↑ ALTO ↑
Diparmento di Scienze Economiche, Aziendali, Matemache e Stasche “Bruno de Fine” Università degli studi di Trieste
Diparmento di Scienze Economiche Aziendali Matemache e Stasche
Università degli studi di Trieste
Impaginazione Gabriella Clabot
Proprietà letteraria riservata. I diritti di traduzione, memorizzazione elettronica, di riproduzione e di adattamento totale e parziale di questa pubblicazione, con qualsiasi mezzo (compresi i microfilm, le fotocopie e altro) sono riservati per tutti i paesi.
ISBN 978-88-8303-761-0 (print) ISBN 978-88-8303-762-7 (online)
EUT Edizioni Università di Trieste Via Weiss, 21 – 34128 Trieste http://eut.units.it https://www.facebook.com/EUTEdizioniUniversitaTrieste
This book has been produced with the financial assistance of the IPA Adriatic Cross-Border Cooperation Programme. The contents of this book are the sole responsibility of the PACINNO project partners and can under no circumstances be regarded as reflecting the position of the IPA Adriatic Cross-Border Cooperation Programme Authorities.
La versione online ad accesso aperto di questo volume è scaricabile presso l’archivio OpenstarTs dell’Università di Trieste al link: https://www.openstarts.units.it/dspace/handle/10077/13037
Innovation in the Adriatic Region
edited by Cozza, Claudio Harirchi, Gouya Markovi unko, Ana
EUT EDIZIONI UNIVERSITÀ DI TRIESTE
5
7 Introduction – Closing the innovation gap in the Adriatic Region: the legacy of PACINNO TRACOGNA, ANDREA
15 Chapter 1 – Methodology IEK, FILIP; MARKOVI UNKO, ANA; GERBIN, ANI
25 Chapter 2 – Albania DEMO, ERVIN; DIBRA, SIDITA; JAUPI, FATMA; GRABOVA , PERSETA;
BESHKU, BLERINA
43 Chapter 3 – Bosnia and Herzegovina ARSLANAGI-KALAJDI, MAJA; TURULJA, LEJLA
61 Chapter 4 – Croatia IEK FILIP; BEGONJA, MARTA; MARKOVI UNKO, ANA; GERBIN, ANI
81 Chapter 5 – Greece PATELI, ADA; MIKALEF, PATRICK; MYLONAS, PHIVOS; VARITIMIDIS, CHRISTOS;
KERMANIDIS, KATIA; ANDRONIKOS, THEODOROS
101 Chapter 6 – Italy BALBONI, BERNARDO; BORTOLUZZI, GUIDO; COZZA, CLAUDIO;
HARIRCHI, GOUYA; PUSTOVRH, ALEŠ
123 Chapter 7 – Montenegro KARADI, VESNA; DROBNJAK, RADIVOJE; BOŠKOVI, VELIBOR
147 Chapter 8 – Serbia JANEV, VALENTINA; PAUNOVI, DEJAN; JOVANOVI-VASOVI, JELENA;
OREVI, SRAN; VRANEŠ, SANJA
167 Chapter 9 – Slovenia UPI, IVAN; ERNE, MATEJ; RANGUS, KAJA; TOMAT, LUKA; ALEKSI, DARIJA;
BOGILOVI, SABINA
189 Chapter 10 – Innovation policies in the Adriatic Region CAPELLARI, SAVERIA; COZZA, CLAUDIO
Index
7
Introduction Closing the innovation gap in the Adriatic Region: the legacy of PACINNO
the adriatic ionian region and its long-standing problems
In the last few years, the European Union has been considering the Adriatic Ionian
Region as a target area for support actions and assistance, with the main goal being
to assure its economic and political stability, stabilise democracy levels, and devel-
op sustainable economic growth and employment.
The Region is affected by severe structural economic problems and obstacles,
i.e., poor infrastructure, weak research funding and weak innovation framework
conditions, scarce connections between academia and business, fragmentation
and limited size of domestic markets, and nonhomogeneous regulatory regimes.
Such contextual factors result in scarce entrepreneurial activity in key industries,
low rates of new venture creation (particularly in science and technology-based
sectors), limited business size, small scale of investments, and firms’ lower inno-
vation attitude.
Overall, the Adriatic Ionian countries appear to be stuck in their position due
to their relative closure to outside influences, and their limited capacity to absorb
new knowledge coming from the external (scientific and business) world. The ex-
treme political fragmentation is also unhelpful and the significant cultural differ-
ANDREA TRACOGNA University of Trieste, PACINNO Project Leader
IN TR
O D
U CT
IO N
ences also create obstacles. Despite the significant past accomplishments of some
localised contexts (e.g., North-east Italy and Slovenia), the Adriatic Ionian Region
as a whole suffers from a severe lack of competitiveness, which can eventually –
if not appropriately addressed - undermine its economic growth and integration
at the European level and maintain instability in, and migration from, the EU’s
south-eastern neighbourhood.
the adriatic ionian region as an innovation ecosystem
One of the main characteristics of innovation today is its tendency to trespass the
boundaries of single companies or institutions, to take place across sectors, indus-
tries and countries, and to be fed by and produce streams of knowledge that circu-
late rapidly from localised areas to the global arena.
It has, then, just been natural for us to conceive of the Adriatic and Ionian area
as potentially a single innovation macro-system. Indeed, the presence in the area of
both Member and non-Member States offers the possibility to explore the poten-
tial for effective transfer of policies, actions, and practices from different groups of
countries. In particular, there are clusters of innovation where advanced practices
and policies of innovation management at the macro and micro level have already
been implemented (such as North-east Italy and Slovenia) and which can facilitate
the transfer of best practices to relatively less developed areas.
With reference to research and innovation, the Adriatic Ionian area is character-
ised by low levels of investment and the lack of competitiveness and technological
capacity of SMEs, which are mostly oriented towards domestic markets. With the
aim of opening markets to more competitive and innovative models, especially to
face the effects of the current economic crisis, it seems necessary to develop new
policies that foster research and innovation and that give priority to investments in
firms directly linked to research and innovation.
Cooperation schemes between national and regional governments, business
sectors and universities, technological institutes, technological parks/business in-
cubators and research institutes need to be supported, while systemic cooperation
between research and private/public companies should be reinforced. Supporting
structures such as technology transfer offices and cluster systems have to improve
technology cooperation and know-how between SMEs. However, governments’ ca-
pabilities to effectively conceive and steer innovation ecosystems are limited.
9INTRODUCTION
pacinno: its mission and approach
PACINNO considers innovation as an open process that crosses businesses, coun-
tries and industry borders. This justifies our interest in exploring innovation eco-
systems, in understanding and leveraging on the roles of different actors, and in
the main determinants of innovative performance at national and regional levels.
Our main aim has been to carry out precise actions/policies in favour of the project
target groups, and who are as follows:
1. Established and new SMEs, operating both in science-based, high-tech settings
and in traditional sectors. They are the natural beneficiaries of technology trans-
fer activities carried out by the research organisations and represent the demand
side of innovation.
2. Highly skilled researchers that have the potential to become the initiators of
high-tech start-up companies and who will receive business and entrepreneurial
support services.
3. Public and private institutions whose mission is to support innovation and tech-
nology-based start-up ventures. They include incubators, accelerators, clusters
and technology transfer offices but also political bodies such as municipalities,
provinces, administrative regions, and national governments in charge of set-
ting the political agenda for innovation and economic development.
PACINNO has been a collaboration platform that connects into a single, regional in-
novation system the academic and research institutions, policymakers and innova-
tive companies of eight countries belonging to the Adriatic Ionian Region (Albania,
Bosnia-Herzegovina, Croatia, Greece, Italy, Montenegro, Serbia, Slovenia). Thus,
PACINNO has aimed at overcoming the main obstacles and barriers to the econom-
ic development of the Adriatic Ionian countries, fostering the competitiveness of
their minor firms (both in high-tech fields and traditional industries), and promot-
ing the creation of innovative start-ups. The aim of the project has been to leverage
on the proactive role of universities and research organisations in boosting innova-
tion in the Region. In particular, the knowledge emanating from the academic re-
search can engender actions that foster an innovative ecosystem and support the
cross-border transfer of best practices and innovative competences throughout the
Adriatic Ionian Region. PACINNO has confirmed that there is innovation potential
in the Adriatic Region, particularly in the universities-business-civic society helix.
