An Empirical Study: The Effect of Performance Incentives, Internal Control System, Organizational Culture, on Fraud of Indonesia Government Officer

The aims of this study is to explore the effect the Performance Incentives, the Internal Control System , the Organization's Culture on Fraud in Directorate of X1 Ministry of X, Indonesia Republic Government . The Data collection used questioner, stratified random sampling and Structural Equation Modeling. Two results were opposite with previous studies,:a) the performance insentive did not affect the fraud, because the incentive did not based on performance instead of its level, most of fraud was done by those with below 5 year working period which most responden came from its level.b) internal control system did not affect the fraud, because application of internal control did not confirm with PP number 60, year 2008 as a good guidance and most fraud done because of opportunity presence. The Organizational Culture, only one in line with previous studies had effected the Fraud, because of succed in punishment socialization, officer training, transparance and accountability.

Introduction 1.
Promoting Good Governance is one of many guiding principles in applying sustainable development strategy (Blair, Tony, 2005) and prevention or eliminating fraud/corruption is the one kind of an action of good governance. Fraud elimination is one of some big problems facing Indonesia, recently which appeared from so many fraud cases involved government officers in any level and department presumed that fraud in Indonesia has been a "culture". The serious efforts has been done by government, one of its is giving Incentive Performance gradually for all government officers in all departments and institutions starting from year 2007 (KMK, 2007), (Adkingpro, 2013). Another effort by increasing internal control system through forming institution that prevent, take action against and evaluation fraud action like BPK (Financial Inspection Institution), KPK (Commssion against Corruption)(2013) and increasing organization culture through transparance and education. Although all efforts has been explored, on average corruptions cases still has increasing trend from year to year. And the most cases found in departments and institutions, amounting 126 cases from 286 cases (KPK,2013). Empirical evidence came from Singapura and Hongkong that succeed in corruption elimination by empowering internal control system and organization culture especially for public sector by doing transparence, education, punished and reward, meanwhile Swedia by increasing the renumeration for their officers.

Good Governance and Corruption Elimination Strategy
Governance is "theway state power is used in managing economic and social resources for developmet of society"(World Bank), "the exercise of political,economic, and administrative authority to manage a nation's affair at all levels". (UNDP in Osborne and Gaebler, 2008). World Bank (1997) in Azyumardi Azra (2002) suggested a comprehensive corruption elimination strategy in 3 components.First, is to build bureaucracy based on the stated law with renumeration structure that take into account the officer honesty. The recruitment using merit and promotion system has to be empowered for preventing political intervention. A credible financial control has to be employed for preventing the arbritary using of public fund. Second, close all possibilities way for officers to make corruption acts by reducing their full authority in forming policies or in managing finance. Third, to maintain the accountability for government officers and running punishment mechanism. Anti corruption institutions and public is required to empower their control and inspections.

FRAUD
Fraud covers robbery, extortion/exploitation, embezzling, fraudulent, destroying something with intention , (Theodorus M, 2010, KUHP). Fraud could be in the form of Corruption, Asset Misappropriation dan Farudulent Statement (ACFE). Corruption is position or occupation mis using for private interest in the form of Conflict of interest , Briberry, Illegal Gratuities dan Economic Extortion. The causal factors of Fraud as Donald Cressey in Fraud Triangle are : pressure, rationalization, knowledge and opportunity. (Theodorus M,2010) Pressure could be come from financial or social factor. Rationalization is the most crucial fraud component by which Frauder look for justification for their actions. Knowledge dan opportunity hold by the Frauder in order to make it hard to find their actions. There are 2 opportunity components as Donald stated, a) General Information and b) Technical Skill. Meanwile. The factor that could become opportunity availability is the weakness of internal control system. There are many examples of type of fraud stated by Sawyer (2008).

Performance Incentives
There are many definitions about compensations as follows: a) "Compensationis what employees receive in exchange for their contribution to the organization". Sancoko (2010:43-51), Werther and Davis (1996), b) compensation is all the thing that employee received as a counter of their service (Handoko, 1991). c) The sum totalof payments, direct and indirect that an employee isgiven in exchange for service provided. There may be as many as five elements, including: base pay, shortterm incentives, long-term incentives, benefits, and perquisites." ( Deluca, 1993). "Compensation refers to every type of reward that individuals receive in return for their labor". (Mondy and Noe, 1993). e) Mondy and Noe (1993) stated : "Compensation refers to every type of reward that individuals receive in return for their labor". ( Mondy and Noe, Milkovich dan Newman (2002).Sugeng Budianto (2012) using performance incentive and salary as renumeration variable indicator, meanwhile Bambang Sancoko (2010) declared about renumeration value indicators. The exstending Performance Incentives is an action in order to raise the employee welfare as such that could be diminished the Fraud level. Swedia has succeed reducing Fraud by delivering performance incentives to their officers.

Internal Control System
Internal control comprises the plan of organization and all of the coordinate methods and measures adopted within a business to safeguard its assets, check theaccuracy and reliability of its accounting data, promote operational effIciency, andencourage adherencp to prescribedmanagerial policies American Institute of Certifield Public Accountant (AICPA).
COSO (The Committee of Sponsoring Organizations of The Treadway Commission) in September 1992, announced a comprehensive structure of control that covered risk management, by redefined internal control in 5 components which related each other. There are: 1.control environment, 2. risk assessment, 3. control activities, 4. information and communication dan 5. Monitoring. This concept adopted by Indonesia Government (PP 60 year 2008). Recent studies by Hermiyati (2010) and Anik Fatun (2013), Singapura and Hongkong had proved that there is negative correlation between internal control effectiveness and fraud.

Organization Culture
Robbins (2006) explained organization culture is committed value system that followed by the member of organization which will differ with the other organization. There are some steps for creating the best employee for sound organization culture. First, Selection, Training and Sosialization, Structural Design, Empowerment and Leadership. Leadership is one important indicator in increasing organization culture because the leadership style influences the running of the organization. Yuki (1981) stated 4 wanted leader actions that could raise organization culture, the leader that: a) supports and does care to employee about their needed and welfare, b) direct, and using planning, organizing, control and coordinazion in his/her command, c) result achievement orientation and d) partisipatif. Second, Performance Evaluation and Third, Reward Sistem. A sound organization culture will have big opportunity in decreasing Fraud as Fatun (2013) and practice executed by Singapura and Hongkong..

Variables Correlation
The strategy for Fraud elimination should be done by constructing beaurocracy based on the law and fair payroll (M Theodorus, 2010) (World Bank, 1997in Azyumardi Azza, 2002 applied succed in swedia, uphold the accountability and the law supremation for government (World Bank ,1997) in Azyumardi Azra (2002). Singapura dan Hongkong was succeed with good governance, internal control system, organization culture, transparence, education and reward (LAN) (BAPPENAS) Stephen P Robbins (2006). H1: There is negative correlation between Performance Incentives and Fraud H2: There is negative correlation between Internal Control System and Fraud H3: There is negative correlation between Organization Culture and Fraud

Methodology (Variables, Dimensions and Indicators) 3.
The questionnaire was designed to collect empirical data based on previous researches. The indicators for Incentive performance was adopted from Sancoko (2010)

Data Collection 4.
The population was all government officer in Directorate X1, Department X the government of Indonesia Republic which was choosed with stratified random sampling with strata sample group based on 7 level, 134 people on the population and 51 sample of its. All measurement used was ordinal scale. The returned questionnaire was 48 from 51, so 82.23%. The most respondent, 85% was came from the lowest level Data Analysis and Results 5.

Descriptive Statistic
In responding about Type of Fraud was found that the most type of Fraud that had been done is forgery or stamp which was executed by most by those whose has worked not more than 5 years In responding of the reason behind Fraud made, the results showed that the reason behind Fraud made was because of the pressure from third parties and the presence of opportunity. In responding of the application of Internal Control System , most respondents answered that it was not confirm with government guidance. In responding of Organization Culture Questions, 30% stated confirm.. 27% answered that Fraud Sosialization and Trainning was conform, 16% was the most confom. 35% stated that the leadership in Directorate X1 was good. 39% stated that there was an information opennes. 48% stated that there was a conformity between implementation public policy arrangement with the stated rule and law. And only 22% declared that punishment Reward, had been applied.

