Journal of Turiba University Acta Prosperitatis Nr. 11OF RECRUITMENT AND SELECTION PRACTICES IN LATVIA ..... 128 Arturs Mons, Velga Vevere ... students who take only the first steps

Acta Prosperitatis

11ISSN 1691-6077

Journal of Turiba University

B.Arul Senthil, D. Ravindran, S.A.Surya Kumar

Udo E. Simonis

Una Skrastiņa, Džeina Gaile

MEASURING EMOTIONAL INTELLIGENCE AMONG BUSINESS SCHOOL STUDENTS IN INDIA

PROBLEMATICS OF AMENDMENTS MADE IN TENDER DOCUMENTS IN PUBLIC PROCUREMENT – THE PERSPECTIVE OF THE COURT OF JUSTICE OF THE EUROPEAN UNION

ECOLOGICAL TURN-AROUND – TRENDS AND PERSPECTIVES

Arturs Mons, Velga VevereBEHAVIORAL ECONOMICS PERSPECTIVE ON ASSESSMENT OF RECRUITMENT AND SELECTION PRACTICES IN LATVIA

Marta Kive, Jānis GrasisPROBLEMS OF APPLICATION OF THE RIGHT TO DATA PORTABILITY

Svetlana Gribanova, Anna Abeltina

Davit Aslanishvili

ANALYSIS OF LITHUANIAN REGIONAL DEMOCRACY ACCORDING TO THE ARTICLES OF EUROPEAN CHARTER OF LOCAL SELF-GOVERNMENT

WORLD EXPERIENCE: COMMERCIAL BANK CREDIT AND ECONOMIC GROWTH RELATIONSHIP

MOTIVATION TO WORK AND MANAGEMENT OF IT PROFESSIONALS: CASE OF LATVIA

Karolis Kaklys

THE DEVELOPMENT OF ANTI-CORRUPTION ENVIRONMENT IN LITHUANIAN PUBLIC SECTOR: BEST PRACTICE AND EXPERIENCE

Eugene EterisSUSTAINABILITY AND DIGITALIZATION: DOUBLE STRATEGY GUIDELINES IN NATIONAL DEVELOPMENT

Ainārs Brencis, Inga Šīna, Ieva BrenceSOCIAL ENTREPRENEURSHIP OPPORTUNITIES IN LATVIAN MUNICIPALITIES

Raimundas Kalesnykas


Acta Prosperitatis Nr. 11

ISSN 1691-6077Publishing house of Turiba University

Telephone: +371 67623521E-mail: [email protected]

Editor-in-Chief: Aldis Baumanis, Dr. paed., Turiba University, Latvia

Co-editor-in-Chief: Daina Vasilevska,Dr. sc.admin., Turiba University, Latvia

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CONTENT

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JournalofTuribaUniversity

ActaProsperitatisNo.11

ISSN1691‐6077

Riga2020

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JournalofTuribaUniversityActaProsperitatisNo.11

Editor‐in‐ChiefDr.paed.AldisBaumanis,TuribaUniversity,Latvia

Co‐editor‐in‐ChiefDr.sc.admin.DainaVasilevska,,TuribaUniversity,Latvia

EditorialBoardProf.AleksanderKobylarek,UniversityofWrocław,PolandProf.AlgimantasUrmonas,MykolasRomerisUniversity,LithuaniaProf.EugeneEteris,EuropeanIntegrationInstitute,DenmarkProf.GregoryJohnSimons,UppsalaUniversity,SwedenProf.InetaLūka,TuribaUniversity,LatviaProf.IngrīdaVeikša,TuribaUniversity,LatviaProf.JānisNačisčionis,TuribaUniversity,LatviaProf.KamilaTišlerová,UniversityofEconomicsandManagementPrague,Czech

RepublicProf.MaijaRozīte,TuribaUniversity,LatviaProf.MarkL.Entin,MoscowStateInstituteofInternationalRelations,RussiaProf.RositaZvirgzdiņa,TuribaUniversity,LatviaProf.SteffiRobak,LeibnizUniveristätHannover,GermanyProf.UdoE.Simonis,BerlinSocialScienceCenter,GermanyProf.VladislavsFomins,VytautasMagnusUniversity,LithuaniaProf.WaldemarDotkuś,WroclawUniversityofEconomics,PolandAssoc.prof.EwaDziawgo,NicholasCopernicusUniversity,PolandAssoc.prof.IvetaLiniņa,TuribaUniversity,LatviaAssoc.prof.MariaKovačova,ŽilinasUniversity,SlovakiaAssoc.prof.RasaDaugeliene,KaunasUniversityofTechnology,LithuaniaAssoc.prof.RenataMatkevičienė,VilniusUniversity,LithuaniaAssoc.prof.SuatBegec,UniversityofTurkishAeronauticalAssociation,TurkeyAssoc.prof.TatjanaPivac,UniversityofNoviSad,SerbiaAssoc.prof.ZaneDriņķe,TuribaUniversity,Latvia

Whenquotedthereferencetotheissueismandatory.

PublisherTuribaUniversity,Ltd.

HeadofPublishingHouseDaigaRugāja

LanguageeditorSundarsVaidesvarans,TuribaUniversity,Latvia

©SIA“BiznesaaugstskolaTurība”,2020,190p.

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CONTENT

PREFACE...................................................................................................................................4

WORLDEXPERIENCE:COMMERCIALBANKCREDITANDECONOMICGROWTHRELATIONSHIP..............................................................6DavitAslanishvili

SOCIALENTREPRENEURSHIPOPPORTUNITIESINLATVIANMUNICIPALITIES......................................................................................20AinarsBrencis,IngaSina,IevaBrence

SUSTAINABILITYANDDIGITALIZATION:DOUBLESTRATEGYGUIDELINESINNATIONALDEVELOPMENT................42EugeneEteris

MOTIVATIONTOWORKANDMANAGEMENTOFITPROFESSIONALS:CASEOFLATVIA.................................................................................................................57SvetlanaGribanova,AnnaAbeltina

ANALYSISOFLITHUANIANREGIONALDEMOCRACYACCORDINGTOTHEARTICLESOFEUROPEANCHARTEROFLOCALSELF‐GOVERNMENT...72KarolisKaklys

THEDEVELOPMENTOFANTI‐CORRUPTIONENVIRONMENTINLITHUANIANPUBLICSECTOR:BESTPRACTICEANDEXPERIENCE...........92RaimundasKalesnykas

PROBLEMSOFAPPLICATIONOFTHERIGHTTODATAPORTABILITY....116MartaKive,JanisGrasis

BEHAVIORALECONOMICSPERSPECTIVEONASSESSMENTOFRECRUITMENTANDSELECTIONPRACTICESINLATVIA.......................128ArtursMons,VelgaVevere

MEASURINGEMOTIONALINTELLIGENCEAMONGBUSINESSSCHOOLSTUDENTSININDIA..............................................................140B.ArulSenthil,D.Ravindran,S.A.SuryaKumar

ECOLOGICALTURN‐AROUND–TRENDSANDPERSPECTIVES...................156UdoE.Simonis

PROBLEMATICSOFAMENDMENTSMADEINTENDERDOCUMENTSINPUBLICPROCUREMENT–THEPERSPECTIVEOFTHECOURTOFJUSTICEOFTHEEUROPEANUNION...............................................................164UnaSkrastina,DzeinaGaile

KOPSAVILKUMS...............................................................................................................184

ACTAPROSPERITATIS11

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PREFACE

Weareverypleasedtopresentthepublicationofthisnewissue.Everyyearwepublisharticlesonvariousareasof scientific research, theauthorsofwhicharewell‐knownscientists:professors,doctorsofsciences,anddoctoralstudentswhotakeonlythefirststepsinscience.

Thisissuecontainstenscientificpaperscoveringawiderangeofkeyissuesin economics and law, representing a wide geographical distribution ofresearchcontexts.ThisvolumecontainsthearticlesofauthorsfromDenmark,Germany,Lithuania,Georgia,IndiaandLatvia.

ThepaperbyDavitAslanishvilifromGeorgiareflectstheproblemoflarge‐scaledisproportionofsuccessinthedevelopmentofthebankingsectorandmainlyanalysestheunsuccessfuldevelopmentoftherealsectoroftheeconomyandthemechanismsoftheinfluenceofcreditmarketfactorsaffectingeconomicgrowth.

The paper by authorsAinarsBrencis, Inga Šina, IevaBrence from Latviaassesses the possibilities of local government in Latvia to participate insocialentrepreneurship,thelegalregulationofwhichhasbeeninforceinLatviaforlessthanayear.

ThepaperbyEugeneEterisfromDenmarklooksatthedevelopmentofglobalandEuropeanactionsinsustainabilityanddigitalization,whichprovideabackgroundintheBalticStates’effortstostreamlinetheireconomicgovernanceaccordingtomodernchallenges.

ThepaperbyUdoE.SimonisfromGermanyasksaboutexcessivemisuseofresourcesandaseriousimpactontheenvironment,aswellastheneedforanationalandglobal“ecologicalupheaval”.Theresearcherarguesthatonlythroughimprovedcooperationamongcountriescanthecollapseofglobalecosystemsbepreventedandglobalsustainabilityensured.

The paper by Latvian researchersSvetlanaGribanova andAnnaAbeltinadescribesthemotivationstructureofITprofessionalsinLatvia.Theresultsoftheresearchshowthatforeffectivemanagementofthisprofessionalgroup,managersshouldcreatecomfortableconditionsforthem,minimizecontrol,focusonwhatpeopledoandnothowtheydoit.

Also,anarticlebyresearchersfromLatviaArthursMonsandVelgaWeveraisdedicatedtothefieldofhumanresourcemanagement.Theauthorsfocusedontheselectionprocessmethodsusedinorganizations,whenhiringpersonnelfordifferentorganizationlevels.

PREFACE

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ResearchersfromIndiaB.ArulSenthil,D.Ravindran,S.A.SuryaKumarconducteda survey amongMBA students of various business schools in India andconcludedthatemotionalintelligenceplaysasignificantroleindevelopmentand is much more important than rational IQ, especially for managers,becausetheyareresponsibleformanagingone’sownemotionalstateandthatofotherpeople.

Thisissueofthejournalalsohasthreearticlesinthefieldoflaw.Thepaperby Raimundas Kalesnykas from Lithuania analyzes the prerequisites forcreatingananti‐corruptionenvironmentinpublicsectororganizationsanddemonstratesLithuania’sbestpracticesinthisarea.

TheauthorKarolisKaklysfromLithuania,inhisarticle,analyzedtheinfluenceoftheprinciplesenshrinedintheEuropeanCharterofLocalSelf‐GovernmentondemocraticprocessesinLithuanianself‐government.HealsoofferssomesolutionsfortheLithuanianlegislatorontheissuesidentified,inordertoimprovenationallegalregulation.

ThearticlebyresearchersfromLatviaMartaKiveandJanisGrasisreflectstheresultsoftheanalysisoftheadvantagesanddisadvantagesoftherighttodataportability,aswellastheirconsiderationinthecontextofdevelopingaregulatoryframeworkfortheprotectionofpersonaldata.

AnarticlebyresearchersfromLatviaUnaSkrastiņaandDžeinaGaileanalysedthe opinions of the European Court and defines the legal principles andconsiderationsthatshouldbetakenintoaccountinsituationswheretenderdocumentsdonotmeettherequirementsoftheprocurementcommissionandrecommendationsareproposedforfurtheractionsinLatvia.

WeshouldliketothankallthemembersoftheEditorialboardfortheirhardwork.Manythanksarealsoduetothecontributorstothisissuefortheirforbearanceandpatienceinthenecessarilylongprocessofpreparingpapersforpublication.

Co‐editor‐in‐Chief,DainaVasilevska

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WORLDEXPERIENCE:COMMERCIALBANKCREDITANDECONOMICGROWTHRELATIONSHIP

DavitAslanishvili,CaucasusUniversity,[email protected]

Abstract

Thisresearchfocusesontheproblemoflargescaledisproportionofsuccess inthedevelopmentofthebankingsectorandmostlyunsuccessfuldevelopmentof the real sectorof the economy. Itshouldbenotedthatthisdisproportionisasubjectofconsiderationin contemporary economic literature and our research is anattempt to broaden the issue and share ideas inside theinternationalscientificcircles.Themainproblemintheresearchis the impact of the banking sector's credit portfolio and thefunctioning of creditmarkets on the economic growth of thecountry.Inthisregard,itisveryimportanttoidentify,studythemacroeconomicstabilizationandacceleratedeconomicgrowthofthecountryandanalysetheimpactmechanismsofthecreditmarketfactorsoneconomicgrowth.Theconclusionthatcombinesmanyoftheresearchandopinionsgiveninthesurveycanbeasfollows:From theeconomicpointofview, themain functionofbanks is to increase the financing/lendingof fundsas thecorepointtoincreaseinvestmentsintheeconomy.Thus,thedevelopmentof the country in economic terms depends on the increase ofinvestments.Atpresent, it is inthehandsofthebankingsectorwhetherto leadustoeconomic immobilityortoacceleratethecountry'seconomicdevelopment throughefficientallocationofresources.

Keywords:Bankingsector,economicgrowth,GDP,creditbooms

DOI:10.37804/1691‐6077‐2020‐11‐6‐19


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Background

Thispaperrepresentsastudyofresearchworksandpublicationsofscientistsfrom different countries related to banking development and economicgrowth,personalinvolvementsandactivityandtheresearchandobservationsoflocalscientistsonrelationsbetweenbankingdevelopmentanditsimpactoneconomicgrowth.Theauthorwishestothankallthosewhosupportedandcontributedtotheproductionofthisstudy.

Introduction

Theimpactofthesmoothfunctioningofthebankingsector'screditportfolioandcreditmarketswithregardtoeconomicgrowthiswidelydiscussedineconomic literature.This issue isrelevant forthe furtherdevelopmentofthe economy of both developed and developing countries. Because ofmacroeconomicstabilizationandacceleratedeconomicgrowth,itisimportantto identify, study and analyse themechanismof impact of creditmarketfactorsoneconomicgrowth.

Theoreticalframework

Inthatview,itisinterestingtoanalysethelevelofstudyofthisproblembyforeign scientists. One of the research works, where this problem wasstudied,waspresentedbyNigerianUniversityofEconomicsresearcherOrjiAnthonyinhisresearchonimpactofbanksavingandcreditsoneconomicgrowth in Nigeria in the period of 1970–2006. The study provided twomodelsofimpactsoneconomicgrowth.ThefirstspecificationmodelfortheARDL‐ECMregressionpresentsspecificationvariablessuchas:Percapitaincome (PCY), the ratio of bank domestic savings tomarket prices. Thesecond specific model was developed to achieve the second objective,focusingoneconomicgrowthinNigeria,namelytheimpactofbankdomesticsavings,bankloansandothervariablesofregressionwithrespecttoGDP(Orji,2012).

Based on the results of the study, the Nigerian government has beenrecommended to make efforts to increase per capita income, reduceunemploymentandeffectivelyutilizebankcreditsandsavingstoaccelerateeconomicgrowthinthecountry.

Anotherresearch,conductedbyagroupofscientists fromEl‐Riyadh, theIslamicUniversityofSaudiArabia,describedwhatwasmostrelevant for

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Qatartoraisethelevelof financialdevelopmentandeconomicgrowthinQatar. The study empirically explores and substantiates the long‐termcausallinkbetweenfinancialdevelopmentandeconomicgrowthinQatarin1990–2012. The country's financial development is measured by threealternativeindicators:thebroadmoney(M2)attitudetoGDP,theratioofprivatesectorbanklendingtoGDP,andtheratioofdomesticbankingcredittoGDP.EconomicgrowthisameasureofrealGDPgrowth.Theresultsofthestudyshowedthatthereisalong‐runpositiveequilibriumrelationshipbetweenallthreefinancialindicatorsandrealGDPgrowthrates.Thestudyfoundthatthereisabilateralcausallinkbetweenthebroadmoneysupply(M2)andGDPaswellastheGDPgrowthrate,andthereisaone‐sidedcausallinkbetweendomesticcredittothebankingsectorbetweenGDPandGDPgrowthintheshortrun.Theresultsoftheobservationshowthatthereisaone‐sidedcauseofapositivecorrelationbetweentheGDPgrowthrateandthedomesticcreditprovidedbythebankingsector(Alkhuzaim,2014).

Therelationshipbetweenbankcreditandeconomicgrowthrelatestothework of Ho Ngai Wa in Macao, in which the author acknowledges thatfinancialdevelopmentandstructurearecloselylinkedtoeconomicgrowth.Inturn,thecountry'sfinancialdevelopmenthasapositiveeffectonthelevelofinvestmentattraction,butisrelativelylowcorrelatedwiththeincreasein production. Empirical research has shown that a number of financialindicators are strongly and positively correlated with economic growth.Macaohasbeenheavilyfocusedonaccesstobankloansandisconsideredoneofthedrivingfactorsinthedevelopmentofmanufacturing(HoNgaiWa,2005).

OfparticularinterestisastudydonetheInternationalMonetaryFundon“Macro‐Financial Stability Policy: Working with the Credit Boom andDownturn”.The“creditboom”episodes,whichincludetherapidgrowthoflending, are a political dilemma for the country. Expansion of access tofinance,widespreadinvestmentsupportandeconomicgrowth(HoNgaiWa,2005)isacommonoccurrence,butwhenenlargementtakesonasharplyacceleratednatureitcanbecomeoffensive,withweaklendingstandards,creditcanbeobtained.Unlimiteduseandvalueof fundsareadangerousbubbleonassets.Normally“creditbooms”areassociatedwithafinancialcrisis(Alkhuzaim,2014),“creditbooms”aredangerousinthebestofsituations,andintheworstcasewehaveacatastrophe.Theywerenotfocusedonthesedangersuntilthe“GreatRecession”crisisof2008–2010.

CreditboomsareproblematicwiththeapproachesofthecentralbanksofIndia andPoland,with the credit boommaking it difficult to distinguish


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betweenhealthyandunhealthycreditflows,sopoliciesshouldbegearedtocontainresults.Forthispurpose,itisnecessarytouseeffectivemonitoringandcontroltoolsovertheresultsofthepastperiod.Astatutorybasehasalreadybeenworkedout,forexampleBaselIIIhasintroducedanumberofcapitalbuffers,whichare adjustedwhen there is amoderate increase incredit(BaselCommitteeonBankingSupervision2010;Dell’Ariccia,etal.,2012). This document discusses how and to what extent we shouldinterveneinthecreditboomorcreditdownturn. Thestudyalsoanalysesthose geographical areas, their location, and problems where the boomeffectismorelikely.TheauthorsconsidersuchcountriesasthecountriesofSouthAfrica andLatinAmerica, aswell as those of theEuropeanUnion,whichareintheprocessofenlargementintheEuropeanUnion.

In termsof economicgrowth, it is very interesting todevelopawarningindicator of the occurrence of a systemic banking crisis. To this end, anarticlebyMathiasDrehmann,dedicatedtothedevelopmentof indicatorsfordetectingtheantiperiodofthebankingcrisis,iscurrentlyrelevant.Thearticle focusesonthe factorsof thebankingcrisissuchas:privatesectorcreditboom,non‐creditlending,credit‐to‐GDPratio,andmore.TheauthorparticularlyfocusesonthenewmarketforBISdata,whichshowsthatbankscancoverupto30%ofprivatenon‐financialsectorlending.Theauthor'sanalysisisbasedentirelyonBIS'snewdatabase,lendingtobanksandtheprivatenon‐financialsector.

Theauthorfocusesontworeasonsintheactiondocument:1) Banksmaybeaffectedbytheissuanceofexcesscredit;2) Byfinancingtheprivatefinancialsector,whichmayhaveunintended

consequences.

MathiasDrehmannfocusesonassessingtheratiooflendingtoGDP,whichmaybeoneoftheindicatorsoftheonsetofthebankingcrisis.Thepercentageof this ratio may indicate the start of a banking crisis in the country.(Drehmann,2013)

Creditmarket formationanddevelopment issuesarealsocoveredbytheCroatianNationalBanksurvey,whichincludesadraftversionofthecreditassessmentinCroatia.Theauthorsoftheprojectare:KatjaGattin‐Turkalj,IgorLjubaj,AnaMartinis,MarkoMrkalj.(Gattin‐Turkalj,etal.,2007)

The research focuses onmonetary aggregates and credit demand,whichhavetraditionallybeenanintermediatetargetofmonetaryandcreditpolicythroughwhichcentralbanksseektoachievepricestabilityinthecountry.Recently, the issue of the emergence of the “religious boom” and its

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predictionhasbecomeanissueincentralandeasternEuropeancountries.Proper forecasting of credit demand, in view of this, contributes to theachievement of financial stability and economic growth in the country,whichisalsorelevantforCroatiatoday. Inthispaper,usingthedeterminantsofstandardcreditdemand,themethodofleastsquaresisusedtodeterminethetotalcreditdemandinCroatia.

TheresultsofthestudyshowthatcreditbehaviourcanbeexplainedbyrealGDPandrealinterestratesonloans.GDPisanimportantforcebehindtheformationofcreditdemand.Othervariableswereusedtotestthereliabilityof the baseline specification. These variables were: inflation, the euronominalexchangerateintheUSDandtheperiodofvariablesincludedtheperiodofthelate90'sandtheperiodof2006.

Thestudypaysgreatattentiontothestudyofpopulationdemandforloans,as the review of economic literature shows that demand for loanssignificantlydeterminespricesforrealestate.And,asthestudyshows,theincreaseininterestratesonloanshashadanegativeeffectonthedemandforloansfromthepopulation. ResearchhasalsoshownahighcorrelationbetweencreditandGDP,theuseofwhichcanbesuccessfullyidentifiedoverthelongterm.

Macroeconomists have long acknowledged that their activity at theforbiddenthresholdisunreliableunderthereal‐timeregimeandcouldposeserious difficulties to the country's economic stabilization policy. In thearticle,theuseofnominalcoefficientsofcredittoGDPratioisconsideredasareferencepointfortheanti‐cyclicalcapitalaccumulationbuffer.Practicallycalculated estimates of the ratio of credit to GDP in real time, with theadventofanti‐cyclicalcapitalbuffers.(Gattin‐Turkalj,etal.,2007)

The determinants of financial system development and private sectorliquidationarediscussedintheMaster’sthesisoftheMiddleEastTechnicalUniversity,publishedbyErzenSöğüt(Söğüt,2008).Thestudyperiodcovers1980–2006.Theconclusionis thatinthelow‐incomecountries,theincreaseofpublicdebtsleadstothereductionofcreditsoftheprivateone,whileinhigh‐incomeanddevelopedcountriesitisnotthecase.Thereasonis,thatinlow‐incomeandless‐developedeconomiesbanksprefertogivecredittothepublicsectorasitisasaferassetandasaresult–creditingofprivatesector isaffectednegatively.Regardinginflation, it is foundthat itaffectsfinancialdevelopmentnegativelyonlyinhighincomecountrieswhileithastheoppositeeffectinlowincomecountries.


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Issuesrelatedtothefunctioningofthecreditmarketandtheeconomyofthecountryarealsorelevant today in thepost‐Soviet republics,which isclearlyindicatedbyMironchikN.L.andM.V.Demidenko'sarticleCredittotheeconomy:newanswerstostandardquestions(Mironchik&Demidenko,2012). The article discusses the impact of the dynamics of the bankingsystem of the Republic of Belarus on the country's economy. The paperpresents comparisons between countries and its econometric modellingmethods,basedonwhichtheauthorsofthearticledrawconclusionsabouttheincreaseintheoptimalrateofreallending,eliminatingthegapbetweendemand and supply factors for credit in Belarus and improving theefficiencyofcreditprocessmanagementinthecountryatthemacrolevel.

Accordingtothisstudy,modellingofcreditdynamicsinBelarusfrom2002–2011revealedthat,alongwithbanks'resourcebases,GDP,interestrateandcurrencyexchangerates,factorssuchas:expectationsofeconomicagentsonlendingchangesandrealestatepriceschange.

The proper performance of the banking sector is very important for thestabledevelopmentoftheeconomyinthecountry.InanarticlebyTamásBalás of 2009, the author argues for the importance of analysing thequalitativeperformanceofthebankingportfolioduringtherecentfinancialcrisis. His proposed PD model estimates other ex‐post portfolio qualityindicators,manyofwhichhavealimitedimpactonloanlosses.Theproblemofmisinterpretingthefactorsandfactorsthataffectthequalityofacreditportfoliooftenleadstoincorrectconclusionsininternationalcomparisons.For example, in Hungarian practice the value of debt on average isconsideredtobeanimportantindicatorbecauseithasastrongrelationshipwith the loan loss.Accordingly, it represents an indicator thatwewouldappreciateinthemodelpredictions(Balás,2009).

For developing countries, including Africa, it is very important to haveeconomiclinksbetweenfinancialdevelopmentandeconomicgrowth.TheKenyan Institute for Political Studies and Public Affairs Analysis presentstudycoversdatafrom50Africancountries,andcoverstheperiod1980–2008.The study (Musamali, et al., 2014)uses twodirectionsof financialdevelopment: the ratio of private sector credit to GDP and the secondmoney‐to‐massratio(M2)toGDP.

Thestudyfoundpositivecorrelationsbetweenfinancialdevelopmentandeconomic growth. However, there is amuch closer link betweenmoneysupplyandeconomicgrowth.Theresultsof thestudyshowthat therealdevelopment strategy of the financial and economic sector in Africadependsonthesefactors.Fromtheeconomicregressionmodelusedinthe

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research process, a two‐way goal‐effect relationship between financialdevelopmentandeconomicgrowthwasidentified.Overall,thereisasharppositiverelationshipbetweenprivatesectorlendingandeconomicgrowthinAfrica.Therewasalsoa relativelyweakpositive relationshipbetweenmoneysupply(M2)andeconomicgrowth,whichisdirectlydependentoninflationarytrendsincountries.Atthesametime,theremaybeaweaklinkbetween indicators, weak development of the country's financial sector.Therefore,Africancountriesshouldtakesignificantmeasures to increaselending to the private sector. At the same time, African countries mustensureastabledevelopmentoftheircountry'seconomy,toavoidconflictsandwarsbetweenandwithincountriestocreateanattractiveenvironmentfor foreign investors, suchas internationalorganizationssuchas theUN,IMF,andshouldpromoteAfricancountriesinterestsinfinancialinstitutions,inordertoimprovetheareasofprivatesectorfunding.Andtheirnationalbanksmustfostereconomicgrowth,shifttosoundmonetarypolicy,andatthesametimeactively fight inflationand itsnegativeeffects incountries(Musamali,etal.,2014).

Indevelopedcountries,thedevelopmentofthebankingsectorisincreasinglyinfluencedbyeconomicgrowthandongoinginflationaryprocesses.ThisistheissuediscussedinthearticlebySunaKorkmazontheimpactofbanklending on economic growth and inflation. The issue was raised in 10European countries, based on data from 2006–2012. According to theanalysisconductedin10countries,thedomesticcreditofthe10Europeanbankshasnotbeeninfluencedbyinflation,butbytheireconomicgrowth.Banksinthecountry'seconomyaremainlyestablishedas intermediariesprovidingfinancialservices(Korkmaz,2015).

Fromtheeconomicpointofview,themainfunctionofbanksistoincreasethelendingfundtoincreaseinvestmentintheeconomy.Thusthedevelopmentofthecountryineconomictermsdependsontheincreaseofinvestments.Banksarecapableofleadingtoeconomicstability,andtheyarealsocapableof accelerating the country's economic development through efficientallocationofresources.

Anotherrisktotheeconomyisthelackofinflationcontrol.Ifinflationisnotunder control in the country, aneffectiveeconomic structurewillnotbeestablished, and the development of the banking sector will always befrozen,andbanklendingwillnotensureinvestmentgrowth.Therefore,asa result ofmonetarypolicy implemented in the country, inflation shouldalwaysbeundercontrol.Fromtheanalysisofthearticle,itcanbeconcludedthatthedevelopmentofthecountry'sfinancialmarketsignificantlyaffects


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itseconomicstrength.However,domesticloansandthebankingsectordonotaffectinflationbutsubstantiallyaffecteconomicgrowth.

In his paper “Does Saving Increase the Supply of Credit? A Critique ofLoanableFundsTheory”FabianLindnershowsthatexcesssavingdoesnotleadtoanexcesssupplyofcredit−whichwouldlowerinterestrates−buttoanexcesssupplyofgoods,servicesand/orlabourwhichwilllowerpricesand production. Finally, Fabian Lindner argues that the identification ofsavingwiththeprovisionofcreditislikelytostemfromtheinvalidapplicationofneoclassicalgrowthmodelstoamonetaryeconomy(Lindner,2015).

RobertKelly,KieranMcQuinnandRebeccaStuartinthearticleregardingIreland“ExploringtheSteady‐StaterelationshipbetweencreditandGDPforaSmallopeneconomy–thecaseofIreland”examinetheBaselproposalandmakestwocontributions.ThisdeterminesperiodsofstabilityinthePSCtoGDP ratio, thus allowing one to estimate the steady state relationship.Acapitalbuffertopreventexcesscreditcanbebasedondeviationsfromthisestimate.Thiswouldseemtobeparticularlywarrantedwhereacountryexperienced a rapid build‐up of credit like Ireland with permanent andstrongcreditgrowth for thedecade.Thepapernotes theemergenceofa“twinclub”developmentacrossEuropeinthatregard.Also,intheiropinionthenotionofalternativestatesintheGDPtoPSCrationeedstobeallowedforinapplyingtheBaselproposalacrosscountries.Additionally,thepaperexamines a counterfactual scenario in which the expansion in credit islinkedtothatofdeposits.Theanalysissuggeststhattheremayhavebeensignificantbenefitsassociatedwithsuchalink(Kelly,McQuinn,Stuart,2013).

GeorgianExperienceandResults

TherelationshipbetweeneconomicgrowthandfinancialmarketdevelopmentisstudiedcarefullybyGeorgianeconomists.VladimirPapavainhispapers–discussestheso‐called“impactofthesharpgrowtheffect”(Papava,2014).Some authors assess the dynamic model of credit risk for the Georgianbankingsystemandanalysethe impactofkeymacroeconomic factorsoncreditrisk.Theimpactofmacroeconomicfactors(GDP,realgrowth,exchangeratedepreciation)oninactiveloansbykeysectorsoftheeconomyisalsodiscussed.Theauthorconcludesthattheprincipleofinvarianceispreservedintheadjustedeconomicgrowthratesbasedontheproportionaloverlapeffect of the sharp growth effect. According to this, the ratio of adjustedindicatorsofeconomicgrowthdoesnotdependontheselectionofbaselineindicators of economic growth and development. The application of this

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principle indicates that thismethod of eliminating the effects of a sharpincreaseisnotcontradictory,andcaneasilybeusedforapracticalpurpose,as confirmedby the analysis of post‐crisis economic growth in thepost‐Sovietcountries.

It should be mentioned, that despite important theoretical research ofGeorgianeconomistsoneconomicgrowth‐thestudyofcreditmarketitself,itschangesanditsimpactoneconomicgrowthislimitedjustbytheoreticaland empirical focus. Just the impact of financialmarket risks and globalcrisison the levelofGeorgianeconomicgrowthhasbeenstudied, ratherthanthedeeprelationshipbetweeneconomicgrowthandfinancialmarketdevelopment.

Great attention is paid to the analysis of the credit market during thefinancial crisis. I. Kovzanadze discusses the peculiarities of the worldfinancialcrisis,theexistingmodelsofitsregulationandthepeculiaritiesoftheiruse.Here,theauthorproposesanewmodelofcrisismanagementandimplementation specifics (Kovzanadze, 2010), discusses the stages andresultsofthechronologiesoftheglobalfinancialcrisisof2007–2008.ItalsoshowstheimpactofthecrisisontheGeorgianeconomy.Atthesametime,it focuses on the Georgian banking system in times of global crisis anddefinesamodelofmonetary‐creditregulationthatwillenablethecountry'sauthoritiestomakeeffectiveuseofthepositiveaspectsofglobalization.

TemurKhomerikistudiedthefeaturesofcreditmarketdevelopmentinanunsustainable environment and characterized the key areas of revealingcreditrelationshipsandthebehaviourofcommercialbanksinanunsustainableenvironment(Khomeriki,2010).Inparticular, inthewakeofthecrisisinthe mortgage market, the process of bank mergers is accelerating;improvements in banking are increasingly linked to the use of moderninformation and communication technologies; in the banking business,traditionalbankingdealswithinnovativeproducts;withthedevelopmentof investment banking, insurance‐security and other financial‐bankingbusiness,theinvestment‐bankingbusinessisdeveloping.

An analysis of the creditmarket situation and the characteristics of thefinancial crisis is provided by David Aslanishvili and Kristine Omadze'sworks,specificallyexaminingtheimpactoftheglobaleconomiccrisisonthedownturn of economic activity andon the backgroundof changes in thecredit portfolio of Georgian commercial banks (Aslanishvili & Omadze,2013;Omadze,2014).


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Overall,thisaspectisdistinguishedbythefactthatthesubjectofresearchbyGeorgianeconomistsisthecausesandeffectsoffinancialcrisesthatarereflectedineconomicgrowth,buttheireffectsoncreditmarketdevelopmentarelimitedtoananalysisofthestateofthebankingsystem.

Oneof the importantaspectsofGeorgianeconomicthought is to identifytrends in the formation and development of the banking system. In thisregard,I.Kovzanadzediscussestrendsinthedevelopmentoftheeconomyandtheformationofthebankingsystem,problemsinthebankingsectorofGeorgia up to August 2008, features of detection, specificity of action,resultsandmore.(Kovzanadze,2010,2002)Inaddition,otherstudiesareconcerned with the peculiarities of the monetary and credit system(Lazarashvili&Melashvili,2014),characterizationandcomparisonoftwo‐tier banking systems with banking systems operating in developedcountries,etc.

Theseaspectsof theresearcharedistinguishedbythe fact thatGeorgianeconomists focus on the improvement of the banking system and thedevelopmentofitsindividualelements.Theimpactofthebankingsystemoneconomicgrowthisrelativelysharp.

Manypapershavebeenwrittenoncreditportfoliochangesandcreditrisks.Their main focus is on the peculiarities of credit portfolio formation ofcommercialbanks,thefactorsthatinfluencetheborrower'screditworthiness,banks'interestratesandcreditpolicyrelationships(Aladashvili,2014).

MayaAladashvilidiscussestheimpactofcreditrisksonthenormalfunctioningof the banking system. The lending principles focus on the purpose,repayment,maturityandcollateraloftheloans(Aladashvili,2012).

Georgian scholars study the characteristics of credit risk in the bankingsectormorein‐depthandindicatethatcreditpolicydefinitionsshouldtakeintoaccountreasonablemaximumloantermsandactual loanrepaymentschedule(Aladashvili,2014).

Thus,accordingtorecentscientificpaperspublishedbyGeorgianscientistsand economists, it is clear that the four aspects of the abovementionedresearch are the main directions of development of Georgian economicthought.Unfortunately,studyingthetransformationofthecreditmarketintheir work and revealing the changes in banking management is onlytheoretical‐empirical. Therefore, it is necessary to analyse the extent towhichthecreditmarketandinstitutionshaveundergonechangesinrecentyears.

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Conclusions

Thestudyprovidesasurveyoftheregionandcountry,fromwhichitbecomesclearthatbankingsavingsandbankcreditsdirectlyaffecteconomicgrowth.The surveyhas analysed twomodelsof impactoneconomicgrowthandconcludesthatthefollowingrecommendationsinclude:increaseinincomepercapita,decreaseinunemploymentandeffectiveuseofbankcreditsandsavingstoaccelerateeconomicgrowthinthecountry.

Other examples of international research are linked to improving thequalityof financialdevelopmentandeconomicgrowthandthelong‐termcause‐effectiverelationshipbetweenfinancialdevelopmentandeconomicgrowthisdetermined.Thisstudymeasuresthefinancialdevelopmentofthecountrywiththreeindicators:M2dependingonGDP,privatesectorbanklendingratio,andtheGDPtotheGDPinthebankingsector.

TherealgrowthofrealGDPisseenasameasureofeconomicgrowth.Theresultsoftheresearchshowedthatthereisalong‐termpositiveequilibriumrelationshipbetweenallthreefinancialindicatorsandtherealGDPgrowthrate.Asaresultoftheresearch,itwasestablishedthatthereisabilateralcausallinkbetweenthemassivemoneymass(M2)andtheGDPandtheGDPgrowthrate.

A number of scholarly research finds that financial development andstructure are closely linked to economic growth. On the other hand, thefinancial development of the country has a positive impact on attractinginvestmentsbutrelativelylowcorrelationwithgrowth.Empiricalresearchhasshownthatanumberoffinancialindicatorsarestrongandpositiveincorrelationwitheconomicgrowth.

ThestudyprovidedbytheInternationalMonetaryFundshowsthedirectpositiveimpactofcreditexpansiononeconomyanditsdevelopment.Inthatfield,theaccesstofinanceandinvestmentstimulateseconomicgrowthanditshouldbesupportedinthefieldofdevelopmentbothcommerciallendingandequityfunding.Butitsaggressivedevelopmentcharacter(limitlessuseoftheloan)andaccelerationmayspeedupinflation,assetpricebubblesandtherefore,astheresult,leadtoweakeconomy.Usually,the“creditbooms”arerelatedtothefinancialcrisis.

Inthatfield,onemoreimportantissueisthecommercialbankingsupervisionasthecorepointofeconomycreditingandtheplaceof“creditbooming”.Specialattentionispaidtofactorsofbankingcrisissuchas:privatesectorcreditboom,non‐creditlending,creditratingrelativetoGDPetc.


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Theresearchfocusesonthestudyofthepopulation'sdemandforcredit.Asthereviewofeconomicliteratureshows,thedemandforcreditssignificantlydeterminesthepricesonrealestate.And,asthesurveyshows,thecreditinterestrateincreasehasnegativeimpactonthepopulation'sdemandforcredits.

Also,researchhasprovenhighcorrelationbetweencreditsandGDP,whichcanbesuccessfullyidentifiedinthelongterm.

Anumberofresearchstudiesshow,inlow–incomecountries,anincreaseof state involvement (crediting the economy) via thepublic debt growthleadstoreductionoftheprivatesectorineconomy.Atthesametime,inthecaseofhigh‐incomecountries,theprivatesectorlendinganddevelopmentmostly satisfies the demand of increasing public sector on credits and,therefore,decreasingdemandoncentralgovernmentdebts.Inbothcases,inflationhasanegativeimpactonfinancialdevelopmentanddecreasethegrowthrateofGDPinthelong‐termperiodoftime.

Thestabledevelopmentoftheeconomyinthecountrysignificantlyensuresthebankingsector'sperformance.Fordevelopingcountries,theexistenceofeconomiclinksbetweenfinancialdevelopmentandeconomicgrowthiscrucial.Twodirectionsoffinancialdevelopmentareusedtocompare:

1) theprivatesectorcreditswithGDPvolumeand;2) thesecondmonetaryaggregate(M2)ratiowithGDPvolume.

Asaresultoftheresearch,positivecorrelationbetweenfinancialdevelopmentandeconomicgrowthhasbeenestablishedandthewaysandthenecessityof futurestudyofGeorgianFinancialdevelopmentandEconomicgrowthareoutlined.

Acknowledgements

Theauthorwishestothankallthosewhosupportedandcontributedtotheproduction of this paper. Included in the list of valuable support are:Caucasus University administration and colleagues from University andbusinesssociety.

References

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Gattin‐Turkalj, K., Ljubaj, I., Martinis, A., Mrkalj, M. (2007). Estimating CreditDemand inCroatia.Croatiannationalbank,ResearchandStatisticsArea,ResearchDepartment

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Kelly, R.,McQuinn, K., Stuart, R. (2013). Exploring the Steady‐State relationship betweencredit andGDP for a SmallOpen economy– the case of Ireland, EuropeanCentralBank.WorkingPaperSeries,No.1531/April

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Kovzanadze, I. (2002). System Banking Crises in Conditions of Financial Globalization.Zhurnal“VoprosyEconomiki”,Vol.8,https://ideas.repec.org/a/nos/voprec/2002‐8‐7.html

Khomeriki,T.(2010).Developmentofcreditmarketinunsustainableenvironment.JournalofBusinessandLegislation,No.17,pp.8–12

Aslanishvili,D.,Omadze,K.(2016).OriginsandtheReasonsofMonetaryCrisesinGeorgia(1995–2016).ModernEconomy,No.7,pp.1232–1250,http://dx.doi.org/10.4236/me.2016.711119

Aslanishvili,D.,Omadze,K. (2019).GreenEconomyandAccess toFinance inGeorgia theAsianInstituteofResearch.JournalofEconomicsandBusiness,Vol.2,No.3ISSN2615‐3726;DOI10.31014/aior.1992.02.03.125

Aslanishvili, D. (2016). Market Foundation for Sustainable Economy Growth and EnergyPolicy(GeorgianCase).ModernEconomy,volume7,pp.314–319;PublishedOnlineMarch2016inSciRes.http://www.scirp.org/journal/me,http://dx.doi.org/10.4236/me.2016.73034

Aslanishvili,D.,Omadze,K.(2013).TheImpactoftheEconomicCrisisontheWorldEconomy–TSU.InternationalScientific‐PracticalConferenceoftheInstituteofEconomics, June28–29,pp.502–508,Tbilisi,Georgia


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Omadze,K.(2014).TheEssenceandCharacteristicsoftheCreditMarket.ProceedingsoftheTSUInstituteofEconomics,pp.390–393,Tbilisi,Georgia

Aladashvili,M.(2014). ImportanceofCreditTransactionsandCreditPortfolioAnalysis inBankingRiskManagement.JournalSocialEconomy,V.1

Aladashvili, M. (2012). The Importance of Credit Portfolio Management in the NormalOperationoftheBankingSystem.JournalofEconomics,11–12,67–69p.m.

Lazarashvili, T., Melashvili, M. (2014). Investments and investment policy in Georgia.ProceedingsofMaterialsofInternationalScientific‐PracticalConference“ActualProblemsofDevelopmentofEconomyandEconomicScience”,pp.329–332,http://eprints.iliauni.edu.ge/6636/14/Konferencia_2014.pdf

Papava,V.(2014).ComparativeanalysisoftheeconomicgrowthratesofGeorgiaandRussia.ProceedingsofMaterialsofInternationalScientific‐PracticalConference“ActualProblemsofDevelopment ofEconomyandEconomic Science”, pp. 48–50, http://eprints.iliauni.edu.ge/6636/14/Konferencia_2014.pdf

Khantadze,G.(2014).PeculiaritiesofCreditPortfolioManagement.NewTbilisiUniversityandAkhaltsikhestateeducationuniversity,Georgia.JournalSocialEconomy,V.1,pp.101–106,https://drive.google.com/file/d/0B3PZSQNPT43SZEl2d1R6S2FpTUk/edit

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SOCIALENTREPRENEURSHIPOPPORTUNITIESINLATVIANMUNICIPALITIES

AinārsBrencis,TuribaUniversity,[email protected]

IngaŠīna,EKAUniversityofAppliedSciences,Latvia

IevaBrence,RISEBAUniversityofAppliedSciences,Latvia

Abstract

Until2018,therewasnolegalforminLatviatoregulatebusinessesthatwerenotaimedatprofitmaking.Therefore,non‐profitorientedorganizationswereforcedtooperateinacontroversiallegalstatus.The entrepreneur could choose to be a merchant, or to doentrepreneurship through a nongovernmental organization –whichisnotsuitableforentrepreneurship.Localmunicipalitieswerealsoforcedtoactinamannerlikeentrepreneurs.Inordertogivetheir organizations autonomy,municipalities set up commercialcompaniesthat,accordingtoLatvianlegislation,wereprogrammedtomakeprofit.Thisledtoasituationwherethemunicipality,which‘’apriori’’operates forthebenefitofcitizens,whenestablishinganewmunicipal companymustbehave likepuremerchantwhoseonlyaimisprofit.Inthisstudy,thepossibilitiesoflocalgovernmentsto engage in social entrepreneurship were studied by usingtriangulationofdataobtainedbydifferentresearchmethods.Thework assesses the possibilities of local governments in Latvia totransform their existing organizations, establish new socialenterprises,andentrustsocialentrepreneurshipfunctionstosocialenterprisesfoundedbytheprivatesector.

Keywords:socialenterpreneurship,municipalities,socialenterpreneurshipinmunicipalities

DOI:10.37804/1691‐6077‐2020‐11‐20‐41


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Introduction

Startingfromtheseconddecadeof the21stcentury,theconceptofsocialentrepreneurship in Latvia has become increasingly topical. It has beenfueledbypracticesofothercountries,theEuropeanUnioninitiativesandnationalproblemsthatthepublicandprivatesectorshavefailedtoaddress.Discussionsrelatedtosocialentrepreneurshiphavetakenplace inLatviaand applied and scientific research have been carried out, which haveresultedinproposalsforthedevelopmentofsocialentrepreneurship.Themostsignificantworksinthisfieldincludethestudy“Latviaontheroadtosocialentrepreneurship”byLesinskaetal.(2012)andastudycarriedoutbyPūķis(2012)on“SocialEntrepreneurshipOpportunitiesinLatvia”,co‐fundedby theEuropeanSocial Fundwith theaimofmonitoring the lawfrom the point of the social economy and developing proposals forimproving legislation. Academic works, such as Dobele's (2013) thesis“Social EntrepreneurshipOpportunities in Latvia” are noteworthy. Usingtheresultsofthework,thementionedauthorhaspublishedatextbookandseveral scientific publications. With the financial support of the NordicCouncil of Ministers, a report “Guidelines for Social Entrepreneurship,SummaryofGoodPracticeandRecommendationsforLocalGovernmentsinLatvia” (Lukjanska&Cirule,2014)waselaborated in late2014. In2014,with the financial support of the European Economic Area FinancialMechanismandtheLatvianState,Lesinska(2014)conductedastudy“SocialEnterprises–Non‐GovernmentalOrganizationsinLatvia”,whichemphasizedthe role of non‐governmental organizations in social entrepreneurship.Also,in2014,theEuropeanCommission(EC)ReportonSocialEntrepreneurshipin Latvia “AMap of Social Enterprises and Their Ecosystems in Europe,Country Report” (European Commission, 2014) was elaborated. All theabove‐mentionedworkshavebeendevelopedwiththesupportofvariousexternal financial instruments underlining the interest of various bodiesoutsideLatviainthedevelopmentofsocialentrepreneurshipinthiscountry.Inouropinion,thisindicatesthatsocialentrepreneurshipinLatviaisdrivenby external forces rather than being developed within the country andtherefore the discussion in this context is not about opportunities andproblemsof social entrepreneurshipdevelopment, but about adaptation.Theexceptionarenon‐governmentalorganizationsthathavebeengrantedthestatusofapublicbenefitorganization,whichmightbeaLatvianversionofwhatiscommonlyunderstoodbytheterm“socialenterprise”.

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Theactivitiesmentionedareaimedatpromotingsocialentrepreneurship,thelegalframeworkofwhichcameintoforceinLatviaonApril4,2018.Thepurposeofthelawistocontributetotheimprovementofthequalityoflifein society and to promote the employment of groups at risk of socialexclusionbycreatingafavorablebusinessenvironmentforsocialenterprises.Despitetheadoptionofthelegalframework,Latvianmunicipalitiesareinnohurrytosetupsocialenterprises,associatingtheSocialEntrepreneurshipLawwithsocialcareratherthancommunity‐projectedactivities.Therefore,the purpose of this study is to evaluate the possibilities of using socialentrepreneurshipinLatvianmunicipalities.

Theoreticalframeworkandothercountries’experience

Because the concept of social entrepreneurship is broad and involvesdifferent policies in different countries, there is no universally accepteddefinitionof social entrepreneurship (Dobele, 2013).They areeither toobroad(e.g.EUcommonpolicies)ortoonarrow(nationalcontext).Therefore,universalsocialentrepreneurshipfeatures(objective)ornationallegislation(subjective)areusedtodefinesocialentrepreneurship.

Whendescribingsocialentrepreneurship,threeelementscanbedistinguished:social entrepreneur (subject), social entrepreneurship (process), socialenterprise (object). The last has been discussed more extensively inliterature.Definingthementionedelementsinabroadercontext,asocialentrepreneur is a sociallymindedpersonwho,bydoingbusiness, solvessocio‐economicproblemsandcreatespositivechangesinsociety(Dobele,2013).SocialbusinessasaprocessisoftencharacterizedbythedefinitionofYunus(Yunus,2007):“theprocessbywhichanentrepreneurproducesgoodsand/orserviceswiththeaimofsolvingsocialproblemsratherthanprovidingbusinessownerswithaprofit”.Dragon(2012)arguedthat“socialentrepreneurship is one way of sharing social responsibility with theprivatesector”,thatsocialenterprisefillsanichebetweenthepublicandprivate sectors. A social enterprise is defined by theMinistry ofWelfare(MoW)as:“acompanywhoseprimarypurposeistocreatesocialimpact,not profit for owners and stakeholders. It operates in the marketplace,producinggoodsandservicesinaneconomicmanner,andusesprofitstoachievesocialgoals,andischaracterizedbyenvironmentalresponsibility”(MinistryofWelfare,n.a.).


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Inordertoreducetheshortcomingsoftheabovedefinitionsitisacceptedto use five general features of social enterprise (used in the research ofLesinskaetal.(2012);Dobele,(2013)):

1) thepurposeofsettingupabusinessshallbetosolvesocialorsocietalproblemsasopposedtoprofit‐makingforthebenefitofitsowners;

2) companiesactaseconomicagentsproducinggoodsandservices;3) companieshaverestrictionsonthedistributionofprofits;4) employeesarepaidinaccordancetothelabourmarket;5) representativesofthetargetgroupsareinvolvedintothemanagement

ofthecompany.

While therearemany featuresofasocialenterprise, themost importantthing that differentiates a social enterprise is its purposewhich: “is notopposed to the purpose of profit” (Pūķis, 2012). The other factors thatidentifysocialenterprisearesecondaryandareaimedatjustifyingtheever‐changingnatureofsocialentrepreneurship.

AsentrepreneurshipandcommercialactivityinLatviaarenotsynonymous,thefieldofsocialentrepreneurshipandinteractionwithcommercemustbejustified. ''Entrepreneurship is the continuous or systematic economicactivityofanaturalorlegalperson''(Amona,1999).Thedirectpurposeofentrepreneurship may not be to profit. Commercial activity in Latviahoweveristheopentradingofgoodsandservices(buyingandselling)byamerchantorcommercialcompanyforprofit”(Laws2001).Thekeywordsinthisexplanationarecapitalinjectionstoensuretheoperationandattitudeofthesubjecttoprofit.Thesefactorsdifferentiatetheentrepreneursfromthemerchants.Basedonthesourcementionedabove,anentrepreneurcanbeanaturalperson,afamily,acompany,astate,alocalgovernment,apublicorganization, a religious organization, and so on.Merchant on the otherhandisanaturalorlegalpersonwhoisoperatinginthenameofprofit.

SocialenterprisesinEuropeanUnion(EU)begantheirgrowthanddevelopmentsince1980s.Duringthisperiod,socialenterprisesdevelopedtheiractivitieswithoutsignificantsupport frompublic fundsor thestate(Kerlin,2006).NowadaysmuchmoreresourcesarenowavailabletoEUsocialenterprisesandvarioussocialinitiatives.Toaccesstheseresources,socialenterprisesareestablishedasnon‐profitorganizations,associationstoachievedifferentgoalsindifferentfields.

