Journal of Management Policy and Practice

North American Business Press Atlanta – Seattle – South Florida - Toronto

Editor Dr. Daniel Goldsmith

Founding Editor Dr. William Johnson

Editor-In-Chief Dr. David Smith

NABP EDITORIAL ADVISORY BOARD

Dr. Andy Bertsch - MINOT STATE UNIVERSITY Dr. Jacob Bikker - UTRECHT UNIVERSITY, NETHERLANDS Dr. Bill Bommer - CALIFORNIA STATE UNIVERSITY, FRESNO Dr. Michael Bond - UNIVERSITY OF ARIZONA Dr. Charles Butler - COLORADO STATE UNIVERSITY Dr. Jon Carrick - STETSON UNIVERSITY Dr. Mondher Cherif - REIMS, FRANCE Dr. Daniel Condon - DOMINICAN UNIVERSITY, CHICAGO Dr. Bahram Dadgostar - LAKEHEAD UNIVERSITY, CANADA Dr. Deborah Erdos-Knapp - KENT STATE UNIVERSITY Dr. Bruce Forster - UNIVERSITY OF NEBRASKA, KEARNEY Dr. Nancy Furlow - MARYMOUNT UNIVERSITY Dr. Mark Gershon - TEMPLE UNIVERSITY Dr. Philippe Gregoire - UNIVERSITY OF LAVAL, CANADA Dr. Donald Grunewald - IONA COLLEGE Dr. Samanthala Hettihewa - UNIVERSITY OF BALLARAT, AUSTRALIA Dr. Russell Kashian - UNIVERSITY OF WISCONSIN, WHITEWATER Dr. Jeffrey Kennedy - PALM BEACH ATLANTIC UNIVERSITY Dr. Jerry Knutson - AG EDWARDS Dr. Dean Koutramanis - UNIVERSITY OF TAMPA Dr. Malek Lashgari - UNIVERSITY OF HARTFORD Dr. Priscilla Liang - CALIFORNIA STATE UNIVERSITY, CHANNEL ISLANDS Dr. Tony Matias - MATIAS AND ASSOCIATES Dr. Patti Meglich - UNIVERSITY OF NEBRASKA, OMAHA Dr. Robert Metts - UNIVERSITY OF NEVADA, RENO Dr. Adil Mouhammed - UNIVERSITY OF ILLINOIS, SPRINGFIELD Dr. Roy Pearson - COLLEGE OF WILLIAM AND MARY Dr. Veena Prabhu - CALIFORNIA STATE UNIVERSITY, LOS ANGELES Dr. Sergiy Rakhmayil - RYERSON UNIVERSITY, CANADA Dr. Robert Scherer - CLEVELAND STATE UNIVERSITY Dr. Ira Sohn - MONTCLAIR STATE UNIVERSITY Dr. Reginal Sheppard - UNIVERSITY OF NEW BRUNSWICK, CANADA Dr. Carlos Spaht - LOUISIANA STATE UNIVERSITY, SHREVEPORT Dr. Ken Thorpe - EMORY UNIVERSITY Dr. Robert Tian - MEDIALLE COLLEGE Dr. Calin Valsan - BISHOP'S UNIVERSITY, CANADA Dr. Anne Walsh - LA SALLE UNIVERSITY Dr. Thomas Verney - SHIPPENSBURG STATE UNIVERSITY Dr. Christopher Wright - UNIVERSITY OF ADELAIDE, AUSTRALIA Volume 14(3) ISSN 1913-8067

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This Issue

Acquiring, Distributing, and Disposing of Potential Human Life: The Current Status of Human Embryos Beyond Chicanery II ...... 11 J. Brad Reich

A human embryo is, by medical definition, “…the developing organism from fertilization to the end of the eighth week.” In the largely un-settled legal realm, a human embryo is “…[neither] ‘persons’ or ‘property’, but occupy[ing] an interim category that entitles them to special respect because of their potential for human life.” Much of the overall debate about human embryos comes from the fact that they may be people, property, or something in between. There is no clear consensus, but we can debunk some inaccuracies based on what is recognized now. This article will attempt to begin to do so.

The Implications of Social Media on Customer Relationship Management and the Hospitality Industry ...... 18 Randal Rosman, Kurt Stuhura

A look into the implications that social media has had on customer relationship management as well as the hospitality industry. This paper explores the research that has been conducted on the subject and lists possibilities for future research and study.

When It Froze in Florida: The Challenges That Occur When Farmers and Local Residents Collide ...... 27 David J. Bechtold, Alex Monroe

Spraying fields with water during a severe freeze is a common practice in Florida. In January of 2010 this practice resulted in the development of sinkholes, dry wells, and a call for water restrictions. Gary Parke, a hydroponic farmer, did not experience significant crop damage nor did he draw significant amounts of water from the aquifer to protect his crops. Hydroponic farming is an ancient approach to farming where water instead of soil is used to grow plants and is looked upon as a possible approach to environmentally safer farming that can be used in urban and suburban farming.

An Analysis of Human Resource Information Systems impact on Employees ...... 35 Kelly O. Weeks

This research hypothesizes that automated collection, storage, and retrieval of information related to the human resource element in any organization helps to make more informed, lasting decisions about positioning, utilization, and retention of its human resources which aids the organization in its competitive efforts. A large-scale household appliance manufacturer that implemented an automated process for its human resource information gathering and now relies on a completely computerized storage, retrieval, and utilization of the human resource-related data was surveyed.

Entrepreneurial Motives and Performance: Evidence from North America ...... 50 Jean-Charles Cachon, José Barragan Codina, Cristina Eccius-Wellmann, Egbert McGraw, Daniel A. Myers

This study examined Intrinsic and Extrinsic Entrepreneurial Motives vs. Performance in the three countries forming North America. The Motives included: Independence, Job security, Monetary gain, and Intrinsic rewards. Mexican respondents rated their success lower than their Canadian and U.S. counterparts, and were less satisfied; they were more centered on Extrinsic Motives, while Canadian and U.S. respondents had a tendency to be primarily driven by Intrinsic Motives, particularly the desire to be independent. While economic survival was an overarching Motive among Mexican business people, intrinsic rewards came out as most important behind the perceptions of success among Canadian and U.S. respondents.

The Need for Lean Training ...... 78 Jim Keyes

The recent economic downturn and the sustaining of lower economic conditions into the near future have caused manufacturers to reevaluate their operations. In many cases this has led to off-shoring, bankruptcies and plant closures. However, during these difficult times many companies have been able to succeed and some flourish. The difference between success and failure may in found in a single word, lean. This research investigates history related to the use of lean techniques, the market need for students trained in the use and application of lean tools and the development of a course dedicated to instructing lean methods.

Servant Leadership and Public Administration: Solving the Public Sector Financial Problems Through Service ...... 84 Robin B. Weinstein

The financial problems facing many states and local governments have caused some to take unilateral actions concerning the terms and conditions of employment in unionized environments governed by collective bargaining agreements. The unilateral actions by the public sector have fostered an adversarial tension between unions and management in public administration. Servant leadership is an emerging leadership paradigm, which proponents believe has universal applicability among various organizations. This paper seeks to present a preliminary literature review and framework seeking to understand if servant leadership can be applied in an adversarial public administration setting.

Emerging Oligopolies in Global Markets: Was Marx Ahead of His Time? ...... 92 Jerry Kopf, Charles Vehorn, Joel Carnevale

The purpose of this paper is to examine the trends toward global industry concentration and discuss the implications of the lack of effective global regulators for the global economy. The paper reviews Karl Marx’s conclusion that the inevitable result of capitalism is a monopoly in light of the evolution of capitalism in the United States from the late 1800’s until the mid-1900s that lead America to enact laws aimed at increasing competition, regulating monopolies and controlling externalities. The focus then shifts to a discussion of the implications of the new era of global industry consolidation without a “global” regulator.

Managing the Link Between Bribery and Wealth Based on Corruption Perception Index (CPI) and Gross National Product (GNP) per Capita ...... 100 Bahaudin G. Mujtaba, Peter Williamson, Frank J. Cavico, Bob McClelland

Corruption is a reality of life in all countries. However, some countries seem to have more widespread and higher levels of illegal and unethical behavior than others. Corruption typically is viewed in the context of culture. Yet might the wealth of a society be another determinant of corruption? Accordingly, the authors wanted to ascertain if there is a relationship between gross national product (GNP) per capita and the corruption perception index (CPI) of various countries. Through ANOVA and regression analysis, the authors found that there is a significant linear relationship between wealth generation of a country and the country’s level of corruption; and in addition the results of the 10 ASEAN countries and the 66 regional countries demonstrated that there is a significant linear relationship between the independent variable GNP (or CPI) and the dependent variable CPI (or GNP).Wealth, therefore, as a component of a societal culture, emerges as a significant aspect of corruption. The implications of these findings as well as suggestions for future research are provided.

CrisisΛ Vs. CrisisΩ: An Explorative View ...... 116 Chandrika M. Kelso, Hugh D. Kelso, III

The word conflict conjures up negative feelings for many of us. While conflict may enhance interaction and social cohesion, it also has the ability to polarize individuals or groups. This paper will provide an explorative view of the word “conflict” and will show how we can shift from a crisis mode into crisis growth. This paper is not empirically based but is the product of the authors’ own experiences, reflections, personal and professional growths. It is also a culminant of the authors’ collective exposure to and resolution of conflicts on a national, international, inter-cultural, legal, and personal level.

GUIDELINES FOR SUBMISSION

Journal of Management Policy and Practice (JMPP)

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The Journal of Management Policy and Practice is dedicated to the advancement and dissemination of management theory, standards and practices by publishing, through a blind, refereed process, ongoing results of research in accordance with international scientific or scholarly standards. Articles are written by business leaders, policy analysts and active researchers for an audience of specialists, practitioners and students. Articles of regional interest are welcome, especially those dealing with lessons that may be applied in other regions around the world. This would include, but not limited to areas of strategic marketing, strategic management and policy, managerial finance and accounting, management information systems, human resource management, business law, organizational theory and behavior, operations management and production. Focus of the articles should be on applications and implications of business, management decisions and performance. Theoretical articles are welcome.

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Acquiring, Distributing, and Disposing of Potential Human Life: The Current Status of Human Embryos Beyond Chicanery II

J. Brad Reich University of Puget Sound

INTRODUCTION

The line it is drawn The curse it is cast… For the times they are a-changin' - Bob Dylan, The Times They are A-Changin’ (Dylan, 1964)

I have written extensively before about “Cyberprocreation”, or using the Internet to create human life. While Bob Dylan pre-dates me, his comments were prescient. The simple fact is that we can now craft human life in ways never before imagined, and still incomprehensible to some. This advancement raises a variety of moral, ethical, and legal issues…and no shortage of economic opportunities and concerns. We are moving closer and closer to life before breathing life.

REGULATORY PERSPECTIVE

There is no federal statutory law defining the legal status of human embryos, but embryos are not “persons” possessing independent rights under federal common law (Roe v. Wade, 1973, 162). However, there is some state legislation providing different perspective. Louisiana designates embryos as legal persons, while Georgia legislation declares that embryo life begins at the single-cell stage and that embryos have rights and responsibilities under state law. New Mexico gives embryos the status of "fetus" by its broad statutory definition and Missouri law is that the life of each human being begins at conception. At the other end of the continuum Michigan recently passed a statute treating some embryos as property and Florida law grants sperm and egg donors joint decision-making regarding embryo disposition. At common law, Texas treats embryos as property by allowing contract law to determine disposition. It appears that Maine, Massachusetts, North Dakota, and Pennsylvania statutorily recognize a special interim status making embryos more than property but less than human and, while Tennessee has

Journal of Management Policy and Practice vol. 14(3) 2013 11 not codified such status, its Supreme Court held that "[Embryos are] not, strictly speaking, either ‘persons' or ‘property', but occupy an interim category that entitles them to special respect because of their potential for human life” (Davis v. Davis, 1992, 588). These are only legal evaluations, so we turn to an “authority” in the field to gain ethical perspective as well. The American Society for Reproductive Medicine (“ASRM”) is "...a voluntary, non-profit organization devoted to advancing knowledge and expertise in reproductive medicine, including infertility, menopause, contraception, and sexuality" (American Society for Reproductive Medicine, 2011). It is "...the leading market force in the field of reproductive medicine" (Reddix-Smalls, 2008, 673). The Society for Assisted Reproductive Technology (“SART”) is "...the primary organization of professionals dedicated to the practice of assisted reproductive technologies (“A.R.T”) in the United States," and “…is also extensively involved in data collection, practice guidelines and standards, government interaction, quality assurance, and research" (American Society for Reproductive Medicine, 2011). ASRM and SART, along with the College of American Pathologists ("COP") created the Reproductive Laboratory Accreditation Program (“RLAP”). That program proffers standards for reproductive laboratories and performs on-site accreditation every two years. SART represents 85% of the clinics practicing ART in the United States and as of 2005, two-thirds of SART programs were RLAP accredited. ASRM appears to be “the” ethical bar for human embryo standards. It contends that “Embryos are deserving of special respect, but they are not afforded the same status as persons” (American Society for Reproductive Medicine, 2011). ASRM goes on to elaborate:

In previous reports, this Committee has made clear its view that embryos should be accorded an elevated moral status compared with other human tissues, but that they should not be viewed as persons (3–5). Indeed, many of the publications of this Committee refer as a starting point to this description of the embryo first published in 1986: ‘‘The (pre)-embryo is due greater respect than other human tissue because of its potential to become a person and because of its symbolic meaning for many people. Yet, it should not be treated as a person, because it has not yet developed the features of person- hood, it is not yet established as developmentally individual, and it may never realize its biologic potential (American Society for Reproductive Medicine, 2011).

So there is, at least some, ethical and state level legal agreement that human embryos occupy a unique status. Accordingly, important questions of acquisition and disposition must be answered, at least so far as currently possible.

ACQUIRING HUMAN EMBRYOS: “ADOPTION”, “DONATION”, AND WHY SUCH TERMS ARE MISLEADING

Any discussion of acquiring human embryos must, at least eventually, address Assisted Reproductive Technology (“A.R.T.”). A.R.T. is the umbrella term for the various medical technologies creating conception through means other than coital reproduction. A.R.T. developed, and is developing, because an increasing number of people cannot conceive a child through intercourse. Those people may well choose to acquire a human embryo. In common nomenclature, there are two ways to do so, adoption or donation; both terms are disingenuous. The most vociferous debate regarding human reproductive tissues focuses, not surprisingly, on a moral issue. That issue is referred to as “commodification”, or whether or not human reproductive tissue should be bought and sold. While there is strident disagreement as to whether human reproductive components, such as embryos, should be bought or sold, the simple fact is that they are and there is no reason to think this will change. This is significant because “embryo donation” is a misleading term as such donation usually involves money changing hands for an embryo. Where embryo donation is legal, the Food and Drug Administration regulates the process. Where not given some “human” status, human embryos are goods.

12 Journal of Management Policy and Practice vol. 14(3) 2013 Embryo adoption differs from embryo donation, but the term is even more misrepresentative. While a variety of sources tout the virtues of embryo adopting, true “adoption” is usually not possible. Human adoption refers to a legal process to establish parentage for a living human being. As previously discussed, in most jurisdictions, embryos are not human life; therefore they cannot be adopted. It is more accurate to understand that, in the vast majority of jurisdictions, embryos are not legally adopted; ownership simply changes hands using traditional contract law. Only one state, Georgia, passed an embryo adoption statute, and that law is predicated on an underlying contractual agreement. Where embryo adoption could exist, it would likely be much more regulated than embryo donation, as it should entail traditional adoption steps such as a home study and judicial approval. In reality, embryo adoption is fundamentally quite similar to embryo donation; the terms are misleading marketing ploys likely designed to make the parties feel “good” and obscure the fact that, regardless of whether the process is termed “adoption” or “donation”, it involves money in exchange for reproductive human tissue.

PERSONAL DISPOSITION: EMBRYO “CUSTODY”

A couple gets divorced. They have embryos in preservation. Who “owns” them, if anyone? The answer is unclear, and may always be so, particularly in light of the varying state-level public policy considerations above. As succinctly stated by one commentator, “We’ve got a state by state patchwork of approaches across the country” (In Divorce, Who Gets the Embryos?, 2012). “Custody” of embryo litigation will become more common as more married people attempt to utilize frozen embryos to produce children. The basic problem is that “[t]he law is having trouble keeping up with [human reproductive] technology” (Farr, 2012) and there is little reason to think that gap will do anything but increase in light of astoundingly rapid technological development. This leaves courts in a difficult position and, understandably, they are forced to simply do what they think is “right” as there is little actual precedent or other legal guidance. It appears that courts ruling on the issue of human embryo custody tend to side with a biological parent’s right not to be forced into parenthood when one party to the dissolution wants to use the embryos to pursue human life and the other does not. There is also litigation pending addressing custodial rights where at least one party on the donor side has a biological connection to the embryo, and no party on the donee side has any. The outcome of that issue has yet to be decided but, by analogy to sperm donor cases, it may well be that the biological donor has parental rights to embryos provided that the donor is “known” to the donee (Lezin, 2003, 188) and embryos are considered something legally akin to traditional living children.

COMMERCIAL EMBRYO ISSUES: DISPOSAL OF POTENTIAL HUMAN LIFE

There may be more than 500,000 human embryos in storage. Those embryos belong to the prospective parents, at least until certain contractual events do or do not occur. Many of those prospective parents eventually place the holding facility in a position where it has the legal right to dispose of the embryos due to the “owner’s” failure to execute contractual duties. While many of these facilities would probably like to dispose of these embryos, they may be very afraid of resulting, and unpredictable, litigation. Such facilities might gain guidance from a very small pool of decisions holding that embryo disposition is usually dictated by contract, but not all courts hold such agreements enforceable and almost all of the existing cases arose out of disputes that addressed some aspect of potentially unwanted familial relationships. Only one case is possibly on point in terms of the independent disposition by a holding facility with no inter-related "custody" issues, New York-Del Zio v. Presbyterian Hospital. In New York-Del Zio, the Del Zios underwent in vitro fertilization using Mr. Del Zio's sperm and Mrs. Del Zio's egg. The co-mingled materials were placed in an incubator. A supervisor learned of the embryo, felt it was his ethical duty to destroy it, consulted hospital officials, and did destroy it. The Del Zios brought suit for intentional infliction of emotional distress and wrongful conversion. The jury returned a verdict for the Del Zios on the intentional infliction claim, but for the hospital on the wrongful conversion cause of action. We glean two things from New York-Del Zio. First, a holding facility disposing of an

Journal of Management Policy and Practice vol. 14(3) 2013 13 embryo, without contractual right, can be liable to the prospective parents in tort. Second, if the embryo is viewed as other than property, the facility is not liable under wrongful conversion, as conversion is predicated on wrongful possession of property. This is extremely interesting because, if embryos are not property, some disposal would open the door for wrongful death claims, but one court found that it unlikely a defendant could be held responsible for the wrongful death of a human embryo because the claim would be too speculative, while another found that the state Wrongful Death Act was not applicable to situations where the embryo was destroyed pre-implantation. On the other hand, if embryos are property, it seems only logical that facilities disposing of them, in violation of an existing contract, could face liability from conversion claims, and possibly other causes of action such as trespass to chattels.

