy

31,60

Portugal

32,60

Malaysia

33,20

Latvia

44,20

Hungary

39,20

United Arab Emirates

30,00

Slovakia

41,40

Saudi Arabia

38,20

Lithuania

40,00

Mauritius

55,00

Barbados

104

60,25

Croatia

52,20

Moldova

114

82,75

Bulgaria

50,60

Poland

36,00

Chile

39,40

Qatar

43,50

Thailand

43,20

Russia

50,20

Greece

53,00

Seychelles

71,50

Panama

110

64,20

South Africa

54,25

Turkey

55,20

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GII

KEI

WEF

CIP

LPI

Average

Rank

Romania

50,80

Mongolia

109

80,50

Costa Rica

49,80

Belarus

55,00

Montenegro

62,00

Macedonia

61,25

Brazil

53,00

Bahrain

49,67

Ukraine

63,60

Jordan

72,60

Armenia

82,40

Mexico

57,60

Serbia

71,80

Colombia

68,40

Kuwait

49,60

Argentina

104

63,80

Source: Own calculations based on: The Global Innovation Index 2014 - The Human Factor in Innovation. Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO), 2014, p. 26 - 27; The World Bank, Knowledge Economy Index (KEI)

2012,

Rankings,

available

at:

www.worldbank.org/kam;

The

Global

Competitiveness Report 2014â&#x20AC;&#x201C;2015, World Economic Forum, Geneva, Switzerland 2014, p. 14 - 16; UNIDO, The Industrial Competitiveness of Nations. Looking back, forging ahead, Competitive Industrial Performance Report 2012/2013, Vienna 2013, p. 10 - 13; The Legatum Prosperity Index 26015, Legatum Institute, London, United Kingdom, November 2015, p. 2

Bulgaria occupies the unenviable 48 position in the ranking. Only Greece and Romania (member countries in the European Union) come after, but as some of the indexes they occupy even higher positions. Data on industrial competitiveness for the period 1990 - 2010 show a constant downward trend and move ever further back in the ranking. The most problematic factors for increasing the competitiveness of Bulgarian industry stand innovation, access to financing and human capital. The application of aggregate indexes for assessing industrial policy is quite successful approach that will continue to evolve and improve. Although currently employed international indexes affects only certain aspects of industrial policy, they can be successfully integrated and can be the basis for making comparisons and analyzes.

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We hope that very soon our country will be included in charts and other international organizations such as the OECD, Deloitte and others. But mostly our expectations associated with the hope that Bulgaria will pay serious attention to its industrial policy and in subsequent international aggregate indices will find its place among the leading countries.

REFERENCES Damyanov, A., 2009, Eclectic views on international business and management. Narodnostopanski arhiv, Academy of Economics “D.A.Tsenov”, Svishtov, Issue 1. Michele Di Mayo. Industrial Policies in Developing Country: History and Perspectives, Oxford University Press, 2009. Porter, M., K. Schwab, The Global Competitiveness Report 2008–2009, World Economic Forum, Geneva, Switzerland 2008. The Global Competitiveness Report 2014–2015, World Economic Forum, Geneva, Switzerland 2014. The Global Innovation Index 2014 - The Human Factor in Innovation. Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO), 2014. The Legatum Prosperity Index 26015, Legatum Institute, London, United Kingdom, November 2015. The World Bank, Knowledge Economy Index (KEI) 2012, Rankings, available at: www.worldbank.org/kam. UNIDO, Industrial Development Report 2002 – 2003. Competing through Innovation and Learning, Vienna 2002. UNIDO, The Industrial Competitiveness of Nations. Looking back, forging ahead, Competitive Industrial Performance Report 2012/2013, Vienna 2013. Еuropean Commission, Indicative Guidelines on Evaluation Methods: Monitoring and Evaluation Indicators, The New Programming Period 2007 – 2013, August 2006.

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

Strategic Context of Project Portfolio Management Nedka Ivanova Nikolova1

Technical university â&#x20AC;&#x201C; Varna, Bulgaria Abstract In 2014 Bulgaria entered its second programming period (2014-2020) which opened a new stage in the development of project management in our country. Project-oriented companies are entering a new stage in which based on experience and increased design capacity they will develop their potential and will accelerate growth. This poses new challenges for science and business to identify strategic opportunities and formulation of project objectives, programs and portfolios of projects that will increase the competitive potential of companies and the economy as a whole. This article is an expression of the shared responsibility of science to develop the scientific front to solve methodologically difficult and practically new tasks that are derived from the needs to increase the competitive potential of the business-based project approach. The main objective of this study is based on the systematization of the results of theoretical research and development of methodology of Project Portfolio Management to explore the opportunities for its application in Bulgarian industrial companies. Key words: project management, project portfolio management.

INTRODUCTION Bulgaria finished the first programming period (2007-2013) with conflicting results and findings on the volume and effectiveness of utilized funds. Questionnaire and empirical studies of project-oriented organizations show that only 61% of managers believe that their projects have achieved their objectives, 82% say they have encountered substantial difficulties in the development, presentation, negotiation

Corresponding author: 1, Studentska str., NUK, office 426, Varna 9010, Bulgaria

E-mail: n.nikolova@infomarket.bg

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and implementation of their projects, 32% of the projects are not completed. Over 70% of managers say they do not feel sufficiently prepared for the development and implementation of projects and they are willing to be trained in order to improve their competence in project management. These results raise complex methodological, legal, regulatory and practical issues related to the development and implementation of project approach in our country. In 2014 Bulgaria entered its second programming period (2014-2020), which opened a new stage in the development of project management in the country. A special feature of the new financial framework (2014-2020) is that it is entirely oriented towards the implementation of the strategic plan "Europe 2020". Smart, sustainable and inclusive growth is the top priority that determines the overall structure of the tasks and the costs of their implementation. The funds are directed primarily towards research and innovation, education, information and communication technologies, building the necessary infrastructure and the fight against climate change. In this context, the basic principles of the new financial framework are targeted to the European added value, focusing of funded projects on the impact and the results, achieving mutual benefits for the whole EU. The main task of Bulgaria is through the integrated efforts of national, regional and company level to ensure maximum design capacity for effective absorption.

METHODOLOGY Methodological basis of this study is the theory and the methodology of Project Management (A Guide to the Project Management Body of Knowledge Fourth Edition PMBOK Guide) and Project Portfolio Management. The recruitment of primary information was conducted through surveys of project-oriented organizations from Varna region. Statistical database of the National Statistical Institute of Bulgaria and EUROSTAT are used as well as interim and final reports of the first programming period Bulgaria (2007-2013).

GENESIS

AND

DEVELOPMENT

THE

PROJECT

PORTFOLIO

MANAGEMENT By increasing the number of project-oriented organizations and increasing their design capacity increase is observed in the number of projects implemented simultaneously. Multiproject management is a new concept of project management

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that extends its active application globally. This poses a number of methodological and practical problems associated with its successful application. In the scientific literature and in practice there is no clearly accepted definition of multiproject management. The closest to our understanding is the definition of Jack Meredith & Samuel Mantel (2014): multiproject management is the management of a set of interrelated projects implemented within a management system in order to receive additional benefits that are unattainable in self isolated realization of individual product (Meredith & Mantel, 2014, p. 34). Project Portfolio Management is the current version of multiproject management. The concept of portfolio management is not new for strategic management. Its principles were first formulated by Henry Markowitz, professor at Baruch College, City University of New York in the article "Portfolio Selection" in Journal of Finance (1952). The full systematization of the theory is presented for the first time in Harvard Business Review (1959). For its discovery Henry Markowitz was awarded the Nobel Prize in Economics (1990). In its original form the theory was developed and successfully applied in the management of portfolios of financial assets. In the basis of the proposed model is standing the principle of effective diversification displayed in “efficient set theorem”. The theorem in its essence defines the model of investment behavior in the process of formation of the portfolio: the investor chooses its optimal portfolio from many portfolios each of which: 1) provides maximum significance level of expected return at any given level of risk; 2) provides a minor risk in any particular meaning to the expected profitability (Markowitz, 1952, p. 72). The set of options of portfolios providing specified performance is defined by the term "efficient set”. The portfolio is considered to be efficient if it dominates all portfolios for a given level of one of the selected indicators. The totality of all efficient portfolios forms the bodere of the efficient set known as the "Markowitz efficient frontier” described in Figure 1.

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Level of portfolio profitability

efficient set

Level of portfolio risk Fig. 1. Graphic pattern of choosing the optimal investment portfolio

To determine the optimal portfolio we should analyze the curves of indifference (L1, L2, L3) which are the geometric expression of possible combinations of investor preferences. The selection of the portfolio implies the investor has previously determined the preferred level of expected return and risk. Then the only point (F) which expresses this combination will lie both on the two curves (L2 and AD). The two curves have no intersection, so the optimal portfolio is located in the tangent point E. The modern theory of portfolio is a system of principles, approaches, methods and procedures to optimize the dynamiccally shaping ollection of investment assets based on the application of mathematical methods of set criteria for the ratio between the expected level of income and risk, taking into account the correlation of profitability (return) between the elements of the portfolio (Nikolova, 2013, p. 49). Occurred in the 50s of XX century the modern portfolio theory marks the intensive development over the past two decades. In the course of its evolution some areas have been identified that continue their own and interrelated development. The advent of Project Portfolio Management refers to the beginning of the 90s of XX century when the principles of the theory of portfolio were transferred to project management.