IntegrationintothelabourmarketwasthemostrepresentedareaofsocialenterprisesintheEU.SocialenterprisesintheEUoperatewheretherearemarket failuresandwhereothermarketplayersarereluctant toaddressthembecauseoflittleeconomicbenefit.However,EUsocialenterprisesare

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diversifiedintheiractivitiesastheyrepresentavarietyofsectorsandhavenodistinctleadership.Forexample,Belgiumisthecountrywiththemostdiverserepresentationofsocialenterprisesectors. In thiscountry, socialenterprisesarealsoactiveinareassuchasaudit,marketing,andresearch.Belgianlegislationallowsthelegalstatusof“socialbenefitcompany”,whichcanbeobtainedbyanycompanyfulfillingthecriteriaoflawcalledSociétésà finalité sociale. Consequently, a specific legal form exists for a socialenterprise.InDenmark,themostcommondefinitionofasocialenterprisemeets the following criteria: (a) not profit, (b) serve social, health orenvironmentalpurpose,(c)sellgoodsand/orservices,(d)profitsaretobereinvested in the company, (e) organizationally independent from thepublicsector,(f)registeredintheCompanyRegister.InDenmarkinsteadofsocialentrepreneurshipstatus(Belgium),thereisaseparatelegalformforsocial enterprises. In France, on the other hand, there is neither specificdefinition nor legal status. Therefore, one can conclude that there is noconsensusamongresearchers,policymakersandindustryaboutwhatkindoforganizationsshouldbe labelledasasocial enterprises. InFrance theyoperateunder the legal formof cooperatives.Similarly, it isorganised inPoland.Thereisnolegaldefinitionofsocialeconomyinthiscountry,butPoland has created the legal form of “social cooperative”. A socialcooperativeisaformoflegalentitythat(a)combinessocialandeconomicfunction, (b) does not redirect profits outside the organization, (c) theorganizationisnotbasedonpoolingthecapital,(d)theorganizationhasahigh degree of autonomy. In Germany, there is no uniform definition ofsocial enterprise. This is due to the fact the country has very developedsocial, which provides social services and is involved in entrepreneurialactivitieswithsocialmission.Thissector includescooperatives,charities,economically active foundations, and associations. Sweden, too, does nothave a separate legal form for social enterprises. Existing forms, such ascooperatives,societies,limitedliabilitycompaniesmightbeinvolved.

InLatvia, a social enterprisemaybea limited liability company thathasbeen granted the status of a social enterprise and carries out economicactivities that have apositive social impact (for example, social services,inclusive civil society development, education, science support, ensuringculturaldiversity).

Methods

Using the deductivemethodof transition from general to individual, theprimaryresearchobjectivesofthisworkwereasfollows:


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1) explorethepotentialfortransformingmunicipalagencies,institutions,andmunicipalcompaniesintosocialenterprises;

2) evaluate the possibilities of establishing new municipal socialenterprises;

3) analyse the possibilities of using the private sector formunicipalpurposes;

4) identifythemaincontradictionsthatwouldhinderthedevelopmentofsocialentrepreneurshipinLatvianmunicipalities.

Quantitativeandqualitativeresearchmethodshavebeenusedtofulfilthetasks.Aquestionnairewasusedasaquantitativemethod,andinterviewswithmunicipalexecutiveswereusedforqualitativepurposes.

The quantitative method took the form of a questionnaire. The pilotquestionnaire was first prepared and sent to the municipalities with arequesttocompleteit.Simultaneoustestingofthisquestionnairetookplaceinthreemunicipalities–Daugavpils,KraslavaandRezekne,duringwhichallshortcomingswereeliminated.Theimprovedquestionnairewaspostedon theweb, followed by a request to the 109municipalities of Latvia tocompleteit.Replieswerereceivedfrom35municipalities.TheaimofthesurveywastoshowtheprevailingmoodinLatvianmunicipalitiesregardingthesocialentrepreneurship.

Thequalitativemethodconsistedofvisitingmunicipalities,conductingthefieldworkandinterviewingseniorofficialsofmunicipalitiesandheadsofinstitutionscompetentfortheimplementationoftheproblemstobesolvedin this research. Thismethodwas used to gain a deeper understanding,conceptualizationandinterpretationoftheproblems.Atotalof25managersor representatives of variousmunicipal organizationswere interviewed.Thelistofinterviewees,thetypeandprofileoftheorganizationsubjecttothefieldstudycanbefoundattheendofthebibliography.Thechoiceofsemi‐structured interviews and fieldwork is based on the need to applydeduction, shifting from general to individual, with emphasis not onevidencebutontheexistingsituation,modellingthecurrentsituationandthecourseoffutureevents.Therefore,whenpresentingtheresultsofthiswork,itmaybedifficultforthereadertodistinguishbetweentheresultsoftheresearchandtheviewsoftheauthors.

Theresultsofthethesiswereinterpretedusingacomparativemethod.Itscontentisdesignedtoconstantlyopposethepossibilitiesoflocalgovernmentsto set up their own social enterprises or to use the capacities of socialenterprises established by the private sector in order to solve variousmunicipalproblems.

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Results

A. Problems of understanding social entrepreneurship in Latvianmunicipalities

Duringthestudy,aproblemcommontomanylocalgovernmentsinLatviawasthattheterminologyofsocialentrepreneurship,asduetolocalizationproblems,thefirstwordmeantnotsocialorpublicgood,butrathersocialcare.ThereasonforthisphenomenonisthedirecttranslationfromEnglish.InEnglishlanguagesocialtermstemsfromtheword“society”.InLatvianlanguage to describe society it is common to use the term “sabiedrība”(latvian lang.) which would better fit the English word “public”. Forexample,inLatvia,itiscustomarytosay,“publicmedia”ratherthan“socialmedia”,“publicbenefitstatus”andnot“socialbenefitstatus”,“publictransport”instead of “social transport”. If one uses word “social” in describingsomething it immediatelyassociateswithsocial careandcare forpeoplewithspecialneedsandnotsocietyingeneral.Asaresult,“theconceptofsocial entrepreneurship in Latvia is distorted and remains narrow”(M.Bojārs,ChairmanofMarupeDistrictCouncil).

The problem is exacerbated by the fact that the use of another, lesscontroversial, term such as “public business” in Latvia is difficult.WhenanalysingtheconceptsofsocialentrepreneurshipinotherEuropeanlanguages,wealwayscomeacrossdirecttranslation.Forexample, inHungarian,thesametranslationmethod isused to localizesocialentrepreneurship. It iscalledszociálisvállalkozások.AsweobservedlookingatotherlanguagesinEuropetermsaretobetranslatedbutnotadapted.DuetothisLatviawillneedtospendalotoftimeandresourcesonmakingpeopleunderstandthatsocialentrepreneurshipisnotdirectly linkedtosocialcarebutsocietyingeneral.

Thelackofunderstandingofsocialentrepreneurshippreventsmunicipalitiesfromlinkingsocialentrepreneurshiptothoseareaswheremunicipalcapitalcompaniescurrentlyoperate,associalcareareconsideredtohavenoplacethere.Thismeansthatinthefuture,whenmunicipalitiesareadvisedtosetupsocialenterprises,thecentreofgravityfortheircreationwillbeinsocialcareservicesandwillbelinkedtotheirclients.Inmunicipalitiesresponsibilityfortheimplementationofsocialentrepreneurshipactionsandprojectswillbedemandedfromsocialcaredepartmentheadswhoastheyadmittedaretoobusywith social care tasksandarevery sceptical todealwith socialentrepreneurshiptasks.


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B.OpportunitiesforLatvianmunicipalitiestogetinvolvedintosocialentrepreneurship

Ingeneral,thedevelopmentofsocialentrepreneurshipinLatviaisviewedpositively.Oneoftheresearchquestionswhethersocialentrepreneurshiplaw andopportunities to establish a social enterprise could improve thepublicandsocialcareisviewedmorepositivelythannegativelyinLatvianmunicipalities.Onafive‐pointscale,theaveragemeanforthisquestionwas3.3.HigheroptimismwasfoundinmunicipalitiesclosertothecapitalRiga.

Thefirstfigureshowsthediversityofentitiesusedtoexecutethemunicipalfunctionsandthelinkageoffunctionswiththeprivatesectoranditsdeclaredareasofactivity.Forexample,supportofnon‐governmentalorganisationsismainlyrelatedtotheactivitiesofinstitutionsandagencies,butmerchantsare more related to the area where they can make business. These arebusinesscompanieswhoseownerismunicipality.Intheprocessofcreatingthefirst figure, itbecamecleartousthatthediversityofentitiesusedtocarryoutmunicipalfunctionsisnotlarge.Also,theyaresimilarinallLatvianmunicipalities – only some local governments have organizations thatslightly differ. From this it can be concluded that in practice unique orextraordinaryenterprisesarerarelyestablishedinLatvianmunicipalities.They are largely unified and subordinate to the statutory functions ofmunicipalities. The above mentioned makes us believe that in socialentrepreneurshipthesituationwillbesimilar–verylowpossibledegreeofcreativity.Inmunicipalitiesestablishmentofsocialenterprisesthatmightofferunprecedentedsolutionstoproblemsisverylow.Itwillbemorelikelyformalityrathercreativity.

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*informaltermsusedinmunicipalities

Figure1.DiversityofentitiesusedtocarryoutmunicipalfunctionsinLatviancitiesofnationalimportance

Source:developedbyauthorsusingpubliclyavailableinformationonmunicipal,agencies,andcompanies(n=8)

Figure1alsoshowsthesectorswithinthecompetenceofthemunicipalitywherethebusinessmethodsforachievingtheresultsofeconomicactivitywouldbemoreapplicableandthosesectorswheretheseopportunitiesarelower. In the middle, both have so called “flexible functions” that couldequallywellbeperformedbyinstitutions,agencies,orcompanies,andareanindirectindicatorofmunicipalfunctionswheresocialenterprisesmightcomeinthemiddle(thebluesquare).

Theactivitiesoftheentitiesusedfortheimplementationofmunicipalfunctionscanbedividedintotwoareas:fundamentalandsociallyoriented.Thesearetermsusedinformallybylocalgovernmentsininternalcommunication.Thesocially oriented sphere is provided by institutions and agencies. TheiractivitiesarecomplementedbyNGOs.Inthefundamentalsphere,especiallyintheutilitiessector,therearemunicipalcompanies,rarelyassistedbyprivatemerchants, mainly based on public procurement. In so called fundamental


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spheretheleastisknownabouttheareawheremunicipalcompaniesandprivatecompaniesmeet.However,theprivatesectorisreluctanttobeacceptedhere.Therefore,initiallynewestablishedmunicipalsocialenterpriseswillplayinterdisciplinaryrolebyimprovingtheworkofmunicipalinstitutionsandtheircompanies.Inotherpossiblecasesofmunicipalsocialenterprises,it is necessary to talk about the transformation of existing municipalinstitutionsorcompanies.

Whethermunicipalitieswilltransformtheirinstitutionsorcompaniesintosocialenterprisesdependson two factors.Firstly, fromaneconomicandsecondly from a political point of view, seeking to emphasize the publicrather thancommercialorientationof themunicipalenterprises towardssociety.Thesecondscenarioismoreplausibleandwouldaimtoreducetheinconsistencies currently facing municipal companies – de iure all themunicipallyownedcompaniesareprofitorientatedthatcontradictsagainstwhattheyaredoingdefacto.However,thisishinderedbytheconcernsoflocal government leaders that, for example, inpeoplesminds aheat andwaterproducingmunicipal company in statusof social enterprise,mightcreateconflictingassociations–company isnotdoingpublicworkbut isabouttoprovidesocialcare.

For economic reasons, the counterargument is the existing opinion ofmunicipalleadersoflowlikelihoodthatamunicipalsocialenterprisewouldfunctionmoreeffectivelythanamunicipalcommercialcompany.Therefore,attheinitialstageifmunicipalitieswilltransformtheircompanies;theywilltransform “less heavy” organisations such as utility services. Companiesthathaveormighthavealinkwithsocialcareissues.

Transformationintosocialenterpriseswouldbemoredifficultformunicipalinstitutions,whichhavefewbusiness‐likeopportunities.So,inthecontextofinstitutionsandmunicipalagencies,onecanmeasuretheproportionofco‐financingorothersupport thatasocialenterprisewill require fromamunicipality.Therefore,inthecaseofmunicipalinstitutionsandagenciesasabodyofsocialentrepreneurshipweforeseetwopossiblescenarios.

1. Transformationofmunicipalinstitutionsintosocialenterprisesmightreducethenegativeimpactofthecentralization.Entrepreneurshipwouldincreaserevenuesandreducetheirconstantneedformunicipalfunding.Beforedecisionsaremade,institutionsneedtoconfrontthesocialmissionwiththeirabilitytoself‐sustain.Thedeeperistheirsocialmission,theharderwillbetooperateinthefreemarketconditions.Ananalysisofmarket opportunitieswould show the proportion of the institution'sownrevenuetotheexpendituretheyneedyearly.

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2. Municipalinstitutionsarenottransformedintosocialenterprises,butnew (private ormunicipal) social enterprise is established and takesovertheroleofmunicipalinstitutionutilisingmarketopportunitiesandbusinessmethods. For example, a craft centre operates asmunicipalinstitutionandmunicipalsocialenterprisewhichcanproduceandsellsouvenirs on the premises of the institution. A tandem is emerging,whereastheinstitutionperformsmunicipalfunctions,butsocialenterprisewithbusinessmethodshelpstomakethebestuseofitsresources.

The role of NGOs in contemporary Latvian social entrepreneurship isemphasizedinFigure2,whichshowsthepercentageofthosewho,intheopinionofmunicipalofficials,arethebesttosolvesocialproblemsbybusinessmethods.Figure2alsoshowsthatNGOsandmunicipalityownedcommercialenterprisesmight be themain subjects for social entrepreneurship. Thisstatement is supported by another question in the municipal survey.Municipalities were asked which type of organization would be mostpositivelyaffectedbytheLatvianLawofsocialentrepreneurship?52%ofmunicipalitiesbelievethatNGOswillbethebiggestwinners, followedbyprivate companies (37%). Only 11% of municipalities believe that thebiggestbeneficiarieswillbethemunicipalitiesthemselves.

Figure2.ProportionofsubjectssolvingsocialproblemsbybusinessmethodsinLatvianmunicipalities(n=35)

Despitethementionedtrends,thescenarioofmasstransformationofNGOsinto social enterprises isunlikely as theyhavemanyadvantages in theircurrent status.Themost likely scenario is that social enterpriseswill beestablishedbyNGOsandwillbelinkedtothem.Workingtogethertheywill

Privatecompanies8%

NGOs37%

Municipalagencies3%

Municipalinstitutions

23%

Municipalcompanies

29%


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trytoengageintonichesthatcurrentlyarewithintheremitofmunicipalsocial care. This means that, in future when social entrepreneurship inLatvia becomes developed the issues currently carried out bymunicipalinstitutionsandagencieswillbeassistedbyNGOsandsocialenterprisesestablishedbythem.Atanearlystage,theNGOwillbethebraincentreofthesestart‐upsocialenterprises,buttheirimportancewilldiminishwithinthedevelopmentofsocialenterprise.

Asthescopeofactivityofmunicipalandprivatecommercialcompaniesisrelatively similar (private companies may duplicate, the services ofmunicipalcompanies,butnotalwaystheygainsuchright),thedevelopmentof social entrepreneurship in this business like municipal sector couldattract other players than NGOs. Fundamental sphere (utility services,public transport, health care) ofmunicipal functions asdiscussed earlierinvolveswiderbusinessopportunities.Thiswouldbeanareawherehybridenterprises could emerge.Hybrid enterprises is a type enterprisewheresocialandprofitgoalscoexist.There, themaincandidates forthisrole inLatvian situation would be private limited liability companies with themunicipality owned shares. Currently, like NGOs in the social sphere,private companies with municipal capital share are the prototypes of aLatvian hybrid enterprises whose interest in transformation into socialenterprisesmaybeofthegreatest.However,comparedtoNGOswhicharecurrently very active in supporting an idea of social entrepreneurship,mentioned private companies stand in shadow and know nothing aboutsocialentrepreneurship.Theircurrentmotivetomoveclosertothepublicsectorandviceversaisrelatedtobalancingcompetitivenessinasituationwherethecompany'sproductcannotbecalledcommercial.Workinginthename of society in the free market conditions help to gain the trust ofmunicipalitiestheircapitalandconsequentcontinuedsupporttoperformaspecifictaskthatislegallystipulatedinacontractrelatedtothedelegationoffunctions.

C.Municipalitiesinsettingupnewsocialenterprises

Previousexamplesrepresentonlytheconsequences,asourstudyrevealedthat the driving, not the motivating force in establishing municipalcompanies, is not to achieve high efficiency or profit, but to ensure thestabilityofpublicservice,whichmunicipalitiesbelieve theprivatesectorcannotguarantee.Forthisreason,municipalitiesareinsomewayforcedtoengageinbusiness,becausethecitizenalwaysdemandsresponsibilityforthebadservicesfromthemunicipalityregardlesswhoisprovider–public

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orprivate.Inordertopreventthemunicipalityfrombeingresponsibleformistakes made by a private entrepreneur, for example, in Marupemunicipality the delegation of services of public interest to the privatesectordoesnottakeplace.

Inothermunicipalitiesthesituationissimilar,asitwasmentionedearlierinformallythefunctionsofthemunicipalityaredividedinto fundamentalandsociallyorientedones.Fundamentalfunctionsinthecontextofprivateorganizations should be outside the subjective risks and be under thecontrolof themunicipality–heat,water,propertymanagement, lighting,greening, and in partwastemanagement. There, the involvement of theprivatesectorisrisky.Mentionedservicescanbeduplicatedbytheprivatesectorbutnotreplaced,forexample,wastemanagementwheretheprivatesectorissuccessfullyinvolvedinsomemunicipalities.Municipalitiesadmitthat their companies are not always efficient, there aremany subjectiveproblems,butthesecompaniesareorganizedinsuchawaythatthecontinuousprovisionofservicestothepopulationismaximizedanddirectlyrelatedtothe municipality rather than being delegated. Stability in this sector isparamount.Businessefficiencyissecondaryissue.Thisleadsustoconcludethatmunicipalitiesarereluctanttoestablishnewcompanies–theyhavenochoice.Inthenameofpublicgoodtheymust.

The consequences of such situation are very well characterised by theLatvianPresidentoftheCompetitionCouncil,MsĀbrama:“Inpractice,therearefewexamplesofamunicipalitysettingupaninnovativecompanywhoseservicesarenotyetavailable”(quotedfromSpakovska,2014).Formunicipalitiestorunenterprisesmeansverysimplifiedactivitythatrequirestofitintoamoderate corridor of customer satisfaction and business developmentwherethepursuitof innovationandinitiativeisnotrewarded.Therearepractically no municipal enterprises in Latvia that stand out from suchinnovationpoorbackground.Theyareverysimilar,onlythemanagementisdifferent.Thismeansthatthesamesituationcanbeaddressedtosocialentrepreneurship, so the opportunities for municipalities to set up anddevelopan innovativesocialenterprisearevery limited.Accordingly, theopportunitiesforestablishingnewsocialenterprisesmustbeviewedfromotherangles–inareaswherethemunicipalityhasanadvantage.Thiswedescribeastheirabilitytocreateanewenterpriseandtoensureitsstability.

Themaincontradictioninthisstudyisthatmunicipalitiesarereluctanttosetupnewsocialenterprises,whileatthesametimetheyarereluctanttodelegatemunicipalfunctionstoprivatesector.Itwasalsofoundthatwith


33

the financial and administrative resources municipalities are strong inestablishinganewenterprisebutweakingeneratingnewideas.

ConsideringLatvianexperienceinreducingtheabove‐mentionedcontradictionsand obstacles, in the context ofmunicipalities it is advisable to considerdeveloping and supporting hybrid entrepreneurship. The essence of ahybridcompanyisthatitcombinesprivateandmunicipalcapacity(ahybridentrepreneursimultaneouslyperformsapublicfunctionandoperatesinthecommercialsphere).Thismitigatesthedisadvantagesofthemunicipalityasanentrepreneur(lowefficiency,lackofmotivation)andmercantilismandthepursuitofpersonalgaininherentincommercialactivities.Inthecaseofthemunicipality,thismaybethegoldenmiddleforcombiningpublicandprivatecapacity,whichhasbeenthemainchallengeofthisstudy.

Inordertosubstantiatethisassertion,itisnecessarytoexplainthereasonswhy in the past, some private companies approached municipalities bydemonstratingthattheiractivitiesarelinkedtopublicsector.Themotiveforgettingclosertothemunicipalityisthehistoricallyestablished.Thisisthesituationwhereprivatecompanyhavebeenoperatinginanareawhichisinthemiddlebetweencommercialandpublic.ManyouridentifiedhybridlikecompaniesinLatviahaveahistoryofatleast20–30years.Theneedandopportunitytocooperatewiththemunicipalityhasnotbeenspontaneous,buthasevolvedover theyears, coincidingwith thepublic interestof themunicipalityandtheentrepreneur.Forexample,“VidusdaugavaTelevision”Ltd, which commercially earns from advertising sales, produces originalnews broadcasts thatwould be difficult to commercialize in the regionswithoutanalternativetosubscriptionfees.Therefore,inordertoensurethedevelopmentofthepublicgood,aprivatecompanyasksthemunicipalitytoco‐financeorotherwisesupportthepublicsideofthecompany'sproduct.Themunicipality,basedontheargumentthataprivatecompanyworksforthepublicgood,hasmanyyearsofexperienceandotheradvantagesusesoneoftheoptionsfordelegatingmunicipalfunctions,resultingincooperationbetweenbothpartiestoachieveaspecificgoal.Correspondingly,themunicipalsupport to the organization enables the public service to be performed,whiletheincomefromcommercialactivities(advertising,broadcasting,andotherservices)isusedforthedevelopmentofthecompany.

There is no evidence thatmunicipal capital can play amajor role in thecreationof anewhybridenterprise.Municipal capitalhas symbolic role:duetosuccessfulcooperation,entrepreneurfeelsstability,butmunicipalityontheotherhandgainsreliablepartner.InLatviansituationmunicipalities

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arenotkeentousetheircapitaltoestablishnewenterprises, theybetterprefertosupportexistingones–thosewithgoodreputation.

Forahybridcompanytobeeconomicallyefficient,itisimportantthatitismanagedbyaprivateentrepreneurratherthanamunicipality,evenifthemunicipalityisthemainstakeholder.Itisrecommendedthatthemunicipalityestablishacontrolmechanism.Thereisnogoodjustificationforamunicipalitytosetupitsownhybridcompaniesortomanageaprivate‐municipaljointventure, as the profit motive cannot be an argument. In addition, incorporategovernancetheprivatesectorismorelikelytobemoreefficient.

Inviewoftheabove,twodevelopmentaloptionswouldbeappropriateforthemunicipalityinthecontextofsettingupasocialenterprise:

1) to develop a pure social enterprise as amunicipal policy tool toaddressmarket failures. The primary condition for its operationwouldnotbeefficiencyorprice,butratherthestabilityofservicedelivery,aprinciplecurrentlyoperatinginmunicipalenterprises;

2) to establish or develop, together with a private entrepreneur, aprivatelyownedandmunicipallycontrolledhybridenterpriseasameansofpublicservicediversificationandinnovation.

D.Anicheforthedevelopmentofmunicipalsocialenterprises

Municipalenterprisesarenotcreatedasanendinitself.Theyaredevelopedbecausetherewasnobetterwaytosolvesocialproblems.Newlyestablishedmunicipalcompaniesaretheresultoflong‐standingpositiveandnegativeexperiencescrystallisingareaswhereprivatesectorisundesirable.

Inthecontextofsocialentrepreneurship,thepositiveornegativeexperiencescannotanswerthequestionofareasandproblemstobesolvedbythenewlyestablishedmunicipalsocialenterprises.Basedonthemunicipalexperiencein setting up new commercial enterprises, a similar scenario for socialenterprisescanbepredicted–municipalitieswillcreatenewsocialenterprisesonly if it isconcludedthatproblemexistsandit isdecidedthataprivatesocialenterpriseformunicipalityposesmoreproblemsthandoesgood.

Takingintoaccountallthecontradictionsmentioned,intheinitialphaseofthe introductionofsocialentrepreneurshipthenicheofestablishingnewmunicipalsocialenterprisescanbedescribedas“interdisciplinary”,wherestrategicsectorsandmunicipalfunctions,whicharewellimplementedbyorganizationssimilartomunicipalinstitutions,collide.Therefore,itcanbeassumed that the social enterprise niche in Latvia should start whereadministrativemethodsareexhaustedandendwherecommercialprofitability


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begins,leavingthisnicheforhybridcompaniesandprivatebusinesses.Thiscouldhappenwhenthemunicipalityfacesmarketdemandthatistoosmalltobeofinteresttothebusiness.Forexample,regionalauthoritieswithlargerural areas and residentswho lack the technical resources tomow theirproperty. People are ready to finance or co‐finance such a service. Themunicipality, led by depopulation risk, sets up a pure social enterprisewhose task is to help citizens manage their property. This exampleillustrates how a social enterprise serves as an instrument ofmunicipalpolicy–toencouragepeopletostayinthecounty,becauseprivatemerchantsrunningsimilarbusinesswiththeirpricingpolicydonotencouragepeopletostay,buttoleave.

By summarizing the opportunities and obstacles, it is possible to justifywherethemunicipalityisstrongandweakinestablishingnewsocialenterprises:

1) withthefinancialandadministrativeresources,themunicipalityisstrong in starting up a business, especially in the regions, and inensuringstablebusiness,guaranteedbypubliccapital;

2) municipality is weak at generating new business ideas, as theindividualorgroupofindividualsemployedbythemunicipalityinthedevelopmentofthecompanymustfollowtheoverallpace.Theirsalarydoesnotcorrespondtotheeffortinvested.

Thismeansthatthemunicipalityhasgoodopportunitiestosetupastabilesocialenterprisebuthas limitedopportunities toestablishan innovativesocialenterprise.Astudyconfirms this statement:77%ofmunicipalitiesbelieve that the term “innovative social enterprise” ismostly associatedwith the private sector rather than themunicipality. The contradictionsmentionedabovemeanthattheestablishmentofanewsocialenterprisebymunicipalitywould be linked to attempts at solving chronical problems,whereinvolvementoftheprivatesectorcreatesmoreproblemsthangood.Itisreasonabletosaythatmunicipalitieswill,forthemostpart,engageinnewsocialentrepreneurshiponlyifotheroptionsareexhausted.TheauthorsofthisstudyagreewithLukjanskaandCirule(2014)thatthemunicipalityshouldprovidesupportforsocialentrepreneurshipfirst,andonlyifthereisalackofsocialentrepreneurshipinitiativetoestablishtheirownenterprises.Theabovestatementisalsoreinforcedbytheresultsofthestudy(Figure3),where the municipalities were asked about their position regarding thedevelopmentofsocialentrepreneurship.

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Figure3.FuturepositionofLatvianmunicipalitiesindevelopmentofsocialenterprises(n=35)

Inmunicipalities,theprevailingview(63%)concernssupportfortransformedmunicipalenterprisesand/orsocialenterprisesformedbytheprivatesector.Withoutchangingtheorderoftheexistingcases,localgovernmentswouldbetterprefertosupportsocialenterprisesratherthanestablishthem.

E.ProblemsofDelegationofMunicipalFunctions:PossibilitiesofUsingthePrivateSectorforMunicipalPurposes

Accordingtothestudy,delegationagreementswiththeprivatesectorarenotwidespreadinLatvianmunicipalities.Municipalitiesuseotheralternativesfor thispurpose.Delegationagreements areusually concludedonlywithpublicsectorentities–theirowncompaniesorthoseofothermunicipalities,orlessoftenwithprivatecompanieswherethemunicipalityholdsshares.The use of delegation agreements in Latvian municipalities can becharacterizedusingtheEuropeanUnion(EU)freemarketprinciple–theinternalmarketisliberalbutprotectionismprevailsattheexternalborders.Similarly, delegation agreements are concluded freely with municipalcompanies,butonlyoccasionallywiththeprivatesector.Themainobstacleto delegation agreementswith the private sector is the large amount offiduciarycreditthatthemunicipalitywouldgivetoaprivateorganization,whichtheprivatesectorisrarelyabletorepay.Especiallywhenitisentrustedwith a strategic task. In order to avoid public outrage, municipalitiesdelegate their functions only if they are given clear formal safeguards.Figure 4 shows the hierarchy of entities used to perform the functions

Active‐ bycreatingown

socialenterprises

37%

Passive‐ bysupportingprivatesocialenterprises

63%


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delegatedbythemunicipality.Ifthemunicipalityhassufficientresources,itseekstofulfillitsfunctionsbyitsownmeans,eitherthroughanadministrativeapparatusorthroughtheestablishmentofinstitutionsoragencies,thefirstofwhicharemoreprocess‐orientedandthelattermoreresult‐oriented.

Figure4.Hierarchyofentitiesusedtoperformmunicipaldelegatedfunctionsandpossiblelinkagetosocialenterprises

Source:developedbytheauthors,basedonfieldresearchinLatvianmunicipalities

Thereisalsonoevidencethatthegrowthofprivatesocialenterpriseswillincrease confidence in the delegation of municipal functions, which is amajorobstacletoprivatesectorinvolvement.ThisstatementissustainablebecauseitisnotwidespreadinmunicipalitiestodelegatetheirfunctionstoNGOs, even though there is a proven practice thatmany associations inLatviaoperatesimilarlytosocialenterprises.Therefore,itisunlikelythatanewlyestablishedprivatesocialenterprisewillprovideagreaterfiduciary

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creditthanthecurrentreputationofanNGOs.Rather,itwillbesimilar.Itcanthereforebeassumedthattheproportiondelegationcreditwillremainthesame.

Conclusionsanddiscussion

Because of the problem existing in the society to associate socialentrepreneurshipwithsocialcare,thegravitycentreforthecreationofnewsocialenterprisesinmunicipalitieswillberelatedtosocialcaredepartments,theirclients,andtheiremployment.

LocalgovernmentsinLatvia(59%)wouldbemorewillingtosupportthedevelopment of private social enterprises than to establish them (41%).This is why local governments are more likely to transform existingorganizationsthantoestablishnewsocialenterprises:

1) inthecaseofmunicipalcompanies,transformationwillbeimpedednotbyobjectivebutbysubjectivebarriers,sinceheat,water,utilitiesand spatial planning in municipalities are called “fundamentalsectors”thatwouldbedifficult fortheirmanagementtoassociatewith the term of social entrepreneurship. Therefore, the serviceswhich are in themiddle between those offered by themunicipalcompaniesandtheinstitutionswillfirstbesubjecttothetransformation;

2) in the municipal institution and agency sector, the role of socialentrepreneurshipislinkedto:(a)atransformationthat,bymitigatingthe impact of the centralization factor, would increase ownrevenuesandreducetheirneedformunicipalfunding.Beforedoingso,oneshouldmeasurehowmuchco‐financingasocialenterprisewillrequirefromthemunicipality;(b)nottransforminganinstitutionbut establishing a new social enterprise which takes over thefunctionsofaninstitutionwithmarketopportunitiesandbusinessmethods.Atandem,wheretheinstitutionperformsmunicipalfunctions,butthecompanyhelpsittomakethebestuseofitsresources.

Thenicheforestablishingnewmunicipalsocialenterprisesischaracterizedbytheterm“interdisciplinary”,aplacewherestrategicindustriesandmunicipalfunctions,whicharewellimplementedbyorganizationsandNGOssimilartomunicipalauthorities, collide.Therefore, thesocialenterpriseniche inLatviashouldstartwhereadministrativemethodsareexhaustedandendwherecommercialprofitabilitybegins,leavingthisnichetohybridcompaniesandentrepreneurs.


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Withitsmaterialandadministrativeresources,themunicipalityisstronginstarting a business, butweak in generating andmanaging new businessideas,asthemainmotiveforstartingasocialenterpriseinamunicipalitywillstemfromtheimplementationofmunicipalpolicieswherecreativityandefficiencyarenotdecisive.Amunicipalitywillsetupasocialenterpriseonly if it is foundthat theproblemischronicaland it isdecidedthat theoperationoftheprivatesocialenterprisecreatesmoreproblemsthangoodforthemunicipality.

Aprivatesectorcompanyisformedoutoftheentrepreneur'sinterestandhisambitionsandisstrongingeneratingnewbusinessideas,soitwouldbenecessarytocreateawayforthedevelopmentofsocialentrepreneurshiptobothreducetheirweaknessesandcombinethestrengthsoftheother.Byjoiningforcestoachieveacommongoal,itwouldbepossibletocreatetheidealsocialenterprise.

Problemsof functiondelegationare themaincontradictionof thisstudy.Municipalities would be reluctant to set up new social enterprises, butwouldnotbewillingtodelegatetheirfunctionstotheprivatesector.Thisiscircumstantial evidence that social entrepreneurship is actually takingplaceinLatvia,butitiscontradictorywithitsnegativeconsequences.

Reducingdelegationdiscrepancieswillbeoneofthemajorchallengesinthedevelopment of social entrepreneurship, as municipalities have built adefensemechanismthattheprivatesectorcannotbreakthrough.Freedomofdelegatingtaskswidelytakesplacewithinthemunicipality.Delegationtoprivatesectorisnotcommon,whichreducesthepossibilityofcombiningthestabilityofthemunicipality'soperationwiththebusinessefficiencyoftheprivatesector.

References

Amona,L.(1999).Likumuterminuvārdnīca.Rīga:KIFBiznesakomplekss

Dobele, L. (2013). Sociālās uzņēmējdarbības attīstības iespējas Latvijā. Available in web:http://llufb.llu.lv/dissertation‐summary/entrepreneurship/LasmaDobele_promoc_d_kopsavilkums_2014_LLU_ESAF.pdf(openedin:4.apr.2018).

European comission (2014).Amap of social enterprises and their eco‐systems inEurope,Country Report: Latvia. Pieejams tīmeklī: http://www.lm.gov.lv/upload/darbs_eng/se_mapping_country_report_latvia.pdf(opened:15.04.2018)

Kerlin,A.J.(2006).‘SocialEnterpriseintheUnitedStatesandEurope:UnderstandingandLearning fromtheDifferences’,Voluntas: International JournalofVoluntaryandNonprofitOrganizations,17(246)

Labklājībasministrija(n.a.).Sociālāuzņēmējdarbība.Availableinweb:http://www.lm.gov.lv/text/3091(opened:31.03.2018)

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Lešinska,A.,LitvinsG.,etal.(2012).Latvijaceļāuzsociālouzņēmējdarbību.Availableinweb:http://providus.lv/article_files/2265/original/SU_gala_9nov.pdf?1352889758 (opened:25.03.2018)

Lešinska,A.(2014).Sociālieuzņēmumi–nevalstiskāsorganizācijāsLatvijā.Availableinweb:http://providus.lv/article_files/2742/original/Soc_uzn_AGNESES_PETIJUMS_FINAL.pdf?1417533355(opened:20.04.2018)

Lukjanska,R.unCīrule,I.(2014).Sociālāsuzņēmējdarbībaspamatnostādnes,labāspraksesapkopojumsunieteikumiLatvijaspašvaldībām.Availableinweb:http://socialinnovation.lv/wp‐content/uploads/2014/07/Sociala_uznemejdarbiba_pasvaldibam_24012014.pdf(opened:20.04.2018)

Pūķis, M. (2012). Sociālās uzņēmējdarbības iespējas Latvijā. Pieejams tīmeklī:http://www.biznesa‐attistiba.lv/userfiles/file/Petijums_3.pdf(opened:10.04.2018)

Yunus,M.(2007).CreatingAWorldWithoutPoverty.NewYork:PublicAffairs

Listofpersonsinterviewedduringtheresearch

Person Positionatthemomentoftheinterview

MarutaPlivda ChairmanofPreiliRegionalCouncil

IlzeTijone HeadofDevelopmentandPlanningDepartmentofBauskaCityCouncil

RitaVectirāneDeputyChairmanofJelgavaCityCouncilinSocial,HealthandCultureProgram

MārtiņšBojārs ChairmanofMarupeRegionalCouncil

PēterisDzalbe DeputyChairmanofDaugavpilsCityCouncil

LīvijaDrozdeDaugavpilsCityMunicipalityActingHeadofSocialServices

AleksejsStecsDeputyChairmanofRezekneCityCouncilonCityDevelopmentandInvestment

ViktorsMoisejs DeputyChairmanofKraslavaCityCouncil

JāzepsBrencis ExecutiveDirectorofKraslavaCityCouncil

AndrisVaivodsMemberoftheBoardofSIA''VidusdaugavaTelevizija''

LilitaSeimuškāne ChairmanofLivaniCountyCouncil

AndrisVaivods VentspilsCityCouncil

ArnitaBriška ChairmanofLivaniCountyCouncil

IneseMagdaļenoka HeadofLivaniSocialService

ZeltītaVanaga DeputyPrincipalofLivaniSecondarySchoolNo.1

MārīteVilcāneAssistantPrincipalofLivaniSecondarySchoolNo.1,Teaching

IlzeGriezāne HeadoftheMultifunctionalYouthInitiativeCenter“Quarterly”


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GuntaJaudzema DirectorofLatgaleArtsandCraftsCenter

AijaSmirnovaHeadoftheRosaryCenterforAlternativeCareServices

IngunaBadune DirectorofLivaniCountyCulturalCenter

Dr.VadimsKrimans LeaderoftheWhiteHouseSociety

AndrejsPatmalnieks ChairmanoftheBoardofSIALivaniHospital

ValentīnaLiepaDeputyChairmanoftheBoardofLīvāniApartmentsandCommunalFacilitiesLtd.

EvaViļķina EconomistofLīvānisiltumsLtd.

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SUSTAINABILITYANDDIGITALIZATION:DOUBLESTRATEGYGUIDELINESINNATIONALDEVELOPMENT

EugeneEteris,EuropeanIntegrationInstitute,Denmark

[email protected]

Abstract

Thearticle’saimistoshowthedevelopmentofglobalandEuropeanactions in sustainability and digitalisation, which provide abackgroundintheBalticStates’effortstostreamlinetheireconomicgovernanceaccordingtomodernchallenges.

Theresearch focusesonrevealing theessenceof theEuropeaninstitutions’activityintransformingtheBalticStates’economicgrowthtowardsmoresustainableanddigitalpolicies.Therefore,theresearchmethodsincludemainly,thoughnotexclusively,theEuropeanCommission’srecommendationsandactionsconcerningsustainabilityanddigitalagenda/economy in theBalticStates,forexample,throughanalysisofthesestates’“smartspecialisationstrategies”andtheirefficiency.

SeveralBalticStateshavealreadyadoptedsustainabilityanddigitalagendaplansandstrategies.TheseaspectsofmoderngrowtharegoingtodefinetheEUstatesandtheBalticcountriesprogressivedevelopmentintheyearstocome.

Finally,thepaperformulatessomeconclusionsandrecommendations,boththeoreticalandpractical,intheBalticStates’adaptationstonewsustainabilityanddigitalparadigminthecountries’perspectivegrowth.

Keywords:digitalisation,growthstrategies,sustainability

DOI:10.37804/1691‐6077‐2020‐11‐42‐56


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Introduction

Modernrevolutioninnationalgrowthpatterns,ignitedbythesustainabilityrequirements and the digital agenda/society’s parameters, has affectedalmostallspheresofsocio‐economicdevelopmentintheBalticStates.

Attheendof2015,duringtheUnitedNations(UN)GeneralAssemblyabout200statesadopted17ambitiousSustainableDevelopmentGoals(so‐calledSDGs)tobereachedby2030.Thegoalsarenumerous:fromendingextremepovertyandcombatinginequalitytoaddressingclimatechangeemergency,tohealthcare,toairandwaterqualityandsoonandsoforth.Theprogresstowards SDGs delivery is monitored by both the European Union (EU)institutionsandtheauthorities in thememberstates;however,after fiveyearsinaction,theprocessisfarfrombeingoptimalandinsomeSDGsthesituationisevenreversing.

Usingmoderndigital“applications”andnewtechnologiescouldhavedefinitepositiveeffectsonSDGsimplementationthrough“greengrowth”developmentpatternsbylargeandsmallcompanies,byeconomicsectorsingeneral,byindustriesandbypolicy‐makers.

Accordingto“GlobalsurveyonSustainabilityandSDGs”(publishedin2020),the SDGs are rather unknown globally in science and education sphereswithanegativeSDGawarenessineconomicscience(50%globallyand56%inEU).

This is the reason that presently, the SDGs are still “rarely addressed inclassicalbusinessstudiesandresearchfieldsofeconomics”,acknowledgedaglobalsurvey.AmongvariousSDGs,priorities,generally,areattributedtosuchgoalsasSDG‐12“Responsibleconsumptionandproduction”,SDG13“Climateactions”andSDG‐4“Qualityeducation”withthemostimportantSDG‐17“Partnershipsforthegoals”.(GlobalSurvey,2020)

Theeffectofmodernindustrialtechnology

AllEUmemberstatesaredesperatelytryingtounitemoderntechnologies(embeddedinthe4thIndustrialRevolutionreport,4IRpublishedin2016)withtheSDGs:nodoubt,the4IRservesasadrivingforceinimplementingSDGs.(Schwab,2016)

Forexample,about70%oftheSDGscouldbeactively implementedwithalready existing digital technology applications. However, the states arepresentlyquiteslowandinefficientinunlockingdigitalpotentials,including

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artificial intelligence (AI). State governance structures have to be moreactiveindeployingnewtechnologiesforbothshort‐termgrowthandlong‐term (commercial) gains through a more responsible and purposefulapproach in using digital technology in implementing SDGs. The figurebelow shows the 4IR’s inherent connections inmodern decision‐makingprocesses.

Figure1

Source:WorldEconomicForum,2020

Digitalagendaandsustainability:effectfortheBalticStates

Europeandigitalpolicyandtechnologiesarenotonlyinterconnectingthememberstatesindevelopingnewgrowthpaths,buttheyarealsointegratingthe EU countries into the global processes ofwhich the SDGs are a vitalcomponent.EUinstitutionshavealreadysetstandardsintelecomsanddataprotection,forinstance,thoughthestatesfallbehindinotherareasofthedigitaleconomy.Investmentsinblockchain,high‐performancecomputing,quantumcomputing,algorithmsandnewtoolsforsecuredatasharingandusagearethevitalpointsonthepathtoinnovation(Eteris,2018).

DigitaldataandAItechnologiescandefinitelyhelptodevelopsmartsolutionsinthememberstatesconcerningnumeroussocio‐economicandsustainabilityissues:fromhealthtofarming,tofoodsecurity,tomanufacturingincluding“smart specialisation strategies”. In these directions, new approaches toeducationandlearning–withimprovedqualityeducation–arethekeystopavingthewayforanewareaofsustainablegrowth.

Thefollowingarethemaindirectionsintheoptimaluseofdigitalsolutionsinsustainability:


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1) digitaleconomyandsocietyissues,whichcanensurethatcitizensandbusinesseswouldhavefulladvantageofdigitalopportunities.However, the Commission noted, about 47 per cent of the EUpopulation isnotproperlydigitallyskilled,yet in thenear future,about90percentofalljobswillrequiresomelevelofdigitalskills(EC,Europefordigitalage,2020);

2) the EU member states actions (with the assistance from the EUinstitutions) increatingproperandefficientconditions fordigitalnetworks and services. TheCommission acknowledges that high‐speed,secureandtrustworthyinfrastructuresandservicesshallbesupportedbytheEU.Only the“rightenvironment” for innovativedigitalserviceswillhelp increatingadvanced infrastructuresandfeasible conditions for investment in digital networks (GlobalSurvey,2020).Better regulations for digital networks and services are alsoimportantforcreatingrulesthatmatchthepaceoftechnology,suchas the next‐generation of 5Gmobile connections or the financialtechnology implementation, so‐called fintech.TherearepresentlyseveraldirectionsintheEUdigitalsinglemarket:someofthemarebothdirectlyandindirectlyconnectedtosustainability.Increatinga digital society, the European Commission aims for an inclusivedigital society in themember states, whichwill benefit from thedigitalsinglemarket.Buildingsmartercities,improvingaccesstoe‐Government,e‐HealthservicesanddigitalskillswillenableatrulydigitalEuropeansociety.(EC,ShapingEuropeandcreatingadigitalsociety,2020);

3) the countries’ digital priorities: digital issues are not a “specificpriority”inthenewCommission;inthepreviouscollege,therewereeventwo“digitalCommissioners”–oneforthedigitaleconomyandanotherone for thedigital society. Increasing “digital role” in thememberstates’socio‐economicdevelopmentisavitalcomponentin European integration too. Data protection has become animportant issue and reforming data protection will give peoplecontrolovertheirdataandhelpbusinessescomplywiththesinglemarket. In May 2018, the General Data Protection Regulationenteredintoforceinthememberstates,whichprovidedforasinglesetofdataprotectionrulesforallcompaniesoperatingintheEU,wherever theyarebased.Strongerrulesondataprotectionmeanthat:a)peoplehavemorecontrolovertheirpersonaldata,andb)

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businessesbenefitfromalevelplayingfieldindigitalspheres(EC,Dataprotection,2018);

4) thecommercialaspectsof the“EUdigitalsociety”strategy,whichguarantee a better access to online goods for consumers andbusinessesbyhelpingthememberstatescreateacommerciallevel‐marketplace.ThenewrulesadoptedintheEUpreventanunjustifiedgeo‐blocking in the EU states: i.e. people can freely buy from awebsitebasedinanotherEUstate;thusbarriersforconsumersincross‐bordershoppingareabandoned.Newrulesenteredintoforcein the member states in December 2018, which ended onlinediscrimination on the basis of nationality or place of residence.Theserulesensuredthatpeoplenolongerfacebarriersasbeingre‐routedbacktoacountry‐specificwebsite,orhavingtopaywithadebit or credit card only from a certain country. Besides, onlinesellersareobligedtotreatallEUconsumersequallyregardlessofthe “shoppingplace”.ThenewCommissionPresident,Ursulavonder Leyen acknowledges the college commitment to upgrade theUnion'sliabilityandsafetyrulesfordigitalplatforms,servicesandproducts, with a new Digital Services Act (EC, New rules oncommerce,2019).

InvestmentsfortheEU’sdigitalagenda

For the successive implementation of the European Fund for StrategicInvestments, EFSI (which was a focal point in the Investment Plan for Europe,originatedinNovember2014)theCommissionextendedin2016itsdurationandcapacitytoboostinvestment.Theso‐called“EFSI2.0”isinforcefrommid‐2018totheendof2020andintendstohelpthestates inincreasing investment targets from€315billion toat leasthalfa trillioneuros. In December 2017, the EU institutions together with the statesagreedonthe“EFSI2.0Regulation”;itbecamethelawinDecember2017(EC,StateoftheUnion,2016).

OneoftheEUagencies,theEuropeanPolicyCenter,EPClaunchedin2017aprogramme“ConnectingEurope”jointlywithStiftungMercator.ConnectingEurope enables projects and organisations to actively engage with EUpolicymakers.Besides, theprogrammefocuseson jointactivitiesbothonthe futureofEuropeandsustainability,climatechangeandotherkeyEUissues.Byconductingthoseactivities,ConnectingEuropefostersanopen,constructive dialogue among the member states and the EU decision‐


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makers.InthiswayitpromotesfavorableexchangesbetweencivilsocietyinitiativesonthegroundandtheEUpolicycommunity.Theprojectenhancesmutual understanding among the EU states in positive contribution tosustainability(EuropeanPolicyCenter,2019).

Sustainableaspectsinthe“digitalindustry”particularlyattractedtheEU’sattention:thus,theCommissionlaunchedinApril2016thefirstindustry‐relatedinitiativeofthe“digitalsinglemarketpackage”,complementingthevarious national initiatives for digitising industry, such as Industry 4.0,SmartIndustryandl'industriedufuture.

TheCommissionistakingactionsalong5maindirections:1) useofpolicyinstruments;2) financialsupport;3) coordinationamongthememberstatesin“digitalindustry”;4) legislativeeffortstotriggerfurtherpublicandprivateinvestments

inallindustrialsectors;5) creatingframeworkconditionsforthedigitalindustrialrevolution.

(EC,ShapingEurope’sfuture,2018)

IndustryisoneofthepillarsoftheEUeconomy:e.g.manufacturingsectorin theEUaccounts for2million enterprises, 33million jobs and60%ofproductivity growth. However, the new industrial revolution, driven bynew‐generation information technologies such as the Internet of Things(IoT),cloudcomputing,bigdataanddataanalytics,roboticsand3Dprintinghas opened new horizons for industry to become more efficient andinnovative. Recent studies showed that digitalisation of production andservicescanaddmorethan€110billionofannualrevenuetotheEuropeaneconomyinthenextfiveyears.

Europeanindustryisstrongindigitalsectorssuchaselectronicsforautomotiveindustry, security and energy markets, telecom equipment, businesssoftware,aswellaslaserandsensortechnologies.Europeanstatesarealsohaveworld‐class research and technology institutes; however, there arelargedisparitiesindigitisationamongEU’sregions.

PresentEUplansareaimedatmobilizingupto€50billionofpublicandprivateinvestmentsinsupportofthedigitisationofindustry.Thismoneyisdividedintothefollowingactivities:€37billioninvestmenttoboostdigitalinnovation; € 5.5 billion national and regional investments in digitalinnovation hubs; € 6.3 billion for the first production lines of next‐generationelectroniccomponents;and€6.7billionfortheEuropeanCloudInitiative.(EuropeanCommission,digitisingindustry,2018)

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Figure2.EIB’seffortsinactivatinginvestments

Source:EuropeanCommission.Investmentplanresults(2020)

AstoEFSIfinancesfortheBalticStatesapprovedbytheEIBGroup,Estoniahashad€158mln,Latvia–€270andLithuania–€386mln;thisfinancial“loans&guarantees”were supposed to trigger, correspondingly,€1335,€1133and€1809mlnofinvestments.Theinvestmentactivity,astotheshareofGDP, isthehighest inEstonia(secondamongEU‐27),seventhinLithuaniaandninthinLatvia(firstwasGreeceandthirdPortugal).

TheEFSIcancontributetolarge,“greendigitalinfrastructure”projects,withdeploymentofthelatesttechnologiestoallowaccesstoultrafastbroadbandin the EU states. These projects can originate from national broadbandplans,regionalinitiativesorbeledbyprivatecompanieswillingtoinvestinfutureorientedbroadbandinfrastructuresanddigitalservicessuchashigh‐performance computing and cloud services. TheEFSI is one ofmanyEUfinancing tools available to start‐ups in the digital sector: for example,projectssuitableforfinancinginthedigitalsectorundertheEFSIcouldalsobenefitfromthesupportofgrantsandfinancialinstrumentsfromHorizon2020,EuropeanStructuralandInvestmentFunds(ESIF)andtheConnectingEuropeFacility.Thisfundingsourcemayfinancepartoftheproject(intheform of a grant or a loan) while an EFSI‐backed loan may cover theremainingcostsoftheproject.