10
this book: mapping the adriatic ionian innovation system and policies
Various editions of the Innovation Union Scoreboard testify to the existence and
persistence of a strong innovation gap in the Adriatic Ionian area is . The Region’s
Member States (Italy, Greece, Slovenia and Croatia) rank below the EU average, with
only Slovenia entering the category of “innovation followers”. Only recently, Serbia
has been included in the group of “moderate innovators”, while no evidence is pro-
vided on the other countries of the area: Bosnia and Herzegovina, Albania, Monte-
negro. These countries appear in another composite indicator: the Global Innovation
Index (GII). In the 2015 edition, Albania was given a score of 0.39 (the maximum is 1
= Switzerland), while Bosnia and Herzegovina got 0.44. Based on the same indica-
tor, Montenegro is performing better than Serbia and Greece.
To get a more granular view of both the innovation gaps and of the potential
of the Region, PACINNO has carried out a comprehensive mapping of innovation
systems in the Adriatic Ionian area by collecting a wealth of indicators from across
ten different dimensions. This mapping tool (http://www.adriaticinnovationmap.
eu) mostly uses secondary data – often directly from the Eurostat, or other sources
such as the GII – complementing them with specific indicators on the three Adriatic
countries for which they are usually missing: Bosnia and Herzegovina, Albania and
Montenegro.
The maps identify a strong gap in the area concerning the human resources em-
ployed in science and technology. Only Slovenia ranks better than the EU average in
terms of R&D employees and researchers per active population. However, in abso-
lute values, this means just 21,000 and 9,000 persons, respectively. The real gap,
for all countries, resides in the very limited absolute number of people involved in
the R&D process: only 800 researchers are active in Albania and 400 in Montenegro.
Such a gap, in terms of talents and skills, is also reflected in the low scientific out-
put of the Region. For instance, recent figures from the World Intellectual Property
Organization (WIPO) report just four patent filings for Albania and 15 for Bosnia and
Herzegovina and the SCImago Journal Rank reports very limited numbers of publi-
cations from Albania, Bosnia and Herzegovina and Montenegro.
However, significant potential for the area resides in the trends for highly skilled
human resources and higher education that have developed in recent years. For in-
stance, all countries in the area have a relatively good number of tertiary-educated
people, as well as a growing number of PhDs. New PhD graduates could easily in-
crease the bulk of prospective research and innovation actors in the area.
Connected to this, another strong gap emerges, as represented by the very lim-
ited private investments in innovation (R&D expenditures) in the area. Public in-
11INTRODUCTION
vestment in R&D is still very limited, although, as a share of GDP, Slovenia performs
better than the EU average; Croatia, Greece and Serbia also show values very close
to the EU average. Also, there are few newly established companies, despite the
relatively promising environment. Indeed, the World Bank’s Doing Business figures
tell of an entire Adriatic Ionian area performing well in crucial indicators such as the
“ease of starting a business” and “ease of protecting investors”.
PACINNO has generated new empirical evidence on innovation not only at the
macro-level, but also at the firm level. More than 1,000 questionnaires have been
collected from SMEs in the Adriatic area, aimed at detailing their innovation be-
haviour. The questionnaires are largely comparable to the Community Innovation
Survey (CIS) and provide very interesting insights. With reference to the link be-
tween innovation performance and inter-firm collaboration, Italian SMEs collab-
orating with partners from other Adriatic Ionian countries have significantly im-
proved their exporting performance. On the other hand, for non-Italian firms, both
domestic collaboration and intra-EU collaboration are significantly enhancing their
innovation performances.
As regards R&D expenses, the findings show that inward and external R&D ex-
penditures, analysed as a percentage of sales turnover, vary significantly across
industries. Overall, there is a tendency for both high-tech and low-tech firms to
allocate a limited amount of resources to R&D, both inward and external, as com-
pared to the European average (above 20% of sales turnover (CIS, 2012)), with only
Slovenia, Bosnia-Herzegovina, Serbia, and Albania overcoming the threshold of the
10% of inward R&D.
As regards innovation performance, the high-tech firms in the Region show a sig-
nificant propensity to introduce new products, particularly in Bosnia-Herzegovina,
Albania, Italy, and Slovenia, while the introduction of innovative products is less fre-
quent for the high-tech firms of Greece, Croatia and Montenegro. The data also reveal
that the firms’ innovation levels are not always related to the market performance.
Indeed, on the one hand, several highly innovative firms in the Region have only
achieved a narrow market scope; on the other hand, many low-tech firms - particular-
ly in those countries characterised by traditional manufacturing sectors such as Italy
and Greece - have been able to significantly expand their markets and sustain growth.
The adoption of a single innovation strategy for the Adriatic Ionian Region
should transcend the current fragmentation of policies at the national level and
leverage on the effective transfer and adoption of the Region’s best practices. In-
deed, in many cases, different national (or even sub-national) innovation policies
address similar problems with very different tools (innovation strategies, laws and
regulations). Very limited coordination of these tools exists, while the EU is asking
for more synergies between Horizon 2020 and structural funds.
12
A goal of PACINNO has been to develop a comprehensive taxonomy of the inno-
vation policies adopted at both national and sub-national levels. Another goal has
been the identification of best practices that could easily be replicated in the area.
Indeed, rather than using world-class experiences as a benchmark, it is believed
that a set of “regional best practices” should become a reference point for promot-
ing innovation in the Region. Evidence coming from the PACINNO project – includ-
ing interviews with policymakers from all countries – suggests that a bottom-up
approach should be followed for both listing the existing policies in the area and
developing a meaningful taxonomy.
what next?
We believe that the potential for innovation and economic development in the Adri-
atic Ionian Region lies in a more effective connection between the academic and
research institutions, the small and medium sized enterprises (SMEs) and the policy
makers, in both traditional and high technology sectors. The establishment of an
effective innovation ecosystem at the Adriatic Ionian level should follow the lines
traced below:
• Towards an Adriatic Ionian network of research centres. After hav-
ing successfully set up a platform for trans-academic cooperation in innovation, and
having carried out several initiatives aimed at promoting innovation at the micro
(firm) level, the challenge of the PACINNO partnership is to assure its sustainability
after the formal expiration of the project (November, 2016). In this respect, Netval,
the Italian association for the valorisation of results from public research, is consid-
ered to be the best practice of reference. Its members include 54 Italian universi-
ties, and 5 public research organisations, representing 66.3% of Italian universities,
75.7% of Italian students and 80.4% of university professors. Founded in 2002,
Netval’s mission is to be the “research interface” for Ministries and local admin-
istrations, industrial associations and industries, venture capitalists and financial
bodies, and to promote the role of public research in innovation processes. Netval
has contributed to the homogenisation of technology transfer (TT) protocols and
procedures among universities and to the emergence of standards in the collabora-
tion with industry. The association has been playing a pioneering role in building TT
indicators and is currently collaborating with Italian ministries about these topics.
• Targeting traditional industries and SMEs. The experience of PACINNO
has demonstrated that the promotion of innovation in the Adriatic Ionian coun-
tries must capitalise on the historical industrial and economic specialisation of the
13INTRODUCTION
Region, rather than just focusing on the promotion of new sectors and entrepre-
neurial activities. We firmly believe that the Region’s innovation potential in tra-
ditional industries is not lower than that in the high-tech industries. Furthermore,
no significant innovation improvement can overlook the SMEs. In this respect, our
aim is to find a balance between the Smart Specialization Strategies defined at the
national-level and the unexploited potential of the thick fabric of service and man-
ufacturing activities of the Region. Innovation policy-makers should not disregard
key sectors such as agriculture, agro-food, tourism, and the blue economy. Also,
SMEs’ adoption of high-impact enabling technologies (such as digital technologies
and new manufacturing techniques) should also be promoted and incentivised in
the traditional industries.
• Linking innovation and cluster policies. From our perspective, innova-
tion policies must necessarily be linked to cluster policies. Our interest in the cluster
perspective is not only linked to its analytical potential, but mainly to its value as a
planning tool for governments, policy makers, and public institutions. In our vision,
the role of such innovation actors should be that of “entrepreneurial” institutions or
“meta-organisers” of the clusters, whose job is that of defining the roles and func-
tions of the other private actors, establishing rules of conduct, substituting absent
actors or accelerating the replacement of those inadequate at the performance of
tasks assigned, stimulating dialogue and encouraging relational dynamics, build-
ing the necessary ties to permit the development of collaborative processes of in-
novation, and the generation of new knowledge and new competitive behaviours.
Clusters also represent potential bridges to the global domains. Indeed, firms from
the Adriatic Ionian Region should exploit both the highly localised knowledge and
the external knowledge available internationally. If on the one hand, the best way
to access local knowledge is to work closely with those who possess it (local sup-
pliers, employees, customers, etc.), on the other hand, companies should have the
capacity and capabilities for developing and exploiting relationships outside of the
Region, using the opportunities offered by globalisation. This is particularly import-
ant in the Adriatic Ionian Region, where both national and sub-national differenc-
es impact on the available knowledge at the local level, which is not sufficient to
achieve world-class level innovation performances. Thus, companies of the Region
must relate to external actors and contexts, where access to more advanced forms
of knowledge, or even an active participation in their creation, is possible.