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THE PORTFOLIO OF PROJECTS AS AN OBJECT OF MANAGEMENT In the theory of Project Management there is no single opinion about the nature of the term "portfolio of projects". Depending on the purpose of research a number of approaches are formed: the first approach defines and examines the portfolios in terms of the combination of the individual elements (Haugen, 2004); second approach explores the relationship of portfolio investment risk (Schuyler, 2011); third approach focuses research on the specific method of portfolio management (Wysocki et al., 2013). Therefore, the term "portfolio of projects" is a complex, multifaceted category, which defines a specific type of investment - an alternative to the "single investment" in a separate project taken at a certain level of a separately taken resource. The portfolio of projects is a specifically formed and structured, dynamically changing set of assets whose management requires a complex consideration of all the factors that determine the optimal ratio between profitability and risk. In the process of forming the project portfolio a new investment quality is provided at set parameters, such as the desired ratio return / risk. The main objective of the investment portfolio is the dynamic optimization of the relationship between selected parameters. There is an increasingly strong belief that portfolio investment is to increase the efficiency of the investment resource by achieving such investment qualities that are only possible with the combination of certain investment projects (projects and / or programs) and unattainable by investing in a separate taken object. The project portfolio is a specific form of investment that the investor provides the desired level and stability of income at minimum risk. It is an appropriately formed and structured set of a new investment quality whose effect is an aggregated value that is greater than the simple sum of the effects of individual components. The portfolio of projects is a combination of different investment values by which a specific investment objective is achieved. Forming the portfolio, the investor proceeds from its investment priorities and constraints of financial resources. The most characteristic feature of specific objectives in the formation of the investment portfolio is their alternative character. For example, providing the shortest turnaround can be achieved with a higher value. The dynamics of various factors can change investment preferences and investment motives of the investor. Alternativeness in the formation of the investment portfolio determines the differences in the strategy of the selection of items and combining them in a portfolio.

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Journal of Innovations and Sustainability (2016) Vol. 2, No2

Therefore, the portfolio of projects is a specific type of investment that has specific core features that distinguish it from other types of investments: 1) The portfolio is made up of multiple assets with different maturities, profitability and risk; 2) The portfolio is a dynamically changing set of assets which is in a continuous transformation and this process has no a strictly determed law; 3) The portfolio is characterized by a specific level of overall risk which unlike the risk of other types of investments reflects the risk of a specific structured dynamic set (a diversified risk). A current priority research in recent years is the relationship of the investment portfolio with the strategic management of the company. In this regard, the portfolio of projects and programs is defined as a set of investment initiatives realizable or planned in connection with the strategic objectives of the organization. This set is not just a juxtaposition of investment components - it involves establishing strategic priorities, preparation and making strategic investment decisions and allocation of resources of the organization in connection with the strategic plans (Wysocki et al., 2014).

PROJECT PORTFOLIO MANAGEMENT INTO THE SYSTEM OF THE STRATEGIC MANAGEMENT OF THE COMPANY Project Portfolio Management is a centralized and systematic management of one or more portfolio and it includes the determining of the components of the portfolio (projects, programs and other related), establishing priorities among them, authorization, coordination and control components of the portfolio in order to achieve strategic objectives of the organization (The Standard for Portfolio Management, 2008). In essence, the Project Portfolio Management combines: 1) organizational efforts to ensure compliance of selected components in the portfolio of strategic development of the organization and 2) efforts in the management of project-oriented activities to effectively achieve the results of the components in the portfolio - projects, programs and other investment activities in accordance with accepted earlier plans and budgets. Therefore, management of project portfolios is closely related to the strategic management of the organization and provides an ongoing review of the composition of the portfolio and its balance taking into account changes in the strategy of the organization and dynamics of portfolio risks. Figure 2 shows the common relationships between strategic and tactical management

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processes of the organization, as well as the palce of the Project Portfolio Management in the mechanism of strategic management.

Vision

Mission Strategy and targets

Strategic planning and management

Management of current operations

Portfolio management

Management of initiated projects and programs

Resources of the organization

Fig. 2. The location of the Project Portfolio Management in the mechanism of strategic management

On top of the management pyramid are presented elements of the strategic position of the organization (mission and vision) that allow long-term goals and objectives to be identified (strategy and targets). These three elements determine all further organizational actions and initiatives. The arrows mark general directions of the processes and the context within which the elements of strategic and tactical management interact. The figure reflects both the organizational and the project aspect of the organization in their common connection and interaction. The ongoing operations (the operational aspect) occurring within the organization are regularly recurring processes or functional tasks that are components of the projects or programs or independent production and management operations aimed at funding sources to support activities within projects and programs or to ensure the effective management of the organization. The overall consistency of the decisions and priorities linking portfolio management with tasks of strategic and tactical level are described in Figure 3.

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Process of strategic planning of the activity of the organization

Management of the contents of the portfolio

Identification

Monitoring and control on the portfolio components

Management of separate projects

Setting priorities

Current strategic plan Determining strategic goals and tasks Key indicators for results Production capacity planning

Categorizatio n

Processes of portfolio management

Assessment of portfolio state and accountability

Balancing of portfolio

Assessment Management of strategic changes

Authorizatio Selection no

yes

Portfolio management processes

Fig. 3. The conceptual model of the processes for portfolio management

In theoretical sources some authors (such as Kloppenborg & Plath, 2001) examined Project Portfolio Management as one of the subsystems of the general governance of the organization. The term "governanceâ&#x20AC;? is used in the theory and the practice of the management of the largest businesses - holding companies, joint stock companies and others, established on the principle of the sharing. This concept is similar but not identical to the content of the term "management" and it is identified with the creation and the use of a certain system for planning, organization and execution of management tasks in a coherent, science-based mode that allows effective achievement of objectives. In other words, the term "governance" includes common strategic tasks in the creation and development of the management of the organization. Very often the governance is defined as "political" or "philosophical" aspect of management which provides for the establishment of borders and the balance of power in organizations, mechanisms for decision-making and coordination of interests. Concentrating on higher levels of management the governance integrates all levels of the management pyramid, providing the required level of consistency.

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Within the overall system of management of the organization the Project Portfolio Management is a business process that occurs regularly within a specific business cycle, typically in one calendar year. It does not have an exactly determed life cycle, analogous to individual projects and programs, because the components in the portfolio are a dynamic combination and they can constantly change their composition and duration. It is more correctly to define the Project Portfolio Management as a process-oriented activity corresponding to the regular processes of strategic management of the organization and as a key component of the systems of project-oriented management of the organization. That is why modern approaches to portfolio management do not use the model of the life cycle, but specific descriptions of the individual business cycle, considering it as a regularly repeated sequence of processes and operations. The analysis of the processes of Figure 3 shows that we can differentiate two groups of processes: 1) processes for management of portfolio content - through these processes procedures are prescribed for determining components of the portfolio (projects and programs), their identification, categorization, uniting in groups and management; 2) processes for monitoring and control - these processes regulate the implementation of the monitoring components in the portfolio according to some predetermined metrics and indicators, providing consistency of components with the strategic goals and objectives and the implementation of changes in the portfolio in the course of the completion of the individual components. The technology of the Project Portfolio Management as described in The Standard for Portfolio Management (2008) embraces a total of 14 processes grouped into two process areas of knowledge: 1) portfolio management and 2) management of portfolio risk. Other elements show how the portfolio management interacts with the strategic management of the organization and the subsystems of management of projects and programs. In the scientific literature there is a dispute regarding the name and content of the different stages of the technological cycle. Despite the differences, we can differentiate the following processes: Identification process which is aimed at creating an updated list of ongoing and new strategic initiatives (components of the portfolio). The main contents of this process are the following operations: 1) comparing the current components and new proposals with the formulated strategic expectations and key indicators; 2) study of the deviations of the components that do not comply with the strategic expectations and indicators; 3) classification of the identified components in groups - projects, programs, current operations and others.

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Categorization process by which unification of selected components in relevant business groups is achieved. This is based on some predefined criteria and indicators aimed at further promoting the balance of the portfolio. Categories of the individual components are determined in relation to the priorities of the strategic plan of the organization and are usually associated with the defined strategic business areas. The process involves three actions: 1) identification of strategic categories of the components of the portfolio in line with the strategic plans; 2) comparison of the identified components with the criteria for categorization and 3) grouping of components by category. Assessment process within which information is collected necessary for evaluation and analysis of the components of the portfolio and general conclusions about each componentare made. The information collected (quantitative and qualitative) is summarized for each component of the portfolio. Key operations in this process are: 1) assessment of the components of the portfolio based on the application of models for comparisons using the assessment criteria and weight factors; 2) creation of presentation and analytical materials needed to make decisions for each component and 3) preparing recommendations for the selection of the components. Selection process (selection) of the components that will be included in the portfolio is a key phase in the technological cycle which aims to identify those components that would provide the highest efficiency of resources invested at a preferred level of risk. Elements are chosen that best suit all or the most predefined criteria. Important in the selection are the results of SWOT analysis of the organization and the opportunity the selected components to connect with the mission, objectives, strategies and strategic plans. Process of defining priorities which consists of ranking priorities within the strategic categories following the specified characteristics of the content (innovation, costs reduction, market share increase or productivity), time, risks, general orientation, interests of the stakeholders and others. The key operations in this process are: 1) development and validation of classification of components (projects and programs) to strategic plans; 2) determining the quantitative indicators on individual characteristics; 3) setting priorities. The process of balancing the portfolio is directed towards integrating a set of components that provide the maximum potential of the investment and sustainability of results obtained in the long term, optimal risks, support of all key stakeholders, and ultimately â&#x20AC;&#x201C; achievement of the strategic goals of the organization. Key operations in this process are: 1) adding new components in the portfolio and their authorization