TheEuropeanInvestmentPlanincludesmorethanjustaguaranteeprovisiontounlockadditionalinvestmentsthroughtheEFSI.Thedigitaleconomyand


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thedigitalsectorshouldsignificantlybenefitfromthevariouselementsofthePlan.

Asforallsectors,projectpromotersinthedigitalsectorcanseektechnicalassistancethroughtheEuropeanInvestmentAdvisoryHub(EIAH).TheHuboffersasingleaccesspointforadvisoryandtechnicalassistanceservicestoallowpromotersget theirprojectsoff theground. (European InvestmentBank,2020)

The European Investment Project Portal – the #InvestEU Portal – is aplatformtoboostthevisibilityofinvestmentopportunities,includingthoseinthedigitalsector,acrossEurope.TheaimofthePortalistobringtogetherproject promoters seeking investment with investors seeking projects.(EuropeanCommission.EuropeanInvestmentProjectportal,2020).

TheEuropeanInvestmentProjectPortal(EIPP)offersassistanceinnumerousviableprojectsconnectedtosustainabilityissues:111projectsin“energyunion”,138intransportation,145inenvironmentalqualityandprotection,andinuseofnaturalresources.

For example investmentopportunities canbe seen in theEIPPby allEUmember states according to numerous criteria, e.g. environment andnaturalresources,infrastructureandinnovation,etc.

InordertoimplementtheSDGs,itiscriticaltomobilizeprivatefinanceatagreater speed and scale. Financial innovations, new technologies anddigitalizationhavethepotential tocontributesignificantlyto thistask. Inthisregard,theUNSecretary‐GeneralhasrecentlyappointedaTaskForceon Digital Financing in SDGs to investigate how this potential can beunlockedwhilemanagingatthesametimetheassociatedrisks.TheTaskForce results and the outcomes were seen at the “German SustainableFintech”undertakenbytheSustainableDigitalFinanceAlliancetoincluderepresentatives from business, politics, civil society and academia inGermanyandEurope.Theideaistorevealnewtrendsinthefinancesector,to leverage innovation for financing sustainable development with keyactorsfromthedigital,sustainabilityandfinancesectorstotriggerfurtherinitiatives.

MostEUstatescreatednationalSDGsolutionnetworks;thus,theGermanSustainableDevelopmentSolutionsNetwork(SDSNGermany)wasfoundedinApril2014whichpooledtogetherknowledge,experienceandcapacitiesof German academic, corporate and civil society to contribute to thesustainabledevelopmentinGermanyandaroundtheworld.

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Inthisregard,theSustainableDigitalFinanceAllianceistoleveragedigitaltechnologies and innovations to enhance financing for sustainabledevelopment.TheUNSecretaryGeneral’sTaskForceonDigitalFinancingoftheSDGsisaclearexampleofactivatingsomeconcreteandactionablesteps to identify ways through which the digital revolution should beharnessedtohelpadvancetheSDGs.

SustainabilityintheEuropeancontext

Sincetheadoptionofthe2030Agendain2015,theEUhasmadesignificantprogress indeliveringon theSDGsandcontinues to reinforce its efforts.Thus,theEUinstitutionshaveactivatedthememberstates’policiestowardstransitiontoalow‐carbon,climateneutral,resourceefficientandcirculareconomythatgoeshandinhandwithincreasedsecurity,prosperity,equalityandinclusion.(EuropeanCommission.Reflectionpaper,2018)

AmongmostpressingsustainabilitychallengesforthememberstatestheCommission suggests for example a transition from a linear to circulareconomy.OneoftheleadingpersonsintheadvocatingSDGs,JeffreySachsonceunderlinedthatsustainabledevelopmenthadbeenboththegreatestandmostcomplicatedchallengeformoderncivilization;however,healsowarnedagainstcynicism,confusionand“miserablepolitics”onmanyissues.Being a former environmentalist leader, Sachs’ conclusion on the globalscene sounds dramatic: enormousworld economyhas already created agiganticenvironmentalcrisisthatthreatenslivesandwellbeingofbillionsofpeople.Besides,theenvironmentalthreatsarerisingonseveralfrontsatthesametime:climatechange,shortageoffreshwater,chemicalpollutionofoceansandthreateninghabitatofotherspecies,etc.Theanswertothesethreats is not a reduced or alternating “de‐growth”, but “sustainabledevelopment”,presentlydubbedSDGs.

Anotherchallengeisinasustainabletransformation“fromfarmtofork”,i.e.foodproductionisalreadyaburdeningissueinmanycountriesintheworld,while 20per cent of food iswasted. Besides, the agro sector can reducegreenhousegasemissionsandlimitclimaterisks.

Twootherchallengesare:future‐proofenergysector,effectiveconstructionandmobility,aswellasensuringasociallyfairSDGstransition.Thus, the EU states have to include in the national governance such priorities as promotingrenewableenergy,energyefficiencyinbuildingsandinclimate‐neutraltransport.AstheReflectionpaperconfirms,buildings,forexample,


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are responsible for around 40% of energy consumption and transportrepresents27%ofEurope’sgreenhousegasemissions.

Thus, the normativesideofsustainabledevelopmentshouldenvisionthefollowingbasicobjectivesof“goodgovernance”:economicprosperity,socialinclusionandcoherence,environmentalsustainabilityandexchangeofgoodpractices.Inthisregard,thenormativeobjectivesofsustainabledevelopmentcouldbeusedtogetherwith“environmentalintegrityandresilience”.

Therealglobalchallengesdemonstrateagrowinginequalityintheworld:therearehugedifferencesinincomesbetweentheindustrialcountriesandtheleast‐developedcountries;therearegreaturban‐ruralinequalities,aswell as income inequality within countries. The only way out of theseinequalitiesistotakeintoconsiderationtheglobalecologicalrealities;thatmeans that the world and regional economies should develop in afundamentallydifferentway(e.g.inenergysector,consumptionandfoodissues)withtheconceptofcirculareconomy’sapproaches.

There are already powerful low‐carbon energies available at sharplydecliningprices,andmoreofthemarecomingeachyear:thegovernmentshave to find new energy pathways based on energy efficiency and low‐carbonenergysupplies;besides,newagro‐farmsystemsadaptedto localecologicalconditionsandcausinglessecologicaldamageshallbeavailableto farmers. The end result from these and other examples would be to“de‐couple” growth from resource use and environmental impacts.However, according to J. Sachs, in the global perspective, “resource de‐coupling”and“impactde‐coupling”havenotyetoccurred(Sachs,2015).

Teachingsustainability:SDGsinuniversities

After the sustainability issues have occupied a permanent place in thestates’politicaleconomies,anotherproblemoccurred:i.e.implementationofSDGsandanoptimaluseoftimeinthenecessarytransitionalperiods.Theimportantpartof the latter is theprocessof “introducing” theSDGs intopeoples’mindsandexperiences.Thus,theissueofteachingsustainabilitycameintotheeducationpolicies’agenda.TheauthorhaspresentedafirstinEurope(andprobably,intheworld)introductionintothecomplexitiesofsuchteachingwithnewapproachestoSDGs‐learning,whicharenolongeranoptionbutamust

Teachingsustainabilityischallengingonnumerousgrounds:first,becauseofthenovelessenceofsustainability;second,becauseoftheinterdisciplinary

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natureofSDGproblems:theteachingprocessrequiresbothcross‐sectoralandholisticknowledgewhichisnotpresentlytaughtintheuniversities.

In teaching sustainability, instructors often face the need to dwell intounchartedwatersofotherscientificfields–natural,technicalandsocial.Hence,thewaystobuildsustainability’squalificationneedinterdisciplinaryapproach.

Assoonassustainablegrowthbecomesacriticallyurgentconcept in thestates’governancetheories,economicallyfeasibleapproachesandsolutionsshallbecomewin‐winsituations.However,mostoftheeducators/teachersarestill in the linearmarketeconomypractice,whichdoesnotallow forrevolutionaryapproachestomodernSDGs.

Thus,newformsofteachingandlearningarenecessaryindeliveringonSDGs, that can help students deal better with complexity, ambiguity,uncertainty,withnewvaluesandmoraldilemmas;inlinewithbreakingthe“business‐as‐usual”approach, ithastochallengethe“education‐as‐usual”concept.Andinthisregard,thenewauthor’sbookdeservesanadditionalattentiontoallinterestedintheSDGsphenomenon.

Highereducationhasexperiencedduring lastdecadesdramatic changes:higher education and research are to takemore active role in the SDGs’perspective implementation. SDGs provided means and ways to draftconcise and credible approaches to their implementationwith a view ofusingdifferentlevelsofeducationandtrainingbyusingmoderntoolsandtechniquestorevealnecessaryknowledgeandrequiredskills.

KnowledgebasedsystemshallincludeSDGscomponentsandsystemthinking.Besides, the following aspects shall be considered: “teach the teachers”abouttheSDGsrequirements;developnewe‐learningskillsinSDGsteaching;developingpartnershipswithotheruniversitiesteachingSDGs;providingcoordination among national political, economic, business, cultural andeducationalauthoritiestofacilitatethestates’SDGsfulfillmentobligationsundertheUNAgenda2030,aswellasanexchangeofpositivepractices.

TeachingsustainabilityhasbecomeachallengingissuesincetheUN2030Agendaenteredintoforce.ThesuccessofimplementingSDGsdepends,firstofall,ontheabilityofstates’educationpoliciestoaccommodatetheSDGsand169targetswithinthemoderneducationalchallenges.TeachingSDGsispartiallydividedamongseveraleducationpolicylevels:schools,colleagues,highereducationinstitutions(generalandspecial).

Teachingandtrainingtoday’syouthmeansprovidingcontemporaryskillstotomorrow’spolicy‐andeconomy‐decisionmakers,providingthemwithnecessarybasicknowledgeonmodern4thindustrialrevolutionchallenges


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withacriticalapproachaswellassystem‐thinkingapproachestocomplexsocio‐economicproblems.

Bothexistingeducationinstitutionsandteachingmethodsshallbere‐assessedfundamentally:highereducationinstitutionsshallteachthenecessaryskillsforSDGs;theteachingmethodsshallbeadaptedtotheneededgeneralandprofessionalskillstopracticallyimplementSDGsandtargetsinthetransformedsocio‐economicpolicies.Long‐termprofessionalandvocationaleducation/trainingshallbeavailablethroughpeople’s lifespan.Allnationalmiddle‐and high‐ education institutions shall provide valuable examples forteachingfuturedecision‐makersprovidingthemwiththenecessaryskills.

TheUNrecommendationstoimplementSDGsareexpectedtobeincludedintothenationaleducationpriorities;nowit’sthestatesturntosetSDGshighineducationpolicies,teachingandtraining.Thetaskiscomplicated;but thatdoesn’tmakenationaldecision‐makers tobe the idle reviewers:“teachingSDGs”meansofferingamixofknowledgeandskillsforeffectivelyimplementing SDGs and the global sustainable targets of the UN‐2030Agenda(Eteris,2019).

Sustainabilityanddigitalization:governments’role

TheEUstates’decision‐makersshallbeactiveinmovingquicklytocreatenewmechanisms in SDGs implementation and indigital technologies.AsWorldEconomicForumunderlinedinwinter‐2020,“timeandexpertiseononehand”coupledwith“enablinggovernmentpoliciesandregulationsontheother” could trigger sufficientprogress.As soon as the rapidpaceofchangeof technological innovationgoeson, the “channelsof technology”willplayagreaterroleinsupportingstates’effortsinSDGsimplementation.Thus, government actions in the member states are likely to include the following actions:

1) developingresponsible“technologycodesandstandards”aswellasdataprotocolsinconsultationwithindustry;

2) harnessing public procurement tools (including sustainabilitystandards)fordigitalassetsandsuppliersof“responsibletechnologyrequirements”;

3) prioritizinginvestmentinthe4IR‐enablinginfrastructuresincludingbroadband,opencloudconnections,satellitesandenergygrids;

4) takingaleadinbasic/appliedresearchandfintechatthe“intersectionof technology and societal/environmental impact”, includingopportunitiesformorecustomers’orientedresearch;

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5) catalyzing innovation in new solutions, e.g. through incubators,acceleratorsandpricesupportmechanisms;

6) performingperspectivesectoralandenvironmentalpolicysolutionsthroughsubsidyreforms;

7) updatingnationalstructuralpoliciestoreflectthe4IRachievements,includingreformsinlabourmarket,taxation,socialsafetynetsandeducation(WorldEconomicForum,2020).

European“greendeal”throughthedigitalagenda

TheCommissionisoftheopinionthatthe“greentransition”shallbea“windowofopportunity”inthememberstatestofostersustainableandjob‐intensiveeconomicactivity.

Europeneedsadigitalsectorthatputssustainabilityandgreengrowthatitsheart.Digitalisationpresentsnewopportunitiesfor:a)monitoringofairandwater pollution, b)monitoring and optimising the consumption andusageofenergyandnaturalresources.

TheCommissionisadvocatinga“sustainableproducts”policy,whichwillprioritisereducingandreusingmaterialsbeforerecyclingthem.However,presently,duetoinsufficientmanufacturingtechnologyopportunities,onlyminimumrequirementswillbesettoregulatetheshareofenvironmentallyharmfulproductsbeingplacedontheEU‐27markets;mostimportantistotackle“falsegreenclaims”.

Twovisibleexamples:theCommissionhasproposedmeasuresin2020toensurethatallpackagingintheEUwouldbereusableand/orrecyclableby2030;newbusinessmodelswillbedevelopedbasedonrentinggoodsandservices to assist member states in shifting consumption patterns awayfromsingleorlimiteduseproducts.

SinceMarch2020,thememberstateswouldfollowtheEUadoptedindustrialstrategy to support thegreen transformation.Hence, themember states’industries will be provided with assistance to modernise and exploitexistingopportunitiesnationallyandregionally.Generally,themainaimisto stimulate the development of new markets for climate neutral andcircularproducts.Asaby‐targetforthememberstates,thedecarbonisationand modernisation of energy‐intensive industries, e.g. steel, cement,chemistry,etc.willbeessential.

Thepotentialsinsustainabilityaregreat:sofar,accordingtotheEurostatdatafrom2016,onlyabout12percentofthematerialsusedbytheEUmemberstates’industriescomefromrecycling.(EC,Sustainableindustry,2019)


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Conclusions

Sustainabilityhasbecomealready“amust”intheBalticStates,aswellasinother EU countries: corresponding EU strategies have turned the EUmember states towards implementing SGDs. Digitalization is having anadditional cumulative effect in this process, while often having someseparateandpositivecircumstances.

Positiveexamplesofteachingsustainabilityinuniversitiesprovidedefinitereasons to believe that changes in education policies in the Baltic StateswouldhavealastingpositiveeffectonSDGsimplementation.

Existingdigitalapplicationsbeingdeployedpresentlythroughspecialists’explorationofthe4IR’schangerswouldprovidefordrastic innovationinthenextdecadeinallspheresofsocio‐economicdevelopmentintheBalticStates.Inherentconnectionsbetweensustainabilityanddigitalizationintheresearch, development and innovation phase are already providing anactivesupportforquickerSDGsimplementationinthestates.

Somepioneeringresearchfields,e.g.quantum‐computinghavealreadybeendetermining optimal carbon capture materials and AI‐enabled research,whichassistincreatingnewantibioticstoaddressmicrobialresistancetocurrentmedicines;inshort,thereareapparentandbreakthroughinnovations–in technology and social/governments policies – to assist the SDGs’implementationinthestates.

Regardless of some problematic issues, modern governing policies, ingeneral, are showing definite potentials in turning available science,technologyanddigitalachievementsintobreakthroughsolutionsthatshallbringcountriesclosertooptimalSDGsimplementation.NewEUeffortsincombiningsustainabilityanddigitalization(e.g.throughthe“greendeal”)thatthecountries’“doublestrategies”arehavingalong‐termpotentials.

References

Global Survey on Sustainability and the SDGs (2020). Schlange & Co. GmbH. See:http://sdghelpdesk.unescap.org/e‐library/global‐survey‐sustainability‐and‐sdgs‐report‐results

Schwab, K. (2016). The Fourth Industrial Revolution. World Economic Forum. In:https://www.weforum.org/agenda/2015/10/the‐fourth‐industrial‐revolution/

WorldEconomicForum.Newsletter:2030–fromtechnologyoptimismtotechnologyrealism,2020. In:https://www.weforum.org/agenda/2020/01/decade‐of‐action‐from‐technology‐optimism‐to‐technology‐realism/

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Eteris,E.(2018).LatviainEuropeandtheworld:growthstrategyforanewcentennial.Inparticular,chapters3.2and3.4.In:https://www.janisroze.lv/lv/gramatas/akademiska‐un‐profesionala‐literatura/ekonomika‐uznemejdarbiba/latvia‐in‐europe‐and‐the‐world.html

EuropeanCommission.AEuropefitfordigitalage:empoweringpeoplewithanewgenerationof technologies (2020). In: https://ec.europa.eu/info/priorities/europe‐fit‐digital‐age_enandhttps://ec.europa.eu/digital‐single‐market/en/economy‐society

Global Survey on Sustainability and the SDGs (2020). Schlange & Co. GmbH. See:http://sdghelpdesk.unescap.org/e‐library/global‐survey‐sustainability‐and‐sdgs‐report‐results

EuropeanCommission.ShapingEurope’sdigitalfuture(2020);agenerallinktotheEUdigitalsinglemarketin:https://ec.europa.eu/digital‐single‐market/enandEuropeanCommission.Creating a digital society (2020). In: https://ec.europa.eu/digital‐single‐market/en/policies/creating‐digital‐society

European Commission. EU data protection rules (2018). In: https://ec.europa.eu/info/priorities/justice‐and‐fundamental‐rights/data‐protection/2018‐reform‐eu‐data‐protection‐rules/eu‐data‐protection‐rules_en

EuropeanCommission.NewEUrulesone‐commerce,2019.In:https://ec.europa.eu/digital‐single‐market/en/new‐eu‐rules‐e‐commerce

EuropeanCommission. Stateof theUnion‐2016: strengtheningEuropean investments forjobsandgrowth(2016).In:https://ec.europa.eu/commission/presscorner/detail/en/IP_16_3002

EuropeanPolicyCenter.ConnectingEurope(2019).In:https://www.epc.eu/en/programmes/Connecting‐Europe~110d3c

EuropeanCommission.ShapingEurope’sdigitalfuture:the4thindustrialrevolution(2018).In:https://ec.europa.eu/digital‐single‐market/en/fourth‐industrial‐revolution

EuropeanCommission.ShapingEurope’sdigitalfuture:digitisingEuropeanindustry(2018).In:https://ec.europa.eu/digital‐single‐market/en/policies/digitising‐european‐industry

EuropeanCommission.Investmentplanresults:breakdownresultsbycountryandsector(2020). In:https://ec.europa.eu/commission/strategy/priorities‐2019‐2024/jobs‐growth‐and‐investment/investment‐plan‐europe‐juncker‐plan/investment‐plan‐results_en

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MOTIVATIONTOWORKANDMANAGEMENTOFITPROFESSIONALS:CASEOFLATVIA

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SvetlanaGribanova,TuribaUniversity,Latvia

[email protected],

EKAUniversityofAppliedSciences,[email protected]

Abstract

Thepurposeofthisarticleistodescribethemotivationstructureof ITprofessionals inLatvia from twopointsofview: from thepointofviewof ITspecialiststhemselvesand fromthepointofviewofHRmanagersworkingonattractingandmanaging ITspecialists.Theresearchquestionishowtoimprovetheefficiencyof ITprofessionalmanagement.The theoreticalbackgroundofthisapproach isbasedonMcClelland’stheoryof learnedneeds.Thisstudyusestheoreticalapproach,focusedonunderstandingof individuals’needsand consideringpeople’sachievementsasthemainmotivationalfactor.Accordingtothistheory,inordertomotivate an employee towork efficiently andmaintain hisdevotiontothecompany,itisnecessarytounderstandhisunsatisfiedneedandofferopportunitiesforitsconstantsatisfaction.

TheresultsoftheresearchshowthatITprofessionalsareagroupofpeoplewhoseneedsforachievementsandneedsforbelongingdominate. Needs for power are present to some extent. Foreffectivemanagementofthisprofessionalgroup,managersshouldcreatecomfortableconditionsofworkforthem.Convenientworkingconditionsassumeminimizationofcontrol,focusonwhatpeopledo,notwhenandhowtheydoit.Itissignificanttoprovideveryaccurateinformationabouttheprojectgoals,restrictions,stagesand deadlines and clearly formulate expectations of labourproductivity and obtained results,minimize routine connectedwithreports.

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Keywords:motivationfactors,labourproductivity,theoryoflearnedneeds,creativepeople,andnarrativeinterview

DOI:10.37804/1691‐6077‐2020‐11‐57‐71

Introduction

Moderneconomyisoftencalled“theknowledgeeconomy”(Stehr&Mast,2012). The idea of knowledge economy is that companies' growth andprofitsmostlydependonknowledgeandinformationthanonsuchfactorsofproductionaslabourandcapital.Thiseconomyreliesontheproperuseof information, as well as its volume and opportunity to distribute thisinformation(Sharif&Irani,2012).Therefore,habits,knowledge,creativityandindividualityofemployees,allthatBeckercalledhumancapital(Becker,2009)arethekeycomponentsofsucheconomy.Thus,attracting,retaining,andmotivatingemployeesbecomeincreasinglychallengingformanagement(Ankli&Palliam,2012).

Successofacompanymostlydependsonstabilityinbusinessprocessesofhumanresourcemanagement(Dominguez,2018;Graa&Abdelhak,2016).Humanresourcesareoftenconsideredasoneofthemostimportantfactorsin achievement of sustainable development of organization (Zaborova&Markova,2018;Vetrakova,etal.,2014).Intheknowledgeeconomy,ITspecialistshave a special role, as it is they who create informational innovativeproducts,improvetechnologicalprocessesandengageinbusinessanalytics(Parijat & Bagga, 2014). Methods of motivation for work, programs forattractingandretainingITprofessionalsdifferfromprogramsorientedonotherspecialists.Studiesshow,that ITprofessionalshavespecificvalues,specialneeds,andtheyprefertokeeptheirownlifestyle(Wei&Yazdanifard,2014).What’smore, IT professionals are in great demand in the labourmarketthatsignificantlycomplicatesmanagementtasks(Lunenburg,2011).

AccordingtotheCentralStatisticalBureau,thenumberofemployeesintheITsector inLatvia for the last10yearshas increasedby58%, from18.9thousand in 2008 tomore than 30 thousand in 2018. The number of ITcompaniesinLatviain2008was2.6thousand;atpresent,therearemorethan 6 thousand already. The share of the IT sector in Latvia’s GDP hasincreasedto4.2%.98%ofLatviancompaniesuseacomputerandInternetin their work and two thirds of companies have their own page on theInternet. At the same time, there is a large shortage of IT specialists inLatvia.AccordingtotheMinistryofEducationofLatvia,only5%ofyoung


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people choose specialties related to IT technology for their studies. As acomparison,thisfigureis18%inEurope.

Themainfactoraffectingtheefficiencyofmanagementandstabledevelopmentofcompanyisthequalityofhumanresources.Successfulbusinessesgenerallyknow about the importance of positive motivation of their employees,perceivingthemasthecompany’sgreatestasset.Intheinformationeconomy,the IT sector, human resources are becoming the biggest competitiveadvantage (Iqbal, 2019). Effective management of human resources isconnectedwithmaintainingthemotivationofemployees.

Thegoalofthearticleistounderstandhowtheconnectionofmotivationtoworkandmotivatorsfor increasinglabourproductivity isbroughtto life.ThepapercomparesthepointofviewofITspecialistsandthepointofviewofHRmanagersworkingonattractingandmanagingITspecialistsinordertofindouthowadequatelymanagersunderstandthestructureoftheneedsandmotivationsofITprofessionalsincontemporaryLatvia.

TheoreticalApproach

This study uses a theoretical approach, focused on understanding ofindividuals’ needs and considering people’s achievements as the mainmotivationalfactor.ThetheoreticalfoundationofthisapproachisbasedonMcClelland’s theoryof learnedneeds(Burnham,2008).According to thistheory,inordertomotivateanemployeetoworkefficientlyandmaintainhisdevotiontothecompany,itisnecessarytounderstandhisunsatisfiedneedsandofferopportunitiesforitsconstantsatisfaction.

Every time an unsatisfied need ismet, an employee feels pleasure fromworkthatincreaseshisdesiretoworkmuchbetter.Iftheprocessofworkisorganizedinawaythatthesatisfactionoftheneedisconstant,acertainrepertoireofbehaviouriscreatedconnectednotonlywiththecontentofthe work, but also with getting pleasure from the satisfaction of needs(Boezeman&Ellemers,2014).

McClelland developed the basic theories of motivation that had existedbefore him (Cerasoli, et al., 2014) and formulated three needs that areformed in people in the process of socialization. He called them learnedneeds:theneedforachievements,theneedforbelonging,andtheneedforpower. Fromhis point of view, everymember of the society owns theseneeds,butforeveryonetheyareexpressedvariously(deGieter&Hofmans,2015).

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From the point of view of the production process, these needs can bedefinedasfollows:apersontakespersonalresponsibilitytofindasolutiontotheproblem;apersonsetsattainablegoals,butassumescalculatedrisks;apersonwantsfeedbackonhislabourproductivity(Rybnicek,etal.,2017).

AtkinsonandRaynor(Braun,etal.,2013)formulatedtherelationshipbetweenmotivationinachievementandcareergrowth.Successfulworkoveralongperiodinaparticularcareerrequiresbothskillsandmotivations.Therefore,thecumulativeachievementdefiningcareersuccessindicatesnotonlythenecessaryabilities,butalsomotivation.

Theimportanceofmotivationinachievementarisesfromitsrelationshiptolabour productivity. Psychologists studying production processes oftendescribetherelationshipbetweenmotivationandlaborproductivityusingthe following formula: productivity = (ability × motivation) (Aydin &Tiryaki, 2018). Campbell and Pritchard (Campbell & Pritchard, 1983)expandedandclarifiedtheroleofmotivationinthisformula.Theyshowedthat there are three activities related to work efficiency for whichmotivationisneeded.Firstly,thisisinitiationofeffortsfordoingthework;secondly,spendingofacertainamountofeffortforthework;and,thirdly,persistence and spending of time in order to do the work well. Theysummarized their point of view on motivation in the following way.Motivationissomethingthatexplainsdirection,amplitude,andconstancyof an individual's behaviour. Motivation depends on abilities, skills andunderstanding of the task to be performed. The environment can limitmotivationifitresistsanindividual'sbehavior(Kohls,etal.,2013).

The theory of learnedneeds allowsus to formulate several assumptionsconcerning the structure of motivation of professionals. People withstronglymarkedneedforachievementaremotivatedbysituationsinwhichtheyhavepersonalresponsibilityforactions,whensuccesscanbeclaimedfortheirowntalentsandefforts.Theyhaveaneedforrisingmobility,forarapid career growth. They prefer to work alone, avoid routine, and setthemselveslong‐termgoals.Materialmotivatorsareimportanttothemasindicatorsofachievement(Sung,at.el.,2015).

Specialists,havingapredominantneedforbelonging,donotliketoworkalone. Cooperation is important for them and they work patiently andthoughtfully.Theyavoidcareergrowth,areabletomaintainrelationshipsinateam,preventconflicts.Theyareafraidtomakeamistake, to let theteamdown,sotheyspenda lotoftimeto findtherightsolution(Valle&Perrewe,2016).


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Theneedforpowercanbeexpressedinmakingalliances, initiatingmostactions, avoiding responsibility, being aggressive, and desire to pass theworktoothers.

MethodologyofResearch

The methodology of research included two parts; each of them was aseparateresearch.ThemaingoalofthefirstpartwastounderstandhowITspecialists themselvesdetermine the factors thatmotivate them toworkmoreefficientlyandproductively.ITprofessionalsworkinginLatviaweretheobject of the first part of the research.This partwasdoneusing thenarrativeinterviewmethod.Theinterviewsampleincludes30interviews:25malesand5females,10respondentsagedfrom20to30,10respondentsagedfrom30to40and10peopleover40.Therespondentswereselectedin accordancewith the principles of constructing a sample ofmaximumdiversity. The sample includes respondents from all age groups andgenerations, which are currently represented on the labour market,respondents who occupy different professional positions and jobresponsibilities.Suchasampleconfigurationallowsrevealingdifferencesassociatedwithdemographicandsocialfactors.

Theaimof thesecondpartof thestudywastocomparethe factors that,frompointofemployee’sview,motivatethemtoworkmoreproductively,withtheincentivesthatHRmanagersuseintheirwork.Theobjectofthesecondpartweremiddle and seniormanagers,HR specialists connectedwithmanagementofITprofessionals.Thesecondpartofresearchusedthemethodofexpertinterview.Atotalof12expertswereinterviewed.Allofthemweremiddleandtopmanagersofcompaniesthatworkinthefieldofinformationtechnology.

ThebasictopicsofnarrativeinterviewswithITprofessionalswerethoserelatedtotheformationofITcommunityinLatvia,effectivemotivationtoworkandjobsatisfaction.Theexpertsspokeabouttheirpointofviewaboutwhatcanbeconsideredasmotivation for ITprofessionals towork,whatvaluematerialmotivationshaveinthesystemofmotivationandwhetherdemographic characteristicsof ITprofessionals influencemotivationandlabourproductivity.

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Results

MotivationofITprofessionals.ITprofessionals’pointofview

Inthecourseoftheinterview,therespondentswereaskedhowtheywouldmotivate their employees if the tasks involved complex, difficult andresponsiblework.

Theanalysisoftheinterviewshowedthat,despitethedangerofgeneralizationsandthefactthatallpeoplearedifferent,andoneITspecialistdiffersfromanother,severalfactorscanbeidentified,thatinITprofessionals’opinion,influence job satisfaction and increase their motivation to work moreefficiently.

Professionalachievements

ITprofessionalsarewellmotivatedbychallenges.Theylikeitwhenalltheirskillsareused.Theyareproudoftheirabilitytosolvecomplextasks.Theyoften strive toprove the significance andvalueofwhat they cando, theuniqueness of their knowledge. What’s more, it is very important forprofessionalstoseethattheirworkmakessense,thatitisneededandusefulforthecompany.

The results of the research show that the most effective strategy formotivatingITspecialistsistorealizethecomplexityoftheproblemsolvedandtheirroleinsolvingit.Acomplextaskisachallengeforanyprofessional.Theneedtocopewithsuchataskcreatesadrive,stimulatesperformance,makesyouforgetaboutthetimespentatwork,i.e.,increaseslabourefficiency.

ThelabourefficiencyofITprofessionalsdirectlydependsonwhetherthemanagercouldsetthetaskappropriatelyandorganizetheworkingprocess.Fairorganizationofworkanddistributionofdutiesareveryimportantforeffectivework.Andheretheroleoftheleaderandhisexamplematteralot.

“Firstofall,Iwouldsetanexample.Yes,wehavesuchprojectswhentheycomeandsay:“Guys,thedeadlinesaretight,thereisalotofwork,andyouneedtoworkhard”.Butwedon'thavethatkindwhenapersoncomes,someleader,pointsateveryoneandsaysthateveryoneworksattheweekend,but he himself is going on vacation. That is, if the project is difficult,everyoneworks.Nomatter it is a director, adviser or aprogrammer” (aman,33yearsold).


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Itshouldbenotedthatspecialistsofthehighestleveldonotneedadditionalmotivation. They alwaysworkwell and efficiently. They cannotwork inanotherway.

Opportunityforprofessionalgrowth

Mental workers are motivated by training, the opportunity to get newknowledge,skills,andtheopportunityto improvetheirskills.Theythinkthat constant training is necessary, and are in dire need of being keptabreastofthelatesttrendsandinnovationsintheirfield.Agapinthisareaisarealthreattotheircareer.Theycannotletthathappen.

Inthecourseoftheinterview,allrespondentsnotedthattheypaycloserattentiontothesearchfornewknowledge.Itis importanttonotethatITprofessionals improvetheirskillsnomattercompaniescompensatetheircostsornot.Therefore,ifthecompanycoverssuchcosts,itisperceivedasanabsoluteadvantageforthecompanycausinggratitudeamongemployeesandmotivatingthemtoworkbetter.

As regards to ways of improving one’s skills, respondents notedparticipationinconferences,listeningtopodcastsandreadingspecializedliterature. However, the most effective way to get new knowledge,accordingtorespondents,isonlinecourses,paidonlinecourses,though.

“Ilikelisteningtopodcasts.Therearespecializedpodcasts;theycoverallsortsoftechnicalthings.Thesearebasicones.Then, if Iget interestedinsomething, I read something special then. Cool colleagues surroundme.Theyalwayssharesomeinformationwithme.Andwhatinterestsme,Itrytolearneverythingaboutit,finditontheInternet,andread.Quiteseldom,butIattendconferences.Butitis,rather,notbecauseoftheinformation,buttorelax,tofindsomenewinspiration”(aman,40yearsold).

Companies are interested in their employees gaining newknowledge, asthis enables increasing their labour productivity and reduces the loss ofpersonnel connected with monotony of work. Companies use differentstrategies in order to organize the process of employees gaining newknowledge.Somecompaniescompensatethetimespentbyemployeesonself‐training.

Some companies organize training courses themselves; they decidethemselveswhichcoursesareuseful foremployeesand inwhatamount.Othercompaniesgoaboutprovidingemployeeswithmaximuminformationaboutexistingcourses,pay for thesecourses,andallocate timetoattendthem.

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Identificationwiththecompany

The research showed that IT professionals, as a rule, firstly identifythemselveswiththeirinterestsorwiththeirprofession,andthenwiththeirorganization.Thiscanbeaproblemwhenaperson'sprofessionalgoalsdonotmatchthegoalsormissionofthemanagementoftheorganization.

ThemaindemotivatorofITprofessionalsisroutine,lackofindependence,creativity and drive. Therefore, only awareness of the complexity andimportanceofthework,aswellasunderstandingthevalueoftheirroleintheworkof thewhole teamand insolvingthisproblem,canmotivate ITspecialists to work more effectively. Some companies purposely form asense of belonging to the team, to the company, to satisfy the need ofemployeesforbelonging.

“Wehaveseveraladditionaldays toourvacation, insurance,paidmobilephonewithverygoodfees.Wealmostdonotcounthowmuchwespendonmobilecommunication.Naturally,Telecomoperatorandallthat.Youwantto do sports, no problem, do sports. Want to participate in volunteeractions‐welcome, here volunteer actions are. You want something else...There is even a whole department considering ideas. The company isinterestedinemployees’ideas,andbesides,inany.Ifyouhaveanidea,youcangiveit,formit.Therearetemplates,documents.Aspecialcommissionwillconsiderit.Ifitisgood,you'llbeabletorealizeityourself,oryouwillbeprovidedwithpeopleinyourteamabletohelpyourealizeitortheywilldoitthemselves,ifitbringsprofitandbenefittothecompany.Youcanbeappointedtheheadofyouridea,whichyoulike,whichyouhaverealized,andyouwillevengetmoneyforit.Ithinkit'saverygoodmotivation,theright motivation when the company is looking for talents inside thecompany”.

It can be assumed that bonuses connected with the payment of mobilecommunication,anopportunitytodosports,etc.areawelcomeaddition,but not a determining motivating factor. However, such companies,accordingtorespondents’words,havethemostqualifiedspecialists.Theyvaluetheiremployees.Therefore,inadditiontotheopportunitytogetnewknowledge and improve their qualification, companies form for theiremployees a whole package of additional services that make their livesmorecomfortable.


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Materialmotivators

Thoughwagesandbenefitscertainlymatter,theycannotbethebasisofastrategy to motivate and retain IT professionals. In the course of theinterview, all respondents emphasized that motivation with the help offinancialinstruments(salaries,bonuses,cancellationofbonuses,threatsofdismissal)isnotaneffectiveway.

“Ithinkthatmoneyisaweakmotivator.Becauseifthereisonlyfinancialmotivation,theywilljustcheat,thatisall.Ithinkthatinthissituationinthemarketitisineffective”.(man,40yearsold).

Ascanbeseenfromtheaboveinterviews,threatsrelatedtodismissalorcancellationofbonusesareevenamoreineffectivemeasurethanfinancialincentive.The situation in themarketof IT technologies inLatvia is thatmost specialists can always find another job. Only companies with aworldwide famecanaffordsomepressureon theiremployees.However,therearealmostnosuchcompaniesinLatvia.

At thesametime, there isashortageofhighlyqualifiedspecialists inthemarket of IT technologies in Latvia. Such specialists “cost “a lot andemployersvaluethem.

“Motivation in IT field is a complex matter. When I start doing somemanaging things, I start hating all programmers. I understand that I amprobably the same; it is very hard tomotivate. Theymust be fascinatedsomehow.Otherwise,itisverydifficult.Iftheyarenotfascinated,youcan'tmotivatethemevenwithmoney”.(aman,41yearsold).

In that way, speaking about the motivation and labour efficiency of ITprofessionals, it is important tounderstand thatmaterial factorsplay anextremelyunimportantroleinthisprocess.ITprofessionalssimplywillnotwork forasalary thatdoesnot fit their ideasofdecent life,whichseemsinadequateornotfairtothem.Afterdiscussionsaboutthissalaryhavebeencompleted,andthespecialisthasdecidedtostartworkinginthiscompany,thequestionofthematerialsidecanbeclosed.Astheresultsoftheresearchshow,ifnecessary,i.e.incaseofmaterialproblems,ITspecialistsknowhowtosolvethisproblemwithoutresortingtochangingajob.

MotivationofITprofessionals.Managers'pointofview

Attracting and retaining IT professionals in contemporary Latvia is adifficult task for a manager, as professionals of this profile are of greatdemandinthelabourmarket.

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“..hispersonalneedsarenecessarytobefoundout.Whatdoesheworkfor?For money, in order to level up his own skill, or to become moreprofessional? Or maybe it's more important for him to work on someinterestingproject,forsomereasonsofhisown.Accordingly,youneedtocommunicatewithhimconstantlyandfindoutabouthisneeds,andcoverthem”.

Managerswhoworkwith IT professionals realize that there is no singlemotivationforallspecialists.Theyunderstandthatpeoplechange,andatdifferent periods of time they have different needs. For this reason, aneffective strategy for a manager, in this case, can be constantcommunicationwithemployees.

Replacingoneemployeewithanother isaveryexpensivecostlyprocess,connectedwithbusinessrisks.Therefore,inallcompanies,managerspayalotofattentiontoloyaltyprograms,andcompaniesspendalotofresourcesonthem.

“DemandforITspecialistsismuchhigherthanspecialistsexist.So,thereisalwaysanopportunityforthemtofindwork,evenmuchmorepaid,thantheirskillallowstoday”.

It is clear from theabovequotes that specialists in this field can claimasalary higher than their skills. In the interviews, managers told thatfreelancerscansometimesearnmorethanspecialistsworkinginstaff,anditmakescompaniesspendmoreresourcesonhiringgoodspecialiststhantheyexpected.

Moreover,companiesoftenbecomedependentonanITprofessional,asincase of dismissal, it will be difficult for the company to find a newprofessionalabletoworkwiththedevelopedsoftware.

“Someorganizations...areinakindoftrap,dependenceonaspecialist.Andas a result, the dismissal of this employee threatens the service of thissoftwaretobestopped.Butitisevenmoredifficulttolookforaspecialistwhocanunderstandsomeoneelse'scode”.

Asarule,managersunderstandthatinorderforanITspecialisttoagreetoworkinacompanyandnottolookforanotherjob,it’snecessarytocreatecertainconditionscomfortableforhim.Andsuccessinsolvingthisproblemisconnected,firstofall,withanadequateunderstandingofthespecificsofITprofessionals’work.

The results of this research show that managers who work with ITspecialistsunderstandcorrectlyoneofthemostimportantmotivationsforthis professional group – professional achievements. IT professionals in


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their interviews often told that they like clear, specific and complicatedtasks,liketobenefitthecompany,liketoseetheresult.

It is important to say that the given tasks should correspond to theprofessional level of the specialist. All IT professionals are constantlylearningandimprovingtheirqualification.That’swhy,theymusthaveanopportunitytodemonstratetheirnewskills.

One more motivation of IT professionals, in managers’ opinion, is goodinterpersonalrelationshipsinthecompany,psychologicalcomfort.

“Inmostcases,ITprofessionalsarethinkingpeople,thinkingcritically.Theyneedtoexpresscreative,engineeringthinking....ThereisanopinionthatITprofessionalsdonotlikepeople,oraresecretive.It’smostlynottrue.Theyareclose,iftheyarenotsatisfiedwithinterpersonalrelationships.”

FromtheabovequotesitcanbeseenthatanimportantmotivationforworkforITprofessionalsis interestintheworkbeingperformedandpleasurefromtheresult.Manyexpertssaidduringtheinterviewthatitisnecessarytomaintaininterestinthetaskstobesolved,tomakesurethattheworkdoes not turn into routine for an IT professional. And, of course, offer adecentsalary.Thisisnotdiscussed,asarule.

In their interviews, ITprofessionals said that it is important for them tohave identification with the company, not just identification with theprofession. Good interpersonal relationships in the company create suchidentification,formadditionalvaluetotheworkplaceandtherefore,workforloyaltytothecompany.

Gettingnewknowledgeandprofessionaldevelopmentisanothermotivation,whichwascalledbybothmanagersandITprofessionalsasaveryimportant.

“Wepayforcoursestheemployeehaschosenhimself.Weletpeoplegotoconferences.Newknowledgeisveryimportantinthisfield.Ifyoudonotdothisthepersonwillsimplyleave.”

IT professionals in their interviews did not speak about importance forthemof freescheduleandopportunity toworkremotely.Perhapssuchaschedule and style of work is perceived by them as something natural,evident,thatisactualizedonlyinasituationofitsimpossiblerealization.

It is important to say that freedom of IT professionalsmakes additionaldifficultiesintheworkofmanagement,buttheyarereadytotakeonrisksinordertomotivatetheITspecialisttowork.

“Sometimesduetothefactthattheyallworkindifferentplaces,firstly,thedifferenceoftimezonesaffectsus.Andduetofreescheduleofwork,people

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canleaveatthemomentwhenIneedthem.Buthereisnothingtodowith.Ihavetosolveitsomehowmyself.”

Atthesametime,careeropportunities,accordingtomanagers,arenotsoattractiveforITprofessionals.Firstly,inthisprofession,professionalskillsandachievementsarevalued,notadministrativestatuses,andsecondly,thestructureofthemarketitselfdoesnotimplyhierarchies.

“Wedonothavesuchahighhierarchy.Howisitintypicaloffices?Therearemanagers,thereisadirector,andthereisadeputydirector.Thereisahighladderandyoucangoalongwayup.ForITdevelopers,thestructureisflatratherthanpyramid‐shaped.”

Ontheotherhand,anorganizationdoesnotalwayshaveanopportunitytopromiseanemployeecareergrowthforagoodjob.

“Thismotivationworksprobablywhenanorganizationhasanopportunitytoprovidewithsuchgrowth,thestafflistallowstodoit.”

Itcanbeassumedthattheprofessionofaprogrammerisnotveryattractivetopeoplewhohavealearnedneedforpower.Theworkinthisfielddoesnotinvolveaggression,buildingverticalrelationships,manipulatingcolleagues.Thisprofessionattractspeoplehavingneedsforachievementandmembership.

Managersmadecontradictorystatementsoftheroleofmaterialmotivatorsformotivatingandretainingemployees.Ontheonehand,expertsadmittedthatinsomecases,materialmotivatorsareused,anditworks.

“Imadeaprogressivescaleofpay‐outfortheemployees.Itmeans,themorehoursoneworks,thehigherpercentofpay‐outforthehourhegets.Let’sassume,therearepeoplewhoaregoodwith70hoursamonth,butsomearereadytotake200.”

On the other hand, experts say thatmaterialmotivators hardly seem tomatterforattractingandretainingaspecialist.Firstly,thisisduetothefactthat the salary of IT professionals in Latvia is already quite high, thecompany'sleaderscannotraiseitconstantly.

“Ouremployeeshaveverydecent salaries.Of course, theyareconstantlygrowinginthemarket.1,500euroswasagoodsalaryonce,nowit’snotaverygoodone.Buttheyget2000eurosnow.”

Secondly, not allmanagers have such a tool to increasemotivation. Thebonusbudgetislimited,salariesareregulatedbythestafflist.

Thirdly,underconditionswheninteresttoworkisstrongerthanmaterialmotivators,itisquiteunreasonabletousematerialresources.


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“For us talks about an interesting task and self‐development helpmore.Howexactlythistask,heisdoingnow,canhelphiminself‐developmentandinthedevelopmentoftheindustryingeneral.”

Animportantresultoftheexpertsurveyofcompanies’managerswhereITprofessionalsworkistheidentificationofgenerationaldifferencesconnectedwith strategies to increase loyalty to the company.Thesedifferencesareexplainedbylifegoalsofspecialistsofdifferentages.

“Young,under30,–theyareambitious,theystillknowlittle,that’swhytheyarereadytotakeoneverything,solvecomplexinterestingtasks.Theyarereadytochangetheworld.”

Atthesametime,asexpertssay,theoldergenerationhasitsownadvantagesconnectedwiththefactthattheyarebetterabletomaintaininterpersonalrelationships,donotcreateconflicts,donotbuildintrigues.Theyjustwork,createaproductandtakeresponsibilityfortheirresult.

Middle‐agedpeople,especiallythosewhohaveafamily,areinterestedinabalance between family and work, and do not really want additionalobligations related to management. However, sometimes they need thestabilityoftheirpositioninthecompany;theycannotaffordtolosetheirjobeven for awhile, so they canbe attractedby thepromiseof a stablecareerposition.

Olderpeoplehaveverygreatprofessionalexperience,theyarevalued,theyknowtheirownworth,andacareerpositioncanbeoneoftheconfirmationsofthisassessment. Inaddition to this, expertsnote that there is somecontradictionwhenaveryyoungpersonoccupiesaleadingposition,andhissubordinateisapersonofage.Therefore,forolderemployees,anopportunitytobecomeateamleadermaybeabettermotivatorthanformiddle‐agedemployees.

Conclusion

TheresultsoftheresearchdemonstratethatITprofessionalsareagroupofpeople,whoseneedsforachievementsandneedsforbelonging,dominateinvaluesettingpattern.AccordingtoMcCleland'stheory,theseneedsareshaped during socialization. This can explain the differences in needsamongrepresentativesofdifferentgenerationsthatwereidentifiedbytheresults of the research. Needs for power are present to some extent,especiallyforthemillennialgenerationandtheyoungergeneration.Similarresultswereobtainedinstudiesconductedinothercountries(Rybnicek,etal.,2017; Vetrakova, et. al, 2014; Zaborova &Markova, 2017). For effectivemanagementofthisprofessionalgroup,managersshouldcreatecomfortable

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conditionsforthem.Inaddition,themaintaskofmanagersistounderstandwhatconditionsarecomfortableforITprofessionals.TheresearchresultsshowthatforITspecialistsinLatviathismeansminimizedcontrol,focusonwhatpeopledo, nothow theydo it. It is very important for them to getaccurateinformationaboutthegoals, limitations,stagesandtermsoftheproject.Clearlyformulateexpectationsoflabourproductivityandobtainedresults, minimize routine connected with reports. The factors identifiedconfirmthetheoryoflearnedneeds.Studiesonthemotivationofcreativeemployees conducted in countries such as South Korea, Turkey, andSlovakiarevealedsimilarfactors(Sung,at.el.,2015;Aydin&Tiryaki,2018).

Inaddition to this, for ITprofessionals toworkasefficientlyaspossible,managersshouldconstantlychallenge thembyofferingcomplexprojectsthatrequirefromemployeesskillstheydonothave.Itisimportanttohelpemployeesunderstandandevaluatetheimpactoftheirworkontheresultofthecompany,torecognizetheeffortsofeachpersoninasuccessfulresult.

Improvement of professional skills plays a special role in the work of ITprofessionals. Managers should provide all opportunities (formal andinformal) for studying and knowledge exchange. Thismay include trainingcourses,branchconferences,andparticipationintechnicalassociations.It issignificanttoencouragethedesiretoexperimentwithnewideasandmethods.

As the results of this study reveal, managers do not always adequatelyunderstandtheneedsofITprofessionals.Theyoverestimatetheimportanceofmaterialincentivesandunderestimatetheroleofincentivesassociatedwithprofessionalachievement.ForeffectivemanagementofITprofessionalsitisimportanttoproperlyunderstandandsatisfythelearnedneedsofITprofessionals.

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Sharif,A.M.,Irani,Z.(2012).Supplychainleadership.IntJProdEcon,140(1),pp.57–68

Stehr,N.,Mast,Jason,L.(2012).KnowledgeEconomy.HandbookontheKnowledgeEconomy,Volume2

Sung,Y.,Choi,S.M.,Ahn,H.,Song,Y‐A.(2015).Dimensionsofluxurybrandpersonality:scaledevelopmentandvalidation.PsycholMark,32(1),pp.121–132

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ANALYSISOFLITHUANIANREGIONALDEMOCRACYACCORDINGTOTHEARTICLESOFEUROPEANCHARTEROFLOCALSELF‐GOVERNMENT

KarolisKaklys,KazimierasSimonavičiusUniversity,Lithuania

[email protected]

Abstract

Thepoorlyaddressedproblemofmotivationofself‐governmentdemocracymayhinderdirect involvementof inhabitants intheprocess of public affairsmanagement and decision‐making onsocial, political, cultural, economic and other issues of self‐government.TherightofcitizenstoparticipateinpublicaffairsisdefinedinthepreambletotheCharterasoneofthefundamentalprinciples of democracy.Moreover, Lithuania has ratified theEuropeanCharterofLocalSelf‐Government(1999),whilecommittingitselftoimplementitsprovisionsinthenationallegalsystem.AswithallCouncilofEuropemultilateraltreaties,thereisacertainmonitoringsystemfortheproperimplementationoftheCharterofLocalSelf‐Government,whichisoneoftheinstitutionaltoolsforenforcementisGroupofindependentexperts.

Therefore,theresearchaimstodeterminethelevelofexpressionoftheprinciplesenshrinedintheEuropeanCharterofLocalSelf‐GovernmentinLithuaniannationallaw;torevealtheinfluenceoftheprinciplesenshrined in theEuropeanCharterofLocalSelf‐Government on the democratic processes in Lithuanian self‐government;toputforwardsolutionsfortheLithuanianlegislatoron issues identified related to questions analysed in order toimprovenationallegalregulation.Theresearchwillusetheoretical,historical,empirical,comparativeandanalyticalmethods.

Keywords:EuropeanCharterofLocalSelf‐Government,municipalcouncil,politicalminorityrights,opposition

DOI:10.37804/1691‐6077‐2020‐11‐72‐91


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Introduction

Firstofall,itmayberecalledthattheEuropeanCharterofLocalSelf‐GovernmentwassignedinStrasbourg1in1985asaninternationaltreatyoftheCouncilofEurope.Todate,all47CouncilofEuropememberstateshaveaccededtothisinternationaltreaty,whichaimstopromotelocaldemocracy.Lithuaniaratified the European Charter on Local Self‐Government in 19992.According toArticle138of theConstitutionof theRepublicofLithuania3,ratified international treaties are part of the Lithuanian legal system.AlthoughitcanbesaidthatthemainprovisionsoftheCharterhavebeentransposed into the Law on Local Self‐Government of the Republic ofLithuania,however,intheeventofcompetitionbetweenthislawandtheCharter,theLithuaniancourtsmustapplytheprovisionsoftheCharter.