15
Y
The main goal of the PACINNO project is to establish a platform for cooperation in
research and innovation on the level of the Adriatic Region, with the aim of over-
coming the main inhibitors to economic development. To this end, it is of crucial
importance to fully understand the factors that enable and inhibit the growth and
development of an innovation-friendly climate in the Region. In order to address
this issue, all eight countries of the Region conducted a micro, meso and macro-lev-
el analysis of innovation in their respective countries. In-depth micro-level research
has been conducted in order to fully grasp individual perspectives on innovation.
Furthermore, to understand organizational perspective of innovation, meso-level
research was conducted, which included two research methods: survey and action
research. Finally, in order to understand macro levels of innovation in the Adriatic
Region countries, two types of data were utilised: quantitative and qualitative.
Moreover, it is important to highlight that this book is a result of several coun-
try-level analyses that were collected in the form of a report. Therefore, the content
is unified and follows the same structure for all eight countries of the Region.
IEK FILIP; MARKOVI UNKO, ANA; GERBIN, ANI MEDRI, University of Rijeka, Faculty of Medicine
Chapter 1 Methodology
1.1 macro level research
One of the main outputs of the macro level analysis on the regional level is the
creation of the Adriatic Innovation Map. In order to obtain more information on this
please visit the Adriatic Innovation Map web site: www.adriaticinnovationmap.eu.
In the PACINNO project, the macroeconomic analysis of innovation enablers and
inhibitors was conducted from both the qualitative and the quantitative perspec-
tives. The quantitative analysis was used to identify and classify the macro-level
enablers and inhibitors.
1.1.1 macro quantitative analysis
Following the review of various empirical studies on national and regional innova-
tion systems and screening of numerous international (EUROSTAT, World Bank,
Total Economy Database, Innovation Union Scoreboard, OECD, Global Innovation In-
dex, EU CORDIS, eCORDA, Global Entrepreneurship Monitor, SCImago) and national
databases, a total of 226 innovation indicators, which can be viewed as enablers or
inhibitors, were pre-selected and grouped into ten categories or “dimensions”. The
data were collected by all project partners during the period from July to November
2014, and were again revised and updated in October 2015.
However, it must be noted that a significant amount of data could not be col-
lected, especially for the non-EU countries of the Adriatic Region, due to their
non-availability, even from local statistics offices. In order to tackle this problem,
the following selection procedure was applied: (1) if there were more than two coun-
tries’ data missing for any of the observed years per variable, the variable was disre-
garded; (2) if there was a minimum of one year of observation with sufficient data
(with not more than two missing), the variable was considered for analysis. This
process resulted in 33 indicators selected for the analysis, with the data referring
to the period from 2011 until 2014. Table 1.1 summarises the macro-level innovation
study dimensions and relevant indicators.
Finally, due to space limitations, for the purposes of this book we have considered
a total of six indicators for the analysis: GDP per capita (economic data), the num-
ber of new PhD graduates (human resources), the total number of students/tertiary
education participation (education system), government expenditure on R&D in the
country (public sector), business expenditure on R&D in the country (private sector)
and the number of SCImago scientific journal articles (scientific output).1
1 A complete list of indicators that were included in the analysis can be found in the extended version of the 6.1 report available at the www.pacinno.eu.
171. METHODOLOGY
No. Dimension Indicators
(in EUR)
(% of active population)
(% of active population)
4 Public sector Government expenditure on R&D in the country
(% of GDP)
5 Private sector Business expenditure on R&D in the country
(% of GDP)
(% of active population)
The dimension of economic data measures some key indicators of the overall na-
tional economic situation and performance. The second dimension is oriented to-
wards human resources, which play a critical role in the innovation process, as the
competitive advantage built on human resources is not easily imitable. The educa-
tion system is considered to play a central role in building innovation capacity, serv-
ing as a vehicle for transferring knowledge and earning competences. In the fourth
dimension, the analysis focuses on several indicators of public sector commitment
to the generation of new ideas. The fifth dimension represents the private sector,
which is considered to be an engine of economic growth and job creation because
of the constant upgrading and adjustments that private enterprises have to make
in order to stay competitive, thus incorporating innovation and new technologies.
Closely related to the innovation capacity is the scientific output, which is also used
as an indicator of a country’s innovation performance.
The data were analysed using descriptive statistics. Considering that it was
not always possible to compare the data by the same year, the arithmetic mean
value of the last three available years of observation was calculated for every se-
lected variable.
2 For more information on innovation system dimensions and indicators see PACINNO 6.1 Report on macro enablers and inhibitors available at www.pacinno.eu.
18
1.1.2 innovation policies mapping
In order to get a perspective on innovation policies, partners performed a search of
the ERAWATCH webpages and reviewed the documents related to their countries.
Based on the obtained information, a list of R&D and innovation policies for the
period from 2007-2013 (coincident with the FP7 period) was created.
The second step, after the identification and description of institutions respon-
sible for innovation policies, was the identification and description of particular
innovation policies. This was also done through desk research of laws/regulations
promoted by the identified policy making institutions. Researchers were encour-
aged to read every document carefully or even consult with the responsible bodies
if necessary.
The final taxonomy of policies was developed by the joint efforts of the consor-
tium and included the following variables:
1. Category in the taxonomy (further divided into direct (various grants) or indirect
(various incentives) support:
3. Responsible body
4. Time span
7. Best practice example (yes/no)
1.1.3 interviews
In order to get a deeper insight into the innovation system and validate the results of
the quantitative analysis, qualitative, semi-structured interviews with key respon-
dents were conducted. The overall goal of the interviews was to identify policies,
measures and instruments, which were evaluated as best practices or innovation
enablers. Semi-structured interviews were chosen as a method for its flexibility,
which enables the interviewer to pursue unexpected paths introduced by the inter-
viewee and to encourage discussion by probing (Neergaard & Ulhoi, 2007). At the
191. METHODOLOGY
same time, it is important to have some structure in order to enable comparison
between countries. The interviews were conducted to the point of saturation, where
additional interviews do not contribute to findings by giving us some new insights
(Kvale, 1996).
Before conducting the rest of the interviews, researchers from every participat-
ing country conducted two pilot interviews in order to test the clarity and appro-
priateness of the whole interview process. An interview guide was used to lead the
researchers, which was prepared on the basis of the literature review and various
reports on innovation systems and policies. The interview was divided into two
main sections. The first section was oriented toward the general overview of inno-
vation measures, instruments and actors, and the second focused on best practice
examples of innovation policies. The interviews were conducted from June until
October 2015.
SAMPLE SELECTION
For the qualitative interviews, respondents were selected using the reference-based
method. This means that the potential respondents were selected on the basis
of their specific position and knowledge on the subject. In addition to the refer-
ence-based method, the snowball (or chain sampling) method was used. The re-
spondents were asked to identify other relevant respondents who were then select-
ed based on their relevance to the research (Patton, 1990).
On the level of the Adriatic Region, a total of 50 interviews were conducted. The
first contact with the respondent was made via e-mail which explained the purpose
of the research, why the respondents were chosen, the researcher’s affiliation and
the general aims of the project. In addition, an invitation letter was attached that
further explained the subject of the interview and its contents.
The final sample consisted of four main groups of respondents: entrepreneurs,
policy makers, academics and intermediaries.
DATA COLLECTION AND ANALYSIS
Face-to-face interviews were used to collect the data with both sides signing the
consent form (Kvale, 1996; Yin, 2011). The consent form contained information
about the interview, its structure and guaranteed confidentiality. Anonymity was
also ensured by coding the respondents’ names and affiliations in all of the inter-
view-related materials. The research team audio-recorded the interviews and later
extracted written summaries from the recorded material, which served as a basis
for data analysis.
Overall, the interviews lasted for 2.743 minutes . The interviews were conducted
with two researchers always present, whenever possible. One was responsible for
20
guiding the interview and the other for taking notes and making sure that the struc-
ture was followed and every topic covered.
The ad hoc creation of meaning method was used for the interview analysis
(Kvale, 1996). This method implies that the researchers were free to choose the
analysis technique depending on the research phase, level of analysis and other
factors. Since the respondents came from different contexts and had different ap-
proaches to the same phenomenon, this method was estimated as the most appro-
priate for the analysis.
The data analysis was done using the Atlas.ti software. It was used to assign
codes, code families and themes to the audio recordings and transcribed summa-
ries. Code families were designed according to the interview structure and were later
accompanied by specific codes assigned to them according to the questions from
the interview structure.