SEM Analysis
The SEM program was running until the data was valid and no multikolinearity with loading > 0.70, and p value < 0.05 VIF < 3.3. As required. The result was model fit,The Reliabilities measured by Composite reliability value cronbach alpha>0.70(0.60 -0.70 is available). H1: There is negative correlation between Incentive Performance and Fraud, rejected, p-value calculation < 0.01, it was < 0.05, it was significant, path coefficient was 0.38, positive correlation, effect size for path coefficient 0.181 so the influence of predictor latent variable was weak.

Figure 2. Research Construct Model
H2: There is a negartive correlation between Internal Control and Fraud , rejected p-value calculation = 0.07 > Requisite p-value was < 0.05, not significant, path coefficient -0.22 was negative correlation, effect size for path coefficient 0.084 , the influence of predictor latent variable was weak H3: There is a negative correlation between Organization Culture and Fraud, accepted p-value calculation = 0.02 < 0.05,significant, path coefficient -0.32 , negative correlation,effect size for path coefficient 0.142, the influence of predictor latent variable was medium.
R-squared value was 0.407, fraud construct could explain only 40,7 % Q-Squared was 0.413, the prediktif was valid because it was > 0.

Conclusion
For Performance Incentives and Fraud, result showed a weak significant positive correlation, this meant the correlation between is weak, it was not line with World Bank recommendation and prior research. The performance incentive has been given based on its level, the higher the level the more the incentive they got. The most respondent came from the lowest level (81%), and the reason behind Fraud was pressure by third party (the Higher level), and that most (50%) be done by officer below 5 year working period with the most type was Forgery and/or Stamp. That is why it was rejected.
There was no negative correlation between Internal Control System and Fraud, it was opposite with recommendation World Bank and prior research. Research found that the application of Internal Control system not confirmed with PP number 60 2008 and 38% of Respondent stated that Fraud was done because of the presence of Opportunity. That is why it was rejected. There was negative correlation between Organization Culture and Fraud, it was in line with World Bank and prior research, most respondent stated that the government succeed in doing socialization of punishment, training for up date officer competence, information transpparency and accountability but still lack in conformity of punishment and reward also selection in officer recruitment. That is why it was accepted. The type of Fraud that was done by government officers were Forgery and/or Stamp, Taken away Office Equipment, Taken away small Box of Money, not record a Transaction and take away the money, record un properly or not accurate and manipulation in quantity and price material purchased, doing purchased which not confirm with the specification. The most type was Forgery and/or Stamp.

Implications and Suggestions
This findings could give a contribution for government to make evaluation in Performance Incentive not only based to the level of officer also take into account the competence, seniority, honesty, fairness distribution and the performance it self. Government also suggested to make a tight control in Forgery and/or Stamps processes as well as other type of Frauds that happened. In Internal Control System, government has to make sure that the application must be in line with the government standard in order to reduce the Opportunity for doing Fraud as research finding. This application could include the empowering of all institution and public interest on Fraud. In Organization Culture, government could continue the presence program (include leadership acceleration) but also take into account about the conformity between reward and punishment and the fairness of officer selection program.The Variables used in this model only could explain 40.70% the effect of those on fraud. The rest, 59.3% affected by other variables that not included such as religion perspective and asimmetry information.It was also suggested to make study in other department, especially on those with higher record of Fraud, such as Tax Office.


WORK-FAMILY CONFLICT IN HOSPITALITY INDUSTRY EMPLOYEES: AN APPLICATION IN IZMIR

This study investigated the impact of work-Family conflict on hospitality industry workers in Izmir Province. This study tries to identify the variables that hospitality organizations can take to help their employees resolve their work–family challenges. A total of 248 respondents were selected for the study using simple sampling technique. The Instrument used for data collection is Work-Family conflict scale which was developed by Netemeyer, Boles and McMurrian (1996). Demographic characteristics and Logistic Regression Analysis were used to test hypotheses that were generated for the study at 0.05 alpha levels. Finding reveals that there was a significant level of work-family conflict in the hospitality industry in Izmir province. Also, it was found that a significant difference exists between age groups, Title of the employee, genders, having children, married and single respondents` experience of work-family conflict. Based on the findings of the study, it was recommended that the level of family responsibilities of the employees need to be considered before assigning responsibilities.

INTRODUCTION
Work and family responsibilities touch each other in so many ways. Many individuals are simultaneously pursuing a career and committed to a family relationship. There are many times when our work and family lives are in conflict with one another. Work-family conflict seems an easy problem at first but it affects the one's work-family life relatively (Özdevecioğlu and Doruk 2009: 71). Taking in to account that people spend most of their time at work, except sleeping time (app. daily 70%), work seems inevitable to affect a person 2. LITERATURE REVIEW Work-family conflict exists when pressures from work and family roles are mutually incompatible. Work-family conflict is a kind of conflict when family responsibilities become more important than work responsibilities or vice versa (Greenhouse and Powel 2003:292). When one's work role hinders his family role, a work -family conflict occurs and when family role hinders one's performing his work requirements, a family-work conflict occurs (Çarıkçı and others, 2009). With work-family conflict, while worker's role demands overcome the individual's sources and hinder fulfilling the family responsibilities. On the other hand, in family -work conflict, the demands of family's role overcome the individual's sources which in turn hinder satisfying family responsibilities: In family -work conflict, family's role demands overcome the individual's sources and hinder fulfilling the work responsibilities (Frone and others, 1992., s.72).
Sometimes our work responsibilities interfere with our family lives. Koyuncu and others (2012) concluded that there is a positive correlation between work-life and familywork conflicts. Researchers focused on gender which has a determining role causing these conflicts in the studies of work-family conflicts. In 2009, Koyuncu and others couldn't find a significant relationship between Turkish manager's gender and work-family conflict in their 'Turkish manager's work-life conflict: Potential stimulus' study. On the contrary previous studies stated that women are more conflicted in work-family life and individual life compared to the male employees (Duxburry and Higgins, 1991:62;Çarıkçı, 2001:6). Women's responsibilities at home and family generally resulted in experiencing work-life conflicts (Koyuncu and others 2012:202). Kuzulu and others (2013) concluded that female employees have more work-life conflicts compared to the male employees and people between the age of 20-30 have more work and private life conflicts compared with the ones between the age of 40 and over. Individuals' age are assessed as another indirect cause of conflict. According to this situation, the older an individual gets, the more his roles about his work and family may increase. Karapınar and others (2006) concluded that when the children are younger, it causes both work-family and family-work conflicts, when individuals are older and their children are younger and the wife doesn't work it causes family -work conflict. In a comparative approach Stier and others (2012:625) examined social policies about work-family conflicts among 27 countries. At the end of the study, in two countries, female employees have workfamily conflicts when compared with the males ones, on an individual level working hours, child oppression and work's features affect the conflict perception. Pocock and others (2007:2) in their 'work, life, and time: Australian Work and Life Index' study, argued that there was a negative relation between working long hours and work-life output in all work and life measurements. Elloy (2004) defines the reasons of dilemma to be caused by factors such as working hours, daily and weekly working, reasons caused by family having a younger child, being older or both man and wife work. In developed societies, balancing the relations between work and family life and preventing conflicts are handled in the context of state's responsibility. Because of the fast changes, in the roles of the females and males, it raises the importance of increasing of the jobs connected with the contract, discussions on balance between work and family life, and bringing up children (Policy Brief, 2006:1-4). Netemeyer and others (2005:130) indicated that when the service industry employees have work-family conflict or family-work conflict, it directly or indirectly affects the employee's performance. Özdevrecioğlu and Doruk (2009: 90) concluded that there is a positive relation between work -family conflict and family-work conflicts. It can be said that once the individual had one of these conflicts, that conflict would trigger the other one. In other words, when there is a balance disruption on work and life, in order to find equilibrium point again, the employee experiences both conflicts.