As with all Council of Europe multilateral treaties, there is a certainmonitoringsystemfortheproperimplementationoftheCharterofLocalSelf‐Government,oneoftheinstitutionaltoolsforenforcementofwhichistheGroup of independent experts. ThisgroupismadeupofaleadexpertandseveraldeputiesfromeachmemberstateoftheCouncilofEurope.TheyareassistedbyasecretariatappointedbytheCongressofLocalandRegionalAuthoritiesoftheCouncilofEurope(CoE),consistingofall648membersrepresenting more than 200,000 municipalities and regions of memberstates of the Council of Europe. Experts are usually chosen from highereducation institutions orNGOsworking in the field of local government.Theyareappointedbyseveralsecretary‐generalstotheCongressofLocalGovernment.TheGroupofIndependentExpertsisassistedbytheCouncilof Europe Secretariat. The Independent Expert Group, assisted by localexperts,preparesreportsontheimplementationoftheCharterintheCoEMemberStatesandmakesrecommendations.Inaddition,attheinvitationoftheStates,expertscarryoutthemonitoringoflocalgovernmentelections.Inordertodiscussalltheseissuesandtocoordinatefuturework,agroupofindependentexpertsmeetsonceayearforanannualmeetingofseveraldays, usually in Strasbourg, at the CoE headquarters, in the so‐calledEuropeanPalace(inFrench–Palais de l‘Europe).

Relevanceof the topic: Thepoorly addressedproblemofmotivationofself‐governmentdemocracymayhinderdirectinvolvementofinhabitantsintheprocessofpublicaffairsmanagementanddecision‐makingonsocial,political,cultural,economicandotherissuesofself‐government.Therightofcitizenstoparticipateinpublicaffairsisdefinedinthepreambletothe

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Charterasoneofthefundamentalprinciplesofdemocracy.Therelevanceof thechosen topic isalsodemonstratedby the fact thatevenbefore theintroductionofthedirectelectionsofmayorsinLithuaniain2011,LithuanianresearcherswhohavestudiedthepeculiaritiesoftheimplementationoftheprinciplesenshrinedintheEuropeanCharterofLocalSelf‐Governmentinthefieldoflocalself‐governmentandincorporationlawconcludedthattheprovisionsoftheCharterwereincorporatedintonationallawdifferently4.Therefore,thepurposeofthisresearch is toanalyse thecontentof theprinciplesenshrinedintheEuropeanCharterofLocalSelf‐Governmentandtoreveal relevantpracticesandproblems in the implementationof theseprinciplesinlocalgovernment.

Theobjectoftheresearch:ImplementationoftheprinciplesenshrinedintheEuropeanCharterofLocalSelf‐GovernmentintheLithuanianlocalself‐governmentandtheirincorporationintonationallaw.

Thetasksoftheresearches:1.TodeterminethelevelofexpressionoftheprinciplesenshrinedintheEuropeanCharterofLocalSelf‐GovernmentinLithuaniannationallaw;2.Torevealtheinfluenceoftheprinciplesenshrinedin the European Charter of Local Self‐Government on the democraticprocessesinLithuanianself‐government;3.Toputforwardsomesolutionsfor the Lithuanian legislator on issues identified related to questionsanalysedinordertoimprovenationallegalregulation.

Themethodsoftheresearch:Theresearchwascarriedoutbyemployinglogical, comparative legalmethods, system analysis, linguistic, empirical,synthesisingmethodsandanalysisoflegaldocuments.Thegeneralizationmethodwasusedtosummarizethecollected(analysed)researchdataandformulateconclusionsandsuggestions.

Abbreviations: NGO – non‐governmental organization; CoE – Council ofEurope;Charter–EuropeanCharterofLocalSelf‐Government.

ThemanifestationoftheprinciplesenshrinedintheCharterofLocalSelf‐Government

intheLithuaniannationallaw

Article2–Constitutionalandlegalfoundationforlocalself‐government

The principle of local self‐government shall be recognizedin domesticlegislation,andwherepracticableintheconstitution.


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TheterritorialadministrativeunitsoftheRepublicofLithuaniaarecountiesandmunicipalities.Countiesareformedfromtheterritoriesofthemunicipalitiescharacterizedbycommonsocial,economicandethno‐culturalinterests.

TheConstitutionoftheRepublicofLithuaniahasaseparatesectiononlocalgovernmentanditsmanagement–“Localself‐governmentandgovernance”(SectionX),whichnotonlyshowstheimportanceoflocalself‐governmentin the State context, but that the principles of local self‐governmentmentioned in the Constitution of the Republic of Lithuania also gainconstitutionalprotection.TheconstitutionalfoundationsofLithuanianlocalself‐governmentarealsoestablishedinarticles10,11and67(17p.)oftheLithuanianConstitution.

There are 60 separate territorial administrative units (municipalities) inLithuania,whichareguaranteedbymunicipallawandimplementedthroughmunicipalcouncilselectedbysecretelections.UndertheConstitutionoftheRepublicof Lithuania, the right of self‐government is guaranteedonly tomunicipalities–lowerterritorialadministrativeunits,thereforeLithuaniaisclassifiedasone‐tiertypeself‐governmentcountry.However,inadditionto the lower (i.e. first‐tier) units, there are higher (i.e. second‐tier)administrative units where the government organizes the management.ThefactthatSectionXoftheConstitutionenshrinesatleasttwotiers(units)ofadministrativeunits,whichtheConstitutionalCourthasalsoheld.5

The first article of the LawonTerritorialAdministrativeUnits and theirBorders6statesthatadministrativeunitsoftheterritoryoftheRepublicofLithuaniaarecountiesandmunicipalities.Thecountyisahigheradministrativeunit of the territory of the Republic of Lithuania, wheremanagement isorganizedbytheGovernmentof theRepublicofLithuania inthemannerprescribedbylaw(thesecondarticleofthesamelaw).

TheConstitutionoftheRepublicofLithuaniadoesnotenshrinetheprocedureforthedesignationofcountyadministrativeinstitutionsorpositions,theirformationortheappointmentandorganizationoftheiractivities,thereforethe legislatorhasasufficientlywidediscretion in formulating thecountymanagementpolicy.

TheterritoryoftheRepublicofLithuaniacurrentlycomprises10countiesand 60municipalities. The majority of municipalities are divided intosmallerterritorialunits–wards.

Based on the data of the Lithuanians enterprise Centre of Registers, on1February2019,therewere103cities/towns,252townships,19075villages.

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Article3–Conceptoflocalself‐government

1.Localself‐governmentdenotestherightandtheabilityoflocalauthorities,withinthelimitsofthelaw,toregulateandmanageasubstantialshareofpublicaffairsundertheirownresponsibilityandintheinterestsofthelocalpopulation.

2.Thisrightshallbeexercisedbycouncilsorassembliescomposedofmembersfreelyelectedbysecretballotonthebasisofdirect,equal,universalsuffrage,andwhichmaypossessexecutiveorgansresponsibletothem.Thisprovisionshallinnowayaffectrecoursetoassembliesofcitizens,referendumsoranyotherformofdirectcitizenparticipationwhereitispermittedbystatute.

ThewordingofArticle3(1)oftheCharterontherightofself‐governmentto conduct its public affairs under its full responsibility is enshrined inArticle 120 of the Constitution of the Republic of Lithuania,whichestablishes, that“Municipalitiesshallact freelyandindependentlywithinthe limits of the competencedefinedby theConstitution and laws”.Thisprovision is also enshrined in Article 4 (2) of the Law on Local Self‐Government.TogetherwithArticle3oftheCharter,whichstipulatesthatthelocalgovernmentshallhavetherightandabilitytohandleandmanagethe major part of public affairs represented by freely elected councils,Article120oftheConstitutionprovidesfortheelectionoflocalgovernmentdecision‐making bodies and the right to vote for citizens and otherpermanentresidentsoftheadministrativeunit.

Article19(1)oftheLawonLocalSelf‐GovernmentstipulatesthattheMayorshall be elected directly for the duration of the term of the MunicipalCouncil. Paragraph 1 of Article 22 of the Law on Local Self‐GovernmentestablishesthatamemberoftheMunicipalCouncilshallbearepresentativeofthemunicipalcommunityelectedbypermanentresidentsofthemunicipalityinaccordancewith theprocedureestablishedby theLawonElections toMunicipalCouncils.

Inthe2019municipalcouncilelectionsinLithuania,1502councilmemberswaselected inallsixtymunicipalities, thenumberofcouncilmembers ineachmunicipalitywasproportionaltothepopulationshowninthetable.


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Table1Population NumberofmunicipalcouncilmembersLessthan5000residents 15membersofthemunicipalcouncilBetween5000and10000residents 17membersofthemunicipalcouncilBetween10000and20000residents 21membersofthemunicipalcouncilBetween20000and50000residents 25membersofthemunicipalcouncilBetween50000and100000residents 27membersofthemunicipalcouncilBetween100000and300000residents 31membersofthemunicipalcouncilBetween300000and500000residents 41membersofthemunicipalcouncilMorethan500000residents 51membersofthemunicipalcouncil

Itisimportanttonote,thatafter2015thefirstdirectelectionsofmayorsheld in Lithuania onMarch 1 – even at sixteenmunicipalities (Birštonasmunicipality, Druskininkai municipality, Ignalina district municipality,Jonavadistrictmunicipality,Kaunasdistrictmunicipality,Lazdijaidistrictmunicipality, Marijampolė municipality, Neringa municipality, Pagėgiaimunicipality,Palangamunicipality,Pasvalysdistrictmunicipality,Rietavasmunicipality, Šakiai municipality,Šalčininkai municipality, Vilkaviškisdistrictmunicipality,Vilniusdistrictmunicipality)7oneofthepoliticalpartiesorpolitical organizations (movements) in themunicipalities of Lithuaniawon an absolute majority, which further emphasizes the importance ofsecuring therightsof theminority (opposition).Moreover,after2019onMarch3, thenumberof "one‐party"municipalities inmunicipalelectionsincreasedtoseventeen.8

Article4–Scopeoflocalself‐government

1. The basic powers and responsibilities of local authorities shall beprescribedbytheconstitutionorbystatute.However,thisprovisionshallnotpreventtheattributiontolocalauthoritiesofpowersandresponsibilitiesforspecificpurposesinaccordancewiththelaw.

2.Localauthoritiesshall,withinthelimitsofthelaw,havefulldiscretiontoexercise their initiativewithregard toanymatterwhich isnotexcludedfromtheircompetencenorassignedtoanyotherauthority.

3.Publicresponsibilitiesshallgenerallybeexercised,inpreference,bythoseauthoritieswhichare closest to the citizen.Allocationof responsibility toanotherauthorityshouldweighuptheextentandnatureofthetaskandrequirementsofefficiencyandeconomy.

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4.Powersgiven to localauthorities shallnormallybe fullandexclusive.Theymaynotbeunderminedor limitedbyanother,centralor regional,authorityexceptasprovidedforbythelaw.

5.Wherepowersaredelegatedtothembyacentralorregionalauthority,localauthoritiesshall,insofaraspossible,bealloweddiscretioninadaptingtheirexercisetolocalconditions.

6.Localauthoritiesshallbeconsulted,insofaraspossible,induetimeandinanappropriatewayintheplanninganddecision‐makingprocessesforallmatterswhichconcernthemdirectly.

TheConstitutionoftheRepublicofLithuaniadoesnotdirectlydefinethepowersanddutiesoflocalself‐governmentbodies,thusleavingthemtobeestablishedby law.The lawdefines indetailwhat functionseach levelofgovernmentshouldperform.Article6oftheLawonLocalSelf‐Governmentlists autonomous functions of municipalities, such as:preparation andapprovalofthemunicipalbudget;settinglocaltolls;management,useanddisposaloflandandotherpropertyownedbythemunicipality;maintenance,repairandconstructionofmunicipalroadsandstreetsoflocalimportance;theorganizationofroadsafetyandmanyothers(45pointsintotal).Itshouldbenotedthatthelistisnotexhaustive,asArticle6(46)oftheLawonLocalSelf‐Governmentprovidesthatotherfunctionsofautonomousmunicipalitiesnotattributedtopublicauthoritiesmayalsobeincluded.

Article 7 of the Law on Local Self‐Government specifies the functionsdelegatedbytheStatetomunicipalities,suchas:registrationofactsofcivilstatus; firesafety; involvement inmanagingstateparks;settingupsocialbenefits and compensation; providing freemeals to students, andmanyothers(38 items in total). It should also be noted that the list is notexhaustive,asArticle7(39)oftheLawonLocalSelf‐GovernmentprovidesthatfunctionsdelegatedbytheStatemayincludeotherfunctionsdelegatedbylaw.

Article8(1)oftheLawonLocalSelf‐GovernmentstatesthattheMunicipalityis responsible for the provision of public services to the population.Municipal institutionsandadministrationdonotprovidepublic services,except as provided by law. They are provided by budgetary and publicinstitutions,municipalcompanies,jointstockcompaniesandotherentities.

Paragraph1ofArticle9oftheLawonLocalSelf‐Governmentstipulatesthatthe Municipality shall administer and ensure the provision of publicservicestoresidents,however,theMunicipalityshallestablishnewpublicserviceprovidersonlyincaseswhereotherprovidersdonotprovidepublic


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servicesortheycannotprovidethemwithgoodqualityandatlowercosttothepopulation.(Article9(2)oftheLawonLocalSelf‐Government)

AccordingtoArticle9–1(1)of theLawonLocalSelf‐Government,aneweconomicactivitymaybecarriedoutwhen:1)itisnecessarytosatisfythegeneral interestofthemunicipalcommunity(and)2) inthelightoftheircommercial interests, other economic operatorswould not carry out, orwould not carry out, such activities to the extent necessary tomeet thegeneral interest of themunicipal community (andonly)3) unless such adecision favoursordiscriminates against individual entitiesor groupsofentities.

Article5–Protectionoflocalauthorityboundaries

Changes in local authority boundaries shall not bemadewithout priorconsultationof the localcommunitiesconcerned,possiblybymeansofareferendumwherethisispermittedbystatute.

TheEuropeanCharterofLocalSelf‐Governmentstipulatesthatchangesinlocalauthorityboundariesshouldnotbemadewithoutpriorconsultationof the local communities concerned, possibly bymeans of a referendumwherethisispermittedbystatute.

In line with this, the Law on Territorial Administrative Units and theirBorders 1999, provides that, in determining the boundaries of a localauthority, the Minister of the Interior must follow a strict procedure,includingelicitingtheviewsoftherelevantlocalcouncilsandconductinganopinionpoll. Thiswasmade clear in the instructiveConstitutionalCourtCase9No. 9/2000, of 28 June 2001, inwhich the Constitutional Court ofLithuaniaruled,thattheGovernmenthadfailedtofollowthisprocedure.

Inconclusiononthispoint,thelawsofLithuaniaareinaccordwiththeCharter,buttheresponsibleorganofthegovernmenthadfailedtofollowthelaws.

Article6–Appropriateadministrativestructuresandresourcesforthetasksoflocalauthorities

1.Withoutprejudicetomoregeneralstatutoryprovisions,localauthoritiesshallbeabletodeterminetheirowninternaladministrativestructuresinordertoadaptthemtolocalneedsandensureeffectivemanagement.

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2.Theconditionsofserviceoflocalgovernmentemployeesshallbesuchastopermit therecruitmentofhigh‐quality staffon thebasisofmeritandcompetence;tothisendadequatetrainingopportunities,remunerationandcareerprospectsshallbeprovided.

TheseprovisionsareenshrinedinChapterFouroftheLawonLocalSelf‐Government,MunicipalAuthorities,theirFormationandPowers(Articles11–21), inwhich state that the structure of municipal administration,regulationofactivitiesandfinancingareapprovedbythemunicipalcouncil.

UndertheLocalSelf‐GovernmentLaw,amunicipalitymaysetupcommittees,commissions andotherbodies itself, although some committees, such ascontrol,budgetandfinancecommittees,aremandatory.Thereisnounifiedstructureofmunicipalcouncilcommittees–eachmunicipalityestablishesaseparate number of committees. For example, in Vilnius, the largestmunicipalitywith51membersofcouncil,therearesevencommitteesinthefollowing areas:economic and financial affairs; social issues; urbandevelopment; health, hygiene and the environment; services and urbaneconomy;culture,sportsandeducation;municipaldevelopmentandpublicsecurity.Othersmallermunicipalitieshaveonlythreeorfourcommittees.

Eachmunicipalcouncilshall,forthedurationofitstermofoffice,approvetheReglamentofProcedureoftheMunicipalCouncil–themaininternallegalactof the municipal council, which establishes the procedure and forms ofactivitiesofthemunicipalcouncil,mayor,vice–mayor,councilcommittees,commissionsandindividualcouncilmembersinaccordancewiththeLawonLocal Self‐Government of the Republic of Lithuania. It also establishes theprocedure for reporting to the mayor, the director of the municipaladministration,themunicipalombudsmanforthebillingcouncilandresidents,aswellasthemainformsandmethodsofcommunicationwiththeresidents.

Articles14and15oftheLawonLocalSelf‐GovernmentoftheRepublicofLithuania provide for exclusive minority (opposition) rights in order toensurepoliticaldemocracy–freedomofopposition.Forthedurationofitsterm,theMunicipalCouncilshallsetupEthics,Anti‐CorruptionCommissionsandaControlCommittee,whoseChairman's candidatesaredelegatedbytheopposition.

Article 15 (1) of the Law on Local Self‐Government stipulates, that theMunicipalCouncilmustformanEthicsCommissionandanAnti‐CorruptionCommissionforthedurationofitsmandate.Themunicipalcouncilappointsthechairmenofthesecommissionsfromthemembersofthecouncilontherecommendationofthemayor.Ifaminoritycouncil(opposition)isdeclared,


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mayor shall nominate the chairmen of the Ethics and Anti‐CorruptionCommissionsontheproposaloftheminority(opposition)ofthemunicipalcouncilinaccordancewiththeprocedureestablishedbytheregulation.

Furthermore, the Law on Local Self‐Government of the Republic ofLithuaniaprovides foranexceptionalprocedure for the formationof theControl Committee, irrespective of the proportionality of the number ofmembersofthecouncilfactionsorcouncilgroups.ItshouldbenotedthatParagraph2ofArticle14oftheLawonLocalSelf‐Governmentestablishesthe principle of equal representation of all groups and factions of theCouncil (irrespective of the majority or minority). While explaining theprinciple of proportional majority and minority representation inParagraph2ofArticle14oftheLawonLocalSelf‐Government,theCollegeofJudgesoftheSupremeAdministrativeCourtofLithuaniahasnoted,thatitsmainobjectiveistosecuretheminorityinterestsoftheCouncil10.TheLawonLocalSelf–GovernmentoftheRepublicofLithuaniaprovidesthat–the Control Committee shall consist of an equal number of delegatedrepresentatives of all factions of theMunicipal Council and the group ofMunicipal Councilmembers, if it consists of at least 3Municipal Councilmembers.Atthesametime,thelegislatorhasenshrinedinArticle14(3)oftheLawonLocalSelf‐GovernmenttherightoftheoppositiontonominateacandidateasChairmanoftheControlCommittee.

Asystematicassessmentof theabove‐mentioned legislationandrelevantcase‐law, which include theoretical minority (opposition) rights, wouldsuggest that there is a system of balancing between themajority of thecouncilandtheminority.However,itshouldbenoted,thatthelegislaturelefttheneedformajorityapprovalforeachcandidateproposedbyagrouporgroupofcouncillors.ItisclearthatthemajorityoftheCouncil'sopposingminority,withoutthesupportoftheirpoliticalopponents,aredeprivedoftheopportunitytoprovetheircandidacy,which,accordingtosettledcase‐law,isthedutyofthemajorityoftheCounciltoapprove.Suchagapinlegalregulationnotonlycreatesaconflictsituationbetweentheprincipleofthefreemandateofamunicipal councilmemberand theperformanceofhisduties,butalsoleavesthelegaluncertaintyofthesystemofleverageandbalance between the majority and minority of municipal councils. Suchuncertaintyprovidesapracticalopportunityforthemajorityofcouncilstoeliminateminorityfromthecompositionofthecontrolcommittee,sothelegislature's requirement for the municipal council to approve theopposition'snominationisrestrictiveandredundantofminorityrights.

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Existingregulatoryissuesneedtobeaddressedbyeliminatingtheneedformajorityapprovalofdelegatedrepresentativesofcouncilmembergroupsorfactionstothecontrolcommittee,leavingituptothemtodecidewhichmemberisbestsuitedtofillthestatutorypostsonthecontrolcommittee.Inthiscase,theprincipleofseparationofpowerscouldalsobefollowed,withdifferentfunctionsbeingdelegatedtodifferentauthorities,prohibitingtheexerciseofforeignfunctions.

Article7–Conditionsunderwhichresponsibilitiesatlocallevelareexercised

1.Theconditionsofofficeoflocalelectedrepresentativesshallprovideforfreeexerciseoftheirfunctions.

2.They shallallow forappropriate financial compensation for expensesincurred in the exercise of the office in question as well as, whereappropriate,compensationforlossofearningsorremunerationforworkdoneandcorrespondingsocialwelfareprotection.

3.Any functionsandactivitieswhicharedeemed incompatiblewith theholdingoflocalelectiveofficeshallbedeterminedbystatuteorfundamentallegalprinciples.

Article120oftheConstitutionstatesthatmunicipalitiesshallactfreelyandindependently within the limits of the competence defined by theConstitutionandlaws.ThisprincipleisalsofoundintheLawonLocalSelf‐Government,forexample:Article3(1).

Article26oftheLawonLocalSelf‐GovernmentstipulatesthatthemembersoftheCouncilshallberemunerated(paid)fortheirworkingtimeduringtheperformanceofthedutiesofamemberoftheMunicipalCouncil.Thissalaryshall be calculated on the basis of the published amount of the countryaverage salary level, taking into account the time actually worked, theduration of which shall be fixed in accordancewith the Regulation. Theamount of remuneration for working time as a member of a municipalcouncil shall be determined by the municipal council. Accordingly,remunerationfortheactivitiesoftheMayorandDeputyMayorisenshrinedinArticle19oftheLocalGovernmentlaw.

As regards the holding of functions deemed incompatible with electedoffice,thelawpreventsapersonfrombeingbothacouncillorandamemberoftheSeimasatthesametime.


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Article8–Administrativesupervisionoflocalauthorities'activities

1.Anyadministrativesupervisionoflocalauthoritiesmayonlybeexercisedaccordingtosuchproceduresandinsuchcasesasareprovidedforbytheconstitutionorbystatute.

2.Anyadministrativesupervisionoftheactivitiesofthe localauthoritiesshall normally aim only at ensuring compliancewith the law andwithconstitutional principles. Administrative supervision may however beexercisedwithregardtoexpediencybyhigher‐levelauthoritiesinrespectoftaskstheexecutionofwhichisdelegatedtolocalauthorities.

3.Administrativesupervisionoflocalauthoritiesshallbeexercisedinsuchawayastoensurethattheinterventionofthecontrollingauthorityiskeptinproportiontotheimportanceoftheinterestswhichitisintendedtoprotect.

Theconstitutionalprincipleofastateundertheruleoflawinvolvesmanydifferentinterrelatedimperatives,includingtherequirementofahierarchyof legislation, from whence arises the rule of law over the secondarylegislation11.Itmeansthattheconstitutionalprincipledoesnotallowsub‐statutorylegalactstoestablishsuchlegalregulationthatwouldcompetewiththeoneprovidedbythelaw.Sub‐statutorylegalactsmaynotchangethelaworcreatenewgenerallegalnormsthatcompetewithoneanother,as this would violate the supremacy of the laws enshrined in theConstitutionoftheRepublicofLithuaniaoversub‐statutorylegalacts12.Asub‐statutorylegalactmustimplementthenormsofthelaw,thereforeitmust be adopted on the basis of law. A sub‐statutory act is an act ofapplicationoftherulesofthelaw,whetheritisofone‐timeapplicationorofpermanentvalidity.13

Theprincipleofmunicipalautonomyisnotabsoluteanditdoesnotrelievepublic administration entity (municipal councils) from the obligation tocomply with all the principles of public law, including the principle oflegality.Municipalcouncils,implementingthefunctionsentrustedtothem,havenodiscretiontoestablishlegalregulationthatdoesnotcomplywiththeprovisionsofhigher‐rankinglegalacts.14

UnderArticle123(1p.)oftheConstitutionoftheRepublicofLithuania:“Inhigheradministrativeunits,thegovernmentshallorganizethemanagementinaccordancewiththeprocedureestablishedbylaw.”Inaccordancewiththe provisions of the second and third paragraphs of Article 123 of the

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Constitution of the Republic of Lithuania and Municipal AdministrativeSupervisionlaw15–administrativesupervisionofmunicipalitiesisperformedby state officials appointed by the Government – representatives of theGovernment. They supervise the compliance of municipalities with theConstitutionandlawsoftheRepublicofLithuaniaortheimplementationofGovernmentdecisions.

Thiswaythecontrolofthelegalityofadministrativeactsadoptedbymunicipaladministration entities is within the competence of the Governmentrepresentative.16TheGovernmentrepresentativeoverseesthemunicipalities'compliance with the Constitution and laws, or enforces governmentdecisions,proposes(mustpropose)torepealoramendunlawfullegalactsof municipal administrative entities, and when the entities of municipaladministration do not agree to repeal or amend the disputed legal act,refusetoimplementthelaworexecutethedecisionoftheGovernment,therepresentativeaddressestheissue(mustapply)tothecourt.

Article4of thenewversionof theLawonAdministrativeSupervisionofLocalGovernmentsoftheRepublicofLithuania,whichcameintoforceon01‐07‐2011, provides that representatives of the Government of theRepublic of Lithuania shall be appointed on the recommendation of thePrime Minister of the Republic of Lithuania. In this way, the tenderprocedure established for the position of the representative of theGovernmentoftheRepublicofLithuaniawaswaived.TherepresentativeoftheGovernmentoftheRepublicofLithuaniahasbecomeastateofpoliticaltrust, subordinateandaccountable to theGovernmentof theRepublicofLithuania. Because the Government itself is a political entity in whichpolitical parties play amajor role17 –there is a clear risk that decisionsrelatedtoadministrativecontrolinindividualmunicipalitieswillbetakenselectively,notbylaw‐basedarguments,butbypoliticalagreements.AftertheSeimasoftheRepublicofLithuaniaadoptedamendmentstotheLawonAdministrativeSupervisionofMunicipalitiesoftheRepublicofLithuania,alsointhepublicspacetherearemanyfearsthatadministrativesupervisionwill be carried out in accordancewith political decisions18, which couldundoubtedlycomplicatethedemocraticprocessinthefuture.

Article123oftheConstitutionstatesthat– incasesandaccordingtotheprocedure provided by law, Seimas may temporarily introduce directadministration in the territory of themunicipality. In implementing thatprovision,Article2(3)oftheLawonTemporaryDirectManagementintheMunicipality19 lists six rather narrowly defined situations in whichtemporarydirectmanagementmaybeintroduced.Thesesituationsinclude


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caseswherethe integrityof theconstitutionalorder is threatenedbythelocal authorities, when no council meetings are convened, the relevantauthoritiesarenotformedortheresultsofthere‐electiontothemunicipalcouncilorcouncilsareinvalidated.Itshouldbenoted,thatinthehistoryofindependent Lithuania, temporary direct management has never beenintroduced, despite the fact, that in practice there have been severalsituationswheretherequirementsofArticle2(3)oftheTemporaryLocalGovernmentlawhavenotbeenproperlyimplemented.

Article9–Financialresourcesoflocalauthorities

1.Localauthorities shallbeentitled,withinnationaleconomicpolicy, toadequatefinancialresourcesoftheirown,ofwhichtheymaydisposefreelywithintheframeworkoftheirpowers.

2.Localauthorities' financial resources shallbe commensuratewith theresponsibilitiesprovidedforbytheconstitutionandthelaw.

3.Partat leastofthe financialresourcesof localauthoritiesshallderivefromlocaltaxesandchargesofwhich,withinthelimitsofstatute,theyhavethepowertodeterminetherate.

4.Thefinancialsystemsonwhichresourcesavailableto localauthoritiesarebasedshallbeofasufficientlydiversifiedandbuoyantnaturetoenablethemtokeeppaceasfaraspracticallypossiblewiththerealevolutionofthecostofcarryingouttheirtasks.

5.Theprotectionoffinanciallyweakerlocalauthoritiescallsfortheinstitutionof financial equalisation procedures or equivalentmeasures which aredesigned to correct the effects of the unequal distribution of potentialsources of finance and of the financial burden theymust support. Suchproceduresormeasuresshallnotdiminishthediscretionlocalauthoritiesmayexercisewithintheirownsphereofresponsibility.

6.Localauthoritiesshallbeconsulted, inanappropriatemanner,onthewayinwhichredistributedresourcesaretobeallocatedtothem.

7.Asfaraspossible,grantstolocalauthoritiesshallnotbeearmarkedforthefinancingofspecificprojects.Theprovisionofgrantsshallnotremovethebasic freedomof localauthoritiestoexercisepolicydiscretionwithintheirownjurisdiction.

8.For thepurposeofborrowing forcapital investment, localauthoritiesshallhaveaccesstothenationalcapitalmarketwithinthelimitsofthelaw.

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Eachmunicipalityhasa formallyautonomousbudget,which isdrawnupandapproved.Thelawsestablishingbudgetfinancingandthetaxsystemgovern both the state budget and municipal budgets. Revenue from anapprovedmunicipalbudgetisintendedforbothautonomousanddelegatedfunctions,unlessotherwisespecifiedintheindividualprograms.

GrantingofstatebudgetgrantsisregulatedbytheLawonMethodologyforDeterminingMunicipalBudgetsRevenue.Grantsmaybetargetedorgeneral20.Targeted grants are awarded for the performance of state functionsdelegatedtomunicipalitiesandforprogramsapprovedbytheSeimasandthe Government. General government budget grants are intended tocompensate differences in the revenue and expenditure structure ofmunicipal budgets due to factors beyond local authority control.Statebudget grants, in particular targeted grants, are conditional on therealizationofspecificresponsibilitiesandthereforeconstituteameansofcontrolling localgovernments.Thevolumeofstatebudgetgrants–morethanhalf–reflectsthelowdegreeoffiscaldecentralizationinthecountry.

Article2(1)(1)oftheLawonMethodologyforDeterminingMunicipalBudgetsRevenuestatesthatpartoftherevenueofthelocalgovernmentbudgetshouldconsistofrevenuefromlocaltaxes.However,onlyaverylimitedpart,about10% to 15%, comes from local taxes set by local authorities,while centralgovernmentgrantsandtaxrevenuesaccountforthebulk.

Sources of revenue for municipal budgets: 1) State budget grants 55%;2)taxrevenue(mainlyincometax)33%;3)municipalincome12%.21

Itshouldbenotedthatdifferentmunicipalitieshaveadifferentshareofthepersonalincometaxcollected.Thisfigureisadjustedbyafactortakingintoaccountninerelevantindicators.Lithuaniaappliestheprincipleofequalizationof revenues between municipalities and implements it according to theformulaestablishedintheLawonMethodologyforDeterminingMunicipalBudgetsRevenue.

Another aggravated problem relates to limiting the growth ofmunicipalbudgets' independent income. Lithuania has obligations to return anyexcessofownincometothestatebudget.Suchincomegrowthrestrictionsreduce the preconditions for municipalities to promote economicdevelopment,entrepreneurship,opportunitiestomeetgrowingeconomicneedsandtheneedforco‐financingofprojectssupportedbyEUfunds.

Therefore,thereisaneedforaclear,transparentandagreed‐uponpolicyofsharingtaxessetandcollectedbythestatewithmunicipalities.Thissituationhas also been criticized in independent expert monitoring reports22,


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expressingconcernthatnewtasksaresometimesassignedtolocalauthoritieswithoutadequateresourcestoimplementthemandrecommendingthattheprincipleofaccompanyingfundingberecognizedbytheLithuanianauthoritiesintheirlegislation.Thisprinciplestatesthat,inordertomaintainabalancebetweendutiesandthecorrespondingresourcesfortheirexecution,eachnewly delegated function should be clearly linked to the correspondingfinancialresources.Thisshouldnothindertheprogressof theCharter inLithuania.

Article10–Localauthorities'righttoassociate

1. Local authorities shall be entitled, in exercising their powers, toco‐operateand,withintheframeworkofthe law,toformconsortiawithotherlocalauthoritiesinordertocarryouttasksofcommoninterest.

2.The entitlement of local authorities to belong toan association for theprotection and promotion of their common interests and to belong to aninternationalassociationoflocalauthoritiesshallberecognisedineachState.

3. Local authorities shall be entitled, under such conditions asmay beprovidedforbythelaw,toco‐operatewiththeircounterpartsinotherStates.

AlthoughtheLawonAssociationsoftheRepublicofLithuania23doesnotdirectly provide for the right to join international self‐governmentassociations as required by Article 10 (2) of the Charter. However, thispossibilityisprovidedintheEuropeanoutlineConventiononTransfrontierCo‐operation between Territorial Communities and Authorities (Madrid,1980),ratifiedbyLithuaniain199724.ThisisalsomentionedintheLawonLocalSelf‐Governmentandinthedocumentsoftheassociationsthemselves.

PursuanttoArticle2oftheLawontheBasicProvisionsoftheAssociationofLocalAuthorities25,theLithuanianAssociationofLocalAuthoritieswasestablished in 1995 as a national association representing the commoninterestsofitsmembers–municipalitiesinallstateauthorities.Registeredasanon‐profitorganization, todayLSAhasestablisheditselfasanactiveorganizationwhose right to represent all 60Lithuanianmunicipalities isrespectedbytheGovernmentandtheSeimas.

Itsmainfunctionsincluderepresentingtheinterestsofall60municipalitiesin the Government and the Seimas. The Law on Local Self‐Governmentstipulatesthatdraftlawsrelatingtomunicipalactivitiesshallbeco‐ordinatedwiththeAssociation.Themostimportantcommittee(inparliament)forthe

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local government is the SeimasCommitteeonPublicAdministration andMunicipalitiesconsistingof11members.TheexperienceoftheAssociationofMunicipalities shows that theusefulnessandresultsof theCommitteevary according to its members at the relevant time and their attitudestowardsself‐government.

Article11–Legalprotectionoflocalself‐government

Localauthoritiesshallhave therightofrecourse toa judicialremedy inordertosecurefreeexerciseoftheirpowersandrespectforsuchprinciplesof local self‐governmentasareenshrined in the constitutionordomesticlegislation.

Localauthoritiesshallhavetherighttousejudicialmeanstosafeguardtherighttoexercisetheirpowersunrestrictedlyandtoensurerespectfortheprinciples of local self‐government enshrined in the Constitution and indomestic law. Accordingly, Article 122 of the Constitution provides thatmunicipalcouncilsshallhavetherighttoapplytothecourtsforviolationoftheirrights.

The second important practical issue is that LSA does not represent allmunicipalities in court proceedings. In order for the LSA to represent aparticularmunicipality,thecooperationofthatmunicipalitywiththeLSAineach individual situation is necessary and a further decision of themunicipalcouncilisrequired.Therealquestionoftherepresentationofallsixtymunicipalitiesinthecourtsthroughtheassociationremainsopen.

Conclusionsandrecommendations

1. Althoughthefundamentalprinciplesoflocalself‐governmentenshrinedinthe Charter have been incorporated into the national legal system ofLithuania in different ways, it could be argued that the incorporation(manifestation)oftheprovisionsoftheCharterintothenationallegalsystemishigh,howevertheproblemisnoticeableinthepracticalapplicationofthelaw,notallnationallegislationworks(imperfectionoflaws).

2. AstheGovernmentitself isapoliticalentity inwhichpoliticalpartiesplayamajorrole,thereisaclearriskthatdecisionsrelatingtoadministrativecontrolinindividualmunicipalitiesmay(intheauthor'sopinionis)betakenselectively,notthroughlegitimatearguments,butthroughpoliticalagreements, itisthereforenecessarytodepoliticizetheprocedureforappointingGovernmentrepresentativestoaddressthecurrentproblem.


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3. Clearerlegalregulationoftheexerciseofpoliticalminorityrightsandthe establishment of a counterweightmechanismbetweenmunicipalpoliticalmajorityandminorityinnationallawisbecomingincreasinglyrelevantandnecessarytomaintainademocraticmodelofgovernance.

4. Existingissuesneedtobeaddressedbyeliminatingtheneedformajorityapproval of delegated representatives of council member groups orfactions to the control committee, leaving it to them todecidewhichmemberisbestsuitedtofillstatutorypositionsonthecontrolcommittee(aswellaswithethicsandanti‐corruptioncommissions).Inthiscase,the principle of separation of powers could also be followed, withdifferentfunctionsbeingdelegatedtodifferentauthorities,prohibitingtheexerciseofforeignfunctions.

5. Asthereare60separateterritorialadministrativeunits(municipalities)intheRepublicofLithuania,inwhichtherearedifferentdemographicand political situations, different regulation of municipal councils,composition of municipal councils, therefore different managementtraditionsareformedinthem.Intheabsenceofasufficientdefinitionofpoliticalminorityrightsofmunicipalcouncils,whichensurethepossibilitiesofoppositionactivities,themediumdevelopsintooligarchictendencies.The poor control of decisions taken by municipal councils andadministrativeactionsaswellasaflawedlegislativeframeworkmakeitpossible to form situations in which the democratic values and theprotectionofindividualrightsandfreedomsarethreatened.

References

1European Charter of Local Self‐Government, Strasbourg, 1985, No. 122. Online access:https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.50219?jfwid=rivwzvpvg

2Ratification of the European Charter of Local Self‐Government in Lithuania, Valstybėsžinios, 1999, No. 82‐2418. Online access: https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.48874

3Constitution of the Republic of Lithuania, Valstybės žinios, 1992, No. 33‐1014,. Onlineaccess:https://www.lrs.lt/home/Konstitucija/Konstitucija.htm

4UrmonasA.,NovikovasA.(2011).Thepeculiaritiesoftheimplementationandincorporationof the principles of European Charter og Local Self‐Government in Lithuanian localgovernmentandnationallegalsystems.Jurisprudence,18(3),pp.1019–1034,ISNN2029‐2058 (online). Online access: https://www.mruni.eu/upload/iblock/378/13_Urmonas_Novikovas‐1.pdf

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5 Judgmentof theConstitutionalCourtof theRepublicofLithuaniaof1998February18ResolutionontheEntitiesofAdministrativeSupervisionofMunicipalActivities,Valstybėsžinios,1998,Nr.18‐435

6 TheRepublicofLithuanialawonTerritorialAdministrativeUnitsandTheirLimits,1994,Nr.60‐1183.Onlineaccess:https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.5911/asr

7 See data available on the official website of the Central Electoral Commission:http://www.vrk.lt/statiniai/puslapiai/2015_savivaldybiu_tarybu_rinkimai/output_lt/rezultatai_daugiamand_apygardose/rezultatai_daugiamand_apygardose1turas.html

8 See data available on the official website of the Central Electoral Commission:https://www.vrk.lt/2019‐savivaldybiu‐tarybu/rezultatai?srcUrl=/rinkimai/864/1/1506/rezultatai/lt/rezultataiTarNariaiMeraiSavivaldybese.html

9 Constitutional Court of the Republic of Lithuania June 28 (2001). Resolution on theEstablishment,DissolutionofMunicipalities,LimitsoftheirTerritoriesandEstablishmentand Modification of Centers. Valstybės žinios, Nr. 9‐2000. Online access:https://www.lrkt.lt/lt/teismo‐aktai/paieska/135/ta326/content

10SupremeAdministrativeCourt of Lithuania (May6, 2014) ruling in the administrativecase,No.A552‐718/2014.Administracinėjurisprudencija,27,pp.226–273

11JudgmentoftheConstitutionalCourtoftheRepublicofLithuania(2011September28)ruling

12ConstitutionalCourtof theRepublicofLithuania(August21,2004December13,2005January19,2005)rulings

13ConstitutionalCourtoftheRepublicofLithuania(September6,2010March9,2012April18,2013February20)rulings

14Supreme Administrative Court of Lithuania (October 19, 2015) ruling in theadministrativecase,No.A‐737‐552/2015.Administracinėjurisprudencija,30p.

15Law on Municipal Administrative Supervision of the Republic of Lithuania, Valstybėsžinios,1998,No.51‐1392.Onlineaccess:https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.56962/asr

16SupremeAdministrativeCourtofLithuania(December6,2010)rulingintheadministrativecase,No.A662‐1429/2010

17Šarkutė, L. (2006). Decision Making Models in the Governments of the Republic ofLithuania:InternalFactorsAnalysis.Viešojipolitikairadministravimas,Nr.18

18Reform of government representatives in counties: officials cut by half, will appointwithout competition, 2018. Online access: https://www.15min.lt/naujiena/aktualu/lietuva/vyriausybes‐atstovu‐apskrityse‐reforma‐pareigunu‐sumazinta‐perpus‐skirs‐be‐konkurso‐56‐1029146

19LawoftheRepublicofLithuaniaonTemporaryDirectManagementintheMunicipality,1995.Valstybėsžinios,Nr. I‐830.OnlineAccess: https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.16639/asr

20LawoftheRepublicofLithuaniaonMethodsforDeterminingMunicipalBudgetsRevenue,1997. Valstybės žinios, Nr. 69‐1743. Online access: https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.41848/asr

21Davulis, T. (2009). Analysis of a situation on local taxes in Lithuania’. IntellectualEconomics,Nr.1(5),pp.21–29,ISSN1822‐8038

22Loizidou, I., Mosler‐Tornstrom, G. 22ndSession 21 March 2012 report of MonitoringCommitteeaboutLocalandregionaldemocracyinLithuania


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23LawonAssociationsoftheRepublicofLithuania.Valstybėsžinios,2004‐02‐14,Nr.25‐745.Onlineaccess:https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.226938/asr

24European outline Convention on Transfrontier Co‐operation between TerritorialCommunities and Authorities (Madrid, 1980), ratified by Lithuania (1997). Valstybėsžinios, 1997‐04‐18, Nr. 33‐816. Online access: https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.37833

25LawontheBasicProvisionsoftheAssociationofLocalAuthorities,Valstybėsžinios,1995,Nr.31‐702.Onlineaccess:https://e‐seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.16642

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THEDEVELOPMENTOFANTI‐CORRUPTIONENVIRONMENTINLITHUANIANPUBLICSECTOR:BEST

PRACTICEANDEXPERIENCE

RaimundasKalesnykasKazimierasSimonavičiusUniversity,Lithuania

[email protected]

Abstract

Thearticleanalysesthepreconditionsfortheestablishmentofananti‐corruption environment in the public sector organizationand demonstrates Lithuania's best practices in this area.Corruptionasamulti–structuredglobalphenomenonunderminesgoodgovernance,publictrustinpublicsectororganizationsandcausesseriousdamagetothefunctioningofthoseorganizations.OneoftheessentialaspirationsoftheLithuanianGovernmentistoreducetheextentofcorruption,increasetransparency,fairnessandopennessinthepublicsector.

Thisresearchfocusesonthejustificationthehypothesis,thatthepublicsectororganizationsmustplayanactiveroleinthefieldofcombatingcorruption,creatinganunfavourableenvironmentfortheprevalenceofcorruption.Thepurposeof theresearch is toshow the added value for the development of anti‐corruptionenvironmentinthepublicsectorasoneoftheeffectivetoolsforminimizingtheextentofcorruption.Researchresultsshowthatlegislationalone isnot sufficient to solve corruptionproblems.Public sector organizations usually do not have effective anti‐corruptiontoolstopreventandmanagevariousformsofcorruption(bribery,nepotism,conflictsof interest,etc.).Byconveyingbestpractice, the author presented a new initiative of Lithuanianpublicsectororganizationstodevelopanti‐corruptionenvironmentaimedatminimizingthelikelihoodofmanifestationofcorruption.

Logicaland comparativeanalysis,documentanalysis,problemanalysisandsystematicapproachresearchmethodsareusedforanalysingissuesrelatedwithboostingtheeffectivenessofcombating

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corruptioninthepublicsector.Theauthorpositsandconcludes,thatthedevelopmentofananti‐corruptionenvironmentshouldbecome a strategic priority of the public sector organization,whichrequirestheestablishmentofaneffectivemanagementsystemfor corruption prevention and the commitment shown by topmanagementtoensureitsfunctioninginarealisticratherthanformalmanner.

Keywords:preventionofcorruption,anti‐corruptionenvironment,publicsector

DOI:10.37804/1691‐6077‐2020‐11‐92‐115

Introduction

Relevanceofthesubject.Thedemocraticstate'saspirationtobecomeamodern,progressive,transparentstategovernedbytheruleoflawisstillhamperedbythephenomenonofcorruption.Therootcausesofcorruptioninalmostallareasofpubliclifearethreateninghumanrights,democracyand the rule of law, distorting social justice, fair competition, businessconditions, slowing down economic growth and posing a threat to stategovernance,thestabilityofstateormunicipalbodiesandpublicmorality(CouncilofEurope,2020).Althoughtheinternationallyrecognizedapproachis that corruption is equallymanifested in thepublicandprivate sectors(Sartor,etal.,2020),thephenomenonofcorruptiondoesmoreharmtothepublicsector.Thiscanbeseenintheresultsofdifferentempiricalstudies(TransparencyInternational,2020;Eurobarometer,2017).

Thenoveltyofresearchisreflectedintheauthor'sdifferingapproachtofinding an effective model for ensuring the integrity of public sectororganizations as a sustainable response to corruption. The LithuanianGovernment havemade progress in addressing corruption in the publicsector.Itisalong‐termstrategicgoalofthewelfareofthestateinscribedintheNationalAnti‐CorruptionProgrammeof theRepublicofLithuania for2015–2025. Accordingly, the regulatory framework has changed, settingthe new requirements for public sector organizations for fightingcorruption.Thepurposeoftheresearchistodisclosetheadvantagesofcreatingananti‐corruptionenvironmentwithinpublicsectororganizationsbydemonstratinggoodpracticeofimprovingtheeffectivenessintheareaofcombatingcorruption.Toachievethepurposeoftheresearch,theauthorinthisarticlesetstwointerrelatedresearchtasks:1)toidentifytheimpact

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ofcorruptiononpublicsectororganizationsduetonotproperselectionandapplication of anti‐corruption tools, and 2) to reveal the peculiarities ofestablishment of an anti‐corruption environment in order to justify itsbenefitsinincreasingtheresistanceofpublicsectororganizationstocorruption.

MeasuringtheimplementationofcorruptionpreventionpolicyinLithuaniashows that nearly 90% of public administration institutions, especiallymunicipalities, ministries and institutions under the ministries, havefollowedtheformalpathofcomplyingwithregulatoryrequirements,otherpublicadministrationinstitutionsareawareofcorruptionriskfactorswithwhichorganizationsareconfrontedintheireverydayactivities(Kalesnykas,2017). In anti‐corruption terms, such public sector organizations areconsidered highly trustworthy organizations, which, in addition to legalmeasures, also take the initiative in creating a secure anti‐corruptionenvironment. This article explores the research problem related withvalidationofstandardizedregulatoryrequirementsofextendingthescopeofanti‐corruptionmeasurescreatingacorruption‐resistantenvironmentinthepublicsector.Researchstudiesandlegalanalysisshowsthatthereareperceptual gaps in knowledge among top managers of public sectororganizationsonthebenefitsofintegratinganti‐corruptiontoolsinbusinessprocesses. This is explained by the fact that very often topmanagers ofpublicsectororganizationsdonotknowwheretobeginincreatingananti‐corruption environment, how to identify corruption risks and whatcomponentsoftheanti‐corruptionenvironmenttochoosefirst.Thisistheresearchhypothesisand inorder tosubstantiate it, theauthoruses thefollowingresearchmethods:logicalandcomparativeanalysis,documentanalysis,problemanalysisandsystematicapproach.Thismayserveastheoutcomeoftheresearchforseekingalternative,butstandardizedtoolsfordevelopmentofasustainableanti‐corruptionenvironmentinpublicsectororganizations, covering legal instruments and institutional framework,managementandethicalrequirements.

Impactofcorruptiononthepublicsector

Various empirical studies show that corruption undermines goodgovernance,transparency,opennessandpublicityofpublicadministration,publictrustinpublicsectororganizationsandcausesseriousdamagetothefunctioningofthoseorganizations(Roelofs,2019;Pillay,2004;Mendilow,et al.2014; Scott, et al. 2018).Excessivebureaucracy,unclear, abstractlydefined and not accessible to all rules and procedures, discretion indecision‐makingandimbalancesinaccountabilityarethegreyareaswhere


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corruptioninpublicsectororganizationsisborn.Atleastthreeelementsarerequiredfortheexistenceofcorruptioninpublicsector:first,apartywillingto circumvent the law illicitly (a bribe giver); second, the party havingadministrativeorpoliticalpowersthathasagreedtohelpthefirstpartytocircumventthelawinreturnforacompensation(corruptpoliticiansorcivilservants); and third, a passivemajority that does notwish to resist thecorruptionphenomenon(anindifferentsociety).

AssessingtheattitudesofLithuanianresidents,businessmanagersandcivilservants towards corruption and its prevalence, since 2001 the nationalanti‐corruptionagency–SpecialInvestigationService(SIS)–hasinitiatedpublicsurveys–“CorruptionMapofLithuania”.Accordingtothefindingsofthesurveyof theLithuanianMapofCorruption2019,municipalitiesandgovernmentinstitutionsareconsideredamongthemostcorruptinstitutionsinLithuania(seeTable1).

Table1

Prevalenceofcorruptioninmunicipalitiesandgovernmentalinstitutions(in%)*

2007 2011 2014 2016 2018 2019Lithuanianresidents Municipalities(cityandregional)

88% 87% 75% 78% 79% 74%

Governmentinstitutions 90% 91% 73% 83% 73% 69% Businessmanagers Municipalities(cityandregional)

91% 92% 64% 74% 74% 74%

Governmentinstitutions 90% 81% 51% 68% 64% 69% %meansverycorrupt+partiallycorrupt

*Source.CompiledbytheauthorbasedontheLithuanianMapofCorruption2019(SpecialInvestigationService,2019)

Whenassessing theproneness tocorruptionofLithuaniangovernmentalinstitutions,itwasfoundthatthemostcorruptedareinstitutionsundertheregulation ofMinistry of Health Security,Ministry of Justice,Ministry ofInterior,MinistryofAgriculture,MinistryofEnvironmentandMinistryofTransportandCommunication(seeTable2).