1.2 meso level research3
In order to study the meso-foundations of innovation in the Adriatic Region we have
conducted a survey.
1.2.1 survey4
The Community Innovation Survey (CIS) is commonly used as the most compre-
hensive source of data for the analysis of innovation at the European level. CIS is
formed as a complex of several different surveys that are conducted by the national
statistics offices in Europe. Since this tool represents a unified research instrument,
it enables direct comparisons of countries, sectors or regions. The CIS survey is also
the main source of data for the Innovation Union Scoreboard (IUS). The IUS serves
as a main tool for the European Commission to assess the innovation performance
of the EU member countries.
Regardless of its comprehensiveness, the IUS still does not cover many coun-
tries of the Adriatic Region. In particular, it partially covers Serbia, but it does not
cover Bosnia and Herzegovina, Montenegro or Albania. In order to fill this gap, the
intention of the PACINNO research team was to use a comparable instrument rely-
ing heavily on the CIS structure. For the purpose of the PACINNO study, the ques-
3 For more information regarding the meso level analysis see PACINNO 4.1 Report on micro founda- tions of innovation (survey on innovative companies) available at www.pacinno.eu.
4 For more information visit www.pacinno.eu.
211. METHODOLOGY
tionnaire was developed partially using the CIS methodology and adding additional
questions derived from the academic literature.
The final version of the questionnaire was comprised of 12 sections with the
focus areas presented in Table 1.2.
After the first English version of the questionnaire was completed, researchers
applied the back translating method, which refers to translating the questionnaire
into the local languages and back into English, all using different translators, fol-
lowed by correction of irregularities.
The final version of the questionnaire was posted on the Limesurvey (www.
limesurvey.com) platform, hosted by the School of Economics and Business, Sara-
jevo (WP4 lead partner).
The survey was conducted between July 2014 and January 2015 and most ques-
tions refer to the period from 2011- 2013. The results were interpreted using descrip-
tive statistics.
Section Focus
1 General information about the enterprise including its NUTS, main activity and NACE, and market presence (national, Adriatic Region and above)
2 Product (goods or services) innovation in terms of introduction of new or significantly improved goods or services, both new to the market and new to the firm
3 Process innovation of firms, defining process innovation as a new or significantly improved production process, distribution method or supporting activity
4 Factors hampering product and process innovation activities
5 Implementation of in-house R&D, external R&D and the level of spending on those activities
6 Sources of information and cooperation for product and process innovation and cooperation between firms and their potential partners
7 Organisational innovation
9 Self-reported performance measure (compared to the most direct competitor)
10 Firmographic data
11 Social innovation
12 Market orientation
1.2.2 sampling and data
A stratified random sampling method was used in all countries of the Adriatic Re-
gion. This implies selecting subsets of the overall population of micro, small and
medium firms and then randomly selecting a sample from those subsets. In the
case of the questionnaires, subsets were selected from the innovative industries
in each country. Researchers from each country decided upon the appropriate in-
dustry. For some countries, official secondary data on the most innovative indus-
tries existed, while for some they did not and the decision was made based on prior
qualitative research and assessment. In case this described sampling method was
not technically and objectively viable in a country, researchers were free to select
another sampling method, trying to take into account the general criteria.
Following the distribution of the survey, a total of 1.165 responses were selected
for analysis based on a 70% completion rate (cut-off criteria).
1.2.3 limitations
Although all the PACINNO project partners carefully followed the sampling and data
collection procedures defined at the consortium level, alternative approaches had to
be taken in some countries, which was mostly due to the absence of adequate official
business registries. Therefore, some caution should be exercised in interpreting the
results for the whole Adriatic Region, taking into account the varieties of the samples.
1.3 micro level research5
In-depth micro-level research was used in order to efficiently grasp individual per-
spectives on innovation.
The initial plan set out in the project proposal included the analysis of 16 firms,
2 per participant country. Since 20 firms were ultimately analysed, the consortium
exceeded the project plan by 25% in terms of outputs. Quantitative data were collect-
ed on the level of individual employees. Statistical inference was analysed via SPSS
20 software. The research was conducted using the questionnaire instrument, which
contained 14 sections and was translated using a back-translating method. The ques-
tionnaire was distributed to respondents during November and December 2014.
5 For more information regarding the micro level analysis see PACINNO 4.2 Report on micro founda- tions of Innovation (in-depth multilevel analysis) available at www.pacinno.eu
231. METHODOLOGY
Table 1.3 below presents the measured concepts in the research on individu-
al-level innovativeness.
The data were collected from the employees for the individual level analysis, but
the questionnaire also included questions about their group/team/unit belonging.
Each project partner made efforts to find suitable innovative SMEs that agreed to
participate in the research. The questionnaires were distributed to their employees
online or in paper format. The final database comprised of 8 countries, 20 firms, 73
groups and 787 individual cases.
Table 1.3 – In-depth micro-level analysis: measured concepts from the individual-level innovativeness model
Section Focus
1. Kvale, S. (1996). Interviews: An introduction to qualitative research interviewing.
Thousand Oaks, California: Sage Publications.
2. Neergaard, H., & Ulhoi, J. P. (Eds.). (2007). Handbook of qualitative research meth-
ods in entrepreneurship. Cheltenham, UK; Northampton, MA: Edward Elgar Pub.
3. Patton, M. (1990). Qualitative evaluation and research methods. Beverly Hills,
California: Sage.
4. Yin, R. K. (2011). Qualitative research from start to finish. New York, London: The
Guilford Press.
DEMO, ERVIN; DIBRA, SIDITA; JAUPI, FATMA; GRABOVA, PERSETA; BESHKU, BLERINA University of Tirana, Albania
Chapter 2 Albania
highlights
• Albania is a country on the Balkan peninsula with a long Adriatic and Ionian coastline,
between Greece in the south and Montenegro and Kosovo to the north.
• The economy of Albania has remained limited, but positive growth during the recent
global financial and economic crisis.
• The sectors with the best potential for growth are agriculture, ICT services, tourism, the
mining industry, renewable energy, manufacturing, transport and logistics.
• Albanian GDP per capita reached 3.605 EUR in 2014.
• In terms of internationalisation, most of the surveyed companies in Albania are present
onlyin the domestic market and they mostly export their products in the Adriatic Region,
considerably less on the markets of the neighbouring countries in Western, Central or
Eastern Europe.
• The levels of support from both local and regional authorities and from the European
Union is low in Albania. The percentage of respondents that received support from the
central government in Albania is slightly higher than the Adriatic Region average.
• Regarding the micro determinants of innovation, knowledge hiding in Albania is not a
common occurrence, as it stands at the level of 1,84, which is lower than the average in
the Adriatic Region (2,31).
• Cultural intelligence is ranked slightly higher in Albania (4,93) than in the Region average
(4,54).
26
2.1 general overview
Albania is a country on the Balkan peninsula in Southeastern Europe, with a long
Adriatic and Ionian coastline, between Greece in the south and Montenegro and
Kosovo to the north. After World War II, Albania became a Stalinist state and re-
mained isolated until its transition to democracy after 1990. The 1992 elections end-
ed 47 years of communist rule and established the multiparty democracy.
According to the 2011 Population and Housing Census, the resident population
in Albania was 2.821,977. The population has declined by about 8% over the last
ten years (INSTAT, 2011), mainly due to high rates of emigration. Many Albanians
left the country in search of work; the remittance remains an important source of
revenue. Along with other Western Balkan countries, Albania was recognised as
a potential country for EU membership in 2003. A Stabilisation and Association
Agreement (SAA) entered into force on 1 April 2009. The European Commission rec-
ommended that Albania should be granted EU candidate status in October 2013 and
it reconfirmed the recommendation in the Progress Report published in June 2014.
Albania still needs to meet the key priorities for EU membership with a particu-
lar focus on administration and judiciary reform, fundamental rights, and the fight
against corruption and organised crime. Moreover, a constructive and sustainable
political dialogue remains essential to consolidate and continue reforms. Despite
difficulties, the Albanian Government has built a strategic vision to transform the
country’s economy from a low productivity, informal and import dependent econo-
my to a modern, innovative and highly productive one.
The economy of Albania has remained limited, but positive growth during the
recent global financial and economic crisis. The sectors with the best potential for
growth are agriculture, ICT services, tourism, the mining industry, renewable energy,
manufacturing, transport and logistics (AIDA, 2015). The overall industrial and trade
performance is characterized by a lack of economic competitiveness. Among main
elements hampering competitiveness are the lack of a specialised and skilled labour
force and a large informal economy. According to the Global Competitiveness Re-
port 2014-2015, Albania is ranked in 97th position out of 144 countries, losing eight
positions from 2012-2013. In terms of labour market efficiency, the country ranks
93rd, while in innovation it is 120th (World Economic Forum, 2014-2015). In terms of
the general socio-economic development, as measured by the Human Development
Index (HDI), the country figures in the ‘high human development’ category, ranking
95 out of 187 countries and territories in 2014; this was down 25 positions when
compared to 2012 (UNDP, 2014).
