Volume 6
ISSN 1581-6311
anagin
Managing
Global
Boštjan Antončič
International
tr n R^V^fy*
[vJ^cIllvl
journal
Managing Global Transitions
International Research Journal
EDITOR
Boštjan Antoncic, University of Primorska,
Slovenia
ASSOCIATE EDITORS
Egon Žižmond, University of Primorska,
Slovenia
Dušan Lesjak, University of Primorska,
Slovenia
Anita Trnavčevič, University of Primorska,
Slovenia
Roberto Biloslavo, University of Primorska,
Slovenia
EDITORIAL BOARD
Zoran Avramovič, University of Novi Sad,
Serbia
Terrice Bassler Koga, Open Society Institute,
Slovenia
Cene Bavec, University of Primorska, Slovenia
Jani Bekö, University of Maribor, Slovenia
Vito Bobek, University of Maribor, Slovenia
Štefan Bojnec, University of Primorska,
Slovenia
Suzanne Catana, State University of New York,
Plattsburgh, usa
David L. Deeds, University of Texas at Dallas,
USA
David Dibbon, Memorial University
ofNewfoundland, Canada
Jeffrey Ford, The Ohio State University, usa
William C. Gartner, University of Minnesota,
USA
Tim Goddard, University of Calgary, Canada
Noel Gough, La Trobe University, Australia
George Hickman, Memorial University
of Newfoundland, Canada
Robert D. Hisrich, Thunderbird School of
Global Management, usa
Andras Inotai, Institute for World Economics
of the Hungarian Academy of Sciences,
Hungary
Hun Joon Park, Yonsei University, South Korea
Štefan Kajzer, University of Maribor, Slovenia
Jaroslav Kalous, Charles University,
Czech Republic
Maja Konecnik, University of Ljubljana,
Slovenia
Leonard H. Lynn, Case Western Reserve
University, usa
Monty Lynn, Abilene Christian University, usa
Neva Maher, Ministry ofLabour, Family and
Social Affairs, Slovenia
Massimiliano Marzo, University ofBologna,
Italy
Luigi Menghini, University of Trieste, Italy
Marjana Merkac, College of Entrepreneurship,
Slovenia
Kevin O'Neill, State University of New York,
Plattsburgh, usa
David Oldroyd, Independent Educational
Management Development Consultant,
Poland
Susan Printy, Michigan State University, usa
Jim Ryan, University of Toronto, Canada
Mitja Ruzzier, University of Primorska,
Slovenia
Hazbo Skoko, Charles Sturt University,
Australia
David Starr-Glass, State University of New
York, usa
Ian Stronach, Manchester Metropolitan
University, uk
Ciaran Sugrue, Dublin City University, Ireland
Zlatko Šabic, University of Ljubljana, Slovenia
Mitja I. Tavcar, University of Primorska,
Slovenia
Nada Trunk Širca, University of Primorska,
Slovenia
Irena Vida, University of Ljubljana, Slovenia
Zvone Vodovnik, University of Ljubljana,
Slovenia
Manfred Weiss, Johan Wolfgang Goethe
University, Germany
Min-Bong Yoo, Sungkyunkwan University,
South Korea
Pavel Zgaga, University ofLjubljana, Slovenia
EDITORIAL OFFICE
University of Primorska
Faculty of Management Koper
Cankarjeva 5, SI-6104 Koper, Slovenia
Phone: ++386 (0) 5 610 2021
Fax: ++386 (0) 5 610 2015
E-mail: mgt@fm-kp.si
www. mgt.fm-kp.si
Managing Editor: Alen Ježovnik
Editorial Assistant: Tina Andrejašic
Copy Editor: Alan McConnell-Duff
Cover Design: Studio Marketing jwt
Text Design and Typesetting: Alen Ježovnik
Managing Global Transitions
International Research Journal
VOLUME 6 • NUMBER 4 • WINTER 2008 • ISSN I58I-63II
Table of Contents
339 The Editor's Corner
341 Globalization at Risk: The Changing Preferences
of States and Societies
James M. Quirk
373 The Causes of Conflict in Public and Private Sector
Organizations in South Africa
Chris van Tonder
Werner Havenga
Jan Visagie
403 Governance and Civil Society at the eu Level
Matevž TomšiC
Mateja Rek
421 Failures in Building Partnership for Success
in the Competitive Market: The Case of
Polish Ski Resorts
MichalŽemla
445 Impacts of the Euro on the Slovenian
Tourism Industry
Helena Nemec Rudež
Štefan Bojnec
The Editor's Corner
The journal has achieved a wider - global readership in 2008. Additional
efforts will be made to extend and improve our presence and recognition
in the international academic arena in the future. I would like to extend
my special thanks to the journal reviewers and the operational editorial
team for their precious contributions to the development of the journal.
The journal continues focusing on the transition research and empha-
sizing openness to different research areas, topics, and methods, as well
as international and interdisciplinary research nature of scholarly articles
published in the journal. The current issue covers topics of the conflict
in public and private sector organizations, changing preferences of states
and societies, democratic governance, partnerships, and Euro currency
adoption.
This issue (Vol. 6, No. 4) begins with a paper written by James M.
Quirk, who presents a viewpoint on the changing preferences of states
and societies, which may present impediments to globalization. In the
second paper, Chris van Tonder, Werner Havenga and Jan Visagie inves-
tigate the causes of conflict in public and private sector organizations
using data from South Africa. In the third paper, Matevž Tomšic and
Mateja Rek study the role of civil society as a factor of European demo-
cratic governance. In the fourth paper, Michai Žemia investigates failures
in building partnership for success in the competitive market by using
the case of ski resorts in Poland. In the last - fifth paper, Helena Nemec
Rudež and Štefan Bojnec examine the impacts of the Euro adoption on
tourism in Slovenia.
Boštjan Antoncic
Editor
Globalization at Risk: The Changing Preferences
of States and Societies
James M. Quirk
After long, wide trends toward freer and more integrated markets, peo-
ples and ideas, reluctance to subordinate the ideals of globalization
to state interests shows signs of serious erosion. Recent examples in-
clude the breakdown of international institutions, the rise in state con-
trol over energy resources and their use as diplomatic leverage, and us
abandonment of the principles of globalization. The sources of these
changing preferences are both ideological and utilitarian. The result is
that key elements of globalization are at risk, but with unpredictable
consequences.
Key Words: political economy, globalization, international institutions,
economic nationalism, resource nationalism, financial crisis
jEL Classification: F02, F13, F33, F52, G01
Introduction
At the end of the 20th century, the great debate between socialism and
capitalism was judged largely to have been resolved in favor of mar-
kets, free trade and entrepreneurs over central planning, protectionism
and state-led roles. The confluence of these 'victories' with the spread
of democracy and great technological advances yielded a multi-faceted
globalization of commerce, culture and even 'the end of history'. Liber-
alism seemed to have gone global, overtaking competing -isms in theory
and in practice.
In the 1980s and 1990s, democratic and market reforms spread across
Latin America, Eastern Europe, and parts of Africa and Asia. Great leaps
in telecommunications increasingly connected these regions with the
West and the rest of the world. Multilateral tariff negotiations expanded
into a global organization of more than 150 countries bound to rules on
goods, services, intellectual property, and dispute settlement. A detente-
era forum for East-West issues became a 56-member organization to pro-
mote democratic, electoral, economic and human rights reform 'from
Vancouver to Vladivostok'.1 Between 1988 and 2007, the Nobel Peace Prize
Dr James M. Quirk is a senior analyst at The Bishop Group and
teaches politics at The Catholic University of America, usa.
was awarded to eight organizations (including the United Nations) for
worldwide humanitarian, nonproliferation, development and environ-
mental efforts.
Rapidly, however, the promise of global peace and prosperity became
challenged by terrorism, energy insecurity, faltering democratic move-
ments and more. In this context, states and populations have more easily
overlooked the open and cooperative ideals. Notable developments in-
clude the breakdown of international institutions, the rise of state con-
trol and diplomatic use of energy resources, and the us shift in priorities
away from the basic ideals of globalization.
Alone, any of these might represent a normal 'blip' in international
politics and economics. But considering new global economic and se-
curity concerns, emerging evidence of retreat from democracy in some
countries (and continued lack of democratic development in others),
and a rise in leaders' use of nationalism and populism to appeal to dis-
quieted electorates, together they may augur an important and troubling
trend. They may suggest political, economic and cultural indicators of
a return to the centrality of states, and the willingness of governments
and populations to put their state interests and identities first. A general
acceptance of democracy and markets remains, but reluctance to subor-
dinate those ideals to state interest shows signs of serious erosion. The
question is whether all this amounts merely to a cacophony of cries from
insecure workers, voters and leaders, or to an inchoate orchestral move-
ment away from global liberalism. This article serves in part as a call for
investigations, qualitative and quantitative alike, into these trends. Such
inquiry would serve scholarly, policy and commercial interests.
First, this article highlights some of the classic and emerging literature
on the changing nature of states and the state system during globaliza-
tion. Second, it considers evidence of three potential trends: the break-
down of international institutions, the rise of state control and diplo-
matic use of energy resources, and the abandonment of the principles of
globalization by the United States. Next, it evaluates two sources of these
changes in preferences by states and societies: ideological shift and prag-
matism. Finally, the article offers avenues of inquiry for further investi-
gation, in search of corroborating or contradictory evidence and more
informed scholarship and policy-making.
One caveat. The goal of the article is neither to mourn nor celebrate a
possible decline of globalization. Some people focus on the economic,
cultural and other costs of globalization - a rich and important area
of study. But this analysis examines threats to generally beneficial as-
pects of globalization such as the expansion of democracy and human
rights, greater international cooperation, and the benefits of integrated
and market-oriented economies. The purpose here is to recognize ongo-
ing changes, to understand the sources of such changes, and to be aware
of their implications. In these ways, policy makers, scholars, business and
citizens can prepare for, ameliorate or even benefit from the effects of
such changes.
Challenges to States and the International System
The shift away from the generations-old movement of freer and more
integrated markets, people and ideas, and from the acceleration and in-
tensification of it known as globalization, takes place within a context
of a longer discussion of the challenges to the primacy of states and of
competing descriptions of the global system.
Among the seminal ideas on the decline of the pre-eminence of
the state is Keohane and Nye's (1977) 'complex interdependence', in
which states were joined by non-state actors as legitimate contenders for
power and influence in the international system. Albert Bressand (1983)
warned of threats to the 'worldeconomy' [sic] even before globalization
bloomed. Later, Susan Strange (1995) explored the expanded role of non-
state actors in the global economy, including organized crime, multina-
tional corporations and inter-governmental organizations. Moses Naim
(2005) judged that the proliferation of micropowers - like bloggers,
hedge funds, human traffickers (and suicide terrorists (Pape 2006)) -
created a hyper-polar system.
The development of states themselves also came under increasing
scrutiny. In an era widely perceived as a global 'wave' of democratization
(Huntington 1991), the reality was more complex. Terry Lynn Karl (1995)
identified 'hybrid regimes' that combined authoritarian and democratic
practices. Guillermo O'Donnell (1996) observed difficulties in 'consoli-
dating' new regimes as democratic. Larry Diamond (2000) warned of a
'reverse wave', signaling the end and ebb of the current era of democra-
tization. Robert Rothberg (2003) and others drew attention to failed and
failing states, while James Dobbins (2007; 2008) and others detailed the
difficulties of nation-building.
States and other actors also faced a changing operational environ-
ment. Jessica Mathews (1997) discussed the shift of powers from the state
to supra-, sub- and non-state actors. Anne-Marie Slaughter (1997) de-
scribed states as transferring some of their regulating duties to transgov-
ernmental organizations. Joseph Stiglitz (2002) acknowledged some of
the shortcomings of international institutions, while David Held (2004)
offered a social democratic alternative to the markets-first globalization.
Jorg Friedrichs (2001) and John Rapley (2006) offered a 'new medieval-
ism' in which overlapping authorities and multiple loyalties are stronger
than states. Henry Kissinger (2001) was critical of those seeking with-
out due care to replace Westphalia's sovereignty and non-interference
with humanitarian intervention and universal jurisdiction. Peregrine
Worsthorne (1991) and Hubert Vedrine (1998) called the us a 'hyper-
power'. But Andrew Bacevich (2005a; 2005b), Chalmers Johnson (2004;
2006) and others warned of the consequences of American empire, while
Thomas Friedman (2005) and Fareed Žakaria (2008) described a 'flat',
'post-American' world. More broadly, Niall Ferguson (2005) noted an
emerging resemblance to the global conditions that contributed to World
War I, reminiscent of Norman Angell's (1909) warnings from that earlier
era of globalization.
The international system was indeed evolving - 'global' was neces-
sary to replace 'international' to reflect the rising role of non-state ac-
tors. But states and state interests did not disappear. It was national elec-
torates that defeated eu restructurings. Governments defending national
interests stalled trade negotiations, and responded with 'unprecedented
measures' (Paulson 2008) to the financial crisis in 2008. It was national
governments that increasingly took state control over energy sectors and
used those resources in aggressive diplomacy. And it was us government
policy, with broad popular support (at least for a while) which shifted
from post-Cold War idealism to realism and from focusing on the bene-
fits of globalization to focusing on its risks. The question is not whether
strong states and globalization can co-exist, but whether state and soci-
etal tendencies are increasingly parochial or integrating. The changing
preferences of states and societies is away from the principles of global-
ization.
The Changing Preferences of States and Societies
The postwar progress toward freer markets, people and ideas, which ac-
celerated and globalized after the end of the Cold War, has come un-
der increasing pressure. This can be illustrated by looking at three evolv-
ing trends: breakdowns in international institutions, increased state con-
trol and diplomatic use of energy resources, and considerable retraction
from globalization ideals by its prime mover and struggling hegemon.
BREAKDOWN OF INTERNATIONAL INSTITUTIONS
Key international organizations of the post-World War ii era faced
abrupt decelerations in the post-post-Cold War era. First, the proposed
restructuring of the European Union stalled after being rejected by pop-
ular referendums in spring 2005 and summer 2008. Second, the Doha
Development Round of the World Trade Organization talks broke down
in June 2006, with little prospect for recovery. Third, the World Bank
and International Monetary Fund (imf) confronted a range of emerging
challenges and criticism. Finally, the 2008 global financial crisis tested
the world's leading economies, with governments responding in ways
fundamentally opposite of market-based solutions.
Shaping the Future of Europe
The European Union (eu) traces its origins to postwar European efforts
at economic reconstruction and political cooperation. After the Cold
War, the pace of'widening' (more member states) and 'deepening' (more
integration) accelerated. It added Austria, Finland and Sweden in 1995,
ten more states (several formerly of the Soviet bloc) in 2004, and Bul-
garia and Romania in 2007. The areas of eu governance expanded from
economic and trade topics to social, justice and foreign policy areas and
the establishment of a common currency.
To manage the larger number of members and issues, a treaty estab-
lishing a constitution for Europe was developed. But in May and June
2005, popular referendums in France and the Netherlands rejected the
new constitution, and polls indicated that voters in the United Kingdom
and Poland might do the same. In France and the Netherlands, the main
political parties supported ratification (as did uk prime minister, Tony
Blair), but substantial elements across the population (55 and 61 percent,
respectively) did not.2 Of the 15 nations that ratified, only Spain (before
France and the Netherlands) and Luxembourg (after) did so by referen-
dum.
Support for 'no' to the constitution was found on both the political
left and right. Issues ranged from concerns over the economy to dissat-
isfaction with the political parties, but also anti-immigration fervor, a
'general crisis in French society', and a sense of distance from the institu-
tion^) of the eu itself.3 (For context, the Maastricht treaty of 1992 also
had early difficulties. Denmark and the uk eventually got special 'opt
out' provisions.) Today, a new governing structure remains necessary to
manage 27 members of diverse geographic, economic, cultural and eth-
nic backgrounds and interests, including the debate over whether to ad-
mit Turkey.
In the wake of the failed constitution, eu members' leaders agreed to
the Treaty of Lisbon in December 2007, with the goal of ratification by
all 27 member states by the end of 2008. All national governments ex-
cept Ireland put the decision-making in the hands of their parliaments.
The Irish, entitled to a referendum by their own constitution, rejected
the treaty in June 2008. As in France and the Netherlands, most of Ire-
land's political, business and labor leadership supported the treaty, but
for a wide range of reasons (including insufficient understanding and
protecting Irish identity), the majority of voters did not.4
This is not to suggest that eu integration was the same as globaliza-
tion, or necessary for it. Rather, the ideas driving eu integration were
dominant elsewhere during the era of globalization, while the questions
facing the eu now are contemporary with and related to broader ques-
tions of global integration.
wTo-Doha
Like the eu, the World Trade Organization (wto) has roots in the post-
war era. Twenty-three countries founded an international trade regime
January 1, 1948, the General Agreement on Tariffs and Trade (gatt).
gatt rounds over the next four decades removed a wide range of tar-
iff and non-tariff barriers and introduced a general principle of 'most-
favored nation' status among the treaty's increasing number of signato-
ries. By 1986,125 countries began the Uruguay Round, which sought to
develop gatt into a permanent institution, the wto, which was estab-
lished in 1995.5
Subsequent efforts at expanding the trade regime have been difficult.6
The 'Seattle Round' was scuttled in the face of anti-globalization protests
in 1999. wTo members tried again at a more secure location, Doha,
Qatar, in 2001. It was to focus on development, not just trade facilita-
tion. The difficulties of the Doha Round took shape by the time of the
Cancun meeting in 2003. A group of developing nations (dubbed the
g-20, with approximately that number of member states) contested us
and eu agricultural policies on subsidies and market access, while de-
veloping nations were resistant to further opening of their markets to
rich-country manufactured goods. When talks in Geneva broke down
in July 2006, many observers considered the Doha Round to be unsal-
vageable, since us law permitting 'fast-track' consideration of any trade
bill (that is, without Congressional amendments) was set to expire, and
did, in June 2007. Doha Round negotiations were restarted in Potsdam
in 2007 and Geneva in 2008, but collapsed each time on the agricultural
and market-access details.
World Bank and imf
The principle international financial institutions are also under increas-
ing pressure. The efforts of the World Bank and imf came under a
range of criticisms, including by at least two Nobel economists (Krug-
man 1999; Stiglitz 2002; 2006; Easterly 2001; 2006; Collier 2007). The imf
also strained under internal, conceptual questions. Its post-1989 'Wash-
ington Consensus' reform package was criticized as 'neo-liberal', blamed
for financial crises and judged generally harmful to implementing coun-
tries. It was finally abandoned by its originators as the 'stale ideological
rhetoric of the 1990s' (Williamson 2003).7 The World Bank and imf were
also distracted when the controversial World Bank president Paul Wol-
fowitz (in 2007) and imf managing director Dominique Strauss-Kahn
(in 2008) faced personal personnel scandals.
The World Bank and imf also faced new competition. Facing enor-
mous demand for energy and other natural resources, China increasingly
uses the vast resources of its government-owned China Development
Bank to make loans to developing countries, to secure access for Chinese
companies to the borrowers' natural resources.8 China makes these and
other deals without the human rights, social and environmental condi-
tions imposed by the imf and World Bank (imf and World Bank 2006).
During the 2008 financial crisis, the entire postwar structure was ques-
tioned. imf's Dominique Strauss-Kahn acknowledged that, 'It is neces-
sary to review the functioning of the architecture of the global finan-
cial system.'9 British prime minister Gordon Brown and French Presi-
dent Nicholas Sarkozy were among those who called for a 'new Bret-
ton Woods [...] to rebuild our fractured international financial system'
(Brown 2008).
Wall Street
From 2007 through 2008, the bursting of the American housing bub-
ble, the implications for the highly leveraged mortgage-related financial
instruments and the subsequent credit crisis among major investment
banks developed into a global financial crisis. Stock markets plummeted
in Russia, Europe, North America and East Asia, with fears of a long re-
cession. The responses to the crisis revealed at least two things: strong,
activist governments and dramatic changes in policy assumptions.
First, the response to the crisis demonstrated that free-market, demo-
cratic governments in the most advanced economies could be strong,
willing actors in an effort to prevent a crisis from becoming a catastro-
phe. us Treasury Secretary Paulson - dubbed 'King Henry' - was the key
figure in the government's series of steps that included vast increases in
authority for the Treasury and the Federal Reserve Bank. Through Oc-
tober 2008, these included arranging the sale, bailout, failure, or restruc-
turing of the major investment banks; supporting the federal takeover of
the giant us firms of the secondary mortgage market; temporarily ban-
ning short-selling; increasing the size and scope of the federal guarantee
on bank deposits; orchestrating the government's right to purchase up to
$700 billion of distressed assets; and issuing a plan to partially national-
ize a number of us banks, with the Treasury purchasing $250 billion in
shares and imposing new restrictions (Cho, Irwin, and Whoriskey 2008).
Purchasing shares in insurers soon followed.
European banks were similarly engaged with plans that came to in-
clude loan and deposits guarantees and governments' direct purchase of
bank shares. But some considered cooperation among the major coun-
tries to be slow in coming: 'Germany shattered any semblance of Euro-
pean unity on the global credit crisis last night' (Boyes 2008) read one re-
port, after an unsuccessful Paris summit and unilateral efforts by Greece,
Ireland, Denmark. As Iceland's banking system neared collapse, and fail-
ing to gather support from its Western allies, the prime minister com-
plained that it was 'every country for itself', and turned to Russia for a
loan (Mason 2008).
Second, the response to the crisis demonstrated a fundamental change
among the governments of wealthy countries. Over the last three decades,
these countries generally had switched from mid-century Keynesian-
fdr interventionist policies toward Hayek-Thatcher-Reagan market-led
policies. Politicians, scholars and the media all made headlines, such as
'Necessity pushes out principles' (Beattie 2008), 'Undertakers deliver last
rites for us capitalism' (Guha 2008) and 'We're all socialists now.'10 The
American electorate slowed down Congressional approval of the original
$700 billion plan - at least partly on ideological grounds - but seemed to
concede in the face of rapidly declining retirement accounts and count-
less media references to the Great Depression. Secretary Paulson (2008)
acknowledged that, 'Government owning a stake in any private us com-
pany is objectionable to most Americans, me included.' Plans to nation-
alize private pension funds, as announced in Argentina, were received by
prominent Democrats in Congress.11 As Paul Krugman pointed out early
in the crisis, 'Much of Washington appears to have decided that govern-
ment isn't the problem, it's the solution.' (Krugman 2008.) Even Alan
Greenspan (2008) confessed that in his trust in markets over regulation,
'I made a mistake.'
Whether this change is temporary or long-term remains to be seen.
But if government efforts at saving the markets are perceived to fail, both
the government and the markets will be criticized. If the interventions
are perceived to work, markets may still be seen as a problem, and gov-
ernment as a solution.
The problems of the eu, wto, imf and World Bank, and the Western
financial sector are important for at least two reasons. First, they identify
that populations and governments in both the developed and developing
regions have large concerns over the future direction and extent of mar-
kets and integration. Second, they mark significant pauses - or perhaps
breaks - in a general trends in the West since the end of World War 11
and globally since the end of the Cold War.
The breakdown of international institutions also may mark potential
inroads for certain rising powers whose strengths lie in Western reliance
on imported energy and whose commitments are not to democratic, hu-
man rights or market-oriented globalization. Ayatollah Ali Khamenei,
Iran's supreme leader, claimed that the Marxist and capitalist models
have failed, proving the Islamic model's superiority. 12 Venezuela's social-
ist president, Hugo Chavez, noted that in the face of crisis the West aban-
doned its free-markets model in favor of socialist policies. 13
energy: state control and diplomatic leverage
Energy-exporting countries have begun to reassert the role of the state
in their energy sectors, and are increasingly using their natural resources
for diplomatic leverage. Concern about 'resource nationalism' in states
like Russia, Iran and Venezuela is based on emerging diplomatic trends,
including relations among these non-democratic energy exporters, and
deteriorating relations between energy exporters and importers.
Russia
Russia headlines a discussion on energy diplomacy. It temporarily halted
gas supply to Ukraine in 2006, reduced oil supplies to the Czech Repub-
lic after a 2008 us-Czech deal on antiballistic missile systems, and had
extended and ultimately hostile disagreements with Georgia. Europe be-
came increasingly worried about its own reliance on Russian energy.
Russia continues to enlarge state control over the energy sector, in-
cluding the state takeovers of Yukos (beginning in 2003) and Sibneft
(2005). By 2006, a new tactic emerged: Russian officials threatened for-
eign oil and gas investors in the name of environmentalism. The Shell
(with partners Mitsui and Mitsubishi) oil and gas project, Sakhalin-2,
and the Russo-Anglo tnk-bp deal in Siberia each became targets, with
state-owned Gazprom as the beneficiary. In 2007, the French oil company
Total was limited to a minority stake in a partnership with Gazprom for
Arctic development. !4
More generally, Russia's relations with the West cooled. In 2006, it re-
ceived a scolding on energy and democracy from us vice president Dick
Cheney in Vilnius, was again denied membership in the wto, and made
deals to provide arms to the anti-American regime in Venezuela. An
eu pipeline deal with Kazakhstan avoiding Russian territory was com-
pleted, and questions were raised over Russia-Algeria cooperation over
gas supplies to Europe. An oecd report (2006) criticized the expansion
of Gazprom and Russian policies. In July 2007 Putin announced a mora-
torium on Russia's compliance with the 1990 Conventional Forces in Eu-
rope (cfe) treaty. In August 2007, Russia planted a flag on the Arctic
seabed near the North Pole, symbolically claiming its potential resources.
Russia has also begun strengthening ties with China and Central Asia in
the Shanghai Cooperation Organization, a nascent military and/or en-
ergy alliance (Gat 2007). The war in Georgia in August 2008, and Rus-
sian recognition of independence for two Georgian regions, marked a
new post-Cold War low point. Late in 2008, Russia and Iran (and Qatar)
discussed creating a natural gas cartel. Advice from a former prime min-
ister of Ukraine was foreboding: the West must 'counter Russia's long-
standing expansionism and its present desire to recapture its great-power
status at the expense of its neighbors' (Tymoshenko 2007).
Iran
Iran has the world's second largest reserves of oil and of gas, already dom-
inated by the state. The government relies heavily on its state-owned en-
ergy sector: oil provides 85 percent of the government's revenues.^ De-
spite higher global energy prices, Iran continued to struggle domestically
with inflation, unemployment and production capacity limits, and in
July 2007 imposed gasoline rations on its citizens.ifi Nevertheless, higher
global energy prices have enabled Iran to assert a more aggressive foreign
policy.
Iranian President Mahmoud Ahmadinejad has attracted considerable
negative attention for his Holocaust denials and threats to the existence
of Israel. But concerns over Iran's foreign policies are also more funda-
mental, rooted in the dominance of Ali Khamenei, supreme leader since
1989 (Ganji 2008). His Iran has a two-pronged foreign policy of con-
cern. First is ordinary regional contests: its support of Hamas, Hezbollah
and certain Shiite militias in Iraq, pursuing its interests against Israel, the
United States and Shia-Sunni cooperation in Iraq.
Second is the dispute over Iran's nuclear power program, and its al-
leged pursuit of nuclear weapons. A nuclear Iran could endanger Israel
and its neighbors, and cause a regional arms race. If the international
community were to increase sanctions for nuclear non-compliance,
Iran might temporarily limit oil exports, or complicate passage of ships
through the Straits of Hormuz,iy resulting in a global price spike without
resolving the issue. If the us or Israel were to attack suspected nuclear
technology sites in Iran, any of a number of options might develop,
from civil unrest to regional war - all threatening global oil supplies.