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Table2Themostcorruptedpublicsectororganizations2019(in%)

Residents Businessmanagers

Civilservants

MinistryofHealthSecurity 69% 66% 59%Republicanhospitals/clinics 92% 92% 93%Cityandregionalhospitals 92% 92% 93%StateMedicinesControlAgency 64% 68% 67%

MinistryofInterior 47% 52% 44%Trafficpoliceservice 81% 78% 78%Territorialpoliceunits 71% 69% 80%StateEnterprise“Regitra“ 59% 60% 68%

MinistryofEnvironment 46% 55% 54%StateForestEnterprise 85% 82% 83%StateTerritorialPlanningandConstructionInspectorate

79% 81% 89%

StateServiceforProtectedAreas 72% 70% 72%

MinistryofAgriculture 45% 50% 53%NationalLandService 80% 83% 89%NationalPayingAgency 77% 76% 83%StateEnterprise“StateLandFund” 57% 53% 59%

MinistryofTransportandCommunication

39% 42% 46%

LithuanianRoadAdministration 81% 82% 78%JSC"LithuanianRailways" 77% 77% 81%StateEnterprises“KlaipėdaStateSeaport”

54% 45% 63%

Governmentagencies PublicProcurementOffice 60% 66% 36%StateFoodandVeterinaryService 57% 67% 50%Drug,TobaccoandAlcoholControlDepartment

52% 49% 25%

Municipalinstitution Publicprocurementdivisions/commissions

60% 61% 54%

Municipalenterprises 56% 55% 60%Constructiondivisions 51% 57% 61%

%meansverycorrupt+partiallycorrupt



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Findingsofanumberofsociologicalsurveysandassessmentsexercisedbythe Special Investigation Service of the Republic of Lithuania confirmsinsightsthattheprevalenceofcorruptioninthepublicsectorisinfluencedbythesefactors(Lithuanianmapofcorruption,2019):nepotism,politicisation(stategovernanceordecision‐making,wherepartyandbiasedcriteriaareused instead of professionalism and merit), bribery and conflicts ofinterests(seeTable3).

Table3ThemostwidespreadformsofcorruptioninLithuanianpublicsector

2019(inbracketssurveydataof2018)

Residents

Businessmanagers

Civilservants

%meansverycommon+common


Whencomparinganswersof the three targetgroups(residents,businessmanagersandcivilservants)onthemostprevalentformsofcorruptioninpublicsectororganizationsitcanbeseenthattheoverallattitudetowardsthethreatsofcorruptiontostategovernanceoverlap.Thedeterminantsofcorruption prevalence in public sector are diverse, covering economic,social, cultural, technological,political, administrative (management) andlegalfactors(Kalesnykas,2014;Rose‐Ackerman,etal.,2016).

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J.Palidauskaitėdistinguishesmicro‐,mezo‐andmacro‐levelfactorsaffectingtheprevalenceof corruptionphenomenon inpublic sector organizations(Palidauskaitė, 2005, 31). At the lowest level (micro‐), the factors thatdetermine corruption are the individual (his principles, values, personalqualities) and the work he does (nature of work, colleagues influence,contactsavailable).

Themezo level is important for the public sector organization, i.e. to itsleadership, the size, nature, structure and delegated decision‐makingauthorityoftheorganization,complexityoftheorganization’sactivitiesandoperations,theorganizationalculture(goalsandmission,valuesandnorms,code of conduct), personnel policy (selection, employment and training,rewards).

At themacro level, the legislative process, the administrative – politicalsystemandthesocialenvironment(normsofsocialbehaviour,criminality)are important. These factors are best reflected in the assessment of theresidents’corruptionexperienceinrelationwiththepublicsector.Themostcommon situation of corrupt practices mentioned by the residents arepaymenttothedoctoraftersuccessfulsurgery(86%),gainingemploymentintopublic administration institutions through acquaintances (86%), theuseoftheofficialcarbyacivilservantforpersonalpurposes(85%)(seeTable4).

Table4Themostcommonsituationsofcorruptpracticesinthepublic

sectororganizations2019

*Source.LithuanianMapofCorruption2019(SpecialInvestigationService,2019)


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Theproblemfacedisthatthepublicsometimesjustifiestheprevalenceofcorruptioninpublicsector,andthisisbestillustratedbythebriberyindexaccording to which residents believe that a bribe helps to solve theirproblems(itpointedaround2/3ofLithuanianresidents).Despitethefactthatthisindicatorhasconsistentlydeclinesince2007,i.e.theproblemofbribery(asitisperceivedinthebroadsense)hascontinuedtodiminish,ithasaffectedthefunctioningofthepublicsector.

As a result, the current Lithuanian Government is paying particularattentiontosearchingforwaystostemthegrowingimpactofcorruptiononthepublicsector.The17thGovernmentoftheRepublicofLithuaniasetoutanambitiouspurpose inChapterIII “Effectiveanduniversal fightagainstcorruption” of the Programme of the Government of the Republic ofLithuaniafor2016–2020,i.e.toachievetransparencyandefficiencyofthepublic sector increasing the competencies in operations of the stateinstitutions(ProgrammeoftheGovernmentoftheRepublicofLithuaniafor2016–2020). The current National Anti‐Corruption Programme of theRepublicofLithuaniafor2015–2025alsopointsouttoincreasingtransparencyandopenness, reducingandeliminatingpossibilitiesofmanifestationsofcorruptioninthepublicsector.Theabove‐mentioneddocumentshighlightedthatcorruptionhasanenormousimpactandposesthehighriskintheseprioritypublicsectorareas:politicalactivitiesandlegislation,activitiesofthejudiciaryandlawenforcementinstitutions,publicprocurement,healthcareandsocialsecurity,specialplanning,statesupervisionofconstructionandwastemanagement, supervision of activities of economic entities, publicadministration,civilserviceandassetmanagement.

So far, the Lithuanian Government has used a considerable amount ofadministrativeandfinancialresourcestoimprovetheimageofthepublicsector. This is also determined by the way Lithuania has chosen – tomeasureprogressinthefightagainstcorruptionthroughtheresultsoftheCorruption Perceptions Index (CPI) survey carried out by TransparencyInternational.Itispredictedthatin2025,theCPIofLithuaniawouldbeatleast70points(onascaleoutof100points)andin2019–65points(in2014, the initialvalueof theCPIofLithuaniawas58).However, in2019Lithuaniareceivedascoreof60ona100‐pointscaleattheCPIandtodayranks35thoutof180countries.Lithuania‘sscorehaschangedforthefirsttime in five years – in 2015–2018 it scored 59 points (TransparencyInternational:LithuanianBranch,2020).DespitethefactthatLithuaniahasmadeslightlybetterprogress,itisstillnotabreakthroughinachievingitsstrategicobjective–toreducetheprevalenceofvariouscorruptionforms

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inthehighriskpublicsectorfields.Lithuaniahasachievedpositiveresultsinthefightagainstbriberyofpublicsectorofficials,howevertheGovernment'slimitedeffortstocurbnepotism,grandandpoliticalcorruptionhavebeennoted.

Inspiteofsomeimprovements,corruptioninLithuanianpublicsectorremainsaconcern.Itismerelyproofthattraditionalanticorruptionmeasuresbasedonmandatoryregulatoryrequirementsarenotsufficient.Publicadministrationinstitutions formally accept and apply legal requirements in the area ofcorruption prevention. However, whether the anticorruption measuresappliedinpublicsectororganizationshaveaneffectandtheenvironmentinwhichtheorganizationoperatesissafefromananti‐corruptionpointofviewisnotassessed.Therearevariousreasonsforthis,butthekeyisthatpublic sector organizations misinterprets corruption management toolswhendirectingalleffortstocontrolcorruptionthroughtheuseofavarietyofcriminalprosecutionmethods(activeactivityfocusedontheconsequences),butnotbyapplyingmechanisms,whichsupporttopre‐emptthespreadofthemanifestationsofcorruptionandtheensuingnegativeconsequencesofthisinadvance(pro‐activeactivity).Itcanbeconcluded,thatpublicsectorintegrityisachallengetoallorganizationsandthebestwaytoensurethatis that public sector organizations consistently act and design an anti‐corruptionenvironmentthatreducestheriskofcorruptionprevalenceandstrengthensitsemployee’sintoleranceforcorruption.

Anti‐corruptionenvironmentintheLithuanianpublicsector

Publicsectorworldwideareincreasinglytakingstepstopreventandcombatcorruptioneffectively.Thisrequiresacomprehensiveandmultidisciplinaryapproach,focusedontheperformanceofcomplexactions:legal,management,financial,promotingorganizationalcultureandethicalbehaviourofemployeesand awareness, why this is necessary (Kalesnykas, 2014). The UnitedNation Convention against Corruption (2005) definesmain internationalstandardsintheareaofpreventionofcorruption,alsoindicatesthemaindirections for developing and implementing effective and coordinatedanticorruptionpoliciesinpublicsector.Asrecognizedbyarticles7and8ofUNCAC, the States should put in place specific preventive measures,includingadoptingmerit‐basedsystemsfortherecruitmentandpromotionofcivilservants,prescribingcriteriaforelectiontopublicoffice,enhancingtransparency in the funding of political parties, preventing conflicts of


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interest,promotingcodesofconductforthepublicsector,andestablishingsystemsforthedeclarationofassets(TheUnitedNationConventionagainstCorruption,2005).Itshouldbenotedthatanumberofotherbindingandnon‐bindinginternationalstandardssetuprecommendationsfordevelopinganeffectivesystemforcorruptionprevention1.

Lithuania takes anactive role in anti‐corruption efforts,mostnotablybyadheringtoandimplementingrelevantrecommendationsofinternationalorganizations in the field of strengthening public sector resistance tocorruption.Thelatestachievementsarethatin2017LithuaniaaccededtotheOECDConventiononCombatingBriberyofForeignPublicOfficials inInternationalBusinessTransactions(LawonRatificationtheOECDConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactions,2017),andthattheLawonwhistle‐blowersprotection(Lawonwhistleblowersprotection,2019)enteredintoforcefrom2019.In2015,LithuanianGovernmentdemonstratedpoliticalwillandpaiddueattentiontobuildinganeffectivemechanismoncorruptionpreventioninthepublicsector.Theprinciplethattheresponsibilityforpreventingcorruptionliesnotwithanabstract“government’,butwitheverypublicsectororganizationwherecorruptionmayoccur,wastakenintoaccountintheimprovementofthecorruptionpreventionsystem.

Thestrategicimpetustocreateananti‐corruptionenvironmentisstatedintheNationalAnti‐CorruptionProgrammeof theRepublicofLithuania for2015–2025,whereinparagraph29.1.2promotes thecreationof theanti‐corruption environment in the public sector (National Anti‐CorruptionProgrammeoftheRepublicofLithuaniafor2015–2025).Thegroundsforcreatingananti‐corruptionenvironmentinthepublicsectorarediverse.

First,currentlythereareanumberofdifferentmandatoryregulatoryprovisionsapplicable to public sector organisations in the field of prevention of

1 ReportofOECDAnti‐CorruptionNetworkforEasternEuropeandCentralAsia“PreventionofcorruptioninthepublicsectorinEasternEuropeandCentralAsia”(OECD,2015);ReportofOECDAnti‐CorruptionNetworkforEasternEuropeandCentralAsia“Anti‐CorruptionReformsinEasternEuropeandCentralAsia:ProgressandChallenges,2013–2015”(OECD,2016);OECDRecommendationonPublicIntegrity:aStrategyagainstCorruption(OECD,2017);OSCEHandbookonCombatingCorruption(OSCE,2016),CommitteeofMinistersoftheCouncilofEuropeResolution(97)24ontheTwentyguidingprinciplesforthefightagainstcorruption(CoE,1997);“QualityofPublicAdministration‐AToolboxforPractitioners”,developedbytheEuropeanCommission’sInter‐servicegrouponPublicAdministrationQualityandInnovation(EC,2017)andetc.

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corruption.Mandatorylegalrequirementshavenotbeensystematizedandthemanagersofpublic sectororganizationsoftendonotknowwhere tobegin, and what to do in preventing the manifestation of corruption(Kalesnykas,2017).

Second, the effectiveness of public sector organization performance inpreventingcorruptionandmeasurementofitsachievementsinsuchareaislackingduetotheprevailingattitudeofavoidingpersonalliability,incasetheanti‐corruptiongoalsarenotachieved.Onlyrarepublicsectororganizationsperiodicallyperformself‐evaluationtoassesstheeffectivenessofapplyingcorruptionpreventionmeasures.Mostpublicsectororganizationsdonottake the initiative and leave the right to deal issues related with theimplementationofcorruptionpreventiontoaspecializedanti‐corruptionagency.T.Hoopehighlighted,thatawell‐functioningmonitoringmechanismhelpstoensurecollectionandanalysisofdataneededtotrackprogressandassessresultsofcorruptionprevention,aswellastheinvolvementofcivilsocietyintheprocess(Hoope,2015,41).

Third, the anti‐corruption awareness of the leadership of public sectororganizations and their support for anti‐corruption initiatives is weak.Commitment to create a corruption‐resistant environment shouldbe thedutyofa“leader”ofthepublicsectororganization.Sucha“leader”shouldbeawareofcorruptionriskfactorswithwhichemployeesareconfrontedintheireverydayactivities,supportemployeeswithrealactionsandadviceand promote an appropriate anti‐corruption culture within the publicsectororganization.A.VanderMerwearguesthateffectiveanti‐corruptionmeasures should consider both the nature and causes of public sectorcorruption(VanderMerwe,2006,32).Thelackofsolidevidentiarybasesforeffectiveimplementationofcorruptionpreventionmeasures(includingthefailuretoassessthefeasibilityofproposedanti‐corruptionmeasures),theabsenceofspecific timelinesandmeasurable indicators toassess thelevel and impact of corruption on the public sector remain the mainchallenges for Lithuania. This is particularly evident in the health caresector(Buinickienė,2017).

In2016,SpecialInvestigationServiceoftheRepublicofLithuaniainitiatedanddevelopedGuideforcreationandimplementationofananti‐corruptionenvironment in the public sector, which were updated in 2018 (SpecialInvestigationService,2018). It is likeanationalanti‐corruptionstandardandfirststructureddocumentinLithuaniaaimedatcreatingasustainableanti‐corruption environment in the public sector. While this documentprovides recommendations to public sector organizations on how to


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identify andproperlymanage corruption risks, strengthen its employeesintolerancetocorruption,buildtransparentandfairstandardsofbehaviour,not all objectives of such document are clearly understood by heads oforganizations.

Currently,managersofpublicsectororganizationsfacechallengeswhenitcomestodefiningwhatweconsiderananti‐corruptionenvironment,whatitscomponentsareandwhatrealbenefitsitcanbringtoanorganization.Itis necessary to be aware that the development of an anti‐corruptionenvironment should be one of the strategic goals of the public sectororganizationandthesettingofaregulatoryandmanagementmechanism,which would help an organization to prevent, detect and respond tocorruption and comply with anti‐corruption laws and commitmentsapplicabletoitsactivitiesisrequiredinordertoachieveit.

Regulatoryframework

Lithuaniahasalreadydevelopedlegalframeworkthatwouldallowpublicsector organizations to ensure adequate resistance of corruption and tocreateananti‐corruptionenvironment.Since1997,therehavebeenanti‐corruptionlawsofvariouskindsinLithuania,mostlydedicatedtotheissuesof public sector integrity, corruption prevention and conflict of interestprevention. InLithuania,separate lawscoveravarietyofanti‐corruptionmeasures,suchasrulesonthepreventionofconflictofinterest,declarationsof assetsand incomesofpublicofficials,mandateof thespecializedanti‐corruptionagency,reportingofcorruptionandprotectionofwhistleblowers,anti‐corruption expertise of legal acts, corruption risk analysis in publicadministrationinstitutions,principlesandobligationsforthedevelopingofthe programmes on corruption prevention etc. National anti‐corruptionlaws were adopted within the framework of Lithuania's commitmentsunder the ratified main international conventions on the fight againstcorruption, i.e. UN Convention against Corruption (Lithuania ratified in2006),CriminalLawConventiononCorruption(Lithuaniaratifiedin2002),Civil Law Convention on Corruption (Lithuania ratified in 2002), OECDConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactions(Lithuaniaratifiedin2017).

National anti‐corruption regulatory frameworkconsistsof twogroupsoflegal acts:primary legislativeacts and secondary legislativeacts. Primaryanti‐corruptionlegislativeactsinclude:

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1) Law on Prevention of Corruption of the Republic of Lithuania(adoptedin2002),whichlaysdownthemainprinciples,aimsandtasks of corruption prevention in the public and private sector,corruptionpreventionmeasuresandalegalframeworkthereof,andcorruptionpreventionbodiesaswellastheirrightsanddutiesinthefieldofcorruptionprevention.BasedonArticle5oftheLawonthePreventionofCorruption,publicsectororganizationsshouldapplythefollowingcorruptionpreventionmeasures:analysisoftheriskof corruption, development of anti‐corruption programmes, anti‐corruption assessment of the legal acts, provision of informationaboutapersonapplyingfororholdingapositioninthepublicsectororganization; provision of information to the Registers of civilservantsandlegalentities,anti‐corruptioneducationandinformationtothepublic;publicdisclosureof thedetectedactsofcorruption;reporting on corruption‐related offenses (Law on Prevention ofCorruption,2002);

2) LawontheAdjustmentofPublicandPrivateInterestsintheCivilServiceoftheRepublicofLithuania(adoptedin1997,amendedin2020) sets‐up anti‐corruption measures to prevent conflicts ofinterest such as declaration of private interests, self‐exclusion inproceduresrelatedwithdecision‐making,restrictionoftherightofrepresentation,restrictionsontheacceptancegiftsorservicesandotherlimitationsafterexpirationinthecivilservice;

3) Laws,regulatingstatus,legalbasisofactivities,procedureforsettingup,competenceandorganisationalstructureofthespecializedanti‐corruptionagencies,suchasLawontheSpecialInvestigationServiceof theRepublicofLithuania (adopted in2000,amended in2018)andLawontheChiefOfficialEthicsCommissionoftheRepublicofLithuania (adopted in2008, amended in2020).The roleof theseinstitutionsisveryimportantinthattheyproviderecommendationsandmethodologicalassistanceontheimprovementandimplementationoftheprovisionsofanti‐corruptionlaws.

Secondary anti‐corruption legislative acts include specific anticorruptionmeasures,embeddedintheLawonLobbyingActivities(adoptedin2000,amendedin2017),LawonProtectionofWhistleblowers(adoptedin2017,enteredintoforce2019),LawonFundingofandControloverFundingofPolitical Parties and Political Campaigns (adopted in 2004, amended in2013),LawonCivilService(adoptedin2000,amendedin2019)andtheLawonPublicAdministration(adoptedin1999,amendedin2014).


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Theanalysisofanti‐corruptionlawsshows,thatintheprocessofcreatingan anti‐corruption environment it is important for the public sectororganizationtoevaluateandproperlyselecttheanti‐corruptionmeasuresenshrined in the legislation. On the other hand, the anti‐corruptionmeasures contained in the above‐mentioned legislation are not alwayspresented as being reasonable and proportionate in practice. In thissituation, public sector organizations do not fully apply the regulatoryrequirementsonafull‐scalebasis,andeveniftheyapply,donotfeeltherealandmeasurablebenefitsofsuchenforcement.Creationofanti‐corruptionenvironmentbasedonlegalrequirementsshouldbecometheinitialdirectionforfurtheractionsinthepublicsectororganization'smanagementsystem.

Thedefinitionofanti‐corruptionenvironmentanditsperception

The term “anti‐corruption environment” is a new concept that is rarelyfoundinempiricalresearch.Onlyinsomeseveralstudies,wecanfindoutaninterpretiveanalysisofsuchconcept(Kalesnykas,2017).Quiteoften,theconcept“anti‐corruptionenvironment”isusedassynonymouswithothersimilar categories such as “zero tolerance for corruption”, “environmentunfavourabletocorruption”,“corruption‐resistantenvironment”(Guideforcreationandimplementationofananti‐corruptionenvironmentinthepublicsector,2018).

The most common perception of the anti‐corruption environment is itsassociationwiththeterm“corruptionprevention”.CorruptionpreventionasalegalcategoryisenshrinedinArt.2oftheLawonPreventionofCorruptionoftheRepublicofLithuania,anddefinedasdetectionandeliminationofthecauses of and conditions for corruption through development andimplementationofasystemofappropriatemeasures,aswellasdeterrenceagainstcorruption‐relatedcriminalacts(LawonPreventionofCorruption,2002).Acomparisonofthecontentofabove–mentionedtermsindicated,thattheterm“corruptionprevention”isamuchnarrowerthantheconcept“anti‐corruption environment”. From the legal definition of the term“corruptionprevention”, threeessentialelementscouldbedistinguished,which could only partially form the anti‐corruption environment, i.e.corruptionriskassessmentandanalysis,developmentandimplementationanti‐corruptionprogrammesandimpositionofsanctionsforcorruption–relatedoffences.Theconcept“anti‐corruptionenvironment”coversamuchwider spectrum of measures to reduce the prevalence of corruption in

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publicsectororganizationsandthesemeasuresarenotalwaysbasedsolelyonlegalrequirements.

AssessingtheongoingLithuania'scorruptionpreventionpolicyoverthelast15years,itcanbeseenthatthereisatendencythatsomeanti‐corruptionmeasureshavebecomeineffectiveandappliedformallywithoutassessingtheirimpacttothepublicsectororganization'sperformance.Realizingthis,in 2018 the Special Investigation Service of the Republic of LithuaniadraftedtheOutlineofCorruptionPrevention(CorruptionResilience),whichpresentedacomprehensivesystemforthecreationofacorruptionresilientenvironment (Outline of Corruption Prevention (Corruption Resilience,2018).ThemainpurposelistedinthisdocumentistoprovidedirectionforupdatingthecorruptionpreventionsystemandcreatinganewresiliencetocorruptionmodelinLithuania.Also,theOutlineofCorruptionPrevention(CorruptionResilience)proposestochangetheterm“corruptionprevention”to the term “resistance to corruption (or integrity)”, as it more closelyreflects the purpose of the objective, i.e. not only to strive to preventcorruption,butalsorealresistancetocorruption.Ascanbeseen,theOutlineofCorruptionPrevention(CorruptionResilience)hasdrawnguidelinesforthe transition from preventing corruption to a broader concept ofcorruptionresistance,whichisperceivedasamodeloftheanti‐corruptionenvironment.Consequently,theterm“anti‐corruptionenvironment”graduallyacquiresthemeaningasalegalcategory,whichischaracterizedbyaholisticapproach that encompasses a complex system using pro‐active and re‐activecorruptionpreventionmeasuresinpublicsectororganizations.

Tosum,theterm“anti‐corruptionenvironment”couldbedefinedasfollows:anti‐corruptionenvironmentisaregulatory‐basedenvironmentinthepublicsectororganizationwithaconstantlyfunctioningsetofcomplexmeasures(pro‐active and re‐active) designed to ensure resistance (integrity) tocorruption by reducing the scope of its prevalence in the organization.Whendesigningtheanti‐corruptionenvironment,theorganizationshouldprioritize activities that oppose or inhibit corruption and its efforts orcommitments should be reflected in the organizations’ strategy or anti‐corruptionpolicy.

Componentsofanti‐corruptionenvironment

Thecomponentscomposingtheanti‐corruptionenvironmentinpublicsectororganizationsarediverse(HandbookonCombatingCorruption,2016).Inmanycases,publicsectororganizationshaveintegratedmandatoryregulatorymeasures into the anti‐corruption environment.However, the regulatory


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measuresarenotalwayssufficienttosolveissuesrelatedwiththeprevalenceofcorruption inthosepublicsectororganizationsthatposehighrisk, forexample, healthcare and medicine sector, municipalities, etc. (EU Anti‐Corruption Report, 2014). Such type of organizations must search foradditionalanti‐corruptiontoolsbywhichitwouldbeeasierprevent,detectandrespondtocorruption–relatedcases.Thesetoolsshouldbecombined,encompassingpreventive(normativeframeworks,riskassessment,recruitmentand training of personnel) or reactive (detection and investigation,disciplinaryactions,penalties)measures.Somescholarsalsosupportthispositionaswellandrecommendtheadoptionofaholisticanti‐corruptionapproachthataddressessystematicaspectsofcorruptionthroughacombinationof measures: clear guidelines and policies, training, operational and HRmanagementmeasures,riskanalysisandmonitoring,internalandexternaloversight,prosecutionandpenalties(Klitgaard,2008;Andersson,etal.,2019).

As noted before, Lithuania is trying to unify the creation of an anti‐corruption environment by setting guidelines for the public and privatesectors.Guideofanti‐corruptionenvironmentinthepublicsector(SpecialInvestigationService,2018)isthefirststructureddocumentinLithuania,whichprovidesdetailedinformationonhowtodevelopandimplementananti‐corruptionenvironment inpublic sectororganizations.Although thedraftersoftheguidelinesstated,thatcomponentsformingananti‐corruptionenvironmentmaybedifferentandthatthereisnosingleuniversalmodelforcreatinganti‐corruptionenvironmentinpublicsectororganisations,butsuch a position is debatable. International good practice shows, thatirrespective of the size and organizational structure of the public sectororganization, the location inwhich theorganizationoperates, thenature,scale and complexity of the organization’s activities, the constituentcomponentsofananti‐corruptionenvironmenthavetobeuniform.

Componentsofanti‐corruptionenvironmentthatneedtobeimplementedare well recognized by international organizations (UN, OECD, OSCE,TransparencyInternationalGRECO,EPAC,EuropeanCommissionandothers),butthedetailofthemeasures,incorporatedinaseparatecomponent,tobeused differ widely according to the relevant circumstances. Then, it isdifficult or sometimes impossible to prescribe in detail what kind ofanticorruptionmeasuresthepublicsectororganizationshouldapplyinanyparticularsituation.Then,thepublicsectororganizationisfreetochooseanyanticorruptionmeasuresatitsdiscretion,butsuchmeasuresshouldbeappropriate to corruption risk and their aimof preventing corruption. Itshould be noted that selected anticorruptionmeasures should not be so

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expensive,burdensomeandbureaucraticthattheybringthepublicsectororganizations’activitiestoahalt,norcantheybesosimpleandineffectivethat corruption can easily occur in the public sector organization. In theprocessofdevelopingananti‐corruptionenvironment,attentionshouldbepaidnotonlytomeasuressetoutinthelegislationbutalsofollowrecognizedinternationalstandardsthatprescribeasystemofestablishing,implementing,maintaining,reviewingandimprovingsuchmeasures.Inotherwords,theanti‐corruptionenvironment iscreatedbyusingastandardizedmodelofanti‐corruptionmanagementsystems(ISO37001:Anti‐BriberyManagementSystems,2016;ISO19600:Compliancemanagementsystems,2014).

Currently,itisusefultosetupauniformstandardforbuildingasystemofanti‐corruptionmeasuresinthepublicsectororganization.IntheLithuanianpublicsector,thereisaspecificmodeloftheanti‐corruptionenvironment,the implementation of which is based on the set of the componentscomprisingtheanti‐corruptionenvironment(seeFigure1).

Figure1.Componentscreatingananti‐corruptionenvironment

intheLithuanianpublicsector

The anti‐corruption environment is being created with the purpose ofensuring a long‐term and effective control system of the prevention ofcorruption in thepublicsector.Publicsectororganizationsshoulddefinethedirectionsforcreatingtheanti‐corruptionenvironment,i.e.directions


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mightbe:a)political,consolidatingthefundamentalvaluesoftheorganization(integrity,goodgovernance,openness,precedenceofpublicinterestsovertheprivateinterests);b)legal,definingthelegalframeworkforcreatingtheanti‐corruptionenvironment;c)organizational,definingthemanagementoftheorganization'sbusinessprocessesinordertoreducethecorruptionrisksandprevalenceofcorruption;d)economic,providingtheresources(financial, human) needed for ensuring the establishment of the anti‐corruptionenvironment;e)cultural, encouragingpersonnelbehaviour tocomplywiththecodeofconduct;f)education,ensuringappropriateanti‐corruptionawarenessandtrainingtopersonnel.Clearlydefiningthedirectionsforcreatingtheanti‐corruptionenvironmentwouldallowthepublicsectororganization to choose and properly implement corruption preventionmechanism.

Benefitandgoodpracticeofcreatingananti‐corruptionenvironmentinthepublicsectororganization

During thepast threeyears, someLithuanianpublicsectororganizationshave made rapid progress in creating an environment unfavourable tocorruption. Examples of good practice show, how various componentscomposingtheanticorruptionenvironmentareperfectlyintegratedintothepublicsectororganization'sbusinessprocesses2.Positiveresultsandbenefitsareobserved,aspublicsectororganizationsreallyperceivetheimpactofcreatedanti‐corruptionenvironmentintheirdailyactivities.Thisisevidentthrough the following features: improved quality of administrative andpublic service, increased transparency and openness of administrativeprocedures anddecision‐making, public trust to organizations’ activities,enhancedintoleranceforandresistancetocorruption,encouragedethicalbehaviour,responsibilityandaccountability.

Someresearchersarguethatbeforecreatingananti‐corruptionenvironment,itisimportantforthepublicsectororganizationtoappreciatethebenefitsofimplementingsuchanenvironment(Hanna,etal.,2011;Spector,2016).

2 Formoreinformationaboutcurrentstatusofdevelopmentofanti‐corruptionenvironmentinpublicsectororganizations,pleasesee:“Lietuvosenergija”Group,state‐ownedJSC,https://www.ignitisgrupe.lt/en/prevention‐corruption;StateEnterprise“Oronavigacija(ON)”,https://www.ans.lt/en/anti‐corruption/;TheNationalLandServiceundertheundertheMinistryofAgricultureoftheRepublicofLithuania,http://www.nzt.lt/go.php/lit/Korupcijos‐prevencija;Elektrėnaimunicipality,https://www.elektrenai.lt/go.php/lit/Antikorupcine‐politika

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Of course, strong and sustained political will from top management isrequiredforitseffectiveimplementation(OECD:IstanbulAnti‐CorruptionAction Plan, 2008, 19). The drive for anti‐corruption commitments andpracticesinvariablydemandsleadership:thewillingnesstoseeklong‐termandwidely‐sharedbenefitsformfromthecreatedanti‐corruptionenvironment.

Anti‐corruptioncommitmentsshouldbeformalizedintheanti‐corruptionpolicy of the public sector organization. Anti‐corruption policy is a key,publiclyavailableandbindingdocument,statingmainprinciplesandbasicprovisions for implementing the anti‐corruption environment. By thisdocument thepublic sectororganization stateswhatpreventive action itwilltakeforstrengtheningintolerancetocorruption(forexample,unethicalbehaviour,nepotism,conflictof interest,bribery,tradingininfluenceandothercorrupt‐relatedoffencesandlessdangerousformsofcorruption)andthat it complieswith the requirements of the international and nationallegal acts in the field of corruption prevention. Anti‐corruption policy isintendedtoensurethattheperformanceandbehaviourofthepublicsectororganization comply with the highest standards of reliability, integrity,transparency,accountability,opennessandprofessionalethicsacceptableto the society. Usually, themain objectives of the anti‐corruption policyimplementedbythepublicsectororganizationareoriented:a) toreducetheriskofcorruptionintheorganization‘sactivitiesandproperlymanageit; b) to ensure proper and timely implementation of anti‐corruptionmeasuressetoutbythelawsandotherlegalacts;c)tosetrequirementsforemployeebehaviourinthefieldofcorruptionpreventionandtomaketheserequirementsbecomerecognizedandvoluntarilyimplementednotonlybytheemployeesbutalsobyallstakeholdersandinterestedparties.

Analyzingtheimplementationpracticeofcorruptionpreventionmeasuresinsomepublicsectororganizationsitcanbeseenthatdevelopmentofananti‐corruptionenvironmentusuallyisbasedontwomodels:

1) Basicmodelofanti‐corruptionenvironment,whichisbasedonthemethodsofcorrectingthebehaviourofthepublicsectororganizationstaffattheprocessofcreatingtheanti‐corruptionenvironment.Themainpurposeofthismodelistocreateandmaintainanorganisation’smicro‐climate, which would encourage the employees to be fair,responsible,transparentandloyalinperformingthedutiesassignedtothem,aswellasadheretotherulesofconduct,avoidanyconflictofinterests,etc.(HandbookfortheCreationandImplementationofAnti‐CorruptionEnvironmentinthePrivateSector,2018,30);


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2) Advancedmodel of anti‐corruption environment,which refers totheformationofananti‐corruptionenvironmentbasedonbehaviourcorrectionandorganisational‐regulatorymethodsfocusedoneliminationofthekeycorruptionproblems,reasonsandpreconditionsfortheprevalenceofcorruptionatthepublicsectororganisation.Itspurposeistocreateandmaintainanorganisation’smicro‐climatebyusingregulatoryandorganisationalmeasures towithdrawormarkedlyrestricttheopportunitytoactnotincompliancewithbehaviouralstandards, and to enhance the probability of being caught uponviolatingthem(HandbookfortheCreationandImplementationofAnti‐CorruptionEnvironmentinthePrivateSector,2018,30).

Summingupthebenefitthatthepublicsectororganizationcangainfromcreatingananti‐corruptionenvironment, it canbeseen that itallows forpublic sector organizations to improve effectiveness of administrationprocedures,transparencyandopennessofdecisionmaking,accountabilitytothepublicandhigherresiliencetocorruption(strategicoutcome).Also,it helps public sector organizations in a timely manner to managereputational, operational, legal and financial risks related to corruption(managementoutcome).Aswell, itallowstosetupconditions for timelyidentification of corruption risks occurring in the organization’s publicadministrationprocessesand,afterevaluatingthem,toselectproportionateand effective preventive measures to manage them (legal outcome).Managersareresponsibleforthefullimplementationofthepreventionofcorruption in the public sector organization and theymust take variousmeasures to achieve positive results. Creation of an anti‐corruptionenvironment is a management tool based on legal instruments, whichshouldberegularlyreviewedandupdatedifthepublicsectororganizationwantstoachievesuccessininthefieldoftacklingcorruption.

Conclusionsandrecommendations

1. Thefindingsoftheauthorofthearticlehighlighttheimpactofcorruptionon various types of public sector organizations, especially on thosewhichareathighriskduetothenatureoftheiractivities,i.e.heathcareandpharmaceuticalorganizations,state‐ownedenterprises,municipalities,organizations working in the field of environmental protection,providing construction services, tax and land use planning services.Corruptionparticularlyaffectsthereputationandimageofpublicsector

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organizations, employees’ morale, financial situation, public andstakeholderstrust,qualityofprovidingservicesandpublicintegrity.

2. The main reasons for corruption in public sector organizations arevarious(bureaucraticadministrativeproceduresandtheirinsufficientopenness,dishonestyofpublicsectoremployees,notenoughtransparencyandopennessinpublicdecision‐makingprocess,notmanagedorpoorlymanagedconflictsofinterest,nepotism,unlawfullobbying,insufficientpubliccontrolmechanismandothers).Butoneofthemostimportantperquisites is that public sector organizations mistakenly perceivecorruptionmanagementtoolsasdirectingalleffortstocontrolcorruptionthroughtheuseofavarietyofcriminalprosecutionmethods(consequence‐orientedactivities),butnotbyapplyingmechanisms,whichsupporttopre‐empt the spread of the manifestations of corruption in advance(pro‐activeactivity).

3. Thecreationofananti‐corruptionenvironment isanewconceptandpolicy against corruption of Lithuanian state governance focused onreducingtheprevalenceofcorruption,managementofcorruptionrisk,strengtheningresilienceandintoleranceforcorruptioninpublicsectororganizations.Thepracticeofcreatingananti‐corruptionenvironmentis based on the regulatory framework that sets binding rules for theapplicationofpreventivemeasuresagainstcorruption.

4. Research indicates that ananti‐corruptionenvironment in thepublicsectororganizationconsistsofapackageofcomprehensivemeasurescoveringareassuchasleadershipandcompliancewithanti‐corruptioncommitments, prevention and management of conflicts of interests,applicationofbindinglegislativepreventivemeasures,corruptionriskassessmentandmanagement,establishmentofanti‐corruptioncomplianceunits, standards of professional behaviour and code of conducts,personnelrecruitment,anti‐corruptionawarenessraisingandtraining,investigatingofcorruptionrelatedoffencesandwhistleblowersprotection.Theseareuniversalandstandardizedtools,whichcanbeusedifpublicsectororganizationswouldliketomakeprogressinreducingmanifestationsofcorruption,otherwise,onewouldbeineffectiveincompletelyisolatinganti‐corruptionactivities.

5. The author takes the stance that regardless of the size of the publicsectororganization,thetypeofpublicsectorinwhichtheorganizationoperates,thenature,scaleandcomplexityoftheorganization'sactivities,its anti‐corruption effortsmust be obvious and realistic. Creating ananti‐corruptionenvironmentwillnotprovideacomprehensiveguarantee


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thattherewillbenocorruptionassociatedwiththeactivitiesofpublicsectororganizations,becauseitisnotpossibletoeliminateallrisksofcorruption.Thepresenceoftheanti‐corruptionenvironmentessentiallycreatestheconditionsandhelpsthepublicsectororganizationtoimplementmeasuresdesignedtoprevent,detectandrespondtocorruption.

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PROBLEMSOFAPPLICATIONOFTHERIGHTTODATAPORTABILITY

MartaKive,Mg.sc.iur.,RīgaStradiņšUniversity,Latvia

[email protected],Dr.iur.,

RīgaStradiņšUniversity,Latvia

Abstract

The aim of the publication is to analyze the advantages anddisadvantagesoftherighttodataportability,aswellastolookattheminthecontextofdevelopmentofalegalframeworkforthe protection of personal data. The General Data ProtectionRegulationenteredintoforceon25May2018andintroducedanew legalframeworkfortheprotectionofpersonaldata intheEuropeanUnion,andalsoincludedseveralnewrights,includingtherighttodataportability.Thesearerightsofthedatasubjecttoreceivepersonaldataconcerninghimself,whichhehasprovidedtothecontroller,inastructured,widelyusedandmachine‐readableformat,andtransmitthisinformationtoanothercontroller,ifitispossible.

Therighttodataportabilityappliesonlytopersonaldataprovidedby the controller to the data subject himself, and only if theprocessingwasinitiallybasedontheconsentoftheuseroronthebasisofacontract.Thismeansthattherighttodataportabilityisnotfeasiblewhendataprocessingisbasedonanotherlegalbasis.

Inthecontextoftherighttodataportability,datasubjectsdirectlytransmitdatafromonedatacontrollertoanotherwheretechnicallypossible. The regulation does not specify what is meant by“technicallyfeasible”.Thewordingindicatesthatthisshouldbeaddressedonacase‐by‐casebasisandadynamicinterpretationoftheterm“technicallyfeasible”shouldbeensured.ThisislimitedbecausetheRegulationdoesnotobligedatacontrollerstoacceptormaintaincompatibleprocessingsystems.


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Keywords:GeneralDataProtectionRegulation,dataportability,datasubject,datacontroller

DOI:10.37804/1691‐6077‐2020‐11‐116‐127

Introduction

On 25 May 2018, new regulatory requirements for the protection ofpersonaldataenteredintoforceintheEuropeanUnioninordertoprovidedatasubjectswithgreatercontrolovertheirpersonaldataandtoincreasesecuritybothonlineandoffline– theGeneralDataProtectionRegulation(hereinafter–theGDPR).Withitsentryintoforce,citizensoftheEuropeanUnion have a number of new rights: the right to receive clear andcomprehensibleinformationaboutwhoprocessestheirpersonaldata,whatdataisprocessedandwhyitisprocessed;therighttorequestaccesstotheirpersonal data held by an organization; the right to request the serviceprovidertosendpersonaldatatoanotherserviceproviderwhentransferringfromoneserviceprovider toanotheror theright todataportability; therighttobeforgottenortherighttorequestthatpersonaldatabedeletedifindividualsdonotwantthemtobeprocessedandif thecompanyhasnolegitimatereasontokeepthem.

TherighttodataportabilityisoneofthemostcontroversialrightsintheGDPR.This is thedatasubject'sright toreceivepersonaldatarelatingtohimselfwhichhehasprovidedtothecontrollerinastructured,widelyusedand machine‐readable format and to transmit that data to anothercontroller (Regulation 2016/679 of the European Parliament and of theCouncil). It is precisely the right to request the transfer ofportabledatadirectlybetweendatacontrollersofthedatasubject'schoice,providedthatthisistechnicallypossible,isanewaspect,asanaccessrightalreadyexistedbeforetheGDPRthatallowedthedatasubjecttoaccessinformationabouthimheldbythedatacontroller.

Therighttodataportabilityallowsthedatasubjecttorequestthetransferof his or her personal data from one data controller to another, thusallowingconsumers to re‐use their information,whileon theotherhandencouragingdatacontrollerstoputinplacesystemswithexportingcapabilities.Thepurposeof theright todataportability is toempowerconsumers tocontrol their personal data. In addition, the right todataportability alsoincreasescompetitionbetweenserviceproviders.

Therighttodataportabilityisrelativelynewandthereforeposesanumberofproblems,astheGDPRdefinesthatthisrightonlyappliestoprocessing

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byautomatedmeans,soitdoesnotapplytomostpaper‐basedprocessingcases(Regulation2016/679oftheEuropeanParliamentandoftheCouncil).Therighttodataportabilityisonlyexercisediftheprocessingiscarriedoutelectronically,inastructuredwayandinawidelyusedformat–structuredandwidelyusedaretwodifferentrequirementsthatmustbemetinorderforconsumerstoexercisetheirdataportabilityrights.Inreality,thesetworequirementswillnotalwaysbemet,astheRegulationdoesnotspecifytheformatinwhichthedataaretobesubmitted.Theconditionsfortheexerciseoftherightexcludecaseswherethedataarenotstructuredorinawidelyusedformat,despitethefactthatoneoftheconditionsismet.

Within the framework of the right to data portability, data subjectsmaytransfer data directly from one controller to another, where technicallyfeasible.GDPRdoesnotspecifywhatismeantby“technicallyfeasible”.Thewordingindicatesthatthismustbeaddressedonacase‐by‐casebasisandthat a dynamic interpretation of the term “technically feasible”must beensured. This is limited because the Regulation does not oblige datacontrollerstoadoptormaintaincompatibleprocessingsystems.

Theright todataportabilityappliesonly if theprocessingwasoriginallybasedontheuser'sconsentoronacontractualbasis.Thismeansthattherighttodataportabilityisnotenforceableincaseswheredataprocessingtakesplaceonanotherlegalbasis.Inaddition,thisrightonlyappliestodataprovidedbythedatasubjecthimself.Theproblemofenforcingtherighttodata portability may also arise in cases where the personal data to betransferredcontainvaluableproprietaryinformationandintellectualproperty.

Giventherapidgrowthofpersonaldatacirculation,datasubjectsneedtogainmorecontrolovertheirdata,therighttobeinformedaboutwhatdataare processed by the controller, for what purposes and, if necessary, totransfertheirdatatoanothercontroller.TheGDPRprovidesforsuchrights,butitisnecessarytoexaminewhethertheproblemsoftheirapplicationdonot make them too complex, incomprehensible and unsuitable for theeverydayuser,whichwouldmeanthattheserightsareapplicableonlyinaverynarrowrangeofcases.

Theconceptofdataportabilityrights

Today, there are a number of e‐merchants or online service providerswhoseservicesrequirethecustomertoprovidetheirpersonalinformation,suchasregisteringinanonlinestoretopurchasegoodsorsubmittingtheirdatatoatelecommunicationscompanytoreceiveitsservices.Thispersonal


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datareceivedbytheserviceprovidersisveryvaluableasitofferssignificantadvantagesovercompetitors,allowingthemtobetterrespondtotheneedsof their customers and thus offer better quality services. Customer dataanalysisisbeingusedmoreandmorenowadays,anditalsohasamonetaryvalue,asitallowscreatingtargetedadvertising.Forexample,byselectingcustomersbyaspecificaddress,acompanymayinvitethemtovisitanewbranchthathasopenednearby,andsoon.Duetothisvalue,somecompaniestended tostoredataanduse it forvarious,mostlycommercialpurposes.This, in turn, led to dissatisfaction among data subjects, often receivingcommercialoffersnotonly for theservices theyalreadyuse,butalso forsimilar ones. As far as the data subject is concerned, it is important tomentionthatthedatamakesthetransitiontoanewservicemoreexpensiveordifficultfortheuser,soasolutionfordataportabilitywasneeded.

Article20of theGDPRintroducesan innovative legalaspect: therighttorequest the transferofportabledatadirectlybetweendatacontrollersofthedatasubject'schoice,providedthatthis ispossible.Thisnormgrantsrights to natural persons, thus excluding data portability in business‐to‐businessrelationshipsthatarenotcoveredbytheGDPR(Somaini,2018).The aspect of that right “if it is possible” indicates that that right is notgeneral.

TherighttodataportabilityisoneofthemostinnovativeaspectsofGDPR,asitallowsthedatasubjecttorequestthetransferofhisorherpersonaldatafromonedatacontrollertoanother,thusallowingconsumerstore‐usetheirinformation,whileontheotherhandencouragingdatacontrollerstoputinplacesystemswithexportingcapabilities.Thepurposeoftherighttodataportabilityistoempowerconsumerstocontroltheirpersonaldata.Inaddition,therighttodataportabilityalsoincreasescompetitionbyreducingthe foreclosure effect and allowing interoperability to be promoted(Carolina&Cartuche,2019).Giventhelargeamountofpersonaldatathatisbeingenteredintoonlineenvironmentstoday,therightofusersnotonlytorequestaccesstotheirinformation,butalsotohaverealopportunitiestocontrolandreusetheirdata, isbecomingincreasinglyimportant.PriortotheentryintoforceoftheGDPR,usershadtofaceadditionalcostsiftheywanted to change serviceproviders.Thiswasoneof the reasons for thedevelopmentofdataportabilityrightstoenableuserstocontroltheirdataandtransferitwithouthindrancebetweenserviceproviders.

The right to data portability strengthens online data protection, thuscontributing to the development of the digital economy and data‐driventechnologies.Rawdatahaslessvalue,itiscreatedbythecontextofthedata,

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when it, together with other data sets, creates new information thatbecomescommerciallyviable(Somaini,2018).Dataportabilityisexpectedto foster the development of data‐driven innovation in the digital singlemarket by encouraging digital service developers to offer additionalcapabilitiesandapplicationstousers.Dataportabilityshouldalsofacilitatethecontrolledexchangeofdatabetweenorganizationsandthushelpenrichservicesandthecustomerexperienceonline.

Thedataportabilityrightonlyappliestopersonaldata,soanydatathatisanonymousornotrelatedtothedatasubjectwillnotbesubjecttothisright.However,theyareapplicabletopseudonomizeddatathatareclearlylinkedtothedatasubject(Bussche&Voigt,2017).Thesecondconditionnarrowsthescopeoftherighttodataportabilitytodataprovidedbythedatasubject.Themainideaofdataportabilityistoenabledatasubjectstoretaincontrolover, transfer and share their data. Chris Saad, co‐founder of the dataportabilityproject,describesthisrightas“anexperiencewithoutborderswherepeoplecaneasilymovebetweennetworkservices,re‐usethedatatheyprovidewhilecontrollingtheirprivacyandrespectingtheprivacyofothers”(VanderAuwermeulen,2017).Atthesametime,greaterrightsfordatasubjectsalsomeanhigherrequirementsfordatacontrollers,whomustbeabletotransferdata.

Advantagesoftherighttodataportability

Therighttodataportabilitymeansthattherearenoadditionalcircumstancesfor the client or the user thatwould force him to remainwith a serviceproviderthatisnotsatisfactoryinhisopinion.Insectorssuchasmedicineortelecommunications,wheretheremaybelargeamountsofinformationthat also contain sensitive data, customers are often reluctant to switchproviderspreciselybecausetheydonotwanttostartthecomplexprocessofreceivingandtransmittinginformation.

Otherbenefitsofdataportabilityincludethefactthatdatauserswillhavetheopportunitytobackupkeydatasuchasmedicalrecordsandinformation,tax returns and other financial information, and will reduce the risk ofconsequences if the service provider suddenly decides to discontinue itsactivities (Macgillivray&Shambaugh,2016). Ingeneral, theright todataportabilitywillalsoincreasethesenseofresponsibilityofdataprovidersandstorers,aswellaspromotetransparencyastowhatinformationisheldbytheserviceprovider.


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Giventhattherighttodataportabilitywillfacilitatethetransitionofcustomersfromoneserviceprovidertoanother,itwillpromotecompetitionbetweenserviceproviders,accordingly.Thebeneficiarywillbetherecipientoftheservice,becauseherethereareopportunitiesforcertainbenefitsintermsofservicequality,price,etc.However,aneasiertransitionfromoneserviceprovidertoanother,whichalsomeanslowercosts,maymakecompanieswant to choose other businessmodels, such as becomingmore selectivetowardsthecustomeratthebeginningofthecollaboration,orinvestinglessresourcesinthecustomerrelationship.

Disadvantagesoftherighttodataportability

Therighttodataportabilitycanbecostlyforusers–theyhavebeencreatedthinkingalsoabouthowtoreducemonopoliesofcompaniesandpromotecompetition, therefore, companies will certainly look for solutions topreventusersfromswitchingtoanotherserviceprovider,andoneofthetoolscouldbeadditionalcostsintheeventofchangingserviceproviders.

Anotherdisadvantage,whichcouldevenbedefinedasacomplexitycausedby theright todataportability, is theseparationofdataportability fromotherrights,suchastherightofaccess.Datacontrollersneedtoexplainverycarefullythedifferencesbetweenthetypesofdatathatadatasubjectcanreceive in exercisinghis orher right of access anddataportability.Datasubjectsmustalsobeawarethattherighttodataportabilitydoesnotapplyinallcases.Inordertoreducecomplicationsincaseswheretherecipientterminatesthecontractandwishestotransferhisdatatoanotherserviceprovider, data controllers should be reminded that the data needs to beevaluatedbeforetheconclusionofthecontract.

Admittedly,thefactthatdataportabilityrightsalsoprovideforaspecificperiodwithinwhichtheymustbeexercisedcouldalsobeaproblemforanumberofinstitutionsorcompanies.Article12(3)oftheGeneralDataProtectionRegulationstatesthat“thecontroller”shall,“withoutunduedelay”andinanycase“withinonemonthofreceiptoftherequest”“informthedatasubjectoftheactiontaken”.Incomplexcases,thisone‐monthperiodmaybeextendedtoamaximumofthreemonths,providedthatthedatasubjectisinformedof the reasons for such a delay within one month of the initial request(Regulation 2016/679 of the European Parliament and of the Council).Increasingthedatasubject'scontroloverhisorherdataisoneoftheaimsoftherighttodataportability.Atthesametime,dataportabilityfacilitatesdatacirculationandsharing.Overtime,theconceptofdataportabilitycould

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contributetotheideathatpersonaldatadonotbelongonlytoindividuals,butcanbeseenasacommonresourceandabasisforinnovation.

Applicationoftherighttodataportability

TheGDPRdoesnotestablisharighttodataportabilityincaseswheretheprocessingofpersonaldataisbasedonconsentorcontract.Forexample,financialinstitutionsarenotobligedtoexercisedataportabilityrightswithregardtopersonaldataprocessedinthecourseoftheirduties,suchastheobligation to prevent and detect money laundering and other financialcrimes; nor does the data portability right apply to professional contactinformation. The right to data portability is only exercised if the dataprocessingiscarriedoutelectronically,inastructuredwayandinawidelyusedformat(Lagos&Swire,2013).Thepreconditionsofstructured,widelyusedandmachine‐readableareasetofminimumrequirementsthatmustallbemetatthesametime.Thesearethetechnicalspecificationsofthedata,whichmustalsohaveinteroperability.