The labour market in Albania is characterized by high unemployment, especially
among the younger population, along with informality and the low participation of
272. ALBANIA
girls and women. The unemployment rate in Albania (for the age-group 15-64 years
old) is 17.9% (INSTAT, 2014). Youth unemployment (aged 15-29) remains a crucial
issue, since the rate has continuously increased from 21.9% in 2011 to 32.5% in 2014
(INSTAT, 2015).
Women in Albania continue to be under-represented in employment and the
gender wage-gap is still wide (Miluka, 2011). They are less present in almost every
employment sector in the country (INSTAT, 2014b). Census 2011 data shows that the
rate of unemployment among Roma and Egyptian minorities remains high due to
low educational qualifications and discrimination.
Albania is finalizing the National Strategy for Development and Integration,
among other priorities, presenting innovation as a driving force for increasing com-
petitiveness. Industrial parks will provide one of the preconditions for a transition
from the present-day economic model, characterized by the use of a low or semi-
skilled labour force and the manufacture of products with low added value, to a
more innovation-driven and knowledge based development model. To ensure a suc-
cessful transition to innovative development, increasing support will be provided
to Albanian enterprises that are seeking to modernize their technology by transfer-
ring and absorbing (in cooperation with academicians and researchers) innovations
currently being applied in other countries or in other local enterprises. Innovation
should become a key source of growth and added value even in traditional and rela-
tively low-technology sectors, such as agriculture, food processing, industry, trans-
port, construction and light industries.
2.1.1 overview of the economic situation in the country
According to the World Bank’s estimation, Albania classifies as an upper middle-in-
come country, which has undertaken important steps toward establishing a credible
market economy over the last twenty-five years. The country has generally been
able to maintain positive growth rates and financial stability, despite the ongoing
international economic crisis.
2.1.2 overview of the research and innovation actors and activities in the country
Innovation system in Albania is composed of a series of actors operating on differ-
ent levels and occupying different roles, as described below.
28
STRATEGIC POLICY MAKING AND PRIORITY SETTING ACTORS
As Albania is a Parliamentary Republic, there are at least three committees respon-
sible for research and innovation laws:
• Education and Means of Public Information Parliamentary Committee;
• Productive Activity, Trade and Environment Parliamentary Committee;
• Economy and Finance Parliamentary Committee. Following the calendar of dis-
cussions, the laws presented at these committees are widely discussed with in-
terested actors.
ADVISORY BODIES
There are two main important institutions operating as advisory bodies that report
to the Assembly:
• The National Council for Higher Education and Science (NCHES) has been estab-
lished as an advisory body to the Council of Ministers (CoM) and the Ministry of
Science and Sport (MSS).
Figure 2.1 – Institutions responsible for R&D and Innovation Policy making in Albania
Parliament
Enterprises
292. ALBANIA
• The Albanian Academy of Science (AAS) was substantially reduced in size after
the reform in 2009.
POLICY DESIGN INSTITUTIONS
• The Council of Ministers (CoM) submits draft laws on national scientific activi-
ties to the Parliament.
• The Ministry of Innovation and Public Administration (MIPA) is responsible for
designing and coordinating policies in the field of information technology and
electronic communications, geo-space information infrastructure, postal services,
audiovisual media and reformation and modernization of public administration.
• The Ministry of Education and Sports (MES) is the main government institution
responsible for scientific research and development policies.
• Other ministries such as the Ministry of Economic Development, Tourism,
Trade and Entrepreneurship (MEDTTE); the Ministry of Agriculture, Rural De-
velopment and Water Administration (MARDWA); the Ministry of Health (MH);
the Ministry of Environment (ME); the Ministry of Transport and Infrastructure
(MTI); the Ministry of Defence (MD) and the Ministry of Culture (MC) design
policies based on evidence produced by the institutions depending on them, as
described below.
POLICY IMPLEMENTATION
• Authority for Electronic Certification (AEC);
• General Directorate of Patents and Trademarks (GDPT);
• Albanian Investment Development Agency (AIDA);
• Business Relay and Innovation Centre (BRIC);
• Agency for Information Society (AIS);
• Albanian Cyber Incident Response Agency (ALCIRT);
• Authority of Electronic and Postal Communications (AEPC);
• Agency for Medicaments and Medical Equipment (AMME).
RESEARCH AND INNOVATION INSTITUTES
• The State-owned Higher Education Institutions (SHEI);
• The Ministerial Research Institutes/Agencies in charge of development and
technology transfer.
• Non-Government Research Entities;
• Private enterprises operating in the field of knowledge and technology transfer
and IT.
2.1.3 recent changes in r&d and innovation system in the country
Recent developments in innovation policies have showed signs of stagnation. In
recent years Albania has performed poorly, despite having clear objectives related
to innovation and research, objectives previously set by the EU.
After an initial momentum that gave a jolt to the Albanian economy, including
legislative work, investments that made ICT penetration possible among business-
es and individuals, through adopting successful practices and friendly business pol-
icies across the country, has come to a stand still.
Re-organizing the Academy of Science, creating a National Strategy of Innovation
and a new agency called the Agency for Research, Technology and Innovation (ARTI)
have not made enough to offset the poor performance in technological foreign direct
investment (FDI) and to shift businesses strategy from buying innovation into the
market rather than developing it internally for sustainable growth. Albania even has
a Ministry of Innovation, despite all of these small agencies and public institutions.
The main reason for this situation is the lack of smart and sustainable growth
foundations, which is achievable through building safe business environments
with an efficient legal framework, and what is most important, a good quality ed-
ucation system.
The main policy innovation milestones are not that recent. Nevertheless, the
National Strategy for Development and Integration was approved in 2008, as was
the National Strategy for Science, Technology and Innovation. One of the main inno-
vation policy agencies, the Albanian Investment Development Agency (AIDA), was
set up in 2010. The actor list of innovation policy also includes various agencies such
as the Business Relay and Innovation Center (BRIC) created in 2011, the National
Agency for Information Society (NAIS) and many others.
The most recent legislative developments, related with the topic, have been
some changes to existing laws such as: the law on Electronic Communications in the
Republic of Albania, E-signature law, E-commerce law, and other similar regulations.
During the last three years no major developments have been made regarding
innovation policy, legislation or concrete measurable steps in terms of economic
impact.
2.2 macro-level analysis of innovation enablers and inhibitors
In this section, the most relevant macro-indicators of innovation in the country are
presented1. These indicators concern six categories of the national innovation sys-
tem: the economic situation of the country, figures regarding human resources as
well as the education system, the innovation investments made by both the public
and private sectors, and the scientific output. The indicators are synthetically rep-
resented in Figure 2.2 and described after that. In the figure, 100 represents the EU
average, while the dotted part of the histograms shows the Adriatic region average.
Figure 2.2 – Albanian Innovation System, selected indicators
The economic data include general economic figures of the country, such as GDP per
capita, total exports, unemployment rate, current account deficit, etc. The Albanian
GDP per capita places the country rather low, in comparison to the Adriatic Region
average as well as the EU-28 average.
1 A more detailed picture about the country’s innovation profile can be found at: http://www.adriaticinnovationmap.eu/country-profile/.
32
The human factor plays a critical role in innovation, as the competitive advantage
built on human resources is not easily imitable. Albania has considerably lower hu-
man resources indicators in comparison to the regional and EU-28 mean. As ex-
pected, considering the country’s size, the total number of new PhD graduates in
Albania is very low compared with the Region and EU-28 mean. As a percentage of
the active population (15-64 years), the total number of new PhD graduates is still
lower than regional and EU-28 level, but it differs by only one percentage point.
Education is quite important in this macro analysis because universities represent
the environment where most research and innovation activity takes place. In rela-
tive terms, the participation in tertiary education has improved and the country’s
rates are higher than across the Adriatic Region and the EU-28. This was mainly the
result of Albania’s higher education liberalization policy, up until 2015. Lately, en-
rolment in tertiary education is limited since the system is being reformed towards
higher quality.
The public sector is a part of the economy that consists of state-owned institu-
tions, including nationalized industries and services provided by local authorities.
Albanian expenditure in R&D is very low in Albania and this was indicated many
times as one of the key reasons for the low performance in terms of sourcing inno-
vation. In relative terms, as a percentage of GDP, EU-28 member states invest more
on R&D than Albania and the Adriatic Region do, on average.