Russia's military ties with Iran, its assistance with the development of
Iran's civilian nuclear power, reports of a Russian scientist providing nu-
clear weapons assistance, and mutual interest in countering American
strength in the region raise questions about their nuclear relationship
(Scolino 2008).
Venezuela
Venezuela's president Hugo Chavez attempts to be a connection be-
tween these various energy issues and new allies. Energy provided over
90 percent of export revenues and more than half of the government's
revenues.i8 Despite domestic electricity problems, 19 the increases in rev-
enue from sharp oil price increases had a directly emboldening effect
on Venezuelan foreign policy. In a 2006 world tour, Chavez secured an
arms deal with Russia, warned against us military action in Iran and
sought Iranian investment, praised Castro beside his hospital bed, en-
tered the Mercosur trade pact, secured China as an oil market and in-
vestor, and cultivated allies in Africa, Syria, Belarus and elsewhere on
energy or anti-American issues. Military purchases included Russian
attack helicopters, fighters and submarines, Belarussian air defense sys-
tems, and Chinese jet trainers. After winning re-election in December
2006, Chavez announced the closing of rctv television channel, gained
authority from the National Assembly to rule by decree, moved to na-
tionalize the telecommunications, electricity, gold and energy sectors (at
considerable expense to foreign firms), and pledged to leave the imf
and World Bank. Chavez seeks a leadership role and increased coop-
eration among Latin American countries, including Argentina, Bolivia,
Columbia, Ecuador and Uruguay.
These countries in turn followed Venezuela's example in reasserting
state control over private assets. Argentina claimed to be defending its
natural resources when it announced plans to expropriate large foreign-
owned tracts of land, despite the owners' claims that they themselves
are protecting the land as environmental philanthropists (Mander 2006).
Bolivia's new populist leader and Chavez ally, Evo Morales, made claims
on foreign companies' natural gas production. Ecuador nationalized the
assets of us-based Occidental Petroleum. Mexico, meanwhile, contin-
ued to prohibit foreign investment in its national oil company, Pemex. A
lack of energy infrastructure improvements risks the future of Mexico's
largest source of income and the us's second-largest oil supplier. 20
Together, these major energy-supplying countries (and some minor
ones) are committed to interests other than full participation in a global
economy, accepting certain costs or even dangers in exchange for short-
term interests of the regime. But at the same time, the 800-pound global-
ization gorilla also began acting in some nationalist, protectionist ways.
united states: abandoning globalization?
The Cold War victory fueled an American surge of faith in democratic
values, and expanded confidence in those values as universal. In the
1980s, the American leadership shifted from containing communism to
defeating it, intent on spreading the political, economic and security
benefits it expected would follow (Reagan 1984; 1987; Bush 1989; 1992).
In the 'unipolar moment' (Krauthammer 1990/1991) after the Soviet col-
lapse, the us saw an opportunity to promote global leadership. The Clin-
ton administration often (albeit not exclusively nor perfectly) sought
to exercise this global leadership multilaterally, focused on democratic
values and institutions, market-oriented economies and human rights.
Democracy promotion was in part pragmatic, with bipartisan belief in
the practical wisdom of expanding the 'democratic peace' (Baker 1992;
Christopher 1993) and in blending realism and idealism (Krautham-
mer 1990/1991; Brzezinski 1997; Clinton 2000). More importantly, it el-
evated American idealism as a foreign policy tool and goal - a mis-
understood version of 'the end of history' and a globalized sense of
'shining city on a hill'. The us military was employed in peacekeeping
and nation-building in Somalia, Haiti, Bosnia, Kosovo and elsewhere.
The democracy-promoting osce expanded to reach 'from Vancouver
to Vladivostok'. Free trade and greater integration was promoted with
the development of nafta and the wto; similar agendas were advanced
in the eu, asean and Mercosur. The virtues of democracy, privatiza-
tion and the freer flow of goods and capital were promoted to post-
Communist transitioning countries, Latin America, East Asia and imf
borrowers.
Policy changes from the Cold War worldview were implemented at
the administrative level as well. The us diplomatic corps made sev-
eral changes reflecting and directing the nature of globalization (Talbott
1997). The Foreign Service Institute required a new course on transna-
tional issues like narcotics trafficking and refugee flows. Many more
us government employees from departments of Justice, Transporta-
tion, Treasury and Health and Human Services were staffing embassies,
and working with multinational and non-governmental groups, not just
bilateral relations. In postwar Bosnia, for example, 'nine agencies and
departments of the us government are cooperating with more than a
dozen other governments, seven international organizations, and 13 ma-
jor ngos - from the Red Cross to the International Crisis Group to the
American Bar Association - to implement the Dayton Peace Accords.'21
The terrorist attacks on September 11, 2001, fueled at least two dra-
matic developments in us policy and sentiment away from these trends
in globalization. The first was a reversion from idealism and multilater-
alism to realism and unilateralism, accelerating a trend that began even
before the attacks. The second was a shift from emphasizing the benefits
of globalization to focusing on its dangers. It manifested this shift with
a more militarized foreign policy, rising nationalism, economic protec-
tionism, and a state-led response to the 2008 financial crisis.
Return to Realism
us reversion to realism and unilateralism predated the 2001 attacks
themselves. William Safire (1999a; 1999b) described this in the New York
Times early in the nomination process, and Condoleezza Rice (2000) was
an unabashed realist when she was Candidate Bush's key foreign policy
advisor. In the first months of the George W. Bush administration, the
us abandoned the 1972 anti-ballistic missile treaty, the environmental
approaches outlined in the Kyoto Protocol, and a standing international
war crimes tribunal.
After the terror attacks, the obvious state-level action was the dislodge-
ment of the Taliban government in Afghanistan. In October 2001, 89 per-
cent of Americans approved of President Bush's handling of the situation
- and 81 percent supported an attack on Saddam Hussein.22 The White
House and the American people had shifted from globally-interested,
post-Westphalian humanitarian intervention and peacekeeping to self-
preserving regime change and pre-emptive war.
Militarizing Foreign Policy
Changes in language and perspective reinforced the new attention to mil-
itary problems and solutions.23 Terrorism was no longer considered a
law enforcement problem, but an act of war. President Bush declared a
'global war on terror', targeted al Qaeda as following 'in the path of fas-
cism, and Nazism, and totalitarianism',24 and warned of Iran, Iraq and
North Korea as the 'axis of evil'. 25 In a strange combination of themes
from former us Presidents Wilson, Truman, Reagan and Clinton, Iraq
was targeted not only for possible weapons of mass destruction, but also
as the cornerstone for democratic change in the Middle East. From Can-
didate Bush, who opposed nation-building, evolved the president of pre-
emption, regime change, and coercive democratization. Rice was judged
to have evolved in this same direction (Kessler 2007).
These changes were formalized in the 2002 National Security Strategy.26
Its themes included 'preserve, defend and extend the peace' and justify-
ing pre-emption as part of the war on terror. These echoed themes of
the 1992 Defense Planning Guidance - unipolarity, unilateralism, pre-
emption - drafted by persons who became top Bush administration
officials in 2001.27 America's 'gravest danger', warned the 2002 nss, is the
'global reach' of terrorists at the 'crossroads of radicalism and technol-
ogy'. The theme continued in the 2006 National Security Strategy, with
reference to illicit arms and wmd trade: 'Globalization has exposed us to
new challenges and changed the way old challenges touch our interests
and values.'28
Nationalism
In addition to Bush's more assertive military posture, questions combin-
ing cultural exceptionalism, national security and economic protection-
ism emerged on two fronts: a new East-West debate (between Islam and
the (Christian or secular) West), and a battle over immigration.
The first was related directly to the September 11, 2001, attacks. Bush
acknowledged that Americans were asking themselves, Why do they hate
us?, and offered his answer: 'They hate our freedoms - our freedom
of religion, our freedom of speech, our freedom to vote and assemble
and disagree with each other.'M A variety of efforts to answer this ques-
tion were undertaken in the subsequent years, with results ranging from
Bush's presumably careless use of the word 'crusade' and a commitment
to changing the political culture and structure of the Middle East, to a
myriad of new university, think-tank, ngo, television and other 'under-
standing Islam' and 'Islam and the West' programs.
If Americans struggled with comprehending this 'clash of civilizations'
(Huntington 1993), they knew an older one - immigration - very well.
During the second Bush administration, the American public increas-
ingly clamored for stricter immigration enforcement.30 Polls from early
2005 through mid-2006 consistently showed that 77 percent of respon-
dents said the us was 'not doing enough to keep illegal immigrants out
of the country'. Polls in 2006 and 2007 found support for using the Na-
tional Guard and 'building a fence' to help secure the southern us border
against illegal immigrants exceeded 60 percent. Seventy percent believed
that illegal immigrants weaken the economy, while nearly 90 percent
thought the problems of illegal immigration were 'very serious' (between
59 and 62 percent) or 'serious' (between 25 and 30 percent). In Europe,
polls also showed overwhelming support for stricter border control and
widespread views that illegal immigration was a problem.31
Reasons for these views varied. Some cited economic issues such as
taking American jobs and the costs to local governments for health care
and education.32 Some claimed a rule-of-law righteousness, arguing that
'my grandparents/my spouse/I came legally' and complaining about the
'catch and release' law enforcement. Cultural protectionists like Hunt-
ington (2004) questioned whether new immigrants had the appropriate
interest in and ability for 'assimilation'. The national security-minded
warned against the ease with which terrorists could cross the border; this
last group often noted the vulnerability of our ports as well. These view-
points coalesced in response to President Bush's 2007 immigration re-
form proposal, which was branded as 'amnesty' for providing a path to
citizenship for illegal immigrants.
Economic Protectionism
In some ways, security, cultural and economic dynamics were mutually
reinforcing. Unlike the usual topics of tariffs and subsidies monitored
by special interest groups, two cases of foreign direct investment became
topics of fierce public debate: the purchase of a us oil company by China,
and the transfer of several us port operations to the United Arab Emi-
rates.
In the summer of 2005, cnooc, an oil firm owned 70 percent by the
government of China, made a bid to purchase Unocal in the us. What
emerged was a 'potent informal political alliance between pragmatic se-
curity hawks and the opponents of free trade' (Hassett 2005). After con-
siderable pressure from its constituents, Congressional (but not White
House) opposition pressured cnooc to withdraw its bid, and Unocal
was acquired by Chevron, a us company.
In early 2006, us legislators again joined popular objection to an in-
ternational corporate deal. By purchasing a publicly-traded British com-
pany, the uae's state-owned dp World would take over operations at
several us ports. Under public pressure, key leaders of both parties in
both houses of Congress worked to block the deal, while President Bush
publicly asked, 'I don't understand why it's ok for a British company to
operate our ports but not a company from the Middle East.'33 A deal
for dp World to sell its us port operations to American-owned aig
Global Investment Group was announced in December 2006. (Foreign
takeovers of 'national security' assets were also resisted even among fel-
low eu members. In 2006, France opposed a bid from metals giant Mit-
tal, headed by a London-based Indian, for Luxembourg-based Arcelor;
Italy opposed a takeover of its toll-road operator by a Spanish firm; and
Spain opposed the merger of Endesa by the German energy firm, E.On.)
2008 Financial Crisis
As described above, the responses to the 2008 financial crisis by us and
European governments were state-centric, with bailouts, arranged deals,
new financial guarantees, and the partial nationalization of banks or-
chestrated by self-empowering finance ministers, central bankers and
heads of state. This varied considerably from the imf prescriptions for
troubled economies in the 1990s, which usually called for fiscal responsi-
bility and market-oriented reforms. During the 1990s, Sweden and Japan
took critical actions, the us supported Mexico and Long-Term Capital
Management, and the imf supported a spiraling Russia. But the govern-
ment roles in the 2008 crisis were historic in scope, dollar amount, and
philosophy.
It is noteworthy that in the us, the White House did not share the
opinion of many of its usual supporters on dp World and immigration;
the protectionism was led by constituents, especially among the pres-
ident's conservative base. Elsewhere, the president generated criticism
for unilateralism and protectionism. Meanwhile, Democratic voters be-
came frustrated with their own Congressional leadership for failing to
deliver on pledges of troop withdrawals from Iraq. The judiciary was
not exempt: the public demanded state and local responses to a 2005
us Supreme Court decision expanding the government's right to seize
private property for re-development.34 A disconnect between govern-
ments and their publics is seen in Europe too: the governments typi-
cally supported the new governing treaties, but the French, Dutch and
Irish voters rejected them, and others might have. In the energy states,
though, the state (even if that means a particular ruler) has led the poli-
cies. Putin and Chavez are criticized as increasingly authoritarian, while
some see a swing to the populist, nationalist, or socialist left in Latin
America.35
Academics, politicians and voters are not the only ones struggling to
understand these changes and conflicts. International business leaders,
long at the vanguard of globalization, 'are being trapped by the un-
even landscape of sovereign protectionism' and 'national parochialism'
among mature democracies (Hamre 2007). That is, the diminishing re-
luctance to subordinate the principles of globalization to parochial inter-
ests comes from voters and regimes of different political philosophies in
various parts of the world, affecting people, governments and business.
The Sources of Changing Preferences
The changing preferences of states and societies that are manifesting
themselves as the breakdown of international institutions, the increased
politicization of oil and the wavering of us commitment to globalization
have at least two underlying sources. The first is philosophical - an ideo-
logical shift. The second is pragmatic, reflecting changing assessments of
the utility of existing policies and structures.
Philosophical Changes
The post-Cold War era, which lasted perhaps a decade, was filled with
hope, expectations and promises of idealism trumping realism. Human
rights, free trade, a global democratic peace, and the end of history would
replace oppression, protectionism, nationalism, balance of power and
ideological struggles. The ideals of intervention in Bosnia, Cambodia,
East Timor, Eastern Slavonia, El Salvador, Haiti, Kosovo, Mozambique,
Namibia, Sierra Leone, Somalia and elsewhere were to promote the hu-
man condition over and despite the political realities of the preceding
decades and centuries.
Even before September 11, 2001, though, the ideological return of re-
alism was underway. George W. Bush's top foreign policy advisor (Rice
2000) promised a realist Weltanschauung. The administration's promi-
nent neo-conservatives such as Wolfowitz and Cheney sought to advance
American hegemony and self-interest, rather than any multilateral con-
fluence of global ideals. After the 2001 terrorist attacks, the American
public gave wide latitude to the administration, at home and abroad, in
the interest of national security (Casey 2008; Giuora 2008). Support for
war against Afghanistan was nearly universal; a seemingly easy victory
there made expanding this militarization of foreign policy to Iraq easier.
This ideological position was joined by much of the American public in
fear of the 'new normal', and spread to opposition to previously obscure
foreign direct investment and immigration issues.
Putin and Chavez were likewise motivated by ideology, although in
some different ways. Yeltsin's handpicked successor did not focus on the
skillful repair and advancement of Russia's broken democratic and mar-
ket 'reforms'. Rather, Putin sought to meet Russians' desperate hunger
for order, stability and a return of national prestige. The economic col-
lapse, the rise of the oligarchs, the struggle with Chechnya, the military's
internal troubles, and the loss of super-power status - Putin was charged
with rectifying these, not strengthening civil society and human rights
law. Putin took on these challenges with his own personal and political
strength, enabled and emboldened by the growing price of oil.
Latin America became increasingly democratic in the 1980s and 1990s.
But in Chavez, Venezuela elected a former military coup leader commit-
ted to a Bolivarian social revolution, promoting social welfare, reining
in the private sector, and combating the prevailing international power
structure. Arguably, these views were not merely politically expedient but
sincere and long-held (Chavez 2005; Guevara 2005). Surviving a coup at-
tempt in 2002 and a recall vote in 2004, Chavez leveraged rising oil prices
into globalizing his Bolivarian agenda, combating international power
arrangements (particularly us hegemony), positioning himself as the ail-
ing Fidel Castro's philosophical heir, and asserting regional leadership
and a global role for Venezuela.
In Iran, the clerical/political leadership's conservatism resisted prospec-
tive reforms under President Khatami. Bordered east and west by us mil-
itary occupation (and potentially democratizing regimes) in Afghanistan
and Iraq, Iran did not choose some fantastical democratization reform
of its own. Instead, it advanced policies to keep the elites in power and to
develop regional hegemony: persisting with its nuclear program, bom-
bast against Israel, and support of anti-Western Hamas, Hezbollah and
certain Iraqi Shiite factions. Meanwhile, Russia, Venezuela and Iran co-
operated in military, economic and diplomatic matters, in what the Lon-
don Times called the 'axis of diesel'.36
New Pragmatism
Understanding ideological trends in countries - returning to 'normal'
or 'historical' patterns of state-centered, self-interested, power-seeking
realism rather than post-Westphalian, Kantian, liberal global idealism -
is an important but incomplete approach to recognizing the threats to
globalization. The trends in the United States, in the newly assertive oil
powers, and especially the breakdown of international institutions also
need to be understood within a more tangible context: pragmatic deci-
sions about utility.
Institutions are created and maintained not merely for what they sym-
bolize, or what they are said to 'mean', but for mutual practical advan-
tage. The League of Nations had invaluable aims, but could not deliver;
the United Nations and its many agencies were created in its wake for
particular tasks. The postwar European Recovery Program was founded,
implemented and concluded. Interpol, opec, fifa and the Shanghai Co-
operation Organization had various founders for various reasons; each
evolves subject to the changing needs, perceptions and abilities of its
members. In the early 2000s, it is this same pragmatism about utility that
threatens several key international institutions - structures that were es-
tablished after World War 11, expanded after the Cold War and served as
foundations of globalization.
The 'democratic deficit', accountability, bureaucracy and other prob-
lems of the European Union have been well chronicled (Ross 1995;
Siedentop 2001; Lord 2004). But the 'no' votes in France, the Nether-
lands and Ireland were accumulations of particular concerns more than
larger philosophical debates. At the time of referendums, there were
uncertain national economies, unpopular governments, and concerns
about proposed eu voting structures and Turkey. The Treaty of Lisbon
was signed with widespread practical acknowledgment of the need for
improvements to the eu's decision-making processes, but without any
emotional surge of'Euro'-ness.
The postwar international financial institutions are also challenged by
practical matters. First is a question of value. With regional financial col-
lapses in Asia, Russia and Latin America in the last dozen years, and
the global crisis in 2008, external and internal evaluations detailed their
shortcomings. Second is a question of governance. The ifi's decision-
making processes are dominated by the United States and a few other
countries. They are criticized for not reflecting changes to the global po-
litical economy since the 1940s. The World Bank began to recognize this,
putting forth in 2006 a 'medium term strategy' to change its governance,
surveillance and assistance policies (de Rato 2006). Third, and related
to value and governance, is the emergence of competition. States and
firms can turn to new bilateral sources of support, such as China and
sovereign wealth funds, for lending and development deals without the
usual ifi conditions and oversight. Private efforts of Billanthropy (ne-
ologism from 'Bill Gates' and 'Philanthropy') or philanthrocapitalism3y
emerged partially in response to ifi shortcomings.
Like the eu and ifis, the World Trade Organization is struggling to
adapt to new missions. The 50 years of lowering tariff and non-tariff bar-
riers has left only the most difficult cases, such as services, intellectual
property rights and, especially, agriculture. Beyond questions of subsi-
dies and market access, agricultural issues include environmental pro-
tection, food security, and rural development. After a record of success
with industrial-age manufactured goods, the wto labors to manage pre-
and post-industrial issues.
Finally, pragmatism drove us and European governments to respond
to the 2008 financial crisis with new regulations, special ad hoc arrange-
ments, promises of very large financial relief, and discussion of over-
hauling the global financial system. These decisions were not made at
a graduate seminar on Smith and Ricardo or a social justice forum on
affordable housing. They resulted from contentious, international, cross-
partisan efforts to prevent dire circumstances from becoming catas-
trophic.
Utility is not entirely dissociated from philosophy, of course. Deciding
to reconsider long-held institutional arrangements, to take advantage of
changing commodities prices, or to focus on new threats is not simply to
choose one ideological perspective over another. It is to make decisions
based on assessments and re-assessments of domestic and international
conditions. The risk is whether in the aggregate such re-assessments in-
cline states and other actors increasingly toward rivalry, threats and vio-
lence, or towards new possibilities for mutual benefit.
Looking Ahead: Possible Consequences
The significant instances of international institutional breakdown, hos-
tile state-controlled energy diplomacy, and trends away from globaliza-
tion call for various kinds of inquiry for the benefits of policy makers,
industry and citizens. Questions include the future of international or-
ganizations, the complex matrix of global energy politics, and the role of
the United States on the world stage.
International Institutions
International organizations have played important roles in advancing
cooperation since the end of World War ii and the end of the Cold
War. They serve as forums for grievance and negotiation, as coordinat-
ing regimes for functional utility, as sources of technical expertise and
assistance, and more. The question of whether they can mature to ad-
dress the needs of the 21st century remains to be seen. Not only is the
wTo deadlocked on development issues, but also on membership: two
decades after Gorbachev's reforms began, Armenia, Georgia and Latvia
(and China and Cuba) are members of the wto, but Russia is not. The
eu struggles with several new, large, and/or poorer members, the long-
standing question of Turkey, and formulating a new framework to ad-
dress its concerns. The imf and World Bank have new competition, less
'liberalizing' and 'integrative' in intent, while high-profile calls for debt
relief may well prove to be only a short-term solution without broader
development success. The reconstruction of global finance is an enor-
mous challenge: the initial G-20 meeting in Washington in November
2008 received mixed reviews.
According to Joseph Nye (2006), even nato's future is at risk. It has
membership debates with Russia over its 'near-abroad', and internal de-
bate over special partnerships with Australia, Japan and others. nato
faces key questions over shaping its new mission, and it has mission dif-
ficulties in Afghanistan. That the alternative, 'coalitions of the willing',
(Haass 1997) has a mixed record in Iraq is no consolation. The osce,
once committed to promoting democracy 'from Vancouver to Vladivos-
tok', faces the prospect of undemocratic Kazakhstan as its chair in 2010
(Walker 2007).-38
New proposals to solve old and new problems will emerge and evolve,
of course. Global stewardship, such as Billanthropy and environmental
initiatives, may be one such pattern. The world's wealthiest individuals
are privately funding new approaches to political and economic develop-
ment, education, poverty, health care, environmentalism, and the provi-
sion of other public goods. George Soros, Ted Turner, Bill Gates, Warren
Buffet, Carlos Slim, Mo Ibrahim and others are able to go around the
usual organizations, or leverage them, in innovative ways where interna-
tional efforts have struggled. Even if personal fortunes are lacking, indi-
viduals like Princess Diana, James E. Carter, Bill Clinton, Al Gore and
Bono can mobilize public awareness (and attract funding) for their own
global initiatives. Meanwhile, non-profit, commercial and state-led envi-
ronmental initiatives may offer not only new technologies but also new
forms of collaboration as policy makers, activists, scientists and entre-
preneurs each seek to advance their versions of global stewardship. Al
Gore's book, An Inconvenient Truth, was a New York Times bestseller; the
film version won the 2007 Academy Awards for best documentary fea-
ture. Whether these or other approaches can improve or replace the roles
of states or international organizations will prove to be an important area
of analysis.
Petropolitics
Global energy politics has numerous military, political, economic and
environmental aspects. Even if there were a 'reverse oil shock' (Romero
2008) it would likely be temporary. The world's energy needs, particu-
larly of large and developing China and India, will continue to increase,
and much of this increased demand will be for oil. The global supply of
oil is under pressure in the short term because its primary sources are
subject to terrorism, war and political instability, and in the long term
because soon (if not already) the world will pass its maximum produc-
tion possibility ('peak oil', Hubbert 1956) and work from there toward
depletion. A new boom is underway in the search for renewable and al-
ternative energy technologies, but no magic formulas are imminent.
Beyond geologic and geopolitical issues, additional problems exist.
Countries positioned to benefit from natural endowments of oil and
other energy resources frequently encounter acute political and eco-
nomic difficulties instead (Gelb 1988; Auty 2001; Ross 2001). Thomas
Friedman (2006) asserted an inverse relationship between freedom and
the price of oil. According to the Failed States Index (Foreign Policy 2005)
nearly two-thirds of the world's proven natural gas reserves and nearly
three-quarters of the world's proven oil reserves were in states that were
judged 'borderline', 'in danger', or 'critical'. Additionally, environmental
concerns and environmental activists have increased pressure on gov-
ernments, corporations and individuals to wean themselves from carbon
fuels. The science and politics of energy - carbon and alternative - will
continue to prove fertile and dynamic areas of inquiry.
us and Globalization
Study of the United States on its own merits and as a force in world af-
fairs will remain vibrant and important. Whatever its shortcomings, for
most of the past half century the United States has been a strong, lib-
eral and mostly benevolent empire. Harold Innis (1948) called American
imperialism 'plausible and attractive'. John F. Kennedy (1961) challenged
other nations to 'ask not what America will do for you, but what to-
gether we can do for the freedom of man.' Post-Cold War American em-
pire became a bipartisan blend of realism and idealism - 'the indispens-
able nation' (Clinton 1996).39 But this occurred while the world became
'normal' again (Kagan 2007). The United States has citizens and allies
weary from Iraq, emerging competitors in Russia, China and elsewhere,
a combination of domestic forces opposing immigration and war, re-
duced credibility in global opinion polls, and mutual suspicion between
it and a wide range of important global actors. If there is a 'new Bretton
Woods', both the prominence and the philosophical approaches of the
new us presidential administration will be important to note.
Paraphrasing the quintessential American writer, Mark Twain, reports
of the death of globalization may be greatly exaggerated. One might see
conditions that contributed to World War I (Ferguson 2004), a 'new Cold
War', China surpassing the West, or a new kind of global conflict. But one
scenario is that the United States could devolve into a great power that es-
chews leadership in most non-vital global issues and areas - a hegemon
unable or unwilling to provide global public goods, becoming instead
mercantilist, predatory, unpredictable, a declining empire, or some com-
bination (Mann 2003; Wallerstein 2003; Ferguson 2004; Johnson 2004;
2006; Hoffman 2004; Bacevich 2005a). Many, in the us and elsewhere,
may initially welcome this retreat to a humbled American isolationism.
But in combination with energy conflicts and ineffective international
organizations, the long, wide trends toward freer and more integrated
markets, peoples and ideas may be threatened. Academia, private sector
resources, policy makers and their publics must work vigilantly to note
and understand these and other developments if they seek to advance
not only their strategic interest but also the human condition.
Notes
1	The Conference on Security and Cooperation in Europe became the Or-
ganization for Security and Co-operation in Europe with the Charter of
Paris for a New Europe in 1990. See www.osce.org.
2	The BBC web site has a thorough introduction to the eu constitution
at http://news.bbc.co.uk/2/hi/europe/3954327.stm, much of the discussion
here relies on it. uk polling data from icm, mori and others is collected
at www.ukpollingreport.co.uk.
3	On the international and domestic sources of public dissatisfaction with
the eu and its constitution, see, for example, Cohen-Tanugi (2005) and
Kramer (2006).
4	See, for example, the survey by the Eurobarometer at http://ec.europa.eu/
public_opinion/flash/fl_245_full_en.pdffor an analysis of voters and non-
voters in the days immediately following the referendum.