GDPRArticle12statesthat“thecontroller”shall,“withoutunduedelay”andin any case “withinonemonthof receipt of the request” “inform thedatasubjectoftheactiontaken”(Regulation2016/679oftheEuropeanParliamentandoftheCouncil).Incomplexcases,thisone‐monthperiodmaybeextendedtoamaximumofthreemonths,providedthatthedatasubjectisinformedofthereasonsforsuchadelaywithinonemonthoftheinitialrequest.

If thedatacontrollerrefuses torespondto thedatasubject's request fordataportability,heisobligedtoinformthedatasubjectwithinonemonthofthereasonsfornotcomplyingwiththedataportabilityrequest(Gijrath,etal.,2018).Inaddition,hemustalsoinformthedatasubjectconcernedofhisrighttolodgeacomplaintwiththesupervisoryauthorityortobringanactionbeforeacourt.TheGDPRdoesnotexplainhowtodealwith largeamounts of data, complex data structures or other technical issues thatcouldcausedifficultiesfordatacontrollersordatasubjects.However,inallcases, it is very important that the person can fully understand thedefinition,schemeandstructureofthepersonaldatathatcanbeprovidedbythedatacontroller(Article29DataProtectionWorkingPartyGuidelinesontherighttodataportability,2016).Forexample,thedatacouldfirstbeprovidedinsummaryformthroughdashboardsthatallowthedatasubjecttotransfersubsetsofpersonaldataratherthantheentire.


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Problemsofapplicationoftherighttodataportability

The right to data portability applies only to data provided by the datasubjecthimself.Toonarrowaninterpretationofpersonaldatawouldbeoflessbenefittoindividuals,buttoobroadwouldbeaproblemforthedatacontroller.Article20oftheGDPRdoesnotspecifywhetherdatageneratedbyaserviceprovidermaybesubjecttodataportabilityforstatisticalandanalyticalpurposes(Vanger,2018).Oneexampleistheuserratingorratingonplatformslikeebay.comandothers.Withlong‐termuseoftheplatform,thedatasubjectisassignedaspecificrating,buttheGDPRdoesnotspecifywhethertheuser'srating is transferabletoanotherdatacontrollerwhenswitchingtoanotherplatform.

Theeffectivenessoftherighttodataportabilitywilllargelydependonthebroad interpretation of the definition of personal data. Article 20 of theGDPRstatesthattherighttodataportabilityappliestodataprovidedbythedatasubjecthimself.Thismeansthatitdoesnotapplytoderiveddata.Forexample,ifthedatasubjectprovidesthedoctorwithinformationabouthissymptoms,itispersonaldata,whileifthedoctoraddstothisinformationhisdiagnosisobtainedduringanexaminationortreatment,itcannolongerbeclassifiedasinformationprovidedbythedatasubjecthimself.

AliteralinterpretationofArticle20oftheGDPRallowsthedatasubjecttotransferonlyhispersonalinformationfromonecontrollertoanother,butdoes not apply to the ratings assigned to the data subject on differentplatforms. And this can prevent data subjects from switching to anotherdatacontroller.

Theissueoftherighttodataportabilityisalsoreflectedinthethirdpartyrighttoprivacy.Allowingonedatasubjecttotransferdatatoanotherdatacontrollerwhen such data also contains information about another datasubjectviolatestheotherdatasubject'srighttoprivacy(Vanger,2018).Forexample,ifaphotopostedonFacebook.comshowsmultipledatasubjectsandoneofthemwantstotransferthatimagetoanotherdatacontrolleronanotherplatform,thisisnotpossiblebecauseitaffectstheotherdatasubjects'rightstoprivacyanddataportability.Anotherexampleisabankaccountstatementthatincludesinformationaboutboththepayerandthepayee.

Iftheinformationrequestedbythedatasubjectincludesinformationaboutothers(e.g.thirdpartydata),thedatacontrollermustconsiderwhetherthiscouldadverselyaffect therightsandfreedomsof thesethirdparties.Thetransferof thirdpartydata to thepersonmaking theportability requestshouldnotbeaproblem,assumingthattheapplicantfirstprovidesthisdata

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inhisinformation.However,thecontrollermustalwaysconsiderwhethertherightsandfreedomsofthirdpartieswillbeadverselyaffected,especiallyif thedataare transferreddirectly toanothercontroller. If therequesteddata is provided to several data subjects (e.g. a joint bank account), theportabilityrequestmustbeapprovedbyallpartiesinvolved.

Inordertoavoidadverseeffectsonthethirdpartiesinvolved,suchpersonaldatamaybeprocessedbyanothercontrolleronlyinsofarasthedataareunderthesolesupervisionoftherequestinguserandareprocessedonlyforpersonalorhouseholdpurposes.Thecontrollertowhomthedatahavebeentransmitted may not use the transmitted third‐party data for his ownpurposes, for example to offermarketingproducts and services to thoseotherthird‐partydatasubjects.

Securityandprivacyrisksarisewhenpersonaldataistransferredfromonedata controller to another. It is the interoperability of systems used bydifferentdatacontrollersthatisconsideredtobeoneofthekeyaspectsthatcanposesecurityrisks.Datacontrollersareadvisedtotakeriskmitigationmeasuresusingadditionalauthenticationinformation,suchastheuseofapasswordorthepossibilitytosuspendthetransferofdataincaseswherepersonaldataaresuspectedtobecompromised(Vanger,2018).Thesesecuritymeasuresareonlyintheformofarecommendation,soeachcontrollerhastherighttochoosewhetherornottoimplementthem,andifsomecontrollerschoosetoimplementthemandsomedonot,theissueofdifferencesinthedataprocessingprocesswillre‐emerge,eventhoughtheGDPRaimstopreventthem.

Itisimportanttonotethattheapplicationoftherighttodataportabilityislimited to a certain format (Cremona, 2017). It is not a right of generalapplication, so before requesting the portability of certain data, the datasubject must consider whether these data meet the conditions for theformatandthejustificationfortheprocessing.

Conclusions

Therighttodataportabilityallowsthedatasubjecttoreceivepersonaldatarelatingtohimselfwhichhehasprovidedtothecontrollerinastructured,widely used and machine‐readable format and to transfer that data toanother controller provided that this is technically possible. This rightincludes two separate rights of data subjects. First, there is the right toreceivepersonaldata.Secondly,thereistherighttotransferpersonaldatato another data controller, if this is technically possible, by transferring


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personal data directly from one controller to another. These rights areseparate,whichmeansthatthedatasubjectcanchoosewhethertoreceivepersonaldata.Or thepersoncanchoose to transfer thepersonaldata toanotherdatacontroller.Apersoncanrequestboth,buttheserightsarenotinterdependent.

Theaspectsofthatrightrelatingtotheconditionswhichmustbesatisfiedfor the right to be exercised indicate that that right is not general. Thewording inregardto transferofdata toanothercontroller“if technicallypossible”meansthatthecontrollermayalsoignoretherequestforportabilityon the grounds of technical incompatibility with the platform of thecontrollertowhichthedatasubjectwishestotransferhisdata.Ifexistingsystemsdonotsupport thedirect transferofdata fromonecontrollertoanother,thisisavalidreasonforthedatacontrollertorejecttherequestfordataportability.Suchatechnicalconditionsignificantlyreducesthepossibilityofexercisingtherighttodataportability,anddoesnotimposeanyobligationonthecontrollertoupgradeormodifythesystemtobecompatiblewithothercontrollers'systems.

Thedataportabilityrightonlyappliestopersonaldata,soanydatathatisanonymousornotrelatedtothedatasubjectwillnotbesubjecttothisright.However,theyareapplicabletopseudonomizeddatathatareclearlylinkedtothedatasubject.Article20oftheGDPRdoesnotdefinewhethertherighttodataportabilityalsoappliestocontextualpersonaldata.Therighttodataportability only applies in cases where the processing is carried out byautomatedmeans,soitdoesnotapplytomostinformationinpaperform,anditonlyappliestodataprovidedbythedatasubjecthimself.Thismeansthatitdoesnotapplytoderiveddata.

Fromabusinesspointofview,therighttodataportabilityisbothachallengeto the traditional competition law system and an opportunity to buildinteroperable systems. From theusers' point of view, the impact of dataportabilityisobviousbothintermsofthecontrolofpersonaldata(andingeneralinordertoincreasetheindividuals’rightsofcontrol)andintermsoftheinterconnectionofserviceusers.Therighttodataportabilitywillalsoincreasethesenseofresponsibilityofdataprovidersandstorers,aswellaspromotetransparencyastowhatinformationisheldbytheserviceprovider.

Oneofthedisadvantagesoftherighttodataportabilityistheseparationofdata portability from other rights, such as the right of access. Datacontrollersneedtoexplainverycarefullythedifferencesbetweenthetypesofdatathatadatasubjectcanreceiveinexercisinghisorherrightofaccessanddataportability.Therighttodataportabilitymayadverselyaffectthe

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rightsandfreedomsofothers.Suchadverseeffectsmayariseincaseswherethe transfer of data from one controller to anotherwould prevent thirdparties fromexercising their rightsunder theGDPR, suchas the right toinformation,access,etc.Therighttodataportabilityhasasignificantimpactonprivacyanddatasecurity:ifdataisportable,identityfraudcanbecomealong‐termpersonaldatabreach,asahackercaneasilytransferhisfakeidentitytomanyotherplatforms.Thereisalsothepossibilitythatseveralpersonsrequestcontrolofthesamedata,whichmeansthattherighttodataportabilitymayadverselyaffectpropertyrights.

Theissueofexercisingtherighttodataportabilityisalsohighlightedintheissueofdataformatandvolume.Processingiscarriedoutonthebasisoftheconsentofthedatasubjectsoracontractandbyautomatedmeans.Thismeansthattherighttodataportability isnotenforceable incaseswheredataprocessingtakesplaceonanotherlegalbasis,aswellasincaseswherethedataissubmittedorstoredinanon‐automatedway.Article20oftheGDPRrequiresdatacontrollerstoensurethetransmissionofdatainawidelyused,machine‐readableformat.Theterms“structured”,“widelyused”and“machinereadable”areasetofminimumrequirementsthatshouldfacilitatethe interoperability of the data format provided by the data controller.However, theGDPRdoesnotdefine theoptimal format tobeused in theprocessofenforcingdataportabilityrights.

Structuredandwidelyusedare twodifferent requirements thatmustbemet in order for consumers to exercise their data portability rights. Inreality,thesetworequirementswillnotalwaysbemet,astheRegulationdoes not specify the format in which the data are to be submitted. Theconditionsfortheexerciseoftherightexcludecaseswherethedataarenotstructured or in a widely used format, despite the fact that one of theconditions is met. The problems of the application of the right to dataportabilityatpresentiscurrentlycausedlargelyduetouncertaintiesaboutthemostappropriateformat,aswellastheneedtomeetallthetechnicalconditions at the same time and ensure a structured, widely used andmachine‐readableformat.

References

Bussche,A.,Voigt,P.(2017).TheEUGeneralDataProtectionRegulation(GDPR),APracticalGuide.Springer,p.383

Cremona,M.(2017).NewTechnologiesandEULaw.OxfordUniversityPress,p.288

Gijrath,S.,Hof,S.,Lodder,A.,Zwenne,G.(2018).ConciseEuropeanDataProtection,E‐CommerceandITLaw,3rded.WoltersKluwer,p.1056


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Lagos, Y., Swire, P. (2013).Why The Right to Data Portability Likely Reduces ConsumerWelfare:AntitrustandPrivacyCritique.MarylandLawReview,p.337

Macgillivray, A., Shambaugh, J. (2016). Exploring Data Portability. Pieejams:https://obamawhitehouse.archives.gov/blog/2016/09/30/exploring‐data‐portability,aplūkots1.04.2020.

Regulation(EU)2016/679oftheEuropeanParliamentandoftheCouncilof27April2016ontheprotectionofnaturalpersonswithregardtotheprocessingofpersonaldataandonthefreemovementofsuchdata,andrepealingDirective95/46/EC(GeneralDataProtectionRegulation)

Somaini,L.(2018).Therighttodataportabilityandusercontrol:ambitionsandlimitations.Rivistadidirittodeimedia,3,p.3

VanderAuwermeulen,B.(2017).HowtoattributetherighttodataportabilityinEurope:Acomparativeanalysisoflegislations.Computerlaw&securityreview,33,p.58

Vanger,A.(2018).TheRighttoDataPortabilityintheGDPR:WhatLessonsCanBeLearnedFromEUExpierence?JournalofInternetLaw,Vol.21,No.7,p.17

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BEHAVIORALECONOMICSPERSPECTIVEONASSESSMENTOFRECRUITMENTANDSELECTION

PRACTICESINLATVIA

ArtursMons,TuribaUniversity,[email protected]

VelgaVevere,EKAUniversityofAppliedSciences,Latvia

[email protected]

Abstract

Theaimofthecurrentpaper istoevaluatethecurrentHumanResource Management evolution in Latvia with respect toemployeerecruitmentandselectionpractices.Thefocusissetontheusedmethodsofselectionprocessinorganizations,whentheyarehiringpersonnelondifferentorganizationlevels.Theauthorsofthecurrentpaperappliedseveralempiricalmethodstoresearchtherecruitmentandselectionprocesses.Thestudywasexecutedintwostages:(1)discussionwithLatvia’srecruitmentspractitioners(Delphimethod),and(2)quantitativestudyperformedinLatvia.Theresearchquestionswerethefollowing.Question1:Whichrecruitmentmethodsareusedintheirrepresentedorganizations?Question2:Whichof selectionmethodsareused in theirorganization?Tocollectprimarydataanonline survey formwas createdwhichwas completely self‐administrative. A sample of 16 businessesfromdifferent industries inLatvia,was selected.The samplingwasconductedduringthewholemonthofJanuary2020anddataisreflected inthefindings.Thesurveyresultsdemonstratethatthe employee selectionmethodsapplied inLatviaarenot thatvarious.Mostoftherespondentsholdsontothetraditionalmethodssuchaspanelinterviewsandonetooneinterviews.

Keywords:behavioraleconomics;humanresourcemanagement;recruitmentmethods

DOI:10.37804/1691‐6077‐2020‐11‐128‐139

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Introduction

ThegoalofthecurrentpaperistoevaluatethecurrentHumanResourceManagementevolutioninLatviawithrespecttoemployeerecruitmentandselectionpractices.Thefocusissetontheusedmethodsofselectionprocessinorganizations,whentheyarehiringpersonnelondifferentorganizationlevels. Human Resource Management (HRM) is an approach to managepeopleresourceswithintheorganization.Historicallyworkershavebeenmanagedformanythousandyears,wecannotimagineconstructingancientsitessuchasTheGreatPyramidsofGizaorTheGreatWallofChinawithoutsomesortoforganizationalmanagement.However,thetermHRMhasbeenaround since early 1900’s, at the time when manufacturing started toblossom, though formerly it was known as “personnel management”.Throughouthistorytheterminologyhasbeenalterednumeroustimes,duethechangeofsocietalandfiscalactivitiesofcertainperiod.Onlyinthelate20th century academics and theoreticians tried to divide both terms byestablishingdifferencesbetweenthepersonnelmanagementandHRM.

Processesofglobalization,rapidderegulation,increasingpaceoftechnologicalinnovationsandtechnologicaladvancement(Yahmed&Dougherty,2017)havecausedquickdevelopmentofHRM.Theexternalstressesbuiltdensityinorganizationsincreasingconcernsandmotivatingcompaniestofocusonstrategicplanning–theprocessofforeseeingfuturechanges.Faciletransferofproducts,servicesandinformation,triggeredbyglobalization,acceleratethedevelopmentofmanagementcorrespondingly(Aycan,etal.2007).TheseglobalactivitieshavesparkedinterestinculturalrelativismandtransferabilityinHRM.Thestudyofcurrentrecruitmentandsectionpractices inLatviaalso can be used as a useful tool for foreign managers and companiesinvesting into Latvia. Nowadays, when globalization is rising and moreorganizationsaregoingmultinational,itisimportanttocomprehendwhichHRMpracticesarecommonandwhichpracticesarespecificfortheselectedareaorculture(Ryan,etal.,1999).Advancementof technologiessuchasWorldWideWebandrapiddevelopmentofITsupportchangesandgivesspaceforfurtherdevelopment(Anderson,2003).Child(1981)pointsoutthat the need for recruiting and selection of employees is worldwide,howeveritdoesnotnecessarilymeanthatallpracticesaregeneralandthesamecanbeapplicableeverywhere.

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Theoreticalframework

Humanresourcemanagementdoesnothaveoneunifiedapproach, therearedifferentconceptsandHRMmodels.HRMmustbeseenasaphilosophythatdeterminesorientations,whichhelpsemployeesreachthegoalsetbytheorganization(Armstrong,2006).TheessenceofHRMhasbeenmuchresearchedover theyears; thecommonpracticesandpolicieshavebeenestablishedwhichareconsideredfundamentaltothehypotheticalapproachto HRM (Weber and Kabst, 2004). There aremany discussions betweenresearchersinculturalandnationallevelsaboutdeviationsofHRMacrossthenations.ThesignificantstudyofEasterby‐Smithetal.(1995)givesclearevidenceoftheculturaldivergenceofHRM,whenrecruitmentandselectionpractices were discovered, concluding that the matter of results wereculturallycomplexandfluctuatedbetweennations.ResearchbyLawler’setal.(1995)supportsthetheoryofHRMdifferencesacrossthediversecultures.Otherstudieshavediscoveredthelinkbetweencompanysize, leadershipandownershiptogetherwithothervariables,whichcaninfluenceappliedHRMpracticesandpoliciesinorganizations(Budhwar&Sparrow,1997).

ThisstudydoesnotaimtoduplicateG.Hofstede’sandothers(2010)researchbyparallelingdifferentdimensionsofnationalcultures.Rather,thestudyintendstoevaluateHofstede’spurposednationalculturevalues,particularlytakingintoaccountthedynamicsofLatvia,andtoidentifytheimplicationsofworkrelatedvaluesforHRManditsperformedpracticesandpolicies.AsitwasconcludedintheearlierresearchesbyEasterbySmithetal(1995)andLawleretal.(1995),HRMhasatouchofculturalsensitivity,especiallywhen recruitment and selection practices are discussed. Combiningfindingsofthepreviouslyconductedresearchwecanhypotheticallystatethattherecruitmentmethodsandselectionpracticesmayvarydependingonthepeculiaritiesofnation,companysizeandownershippattern(Jasim,2020;Doz,2020;Englmaier&Schussler,2016).

The key task of staff recruitments is to draw potential applicants to thevacantpost,candidateswhoseprofilematchdemandedrequirementsandultimatelymakeaselectioninfavorofanappropriate,keenandperspectivecandidate. It is knownandproven, that intellectual capital of knowledgeowned by organization will give it a competitive advantage in market.(Subramaniam&Youndt,2005).Organizationswhichdesireandareabletoattract advanced, open‐minded, performance‐oriented employees gain abetterpositioninthegrowthofthelabormarketandtheirabilitytoadapttochanginginternalandexternalenvironmentalconditions.Thesearchfor


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newemployeesmaystartwithcreatingthejobposter.Nowadays,whenthemarketismultifariousandfast‐moving,jobadvertisementstoachievetheintended development must be attractive and exceptional – one thatattracts attention, engages with applicants and encourages to act. Inaddition,ithastoattractinterestamongpotentialemployeeswhowillbepartoftheorganizationalculture,whowiththeirenthusiasmandtalentwillbe able to ensure the organization's growth and success in a particularmarketsegment,haveresponsibilitytowardstheclientsoftheorganizationandbeopentolearningnewknowledge.

Thenextstepintheprocessistheadvertisementofvacantpost,whichcanbedoneinseveralways,internallywithintheorganizationorexternallyorbothpracticesusedsimultaneously.Internalrecruitingreferstopotentialcandidatesforthevacantpostwithintheorganizationfromalreadyexistingworkforce,whileexternalrecruitingtargetscandidatesoutsideanorganization(Hughes & Rog, 2008). Over the year’s usage ofmedia, including onlinesocial platforms, for this purpose has been increased (Anderson, 2003;Chapman&Webster,2003;Lievens&Harris,2003).Expertsadviseplacingtheadvertisementwhereitwouldbereadbythelargestnumberoftargetgroups, i.e., where themost job advertisements are published all in oneplace.Capabilitiesofinternetneverhavebeenaspronouncedasitisnow,ithas become a new leading driver for candidate sourcing (Hunt, 2014).Increasinglynewtools for rightcandidatesourcinghavebeendevelopedanditaffectsthetraditionalapproachtosourcing.Therecruitmentprocesschangesduethefactorsinitiatedbyindustrializationandmodernization,ascountriesbecomemoredevelopedeconomically,observationsshowtheshifttowardsnewmanagementpatterns,workrelatedvaluesandapproaches(Ronen&Shenkar,1985;Wasti,1998).Modernandinnovativeapproachesto sourcing take the upper hand, especially in times when quality, costefficiency and time consumptions is cherished themost (Sinha & Thaly,2013).Rapiddevelopmentofinformationtechnology,WorldWideWebandtremendousgrowth inusageofsocialmediamakeaprofound impactonsourcingcandidates(Dutta,2014).

Some studies have discovered negative impact on recruitment processcausedbycomplextechnicalsophismsbetweenorganizations(Anderson,2003;Bartram,2002).Oftenalternativemethodsarebeing introducedintherecruitingprocess,suchasinformalpromotionmeasuresofvacantjobpostsinemployee,family,friendnetworks,andreviewofpastunsolicitedapplicantsorreachingouttoemploymentagencies.Theinformalmethodisoftenusedinorganizationssincetheyappeartobecostefficient.Understanding

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theimportanceandimpactofrecruitmentissignificant,especiallypointingoutthatsourcing,yet thegreatestmethod forrecruitingprocess, isquitedebatable(Houran,2017).

Severalmethodsareknownonceitcomestoselectingtherightcandidateforvacant jobpost. Someof thesemethodsusedbyorganizationsare asfollows: application forms, one to one and/orpanel interviews, differenttests and many other methods. Levy‐Leboyer (1994) points out thediversity across the nations that influences selection practices. Socialculturalfactors,laborlegislationalsohavestrongimpactonthedominantselectionmethodinthecountry.

Methods

The authors of the current paper applied several empirical methods toresearchtherecruitmentandselectionprocesses.TheaimofthisstudyistofindoutwhichrecruitmentandselectionpracticesareappliedinLatviaandhowtheseaspectscanberelatedtothebehavioraleconomicsperspective.This objective was proposed by the authors on the basis of the currentresearchinthefielddepictedinthechapterabove.

Thestudywasexecutedintwostages:1) discussionwithLatvia’srecruitmentpractitioners(Delphimethod);2) quantitativestudyperformedinLatvia.

To learnmostapplicablepracticesof recruitmentandselectionpracticesusedinLatvia,theauthorsattendedRigaHRMeetup#14workshoponthe15thofAugust2019,togainfirsthanddatatosummarizewhichmethodsofrecruitingandselectingpracticesaremostlyimplementedinthecountry.Theworkshophad33attendees,representingpublicandprivateorganizationsfromdifferentfields.SeekingcompleteunderstandingofrecruitmentandselectionpracticestheDelphimethodwasapplied–asystematicapproachtointeractwithallmembersinseveraldiscussionsetstogainfairjudgment.TheDelphi approach inbasedon thehypothesis, thatgroup judgment ismorevalidthan individualandthatwouldprovidemoreaccurateresultswhichwill be used in the second research stage. By applying theDelphimethod in several discussion sets, we minimize the bandwagon effectavoiding theuptakeofsamebeliefsbyallparticipants.Thereareseveralstudiesonthebandwagoneffect,(references)wherethisphenomenonhasbeenresearchedandbeenprovedthatbymorepeoplebelievingorclaimingsomethingothermemberswillagreeandjointhemwithoutactualevidenceorpriorexperience.TheadditionaladvantageoftheDelphimethodisthat


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itprovidesauthorswithresultswhicharelesscorruptedbythehaloerror.Alsosnowballapproachwasalsoapplied,wherefield’sexpertsencouragedengageothersprofessionalstosharetheirpractices(Avella,2016).

Theresearchquestionswerethefollowing.Question 1: Which recruitment methods are used in their representedorganizations?Question2:Whichofselectionmethodsareusedintheirorganization?

Completing the first study stage a quantitative research approach wascommenced to determine empirical observations relating to the currentrecruitmentandselectionpracticesinLatviaidentifiedinthefirststage.Tocollect primary data an online survey form was created which wascompletely self‐administrative. A sample of 16 businesses fromdifferentindustriesinLatvia,wasselected.ThesamplingwasconductedduringthewholemonthofJanuary2020andthedataisreflectedinthefindings.

Resultsanddiscussion

AttendingtheRigaHRMeetup#14workshoptheauthorsgainedanoverallperceptionoftheapplicationprocessusedamongrecruitingprofessionalsinLatvia.Duringtheworkshop immediate informationwasgainedaboutfactorsthataredirectlyrelatedtorecruitmentandselectionprocess.Thisknowledge solidifiedareaswhichwere important to researchduring thesecondstage.Throughouttheworkshopparticipantsdiscussedapproacheswhichwere alignedwith current trends in leading countries around theworld.There,amongtheparticipants,itwasagreedunanimouslythatallofthemwereapplyingthelatestmethodsofrecruitingandselectionpractices.Duringthesecondstagetheauthorswantedtotestthereliabilityofthesestatements.

Firstly, authors wanted to gain knowledge if respondents have a clearprotocolwhichisfollowedwhenanysortofhumanresourcemanagementactivities are carried out. During the first stage of the research highimportancewassetonaspectssuchastheneedforclearlydefinedhumanresources management strategy. The majority of participants whilediscussingthe importanceofwrittenprotocols, confirmedthat theyhaveseveralwrittenstatementsandstrategiesintheircompanies(seeFigure1).

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Figure1.Writtendocumentsthathaveanimpactonhumanresourcemanagementactivitiesinacompany

However,observingoverallresultsofthedatacollectedregardingwrittenstatementsandstrategieswecanclearlyconcludethattheimportanceofwrittenhumanresourcemanagementstrategyisn’tthathighintheprioritylist.Lessthanhalfofrespondentsofthetotalsampleconfirmedthatwrittenstrategiesrelatedtohumanresourcemanagementexistintheirorganizations.

AccordingtoKornFerrycompanyresearch(2015),about40%ofcompaniesoutsource much if not the complete recruiting process to agencies orsubcontractors who carry out this process. In most of these cases,subcontractorswouldcarryoutactivitiesonlineondifferentsocialplatformsto find the candidate appropriate to the company’sdemands.During theworkshop, about half of participants involved in the discussion group,agreed that they outsource third parties to carry out such processes.However, a discrepancy was observed between data registered via theonlinesurveyandwhatwasperceivedduringtheworkshop(seeFigure2).


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Figure2.Outsourcingoftherecruitmentprocess

Another noteworthy aspect the authors were keen to research was therecruitingmethodscurrentlyappliedinLatvianbusinesses.Weknowthatthereareseveralmethodshowtoattractpotentialworkforcetobusiness.Therearenotwojobswhichwillhavesamerequirementsnortwocompanieswithidenticalneeds.Thismakeusthinkthatbusinessunitsneedtoapplydifferenthiringtacticstoattracttherightcandidatestheyarescoutingfor.

Ithastobeadmittedthatvariousrecruitingmethodscanbeappliedwithinthe same business unit depending on the position and division of thebusiness.Thehumanresourcemanagementspecialistscannotusethesamehiringmethodstofindsuperiorcandidateforeverydepartmentthesameway.Table1depictsthemethodsappliedforhiringemployees.

Table1Recruitmentmethods

Recruitmentmethods Managerial ProfessionalClerical/Manual

Usuallynotused

AdvertiseInternally 5 6 9 3Word‐of‐mouth 4 9 13 2Advertisementinnewspapers 1 2 5 11

Useofcompanywebsite 8 11 13 3Useofcommercialwebsite

8 12 13 3

SocialMedia(LinkedIn,Twitter,Facebook)

10 13 11 2

Unsolicitedapplication 0 1 8 8Careerexhibitions 0 2 5 11TraineeProgram 0 2 8 8

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Selectingandhiringtherightcandidatewhomatchestherequirementsandcancontributetocompanyfromthefirstdayiseverybusinessunits’goal.Selectingthesuitablecandidateconsistsoftwoprincipalstages:shortlistingandassessment.Itisexpectedthatemployerstreatallcandidatesequallythroughoutbothstages.Selectionshouldbeperformedwithoutdiscriminationorbias,purelybasedonthecandidate’sabilitiesandexperiences,performancecapabilitiesandtheirlongtermpotentialfordevelopment.Severalmethodswhichaccordingtoparticipantswereappliedintheirselectionprocesswasobservedduringtheworkshop.Thefocuswassetontheassessmentstageof selecting the right candidate for the employer, including differentapproachesof interviewsaswellasvarioustestingmethods.Toevaluateaccuracyofgroupdiscussionresultsasurveywasdesignedtoobserveevaluationmethods applied during the selection practices. The questionnaire wasdesignedinatechniquethatwouldallowtheauthorstogainaperspectiveon approaches used for employees of different hierarchy levels. All themethodsobservedduringthefirststageoftheresearchwereincludedinquantitativeresearch(seeTable2).

Table2Selectionmethodsbyjobtype

SelectionTechniques Managerial ProfessionalClerical/Manual

Usuallynotused

Panelinterview 9 9 11 4One‐to‐oneinterview 12 11 13 1Applicationforms 3 4 6 6Psychometrictests 2 2 1 14Aptitudetests 3 7 6 8References 9 10 5 6Abilitytests/Trialday 2 3 2 12Technicaltests 3 4 4 11Computationaltests 1 3 0 13Onlineselectiontests 0 2 2 14

After analyzing the survey results it is clearly evident that the selectionmethodsappliedinLatviaarenotthatvarious.Mostoftherespondentsholdon to traditional methods such as panel interviews and one to oneinterviews.Asitwasobservedduringthestageone,recruitingspecialistsreportedusingdifferenttestingmethodsduringtherecruitingandselectionprocess,similartothosedoneinleadingcountriesaroundtheworld,buttheresultsofsurveyindicatesomethingdifferent.Thereisacommontrendthathumanresourcemanagementspecialistsdonotapplythenewestpracticesandmethodswhileconductingtherecruitmentprocess.


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Conclusion

TheaimofthecurrentresearchwastoevaluatethecurrentHumanResourceManagementevolutioninLatviawithrespecttoemployeerecruitmentandselection practices. The research was conducted in two stages: first,discussionwithprofessionals;second,onlinesurveyofthehumanresourcemanagementprofessionals.Theresearchshowedthatthereexistedsomediscrepancies between answers received in the discussion and onlinesurveydata,namely,during thediscussionspecialistsadmitted that theyusethenewestmethodsintheemployeerecruitmentandselectionprocess,while the survey results indicated thatmost respondents use traditionalmethods, suchasone‐to‐one interviews,panel interviewsandreferencesinsteadofvarioustests(psychometrictests,abilitytests,computationaltests,onlineselectiontests).Itcanbepartlyexplainedbythe‘nudge’phenomenonduringdiscussions(professionals feltcompelledtoadmitusingthe latestcandidateselectionmethods,althoughtheireverydaypracticedemonstratedaratherconservativeapproach).TheresultsoftheresearchcanserveasaninsightintothecurrentsituationinLatviainthefieldofrecruitmentandjobcandidateselectionpractices,aswellasthestartingphasefor further in‐depthanalysis.

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Anderson, N. (2003). Applicant and recruiter reactions to new technology in selection:acriticalreviewandagendaforfutureresearch.InternationalJournalofSelectionandAssessment,Vol.11,Nos2/3,pp.121–136

Armstrong, M. (2006). A Handbook of Human Resource Management Practice, 10th ed.London/Philadelphia:KoganPage,957p.

Avella,J.R.(2016).Delphipanels:Researchdesign,procedures,advantages,andchallenges.InternationalJournalofDoctoralStudies,Vol.11,pp.305–321

Aycan, Z., Al‐Hamadi, A. B., Davis, A., and Budhwar, P. (2007). Cultural orientations andpreferencesforHRMpoliciesandpractices:thecaseofOman.InternationalJournalofHumanResourceManagement,Vol.18(1),pp.11–32

Bartram, D. (2002). Testing on the internet: issues, challenges and opportunities, paperpresented at the International Conference on Computer‐based Testing and the Internet,Winchester

BenYahmed,S.,Dougherty,S.(2017).DomesticRegulation,ImportPenetrationandFirm‐levelProductivityGrowth.JournalofInternationalTrade&EconomicDevelopment,Volume26(4),pp.385–409

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Budhwar, P. S. and Sparrow, P. R. (1997) 'Evaluating Levels of Strategic Integration andDevelopment of Human ResourceManagement in India'. International Journal ofHumanResourceManagement,Vol.8,No.4,August,pp.476–494

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Doz,Y.(2020).Fosteringstrategicagility:Howindividualexecutivesandhumanresourcepractice contribute. Human Resource Management Review, Vol. 30(11). Retrieved 15December,2020fromhttps://reader.elsevier.com/reader/sd/pii/S1053482219302608?token=A695F2197AED431F7A90844DCA080A6A03EAA6CC9C211FC41C578A860DC62828870E07D61353417661C4B09B028BE08B

Dutta,D.(2014).Tweetyourtune–Socialmedia,thenewpiedpiperintalentacquisition.TheJournalofDecisionMakers,Vol.39(3),pp.93–104

Easterby‐Smith, M., Mailna, D., and Yuan, L. (1995). How Culture Sensitive is HRM?AComparativeAnalysisofPracticeinChineseandUKCompanies.InternationalJournalofHumanResourceManagement,Vol.6(1),pp.31–59

Englmaier, F., Schussler, K. (2016). Complementarities of Human‐Resource ManagementPractices:ACaseforaBehavioral‐EconomicPerpective.JournalofInstitutionalandTheoreticalEconomics‐ZeitschriftfurdieGesammteStaatwissenschaft,Vol.172(2),pp.312–341

Hofstede,G.,Hofstede,G.J.,andMinkov,M.(2010).CulturesandOrganizations.SoftwareoftheMind.NewYork:McGrawHill,576p.

Houran,J.(2017).NewHRstudy:CandidrecruitmentexperienceswithLinkedIn.RetrievedApril 27, 2019, from http://www.aethoscg.com/aethos_insights/new‐hr‐study‐candid‐recruitment‐experiences‐with‐linkedin/

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MEASURINGEMOTIONALINTELLIGENCEAMONGBUSINESSSCHOOLSTUDENTSININDIA

B.ArulSenthil,AcharyaBangaloreB‐School,Karnataka,India

[email protected],

KristuJayantiSchoolofManagement,[email protected],

PhDStudentofTuribaUniversity,[email protected]

Abstract

This paper examines theTraitEmotional Intelligence (TEI) ofbusinessschoolstudentsusing theTraitEmotional IntelligenceQuestionnaire‐ShortForm(TEIQ).Theprimaryobjectiveof theresearchistostudythewellbeing,self‐control,emotionality,andsociabilityofstudentsinavariousbusinessschoolsandtoidentifythe differences in students’ emotional intelligence (EI) withregardstostudents’undergraduate(UG)degree,familytype,workexperience,broughtupplaceandgender.ThissurveywascarriedoutamongtheMBAstudentsofavariousB‐schoolsinIndiaanddata were collected from 141 respondents. The researchersemployed T‐Test & one‐way Anova to test all variables usingdescriptivestatisticsforbetterunderstanding.Manyresearchersprovedthatemotionalintelligencehelpsinsuccessfulleadershipirrespective of domains. Researchers strongly believe studentswhopursuemanagementdegreeswillonedaybecomebusinessleaders.Therefore, there isa scope inEI forbusiness students.ManyresearchpapersonEIforleadershavebeenpublishedbutonlyfewhavebeenpublishedonEIforbusinessstudents.Oneoftheresultsfromthisstudyshowsthatstudentswhobroughtupinsemi urban cities exhibit significant differences in wellbeingfactorofTEI.


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Keywords:TraitEmotionalIntelligence,BusinessSchoolStudents,B‐School,Leadership

DOI:10.37804/1691‐6077‐2020‐11‐140‐155

Introduction

Emotionsareoneofthefascinatingthingsaboutthehumanexperience.Intoday’sscenario,weashumanbeingsaregivingtoomuch importancetoour thought process.Butwedonot give significant consideration to ourfeelingsandemotions.Forindividualdevelopment,humansneedtoenhanceemotional skills and social skills for a better life. Fromanorganization'spointofview,emotionalintelligence(EI)helpsemployeestoperformwellat work, especially in the service industry because employees need tointeractwiththecustomersintheserviceindustry.Therefore,employeesshould have interpersonal skills, besides emotional intelligence skills. EIhelpsemployeestoengagemorewithcustomers,eventhoughcustomersarerude.Therefore,EIhelpsbothinpersonalandprofessionallife.

In this paper, researchers explore EI among business school students inIndia.ResearchersfeelthatEIwillhelpMBAstudentstomanagetheirownemotionsandunderstandingtheemotionsofothers.OnlyfewbusinessschoolsinIndiaofferemotionalintelligencecoursestotheirMBAstudents.SothroughtheadditionofanEIrelatedcourseintheMBAcurriculum,wecanteachstudentsnotonlyfortheirintellectualgrowthbutalsofortheiremotionalgrowth.Thereisaneedforexploringemotionalintelligencebybusinessstudentsbecause these students one daywill become the heads of the company.ManyleadersandresearchersstatethatEIplaysamajorroleinleadershipeffectiveness.MayerandSalovey(1990)defineEIas,“theabilitytomonitorone’sownandother’sthinkingandactions”.LeaderswhopossesshighEIcanperformwellandatthesametimetheycaninfluencepositiveattitude,behaviour, and outcome to theworkers (Carmeli, 2003) Leadership andemotionalintelligencearemajorgeneralskillsthatarelinkedtoincreasedperformanceattheworkandeffectiveleadership(Vyas,2017).

Emotionalintelligence

Emotionalintelligenceinsimpletermscanbeexpressedasacreationofabalancebetweenemotionalthinkingandcognitivethinking.EIhasbeenarealbreakthroughinbehaviouralscience.Theconceptofferedaplatform

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fornewknowledgeandpracticesinseveralfieldsincludingmanagement.EIis something more than a fancy name repackaging existing notions andconceptsofempathy,self‐awarenessandmore.Theevidencedoessuggestthat EI as a concept is useful in gaining insights into a broad range ofbehaviours and functions beyond what existing concepts and measuresofferfromeducation,learningthroughworkandorganizationalbehaviour(Sivan&Zysberg, 2014).The effectiveuseof emotions canbringmentalabilityandgrowthprospectsinacareeraswellaspersonallife.AccordingtoMayer‐Salovey,theabilitytoperceiveemotionsandfacilitateemotionsisan experiential process of EI. Whereas understanding and managingemotionsisastrategicprocessofEI(Emmerling,2006).TheMayer‐Salovi‐CarusoEmotionalIntelligenceTest(MSCEIT)isusedtoresearchEmotionalIntelligenceinorganizations.Thetestshowshowtheemployeecontrolshisbehaviour,respondstosocialdifficultiesandmakesdecisionsthatachievepositiveresults.

Emotionalintelligenceismoreoveranimplicationstudywhenitcomestothefieldofmanagement.PeoplewhoperformwithbetterEItendtohavebetter pro‐social behaviour and good decision‐making skills. Emotionalskillsareimportantinalmostallareasofaperson’slifefromcareersuccesstobeinglikedbyothers.Emotionalintelligenceisatypeofsocialintelligencethat involves the ability to monitor one’s own and other’s emotions, todiscriminateamongthemandtousetheinformationtoguideone’sthinkingandactions(Mayer,etal.,2001;Warwick&Nettelbeck,2004).

Moderndevelopmentsandautomationshavereducedthehumanabilitytolookatanissuefromatechnicalaswellasanemotionalway.Beingraisedup in anuclear family and lackofEI activitiesduringprimaryeducationcould be possible reasons for the decline in EQ level (Goleman, 1998).Althoughthereareamplestudiesconductedonemotionalintelligenceandleadershipeffectivenessitisimportanttoconsidertheemotionalaspectsofbusiness school students as they will become the future managers andleadersoforganizations(Harms&Credé,2010;Sadri,2012).Theurgencyinthe educators’ need for action is also fuelled by sociological changes insociety.Familydisintegration,culturaldiversityanditsimpactonnormsofbehaviour and the deleterious effects of poverty all contribute to thechallenges children and adolescents currently face in their lives (Stokes,2004). The strengtheningof positive interpersonal relationships is a keyfactor in the health trajectories of young people (Umberson & Montez,2010)ByincludingEIasacoursepaperandexposingbusinessstudentsintoemotionfocusedactivitiestherecanbesignificantchangesintheiremotional


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awareness,whichmaycertainlycontributetowardsbuildingbettermanagersandleadersfortheorganization.

Whenweassumethateveryonehasonlyemotionalbrainandnoneocortexinthem,wewouldbecomemorereactivewithsensoryinputandwouldbeunabletomakewisedecisions.Itwouldbetragicwhenitisviceversa,withneocortexandnoemotionalbrain,whenwewouldbe justcoldheartlesscomputers.Theeffectivefunctioningisthebalanceandinteractionbetweenthesetwobrains,asopposedtothesuppressionofoneortheother.Thewaythatthebrainfunctionsisthatsensorydatagoestothethalamusandthenacrossasinglesynapsefirsttotheamygdala,beforethesamesignalissentseparately to the neocortex (Cobb&Mayer, 2000).The rationalization ofthoughtprocessisnecessarytoattainanemotionalstability.Theprocessofemotional intelligence includes inter‐personal skills and intra‐personalskills.Thus,thedevelopmentofEIabilitiesamongthemanagementstudentsisvital.

Traitemotionalintelligence

Traitemotionalintelligence(TEI)isdefinedasaconstellationofemotionalperceptionslocatedatthelowerlevelsofpersonalityhierarchies.TEI(or‘emotionalself‐efficacy’)referstoaconstellationofbehaviouraldispositionsand self‐perceptions concerning one’s ability to recognize, process, andutilizeemotion‐ladeninformation(Petrides,2011).AlthoughtheroleofTEIinmediatingacademicsuccesshasbeenmeasuredinsomestudies(Perera&DiGiacomo,2015;Petrides,etal.,2004a;Saklofske,etal.,2012),thereisstillaneedfor further investigation inthe fieldofmanagementstudents.ConceptuallyTEIintegratestheaffectiveaspectsofpersonality.Personalityisanenormousdomainthatcomprisescharacteristicslikemotives,interests,values,emotionaltraits,socialtraitsandmanyothers(Funder,2012).TEImeasuresgenerallyuseaself‐reportformatadoptingtheperspectivethatitisthepersonalandsubjectiveaspectsofone’semotionallife,experiencesandinteractionsthatarecentraltoanunderstandingofEI.Itisimportanttoensurethattherespondentisprovidingaccurateresponsestoquestionsand not ‘faking ‘or distorting in order to achieve other goals (Petrides,2009).Thepresentstudyaimsatmeasuringthe15facetsofTEIcomponentsthrough TEIQ developed by K V Petrides on wellbeing, self‐control,emotionality,sociability.Theconceptofwellbeingcanbesimplyexplainedas the conditions of quality life, positive physical and mental health.WhereasSelf‐controldefinestheabilityofindividualintermsofmanagingandrespondingtoexternalstimuli.Emotionalityexplainstheindividual’s

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abilityinunderstandingone’sownemotionsandofothers.Sociabilityreferstotheinterpersonalandintrapersonalskillsofanindividual;itdealswiththesocialinteractions.Ontheotherhand,thosewhohavealowscorearenotgoodinsocialinteraction,andhaveahardtimeimpressingthecrowdduetolackofsociabilityskills(Petrides,etal.,2004b).

Thedifferentpatternofassociationsandmodels forstressandacademicsuccess indicate thatEI components related to theregulationofemotionandtoadaptabilityarerespectivelysalienttodealingwithacademicstressandtoachievingacademicsuccess(Saklofske,etal.,2012).However,thereareseveralstudiesconductedintermsofusingTEIQasasubjectmatterofstudy.TherehavebeenempiricalevidencesshowingrelationshipbetweenTEIandmentalhealth.Therearestudiesdemonstratingreliableassociationbetweenthetwoconstructs(Mikolajczak&Luminet,2009).

WhyEIinbusinessschool?

EI has been found to be positively associatedwith psychological health.(Schutte&Malouff,2011,2014)Theeffectsofemotionalintelligenceconcerningage,workexperience,andacademicperformancehavebeenstudiedearlier.In these studies, it has been proven that the results of individuals withbetteremotionalintelligenceabilitieswerefourtimesimportantthanIQindeterminingprofessionalsuccessandprestige(Goleman,1998)TheearlierstudyconductedwithbusinessstudentsofSouth‐easternUniversityshowsthat the resultsof generalizability (Shipley, et al., 2010)of the sample islimited.Studentswithmid‐rangeGPArequiremoreEIskillswhereaswhenitcomestoagethereisnotanysignificantrelationshipwithEI(Putranto,etal.,2018).However,emotionalintelligenceisconsideredanadaptivefunctionthat improveswithaging.There is aneed tomeasureEI abilities amongmanagement students, as it requires further investigation in parameterssuch as family background, work experience that affects their EI copingskills.InterestinglyforstudentsstudiesabroadhasbeentakenasoneofthevariablesinmeasuringEmotionalIntelligence(Timmins,2006).Thereisnostatisticalsignificancefoundinaccordancetostudentswhostudiedabroadwithadifferentculturaldiversity.TheconceptofEmotionalIntelligencemadeits impact in many academic disciplines. The study which encompassedveterinarian medical students gave importance to this non‐technicalcompetencywhichformsthebaseforachievingcareersuccess(Magsino&Opulencia,2015).Theentrepreneurialintentionsofmanagementstudentshavebeen focusedon in a study. Thequalitative content analysesof thenarratives revealed that actual business exposure as part of the course


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curriculumincreasedthestudents’EIandthatthereweredifferentreasonsforthechange.Therearecertaininterventionprogramsgiventostudentsin academic settings in terms of EI through experiential learning. Quasiexperimental design has been followed to know the validity of theIntervention programs. Similar research withmanagement students hasbeen conducted and the results prove there is a significant differencebetweenEIscoresaftertheexperientiallearningintervention(DeRoberto,2011). Even there are studies that were focused on managerial levelemotional intelligence programs in the learning organization. Studieswithin the business community have shown that a leader with higheremotional intelligence can stimulate greater productivity (DeRoberto,2011).Thesignificanceof conductinga studyonmanagementstudents isevident as it is directly connected with the future stakeholders of theorganization. EI regulated activities have been continuously studied invariousacademicdisciplinesirrespectiveoftheresearchdesign;itcanbean intervention model, past and present literature, instrumentation,didacticteachingmethodsemployingEIconcepts,anddataanalysis(Davis,2013).TheclaimofDanielGolemanaboutthesignificanceofEI(alsoknownas EQ) over IQ has createdmany avenues for further exploration in thecontext. Similarly, a comparative analysis of emotional intelligence andintelligencequotientamongSaudibusinessstudents’academicperformancehas beenmade comparing public and private university students whichshows significant pieces of evidence in terms of EI improvement withregardstopublicuniversitystudentswhereasprivateuniversitystudentswerefoundtohaveexcellentIQaswellasEI(Khan,2019).

Hypotheses

Theresearchersframedthefollowinghypothesesbasedonthedifferentiationofthestudent'sprofile.

H1: There is no significant difference betweenmales and females inTEIdimensions.

H2:ThereisnosignificantdifferencebetweenArts&ScienceandEngineeringdegreestudentsinTEIdimensions.

H3: There is no significant difference between the Joint family and theNuclearfamilyofthestudentsinTEIdimensions.

H4:Thereisnosignificantdifferenceamongstudent'sworksexperienceinTEIdimensions.

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H5:ThereisnosignificantdifferenceamongstudentsbroughtupplaceinTEIdimensions.

Methodology

Asurveyquestionnairewasadministered to141students indifferentB‐schools in India. The studywas conducted in the classroom. The surveyinstrumentconsistedof30questionsonaseven‐pointLikert‐typescalethatmeasuredTEIusingtheTEIQmodel.

Thedemographicsof theparticipants includedgender,UGdegree, familytype,workexperienceandbroughtupplace.Totally141studentsweretherespondentsforthisresearch,outofwhich,80weremenand61women;126 students were with arts and science degree and 15 students fromengineering degree; 117 students come from a nuclear family and 24studentscomefromajointfamily.Among141respondents,117studentsdon’thaveanyworkexperience,14studentshaveworkexperiencefrom0–1yr, and 10 students have work experience from 1–2yrs. Among 141respondents, 44 students were brought up in metro cities i.e. Mumbai,Bangalore, whereas 50 studentswere from semi‐urban cities i.e. Trichy,Mysore;theremaining47studentswerefromruralareasinIndia.

Results&discussions

TraitEIonGender

Table1T‐TestandDescriptiveStatisticsofVariable(TraitEmotionalIntelligenceonGender)

Gender N Mean SD F‐Ratio(Sig.)Wellbeing Male 80 4.4792 1.00119 F=.080(.777)

Female 61 4.8716 .98995Self‐control Male 80 4.1229 .48518 F=1.067(.303)

Female 61 4.1148 .59670Emotionality Male 80 4.3922 .65324 F=.029(.864)

Female 61 4.5041 .61575Sociability Male 80 4.1625 .74958 F=.120(.730)

Female 61 4.2213 .80664 T‐TestresultscorrespondingtoWellbeingshowthat(seeTable1)thatmalestudents(μ=4.4792,σ=1.01)donotdiffersignificantly(F=0.080,Sig.=0.777)fromfemalestudents(μ=4.8716,σ=.989).


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T‐TestresultscorrespondingtoSelf‐Controlshowthatmalestudents(μ=4.1229,σ=.485)donotdiffersignificantly(F=1.067,Sig.=0.303)fromfemalestudents(μ=4.1148,σ=.596).

T‐TestresultscorrespondingtoEmotionalityshowthatmalestudents(μ=4.3922,σ=.653)donotdiffersignificantly(F=0.029,Sig.=.864)fromfemalestudents(μ=4.5041,σ=.615).

T‐TestresultscorrespondingtoSociabilityshowthatmalestudents(μ=4.1625,σ=.749)donotdiffersignificantly(F=0.120,Sig.=0.730)fromfemalestudents(μ=4.2213,σ=.806).

TraitEIonUGDegree

Table2T‐TestandDescriptiveStatisticsofVariable(TraitEmotionalIntelligenceonUGDegree)

UGDegree N Mean SD F‐Ratio(Sig.)Wellbeing Arts&Science 126 4.6085 .98867 F=1.369(.244)

Engineering 15 4.9889 1.17085Self‐control Arts&Science 126 4.1151 .51660 F=3.739(.055)

Engineering 15 4.1556 .68564Emotionality Arts&Science 126 4.3988 .62264 F=.222(.638)

Engineering 15 4.7917 .67425Sociability Arts&Science 126 4.1481 .75901 F=.659(.418)

Engineering 15 4.5222 .83063 T‐Test results corresponding toWellbeing show (see Table 2) thatrespondentswithArts&Sciencedegree(μ=4.6085,σ=.988)donotdiffersignificantly(F=1.369,Sig.=.244)fromstudentswithEngineeringdegree(μ=4.9889,σ=1.170).