Private enterprises are the main source of innovation and an engine of economic
growth and job creation, since commercial enterprises constantly incorporate new
technologies in their businesses due to market pressures and an imperative to stay
competitive. Data on business expenditure on R&D in the country show that Alba-
nian private sector investment in R&D is more than 260 times lower than the aver-
age regional spending and represents only 0.08% of GDP.
The scientific output of a country is closely related to its innovation capacity. At the
same time, it can be used as an indicator of a country’s innovation performance.
The number of SCImago scientific journal articles is, in relative terms, lower for Al-
bania than the Regional mean, yet below the EU-28 average value.
332. ALBANIA
2.3 meso-level analysis of innovation enablers and inhibitors
The survey of innovative companies in Albania was based on a sample covering all
the country area. A total of 870 companies were randomly selected by a database
provided by the National Institute of Statistics with innovative or potentially in-
novative organisations. Furthermore, 440 companies were randomly selected with
sample characteristics based on NACE Rev2 of 50% production (C-manufactur-
ing; D-electricity, gas, steam and air conditioning supply; E-water supply, sewer-
age, waste management and remediation activities; and F-construction) and 50%
services (J-information and communication companies; K-financial and insurance
activities; M-professional scientific and technical activities; N-administrative and
support service activities; and P, Q-education and human activities). The sample
was composed of 15% micro, 35% small and 50% medium size enterprises.
After the first contacts, only 85 companies of the sample agreed to collaborate
and fill the questionnaire. Other companies from the initial database were contact-
ed, with the goal of preserving the initial sampling based on size, sector and clas-
sification. Finally, 106 questionnaires were completed, mainly through face-to-face
interviews. Only 20% of responses were gathered through online LimeSurvey, after
a short introductory meeting. Direct contacts with company representatives were
necessary to ensure a clear understanding of the research scope and some of the
concepts used.
During the research process, no methodological difficulties were encountered.
The researchers were directly involved in filling in the questionnaire. Although this
was time consuming, it influenced the quality of the data and the fairly high per-
centage rate of completion.
2.3.1 organizational innovation
Organizational innovation represents a new method in the firm’s business practic-
es, workplace organization or external relations that have not been previously used
by the firm as a strategic decision.
The average grade with regards to the organizational innovation for Albanian
companies is 4,45 and it slightly higher than the Regional mean (4,29). Renewal
of internal rules and procedures and developing structural effectiveness hold the
highest ranking in both, Albania and the Adriatic Region as a whole, where both
reached approximately 5 points on the scale from 1 to 7. New management sys-
tem implementation and the different roles within the organisation are also highly
34
ranked both in Albania and in the Adriatic Region. The biggest disparities in favour
of Albania, compared to the Adriatic Region as a whole, are evident in the update of
compensation policies. Furthermore, changes in the employees’ tasks, restructur-
ing of intra-communications systems and altering the ways in which the objectives
are set, have the lowest ranking in both Albania and the Adriatic Region.
Chart 2.1 – Organizational innovation (Albania in comparison to the Adriatic Region average)
4,45
4,78
4,07
2.3.2 internationalization level as innovation enabler
Most of the surveyed companies in Albania are present only in the domestic mar-
ket and export their products mostly in the Adriatic Region; they conduct consid-
erably less business in the markets of the neighbouring countries in the Western,
Central Europe and Eastern Europe. In Albania, in the period from 2011-2013, for
most of the companies included in the study (77,36% of the sample), the local mar-
ket is the dominant market for goods and services, followed by other European
352. ALBANIA
countries, Adriatic Region countries (47.17%), Western and Central Europe (27.36%)
and Eastern Europe (18.87%).
As demonstrated in Chart 2.2 , in both cases, the least represented markets are
those in South and Central America, North Africa, the Middle East, East Asia and
North America. The national markets are the most represented areas in both Al-
bania and the Adriatic Region as a whole; whereby in Albania, 78% of respondents
were present on the domestic market, while for the Adriatic Region as a whole this
rate amounts to 95%. The next most prevalent markets where companies sold their
goods and services were in both cases those of the Adriatic Region countries, for
47% of companies operating in Albania and 31% in the Adriatic Region. In total,
Adriatic countries have more intensive trade collaborations with Western, Central
and Eastern Europe when compared with Albania, which remains a relatively more
isolated country.
Chart 2.2 – Geographic markets where enterprises sold goods and/or services during 2011, 2012 and 2013 (Albania in comparison to the Adriatic Region average)
4,45
4,78
4,07
2.3.3 innovation incentives as innovation enablers
Public financial support of innovation activities remains low in the country. Central
government is reported as the main public funding source for research and develop-
ment by 10,5% of respondents. Local or regional authorities are stronger supporters
in financing innovation in the Adriatic Region, in comparison with Albania where
research and innovation is considered a national strategy. There are low levels of
EU funding of innovation in Albania (5,95%), which might be explained by Albania’s
delayed EU candidate status (June 2013) and the lack of capacities of Albanian com-
panies to apply for EU funds under the stabilisation and association agreement.
As we can see in Chart 2.3 , the level of received support from local or regional
authorities, as well as the EU, is low in Albania. Support received from the central
government in Albania is slightly higher than the Adriatic Region average, although
the overall public financial support in both cases (Albania and the Adriatic Region)
is rather poor.
Chart 2.3 – Public financial support (%) for the innovation activities in enterprises during 2011, 2012 and 2013 coming from the government (Albania in comparison to the Adriatic Region average)
4,45
4,78
4,07
In Albania, three innovative, small-medium sized companies participated in the
study. In total, 99 employees of the three companies were involved and completed
the questionnaires. The first company was an internet service provider operating in
Albania offering also digital cable television and telephone to its customers. It is
the first service provider that has implemented digital technology in Albania and is
innovative in providing services of high digital quality, based on the latest technolo-
gies such as cable, optical fibre, ADSL, ADLS 2+, wireless, phone cards, etc. The sec-
ond company was stable, with more than 15 years of experience in the retail chain of
high-tech and innovative products in Albania and the Balkan Region. The third com-
pany, operating in the furniture industry for over ten years, was well known for its
innovative products designed mostly for the European market, but not exclusively.
The gender structure in three Albanian companies is almost balanced, with a
representative of 52% male versus 48% female. The average employee age in the
three Albanian companies is 30,6, which represents the lowest average employ-
ee age on the level of the Adriatic Region. The percentage of employees holding
a Bachelor’s Degree (54,5%) represents the majority of the employees in the three
Albanian companies involved in this survey, followed by the employees with com-
pleted Master’s Degree (34,3%) and, finally, 10,1% of the employees that hold the
high school diploma.
The following graph presents the average descriptive results for Albania in com-
parison with the Adriatic Region. Furthermore, we are referring to the results of
multi-level analysis at the Adriatic level.
The data show that knowledge hiding in Albania is not a common occurrence,
as it stands at the level of 1,84, which is lower than the average of the Adriatic Re-
gion (2,31). Interestingly, the econometric data analysis on the Adriatic Region lev-
el showed a slightly positive correlation between knowledge hiding and individual
innovativeness, which is contradictory to the previous empirical studies that claim
that knowledge hiding negatively affects innovativeness.
Employee silence construct is connected to the fact that the employees do not
share their ideas openly and it stands at the level of 2,07 in Albania, which is slightly
lower when compared to the Adriatic Region (2,71).
The construct of cultural intelligence is on the Region level correlated with the
individual-level innovativeness, which means that the more culturally conscious
the employees are and the more knowledgeable they are about different languages,
cultural values, etc., the more innovative they are likely to be. This determinant rep-
resents a value of 4.93 in Albania, which is slightly higher than the average (4,54) in
the Adriatic Region.
38
The perceived time pressure determinant does not show any significant statis-
tical correlation with the level of innovativeness in the surveyed companies of the
Adriatic Region. On the basis of the survey carried out in Albania, this determinant
is 3,68, while the Adriatic Region average is 4,12.
Creativity, idea championing and individual innovation are ranked at the high-
est level in Albania (5,12) compared to other countries of the Adriatic Region, with
the average value of 4,66.
Task conflict, as a measurement of disagreement between group members is
presented at the level of 3,56 in Albania, while the average representation in the
Adriatic Region stands at 3,24.
Absorption/flow at work, work enjoyment and intrinsic work motivation are
ranked rather high in Albania (absorption= 4,54, work enjoyment=4,98, intrinsic
work motivation=4,90), which is equal or slightly higher than the Adriatic Region
average. However, the research has shown no significant correlation of these con-
structs and individual-level innovativeness on the Adriatic Region level.