WORK-FAMILY CONFLICT IN THE HOSPITALITY INDUSTRY
Many employers realize that it is in their best interest to help their employees balance their work and family lives. Although the tourism industry is one of the most important industries with regard to creating revenue and employment opportunities, it is also one of the most problematic industries for employee benefits and working conditions, in particular during peak season which is in between April to September. At the same time, those who work in the hospitality industry are generally low waged and work in irregular, long, heavy working conditions and they also have to work with demanding and difficult customers (Karatepe ve Aleshinloye, 2009). According to the 2011 report of Ministry of Labor and Social Security, the tourism industry has some problems which include low wages, working on official and weekly holidays without payment, working long hours, violating break time regulations and employing illegal foreign workers often off the record.
Yıldız (2011:68) stressed that people working in tourism industry were under pressure because of private working conditions, long working hours, working weekends and holidays which bring in many problems and decrease moral and the level of enthusiasm of employees.
In the same way Yanardağ and Avcı (2012:39) concluded that employment problems stem from long working hours, low wages, and no social security for employees. Küçükusta (2007) stated that the most important costs for the accommodation industry is work and life imbalance or conflict which causes redundancy of a qualified staff, cost of recruiting a new staff, placement, education, Bringing to the task, and loss of productivity. Zhao and Mattilla (2013: 310) indicated that, in the case of work-family conflict of front office employees, the employees show less positive behavior in the workplace, loose emotional attachment to the workplace and thus the conflict results with a decrease in customer satisfaction. In Tromp andBlomme (2012: 1213) stated that, regulation of working hours is an important factor in the control of work-family life and especially in the hospitality industry this causes negative work-family conflict.
Ronald and others (2013:39) emphasized that there is a positive relation between family-work and work-family conflict and they concluded that there are more work -family conflicts than family -work conflicts. People who experiences high level of work -family conflict and low level of family-work conflict has a high level work satisfaction and energy. Kartepe (2011:10) stated in his study among the hotel employees in Nigeria that work -family conflict had a negative effect on work satisfaction and weakens the working skills of the employees working at the front line. Deery and Jago (2009:108) concluded that tourism industry employees couldn't balance both work and family life because of long working hours, role confusion, time and family life oppressions. In the tourism industry, identifying employee's conflict situations and uncovering the reasons will contribute a lot to the tourism literature. Tromp andBlomme (2012: 1218) stated that when associating the regression models for employees inside hospitality industry and employees outside hospitality industry have shown similar predictors which include precarious work arrangements, low wages, long working hours, the densification of working time -leaving hardly any unproductive time during working hours -and unpredictable demands for overtime.

Population And Sampling
This study conducted to determine employees' work-family conflict in international hotel chains and individual hotel businesses. Thus, the main population of this study constituted of International hotel chains and Individual 5 star hotel businesses located in Izmir province. There are six international chain hotels and 11 units of individual 5 stars hotel businesses found in İzmir province (İzmir İl Kültür Turizm Müdürlüğü 2014). According to the information which is obtained from human resource managers of these hotels, approximately 4,000 people employed in the international chain hotels, 3500 people are employed in individual 5 star hotels and in total these hotels employs a total of 7500 people. In this sense, the main population of the study is 7500 people. Time, accessibility and being an important tourism destination was important factors in the selection of Izmir province.
Simple sampling method chosen to collect data from these 5 star hotel businesses located in Izmir province. The data were collected through a questionnaire and in total 289 valid questionnaires was gathered from respondents. 136 of these questionnaires belong to individual 5 star hotel businesses and 153 questionnaires belong to the international hotel chain respondents.
The hypothesis of this study was determined as follows: H1: Work-family conflict among hotel staff varies according to international chains and individual 5 star hotel businesses.
H2: Work-family conflict among hotel staff varies according to the age variable.

CREATING QUESTIONNAIRE AND RELİABİLİTY ANALİYSES
The population of this study constituted of International hotel chains and individual 5 star hotel businesses located in Izmir province and a questionnaire was used to collect the data. The questionnaire consisted of two parts. In the first part, there are questions to determine demographic and categorical characteristics of individuals. In the second part, the levels of employees' work-family conflict measured. The study used a work-family conflict scale which was developed by Netemeyer, Boles and McMurrian (1996). This scale consisted of two subscales. Both subscales composed of 5-point likert scales style and determine the status of the conflict with judicial sentences. As for reliability analysis of the scales Netemeyer and others (1996) determined that work-family conflict scale originating from business life and family-work conflict scale originating from family life's alpha values are 0.88 and 0.89, respectively. Similarly, Efeoğlu (2006) determined the reliability analysis for Work-family conflict scales as the alpha values between 0.8288 and 0.8845.
In this study, reliability was assessed by determining internal consistency (Cronbach's alpha coefficient). Work-family conflict scale's Cronbach's alpha value found as ,903 and family-work conflict scale's Cronbach's alpha value found as 0,888 respectively.

Logistic Regression Analysis
Regression analysis is one of the most widely used statistical methods for examining relationships between variables. Before starting regression analysis, one need to know the nature of the variables and must determine dependent and independent variables (Özdamar: 2004, 187). Dependent variable is generally known as a measurable and continuous variable. But every time the dependent variable cannot constitute a continuous variable. The intended use of logistic regression analysis is the same as other reconstruction technique models used in statistics. Using least variables for the best fit which defines the relationship between dependent (outcome) variable and a set of independent variables and then set up a generally acceptable model. Letting x denote the vector of predictors {x1, x2,……xk}. The statistical model that is generally preferred for the analysis of binary responses is instead the binary logistic regression model, stated in terms of the probabilty that Y=1 given x, the values of the predictors: prob = .
As before, xβ stands for . The function P= is called the logistic function (Harell, 2001) The basis of the logistic regression model is superiority ratio (odds ratio). Superiority ratio is obtained from the probability of occurrence of an event with the probability of not occurrence. Logistic regression model is obtained from taking the natural logarithm of the superiority ratio. Maximum likelihood method is widely used when estimating parameters of logistic regression model (Akgül and Çevik, 2003: 390;Berenson and Levine, 1996: 837-838).

RESULTS
In this study, when we look at the demographic characteristics of respondents, most of the them were female (51, 4%) and married (57,3%) that (41,7%) were between the ages of 26-35, % 46,2 do not have children. Most of the participants does not receive help for the housework, child care and food jobs. All information on the characteristics of the participants categorically is located in Table 1. This study, employees' work-family conflict in the hospitality industry, was examined whether there is a significant relationship between work-family conflict and categorical characteristics of respondents with logistic regression analysis. In logistic regression analysis for two different dependent variables were analyzed in two different logistic regression models. In the first model the dependent variable is work-life conflict ( 1=There is 2= There is not) were included in the model. The validity of the model, was tested with Hosmer Lemeshow test.
Hypothesis of the test is as follows.
H0: Prediction of equation is significant.

H1: Prediction of equation is not significant.
Hosmer Lemeshow test results of the chi-square value was calculated as 9.564. p = 0.305> 0, 05 was obtained and the model found suitable as the H0 hypothesis was accepted.  Considering Table 3, work-life conflict of personnel working in hotels; age, sex, marital status, and cleaner effects of independent variables appears to be important in the model. Exp (B) values in Table 3, shows odds ratio. If the odds ratio, is the probability of occurrence of an event to the rate of not occurring; exp (B) indicates the probability of having more occurrence of Y variant, with the effect of Xp variant, is how many times more or probability of how many percentages more at the rate of specifies that in case. In other words, the odds ratio shows that how many times more or less of the two examined events can emerge when one compared with the other one. When examining the results obtained of the independent variables (B) coefficient is negative ODDS rate, taking into account the negative relationship will be interpreted in terms of a decrease. Considering an hotel staff, by variable of (Marital status), the possibility of having work-family conflict compared to chance of not having it, decreases 0.47-fold. Based on the age variable of the hotel staff the probability of having work-family conflict 1.070-fold increases than not having it, according to gender variable 2,030 and by the variables of cleaners 2.277-fold more increased.
In the second model the dependent variable life-work conflict (1 = no 2 = yes) were included in the model.
Hosmer Lemeshow test result of the chi-square value was calculated as 11,934. p= 0.154 > 0, 05 was obtained that the model is appropriate and H0 hypothesis accepted.  Considering Table 5, the life-work conflict of respondents; age, gender, title, marital status, and cleaner effects of independent variables appear to be important in the model. Based on a handled hotel staff's 'marital status' variable, the possibility of having workfamily conflict compared to not having it is 0.376-fold less. In line with the Title variable it decreases 0.626-fold. According to the age variable of the hotel staff; the possibility of having work-family conflict compared to the chance of not having it 1,093-fold increases, according to gender variable 1.256 increases, according to the number of children variable 1,492 increases and according to the cleaners variable 2,531-fold increased.