5	Of related interest is the analysis of the increasing difficulty of admission
to the wto, by Jones (2006).
6	See, for example, Jones (2006).
7	Compare with Williamson's (2002) defense of the Washington Consensus
and his criticism of it being labeled 'neo-liberal'.
8	A recent New York Times column on China in Chad, for example, is by
French and Polgreen 2007.
9	Reuters, imf urges coordinated eu approach to crisis, October 4, 2008.
Http://www.reuters.com/article/usDollarRpt/idusL470304920081004.
10	Possibly the first to use this was Libertarian Party us presidential can-
didate Bob Barr, http://www.telegraph.co.uk/opinion/main.jhtmKxmW
opinion/2008/ 10/ 09/do 0901.xml.
11	Targeting your 401(k). Wall Street Journal, November 14, 2008.
12	Agence France-Presse, Iran hails world financial crisis as 'end of capital-
ism'. October 15, 2008. Http://www.breitbart.com/article.php?id=
081015152055.72llwkbo.
13	Reuters, Chavez says 'Comrade Bush' turns left in crisis. October 15, 2008.
Http://www.reuters.com/articlePrint?articleId=usTRE49F0K720081016.
14	Notably, Germany's energy relationship with Russia stood out from other
European countries. Germany and Russia agreed to a special pipeline
route, Nord Stream, toward the end of chancellor Gerhard Schroeder's
term; Schroeder took position at Gazprom shortly thereafter (Kramer
2007). In 2008, German energy company E.On completed a deal with
Gazprom to acquire a stake in a major Siberian natural gas field, on terms
said to be friendly to E.On (see, for example, Chazan and Esterl 2008).
15	us Department of State. 2008. Background Note: Iran. Http://www.state
.gov/r/pa/ei/bgn/5314.htm.
16	See, for example, imf (2007) and Economist Country Briefings: Iran
(http://www.economist.com/countries/Iran); compare with Campbell (2007).
17	Ayatollah Ali Khamenei offered such a scenario in September 2008 (Agence
France-Presse, Iran boasts its forces can control the Gulf, http://
www.breitbart.com/article.php?id=080916143106.poyzy127&show
_article=1).
18	us Department of State, Background Note: Venezuela. June 2008. Http://
www.state.gov/r/pa/ei/bgn/35766.htm.
19	Reuters, Oil powerhouse Venezuela struggles to keep lights on. October
22, 2008. Http://www.reuters.com/article/GCA-Oil/
idusTRE49M0Bw20081023.
20	Worldwide, firms owned and/or controlled by the state are the largest
companies in the emerging markets. Of the top 100 companies in the
world, by market capitalization, nine are from Russia, China or Brazil.
Mexico is the only other emerging market with a company in the top
200. Of these nine, six are energy companies (including Gazprom, third
largest company in the world by market capitalization), and five are Chi-
nese (two energy, two financial, one telecom). Of the top 200 companies
worldwide, 16 are emerging market firms, and only two of those are not
state controlled. (Emerging into a world of giants, Financial Times, August
22, 2006.)
21	Examples are offered by Talbott (1997); Bosnia from p. 79 therein.
22	PollingReport.com, Newsweek/Princeton Survey Research Associates. Oc-
tober 10-11, 2001. Http://www.pollingreport.com/terror8.htm.
23	Bacevich (2005b) and Johnson (2004) examine this new militarism from
a broader perspective and longer time horizon.
24	Address to a Joint Session of Congress, September 20, 2001.
25	State of the Union, January 20, 2002.
26	National Security Strategy. September 17, 2002. Http://www.whitehouse
.gov/nsc/nss/2002/index.html.
27	Authors included Paul Wolfowitz (Donald Rumsfeld's deputy secretary of
defense), and I. Lewis Libby (chief of staff to vice president Richard Ch-
eney). For the original reporting, see Tyler 1992a; 1992b.
28	2006 National Security Strategy. Http://www.whitehouse.gov/nsc/nss/
2006/sectionX.html.
29	Address to a Joint Session of Congress, September 20, 2001.
30	The following us data is from PollingReport.com (http://www
.pollingreport.com/immigration.htm).
31	The European data is from FT/Harris polls of uk, France, Germany, Italy
and Spain (October 2006), at http://www.harrisinteractive.com/news/
allnewsbydate.asp?NewsiD=1107. Ipsos mori poll of uk (August 2006),
at http://www.times-archive.co.uk/onlinespecials/trends1.pdf.
32	During the 2006 election cycle, the pro-immigrant factions also be-
came more vocal, gaining some support from Democrats on social jus-
tice and anti-discrimination bases and from big-business Republicans on
economic rationales - see, for example, the editorial 'The Immigration
Dodge' in Los Angeles Times, September 6, 2006.
33	Quoted by cnn, Bush, Congress clash over ports sale. February 22, 2006.
Http://www.cnn.com/2006/poLiTics/02/21/port.security/.
34	Kelo v. City of New London, ct, Supreme Court of the United States, June
23, 2005.
35	The narrow, eventual loss by presidential hopeful Andres Manuel Lopez-
Obrador in Mexico by fall 2006 had slowed this 'leftward swing', but Hugo
Chavez's reelection in Dec. 2006 may keep it alive - see Casteneda (2005)
and Schamis (2006). On Putin, see, for example, the series of articles by
Aron (2007), Kasparov (2007) and Sestanovich (2007) in the Journal of
Democracy.
36	The axis of diesel, Times, October 18, 2008. Http://www.timesonline.co
.uk/tol/comment/leading_article/article4965123 .ece.
37	The birth of philanthrocapitalism, Economist, February 23, 2006. Billan-
thropy, Economist, June 29, 2006. For competing perspectives, see Bishop
and Green (2008) and Edwards (2008).
38	Kazakhstan was originally slated to chair osce in 2009.
39	Clinton at the Democratic National Convention, Chicago, August 29,
1996. M. Albright used the term 'indispensable nation' upon being nom-
inated as secretary of state, December 5, 1996, and subsequently. On the
bipartisan blend of realism and idealism, see, for example, Krauthammer
(1990/1991), Wolfowitz (1992) and Brzezinski (1997).
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The Causes of Conflict in Public and Private Sector
Organizations in South Africa
Chris van Tonder
Werner Havenga
Jan Visagie
The uncertainty that accompanies organizational change heightens
prospects for intra organizational conflict. Notwithstanding this, the
knowledge base on the sources (or causes) of organizational conflict is
underdeveloped - largely as a result of a low incidence of empirical re-
search, and in particular in South Africa. The current study explored
the perceived sources of conflict in two South African organizations
operating in different economic sectors. An experimental survey focus-
ing on both the causes and the impact of conflict was administered to
a sample of 203 employees, representing both companies. Comparative
analysis revealed significant differences between the two organizations'
views with regard to the causes and consequences of conflict. The impli-
cations of these findings for future research and conflict management
are discussed.
Key Words: organizational conflict, conflict management, human
resource management, management
jEL Classification: D740, L290, M120
Introduction
Major change and continued turbulence in the social, political, techno-
logical and economic environments at a global level, but also locally in
South Africa, are creating an uncertain and complex environment in
which organizations have to operate. Fuelled predominantly by rapid
advances in the information and communications technology (ict) sec-
tor, globalism has become both a cause and a consequence of sustained
change (Van Tonder 2008), which, by all accounts, appear to be in-
creasing in magnitude and pace (Burnes 2003; Schabracq and Cooper
Dr Chris van Tonder is a Professor in the Department of Human
Resource Management, University of Johannesburg, South Africa.
Dr Werner Havenga is a Senior Lecturer in the Department of Human
Resource Management, University of Johannesburg, South Africa.
Dr Jan Visagie is an Associate Professor at the School of Human
Resource Sciences, North-West University, South Africa.
2000; Vakola, Tsaousis, and Nikolaou 2004; Van Tonder 2007a; 2007b).
Increasing uncertainty and complexity in the operating environment
of organizations provide fertile ground for the onset of conflict in the
workplace (in the vernacular conflict is typically viewed as a form of dis-
agreement or argument, or an incompatibility in the views, opinions,
principles and so forth of two or more individuals - The South African
Concise Oxford Dictionary 2002: 242). Indeed, an increase in the inci-
dence of conflict is to be expected (cf. De Dreu, Van Dierendonck, and
De Best-Waldhober 2002). Given these considerations a strong case can
be argued for a heightened probability of conflict in both public and pri-
vate sector organizations in South Africa on grounds of the influence
of, among other, organizational change, affirmative action programmes,
competition for scarce resources and regular changes in management.
In the South African context, however, limited empirical information is
available on local authorities' and private sector businesses' awareness
and understanding of conflict, their perception of the causes or sources
thereof, and how conflict should be managed. In this regard Holtzhausen
(1994,19) has argued that organizational conflict can be resolved if the
causes are identified and solutions are found which accommodate all the
parties involved. Indeed, attempting to deal with and/or manage conflict
successfully without identifying the causes of such conflict is a lost cause
(Havenga 2004, 04). With conflict being a pervasive phenomenon in or-
ganizations, effective management i. e. dealing with conflict in such a way
that it does not recur, is clearly needed. In this regard the management
of the origin (or sources) appears to be key to the effective resolution
of the conflict. This, in turn, presupposes that managers have a clear un-
derstanding of the many sources of conflict in organizational settings (cf.
Nelson and Quick 2001,24).
With regard to the causes of conflict, it is useful to note that the causes
(sources) and 'conditions' of conflict can be linked and collectively re-
garded as prerequisites for conflict (Jordaan 1993,25-45). Closer scrutiny
of relevant terminology reveals that several authors in fact equate sources
of conflict to prerequisites or causes of conflict (Marx 1965; Dahrendorf
1976; Hellriegel, Slocum, and Woodman 1983; Robbins, Odendaal, and
Roodt 2003).
Marx (1965) and Dahrendorf (1976) specifically emphasized freehold
(poverty rights), poverty, social mobility, absence of security, unemploy-
ment, competition and class consciousness as causes of conflict. Some of
these sources were implicitly identified by the authors as forming an inte-
gral part of the structure of society. Scholars in the domains of sociology,
industrial sociology, behaviorism, and management science have since
incorporated these causes, in one way or another, in their typologies of
the causes of conflict (Ashley and Orenstein 1985; Lopreato and Hazel-
rigg 1972; Deutsch and Coleman 2000; Ritzer 1992; Turner 1991). Most of
these scholars, however, approached conflict and its causes from a macro
economics and political perspective and paid very little attention, if any,
to conflict as experienced at the level of the individual organization or
business, whether small, medium or large.
Problem Statement and Objective
The impact and consequences of unattended conflict in the workplace on
employees and the organization generally (cf. Dijkstra 2006), would ar-
gue for immediate attention to the resolution of the conflict rather than a
careful and systematic (and invariably more time-intensive) approach to
investigating the underlying causes of conflict. There is little to indicate
that organizations actually attempt to establish the underlying causes of
institutional conflict. Rather, and in order to resolve conflict, individu-
als or groups resort to conflict management instruments without first
determining what the sources (causes) of conflict are - a key element
in developing appropriate conflict resolution strategies (Havenga 2004,
88). Mayer (2000, 8), for instance, argues that if the causes of conflict are
known and understood, a conflict map can be developed, which could
guide conflict resolution processes. Understanding the different forces
that inform conflict behavior consequently empowers the facilitator or
manager with the opportunity to develop a more selectively focused and
nuanced approach for dealing with the specific occurrence of conflict.
An important consideration, however, is the likelihood of organization-
specific conflict perceptions. In much the same way that employees at
different levels within the organization tend to differ in their percep-
tion and characterization of a common change event (cf. Van Tonder
2006; 2007b), so too should inter-organizational differences in conflict
perception be anticipated. Perceived differences in the characterization
of organizational changes imply a differentiated approach to dealing ef-
fectively with the unfolding change event (i. e. 'change management'). A
comparative analysis of conflict perceptions, between different types of
business organizations, may consequently itself assist in the process of
identifying appropriate conflict resolution styles or strategies.
The key research question that emerges from this brief consideration
of organizational conflict is whether the perceived causes of institutional
conflict are organization-specific or universal across organizations in dif-
ferent economic sectors. Secondly, and related to the former, is whether
employees' experience of the impact of the conflict is organization-specific or
common across different organizations? The current study's primary ob-
jective, consequently, was to establish and compare causes of conflict in
a private business and a public concern. As a secondary consideration,
the study also attempted to establish, at this preliminary stage, variation
in the reported impact of conflict on the individual employee.
Before considering the design and methodological parameters for
conducting such an (exploratory) study, it is necessary to briefly con-
sider prevailing views on the sources of organizational conflict.
Sources of Conflict
The number and range of potential sources of conflict suggested by
scholars are substantive, but most of these were theoretical conceptu-
alizations with rigorous empirical research a rarity. The scientific legit-
imacy of these claimed sources of conflict as well as the categorization
systems proposed, remain problematic in the absence of empirical re-
search. This is particularly applicable to the South African environment
where empirical studies on the causes of organization-level conflict are
not in evidence.
When considering research beyond the South African setting, it is ob-
served that the causes of conflict emphasized by scholars seldom perti-
nently addressed the organization or business level. Earlier and more re-
cent accounts of these sources of conflict in many instances addressed the
subject at the macro-structural rather than the micro- or business level,
where these sources were typically interpreted as prerequisites for con-
flict to develop (Dahrendorf 1976; Jordaan 1993; Marx 1965; Mayer 2000;
Robbins Odendaal, and Roodt 2003; Stroh 2002). Those who did con-
sider the causes of conflict at the organizational level identified a multi-
tude of potential sources of conflict. Accordingly, such sources or causes
included differences in knowledge, beliefs or basic values; competition
for position, power or recognition; a need for tension release; a drive
for autonomy; personal dislikes; and differing perceptions or attributes
brought about by the organizational structure, different role structures,
heterogeneity of the workforce, environmental changes, differences in
goals, diverse economic interests, loyalties of groups, and value discrep-
ancies, which were all considered at various stages as major causes of
conflict in organizations (Renwick 1975, 444-456; Weider and Hatfield
1995, 687).
Havenga (2002, 160) indicated that causes of conflict at the level of
the organization could also include resource availability; affirmative ac-
tion programs; the scope and content of workload; the introduction of
new management techniques; and differences of a cultural and racial na-
ture. A typology that further categorizes sources of conflict is offered
by Nelson and Quick (2001, 424-8) who differentiate between struc-
tural factors (causes) i. e. those that develop from within the organiza-
tion and originate from the manner in which work is organized, and sec-
ondly, personal factors, which emerge as a result of individual differences
among employees. Although the potential sources of conflict seemingly
abound, the important role of communication as a potential source of
conflict appears to be understated. With a few exceptions (Ritzer 1972;
Robbins 1998; Vecchio 2000) communication is infrequently considered
as a source of conflict. The typologies utilized by these authors tend to
suggest that the various sources of conflict can be classified into three
categories, namely communication processes, structure, and individual
behavioral factors. However, despite the frequency with which causes
(sources) of conflict are nominated or suggested, empirical support for
the claimed validity of these causes or typologies is substantively lacking,
which suggests that any and each categorization framework is as helpful
or unhelpful as the next.
Research Methodology
The preceding and somewhat reductionistic perspective on conflict be-
lies the complexity that has gradually crept into definitions of conflict
over time. These definitions have invariably further differentiated or ac-
centuated different types of conflict, for example intrapersonal, interper-
sonal, intra- and intergroup conflict, and organisational conflict (Rahim
1983). Others have focused on the different dimensions on which con-
flict is partially or completely described, for example, the emotive and
cognitive components of conflict (cf. Schmidt and Kogan 1972), while
others accentuate the act of opposition, disagreement or argument (the
action component) of conflict as emphasized in the Oxford definition.
It is understandable that definitions will range from the inclusive to the
exclusive and would reflect discipline-specific foci and variation.
Several considerations, however, have a bearing on the manner in
which conflict is conceptualized and operationalised in this study. The
paucity of empirical research in the South African context suggests an ex-
ploratory study which would constitute a first step towards more refined
and focused research on the sources of organizational conflict. The cur-
rent study consequently aims to empirically explore the causes or sources
of conflict as perceived by employees of participating organizations.
Moreover, the adoption of a specific definition of conflict could im-
pose unnecessary constraints on the operationalisation of the construct,
especially if it is acknowledged that the average employee is bound to
have an internalized, yet rudimentary concept of conflict - more in line
with popular usage and definitions. Dijkstra (2006,104-5) for example
has proposed that the distinction between cognitive and affective conflict
be abandoned on the grounds of the strong correlations observed in two
independent studies and the virtual impossibility of precisely separating
out cognitive and affective dimensions in an assessment of workplace
conflict. For the purpose of this study and drawing on definitional pa-
rameters utilized among other by Dijkstra (2006, 21), De Dreu, Harinck
and Van Vianen (1999), Schmidt and Kochan (1972), and Wall and Callis-
ter (1995), conflict is viewed as a dynamic process that commences with a
perception of incompatibility of opinions, beliefs, principles, values, and
perceptions between individuals and groups of varying sizes.
Practical considerations suggested a survey-based field study design.
This entailed the development and administration of an experimental
questionnaire that sampled employees' perceptions with regard to vari-
ous causes (or sources) of organizational conflict and, secondly, employ-
ees' reported experience of the impact of institutional conflict. For com-
parative purposes two organizations operating in different economic sec-
tors were approached for participation in the research. The methodolog-
ical parameters of the study are briefly outlined in the ensuing section.
THE research sETTING
For the current study the research setting was limited to one public (non-
profit) local authority and one private (profit-orientated) agricultural
company. The choice of these two organizations was based on the per-
ceived differences in their relative status, not only in terms of their core
business orientation (public versus private) but in particular because of
the differential rates at which affirmative action and transformation pro-
grams have been implemented in these organizations. At the time of the
research, the local authority has progressed considerably with regard to
affirmative action and transformation programs, and in excess of 45%
of its employee complement was people of color. In the case of the agri-
cultural company more than 90% of the employees in post levels 5 to
16 were white. Differences are also observed in the organizations' em-
ployee profiles on dimensions such as ethnicity, language, social and cul-
tural factors, but also in terms of the pace with which affirmative action
and transformation have taken place in the organizations. Against this
context, it is intuitively logical that variation in the causes and mani-
festations of conflict would more readily surface in a comparative study
of organizations with more rather than less diverse employee profiles.
The primary focus, consequently, is not so much on discerning differ-
ences between similar organizations as it is about discerning variation
in potential sources of conflict (which is maximized by the inclusion of
dissimilar organizations and consequently employee profiles).
Notwithstanding the preceding, and using a common measure, both
the local authority (municipality) and the agricultural company were
classified as B-category (or B-type) organizations when considered in
relation to 'peer' organizations. This simply meant that the two partici-
pating organizations were comparable in terms of the size and scope of
operations.
measuring instruments
The study utilized a single, experimental questionnaire to explore re-
spondent perceptions of the causes and manifestations of organizational
conflict. It comprised three sections which sampled biographical infor-
mation (section a), perceived causes of organizational conflict, (sec-
tion b), and alternative manifestations or consequences of organizational
conflict (section c).
Section b employed a 4-point Likert-scale which allows respondents
to indicate the extent of agreement or disagreement with listed causes
of conflict. The choice of variables for inclusion in section b, the poten-
tial causes of conflict, was hampered by the many different viewpoints
on what variables should be regarded as causes of organizational con-
flict. The limited empirical research available, furthermore, does not pro-
vide adequate guidelines or pointers in terms of more or less prominent
causes, or the settings or circumstances in which they are likely to be ob-
served or not. As point of departure, nine seemingly more prominent
sources of conflict were identified from the literature, as well as affirma-
tive action - a potential cause of organizational conflict that is novel and
unique to South Africa. This variable has received attention in several
other areas of scholarly pursuit, but in the domain of conflict research
has received limited attention. It was argued that these ten causes should
suffice as an initial and exploratory framework for revealing differences
between different organizations (and different sectors) on the causes of
organizational conflict (should they exist). Subsequent research could
focus more pertinently on using a refined and possibly more elaborated
list of potential causes of organizational conflict. The ten sources of con-
flict evaluated empirically were: affirmative action; cultural differences;
racial differences; new management techniques; scarce physical resources;
effective personnel; rationalization; new technology; extent and content of
employee's work; and misuse of power.
Section c made use of seven statements which conveyed different
forms in which conflict could manifest. These were identified after con-
sidering the views of Folger (1993), Nelson and Quick (2001) and Opotow
(2000) and included a decline in performance, hostility towards col-
leagues, a decline in cooperation, experienced depression, considering
a job change, alienation from colleagues, and developing health prob-
lems. Respondents were asked if they experienced conflict and if so, how
it impacted on them. They then had to indicate those consequences or
manifestations that applied to them.
The questionnaire was pretested in a pilot study to enhance its validity
and was administered among academic colleagues at two universities,
and human resources managers and staff-members of the organizations
that participated in the study (but who did not form part of the sample).
the sample
For both the local government and the agricultural organizations, sam-
ples were drawn from top-management and middle-management as well
as operational levels. In the case of the local authority a stratified random
sample was drawn which spanned all departments and included employ-
ees who differed in terms of gender and race group. The theoretical sam-
ple comprised 193 of a population of 386 employees (job-levels 1 through
13), but in practice 143 questionnaires were returned, of which only 139
were useful. This represents a 72% return rate, which is considered ad-
equate for purposes of employing statistical procedures and making in-
ferences about the population (Hair, Anderson, Tatham, and Black 1995,
103).
The corresponding population for the agricultural company com-
prised 101 employees. Questionnaires were sent to every member of this
group and 65 completed questionnaires were returned. One question-
naire proved unusable, with the remaining 64 questionnaires signifying
a return rate of 63.4%. This return rate, similarly, was considered ade-
quate for purposes of statistical analysis.
In the local authority sample of 139, males dominated (74.1%) while
females (62.5%) constituted the largest contingent of the 64 respondents
in the agricultural company. Local authority respondents were evenly
spread across the age categories 'up to 35 years', '36 to 45 years' and '46
years and older' (34.5%, 32.4% and 32.4% respectively). For the agri-
cultural company the comparative proportions of respondents for these
categories were 28.1%, 37.5% and 32.8% respectively. The majority of the
agricultural company sample, 78.1%, possessed a grade 12 or lower ed-
ucational qualification compared to the 56.1% for the local authority
sample. This difference is accounted for by the observed variation in
post-school qualifications, where the local authority sample consisted
of 43.9% or 61 respondents that possessed a tertiary diploma or degree,
compared to the 21.9% (14 respondents) of the agricultural company.
The most notable differences observed between the two samples relate to
home language. In the case of the local authority, 56.5% of respondents
were Afrikaans-speaking (8.7% were English-speaking) compared to the
92.1% of the agricultural company (no English-speaking respondents
were among the participating members). This substantial difference is
echoed also in the difference observed with respect to African languages.
In the local authority 34.8% of respondents spoke African languages
compared to the 7.9% in the agricultural company. In the latter instance
all respondents (7.9%) spoke Sotho. In the Local Authority sample the
proportion of respondents that spoke African languages (34.8%) com-
prised Tswana (15.2%), Sotho (10.9%), Xhosa (5.8%) and Zulu (2.9%).
For the purpose of analyzing the structure of the measurement instru-
ments, the two samples were combined and treated as a single sam-
ple. However, demographic indicators (e.g. group/organizational affil-
iation) allowed the researcher to control for variation between groups
and where indicated independent analyses per subsample were con-
ducted.
procedure
Authorization to conduct the research and administer the questionnaires
was obtained in advance from both companies, and employees were no-
tified of the impending research via the Human Resource departments
of the participating organizations. In both instances respondents were
briefed and questionnaires distributed with the assistance of these de-
partments. Protocols were all received within two weeks of distribution.
data analysis
Data obtained in response to the questions on the sources of conflict
(section b) was of a continuous (interval) nature, while that obtained in
respect of the impact of conflict (section c) was of a categorical nature,
requiring different analytical procedures. For all analyses the spss 16.0
program (spss 2007) was utilised, and for all statistical tests an alpha or
significance level of 0.05 was the accepted threshold at or beyond which
the occurrence of a type i error will be tolerated.
On grounds of the theoretically inductive manner in which the sources
of conflict items were identified and the questionnaire constructed, it was
uncertain whether the different sources of conflict (items in the ques-
tionnaire) did in fact measure distinct constructs. For this reason prin-
cipal components analysis, which utilises total and unique variance as
opposed to shared or common variance, was selected to reveal potential
latent constructs and to establish underlying patterns in the data set. This
suited the exploratory objectives of the study to a greater extent than fac-
tor analysis (cf. Hair et al. 1998). The internal consistency of the extracted
components (sources of conflict) was established using Cronbach's a,
after which component scores were computed and mean differences be-
tween the local authority and the agricultural organisation analysed with
the aid of anova procedures.
For the second focus of the study which dealt with the impact or mani-
festation of conflict, the obtained categorical (frequency) data were con-
verted to proportions and the different effects of conflict (variables) were
subjected to an exploratory hierarchical cluster analysis using Ward's
method. This was followed with a two-step cluster analysis, which in-
corporated the extracted sources of conflict as continuous variables. The
local authority and the agricultural company were then compared on
the basis of how respondents per organisation were grouped by the pro-
cedure.
Research Findings
The results of the empirical study are reported in accordance with the
two main foci of the study, namely the causes or sources of conflict and
the effect or manifestation of conflict.
table 1 Intercorrelations among items related to sources of conflict
	Item 1 2	3	4	5	6	7	8	9	10	M	sd
1.	Affirmative action 1.00 .493	433	3 .303	•3i3	•453	3 .233	.08	.283	3 .393	2.76	1.07
2.	Cultural differences 1.00	.793	.243	3 .293	.353	.151	.12	.343	.443	2.48	1.08
3.	Racial differences	1.00	.172	.273	.313	.10	.131	.353	.493	2.45	1.03
4.	New management techniques		1.00	.313	.283	.161	.313	3 .333	.313	2.55	.99
5.	Lacking physical resources			1.00	.603	.192	3 .293	.313	.373	3.02	1.06
6.	Shortage: effective personnel				1.00	.273	.263	.363	.453	3.08	1.03
7.	Rationalization/dismissals					1.00	.121	.151	.363	2.21	1.17
8.	New technology						1.00	.423	.11	2.21	1.03
9.	Work: scope, content							1.00	.343	2.33	1.04
10.	Misuse of power								1.00	2.50	1.16
notes Correlations of 0.3 and 0.5 are regarded as indicating medium and large ef-
fects respectively (Cohen 1988). A correlation in excess of 0.3 was considered practically
meaningful for the sample and research population engaged in this study. N = 184, 1p <
.05,2p < .01,3p < .001 (one-tailed).
causes of conflict
After allowing for the elimination of cases with missing values, a sample
of 184 was available for analysis and the intercorrelation matrix of the
ten sources of conflict items was compiled (table 1). The latter was con-
sidered suitable for the application of principle components analysis on
grounds of Bartlett's test of sphericity (approximate x2 (45, N = 184) =
614.17, p < .0005) and the Kaiser-Meyer-Olkin measure of sampling ade-
quacy (.789).