Chart 2.4 – Micro-determinants of innovation in Albania and the Adriatic Region
4,45
4,78
4,07
392. ALBANIA
When it comes to the time perspectives, the research data produced at the
level of Adriatic Region show that only past positive and present hedonistic per-
spectives are significantly related to innovativeness. Past negative and future time
perspectives do not show significant influence at the Regional level. Interestingly,
research has shown that in the countries of the Adriatic Region, past positive time
perspectives, such as feeling pleasure when thinking about the past and nostalgia,
are strongly negatively related with innovativeness. This suggests that the more
dominant the past positive time perspectives in the employee, the less innovative
the employee is. Past positive time perspectives is negatively correlated with in-
novativeness at the Regional level, and it is almost equally ranked in both Albania
(3,46), and the Adriatic Region (3,62), while present hedonistic time perspective is
marginally positive correlated to innovativeness, and it is ranked higher in the case
of Albania (3,74) compared to the average of the Adriatic Region (3,52). Past nega-
tive and future time perspectives did not show any significant correlation with in-
novativeness in the Region. Since in both cases, past negative time perspectives in
Albania is ranked rather low, it may be interpreted as a positive result, while future
time prospective is mid-ranked in Albania as well as the Adriatic Region.
Referring to time management, the survey carried out in the Adriatic Region
shows some supporting evidence, while other variables turn out to be non-signifi-
cant. First of all, it is confirmed that time management is positively and significant-
ly correlated with the individual level innovativeness. It also represents one of the
largest determinants of individual-level innovation (coefficient-wise). This determi-
nant is ranked significantly high in Albania (5,36), which is slightly higher than the
Adriatic Region average (5,1).
According to our research, entrepreneurial and intrapreneurial intentions are
shown to be significantly related with employees’ innovativeness at the level of
the Adriatic Region, which implies that entrepreneurial skills may be of potential
benefit for the company as it stimulates the innovation processes. This determi-
nant in Albania stands at the level of 4,99, which is higher than the Adriatic Region
average (4,03).
Self-efficacy, which has been identified as an inhibitor of innovativeness in this
research on the Adriatic Region countries, is ranked rather high (5,63). This could
point to the conclusion that employees in Albanian companies are more optimistic
regarding their abilities to perform new tasks.
With regard to uncertainty avoidance in this research, as a construct for the mea-
surement of national culture, it does not significantly correlate with the level of in-
novativeness in the surveyed companies of the Adriatic Region. However, this deter-
minant is highly ranked in both Albania (6,27) and the Adriatic Region (5,43), which
implies some specific cultural characteristics of risk aversion in the Adriatic Region.
40
Individualism, as another construct that measures national culture, represents a
rank of 5,55 in Albania and 4,48 in the Adriatic Region. The same as in case of un-
certainty avoidance, the econometric analysis showed that this determinant does
not play a significant role in explaining the individual-level innovativeness in the
Adriatic Region.
2.5 conclusions
Over the last 25 years, Albania has established a multiparty democracy and shift-
ed from a centrally planned economic system. In recent years during the post-eco-
nomic crisis, the country has maintained a limited but positive growth and Alba-
nia has moderately succeeded in developing a functioning market economy. The
government’s strategic objective of becoming an EU member state led to a series
of policies and reforms to be undertaken in public administration, fundamental
rights, and the fight against corruption and organised crime, which come as pre-
requisites of a well-functioning state. Overarching reforms to increase the coun-
try’s competiveness and boost its capacity to cope with European markets are still
missing. Analysis performed for the aim of this study reveals that most of the sur-
veyed companies in Albania are present only on the domestic market, and export
their products mostly in Adriatic Region, considerably less on the markets of other
neighbouring countries in the Western, Central and Eastern Europe. In the Albanian
National Strategy for Development and Integration, innovation is considered as a
driving force for increasing competitiveness. The multilevel analysis of determi-
nants of innovation on national and regional (Adriatic area) levels, shed light on the
country’s current situation and its prospects for further competitive advantage. Re-
search and development and innovation policy analysis reveals a series of initiatives
in the legal framework, policy formulation and institutional set-ups. The creation of
the Ministry of Innovation, reformation of the Agency for Research, Technology and
Innovation, and the issuing of Cross Cutting Strategy “Digital Agenda of Albania
2015-2020”, are considered as positive steps, but there are still no clear signs of
their economic impact. One of the key reasons for the low performance in terms of
sourcing innovation is low investment in this sphere. Public institutions responsi-
ble for R&D and innovation, especially central government, which is reported as the
main funding source for R&D, function with a limited budget (in relative terms as
a percentage of GDP) that is lower on average than any of the EU-28 countries and
Adriatic Region. The private sector investment in R&D is more than 260 times lower
than the average regional spending and has a low level and capacity of exploiting EU
funding sources of innovation.
412. ALBANIA
Decreases in the properly skilled human capital force, low productivity and infor-
mality are preventing Albanian economic competitiveness. The extensive research
performed to fully accomplish a diagnosis on a macro level, based on secondary
macro data and policy analysis, reveals that Albania has considerably lower human
resources indicators, in comparison to the Regional and EU-28 mean. While the
meso level analysis conducted through a survey of innovative companies, reveals
some optimistic dimensions of the private sector in terms of innovation enablers.
Albanian companies report a higher level of organizational innovation compared
with the Region overall. Companies operating in Albania seem open to introducing
new management systems and different roles and, in comparison with the Region,
invest more in the updating of compensation policies, which is expected to lead to a
lower employee turnover rate and higher company performance in the long run. The
micro level analysis performed to explore important determinants of individual in-
novativeness within the company, discloses that absorption/flow at work, work en-
joyment, intrinsic work motivation, cultural intelligence, creativity, idea champion-
ing and individual innovation are ranked rather high in Albania and equal or slightly
higher than the Adriatic Region average. Time perspective analysis shows the low
ranking of past negative time perspectives, meaning a more forward-looking view
and a positive result linked to innovation. These evidences prove the existence of
enablers of innovation on meso and micro levels. Further investigation and research
of the Albanian context regarding sources and foundations of organizational inno-
vation, might divulge useful managerial recommendations and could lead to the
design of an evidence based innovation policy cycle.
42
1. Institute of Statistics of Albania (INSTAT). (2011). Main Findings.
2. European Commission. EU candidate status for Albania. (2014). Retrieved from
http://europa.eu/rapid/press-release_MEMO-14-439_en.htm
http://www.aida.gov.al/home.
4. World Economic Forum. (2014-2015). The Global Competitiveness Report. Re-
trieved from http://www3.weforum.org/docs/WEF_GlobalCompetitivenessRe-
http://hdr.undp.org/en/content/human-development-report-2014
6. Institute of Statistics of Albania (INSTAT). (2014a). Labor Market, 2014. Retrieved from
http://www.instat.gov.al/media/291851/tregu_i_pun_s_2014.pdf.
7. Ministry of European Integration. (2015). Retrieved from http://www.integrimi.gov.al
8. Miluka, J. (2011). Gender wage gap in Albania: Sources and recommendations.
Pegi Tirana, Albania: UN Women.
9. Institute of Statistics of Albania (INSTAT). (2014b). Women and men in Albania
2014. Retrieved from http://www.instat.gov.al/media/257796/femra_dhe_
meshkuj_2014_.pdf.
10. Institute of Statistics of Albania (INSTAT). (2015). Youth in Albania: Challenges
in changing times. Retrieved from http://www.instat.gov.al/media/316725/
youth_in_albania_challenges_in_changing_times.pdf.
BIBLIOGRAPHY
43
Chapter 3 Bosnia and Herzegovina
highlights
• Bosnia and Herzegovina (B&H) is a South-Eastern European country, situated in the heart
of Balkans.
• Due to the destructive war in the 1990s, and the dysfunctional structure of the country
that resulted from the Dayton agreement, Bosnia and Herzegovina is lagging behind oth-
er countries in the region.
• The GDP per capita of B&H places the country far below the average of the Adriatic Re-
gion, as well as below the EU-28 average.
• In comparison to the Regional and EU-28 mean, B&H has a far lower number of new PhD
graduates, in relative terms.
• B&H SMEs show relatively poor levels of internationalisation, where national markets are
the most represented areas with the presence of 98%.
• The level of received support through innovation incentives from the government, Re-
gional authorities and the EU is low for all measured forms of financing. The majority of
innovative firms in B&H within the three-year period 2011-2013 did not receive any kind of
public financial support for innovative activities.
• Knowledge hiding in both B&H (1,60) and the Adriatic Region (2,31) is on a relatively low
level. Respondents from B&H exhibit slightly higher than average cultural intelligence
(5,17) compared to the average of the Adriatic Region (4,54).