CONCLUSION
The reduction of conflict in the work life and family life and it's reflection into behaviors are important in terms of business performance. The study focused on work-family conflict and demographic characteristics in assessing the performance of individuals in the working life. It is important that businesses should measure the size of the conflict by means of interviews and surveys.
Work-family conflict varies according to the age, gender, title, marital status, and home help depending on the use case. Today, developed countries begin to provide annual reports related to work-family conflict and they started to exchange ideas with the private sector about the extent of the conflict. Work life conflict directly affects both the employee's family and the business. In this study, firstly categorical characteristics tested. Based on the categorical characteristics the relationship between work-family and family-work conflicts was investigated. Research finding's possible contributions are summarized in the following way; i. There were no significant differences in the level of work-family conflict between surveyed employees of international chain hotels and 5 star individual owned hotels. The results can be attributed that the research being done in the province of Izmir and compared businesses were city hotels. The human resource department managers stated that employees work in three shifts and in very rare occasions working hours exceed eight hours. Thus, arising from the results of this study, are not surprising. In terms of operating principles, 5 stars individual-owned enterprises have similar features with the principles of international hotel chains, in the province of Izmir. ii. In the study of work-family conflict; age, sex, marital status, and taking cleaner variables were statistically significant. The result supports the results of other studies on this subject. In work-family conflict, the gender case must be dealt as a sensitive variable. Female employees are likely to have more conflicts than male employees because they are responsible for housework and household care. The ones who get help for the house work have less conflict when comparing with the ones who don't is another result of this study. Getting help for the house work is an important variable for reducing the conflict. Finding reveals that married respondents have more conflict than the single ones. It is because of having more responsibilities in their family life when compared to single ones. iii. Life-work fit is workers' perception that the job is balanced with home life they feel safe doing the work and that they have flexibility to attend to work and home duties. The results of this study indicated for the life-work conflict that age, gender, marital status, and taking cleaner are important variables. These results support the related literature. The mentioned variables in workfamily conflict are also important in life-work conflict. Title variable has emerged as an important variable different from work-family conflict. As the Title of employees increases in business, responsibilities given to him, increases too. For this reason, there is a need for establishing and maintaining a family-supportive work environment in the city hotels. Based on the findings of the study, it was recommended that the level of family responsibilities of the employees need to be considered before assigning responsibilities.
This study verifies the assumptions set forth in the related literature. Based on this an assessment of the quality of this study can be listed as follows: i. The study consisted of a comparison between international hotel chains employees and individual-owned five star hotels in the work-family conflict issues. ii. The study was conducted in the city hotels, iii. The study offers contribution to the literature on the basis of the above assessments. The present study offers new vistas for hospitality industry.
The data collection of this study fitted into a certain time interval and simple sampling method has been selected which limited the findings. The research was conducted only in the province of Izmir. More data collection points are needed to understand the changing nature of work and family issues over time. The study cannot say that the results cover all the hotels businesses in Turkey and the results of this study have limited generalizability to the entire workforce.
Future studies should also continue to refine the methodology used in the area of work-family research. Results of this study indicated that demographic factors on workfamily conflict are important. Further studies are needed for each demographic factor affecting the size of the conflict. Future studies may compare employees who work in resort hotels and city hotels in Turkey's leading provinces which tourism revenues and the number of tourists is important for the country. Most importantly, the future researches should take place in the high season, are among the suggestions of this study.


s2fieldsofstudy: Business Education

text:
Examining the Relationship of Organizational Agility and Organizational Forgetting with Organizational Effectiveness

This study aimed to investigate the relationship of organizational agility and organizational forgetting with organizational effectiveness among staff of the education administration of Zahedan. The population of this study included a total of 645 staff of the education administration of Zahedan who served in the 2013-14 school year. Using the Krejcie-Morgan table, 200 individuals were selected through applying stratified random method. To collect data, three questionnaires including Organizational Agility [1], Organizational Forgetting [2] and Organizational Effectiveness [3] were used. Content validity of these questionnaires was approved by the faculty members of the Department of Management and confirmatory factor analysis was used to ensure the results. In addition, Cronbach’s alpha for the scales of organizational agility, organizational effectiveness and organizational forgetting was calculated, which was 0.73, 0.74 and 0.76, respectively. The results showed that there was a significant positive correlation between organizational agility and organizational effectiveness. Moreover, there was a significant positive relationship between organizational forgetting and organizational agility. In addition, there was a significant positive relationship between organizational forgetting and the components of organizational effectiveness. Additionally, there was a significant positive correlation between organizational agility and the components of organizational effectiveness.

Introduction
Nowadays, the dominant thinking assumes and defines organizations as entities that not only respond to the external environment, but also actively shape and influence their own environment. Only organizations can continue to survive and compete in competitive markets that are able to achieve such capabilities [4]. In other words, previous approaches and solutions have lost their ability to face organizational problems and the external environment or are better to be replaced with recent approaches. Thus, one way of responding to these changes is organizational agility. In fact, organizational agility is a new paradigm for the development of organizational engineering and competitiveness. Agile organizations are open to learn anything new that increases their efficiency by taking advantage of new opportunities [5]. The foundation of agile is the integration of systems/information technology, personnel, business processes and equipment within a coordinated and flexible organization to quickly respond to events and changes in the environment [6]. Organizational agility is the ability to sense and react quickly and successfully to environmental changes. Like producers other organizations and institutions are forced to seek agility to compete in the 21th century, because modern organizations face growing pressure to find new ways to compete effectively in the global market dynamics [7]. Agility improves organization's ability to supply high quality products and services and thereby is an important factor for the productivity [8]. Moreover, due to the speed and acceleration of changes in today's world, it seems that organizational forgetting is a factor that helps managers and organizations to solve problems and realize their goals, since organizations face a great deal of useful and useless information which is accumulated in the organizational memory and in some cases prevents fast progress of organizations [9].
To some extent, organizational forgetting and learning are two types of organizational change, including organizational development at two points of time. In the case of forgetting, the organization follows a certain procedure at a point of time and then it does not take long to inactivate it in the next point of time. As Mahmoudvand [2] stated, Wiek and Covaen (1999) explained his observations in the literature of organizational change and distinguished between the changes that were gradually evolving, changing and growing and those which happened suddenly in batches. Considering the above, one of the main goals of organizational agility and organizational forgetting is to achieve organizational effectiveness as a standard for performance evaluation of the organization. Organizational effectiveness is a method with which organizations evaluate successful realization of their tasks through organizational strategies. Simply, effectiveness is usually in the form of an extent, level or degree in which the organization achieves its goals [10]. Organizational effectiveness is the degree or extent to which the organization approaches its intended goals [11]. Organizational effectiveness is a condition in which the intended organization uses limited resources and at the same time is able to achieve a target or targets, according to the established criteria. If we consider a rational model for the organization, organizational effectiveness can be defined as the ability of an organization to achieve its goal [12]. The rational model of goal examines the organization's ability to achieve its goals. This model is associated with both simple and complex organizational effectiveness [11].