WHERE EMBRYOS ARE HUMAN LIFE (OR MAY INTERPRETED AS SUCH)

“One of the most deeply held beliefs in our society is that life-whether experienced with or without major physical handicap-is more precious than non-life.” (Bermon v. Allan, 1979, 12)

Some storage facilities may be able to legally dispose of human embryos as abandoned property. However, what about the few jurisdictions actually, or arguably, treating human embryos as human life? In those, a very interesting question would be what “should” be done to/for human embryos abandoned to storage facilities? Such inaction would be, directly analogous to, parental abandonment of a living child, so what should the judiciary do regarding the abandonment of human life not yet born? It appears that, while a question of individual state law, the nation-wide standard, regarding the health and welfare of living children, is “best interests”. It also appears, albeit with reluctant admission from certain courts it light of the moral issues involved, that they support the existence of life over the lack of life. Combining these two perspectives, the current conclusion is that the majority of jurisdictions would hold that it is in the best interest of unborn life to have the chance to be born. Accordingly, and likely impossibly, storage facilities holding human embryos, in states that give them human status, would have to commence termination of parental rights actions in order to facilitate some form of transfer from storage to wherever the courts determine the best interests of the embryo lie. In a circuitous development, perhaps this then creates available embryos, and a judicial procedure, for true human embryo adoption.

CONCLUSION

Assisted Reproduction Technology is big business and should continue to grow. The acquisition, distribution, and disposal of human embryos should grow accordingly. The reality is that, absent a United States Supreme Court decision on point, the judicial status of human embryos will be made on a state-to- state basis, arguably reflecting public policy of those respective states. Whether such determination is “right” or “wrong” is not a legal issue, but rather one of individual morality. But, as morality frequently shapes legislation and judicial decision making, it is a discussion that needs to happen now.

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Journal of Management Policy and Practice vol. 14(3) 2013 17

The Implications of Social Media on Customer Relationship Management and the Hospitality Industry

Randal Rosman University Nevada Las Vegas

Kurt Stuhura University Nevada Las Vegas

INTRODUCTION

With the emergence of social media, consumers now have more control over how information is generated, created, organized and shared (Trackeray et al. as cited in Zhang, Mattila, & Cranage). Consumers use new media to participate in social networks, which enables them to create and share content, communicate with one another, and build relationships with other consumers (Hennig-Thurau et al., 2010, p 312). As consumers today spend a lot of time creating user generated content and posting it on the Internet, it behooves the business community, and hotels specifically, to take note and keep track of what is being done in order for them to market themselves correctly. While travel consumers in the past relied heavily on travel journalism and traditional media to help guide them to the best places to go and the most exciting things to do, the Internet has now taken over that role as information provider (O’Connor, 2008). According to the US Travel Association, the Internet was used by approximately 90 million American adults to plan travel during 2008 with 76% of those people using it for planning leisure trips (USTA, 2009). A 2010 study published by Deloitte titled ‘Hospitality 2015’ states that social media and new technology trends will play the key role over the next five years towards the growth in the hospitality industry; the study further points out that with millions of consumers having internet access around the globe, that the study’s numbers are expected to increase by 50% in 2015 (as cited in Lee, 2010, p 7). Given the potential impact of social media on online tourism, knowledge about the role of social media in travel information search is important in order to better inform tourism marketing practices (Fesenmaiser, 2007; Gretzel, 2006; Xiang & Gretzel, 2010, p 181). Social media is changing the ways that business are going about marketing themselves to their consumers, as it forces a rethink of traditional marketing methods. 81% of surveyed executives expect to increase investment on social media projects and reduce traditional marketing (Value of Social Media, 2010 as cited in Zhang et al., 2011). Moving through this paper, we will look at past literature and use it to break down the effect that social media has had customer relationship management and on marketing for hotels specifically. No

18 Journal of Management Policy and Practice vol. 14(3) 2013 rational person can deny the fact that social media has changed the world of marketing, as marketing and advertising are no longer confined to the three main channels of the 1970s, 80s and 90s, print, radio and television. Nowadays consumers can be reached at all times in almost any place they go thanks to the proliferation of Internet capable smart phones, and this means that companies must work hard to keep their brand and image relevant and on point. Another thing that we are going to be looking at is how the new social media has affected companies’ relationships with their customers, especially as it pertains to the ease of which consumers can now complain or compliment a company. With so many online rating sites, as well sites where people can publish personal thoughts via written or video format, companies nowadays have an amazing opportunity to become more directly involved with their consumers. The hospitality industry in general has been affected tremendously by the advent of the new forms of social media, as they are no long only being judged by a set of formal criteria decided upon by travel guide writers, but now are open to reviews that can be read by the “everyman”. We will be looking at how these new travel related websites, be they advertising or review, are helping and possibly hurting the hotel industry as it attempts to play catch up with this new media.

LITERATURE REVIEW

The Impact of Social Media on Customer Relationship Management In the era of new media, managing customer relationships is like playing pinball - companies serve up a "marketing ball" (brands and brand-building messages) into a cacophonous environment, which is then diverted and often accelerated by new media "bumpers," which change the offering's course in chaotic ways. After the marketing ball is in play, marketing managers continue to guide it with agile use of the "flippers," but the ball does not always go where it is intended to and the slightest miscue can be amplified into a catastrophic crisis (Hennig-Thurau et al., 2010, p 313).

This statement holds its ground today as well as it did a year ago if not more so as the United States economy heads towards a possible double-dip recession. Nowadays the concept of brand loyalty is an important one as marketers advertising and promotion budgets are cut, and it is much easier to keep someone buying a good than to convince a new person to start buying it. Customer relationship management (CRM) is important to marketers and brands today as they strive to keep their customers from “straying” to opposing brands. Customer relationship management is defined as a process which helps in profiling prospects, understanding their needs, and in building relationships with them by providing the most suitable products and enhanced customer service (“Customer Relationship Management”, n.d.). SCRM, which is the combination of social media and CRM, is described as the business strategy of engaging customers through social media with the goal of building trust and brand loyalty (Woodcock et al., 2011, p 52). With the advent of the Internet, and social media in particular, it has never been easier to connect with ones consumers than it is now. Traditional CRM helps to manage customer relationships on a huge scale, but it does not help in building mutual trust between buyers and sellers as it is impossible to build trust with thousands of customers over e-mail, mail, or phone (Woodcock et al., 2011, p 53). Nowadays more than ever trust is a major factor is buyer-seller relationships, as we only have to look at China to see how much a company can fall after losing their customers trust. According to Woodcock et al., SCRM is how: We [the marketer] help you engage with us, whenever you need to, wherever you are, in ways that are convenient to you; provide you with the personal experience you need to keep you engaged, informed, interested and maybe even entertained; transact with each other, or through third parties, in ways that are mutually valuable; get to know each other over time so that we can tailor what we do (and how we do it) with you in mind (2011, p 52).

Journal of Management Policy and Practice vol. 14(3) 2013 19 As you can see, SCRM is very individually focused, and since a large part of CRM deals with building trust, it is important that the consumer be made to feel that they are important to your brand or company. SCRM can also be useful for a company, as it supports the whole customer lifecycle, and should lead to increased sales and decreased costs if implemented correctly (Woodcock et al., 2011, p 55). Customer relationship management is not a new concept, nor has it tenets changed dramatically; it is just the way that it is carried out now that has changed. Kierzkowski et al., (1996) point out that retaining customers is the perquisite for learning and building relationships with them, and Chan and Guillet (2011) continue on by pointing out that providing interesting and valuable content on social media sites has become very important for that reason (p 365). It is essential for marketing managers to continuously find a solution to appeal to and to keep new and current customers (Schneider, 2009 as cited in Lee, 2010, p 2). Since, as Lee (2010) points out, when a company gets their customers involved and engaged, it leads to lasting working relationships (p 7). Furthermore, there is a strong correlation between high customer- retention rates and sustainable profits (Murphy et al., 2003, p 73), which goes to explaining why social media should be considered a key element these days in CRM. A significant part of CRM, and usually the first step in the relationship process is getting to know your consumers, their likes, dislikes, and things of that nature. This learning process has been going on for years, especially in the hotel industry, with the comment cards that guests would fill out. As Stringam and Gerdes Jr (2010) state, hoteliers have found that review of the information in comment cards enabled them to make management decisions that resulted in improved service operations, increased profitability of the hotel, and increased the loyalty of hotel guests (p 776). It is important that companies listen to their customers, because by doing so they might just be able to avoid a pitfall down the road. Social media can make it much easier for companies to learn about their customers, even if it’s just by reading what they write online. Kaplan and Haenlein (2010) say that companies should find out what their consumers would like to hear, what they would like to talk about, and what they might find interesting, enjoyable, and valuable; then the company should go about developing and posting content that fits those expectations (p 66). O’Connor (2008) also points out that becoming friends with the customer allows companies to see first-hand what their customers are like, and can be an incredible source of market intelligence, as it can give them access to information that would be difficult or impossible to obtain otherwise. Another important step in the CRM process is that of retaining consumers. Woodcock et al., (2011) point out that through the use of SCRM a company can get to know their high value customers, and then proceed to market accordingly to those customers (p 56), ideally creating the feeling for the customer of being in a one-on-one relationship with the company or brand. This is one of the major pluses of using social media in CRM, as it has the ability to create a sense of trust between the marketer and the consumer, and it can also lead to better customer service. Murphy et al., (2003) show that customer service has a strong link to customer satisfaction, which then yields customer loyalty and long-term profitability (p 76). It has also been shown that when a company gets their customers involved and engaged, it can lead to lasting working relationships with organizations (Lee, 2010, p 7), and that maintaining ongoing contact is essential to developing and keeping that relationship (Keirzkowski et al., 1996, p 15). The third step in the customer relationship management cycle is engaging the customer, because through engaging the customer, you can keep them on your side. Woodcock et al. (2011) state that it is clear that the greater the consumer engagement, the greater the financial value of the customer, and that a deeply engaged, or committed consumer has 5x-8x the value of an average consumer (p 56). This means that if you are able to engage your consumers and move them from just being mildly committed to engaged, you increase the value of that consumer for your company. Different types of social media can have different effects on consumers and consumer brand relationships. A fan page on Facebook allows customers to communicate with one another, and more importantly, to communicate with the company (Zhang et al., 2011, p 1). The use of corporate blogs enables companies to strengthen relationships with their customers (Lee, 2011, p 17), as the customers are kept abreast of the happenings at the company and therefore feel involved. Firms are also increasingly

20 Journal of Management Policy and Practice vol. 14(3) 2013 trying to use online communities to enhance their customer relationships (McAlexander, Schouten, and Koenig, 2002, as cited in Hennig-Thurau et al., 2010, p 319). For example, in online communities of information technology firms such as Hewlett-Packard and Microsoft experienced customers support peer customers who face product-related problems ("consumer support forums"; e.g., Mathwick, Wiertz, and De Ruyter 2008, as cited in Hennig-Thurau et al., 2010, p 319). As mentioned previously, the hospitality industry has been very involved in customer relationship management for years. Tourism businesses and organizations have adopted the Internet as one of the primary communication channels for gaining and retaining visitors (Buhalis and Law, 2008; Pan et al., 2011). Jeong and Jeon (2008) point out that with varied formats of CGM, the hospitality industry is becoming more open minded about listening to customers' unfiltered and candid experiences about it offerings. In doing so the industry immediately addresses issues and acts appropriately to establish a lifelong relationship with its customers (Starkov & Price as cited in Jeong & Jeon, 2008, p 124). In a look towards the future, O’Connor (2010) identifies that hotels will need to actively embrace the concepts of social networks and user-generated content, and try to leverage these developments to generate incremental business and build customer loyalty (p 769). To sum up, when harnessed with CRM, social media can deliver financial benefits to companies in every sector. The benefits are centered on 'customer engagement' and are not peripheral but fundamental to driving business performance. Financial benefits apply across the customer lifecycle, in acquisition, retention, value development and managing cost to serve (Woodcock et al., 2011). In addition, engaged consumers on social media have the desire to actively engage and to become both producers and consumers of information, so called "prosumers" (Toffler, 1980, as cited in Kaplan and Haenlein, 2010, p 66).

The Impact of Social Media on Hotels When it comes to hotels, the Internet and social media has changed how they do business over time. As Litvin et al. (2008) point out, cyberspace has presented marketers with new avenues to improve the efficiency and effectiveness of communication, and new approaches for the acquisition and retention of customers (p 458). Hotels and social media appear to be a great fit, as hotels are information gatherers and always try and get repeat business from their consumers. These days, hotels use the Internet to provide information and to promote and distribute their products and services (Murphy et al., 2003, p 72). They realize that in order to stay competitive in the digital world, the hotel has to be engaged or involved with their intended consumers, usually through some form of social media, while increasing awareness about their brand and building relationships with both new and loyal customers (Lee, 2010, p 11). On the whole, the popularity of travel distribution over the Internet has provided hoteliers and consumers alike the opportunity to review consumer generated content across the industry. This is important because when used together, these reviews and ratings provide a powerful tool and a wealth of data to hotel management (Stringam & Gerdes Jr., 2010, p 775). When it comes to social media sites, there are a lot out there, and they tend to vary in importance from place to place around the world; here is a look at some of the social media sites that are popular with hotels. According to a study done by Chan and Guillet (2011), among the 23 social media sites investigated in their study, Twitter (56.7%) and Facebook (53.7%) were the most widely used social media sites in the industry (p 353). Following those were YouTube (38.8%), Flickr (26.9%), and TripAdvisor (23.9%) (p 353), so as you can see, hotels appear to be on more than one social media site at a time. A few other interesting facts from their study was that only 15 out of the 67 hotels that they surveyed used blogs for marketing purposes, and that few of the hotels surveyed used Second Life, MySpace, or LinkedIn as a way to stay connected with their consumers (p 354). This is not necessarily a bad thing though, because as Chan and Guillet (2011) point out, hotels do not need to be present on all social media sites, and they should take firm-specific traits into consideration when deciding which social media to use (p 365). When it comes down to joining a social media site, it is important that hotels do so without hesitation and with a plan. Social media can be very useful for a hotel, as not only does it let them interact with their

Journal of Management Policy and Practice vol. 14(3) 2013 21 consumers, it can help them to move product as well. As O’Connor (2008) puts it, from the supplier perspective, the highly perishable nature of travel products makes effective distribution particularly important, as any unsold item cannot be stored and subsequently consumed at a later date. Using social media as a marketing tool can also provide a good ROI for a hotel, as it requires a low cost of investment, and yet can provide so many benefits. This is confirmed by Hailey who says that there are advantages in marketing through social media, low cost investment, direct consumer communication, brand communication and also it acts like a verbal evidence theory that people tend to believe when compared to commercial advertising (as cited in Lee, 2010, p 8). Buhalis and Law (2008) also point out that by being on social media, hotels can learn more about their users, and in turn, use their new gained knowledge to more effectively market themselves to their consumers, as well as provide new products or offerings that their consumers might enjoy. In general, by joining a social media site, a hotel opens itself up to opportunities that it would not as easily have otherwise, such as the ability to gather consumer information, see trends in the industry, and create better relationships with its consumers. When it comes to hotels and consumer generated media (CGM), hotels and consumers use it in different ways. For consumers, CGM seems to be a way for them to double-check what they have heard about the hotel or destination that there are going to. According to Gretzel & Yoo, word-of-mouse recommendations have been shown to affect the purchase decisions and public perceptions of hotels (as cited in Stringam & Gerdes Jr, 2010, p 775). Another study by Gretzel et al., quote statistics from Complete, Inc. that suggest that almost half of travel purchasers used CGM in their travel planning, and that one-third found its input useful (as cited in O’Connor, 2010, p 760). The issue of trust is also brought up when dealing with CGM, and it is important for hotels to note that in a survey carried out by TimesOnline in 2007, 82% of respondents trust reviews posted on a travel review site like TripAdvisor.com (McGarth & Keenan, as cited in Jeong & Jeon, 2008, p 125). If consumers are so trusting of what is put on travel review sites like TripAdvisor, it behooves hotels to pay attention to what is being said on there, and to act accordingly. There are two ways for hotels to use CGM, they can either create it themselves, or react to what others are putting online. In the case of company created media, the key for the hotel is to stimulate usage and to make bulletin boards interesting and lively so that consumers return often to their site (Litvin et al., 2008, p 464). Examples of hotel created media include the blog, Marriott on the Move!, which is used by Bill Marriott, Chairman and CEO of Marriott International, to engage in a dialogue with consumers. Another example would be the Wynn Las Vegas and Encore hotels using Twitter and Foursquare to stay connected with their guests (Lee, 2010, p 13), and using those applications to provide up to the minute updates on happenings around the hotels. When it comes to using the CGM that consumers are posting online, one of the most important things a hotel can do is to listen and learn. The best way to gain a full understanding of a customer's feelings about a hotel is to analyze the content of the customer's comments (Lewis & Pizam, 1981; Pullman, McGuire, & Cleveland, 2005; Stringam & Gerdes Jr, 2010, p 776), and these comments can now be posted anywhere on the Internet. Analysis of guest comments is not something new for hotels; they have used it for years to help them correct problems with services or products that have been pointed out to them. This in turn had the ability to lead hotels to greater profitability as they could become more efficient, and could also create loyalty as consumers could see that their comments were taken to heart, and so there a bond could form between the two. A salient point broached by Jeong and Jeon (2008) was that managers, by listening to guests’ voices about their hotel experience, have an opportunity to review and re-evaluate their operational strategies and management goals against industry norms and performance averages (p 136). Jeong and Jeon (2008) also point out that: Hotel review sites seem to provide hotel management with valuable market information that is not directed by researchers, but freely volunteered by guests, thereby offering a raw opportunity to read industry performance trends as well as benchmark a hotel against the industry in general. (p 137)