Principle components analysis, using varimax rotation, revealed mul-
tiple components, but four components were retained (three complied
with the latent root criterion of one, while inclusion of the fourth com-
ponent was based on interpretation of the scree plot). The four compo-
nents collectively accounted for 71.34% of the total variance and although
the small number of items per scale (4) impacted on the reliability coef-
ficients, the obtained alpha values (.81, .75, .65 and .62) were acceptable
given the study's exploratory nature (see table 2).
Inspection of table 2 reveals that data on sources of conflict did indeed
follow response patterns which essentially indicate that respondents per-
ceived four primary sources of conflict. These indicate that respondents
view conflict as originating in managerial practices that are perceived as
racially informed (or related) abuses of power (workplace discrimina-
table 2 Rotated component matrix, Eigen values, explained variance
and reliability coefficients
Componentb
Variables	C1	C2	c3	C4
3. Racial differences	.90	.08	.14	-.00
2. Cultural differences	.89	.13	.13	.04
1. Affirmative Action	.55	.40	.04	.22
10. Misuse of power	.51	.32	.13	.48
5. Lacking physical resources	.12	.84	.23	.03
6. Shortage: effective personnel	.22	.81	.19	.17
8. New technology	-.04	.12	.85	-.02
9. Scope and content ofwork	.33	.13	.71	.06
4. New management techniques	.13	.22	.57	.21
7. Rationalization/dismissals	•03	.08	.10	•93
Eigen values	3.90	1.34	1.04	.84
% total variance	39.05	13.41	10.44	8.44
Cumulative variance (%)	39.05	52.46	62.90	71.34
Alpha Coefficienta	.81 (4)	.75 (4)	.65 (4)	.62 (4)
notes N = 184. Principal Component Analysis with varimax rotation and Kaiser nor-
malization.
a Cronbach a calculations based on standardised items/variables. For each of the four
scales the four highest loading variables were retained. Alpha coefficients of .70 or
above are desirable (Bartholomew, Handerson, and Marcia 2000; Nunnally and Bern-
stein 1994), but in exploratory research could be as low as .60 and be acceptable (Hair et
al. 1998).
b Components were labelled Racially-informed management practices (c1), Inadequate
and ineffective resources (C2), Work demands associated with changes in technology and
management practices (C3), and unjust layoffs/rationalization (C4).
tion would be illustrative). Inadequate and ineffective resources, which
include physical resources to perform work, but also ineffective staff,
emerged as the second major source of conflict (Component C2 - table
2). Changes in work demands associated with changes (e. g. innovation)
in technology and management practice, and perceived unjust rational-
ization (staff layoffs) emerged as the third and fourth sources of conflict
in these organizations.
The individual variables (items) which loaded highly on the first and
second components (c1 and C2) suggest that employees in this study ef-
fectively interpreted racial and cultural differences as synonyms. They
table 3 Analysis of variance for group differences with regard to sources of conflict
	Local Authority		Agricult. Company							
	M	sd	M	sd		ss	df	Ms	F p	da
C1	7.91	2.36	6.10	2.51	b	133.88	1	133.88	3 22.933.000	.75
	(2.87; II.48)		(2.87; 11.48)		w	1085.61	186	5-83		
C2	7.63	1.68	5.62	1.99	b	171.43	1	171.43	53.693.000	1.12
	(2.39; 9.58)		(2.39; 9.58)		w	609.76	191	3-19		
C3	6.14	1.76	5.00	1.62	b	56.30	1	56.30	3 19.023.000	.66
	(2.38; 9.52)		(2.38; 8.56)		w	565.30	191	2.96		
C4	4.68	1.49	3.88	1.64	b	26.93	1	26.93	2 11.242 .001	.52
	(1.86; 7.44)		(1.86; 7.44)		w	450.22	188	2-39		
notes Values in parentheses represent minimum and maximum values for the group.
Sources of conflict: C1 - racially-informed management practices, C2 - inadequate and
ineffective resources, C3 - work demands associated with changes in technology and
management technique, C4 - rationalization/layoffs perceived as unjustified (sources of
conflict are the retained components from pc analysis).
a Cohen's d (index of effect size) is considered small when ranging between .20 and .50,
medium when between .50 and .80, and large when equal to .80 and above (cf. Cohen
1988; Rosenthal and Rosnow 1991; Valentine and Cooper 2003). An effect size of d = .80
is generally considered practically meaningful.
b - between, w - within, 1p < .05,2p < .01,3p < .001.
similarly experienced difficulty in disassociating a lack of physical re-
sources and a shortage of effective personnel. This observation under-
scores the necessity of empirically testing theory-derived concepts of
conflict (sources of conflict).
When comparing the local authority and the agricultural company on
each of the four sources of conflict, statistically significant differences
were observed between the two organizations (see table 3). For each of
the four sources of conflict the staff of the local authority experienced
this more intensely than those of the agricultural company. Most no-
table, were perceived racially-informed management practices and the
absence of adequate and effective resources, which were more prominent
sources of conflict in the local authority, compared to the agricultural
company, £(1,186) = 22.93, p < .001 and £(1.191) = 53.69, p < .001 respec-
tively. Medium to large effect sizes are recorded for the differences ob-
served between the two institutions with regard to the sources of conflict
(refer Cohen's d, table 3), which suggest that differences are practically
meaningful (or approaching practical meaningfulness).
The mediating role of demographic variables in the perceived causes
of conflict (dependent variable) was tested with several factorial anovas.
Significant main and interaction effects for different demographic vari-
ables were occasionally observed e. g. language for racially-informed
managerial practices, F(2,132) = 4.50, p = .01 and rjp = .06). In a simi-
lar manner main effects for organization and age, and several interaction
effects with organization were observed for the second source of con-
flict (c2 - quality of resources), while a gender-age interaction was noted
for the third source of conflict (c3 - work demands). For the fourth
source of conflict, C4 (rationalization), organization and qualifications
emerged as main effects together with a language-age interaction effect.
The strength of these associations, however, was negligible (the highest
partial Eta-squared recorded were rp, = .15 and rp, = .10, with the ma-
jority rjp < .07). The influence of these demographics on the differences
observed in the mean sources of conflict scores for the two organiza-
tions are therefore inconsistent and of no practical significance. These
findings instead point to further analyses at the level of the organization
where the role of various other organization-specific variables including
demographic variables might shed further light on organization-specific
respondent views of the sources of conflict. These analyses are beyond
the scope of the current study.
In essence the results suggest that sources of conflict are likely to be
multifaceted, but common to different types of organizations (across
economic sectors) in South Africa, yet may not be equally relevant or
influential in the perceived onset of conflict within these organizations.
manifestation and impact of organizational conflict
The second research question dealt with the manifestation or effects of
organizational conflict. Respondents were presented with seven response
categories which conveyed the effects of conflict (or manner of conflict
manifestation) in their respective workplaces. Each respondent marked
those effects he/she experienced. The frequency with which the different
effects of conflict were experienced by the respondents of the two orga-
nizations is indicated in table 4.
Again, and consistent with the exploratory aims of the study, the ob-
tained response frequencies for effects of conflict (variables) were sub-
jected to hierarchical cluster analysis (cf. Hair et al. 1998) using Ward's
method and squared Euclidian distance (standardized) to reveal struc-
ture and coherence in the categorical data. The dendrogram resulting
from this analysis is presented in figure 1. Variables (or cases) with high
table 4 Frequencies for the local authority and the agricultural company on effects
of conflict
Local	Agriculture	Total
Authority Company	Sample
Effects of conflict	fa	%	f	%	f	%
ca Performance decline	67	49.3	31	49.2	98	48.3
cb Hostility towards colleagues	37	27.2	18	28.6	55	27.1
cc Decline cooperation	29	21.3	7	11.1	36	17.7
cd Experience depression	65	47.8	24	38.1	89	43.9
ce Contemplate job change	43	31.6	21	33.3	64	31.5
cf Withdrawing from colleagues	41	30.1	26	41.3	67	33.0
eg Develop health problems	41	30.1	14	22.2	55	27.1
notes N = 203. For the local authority, n = 139. For the agriculture company, n = 64.
a f = number of local authority respondents who experienced this effect of conflict, while
% indicatesf expressed as a proportion of all local authority employees that participated
in the research.b f = number of agriculture company respondents who experienced this
effect of conflict, while % indicates f expressed as a proportion of all agriculture com-
pany employees that participated in the research.c f = total number of respondents (local
authority and the agriculture company) who experienced this effect of conflict, while %
indicates this frequency expressed as a proportion of the total sample (N = 203).
similarity (or low distance) are clustered close together. The proximity
observed between effects of conflict on the y-axis indicates this perceived
association between different effects of conflict. This is echoed by the
proximity coefficients on the x-axis where lower order effects of con-
flict (clusters) converge to form more embracive clusters and constructs,
for example depression and health problems are closely associated, which
when clustered together address the impact of conflict on the employees'
physical and emotional wellbeing. This category is somewhat removed
and hence different from experienced hostility towards colleagues, and
withdrawing from colleagues as a result of conflict, which both indicate
the effect of conflict on relations with colleagues. The next level of con-
vergence occurs when thoughts of changing jobs (a state of mind) com-
bine with depression and health problems to provide an overall index of
the impact of conflict on employee wellbeing (mentally, emotionally and
physically). At more or less the same position on the x-axis it is also ob-
served that a decline in cooperativeness as a result of conflict, converges
with experienced hostility towards and withdrawal from colleagues. This
suggests that conflict has a pronounced effect on social and interpersonal
Rescaled distance cluster combine
0 5 10 15 20 25
Label/number i-1-1-1-1-1
Depression 4 —.-
Health problems 7 —'	-
Contemplate job change 5-
Hostility 2
Withdrawal 6 —'	-
Decline cooperation 3---
Performance decline 1 -
figure 1 Effects of conflict: Dendrogram of cluster solutions (hierarchical cluster
analysis using Ward's method and squared Euclidian distance between
observations (converted to z-scores), N = 199)
relations more generally. A decline in the employee's performance ap-
pears to be distinct from the social and individual well-being effects of
conflict. These categories similarly suggest that the effects of conflict in
these organizations reflect different degrees of severity with a decline in
the employee's performance presumed to be less severe than social with-
drawal or depression. Regardless of the relatedness of these categories of
conflict manifestations, they all constitute undesirable outcomes for the
individual and organization.
In summary, hierarchical cluster analysis for this sample indicates
that the experienced impact of conflict contributes to a decline in per-
formance, has a social impact which manifests in hostility, withdrawal
and uncooperative behavior, and impacts on the mental, emotional and
physical wellbeing of the employee.
To probe whether the experienced impact of conflict was consistent
across the participating organizations or organization-specific, but also
associated with the sources of conflict, a two-step cluster analysis proce-
dure was performed. During the first step of this exploratory technique
the categorical variables of organizational affiliation, gender, age, quali-
fications, tenure and the seven effects of conflict, as well as the four stan-
dardized continuous variables (sources of conflict, refer table 2) were in-
corporated in the extraction of 'preclusters'. This was achieved through
the centroid method with the log-likelihood criterion as a distance mea-
sure (Chan 2005; spss 2007). During the second step these 'preclus-
ters' were used as single cases in a hierarchical clustering procedure. The
Schwarz Bayesian information criterion (bic) indicated that five clusters
The Causes of Conflict in Public and Private Sector Organizations 389
table 5 Cluster profiles following two-step cluster analysis: Categorical variables
	Cluster 1a		Cluster 2b		Cluster 3c		Total
Variables	/	%	/	%	/	%	/
Demographic variables							
Organization							
• Local Authority	88	75.2	29	24.8	.0	.0	117
• Agriculture company	7	12.1	15	25.9	36	62.1	58
Gender							
• Male	76	69.7	19	17.4	14	12.8	109
• Female	19	28.8	25	37.9	22	33.3	66
Age							
• Less than 35	22	36.7	26	43.3	12	20.0	60
• 36-45	32	58.2	14	25.5	9	16.4	55
• More than 46	41	68.3	4	6.7	15	25.0	60
Qualifications							
• Up to grade 12	53	48.6	28	25.7	28	25.7	109
• Diploma/certificate	27	65.9	11	26.8	3	7.3	41
• Degree	15	60.0	5	20.0	5	20.0	25
Language							
• English	9	100	.0	.0	.0	.0	9
• Afrikaans	60	48.8	27	22.0	36	29.3	123
• Other	26	60.5	17	39.5	0	.0	43
Tenure							
• 1-4 years	5	14.3	17	48.6	13	37.1	35
• 5-10 years	32	58.2	16	29.1	7	12.7	55
• More than 11 years	58	68.2	11	12.9	16	18.8	85
Effects of conflict							
Performance decline	41	45.6	35	38.9	14	15.6	90
Hostility towards colleagues	17	32.7	30	57.7	5	9.6	52
Decline cooperation	15	45.5	18	54.5	.0	.0	33
Experience depression	37	45.7	37	45.7	7	8.6	81
Contemplate job change	18	32.1	33	58.9	5	8.9	56
Withdrawing from colleagues	17	28.3	28	46.7	15	25.0	60
Develop health problems	28	56	19	38.0	3	6.0	50
notes N = 175. Excludedcases = 28. f conveys the cluster frequency on the specific row
variable, which is expressed in the adjacent column as a % of the total row frequency for
the row variable (indicated in the last column).a n = 95,b n = 44,c n = 36.
table 6 Centroid means on continuous variables (sources of conflict)
Cluster 1a Cluster 2b Cluster 3c
Source of conflict	m sd m sd m sd
Racially-informed management practices (c1)	7.35	2.34	8.87	2.01	5.16	1.94
Inadequate and ineffective resources (c2)	7.54	1.53	7.55	1.87	5.00	1.77
Work demands associated with changes in	6.04	1.72	5.98	1.89	4.71	1.43
technology and management technique (C3)						
Rationalization/layoffs perceived as	4.61	1.47	5.08	1.52	3.38	1.35
unjustified (C4)						
notes N = 175. Excluded cases = 28.a n = 95,b n = 44,c n = 36.
were probably optimal, but the spss two-step cluster algorithm by de-
fault selects that number of clusters beyond which the anticipated gains
of adding further cluster information are offset by the complexity of the
new (elaborated) cluster solution, and instead extracted three clusters
(spss 2007). Tables 5 and 6 provide an outline of the three cluster profiles
in terms of included categorical variables as well as the centroid means
and standard deviations for the clusters on the different sources of con-
flict.
As observed in the data presented in tables 5 and 6, the three identified
employee groups (clusters) differ markedly and significantly in terms of
important categorical and continuous variables (figures 2 and 3).
Inspection of figures 2 and 3 reveals that clusters one and three are
effectively organization-specific employee groups with the vast majority
of the membership in cluster one (88 or 83.6% of cluster one member-
ship) employed by the local authority, while all employees in cluster three
(36 or 100% of cluster three membership) are employed by the Agri-
cultural company. Chi-square values (horizontal axes, categorical vari-
ables - figure 2) indicate that cluster one, comprising largely long-serving
male local authority employees, differs significantly from cluster two (a
predominantly young to middle-aged group with relatively short tenure
with membership equally distributed among the Local Authority and the
Agriculture organization), and cluster three (two thirds of members be-
ing female, all Afrikaans-speaking and all employed by the agriculture
company).
Of importance is that the local authority and agriculture company em-
ployees (clusters one and three) do not differ from one another in terms
of the impact of conflict, apart from the muted effects of conflict re-
0
Organization
Gender
Withdrawal
Tenure
Contemplate job change*
Hostility*
Age*
Performance decline*
Language*
Depression*
Qualification*
Decline cooperation*
Health problems*
10
20
30
40
50
60
70
80
TwoStep Cluster Number = 1
0
Contemplate job change
Hostility
Depression
Withdrawal
Decline cooperation
Performance decline
Age
Tenure
Gender*
Health problems*
Language*
Qualification*
Organization*
0
Organization
Language
Depression
Gender
Decline Cooperation
Health Problems*
Contemplate Job Change*
Hostility*
Tenure*
Qualification*
Performance Decline*
Withdrawal*
Age*
10
20
30
40
TwoStep Cluster Number = 2
50 60	70 80
TwoStep Cluster Number = 3
10
20
30
40
50
60
70
80
figure 2 Extracted clusters and the importance of demographic variables and effects
of conflict: Chi-square
notes Two-step cluster analysis performed through using the centroid method with
log-likelihood as distance measure. N = 175 (case-wise deletion of missing values),
* non-significant, • critical value, test statistic.
-40 -30 -20 -10
0
10
20
30 40
50
60
70
C2StaRes
C3TecWoManag*
C4RationPow*
C1RaCulPow*
TwoStep Cluster Number = 1
-40 -30 -20 -10
10 20	30 40 50 60 70
			
•	C1RaCulPow	•	
•	C4RationPow	•	
•	C2StaRes*	•	
•	C3TecWoManag*	•	TwoStep Cluster Number = 2
-80 -70 -60 -50 -40 -30 -20 -10	0	10 20 30
TwoStep Cluster Number = 3
C2StaRes
C1RaCulPow
C4RationPow
C3TecWoManag
figure 3 Extracted clusters and the importance of sources of conflict: Student's t
notes Two-step cluster analysis performed through using the centroid method with
log-likelihood as distance measure. N = 175 (case-wise deletion of missing values),
* non-significant, • critical value, test statistic.
0
ported on a single dimension (in the former, 28.3% of employees tend
to withdraw socially, while 8.6% in the latter experience depression as a
consequence of conflict). Employees in the agriculture company cluster,
however, also differ significantly from the other clusters in terms of the
absence of a reported decline in cooperation.
In stark contrast, the younger and relatively short-tenure employee
group (cluster two), comprising both the local authority and agriculture
company employees, differs significantly from groups (clusters) one and
three in terms of their experience of the effects of conflict. In this cluster
the proportion of members who reported experiencing six of the seven
manifestations of conflict, ranged between 38.9% and 58.9%. Whereas
the most important differentiating categorical variables for groups one
and three were organizational affiliation and gender (cluster one) and or-
ganizational affiliation, language and gender (cluster three), this group's
most prominent differentiating categorical variables were the six man-
ifestations of conflict. These results suggest that factors other than de-
mographic features and organization-specific features may be contribut-
ing to this intense and wide-ranging experience of the impact of con-
flict. What these factors may be, is the subject of speculation, but stress-
proneness and/or a personality predisposition may be explored as hypo-
thetical factors in subsequent research.
The three employee groups, however, are also significantly differen-
tiated by their perceptions of the sources of conflict (see figure 3). The
shortage of effective staff and resources (c2) emerged as a more important
source of conflict for the local authority group (cluster one) compared
to the other groups. By contrast, the employees of the agriculture com-
pany (cluster three) do not perceive the four sources of conflict with the
same intensity as the local authority group (cluster one) and the mixed
membership group (cluster two). The mixed membership group (cluster
two), comprising employees of both the local authority and agriculture
organizations, is significantly differentiated from the two organizational
groups (clusters one and three) on the basis of the significant importance
accorded to racially-informed management practices (c1) and perceived
unjust rationalization or layoffs (C4) as sources of conflict.
It is not possible to infer causality, but cluster analysis does indi-
cate that younger and shorter tenure employees (male and female, from
both organizations) display a greater sensitivity to sources of conflict as-
sociated with power abuses, and experience such conflict in a signifi-
cantly more elaborate and destructive manner when compared to the
organization-specific employee groups. To be expected, the diverse em-
ployee profiles of the two organizations preclude sensible comparison of
the sources and effects of conflict as observed for the two organizations.
In summary, the exploratory two-step cluster analysis reveals that both
the perceived sources of conflict and the reported effects of conflict for
this sample are group (cluster)-specific but also organization-specific
(yet at the same time not exclusively so).
Discussion and Conclusion
The current study set out to investigate firstly whether the perceived
causes of institutional conflict are organization-specific or universal across
organizations in the public and private sectors and, secondly, whether
employees' experience of the impact of conflict follows similar patterns.
More importantly, results reveal a coherent structure for the sources of
conflict across the different respondent populations and organizations
engaged in this study. Yet, at the same time, evidence of organizational
distinctiveness (organization-specific variation) was also observed. The
exploratory cluster analyses suggest that this 'similar-yet-different' pat-
tern applies equally to respondents' experience of the impact of conflict.
sources of conflict
The results generated by this exploratory study are broadly consistent
with earlier observations by Renwick (1975) and Weider and Hatfield
(1995) who have indicated that factors such as the heterogeneity of the
workforce, loyalties of groups, diverse economic interests, among other,
are relevant sources of workplace conflict. To an extent the findings also
affirm Havenga's (2002) perspective that causes of conflict at the organi-
zational level would include factors such as resource availability, affirma-
tive action programs, the scope and content of work, the introduction
of new management techniques, and differences of a cultural and racial
nature. The findings obtained do indeed indicate these factors to be rele-
vant, but not in the unidimensional and somewhat reductionist manner
in which they were conceptualized. Indeed, sources of conflict are bound
to be more complex and multifaceted than are currently suggested by the
unidimensional labels encountered in the bulk of the literature.
The findings of this study indicate, for example, that it is not manage-
ment that is a source conflict, but management that is predisposed to act
in a racially-informed manner and which manifests in managerial prac-
tices that are perceived as abuses of power that emerges as a source of
conflict. Similarly, it is not rationalization or staff layoffs that are con-
sidered a source of conflict, but rationalization/staff layoffs that are per-
ceived as an abuse of managerial power. New technology in itself (and
new management techniques for that matter) do not prompt conflict,
but it is the relationship of these innovations to the employee's scope and
content of work that is likely to be perceived as a source of conflict in
the workplace. These observations suggest that perceived sources of con-
flict in the organisation cannot be disentangled, inter alia, from broader
systemic, socio-political, economic and labour trends and dynamics. In-
deed, researchers should exercise caution and avoid overly reductionist
conceptualisations of organisation behaviour constructs in an increas-
ingly dynamic and open systems setting.
The prominence of 'organization' as differentiating factor between re-
spondents' views of sources of organizational conflict in the absence of
consistent and significant demographic influences, prompts us to hy-
pothesize that other organization-specific characteristics may be more
important mediators of perceived sources of conflict than may be gener-
ally presumed. This may for example relate to phenomena such as orga-
nizational identity and organizational culture (cf. Van Tonder 2000; Van
Tonder and Lessing 2003), the dynamics associated with distinctive man-
agement profiles and styles in such identity- and culture-specific settings,
the attitudes cultivated under such circumstances, as well as the influence
of these features in attracting employees with a particular profile to these
companies.
The marked differences observed between the two organizations in
terms of perceived sources of conflict and the experienced impact of con-
flict are accounted for by the advanced stage of sociopolitical transforma-
tion in the local authority. Of the two companies, the latter has substan-
tially progressed with the introduction of employment equity practices
and has a large contingent of African (non-white) employees (principles
of affirmative action and employment equity have been implemented
to a considerable extent). This substantially diverse workforce presents
with greater heterogeneity (e. g. in values and belief systems) and hence
the enhanced prospects for conflict (cf. Williams and O'Reilly 1998). The
agricultural company's workforce, by contrast, is substantially more ho-
mogeneous (has very few non white employees in the job levels sampled,
and a single language, Afrikaans, is dominant which, in a broader eth-
nical sense, conveys greater conservatism in nature and culture). This
coherence should translate into a reduced likelihood of misunderstand-
ing and consequently a lower incidence of perceived conflict. Not being
a private sector company, the local authority would experience resource
constraints to a greater extent than the agricultural company. Note, how-
ever, that although these sources of conflict are less intensely experienced
in the agricultural company, they are still strongly felt.
The low incidence with which sources of conflict is perceived in the
agriculture company is likely to be an artefact of a largely homogeneous
workforce where socio-political transformation has not yet progressed
to the extent that the organisation's culture, identity and managerial and
workforce profiles have been altered substantially by the 'enforced' intake
of senior staff from previously disadvantaged communities. Unlike the
significant differences observed between the local authority and the agri-
culture company groups (clusters), which are explained in terms of the
impact of transformation on the homogeneity of the workforce in the re-
spective institutions, the results for the mixed membership group (clus-
ter 2) are less clear. The severity with which conflict is experienced by this
group (cluster 2), which is equally comprised of local authority and agri-
culture company employees, and which is markedly different from the
organisational groups (clusters 1 and 3) points to common denominators
other than institutional affiliation or population demographics. Person-
ality predispositions and tendencies toward anxiety, stress, and burnout,
but also coping styles, belief systems and attitudes may offer important
avenues for more elaborate investigation. In the prevailing South African
setting with its diverse workforces, employment equity legislation, and
heightened sensitivity to racism, it is quite plausible that Baron's (1997)
'hostile attribution bias' may offer additional explanatory power. The lat-
ter refers to a predisposition towards attributing the conduct of other
parties in the conflict situation to hostile motives and objectives.
Although tentative, the results nonetheless suggest that ongoing re-
search should adequately account for the complex influence of context
- both the immediate organizational setting and the broader sociopo-
litical and national context in which organizations are situated. This is
evidenced in references to affirmative action and in particular in its as-
sociation with managerial practices and perceived power abuse.
effects of conflict
Results of the two-step cluster analysis confirmed the largely organisation-
specific nature of not only the perceived sources of conflict, but in par-
ticular also the reported experience and impact of workplace conflict.
Consistent with Dijkstra's (2006) observations, conflict as a stressor in
the current study elicited unpleasant emotions, which are associated with
reduced work performance and individual well-being. Drawing on the
Euclidian distance measures which portray similarity-dissimilarity be-
tween effects of conflict (see dendrogram, figure 1), it can be surmised,
ceteris paribus, that a declining performance would be the most obvious
and common consequence of these three equally undesirable outcomes
of conflict. The interpersonal and social relations impact of conflict, as
well as the compromised mental, emotional and physical well-being of
the employee, represents increasingly severe consequences of workplace
conflict. The intrapsychic dynamics involved in the differential expe-
rience of conflict cannot be discerned from the results of the current
study and represents an important area of continued research into the
sources and effects of workplace conflict. This is important, as differ-
entiated responses to conflict call for differentiated conflict mediation
and management strategies. In the current study (refer figures 2 and
3) the mostly male and longer tenure local authority employee group
(cluster 1), manifested with a significantly greater incidence of reported
withdrawal, which is not only damaging to the organization and will
adversely impact organizational performance, but also suggests and re-
inforces a conflict strategy best described as 'conflict avoidance'. This in
fact appears to be the essence of the response of employee groups two
and three to the experienced conflict. The reported effects of conflict as
evidenced for these two groups similarly convey a conflict negation or
conflict avoidance approach or strategy (see figures 2 and 3). Withdrawal
or alienation from peers and superiors in conflict situations echoes an
avoidance style of conflict management, while experienced depression
may result in a similar avoidance style of dealing with conflict - both ad-
versely impacting on the individual and the organization's performance.