Research Background
A study, investigating the relationship between organizational forgetting and organizational agility in electronic industries of Shiraz, answered to its first research question using the Pearson correlation coefficient analyses and revealed that there was a significant positive relationship between purposeful organizational forgetting and its dimensions with organizational agility [9]. Tabarsa and Mirzadeh [13] explained a variety of organizational forgetting processes and outcomes and justified the role of knowledge management in each of these processes. Another study studied the relationship between job satisfaction and organizational agility and indicated a positive and significant relationship between organizational agility and its subcomponents including responsiveness, competence, flexibility and speed at work with job satisfaction [7].
Zeng and Chen [14], examining the relationship between organizational forgetting and organizational innovation and the mediating effect of organizational learning capability, stated that management of organizational forgetting depend on the priority of organizational learning over organizational innovation. The researchers focused on organizational innovation, intentional (purposeful) organizational forgetting and organizational learning capability and tried to find the relationship between intentional organizational forgetting, organizational learning and organizational innovation. They stated that purposeful organizational forgetting is an important component of knowledge management. Gelberson and Levin, in a study entitled "Incorporating Forgetting into Learning Curves", defined learning curves as graphs that show the extent of the organizational or personal progress. The diagram can be used to determine the progress of the organization when repeating the same action [15].
Moshabbaki and Rabieh, in a study entitled "Intentional Organizational Forgetting (Strategic): The Elixir of Competitiveness in the organization" examining the concept and forms of organizational forgetting given the importance of strategic purposeful organizational forgetting in addition to measuring the level of purposeful organizational forgetting, examined its relationship with charismatic leadership at different levels of the Iranian automobile industry and stated that forgetting is not as easy as learning, and may be harmful or helpful and is perceivable at both dimensions of purposeful and non-purposeful [16]. Ho examined the relationship between organizational health (one of the components of the effectiveness of Parsons' model based on the combinatorial approach of Hoy and Miskel) and job satisfaction and performance of professors at Singapore University and found a significant relationship between effectiveness, job satisfaction and performance [17]. Karamdokht, exploring the relationship between organizational behavior and organizational effectiveness of Babolsar high schools, concluded that there was a significant positive correlation between organizational behavior and organizational effectiveness of school administrators [3]. Towfiq Poor examined managers' leadership style and its relationship with effectiveness of boys' elementary schools in Ardabil and found a significant relationship between leadership styles and school effectiveness. There is a relationship between organizational agility and organizational effectiveness [18].
This study aimed to investigate the relationship of organizational agility and organizational forgetting with organizational effectiveness among staff of the education administration of Zahedan.
There is a relationship between organizational agility and organizational effectiveness. There is a relationship between organizational forgetting and organizational effectiveness There is a relationship between organizational agility and components of organizational effectiveness. There is a relationship between organizational effectiveness and components of organizational agility. There is a relationship between organizational forgetting and components of organizational agility.

Research Methodology
Descriptive research method was applied. The population of this study included a total of 645 staff of the education administration of Zahedan who served in the 2013-14 school year. Using the Krejcie-Morgan table, 200 individuals were selected through using stratified random sampling method due to heterogeneity of the population regarding gender. Instruments contained three questionnaires including Organizational Agility [1] which is consisted of 35 items; Organizational Effectiveness Inventory [3] which is developed based on the Parsons's model (AGIL) with 28 items and Organizational Forgetting Inventory, a researcher-made questionnaire adopted by Mahmoudvand [2] from Holan, Philips and Lawrence's (2004), which was developed to measure the level of forgetting consisting of 9 items. In order to examine the content validity, questionnaires were distributed among a number of faculty members of the Department of Management.

Reliability of the Questionnaires
To calculate and determine the reliability of these three questionnaires, Cronbach's alpha coefficient was applied, the results of which are presented in the following tables. A. Organizational Agility: To evaluate the reliability of this questionnaire, a preliminary study was conducted on a sample of 36 individuals. Afterwards, the reliability coefficient was calculated for each component of organizational agility using SPSS software. To enhance components' reliability coefficient, a number of questions were eliminated. Thereof, the number of questions was reduced from 43 questions to 35 questions ( Table 1). B. Organizational Effectiveness: To assess the reliability of this questionnaire, a preliminary study was conducted on a sample of 36 individuals. Afterwards, the reliability coefficient was calculated for each component of organizational effectiveness using SPSS software. To enhance components' reliability coefficient, a number of questions were eliminated. Thereof, the number of questions was reduced from 28 questions to 24 questions. Karamdokht examined the reliability coefficient of Organizational Effectiveness Questionnaire and reported that this coefficient was 0.91 [3] ( Table 2).

Analysis and Description of the Demographic Data
In this section, through applying statistical analysis, distribution of the sample in terms of variables including gender, age, level of education, years of service, and types of employee are discussed. Considering Table 3, it can be mentioned that the majority of participants (186 individuals) were male, i.e. 93% of the sample, and 14 individuals were female.
With regard to Table 4, it can be stated that the majority of the sample, i.e. 55.5% of the participants, were in the age group of 40 years old and higher. Afterwards, 21% of participants were placed in the age group of 36 to 40 years old and 34% of them were in the age group of 32 to 40 years old. Moreover, 10.5% of participants were 24 to 32 years old.
With regard to Table 5, it can be asserted that the majority of the sample (61 individuals), i.e. 30.5% of participants, had 20 to 25 years of service. Afterwards, 59 individuals, 29.5% of the sample, had 25 years of service and higher. Additionally, 55 individuals, i.e. 27.5% of the sample, had less than 15 years of service and 25 individuals, 12.5% of the sample, had 15 to 25 years of service.
Considering Table 6, it can be argued that the majority of the sample (132 individuals), i.e. 66% of participants, had BA degrees. Afterwards, 40 individuals, 20% of the sample, had MA degrees. Additionally, 14 individuals, i.e. 7% of the sample, had associate degrees and 14 individuals, 7% of the sample, had a diploma.
Regarding Table 7, it can be stated that the majority of the sample (163 individuals), i.e. 81.5% of participants, were full-time employees. Afterwards, 25 individuals, 12.5% of the sample, were contract employees and 12 individuals, i.e. 6% of the sample, were apprentices.

H1:
There is a relationship between organizational agility and organizational effectiveness. H2: There is a relationship between organizational forgetting and organizational effectiveness. As can be seen (Table 8), considering the significance of t-value, validity and fitness of the model is confirmed because the chi-square value, the RMSEA value and the ratio of chi-square to df is good and the GFI as well as AGFI values are over 90%. Therefore, these two hypotheses are confirmed.

H3:
There is a relationship between organizational forgetting and components of organizational effectiveness. As can be seen (Table 9), considering the significance of t value, validity and fitness of the model is confirmed because the chi-square value, the RMSEA value and the ratio of chi-square to df, is good and the GFI as well as AGFI values are over 90%. Therefore, all hypotheses are confirmed.
H4: There is a relationship between organizational agility and components of organizational effectiveness. As can be seen (Table 10) considering the significance of t value, validity and fitness of the model is confirmed because the chi-square value, the RMSEA value and the ratio of chi-square to df, is good and the GFI as well as AGFI values are over 90%. Therefore, all hypotheses are confirmed.
H5: There is a relationship between organizational effectiveness and components of organizational agility. As can be seen (Table 11), considering the significance of t value, validity and fitness of the model is confirmed because the chi-square value, the RMSEA value and the ratio of chi-square to df, is good and the GFI as well as AGFI values are over 90%. Therefore, all hypotheses are confirmed.
H6: There is a relationship between organizational forgetting and components of organizational agility. As indicated in this Table 12, regarding the significance of t value, validity and fitness of the model is confirmed because the chi-square value, the RMSEA value and the ratio of chi-square to df, is good and the GFI as well as AGFI values are over 90%. Therefore, all hypotheses are confirmed.