22 Journal of Management Policy and Practice vol. 14(3) 2013 What is better than free information that can help you as a business to grow and possibly prosper? Very little, so it is important for hotels to take note of CGM and to monitor it closely so that they can track industry and customer trends, as well as learn about improvements that they might need to make. One of the main types of CGM that hotels deal with frequently is that of EWOM, and due to the Internet, it can spread quickly to everyone. According to the Cornell Center for Hospitality Research, hotels have relatively little control over consumer generated ratings and word-of-mouse recommendations (as cited in Stringam & Gerdes Jr, 2010, p 775), which means that hotels must always be reacting to it. This is important, especially in the case of hotels, as EWOM is thought to be particularly important for services (particularly those that are complex or are associated with high risk such as leisure travel), as their intangible nature makes pre-purchase trial impossible (Mazzarol, Sweeney, & Soutar, 2007 as cited in O’Connor, 2010, p 758). Kirkpatrick and Roth (2005) point out that you can also manage EWOM for the purpose of revenue generation (as cited in Litvin et al., 2008, p 463), since people will see positive EWOM as a recommendation for your property, and can therefore drive consumers to choose you over a competitor. Litvin et al. (2008) also say that by allowing and encouraging EWOM on the company created social media site through posted comments, it can provide the host company genuine and untainted consumer feedback, while at the same time providing a service recovery mechanism to reply, rebut, or rebuff negative comments (p 464). That does not have to just apply though for the company’s own social media site; it is important that hotels continuously track what is being said about them everywhere on the Internet, especially on travel review sites. As O’Connor (2010) points out, on TripAdvisor, hotels have the opportunity to post a management response to each review (p 762), however, that fact does not seem to be being taken advantage of. Chan and Guillet (2011) in their study of Hong Kong Hotels and social media, found that only about 24% of hotels responded to customer reviews on TripAdvisor, and of those that replied, 25% only provided a one-off response (p 353-354). It is important for hotels to get involved in responding to EWOM, especially negative EWOM, as it has the ability to drive customers away if they are given no context for the negative review. In summation, tourism businesses need to better monitor the information sources from the third-party and Web 2.0 websites such as TripAdvisor.com and take advantage of them (Pan et al., 2011, p 373). For hotels using social media, Kierzkowski et al. (1996) states that frequent updating is important, as fresh but still valuable content keeps customers returning to your site. A final point that needs to be stressed is that some hotels seem to have the misconception that social media is just another advertising channel. Ergo, they fail to socialize, respond, interact, and build relationship with customers, which is an essential component of SM (Briscoe, 2009; Kaplan & Haenlein, 2010; Scott, 2007; Tylee, 2009; Xiang & Gretzel, 2009; Chan & Guillet, 2011).

IMPLICATIONS, LIMITATIONS, AND FUTURE RESEARCH

The present study builds on the work of Chan and Guillet (2011), but this study has a different scope. Chan and Guillet look into how the hotel industry as a whole in Hong Kong is utilizing social media marketing, whereas my study looks specifically at four and five diamond hotels located in the Las Vegas area. While the study has not yet been completed, from looking at the literature, it can be extrapolated that hotels in general are for the most part not using social media to its full potential, and in many cases are using it incorrectly. It can be inferred that hotels need to change up their marketing game plans in some cases in order to take advantage of social media and all the benefits that it may contain. From the literature we can also see that online word-of-mouth, EWOM, has a large influence of users of Internet travel review sites, whether it is on TripAdvisor or on Facebook. This study is very limited in its scope as it only looks at 30 hotels, and should not be generalized for the industry as a whole. This study specifically looks at four and five diamond hotels, and as is the case in most places, they are not the dominant supplier of rooms in the Las Vegas hotel industry. This study is also limited in that it uses second hand data in compiling its information, and that it only takes its data from a short window of time.

Journal of Management Policy and Practice vol. 14(3) 2013 23 Future research might want to look at other parts of the Las Vegas hotel industry and its use of social media marketing, or even look at any major metropolitan city in the United States as few studies seem to have been done on it yet. Alternatively, researchers may choose to replicate this study and see if hotels have improved or regressed in their use of social media over time.

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26 Journal of Management Policy and Practice vol. 14(3) 2013

When It Froze in Florida: The Challenges That Occur When Farmers and Local Residents Collide

David J. Bechtold University of Tampa

Alex Monroe University of Tampa

INTRODUCTION

Over the past several decades water and water rights have become an issue of growing controversy between farmers and non-farmers as rural land becomes suburbs to large, growing urban areas. Where 50 years ago a square-mile in a rural area may have 5 homes and acres of citrus, strawberries, or tomato fields, today that same square-mile could have 500 homes, parks, recreational centers and even hotels that are intermingled with working fields. Yet it is not just access to water that can be points of controversy. Sometimes it is the aftermath when water is used that creates anger, hardship, and a call for change. In January 2010 the state of Florida experienced 11 straight days of below freezing weather. This weather impacted agricultural crops throughout the state exacting millions of dollars of damage. In central Florida this damage would've been even more devastating, especially for the regions strawberry producers, had it not been for the continuous spraying of the crops with water from deep water wells. This approach to combating freezing temperatures has been the standard for the past 60 years and has saved millions of dollars of crops. That winter however the approach the farmers used created numerous sinkholes, dry wells, and great animosity between the farmers and the homeowners in the region. This animosity created a call for new regulations regarding water access by farmers as well as a call for a new approach to farming. The following case considers the challenges facing agriculture as farmers try to cope with the increasing intrusion of urban and suburban areas into what were traditionally agricultural farmlands. We will investigate more fully some of the arguments that were made by the farmers who were damaged as well as look at technology being used in the region that allowed some farmers to protect their crops from the freeze without excessively draining underground aquifers. Technology that was developed 5000 years

Journal of Management Policy and Practice vol. 14(3) 2013 27 ago that when used today can create new approaches to farming, new and profitable markets for produce and vegetables, and peaceful co-existence between farmers, homeowners, and businesses.

THE FLORIDA FREEZE OF 2010 AND ITS AFTERMATH

On January 3 of 2010 a cold front settled into Plant City, Florida. Overnight lows were projected to be below freezing and in response to this projection strawberry farmers in the region began spraying their fields to protect their crops. This water was drawn from deep wells that were connected to the primary aquifer that provided water to farmers, homeowners and businesses in the Plant City area. This approach to freeze mitigation has been common practice in Plant City and throughout Florida for over 60 years so there was little concern when the sprayers came on. Over the course of the next 11 nights the temperature continued to drop below freezing and the farmers continued to spray their fields. In spite of the spraying most farmers experienced significant damage to their crops. Yet the biggest challenges that the farmers faced were in many instances not caused by the cold weather but rather by their continuous use of the underground water aquifer to spray their fields. As the cold spell continued sinkholes started to appear in fields, in county roads, and under homes in and around Plant City.

Sinkholes Sinkholes are ground-surface depressions that result when a subterranean void weakens support of the overlying earth (InterNACHI website). In Florida these depressions were caused due to a rapid depletion of aquifers that could not be replenished through groundwater seepage quickly enough to prevent the collapse of limestone underground structures. Over the course of the eleven-day freeze 140 sinkholes were reported in the region. In addition to the sinkholes there were also over 750 complaints regarding dried-up or damaged residential wells (Jackson, J., 2012). Even as the sinkholes appeared the farmers continued to spray their fields drawing down millions of gallons more of water from the aquifer each night and raising the frustration and anger of their neighbors. “My home is being consumed by a sinkhole!” one resident in the region told a news reporter, “You can talk about the weather, the aquifer, the farmers, wells, and people’s homes, but it all comes down to a need to restrict water usage” another said (Newman, G., 2010). The farmers were accused of being insensitive to the homeowners. They saw the damage caused by their pumping and still they continued pumping water night after night. Calls for water restriction and alternate water use permits on the farmers soon resounded throughout the region. The farmers respond by saying that they were willing to repair any damage that they may have caused but it was their belief that the damage was not caused solely by their farming (A. Monroe, personal communication October, 2010). The farmers felt that the change in land use that had occurred over the past several decades was the cause. It was not that long ago when farmers and their farms coexisted with only a few homeowners. In those days they said when cold weather settled over the region spraying the fields rarely caused residential wells to go dry or sinkholes to appear. The farmers also pointed out that even though it seemed to be excessive the water they used for those 11 nights was actually significantly less than the water they use in late summer when they start to plant their fields, an activity that normally causes little or no damage or sinkholes in the region. It was the farmer’s belief that they were being held solely accountable for what they felt was a combination of their need to access water to protect their crops as well as the high-density housing developments in the area that became much more active in wintertime due to seasonal residents as well as the increased tourism in the area. Combined all of these factors contributed to excessive water use in the region that was then exacerbated during those 11 nights (A. Monroe, personal communication October, 2010). The farmers noted that they were already responsible for repairing any dry or damaged residential wells that may have been impacted by their actions even though they had been working the land long before these new homes arrived. For some farmers these were significant costs above and beyond what was lost due to frozen crops and freeze damage on their own property. They also wanted people to

28 Journal of Management Policy and Practice vol. 14(3) 2013 remember that their farms provided an economic and a societal benefit to the region even as they are being vilified for trying to protect their livelihood.

After the Freeze However the repercussions of those 11 days continues to reverberate throughout the state. After that winter freeze the insurance industry asked the Florida Legislature to limit the liability on property damage claims related to sinkholes, while county environmental protection agencies continued to warn that current practices and the states doctrine of sovereign immunity were making sinkholes an even more frequent occurrence to the detriment of the state’s economy as well as to public safety. In response to the issue of sinkholes that were occurring in 2012 in Alachua County Chris Bird, the counties EPA Director stated, “Even though it is related to the drought, it’s really over-pumping of the aquifer that is making matters worse and making conditions such that we’re more likely to have sinkholes” (Gainesville Sun, 2012). As Ted Campbell, executive director of the Florida Strawberry Growers Association said during the freeze, “we really don't want to shrink the industry, yet we want to protect any collateral damage that may occur. So the answer is (to) find alternative freeze mitigation, not to restrict annual use permits, and put farms out of business.” (Newborn, S., 2010). Even before the freeze one farmer in the region had begun to look at new technologies in order to produce a strawberry crop. He took as his inspiration how the ancient Babylonians created their “Hanging Gardens” and how the Aztec’s fed their population in their capital city of Tenochtitlan, a city that at that time was twice the size of the largest cities in Europe. The Babylonians and the Aztecs did this by using hydroponic farming methods to grow their crops and this is what Gary Parke of Parke Family HydroFarms had been doing since January 2005.

Parke Family HydroFarms Strawberry farming in Plant City, Florida has been part of the Parke family heritage for well over 50 years. R. E. (Roy) Parke, the largest strawberry farmer in the state, was a farmer who immigrated to Pennsylvania from Northern Ireland in 1924. He and his family moved to Plant City, Florida in 1956 and started their first farm on 10 acres. Ironically it was Roy Parke that first used his sprinkler irrigation system during a freeze to protect the crops from damage and established the standard that is used for freeze mitigation throughout the state (The Grower, 2008). The legacy of farming in the Parke family has been passed down from father to son and daughter. Today in the region several Parke family members own strawberry farms or are active members of the Strawberry Farmers Association. They look to promote farming and the value that farming has to the region whenever the opportunity presents itself. Most of their farms are traditional farming operations that require large plots of land. Gary Parke, however, decided to try something different in his approach and began a hydroponics farm.

HYDROPONIC FARMING

While hydroponic farming is extremely old, the modern use of this technology is fairly recent. The central difference between hydroponic farming and traditional farming is that hydroponic farming suspends plants in a water-based solution rather than in soil. The solution allows for moisture and nutrients to be fed directly to root systems rather than having it seep through inches of soil. This approach is not only more efficient it is also more environmentally friendly as fertilizer and other chemicals are applied in appropriate quantities directly to root systems rather than spread on the topsoil and then filtered to the roots, and the environment, through the use of heavy irrigation. The effects of hydroponic farming on water usage are significant. Parke says that each of his strawberry plants requires 4.8 ounces of water daily compared to 250 ounces of water daily that is required for his neighbor’s field grown plants (Parsons, V., 2007). As Parke said, “traditional farms probably use more water in half an hour than I use in two weeks”. Yields are also much higher according to Parke where an acre of strawberries planted in hydroponic towers is equivalent to 6 acres of field

Journal of Management Policy and Practice vol. 14(3) 2013 29 grown plants (Behnken, S., 2010). Yet to acquire these advantages requires a significant upfront investment. When Gary Parke established his hydroponic farm his family and neighbors questioned his decision to invest the amount of money that he invested to prepare such a small amount of acreage. According to Ted Campbell a hydroponic farm may cost as much as $60,000 an acre to prepare (Behnken, S. 2010). A similar investment in a traditional farm would have prepared 5 to 10 times the acreage. Parke had to drill deeper wells, and he had to use a complex array of plastic, PVC piping, and plant towers in order to support his crop. In spite of the costs Parke believed that this approach to farming was superior to traditional farming methods. His reasoning was that this approach not only produced healthier crops, it was also a safer way to farm.

Hydroponic Farming – A Safer Food Source In all types of farming providing plants with water and nutrients represents the greatest, and most expensive, challenge. At Parke Hydrofarm Gary Parke provides nutrients directly to root systems, which unlike traditional and organic farmers, insures that leaves and produce are not contaminated with fertilizer being left on the plant. “Hydroponics is a safer food source; it's a more controlled food source. Do you remember salmonella? Unfortunately, it killed two folks – the spinach scare a few years ago? Well, what happened was that a farmer or farmers were broadcasting their fertilizer. They were fertilizing their fields like all farmers do. You spread out the manure and then you turn on the water. For example, if you were out in the middle of the field it would land on your chest and everywhere. You turn the water on to get it to go off your chest and go into the ground where you want it to go. For whatever reason, they (the farmers of the contaminated spinach – authors) didn't leave the water on long enough. Maybe the sprinkler in a section of the field wasn't turning properly or something and the salmonella dried, the manure dried, on the spinach leaf. And when it's dried we cannot see it, so it's harvested and sold and unfortunately people die. Hydroponically I feed everything to the root system. What happened to the spinach is called feeding foliarly (applying an application to the leaf of the plant - authors). You put it out everywhere and then you use your watering system to put it into the ground. I don't leave anything on the leaf so it's never a problem” (A. Monroe, personal communication October, 2010).

Hydroponic Farming – Public Health and Safety It was this concern for safety that was one of the main appeals for Parke when he started his hydroponic farm. Not just food source safety for the consumer but also work-place safety for himself. Parke decided to go into hydroponic farming because “I didn't want to use insecticides and pesticides because I will be exposed to it. The fringe benefit of my customers getting pesticide free produce is that I'm not getting exposure. I was a pallbearer in my 20s for a farmer who was 46. I am now 47. Guy never smoked or drank and I am burying him because he was exposed to the pesticides he was using every day” (A. Monroe, personal communication October, 2010). Chronic exposure to pesticides and chemical fertilizers have come to be consider as a risk factor for certain neurodegenerative diseases and certain types of cancers for farmers and other members of the farming community. When the National Cancer Institute conducted its Agriculture Health Study they found that people in the farming community have lower death rates than the general population for chronic diseases such as coronary heart disease as well as for lung, esophagus, bladder and colon cancer. Researchers felt that this reduced risk was due to a general healthier life style that included lower smoking rates, a more physically active lifestyle, and dietary factors. However, these same individuals were also found to have higher incidence rates for leukemia, non- Hodgkin’s lymphoma, multiple myeloma and soft tissue sarcoma as well as for cancers of the skin, lip, stomach, brain, and prostate (National Cancer Institute, 2011). Other research conducted by the National Institute for Neurological Disorders and Stroke (NINDS) found that chronic exposure to pesticides appeared to also be a risk factor of certain neuro-degenerative diseases such as Parkinson’s Disease (Petrovitch, H., Ross, G.W., Abbott, R., Sanderson, W.T., Sharp, D., Tanner, C.M., Masaki, K., Blanchette, P.L., Popper, J.S., Foley, D., Launer, L., White, L.R., 2002). The complex nature of these and

30 Journal of Management Policy and Practice vol. 14(3) 2013 other environmental exposures has made it hard as yet to determine the magnitude of the risk that chronic exposure of chemical fertilizers and pesticides poses to the farming community or the general public. One thing is clear however, these studies have shown that a health risk does exist that is related to these exposures and that the overall potential impact to the general public health will grow as farming and non- farming populations continue to merge together.

Hydroponic Farming – Crop Yields and Obstacles In addition to providing crops that are pesticide and fertilizer free, as well as less water intensive, Parke has the additional advantage of getting greater crop yields on fewer acres of land. He grows 54,000 plants on a half-acre of land, a number of plants that would require 3 acres or more of traditional farming (Behnken, 2010). His yields are also increased per plant, “Instead of getting one pound per plant, you’ll get between three and four pounds per plant,” Parke said (Parsons, V., 2007). The lower supply requirements as well as increased yields drives the total costs for the life of the plant to about a tenth of the cost of a traditionally farmed plant. According to Parke to generate the same amount of income using traditional farming you would need several times the amount of acreage. Yet Parke does face obstacles with his approach to farming. In addition to the large upfront costs his hydroponic system is not considered in Florida to be irrigation and for that reason his water use is taxed “I went ahead and spent a lot of money and jumped to the front of the pack. Everything that you and I walked through (Parke’s hydroponic fields – authosr) to get over here by law, by definition is irrigation. No irrigation in the State of Florida is taxed except for mine. We are trying to get some laws – why do I have to fight or go to Tallahassee, go to my county to get some laws changed? Why do I have to change anything? (Water use for hydroponic farming – authors)… that's irrigation. We have a law. It's non- taxable. Why am I getting taxed?” Finally since Parke uses refined nutrients in feeding his plants instead of unrefined nutrients such as manure and since he does not plant in soil his produce cannot be called “organic” under Florida statute (A. Monroe, personal communication October, 2010).