T‐TestresultscorrespondingtoSelf‐Controlshowthatrespondentswith Arts & Science degree (μ= 4.1151, σ= .516) have significantdifferences(F=3.739,Sig.=.055)whencomparedtorespondentswithengineeringdegree(μ=4.1556,σ=.68564).

T‐TestresultscorrespondingtoEmotionalityshowthatrespondentswithArts&Sciencedegree(μ=4.3988,σ=.622)donotdiffersignificantly(F=.222,Sig.=.638)fromengineeringstudents(μ=4.7917,σ=.674)

T‐Test results corresponding to Sociability show that respondentswithArts&Sciencedegree(μ=4.1481,σ=.759)donotdiffersignificantly(F=.659,Sig.=.418)fromEngineeringstudents(μ=4.522,σ=.830).

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TraitEIonFamilyType

Table3T‐TestandDescriptiveStatisticsofVariable(TraitEmotionalIntelligenceonFamilyType)

UGDegree N Mean SD F‐Ratio(Sig.)Wellbeing Nuclear 117 4.7151 1.00193 F=.947(.332)

JointFamily 24 4.3264 1.01852Self‐control Nuclear 117 4.0812 .51352 F=.678(.412)

JointFamily 24 4.3056 .60327Emotionality Nuclear 117 4.4872 .63661 F=1.498(.223)

JointFamily 24 4.2135 .60397Sociability Nuclear 117 4.2407 .79584 F=2.812(.096)

JointFamily 24 3.9306 .59571 T‐TestresultscorrespondingtoWellbeingshowthatthereisnosignificantdifference (F= .947, Sig. = .332) between respondents in terms ofNuclear(μ=4.7151,σ=1.00)(seeTable3)orJointFamily(μ=4.3264,σ=1.01).

T‐Test results corresponding to Self‐Control show that there is nosignificantdifference(F=.678,Sig.= .412)betweenrespondentsintermsofNuclear(μ=4.0812,σ= .513)(seeTable3)or JointFamily(μ=4.3056,σ=.603).

T‐Test results corresponding toEmotionality show that there isnosignificantdifference(F=1.498,Sig.=.223)betweenrespondentsintermsofNuclear(μ=4.4872,σ=.636)orJointFamily(μ=4.2135,σ=.603).

T‐TestresultscorrespondingtoSociabilityshowthatthereisnosignificantdifference(F=2.812,Sig.= .096)betweenrespondents in termsofNuclear(μ=4.2407,σ=.795)orJointFamily(μ=3.9306,σ=.595).

TraitEIonWorkExperience

Table4OneWayAnovaandDescriptiveStatisticsofVariable

(TraitEmotionalIntelligenceonWorkExp)

WorkExp N Mean SD F‐Ratio(Sig.)Wellbeing NoWorkExp 117 4.6410 1.00730 F=.125(.882)

0.1‐1yr 14 4.6071 1.175981.1‐2yr 10 4.8000 .90540Total 141 4.6489 1.01178

Self‐control NoWorkExp 117 4.0855 .52959 F=1.524(.221)0.1‐1yr 14 4.2381 .529931.1‐2yr 10 4.3500 .56900Total 141 4.1194 .53427


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Emotionality NoWorkExp 117 4.4338 .63940 F=.070(.932)0.1‐1yr 14 4.4464 .649921.1‐2yr 10 4.5125 .65999Total 141 4.4406 .63748

Sociability NoWorkExp 117 4.1638 .75143 F=.343(.710)0.1‐1yr 14 4.2857 .959501.1‐2yr 10 4.3333 .79349Total 141 4.1879 .77251

One‐wayANOVAresultscorrespondingtowellbeingshow(seeTable4)thatstudentswithnoWorkExp(μ=4.6410,σ=1.00),studentswith0.01‐1yrWorkExp(μ=4.6071,σ=1.17),andstudentswith1.1–2yrWorkExp(μ=4.80,σ=.905)donotdiffersignificantly(F=.125,Sig.=.882).

One‐way ANOVA results corresponding to self‐control show thatstudentswithnoWorkExp(μ=4.0855,σ=.529),studentswith0.01–1yrWorkExp(μ=4.2381,σ=.529),andstudentswith1.1–2yrWorkExp(μ=4.3500,σ=.569)donotdiffersignificantly(F=1.524,Sig.=.221).

One‐wayANOVAresultscorrespondingtoemotionalityshowthatstudentswithnoWorkExp(μ=4.4338,σ=.639),studentswith0.01–1yrWorkExp (μ= 4.4464, σ= .649), and students with 1.1–2yr Work Exp(μ=4.5125,σ=.659)donotdiffersignificantly(F=.070Sig.=.932).

One‐way ANOVA results corresponding to sociability show thatstudentswithnoWorkExp(μ=4.1638,σ=.751),studentswith0.01‐1yrWorkExp(μ=4.2857,σ=.959),andstudentswith1.1‐2yrWorkExp(μ=4.3333,σ=.793)donotdiffersignificantly(F=.343,Sig.=.710).

TraitEIonBroughtupplace

Table5OneWayAnovaandDescriptiveStatisticsofVariable(TraitEmotionalIntelligenceonBroughtuparea)

Broughtupplace N Mean SD F‐Ratio(Sig.)Wellbeing Urban(MetroCities) 44 4.3636 .94710 F=3.493(.033)

Semi‐Urban(Otherdevelopedcities)

50 4.9067 1.11888

Rural(Village/Panchayats)

47 4.6418 .89076

Total 141 4.6489 1.01178Self‐control Urban(MetroCities) 44 4.1742 .50444 F=.451(.638)

SemiUrban(Otherdevelopedcities)

50 4.1200 .53456


47 4.0674 .56643

Total 141 4.1194 .53427

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Emotionality Urban(MetroCities) 44 4.3778 .59704 F=1.367(.258)SemiUrban(Otherdevelopedcities)

50 4.5600 .76107


47 4.3723 .51241

Total 141 4.4406 .63748Sociability Urban(MetroCities) 44 4.0909 .61993 F=1.127(.327)

SemiUrban(Otherdevelopedcities)

50 4.3167 .91983


47 4.1418 .72563

Total 141 4.1879 .77251 One‐wayANOVAresultscorrespondingtowellbeingshow(seeTable5)that students in the Urban (Metro Cities) (μ= 4.3636, σ= .947),studentsintheSemiUrban(μ=4.9067,σ=1.11),andstudentsintheRural (μ= 4.6418, σ= .890) have significant differences. The valuesshowthattherearesignificancedifferencesamongtherespondents(F=3.493,Sig.=.033)withregardstoSemiUrban(μ=4.9067,σ=1.11).

One‐way ANOVA results corresponding to self‐control show thatstudentsintheUrban(MetroCities)(μ=4.1742,σ=.504),studentsinthe Semi Urban (μ= 4.1200, σ= .761), and students in the Rural(μ=4.0674,σ=.566)donotdiffersignificantly(F=.451,Sig.=.638s).

One‐way ANOVA results corresponding to emotionality show thatstudentsintheUrban(MetroCities)(μ=4.3778,σ=.597),studentsinthe Semi Urban (μ= 4.5600, σ= 1.11), and students in the Rural(μ=4.3723,σ=.512)donotdiffersignificantly(F=1.367,Sig.=.258).

One‐wayANOVAresultscorrespondingtosociabilityshowthatstudentsintheagegroup20‐22(μ=4.0909,σ=.619),studentsintheagegroup23–24 (μ= 4.3167, σ= .919), and students in the age group 25–27(μ=4.1418,σ=.725)donotdiffersignificantly(F=1.127,Sig.=.327).

Discussions

The study aims at examiningTEI based on student’sGender, UGdegree,Work‐experience, Family background and Brought up place. The studyshowsthatthereisnosignificantdifferencebetweenTEIintermsofGender.Thefemalebrainconsistsofalargerprefrontalcortexanditmaturesfasterinwomenwhencomparedtomen.Itputsabrakeonemotionsandpreventsthem fromgoingwild. Studies reveal that femaleshavemore interactionthatissocialandtheyfocusintenselyontheiremotionsandcommunication(Brizendine,2006).Researchersareinterestedinfindingouttherelationshipassociatedwiththeeducationbackgroundoftherespondentsintheaccount


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ofTEIskills.Throughtheobservation,wegottoknowthatmostofthestudentsinTierIIIBusinessschoolsofIndiahaveanArtsSciencebackgroundduringtheirUnderGraduation. Thismade researchers tomake a hypothesis onwhetherthereisanysignificancedifferencebetweenengineering&artsandscience degree students. In this study, engineering background studentshavemoreself‐controlthanartsandsciencestudents.Thisresultsurprisedthe researchers as normally the students who pursue arts and sciencedegree students spend more time on extracurricular activities thanengineering students. Through extracurricular activities one candevelopself‐controlskilli.e.Sports.Researcherssuggestthefutureneedtoexplorethishypothesisinfurtherdetail,sothatwecanhavebetterunderstandingonthisregard.

FurtherTEIisevaluatedonstudentswithregardstotheirFamilybackground.Whenwelookattheissueindepth,itcanbeseenthattheearlystagesofchilddevelopmentandtheparentalstyleshavesignificanceinshapingtheadulthoodofanindividual.Thereisamajorcontributionofparentalstyles,whichisinstrumentalinshapingtheemotionalintelligenceofanindividual.Thedevelopment level of emotional intelligence is influencedby the fiveparentalstyles:Authoritarian,Dictatorial,andPermissive,DemocraticandRejecting/Neglecting. According to Jean Piaget’s theory of cognitivedevelopment,theprocessofequilibrationdrivesthedevelopment.Itcomprisesof assimilation,accommodation.The theoryconcerns theemergenceandacquisition of schemata‐schemes of how one perceives the world in“Developmental stages,” timeswhen children are acquiring newways ofmentally representing information (Piaget, 1977). According to DanielGoleman, it is to be believed that children from a joint family possess ahigherlevelofemotionalintelligencethanchildrenfromanuclearfamily.The importance and contributionof parents and familymembersduringchild rearing contributes greatly in shaping thepersonality of a child. Incontrast our study shows no significant differences in TEI concerningFamily type of students. Emotional intelligence is said to be an adaptivefunctionanditgrowswithage.Thebroughtupplaceandtheenvironmenthas an influence too on human behaviour. It is necessary to take intoaccounttheplacewherethestudentswerebroughtup.Thestudentsinthesemi‐urban area show significant differences inwell‐being dimension ofTEI. It is observed that students from semi‐urban background naturallycomewith better EI related abilities than from other backgrounds. It isbecausestudentswhogrowinsemiurbanareahavebothruralinfluencesandmetro influences,whichhelps themtounderstandmoreaboutotherpeopleandoneself.Thisbetterunderstandinghelpsthemtolivehappily.

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Students with considerable emotional wellbeing can have differences inperceivingthingsandcanhavebetteremotionalreactionstowardspeople.ThecoupletsbelowfromIndian literature,oneaSanskrit sloka(mantra)andtheotheraTamilcouplethelpustounderstandtheimportanceofself‐awareness.Infactself‐awarenessisthebaseforemotionalintelligence.

[InSanskrit]

ThiscoupletfromBhagavad‐Gita(ChapterII,Verse15)

यं िह न थय ेते पु षं पु षषभ |

समदु:खसुखं धीरं सोऽमृत ाय क ते ||

yaṁhinavyathayantyetepuruṣhaṁpuruṣharṣhabhasama‐duḥkha‐sukhaṁdhīraṁso’mṛitatvāyakalpate

ItclearlynarratesthewholeideaofEmotionalIntelligence(EI).Itsays:amanwhoisquietandstaysunperturbedbyeithertormentorjoyisthepersonwhoachieveseverlastinglife.

[InTamil]

ThisisfromThirukkural(kural123)

செறிவறிந்துசீர்மைபயக்கும்அறிவறிந்துஆற்றின்அடங்கப்பெறின்.

SerivarindhuSeermaiPayakkumArivarindhuAatrinAtangapPerin.

It says, knowing that self‐control is knowledge, if a man should controlhimself,intheprescribedcourse,suchself‐controlwillbringhimdistinctionamongthewise.

Leadersmustunderstandtheabovetwoverses,becauseitclearlygivesthemguidance for better leadership. Any type of leadership needs happinesstowardswhat theyaredoing.This studyemphasisesB‐Schools students’needs forhigh emotionalwellbeing, because these studentswill onedaybecome business leaders and they are going to influence thousands ofhumanlives.Leadersareperceivedasarolemodel,becausetheyknowhowtocontroltheiremotions,showself‐control.Iffollowerstrustleaders,theworkflowoftheorganizationorenterprisewillbemoreefficient(Raghavendra


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&Senthil,2017).Arolemodelintheworkplaceissomeonewhodoesnothaveanofficial leader. Itcanbeanyemployeewhoisalwayscalmunderpressure,deservestrustandachievesthegoal.Thisrolemodelmayinspireothersiftheyseethattheattitudeandethicsofthiscolleagueleadhimtosuccess.

Conclusion

Leadership is considered one of the important qualities for effectivemanagement. There are many studies, which prove the significance ofEmotionalintelligenceanditsassociationwithleadershipeffectiveness.

ThepresentstudyaimsatmeasuringtheEmotionalintelligenceofBusinessschoolstudentsconsideringparameterssuchasGender,UGdegreebackground,thefamilytypeinwhichtheybelongtocategorisedasjointfamily/Nuclearfamily,theworkexperiencetheyhave,theUGdegreetheyhaveandfinallythebroughtupplace.OneoftheresultsfromthisstudyshowsthatstudentswhowerebroughtupinsemiurbancitiesexhibitsignificantdifferencesinwellbeingfactorofTEI.

ThisempiricalstudyresultsemphasisethatEIhasaroleinB‐Schoolsstudents’curricula.Hence, researchers recommend theBusinessschools introduceanEIcourseintheacademiccurriculuminordertoexposefutureleaderstothepracticeofemotionalintelligence.Furtheritisnecessarytofocusonstudents from rural and urban parts in terms of EI education. Socio‐EmotionalLearning(SEL)practicescanbeprovidedtothefocusedgroupofstudents. Through intervention techniques students can able to improvetheir EI skills. It helps thembecome a better leader ormanager in theirrespective field.Mastering the EI skills has its yield always in career. AstherearesignificantdifferencesinEIwithstudentsfromsemi‐urbanpartstheyhavebetterEIcomparedtothestudentsfromruralandurbanparts.Itprovesthattheenvironmentinwhichthestudentsgrowuphasasignificantinfluence on their EI. The research can be extended to various levels ofbusiness schools across the globe to see how EI influences academicperformanceandplacements.

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ECOLOGICALTURN‐AROUND–TRENDSANDPERSPECTIVES

UdoE.Simonis,BerlinSocialScienceCenter,Germany

[email protected]

Abstract

Thecurrentthreateningenvironmentaltrendspointtoenormousenvironmental policy challenges at the national, regional andglobal levels.To improve thissituation, it isnecessary tobeginfundamentaleconomicandsocialtransformations.Suchprocessescreateenormouspoliticalproblems.Thearticleanalysesindetailfour historical studies that explain the need for a globalenvironmentalshift,andexploresthepossibilityoftransformationalprocesses.Transformationasaradicaltransformationisavalue‐orientedprocess.

Keywords:ecology,limitstogrowth,socialcontractforsustainability,environmentalgovernance

DOI:10.37804/1691‐6077‐2020‐11‐156‐163

Limitstogrowthandecologicalovershoot

The UN Conference in Rio de Janeiro (1992) was a milestone in globalenvironmentalpolicy. It brought the conceptof sustainabledevelopmentinto the debate, and led to basic international agreements on climate,biodiversity and desertification. However, in the 28 years since thatconferenceithasnotbeenpossible–despitesuccessesinsomeareas–tosystematically align development paths in theworld in such away thatimportant ecological limits are observed and respected. Therefore,threatening ecological trends persistwhich indicate huge environmentalpolicychallengesatthenational,theregionalandthegloballevel.

Indicators of resource use and environmental impact play a key role indescribingtheactualecologicalsituation.Byintroducingtheterms“ecologicalfootprint”and“ecologicalrucksack”,progresswasmadeinmeasuringthe


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renewablebiologicalcapacityandthenaturalresourceuseassociatedwithproduction and consumption. These indicators reveal cases of massiveoversteppingofboundaries,of limitstogrowthandecologicalovershoot,bothunderpinningtheurgentneedfora“globalecologicalturn‐around”.

Inviewofthesetrendsit’surgenttoplacetheterm“ecologicalturn‐around”into the focus of policy‐making, because only then will fundamentaleconomicandsocialtransformationprocessesbeinitiated.However,suchprocesses present enormous policy challenges that have scarcely beenreflecteduponasyetinsocialdiscourse.Besides,theresponsestothecallforanecologicalturn‐aroundarequitediverse,andnotalwayscomplementaryandharmonious.

Inthefollowing,fourimportanthistoricstudiesshallbediscussedtoshedlight on the diversity of the arguments raised concerning the need for a“globalecologicalturn‐around”,andbelookedatforthehiddenchancesofimplementationtheystillmayimply.

Asocialcontractfora“GreatTransformation”

TheGermanAdvisoryCouncilonGlobalChange(WBGU)inaflagshipreportsubstantiated the need for a great global transformation, requiring theconclusionofasocialcontractforsustainability(WBGU2011).

A “social contract”, this hypothetical construct of classic contract theory,from Thomas Hobbes and John Locke to Jean‐Jacques Rousseau, is re‐interpretedbytheWBGUtomeanthatindividualsandcivilsociety,statesand the community of states, business and academia take collectiveresponsibility for theavoidanceofclimatedisasterand for theecologicalconservationof“PlanetEarth”.

A“greattransformation”,thetermcoinedbyeconomistKarlPolanyiinhisanalysis of the first industrial revolution, is re‐interpreted in normativeterms by theWBGU: A radical transition of national economies and theglobal economy within specific “planetary guard rails” should preventovershootandthecollapseofglobalecosystems.

Sofar,sogood.Butsomequestionsremain:Howcananewsocialcontractcome into being? How can a great transformation get under way? TheWBGUinitsreportpresentsseveralbasicideasaboutthefirstquestion,andagreatmanyideasaboutthesecondone.

Unsustainablesituationscaneasily“tipover”;thenewdemocraticmovementsinseveralcountriesareseenasevidenceofthatinsight.Thecarbon‐based

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worldeconomicmodelisanunsustainablemodelbecauseitendangersthestabilityoftheclimatesystem;thenaturallifesupportsystemsforfuturegenerationsareindeeptrouble.Thetransformationtowardsalow‐carboneconomy and society, in the view of theWBGU is therefore asmuch anethicalimperativeaswastheabolitionofslaveryandthecondemnationofchild labour. However, for this transformation to happen, the structuraltransitionofeconomyandsocietymustbemadeecologicalinthemostsuitableway.Howcansuchan“ecologicalturn‐around”takeplace,howcanitsucceed?

Primarily, theWBGUadvocates improving and intensifying thepractisedclimatepolicyinthreemajortransformationfields:a)energy,b)urbanisation,andc)landuse.

Several“measurepackets”withmajorstrategicleveragearepresentedtoacceleratethetransformationtowardsalow‐carboneconomyandsociety,especiallythefollowingones:

“apro‐activestatewithextendedcitizenparticipation”; “globalcarbonpricing”; “thepromotionofrenewableenergies”; “sustainableurbanisation”; “climate‐compatiblelanduse”; “internationalisationofclimateandenergypolicy”,andan “internationalcooperationrevolution(!)”.

Allinall,thisseemstobea“majorcoup”;theWBGUreport,nodoubt,isfullofthought‐provokingideasandmanifoldrecommendationsforaction.Butwhatislacking?Aboveall,anideaofhowtheworkperformedbyscientistscanreachnotonlythegovernments,theelitesanddecision‐makers,butalsosocietyat large, theEuropeans, theglobalcitizens,so that itcantrulybeinitiated:themuchneeded“greattransformation”.

Ecologicalturn‐aroundanywhere?

TheGermanJahrbuchÖkologie(ecologyyearbook)takesadifferent,morepragmatic approach to the question (Wende überall? 2012). Whether aprofound transformation of economy and society – an ecological turn‐around–ispossibleandprobableisnarroweddownwithastronghypothesis:Therewillbepioneers,butalsolaggardsanddunces.

Thiscompelling“tripleimage”emergeswhenanalysingthelatestdevelopmentsinGermany (andprobablymanyother countries), be it in the sectors ofenergy,transportandmobility,agricultureandfood,businessandacademia,aswellasconcerningtheissuesofawarenessandculture,i.e.ofchanging


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people’sheartsandminds.Acomparisonofthecurrentturn‐arounddynamicsrevealscertainsimilaritiesbutalsomajordifferences.

Phasingout,switchingandmoving–thesearecentraltopicsofthedebate(atleastinGermany):phasingoutnuclearpowerandbrowncoal;switchingto cleaner and softer technologies;moving to renewable energies: solar,wind,water,biomass,geothermalenergy.

The2011resolutionbytheGermangovernmentandparliamenttophaseoutnuclearpowerbytheyear2022,andthe2019resolutiontophaseoutcoalbytheyear2038metwithapprovalfromcivilsociety.

Switching isbeingpromotedbysettingnewtechnicalstandards,howeverstillhinderedbyvestedinterestsmanycompanieshaveinretainingtheireconomicpower.

Movingtorenewableenergiesismetwithenormousapprovalbynumerousnewactors(particularlyinthefieldsofsolar,windandgeothermalenergy),bymanymunicipalities and cooperatives (especiallywind and biomass),and by millions of homeowners who have taken action themselves (inphotovoltaics).

Incontrasttotheenergysector,nothingsimilarhasbeenoccurringsofarinthetransportsector,whichledtopostulateadifferentstrategy,the“mobilityturn‐around”,i.e.thenecessarymergerofenergyandtransportactivities.

Inspiteofanumberofsuccessesintheorganicandfairtradesegment,theagricultureandfoodsectorsturnouttobehighlyresistanttonecessarychange.

Althoughitwasimpossibletodetectanecologicalturn‐aroundintheeconomyas a whole, in recent years very many companies demonstrated howsustainability‐orientedentrepreneurshipcouldlooklikeandbeinstalled.

Thequestionconcerningtheecologicalturn‐aroundinacademiaresultedinastrongphilippicagainsttheantiquateddisciplinarystructuresandinterestswhich have stifled transformative ecological research and education, oronlyenabledittothriveinanumberofinstitutesbutnotintheuniversitysystematlarge.

Pioneers,laggardsandduncesthusistheprevalentpatternwhenconsideringthedevelopmentofvarioussectorsandareasinGermany(andprobablyinmostothercountries)–itistheanswertothequestionconcerningstatusanddynamicsofthe“ecologicalturn‐around”atthenationallevel.

No doubt, the answer would likely be similar when contemplating thequestionoftheecologicalturn‐aroundatthegloballevel;buthere,thebasicquestionsareaskedinadifferentway.

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Globalenvironmentoutlook

The Global Environment Outlook by the United Nations EnvironmentProgramme(GEO5)describesthestatusandtrendsofthevarioussegmentsof theglobalecology(UNEP2012).Therehasbeen furtherdeterioration,rather than improvement in the majority of the ecological segmentsconsidered in the extensive study. This especially, when comparedwithGEO4,andtoanevengreaterextentcomparedwithGEO1.

Thisdeteriorationisthecaseforgloballyrelevantemissions(inparticularcarbonemissions)andglobalresourceutilisationingeneral,forrenewableresources (aboveall fisheries)and fornon‐renewableresources (suchasmetals) inparticular,whichhavereachedahistoricmaximum,leadingtooveruseorovershoot.

ThebasicpatternofaglobaloverloadofecosystemsandanoveruseofresourceshasbeenconfirmedbytheUnitedNations’INTERNATIONALRESOURCEPANEL.Inaninitialreport(IRP2011),individualattemptsofdecouplingresourceconsumptionandenvironmentalimpactsfromthegrossdomesticproduct(GDP)wereidentified,butnoappreciable,letaloneimpressive,achievementscouldbefound.

Over the past 100 years, the global extraction of building materials hasincreasedbyafactorof34,thatofironandmineralsbyafactorof27,thatoffossilfuelsbyafactorof12,andtheuseofbiomassbyafactorof3.6.Thisexpansion of the consumption of natural materials and their use forindustrialproductionhasledtoconsiderableecologicalcontaminationanddestruction:toairpollution,climatechange,soildegradation,watershortageand a loss of biodiversity, to name just a few effects. Only an absolutedecouplingoftheuseofthesematerials fromtheGDPcouldhelpprotectresourcesandrelievethestrainonthenaturalenvironment.

Althoughsomeelementsofadecouplingstrategywereidentifiedinthetwoindustrialcountries(GermanyandJapan)investigatedindetailinthestudy(IRP2011),onlyverymodestsuccesseswerediscernible.Inthetwocasestudiesondevelopingcountries(ChinaandSouthAfrica),therewasneitherastrategynoranymeasurablesuccessfoundregardingresourcedecouplingandimpactdecoupling.

Theconclusionforthischapterisclear:theindustrialisedcountriesaswellas the emerging and developing countries continue to be on a collisioncoursewith thenatural environment; therecannot (yet)beany talkof aremarkableordrasticecologicalturn‐around.Therearemanyreasonsfor


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thisstateofaffairs,suchaslaggingpeople’senvironmentalawarenessandtheirshort‐termeconomicinterests,butalso,andperhapsaboveall,apolicythatis(asyet)unabletoreallycopewithglobalenvironmentalchallenges.

Globalgovernance

Despitethenumerousconferencesheldandthemanyinternationaltreatiessignedsincethe1972UNStockholmConferenceontheHumanEnvironment–i.e. over the past 48 years – it is apparent that the institutions andmechanismsbywhichhumansandstatesgoverntheirrelationshipwiththenaturalenvironmentareutterlyinsufficient.TheevidenceofthisallegationcouldbedetectedattheUnitedNationsConferenceinRiodeJaneiroinJune2012(“Rio+20”).

Twocentralthemeshadbeenplacedonitsagenda:“greeneconomyinthecontext of sustainable development and poverty eradication”, and an“institutionalframeworkforsustainabledevelopment”.TheUnitedNationsEnvironmentProgramme(UNEP)hadworkedhardonthesetopics,givingexpertsfromdevelopingandindustrialisedcountriestwoyearstocontemplateon a solid concept. The resultwas a report containing a compromise intermsofbothlanguageandcontent:the“greeneconomy”wasunderstoodas amethod of production that “increaseswell‐being and leads tomoresocial justice, while simultaneously reducing environmental risks andecologicalscarcities.”

Itwasnotabadstartingpointforan“ecologicalturn‐around”,aswellasfora“globalsocialcontract”anda“greattransformation”,onemightthink.Buttherealitieswerefarfromsuchoptimism.

At the conference, these definitions were not seriously brought up fordiscussiontofleshoutorcompareterms,butwasloadedwithallkindsofprejudices–asitstillisnowadays.Itseemsthatwenolongerliveintimesofrationaldiscourse;thepoliticalmoodispoisoned,andmutualinternationaltrustgotlargelylost.

The international communityof statesdidhoweveragree to support theconceptofthe“greeneconomy”inRio.Thisagreementwasmadedespitefierceoppositionfromlargesectionsofthefossil‐basedindustrialeconomy,aswellasfromsectionsofcivilsociety,whosaw(orwantedtosee)initakindofneo‐colonialism,greenwashing,protectionism,ortheconditionalityoffinancialsupport.Accordingtotheoutcomedocumentoftheconference(Paragraph56),“greeneconomyshouldbeusedasanimportanttool–inaccordancewithnationalcircumstances”.

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“Green economy”, in this way, does not concern the goal of minimisingresource use and eliminating pollutant emissions, of reducing the use ofenergy and lowering per capita carbon emissions – as one could havedefinedit–butissupposedtobeatool!Andthistoolistogeneratefurtherquantitative economic growth. Economic growth may help alleviate thepovertythatpersistsintheworldtothisday,butwhatwillsuchanenforcedgrowthstrategymeanfortheglobalecosystemsandthenaturalresources?

Allthesamemightberemarkedabouttheinstitutionalissues:Accordingtothedocument,UNEPistobestrengthenedandenhanced;butitwillnotbetransformedintoaspecialisedagencyoftheUnitedNations–liketheWHO,theILOortheFAO.ThispotentialpoliticalinnovationwasblockedatRio2012,bytheUSAinparticular,butalsobyCanada,RussiaandJapan.

The UN General Assembly now can decide on universal membership inUNEPandonbetterfinancingoftheprogramme.ThepossibilitiesUNEPhastoassumeenvironmentalpolicycoordinationtasksandtoactasanearlywarning system against deteriorating environmental problems may tosomeextentbeimproved.ButUNEPinthiswaywilldefinitelynotgainthecompetences necessary for effective global environmental policy – andtherewillbenopromotionofabasicparitybetweeneconomicandecologicalinterestsinthisworld.

Consideringthereasonsfortheinternationalcommunityofstates’structuralincapacity toact effectively,whichemergedagainandagain in regard toenvironmentalandsustainabilityissues,threemajorgovernanceproblemsarediscernible:

1) thehorizonoftheG8andtheG20meetingshasincreasinglybecomenarroweddowntoshort‐termcrisismanagement;

2) theUSgovernmentisnolongercapableoftakingonarationalleadingroledueto ideologicalblockades.Europe,whichought to takeonthisrole, isnot (yet)sufficientlycoherent fromanenvironmentalpolicyperspective;

3) thegeostrategicrepositioningoftheworld–waningpowersintheWest, rising powers in the East – acts as an impediment to thegloballynecessaryintegrationoftheenvironmentandsustainabilityissues,ofenvironmentalprotectionandsustainabledevelopment.

TheWBGUsuccinctlysummedupthisstrikingpredicamentfollowingRio2012 in the following words: “The result is an international crisis ofleadership and confidence, a G‐ZeroWorld in which no leading powereffectivelyistakingtheinitiativeandnocoalitionscapableoftakingactionareemerging.”


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Outlook:Environmentalcollapseorplanetarycooperation

Inviewofthesedangeroustrends,oneisremindedofJaredDiamond,whosystematicallyanalysedthehistoriccollapseofsocieties.Hisbook“Collapse”revolves around thequestionwhypeople and societiesdo stupid things.Diamondanswersthisquestionwithatheoryoffourstagesofdisastrousdecision‐makingprocesses:

1) itcouldbethatasocietyfailstoanticipateaproblem;2) asocietydoesnotwanttoperceivetheproblem;3) asocietymayperceivetheproblem,butdoesnotmakeanyserious

efforttosolveit;4) theelitesofasocietyclosethemselvestotheconsequencesoftheir

actions,hamperingtransformationandacceleratingthecollapse.

Diamond,however,iscautiousaboutthequestionoftransferringknowledgeon historical cases of collapse to the present epoch. After all, there aredifferences between the past and the present – not just concerning theproblemsthemselves,butalsoconcerningthereactionstothem.Hisremainingoptimismrestsonthemodernpossibilitiesofcommunication.Unlikeinthepast,hesays,wearenowcapableoflearningfromothersocietiesthataredistantintermsofspaceandtime.Hedoesnotsaythatweshould,no,hebelievesthatwewill(!)decideinfavourofusingthisuniqueadvantage.

Inordertostrategicallybackupsuchstructuraloptimism,theWBGUinitsreportstronglyadvocatedbetterplanetarycollaborationinthefuture–andcalledfornolessthana“revolutionininternationalcooperation”toachieveit.

References

Agenda 21. United Nations Conference on Environment & Development Rio de Janerio,Brazil, 3 to14 June1992.Onlineaccess:https://sustainabledevelopment.un.org/content/documents/Agenda21.pdf

Diamond, Jared: Collapse: How Societies Choose to Fail or Succeed: Revised Edition.Publisher:PenguinBooks;Revisededition,2011,ISBN978‐0143117001

GermanAdvisoryCouncilonGlobalChange(WBGU):WorldinTransition:ASocialContractforSustainability.Berlin,2011

InternationalResourcePanel.DecouplingNaturalResourceUseandEnvironmentalImpactsfromEconomicGrowth.Geneva,2011

Meadows, Donella, Dennis Meadows & Jørgen Randers: Limits to Growth – The 30 YearUpdate.WhiteRiverJunction,2004

United Nations Environment Programme (UNEP): Global Environment Outlook (GEO 5).Nairobi,2012

Wendeüberall?VonVorreitern,NachzüglernundSitzenbleibern.–JahrbuchÖkologie,2013,Stuttgart2012

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PROBLEMATICSOFAMENDMENTSMADEINTENDERDOCUMENTSINPUBLICPROCUREMENT–

THEPERSPECTIVEOFTHECOURTOFJUSTICEOFTHEEUROPEANUNION

UnaSkrastina,TuribaUniversity,[email protected]

DzeinaGaile,UniversityofLatvia,Latvia

[email protected]

Abstract

Duringtheprocurementprocess,itisoftenfoundthatthetenderssubmittedaredeficient,forexample,requireddocumentsarenotsubmitted.Giventheamountofinformationtobeprovided,thetypesoferrorsaredifferentandcanapplytothequalificationofthetenderer,itstechnicalorfinancialtenderandotheraspects.In each of these situations the procurement commissionmustevaluatewhetheritispossibletocorrecttheerrororthetendershouldberejected.ThePublicProcurementLawdoesnotcontainverydetailedand clear regulation on this situation.Thereforedecisions of contracting authorities are often challenged andfoundtobeunfounded.Itjustifiesthetopicalityofthestudy.TheaimofthestudyistosummarizeandanalyzethefindingsoftheEuropeanCourtofJusticetodeterminewhatlegalprinciplesandconsiderationshavetobetaken intoaccount insuchsituationsandtomakerecommendationsforfurtheractioninLatvia.Thedescriptive,comparativeandanalyticalresearchmethodswereused.Thestudywillresult insuggestionsastowhatconditionsshouldbeconsideredwhenassessingthepossibilityofcorrectionstothetender.

Keywords:publicprocurement,correctionstotender,errors

DOI:10.37804/1691‐6077‐2020‐11‐164‐183

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Introduction

Duringthepublicprocurementprocess, it isoftenfoundthatthetenderssubmittedaredeficient,forexample,requireddocumentsarenotsubmittedorinformationinthetenderiscontroversial.Thiscouldbebothduetothenegligenceofthetendererorwithapurposetolaterimprovethetender.Giventheamountofinformationtobeprovided,alsothetypesoferrorsaredifferent–theycanapplytothequalificationofthetenderer,itstechnicalor financial tender, exclusion criteria and other aspects of the tender. Ineachofthesesituationstheprocurementcommissionmustevaluatewhetheris it possible to correct the error while not permitting any substantiveamendments to the tender,or itshouldreject the tender.AsU.Skrastiņapointsout,intheevaluationprocesstheprocurementcommissionalmostalwayscomesintoasituationthatisnotregulatedinanylegalact,includingprocurementdocuments,becauseitisnotpossibletoforeseehowthewiderangeofsupplierswillunderstandthevariousrequirements,astheywillundoubtedlyinterpreteachrequirementintheirowninterest.Forexample,theywillsubmitsimilardocumentorwillnotsubmititatall,modifyorveryroughly fill in the financial tenderorother forms. In thesesituations theprocurementcommissionshallseekitsownfairandequitablesolution.Forexample, by asking or not asking additional information, correcting orrejectingthetender.(Skrastiņa,2015)ThePublicProcurementLawdoesnot contain very detailed and clear regulation that would help thecommissioninallcasesandtherearenospecificguidelinesforsuchsituations.As a result, decisionsof contracting authorities areoften challenged andfoundtobeunfounded.This leadsto ineffectiveprocurementproceduresand additional resources spent which could be prevented if there wereclearer guidelines.Already in1998Arrowsmith concluded that it is veryimportantthatconsiderationshouldbegiventosupplementingthecurrentrules with some more detailed guidance from the Commission on theirapplication.More specifically, interalia, guidance shouldbegivenon theextenttowhichdiscussionsmaybeheldwithprovidersaftertendershavebeen submitted to deal with various problems such as ambiguities andinconsistencies.(Arrowsmith,1998)Itjustifiesthetopicalityofthetopic.Ofcourse,oneofthesimplestsolutionscouldbetoprohibitanychangesinthetenders, but, as Arrowsmith has observed, the problemwith adopting a“strict”viewintheabovesituations–thatamendmentsarenotpermittedwhenthismightgivethebidderchanceforeffectively“changing”thebidaswellasadjustingforerror–isthaterrors,inconsistenciesandambiguities

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areveryprevalentinmanycomplexprocurementprocesses,andnottotakeaccount of these may mean that many bidders are eliminated and it isdifficult to secureabestvalue formoney. (Arrowsmith,1998)ThereforeArrowsmith concludes it is necessary to balance, on the one hand, theinterestsoftheEUdirective,particularly,theneedtocurbabuseasreferredtoabove,and,ontheother,theinterestsofMemberStatesinsecuringvalueformoneyintheirowncircumstances,aswellastheinterestsofindividualfirms, the last two being relevant considerations in applying the EUprincipleofproportionality.Andtherearetwomainquestionstoconsider–whether there iseveraduty toallowa tenderer tocorrecterrors,and–where there is no duty, how far an authority has a discretion to allowcorrectionifitchoosestodoso.(Arrowsmith,2014,820–821).Toseehowthe regulation of this aspect has developed and whether it reflects theprinciplesprovidedbytheEuropeanCourtofJustice(hereinafter–ECJ)thedevelopmentofitscase‐lawwillbesummarized.Theaimofthestudyistosummarize and analyze the findings of the ECJ to determine what legalprinciples and considerations have to be taken into account in suchsituationsandtomakerecommendationsforfurtheractioninLatvia.Theresearch methods used include descriptive, comparative and analyticalmethods.Thestudywillresultinsuggestionsastowhatconditionsshouldbeconsideredwhenassessingthepossibilityofcorrectionsofthetender.Duetothelimitedscopeofthearticlethestudywillreviewonlyjudgementsof European Court of Justice, without looking at the judgements of theGeneral Court that could be a further topic of study, and themain focusregardingregulationwillbeontheopenproceduresinthe'classicalpublicsectordirectives'.

Legalregulation

ThemostrecentregulationregardingamendmentsintendersonEUlevelistheArticle56(3)ofDirective2014/24/EUoftheEuropeanParliamentandoftheCouncilof26February2014onpublicprocurementandrepealingDirective2004/18/EC(hereinafter–Directive2014/24/EC)whichprovidesthat where information or documentation to be submitted by economicoperators is or appears tobe incompleteor erroneousorwhere specificdocuments are missing, contracting authorities may, unless otherwiseprovided by the national law implementing this Directive, request theeconomicoperatorsconcernedtosubmit,supplement,clarifyorcompletethe relevant information or documentation within an appropriate timelimit, provided that such requests aremade in full compliancewith the


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principles of equal treatment and transparency. (Directive 2014/24/EC,2014,56.3.).AccordingtoSanchez‐GraellsArticle56(3)shouldbeseenasacodificationof thecase lawof theCJEUconcernedwith thedutyof goodadministration in theareaofpublicprocurementandneed toberead inconjunctionwithitsinterpretationofthelimitsimposedbytheprinciplesof transparency and equal treatment. He further concludes that Article56(3)ofthenewDirectiveshouldbewelcomeinasmuchasitcancontribute(throughtheinterpretationtobegiventoitbytheCJEU)tothedevelopmentof a common (minimum) standard of “good administration” in publicprocurementacrossallEUMemberStates–regardlessoftherequirementsof theirdomesticcodesofadministrativeprocedureorsimilarprovision.(Sanchez‐Graells,2014,103)

ThisregulationistransposedinthePublicProcurementLaw(hereinafter–PPL),inforcesince1March.Article41(6)and(7)ofthePPLprovidesthatifthecontractingauthorityestablishesthattheinformationoradocumentcontainedintheapplicationorthetenderorsubmittedbythecandidateortenderer is unclear or incomplete, it shall request that the candidate ortenderer, or the competent authority clarify or supplement the relevantinformationordocumentorsubmitthemissingdocument,ensuringequaltreatmentofallcandidatesandtenderers.Thecontractingauthorityshalldetermine the term for submission of the necessary information ordocumentcommensuratewith thetimenecessarytoprepareandsubmitsuch informationordocument. If thecontractingauthority inaccordancewithParagraphsixofthisArticlehasrequestedtoclarifyorsupplementtheinformation contained in the application or tender or submitted by thecandidateortenderer,butthecandidateortendererhasfailedtodoitinaccordancewiththerequirementsdeterminedbythecontractingauthority,thecontractingauthorityshallevaluatetheapplicationortenderbasedoninformationatitsdisposal.FurtherArticle41(8)providesthatduringtheevaluation of the tenders, the contracting authority shall be entitled torequestthatinformationcontainedinthetechnicalandfinancialtenderbeexplained,aswellasthesamplesofofferedproductsaresubmitted,ifanyare necessary for the product conformity assessment and the tendererthroughthedocumentsavailable theretocannotproveto thecontractingauthoritytheconformityoftheproducts.Thecontractingauthorityshallnotrequesttosubmitthesamplesofsuchproductswhicharetobeadjustedorproducedduringtheperformanceoftheprocurementcontractinaccordancewith the requirements thereof, if such samples are not available to theeconomicoperatorbeforetheconclusionof theprocurementcontract,as

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wellastheproductsamplesthesubmissionwhereofcausesincommensurateexpensestotheeconomicoperator.And,finally,Article41(9)providesthatduringtheevaluationofthetenders,thecontractingauthorityshallcheckwhetherthetenderisfreeofarithmeticerrors.Ifthecontractingauthoritydetectssucherrors,itshallcorrectsucherrors.Thecontractingauthorityshallnotifythetendererwhoseerrorshavebeencorrectedofthecorrectionoferrorsandthecorrectedsumofthetender.Whenevaluatingthefinancialtender,thecontractingauthorityshalltakecorrectionsintoaccount.(PublicProcurementLaw,2017)Aswecansee,paragraph6referstoqualification,paragraph8referstothetechnicalandfinancialtenderandparagraph9–toarithmeticalerrors.ThePPLhasaddedanadditionalregulationtotheDirective,e.g.,ithasmademandatorythecorrectionofarithmeticalerrorsaswell as the request for additional information regarding qualificationdocuments.ItisaseparatetopiconhowfarthediscretionofMemberStatecangoinsuchcases.FurtheranalysisoftheECJcase‐lawwillreflecthowtheregulationinforcehasevolved.

BeforeLatvia’saccessiontotheEU

One of the very first cases in the context of tender amendments is the‘Storebaelt’ where as a result of negotiations the contracting authorityaccepted amendments in the tender in a form of reservations regardingprice.TheECJstatedthat,althoughthedirectivemakesnoexpressmentionof theprincipleofequal treatmentof tenderers, theduty toobservethatprincipleliesattheveryheartofthedirective[71/305/EEC]whosepurposeis toensure inparticular thedevelopmentofeffectivecompetition in thefieldofpubliccontract.Observanceoftheprincipleofequaltreatmentoftenderersrequiresthatalltenderscomplywiththetenderconditionssoastoensureanobjectivecomparisonofthetenderssubmittedbythevarioustenderers. That would not be satisfied if the tenderers were allowed todepartfromthebasictermsofthetenderconditionsbymeansofreservations,except where those terms expressly allow them to do so. (ECJ, 1993,C‐243/89)Inthiscasethetendererdidnotcomplywiththerequirementsregarding price setting, therefore this principle was not observed. TheAdvocateGeneralTesauropointedoutthatthedirective’sverypurposeisfirst and foremost to secure equality for all those who take part in atenderingprocedure.(OpinionofAdvocateGeneralTesauro,1992)HealsopointedouttotheCouncilStatementconcerningArticle5(4)oftheDirective71/305/EECwheretheCouncilandtheCommissionstatethatinopenandrestricted procedures all negotiation with candidates or tenderers on


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fundamentalaspectsofcontracts,variationsinwhichare likelytodistortcompetition,andinparticularonprices,shallberuledout;however,discussionswith candidates or tenderers may be held but only for the purpose ofclarifyingorsupplementingthecontentoftheirtendersortherequirementsofthecontractingauthoritiesandprovidedthisdoesnotinvolvediscrimination.(Council,1989)Asimilarstatementhasbeenissuedregarding,forexample,Article7(4)ofCouncilDirective93/37/EECof14June1993concerningthecoordination of procedures for the award of public works contracts.(Council,1994)Regardingthisview,Bovispointsoutthatallnegotiationswith candidates or tenderers on fundamental aspects of contract, inparticular on prices, are prohibited in open and restricted procedures;discussions with candidates or tenderers may be held, but only for thepurposeofclarifyingorsupplementingthecontentoftheirtendersortherequirements of the authorities and provided this does not involvediscriminatorypractices.Theneedforsuchaprohibitionisclear,sincethepossibility to negotiate may allow the authority to introduce subjectiveappraisalcriteria.(Bovis,2007,77)Asitcanbeseen,theproblematicsoftenderamendmentswastopicalalreadybeforepublicprocurementsysteminLatviaevenevolvedinawayweknowitafterrestorationofindependence.Further in ‘Waloon Busses’ case amendments were made to one of thetendersaftertheopeningoftenders–dataonfuelconsumptionandchangeofsparepartsofthebussesitofferedwereadjustedandthisinfluencedthewinner'schoice.ECJreferstotheprevious ‘Storebaelt’decisionandnotesthattheprocedureforcomparingtendershadtocomplyateverystagewithboththeprincipleoftheequaltreatmentandtheprincipleoftransparencysoas toaffordequalityofopportunity toall tendererswhen formulatingtheirtenders.Whenacontractingentitytakesintoaccountanamendmenttotheinitialtendersofonlyonetendereritisclearthatthattendererenjoysan advantage over his competitors therefore the contracting authorityfailedtofulfilitsobligationsunderDirective.(ECJ,1996,C‐87/94)

Soitcanbeconcludedthatitisnotallowedtoallowonetenderertochangethetechnicalproposalafterthesubmissiondeadlinetoimproveitbecausethatwouldinfringetheprincipleofequaltreatmentandtransparency.ThiscouldbeconcludedfromthegeneralprinciplesofthePPL,butitcannotbesaidthatthisideaisclearlyreflectedintheArticle41(8)ofthePPL.

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PeriodregardingDirective2004/18/EU

AsfromthemomentwhenLatviajoinedtheEuropeanUnionin1May2004andstartedaligningitslegislation,theregulationofDirective2004/18/ECof theEuropeanParliament andof theCouncil of 31March2004on thecoordinationofproceduresfortheawardofpublicworkscontracts,publicsupplycontractsandpublicservicecontracts(hereinafter– theDirective2004/18/EC)becamerelevant.Article51”Additionaldocumentationandinformation” of Directive 2004/18/EC provided that the contractingauthority may invite economic operators to supplement or clarify thecertificatesanddocumentssubmittedpursuanttoArticles45to50.Thesearticles referred to the criteria for qualitative selection, i.e., Article 45‘Personalsituationof thecandidateor tenderer’,Article46 ‘Suitability topursue the professional activity’, Article 47 ‘Economic and financialstanding’,Article48‘Technicaland/orprofessionalability’,Article49‘Qualityassurancestandards’and50‘Environmentalmanagementstandards’,sonoregulation regarding technical or financial tenderwasprovidedwhich isconfirmedbyECJ.

In the ‘Slovensko’ case it was evaluated whether in a restricted publicprocurementprocedurewherethetendersubmittedisimpreciseordoesnot meet the technical requirements of the tender specification thecontractingauthoritymayormustseekclarification.TheECJstatedthattheprincipal objectives of the EU rules in the field of public procurementincludethatofensuringthefreemovementofservicesandtheopening‐uptoundistortedcompetitioninalltheMemberStates.Inordertopursuethattwofoldobjective,EUlawapplies,interalia,theprincipleofequaltreatmentof tenderers and theobligationof transparency resulting therefrom.Theobligationoftransparency,foritspart,isessentiallyintendedtoprecludeany risk of favouritism or arbitrariness on the part of the contractingauthority. It is in the light of those considerations that the questionsreferred to theECJmust be answered. ECJ notes thatDirective 2004/18does not contain anyprovision for the said situationwhen the technicaltenderisimprecise.Theprincipleofequaltreatmentoftenderersandtheobligation of transparency resulting preclude, in that procedure, anynegotiation between the contracting authority and one or other of thetenderers.Therefore it doesnot follow fromArticle2 or fromanyotherprovisionofDirective2004/18,orfromtheprincipleofequaltreatmentorthe obligation of transparency, that, in such a situation, the contractingauthority is obliged to contact the tenderers concerned.Those tenderers


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cannot,moreover,complainthatthereisnosuchobligationonthecontractingauthority since the lackof clarity of their tender is attributable solely totheirfailuretoexerciseduediligenceinthedraftingoftheirtender,towhichthey, like other tenderers, are subject. None the less, Article 2 of thatdirectivedoesnotpreclude,inparticular,thecorrectionoramplificationofdetailsofatenderwhereappropriate,onanexceptionalbasis,particularlywhenitisclearthattheyrequiremereclarification,ortocorrectobviousmaterialerrors,providedthatsuchamendmentdoesnotinrealityleadtothe submission of a new tender. In the exercise of the discretion thusenjoyedbythecontractingauthority,thatauthoritymusttreatthevarioustenderersequallyandfairly, insuchawaythatarequestforclarificationdoesnotappearundulytohavefavouredordisadvantagedthetendererortenderers to which the request was addressed, once the procedure forselectionoftendershasbeencompletedandinthelightofitsoutcome.Thefollowingconditionsshouldbemet:

a request for clarification of a tendermay bemade only after thecontractingauthorityhaslookedatallthetenders;

thatrequestmustbesentinanequivalentmannertoallundertakingswhichareinthesamesituation,unlessthereisanobjectivelyverifiablegroundcapableof justifyingdifferent treatmentof the tenderers inthatregard,inparticularwherethetendermust,inanyevent,inthelightofotherfactors,berejected;

thatrequestmustrelatetoallsectionsofthetenderwhichareimpreciseor which do not meet the technical requirements of the tenderspecifications, without the contracting authority being entitled torejectatenderbecauseofthelackofclarityofapartthereofwhichwasnotcoveredinthatrequest.(ECJ,2012,C‐599/10)

Itcanbeconcludedthatincaseofimprecisetechnicaltenderitisallowed,butnotmandatorytoallowcorrectionsinthetenderandthisisinlinewiththe regulation of 40(8) of the PPL giving the contracting authority adiscretionregardingtechnicalandfinancialtenders.However,thePPLdoesnotsetanyadditionalconditionsprovidedintheECJcase‐law.