Discussion
In relation to the first question, the results suggested that there was a significant positive correlation between organizational agility and organizational effectiveness. The results of this research are consistent with the results of the study of Bagherzadeh, Baluyi Jamkhaneh and Moafi's who investigated agility capabilities in public organizations focusing on Mazandaran post office as a case study [19]. The results are also in line with the results of Nickpour and Salajegheh who studied the relationship between organizational agility and job satisfaction and found a positive and significant relationship between organizational agility and its components including responsiveness, competence, flexibility and speed at work with job satisfaction [7]. The results are also consistent with the findings of Vinod who explored organizational agility before and after the implementation of "universal design system" and considered twenty indicators for organizational agility [20]. With regard to the second research question, the results showed that there was a significant positive relationship between organizational forgetting and organizational effectiveness. In other words, organizational forgetting can increase organizational effectiveness. The results are consistent with those of Tabarsa and Mirzadeh [13] and Moshabbaki and Rabieh's [16] study entitled "Intentional Organizational Forgetting (Strategic): the Elixir of Competitiveness in the organization" stating that forgetting is not as easy as learning, and may be harmful or helpful and is perceivable at both dimensions of purposeful and non-purposeful. These results are also in line with Haji Azizi, Dokht Esmati and Moradi's study entitled "Organization Forgetting: A New Approach to Knowledge Management" addressing and examining concepts such as organizational knowledge and organizational learning, organizational forgetting and its role in organizations [21].

Conclusions
The results of the third research question suggested that there was a significant positive correlation between organizational forgetting and components of organizational effectiveness. In fact, organizational forgetting increases or decreases the influence of the components of organizational effectiveness. The findings are in line with those of Zeng and Chen's study entitled "The Relationship between Organizational Forgetting and Organizational Innovation: The Mediating Effect of Organizational Learning Capability" stating that management of organizational forgetting depends on the importance of organizational learning to organizational innovation [14]. The results are also consistent with the results of Gelberson and Levin's study entitled "Incorporating Forgetting into Learning Curves" which defined learning curves as graphs that showed the extent of the organizational or personal progress and showed that the diagram could be used to determine the progress of the organization when repeating the same action [15].
The results of the fourth research question suggested that there was a significant positive relationship between the components of organizational effectiveness and organizational agility. This is in line with the studies of Ho [17], Worley and Lawler [1], and Nickpour and Salajegheh [7] which studied the relationship between organizational agility and Job satisfaction and found a positive and significant relationship between organizational agility and its components including responsiveness, competence, flexibility and speed at work with job satisfaction.
The results of the fifth research question suggested that there was a significant positive relationship between the components of organizational agility and organizational effectiveness, i.e. organizational effectiveness can affect the components of organizational agility and increase organizational agility. The findings are consistent with the findings of Ho [17] and Worley and Lawler [1].
The results of the sixth research question indicated that there was a significant positive correlation between the components of organizational agility and organizational forgetting, i.e. forgetting increases the components of organizational agility. The results are consistent with Moshabbaki and Rabieh's [16] study entitled "Intentional Organizational Forgetting (Strategic): The Elixir of Competitiveness in the organization", and the studies of Zeng and Chen [14] and Karamdokht [13].

Suggestions Regarding the Obtained Results
As stated earlier, sustainable and flexible strategy has a key role in agility of organizations. Therefore, managers should consider flexibility in adopting strategies in order to avoid problems when facing sudden changes. To acquire agility, educational organizations should draw an exact portrait of future and educational perspective to relatively predict its structures. Given that compatible designs are the most important variables of organizational agility and their effectiveness has been confirmed, the organization should apply structures which enable it to quickly respond to external changes. In other words, the educational organization that wants to be agile should possess organic and flexible structures. Managers of educational organizations are suggested to provide a work environment and climate that facilitates organizational agility. According to the findings of this research study, they should assign staff with more authority and responsibility in decision-making to enable them to adopt their creativity and thus provide innovative methods in their work environment.

Limitations
1. Unwillingness of some staff to respond to the questionnaires. 2. Conservative environments in offices that may have influenced responses to the questionnaires. 3. The effect of personal biases and interests of research participants on research results.


UKRAINIAN BUSINESS IN EUROPEAN INTEGRATION PROCESS: A CLUSTER APPROACH

This article deals with the investigation of the mechanisms for the activation of businesses in the Ukraine. It is possible through increasing the cooperation with the European Union (EU). The paper emphasizes the need for radical changes in the conduct of Ukrainian businesses in order to enhance investment and innovation. This paper proposes that today the international integration processes in the Ukraine require new approaches and technology cooperation, promotion the transfer of innovation, and the investment processes. Indicated in this paper are the current approaches and new challenges that have arisen today which require rapid reorientation of the close relationship of science and industry and the development of information and in the infrastructure sector. The authors propose the use the cluster integration processes in the region for intensification investment and innovation activity that is necessary today to strengthen cooperation with the EU. The paper is presents a method of complex analysis of the regional development characteristics and regional cluster initiatives; and their reflections on a map.

INTRODUCTION
Current global trends could open up new avenues for the Ukraine and present new horizons for growth. The Ukraine is a young developing country that is building a market economy and is setting the current legislative provisions for the effective regulation of businesses. The need for new mechanisms for state control of the economy is caused by the opening of the European market for domestic producers.
The need to intensify Ukrainian policies in the direction of cooperation with the EU caused a number of advantages that are specific to the European standards of living: level of economic development, high quality of life, human rights, democracy, energy security, free tours.
There are also new problems of industrial and regional growth: the need for cooperation between the Ukraine and countries of Europe, and the reorientation of markets, growth of competitiveness and the quality of Ukrainian products, the establishment of clear strategic guidelines for industrial development. The main objectives that are strategically important in developing of Ukraine are defined by global leadership in the production of food and energy, which is caused by the presence of significant untapped potential in these areas. So, the implementation of effective mechanisms of activation is planned in these fields.
We have proposed our own interpretation of the need to establish effective linkages and the integration definitions of cluster models of integration.
We consider the mechanisms of integration relations of cooperation based on value chains of participants who develop models, which are based on mutual interrelation chains and the effects of cooperation within the integration association.
In turn, we review the cluster integration model as a feature of the inter-regional economy that provides dynamic measures which are based on increasing profits and innovation. This is important in connection with external effects and enhances the strengths of the participants.
Such key concepts as cooperation, cluster and innovation -are interrelated, because by attracting innovations in such integration associations in cooperation as a cluster, it makes it possible to maximize the results from arising synergy effects.
The main goals of our research are: Identification of the main features of Ukrainian business; identification of the opportunities of development in today's challenging environment; determining the need for the intensification of innovation and investment activity to ensure the identified opportunities; the analysis of the current cluster activity in Ukraine; present proposals for intensification of such activities.
Results of the implementation of the goals formulated proposals for the revitalization of Ukrainian business towards European integration by enhancing innovation and investment activities, using new possibilities of development based on cooperation and the formation of cluster initiatives.

LITERATURE REVIEW
Today in Europe there is a clear focus on innovation and the development of mechanisms for implementation of innovative technologies in action. In most of the economic papers the importance of such processes is emphasized. Back in 2003, it was determined t radical, it can result from technology transfer or through the development of new business concepts, it can be technological, organizational or presentational. Achieving an innovation performance that makes the European Union a world reference for innovation represents an enormous opportunity that can translate into raised living standards over the coming years. Progress towards such a more innovative European economy is however proving tentative and fragile (Brussels, 2003 In the Ukraine today there are new prospects, but there is a need to identify the mechanisms for the activation of investment and innovation processes. One such mechanism is the cluster. For the first time to the phenomenon of "clustering" was identified by A. Marshal (1920), when he noticed a tendency towards concentration of specialized companies in the industrial area. Schumpeter (1934) stated the fact of the innovation cluster.
However, the founder of the theory of clusters considered to be Michael Porter because he was developing his theory of competitive advantage. He drew the attention of the authorities to the concept of industrial clusters. Michael Porter still continues today to develop the concept, helping to improve theoretical approaches to the analysis of cluster effects. regional aspects of cluster and notes the positive trends depending cluster activity and employment growth in the region.
Thus, the most widely used definition of cluster a group of geographically neighboring interconnected companies and associated organizations operating in a particular area and featuring the activities and complement each other (Porter, 1985).
In the world there are different approaches to the interpretation of this category. G. Swann and a group of companies within the same industry, which are Rosenfield (1997) indicated "cluster a concentration of firms that are able to provide a synergistic effect due to geographic proximity and interdependence". W. Elsner (1998) also defined a cluster as being: "Cluster a group of firms that are functionally linked both vertically and horizontally". L. Van den Berg, E. Braun, and W. van Widen (2001) stated that "Clusters localized network of specialized organizations in which production processes closely linked due to Despite a long and constructive study the problem of innovation in performance and cluster development, these issues remain relevant and need to have a developed process for practical mechanisms for implementation.
We propose to continue the development of scientific achievements in innovation and cluster by unification of these concepts into single interconnected mechanisms of intensification for Ukrainian businesses and for promising a new direction in terms of cooperation with the European Association.