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in order to provide the required balance; 2) determining new (potential) components; 3) removal of components that do not comply with the most important criteria. In a research the consulting company Deloitte Consulting (McIntyre, 2014) found that only 34% of surveyed organizations managed to achieve this common value that the project can add to the organization's strategy. Deloitte Consulting formulates the following major symptoms of ill-balanced portfolio: 1) presence of a large number of projects, most of which are derived from the strategic priorities of the organization; 2) contradictory determination of the effect of the competing components regardless of tax effects; 3) presence of "interesting" projects that do not contribute to the realization of the strategy or the costs are greater than the contribution, but they have a social importance for the organization; 4) presence in the portfolio of projects or programs with high risk or no risk studies. Authorization process by which an official status of the components of the portfolio is obtained and the necessary financial, human, information and other resources are determined. The process includes the following key operations: 1) communications on the portfolio contents between key stakeholders; 2) acquisition of a formal status of approved components and suspension of work on the other; 3) allocation or reallocation of resources by components; 4) final consideration and discussion with stakeholders of the expected results (budget, risks, time schedules, etc.). The process of evaluation of portfolio and accountability lies in gathering information on indicators for the components of the portfolio, development of project reports, conduction of interim and final analyzes of the progress of implementation in specified intervals to ensure consistency of the results with the strategies of the organization. The process includes the following key operations: 1) analysis of the correspondence of the activity of the components of the portfolio with the requirements established in the standards; 2) analysis of priorities, relationships, content, risks, outcomes and financial performance of components based on a comparison with the control criteria and expectations of the strategic management of the organization; 3) impact analysis of the components of the portfolio on economic forecasts, the established resource constraints and established performance indicators; 4) development of proposals for the management of the portfolio as a whole. Dynamic changes in an increasingly complex global environment in which the organizations operate impose the need of management of the strategic changes in the organization. This process should provide flexible adaptation of the portfolio to changes in the development strategy of the organization. The spurious changes in

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strategy are not usually included in the process, but are controlled within the amendments to the strategic criteria and quantitative indicators of strategic goals. The most significant strategic changes, however, suggest dramatically changes in the overall direction of the activities, objectives, strategies, composition of structural subdivisions. This process includes steps of determining the nature and the importance of strategic changes and hence the need for a transition to change the portfolio. The complex nature of the Project Portfolio Management involves the active interaction between the processes for portfolio management and the strategic management of the organization. Such interaction is achieved within all groups of processes - initiation, planning, execution, control and completion, and involves not only implementing these processes within the individual components in the portfolio, but also on the strategic organizational level.

CONCLUSIONS (1) Project Portfolio Management is an effective tool for strategic management of the organization. Its popularity is growing along with the increasing in the number and capacity of project-oriented organizations and the level of competence of management. (2) In Bulgaria the Project Portfolio Management is a new, still less popular and insufficiently studied in a practical term approach. Its promotion and active application into practice presume the active deploy of the scientific front for the development of methodological problems for its use in conditionss of Bulgarian companies as well as intensive training of a new generation of managers in strategic management of companies. (3) It is necessary the Project Portfolio Management to be included in the curricula of universities preparing specialists and experts on strategic and project management.

REFERENCES EU structural funds. Single Information Web Portal: http://eufunds.bg/. Europe 2020 Startegy: http://ec.europa.eu/europe2020/index_en.htm/. Eurostat: http://ec.europa.eu/eurostat/. Harvard Business Review: https://hbr.org/. Haugen, R. A., Modern Investment Theory, Prentice-Hall, Forth edition, 2004.

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Kloppenborg, T.J., Plath, D.A., Effective Project Management Practices during Expert Systems Implementation, Project Management Journal, December 2001. Markowitz, H., Portfolio Selection, Journal of Finance, March, 1952. McIntyre, J., The Right Fit, PM Network, November, 2014. Meredith, J., Mantel, S., Project Management: A Managerial Approach, John Wiley and Sons, 2014. National Statistical Institute: http://nsi.bg/. Nikolova, N., The investment strategy of the company: management of the financial investment

portfolio.

[Investitsionnata

Publishing

strategiya

house firmata:

“Business upravlenie

plus”, na

2003.

finansoviya

investitsionen portfeĭl, IK”Biznes plyus”, 2003] [BG]. PMBOK® Guide and Standards Schuyler, J., Risk and Decision Analysis in Projects, 2d Edition, Newtown Square, PA: Project Management Institute, 2011. The official web-site of the Nobel Prize: http://www.nobelprize.org/. The Standard for Portfolio Management, Second Edition, Project Management Institute Inc., 2008. Wysocki, R. K., Beck, R., Crane, D., Effective Project Management, 2d Edition, N.Y.: John Wiley & Sons, 2013.

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

Integrative Function of Knowledge in the System of the Competitive Potential of the Company Nedka Ivanova Nikolova1

Technical university â&#x20AC;&#x201C; Varna, Bulgaria Abstract The paper explores the integrative function of knowledge in the system of the competitive potential of the company. It argues that knowledge is the integrator of the different elements of the overall competitive potential of the company. The approach and the model of Michael Porter are analyzed in the study of knowledge as a key factor for success in the competitive struggle. The main objective is to explore approaches and models of knowledge management and best practices of their implementation in order to promote and adapt them to the conditions of Bulgarian business organizations in their striving after competitiveness increase. Key words: knowledge, management, competitiveness.

INTRODUCTION At the beginning of the XV century the English philosopher Francis Bacon consciously stated that "Knowledge is power" and more than five centuries later it is considered that he refers it to the knowledge and skills of the individual. Only at the end of XX century management science focused the attention on the "knowledge capital" as an integral part of the total capital of the company on which effective management depends the successful realization of its objectives. The Interest in this aspect of management, called knowledge management, is growing along with the development of new management technology based on information

Corresponding author: 1, Studentska str., NUK, office 426, Varna 9010, Bulgaria

E-mail: n.nikolova@infomarket.bg

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technology and communications. The increased focus on knowledge management in companies has two aspects: theoretical aspect - increased popularity of resource-type model based on knowledge and examination of companies such as self-learning organizations; in practical terms - the transition from an industrial economy to an economy based on knowledge, which is dominated by enterprises and industries that enjoy high intensity information and research products. Modern theory defines knowledge as something elusive that lives in a shared environment - mental, bodily or virtual; it is possible to be separated from that medium and recorded on material carriers - documents, reports, books, articles, databases, etc. and in this form it represents information. Existing or created knowledge is a strategic factor in maintaining a sustainable competitive advantage. The process of knowledge management seeks the synergy between data processing and information capabilities of information technology and the human skill to find new creative solutions.

METHODOLOGY Methodological basis of this study is the theory of competition and competitive analysis. Over the last decade the methodology and practice of knowledge management is actively developing and its effects are examined on various aspects of the organization, especially on its competitiveness. The basis is the model of Michael Porter's â&#x20AC;&#x201C; the chain of application of knowledge. Various modern models of knowledge management in organizations are examined and tested.

THE DEFINITION AND SCOPE OF THE TERM "COMPETITIVE POTENTIAL" The competitiveness of companies is an integral indicator of the level of development of the national economy and at the same time is the most important factor for increasing its potential. In conditions of increasing globalization the competitiveness of companies provide their stable position in the domestic market and allows them to expand their positions in global markets by increasing export volumes and development of foreign subsidiary companies. In modern economic literature, the terms "competition" and "competitiveness" are defined and they do not raise serious scientific discussions. But we could nor say the same, however, about the methodology and tools of their research and development. Therefore, our research interest is concentrated on examining the tools and factors affecting the dynamics of corporate competitiveness. 46 |

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In the specialized scientific literature the term "factors to increase competitiveness" is most often defined as the internal or external business conditions, circumstances, influences, forces that permanently and significantly affect the competitiveness. For example, Velev (2004) writes that they are a complex of internal and external to the enterprise conditions that determine the results of its operations and the level of its successes against those of competitors. They are different circumstances, processes, events, effects or characteristics of the enterprise, region or country (Velev, 2004, p.18). The emphasis in this definition is on the dynamic and complex nature of factors. The heterogeneous nature of their impact requires a different approach and different actions in their management. Close to that is the opinion of Hadziev (2014) exploring the competitiveness of the positions of the complex reengineering and considering also factors such as external (environmental factors) and internal (factors within the organization): competitive advantages associated with the growth of the industry concern environmental factors and internal factors (industrial potential, economic indicators, financial indicators, labor, social indicators) ensuring the growth of the industry (Hadzhiev, 2014, p. 33). In the competitive analysis it is assumed that each of the components of the internal environment determines the specific type potential, and their total interaction creates synergies in the development of the organization. Here potential means a degree of power, hidden opportunities in the respective fields, a set of forces necessary for the realization of the objectives of the organization (Doz, 1980, p. 24). On this basis, we can differentiate several types of potentials. Each group represents the potential of the

individual

components

the

internal

environment

enhance

the

competitiveness of the organization (see Table 1).

Table 1. Types of the potentials of the organization Type Human potential

Characteristics The potential capacity of the organization's staff to perform its functions with qualification, effectiveness and quality, to refer to changes in the organization in a positive and motivated way in order to its further development, to accept and follow the mission, goals and strategies of the organization.

Intellectual

The potential ability of the organization to improve its

potential

operations in the way of adoption of new technologies and methods for conducting business, as well as the capability of such an organization of the work of staff where to trigger to

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Type

Characteristics the maximum the creativity, the ability to solve problems, to use effectively the ability to obtain, create, use, storage and transfer of the collective knowledge.

Organizational

The potential ability of the organization to create and where

potential

necessary

quickly

and

flexibly

modify

organizational

structures so as to fully meet the objectives of the organization. Informational

The potential ability of the organization to create and maintain

potential

a high level of effectiveness of mechanisms for receiving, processing, interpretation and further dissemination of information flows with maximum benefit for the organization.