Evidence of such 'avoidance' of conflict, is also observed in, for example,
absenteeism and personnel turnover, as observed by Van de Vliert (1996,
405-25). The observed inefficiencies reported by Van de Vliert (1996)
were also recorded by Jehn (1997, 557), who noted that these inefficien-
cies resulted in poor work performance. This perspective underscores
the importance of differentiating between the occurrence (incidence) of
conflict and the employee and organization's response to such conflict
(e.g. avoidance) - as argued by Dijkstra (2006). Not only will such a
distinction facilitate understanding of the nature of conflict and its im-
pact on every day employee well-being, but it will crystallise the action
component in the response to the conflict ('the reaction'). This in turn
introduces greater focus and specificity and will result in differentiated
conflict management strategies, which should prove more effective in
the resolution of specific sources of workplace conflict. Effective conflict
resolution strategies will remove and eliminate the underlying causes
of conflict and will reduce the potential for recurrence of similar con-
flicts in future. The implications of this, however, are that appropriate
and accurate data on the sources of conflict should emerge, and sec-
ondly, that organizational functionaries and managers acknowledge that
conflict resolution is a shared priority (Kreitner and Kinicki 2000, 43),
which in turn necessitates a greater involvement of all individuals and
groups likely to be effected by the conflict. The fundamental challenge
of conflict management, is to address the identified sources of conflict
effectively and expediently in a manner that will minimise its negative
impact on the workforce (cf. Crawley 1995, 5).
constraints of the current study
AND FUTURE research
Notwithstanding the exploratory aims, the findings of the current study
should be interpreted with a measure of caution. In the current study
the range and nature of sources of conflict and its manifestation have
been constrained by the theoretically-inductive approach adopted by
the researchers in conceptualising the sources and effects of workplace
conflict. The results of the principle components analysis suggest that
more potential sources of conflict exist than those reliably extracted.
Continuing research should consequently concentrate on the theoreti-
cal elaboration and refinement of the tentative measures employed in
this study. This should address both the range of potential sources of
conflict, and the item pool which operationalizes such theoretically de-
rived constructs. However, it would be more productive and expedient
to engage in in-depth exploratory qualitative research to supplement the
prevailing understanding of theoretically-derived conflict sources - as
a precursor to elaborating and refining the measurement instruments.
The current study furthermore indicates that reductionistic conceptual-
isations of otherwise elaborate and complex dynamic constructs, such as
sources of organisational conflict, is a material threat.
The exploratory design utilised in the study, while revealing in many
respects, nonetheless imposed constraints which precluded analyses and
observations on causality. Future research should also probe the extent to
which specific sources of conflict contribute to specific response patterns
(experienced impact of conflict), and whether specific types of conflict
(sources) may elicit specific behavioural, emotional and psychological
responses. This points to a need also for more systemic theories of con-
flict that not only reveal causality between antecedent conditions, sources
and experienced effects of conflict, but also adequately account for per-
sonal (e. g. psychological), institutional and broader contextual factors
that relate to the phenomenon of workplace conflict.
Despite these cautions, the findings of this exploratory study nonethe-
less provide pointers and several productive avenues for continuing re-
search on the sources of conflict, which ultimately should contribute
to the emergence of more effective conflict diagnosis and management
strategies.
In closing, the current study - albeit tentative - has raised awareness
of the multifaceted nature of sources of conflict and revealed both uni-
versal and idiosyncratic content in the sources and effects of conflict.
This underscores the importance of maintaining a contextual and sys-
temic frame of mind when conceptualizing and operationalizing sources
of conflict and, indeed, when contemplating the effective resolution of
conflict in organizational settings.
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Governance and Civil Society at the eu Level
Matevž Tomšic
Mateja Rek
In their article, the authors deal with the role of civil society as a factor
of European democratic governance. Democratic governance is per-
ceived as an 'extended polyarchy' that refers both to the electoral di-
mension of accountability and to the mechanisms of permanent con-
trol over power-holders through institutional balance of power. The au-
thors examine specifics of governance and civil society at the eu level,
claiming that participatory democracy is unrealistic at the eu level,
which holds also for citizens' engagement in civil society organized at
eu level. They argue that civil society organized at the eu level can con-
tribute to higher accountability of the Union's institutions, but in a spe-
cific way, less through enhancing political engagement of citizens and
linking them to political institutions but more through mutual control
of different societal actors that would foster greater transparency of po-
litical process.
Key Words: governance, civil society, democracy, accountability,
European Union
jel Classification: Y9
Introduction
Governance that in general terms refers to the system of measures that
involve setting the rules for the exercise of power and settling conflicts
over such rules (Hyden 1999,185) is one of the most widely used political
concepts and takes a central place in contemporary debates in social sci-
ences (Pierre and Peters 2000,1). In the last years, the notion of a need for
establishment of mechanisms of efficient and democratic governance not
only on the national but also on supra-national level has gain on impor-
tance. These would mean creation of institutions that would be able to
deal with problems brought by the processes of globalization, especially
in the sense of provision of global public goods (see, for example, Grif-
fin 2003), and enhancing the accountability of global actors (see Kahler
2004; Held 2004).
Dr Matevž Tomšic, is an Assistant Professor at the Faculty of Applied
Social Studies, Slovenia.
Dr Mateja Rek is an Assistant Professor at the Faculty of Applied
Social Studies, Slovenia.
The issue of governance is strongly related with democracy, i. e. its
status as a form of political order. The so called third wave of democra-
tization (Huntington 1993) that started in the 1970s in Southern Europe,
continued in the 1980s in Latin America and ended with the collapse of
communist regimes in Central and Eastern Europe in 1989, brought the
spread of democracy as a form of government that has been unprece-
dented in history. However, there are disagreements about the prospects
of the development of democracy. While some analysts see some prob-
lematic elements in the situation after the fall of communism, that may
instead of world-wide democratic order bring the new world disorder
(see Jowitt 1993), others claim that nowadays democracy has no equal
contender on the global level (see Plattner 1991). The fact is that the
number of formally democratic countries from the early 1970s more than
doubled (Diamond 1999,25). However, reversals of democratic processes
are not excluded, as well as processes which could undermine the quality
of governance of advanced societies. Stability and progress of the demo-
cratic process thus depends on political as well as non-political institu-
tions and actors and their mutual relations, especially in terms of their
ability to cooperate for the common good.
In our article, we will examine the role of civil associations as a fac-
tor of democratic governance at the level of the European Union, a
political entity which is the most integrated supra-national association
in the modern world. It is characterised by complex interactions and
networking between public and private actors. As Smismans (2006, 6)
points out, this may be a democratic time bomb as it challenges tradi-
tional ideas of democratic accountability but may also provide a poten-
tial to deepen democracy through participatory procedures. It is often as-
sumed that eu citizens can gain new power and voice through the mobi-
lization in transnational civic organizations. These organizations should
represent mechanisms of vertical accountability that may include citi-
zens acting through civic organizations on the eu level policy processes.
In this theoretical framework organised civil society is seen as a lever for
a higher degree of participative democracy in the eu (Kohler-Koch and
Finke 2007; Cichowski 2007).
The purpose of our article is to test some of these assumptions and
to contribute to a wide, ongoing academic and policy debate about the
role of civil society in the eu governance. First we will clarify some con-
ceptual issues of modern democracy and elaborate the very concept of
democratic governance and its main components, and then we will deal
with the specifics of governance and civil society at the eu level, espe-
cially in terms of the relation between civil actors and political institu-
tions and the role of civil associations as agents of European governance.
We will present our empirical studies, which aimed to explore the ability
of civic organisations to mediate between eu citizens and 'their' institu-
tions. Our empirical work focuses on intra-organisational ties and mech-
anisms of communication and cooperation in transnational civic organi-
sations in the eu. We assumed that the quality of these organisational ties
could play an important role in assuring democratic effects of civic or-
ganisations at the eu level but we questioned the ability of transnational
organisations to develop sustainable ties reaching across different levels
of eu's governance (reaching from eu citizens organised on local levels,
across national levels and supranational level to the eu institutions and
back again to the grassroots of society) which could ensure vertical ac-
countability. Consequently our thesis is that civil society organized at the
eu level can contribute to higher accountability of the eu's institutions,
but in a specific way, less through enhancing political engagement of cit-
izens and linking them to political institutions but more through mutual
control of different societal actors that would foster greater transparency
of political process.
Good Governance in a Democratic Polity
Dilemmas about the future of democracy as a system of governance at the
national as well as supra-national level lead us to the very notion of this
term, meaning that some conceptual issues ought to be clarified. First of
all, it should be pointed out that democracy is a complex phenomenon
which could refer to some kind of ideal state of society, characterized
by perfect freedom and equality where the real power is located in the
hands of people, as well as to real-existing forms of socio-political order,
usually referring to modern Western societies (often in connection with
the market economy). As stated by Michael Saward (2000, 3), 'the story
of democracy is nothing if a story of innovation'. It is thus characterized
by dynamism and openness to new ideas, notions and concepts. Even
by the notion of democracy as an existing system (which is nevertheless
our research interest) we have different definitions of its 'scope' (in the
sense of its constitutive elements). Many theorists advocate the minimal-
ist approach, a kind of Schumpeterian definition of democracy as a sys-
tem in which citizens can choose between different political actors/elites
(Schumpeter 1996). In that case, the most important issue is the exis-
tence of institutional mechanisms, which enable free political competi-
tion (of course, with constitutionally determined exceptions) and selec-
tion of preferable alternatives. The weakness of this approach is its 'shal-
lowness'. Namely, because of its focus on the normative level of politics
it often disregards the back-stage happenings, as well as factors that are
not a part of the political system but nevertheless importantly influence
its nature.
However, there is another, more 'qualitative' notion of democracy
which takes into account the conditions needed for its 'healthy' func-
tioning. Dahl's concept of polyarchy as 'real-existing democracy' con-
tains the following institutional factors, necessary for the persistence of
democracy: elected officials, free, fair and relatively frequent elections,
freedom of expression, alternative sources of information, autonomy of
association and inclusive citizenship (Dahl 1971; 1989; 1998). Some theo-
rists stress the importance of institutional factors like viable civil society,
rule of law, competent and autonomous civil service etc., without which
democratic political life is not possible. O'Donnell stresses the need for
control over power-holders through mechanisms of so - called horizon-
tal accountability, which refers to the mutual control in the sense of a
system of checks and balances - the principal condition for it is the ex-
istence of independent control institutions (judiciary, different agencies
etc.) (O'Donnell 1998; see also Schedler et al. 1999). There are also some
other factors that are often mentioned as conditions of fully developed
democracy, for example the existence of welfare policies and other mech-
anisms for tackling social inequalities.
Despite the desirability of such kind of qualitative completion, it is
necessary to warn against other kind of biases in a case when one wants
to include into a framework of democracy everything that is in his/her
opinion necessary for the well being of the people. In this way, the char-
acteristics of the concept could become blurred. Too idealized a notion
of democracy is problematic since it could lead into disappointment and
the belief that democratic order does not exist at all - in this way, he/she
neglects the differences between different levels of democracy of exist-
ing political systems. As stated by Karl and Schmitter (1996, 59), democ-
racy is even not necessarily more economically and administratively effi-
cient and orderly run than other forms of government. Considering this,
we could agree with Samuel Huntington who says: 'Governments pro-
duced by election may be inefficient, corrupt, short-sighted, irrespon-
sible, dominated by special interests, and incapable of adopting poli-
cies demanded by the public good. These qualities make such govern-
ments undesirable but they do not make them undemocratic.' (Hunt-
ington 1991,10.) But we could add to this that such characteristics make
democracies of lower quality.
In our conceptualization, we connect good governance to the notion
of democracy as an 'extended polyarchy'. This means a supplementation
of the original (Dahlean) concept that is related primarily to the electoral
dimension of accountability (i. e. processes of political selection based
on freedom of political action and political equality) with mechanisms
of permanent control over power-holders through institutional balance
of power between different branches of government as well as through
mutual checking of civil and state actors on a different level of polity.
Our definition of good, i. e. democratic governance is, thus, in ac-
cordance witha 'wider' notion of democracy, meaning not only formal
rules and institutional norms but also the performance of democratic
institutions and their agents. As stated by March and Olsen (1995, 44),
'democratic governance is more than the management of efficient po-
litical coalition building and exchange within prior constraints [...] It
involves moulding social and political life - shaping history, an under-
standing of it, and an ability to learn from it.' In this sense, it is related
to the state of political stability, perceived in a dynamic and flexible way,
as the 'capacity of the political system to be selective when including in
its modus operandi relevant actors and topics, and the capability of de-
veloping the problem-solving capacities in order to fulfil the functions
entrusted to it' (Adam 1994,37).
Quality of Governance at the eu Level
Since the European Union has been developing into the direction of a
more integrated form of political entity, the issue of governance at the
Union's level is becoming increasingly relevant. It stopped functioning
as an inter-state association but continued as a political formation with
institutions, activities and authorities on its own. An important question
is whether and towhat extent the model of good governance, described
above, is applicable to the level of the European Union. Aspects of demo-
cratic governance like system stability, inclusiveness and effectiveness are
to some extent important for political life at the eu level. However, it
is not possible simply to transplant to the eu institutions the principles
of democracy that are in place at the level of member-states. There are
certain limits to democracy at the eu level if one means by the term
'democracy' the majoritarian principle with equal weight of each citi-
zen's political preference (the rule 'one person, one vote'). What is often
stressed is so called 'democratic deficit' (see Norton 1996), meaning the
lack of many features we associate with democratic governance (Horeth
1999, 249), such as involvement of citizens in the political processes at
the Union's level and their influence on European affairs. The Eu is too
different from the domestic democratic institutions that citizens are used
to. As a result, citizens have troubles in understanding the eu, and have
problems with adressing and regarding it as a democratic system, nor
can they identify with it (Follesdal and Hix 2006).
This is related to the realization that eu institutions increasingly,
through broadening of their policy scopes, directly influence lives of
the citizens of the eu, who - if we for instance consider the data from
Eurobarometer (2008) - don't really care much for participation on the
eu level, don't think that their 'voice is heard on the level of the eu'
and don't express high levels of trust regarding the eu institutions. The
democratic challenge is one of the reasons why the eu was for instance
trying to produce a new constitution and is fostering the development
of organized civil society on the level of the eu, designed to make the
Union easier to understand, more open and more efficient. One of the
main targets of criticism of such a process is its top-down nature that
leads to the perception of it as an elite project or enterprise (see, for
example, Dahl 1999), which makes the possibility of establishment of
mechanisms of vertical accountability that may include citizens acting
through the electoral process or indirectly via civic organizations rather
questionable.
One has to acknowledge that a number of mechanisms of accountabil-
ity have been put in place in the eu. Electoral accountability, involving
the European Parliament, is only part of the picture. eu institutions are
accountable to governments; agencies within governments are held ac-
countable to one another through the process of 'comitology'; a consid-
erable degree of transparency holds participants, much of the time, ac-
countable to the public through the media. Additionally there is a need
for mechanisms of permanent control over power-holders through mu-
tual checking of civil and eu actors on a different level of polity, as it is
assumed that a number of elements of democracy and accountability are
still lacking in the eu. This is true on at least two levels. On one level, the
eu lacks the kind of integrated public sphere and civil society that sus-
tains democracy and accountability in national states. On the other level,
the eu's institutions fall short of standards of democracy and account-
ability: popular representation plays only a minor role in many policy
areas, and mechanisms of accountability are not always well-developed.
In addition, the eu's policy-making system as well as its political system
is not transparent, which prevents effective democratic control and ac-
countability. Solutions to these perceived problems are compounded by
the multilevel character of the eu and the diversity between its member
states.
This can be clearly seen in the case of the organized civil society on the
level of the eu, where even the very basic questions of who are the actors
of the civil society (Magnette 2006; Armstrong 2003), organized on the
level of the eu, being a multi-form, multi-dimensional and multi-level
phenomenon, and what should be their role in the processes of European
integration, are unclear and left to contested interpretations. This affects
functional mechanisms of communication and cooperation among civil
society actors and the eu bodies (Fazi in Smith 2006) which - as we will
argue - even though they are intended to foster vertical accountability
do not really reach across different levels of the multilevel system of eu
governance.
Civil Society as an Actor of eu Governance
It is often assumed that transnational European civic organizations can
play an intermediary role between the citizens and institutions of the
eu (ceo 2001; 2006) and with these processes also establish mechanisms
of vertical accountability that may include citizens acting through civic
organizations on the eu level. This assumption plays a key role in defin-
ing the ways in which civic organizations, that are active at the eu level,
access and can influence the eu policy making (Fazi and Smith 2006;
Kohler-Koch and Finke 2007). In the White Paper on European Gover-
nance we can find following statement: 'Civil society plays an important
role in giving voice to the concerns of the citizens and delivering ser-
vices that meet people's needs. [...] Civil society increasingly sees Europe
as offering a good platform to change policy orientations and society.
[...] It is a real chance to get citizens more actively involved in achieving
the Union's objectives and to offer them a structured channel for feed-
back, criticism and protest.' (ceo 2001,34.) Other important documents,
which are defining the dialogue between civic organizations and the Eu-
ropean Commission, like The Green Paper (oeo 2006) or the document
called 'Communication on general principles and minimum standards
for consultation of interested parties by the Commission' (2003) are full
of similar ideas, when defining the role of transnational civic organi-
zations in the eu. Consultations with civic organizations is becoming
a common procedure of policy processes on the eu level (see Fazi and
Smith 2006; Gornitzka and Sverdrup 2007), even though there are still a
number of unresolved questions, especially regarding the representation,
accountability in the actual ability of transnational civic organizations,
to mediate across the eu's multilevel system. One of the biggest concerns
is, whether transnational civic organizations are actually able to mobilise
Europeans on specific policy issues and whether they can promote inter-
ests and participation of the eu citizens and on their behalf influence the
policy making of the eu institutions.
There are thousands of civic organizations in the eu. Many of them
have organized themselves on the eu level with intent to influence the
policy making on the eu level. Such transnational organizations usually
adopt a multilevel structure, including local, national and international
elements. European consent is consent between member states, and the
structuring of eu associations mainly follows these guidelines. eu as-
sociations are mostly confederate structures or, so say, umbrella orga-
nizations,, i. e. associations of national associations, that were set up by
their members for the purpose of representing their political interests
in eu policy-making (Greenwood 2005); even though other forms are
also present (individual-based organizations, virtual organizations etc.).
These umbrella organizations should 'not only mobilize, but represent
a framework for resolving conflicts and reaching agreements, which in
turn results in better cooperation and integration of activities' (Hadenius
and Ugga 1996,1622). We should also stress that the majority of these eu
associations are composed of national groups/organisations and not of
eu citizens (Kohler-Koch 2005; Rek 2007). Their members are national
organizations, which present views and concerns as well as represent in-
terests of their citizens or local civic organizations on the eu level. The
concept of participation within organized civil society at the level of the
eu is limited to organized interests and groups (Magnette 2006) and pro-
vides spaces of interest representation (Warleight 2001; 2003), advocacy
(Skocpol and Morris 1999; Ruzza 2008) and lobbying (Saurugger 2006;
Greenwood 2005; 2008) and not active participation of citizens.
In an absence of active participation of eu citizens directly on the
eu level, the organizational ties of transnational civic organizations (be-
tween local, national and supranational/eu level) become crucial for
civil society to be able to play the assumed intermediary role between
the eu citizens and 'their' institutions. To better understand the qual-
ity and strength of these ties within transnational organizations, which
are reaching across different levels of the eu governance, Mateja Rek and
Frane Adam (Adam 2007a; Rek 2007) organized a workshop entitled 'So-
cial Capital, Civic Engagement and Quality of Governance in the Euro-
pean Union' in December 2005 in the framework of the 6th framework
connex project. The workshop was structured as a focus group. The
aim of our focus group was to gain additional insights into current re-
flections on the role, functioning and characteristics of civil society or-
ganised at the eu level by bringing together practitioners (ngos and in-
terest group representatives, policy-makers etc.)40 working in the field of
civil society in the eu with scientists researching these issues.
The participants in our focus group painted a quite pessimistic pic-
ture of co-operation and communication across different levels of the
internal organization of eu associations: Talking about European asso-
ciations, ideally there is a European representation and membership -
national members, regional members. In order to be effective in interest
representation and in influencing policy decisions, all members should
be well prepared to be engaged in the agenda of the discussion and to
make compromises and good decision-making possible. It is highly im-
portant that everybody is prepared to find a common position and that
this common position is accepted across different levels of the confed-
eral composition. This is a question of culture, that includes both the
national characteristics that individual players 'bring to the table' as well
as the organizational culture of a particular association. Once the com-
position has been agreed on, it is lobbied during the European decision-
making process, preferably with one voice, at the national level vis-a-vis
the national institutions and at the same time vis-a-vis the Commission
and the parliamentarians in the eu. If everybody is well briefed then
there are much greater chances of a successful lobbying outcome.
Yet, as argued by the participants in the focus groups, this is an ideal
model but in practice there are usually issues of communication and
problems of co-ordination among the different layers. On the one hand,
a specialised body of expertise is centered in Brussels and they are the
only ones who have contacts, knowledge and up-to date information
about the current state of affairs at the eu level. But at the same time
it was argued that regional and national organizations, even though they
are affiliated with the Brussels level, often do not recognise the impor-
tance of lobbying at the eu level or taking advantage of these affiliations
for co-ordinated actions among different levels. In that sense, the verti-
cal communication and co-operation within the multi-level structure of
interest group associations seems to be very weak.
In Brussels everything makes sense to everyone in Brussels. It makes per-
fect sense, all the policies, and the processes. But this needs to be translated
down to the national level to regional levels and so on. And vice-versa,
when it comes to this 'bottom-level' the information has to come back up.
Research Advisor, Slovenian Business and Research Association
Why is a feedback loop important for the lobbyists? The members give
them support for lobbying and a negotiation mandate for lobbying at the
eu level and often act as lobbyers at the national level. National members
or, better said, national organization and experts are usually correspon-
dents for the eu level, feeding them with information from the national
and local levels. Members provide resources for the lobbying activities
at the eu level, which is crucial especially for the pressure groups of pri-
vate interests which are usually more dependent on the resources of their
members compared to ngos dealing with social issues, as the latter have
easier access to funding by an eu institution. There is a need for a posi-
tive, well-informed communication loop between the Brussels level and
the national level. In that sense we could argue that civil society orga-
nized at the level of the eu and the national levels represents introverted
circles that have in most cases only weak (face-to-face) links to the other
level. The (horizontal) links between national representations are even
weaker - which is an obstacle to building a stronger common position
and identification with the organization as a whole, as federal strategies
are especially effective when members can participate in more than one
national group, thus weaving personal ties among these groups and re-
inforcing a sense of identity with the larger whole (Putnam 2004, 278) -
but as it seems, building horizontal ties among national or local groups
remains the future task of eu associations. What is the reason for this
state of affairs?
Lobbying in Brussels is a very technocratic job. It is a profession on
its own, grasping specialised knowledge of eu affairs and contacts in a
specific sector of policy-making in the Eu. The national members are
not interested in having the skills of an eu lobbyer and to in being able
to actively participate in lobbying, but they do need representation. An-
other reason for 'communication filters' between national and eu levels
was seen in the predominantly virtual form of communication among
different levels. Members are geographically distanced from each other
and in many cases they do not know each other, or even the Brussels of-
fice does not know them personally. If there is no personal contact it is
even harder to engage them in the process. If somebody is disinterested
to begin with, if they only hear from 'Brussels' in a virtual setting, it is re-
ally hard for them to become actually physically involved in the process.
When there is just interest from one side in this quasi-virtual space, this
creates problems and gaps in communication.
How can the communication between the layers be improved?
•	Personalisation of experience: by trying to find ways to increase the
human touch because this is ultimately the best way of communi-
cation. Examples of good practices are small-scale workshops and
'field trips', which make the experience of the eu level tangible, ap-
plicable and more personal.
•	Leadership of the eu associations is an under-researched area but
what can be detected is a lack of 'big' or, better put, European lead-
ers. Leadership as perceived in the modern world is really an Ameri-
can concept. In Europe we have to redefine the concept of leadership
in terms of the capacity to lead in a multi-national, multi-cultural
and multi-lingual environment. Strong leadership figures who are
present over a long period of time could have a stronger capacity to
mobilise people for participation and to facilitate communication
across the filters of different layers.
•	Legitimacy: in the sense of having trust and confidence in certain
organizations as opposed to others. There is a certain boldness on
the part of European institutions and the civic organizations at the
eu level to fulfil their goals and to present their implementation.
Even the Commission and all the civic associations should have to
legitimise themselves; by fulfilling their obligations to the mem-
bers. This is broader than just communicating the ideas or being
transparent. Incorporating legitimacy into the organization's strat-
egy could have positive effects for both communication and trans-
parency.
•	The issue of transparency - all of the stakeholders are calling for
transparency - at the eu level and at the level of member states. A
more transparent structure of communication could facilitate com-
munication within the organizational structure. In this context, the
problem of virtual or semi-virtual organizations was presented - in
the majority of cases it is hard to identify their actual membership
and the role of the members in the organization.
These findings can be compelemnted with other current studies (see
Warleigh 2001; 2003; Kohler-Koch and B. Finke 2007; Deth Van et al.
2006; Maloney and Rossteuchtscher 2007) which are suggesting that Eu-
ropean civic associations display little interest in educating their mem-
bers back in the member states about eu issues, but rather get caught
up within the ivory tower world of Brussels institutional politics. We can
encounter a situation of civil society associations becoming elitist in a
way that leadership distances itself from the followers instead of provid-
ing incentives for citizens' active participation. In an attempt to detach
the elite networks into which leaders of civic organizations are included,
a study was carried out in Slovenia and Poland (in the frame of eu's
6th framework Connex project). The study was carried out by coworkers
of the Center for Theoretical Sociology at the Faculty of Social Sciences
(see Adam 2007b) in Ljubljana and a research team affiliated to the In-
stitute of Philosophy and Sociology at the Polish Academy of Science in
Warsaw (see Gasior-Niemec at al. 2007). In February and March 2007
we conducted a series of structured interviews. One of the preliminary
conclusions of this study concerns the relationships between the leader-
ship of national civic organizations (which are usually also the ones who
represent the civic organization members in European civic associations)
and the members of these organizations. We encounter a situation where
non-governmental organizations, in order to exert democratic effects,
have to perform in accordance with 'the logic of influence'. If a particular
organization is to be successfully engaged in participation (networking),
i. e. being able to effectively represent issues or assert influence, it may be
necessary to act in pursuit of influence, even if this would consequently
mean putting the role of membership behind (Kristan 2007). The study
confirmed the assumption that the leadership of civic organizations does
not necessarily need to consult membership regarding important issues.
On the contrary, it happens quite often that only a few people decide,
which raises a serious doubts regarding the democratic nature of civic
organizational structures. Their democratic effects are thus highly con-
tingent. We can also encounter a new type of elitism - civic elitism - that
still needs to be researched.
The irony of all this focus upon transnational structures of organized
civil society is that eu policies do open up spaces for civic engagement
which do have potential to connect societal actors to transnational sys-
tems of governance. Though they may not directly bring about the
democracy enhancing effects, they can, nevertheless, function as agenda-
setters and provide a counter-balance to state and economic actors. By
providing an intermediary infrastructure they support the articulation
and bundling of societal interests and are also able to give their own im-
petus to the definition of these interests. But by placing so much empha-
sis upon the need for a transnationalised and Europeanized civil society,
the eu institutions seems to undermine the very claims for the inclu-
sion of civil society which prompted the search for a means of bridging
the gap between society and transnational governance. As Armstrong
points out (2001), though the explicit objective is to further transna-
tional cooperation, eu policies focusing predominantly on the Eu-level
organized civil society may in practice create additional obstacles, and
domestic civil society actors may further lose influence as transnational
governance and transnational civil society take on greater roles - with a
stress on representing interests and lobbying - while having only weak
links among different levels of eu governance, which is not really a fertile
ground for the establishment of mechanisms of vertical accountability
that may include citizens acting through civic organizations on the eu
level.