REQUIREMENTS AND OPPORTUNITIES THAT ARE IN FRONT OF UKRAINIAN BUSINESSES TODAY
During the last year there have been changes in the structure of exports in the direction of increasing exports from the Ukraine to EU countries. So, during six months in 2014 compared with the previous year the percentage of exports to the EU increased from 28% to 33%. Today transformations in Eastern Europe make it possible to establish trans-border cooperation among Ukrainian and European businesses, to contribute to the development of new joint projects, and to revitalize tourism in both directions. Today, Ukrainian businesses are ready to introduce new forms of cooperation, such as the organization of clusters, tech incubators in various areas of both production and services (tourism) in order to attract foreign expertise and investments.

Figure2. Structure of Ukrainian import (State
Statistics Service of Ukraine) Export growth in Ukraine is possible when there are significant changes in approaches to business. The basis for modern changes in business in the Ukraine has been the increasing investment attractiveness and innovative activity.
Ukrainian businesses today are in fairly difficult conditions for development. Existing problems, as well as in the internal environment business structures and in the environment in which they are located contribute to the problem.
In turn, the difficult conditions for the functioning business structures within the country have made it complicated for their work in foreign economic activity.
The main problems inside the country for business development are: accelerating inflation, falling revenues; imperfect tax system, which is too burdensome for small producers; high level of illegitimate businesses; low level of management, lack of knowledge, experience and culture of market relations; lack of business support infrastructure; the lack of complete and reliable information on the state and market conditions, low levels of consultancy services and special education programs; the virtual absence of state financial support; western partners distrust and negative mental attitude of the population to the business; the lack of an effective mechanism for resource potential (availability fertile lands and minerals); personnel potential (highly qualified professionals); research potential (presence of a large number of scientific institutions using advanced scientific developments); infrastructure potential (availability of powerful industrial objects and institutions for their functioning).

Ukrainian Business in European Integration Process: A Cluster Approach
But today there are also a number of negative features that hinder the efficient operation of Ukrainian businesses in the international market.
1. Political and legal problems arising from imperfections or lack of necessary legislation, arbitrary interpretation, preservation of the potential of abuse of political stability in our country and in our foreign partners 2. Organizational and structural problems of business due mainly to causes such as imperfect and underdevelopment of the domestic market infrastructure institutions slow the Ukraine's entry into the international political and economic structures, conservatism in decisionmaking and more.
3. Economic problems are caused by lack of business convertibility of the currency, a violation of the principles of market pricing imperfections of real economic incentives, lack of an effective system of international marketing as a condition of effective communication between supply and demand internationally. 4. Socio-economic problems of business due to conservative economic thinking, lack of professional management experience in a large part of the subjects of international economic relations, rejection of a certain part of society some forms of international business, lack of knowledge of foreign languages and more.
We believe that the possibilities of cooperation between Ukrainian and international business partners should be joint ventures and integration organizations.
In order to ensure sustainable business growth on selected strategic goals it is necessary to justifiy qualitatively new investment and innovation development models that will provide modernization and transfer of modern technology. Such models include the organization of clustered forms of associations in business and create tech incubators. The importance of establishing regional and crossborder clusters is caused by the need to consolidate resources for strategic development areas. In terms of the global innovation mechanism development of economic systems are obtained by the development of innovative technologies, which are based on new physical principles and effects, as well as new systems and business practices. Therefore, the cluster is being implemented as not only an optimizing mechanism, but it becomes the trigger and promotion of new technical and socio-economic systems activities, and a mechanism of technical re-equipment of the previous technological structure.
Today international integration processes in the Ukraine require new approaches and technology cooperation, promoting the transfer of innovation and the investment processes. The strategic choice of the Ukraine is directed into the integration and cooperation with the European Union. But the difficult political situation in the Ukraine today has a negative impact on the development of innovation and investment attractiveness.
One of the promising areas in the field of innovation and investment cooperation between the Ukraine and EU is that the Ukraine is going to become an associate member of the EU Framework Programmer for Research and Innovation "Horizon 2020" (HORIZON 2020). This program provides an innovative breakthrough and active investing involved in scientific research that establishes the relationship of science and immediate implementation of its results. These issues are extremely important for the Ukraine today. Effective experience in setting up and the implementation of financial instruments will ensure the competitiveness of Ukrainian goods and services.
Current approaches and new challenges that have arisen today require rapid reorientation of the close relationship of science and industry, the development of information and infrastructure sector. Ukraine businesses need knowledge- The Ukraine owns a significant innovation potential, but there is a lack of a mechanism for the transformation innovation into the practice of using.

Ukrainian Business in European Integration Process: A Cluster Approach
The current approaches and new challenges that have arisen today require rapid reorientation of the close relationship between science and industry. There needs to be a development of information and infrastructure sector. Ukraine businesses need knowledgebased technologies. The Ukrainian economy needs to direct investment processes to the most promising economic activities with the ultimate goal of selling products or services towards the European Union. The restructuring, which today has become extremely important, involves changes in energy, manufacturing, agriculture and tourism. The implementation of regional development strategies based on the dominant industrial production to the economic development strategy, based on knowledge is very important. In order to determine the relationship between R & D and regional economies management it is necessary to strengthen regional conditions for the development of innovative processes.
Operation of the regional economy depends heavily on the strength of the local cluster and the number of innovations.
Research competitiveness and economic development tend to focus on the nation as the unit of analysis, and on a national basis and policies as drivers. Regional scientists and economic geographers have long understood that there are significant differences in economic performance between regions in virtually every country. This suggests that many of the major determinants of economic operation can be found at the regional level.
To investigate these differences in regional activities in the method described by Porter (Porter, 2005) proposed to consider the various industries that make up the regional economy. Distribution of economic activity in industry shows three common types of industries with very different models of spatial competition and territorial behavior. Their distinction is important to test hypotheses about regional performance (operation).
Effective mechanism to attract modernization processes in the enterprises of the region is the organization of regional innovation clusters, which are the scope of cooperation between governmental, industrial and academic institutions. Cluster -a voluntary association of independent entities that retain their autonomous legal status, but are working together for the sake of competitive production and overall economic and personal benefits. Clusters are formed in a particular area of business, provided that members of the cluster are linked technologically and, often, on the basis of geographical proximity (Porter, 2005). This cluster approach is a modern international recognized alternative implementation of innovative modernization through an established mechanism of interaction.
Thus, we select the cluster concept as a regional association of regional governments and business to the area, together with that of industries; science and education, due to the effect of interaction significantly affect the potential of the region.
Today in all the developed countries in the areas of big business attempt intensified mergers and acquisitions to form a super-multinational companies, strategic alliances and partnerships between them. Small and medium business head towards the formation of regional clusters. Cooperation in the region at different levels is a prerequisite for innovation and increase the competitiveness of both enterprises and regional economy.
Innovation is a key driver of business and

Ukrainian Business in European Integration Process: A Cluster Approach
Tamara Kachala, Yanina Kovalchuk www.ieeca.org/journal 6 regional competitiveness. They are seen as an interactive learning process, involving various social and economic actors who deal with a variety of information and knowledge.
Possible areas of involvement innovation in regional space to develop regional strategies for modernization ( Figure 3): purchase of innovative implementations of the environment; development of innovations in R & D institutions in a particular regional space. Figure 3. The mechanism of attraction innovation achievements into the cluster activity As shown in Figure 3, the development of regional strategies of modernization based on the basic directions of economic development of the region, which includes the future organization of a number of cluster groups for each area of economic activity in the region and further their cooperation in the areas of intersection of interests.
The strategy of national modernization in the Ukraine is one of the objectives of innovation as defined with infrastructure and technology transfer. Implementation of this task is provided by creating a network of innovative clusters. So, today government focuses on promoting the creation of industrial clusters producing competitive products.
The main purpose of realization of the cluster policy in the region is to ensure high rates of economic growth in the region and diversified economy by improving the competitiveness of all members of the cluster association. Positive aspects of regional clusters become possible due to favorable geographical location of the cluster members within the region, increased access to innovation, service and highly qualified personnel.  Figure 3. The mechanism of attraction innovation achievements into the cluster activity As shown in Figure 3, the development of regional strategies of modernization based on the basic directions of economic development of the region, which includes the future organization of a number of cluster groups for each area of economic activity in the region and further their cooperation in the areas of intersection of interests.
The strategy of national modernization in the Ukraine is one of the objectives of innovation as defined with infrastructure and technology transfer. Implementation of this task is provided by creating a network of innovative clusters. So, today government focuses on promoting the creation of industrial clusters producing competitive products.
The main purpose of realization of the cluster policy in the region is to ensure high rates of economic growth in the region and diversified economy by improving the competitiveness of all members of the cluster association. Positive aspects of regional clusters become possible due to favorable geographical location of the cluster members within the region, increased access to innovation, service and highly qualified personnel.