Production

The potential ability of the organization in a timely manner

potential

and with maximum profit to produce high-quality, competitive products, meeting the expectations of consumers, to carry out effective sales and after-sales service.

Technical

The potential ability of the organization to apply cutting-edge,

potential

highly efficient technologies in all spheres of activity quickly and flexibly to improve or completely change them in accordance with the latest achievements of scientific and technical progress.

Financial potential The potential ability to achieve maximum financial results under conditions of sufficient in volume and structure capital, sufficient to meet the conditions of liquidity and financial stability of the organization, high return on invested capital, the availability of an effective system of financial management, providing transparency for current and future financial state of the organization. Investment

The potential ability of the organization to attract investors

potential

and capital which in size

and structure ensure the

implementation of the investment program. Marketing

The potential ability of the organization to make adequate

potential

analyses and assessment of the internal and external environment, opportunities and threats that may arise from them. This is the organization's ability to react to market

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Type

Characteristics requirements, to monitor the market and adapt its strategy in accordance with the changing environment.

Innovation

The potential ability of the organization to develop new

potential

products and technologies to conduct business, meeting the requirements of the market and the consumer needs.

Competitiveness of the organization is formed by the potential in each of those areas. All fields are in constant interaction and thus form a common competitive potential of the organization which some authors define as level of opportunity (Grant, 2010) or a degree of organizational power (Doz, 1980). They come from existing and potential resources and organizational ability of the organization to their effective use and reproduction. The overall competitive potential determines the actual and the potential competitiveness of the organization: ď&#x201A;ˇ

The real competitiveness, also called competitive status of the organization, is

defined by the current market share compared to those of competitors; ď&#x201A;ˇ

The potential competitiveness is reflected in the organization's ability to

dynamically develop and increase market share. It is determined by the aggregate competitive potential of the organization, which was formed by private potentials of individual organizational spheres. In determining the aggregate competitive potential the access to resources of the organization, the amount of production capacity, quality and quantity of labor, financial and other resources, and sources for expansion should be considered. In recent years a notion is promoted that in the structure of the aggregate competitive potential of the organization should be differentiated the strategic group of the potential, one that allows an organization to create and maintain a long-term competitive advantage. This strategic group includes intellectual, information and innovation potential. The integrative important feature in this device is assigned to the knowledge that is the basis of all kinds of potentials of the organization.

STRUCTURING

AND

FORMALIZATION

KNOWLEDGE

THE

ORGANIZATION The theme for the effective management of knowledge and its application to improve the competitive potential of the organization is new and insufficiently investigated. The study of the various components of the competitive potential imposes the need

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to distinguish categories of "knowledge" and "information" and related concepts. Despite the apparent clarity, those categories are sufficiently complex and ambiguous, which is reflected in how to formulate and use them. Most authors adhere to the theory of separation of the terms "data", "information" and "knowledge" that are presented in the following logical sequence: output data (collected by empirical or other ways of human knowledge) - information (context in which data are used) - knowledge (conclusions on the basis of data and information). Thus, the main difference of knowledge from information may be sought in the degree of organization and rationalization of primary data. A new stage in the development of the modern understanding of knowledge is marked by the theory of Japanese scientists Nonaka and Takeouchy (1998). Their theory defines knowledge as something elusive that lives in a shared environment (mental, personal, virtual); it is possible that to separate it from that environment and recorded on tangible media (documents, reports, books, articles, procedures, databases, etc.) and as such it constitutes information (Nonaka and Takeouchy, 1998). This approach presents the knowledge as a tool which enables information to be managed. The key in this theory is the division of knowledge to explicit and implicit. Explicit is the knowledge that can be described, registered and stored. Implicit is the knowledge that could not be described and stored. Close to this understanding is the opinion of Daniels (2005) who wrote that depending on the technology of business the knowledge can be divided into two parts (Daniels, 2005, p. 72): 1) Knowledge that can be separated, systematized and codified. It can be stored, transmitted and divided. Its legal protection can be provided by means of copyrights, patents and "know-how". Without remedy this knowledge could be easily copied and can quickly nullify the competitive advantages of the company. 2) Knowledge that wholly or partially could not or should not be materialized and stored. It can be identified, to reveal in a number of ways for application, but its differentiation is wholly or partially impossible. The transmission of this knowledge is implemented in the workplace through the way of training. These are usually "the keys of the business", valuable experience, unique ideas, etc., which are difficult to preserve and protect in a legal way. Once established, it is difficult to control. In recent years an understanding is formed that namely this implicit knowledge is the most powerful source of competitive advantages because its carrier is the human individual. It embodies the relationships between people and the norms of behavior in the process of work, generally accepted values and the creativity with which people create and store any value. This knowledge is not easy to be detailed, formalized and

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recreated, which means that its distribution and copying is difficult. So it becomes a source of sustainable competitive advantages. So, the success or failure of a company depends on the ability of the management to properly use implicit knowledge created by combining it with explicit knowledge (systems or databases). This understanding of the distinguishing between the two types of knowledge underlies the delimitation of two processes: "knowledge management" and "information management". In order to be effective, the process of knowledge management in the organization, it should considers explicit and implicit knowledge. An interesting relationship is established between the size of the company and the way of management of both components of knowledge - explicit and implicit. The development of high information technologies helps large organizations to manage more easily explicit knowledge and vice versa, reducing the size of the organization reduces the use of explicit knowledge and the use and the management of implicit knowledge are greater (Hristov and Logofetova, 2006). Over the last decade the role of the intellectual capital is increasing in the form of structured information â&#x20AC;&#x201C; scientific, technical, technological advances providing increasing competencies that are the foundation of innovation. Porter (1980) considers the innovation as a determining factor in achieving and maintaining sustainable competitive advantages. Each innovation is based on a system of knowledge in techniques, technology, marketing, organization and management. Analyzing

the

relationship

innovation

with

knowledge

management

organizations, Porter proposes an approach for providing "inside awareness" in response to "outside awareness" about the status and nature of changes in the external environment (Figure 1). This approach, also called "chain of knowledge", explores the function of knowledge upon activation of innovation and the conversion of knowledge into new products and services that provide sustainable competitive advantages. The inner awareness is formed on the basis of individual, group and organization one and the process of knowledge goes through several stages: 1) accumulation of a critical mass when knowledge begins to be used first by individual specialists, and then by the group; 2) rapid absorption when the group knowledge is turned at a greater extent into inner for the organization; 3) development process (self-growing) of knowledge that combines internal organizational and external knowledge, which can create a synergetic effect - a new product or service that are able to influence qualitatively on the market situation (Figure 2).

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awareness outer

inner

outer

inner

outer

new goods and services

developed and developing sciences

outer

inner

outer

inner

reaction

innovation processes

practical application and research on the availability of new knowledge

inner inner

Fig. 1. Model of Michael Porter's Level of knowledge

Critical mass

Accelerated learning

Self-expansion of knowledge

Knowledge

Stages

Fig. 2. Main stages of formation and development of knowledge in the organization to innovative results

KNOWLEDGE MANAGEMENT IN THE ORGANIZATION The leap development and self-growing knowledge in the organization requires an effective system for its organization and management. In recent years the interest is growing in the theory, methodology and practice of building and developing systems

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for knowledge management, but it should be noted that there is no single internationally accepted understanding of this concept. Most often "knowledge management" refers to a wide range of activities related to different practices of organizing generation, collection, storage and use of knowledge. In organizational plan, knowledge management can be seen as a way to create such an organizational environment in which people will be encouraged to create, learn, share and use knowledge in a team and for the organization, and through the established value - in benefit of its clients. According to the conviction of the author, the development of knowledge, training and learning are interconnected elements which, if managed properly, turn the organization into a new type â&#x20AC;&#x201C; the learning organization. Knowledge management allows for its maximum efficient use in the organization, thereby creating new knowledge. Training becomes a catalyst for development and a source of brainpower to create and maintain sustainable competitive advantages. The need for continuous training is becoming one of the most important competencies of organizations that seek not just to survive but to grow within the new knowledge economy. Creating sustainable advantages, organizations that continually set goals related to education are becoming market leaders. In the process of training the relationships between people in the organization change and the relationships of people to the organization, which leads to a change in the formal and informal rules governing the behavior of the entire organization. The main result of the implementation of the systems for knowledge management lies in the fact that simultaneously with increasing the customer value created by the organization and the process of organizational change develops too. In the practice of management these positive aspects of knowledge management are realized. The authorâ&#x20AC;&#x2122;s study, conducted in 2015 by interviews with managers of 42 industrial companies in the Varna region, shows that 92% of them are convinced that knowledge management is a key factor for increasing the competitiveness of their companies. Very few of them, however, can describe their organization as a selflearning. The most significant methodological problems which were selected by survey relate to: 1) the formalization and transformation of knowledge and turning it into "library of knowledge"; 2) the structure and the architectonic of the system for knowledge management; 3) the technology of the process of knowledge management; 4) information system for the implementation of management; 5) internal organizational standards for the construction and development of the system; 6) the program to change people's attitudes - changing behavior and attitudes of

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employees - communication system, a system of incentives, removal of barriers to knowledge sharing, etc. In the scientific literature various models for the organizational system of knowledge management are proposed and discussed. In a study of McAdam and Reid (2001) four key areas are detached that need to build a constructive framework of such a system: identifying and defining the knowledge, materialization, dissemination and evaluation of the benefits of knowledge. Beijerse (2000) examines a model of nine steps: 1) determination of necessary knowledge; 2) determining the available knowledge; 3) identification of missing knowledge; 4) development of new knowledge by assessing the opportunities the company to acquire the missing knowledge by itself; 5) acquisition of knowledge, that the company could not create itself; 6) systematization and preservation of knowledge so as to be accessible to all needing it; 7) knowledge sharing; 8) use of knowledge in the best way for the organization; 9) assessment of knowledge used. In Figure 3 presents the systematic conceptual model proposed by the author.