Hydroponic Farming – The Advantages of Small Scale Even with these challenges Parke feels that his approach to farming is safer, more environmentally and community friendly and most importantly, can reduce the risk of farming. This was clearly demonstrated during the Florida freeze of 2010. While some farms lost up to 25% of their crops even with water spraying Parke lost less than 10%. This was due to the fact that, because of his smaller acreage and more compact planting he was able to use plant coverings instead of spraying. If his coverings were not sufficient he used misters instead of spray to provide added protection. His advantage is due to his scale. “All the alternatives – covers, foam, high tunnels, chemical applications – have all been tried.” Ted Campbell says, “Some work fairly well on a small scale but are hard to manage on a large, commercial scale. The physical ability to cover 8,000 acres of strawberries on a regular basis is overwhelming” (Behnken, S., 2010). Parke himself says that if the 54,000 plants he has on his half acre were spread out over several acres then he would not be able to use coverings, “Where do you store 30 acres worth of covering”. Yet what Parke has done describes a different approach to farming that, as we move into the 21st century needs to be carefully considered as an alternative to traditional ways to grow food.

FARMING IN THE 21ST CENTURY

Farming in Urban/Suburban Areas Migration of populations into urban areas has been a consistent phenomenon for decades. A natural outcome of this migration has been the expansion of urban and suburban residential and business centers into traditionally agricultural areas. Over the past several years however a reverse trend of moving farming operations into urban areas have been in the making. Perhaps no plans are as ambitious as those of Hantz Farms in Detroit, Michigan.

Journal of Management Policy and Practice vol. 14(3) 2013 31 Hantz Farms and Detroit, Michigan Hantz Farms has proposed to the city council of Detroit, Michigan that they be allowed to acquire inner city acreage for large scale farming operations. Hantz believes that the introduction of traditional farming into abandon land sites would not only provide the region with locally grown food but also generate jobs and tax revenue from previously under-utilized or abandoned property. Originally proposing traditional crops Hantz has worked with the city and over the past four years has revised their plans due to concerns regarding pests and pesticide exposure. Today Hantz Farms proposes that the inner- city acreage would be better suited for tree farms that would become orchard’s or timber though even these revised plans are being meet with resistance (Berman, L., 2012; Berggren, M., 2012). The public concerns regarding food quality, environmental and public health damage due to excessive pesticide and fertilizer run-off, and access to water exacerbates how urban and suburban residents interact with farmers. Other concerns include turning over large tracts of land that could be dedicated to providing better housing for the poor. On the other hand, there also has been an increase in market opportunities as consumers have become more concerned with how, and where, their food is grown.

Public Support for Locally Grown Foods Other concerns notwithstanding, there is growing support of regional farming. Local residents and businesses view regional farming as a way to promote small sized farmers, their community, and as a way to acquire fresher vegetables and produce. The desire for organically grown food, or perhaps more appropriately pesticide free food, continues to be an increasing market opportunity for farmers and restaurants. Finally direct to consumer marketing either through the use of “farmer’s markets” or “u-pick” harvesting continues to gain in popularity as consumers continue to move closer to producers or vice- versa. The challenge remains on how can you economically meet these changing market desires and still achieve efficient scale with a smaller environmental and land use footprint.

The Hydroponic Solution Hydroponic farming offers many opportunities to serve smaller communities with locally owned farms that require smaller acreage, smaller water requirements, and minimal or no potential for run-off contamination. These farms can be as small as a half acre and, because of high production capacity, can be financially viable in an inner-city setting. Unlike Hantz Farm, which is considering the acquisition of up to 10,000 acres in urban Detroit for the world’s largest farming operation, hydroponic farming can provide many of the same advantages to the local community while using significantly less land and water resources. They can be designed as micro-farms, providing fresh produce and vegetables to consumers that do not have access to reliable transportation and therefore need to be have food providers within walking distance, as well as entrepreneurial opportunities for the small farmer. In addition to smaller physical size, yields can be such that urban farming using hydroponic technology could generate sustainable revenues and not be at risk of being displaced when economic growth places a higher premium on inner city land. There are challenges of course to this approach to farming. Initial investment is substantial, though less when one considers the additional necessary infrastructure (i.e. tractors, irrigation, storage, labor) that is need for large scale farming operations. There are also government grants and support to help establish the infrastructure to begin hydroponic farming operations. Tax policy, especially at the state level, must be reviewed and, if necessary, reconsidered to provide hydroponic farming with the same water use benefits that are currently provided to traditional farmers. Given the potential environmental, social, and economic benefits that these farms can provide tax policy may even need to be modified to support the creation of larger numbers of small-scale hydroponic farms, especially in urban and sub-urban areas. Finally the general public must come to accept the delivery of refined nutrients to the plant as clean, safe, and equivalent to organic farming and therefore warranting an “organic” or equivalent certification. This will allow hydroponically grown fruits and vegetables to have the same value added and price benefits as organically grown food.

32 Journal of Management Policy and Practice vol. 14(3) 2013 “It’s kind of cheating, but it works.” Parke says, “People talk about what hard work farming is, or how back-breaking it is to pick berries, and I just smile” (Parsons, V. 2007). Gary Parke’s approach to farming addresses a number of the growing concerns that the general public has regarding how we can grow safe food in an environmentally friendly manner. It addresses how farmers and non-farmers can live next door to each other and not feel that they must compete for the most basic of resources such as water, or worry that their homes will sink into a hole in the ground, or that their children will be chronically exposed to pesticides or fertilizers. It addresses how the small farmer can survive and how the local community can access the freshest fruits and vegetables for their restaurants and their homes. Most importantly it addresses how farming can again become part of a local community and appreciated as a good neighbor. As Parke says, “The more you look at it, it’s a safer, more nutritional way, and the ground gets some rest” (Gulfport Patch, 2011).

REFERENCES

Behnken, Shannon. (2010). To protect berries there are few options, many drawbacks. Retrieved from http://www2.tbo.com/news/plant-city/2010/jan/17/na-to-protect-berries-there-are-few-options-many-d-ar- 54759/.

Berggren, M. (7/6/2012). Hantz Farms, proposed $3 million commercial urban agriculture venture moves closer to land deal with city of Detroit. Retrieved from http://www.huffingtonpost.com/2012/07/06/hantz- farm-detroit-land-deal_n_1652537.html.

Berman, L. (3/20/2012). Urban farming idea slowly sprouts in Detroit. Retrieved from http://www.detroitnews.com/article/20120320/OPINION3/203200352.

The Gainesville Sun. (May 16, 2012). Editorial: Florida crumbling. Retrieved from http://www.gainesville.com/article/20120516/OPINION01/120519742.html.

The Grower. (June 11, 2008). Florida strawberry leader Roy Parke dies. Retrieved from http://www.thegrower.com/news/regions/florida/florida_strawberry_leader_roy_parke_dies _117888519.html.

Gulfport Patch. (January 18, 2011). Hydroponic Growing Bears Fruit. Retrieved from http://gulfport.patch.com/articles/hydroponic-growing-bears-fruit.

InterNACHI (International Association of Certified Home Inspectors). Sinkholes. Retrieved from http://www.nachi.org/sinkholes.htm.

Jackson, J. (1/1/2012). Strawberry growers adopt water savings to avert sinkholes. Retrieved from http://www.thegrower.com/issues/citrus-vegetable/Strawberry-growers-adopt-water-savings-to-avert- sinkholes-136084263.html?view=all.

National Cancer Institute. (June, 2011). Agriculture Health Study fact sheet. Retrieved from http://National Cancer Institute http://www.cancer.gov/cancertopics/factsheet/Risk/ahs.

Newborn, S. (11/17/2010) Freeze restriction on farmers on hold. Retrieved from http://www.wusf.usf.edu/news/2010/11/17/freeze_restrictions_on_farmers_on_hold.

Newman, G. (2/24/2010). Residents criticize groundwater pumping. Retrieved from http://www2.tbo.com/news/plant-city/2010/feb/24/pc-residents-criticize-groundwater-pumping-ar- 229694/.

Journal of Management Policy and Practice vol. 14(3) 2013 33

Parsons, V. (Spring, 2007) Future of Florida farming may be rising in Dover. Retrieved from http://baysoundings.com/spr07/futureofFloridaprint.html.

Petrovitch, H, Ross G.W., Abbott, R., Sanderson, W.T., Sharp, D., Tanner, C.M., Masaki, K., Blanchette, P.L., Popper, J.S., Foley, D., Launer, L., White, L.R. (2002). Plantation work and risk of Parkinson’s Disease in a population-based longitudinal study. Archives of Neurology 59, (11), 1987-92.

Post, R. (3/7/2010). Dozens of sinkholes in Plant City, Florida after farmers pump extra water to protect crops from bitter cold. Retrieved from website www.geoprac.net/geonews-mainmenu-63/65-geologic- hazards/676-dozens-of-sinkholes-in-plant-city-florida-after-farmers-pump-extra-water-trying-to-protect- crops-from-bitter-cold.

34 Journal of Management Policy and Practice vol. 14(3) 2013

An Analysis of Human Resource Information Systems impact on Employees

Kelly O. Weeks Texas A&M University Galveston

INTRODUCTION

A human resource information system (HRIS) “is a systematic procedure for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources (Cathcart, 1999). Human resource systems are the organizational support struts that keep internal operations running smoothly (Horney & Ruddle, 1998). Organizations change to new HR information technologies for many good reasons such as: HR may want to take advantage of the corporate intranet, save money through self-service, or acquire the best software for specialized purposes like pension or COBRA management (Roberts, 1998). The use of an HRIS offers incremental leaps in efficiency and in the response time of many human resource jobs that are traditionally labor intensive. The HRIS helps to eliminate duplication of efforts and to better organize the efforts of the HR staff. The HRIS can even allow the HR staff to shift from data maintenance to the strategic use of human resources. The first step in the design of an HRIS is to specify the requirements and the purpose of the system. This includes the target users, the type of data to collect, the amount of data to collect, and how often to collect the data. The next step is to construct the organizational system design. This step resolves issues concerning who will utilize the system, how will it be accessed, and how will it be updated. Often it is easier to visualize an HRIS in order to better understand how it should be constructed and utilized. An HRIS can be visualized as consisting of three functions: Input, data maintenance, and output. In the input function, the information concerning the personnel is entered into the system. This can be done via data entry or by newer methods such as scanning from original documents. The data maintenance function updates and adds new data to the database. Lastly, the output function generates information that is presented in a useful format. Recent studies show that the implementation of HR technology can increase an organization’s market value. The key is having measurable goals for your HR system (Britt, 2002.) In the early stages of HRISs it was typical to find most systems run by management information system specialists. This staff made of all the major decisions. It selected the software, hardware, platform, and designed the processes. Today, cross-functional teams typically run HRIS projects.

Journal of Management Policy and Practice vol. 14(3) 2013 35 Ford Motor Company began to use an HRIS in the early 1980s. The main early challenge to the organization was the transition from the HRIS being controlled by the Information Technology staff to the creation of an HRIS staff. Now that the organization’s system includes information that is vital to many different departments within the organization, the information is viewed as a corporate resource. Due to this factor, the advent of the internet and the increasing need of the information stored in the HRIS by different department within the organization have led the organization to consider moving control back to the Information Technology department (Roberts, 1999). The HROne project at Citigroup involves restructuring the diverse HR operations into a single system. This system will automate processing, eliminate duplicate efforts, and establish one set of policies for the organization. AT&T has undergone a similar metamorphosis that is similar to Citigroup. AT&T has reorganized its HR operations and outsourced most of the functions to AON Human Capital Services. This outsourcing has allowed the HR staff to spend more of its efforts focusing on strategic issues (“How two organizations are achieving HR value”, 2003). The selection of an HRIS is terribly vital to an organization due, in part, to the fact that the organization will typically use the system for a period of at least eight years. The selection process can last from three to nine months. The organization can hire a specialist to recommend a system or the organization can purchase existing software such as SAP or PeopleSoft. It is a good strategy to get the hardware right so that the new system will connect adequately with the existing system and will map data properly and consistently across systems (Roberts, 1998). The move to a web-based system or to a corporate intranet is currently the top cost-cutting strategy at use within organizations that utilize HRISs. The use of these systems improves efficiency within the organization. Other examples include the use of e-mail to communicate HR related information instead of the postal service. Another method is providing self-service HR applications within the organization. This is especially effective in tasks that require much data entry and can be performed directly by the employee. Many smaller organizations struggle with the implementation of an HRIS on a limited budget. The use of application service providers (ASP) has greatly aided the recruitment aspect of the organization. The use of outsourcing can include other areas of the HR function as well. Payroll, relocation services, and FMLA compliance are other functions that can be effectively outsourced. The lack of strategic or operational functionality has been cited as a recurring problem with current HRIS. Insufficient integration with other systems within the organization, complication of the system, inflexibility, and lack of a user-friendly interface are also mentioned. Many organizations struggle with the ability to make information available to employees and to implement HRIS goals within a limited budgetary situation. Another problem facing organizations using HRIS is that of training the staff on its proper and effective use. HR systems of successful firms often display practices reinforcing consistent themes or messages (Baron & Kreps, 1999). The future will witness the rapid expansion of many organizations to utilize electronic HR (E-HR). E-HR can be described as the overall HR strategy that redistributes the HR function throughout the organization and to trusted business partners. E-HR unites HR activities with finance, customer service, and the supply chain. E-HR is very cost effective, especially for small to medium organizations and it also helps to eliminate duplicate data collection. E-HR has been identified as a catalyst toward achieving business strategies. A major deterring factor of these systems has been the costs of implementation and maintenance. By outsourcing, one has access to expert knowledge and services that may be too costly for them to provide themselves. Also, outsourcing E-HR reduces operating costs and large investment risks involved in buying software. Employee self-service (ESS) is one of the newest trends in HRIS. The technology that drives the ESS allows managers to gain direct access to HR databases without the assistance of the HR department. This facilitates the inclusion of HR related information into many organization decisions. To further leverage the value of an HRIS, organizations will come to view the system as a portal to all knowledge for managers and employees. This communication tool will allow employees, vendors, and customers to communicate with one another via the portal. The portal will include job information, tools, data, and news. As technology increases, workflow processes will become smarter. The HRIS could be improved to assist a manager processing performance reviews with prompts related to the real-time evaluation. In addition to this, the use of expert systems to aid personnel will increase. This trend is

36 Journal of Management Policy and Practice vol. 14(3) 2013 already being noticed in law and medicine. In an attempt to further stretch already strained budgets, many organizations are likely to upgrade rather than replace existing software. One of the most exciting new trends in HRIS is the use of wireless HRIS. A wireless HRIS enables managers and employees to access and change their HR data by the use of a web-enabled pocket PC or a cellular telephone. New technology for the future includes the use of wireless PCs, Tablet PCs, and multi-function devices such as IBM’s MegaPad (“Coming soon: wireless HR information systems”, 2002).

CONSTRUCT

Foundation An HRIS “is a systematic procedure for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources (Cathcart, 1999). Prior to the introduction of computer technology into the organizational mainstream, an employee would submit a paper application to a potential employer. This application would contain typical demographic information that would be stored within a folder that the HR department could access as necessary. Once the employee was hired, pertinent information from the application was also sent to the finance department for payroll purposes. Most employers viewed this information as necessary, but not valuable. One of the computerized information systems first used by American organizations was that found within the personnel department. In the 1950s, select organizations began to install automated payroll systems (Blair, 1988). Because large corporations were the typical users of early HRIS, the initial development of software was directed towards the mainframe computer market. Due to the fact that large employers were the only customers for HRISs, software vendors and HRIS professionals were guided by their needs. At this time, most systems were batched which produced systems that were centralized. The HRIS professional developed into an information technology function whose main concern was to maintain the integrity of the database. As computer technology increased and the cost of computing decreased, the usage of HRISs in organizations became more prevalent (Cottrell & Robertson, 1987). In the 1980s, office automation was initiated in many large corporations. This led to the increased development of HRISs. The emphasis was on developing HRISs very inexpensively. The thought was that people within the HR department could be replaced with software. Instead of having employees maintain extensive records, a technician would enter the information once into a system and update records as necessary. A downside to the new technology was the high price tag associated with the software packages. Typical packages could cost in excess of $200,000. One should first define the business processes to learn what steps are involved and which databases will be accessed. Then ascertain what “middleware” or workflow engine is needed between the new HR system and the legacy system (Roberts, 1998).

Benefits The use of an HRIS offers incremental leaps in the efficiency and the response time of many human resource jobs that are traditionally labor intensive. The HRIS helps to eliminate duplication of efforts and to better organize the efforts of the HR staff. Guinn (1998) has shown that organizations that implement one system usually implement another. One key benefit of an HRIS is the ability to consistently develop and manage employees based on the value of an individual’s contribution. Enterprise-wide HR systems can improve an employee’s job productivity by cutting repetitive work and speeding the pace at which manual processes are managed (Horney & Ruddle, 1998). This software provides a ready application that can be linked with the legacy systems. Often, the use of an HRIS relieves the HR personnel from clerical transactions to focus upon strategic planning. An HRIS also provides better knowledge management, which can improve an organization’s competitive advantage (Lin, 2005). In addition, the system can produce many HR reports that can better inform management about the staff. New HR systems will provide the infrastructure needed not only to hire, manage, and motivate and evaluate people, but it will also assist in longer-range business planning, staff forecasting, facilities planning, and budgeting (Horney & Ruddle, 1998). The use of an HRIS provides additional benefits to an organization. It can improve the

Journal of Management Policy and Practice vol. 14(3) 2013 37 efficiency of the HR operation, which will improve profitability. An HRIS can generate a new level and number of reports. It can allow the employees to enter data directly (Bsat & Beckers, 2002). The HRIS can allow the HR staff to shift from data maintenance to the strategic use of human resources. The decreased demand for time-consuming data processing will provide the opportunity to focus upon more global activities. In addition, one of the new trends in HRISs is the use of kiosks that allow employees to update and verify personal information, which reduces the need for HR personnel to perform this function. Many organizations leverage their investment in an HRIS by integrating it with other internal systems. This is commonly witnessed by the combination of the HR and payroll functions. Such an HRIS is extremely valuable in selecting people for global assignments and managing them while they are abroad. An integrated global HRIS can assist HR personnel in integrating global issues with local concerns and consequently giving employees who are going abroad information they need to assess the value of the move (Stroh, Grasshoff Rude, & Carter, 1998). Hence, HRISs can help companies select candidates for global assignments. An HRIS can also be used to great benefit in the area of job placement and promotion planning. E-recruiting involves the collection, storage, and retrieval of information concerning employees (Cullen, 2001). Since this data will be organized more proficiently, this still allows the firm to focus on solving problems rather than simply collecting data. E-recruiting illustrates that the application of technology can create huge efficiencies and financial savings in HR. At higher levels, E-recruiting shows the critical need for the redesign and integration of most HR systems and practices (Cullen, 2001). An HRIS containing the job description, skill sets necessary, and in-house employee information is an invaluable asset. With a very detailed job description, the organization has a much better opportunity to match the skills of its existing staff to the needs of the position that is open in a much quicker time. It has been noted in Tensaki, et al. (1998) that organizational execution failures are often the result of poor human capital management. This highlights the need for the human resource function to be included in the organization’s strategic planning. There are several benefits of a self-service HRIS, which are as follow: they require a lower HR-to-staff ratio, this saves time for HR staff and employees, they improve accuracy in personnel information, and they empower employees.