Furtherthefirstcasewherequalificationrequirementswereevaluatedisthe‘Manova’case,whereaprocurementprocedurewasorganisedaccordingtotheregulationapplicabletotheserviceslistedinAnnexIIBofDirective2004/18/EC.Tendererswererequiredtosubmitacopyofthemostrecentbalancesheetinsofarasthetendererisobligedtodrawupsuchdocumentand few of tenderers had not included this document in their tenders,thereforethecontractingauthorityrequestedthemtosubmitit.ECJpoints

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out that the application of the principle of equal treatment to publicprocurementproceduresdoesnotconstituteanendinitself,butmustbeviewedinthelightoftheaimsthatitisintendedtoachieve.Itissettledcase‐law that the principle of equal treatment requires that comparablesituationsmustnotbetreateddifferently,andthatdifferentsituationsmustnotbetreatedinthesameway,unlesssuchtreatmentisobjectivelyjustified.The principle of equal treatment and the obligation of transparencyprecludeanynegotiationbetweenthecontractingauthorityandatendererduringapublicprocurementprocedure,whichmeansthat,asageneralrule,a tender cannotbeamendedafter it hasbeen submitted,whether at therequest of the contracting authority or at the request of the tendererconcerned.Itfollowsthat,wherethecontractingauthorityregardsatenderasimpreciseorasfailingtomeetthetechnicalrequirementsofthetenderspecifications, it cannot require the tenderer to provide clarification.However,theECJhasexplainedthatArticle2ofDirective2004/18doesnotprecludethecorrectionoramplificationofdetailsofatender,onalimitedand specific basis, particularly when it is clear that they require mereclarification, or to correct obviousmaterial errors. Further ECJ refers tocertain requirements to mark the bounds of the contracting authority’srighttomakeawrittenrequesttothetendererortenderersconcernedforclarificationoftheirbidthatitlaiddowninthe‘Slovensko’case,remindingalso that requestmaynot lead to the submission,bya tenderer,ofwhatwouldappearinrealitytobeanewtenderandwhenexercisingitsrighttoask a tenderer to clarify its tender, the contracting authoritymust treattenderersequallyandfairly, insuchawaythatarequestforclarificationdoesnotappearundulytohavefavouredordisadvantagedthetendererortenderers to which the request was addressed, once the procedure forselection of tenders has been completed and in the light of its outcome.Accordingly, a contracting authority may request the correction oramplification of details of such an application, on a limited and specificbasis,solongasthatrequestrelatestoparticularsorinformation,suchasapublishedbalance sheet,whichcanbeobjectively shown topre‐date thedeadline forapplying to takepart in the tenderingprocedureconcerned.But inthiscasethecourtprovidesonelimitation–thiswouldnotbethecaseifthecontractdocumentsrequiredprovisionofthemissingparticularsorinformation,onpainofexclusion.Itfallstothecontractingauthoritytocomplystrictlywiththecriteriawhichithasitselflaiddown.(ECJ,2013,C‐336/12)Firstly,consideringthereferencemadetotheconditionslaidoutin the ‘Slovensko’ case, it canbe concluded that theECJdoesnot strictlydifferbetweenclarificationof the informationofqualificationdocuments


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andtechnicalproposal,atleastinthiscase.ThePPLdoesnotmentiontheseconditionsinitsregulation.Secondly,theECJaddsideaofinformationthat‘canbeobjectivelyshowntopre‐datethedeadlineforapplyingtotakepartin the tendering procedure concerned’, but it is not clear what are thelimitationsofuseofthisaspect,i.e.,whetheritallowstocorrectallerrorsiftheinformationtobesubmittedpre‐datethedeadlineofapplication.PPLdoesnotcontainanyreferencetothisaspect.Thirdly,theECJreferstothelimitation–‘thiswouldnotbethecaseifthecontractdocumentsrequiredprovisionof themissingparticularsor information,onpainofexclusion’.PPLdoesnotreflectontheregulationoftheprocurementdocuments,sincethePPL41(6)puts adutyoncontractingauthority to requestadditionalinformation regarding qualification regardless of the regulation of theprocurementdocumentation.Sothecontractingauthorityhasnodiscretionregarding errors in qualification documents. It is yet to be evaluatedwhether the formulation of Article 56(3) of the Directive 2014/24/EU‘contractingauthoritiesmay,unlessotherwiseprovidedbythenationallawimplementingthisDirective’ismeanttoallowsuchlimitations.

Further in the ‘Cartiera dell’Adda’ case the ECJ deliberated on whetherArticle 45 of Directive 2004/18 must be interpreted as precluding theexclusionofaneconomicoperatorfromatenderingprocedureongroundsthattheoperatorhasfailedtocomplywitharequirementlaiddowninthecontract documentation to annex to the tender, on pain of exclusion, astatement to the effect that the person designated in the tender as theoperator’stechnicaldirectorhasnotbeenthesubjectofcriminalproceedingsor a conviction, where, at a date after the expiry of the deadline forsubmittingtenders,suchastatementhasbeenprovidedtothecontractingauthorityor it isshownthatthepersoninquestionwas identifiedasthetechnicaldirectorinerror.ECJreferstothe‘Manova’casethattheprincipleofequaltreatmentrequirestendererstobeaffordedequalityofopportunitywhen formulating their bids,which therefore implies that the bids of alltenderers must be subject to the same conditions and the obligation oftransparencyisintendedtoprecludeanyriskoffavouritismorarbitrarinessonthepartofthecontractingauthority.Itimpliesthatalltheconditionsanddetailedrulesoftheawardproceduremustbedrawnupinaclear,preciseand unequivocalmanner in the contract notice or specifications so that,first, all reasonably informed tenderers exercising ordinary care canunderstandtheirexactsignificanceandinterprettheminthesamewayand,second, the contracting authority is able to ascertain whether the bidssubmittedsatisfythecriteriaapplyingtothecontractinquestion.Therefore

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theDirectivedoesnotprecludetheexclusionofatendererongroundsthathehasomittedtoannextohisbidaswornstatementrelatingtothepersonidentified in the bid as technical director. In particular, in so far as thecontractingauthoritytakestheviewthattheomissionisnotapurelyformalirregularity, it cannot allow the tenderer subsequently to remedy theomission inanywayafter theexpiryof thedeadline for submittingbids.Furthermore Article 51 of Directive 2004/18 cannot be interpreted aspermittingthatauthoritytoacceptanyrectificationofomissionswhich,asexpresslyprovided for in the contractdocumentation,must result in theexclusionofthebid.(ECJ,2014,C‐42/13)InthecontextofPPLregulationthissituationwouldbedifficulttoevaluate.

Inthe‘PartnerApelskiDariusz’caseitisevaluatedwhethertheprinciplesofequaltreatmentandnon‐discriminationofeconomicoperators,laiddowninArticle2ofDirective2004/18,mustbeinterpretedasmeaningthattheyprecludeacontractingauthority,aftertheopeningofthetenderssubmittedinapublicprocurementprocedure,fromallowingtherequestofaneconomicoperator,whichhassubmittedatenderforthewholeofthecontractconcerned,toconsideritstendersolelyfortheawardofcertainlotsofthatcontract.The ECJ refers to the previous considerations laid down in ‘Cartieradell’Adda’and‘Manova’cases.RegardingthespecificcaseECJnotesthatitis common ground that such communication, by which an economicoperator indicates to the contracting authority, after the opening of thetenders,theorderofpriorityofthelotsofthecontractconcernedaccordingtowhichitstendershouldbeassessed,farfrombeingmerelyaclarificationmadeonalimitedorspecificbasisoracorrectionofobviousmaterialerrors,constitutes,inreality,asubstantiveamendmentwhichismoreakintothesubmissionofanewtenderanditisnotallowed.(ECJ,2016,C‐324/14)ThePPLdoesnotcoversituationslikethisthereforethecontractingauthoritywould have to base its decision solely on condidereations regardingprinciplesofpublicprocurement.

Inthe‘Pizzo’casetheECJevaluatedwhethertheprincipleofequaltreatmentandtheobligationoftransparencyaretobeinterpretedasprecludinganeconomic operator from being excluded as a result of that economicoperator’s non‐compliance with an obligation which does not expresslyarisefromthedocumentsrelatingtothatprocedureoroutofthenationallawinforce,butfromaninterpretationofthatlawandfromtheincorporationof provisions into those documents by the national authorities oradministrativecourts.ECJreferstothe‘Cartieradell’Adda’caseandthattheECJhasalsoheldthattheprinciplesoftransparencyandequaltreatment


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whichgovernallproceduresfortheawardofpubliccontractsrequirethesubstantive and procedural conditions concerning participation in acontracttobeclearlydefinedinadvanceandmadepublic,inparticulartheobligationsoftenderers,inorderthatthosetenderersmayknowexactlytheproceduralrequirementsandbesurethatthesamerequirementsapplytoall candidates.But in a situationwherea condition forparticipating in aprocedure for the award of a contract, on pain of exclusion from thatprocedure, isnotexpressly laiddownin thecontractdocumentationandthatconditioncanbeidentifiedonlybyajudicialinterpretationofnationallaw,thecontractingauthoritymaygranttheexcludedtendererasufficientperiodoftimeinordertorectifyitsomission.(ECJ,2016,C‐27/15)ThiskindofsituationisalsonotregulatedinthePPL.

Inthe‘Ciclat’casetheECJevaluatedwhetherArticle45ofDirective2004/18andArticles49and56TFEUmustbe interpretedasprecludingnationallegislationwhichobligesacontractingauthoritytoconsideraninfringementrelating to the payment of social security contributions, recorded in acertificate requestedby a contracting authority on its own initiative andissuedbythesocialsecurityinstitutionstobeagroundforexclusion,wherethat infringement existed on the date of the participation in a tenderprocedure,even if itno longerexistedonthedateof theawardorof theverification carriedouton the contractingauthority’sown initiative.TheECJ provides that although a contracting authority may request thecorrectionoramplificationofdatarelatingtoanoffer,suchcorrectionsoradditionsmayrelateonlytodatawhichcanbeobjectivelyshowntopre‐date the deadline for applying to take part in the tendering procedureconcernedandmaynotrelatetoinformationwhichmustbecommunicated,failingwhichthetenderwillbeexcluded.Article51ofDirective2004/18cannot be interpreted as permitting that authority to accept anyrectificationofomissionswhich,asexpresslyprovidedforinthecontractdocumentation,must result in the exclusion of the tenderer. (ECJ, 2016,C‐199/15) This judgement again containd idea of ‘data which can beobjectively shown to pre‐date the deadline for applying’ regardingexclusioncriteria.ThesesituationsareregulatedbyArticle42ofthePPLonexclusioncriteriathatisseparatetopic.

In the ‘Esaprojekt’case ECJ answered whether Article 51 of Directive2004/18, in conjunction with Article 2 thereof, must be interpreted asprecluding an economic operator, in order to prove that it satisfies theconditions for participating in a public procurement procedure, fromsubmitting to the contracting authority, after the expiry of the period

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prescribed for applications to take part in a public tender procedure,documentsnotincludedinitsinitialbid,suchasacontractperformedbyanotherentityandtheundertakingbythelattertoplaceatthedisposalofthatoperatorthecapacitiesandresourcesnecessaryfortheperformanceofthe relevant contract. The ECJ referred to the conclusions made in the‘PartnerApelskiDariusz’case.Inthepresentcasesuchfurtherinformation,farfrombeingmerelyaclarificationmadeonalimitedorspecificbasisoracorrection of obvious material errors is in reality a substantive andsignificant amendment of the initial bid, which is more akin to thesubmission of a new tender. Such a communication directly affects theessentialelementsoftheawardprocedure,namelytheveryidentityoftheeconomicoperatorwhichmaybeawardedthepubliccontractconcerned,and the verification of the capacities of that operator and, therefore, itsability to perform the contract concernedwithin themeaning of Article44(1)ofDirective2004/18.(ECJ,2017,C‐387/14)AstheAdvocateGeneralBobekpointsout,thepossibilityforsubmittingadditionalinformationafterthedeadlineforsubmissionisconsideredexceptional,butnotnon‐existent.Thequestionthenbecomeswherepreciselytodrawtheline.Inhisview,theapproachoftheECJcouldperhapsbestbecapturedbyametaphor:theinformationanddocumentationsubmittedbyatendereruponthelapseofthesubmissiondeadlinerepresentsasnapshot.Onlytheinformationanddocumentationalreadycontainedinthatpicturemaybetakenintoaccountby the contracting authority. This does not prevent the contractingauthorityfromzoominginonanydetailsinthepicturethatwereabitblurryandrequestingan increase in thepicture’s resolution inorder tosee thedetailclearly.Butthebasicinformationmustalreadyhavebeen,albeit inlowresolution,intheoriginalsnapshot.Followingthatlogic,heconsideredthat a tenderer, in principle, cannot be permitted to demonstrate that itfulfilsthetechnicalandprofessionalrequirementsofatenderbyrelyingonthe experience of third parties not referred to prior to the submissiondeadline.Thatisamaterialchangeaffectingakeyelementoftheprocedure.(AdvocateGeneralBabek,2016)Thiscaseresolvesthequestionwhetheritis possible to attract additional subcontractors, but this question wouldrequiremoreindepthanalysissinceitispossibletochangethesubcontractorsincasetheexclusioncriteriaapplytothemaccordingtotheArticle42(7)ofPPLandthequestionofinformationaboutexperienceofthetendereralsoneedsadditionalanalysis.

Inthe‘ArchusandGama’caseatenderersentnewsamplesafterthesubmissiondeadlinestatingthattherehadbeenaninadvertentmistakeandthesampleannexedtotheirtenderdidnotconformtothetenderspecification.TheECJ


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referstothepreviouscase‐lawstatingthatingeneralnonegotiationsareallowed after the tender submission deadline, however, the principle ofequaltreatmentdoesnotprecludethecorrectionoramplificationofdetailsofatender,whereitisclearthattheyrequireclarificationorwhereitisaquestionofthecorrectionofobviousclericalerrors,subject,however,tothefulfilmentofcertainrequirements.Arequestsentbythecontractingauthoritytoatenderertosupplythedeclarationsanddocumentsrequiredcannot,inprinciple, have any other aim than the clarification of the tender or thecorrection of an obvious error vitiating the tender. It cannot, therefore,permita tenderergenerally tosupplydeclarationsanddocumentswhichwererequiredtobesent inaccordancewiththetenderspecificationandwhichwerenotsentwithinthetimelimitfortenderstobesubmitted.Norcan it result in the presentation by a tenderer of documents containingcorrectionswhereinrealitytheyconstituteanewtender.Inanyevent,theobligationwhichacontractingauthoritymayhaveundernational law,toinvitetendererstosubmitthedeclarationsanddocumentsrequiredwhichtheyhavenotsentwithinthetimelimitgivenforthesubmissionofoffers,or to correct those declarations and documents in the event of errors,cannotbepermittedexceptinsofarastheadditionsorcorrectionsmadetotheinitialtenderdonotresultinasubstantialamendmentofthattender.InthiscaseECJ left for thenationalcourt todecideonthe factualsituation.(ECJ,2017,C‐131/16).Thisjudgementagainappliestothetechnicalproposal.

In the ‘CasertanaCostruzioni’ case theECJevaluatedwhetherdirective isprecludingnationallegislationwhichexcludesthepossibilityforaneconomicoperator taking part in a tendering procedure to replace an auxiliaryundertakingthathaslostrequiredqualificationsafterthesubmissionofthetender and which results in the automatic exclusion of that operator.AccordingtotheECJthepossibilityafforded,unpredictably,exclusivelytoaconsortium of undertakings to replace a third‐party undertaking whichbelongstothatconsortiumandhas lostaqualificationthatisrequiredinordernottobeexcludedwouldamounttoasubstantialchangeofthetenderandtheveryidentityoftheconsortium.ThereforethatArticles47(2)and48(3)ofDirective2004/18mustbeinterpretedasnotprecludingnationallegislationwhichexcludesthepossibilityforaneconomicoperatortakingpartinatenderingproceduretoreplaceanauxiliaryundertakingthathaslost required qualifications after the submission of its tender andwhichresultsintheautomaticexclusionofthatoperator.(ECJ,2017,C‐223/16)

Inthe‘MA.T.I.SUD’caseintheevaluationprocesstheprocurementcommitteenotedthatthedeclarationofcommitmentrequired,designatingMA.T.I.SUD

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astheleadundertakingoftheAssociation,lackedthesignatureofitslegalrepresentative. Accordingly, the contracting authority requested that theAssociationremedythatirregularity,onpainofexclusionfromthetenderprocedure,andthatitpayafinancialpenaltyofEUR35000.ECJpointsoutthatit ispossibletosupplementorclarifythecertificatesanddocumentssubmittedpursuanttoArticles45to50ofDirective2004/18/EC.NeitherthatprovisionnoranyotherprovisionofDirective2004/18containsdetailsonhowsucharectificationmaytakeplaceorontheconditionstowhichitmay be subject. Member States may therefore decide to subject thatpossibilityofrectificationtothepaymentofafinancialpenalty.However,whentheyimplementthepossibilityprovidedforinArticle51ofDirective2004/18,theMemberStatesmustensurethattheydonotjeopardisetheattainment of the objectives pursuedby that directive or undermine theeffectivenessofitsprovisionsandotherrelevantprovisionsandprinciplesof EU law, particularly the principles of equal treatment and non‐discrimination, transparency and proportionality. Article 51 of Directive2004/18 cannot be interpreted as allowing the contracting authority toacceptanyrectificationofomissionswhich,asexpresslyprovidedforinthecontractdocumentation,hadtoleadtotheexclusionofthetenderer.BesidesECJ points out that in accordance with the principle of proportionality,whichconstitutesageneralprincipleofEUlawandwithwhichtheawardof contracts concluded in theMemberStatesmust comply, themeasuresadoptedby theMemberStatesmustnot gobeyondwhat isnecessary inordertoachievethatobjective.FurtherECJnotesthattheveryconceptofsubstantialirregularityinthiscasedoesnotappeartobecompatiblewithArticle 51 of Directive 2004/18 or with the requirements to which theclarificationofatenderinthecontextofapubliccontractfallingwithinthescope of Directive 2004/17 is subject. It follows that the mechanism ofassistanceincompilingthedocumentationprovidedforinPublicProcurementCode is not applicable if the tender submitted by a tenderer cannot berectifiedorclarifiedwithinthemeaningofthecase‐law,andthat,consequently,nopenaltycanbeimposedonthetenderersinsuchacase.Inthatregard,itshould be noted, first, that the setting in advance by the contractingauthorityoftheamountofthepenaltyinthecontractnoticedoesindeedfulfil the requirements arising from the principles of equal treatment oftenderers,transparencyandlegalcertainty,inthatitisobjectivelysuchasto avoid any arbitrary or discriminatory treatment of tenderers by thatcontracting authority. The fact remains, however, that the automaticapplicationofthepenaltythussetinadvance,irrespectiveofthenatureofthe rectificationsmade by the errant tenderer and therefore also in the


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absenceofanyspecificreasons,doesnotappeartobecompatiblewiththerequirementsderiving from theprincipleofproportionality. It shouldbenoted, secondly, that the imposition of a financial penalty is indeed anappropriatemeans of achieving the legitimateobjectivespursuedby theMemberStaterelatedtotheneedtoplaceresponsibilityonthetenderersinsubmittingtheirtendersandtooffsetthefinancialburdenthatanyregularisationrepresentsforthecontractingauthority.However,theamountsofpenaltiessuchasthosesetoutinthecontractnoticesbythecontractingauthoritiesinthetwocasesinthemainproceedingsappearmanifestlydisproportionateassuch,takingintoaccountthelimitsplacedontherectificationofatenderunderArticle51ofDirective2004/18andontheclarificationofatenderwithin the framework of Directive 2004/17. (ECJ, 2018, C‐523/16 andC‐536/16).ThesituationwithpenaltyisnotrelevantincaseofPPL,butitisinterestingoptiontolookatincaseofamendmentstoatender.

TheAdvocateGeneralCamposSanchez‐Bordona,regardingexistingcase‐law,concludesthata‘clarificationmadeonalimitedorspecifiedbasisoracorrection of obvious material errors’ is therefore accepted, but not a‘substantiveandsignificantamendmentoftheinitialbid,whichismoreakintothesubmissionofanewtender’.Theprovisionof‘documentswhicharenot included in the initial bid’ is also ruled out where their subsequentsubmissionwould,inreality,amounttothemakingofanewbid.Norwoulditbepossibletoremedyirregularities‘ifthecontractdocumentsrequiredprovisionofthemissingparticularsorinformation,onpainofexclusion[,since]itfallstothecontractingauthoritytocomplystrictlywiththecriteriawhichithasitselflaiddown’.(Sanchez‐Bordona,2017)Thesituationwithalack of signatures is difficult becausemany different documents requiresignaturesandthenewe‐procurementsystemhasbroughtnewchallengesregarding thisaspect.However, it is clear that thePPLdoesnotregulatesituationsliketheonesreviewedinthejudgement.

In the ‘VARandATM’ casearequirementwas included thataneconomicoperatorproposingequivalentsolutionstotherequirementsdefinedbythetechnical specifications shallmake thisknownbya separatedeclaration,whichitshallattachtoitstender.TheprovisionofDirective2004/17/ECdoesnotstateatwhatpointintimeorbywhatmeansthe‘equivalent’natureofaproductofferedbyatenderermustbeproved.Itfollowsthat,whenthecontracting authority makes use of the option available to it under thesecond sentence of Article 34(8) of that directive, it must require thetendererwhichwishestoavailitselfofthepossibilityoftenderingproductsequivalent to those defined by reference to a specific mark, origin or

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productiontoprovide,atthetimeofsubmissionofitstender,proofoftheequivalenceoftheproductsconcerned.Suchverificationandthepossibleadoptionofadecisionthatequivalencedoesnotexistcan,however, takeplaceonlyafterthetendershavebeenopened,whentheyareassessedbythecontractingentity,whichmeansthatthatentitymusthaveevidencethatenables it to assess whether and to what extent the tenders submittedsatisfytherequirementsinthetechnicalspecifications,asotherwiseitwillruntheriskthattheprincipleofequaltreatmentmaybeinfringedandthatthe tendering proceduremay be vitiated by an irregularity. As a result,although the contracting entity cannot permit tenderers to prove theequivalenceofthesolutionswhichtheyproposeaftertheyhavesubmittedtheirtenders,thatentityhasadiscretionindeterminingthemeansthatmaybe used by tenderers to prove such equivalence in their tenders. Thatdiscretionmust, however, be exercised in such away that themeans ofproofallowedbythecontractingentityactuallyenablethatentitytocarryoutameaningfulassessmentofthetenderssubmittedtoitanddonotgobeyondwhatisnecessaryinordertodoso,bypreventingthosemeansofproof from creating unjustified obstacles to the opening‐up of publicprocurementtocompetition,inbreachofArticle34(2)ofDirective2004/17.(ECJ,2018,C‐14/17)ThissituationisalsonotclearlyregulatedinthePPL.

PeriodregardingDirective2014/24/EU

Inthe‘Lavorgna’casetheECJhadtoanswerwhethertheprinciplesoflegalcertainty,equal treatmentand transparency, towhichDirective2014/24refers,mustbeinterpretedasprecludingnationallegislation,suchasthatatissueinthemainproceedings,accordingtowhichfailuretolistthelabourcosts separately, in a financial tender submitted in a procedure for theawardofpublicservices,resultsinthattenderbeingexcludedwithoutthepossibility of supplementing or amending the tendering documentation,evenwheretheobligationtolistthosecostsseparatelywasnotsetoutinthetenderdocuments.TheECJrefersagaintothesettledcase‐law,i.e.,first,theprincipleofequaltreatmentrequirestendererstobeaffordedequalityofopportunitywhenformulatingtheirtenders,whichthereforeimpliesthatthe tenders of all tenderers must be subject to the same conditions.Secondly,theobligationoftransparency,whichisitscorollary,isintendedto preclude any risk of favouritism or arbitrariness on the part of thecontracting authority. That obligation implies that all the conditions anddetailedrulesoftheawardproceduremustbedrawnupinaclear,preciseand unequivocalmanner in the contract notice or specifications so that,


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first, all reasonably informed tenderers exercising ordinary care canunderstandtheirexactsignificanceandinterprettheminthesamewayand,secondly,thecontractingauthorityisabletoascertainwhetherthetenderssubmittedsatisfy thecriteriaapplying to thecontract inquestion.So theanswer to the question is that the principles of legal certainty, equaltreatmentandtransparency,asreferredtoinDirective2014/24,mustbeinterpretedasmeaningthattheydonotprecludenationallegislation,suchasthatatissueinthemainproceedings,accordingtowhichfailuretolistthelabourcostsseparately,inafinancialtendersubmittedinaprocedurefor the award of public services, results in that tender being excludedwithout the possibility of supplementing or amending the tenderingdocumentation,evenwheretheobligationtolistthosecostsseparatelywasnotsetoutinthetenderdocuments,insofarasthatrequirementandthatpossibilityofexclusionareclearlyprovidedforbythenationallegislationonpublic procurement expressly referred to in those tender documents.However, if the provisions of the tender procedure do not enable thetenderers to list those costs in their financial tenders, the principles oftransparency and proportionalitymust be interpreted as not precludingtenderers frombeing allowed to regularise their position and to complywiththeobligationsundertherelevantnationallegislationwithinaperiodsetbythecontractingauthority.(ECJ,2019,C‐309/18)DuetothelaconicregulationofArticle41(8)ofthePPLthecontractingauthoritywouldhaveproblemstocometosimilarconclusionsinsuchasituation.

Conclusions

1. The ECJ has concluded and it has been incorporated in the publicprocurementregulationthatitispossibletoclarifyandsupplementtheinformationinthetender,iftheprinciplesofequaltreatmentoftenderersandtransparencyaremet.

2. The ECJ has provided general guidelines to conclude when theseprinciplesaremet,forexample,suchamendmentscannotinrealityleadtothesubmissionofanewtenderandarequestforclarificationmaynotappear unduly to have favoured or disadvantaged the tenderer ortenderers to which the request was addressed. However, in eachsituationadditionalaspectshasbeenevaluatedbytheECJ,forexample,whetherithasbeenclearfromthetenderdocumentsthattheinformationmustbesubmitted,whetherthedatawasavailablebeforetheapplication

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deadlineetc.Itisnotclearwhichoftheseaspectsshouldbeappliedineverysituationwhenthereisanerrorinatender.

3. ThePPLdoesnotcontainspecificaspectslistedinthecase‐lawreviewedandcouldnotbehelpfulinmanysituationsreviewedbytheECJ.However,thePPLregulatesaspectsnotincludedinthereviewedcase‐law,especiallyregardingdiscretionofthecontractingauthoritytoaskclarification.

4. Therearemanydifferentsituationswherethetendercouldhaveerrorsaswellasdifferentaspectsthatshouldbetakenintoaccountineachofthem,thereforeitischallengingtoconcludethe‘right’approachineachsituation.ThereviewedECJcase‐lawgivesonlypartialguidancethatisneededtoevaluatetheerrorsintendersandadditionalstudyisneededto givepracticaldirections that couldbeuseful forall situations thatoccurinpublicprocurement.

References

Literature

Arrowsmith,S.(1998).TheproblemofdiscussionswithtenderersundertheE.C.ProcurementDirectives:thecurrentlawandthecaseforreform.PublicProcurementLawReview,70,7(3)

Arrowsmith,S.(2014).TheLawofPublicandUtilitiesProcurement:RegulationintheEUandUK,Vol.1(3rded.).Sweet&Maxwell

Bovis,C.(2007).EUPublicProcurementLaw.UnitedKingdom:ElgarEuropeanLaw

Council (1989). Statement concerning Article 5 (4) of Directive 71/305/EEC. Retrieved20.02.2020.fromhttps://eur‐lex.europa.eu/legal‐content/EN/TXT/PDF/?uri=OJ:L:1989:210:FULL&from=EN

Council(1994).StatementconcerningArticle7(4)ofCouncilDirective93/37/EECof14June1993concerningthecoordinationofprocedures for theawardofpublicworkscontracts.Retrieved 20.02.2020. from https://op.europa.eu/en/publication‐detail/‐/publication/5a4fb076‐83f7‐452e‐a6db‐699355854a75/language‐en/format‐PDF/source‐search

Sanchez‐Graells, A. (2014). Exclusion, Qualitative Selection and Short‐listing in the NewPublicSectorProcurementDirective2014/24inLichère,F.,Caranta,R.Treumer,S.(Eds.)ModernisingPublicProcurementLaw:TheNewDirective.DJØFPublishing

Skrastin̦a,U.(2015).Publiskieiepirkumi:Piedāvājumaizvēleskritērijiunvērtēšanapubliskajāiepirkumā.Rı̄ga:BiznesaaugstskolaTurība

Legislation

Directive2004/18/ECoftheEuropeanParliamentandoftheCouncilof31March2004onthe coordination of procedures for the award of public works contracts, public supplycontractsandpublicservicecontracts.OfficialJournal,L134,30.4.2004,pp.114–240

Directive2014/24/EUoftheEuropeanParliamentandoftheCouncilof26February2014onpublicprocurementandrepealingDirective2004/18/EC.OfficialJournal,L94,28.3.2014,pp.65–242

PublicProcurementLawAdopted15.12.201.LatvijasVēstnesis,29.12.2016.,Nr.254.Lastamendments:05.12.2019.


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Court of Justice of the European Union. 22 June 1993. Commission of the EuropeanCommunitiesvKingdomofDenmark.CaseC‐243/89

Court of Justice of the European Union. 25 April 1996. Commission of the EuropeanCommunitiesvKingdomofBelgium.CaseC‐87/94

CourtofJusticeoftheEuropeanUnion.29March2012.SAGELVSlovenskoa.s.andOthersvÚradpreverejnéobstarávanie.CaseC‐599/10

Court of Justice of the European Union. 10 October 2013. Ministeriet for Forskning,InnovationogVideregåendeUddannelservManovaA/S.CaseC‐336/12

Courtof Justiceof theEuropeanUnion.6November2014.Cartieradell’AddaSpAvCEMAmbienteSpA.CaseC‐42/13

Court of Justice of the European Union. 7 April 2016. Partner Apelski Dariusz v ZarządOczyszczaniaMiasta.CaseC‐324/14

CourtofJusticeoftheEuropeanUnion.2June2016.PippoPizzovCRGTSrl.CaseC‐27/15

CourtofJusticeoftheEuropeanUnion.10November2016.CiclatSoc.Coop.vConsipSpAandAutoritàperlaVigilanzasuiContrattiPubblicidilavori,serviziefurniture.CaseC‐199/15

Courtof JusticeoftheEuropeanUnion.4May2017.Esaprojektsp.zo.o.vWojewództwoŁódzkie.CaseC‐387/14

CourtofJusticeoftheEuropeanUnion.11May2017.Archussp.zo.o.andGamaJacekLipikvPolskieGórnictwoNaftoweiGazownictwoS.A.CaseC‐131/16

Court of Justice of the EuropeanUnion. 14 September 2017. Casertana Costruzioni Srl vMinisterodelleInfrastruttureedeiTrasporti‐ProvveditoratoInterregionaleper leoperepubblichedellaCampania edelMolise andAziendaRegionaleCampanaper laDifesadelSuolo–A.R.CA.DI.S.CaseC‐223/16

CourtofJusticeoftheEuropeanUnion.28February2018.MA.T.I.SUDSpAvCentostazioniSpAandDuemmeSGRSpAvAssociazioneCassaNazionalediPrevidenzaeAssistenza infavoredeiRagionieriePeritiCommerciali(CNPR).JoinedcasesC‐523/16andC‐536/16

CourtofJusticeoftheEuropeanUnion.2May2019.LavorgnaSrlvComunediMontelanicoandOthers.CaseC‐309/18

OpinionofAdvocateGeneralTesauro,CaseC‐243/89,CourtofJusticeoftheEuropeanUnion,17November1992

OpinionofAdvocateGeneralBobek,CaseC‐387/14,CourtofJusticeoftheEuropeanUnion,24November2016

OpinionofAdvocateGeneralCamposSanches‐Bordona,JoinedCasesC‐523/16andC‐536/16,CourtofJusticeoftheEuropeanUnion,15November2017

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KOPSAVILKUMS

Pasaulespieredze:attiecībasstarpkomercbankukredītuunekonomiskoizaugsmi

DavitAslanishvili

Šajā pētījumā aplūkota problēma saistībā ar nesamērīgi liela mērogapanākumiem banku sektora attīstībā un lielākoties neveiksmīgu reālāsekonomikas nozares attīstību. Jāatzīmē, ka šī nevienlīdzība ir apsprieststematsmūsdienu ekonomiskajā literatūrā un šis pētījums irmēģinājumspaplašinātšoproblēmuundalītiesaridejāmstarptautiskajāszinātniskajāsaprindās. Galvenā pētījuma problēma ir banku sektora kredītportfeļa unkredīttirgus darbības ietekme uz valsts ekonomisko izaugsmi. Ņemot tovērā,irļotisvarīgiidentificēt,izpētītvalstsmakroekonomiskostabilizācijuunpaātrinātekonomiskoizaugsmi,analizētkredītutirgusfaktoruietekmesmehānismus uz ekonomisko izaugsmi. Secinājums, kas apkopo pētījumalielākodaļuunaptaujāsniegtosviedokļus,iršāds:noekonomiskāviedokļagalvenā banku funkcija ir palielināt līdzekļu finansēšanu/aizdevumu, kassavukārt ir nozīmīgākais elements investīciju pieauguma veicināšanāekonomikā.Tādējādivalstsizaugsmenoekonomiskāviedokļairatkarīganoinvestīcijupieauguma.Šobrīdbankusektorsiratbildīgsparto,vaitasmūsvedīsuzekonomiskuinercivaipaātrināsvalstsekonomiskoattīstībucaurefektīvuresursusadali.

SociālāsuzņēmējdarbībasiespējasLatvijaspašvaldībās

AinārsBrencis,IngaŠīna,IevaBrence

Līdz2018.gadamLatvijānavpastāvējusijuridiskāformatādasuzņēmējdarbībasregulēšanai,kurasmērķisnavpeļņasgūšana.LīdzartobezpeļņasorganizācijasLatvijābijaspiestasdarbotiesstrīdīgājuridiskajāstatusā.Uzņēmējsvarējaizvēlētiesvainukļūtparkomersantu,vaiarīnodarbotiesaruzņēmējdarbībucaur nevalstisku organizāciju, kas nav visai piemēroti uzņēmējdarbībai.Vietējās pašvaldības bija spiestas rīkoties līdzīgi kā uzņēmēji. Lai iegūtuautonomiju savām organizācijām, pašvaldības ir izveidojušas komerc‐uzņēmumus,kuriatbilstošiLatvijaslikumdošanaiirparedzētipeļņasgūšanai.Veidojāssituācija,kurāpašvaldība,kasaprioridarbojasuzņēmumalabā,nodibinotkomercuzņēmumu,cenšasgūtpeļņu–galvenokārtnosabiedrības.

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Šajā pētījumā, pielietojot ar dažādām pētniecības metodēm iegūto datutriangulāciju,izvērtētasvietējopašvaldībuiespējasuzsāktsociālouzņēmēj‐darbību, kuras tiesiskais regulējums Latvijā darbojas mazāk par gadu.Pētījumā izvērtētas Latvijas vietējo pašvaldību iespējas pārveidot esošāsorganizācijas,dibinātjaunussociālosuzņēmumusunuzticētsociālāsuzņēmēj‐darbībasfunkcijasprivātajāsektorādibinātajiemsociālajiemuzņēmumiem.

Ilgtspējaundigitalizācija:nacionālāsattīstībasdivpusējāsstratēģijasvadlīnijas

EugeneEteris

RakstamērķisirparādītglobāliEiropāveiktodarbībuattīstībuilgtspējasundigitalizācijasnodrošināšanā,kassniedzpamatuBaltijasvalstucentieniempilnveidottoekonomikaspārvaldībuatbilstošimodernajiemizaicinājumiem.

PētījumāatklātabūtībaEiropasinstitūcijudarbībai,transformējotBaltijasvalstuekonomiskoizaugsmiilgtspējīgākasundigitālaspolitikasvirzienā.Tādēļpētniecībasmetodēsgalvenokārt(betnetikai)iekļautasEiropasKomisijasrekomendācijasundarbībassaistībāar ilgtspējuundigitāloprogrammu/ekonomikuBaltijasvalstīs,piemēram,analizējotšovalstuviedāsspecializācijasstratēģijasuntoefektivitāti.

DažasBaltijasvalstisjauirpieņēmušasilgtspējasundigitālāsprogrammasplānusunstratēģijas.ŠiemodernāsizaugsmesaspektidefinēsESvalstuunBaltijasvalstuprogresīvoattīstībunākotnē.

Visbeidzot, pētījumā formulēti daži teorētiski un praktiski secinājumi unieteikumiBaltijasvalstuadaptācijaijaunaiilgtspējaiundigitālajaiparadigmaišovalstuperspektīvajāizaugsmē.

ITprofesionāļumotivēšanaunvadība:Latvijassituācija

SvetlanaGribanova,AnnaĀbeltiņa

RakstamērķisiraprakstītITprofesionāļumotivācijasstruktūruLatvijānodiviemskatupunktiem:nopašuITspeciālistuviedokļaunnoHRvadītājuviedokļa, kuri nodarbojas ar IT speciālistu piesaistīšanu un vadīšanu.Pētījumajautājumsir,kāuzlabotITprofesionāļuvadībasefektivitāti.PētījumateorētiskaispamatojumsbalstītsMakklelandavajadzību teorijā.Pētījumāizmantotateorētiskapieeja,kaskoncentrējasuzindivīdavajadzībuizpratniunņemvērācilvēkusasniegumuskāgalvenomotivējošofaktoru.Vadotiespēc šīs teorijas, lai motivētu darbinieku strādāt efektīvi un uzturētu tā

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atdeviuzņēmumam,nepieciešamssaprasttāneapmierinātāsvajadzībasunpiedāvātiespējastopastāvīgaiapmierināšanai.

Pētījumarezultātiparāda,kaITprofesionāļiircilvēkugrupa,kurādominēvajadzībapēcsasniegumiemunpiederības.Zināmāmērāpastāvvajadzībapēcvaras.Šīsprofesionālāsgrupasefektīvaivadībai,vadītājiemjāradataikomfortablidarbaapstākļi.Ērtidarbaapstākļiietverkontrolessamazināšanu,koncentrēšanosuzto,kocilvēkidara,nevis–kadunkātodara.Irsvarīginodrošinātļotiprecīzuinformācijuparprojektamērķiem,ierobežojumiem,posmiem un termiņiem un skaidri formulēt gaidas attiecībā uz darbaproduktivitātiuniegūtajiemrezultātiem,samazinātrutīnusaistībāaratskaitēm.

LietuvasreģionālāsdemokrātijasanalīzesaskaņāarEiropasvietējopašvaldībuhartaspantiem

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Nepietiekami adresētāmotivācijas problēma pašvaldību demokrātijā varkavēt iedzīvotāju tiešu iesaistīšanos sabiedrisko lietuvadībasprocesāunlēmumupieņemšanāpar sociālajiem,politiskajiem, kulturālajiem, ekono‐miskajiem un citiem pašvaldību jautājumiem. Pilsoņu tiesības piedalītiessabiedriskajāslietāsirdefinētashartaspreambulākāviensnofundamentāliemdemokrātijas principiem. Turklāt Lietuva ir ratificējusi Eiropas vietējopašvaldību hartu (1999), apņemoties ieviest tās noteikumus nacionālajātiesību sistēmā.Kā ar visiemEiropasPadomes daudzpusējiem līgumiem,pastāv noteikta uzraudzības sistēma pareizai vietējo pašvaldību hartasieviešanai,kurāviensnoinstitucionālajieminstrumentiemizpildesnodroši‐nāšanaiirneatkarīguekspertugrupa.

Līdz ar to pētījumamērķis ir noteikt Eiropas pašvaldības hartā ietvertoprincipu izpausmes līmeni Lietuvas nacionālajos likumos; atklāt Eiropasvietējopašvaldībuhartā ietvertoprincipu ietekmiuzLietuvaspašvaldībudemokrātiskajiemprocesiem;izvirzītrisinājumusLietuvaslikumdevējiemjautājumu analīzē identificētajām problēmām, lai uzlabotu nacionālotiesiskoregulējumu.Pētījumāizmantotasteorētiskās,vēsturiskās,empīriskās,salīdzinošāsunanalītiskāsmetodes.

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PretkorupcijasvidesattīstībaLietuvassabiedriskajāsektorā:labākāspraksespiemēriunpieredze

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Rakstāanalizētipriekšnoteikumipretkorupcijasvidesieviešanaisabiedriskāsektora organizācijā un demonstrēta Lietuvas labākā prakse šajā jomā.Korupcija kā multistrukturāls globāls fenomens negatīvi ietekmē labupārvaldību, sabiedrības uzticību sabiedriskā sektora organizācijām unnopietnikaitēšoorganizācijufunkcionēšanai.ViensnobūtiskākajiemLietuvasvaldībascentieniemirsamazinātkorupcijasapjomu,palielinātcaurredzamību,godīgumuunatklātībusabiedriskajāsektorā.

Šajāpētījumāmēģinātspierādīthipotēzi,kasabiedriskāsektoraorganizācijāmjāieņemaktīvalomakorupcijasapkarošanā,radotnelabvēlīguvidikorupcijasizplatībai.Šīpētījumamērķisirparādītpievienotovērtībupretkorupcijasvidesattīstīšanaisabiedriskajāsektorākāvienamnoefektīviempretkorupcijasinstrumentiem korupcijas pakāpes samazināšanai. Pētījuma rezultātiparāda,kanepietiektikaiarlikumdošanu,laiatrisinātukorupcijasproblēmas.Sabiedriskā sektora organizācijām parasti nav efektīvu pretkorupcijasinstrumentu, ar kuriem novērst un pārvaldīt dažādas korupcijas formas(kukuļdošanu,nepotismu,interešukonfliktuu.c.).Izvēlotieslabākopraksi,autorspiedāvāLietuvassabiedriskāsektoraorganizācijāmjaunuiniciatīvuattīstītpretkorupcijasvidi,kasvērstauzkorupcijasizpausmjuiespējamībassamazināšanu.

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Tiesībuuzdatupārnesamībupiemērošanasproblemātika

MartaKive,JānisGrasis

Raksta mērķis ir analizēt tiesību uz datu pārnesamību priekšrocības untrūkumus, kā arī aplūkot tās fizisko personas datu aizsardzības tiesiskāregulējuma attīstības kontekstā. Vispārīgā datu aizsardzības regula, kasstājās spēkā2018. gada25.maijāun ieviesa jaunu fiziskopersonasdatuaizsardzībastiesiskoregulējumuEiropasSavienībā,ietvēraarīvirknijaunu

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tiesību,tostarptiesībasuzdatupārnesamību.Tāsirdatusubjektatiesībassaņemt personas datus attiecībā uz sevi, kurus viņš sniedzis pārzinimstrukturētā, plaši izmantotā un mašīnlasāmā formātā, un minētos datusnosūtītcitampārzinimpienosacījuma,jatasiriespējams.

Tiesības uz datupārnesamību attiecas tikai uz personas datiem, kodatupārzinimiesniedzispatsdatusubjekts,turklāttāsirspēkātikaitad,jadatuapstrādesākotnējitikusipamatotaarlietotājapiekrišanuvaiarīuzlīgumapamata. Tas nozīmē, ka tiesības uz datu pārnesamību nav īstenojamasgadījumos,kaddatuapstrādenotiek,balstotiesuzcitutiesiskopamatu.

Tiesībuuzdatupārnesamībuietvarosdatusubjektivartiešipārraidītdatusnovienadatupārziņacitam,jatasirtehniskiiespējams.Regulānavprecizēts,konozīmē“tehniskiiespējams”.Formulējumsnorāda,katasirjārisinakatrākonkrētāgadījumāunjānodrošinadinamiskajēdziena“tehniskiiespējams”interpretācija.Tasirierobežots,joregulaneradapienākumudatupārziņiempieņemtvaiuzturētsaderīgasapstrādessistēmas.

BiheiviorālāsekonomikasperspektīvauzdarbāpieņemšanasunatlasespraksesnovērtējumuLatvijā

ArtursMons,VelgaVēvere

Šīpētījumamērķis irnovērtētpašreizējo cilvēkresursuvadībasevolūcijuLatvijā attiecībā uz darbinieku pieņemšanas un atlases praksi. Pētījumskoncentrējasuzorganizācijuizmantotajāmmetodēmatlasesprocesā,kadtāspieņemdarbāpersonāludažādosorganizācijaslīmeņos.Laipētītudarbāpieņemšanasunatlasesprocesus,pētījumaautoriizmantojavairākasempīriskāsmetodes.Pētījumstikaveiktsdivosposmos:(1)diskusijaarLatvijaspersonālaatlasesspeciālistiem(Delphimetode)un(2)kvantitatīvaispētījums,veiktsLatvijā.Pētījumajautājumibijasekojoši:kurasdarbāpieņemšanasmetodestiekizmantotastopārstāvētajāsorganizācijāsunkurasatlasesmetodestiekizmantotas to organizācijās? Lai iegūtu primāros datus, tika izveidotatiešsaistesaptaujasforma,kururespondentsvarējaaizpildītbezpalīdzības.Tika atlasīta 16 uzņēmumukopa no dažādām industrijāmLatvijā. Atlasetika veikta visu 2020. gada janvāri, un tās dati ir atspoguļoti rezultātos.Aptaujasrezultātidemonstrē,kaLatvijāizmantotāsdarbiniekuatlasesmetodespārākneatšķiras.Lielākārespondentudaļapieturaspietādāmtradicionālāmmetodēmkāpaneļintervijasunindividuālāsintervijas.

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AugstskolustudentuemocionālāsinteliģencesmērīšanaIndijā

B.ArulSenthil,D.Ravindran,S.A.SuryaKumar

Šajā rakstā apskatīta emocionālās inteliģences (EI) iezīme augstskolustudentos,izmantojotemocionālāsinteliģencesiezīmesīsāsformasanketu.Pētījumagalvenaismērķisirizpētītdažāduaugstskolustudentulabsajūtu,paškontroli, emocionalitāti un sabiedriskumu un identificēt atšķirībasstudentuEIattiecībāpret studentubakalauragrādu,ģimenes tipu,darbapieredzi, dzimto vietu un dzimumu. Aptaujā piedalījās MBA studenti nodažādām augstskolām Indijā, un tika ievākti dati no 141 respondenta.Pētnieki izmantoja T‐testu un vienvirziena dispersijas analīzi (ANOVA)mainīgopārbaudīšanai,labākaiizpratnei,izmantojotaprakstošostatistiku.Vairāki pētnieki pierādīja, ka emocionālā inteliģence sekmē veiksmīguvadībuneatkarīginojomas.Pētniekiuzskata,kastudenti,kuricenšasiegūtgrādu vadībā, reiz kļūs par biznesa līderiem. Līdz ar to EI ir nozīmīgabiznesastudentiem.Par līderuEIpublicētidaudzipētījumi,bet tikaidažipētījumi ir publicēti par biznesa studentu EI. Viens no šī pētījumarezultātiemparāda,kastudenti,kuriaugušidaļējiurbānāsteritorijās,izrādabūtiskasEIlabklājībasfaktoraatšķirības.

Ekoloģiskaisapvērsums–tendencesunperspektīvas

UdoE.Simonis

Pašreizējāsdraudīgāsvidestendencesnorādauzmilzīgiemizaicinājumiemvidespolitikānacionālā,reģionālāunglobālālīmenī.Laiuzlabotušosituāciju,nepieciešamsuzsāktfundamentāluekonomiskounsociālotransformāciju.Šādi procesi rada milzīgas politiskas problēmas. Rakstā analizēti četrivēsturiskipētījumi,kuros izskaidrotanepieciešamībapēcglobālāmvidespārmaiņāmunizpētītatransformējošuprocesuiespējamība.Transformācijakāradikālaspārmaiņasiruzvērtībuorientētsprocess.

Publiskāiepirkumapiedāvājumadokumentācijāizdarītogrozījumuproblemātika–EiropasSavienībastiesasperspektīva

UnaSkrastiņa,DžeinaGaile

Iepirkuma procesa laikā bieži var novērot, ka iesniegtie piedāvājumi irnepilnīgi, piemēram, nav iesniegti nepieciešamie dokumenti. Ņemot vērāpiedāvātās informācijas apjomu, pieļautās kļūdas ir dažādas un var būtsaistītasarpretendentakvalifikāciju,uztātehniskovaifinanšupiedāvājumu

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uncitiemaspektiem.Katrānošīmsituācijāmiepirkumukomisijaijāizvērtē,vai kļūdu iespējams izlabot vai arī jānoraida pretendents. Publiskāiepirkumalikumsnesaturdetalizētuunskaidrušādusituācijuregulējumu,līdz ar to līgumslēdzēju iestāžu lēmumibieži tiekapstrīdētiun atzīti parnepamatotiem.Tasirpamatojumspētījumaaktualitātei.Pētījumamērķisirapkopot un analizēt Eiropas Tiesas atzinumus, lai noteiktu, kādi tiesībuprincipiunapsvērumi jāņemvērāšādāssituācijāsunsniegtu ieteikumusturpmākai rīcībai Latvijā. Tika izmantotas aprakstošās, salīdzinošās unanalītiskās pētniecībasmetodes. Pētījuma rezultāti sniedz ierosinājumus,kādinosacījumibūtujāņemvērā,novērtējotpiedāvājumalabojumuiespēju.

Acta Prosperitatis

11ISSN 1691-6077


B.Arul Senthil, D. Ravindran, S.A.Surya Kumar

Udo E. Simonis

Una Skrastiņa, Džeina Gaile

MEASURING EMOTIONAL INTELLIGENCE AMONG BUSINESS SCHOOL STUDENTS IN INDIA

PROBLEMATICS OF AMENDMENTS MADE IN TENDER DOCUMENTS IN PUBLIC PROCUREMENT – THE PERSPECTIVE OF THE COURT OF JUSTICE OF THE EUROPEAN UNION

ECOLOGICAL TURN-AROUND – TRENDS AND PERSPECTIVES

Arturs Mons, Velga VevereBEHAVIORAL ECONOMICS PERSPECTIVE ON ASSESSMENT OF RECRUITMENT AND SELECTION PRACTICES IN LATVIA

Marta Kive, Jānis GrasisPROBLEMS OF APPLICATION OF THE RIGHT TO DATA PORTABILITY

Svetlana Gribanova, Anna Abeltina

Davit Aslanishvili

ANALYSIS OF LITHUANIAN REGIONAL DEMOCRACY ACCORDING TO THE ARTICLES OF EUROPEAN CHARTER OF LOCAL SELF-GOVERNMENT

WORLD EXPERIENCE: COMMERCIAL BANK CREDIT AND ECONOMIC GROWTH RELATIONSHIP

MOTIVATION TO WORK AND MANAGEMENT OF IT PROFESSIONALS: CASE OF LATVIA

Karolis Kaklys

THE DEVELOPMENT OF ANTI-CORRUPTION ENVIRONMENT IN LITHUANIAN PUBLIC SECTOR: BEST PRACTICE AND EXPERIENCE

Eugene EterisSUSTAINABILITY AND DIGITALIZATION: DOUBLE STRATEGY GUIDELINES IN NATIONAL DEVELOPMENT

Ainārs Brencis, Inga Šīna, Ieva BrenceSOCIAL ENTREPRENEURSHIP OPPORTUNITIES IN LATVIAN MUNICIPALITIES

Raimundas Kalesnykas


Acta Prosperitatis Nr. 11

ISSN 1691-6077Publishing house of Turiba University

Telephone: +371 67623521E-mail: [email protected]

Editor-in-Chief: Aldis Baumanis, Dr. paed., Turiba University, Latvia

Co-editor-in-Chief: Daina Vasilevska, Dr. sc.admin., Turiba University, Latvia

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Documents

Journal of Turiba University Acta Prosperitatis Nr. 11OF RECRUITMENT AND SELECTION PRACTICES IN LATVIA ..... 128 Arturs Mons, Velga Vevere ... students who take only the first steps