Out of the organization Implicit knowledge

Repositories of knowledge

Explicit knowledge

Main components of knowledge management systems

Internalization

Knowledge (as a process)

â&#x20AC;&#x153;Knowledge libraryâ&#x20AC;? of the organization

Learning organization

Main components insuring the technology of knowledge management

Strategic awareness (trends and character of development)

Insurance of the effectiveness of the activities

Fig. 3. Conceptual model for building organizational system for knowledge management

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CONCLUSIONS The system of knowledge is an important element in the mechanism of strategic management, providing not only the successful implementation of business processes, but also turning the organization in a self-learning and growing one. The modern systems of knowledge are a new and quality development of existing databases and they include not only the obvious (materialized) knowledge but also the implicit. Knowledge plays an important integrative function in the formation of the competitive potential of the company, building and maintain sustainable competitive advantages. Materialized in the products and services of the company, knowledge makes the company a market leader and maintain its competitive position in the long run. The establishment and the effective use of knowledge presumes building and developing a system for knowledge management based on modern achievements of high information technologies. In the practice of Bulgarian industrial companies the need to build and maintain systems for knowledge management is increasingly realized, but there are a number of conceptual, technological, financial, organizational and other problems, shared experience is also missing.

REFERENCES Beijerse, R., Knowledge management in small and medium-sized companies: knowledge

management

for

entrepreneurs,

Journal

knowledge

Management, Vol. 4, 2000, p. 162-179. Daniels, L., Business Information Sources, Berkley: University of California Press, 2005. Doz, Y. L., Strategic Management in multinational Companies, Sloan Management Review in press, 1980. Grant, R. M., The Resours-based Theory of Competitive Advantage: Implications for Strategy Formulation//California Management Rev., Vol. 33, 2010. Hadzhiev, B. Complex reengineering and a system of modes for its application in the food industry. Autoreference of the D.Sc. dissertation in Economics. University of Food Technologies, Plovdiv, 2014. [Kompleksen reinzhenering i sistema ot moduli za negovoto prilagane v khranitelnata industriya. Avtoreferat na disertatsionen

trud

prisazhdane

nauchna

stepen

â&#x20AC;&#x17E;doktor

ikonomicheskite naukiâ&#x20AC;?, Plovdiv, 2014] [BG].

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Hristov, D., Logofetova, Y., Knowledge management in the small and medium entreprises, Hiron Management consulting, 2006. McAdam, R., Reid, R., SME and large organization perceptions of knowledge management: comparisons and contrasts, Journal of knowledge Management, Vol. 5, November 3, 2001, p. 231-241. Nonaka, I., Takeouchy, H., The concept of ba: building a foundation of knowledge creation, California Management Review, Vol.40, N 3, 1998, p. 40-54. Porter, M., Industry structure and competitive strategy: Keys to profitability, Financial Analysts Journal, 36 (4) 1980. Velev, M. Evaluation and analysis of company competitiveness. Publishing house “Softrade”, 2004. [Otsenka i analiz na firmenata konkurentosposobnost, IK ”Softreĭd”, 2004] [BG].

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Journal of Innovations and Sustainability

Volume 2 Number 2 2016

The Cultural and Natural Heritage in the Western Part of the Republic of Macedonia and Their Impact on the Spatial Development Anita Todorova & Marija Ljakoska1

Ss Cyril and Methodius University, Faculty of Natural Sciences and Mathematics, Institute of Geography, Skopje, Macedonia

Abstract The territory of Western Macedonia covers an area of 10473 kmÂ˛, or 40.7% of the total territory of the Republic of Macedonia. The territory includes Polog, Pelagonia and the Southwest Plan Regions. The cultural and the natural heritage in the western part exceeds the country borders, so some of them are important tourist destinations in the Balkans and Europe. The transformation of the area can be observed through the number of visitors, realized overnight stays, participation of the tourism in the national GDP and their impact on the development of linear and institutional infrastructure in this part of the country. Key words: spatial development, cultural and natural heritage, Western Macedonia.

INTRODUCTION In the Republic of Macedonia, according to the type, quality and size, tourist localities and facilities are spatially separated into three large zones with a certain tourist value, as follows: Western Macedonia, Eastern Macedonia and Povardarie (Panov, 1968). According to the Nomenclature of Territorial Units for Statistics, NUTS 3, adopted by the government, the Republic of Macedonia is divided into 8 regions. Three of these

"Ss Cyril and Methodius" University, Faculty of Natural Sciences and Mathematics Institute of Geography, Skopje, Macedonia E-mail addresses: todorova.anita@yahoo.com, ljakoska.marija@yahoo.com 1

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regions are forming the territory of Western Macedonia. These are the Southwest, Polog and Pelagonia region2. Southwest region extends at the furthest south part of Macedonia with an area of 3340 kmÂ˛, Pelagonia region is located in the southern part of Macedonia and covers part of Pelagonia valley and the basin of Prespa Lake. It covers an area of 4717 kmÂ˛. Polog region, which covers an area of 2416 kmÂ˛ is located in the northwestern part of the Republic of Macedonia. According to detailed indicators, i.e. towards the importance of the tourist places, the number of accommodation facilities, nights spent and the number of tourists during the season, functionally most developed is the western part of the country. The largest contribution to the tourist industry realizes the Southwest region, Polog region is known for its natural heritage, while Pelagonia region, thanks to the proximity to the Southwest region, which is considered as the most attractive on the one hand, and the Corridor 10 passing nearby on the other hand, creates the transitional character of the region (Panov, 1968). Position and traffic connections are the basis, the most important criterion. It is therefore very important the distance from the main tourist flows and connection to the main tourist claimants (Budinoski, 1995). Therefore, as an important element in terms of traffic connection is the connection by rail (Budinoski, 1995), i.e. railways Skopje-Tetovo-Gostivar-Kicevo and Skopje-Veles-Prilep-Bitola (Stojmilov, 2005), the existence of the international Airport in Ohrid, as well as proximity to highways, Corridor 8 and a branch of Corridor 10. Certainly, it must be mentioned the border crossings Blato, Kjafa San, St. Naum and Stenje on the Macedonian-Albanian border, Medzitlija on the Macedonian-Greek border and Jazhince on the Macedonian-Kosovo border (Stojmilov, 2005).

WORKING METHODS The space should be viewed as a set of features in order to minimize collisions and maximize the complementarities (Stojmilov, 1981). Therefore, the methodology that was applied in the preparation of this work is multidisciplinary. The results of the research from different scientific disciplines adjust to the needs of this paper. There are used the method of research, methods of assessment and qualitative methods, then method of inventory and evaluation. The analysis is done with the level of

Gazette of the Republic of Macedonia No. 158 from 28.12.2007.

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regions, and larger spatial units. General methods and techniques are related to planning activities while making the analysis, evaluation and synthesis as a methodological phase of spatial planning development. With help from the methods of analysis and synthesis based on individual buildings or sites of natural and cultural heritage in space, we get complex parts. First was implemented the inventory and evaluation of the conditions, benefits and factors for development of tourism in different regions and it is taken as an input for the organization and revitalization of these areas for tourism purpose (Stojmilov, 1981). Besides the above mentioned methods there were used the method of direct research or field work, a method of direct observation, mathematical-statistical method, and the method of comparison with which it has already been worked, especially on defining the spatial units. Among those names must be mentioned Panov, Jeremic, Stojmilov, Zikov, and others. After presenting the situation and the facts necessary for the application of these methods, the results obtained during the research are presented in the paper.

CULTURAL AND NATURAL HERITAGE OF WESTERN MACEDONIA The geographical position of the Republic of Macedonia being in the central part of the Balkan Peninsula, and the lot of natural beauties and goods that are found here, have been a major cause of these spaces to be inhabited by different people and civilizations, ranging from ancient Greece and the Roman Empire to the Ottoman Empire (Panov, 1968). All of them have left traces in the material culture of the Republic of Macedonia as fortresses, cemeteries, houses, churches, monasteries, mosques, baths, etc. in various styles, from Byzantine to Oriental, but all of them have its own indigenous native art (Baseski, 1981). Besides the above mentioned natural amenities, close contribution to the creation of a tourist profile is diverse and indigenous cultural and historical heritage. Archaeological findings, castles, churches, mosques and folk architecture arouse special interest. Natural heritage is a part of nature and sites consisting of geological, physical and geographic or biological formations or groups of such formations, with outstanding value from the aesthetic, conservation or scientific point of view3. The territory of the

Gazette of the Republic of Macedonia No. 67/04; Low for nature protection, Skopje, 2004.

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Republic Macedonia abounds in natural features that need to evaluate and affirm in order to be visited by nature lovers. Tourism is directly tied to space and conditioned by its specific natural features. However, tourism does not require any kind of space, but a quality one and as a rule, that space is always limited (Stojmilov, 1979).