Design In the modern workplace, an HRIS is a hybrid of several different types of information systems. Two variables, human resource philosophy and desired employee contributions play an instrumental role in organizational choices regarding the types of human resource policies used to manage employees across organizations (Lepak, Marrone & Takeuchi, 2004). The modern HRIS includes functions of transaction processing systems, communication systems, decision support systems, and some elements of artificial intelligence. The first step in the design of an HRIS is to specify the requirements of the system. This includes the identifying of the target users, data to collect, amount of data to collect, and how often to collect the data. The next step is the business system design. This step resolves issues concerning who will utilize the system, how will it be accessed, and how will it be updated. An integrated HRIS is one that contains a comprehensive set of human resource functions. The integration of these functions allows an organization to use the system to access data to make decisions. In the initial phase of designing HR systems, they are sometimes sacrificed for short-term cost savings. This idea is self-defeating and can result in role ambiguity and can also lead to lower productivity, lower morale, and turnover (Treen, 2001). An HRIS can facilitate job placement positions by containing all the data pertaining to the job description, compensation, training requirements, and existing employee appraisals.

Components An HRIS can be visualized as consisting of three functions: Input, data maintenance, and output. In the input function, the information concerning the personnel is entered into the system. This can be done via data entry or by newer methods such as scanning from original documents. The scanning technology allows even signatures and handwritten notes to be entered. The data maintenance function updates and adds new data to the database. Lastly, the output function generates information that is presented in a useful format (Bsat & Beckers, 2002).

38 Journal of Management Policy and Practice vol. 14(3) 2013 Software Many of the enhancements to HRISs are designed to produce the specified information faster and at a lower cost. Another way in which organizations are trying to combat the costs associated with HRISs is to use off-the-shelf software instead of creating a custom system. PeopleSoft, SAP, Oracle, and Lawson Software produce the best known software packages. The software packages available today were created by designers with access to extensive libraries of benchmarks and best practices. In a flexible organization, using an available software package can prove to be very productive and cost effective (Kroot, 1998). HRIS software vendors are now broadening their horizons to offer workforce planning, budgeting, tracking headcounts, and turnover management. Additionally, software vendors are increasing the ability of their packages to integrate with other typical organization applications (“The best HR software now”, 2001). PeopleSoft software has expanded upon this theme to include vast amount of information concerning employees in its software package. This includes motivators, objectives, skills, and training. By utilizing this information, the organization can improve its ability to improve employee retention. This can be aided by an HRIS that assists in training, job matching, and career development. PeopleSoft also has a program called Workforce Rewards. This is an application to improve compensation planning and job pricing. This is an analytic tool that enables one to sort the data to create multidimensional what-if scenarios and hypotheses (Hammers, 2002). PeopleSoft 8 allows employees to read corporate communications, access their personal benefits information, and enroll for benefits via the portal. Success Plan software allow organizations to anticipate staff movements and manage organizational change quickly and effectively. The software is designed by HR professionals to view at a glance the management structure, the weaknesses, and the strengths of an organization. Another popular HRIS software package is Oracle HRMS. Oracle is a challenger to People Soft and SAP as the top-selling software package. While it is highly flexible and adaptable, this package is quire costly in terms of installations, training, and maintenance (“The best HR software now”, 2001). To combat the often high expense involved with utilizing the HRIS vendor’s own training personnel, third- party instruction has become more prevalent. A major complaint with vendor supplied trainers is that they work on their own time table, own schedule, and are not very flexible. In contrast, the third-party organizations offer training schedules that are highly adaptive and flexible. Third-party trainers tend to serve well for organizations that want to outsource training or to simply supplement in-house training. Often, the third-party trainers are much closer geographically to the organization in question. This further reduces costs and increases response speed (Jossi, 2001).

Selection The selection of an HRIS is terribly vital to an organization due, in part, to the fact that the organization will typically use the system for a period of at least eight years. The selection process can last from three to nine months. The organization can hire a specialist to recommend a system or the organization can purchase existing software such as SAP or PeopleSoft. These are software packages that combine computer systems of all departments and operate via a single database. Another option available to organizations is to select specialty HR software. Examples of this type of software include NuWeb Suite and HR Expert. HR organizations can achieve much greater success if they build common analytical frameworks, common technology platforms, and tools for the real-time sharing of data generated by a full range of HR applications (Cullen, 2001). Therefore, choosing the right system for an organization is crucial to gaining an advantage from implementing an HR system. Unfortunately, many organizations are discovering a lack of operational functionality and poor integration with their current organization systems when installing an HRIS. They are also finding the systems very complicated, inflexible, and often not very user-friendly. The installation of software designed to fit the “generic” organization does not work for all organizations. If the organization is flexible and learning oriented, the move to an off-the- shelf system can be managed. In contrast, if the organization is diverse and resistant to change, this process is often unsuccessful (Kroot, 1998). HR systems are critical to improving the organization’s profitability, serving customers better, and ensuring that the institution competes more effectively in the marketplace. As part of the advance planning of an HR system implementation, one may need to conduct

Journal of Management Policy and Practice vol. 14(3) 2013 39 an organizational readiness assessment (Horney & Ruddle, 1998). Such an assessment can help determine the factors most likely to help or hinder one’s success with change efforts.

Team Members In the early stages of HRISs it was typical to find most systems run by management information system specialists. This staff made of all the decisions. It selected the software, hardware, platform, and designed the processes (Deshpande, 2001). Today, the manner in which organizations divide the responsibilities for an HRIS varies by organization. In most organizations, cross-functional teams now run HRIS projects (“HR and HRIS”, 2002).

CURRENT

Web-Based systems The move to a web-based system or a corporate intranet is currently the top cost-cutting strategy at use within organizations that utilize HRIS. The use of these systems improves efficiency within the organization. For employees that are familiar with the Internet, using a web-based system is easy. By placing benefits information online, communication is streamlined and routine questions are held to a minimum. This frees the HR staff to focus on other areas within the organization. The use of a web-based system allows the corporation to control the channels of communication to ensure that the information that is presented is accurate. It also benefits the employees because they are able to access their information quickly and to easily ensure that it is correct. Web-based HR systems can reduce administration costs by 40%. One of the main business drivers is the need to reduce administration within the HR function, allowing the HR staff to focus on more value-added activities. Other examples include the use of e-mail to communicate HR related information instead of the postal service. Another method is providing self-service HR applications within the organization. This is especially effective in tasks that require much data entry and can be performed directly by the employee. Many organizations are also placing their job applications online to reduce costs and increase accuracy (How employers save on HRIS costs, 2002).

Application Service Providers (ASP) Many small organizations struggle with the implementation of an HRIS on a limited budget. The use of application service providers (ASP) has greatly aided the recruitment aspect of the organization. Providers such as JobPlanet provide a high-end, customer-friendly web site that retains the look of the organizations own web site. This service facilitates applicant resume preparation, job searches, and availability notification. Another system is Best! Imperativ HRMS. This system offers many of the features of more expensive programs such as PeopleSoft and SAP without the large price tag. In addition to the cost savings of the software is the elimination of the high cost of maintaining and upgrading the package (Meade, 2001). To assist employees in their use of an ASP, some employers are utilizing decision support systems to help the employees make better decisions. A DSS offered by Synergy HR Technologies provides an online plan comparison tool to help employees determine which benefit plan is most appropriate for their needs. Kodak has used this software to assist its employees in selecting between different health care plans.

Outsourcing The Society for Human Resource Management human resource outsourcing survey report (2005) found that 58% of organizations outsource a portion of or their HR functions (Logue, 2004). The rising costs of HRIS and the related software are a leading cause for many organizations to reconsider the need to make such large investments or to turn this function over to an outside vendor. Payroll, relocation services, and FMLA compliance are other functions that can be effectively outsourced. In selecting outside firms to manage the HRIS for an organization, one need pay close attention to ensure that the proposed firm possesses the necessary expertise to successfully perform the functions necessary. Another

40 Journal of Management Policy and Practice vol. 14(3) 2013 area of concern is that the length of the agreement between the organizations involved can often limit quick change (“Questions to ask before you outsource any HRIS”, 2002). One of the concerns that arise from the use of ASPs is that of security. With the rash of Internet hackers that have infiltrated many organizations websites, this issue is now becoming more relevant.

Employee Self-Service (ESS) Employee self-service (ESS) is one of the newest trends in HRISs. The technology that drives the ESS allows managers to gain direct access to HR databases without the assistance of the HR department. This facilitates the inclusion of HR related information in too many organization decisions. The use of self-service HRIS has produced on average a $255 reduction in transaction costs (HR Technology Is Fueling Profits, Cost Savings, & Strategy, 2006). The use of HRISs has also resulted in fewer transcription errors when the employee directly enters his or her own information (Turek, 2000). Due to ESS systems not residing on a server, anyone with an Internet browser can access the services available on the HRIS. Many organizations now allow their employees to access their benefits information and pay histories via online computing (Self service: staff helpings, 2005). This helps the organization by saving printing costs and helps the employee by increasing the rapidity of payment. Along with placing benefits and pay information on-line, many organizations are now placing job placement information on the ESS systems to keep the employees informed. Additionally, training resources are more easily accessed by using an ESS system. The use of these resources improves the skill set of the employees and assists the organization in tracking the skills and abilities of its employees.

Challenges The lack of strategic or operational functionality has been cited as a recurring problem with current HRISs. Insufficient integration with other systems within the organization, the complication of the system, inflexibility, and the lack of a user-friendly interface were also mentioned. Organization’s top management must communicate the need to implement new systems. Also, people resist the implementation because they are not asked to participate in the development of new business strategies, solutions, and plans (Horney & Ruddle, 1998). So management needs to try to get employees involved, which will reinforce acceptance and use. Many organizations struggle with the ability to make information available to employees and to implement HRIS goals within a limited budgetary situation (“Top HRIS challenges”, 2002). Another problem facing organizations using HRISs is that of training the staff on the use of the system. One solution is to utilize third-party instruction. Third-party trainers usually are very flexible, closer to the client, and less expensive than traditional vendor supplied trainers.

FUTURE

E-HR The future will witness the rapid expansion of many organizations to utilize electronic HR (E-HR). E- HR can be described as the overall HR strategy that redistributes the HR function throughout the organization and to trusted business partners. E-HR unites HR activities with finance, customer service, and the supply chain. E-HR is very cost effective, especially for small to medium organizations and it also helps to eliminate duplicate data collection (Karakanian, 2000; Lengnick-Hall & Moritz, 2003). When transactions are designed to be executed via E-HR systems, much of the transactional work that human resource professionals do can be eliminated (Tenaki, et al, 1998). Roberts notes, 70% of the functions of new HR systems remain untapped because users only make the new system do what the old systems did (Roberts, 1998). So, in the future, firms will need to try and maximize their equipment to realize the full potential. Roberts also urges the use of a reward system to motivate employees to use the new system.

Security A concern of many HR professionals is the security of wireless and ASP HRISs. The security risks are especially heightened with the implementation of the Health Insurance Portability and Accountability

Journal of Management Policy and Practice vol. 14(3) 2013 41 Act (HIPAA). Another concern is the disposal of information on hard drives to be discarded. Improper disposal of hard drives has led to several costly lawsuits (“Trends to watch in HR technology”, 2003).

Portal To further leverage the value of an HRIS, organizations will come to view the system as a portal to all knowledge for managers and employees. This communication tool will allow employees, vendors, and customers to communicate with one another via the portal. It will include job information, tools, data, and news (“The truth about leveraging HRIS”, 2000). The days of shuffling and maintaining videotapes and having to schedule all employees to meet at a specific time for a meeting can be eliminated (Greengard, 2001). In an attempt to further stretch already strained budgets, many organizations are likely to upgrade rather than replace existing software (What are the top HRIS issues in 2003?, 2003).

Workflow As technology increases, workflow processes will become smarter. The HRIS could be improved to assist a manager processing performance reviews with prompts related to the real-time evaluation. In addition to this, the use of expert systems to aid personnel will increase. This trend is already being noticed in the fields of law and medicine (Greengard, 1999).

Wireless Systems One of the most exciting new trends in HRIS is the use of wireless HRIS. A wireless HRIS enables managers and employees to access and change their HR data by the use of a web-enabled pocket PC or cellular telephone. New technology for the future includes the use of wireless PCs, Tablet PCs, and multi- function devices such as IBM’s Mega Pad (Coming soon: wireless HR information systems, 2002). Sanjay Kumar, CEO of Computer Associates International Inc., predicts that wireless computing will be the next technological advance to alter the business landscape. Mr. Kumar also expects the continued miniaturization of computer technology to have the greatest impact upon people’s daily lives (Hoffman, 2002). One of the advantages of wireless HRIS is that the user can access, modify, and save information from a variety of wireless devices. Researchers are now designing HRIS designed to be accessed via personal digital assistants, notebook computers, and cellular phones. This frees the manager from being constrained to a desktop computer or paper based methods of managing HR related information and allows him or her to be truly mobile. Spectrum Human Resource Systems has recently introduced its proprietary mobile HRIS. This system, named ivantage mobile, allows HR managers to take important employee data with them regardless of their location. A large concern with wireless technology is security. In fact, information technology security specialists are now so high in demand as to at the top of the information technology pay scale (McGee, 2001). The most common method of network attack is the denial of service attack. This attack prevents the network from being accessed and shuts it down. Other types of attacks involve data theft and attacks generating from within the organization. Fortunately, network security is improving with the newer versions of firewalls available, but risks are still evident.

ORGANIZATIONAL EXAMPLES

Ford Motor Company began to use HRIS in the early 1980s. The main early challenge to the organization was the transition from the HRIS being controlled by the information technology staff to the creation of an HRIS staff. Now that the organization’s system includes information that is vital to many different departments within the organization, the information is viewed as a corporate resource. The advent of the Internet and the increasing need of the information stored in the HRIS have led the organization to consider moving control back to the information technology department (Roberts, 1999). International Paper (IP) recently overhauled its systems. It started by setting two clear and measurable goals: reduce the HR-to-staff ratio and cut the per person cost of its HR department (Britt, 2002). The project is still ongoing but IP says it has already reached its preliminary goals.

42 Journal of Management Policy and Practice vol. 14(3) 2013 Citigroup is currently streamlining its HRIS. Citigroup has more than 270,000 employees in 100 nations of the world. This organization has 22 separate HRIS platforms in use. The HROne project involves restructuring the HR operations into a single system. This system will automate processing, eliminate duplicate efforts, and set one set of policies for the organization (“How two organizations are achieving HR value”, 2003). AT&T has undergone a metamorphosis similar to Citigroup. AT&T has reorganized its HR operations and outsourced most of the functions to AON Human Capital Services. This outsourcing has allowed the HR staff to spend more of its energy focusing on strategic issues. Federal Express Corporation’s PRISM system is endowed with many capabilities. PRISM contains information on every job applicant in an online database. Once the applicant is hired, PRISM verifies that the applicant is suitable and that the position has budget authorization. The system then automatically assigns an employee number and creates and employee record. At Federal Express, employees are responsible for updating their own personal data. Through PRISM employees can perform this function. PRISM also provides employees with access to information on internal openings by displaying job descriptions. In this system, the managers post the job openings without the assistance of the HR department. Any interested employee can apply online. PRISM provides the data concerning the employee to the hiring manager. In addition, PRISM coordinates all the training and testing (Palvia, 1993). PRISM has improved employee commitment and morale. Employees feel that they are treated fairly and given the best opportunity for advancement (“HR in the cybercorp”, 1997). Proctor and Gamble (P&G) signed a $400 million agreements with IBM to outsource its global HR services. This is a 10-year deal that started January 1, 2004. This allows P&G to be more flexible and adaptive while focusing employees on the core competencies. Kodak instituted its HRIS in response to problems experienced by employees when selecting between the many health plans offered by Kodak. Many employees were simply choosing the most expensive health plan because of the perception that the most expensive plan must be the best. Kodak introduced a plan comparison product designed by Synergy HR. After the introduction of the product, Kodak witnessed a dramatic redistribution of health care selections among its 30,000 employees. The University of Arizona has moved its employment application process to the digital age. The largest employer in Tucson, Arizona, the university launched its paperless application process in 2004. The new system allows job seekers to apply for a limitless number of jobs with just one application. The applicant will receive immediate confirmation that the application was received and can track the status of the application.

RESEARCH

The various HRISs discussed in this paper represent the state of the art at this present time. But, the present technology is only a small fraction of the possible strategic uses that HRISs can provide. This paper further research into the uses of HRIS in strategic planning; specifically in the area of promotion planning and career planning. Most organizations use computerized payroll systems. These systems contain very basic information about the employees of the firm. This information can include the name, age, address, and phone number of the employee. It can also include tax-related information such as family size, income, and garnishments. Some payroll systems can even track attendance. For many organizations this is the limit of the payroll information systems in use. But, by taking this information and combining with additional data, organizations can construct an HRIS that can truly enable the organization capitalize on this database. Organizations can collect additional data about its employees. This data can include any physical disabilities or other divulged medical conditions. The education and past experiences of the employee can be obtained from his or her application and/or resume. The employee can be asked to complete a survey that asks, among other things, the area of the country or the world that is preferred to live in. With this information, a savvy organization can utilize an HRIS to improve its strategic planning.