44
3.1 general overview
Bosnia and Herzegovina is a South-Eastern European country, situated in the heart
of Balkans. It borders Croatia, Serbia, and Montenegro and has open access to the
Adriatic Sea. The population in Bosnia and Herzegovina, according to the latest
published Census results (2013), was 3.53 million inhabitants (Agency for Statistics
Bosnia and Herzegovina, 2016).
Bosnia and Herzegovina declared sovereignty in October 1991 and independence
from the former Yugoslavia on 3 March 1992, after a referendum boycotted by eth-
nic Serbs. The Bosnian Serbs - supported by neighbouring Serbia and Montenegro
- responded with armed resistance aimed at partitioning the republic along eth-
nic lines (CIA.gov, 2015). On 21 November 1995, in Dayton, Ohio, the warring par-
ties initialled a peace agreement that ended three years of interethnic civil strife;
the final agreement was signed in Paris on 14 December 1995 (CIA.gov, 2015). The
Dayton Peace Accords retained Bosnia and Herzegovina’s international boundaries
and created a multi-ethnic and democratic government charged with conducting
foreign, diplomatic, and fiscal policy. A second tier of government was also recog-
nized, composed of two entities roughly equal in size: the Federation of Bosnia and
Herzegovina (FBiH) and the Republika Srpska (RS). The FBiH and RS governments
are responsible for overseeing most government functions, and the FBiH is further
divided into 10 cantons that pursue executive government in this entity for most of
the strategic fields (e.g., education).
Due to the destructive war in the 1990s, and the dysfunctional structure of the
country that resulted from the Dayton agreement, Bosnia and Herzegovina is lagging
behind other countries in the region. Steps toward EU membership are slow and re-
quested reforms are hardly being implemented. For example, Bosnia and Herzegov-
ina formed the Stabilisation and Association Agreement with the EU in June 2008
and it was ratified in February 2011; however, it came into force only in June 2015 (DEI,
2015). One of the main reasons for this was that leading parties in the country could
not agree upon implementing the verdict of the European Court of Human Rights
that represents the Violation of Article 14 (prohibition of discrimination) of the Eu-
ropean Convention on Human Rights taken together with Article 3 of Protocol No. 1
(the right to free elections), and Violation of Article 1 of Protocol No. 12 (the gener-
al prohibition of discrimination) to the Convention (COE, 2015). Since relations with
other countries in the region are multifaceted, the geopolitical situation of Bosnia
and Herzegovina remains complex. There are no strong transport routes that pass
through the country and it has been slow to rebuild its transport infrastructure.
According to the World Bank, there are four main areas for development in Bos-
nia and Herzegovina (World Bank, 2015): agriculture (although the share of agricul-
453. BOSNIA AND HERZEGOVINA
ture in the economy has decreased to less than 10% over the last decade), environ-
ment, health and private sector development (the country is hindered by one of the
least friendly business environments in the region).
Bosnia and Herzegovina has three national parks and three nature parks, where
one of the last remaining primeval forests in Europe is located. Recently, an Instru-
ment of Pre-Accession (IPA) funds has become available for the country, which makes
it easier for different levels of government, as well as non-governmental bodies and
organisations, to pursue projects that are in line with country’s and EU priorities.
3.1.1 overview of the economic situation in the country
Bosnia and Herzegovina is a small and upper middle-income country (World Bank, 2015). Gross domestic product per capita increased to € 3,642 in 2014 (Agency for Statistics Bosnia and Herzegovina, 2015). The country had a nega- tive GDP real growth rate in 2009 (-2.9) and in 2012 (-0.7) . The global financial crisis has had a negative impact on the economy. Foreign direct investment in- flows in the period 2000-2013 increased approximately three times. The total number of employed persons increased to 813.000 in 2013. The expert estima- tion is that country needs between 0.6 and 1.3 million new jobs, as well as new knowledge, research, innovation, and development.
Between 1998 and 2008, Bosnia and Herzegovina experienced strong growth,
with GDP increasing by over two thirds in real terms and poverty dropping from near-
ly 20% to around 14% (World Bank, 2015). In years 2006, 2007 and 2008, growth was
steady at about 5% annually. However, as demonstrated in the GDP real growth rate
stated above, the global financial crisis of 2008-2009 is having an ongoing nega-
tive impact on the country’s economy. Slower growth in the main Euro zone export
markets, political and social turmoil, the lack of progress in making improvements
to the business climate (e.g., through streamlined regulations, trade procedures or
lack of progress on transport links) could all reduce the economic growth rates in
Bosnia and Herzegovina.
According to the Labour Force Survey (Agency for Statistics Bosnia and Herze-
govina, 2015), the unemployment rate in the country is 27.7%, while for young per-
sons (aged 15 to 24) it is the highest – 62.3 %. These figures are higher than the
highest unemployment rates in EU countries. The poverty headcount ratio on na-
tional poverty lines (% of population) for Bosnia and Herzegovina was 17.9% in 2011,
which was a decrease compared to 18.2 % in 2007.
46
3.1.2 overview of the research and innovation actors and activities in the country
Currently, Bosnia and Herzegovina does not have a national innovation system in
place. Although it is known that the following dimensions constitute the national
innovation system: institutions, public sector, education system, private sector, hu-
man resources, scientific output, linkages, entrepreneurship, SMEs and funding, at
present, there are no coherent efforts to link and coordinate all of these dimensions.
The complex constitutional structure of B&H delegates policy and funding responsi-
bilities across the entities of the RS, the FBiH, and the Brko District (BD), as well as
across the cantonal structure of policy implementation bodies in FBiH.
DECISION MAKING BODIES
• Ministry of Civil Affairs of Bosnia and Herzegovina (Department of Education
and Department of Science and Culture);
• Ministry of Foreign Trade and Economic Relations.
FURTHERMORE, EACH ENTITY HAS ITS OWN DECISION MAKERS AS FOLLOWS:
• Federation of Bosnia and Herzegovina: Ministry of Development, Entrepreneur-
ship and Crafts, Federal Ministry of Education and Science;
• Republika Srpska: Ministry of Science and Technology, Ministry of Education and
Culture, and Ministry of Industry, Energy and Mining.
RESEARCH CENTRES AND INSTITUTIONS
• 44 licensed institutions of higher education (26 universities and 18 independent
colleges, with a total of 140 faculties and 10 academies);
• 24 research institutes in RS (13 public, 10 private and 1 virtual);
• 30 institutes (20 public and 10 private) in Federation Bosnia and Herzegovina.
473. BOSNIA AND HERZEGOVINA
Source: ERAWATCH Country Report for Bosnia and Herzegovina
Legend • MCP BiH – BiH Ministry of Civil Affairs; • FMON – FBiH Ministry of Education and Science; • MNTRS – RS Ministry of Science and Technology; • MON-KS – Ministry of Education, Science and Youth, Canton Sarajevo; • MONKS-ZDK – Ministry of Education, Science, Culture and Sport, Canton Zenica Doboj; • MONKS-TK – Ministry of Education, Science, Culture and Sport, Canton Tuzla; • MONKS-USK – Ministry of Education, Science, Culture and Sport, Canton Una Sana; • MPZKS-P-K – Ministry of Education, Science, Culture and Sport, Canton Posavina; • MONKS-BPK – Ministry of Education, Science, Culture and Sport, Canton Bosnia-Podrinje; • MONKS-SBK – Ministry of Education, Science, Culture and Sport, Canton Central Bosnia; • MONKS-HN-K – Ministry of Education, Science, Culture and Sport, Canton Herzegovina-Neretva; • MPZKS-ZH-K – Ministry of Education, Science, Culture and Sport, Canton West Herzegovina; • MPZKS-HB-K10 – Ministry of Education, Science, Culture and Sport, Canton 10; • OOBD – Department of Education of Brko District.
48
3.1.3 recent changes in r&d and innovation system in the country
In 2014 the Agency for Statistics of Bosnia and Herzegovina published the first two
releases for monitoring research and development (2012) and patents (2013) as a
first step in providing statistics on R&D and innovation on the state level. The coun-
try has a national science, technology and innovation (STI) strategy, adopted in 2009,
with the 2010-2015 time frame, which provides directions for R&D funding, but the
operational power is distributed to FBiH entities that have drafted their entity-level
STI strategies with different time frames and different funding targets. Hence, Bos-
nia and Herzegovina should initiate a project of creating a new STI Strategy for the
period 2016-2020. In this sense, the results of the PACINNO project will definitely
provide additional statistical indicators on R&D and innovation. The first findings of
the PACINNO project were presented at the Public Policy Conference in Bosnia and
Herzegovina in May 2015, where the key decision-makers were present and received