Southwest Region This region has the most attractive natural and anthropogenic motives for the development of tourism in our country. With their attractiveness they exceed the borders of our country and make this area one of the most important tourist destinations in Europe (Budinoski, 1995). As the most important city we will mention the city of Ohrid, located in the southwest of the region. It is believed that the city existed under the name Lihnidos 353 BC and, therefore, all the cultural and historical sights are protected by UNESCO in 1980. We will mention sites and buildings of cultural heritage in Ohrid like: the old town of Ohrid, which is an open museum with its well-preserved architecture of the period between 17 and 19 century. The houses are not only interesting in appearance, and built on multiple floors, but also after their interiors. One of the most interesting is the house of Robevci in which today is housed the Ethnological Museum of Ohrid (Panov, 1968). Samuil's Fortress (Samoilovata Tvrdina), built upon foundations of an older fortress is one of the most significant and oldest monuments in Ohrid (Mileski, 1970). Special interest arouses the St. Sophia church, which is the oldest in Ohrid and in our country too. It is from the 11th century, but perhaps even much earlier. In the Ottoman Empire it was a mosque, the icons were covered with plaster, but after World War II, they were restored and conserved. The frescoes are from the 12th to 14th century (Mileski, 1970). The church St. Pantelejmon, Plaosnik which is surrounded by buildings of the first university in the Balkan, the Clement University that was first built in 886. The ancient amphitheater in Ohrid, which is adapted in a facility for performance of cultural and artistic manifestations during the tourist season (Mileski, 1970). The monastery of St. Naum, from 9th or 10th century, which is located in the southern part of the lake. Here is also located the tomb of St. Naum. Church St. Jovan Kaneo and many others4.

Tourist guide: Macedonia: cradle of culture, land of nature. Ministry of Economy, Republic of

Macedonia, Skopje, 2009.

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The town of Struga well known by the Struga’s Poetry Evenings that were begun with organizations in 1962 in honor of the brothers Miladinovci. They are organized in August. Than, the monastery complex Kaliste, known for the cave church of St. Bogorodica. The city of Kichevo, located in the heart of Western Macedonia. With rail is connected to Gostivar, Tetovo and Skopje, and with road to Gostivar, Tetovo and Skopje. With regional roads is connected with Ohrid and Bitola. Kichevo is mentioned in the 11th century. One of the most important archaeological localities is Kitino Kale which got its name after the sister of Prince Marko, who is considered that had lived in this area. But thanks to the coins of Alexander III that were found here, it is assumed that this locality was inhabited much earlier. Here we must mention the monastery of a Holy Mother of God or, The Birth of the Virgin Mary (St. Bogorodica Precista or Raganje na Presveta Bogorodica), a monastery dedicated to the Christians and the Muslims. The church is beleaved that has a healing water spring and an icon which is believed that helps those who want to have a child. It was founded in 1316. Then Knezinski Monastery, dedicated to St. George which has existed since the first centuries of Christianity. Museum of Liberation, housed in a building from 1892, in the city center, which owns a number of documents, photographs, images, maps, flags, mosaics, frescoes, weapons and other items. A special feature to this region gives the monastery St. John the Baptist (St. Jovan Bigorski) located near Debar. The monastery was founded in 1020, the church was entirely built in 1800 and painted in the 18th century. The rich iconography that has been painted in the monastery is from the period between 16th and 20th century. This monastery has the most beautiful carved iconostasis. Then, the monastery in the village Rajcica dedicated to St. Barbara from 1597. We also must mention the village Galicnik were, every year in July on St. Peter’s day is maintained the traditional Galicnik Wedding, event that contributes to foster customs, folk songs, games and dances, and Galicnik’s ethnic costumes. The natural heritage characteristics of this region are the Debar baths, better known under the names Banjishte and Kosavrasti that belong to the sulphatehidrocarbonats, alkaline-earth muriatic waters (Stojmilov, 2011). The temperature of the water in Bath Banjishte is 39°C, and of Kosovrasti is 41°C and it is used to treat several types of diseases5. In these baths except "The health tourism" it started to develop the recreational tourism too. Near the Baths there is the only gypsum cave

http://bdcapa.com/mk/терапии/.

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in the Republic of Macedonia, which falls into the category Natural monument which attracts with its specificity and uniqueness. Interesting for nature lovers are also the Vevcan’s Springs, located on the eastern slopes of the mountain Jablanica. They represent a typical anisotropic karst aquifer whose water erupts from cracks. The main spring emerges from a cave with a capacity of 1.5 m³/s (Kolchakovski, 2004). In 2012 the Vevcan’s Springs are declared by the Law as a monument of nature, covering an area of 1370 ha. The springs are arranged for visiting. Black Drim River is the expiration of the Ohrid Lake with a total length of 56 km in the territory of the Republic Macedonia. Black Drim River has built an imposing ravine valley, while from the water, there are created two artificial reservoirs (Globochica and Debar Lake) which are a recreation for nature lovers (Kolchakovski, 2004). The biggest tourist significance is the Ohrid Lake, the biggest natural lake in the Republic of Macedonia with an area of 348.8 km² of which 229 km² belong to the Republic of Macedonia (Kolchakovski, 2004). Interesting for the lake is that it has a population of about 147 endemic species of organisms from which a portion are living fossils, almost unchanged from the tertiary period. They are the following: the endemic sponge (Ochridaspongia rotunda), about 27 relict species of snails from which 86% are endemic, then Belvica (Acantolingua ochridana) and most characteristic species of Ohrid trout (Salmo letnica) (Kolchakovski, 2006). The lake with its beauty is declared by the Law as a Monument of nature, and in 1979 by the international organization UNESCO is putted on the list of World Natural Heritage. In this region interesting by its emergence and location is the Mountain Galicica located between Lake Ohrid and Prespa from the west to the east. In this area are interesting the geomorphological relief forms from which, ten caves and pits, two striking glacial cirques and periglacial impressive solifluctions terraces on Old Galicica. It is rich with flora and fauna. Due to the natural beauty and the flora and fauna, in 1958 it was declared as a National Park in the Republic Macedonia with an area of 22750 ha. Within the National Park there are 600 flora species, of which 170 are of woody vegetation, there are relict and endemic plants. Also under protection in this area are placed 170 species, of which 10 are amphibians, 18 reptiles, 124 birds and 18 mammals6. Here are natural curiosities: the springs

Programme for development of the Southwest mountain region 2010-2015, Center for development of

the Southwest region, 2010.

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near St. Naum, and the only island in the Republic Macedonia - Golem Grad in the Prespa Lake (Kolchakovski, 2006). Great influence, attracts the sulphur spring Duvalo located in the village Kosel which lays northeast of Ohrid. It is a post-volcanic appearance that looks like a miniature crater with a diameter of 0.5 m and a depth of 30 cm. From the opening of the crater erupt emissions of carbon dioxide and sulfur hydrogen. Thus, this phenomenon is at the same time a Moffett and sulfur spring (Dimitrovska, 2010). In 1979 the site was declared a monument of nature. The most important in this area is the karst relief form cave “Slatinski Izvor” located on the left side of the Slatina River valley in the vicinity of the village of Slatina. It is the longest explored cave in the Republic of Macedonia with a length of about 4 km7. The cave is rich in internal morphological elements, cascades, dry riverbed, river terrace and a large variety of cave decorations. The most striking cave ornament is the ornament in the form of a cluster that is the first registered in our country. The Cave “Slatinski Izvor” is put on the temporary list in 2004 for natural values of UNESCO World Heritage, while in 2011 was declared as a natural monument of world importance. The cave Peshna which is located 6 km from Makedonski Brod is also interesting for visiting. A characteristic of this cave is its slot. The slot has impressive dimensions 52.4 x 16 8 m, (Kolchakovski, 2004). From the northern part of the cave after heavy rainfall breaks a strong spring, while in dry periods it dries up. At the entrance of the cave there is a medieval fortress. This cave is proposed to be declared as a natural monument.

Pelagonia Region In this region are located the cities of Bitola, Prilep, Resen, Krusevo and Demir Hisar. Bitola is presumably founded by the Slavs, and under the present name was first recorded in 1014. In the 13th and 14th centuries it was a famous shopping center. From 1382 when was under Turkish rule, it became part of the largest and most important strategic centers. Then were built madrassas and religious Law school, mosques (Nikolovski et al., 1971). Among significant facilities that are part of the cultural heritage it can be emphasized the mosques Ajdar Kadi from 969, Yeni Mosque from 966 or 1558/59, with 40 meters high minaret, mosque Isaac from 914, and the Bezisten, the covered Bitola’s bazaar.

http://www.ursusspeleos.com.mk/slatinskiizvor.htm/.

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Shirok Sokak, the main street and pedestrian zone, on both sides with houses which testify about the old architecture with rich wooden verandas and rich ornamentation. At the end of Shirok Sokak is the Clock Tower, which is thought to have been built in the 17th century. The tower is 33 meters high. Heraklea is mentioned as a city that was formed or found by Philip II around the middle of the 4th century BC. In 168 BC, Heraclea was under Roman rule. In the early Byzantine period it was a bishopric. In 533 AD it was first mentioned for the first time as Heraklea Linkestis that is just a proof that it is the same Heraklea. Near Prilep is Stibera, archaeological site of the 4th century, with turret walls, built of stone without using of plaster. The city had acropolis and is surrounded with massive walls, statues of marble, metal and ceramic objects, and coins that testify for the trade relationship with the Aegean and the Adriatic Sea (Baseski, 1981). Treskavec Monastery, is 10 km from the center of Prilep which originated from the late 12th or early 13th century. There, the Byzantine frescoes are from the 14th century. The monastery is considered to be one of the most valuable medieval monuments on the Balkan, counted in the list of 100 most endangered monuments in the world. Tobacco Museum, which is unique and is one of its kind on the Balkan and one of the biggest in Europe, opened in 1973 on the occasion of 100 years of tobacco production in Prilep (Panov et al., 2010). Krushevo is a city where the houses themselves represent extraordinary valuable architectural buildings with its original structure and appearance, which amazed visitors as they represent an indigenous architecture. How valuable they are, shows the fact that 90 houses in the city are under the protection of the Law, (Stojmilov, 1977). Among the significant buildings is the Makedonium, a monument which symbolize the liberation struggle of the Macedonian people, then also highly visited are the City Museum and Art Gallery Nikola Martinoski (Stojmilov, 1977). Near Resen, around 3 km east of the village Slivnica, it is the Slivnica Monastery which is dedicated to St. Mary. The church was painted in 1607. There were inns, but now, thayare destroyed. Slepche monastery, near Demir Hisar, is dedicated to St. John the Baptist (St. Jovan Pretecha) that existed in the late 14th century (Nikolovski et al., 1971). The Prespa Lake is situated between mountains Galicica from the west and Pelister from the east. It covers an area of approximately 274 kmÂ˛ of which 176.8 kmÂ˛ belong to the Republic of Macedonia. In Prespa Lake and its surroundings lives endemic and relict flora and fauna. There are registered 24 endemic taxons (Dimitrovska, 2010). Fish animal community in the lake is represented by 17 native species of which 6