Journal of Management Policy and Practice vol. 14(3) 2013 43 The organization can utilize the family situation of an employee to determine if relocation is desirable, affordable, and possible for the organization. By examining the age and attendance of an employee, an organization can include this data in determining if the physical requirements of the position will be too demanding for the employee. The educational and work-related training that an employee possesses will reveal some of his or her skills so that the organization can best match those skills to the most appropriate position. Additionally, if an employee has a particular handicap or medical condition that hinders their work, this must be taken into consideration when positions are offered. By expanding the use of an organization’s employee information database, the organization can greatly improve its strategic planning. By matching skills to positions, the organization improves its succession and promotion planning. In addition, the use of this fully-integrated HRIS will allow the organization determine its hiring needs and to issue specific skills and abilities necessary for the positions available. This paper conducts an in-depth research into an organization to determine the manner in which HRISs are being utilized. In conducting research about the organization, data will be gathered concerning what type of HRIS is in use, the length of time that the HRIS has been in service, which person(s) or department(s) utilize the HRIS, has the implementation of the HRIS increased efficiency within the organization, and if the HRIS is used in the strategic planning processes of the organization. This research will be beneficial to organizations that use HRISs and those that currently do not.

METHODOLOGY

This research project hypothesizes that automated collection, storage, and retrieval of information related to the human resource element in any large-scale organization will help the organization in question to make more informed, more effective, and more definite decisions concerning the hiring, the positioning, the utilization, and the retention of its human resource which will help that organization in its competitive efforts for survival in the marketplace. A large-scale household appliance manufacturer that has plants in various metropolitan areas scattered all around the U.S. territory that did implement an automated system for the handling and the management its human resource information gathering, and that is now relying on a completely computerized storage, retrieval, and utilization of the human resource- related data was surveyed. The survey instrument compares and contrasts the efficiency and effectiveness of employees’ positioning, utilization, management, and retention before and after the implementation of such HRIS in order to determine the effect of the HRIS on the organization’s efficiency and competitiveness in the marketplace. The survey instrument was sent to 234 department managers and area supervisors working for a major household appliance manufacturer that has plants located in all areas of the United States and prompted them to respond to 12 questions related to the line employees that did work previously as well as the ones that are presently working in their respective departments. The total number of employees working for this appliance manufacturer was reported to be around 12600 workers. The survey asked for a comparison between the group of workers that were employed before the implementation of the HRIS and the ones that have been in employment since the implementation of such system, in order to compare and contrast the effects that were brought by the introduction of such an automated HRIS on the efficiency and effectiveness of that major household appliance manufacturer’s operations and position in the marketplace. Before the implementation of the HRIS, 22% of the employees required on-the-job training before beginning to perform their duties, 7% requested reassignment and 13% quit their job whereas after implementation of the HRIS, only 6% of the employees required on-the-job training, 2% requested reassignment and 8% quit their job – a considerable decrease in the need for on-the-job training and a modest decrease in employees requesting re-assignment and quitting their job. Before implementation of the HRIS, 78% of employees handled their job successfully and efficiently which increased to 91% after the HRIS implementation. Employee satisfaction on-the-job improved from 66% before to 84% after the HRIS implementation. Task-related employee grievances decreased from 56% before implementation to 23% after implementation of the HRIS while 46% of the employees were successful in performing their

44 Journal of Management Policy and Practice vol. 14(3) 2013 jobs after training prior to the HRIS implementation compared to 68% after implementation of the HRIS. Sixteen percent of the employees had committed work-related mistakes on-the-job before the HRIS implementation compared to 5.4% after the implementation. Employee productivity rose from 78% before the HRIS implementation to 89% after the HRIS implementation, and employee absenteeism decreased from 13% before the HRIS implementation to 7.9% after the HRIS implementation. The rate of employees carrying out job-related tasks correctly rose from 92% to 97%, and the allocation of employees to the wrong job decreased from 8.5% before the HRIS implementation to 3% after the HRIS implementation. There was an overall improvement in every aspect of the job covered by the questionnaire: a 16% decrease in training on-the-job, a 5% decrease in employees requesting job reassignments, a 5% decrease in employees quitting their job, a 13% increase in employees handling their job successfully and efficiently. Job satisfaction increased by 18%, task-related employee grievances decreased by 33%, the success rate of employees after training increased by 22%, mistakes being committed on-the-job decreased by 10.6%, employee productivity increased by 11%, absenteeism decreased by 5.1%, correctly performing the job increased by 5% while the allocation of employees to the wrong job decreased by 4.5%.

CONCLUSION

An HRIS utilizes computerized collection, storage, and retrieval technology to improve handling and management of the human resource information within an organization. An HRIS enables decision makers and planners of an organization to improve the efficiency, effectiveness. and timeliness of the information at their disposal. New technology has provided decision makers and strategy makers in an organization with an avenue to access the information about the human resource in their organization without having to involve the Human Resource Department. With the advent of web-based as well as wireless HRIS, the utilization as well as the benefits of such systems will only improve as time goes by. Human Resource Information Systems are rapidly becoming vital to the successful and skillful operation of the modern organization. The development of computerized HRIS has taken various directions over the years, and the use of such systems differs between one organization and another; however, with the positive leaps in technology to be experienced in this new millennium combined with those currently being researched, the usefulness, efficiency, and necessity of HRISs will only increase as can be seen by the data collected for this study.

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46 Journal of Management Policy and Practice vol. 14(3) 2013 Lepak, D., Marrone, J., Takeuchi, R. (2004). The relativity of HR systems: conceptualizing the impact of desired employee contributions and HR philosophy. International Journal of Technology Management, 27, 6/7, 639.

Lewis, A. (2000, September 28). You’ve got to hand it to them. People Management, 6, 19, 47.

Logue, A. (2004, October). What’s ‘just right’ for you? HR Magazine, 49, 10, 78-83.

Meade, J. (2001, July). Big-time HRIS for smaller companies. HR Magazine, 46, 7, 127.

OConnell, S. (1995, June). Does a higher price mean a better product? HR Magazine, 40, 7, 32.

Palvia, P., Sullivan, S., Zeltman, S. (1993, June). PRISM profile: an employee-oriented system. HR Focus, 70, 6, 19.

Questions to ask before you outsource any HRIS (2002, February). HR Focus, 79, 2, 5.

Roberts, B. (1998). The new HRIS: Good deal or $6 million paperweight? HR magazine, 43, 2, 40-44.

Roberts, B. (1999, June). Who’s in charge of HRIS? HR Magazine, 44, 6, 130.

Roberts, B. (2000). HR-specific standards may speed data exchange. HR magazine, 45, 6, 183-186.

Salopek, J. (1999, July). Ethics: whys and wherefores. Training & Development, 53, 7, 10.

Self service: staff helpings. (2005, September 14). Employee benefits, 51.

Stroh, L., Grasshoff, S., Rude, A., Carter, N. (1998). Integrated HR systems help global leaders. HR Magazine, 43, 5, 14-17.

Ten questions to ask about HR ASP security (2002, May). HR Focus, 79, 5, 13.

The best HR software now (2001, March). HR Focus, 78, 2, 11.

The truth about leveraging HR information services (2000, June). HR Focus, 77, 6, 11.

Top HRIS challenges (2002, October). HR Focus, 79, 10, S1.

Totty, P. (2001, August). Human resource information systems. Credit Union Magazine, 67, 8, 53.

Treen, D. (2001). The HR challenge for the high-tech start-up. Ivey Business Journal, 65, 3, 10-12.

Trends to watch in HR technology (2003 July). HR Focus, 80, 7, 6.

What are the top HRIS issues in 2003 (2003, May)? HR Focus, 80, 4, 3.

Journal of Management Policy and Practice vol. 14(3) 2013 47 TABLE 1 BEFORE AND AFTER RESULTS OF HRIS IMPLEMENTATION

BEFORE HRIS AFTER HRIS HR ACTIVITY IMPLEMENTATION IMPLEMENTATION

EMPLOYEES REQUIRING ON 22% 6% THE JOB TRAINING

EMPLOYEES REQUESTING 7% 2% REASSIGNMENT

EMPLOYEES QUITTING THEIR 13% 8% JOB

EMPLOYEES SUCCESSFUL AND EFFICIENT IN HANDLING THEIR 78% 91% JOB

EMPLOYEE SATISFACTION ON 66% 84% JOB

TASK-RELATED EMPLOYEE 56% 23% GRIEVANCES

EMPLOYEES SUCCESSFUL IN 46% 68% THEIR JOB AFTER TRAINING EMPLOYEE MISTAKES / ACCIDENTS COMMITTED ON 16% 5.4% THE JOB

INCREASED EMPLOYEE 78% 89% PRODUCTIVITY

EMPLOYEE ABSENTEEISM 13% 7.9%

EMPLOYEES CARRYING OUT 92% 97% TASKS CORRECTLY

ALLOCATION OF EMPLOYEES 8.5% 3% TO THE WRONG JOB

48 Journal of Management Policy and Practice vol. 14(3) 2013 TABLE 2 RESEARCH HISTORY OF HRIS

Type of study Summary Source

Beginning of Discussions on the beginning of the HRIS implementation of HRIS Cottrel & Robertson, 1987 The role of HRIS is discussed Pasqualetto, 1988 Discusses connectivity and connection issues Radford, 1988 Privacy Concerns over effective privacy Bland-acosta, 1988 Noe et al, 1994; Shearer and Steps that Companies Should Take to Winter, 1992; Moulton, 1986; Secure an HRIS Adams, 1992 Privacy concerns such as who can access, change, or modify the database Myers, 1988 Gratton, Hope-Hailey, Stiles, & Competitive Developing sustainable competitive Truss, 1999; Losey, 1999; advantage advantage Pfeffer, 1994; Noe et al, 1994 HRIS is now used not only for Broderick and Boudreau, 1992; administrative purposes but also for Kossek et al., 1994; Kovach et strategic and business decision- al., 2002; Weick, 1979; Strategic making purposes Wilkerson, & Paul, 1985 Executive decision-making, employee training, technology selection, interdepartmental integration, and organizational DeSanctis, 1986; Haines, & Petit, Executive reporting structures 1997; Richards-Carpenter, 1996 Recommends that employers in both the public and the private sectors Shearer and Winter, 1992; Legal have a policy of "no comment" Briody, 1999 Support Discusses use of HRIS to support functions daily human resource management Ball, 2001 Showed that smaller organizations are less likely to use HRIS Martinsons 1994 Discusses hardware and software Technology changes Cottrel & Robertson, 1987 Technology has made it easier and cheaper for human resource managers to gather and maintain an infinite amount of data Hubbard, 1998 Technological and intellectual innovations Cascio, 1998; Robbins, 1998 Haines, & Petit, 1997; Richards- Carpenter, 1997; Simon, & Discuss changes in technology Werner, 1996

Journal of Management Policy and Practice vol. 14(3) 2013 49

Entrepreneurial Motives and Performance: Evidence from North America

Jean-Charles Cachon Laurentian University of Sudbury

José Barragan Codina Universidad Autonoma de Nuevo Leon

Cristina Eccius-Wellmann Universidad Panamericana (Guadalajara)

Egbert McGraw Université de Moncton

Daniel A. Myers University of Western Kentucky

INTRODUCTION

The purpose of this article was to report on two research issues. The first issue was to verify empirically in which aspects entrepreneurial motives and performance expectations and subjective evaluations were similar or different between Canada, Mexico, and the United States of America. The second issue was to verify if the instrument previously developed by Benzing, Chu and Kara (2009) and by Robichaud (2011) and Robichaud, Cachon, and Haq, (2010) would be reliable when used in these three different countries. The originality of the present research lies in the use of an instrument already proven to have worked satisfactorily in Asian countries (Benzing, Chu and Kara, 2009) and in Canada (Robichaud, 2011; Robichaud, Cachon, and Haq, 2010). Another original aspect of this research is the size of the sample, which includes a total of 1,272 respondents, of which 375 were from Canada (the four Atlantic Provinces

50 Journal of Management Policy and Practice vol. 14(3) 2013 and Ontario), 278 from Mexico (states of Jalisco and Nuevo Leon), and 619 from the U.S.A. (Illinois, Kentucky, and Tennessee). It is particularly noteworthy to acknowledge that empirical studies of entrepreneurs are not as abundant in Mexico as they are in the U.S. or Canada. As the literature review will show, most of the research relevant to entrepreneurial motivation in Latin America is based on macroeconomic data and government surveys. The data gathering process involved six teams of researchers from the three countries. These researchers were involved in a five-year consortium funded by the governments of the three NAFTA countries. One objective of the project was to research entrepreneurs identified with particular minority situations, such as women, Indigenous peoples, immigrants, and minorities specific to some countries such as French Canadians and rural business people. Results regarding these groups are expected to be presented separately, as the present report deals only with the motives of the general groups. As the literature review will indicate, previous research on entrepreneurial motives had identified the necessity to investigate in further detail various contexts in which business creation was occurring (Carsrud and Brannback, 2011). In terms of motives, the dichotomy between intrinsic and extrinsic motives had proven of particular interest in the literature (Robichaud and McGraw, 2008). The theoretical framework for this research includes six components, of which four are measured by the instrument, i.e. the Motives of the entrepreneurs, the Barriers they faced, the Success Factors involved, and the Performance Expectations and Evaluations entrepreneurs were contemplating.

LITERATURE REVIEW

The review below starts by examining the fundamental psychological aspects of Motivation as a general human behavior research problem. A second section reviews experimental psychology and links motivation theories to the literature in organizational behavior, management, and entrepreneurship. The third part reviews motivational aspects specific to entrepreneurship.

Psychological Foundations of Motivation Theory Psychologists define the study of motivation as the inquiry into human thought and behavior. The purpose of motivation research is to identify why people think and act the way they do, given a number of external factors that affect them. Psychological theory considers motivation as a problem divided into two parts, the first one being triggering the activation of behavior, the second one being the direction of behavior. Psychologists have recognized that all the complexities related to motives and their interactions amongst organisms are not a completely understood phenomenon (Deese, 1967). These observations were considered as being particularly true for human motivation. Behavior activation involves the satisfaction of biological needs, while cognitive needs give behavior a direction. Behavior activation is described as a response of the cells in the central nervous system to either a) internal or external stimuli or, b) to internal central nerve cell activity. Biological needs such as hunger also provoke arousal. Such arousal to activity contrasts with a previous state of rest. Physiological needs and instincts have been documented by psychologists to produce specific responses (Beach, 1948, 1955; Tinbergen 1951; Lorenz, 1966). Explaining the activation of behavior was only able to describe its physiological triggers. Explaining the direction of behavior, however, is the most complex part as it involves cognitive needs or motives. These motives, which form Motivation as a general construct, derive in part from 1) physiological stimuli or variables (genes, hormones, brain and other stimuli) and 2) from psychological variables which are dependent from experience and learning. These psychological variables are learned and include social learning, cultural learning, expectancies of outcomes, as well as negative and positive reinforcers (incentives or disincentives to act in a specific way). Zimbardo (1985) summarizes the role of motivation as a set of intervening variables between a range of stimuli inputs belonging to the two categories of variables mentioned above (physiological and psychological), and a number of possible actions, «response outputs», or «behavioral responses». These

Journal of Management Policy and Practice vol. 14(3) 2013 51 behavioral responses include, according to Zimbardo, activity within the nervous system, goal-directed or instrumental actions, unrewarded persistence, goal-reaching actions such as consumption, as well as actions which are displaced, disguised, or disruptive. These latter actions can be fantasies and dreams but also accidents, or substitute target actions which are performed in replacement of a course of action that may appear more desirable but is not perceived as being within reach for whatever reason. Psychological theories of motivation have been, for several decades, tested by experimental psychologists. The concepts used as components of these theories have been operationalized into laboratory experiments using animals. Results obtained so far from these experiments are showing the complexity of the decisions relative to motives and expected outcomes from actions.

Experimental Psychology and Applied Aspects of Motivation Experimental psychologists have always been testing their theories on laboratory animals such as rats. In doing so, they have successfully demonstrated that actions (often also labeled as «behavioral responses», Bartoshuk, 1971) are a function of a degree of deprivation. For example, studies were conducted on water deprived rats (Stellar and Hill, 1952, Collier, 1964), as well as food deprived rodents (Miller, 1956, 1957) and pigeons (Megibow and Zeigler, 1968). Conclusions from this body of research were that, on an experimental basis, each deprivation procedure was resulting in a unique type of action. While the degree or the intensity of the response to the stimuli varied, researchers did conclude that deprivation was a powerful trigger for action. Recent research related to food deprivation is showing that complex brain processes are involved among rodents such as rats and mice, where, for example, animals decide whether they are satisfied with a «good enough», rather than a «perfect» outcome (Kay, Beshel, Martin, 2006). In other words, scientists had previously worked with the assumption that rodents aimed at perfect accuracy when identifying a potential food source’s odor. A study by Rinberg, Koulakov and Gelperin (2006) found that laboratory mice allowed to decide how long they would sample an odor chose to reduce the duration to the lapse of time sufficient to make what was labeled as a “good enough” decision, i.e. a reward level corresponding to a lesser amount of effort. In conclusion, it appears that Experimental Psychology has empirically verified two important aspects of motivation, one being the importance of deprivation as a cause for action, the other being that action, or behavioral response, is not a simple reaction to a stimulus or its absence, but rather the result of a decision-making process relative to the nature and the extent of the desired outcome.

General Theories of Motivation During the twentieth century, a number of theories of motivation were developed by psychologists to explain human behavior in general. When researchers tried to explain managers and employees behavior at work, they resorted to several of these theories, in particular the following: A need hierarchy by Maslow (1943), Herzberg’s (1968) two-factor model, as well as McClelland’s theory of the needs for achievement (NAch), affiliation, and power (1961, 1962, 1965, 1968, 1969, 1986), Skinner’s positive reinforcement theory (1953, 1976), and expectancy models related to goal attainment (Vroom 1964, Porter and Lawler, 1968; Campbell et al., 1970). Not surprisingly, researchers in entrepreneurship rapidly adopted these theories as potential explanations for an individual’s choice to become self-employed. In an extensive review of the literature on organizational behavior as it applies to entrepreneurial behavior, Gartner, Bird, and Starr (1992) found that the different categories of motivation theories used to describe organizational behavior came far from addressing the variety of motivational situations involved in the creation of organizations (p. 25). Since then, empirical research on entrepreneurial motives has led to a number of converging conclusions.