Conclusion
The notion of 'democratic deficit' of the eu is - as much as it is based
on understandable frustration of many Europeans with 'detached' and
often unresponsive political institutions - problematic since it derives
from the assumption of 'transplantability' of the democratic principles
from the level of member-states to the eu institutions. There are certain
limits of democracy at the eu level if one means by the term 'democ-
racy' the majoritarian principle with equal weight of each citizen's po-
litical preference (the rule 'one person, one vote'). The reason for this
'democratic deficiency' is the non-existence of a European constitutional
demos (Weiler, Haltern, and Mayer 1995; Weiler 2002), i. e. a European-
wide constituency sharing common values and identity that would re-
place - or at least complement - national ones. The European demos,
European public and European civil society could be established only in
an evaluative way.
One can argue that participatory democracy is unrealistic at the Eu
level, which holds also for citizens' engagement in European civil society.
According to the above mentioned, it can be argued that the establish-
ment of mechanisms of vertical (electoral) accountability correspond-
ing to those in nation-states is, at the moment, not an option at the eu
level. What is more feasible is the creation of institutions of horizon-
tal accountability, i. e. highly professional, competent and autonomous
bodies that would supervise activities of the key executive institutions
of the eu. This means in the first place strengthening of the European
rule of law and policies that would enhance the transparency of Euro-
pean policies.41 Civil associations, organized at the eu level, could be a
factor of accountability of European political institutions but in a rather
elite manner, meaning not through direct involvement of citizenry and
representation of grass-root initiatives but through advocacy of different
important interests of social, economic, political or cultural nature and
informing political institutions as well as the general public on the is-
sues that are of their particular concern. They can be perceived as a part
of the European system of checks and balances, where different actors
from both the political sphere and civil society cooperate in the process
of policy-making to exchange information on different issues as well as
to monitor each other's activities.
Notes
1	14 individuals (4 scientists, 2 representatives of business eu associations,
1 representative of a think-tank dealing with eu policies, 2 representatives
of civic eu associations, 4 representatives of liaison offices in the field of
research and a representative of the European Commission) participated
in our focus group. For further information on the participants and out-
comes of the focus group, visit: http://www.connex-network.org/.
2	Some analysts argue that the institutional setting of the eu already con-
tains mechanisms to provide accountability of European policy-makers.
As stated by Moravcsik (2002, 604): 'Constitutional checks and balances,
indirect democratic control via national governments, and the increasing
powers of the European Parliament are sufficient to ensure the eu policy-
making is, in nearly all cases, clean, transparent, effective and politically
responsive to the demands of European citizens.'
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Failures in Building Partnership for Success
in the Competitive Market: The Case of
Polish Ski Resorts
Michai Žemia
The topic of local stakeholders' collaboration for success on the tourism
market is a popular one, however research is usually devoted to well es-
tablished Western economies. Created in this way, rules of cooperation
are not fully suitable for new democracies in Central and Eastern Euro-
pean countries. Western standards of cooperation can not be achieved
in Polish winter sports destinations, which is mirrored in the analyzed
example of the Polish biggest ski resort - Szczyrk. Mutual mistrust and
hostile attitude are typical for stakeholders in this example. The very
low competitiveness level of the product is the most visible effect. Ad-
ditionally, ski product development in Poland is highly criticized from
the environmental point of view, which results in another difficult to
manage, severe conflict sourced in different interpretations of the idea
of sustainable tourism development.
Key Words: ski resort, partnership, Central and Eastern Europe,
Polish ski industry
jel Classification: L83, R58
Introduction
Mountain holidays are regarded as being the third most popular way of
spending leisure holidays in Europe with an estimated share of 12% of
the market. Among them almost half of the journeys are taken in the
winter season (Freitag 1996). It is very probable that most of those win-
ter mountain holidays are connected with winter sports like skiing or
snowboarding. So winter sports create a huge and very competitive mar-
ket. The opening of borders and the European integration process have
changed conditions of operating for most of ski resorts both in Western
and Central Europe. Both of them were given an opportunity to enter
new markets but also have to face new competitors. It is a very challeng-
ing task for Polish ski resorts used to the surplus of the demand over the
supply.
Dr Michai Zemla is an Assistant Professor in the Tourism Department
of the Katowice School of Economics, Poland.
According to Flagestad and Hope, indicators such as the number of ski
visitors in lift systems during the 1980s and 1990s suggest that the Western
European ski market is in stagnation (Flagestad and Hope 2001a, 6). The
ski markets of Eastern and Central Europe, including, amongst others,
Poland, Slovakia, the Czech Republic and Bulgaria, are exceptions. The
Eastern and Central European market is characterised by rapid growth
resulting in an average growth for the whole continent reaching 2.5% an-
nually (Smith and Jenner 1999). According to Hudson, with two million
visits annually, Poland's share in the world ski market can be estimated
to be about 0.5% (Hudson 2000, 28). These statistics are significant and
illustrate the huge potential of the Polish ski market, as these two million
visits are almost entirely domestic ones. As many as 20% of Poles declare
they go skiing at least once a year (tns obop 2004).
The concept of local and regional cooperation for success in the
tourism market, although still discussed regarding details and chang-
ing requirements (Hall 1999), is well developed (Jamal and Getz 1995;
Fyall and Garrod 2005) and the idea of a Local and Regional Tourism
Organization looks to be set down strongly (Murphy 1985; Middleton
and Hawkins 1998). Still, the theory prepared on the basis of and for
western well-established democracies is not always suitable and easy to
implement in countries of Central and Eastern Europe (Brezovec and
Brezovec 2004; Roberts and Simpson 1999). The aim of presented paper
is to close partially this gap by analyzing the example of Polish winter
sports destinations and their specific problems. Instead of being another
good example of positive effects gained thanks to the local partnership,
the case of Polish winter sports destinations reveals clearly what can
happen if the effective cooperation is missing. However, Schendler ar-
gues that failure is often more instructive than a case study of a success
(Schendler 2001). One of the most illustrative examples of local prob-
lems which remain unsolvable is Szczyrk - one of the most traditional
and popular Polish ski resorts.
The main methodology used is the case study approach (Yin 1981;
1994; Miles and Huberman 1994). Regarding Yin's (1994, 39) terminol-
ogy, it is a Type 3 case study - embedded single case study. One of the
most popular and biggest Polish winter sport destinations - Szczyrk - is
the main object of the study, however, when necessary, other examples
of Polish ski resorts are also mentioned. The use of case study methodol-
ogy is justified here by the fact that the presented research involves initial
reconnaissance, as no previous research on Polish winter sports desti-
nations was conducted before. Data necessary to prepare the case study
were collected from official and informal statements of local stakeholders
and from the analysis of their web pages. The case study is supported by
results of marketing research into the Polish winter sports market con-
ducted by the Tourism Department at the Katowice School of Economics
in 2004 and 2005. Data were obtained from ten Polish major ski areas,
including Czyrna-Solisko in Szczyrk. In each of the ski areas, 100 skiers,
or snowboarders, were asked to answer a questionnaire in the form of
an interview. As the interview was conducted while people were stand-
ing in ski-lift queues, and was generally perceived as an attractive way
of making use of time, there were very few refusals, which is similar with
other researches conducted among queuing skiers (Tsiotsou 2005). A full
presentation of the obtained results is presented in Žemia 2005 and Cies-
likowski, Chudy-Hyski and Žemia (2004). Most of those results are only
partially connected with the specific subject of this paper and are not pre-
sented here. However, answers to questions about the level of satisfaction
derived from a stay in a resort, evaluation of main weaknesses of the re-
searched resort, the most important customers' requirements and length
of ski trip are used here to illustrate the presented ideas and problems.
Although stakeholders' cooperation in tourism destinations' and win-
ter sports destinations operating are widely presented in the literature,
they are not so far presented thoroughly in the context of Central and
Eastern European countries in transition. Typical problems of those
countries connected with tourism destinations' development were also
presented in the literature but with regard to analysis of destination com-
petitiveness (Gomezelj Omerzel 2005), economic change (Williams and
Balaz 2000), destination image (Hall 1999; Konecnik 2004; Konecnik and
Ruzzier 2006) or destination positioning (Orth and Tureckova 2002).
Among the rare examples in which the stakeholders' cooperation in
tourism destinations in European countries in transition was exam-
ined are the works of Roberts and Simpson (1999), Brezovec and Bre-
zovec (2004) and Holesinska (2007). Still only in the work of Holesinska
(2007) is a focused analysis of a specific case offered but, in contrast to
the present paper, Holesinska's research was based on the interview with
stakeholders, which leads rather to a description of stakeholders willing-
ness to cooperate than to the less optimistic reality. Also all cited papers
are written within a national or regional context and it is difficult to find
a single study of problems of collaboration in countries in transition in
Central and Eastern Europe devoted to the analysis of local development.
Cooperation, Partnership and Networking in Winter Sports
Tourism Destinations
In present - day society, rapid changes in the transitional global econ-
omy have increased competition between businesses and organizations
that produce value for customers. The use of cooperation and alliances
between local actors has for a long time been discussed as providing
strategies to meet up with this increasing competition. One example
where this focus has gained acceptance is among tourist destinations.
Middleton and Hawkins point out four major groups of players involved
in local tourism development. They are: residents, elected representa-
tives and appointed officials of local government, businesses providing
directly and indirectly services and goods for visitors to the destination,
and visitors (Middleton and Hawkins 1998, 87). Because of differences
in goals and ways of acting between the stated players, the importance
of developing partnership to achieve synergy between the private and
public sector is inescapable. Local partnership, however, needs jointly
negotiated and agreed approaches to tourism management in which
the goals are mutually defined and endorsed, and the techniques de-
signed to achieve matching of demand and supply are jointly operated
(Middleton and Hawkins 1998). Such a partnership might be reached
thanks to the effective operations of the Local Tourism Organizations.
Although the concept of lto is well known, there is no universal best
way of organizing effective structure of such institution, and instead
the need for an elastic situational approach is pointed (Heath and Wall
1992). New management theoretical concepts, especially networking and
inter-organizational competitive advantage paradigms (Gulati, Nohria,
and Žaheer 2000), might be helpful when searching for effective ways to
achive destination management (Fyall and Garrod 2005; Wang and Xi-
ang 2007; Beritelli, Bieger, and Laesser 2007).
Previous studies show that traditional marketing theory is only of lim-
ited value to most tourist enterprises and destinations, as it is based on
the assumption that a company has full control over the marketing and
image-creation of its product (von Friedrichs Grängsjö 2007, 2). A fur-
ther limitation for tourist enterprises is that a tourist product with spatial
fixity does not usually involve a single entrepreneur, but ownership is of-
ten spread amongst several small enterprises, each of which is dependent
on the others to provide a unified quality product for the tourist. The
different entrepreneurs involved in the tourist destination could all have
their own individual motives and values that affect the way in which they
operate. Another of the disadvantages of traditional marketing theories
is that they do not include the relationships, interactions and networks
that provide the geographical and social framework within which the
entrepreneur operates. The relationship between cooperation and com-
petition becomes essential with regard to the marketing of a tourist des-
tination as it occurs at various levels (Weaver and Oppermann 2000). In
one respect, the tourist destination constitutes a unified tourist product
in relation to other potential destinations for tourists. In another respect,
competition exists at the destination between the various elements of the
tourist product (von Friedrichs Grängsjö 2007, 2).
It is considered here that tourism is a network industry par excellence
(Scott, Cooper, and Baggio 2007, 7). Support for this claim is found in
the definition of tourism as systems where interdependence is essential
(Bjork and Virtanen 2005), and collaboration and cooperation between
different organizations within a tourism destination creates the tourism
product (Pechlaner, Abfalter, and Raich 2002; Fyall and Garrod 2005).
In this way, local alliances, agreements and other formal and informal
governance structures help to compensate for the fragmented nature
of a tourism destination (Scott, Cooper, and Baggio 2007, 8). Network-
ing theories has been suggested as a way to better understand ongoing
marketing activities and processes aiming to develop a business (von
Friedrichs Grängsjö 2007, 2). Buhalis (2000) indicates that most desti-
nations consist of networks of tourism suppliers and that the benefits
of such networks include a more profitable tourism destination (Morri-
son, Lynch, and Johns 2004). A second reason for studying networks as
a central part of tourism is that they form a basis for collective action. In
tourism, many of the main resources of a tourism destination are com-
munity 'owned', so that are used jointly to attract tourists. These may be
physical resources such as beaches, lakes, scenic outlook, national parks
and beaches; built resources such as museums, art galleries and heritage
buildings; or intangible resources such as destination brands or the rep-
utation for friendliness of the local people. Such collective action does
not necessarily require a network organization, but in a situation with
a general lack of resources and where decisions related to tourism are
not often seen within the government mandate, the response is often a
network of interested stakeholders (Scott, Cooper, and Baggio 2007, 8).
Implementation of company management originated theories into the
ground of tourism destinations has to be very careful, as phenomena
not observed commonly in business networks do occur here. These are,
among the others, strong involvement of public authorities and the po-
litical nature of decisions (Hall 1999; 2003), key role of free goods in
product development (Hassan 2000), or non-profit character of the des-
tination, Also the management should acknowledge the existence of a
very big number of stakeholders with different characteristics, powers
and aims, often conflicting (Flagestad 2002; Hall 2004), though the mul-
tistakeholder approach should be implemented (Sautter and Leisen 1999;
Flagestad 2002), and one of the most important tasks is conflict manage-
ment. In presented here case study, conflicts between stakeholders are
pointed as one of the most important reasons for failure in establishing
long term partnership or at least operational cooperation. Understand-
ing the difference between different levels of cooperation and partner-
ship is also important here, as, according to Mendell (1999) and Hall
(1999), those might include; 1) linkages or intensive contacts between
two or more actors; 2) intermittent coordination or mutual adjustment
of the polices and procedures; 3) ad hoc or temporary task force activity;
4) permanent and/or regular coordination; 5) a coalition; 6) a network
structure. As far as cooperation might be taken only to implement some
current actions and to achieve short-term goals, the term partnership
imposes a long time horizon of cooperation and mutual trust. So the real
partnership in a destination will be established when all parties involved
in development of the product would gather, not once but regularly, and
work out and implement a common vision of this development and
common strategy with measures taken to achieve common goals. This
task seems to be much more challenging than just taking from-time-to-
time common actions, but the existence of local partnership may be the
starting condition for effectiveness of short-term common actions.
Ski resorts are specific destinations because of their tourism infras-
tructure and strong connection with mountain areas. There are also spe-
cific management problems characteristic for ski resorts. The first and
most obvious difference is connected with business engaged in the lo-
cal tourism stage. In resorts with big ski areas the operator of the ski
lift infrastructure is often one of the most powerful actors and a big-
ger company than the rest of local tourism sector. Then, differently than
in most other destinations, Jarillo's (1988) hub network seems to de-
scribe best the relationships among stakeholders in winter sports des-
tinations. This situation might be even more complicated in many Pol-
ish ski localities like in Wisia or Szczyrk as there are numerous examples
of the existence of two or more not interlinked ski areas in one locality
which are rather competitors than cooperators. The question of stake-
holders' cooperation in winter sports destinations was undertaken by
Flagestad (2002) and Bieger, Beritelli and Weinert (2004) but only with
regard to the well developed markets of Alpine countries or Sweden and
their results are not to be easily extended into the Polish winter sports
market.
On the basis of literature analysis, four major problem areas of collab-
orative approach to winter sports destinations are examined in the pa-
per. These are: cooperation and conflicts between local stakeholders, in-
volvement of local authorities, intra-destination cooperation and dealing
with conflict between tourism product development and nature preser-
vation. Studying the bases of cooperation and conflicts between local
stakeholders is the most obvious. Regarding the fact that most Polish
winter sports destinations can be classified as integrated resorts (Žemia
2004) where the special role is reserved for public authorities, also here
their role is examined thoroughly. Western European destinations exam-
ples proves that nowadays only intra-destination cooperation is usually
not enough for creating a competitive offer, for the question of regional
inter-destination cooperation is also raised. Finally, the underlying the
problem of nature preservation mirrors the typical feature of winter
sports destinations, which is especially sharp criticism from ecologists'
organizations.
Polish Ski Market and Szczyrk's Position as a Leading Polish
Winter Sports Destination
The general perception that Poland is a typical lowland country is a cor-
rect one as only about 3% of the country area is 500m above sea level.
However, the 3% of the Polish territory represents, in absolute terms, a
surface area of about 10,000 km2 which is about half of the size of Slove-
nia. Although relatively small in size, one fifth of the Polish accommo-
dation capacity, is concentrated in these mountainous districts. Demand
for this area comes from domestic markets, as about 20% of Poles state
that they go skiing at least once a year (tns obop 2004).
The Polish ski market's closure to international tourism has resulted in
specific attitudes of Polish skiers, who used to ski only on Polish slopes,
and of the owners of Polish ski areas, who used to cater only for the do-
mestic market. Now, almost 20 years after the fall of communism, the
Polish ski market continues to be almost autarkical. Polish skiers, gen-
erally preferring one-day ski trips, usually ski in Poland, while foreign
guests in Polish ski resorts are extremely rare.
Therefore, the Polish ski-operators have been operating in a market
characterized by the surplus of demand over supply. The opening of bor-
ders and the growing popularity of outbound tourism, especially after
Poland's accession to the eu, have begun to change the comfortable situ-
ation of Polish ski operators. Due to the huge quality gap between Polish
and foreign ski-resorts, those in neighbouring Slovakia and the Czech
Republic, as well as those in the Alpine regions are becoming more pop-
ular among Polish skiers. The key question now is how the stakeholders
in Polish ski resorts can adapt their actions to become competitive inter-
nationally.
In total, there are almost 100 towns and villages in the Polish Carpathi-
ans and Sudety Mountains with some ski infrastructure, although these
are mostly small and poorly equipped ski resorts. Most of them are lo-
cated in the Carpathian Mountains, where Szczyrk, Biaika Tatrzanska,
Wisia and Žakopane seem to be the most popular ones, although only
Žakopane and Wisia have become recognizable names among interna-
tional tourists due to the hallmark ski-jumping competitions, and the
Polish ski-jumping champion Adam Maiysz. Szczyrk and Žakopane are
the best developed Polish ski resorts regarding numbers of lifts and
slopes. Although the Sudety Mountains have only fourteen ski areas,
they have the two amongst the biggest ones in Poland - Szklarska Poreba
and Karpacz. In addition, the resorts in Žieleniec and Sienna are also
very popular.
Polish ski-resorts are exceedingly overcrowded and 30 minute queues
for a ski lift are nothing out of the ordinary. This is due to the high pop-
ularity of skiing in a country with a very limited supply of mountain-
ous areas. In Poland statistically there are 1300 people per 1 km2 of the
mountainous area. In comparison this figure is 10 times lower in Aus-
tria. As a consequence, ski lift operators do not feel any need to improve
their services as their profits are dependent almost entirely on weather
conditions. Thus, Poland has many small ski-areas with appalling infras-
tructure and poor quality of service, which partly explains why there are
almost no foreign tourists at Polish ski-resorts.
Up till now, Polish skiers nurtured on Polish resorts have not been
very demanding and have accepted the local offer as long as it was pro-
vided at a reasonable price. However, since Polish ski resorts have be-
come more expensive than their Czech and Slovak counterparts, and
Poles have started visiting the Alpine regions, Polish resorts are gradu-
ally facing a very competitive market environment. To adjust appropri-
ately is a challenging task for most of the Polish ski-operators, who are
used to having a guaranteed visiting rate as long as there are good snow
conditions. Some of them visibly follow the market changes, and rapid
development of the existing and new ski areas can be observed in Poland
during recent years. This includes both quantitative growth represented
by the increasing number of ski facilities and qualitative growth con-
nected with the growing number of high standard lifts, snow guns etc.
Szczyrk - a popular town in the western part of Carpathian moun-
tains range - can be presented as an example of a locality where ski areas
built by external investors have existed for over 20 years. In spite of many
investments made in other places, the Czyrna-Solisko ski area in Szczyrk
remains by far the biggest Polish ski area as regards the number of lifts
and total length of slopes. Remembering that Czyrna-Solisko is not the
sole ski area located in Szczyrk, this town can be truly regarded as the
'Polish winter capital'.
In spite of the impressive numbers, the situation is not so optimistic
when looking deep inside. Szczyrk is the only important ski locality in
Poland where a single ski lift has not been built in last five years. The
ratio of slopes with artificial snowing equipment as well as with evening
lights is among the lowest Poland. There are only two very old and slow
chair lifts and t-bar ski lifts are also often behind the times. Szczyrk is jus-
tifiably regarded as one of the most crowded ski localities in Poland and
the level of visitor's satisfaction remains lower than in competing places.
Long queues to lifts were pointed out by 62% of Szczyrk visitors as one of
the three major weaknesses, which was the second highest result among
10 researched resorts. Respondents were asked also about their general
satisfaction derived from their stay in a given ski resort. They were asked
to use a 5 point Likert scale ranging from -2 (completely unsatisfied) to
2 (completely satisfied). Results are presented in table 1. With the mean
0.59 Szczyrk found itself to be number 9 among 10 researched ski resorts.
However, one should not conclude that Szczyrk's visitors are more unsat-
isfied than those of its competitors. Only 7 respondents declared them-
selves to be unsatisfied and none to be completely unsatisfied, which is
comparable to most of Szczyrk's competitors. Low level of overall satis-
faction is here strongly affected by the highest among researched resorts
ratio of visitors remaining indifferent - not satisfied nor unsatisfied (0).
Generally it is visible in table 1 that the highest level of customer satis-
table 1 Overall satisfaction derived from the stay in the researched ski resort
Resort	2	1	0	-1	-2	Mean
Szczyrk (Czyrna-Solisko)	17	32	43	7	0	0,59
Žakopane (Gubalöwka)	32	54	14	0	0	1,18
Biaika Tatrzanska (Kotelnica)	36	45	15	3	1	1,12
Wierchomla Mala	31	52	15	0	2	1,10
Miedzybrodzie Žywieckie (Žar)	32	44	22	1	1	1,05
Sienna (Czarna Göra)	24	48	28	2	0	0,94
Szczawnica (Palenica)	19	54	23	3	1	0,87
Ustron (Czantoria)	16	49	28	6	1	0,73
Szklarska Poreba (Szrenica)	18	32	41	7	0	0,61
Žakopane (Kasprowy)	14	35	34	5	2	0,54
10 researched resorts	25	45	26	3	1	0,90
notes 2 - completely satisfied, 1 - satisfied, 0 - neutral, -1 - unsatisfied, -2 - com-
pletely unsatisfied.
faction was detected in newly built resorts like Biaika Tatrzanska, Wier-
chomla or Žar, while the most traditional resorts with established posi-
tion in the Polish ski market for many years, because of suffering from
the lack of new investments in improvement of the old infrastructure -
Szczyrk, Szklarska Poreba and Žakopane-Kasprowy Wierch - were eval-
uated as the worst among the researched resorts.
Conflicts and Problems: In Search of Reasons
for Szczyrk's Stagnation
Szczyrk is also the model example of conflicts blocking the development
of winter sports destinations. The big potential and leading positions on
the market are being lost due to the helplessness of local stakeholders
involved in numerous conflicts.
SKI area operator versus LAND OWNERS CONFLICT
In countries where there are no legal regulations on use of land for ski
purposes and where ski lift operators usually only lease land for slopes,
like Poland, owners of the land agreement for the development or even
existence of ski infrastructure must be ensured. The most convincing
negative example is Szczyrk. Due to the conflict of the land owners with
gat - the company operating the Czyrna-Solisko ski area - 9 out of
13 ski lifts had to be closed down because their slopes were cut with
fences. Both sides treat their opponents as enemies and accuse them
of numerous little frauds. Additionally the conflict has also a personal
background, as one of the most prominent gat opponents among the
land owners is a previous member of the board of gat who clashed with
the new board. The unpredictable situation with the land owners is still
pointed to as the main reason why gat has not made any new invest-
ments since the ski area opening over 20 years ago.
Sharp conflicts between ski area operators and land owners can be ob-
served also in many other Polish ski resorts. The most famous, in the
2005/2006 winter season, was the case of Gubaiowka in Žakopane where
only one family against all the other land owners stopped the ski area.
This was the direct reason for setting up works on snow law by a few
politics parties. However the project, created in a nervous atmosphere,
instead of solving problems was concentrated only on defending the in-
terests of ski operators. The main accusations made by land owners were
not referred to. These include the way of using and preparing slopes both
in winter and in summer, including illegal cutting of trees to widen the
slope by the ski operator and conducting building and other construc-
tion works in summer by land owners. The projects of 'snow law', pre-
pared in consultancy with major ski operators, show their perception of
land owners and their role in ski resort development. They are perceived
rather as an anti-development power and rivals than as partners and im-
portant local stakeholders. Often good examples of Alpine countries with
some kind of 'snow law' were referred to. But presentation of only legal
conditions without full examination of practice may give the wrong im-
pression of the role played by land owners in countries with the highest
level of development of the skiing industry. In research conducted by
Flagestad (2002) land owners were found to be the most important and
powerful stakeholders in winter sports destinations both in Sweden and
Switzerland, overlapping investors or ski operators.
One of the reasons for the problem is the impression of being excluded
from the decision process and from benefiting their own propriety felt
by land owners. Especially when the ski operator is an external, big com-
pany, this may lead to the existence of two different groups of stakehold-
ers with two different goals and conflicting interests. Local stakeholders,
including land owners, and external investor do not play in one team to
create an outstanding market offer, instead they try to maximize their
profit at the expense of the second side. In Szczyrk there is one more rea-
son for such a situation. This is its localization and connected with this
the structure of visitors. The biggest segment of skiers visiting Szczyrk
are one day visitors from the Silesian voivodeship, especially from the
nearby located Katowice agglomeration, who are characterized by very
low interest in local services other then ski lifts. Visitors from the Silesian
voivodeship made up as much as 46% of visitors in Szczyrk. This results
in one of the shortest mean declared lengths of stay - 4.39 days (while
the mean for 10 researched resorts was 5.19) and one of the biggest ratios
of one day visits - 46% (mean for 10 resorts - 30%). Also respondents
were asked about the three most important requirements regarding a ski
resort. Characteristic is that visitors in Szczyrk put much more weight
than visitors of other resorts onto elements connected directly with ski
infrastructure, like good preparation of ski slopes, no queues to lifts or
comfortable lifts, while not appreciating the importance of elements of
the ski resort's product not directly linked with skiing, like accommoda-
tion, apres-ski or safety (table 2).
The data presented above shows that skiers' spendings at the destina-
tion in Szczyrk are small, and almost the sole stakeholders truly benefit-
ing from their visits are the ski area operators. Then it is easy to under-
stand why local inhabitants do not connect their prosperity with winter
offer development, which connection should be obvious in other situa-
tions and which is treated as obvious by gat.