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species are Macedonian endemic species and one specie is Balkan endemic. From avifauna are represented 105 bird species. Of these, 61 species of waterfowl are under strict protection. Because of the environmental values and scientific importance, the Prespa Lake in 1977 was declared as a monument of nature, and in 1995 is placed on the World Ramsar list of important aquatic sites8. The Island Golem Grad is located in the waters of Prespa Lake. The island has a length of about 800 m and a maximum width of 500 m, (Kolchakovski, 2004). The Island Golem Grad is characterized by its flora and fauna. The most characteristic occurrence is the wild juniper (Juniperus excelsa) and a number of snakes from where it received the name Snake’s Island. The Island is within the National Park Galicica and is protected by the Law. In the island are also found remains of Neolithic settlements, Hellenistic, Roman times and from the Middle Ages. It can be said that the island is interesting for visiting, but is not yet adapted for organised tourist visits. This region includes strict nature reserve and ornithological site Ezerani which was declared by the Law in 1996. It occupies the northern coastal part of Prespa Lake, with a protected area of 2.080 ha9. There are about 200 species of birds, of which 104 are water birds, 62 are on the list of protected species under the Bern Convention, while 3 species are on the European Red List of Globally Threatened Species (Dimitrovska, 2010). Interesting to visit in this region is the national park Pelister, the oldest in the Republic of Macedonia, declared in 1948. It is located on the same mountain and covers an area of 17.150 ha10. Especially important for the park's forest is the complex of Tertiary five- needles pine “Molika” (Pinus peuce). In the national park striking are the periglacial relief forms - rock rivers and from the glacial relief, the Big and the Small Lakes on the Pelister also known under the name “Pelister’s Eyes”. The locality Markovi Kuli is situated near the town of Prilep. The fortress Markovi Kuli lies on a natural rocky hill whose top is 951 meters above sea level, enhanced with several defensive ramparts. The settlement is taken as unconquerable fortress. Here lived King Samuel and then the hero Marko after whom it was named. It is composed of numerous different denudation relief forms which are representing an exclusive sculpture of the relief. For national monument the locality was first declared

Resolution law for nominating the Prespa lake as a Natural monument, Skopje, 2011.

Gazette of the Republic of Macedonia No. 37/96; Law for proclaiming of ornitology site”Ezerani” on the

Prespa lake, for the strict natural reserve, Skopje, 1996. 10

Gazette of the Republic of Macedonia No. 150; Law for proclaiming a part of mountain Pelister as a

national park, Skopje, 2007.

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in 1967 and again in 2006 and 2004 was declared on the provisional list of UNESCO World Heritage site. This region includes the Natural Reserve "Lokvi- Golemo Konjari" which as a strict nature reserve was declared by the Law in 2003. It covers an area of 50 ha11. The main reason for declaring the locality as a strict nature reserve is the presence of endemic dragonflies Pelagonia’s shrimp (Chirocephalus pelagonicus) (Dimitrovska, 2010).

Polog Region In this region, there are two urban settlements, Tetovo and Gostivar, as most significant tourist localities. Tetovo is situated in the Northwest part of the region, and it is said that it dated from the 13th century. More valuable cultural and historical objects in the town and its nearenass are Tetovo’s Kale, a fortress built in 1820 by Abdulaman Pasha, where the influence of the Ottoman architecture can be seen in a great deal. This archeological complex is consisted of five domes, kitchens, baths and a well, remains of storehouses and dinning rooms, and in one part under the Kale, there are some remains of a church that existed there in the 14th century. There are some remains of a prison with three underground canals. The Multicolored Mosque or better known as the Pasha’s Mosque, situated in the town, dates from 1495. In the yard of the mosque there is a turbe (a tomb), where the sisters Hurshida and Mensure are buried, who were the main donators for this mosque to be built. Arabat Baba Teke, built in the 18th century, has a shadravan (fountain), tomb, tower, a guest mansion and here, the dervish life lasted till 1912. Today here ishosted the Folk Town museum. From the natural beauties we can select the Shara Mountain, which is situated in the northwest part of the Polog region. It is one of the highest mountains in the Republic of Macedonia with the highest peak Turchin (2.748 m). On the mountain can be found the fluvial, karst, glacial and periglacial relief. An evidence that the glacial relief is present are the cirques and glacial lakes. In the part of the mountain that belongs to the territory of the Republic of Macedonia, there are totally 27 glacial lakes, of which, 19 are permanent. More known glacial lakes are the Bogovin lake, the Black lake, and the Big Gjol, whereas the highest sea level lake is the Dobresh lake (2.440) (Kolchakovski, 2004). On the Shara mountain there are nearly

Gazette of the Republic of Macedonia” No. 71/03; Law for proclaiming of the locality ”Lokvi-Big

Konjarevo” into strict natural reserve, Skopje, 2003.

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200 endemic taxons. From the fauna there are present relict daily butterflies, couple of reptile kinds and mammals which are classified as endangered species. The Shara mountain is nominated to be declared as a National Park because of its natural beauty and rich wildlife. The National Park Mavrovo represents the biggest national park in Macedonia and is situated between the three borders between Albania, Kosovo and the Republic of Macedonia. It covers the southern parts of the Shara mountain, the western and central parts of the mountain Bistra as well as the mountain Korab. The middle part of the national park covers the valley and the junction area of the river Radika. The National Park Mavrovo consisted of interesting fluvial, karst, glacial and different kinds of denudation relief forms. From the underground karst relief forms, the most known is the cave Alilica, which is situated in the valley of the river Tresonechka. The cave system Alilica is consisted of underground canals from the Upper and Lower Alilica. The total explored length of the cave is 590 m (Kolchakovski, 2004). From the hydrological objects the most characteristic is the waterfall Duf. The National Park abounds with rich wildlife from which the biggest area is covered by the complex of mount beech forests. In this area there are registered more than 1435 different plants from which 404 classes and subclasses are classified in the category of curative herbs. Nearly 13 species are endemic, and almost 29 are rare floral species12. From the wildlife are registered 140 kinds of birds (Kolchakovski, 2006). For the first time the national park is announced in 1949, and because of the great extension of the borders the park was pronounced once again in 1952. The current area of the National Park Mavrovo is 73088 ha according the old way of measuring, or 72204 ha according the new way of measuring13. The cave Ubavica, (Beauty) or Gjonovica is situated on the mountain Bukovik, near the village Upper Gjonovica. Its explored length is 1010 m (Kolchakovski, 2004). The cave is rich with cave ornaments, a lake and a pretty high waterfall. The cave Dona Duka is situated on the mountain Zheden with a length of 700 m (Kolchakovski, 2004). From hydrological view the cave represents a dry cave with a wide net of canals and galleries. In the cave there are small lakes which are formed by water which drops from above. It is rich in cave ornaments, and at the same time we have to say that this cave is nominated to be protected as a monument of the nature.

http://npmavrovo.org.mk/инвертебратна-фауна/.

http://npmavrovo.org.mk/општи-информации/.

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MATERIAL BASE, NUMBER OF VISITORS AND REALIZED OVERNIGHT STAYS In spite of natural-attractive, socio-cultural, communicative-traffic, spacious and other factors of the turistic offer, the Republic of Macedonia in the biggest part of international and national meaning, deals with a great amount of material-receptive factors, where the overnight stays capacity and catering objects for food and drinks (hotels, motels, bars, restaurants, pubs, etc.) are composing the nucleus of the material base directly involved into every touristic program of the touristic offer14. One of the biggest problems that the Republic of Macedonia is faced with is the fact that the tourism unfortunately has a seasonal character. That can be seen through the number of tourists during the summer months, especially July and August which is 3 or 4 times higher than in the winter months, January and February15. The situation is similar on the territory of Western Macedonia, but if we make an analysis of each region, separately, we can notice that the Southwest region is the most distinctive, with the biggest difference, because during the summer months the number of visitors and tourists is about 10 times bigger from the number of visitors and tourists in the winter months. In the summer period during the summer months, the Southwest region participates with over 50% of the total number of tourists in the country. This appearance in the region is naturally connected with the presence of the two natural lakes, the Ohrid and Prespa lake, and also the national park Galichica. In the Pelagonian region, these differences are not so emphasized, whereas in the Polog region the situation is quite different. Here, the number of the tourists in the winter months is almost 50% bigger compared to the summer period. It is certainly due to the presence of the two largest ski resorts, Mavrovo and Popova Shapka. Yet, the number of the tourists in this region is rather smaller than in the Southwest region. The number of the domestic tourists in each of the regions dominates, but in the last couple of years the differences are more neglectable. The biggest number of foreign tourists comes from Serbia, Poland, Turkey and Greece. In the Southwest region the tourists are mainly from Serbia, Bulgaria, Japan and Poland, in the Pelagonia region from Slovenia, Serbia, Turkey and Greece, and in Polog region the tourists are mainly 14

Annual report for enforcing of the Spatial plan of the Republic of Macedonia in 2008, Skopje, 2009.

