Management Between Developed and Transitional Economies: The Case of Croatia

Abstract

The paper “Management Between the Developed and the Transitional: The Case of Croatia” addresses the key research question of management development within the context of the European Union, comparing highly developed economies such as Germany with transitional economies such as Croatia. The research examines the hypothesis that Croatian management exhibits a substantially lower level of development compared to German standards and remains in a deep transitional phase. This hypothesis is tested through an empirical study conducted in 2025 on a sample of 10 medium-sized enterprises (up to 250 employees), based on questionnaires distributed to top and middle management, with responses rated on a Likert scale from 1 to 5. In this paper, the historical development of management from the industrial revolutions to contemporary models is followed, highlighting the evolution of the P–O–L–C functions (planning, organizing, leading, controlling) according to Fayol and their symbiosis within the German model, where controlling plays a central role in supporting decision-making through the integration of e-technologies such as SAP systems. In Croatia, three generations of management theorists are identified. The first generation (Buble, Sikavica) introduced five functions, accompanied by inaccurate translations, such as using “controlling” in the sense of “control” rather than controlling as a management function. The second generation largely replicated earlier insights, while the third generation gradually introduced new concepts through controlling literature, yet without broader acceptance. At the same time, the distinction between management (as an operational process) and governance (as owner supervision) remains unclear due to the legacy of centralised planning. The empirical survey results reveal critical deficiencies in management practice, where management is reduced to intuitive decision-making by top management and a short-term profit orientation, without strategic goals, annual planning, implementation monitoring, or systematic market intelligence, while controlling is interpreted as internal control and perceived as unnecessary (scores ranging from 0 to 2). From a theoretical perspective, Croatia achieves only 10.5 points compared to Germany’s 60 (17.5% of relative development), reflecting deficiencies in predictive analysis, lifelong learning, and the transfer of knowledge to the wider community. The German “school of management”, developed through cooperation between universities and industry, ensures resilience and competitiveness. At the same time, the Croatian system suffers from fragmentation, limited cooperation (mainly with Bosnia and Herzegovina), and the absence of long-term programmes beyond Erasmus, which confirms the hypothesis and highlights risks for Croatian entrepreneurship, a significant segment of the national economy. In conclusion, systematic reforms are needed: adoption of German standards, mandatory lifelong learning, international cooperation, and the integration of controlling at all organisational levels in order to close the gap and support sustainable growth within the EU context.