COMPREHENSIVE ASSESSMENT OF REGIONAL ECONOMIC DEVELOPMENT IN UKRAINE
According to the opinion of Porter, competitiveness should be considered in the light of the international competitiveness and clusters -groups of companies of different industries with fundamental importance to the ability of these clusters efficient use of internal resources. After analyzing the competitive opportunities of more than 100 branches in ten countries, Porter concluded that the most competitive multinationals do not usually spread by country and tend to be concentrated in one country, and more -in one region of the country.
The authors studied the characteristics of regional development in the Ukraine based on the following factors: the volume of industrial production, capital investments, imports and exports, innovation activity in the region, agricultural production, the volume of construction works [State Statistics Service of Ukraine]. In addition, the analyzed cluster activity and found promising regions for clustering area (Fig. 5).
We presented the grouping of regions by a comprehensive assessment of the above indicators, which makes it possible to identify specific features of regions.
Also, the presence of regional cluster initiatives in the work is shown. Moreover, the regions that are in the top five for specific indicators are marked with individual labels. So in that area, in which the region is a leader, and there are cluster initiatives necessary to develop such a trend toward specialization.
Regions that are characterized by low levels of economic development, but with cluster initiatives have directed themselves towards unused potential. Table 1 provides a list of existing clusters and cluster initiatives in regions of the Ukraine.
The analysis showed a significant differentiation in the developing regions of Ukraine, as well as the existence of significant untapped potential for investment and innovation development areas.
We propose for consideration several successful functioning of clusters and cluster initiatives in Ukraine.
Per and engaged in the practical implementation in the territory of the Podolsk region. As a result, there have been several information sessions, forums, lectures, a prepared a number of publications in the local press and the national press, published scientific articles in such newspapers as: Ukrainian Centre for Policy Studies, State Committee for Enterprise http://www.ppngo.org/eng/index.php).
Under the auspices of the constant and active support of the Association were established and developed sewing cluster, cluster of construction and tourism cluster. These clusters of Association repeatedly were presented at exhibitions in Khmelnytsky, Kiev, and Vienna. Intensive work companies and organizations in clusters led to the joint development and introduction of fundamentally new for Ukraine products that are in demand in the domestic and foreign markets. The philosophy of the Association is based on the fact that it is impossible to achieve the desired changes in the economy and management without elements of civil society.
Therefore, the issue of economic development and the building of a European civil society has always considered together.
The mission of the Association -improve socioeconomic conditions of the population Podolsk region by promoting economic development at the micro-level and create a favorable social infrastructure that meets the standards of the European Union.
Activities and objectives of the Association: Creation and maintenance industry industrial clusters; Support and development of cross-sector dialogue and partnerships; Conduct socio-economic analysis Podolsk region; Implementation of educational projects and business; Introduction of innovative technologies in education; Promoting cooperation business, scientific and educational institutions; Activity Centre in the implementation of the Ukraine's European choice, cross-border and interregional cooperation, and participation in space programs of the European Union. The concept of combining the integration efforts through clusters picked up in many other regions of the Ukraine. Considering the Khmelnytska region as a training center, a platform within which to search for the most suitable models for their regions combining its natural and intellectual resources. We should recognize that the most persistent and dynamic regions in the past decade have achieved considerable success in the study of ways and development of its cluster model.
For the next two-three decades we should recognize the southern regions Odessa, Kherson region, as well as the Carpathian region Ivano-Frankivsk, Zakarpattia and Lviv region. In almost all the regions marked (and those they seek to catch up) was observed, as international experience shows, only the first stage of clustering of the regional economy, bring together business, science and power is exercised in the areas of most rapid return on invested capital and profits in the field of tourism, construction, and either or light industry. Agricultural, tourist and recreational, educational, flax, transport, automotive, feed, and wood. Dnipropetrovsk National Innovation Cluster "New construction machinery and cluster" Donetsk National Innovation Cluster "New technologies of nature" Transcarpathian Transportation and Logistics Cluster Zaporizhia Green tourism, beekeeping (cluster Honey "Bee knows no boundaries" (Melitopol) and Agricultural Engineering Innovative technology cluster "Ahrobum" ( Melitopol) Food Cluster "Buy Zaporozhye. Choose your " Ivano-Frankivsk Cluster folk crafts "Constellation" Cluster lizhnykarstva Kiev National innovation cluster "Energy for Sustainable Development" (Kyiv, Polytechnic) National Innovation Cluster "Technology Innovation Society" (Kyiv, Polytechnic) National Innovation Cluster "Innovation Culture Society" (Kyiv, KNU. Shevchenko) National Innovation Cluster "new food" . Lugansk Cluster "Luhanskinvest" includes light industry and commercial enterprises Cross-border nanoclusters Lviv A cluster of information technology and business services [http://it-bpo.lviv.ua/] Cluster Biotechnology Mykolaiv Clusters of Mykolayiv region. Odessa Regional Centre clustering economy helps businesses Odessa region to create network businesses (clusters) Cluster "transit potential of Ukraine" Clusters Danube Poltava Regional clusters of environmentally friendly products (Poltava region Automotive Cluster, a cluster of green tourism Chernivtsi RGO "First agrarian cluster" Tourist cluster "Seven Wonders of Ukraine" An example of effective use of natural resources, in particular granite, the development of the construction industry and building construction and building materials cluster can serve as the efforts made in the Zhytomyr region. Among the participants of these cluster two banks intensively cooperating with construction companies and institutions providing training and implementing an internship program for staff.
Yet this is only the beginning of the upcoming large-scale modernization of industrial policy in the Ukraine.

CONCLUSION
Today, the Ukraine is in a difficult position. But it has great potential for change in terms of resources, institutional, human, scientific and other types of building. It is necessary now is to use the successful experience of EU countries to overcome crisis in the economy. There is effective cooperation with the EU.
The key to effective development of Ukrainian business is to promote the investment and innovation processes.
It is important now is to identify priority areas of development in the regions of the Ukraine, in order to improve the overall economic situation. Proper use of potential regional opportunities is the key to effective development.
The use of cooperation mechanisms allows the potential to intensify the processes in the region, to attract investors and promote innovative development.
Cluster is one of these mechanisms which have been proposed for implementation in the Ukraine.
Improving the competitiveness of the regional economy is possible through extensive technological upgrading of production capacity of enterprises in the region, which is possible if a comprehensive strategy for modernizing innovative regional economy is implemented. These measures are the key to economic growth and economic security of the economy. This modernization by implementing innovation is a complex process that requires a high interaction between participants of the area and its environment. Such interaction is possible within the framework of regional clusters that promote public-private partnership and cooperation of certain areas of interrelated activities in the region.
The above comprehensive approach to the analysis of innovative activity that is applied in Europe, allows for qualitative research level innovation, to identify growth opportunities and drawbacks of the sphere to be overcome by the introduction of effective mechanisms for regulation and promotion of innovative activities in a country or a particular region.