Motives Specific to Entrepreneurs Young (1983) and several others (Begley and Tan, 2001) concluded empirical studies of entrepreneurs in various countries across the world with similar conclusions. According to them, people went into self employment for motives which were the result of an interaction with their environment

52 Journal of Management Policy and Practice vol. 14(3) 2013 (Feeser & Dugan, 1989; Scott and Anderson, 1992) and related to personal or economic outcomes (Freytag and Thurik, 2007). Interactions leading to entrepreneurship are social ones, generally revolving around family and work, both often being intertwined: this is the case when the workplace is also a family dwelling or family- owned business, as found in over half of work settings according to a wide array of studies (Stewart, 2003). Strictly work-related social interactions lead to outcomes such as job satisfaction which, not differently from family workplaces, yield both personal and economic outcomes. Personal outcomes have been labeled as self-oriented goals, humane (Freytag and Thurik, 2007), or intrinsic goals. They include the desire to achieve autonomy by taking control of one’s life, an increased sentiment of making personal choices for oneself, and a mix of psychological rewards related to personal satisfaction, personal improvement and growth, doing something you enjoy, or proving yourself to others. Working along with siblings and family members also are expressions of desires driven by the entrepreneur’s work and family environment. Related to this latter intrinsic goal are altruistic goals such as providing jobs for their family, as well as securing as much as possible the long-term existence of employment for its members, for example by transmitting the business to them after retirement or securing the longevity of the business. Altruistic motives may also be directed towards non-family members when entrepreneurs decide to pass on the firm to associates and employees. Family business statistics have shown an attrition rate of about fifty percent for each generation, therefore creating a vast amount of family businesses that either disappear or become owned by non-family members. Economic outcomes have been described as external, performance, or extrinsic goals. They comprise various levels of monetary rewards. The most basic one is improving one’s income or personal gain, often where someone becomes self-employed as the result of a social situation of necessity such as losing employment or having a divorce. At a higher level, obtaining some form of economic security in the longer term is a natural extension of the first level similar to the security need in Maslow’s hierarchy. To pursue the analogy, maintaining a level of income that keeps the entrepreneur from being dependent upon a boss leads to the need for independence or personal freedom. In the entrepreneurial situation, this latter motive is directly related to a successful outcome for the business itself, which is growing a business and making it more profitable. Table 1 summarizes both categories of entrepreneurial motives by presenting them according to three stages. The first stage, or basic stage, is related to the motivation of the entrepreneur at the time where the business was created. The second stage, or secure stage, describes the motives in a longer term, i.e. the desire to maintain or secure the durability of the successful outcome achieved by going into business. The perennial stage aims at ensuring the viability of the business beyond the entrepreneur’s desired working life span, or after retirement. TABLE 1 ENTREPRENEURIAL MOTIVES LITERATURE: LEVELS BY CATEGORY - INTRINSIC VS. EXTRINSIC

Level of motive Intrinsic Extrinsic Take control of one’s life, do something you enjoy, and prove Improve or secure income Basic – immediate stage yourself to others (obtain social Secure business ownership status desired) Provide for yourself and (when Secure long term cash flows Secure stage perceived as necessary) for your Secure long term business family in the longer term viability Pass the business on to others Business growth and profits Perennial stage (may be family or not) Equity building

Journal of Management Policy and Practice vol. 14(3) 2013 53 Comparing Motivational Differences Between Countries General Notions Engelen, Heinemann and Brettel (2009) have reviewed an extensive body of research on cross- cultural entrepreneurship. Similarly, Begley and Tan (2001), as well as Freytag and Turik (2007) have compared the environments and determining factors of venture creation in different country settings. The common characteristic of this body of research is that it focuses on a macro-economic orientation. This perspective has indeed confirmed that business creation was a major contributor to job creation, to economic growth (more specifically by high-growth firms), and that it could effectively be encouraged via specific policy measures. However, as Hessels, van Gelderen and Turik (2008) noted, these are not the reasons business people invoke for starting a company. In that respect, the macro approach does not address the micro issue of why people engage into self-employment as individuals, whether they start a venture alone or as part of a team. As observed earlier, entrepreneurial motives are the result of individual psychological processes. In that respect, authors have often cited attitude models such as Ajzen and Fishbein’s (1980), as explanatory of people’s intentions (Krueger and Carsrud, 1993). A number of studies conducted since the turn of the century have tried to compare entrepreneurial motives across various countries and cultures. Results showed that extrinsic economic motives played a major role for becoming self-employed. In Nigeria, Kenya, and Ghana (Benzing, Chu, 2009; Chu, Benzing and McGee, 2007), the necessity to increase the family income was the dominant motivation observed despite ethnic and cultural differences. In a communist country in transition such as Vietnam, Benzing, Chu and Callanan (2005) found entrepreneurs motivated by the need to secure a safer income in the northern region of Hanoi, while those in the more prosperous southern region of Ho Chi Minh City were more likely to pursue personal needs related to achievement and business growth. Studies within countries or regions in transition from communism such as the former Soviet Union and Eastern Europe, as well as some limited areas of China, have shown the importance of the past and present context (Roberts and Zhou, 2000). In particular, past business experience within a given society was suggested to play an important role in the success of post-transition businesses, on a macro level. On a micro level, social networks, previous management experience and informal connections were cited by several researchers as an important set of factors (Kusnezova, 1999; Ledeneva, 1998; Yan and Manolova, 1998), while traditional intrinsic and extrinsic motives were cited across various former communist countries (Smallbone and Welter, 2001; Smallbone et al. 1996, 1999).

Latin America Other countries have been studied where entrepreneurship was seen as the only available option for one’s survival, such as the Philippines (Chu, Leach, and Manuel, 1998), as well as Nicaragua during economic downturns (Pisani and Pagan, 2004). Latin American countries have been cited for entrepreneurial activities both in the formal and informal economic sectors (Pisani and Patrick, 2002; Portes and Schauffler, 1993). In Latin America, the informal sector is often labeled as involving low labor standards and poor working conditions (Galli and Kucera, 2004). As compared to industrialized countries, where on average 10.5% of the population was involved in a formal business in 2008, the proportion in Latin America was 7.7% (Klapper, Amit, and Guillen, 2010). Data regarding the informal sector were much higher in Latin America: Galli and Kucera (2004) reported that informal employment among fourteen Latin American countries increased from 51.8% to 57.7% from 1990 to 1997, while Fajnzylber, Maloney, and Montes-Rojas (2009) considered 50% as the average proportion of micro businesses across Latin America. There is no universal definition of the informal sector (Maloney, 2004). In the Latin American context, the informal sector is generally defined as comprising primarily the self-employed (or single person firms, often family businesses) and microenterprises (also labeled as micro firms or micro businesses with five or fewer workers). Both types of firms are being used as proxy measures of the informal sector (Fiess et al., 2010). A typical feature associated with work in the informal sector is the absence of social and labor protection; hence the dualistic view of a labor market divided into two homogeneous blocs, the formal sector and the informal. In this perspective, the informal sector is

54 Journal of Management Policy and Practice vol. 14(3) 2013 described as stagnant, unproductive and undesirable (Fajnzylber, Maloney and Rojas, 2006), and pervasive across developing countries as well as industrialized ones. For example, sociologists have described self-employed ethnic minorities comprising individuals with insufficient skill sets (illiteracy, lack of numeracy, computer use, and planning skills) and long term unemployment (Li and Dong, 2007; Carrasco, 1999). To the opposite, de Soto (1989) argued that efficient and profitable informal sector businesses were being established to flee from over regulations. In his view, this phenomenon represented a surge of real market forces in Latin America, where governments were described as allowing only privileged elites to partake into the economy under the guise of markets regulation. A growing body of research based upon empirical findings by Fields (1990) confirmed at least in part de Soto’s theory: a somewhat more complex informal sector was uncovered, composed of several differing segments, where most business actors were there voluntarily, particularly during expansion periods of the economy within urban settings (Perry et al., 2007; Fajnzylber, Maloney, and Rojas, 2006; Maloney, 2004 and 1999). Studying four Latin American countries (Argentina, Brazil, Colombia, and Mexico), Fiess and al. (2010) did confirm an expansion of informal business activity during recessions. They also found that a large part of the informal sector had developed due to increased external market demand and internal productivity within the informal sector itself. Comparing the formal and informal sectors in Brazil, Mexico, and South Africa, Bargain and Kwenda (2010) found the upper-tier self- employed earnings from the informal sector significantly higher than those obtained by formal sector workers. However, at the lower end, informal sector earnings were significantly below those from the formal sector.

Motivational Similarities and Differences Between the Three NAFTA Countries Cultural Aspects While there is an absence of literature on the specific topic of comparing entrepreneurial motives across the three NAFTA countries, there is evidence of the presence of two dominant cultures among these countries. In the case of Canada and the United States, the dominant culture is what can be labeled as the North American culture, while, for Mexico, the dominant culture is the Latino-American one, which is common to all continental countries situated south of the Rio Grande. These three countries share in common the fact that they also harbor a variety of minority cultures associated with over a hundred Indigenous peoples, as well as over a hundred and fifty minorities resulting from waves of immigration since European contact in 1492. Despite descriptions of these societies as «multicultural» or as «ethnic mosaics», the reality is that the dominant culture is imposing its modes of thinking and behaving upon society in each country (Guerra, 2005). Mitchell et al. (2000) observed that, while the context of entrepreneurship varies from one country to another, researchers keep finding similarities in the decision making process leading to business creation. In terms of context, Eversole (2003) observes that poverty is a strong motive for people to become self- employed in Latin America. Several researchers such as anthropologists studying peasants have made a distinction between self-employed peasants in rural cities and villages and urban business owners: while the former are viewed as motivated by subsistence (Cook and Binford, 1990; Wolf, 1966), the latter pursue the maximization of their profits, and urban small business owners act as entrepreneurs reinvesting profits (Buechler and Buechler, 1992). In terms of ultimate objectives whether entrepreneurs pursue a growth in their business as opposed to just provide for themselves and their family, Eversole (2003) concludes that such a question may be irrelevant due to the constraints micro entrepreneurs are facing.

Comparisons Between the U.S. and Latin America Zimmerman and Chu (2009) have found many similarities between entrepreneurs in Venezuela and the U.S., including gender proportions, age distribution and average longevity of the firm, as well as differences such as the level of education and a lesser important desire for independence among Venezuelan entrepreneurs. Zimmerman and Chu (2010) also reported that both intrinsic and extrinsic factors came as strong motivators among Venezuelan entrepreneurs. However, these results were based only upon differences between mean scores. Comparisons between Mexico and the U.S. were reported by

Journal of Management Policy and Practice vol. 14(3) 2013 55 Fajnzylber, Maloney and Montes-Rojas (2006) for microenterprises and their patterns of entry, survival and growth. Variables such as age, education and marital status were significantly similarly distributed and the dynamics of the businesses were the same in both countries. Fairlie and Woodruff (2007) obtained the same results, where education was negatively correlated to being self-employed, but positively correlated to being an employer. In other words, in both countries people with a higher education tend to create businesses that are larger and beyond the mere level of self-employment. Moreover, self-employment was viewed very positively in Mexico, even among salaried workers, particularly those with a high education level. Maloney (2004) concluded that, in general terms, the patterns of entry and exit to and from microenterprise were similar between Mexico and the U.S.

Entrepreneurship and Small Business in Mexico There is an abundant recent literature about entrepreneurship and small business in Mexico. Fairlie and Woodruff (2007) describe the country as highly entrepreneurial, with 25% of the workforce being a “self-employed business owner” (see also Reynolds et al., 2002). Not surprisingly, issues observed across Latin America were also present in this country. The poverty phenomenon is, however, unequally distributed across regions and economic sectors. McKinley and Alarcon (1995) reported a wider prevalence of poverty in the states of Oaxaca, Chiapas and Guerrero, in rural areas as opposed to urban, and among agricultural workers and small farmers or “campesinos”. While the agricultural sector contributed 53.4% of the poverty headcount ratio (HCR) for Mexico, in manufacturing, industrial workers contributed to 5.1%, while self-employed workers contributed to only 1.9%. In services, street vendors and domestic workers were the occupations ranked as the poorest by McKinley and Alarcon. A more recent study by Popli (2010) concurred to these conclusions, stressing that self-employed unskilled workers have seen their situation deteriorate further after 1994. As elsewhere in Latin America, where unemployment protection does not exist, self-employment in Mexico often happens as a result of an increase in forced unemployment (Galli and Kucera, 2008; Alarcon and Zepeda, 2004), particularly in rural areas. Using data from Hernandez and Velasquez (2002), Alarcon and Zepeda (2004) reported an increase from 38.4% to 39.2% per cent of the informal (i.e. unskilled self-employed) labor force in the country between 1990 and 2000, a period marked by deteriorating employment conditions. Klapper, Amit, and Guillen (2010) added to the aforementioned (see preceding section) definition of the informal sector that it represented a “shadow economy”. In it, firms can stay small and informal, while evading high marginal tax rates, registration and regulations compliance, but also renouncing the benefits provided to the formal sector: judicial protection, access to formal credit, to government programs, to foreign markets and other elements of the environment likely to help growing the firm.

The Motives of Mexican Entrepreneurs In terms of entrepreneurial motives, Cunningham and Maloney (2001) found that a large majority of entrepreneurs in Mexico were voluntarily in business for two main reasons, one intrinsic (the desire for greater independence), the other extrinsic (seeking higher income). Only a “small minority” were found to be older workers who could not be hired again once they had suffered a job loss for various reasons. More recently, a study by Kantis, Ishida and Komori (2002) which included 700 business people from Mexico, (as well as Argentina, Brazil and Peru) found the following: extrinsic motives cited by more than 50% of the respondents were contributing to society (57.7%), and improving one’s income, while the intrinsic motives most cited were self-actualization (89%) and being one’s own boss (Mexico had the highest proportion for that motive at 80.5 per cent). The Mexican samples were gathered mainly within the two largest urban centers of Mexico City and Guadalajara (Kantis, Ishida and Komori (2002). Other motives reported (all by less than 35% of the sample) were as follows: to become wealthy, to achieve social status, to become a role model (in the media, among friends, within the city or within the family), to follow a family tradition, because of an impossibility to pursue a higher education, and because of being unemployed. Samaniego (1998) found motivational differences between self-employed people with employees and own-account workers. Individuals who created businesses as employers cited insufficient

56 Journal of Management Policy and Practice vol. 14(3) 2013 remuneration as their motive in the highest proportion (40%). The second motive was mentioned by 25% and included business closure, end of contract, dismissal or pension. A third category of motives mentioned were more intrinsic: seeking flexibility, not being subordinated, shorter work hours, being with family. For those who started a business as a sole proprietor and worker, one third reported involuntary reasons such as job termination, but extrinsic factors such as insufficient income still represented 25% of the responses, followed by intrinsic factors. Both the Kantis, Ishida and Komori (2002) and the Samaniego (1998) studies reported higher than average levels of business owners aged above 30, married, male and with a higher education, similarly to the comparisons mentioned earlier between Mexico and the U.S. Kantis, Ishida and Komori (2002) also reported that Latin American entrepreneurs were venturing into entrepreneurship on average at the age of 26, as compared to 33 for East Asians.

THEORETICAL FRAMEWORK

Figure one summarizes the theoretical framework used for this study, which is largely based upon the one developed in Robichaud, Cachon, and Haq (2010). It includes six components, of which four have been measured empirically, both previously and within this study. Two of the components were not measured directly but were inferred from various models in the literature (Ucbasaran, Westhead, Wright, 2001): they are the Business Characteristics specific to each firm, while the Individual and Cultural/Environment Characteristics are specific to people involved with that firm in all the dimensions of their social context. The four components measured in this study are Motivations, Success Factors, Barriers, and Performance. These four sets of factors are consistently reported as being closely related as they form important components of the entrepreneurial process. While some models view Motivations as separate in time from the entrepreneurial process, or “antecedents” (Ucbasaran, Westhead, Wright, 2001), there is evidence that Motivations are related to how entrepreneurs view the performance of their business, in particular what type of outcome they expect on an on-going basis. Several studies have linked motives to business performance in a significant way, particularly in the case of extrinsic motives as opposed to intrinsic ones (Morris et al., 2006; Kuratko, Hornsby and Naffziger, 1997; Naffziger, Hornsby and Kuratko, 1994). The framework presented in this study does not attempt to presuppose what is the level of contribution of each component to business performance. The framework only postulates that it is possible to measure Motivations, Success Factors, and Barriers as contributors or in relation to Performance expectations and subjective evaluations of success.

FIGURE 1 THEORETICAL FRAMEWORK: MOTIVATIONS, SUCCESS FACTORS, AND BARRIERS TO ENTREPRENEURSHIP

Individual and Cultural/Environmental Characteristics

Success Factors Performance

Motivations Expectations and Barriers Evaluations

Business Characteristics

Journal of Management Policy and Practice vol. 14(3) 2013 57 HYPOTHESES

The first research question was about the similarity of motives among business people in the three countries. The literature review led to the following hypotheses about Entrepreneurial Motives. The first hypothesis is that both intrinsic and extrinsic motives will be displayed by entrepreneurs in the three countries. The second hypothesis is that entrepreneurs in Canada and the U.S. will display more similar motives than entrepreneurs in Mexico. The third hypothesis is that there is a relation between the performance expectations considered as important by entrepreneurs and their motives in the three countries. The second research question was about the reliability of the instrument itself across the three countries. As a consequence, a reliability analysis was be used to verify it. Both the Motivation and Performance Expectations scales were tested for reliability, which results are reported below.