OTHER conflicts AND LACK OF COOPERATION BETWEEN
LOCAL stakeholders
Apart from the most important and sharpest conflict between gat and
land owners, there are also many other conflicts or at least passiveness
and mistrust between stakeholders. As an effect, there is no much -
needed cooperation between them. The best example can be the two
biggest ski areas which are situated just next to each other. Actually they
are even connected by a slope, but skiers have to watch out which lift
they take to use the ticket they have bought. This impossibility of im-
plementing a common ticketing system or other forms of cooperation is
even stranger when it is considered that both operators are state owned
companies (however they are within the responsibility of different min-
istries). During the problems described above with slopes closure, the
number of winter visitors in Szczyrk felled so dramatically that it not
only threatened the profitable existence of local service providers like ac-
commodation facilities or gastronomic outlets, but was also visible in
diminished turnover in other ski areas, including Skrzyczne - the second
biggest ski area. However, even this situation did not force ski area op-
table 2 Three of the most important customer requirements in a winter sport
destinations
Requirement	Visitors to Szczyrk (%)	Visitors to 10 resear- ched resorts (%)
Easy access	35	38
Information available	7	7
Feeling of safety	9	18
Guarantee of snow-cover	24	33
No queues to lifts	50	32
Large number of diversified ski slopes	23	20
Well-prepared ski slopes	53	31
Fast and comfortable lifts	26	15
Ski ticket covering many lifts	9	7
Low price of services	11	18
Separated snowboard infrastructure	4	6
Additional services for skiers	2	4
Satisfying accommodation base	3	10
Satisfying gastronomic base	6	7
Evening entertainment	1	5
Additional recreational offer	1	2
Local folk/cultural events	0	2
Scenic beauty	7	10
Peaceful atmosphere	0	2
Others	3	4
erators or other stakeholders to think over some collaborative actions to
fight the crisis.
In many Alpine countries ski operators cooperate with other services
providers in promotion by preparing common publications and web
pages. Also, often a common pricing policy is established by creation
of tourism packages consisting of ski ticket and accommodation. Those
kinds of cooperation so far have been not even considered. There is also
no idea of ski buses, even though the number of skiers' private cars ex-
ceeds highly the capacity of local roads and parking places.
THE ROLE OF LOCAL AuTHORITIES
One of the first ways, which come to one's mind when thinking about
possible solutions to the described situation might be the strong lo-
cal leadership, which could integrate all stakeholders, including those
in conflict, around the idea of development of the ski resort. This role
should and might be played by the local government. Unfortunately lo-
cal authorities in Szczyrk are weak, without the charisma needed to be a
leader, and are not efficient. Totally helpless with huge traffic jams and
lack of parking places, responsible for poor and dispersed tourism pro-
motion and, even worse, absence of vision for development of the town's
tourism offer and not effectively acting as mediator, Szczyrk local au-
thorities cannot be regarded by other stakeholders as a powerful player
and potential leader.
However the strongest criticism of Szczyrk's local authorities is con-
nected with their weak response to the conflict between gat and land
owners, which can be dangerous for the whole economy of Szczyrk. The
priority taken by authorities is to not get involved in the conflict as one
of the sides, which is correct, however neutrality cannot be mixed with
passiveness. Also no single interesting solution was offered by the au-
thorities.
potential effects of regional cooperation
between ski resorts
As long as local partnership is the basic condition for achieving sustain-
able success for a ski resort, regional cooperation between resorts seems
to be a good way of setting up the competitive advantage. This coopera-
tion should be carried out within the wider understood region managed
as a tourism destination. This task appears to be especially challenging
because it encourages the closest competitors to cooperate.
The first reason why it is worth considering such cooperation is con-
nected with the very essential feature of tourism - tourists' need to visit
and explore different places. Many tourists during their stay in one place
tend to visit also some other towns and villages around. This means
that the relative increase in attractiveness of the neighbouring locality
need not necessarily create the threat of losing some potential guests, but
could be also an opportunity to attract new visitors to nearby located
attractions. The same thing may concern ski resorts. First of all, com-
munities within the ski area may benefit from a non-skiing attraction
located nearby. This justifies the need for cooperation of ski resorts with
other types of resorts. But also the cooperation between ski resorts may
by profitable. In Alpine countries where huge ski areas prevail, the co-
operation between communities connected by one ski area is obvious.
But rather less probable is cooperation of that type between communi-
ties from different ski areas as, due to the uncountable number of slopes
and ski operators' pricing policies, skiers tend to spend all the stay in one
area. The opposite situation emerges in Poland: 3 or 5 slopes are usu-
ally not enough for tourists to spend a week skiing in one ski area, and
visitors often look for new impressions in neighbouring resorts. So im-
provements made in nearby areas may stimulate visits, but this needs
not only cooperation between resorts but also taking specific action like
information campaigns.
One of the most important dimensions of segmentation of the winter
sports market is the distance between destination and visitor's place of
living, which is strongly connected with length of stay and frequency of
visits. Not surprisingly, tourists from remote markets usually visit a ski
resort rarely and stay longer, while skiers from the closest surrounding
prefer frequent one-day visits. It's worth adding that the demand of each
of those segments is seasonal, but their seasonality differs by the length
of the cycle. Visits from distant places are usually concentrated into the
short period of the peak of the season, especially during winter holidays,
Christmas or Easter, while one-day visits are divided more equally over
the whole winter season with strong intensification during weekends. in
order to combat the negative effects of seasonality, ski resorts have to
keep a balance between visits by tourists from both segments, and too
strong dependency on one of them can be dangerous. This situation may
be observed in many Polish ski resorts like Szczyrk, where short visits are
dominant.
Operating on two market segments imposes the use of different mar-
keting strategies. When competing in nearby located markets among the
most important factors are ease and length of journey. The limited time
that skiers agree to devote to a journey also limits their possibilities of
choice. In this market, the closest neighbours must be also the closest
competitors. Remembering the already stated great importance of this
market in Poland, it is easier to understand mutual reluctance between
neighbouring resorts.
Still, there is a need to balance short visits with longer stays much
more profitable for a resort. However, there is a barrier for many Pol-
ish ski resorts to compete effectively on remote markets. They are sim-
ply too small and not sufficiently recognizable, not only for international
tourists but also for inhabitants of Central and Northern Poland. To fight
this situation they should create a positive image of the region, which can
easily be recognized. Without a positive overall image of the Polish ski ar-
eas, any single Polish resort can have only limited chances for success on
the international market. The decision to start closer cooperation with
closest competitors can be painful for many resorts, yet it seems to be
unavoidable in long-term horizon.
Establishing such a cooperation or even partnership at regional level
can produce one more opportunity. Apart from the criterion of length
of stay, also some other dimensions of segmentation can be very use-
ful. An example of one of them is the choice between attracting fami-
lies with children or youth. Expectations of those two groups are differ-
ent and sometimes even divergent, so it is difficult to serve them both
in one locality. Ski resorts in one region, however, instead of compet-
ing with each other in offering similar products can differentiate their
offers and specialize in serving one specific segment. This is well illus-
trated by examples of Austrian resorts from Landers Tyrol or Salzburg.
Maria Alm in Hochkönig Winterreich is a typical resort prepared to serve
families with kids where there aren't any places playing loud music late,
but where there are plenty of attractions for children and also specially
prepared ski-schools. Located 30 km. from Maria Alm, Saalbach offers a
completely different product based on well-developed apres-ski services
and amusement business.
Such differentiation of ski resort images can be copied also into the
Polish ground, but is practically impossible without involvement of re-
gional authorities. As with Tirol Werbung in Tyrol or Salzburger Land
GmbH in Salzburg, a similar role can be played by Polish voivodeship
governments and Regional Tourism Organizations created with their ini-
tiations. Regional government and/or the Regional Tourism Organiza-
tion is responsible for the image of the whole region and has to coor-
dinate actions taken by all localities, and should also support or even
prepare plans for strengthening the image of the region as a destina-
tion offering differentiated products well adjusted to the specific needs of
many different tourists. A suggestion for implementing such a product
differentiation was made in the Strategy of Tourism Development in the
Silesian voivodeship. According to this proposal, Szczyrk is to develop
the position of perfect resort for demanding skiers while Wisia and Is-
tebna should attract skiers interested in local traditions and culture, and
Brenna should appeal to families with children and other groups looking
for small scale tourism often combining skiing with agrotourism stays.
This long-term vision seems to be a bit unrealistic according to the hith-
erto lack of cooperation at both local and regional levels, yet if carefully
implemented by small steps it may strengthen the competitive position
of all Silesian resorts in few years time.
OPPOSITION FROM NATuRE PRESERVATION ORGANIZATIONS
Alpine skiing is considered to be one of the most environmentally dam-
aging forms of tourism (Kurek 2004; Holden 2000; Pickering and Hill
2003; Geneletti, forthcoming). Also the location of skiing in mountain-
ous areas means that it is using using one of the most fragile and also
often valuable ecosystems (Kurek 1999). Conflict between protection and
development of the ski industry is especially sharp in Poland, where tra-
ditions of ecological movements are very strong and the supply of suit-
able areas for skiing is dramatically lower than the demand. Almost all
Polish mountain ranges, and even single mountains with better than av-
erage natural conditions for skiing development, are protected as Na-
tional Parks or in other ways. Often on the area of National Parks there
are some infrastructures for skiers, existing which are older than those of
park protection. This is the situation of 3 of Poland's biggest ski resorts:
Žakopane (Tatrzanski np) and Karpacz and Szlarska Poreba (Karkonoski
np). Since law forbids new investments in ski infrastructure in National
Parks - and this restriction includes not only building new lifts or slopes,
but also raising their capacity - those ski areas remain with very old
equipment and a rather low quality of services. This causes great dissat-
isfaction to the so-called 'ski lobby' including ski operators, some skiers
and local officials. Very strong pressure made by them integrates also the
'ecologist lobby'. The position of National Parks' administrations sup-
ported by many ecologists' organizations seems to be also unbreakable.
The most extreme example of 'war' between those two parties is from the
Carpathians resort of Korbielöw - where ski lifts operate up to the peak
of Pilsko where conditions for skiing are especially good, but where also
a very valuable nature reserve is located. During the strongest argument
a few years ago an 'unknown delinquent' damaged the rope of a lift in a
way that caused a big loss for the ski operator and might have threatened
the safety of users if not detected earlier. This shows that players like Na-
tional Park administration,ecological organizations and the Ministry of
Nature Protection, have to be welcomed when plans for developing ski
areas are made. Building new lifts cannot be treated as a single victory
over the ecologists but has to be based on a long-term agreement. This
agreement can be reached only when both sides soften their positions.
Protectionists have to understand the need for the existence of ski infras-
tructure, but also the most environmentally damaging projects have to
be abandoned.
Development-protection conflict is not visible in Szczyrk as strongly
as in other regions of the Polish mountains. Located far away from Na-
tional Parks and nature reserves, Szczyrk is usually not perceived by ecol-
ogists as an especially valuable area. Additionally, the scale of investments
taken many years ago means that nowadays there is not much nature to
preserve in Szczyrk. However, this 'peace' between ecology and devel-
opment lobbies in Szczyrk can be explained also the other way. Usually
ecologists' protests are connected with new investments projects. And in
Szczyrk there has been no such a project with high probability of imple-
mentation for many years.
Discussion and Conclusions
The practice of Western European countries offers easy and efficient so-
lutions when trying to develop a tourism destination. However, in a
country without many years of existence of established and effective local
democracy and free market, inhabited mainly by people who have grown
up under communism, characterized by lack of knowledge and difficulty
with defining the common good, tourism destinations in Central and
Eastern European countries in transition are not yet prepared to imple-
ment those solutions based on collaborative actions of local stakeholders.
In Polish winter sports destinations, differently than in other Central and
European countries like Slovakia, the Czech Republic or Slovenia, the
huge domestic demand and low level of skiers' expectations addition-
ally 'helped' local stakeholders to underestimate threats connected with
competition in the open market. In such conditions it is even harder to
persuade almost anyone to consider collaboration.
In Poland, ski areas are often situated in former existing settlements in
which the tourism offer is not limited to the ski product. This situation
imposes on local governments the task of ensuring sustainable develop-
ment of ski tourism. The first step must be to integrate all players and
encourage them towards close cooperation. All examples of local con-
flicts listed above show how difficult a task it is. Unfortunately neither
of the parties, including the authorities, is prepared for cooperation. The
awareness of divergences of goals of different players and mutual mis-
trust are still dominant in Polish ski resorts. Actually, doubts about the
existence of common goals are partially justified. Especially the ski oper-
ator, when it is as an external investor, might be the subject of suspicions
of other players. the operator's simplest aim is maximal usage of the lift's
capacity. In many Polish resorts the easiest way to achieve this is to attract
one-day visitors from nearby located cities. But one-day visitors are not
profitable guests for the local economy, which needs need development
of some public services like transport, parking places etc. In a situation
when demand for one-day skiing in Poland is huge, ski operators expect
from local governments rather improving those services than preparing
and implementing a holistic development strategy. On the other hand,
local governments vainly rarely attempt to implement the strategy by
encouraging ski operators to adopt a discount ticket polocy for longer or
off-season stays.
Sharing profits is the most common problem blocking potential co-
operation between business entities in Polish ski resorts. The conflicts
between ski lift operators and landowners are typical examples. Also this
seems to be the main reason why it is so difficult to implement com-
mon ticketing systems. In this situation, such normal things in Alpine
countries like price cooperation between ski operator and accommoda-
tion entities or common financing of operation of ski buses are not even
considered.
Overcoming those prejudices may be done by local governments, yet
local governments are often responsible for their existence. Attempting
to initiate the local cooperation is their important task, and without such
actions all other players tend to be passive too. In all conflicts where the
authorities are not directly one of the sides, they should also act as a me-
diator. This includes conflicts of ski operators with landowners or with
ecologists. (Unfortunately many Polish local governments got involved
in the second mentioned conflict by taking the side of ski development.)
Closing most of slopes in a town economically dependent on skiers' ex-
penses, as in Szczyrk, can cause serious damages to the local economy -
and passive position of local authorities is surprising.
The low efficiency of local governments' actions can be a self-evident
prediction. The common lack of competency in implementing political
aims warned citizens and companies of the pointlessness of all actions
taken by local governments. Such a position is maintained often without
deep analysis of local authorities' aims, which are neglected even if they
are really well prepared. In these conditions it is difficult to persuade
almost anyone to break the mistrust and start to cooperate with the local
authorities. Lack of current efficient actions taken by local government is
the most visible and damaging effect of aversion to cooperation among
the local players.
Problems of cooperation for development of inter sports destinations
in Poland, as illustrated by the example of the 'Polish winter capital' -
Szczyrk - presented in this paper, show how difficult is implementation
of the rules prepared on the basis of Western highly developed coun-
tries in the practice of the new democracies of Central and Eastern Eu-
rope. Especially, since those general rules usually do not cover precisely
the problems observed in those countries as well as the specific prob-
lems of destinations of a special kind, like winter sports destinations in
this example. To be prepared for effective collaboration and partnership,
stakeholders in Western destinations have gained experience over many
years and have had strong support of science in analyzing the exten-
sively emerging problems. In countries like Poland, it is difficult to ex-
pect that public or private sector stakeholders would be prepared to make
the move and cut the distance to Western European countries, especially
since the support from the scientists is very low and the debate on the
approach proper for the new democracies is still absent (Hall 1998). In
a situation when neither of the parties is prepared for cooperation, the
stress has to be made on stakeholders' education and a help in changing
their hostile attitude towards other stakeholders. The presented paper
analyzes the main reasons for typical Polish ski resorts' problems of de-
velopment and suggests some ways of solving them. This is, is hopefully
the beginning of scientific debate on the topic of creation of the most ef-
fective solutions and spread of knowledge among actors involved in win-
ter sports product development in Poland. The main contribution of the
presented paper is, therefore, pointing out the main reasons for failure
of the researched destination, which might be similar to many other des-
tinations in Central and Eastern Europe. Earlier studies on destination
collaboration (Brezovec and Brezovec 2004; Roberts and Simpson 1999)
in this region were concentrated rather on searching for some general
rules than on investigating specific examples.
Further studies based on the presented topic should include two main
areas. First, is there a need for a tailor-made theory for destinations like
Szczyrk? Can the failure of Szczyrk be explained by the same measures
as the success of one of the Western European destinations? And if not,
is Szczyrk different from most other destinations because it is a destina-
tion located in country in transition in Central Europe, or because it is a
destination of specific type - winter sports destination? Once the general
theory of collaboration within tourism destinations is well developed it
is time to investigate the adjustment needed in given situations.
The second question is connected with actions needed to enhance col-
laboration in Szczyrk-like destinations. Do local stakeholders not coop-
erate because they do not have knowledge to understand possible ben-
efits of cooperation, or because the mutual mistrust is strong enough
to overcome the expected benefits of cooperation? The case of Szczyrk
might suggest that to some extent both possibilities are correct. Expert
support and education can be enough to overcome lack of knowledge,
however it might not be sufficient to overcome prejudices. This task
without sound leadership and good practice examples could be not fea-
sible.
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Impacts ofthe Euro on the Slovenian
Tourism Industry
Helena Nemec Rudež
Štefan Bojnec
This paper examines the impacts of the Euro adoption in Slovenia on
its tourism. For this purpose, the empirical research among foreign
tourists in Slovenia was conducted on their perceptions of the Euro
adoption in Slovenia during the second half of 2007. The multivari-
ate factor analysis was performed, which confirmed the four common
dimensions of the Euro impacts on Slovenian tourism: attractiveness,
costs, expensiveness, and comparison. The mean values of the ana-
lyzed items indicate the most positive impacts of the Euro on the direct
price comparison and the easiness of comparison among tourist des-
tinations in the Euro zone. The empirical results suggest that the Euro
adoption has had the greatest impacts on better comparisons among
tourist destinations in the Euro zone, followed by a significant decline
in travel-operational costs. The increase in the expensiveness of the des-
tination among foreign tourists is confirmed, whereas no significant
improvement in the attractiveness of Slovenia as a tourist destination
was proved after the Euro adoption.
Key Words: the Euro adoption, European Union, Slovenian tourism,
multivariate factor analysis
jEL Classification: C42, E42, F36, L83
Introduction
The literature about tourism suffers from a lack of studies concerning the
effects of the Euro adoption on the attractiveness and competitiveness of
tourist destinations. The tourist sector has failed to attract research about
the Euro impacts on tourism (Gil-Pareja et al. 2007). Notwithstanding,
this open question is a very crucial research topic with policy implica-
tions, since the Euro as a national currency will be also adopted in some
Dr Helena Nemec Rudež is an Assistant Professor at the Faculty
of Tourism Studies Portorož - Turistica, University of Primorska,
Slovenia.
Dr Štefan Bojnec is an Associate Professor at the Faculty
of Management Koper, University of Primorska, Slovenia.
other, particularly Central and Eastern European, countries in the fu-
ture. This might explain why studies about the Euro impacts on tourism
are focusing especially towards these non-Euro zone countries and their
tourism industry (e. g. Bieger and Laesser (1999) for Swiss tourism; Jenk-
ins (2001) for the uk hospitality industry; Ratz and Hinek (2006) for
Hungarian tourism).
At the time when the European Union (eu) was founded in the late
1950s with the Treaty of Rome, the modern tourism in Europe was be-
ginning to develop. The phase of the modern tourism development has
been characterized by a strong tourism development and a steady growth
of tourists' arrivals and tourism expenditures, but there has also been
emerging a strong competition among existing and new tourist destina-
tions.
Since the 1990s the Single European currency (Euro) has been intro-
duced in fifteen eu countries.3 The eu drafted the Treaty of Maastricht in
December 1991, and signed it in February 1992, which provided a basis for
the Euro. Five economic and monetary conditions (called the Maastricht
convergence criteria) that have to be fulfilled before a state is allowed to
join the European Monetary Union (emu) were decided in the Treaty
of Maastricht.4 To become a member of the Euro zone, Slovenia had to
satisfy the set Maastricht convergence criteria. On 27 June 2004 Slove-
nia entered the Exchange Rate Mechanism erm2. The aim of the erm2
entry was to ensure the stability of the Slovenian Tolar/Euro exchange
rate in agreement with the competent European institutions. Finally, on
1 January 2007 Slovenia adopted the Euro as the 13th country to enter
into the Euro zone. Now, since Slovenia has entered the Euro zone, we
can evaluate the concrete effects of the Euro adoption on the Slovenian
inbound tourism. For this purpose, research was undertaken on effects
of the Euro adoption among the foreign tourists visiting Slovenia.
The goal of the research is to analyse possible effects of the Euro adop-
tion in Slovenia from the foreign tourists' point of view and, thus, to ex-
amine the consequences of the Euro for the Slovenian inbound tourism.
It is presumed that the adoption of the Euro in Slovenia has had impacts
on the attractiveness and competitiveness of the Slovenian tourism in-
dustry. The results can foresee and anticipate the possible effects of the
Euro adoption on tourism in countries that will adopt the Euro in the
future. The field research work with the written questionnaire (table 1)
was conducted in 2007. Consequently, the short-term pre- and post-Euro
adoption effects are reflected in the research.
Impacts of the Euro on the Slovenian Tourism Industry 447
table 1 Questionnaire on Euro impacts on Slovenian tourism
Please, give your personal opinion on the statements below, where 1 means 'I strongly
disagree', 2 means 'I somewhat disagree', 3 means 'I neither agree nor disagree', 4 means
'I somewhat agree', and 5 means 'I completely agree'.
A1 The Euro allows me to directly compare prices in Slovenia with prices in other Euro zone countries.	1	2	3	4	5
A2 The Euro makes me feel that I get greater value for money in Slove- nia than in my country.	1	2	3	4	5
A3 Not having to exchange currencies for travel to Slovenia represents an important reduction in travel costs for me.	1	2	3	4	5
A4 The fact that the Euro is used in Slovenia reduces the time I need for travel preparation.	1	2	3	4	5
A5 Slovenia is now a more expensive destination than it was before it adopted the Euro.	1	2	3	4	5
a6 Travelling in Slovenia is now more expensive than travelling to destinations outside the Euro zone (for example Croatia, Bulgaria, Hungary).	1	2	3	4	5
A7 Travelling in Slovenia is now as expensive as travelling to other destinations within the Euro zone (for example Austria, Italy).	1	2	3	4	5
B1 Travelling in Slovenia is now easier for me because of the Euro.	1	2	3	4	5
B2 When I made my travel decisions, I chose Slovenia because the Euro is used as the national currency.	1	2	3	4	5
B3 I will probably travel to Slovenia more often than I would other- wise because the Euro is used as the national currency.	1	2	3	4	5
B4 Slovenia has become better known as a destination than it was before the Euro was introduced.	1	2	3	4	5
B5 Slovenia has become a more attractive destination than it was before the Euro was introduced.	1	2	3	4	5
b6 Slovenia has a better image now than it had before it introduced the Euro.	1	2	3	4	5
B7 It is easier to compare prices in Slovenia to other destinations inside the Euro zone (for example Austria, Italy) since Slovenia adopted the Euro.	1	2	3	4	5
•	Please, indicate your age group: (a) 19 or below, (b) 20 to 29, (c) 30 to 39, (d) 40 to 49,
(e) 50 to 59, (f) 60 or over.
•What country are you from?_
•	Gender: (a) male, (b) female.
The paper proceeds as follows. The next section provides a review of
the literature. After that the research design is explained. Following this,
data sources, methods and empirical results are discussed. The conclud-
ing remarks are presented in the last section.
Review of Related Literature
More than 300 million people use the Euro as their own national cur-
rency, and the number will increase with the further Euro adoption par-
ticularly in some new member states of the eu. Prior to the Euro com-
ing into physical circulation, Torres Marques (1998) argued that the Euro
currency is potentially a major instrument for decisively improving the
present overall trends in the European tourism industry.
According to the European Commission (2007), positive impacts or
benefits of the Euro adoption can be classified into several categories:
easier travel for people (no need for currency exchange, and better com-
pared prices), impacts of the single market (no exchange rate fluctua-
tions and transaction costs, price transparency, enhances competition
by allowing for easier price comparison, better investment decisions
and more investment opportunities), impacts on the financial market,
macroeconomic impacts on the economy as a whole (for example price
stability, sound public finances, and lower interest rates), impacts on
the international role of Europe, and impacts on political integration.
Indeed, there are many impacts of the Euro on tourism.
It is clear that the Euro creates a more transparent economic envi-
ronment by eliminating exchange rate risk and uncertainties in tourism
inside the Euro zone (wto 1998). Additionally, within the Euro zone, the
exchange rate is no longer a factor of relative price competition, since it
is not possible through real exchange rate depreciation to take possible
advantages to lower the relative price of tourism products vis-a-vis com-
petitors in the Euro zone. Altogether, inside the Euro zone, exchange rate
costs have been eliminated.
The stability of the economic environment in the emu was confirmed
also by the limited effect of the Euro adoption on prices. The statisti-
cal analysis by Eurostat showed that price increase linked to the Euro
changeover in the Euro zone in 2002 ranged within 0.12% to 0.29% com-
pared to the 2.3% of inflation (measured by hicp), but the most signif-
icant part of the total effect of the Euro changeover took place between
December 2001 and January 2002 within the range of 0.09% and 0.28%
(Eurostat 2003,5). However, Eurostat indicated that the Euro changeover
had led to some price increases in specific sectors, such as restaurants,
cafes and hairdressers, recreational and sporting services. Some of these
are internationally non-tradable services that are targeting not only visi-
tors and tourists, but particularly domestic consumers. According to the
European Commission (2007), because of the regular purchases of these
kinds of services, the effect on public opinion may have been notable.
The first analyses in Slovenia, undertaken by the Institute of Macroeco-
nomic Analysis and Development (imad) have shown that: firstly, the
contribution to price rises that can be linked to the adoption of the Euro
in Slovenia is comparable to a corresponding contribution in the Euro
zone in 2002; secondly, the price increase of services in the hospitality
sector can be largely associated with the Euro adoption and explained by
corrections and rounding-up of prices; thirdly, the price increases due
to the Euro adoption were estimated at 1.8% in December 2006, and at
1.4% in January 2007 when the price increase was taking place (as in other
emu countries) in two months, i. e. in the month prior to the Euro adop-
tion and in the subsequent month (imad 2007, 9).
The Euro may be seen as an important tool for the attractiveness and
competitiveness of tourist destinations in the Euro zone countries as it
can bring many advantages to the tourism industry, as was already dis-
cussed in the 1990s' (Leu 1998; Keller 1998; Raffling 1998; Shackleford
1998). Keller (1998) divided the impacts of the Euro on tourism into
two categories: macroeconomic impacts and structural impacts (such as
price transparency). Following Keller, macroeconomic impacts include
reinforcement of the European economic and political integration and
growth within the Euro zone that causes lower interest rates and thus less
expensive investments in tourism, which enhances competitiveness. On
the other hand, according to Leu (1998,8), the Euro contributes to the ex-
pansion of freedom of travel since its use reduces the costs and time spent
on currency exchange, as well as mitigating administrative problems and
even possible cheating on the currency exchange. In addition, Shackle-
ford (1998,11) lists three benefits of the Euro for the consumers. They are:
firstly, simplicity of transactions since tourists have to carry only one, a
single currency; secondly, transparency in use, represented by a greater
familiarity with the purchasing-power of the Euro, which enables better
comparison of prices; and, thirdly, elimination of costs and time in the
economy regarding exchange of currencies.
Raffling (1998) also argues for several benefits of the Euro, such as: eas-
ier price calculation, no foreign exchange risk and costs, fewer currencies
- thus making daily life easier, image corrections through price trans-
parency and, consequently, higher travel budgets. In fact, price trans-
parency enables price comparability inside the Euro zone and, as such,
increases price competition among the tourist destinations inside the
Euro zone. Therefore, it reduces prices in the long-run and leads to the
improvement in price-to-value ratio. However, contrary to the theoret-
ical expectations, Ratz and Hinek (2006, 594) found a lack of increased
competition in the Hungarian tourism industry vis-a-vis the other Eu-
ropean tourist destinations as a result of the Euro introduction. This
suggests that not only monetary, exchange rate factors, but particularly
structural and real economy factors are important for competition in the
enlarged Euro zone tourist markets.
