The South East European Journal of Economics and Business

LEADERSHIP STYLES AND EMPLOYEE PERFORMANCE IN NON-PROFIT ORGANIZATIONS: THE MEDIATING ROLE OF EMPLOYEE MOTIVATION AND CREATIVITY

2026-02-07T12:36:25+00:00

Non-profit organizations (NPOs) depend on employees and volunteers to deliver services and advance the NPOs’ missions. This study examines how leadership styles shape employee motivation and creativity and, in turn, performance in NPOs. Primary data were collected via a structured questionnaire from 179 NPO employees in Croatia and analyzed using PLS-SEM. Results indicate that transformational and transactional leadership styles are positively associated with motivation and creativity, which both relate positively to performance. In contrast, autocratic and laissez-faire leadership styles were either non-significant or negatively associated with these outcomes (while democratic leadership was non-significant for motivation but negative for creativity). These findings suggest that emphasizing inspirational vision, individualized support, clear goals, and fair recognition can bolster day-to-day motivation and creative effort, translating into improved performance and greater organizational stability. In terms of theory, the study clarifies motivation and creativity as dual mechanisms linking leadership styles to performance within the non-profit context. In terms of practical implications, the results offer clear guidance for leadership development and HR policy in resource-constrained NPOs.

The THE DOUBLE-EDGED SWORD OF SALES GROWTH: IMPLICATIONS FOR SMES INSOLVENCY RISK

2026-02-07T12:40:42+00:00

Research on SME insolvency is one of the most important areas in economy because it is crucial for economic growth which would not be possible without growing firms. These two phenomena - insolvency and growth are typically studied independently. This study brings them together by examining the interaction between sales growth and insolvency among small and medium enterprises (SMEs). On the dataset of financial ratios for Croatian SMEs by applying logistic regression with interaction effects, it is investigated how sales growth, leverage and liquidity affect the probability of insolvency. The results showed that sales growth decreases the risk of insolvency, but that it depends on the level of indebtedness of SMEs. The least risky are those SMEs whose sales growth is supported by an adequate level of capital. SMEs with high sales decline have the highest probability of insolvency even when leverage and liquidity are suitable.

MODELLING OF STRUCTURAL EQUATIONS BASED ON THE RELATIONSHIP BETWEEN FINANCIAL OVERDEBT, JOB RISK, DECREASED QUALITY OF LIFE, AND PROACTIVE BEHAVIOR IN THE MEANING OF FINDING AN ADDITIONAL JOB

2026-02-07T12:44:52+00:00

Modern lifestyles often put at risk careless and reckless financial management, which can lead to over-indebtedness, default and bankruptcy. The inability of individuals to manage their finances is accompanied by numerous negative business, social and family implications that manifest themselves through financial stress, limited spending opportunities, which are directly related to the quality of life, and increasing inequality. In the paper, the authors investigate the phenomenon of excessive borrowing in Croatia to improve the quality of life and artificially raise the standard of living, which limits the plans of the inhabitants of Croatia. Quality of life, within the framework of this research, encompasses the dimensions of financial stability, health, social inclusion and general satisfaction with life, analysing how an individual’s economic circumstances shape their personal and social well-being. Furthermore, the paper analyses (i) the characteristics of individuals in financial difficulties, their attitudes towards debt reduction planning and financial recovery strategies, and (ii) differences in proactive behaviour among individuals, particularly in the context of willingness to take on additional work and the benefits of living standards in response to the current deterioration of their financial situation. The research results indicate that the key to achieving an economy of well-being is finding a balance between the benefits of credit and a sustainable level of indebtedness adjusted to the individual’s financial capabilities. In this context, the research was conducted on a purposive sample of 782 respondents who experienced a loss of economic autonomy and sovereignty in making financial decisions, which influenced their proactive behaviour. Conclusion: The research results confirm that the key to achieving economic well-being is establishing a balance between the benefits of credit and a sustainable level of indebtedness that does not threaten the financial stability of the individual. The research was conducted on a purposive sample of 782 respondents who experienced a loss of economic autonomy, which had a direct impact on the quality of life. The research results suggest that economic factors, such as low income and increased indebtedness, have a more pronounced negative effect on quality of life, while job riskiness may be a reason for finding additional work.

ARE ALBANIAN HOUSEHOLDS FINANCIALLY FRAGILE?

2026-02-07T13:05:20+00:00

This study investigates financial fragility among Albanian households, measured by their ability to cover unexpected expenses, while analysing the impact of socio-economic factors and asset portfolios. Using data from Albania’s first Household Wealth Survey, we find that 59 % of households lack sufficient liquidity to withstand financial shocks, classifying them as financially fragile. Our multinomial regression analysis reveals three key findings: first, households with more educated heads show significantly lower fragility; second, access to formal financial services enhances resilience; and third, family support networks serve as an important buffer against financial vulnerability. These results demonstrate that both formal financial inclusion and informal family ties play crucial roles in household financial stability. These findings suggest that promoting financial education, expanding access to financial services, and supporting remittance channels can help reduce household vulnerability in Albania.

TOP TEAM MANAGEMENT HETEROGENEITY: DOES IT IMPROVE LARGE COMPANIES’ FINANCIAL PERFORMANCE?

2026-02-07T13:09:33+00:00

The most crucial question in strategic management is the role of the top management team (TMT) in a company’s overall success. Empirical studies support the thesis that the TMT plays an important role in defining companies’ outputs, thereby focusing on TMT structure. The research question of this paper is as follows: What is the impact of TMT heterogeneity on large companies’ performance in Croatia? The authors employed a secondary quantitative approach. A panel analysis was conducted from 2015–2020. The research included 62 large companies that met the requirements. The results indicated a positive impact of gender and cultural heterogeneity on companies’ performance, as measured by return on assets (ROA). In the return on sale (ROS) model, a positive impact of TMT heterogeneity is not indicated. This paper contributes by identifying the TMT structure from heterogeneous aspects in Croatia and analysing the impact of heterogeneity on companies’ performance in line with the recommendations for defining the TMT structure.

THE RELATIONSHIP BETWEEN EXTERNAL DEBT AND ENVIRONMENTAL QUALITY IN TÜRKIYE: A FRACTIONAL FREQUENCY FOURIER ARDL BOUNDS TEST APPROACH

2026-02-07T13:13:52+00:00

As efforts to achieve global sustainability goals intensify, it is increasingly important to understand the environmental consequences of countries’ economic policies, particularly the impact of macroeconomic variables such as external debt. This study analyses the impact of Türkiye’s external debt on environmental sustainability for 1970–2023 using the Fractional Frequency Fourier Autoregressive Distributed Lag (FFF-ARDL) method. Moreover, the variables of economic growth, renewable energy consumption (REN), and non-renewable energy (NREN) consumption were included in the model, and the Environmental Kuznets Curve (EKC) hypothesis was tested. Carbon dioxide (CO2) emissions were used as a proxy for environmental sustainability. The long-run coefficient findings indicate that increases in external debt reduce CO2 emissions, while economic growth initially increases emissions but then declines after a certain income threshold, confirming the EKC hypothesis. Moreover, REN energy consumption decreases CO2 emissions, whereas NREN energy consumption increases them. The Fourier Toda-Yamamoto test results indicate unidirectional causality running from CO2 emissions, REN, and external debt to NREN consumption. There is also unidirectional causality running from economic growth, REN, and NREN consumption to external debt. These findings suggest that Türkiye’s external debt management and the transition toward REN sources are crucial for reducing CO2 emissions.