15http://makstat.stat.gov.mk/pxweb2007bazi/Dialog/varval.asp?ma=Turizam_Reg_Nokeva_mk&ti=&p

ath=../Database/StatistikaPoOblasti/TirizamUgostitel/Turizam/&lang=18.

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from Kosovo and Abania, which is mostly like, because of the closeness to the border with these countries. On the national level, the foreign tourists dominate. The number of tourists in the last ten years, although with some oscillations, in general, marks a positive trend. Of the total number of tourists in the country, in 2014, the Western part of the Republic of Macedonia participated with 49.5%. The biggest share of 36.6% of the total number of tourists in the country belongs to the Southwest region and 74% of the number of tourists in the Western part of the country. That same year, the Western part of the Republic of Macedonia participates with 59.4% in the total number of overnight stays in the country. Of the total number of overnight stays realized in Western Macedonia, the Southwest region contributes even 83.9%. Southwest also has the highest number of beds in the country or 59.5%. As for the mountain Laws defined by a concept for Development of the tourism and organization of the tourist spaces established by the Spatial Plan of the Republic of Macedonia, we can conclude that the frame and the level of the tourist offer gets behind the real receptive possibilities and potentials in the area.

DISCUSSION With its excellent geographic location, natural beauties and plenty of cultural and historical monuments our country presents a very interesting area. Unfortunately, many of them are not enough affirmed, urbanely formatted and even not easily accessed and mutually neatly linked (Panov, 1968). With the planning of the space you can achieve an optimal valorization of the values for the tourism development, and one can see the opportunity for rational usage of the structures that are built, opportunity for collecting and circling the current touristic offer and itâ&#x20AC;&#x2122;s intensifying for usage, and again it can be seen in the possibility of activating new areas with dominant natural tourist resources. Here can be found a ground for an opportunity for optimization of the future touristic development and the priorities of materializing of the current and building of new tourist places and new investments (Zikov, 2010). At the same time, managing cultural heritage requires an

interdisciplinary

approach,

including

urban

and

regional

planning,

communication and marketing, training and education, as well as the various uses of the landscape, such as agriculture, forestry, industry and tourism. Above all, cultural heritage should be an integral part of territorial planning and as such it should be linked to a wider reflection on the sustainability of regional and urban development (Pultrone, 2015).

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The tourism does a root change into the geographic ambience, it vitalizes the geo ambience, harmonizes it and puts in new contents (Marinoski, 1995). The positive effects of the development of tourism are employment, achieving additional income for the population, revival of the cultural heritage and so on (Iliev & Ljakoska, 2013). The touristic development and building of the convenient material base, are very important from the aspect of preventing the migrations, as well as infrastructural equipping of the space (Budinoski, 1995). The touristic heritage through his touristic presentation is an excellent opportunity for the realization of what is possibly more financial benefit on a national and local level (Panova, 2010). The cultural and natural heritage should be used as a basis for development of the following kinds of tourism, according the needs, as summer, winter, mountain, bath, transit, business, congress, hunting, weekend and picnic tourism (Stojmilov, 1981). The development potential of one tourist area, beside the natural, antropogenetic and spatial opportunities, depends a lot on its tourist location (Stojmilov, 1979). The airport in Ohrid together with both border passes, St. Naum and Kafa San, give this space an international character (Marinoski, 1995).

CONCLUSION Our country is rich in great number of material evidences, represented by many archeological sites as well as written materials which point out that it is one of the cradles of the world civilization (Panov et al., 2010). Most advantageous circumstances for tourism development has the Southwest region of the republic, where the distinguished places are Ohrid and Prespa. Therefore, in the preparation of the spatial plans, whether on a national, regional or local level, the activities should be pointed towards the part how to create opportunities for optimal usage of the total touristic row base and creating possibilities how the touristic capacity and contents to be rationally classified (Zikov, 2010). The tourist development does a root change of the geospace in this region (Marinoski, 1995). Because of that, it is essential for these touristic spaces to be put into a team of technical and urban meaning, so they can fulfill the whole time to their visitors with particular contents (Stojmilov, 1979). The transformation is present and visible through the economic effects as well as the natural and socio-psychological influence. The changes are manifested into the material base, overnight stays capacity, catering objects, changes in the number of

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beds, number of employed persons and the total trading and it has a great impact on the tourist construction and viscosity, but above all, those changes are very visible in the culture of living because the tourism and touristic demand are already counted as a lifestyle not a luxury. It becomes a need, as one of the basic elements of the living standard (Marinoski, 1995). Beside the enormous natural and artificial potentials of the tourist offer for the foreign and domestic tourism, defined in the relationship between the tourism values and contents, and according to the trends of the international and domestic demand, it can be said that the development of the tourism in the Republic of Macedonia as in its western part still does not accomplish the predicted dynamic and the achieved level in all kind of tourism is way behind the real receptive possibilities and potential touristic demand.

REFERENCES Annual report for enforcing of the Spatial plan of the Republic of Macedonia in 2008, (2009), Skopje. Basheski, I. (1981). Cultural monuments in Prilep and surrounding, G. Sight, book 6, Skopje, p. 88-98. Budinoski, M. (1995). Criteria for valorization of the tourism development factors, Geographical review, book 30, Skopje, p. 91-106. Budinoski, M. (1995). Tourism as a factor for faster and more stable development in Ohrid-Prespa’s region, Proceedings of the first congress of the geographers, Ohrid, p. 322-330. Dimitrovska, O. (2010). Protection of the natural heritage, intern script, Skopje. Gazette of the Republic of Macedonia No. 150, 2007, Law for proclaiming a part of mountain Pelister as a national park, Skopje. Gazette of the Republic of Macedonia No. 37/96, 1996, Law for proclaiming of ornitology site”Ezerani” on the Prespa lake, for the strict natural reserve, Skopje. Gazette of the Republic of Macedonia No. 71/03, 2003, Law for proclaiming of the locality”Lokvi-Big Konjarevo” into strict natural reserve, Skopje. Gazette of the Republic of Macedonia” No. 67/04, 2004, Low for nature protection, Skopje. Gazette of the Republic of Macedonia”no. 158 from 28.12.2007. http://bdcapa.com/mk/терапии/.

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http://makstat.stat.gov.mk/pxweb2007bazi/Dialog/varval.asp?ma=Turizam_Reg_N okeva_mk&ti=&path=../Database/StatistikaPoOblasti/TirizamUgostitel/Turi zam/&lang=18 http://npmavrovo.org.mk/инвертебратна-фауна/. http://npmavrovo.org.mk/општи-информации/. http://www.ursusspeleos.com.mk/slatinskiizvor.htm/. Iliev, D., Ljakoska, М. (2013). Tourism and its function in the development of hilly mountainous area in the municipality Radovish, proceedings, symposium Ohrid, p. 377-387. Kolchakovski, D. (2004). Phisical geography of the Republic of Macedonia, PMF, Skopje, 2004, p. 1-272. Kolchakovski, D. (2006). Biogeography, PMF, Skopje, p. 182. Marinoski, N. (1995). Transformation of the geographic surrounding under the influence of the tourism in Ohrid region, The first congress of the geographers, Ohrid, p. 331-339. Mileski, G. (1970). The Ohrid lake as an important fishing and touristic area in the Republic of Macedonia, Annual Proceedings, book 18, Skopje, 1970, p. 5-90. Nikolovski, A., Kornakov, D., Balabanov, K. (1971). Cultural monuments in the Republic of Macedonia, Misla, Skopje, p. 118-216. Panov, M. (1968). Touristic values of particular areas in the Republic of Macedonia, Annual Proceedings, book 16, Skopje, p. 217-272. Panov, N., Mijalov, R., Taleska, M. (2010). Valorization of the touristic potentials in Prilep and Prilep, Annual proceedings, book 38, Skopje, p. 37-60. Panova, К. (2010). Cultural-historical monuments as a factor for tourism development in the Republic of Macedonia, with special review of the city of Skopje, master work, Skopje. Programme for development of the Southwest mountain region 2010-2015, 2010, Center for development of the Southwest region. Pultrone, G. (2015). Cultural territorial planning for innovative scenarios of sustainable development opportunities and strategies for European cities and regions, Proceedings of the conference Cultural heritage-possibilities for spatial and economic development, Zagreb. Resolution Law for nominating the Prespa lake as a Natural monument, 2011, Skopje. SSORM (2015). The regions in the Republic of Macedonia, Skopje.

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Stojmilov, A. (1977). Touristic values of the Pelister and Jakupicaâ&#x20AC;&#x2122;s mountain touristic region, Annual Proceedings, book 23, Skopje, p. 7-96. Stojmilov, A. (1979). Defining and function of the touristic spatial units in Eastern Macedonia, Annual Proceedings, book 17, Skopje, p. 111-128. Stojmilov, A. (1981). Systematization of touristic spatial units in the Republic of Macedonia by municipalities, Annual Proceedings, book 26, Skopje, p. 79-96. Stojmilov, A. (2005). Socio-economic geography of the Republic of Macedonia, PMF, Skopje, p. 311-334. Stojmilov, A. (2011). Geography of the Republic of Macedonia, UTMS, Skopje, p. 161. Tourist guide: Macedonia: cradle of culture, land of nature. Ministry of Economy, Republic of Macedonia, Skopje, 2009. Zikov, M. (2010). Defining of the tourism regions and goals of the spatial planning of the tourism in the Republic of Macedonia, Annual Proceedings, book 38, Skopje, p. 24-30.

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Journal of Innovations and Sustainability Volume 2, Number 2, 2016

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