Furthermore, Gil-Pareja et al. (2007) argue that the Euro has induced
effects also on the expansion of business tourism as a consequence of
the positive impact of the emu on trade creation. Indeed, several pa-
pers found a positive impact of the Euro on merchandise trade devel-
opments. Therefore, this implies that international tourism in the Euro
zone is fully affected by several impacts that the Euro has brought to this
area. Moreover, shifts in international tourism flows were predicted and
thus expected because of the removal of the exchange rate (Smeral and
Weber 2000, 997). However, so far we have not found any study, made
after the Euro adoption, to confirm or reject these predictions and ex-
pectations of the Euro adoption on tourism.
So far, most of the literature on the Euro effects on tourism dates from
the period before the Euro adoption in 2002 (e. g. wto 1998; Keller 1998;
Leu 1998; Raffling 1998; Shackleford 1998; Bieger and Laesser 1999; Socher
1999; Smeral and Weber 2000; Jenkins 2001) or refers to data prior to
the Euro adoption (Mazanec 2002; Kanada 2003), or else it relies on in-
vestigation into Euro impacts outside the Euro zone. For example, Ratz
and Hinek (2006) examined the Euro impacts in Hungary. Similarly, Ba-
har and Kozak (2006) investigated on the Euro impacts on tourism in
Turkey in 2004, irrespective of whether the respondents were from the
Euro zone or not. Nevertheless, according to the findings of Gil-Pareja et
al. (2007), the impact of the Euro on tourism is greater when the Euro is
effectively circulating in the economy rather than when it was simply a
unit of account (before the year 2002). Thus, the research regarding the
Euro impacts on tourism in the Euro zone after the Euro adoption might
be crucial for understanding the attractiveness and competitiveness of
tourist destinations within the Euro zone as well as externally. Unfortu-
nately, it has received relatively little attention in the literature with the
exception of the study by Gil-Pareja et al. (2007).
Kanada (2003) studied the Euro effects on tourism in Tenerife (Spain)
and found that tourism flows to the Tenerife tourist destination declined
after joining the emu. He explained this fact by a price increase in Tener-
ife due to a price convergence across the emu (since Spain was treated
as a low-price country) that outweighs any increase in demand due to
reductions in transaction costs and currency risks. Furthermore, Kanada
states that tourism flows to Germany increased after joining the EMu
because of a price convergence (since Germany was treated as a high-
price country). Smeral and Weber (2000,1000) forecasted the changes
in international tourism that are induced by the Euro adoption, which
raises tourism export in the hard-currency countries (for instance in
Germany or Austria) by improving price competitiveness, while it lowers
tourism export in the soft-currency countries (for instance in Italy). In
addition, Jenkins (2001,228-9) argued that there will be downward pres-
sures on prices in the Euro area, especially where prices are high, because
tourists seek better value-for-money, which may easily be identified by
better comparison of prices in the Euro as a single currency. Similarly,
Bahar and Kozak (2006, 241) found that Turkey has a higher competi-
tive power in prices than its counterparts in the Euro zone (for instance
France, Spain, and Greece). However, Gil-Pareja et al. (2007) investigated
the Euro effects on tourism in 2004 in the EMu-12 members and found
that the emu boosts tourism flows by having a positive and significant
effect on tourism, which is quite widespread across tourist destination
countries of the emu.
Research Design
The Euro contributes to the profile and positioning of 'Destination Eu-
rope' in world tourism (Leu 1998, 7). Moreover, according to the afore-
mentioned literature review, we can derive an assumption that the adop-
tion of the Euro results in more attractive and competitive tourism in the
Euro zone. In addition, the question on the importance of the Euro for
competitiveness vis-a-vis the non-Euro zone using cross-exchange rates
is estimated in different models of destination competitiveness.5 The ef-
fects of the Euro adoption can be found in several factors of tourism des-
tination competitiveness. For instance, real exchange rate (De Keyser and
Vanhove 1994), awareness/image/brand and cost to value ratio (Ritchie
and Crouch 2000), and price competitiveness (Gooroochurn and Sugi-
yarto 2005) that are found as factors of tourism destination competi-
tiveness. Nevertheless, there is a lack of studies in the field of tourism
competitiveness research to investigate and assess the Euro impacts on
the attractiveness and competitiveness of tourism destinations inside the
Euro zone. Hence, we argue and set a hypothesis that the Euro adoption
has made the Slovenian tourist destination more attractive and compet-
itive. Based on the literature review, we try to explore foreign tourists'
perceptions of the Euro adoption in Slovenia.
Data Sources and Methods
A written questionnaire for the current study was designed (see table 1 for
more detail) to estimate the perception of the foreign tourists that visited
Slovenia during the second half of 2007 on price and non-price impacts
of the Euro adoption on Slovenian tourism attractiveness and competi-
tiveness. The written questionnaire is divided into two main parts. The
first part of the questionnaire comprised 14 five-point Likert-type scales
in order to investigate how respondents perceive the effects of the Euro
adoption, where 1 indicated 'I strongly disagree', 2 indicated 'I disagree',
3 indicated 'I neither agree nor disagree', 4 indicated 'I somewhat agree'
and 5 indicated 'I strongly agree'. The second part of the questionnaire
comprised three questions and examined basic questions on the demo-
graphic characteristics of respondents in order to classify them by age,
country of origin and gender. The questionnaire was translated from
Slovenian into English, German and Italian for the purpose of the sur-
vey. A pilot test was conducted with 21 foreign tourists to ensure clarity
and comprehensibility of the written questionnaire.
The survey was conducted among foreign tourists. For this purpose
the foreign guests of 7 Slovenian hotels were asked to complete the ques-
tionnaire. The hotels were randomly selected. The important factor for
choosing the hotel was the willingness of hotel managers to ask their
guests to participate in the survey. The data were collected in the second
half of 2007. The written questionnaires were given to the hotel guests at
the hotel reception desk when they checked into the hotel, asking them
to complete and return the questionnaire at the reception desk. A to-
tal of 139 usable questionnaires from the foreign tourists were collected
from the survey. We are aware that among possible limitations is the size
of the sample, since there were 1,751,332 foreign tourist arrivals in Slove-
nia in 2007 (see http://www.stat.si). However, we believe that our sam-
ple is representative as it was conduced in the most important Slovenian
tourist destinations and within them in the hotels that are important by
the number of foreign tourist arrivals and overnight tourist stays.
The collected data were analysed using multivariate methods of anal-
ysis and employing the Statistical Package for Social Sciences (spss) ver-
sion 14.0. Firstly, descriptive statistical analysis is used for the demo-
graphic data of respondents and for each of the Likert-type scale ques-
tions. Secondly, exploratory factor analysis (e. g., Kachigan 1991; Kline
1999; Hutcheson and Sofroniou 1999) was conducted to identify under-
lying dimensions of the Euro impacts on the Slovenian tourism industry.
Results
Descriptive statistical analysis (table 2) shows the collected demographic
characteristics of the respondents in order to reveal their age, country of
origin and gender characteristics. The respondents were by gender 49.6%
male and 50.4% female. The largest age group was older than 60 years of
age, represented by 33.8% of the respondents, followed by the 50-to 59-
year age group of 20.9% of respondents. The majority of the respondents
originated from Italy (61.2%), followed by Austria (19.4%) and the uk
(11.5%). The structure of the foreign tourists in the sample differs from
that of the structure of the foreign tourists in Slovenia. In fact, according
to the data of the surs (2008), the structure of the foreign tourists in
Slovenia in 2007 was: 21% of Italian tourists, 12% of German tourists,
12% of Austrian tourists, 5% of tourists from the uk. Therefore, we can
see that our sample includes a greater percentage of Italian tourists.
The multivariate factor analysis confirmed the existence of the four
common factors explaining the impacts of the Euro adoption: attrac-
tiveness, costs, expensiveness, and comparison (table 3). The Principal
Component methods with Varimax rotation were employed on all 14
items from the first part of the questionnaire. The eigenvalue criterion
and Scree Plot were used to identify the number of common factor di-
mensions. The four common factors emerged with eigenvalues greater
than 1. The four common factors solution was found to explain 66.7%
of total variance across the 14 items. A Bartlett's test of sphericity indi-
cated a statistically significant (p = 0.000) correlation matrix and a kmo
produced value of 0.793. This reveals that a factor analysis solution was
appropriate for the 14 items. Cronbach's alpha was computed for each
common factor. Its scores ranged from 0.557 to 0.873. Thus, the results of
the factor analysis are considered to be reliable.
The first common factor is labelled as 'Attractiveness' and includes five
items with the highest weights greater than 0.8. They are items 'Decision
on choice to travel to the destination', 'More frequent travel to destina-
table 2 Descriptive statistics on the demographic profiles of respondents
	Frequency	%
Gender		
Male	69	49.6
Female	70	50.4
Age group		
19 years or below	5	3.6
20 to 29 years	14	10.1
30 to 39 years	20	14.4
40 to 49 years	24	17.3
50 to 59 years	29	20.9
60 years and over	47	33-8
Country of origin		
Austria	27	19.4
Belgium	1	0.7
Czech Republic	1	0.7
Germany	6	4.3
The uk	16	11.5
Italy	85	61.2
Netherlands	3	2.2
tion', 'Better known destination', 'More attractive destination because',
and item 'Better image of a destination'. The second common factor is
interpreted as 'Costs' comprising four items with the highest weights
greater than 0.7 for the 'Feeling of greater value for money', 'Reduction
in travel costs', 'Time reduction of travel preparation' and item 'Easier
travel'. Item 'Decision on choice to travel to the destination' had a fac-
tor loading of 0.552 on the first common factor and 0.588 on the second
common factor. However, since the item reflects attractiveness more than
costs dimension, we decided to include it in the first common factor. The
third common factor reflects three items with the highest weights greater
than 0.8 that are associated with 'Expensiveness'. These items are: 'More
expensive destination', 'More expensive than outside the Euro-zone' and
'As expensive as in other parts in the Euro-zone'. Each of the three items is
'negatively' worded, meaning that higher values of the results show less
agreement with positive impacts of the Euro or, more specifically, they
indicate negative impacts of the Euro. The last, fourth common factor
table 3 Factor matrix explaining the impacts of the Euro adoption
Factors and items	(1)	(2)	(3)	(4)
Factor 1: Attractiveness		5.017	35.834	0.873
b6 Better image of a destination	0.849			
B5 More attractive destination	0.812			
B4 Better known destination	0.771			
B3 More frequent travel to the destination	0.598			
B2 Decision on choice to travel to the destination	0.552			
Factor 2: Costs		1.844	13.169	0.769
A3 Reduction in travel costs	0.767			
A4 Time reduction for travel preparation	0.701			
B1 Easier travel	0.684			
A2 Feeling of greater value for money	0.605			
Factor 3: Expensiveness		1.379	9.851	0.665
a6 More expensive than travelling outside the	0.805			
Euro zone				
A5 More expensive destination	0.794			
A7 As expensive as in other parts of the Euro zone	0.717			
Factor 4: Comparison		1.099	7.847	0.557
B7 Easier comparison	0.744			
A1 Direct price comparison	0.716			
notes Column headings are as follows: (1) factorloading, (2) Eigen-value, (3) variance
(%), (4) alpha. KMO = 0.793. Bartlett's Test of Sphericity = 755.516 at df = 91 with a
significance of p = 0.000.
is labelled as 'Comparison' and includes two items with weights greater
than 0.7 for 'Direct price comparison' and 'Easier comparison'. There-
fore, these results imply lower transactional and operational costs using
the Euro across the Euro zone.
The mean values and standard deviations for the 14 analyzed items
were calculated (table 4). The mean scores of the Likert's scale possible
from 1 to 5 ranged from the lowest of 2.77 to the highest of 4.17. The re-
sults suggest that the adoption of the Euro enables better comparison
of the tourist economy between Slovenia and other tourist destinations
in the Euro-zone. In fact, the mean values of both items reflecting the
common factor 'Comparisons' are the highest among all the items as
they ranged between 4.14 and 4.17, respectively. The respondents had a
table 4 Mean values and standard deviation of analyzed items
Factors and items	m	sd
Factor 1: Attractiveness
b6 Better image of a destination
B5 More attractive destination
B4 Better known destination
B3 More frequent travel to the destination
B2 Decision on choice to travel to the destination
Factor 2: Costs
A2 Feeling of more value for money
A3 Reduction in travel costs
A4 Time reduction for travel preparation
B1 Easier travel
Factor3: Expensiveness
a6 More expensive than travelling outside the Euro zone
A5 More expensive destination
A7 As expensive as in other parts of the Euro zone
Factor 4: Comparisons
B7 Easier comparison
A1 Direct price comparison
notes m - mean value, sd - standard deviation.
relatively high level of agreement with the items regarding the common
factor 'Costs'. Their mean values ranged between 3.30 for the item 'Feel-
ing of greater value for money' to 3.84 for the item 'Easier travel'. There
was less agreement among the respondents about the common factor
'Expensiveness' and the common factor 'Attractiveness'. The mean val-
ues of the items in the common factor 'Expensiveness' range between
3.04 and 3.54, indicating the perception of a more expensive destination
after the Euro adoption. The items of the common factor 'Attractiveness'
have mean values that ranged from 2.77 to 3.45. We have to stress that
there is just one item with a mean value below the neutral answer 3.00
in the common factor 'Attractiveness'; this is item 'Decision on choice to
travel to the destination' that regards the Euro impact on the decision to
visit Slovenia. There is also a wide divergence of opinion among respon-
dents reflected by relatively high standard deviations ranging between
the lowest of 1.113 and the highest of 1.523 among the items. The widest
3.45	1.294
3.17	1.293
3.44	1.287
3.03	1.523
2.77	1.515
3.30	1.317
3.63	1.247
3.45	1.270
3.84	1.270
3.25	1.235
3.54	1.249
3.04	1.334
4.17	1.113
4.15	1.335
divergence of the opinions was with the item 'More frequent travel to
destination', which states that tourists are likely to travel to Slovenia more
often because of the Euro adoption.
Conclusion
The aim of the paper has been to answer the question of whether there
are any impacts of the Euro adoption on the international attractiveness
and competitiveness of the Slovenian tourist destination. The study has
uncovered the characteristics of the Euro adoption in Slovenia as per-
ceived by the foreign tourists. A great majority of the foreign tourists in
our sample are Italian tourists. It was found that there are four common
dimensions of the Euro adoption connected with the perceptions of the
foreign tourists in Slovenia as the tourist destination particularly inside
the Euro zone.
The price competitiveness due to the Euro adoption is explained by
the four common factors: Factor 1 (Attractiveness), Factor 2 (Costs), Fac-
tor 3 (Expensiveness), and Factor 4 (Comparison). The mean values of
the analyzed items have revealed that there is a strong agreement among
the respondents regarding the items that are included in the common
factor 'Comparison'. The result suggests that a higher level of competi-
tiveness in international tourism in the Euro zone is set through enabling
easier and direct comparison of prices among the tourist destinations in-
side the Euro zone. Lower agreement is found with items regarding the
common factor 'Costs' according to the mean values. Furthermore, there
is an agreement with the items regarding the common factor 'Expen-
siveness' showing that, in the light of the foreign tourists in our sample,
Slovenia is now a more expensive tourist destination than it was before
the Euro adoption (mean score = 3.54) and it is also more expensive in
comparison to the countries outside the Euro zone (mean score = 3.25).
The latter finding depends also on cross-exchange rates or on real ex-
change rate developments of the Euro vis-a-vis other currencies, which
has not been explicitly analyzed. However, this is in line with the find-
ings of Smeral and Weber (2000) that countries with soft-currency will
feel disadvantages in price competition after the Euro adoption. This dis-
advantage, however, can be surpassed in the long-run through structural
and real economy improvements, whereas our focus has been on the bet-
ter comparison of prices in the Euro zone. Contrary to our expectations,
there is just a slight association between the Euro adoption and the in-
crease of the attractiveness of Slovenia in the perceptions of the foreign
tourists. The mean values of the items that are included in the common
factor 'Attractiveness' vary around the average score. The empirical re-
sults imply that the advantages of the Euro adoption are seen by better
comparisons, lower travel-operational costs and just a slight improve-
ment in destination attractiveness. The Euro adoption is not found as the
main criterion among the respondents for choosing Slovenia as a desti-
nation to visit. Other items regarding the common factor 'Attractiveness'
are all above the neutral answer. This is quite important for Slovenia for
its positioning as an international tourist destination.
The elimination of exchange rate transaction costs and better price
comparisons in the Euro zone have been clearly confirmed by the percep-
tions of the foreign tourists, but higher prices and just a slight increase
in attractiveness of the tourist destination have failed to contribute to a
more competitive environment of Slovenian tourism. Nevertheless, the
research does shed some light on issues related with the Euro adoption
effects on the tourism industry.
We are aware that among possible limitations is the size of the sample
as an issue for future research. Among the possible improvements of the
research is also the widening of the number of the variables in the ques-
tionnaires to be used in the multivariate factor analysis. Furthermore,
among the issues for future research are the impacts of cross-exchange
rate relations between the soft- and hard-currency countries. This can
be investigated by an inclusion of the real exchange rate with issues of
real exchange rate appreciation vs. depreciation and by different sample
coverage focusing not only on the Euro zone tourists, but also on wider
international tourist destinations. Lastly, further research is needed to
investigate possible improvements in the competitiveness of Slovenian
tourism in the long-run, vis-a-vis other new member states of the eu,
that are caused by the Euro adoption.
Notes
1 In 2002, the Euro was introduced in twelve countries: Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Nether-
lands, Portugal, and Spain. Among the EU-15 at that time, Denmark, the
United Kingdom, and Sweden remained outside the Euro adoption. In
2007, the Euro was introduced in Slovenia and in 2008 in Cyprus and
Malta. Moreover, it is worth mentioning that the Euro is also used in
transactions in some non-Euro zone countries, particularly as explained
by Gros (2002), in the 'euroized' Balkans (Montenegro and Kosovo).
2	These five macro-economic convergence criteria are: an inflation rate of
no more than 1.5 percentage points above the average of the three coun-
tries with the lowest inflation rates; nominal long-term interest rates not
exceeding by more than 2 percentage points those for the three countries
with the lowest inflation rates; no exchange rate realignment for at least
two years prior to the Euro introduction; a government budget deficit not
in excess of 3 percent of each country's gdp; and a gross debt to gdp ratio
that does not exceed 60 percent.
3	We have to clearly underline that our focus is not on the Euro impacts in
cross-exchange rate terms (e.g. Euro vis-a-vis us dollar or any other world
significant currency), but rather on the importance of the Euro adoption
for tourists that are visiting Slovenia. As the majority of them are from
the Euro zone countries, our results are biased towards the Euro impacts
on attractiveness and competitiveness of the Slovenian tourist destination
inside the Euro zone.
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Ritchie, J. R. B., and G. I. Crouch. 2000. The competitive destination: a
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zation.
2009
Management International Conference
Creativity, Innovation
and Management
10th International Conference
Organised by the University of Primorska,
Faculty of Management Koper, Slovenia,
Euro-Mediterranean University, Slovenia,
and University of Sousse, Tunisia
25-28 November 2009
Sousse, Tunisia
Conference Aims
Management International Conference is a traditional conference for scholars
of management studies, welcoming participants from around the world, with
broad and diverse research interests. Among the many topics related to man-
agement, the special focus of MIC 2009 is on creativity and innovation that are
becoming important conditions for a successful society. The modern world puts
emphasis on better use of knowledge and rapid innovation. Many countries are
striving to become the world's leading knowledge-based economy.
The year 2009 was also declared the European Year of Creativity and Innova-
tion. There is a need for skills and competences that enable people to embrace
change as an opportunity and to be open to new ideas in a culturally diverse,
knowledge-based society.
The aim of the conference is to present and discuss research that contributes
to the sharing of new theoretical, methodological and empirical knowledge, and
to a better understanding of management practices, in particular in the field of
Creativity, Innovation and Management.
In recent years, the MIC Conference has been organised in partnership with
the newly established Euro-Mediterranean University. Papers related to issues
of intercultural dialogue and management in multicultural societies are thus
especially welcome.
Conference Subject Areas/Sessions
Contributions from various areas of management are welcome, also scholars
in other disciplines offering new perspectives on the conference theme are
encouraged to participate.
The conference will focus on the following topics:
•	Business Administration, Organisation and Marketing
•	Creativity, Innovation and Technology
•	Doing Business in Mediterranean Region
•	E-business and Information Technology
•	Economy, Finance, and Law
•	Knowledge Management and Human Resources
•	Management and Education
•	Management in a Multicultural Society
•	Research Methods
•	Small Business and Entrepreneurship
•	Social Issues in Management
•	Sustainable Development
Conference Proceedings
MIC 2009 Conference Proceedings will publish only full-length papers,
subject to a double-blind revision process. Authors of the best papers
presented at the conference will be invited
to submit their contributions
to a number of relevant
referred international
journals.
fw
I C 2009
Creativity, Innovation
and Management
10th International Conference Proceedings
25-28 November 2009
Sousse, Tunisia
ISBN 978-961-266-048-2
Conference Officers
Conference Chairs
Dr. Egon Žižmond (University of Primorska, Faculty of Management Koper),
Dr. Ahmed Noureddine Helal (University of Sousse),
Dr. Joseph Mifsud (EMUNI University)
General Chair
Dr. Binshan Lin (Louisiana State University in Shreveport)
Programme Chair
Dr. Janez Šušteršic (University of Primorska, Faculty of Management Koper)
Conference Directors
Dr. Nada Trunk Širca (EMUNI University),
Dr. Touhami Abdouli (University of Sousse)
Conference Director Assistants
Marijana Pregarac (University of Primorska, Faculty of Management Koper),
Neila Harbi (University of Sousse),
Jana Jurjec (EMUNI University)
Important Dates
E-registration: February 1, 2009
Abstract/paper submission: April 30, 2009
Notification of acceptance: June 15, 2009
Final paper submission: August 15, 2009
Early registration: August 15, 2009
Late registration: October 1, 2009
Contact
Faculty of Management Koper
Cankarjeva 5, SI-6104 Koper, Slovenia
T: +386 5 610 2012, F: +386 5 610 2015
E: mic@fm-kp.si, www.mic.fm-kp.si

University of Primorska
Faculty of Management Koper
University
V^/ EMUNI
Vjrr * le'T
University of Sousse
International Journal
of Euro-Mediterranean Studies
ISSN 1855-3362 Call fir Papers
The International Journal of Euro-Mediterranean Studies is an inter-
disciplinary forum dedicated to examining issues in the
intersections of humanities and social studies in the Euro-
Mediterranean area. It proposes a scholarly response to the
current political actions of making a new 'biopolitical' region
and provides further rethinking of the acute questions concern-
ing this area. It does not reflect only on the official discourses
and dominant politics, but also on the ambivalent and trans-
gressive cultural productions and the performances of identities
in order to present the 'polyvocality' of the Mediterranean
societies and cultures.
Published by
Center emuni, University Center for
Euro-Mediterranean Studies, Slovenia
Scientific Research Center of the Slovenian
Academy of Sciences and Arts
University of Nova Gorica, Slovenia
Editorial Office
emuni Press
Sončna pot 20
si-6320 Portorož, Slovenia
Phone +386(0)5 67136 00
Fax +386(0)5 67136 05
ijems@emuni.si
www.ijems.emuni.si
Managing Global Transitions
International Research Journal
AIMS AND SCOPE
The journal Managing Global Transitions
is aimed at providing a forum for
disseminating scholarship focused on
transitions. The journal seeks to publish
ground breaking work in management
research that will provide integrated and
diverse perspectives on the processes of
change and evolution in a broad range of
disparate fields, including systems theory,
leadership development, economics,
education, industrial relations, law, sociology,
informatics, technology, decision-making
theory, and action learning. To further the
understanding of transition environments
internationally the journal aspires to enhance
the availability of case studies and analysis of
data from different cultural environments in
public, non-profit, and corporate contexts.
INFORMATION FOR AUTHORS
Manuscripts are accepted on the understan-
ding that they are original and not under
simultaneous consideration by any other
publication. All manuscripts are double-
blind peer reviewed.
Manuscripts should be prepared following
The Chicago Manual of Style.
Manuscript Style
•	Manuscripts should be submitted
electronically via e-mail. We accept files
created with all major word processing
packages, but prefer MS Word and ltex.
•	The editors reserve to right to return
to authors, without peer review,
improperly formatted manuscripts.
•	Papers should be between 5000 and
6000 words in length, accompanied by
a 100-150-word abstract, and no more
than five key words and two areas of iel
classification (see http://www.aeaweb
.org/journal/jel_class_system.html)
on a separate sheet.
•	The title page must list full title,
author(s) address, and e-mail.
•	Paper size should be A4. Margins should
be set for a 25 mm (1 in.) top, bottom,
left, and right. The point size should be
12 and the font should be Times New
Roman. Italics should be used for
emphasis and bold for headings. Put
blank lines between paragraphs and
differentiate major and minor headings.
•	Footnotes are not permitted. Endnotes
are permissible but should be kept to a
minimum.
•	All illustrations and tables should be
grouped at the end of the text.
Reference Style
The author-date system of citation for
references should be used in the text, followed
by page number if a direct quotation is given,
e.g., (Jackson 1979,181). The alphabetized
reference list should be titled 'References'
with entries in the following format:
Beech, M. H. 1982. The domestic realm in the
lives of Hindu women in Calcutta.
In Separate worlds: Studies of purdah in
South Asia, ed. H. Papanek and G. Minault,
110-38. Delhi: Chanakya.
Jackson, R. 1979. Running down the
up-escalator: Regional inequality in Papua
New Guinea. Australian Geographer 14 (5):
175-84.
Lynd, R., and H. Lynd. 1929. Middletown:
A study in American culture. New York:
Harcourt, Brace and World.
University of Chicago Press. 2003. The
Chicago manual of style. 15th ed. Chicago
and London: University of Chicago Press.
copyright notice
Copyright for all articles published in
Managing Global Transitions is held by
individual authors.
subscriptions
Annual subscription (four issues):
individual rate € 39,
institutional rate € 49.
Prices include postage.
indexing and abstracting
Managing Global Transitions is
indexed/abstracted in the International
Bibliography of the Social Sciences,
EconLit, RepEc and doai.
The journal is supported by
the Slovenian Research Agency.
Printed in Slovenia
Managing Global Transitions
International Research Journal
volume 6 • number 4 • winter 2008 • issn i581-63ii
341 Globalization at Risk: The Changing Preferences
of States and Societies
James M. Quirk
373 The Causes of Conflict in Public and Private Sector
Organizations in South Africa
Chris van Tonder
Werner Havenga
Jan Visagie
403 Governance and Civil Society at the eu Level
Matevž Tomšič
Mateja Rek
421 Failures in Building Partnership for Success
in the Competitive Market: The Case of
Polish Ski Resorts
Michal Žemia
445 Impacts of the Euro on the Slovenian
Tourism Industry
Helena Nemec Rudež
Štefan Bojnec
VA
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