METHOD

Instrument The instrument is based upon former research by Benzing, Chu and Kara (2009), Robichaud, Cachon and Haq (2010), and Robichaud (2011). It was tested after having been translated into Spanish (the English and French language versions had already been used and tested). The Motivation scale was modified for the purpose of the present study by the deletion of one item from the twelve-item scale used for Robichaud, Cachon and Haq (2010) – “To be able to use my past experience and training”, and by the addition of seven items from Robichaud (2011) aiming at better measuring other facets of both extrinsic, intrinsic and other motives, bringing the total number of items to eighteen. New extrinsic items were “To acquire a comfortable living”, “To build up equity for retirement”, “To maximize business growth”, “To create my own job”, and “To increase sales and profits”. One item was related to the need for independence: “To make my own decisions”, while “To meet the challenge” was related to intrinsic needs. These statements were based upon a literature review and validated with qualitative interviews by Robichaud (2011). The motivation scale of the instrument could be considered as statistically reliable in terms of internal consistency. The Cronbach Alpha coefficient was .895 and the Guttman Split-Half coefficient was .823. The Motivation scale comprised eighteen variables measured with a five-point Likert scale. An answer of 5 would rate the variable as “extremely important”, 4 as “very important”, 3 as “mildly important”, 2 as “not very important”, 1 as “unimportant”. The extent to which expected performance outcomes were rated by respondents were measured by six variables rated with the same five-point Likert scale described above. These variables are listed in the results section below. Business performance evaluations and expectations were measured with two sets of questions using a five-point Likert scale. Two questions were on Performance Evaluations in general, asking respondents to subjectively rate the level of success of their business (“Unsuccessful”, “Below Average”, “Average”, “Very Successful”, or “Extremely Successful”) and to what extent they were satisfied with their business success (“Very dissatisfied”, “Dissatisfied”, “Somewhat Dissatisfied”, “Very Satisfied”, or “Extremely Satisfied”). Another six questions (also developed and validated by Robichaud, 2011) asked about the Expected Performance criteria preferred by respondents, using the same ratings as the Motivation scale described above. Four of the criteria were intended to be reflective of intrinsic motives (personal satisfaction, achieving a work-family balance, reaching goals, and recognition), the other two, Financial returns and Money drawn from the business, resulted from extrinsic motives. The Expected Performance items formed a scale of six statements which had a Cronbach Alpha coefficient of .72, which represents an acceptable level of reliability.

58 Journal of Management Policy and Practice vol. 14(3) 2013 Samples Selection and Interviews The total number of 1,272 respondents was obtained as follows. In Canada, business lists were obtained from InfoCanada, 3,000 for the Atlantic provinces and 3,000 for Ontario, where 1,002 and 2,544 were contacted by telephone respectively to secure interview participation: 154 agreed to participate in the Atlantic (15.4%), and 221, or 8.4%, agreed to participate in Ontario, for a Canadian total of 375 respondents. Data were collected in May-June 2010 via the Internet in the Atlantic, with «SurveyMonkey», and by telephone in Ontario. In the U.S., 3,530 businesses were contacted in Western Kentucky and the Northern Nashville area of Tennessee, of which 395 participated (11%) in the mail and web survey administered in July-August 2010. Business lists were provided by Chambers of Commerce and local Small Business Development Centers. 2,000 Illinois businesses located outside the Chicago metro area were contacted via a Dun and Bradstreet source, with 224 questionnaires completed (11.2%) by mail in the summer 2010. The total number of U.S. respondents was 619. In Mexico, businesses were visited in person and listings obtained from the local Chambers of Commerce. 278 respondents participated from Mexico: There were 78 respondents in the Guadalajara (state of Jalisco) city area, and 200 in the Monterrey (state of Nuevo Leon) area. Guadalajara had a population of approximately 4.5 million, and Monterrey 3.8 million, when the interviews were conducted in 2010 and 2011.

Data Analyses Data were first coded at each of the six participating institutions then sent to Western Kentucky University for integration, formatting, and final verification. For the purpose of this article, data were analyzed using the SPSS package.

RESULTS

Characteristics by Country Table 1 shows the distribution of respondents by personal and business characteristics for each country. In the three countries, a majority of the respondents had completed a formal higher education, a result consistent with previous research. Age distributions show a higher proportion of younger entrepreneurs in Mexico. In terms of business creation, most of the respondents had started their business, with a higher proportion in Mexico: this might explain the lower experience average among Mexican businesses (10 years as compared to 14 years in Canada and 20 years in the U.S.). The higher proportion of young entrepreneurs in Mexico explains why the average number of years of previous business experience is lower there. Mexican businesses also were more concentrated in large urban areas (Guadalajara and Monterrey). A final question asked respondents was: “In your opinion, what percentage of your sector’s activity is done “underground” or not reported (for income tax purposes for example)”. Table 2 shows that more than half of the Mexican respondents reported some level of underground activity in their sector, more than double the proportions in the two other countries.

Journal of Management Policy and Practice vol. 14(3) 2013 59 TABLE 2 CHARACTERISTICS BY COUNTRY

Canada U. S. A. Mexico Total sample No. % No. % No. % No. % Gender: female 147 40.1 118 20.8 84 30.4 349 28.8 male 220 59.9 450 79.2 192 69.6 862 71.2

Education: High school not completed 33 9 8 1.4 27 9.8 68 5.6 High school diploma 119 32 155 27.4 49 17.8 323 26.7 College/university degree 219 59 403 71.2 199 72.4 821 67.7

Age: 20-29 4 1.1 8 1.4 60 22.6 72 6.0 30-39 44 12.0 46 8.1 51 19.2 141 11.7 40-49 135 36.7 104 18.3 84 31.7 323 26.9 50-59 126 34.2 217 38.2 54 20.4 397 33.1 60 and over 59 16.0 193 34.0 16 6.0 268 22.3

City size: under 25,000 121 32.8 222 39.8 15 6.1 358 30.6 25,000 to 99,999 86 23.3 260 46.5 23 9.4 369 31.5 Over 100,000 162 43.9 76 13.7 208 84.5 446 38.0

Business creation:

Respondent 261 69.6 373 65.3 229 82.7 863 70.6 Acquisition 86 22.9 125 21.9 27 9.7 238 19.5 Inheritance 16 4.3 36 6.3 10 3.6 62 5.1 Franchise 12 3.2 17 3.0 11 4.0 40 3.3 Other 20 3.5 20 1.6

Proportion who started 68 18.3 167 29.4 128 34.6 363 29.9 for economic necessity

Years in business 14.2 years 19.9 years 10.0 years 15.9 years Prior management experience 6.9 years 6.7 years 5.6 years 6.5 years Prior experience in sector 12.7 years 7.6 years 6.3 years 8.9 years

Sector: Retail 104 27.7 111 19.9 59 21.2 274 22.6 Wholesale 15 4.0 27 4.8 71 25.5 113 9.3 Other Services 195 52.0 308 55.2 114 41.0 617 51.0 Manufacturing 38 10.1 56 10.0 21 7.6 115 9.5 Construction 23 6.1 56 10.0 13 4.7 92 7.6

Proportion of unreported or underground activity in your sector: 1 percent to 9% 29 10.0 49 10.1 17 7.1 10-19% 18 6.2 37 7.6 33 13.9 20-49% 19 6.4 33 6.8 46 19.3 50% and over 6 2.0 10 2.0 42 17.7 Total 72 24.6 129 26.5 138 58.0 339 33.5

Total responding 291 100.0 483 100.0 238 100.0 1012 100.0

60 Journal of Management Policy and Practice vol. 14(3) 2013 Motivation Scale Table 3 presents mean scores by each of the eighteen items of the scale by country. Four motivational variables showed no significant mean difference across the three North American countries: “To meet the challenge”, “To increase sales and profits”, “For my own satisfaction”, and “To maintain my personal freedom”. It is notable that three of these variables represent intrinsic motives, while increasing sales and profits is an extrinsic one. In terms of differences between countries, scores obtained in Mexico significantly differed from those obtained in both Canada and the U.S. only with four variables. In three cases, Mexican scores were lower: “Making my own decisions”, “Build up equity for retirement”, and “To have fun”, while in one case the mean score was higher: “Build a business to pass on”. There were ten variables where scores in Mexico were significantly different from those in one of the other countries, four in the case of Canada, eight as compared to the U.S.

TABLE 3 MOTIVATION SCALE MEANS AND STANDARD DEVIATIONS BY COUNTRY

Canada U.S.A. Mexico Motivation variables Mean Std. D. Mean Std. D. Mean Std. D. Make my own decisions 4.46 .793 4.30 .780 4.01 1.067 Acquire a comfortable living 4.33 .800 4.11 .771 3.95 1.001 Build up equity for retirement 4.09 1.067 3.99 .963 3.35 1.246 Maximize business growth 3.87 1.061 3.73 .964 4.07 1.045 Meet the challenge 4.01 .980 3.96 .922 3.90 1.105 Prove I can succeed 4.06 1.043 3.79 1.084 3.77 1.212 Create my own job 4.37 .955 3.89 1.027 4.14 1.077 Increase sales and profits 4.07 1.026 3.95 .918 4.16 .932 Be my own boss 4.42 .885 4.19 .895 4.07 1.126 Increase my income 4.15 1.016 4.06 .842 4.33 .881 Gain public recognition 3.20 1.282 2.57 1.097 2.98 1.274 Provide jobs for family 2.99 1.437 2.46 1.233 3.23 1.234 For my own satisfaction 4.07 .981 4.06 .860 4.25 .959 To always have job security 3.96 1.139 3.61 1.135 4.07 1.019 Build a business to pass on 3.04 1.463 2.89 1.262 3.50 1.236 Maintain my personal freedom 4.07 1.057 4.09 .934 3.93 1.116 Be closer to my family 3.58 1.331 3.40 1.207 3.75 1.284 Have fun 3.71 1.295 3.51 1.173 2.76 1.416

Number of respondents 364 527 261 Mexico: Bolded means represent a significant difference with both Canada and the U.S.; underlined means represent a significant difference with Canada only; italicized means represent a significant difference with the U.S. only. Canada and U.S.: Bolded and italicized means represent a significant difference between these two countries only. Significance levels are all at p<.001 (t-tests for equality of means, 2-tailed).

Motivations – Factor Analyses General Comments Results from the factor analyses for each country appear on tables 4 to 6. Four factors were extracted for each of the three countries. The tables below present results obtained via the principal components analysis method (PCA). Factor loadings considered as strong enough to be included in a factor were those equal to .5 or more. As this method has been contested for not being a “true” method of factor analysis

Journal of Management Policy and Practice vol. 14(3) 2013 61 (Costello and Osborne, 2005), computations were processed with one of the widely accepted FA methods. Results were confirmed with the maximum likelihood (ML) procedure, a classical factor analysis method (Nie et al., 1975). While Costello and Osborne (2005) suggest a threshold of .3 for acceptable loadings, a level of .4 was used here. Results for Canada identified the same variables as components of the four factors. The U.S. data also resulted in identical component variables except for one, “Recognition”, which had a loading of .356 after the ML procedure, as compared to a loading of .491 under the PCA method. This suggested that it could either be kept under less stringent threshold assumptions, or be rejected, at least for the time being. The same set of variables was extracted for Factor 1 within the data from Mexico. Factor 2 retained three of the PCA variables and excluded two (“Be closer to my family” .391 loading; “Have fun” .299 loading); Factor 3 included the four variables found in the PCA solution, as well as Factor 4, with the addition of the “Be closer to my family” variable (.468 loading). Given the existence of previous research using the same scales, it was relatively easy to label the factors obtained. The four factors were labeled as follows: The Extrinsic/Income Factor represented the set of motivational variables associated with monetary gain, either business or personal. The Intrinsic Motives Factor included cognitive variables related to personal motivators. The Independence Factor was made of variables associated with the need for ownership and internal control. Finally, the Family/Security Factor addressed the basic needs related to providing for oneself and one’s entourage.

Comparison Between the Three Countries Among the Canadian respondents, the first factor, which explained almost 44% of the total variance, was the Family/Security Factor, while the Extrinsic/Income Factor came in second place, and explained only 7.6% of the variance. The two other factors explained respectively 7.3% for Independence, and 6.9% of the variance for Intrinsic Motives. Factors 1 and 4 included four variables each, while five variables formed Factors 2 and 3, all loadings being above .5. These groupings confirm those obtained by previous research (Robichaud, McGraw and Roger, 2001; Kuratko, Hornsby and Naffzinger, 1997), except for the prevalence of the Family/Security factor. One variable, “To always have job security” failed to meet the threshold of a .5 level of loading in both the cases of the U.S. (.442) and Mexico (.440); moreover, the variable was crossloading at low levels of .26 to .44 over three factors in both country groupings. In the U.S., two other variables had lower loadings than expected, “Gain public recognition” (.491 and not crossloaded), and “Have fun” (.464 but crossloaded over two other factors at .23 and .33). In Mexico, “Create my own job” was crossloaded on three factors, with a highest loading of .478 on Factor 1, .469 on Factor 2, and .321 on Factor 3. As a result, the U.S. data comprised 15 variables included in the factors, while the Mexican data had 16, as compared to 18 in Canada. In the U.S. and Mexico the first factor was the Extrinsic/Income one, with almost 34% of the total variance explained in the U.S., and 32% in Mexico. While both countries included the same four variables in this factor (“Acquire a comfortable living”, “Increase my income”, “Maximize business growth”, and “Increase sales and profits”), results from the U.S. also included “Build up equity for retirement” as part of this factor, as did the Canadian groups. Independence was the second factor in the U.S. (9.97% of total variance, four variables) and in Mexico (9.49% of total variance, five variables), but the mix of variables was slightly different between the two countries. The three variables with the strongest factor loadings were the same for both countries: “Maintain my personal freedom”, “Make my own decisions”, and “Be my own boss”. In the U.S., a fourth variable which loaded on this factor was “Create my own job”; in Mexico, a fourth variable was “Be closer to my family”, plus a fifth one, “Have fun”. When a first factor analysis eliminates variables from a model due to lower than expected loadings, it is customary to attempt another analysis with only the remaining variables in order to find out which loadings are remaining the same and which ones may have shifted between factors, particularly where there are crossloaded variables. As a result, new principal component analyses were performed with the remaining fifteen variables with the U.S., and sixteen variables with Mexico. The U.S. data revealed the same factors as previously extracted, as well as the same variables, but with slightly higher loadings for

62 Journal of Management Policy and Practice vol. 14(3) 2013 the strongest variables in each factor: for example, loadings for “Acquire a comfortable living” increased from.795 to .803, and from .816 to .833 for “Be my own boss”, in Factors 1 and 2 respectively. The explained variance levels had also increased; up to 35.19%, 11.80%, 10.43%, and 8.70% respectively for Factors 1 to 4 (total up to 66.12% from 60.7%). For Mexico, a new principal component analysis also showed the same variables loading on the same factors, but with one difference as compared with the previous analysis: Factors 2 and 3 now appeared in the reverse order, the Intrinsic factor being now in second position, while the Independence factor was in second position. The explanation for the shift is that a factor’s importance is represented by the total variance it accounts for in the data (Nie et al., p. 477): in the case of Mexico, the variance explained by the Independence factor increased from 9.49% in the previous model to 9.53% in the new model. However, the Intrinsic factor increased its proportion of explained variance from 8.95% to 10.81%. As the proportion of the variance explained by a given factor results from dividing its eigenvalue by the number of variables, it is noticeable here that it is the eigenvalues of both factors that shifted, from 1.611 to 1.729 for the Intrinsic factor, and from 1.709 to 1.524 for the Independence factor.

TABLE 4 MOTIVATIONS – FACTOR ANALYSIS FOR CANADA

Factor 1 Factor 2 Factor 3 Factor 4 Variables Family/Security Extrinsic/Income Independence Intrinsic Be closer to my family .840 .217 .136 .079 Build a business to pass on .772 .194 .105 .146 Provide jobs for family .655 .226 .165 .284 Have fun .643 .107 .213 .234 Increase my income .120 .770 .312 .091 Increase sales and profits .128 .765 .038 .392 Acquire a comfortable living .247 .661 .278 .024 Build up equity for retirement .345 .650 .220 .112 Maximize business growth .198 .643 .116 .488 Be my own boss .087 .198 .833 .135 Make my own decisions .142 .166 .718 .275 Create my own job .198 .248 .650 .223 Maintain my personal freedom .479 .116 .578 .255 To always have job security .450 .412 .551 .110 Meet the challenge .145 .177 .158 .842 For my own satisfaction .247 .049 .210 .716 Prove I can succeed .153 .237 .300 .702 Gain public recognition .424 .285 .203 .510 Eigenvalues 7.913 1.368 1.313 1.242 Explained variance 43.96% 7.60% 7.29% 6.90% Cronbach’s Alpha .817 .848 .843 .761

Journal of Management Policy and Practice vol. 14(3) 2013 63 TABLE 5 MOTIVATIONS – FACTOR ANALYSIS FOR THE UNITED STATES

Factor 1 Factor 2 Factor 3 Factor 4 Variables Extrinsic/Income Independence Intrinsic Family/Security Acquire a comfortable living .795 .321 .008 .105 Build up equity for retirement .780 .136 .005 .107 Increase my income .706 .331 .129 .135 Maximize business growth .693 -.068 .423 .072 Increase sales and profits .641 -.011 .455 .136 Be my own boss .112 .816 .213 .002 Maintain my personal freedom .114 .761 .170 .199 Make my own decisions .215 .695 .106 -.033 Create my own job .186 .531 .475 .147 To always have job security .356 .442 .258 .359 Meet the challenge .220 .054 .786 .058 Prove I can succeed .149 .251 .773 .019 For my own satisfaction -.014 .456 .596 .096 Gain public recognition .188 .146 .491 .169 Have fun -.079 .226 .464 .330 Build a business to pass on .117 .034 .153 .815 Provide jobs for family .097 -.053 .099 .777 Be closer to my family .164 .233 .064 .733 Eigenvalues 6.113 1.795 1.656 1.362 Explained variance 33.96% 9.97% 9.20% 7.57% Cronbach’s Alpha .835 .806 .756 .738

TABLE 6 MOTIVATIONS – FACTOR ANALYSIS FOR MEXICO

Factor 1 Factor 2 Factor 3 Factor 4 Variables Extrinsic/Income Independence Intrinsic Family/Security Increase my income .840 .187 .011 .008 Increase sales and profits .807 .008 .177 .122 Acquire a comfortable living .594 .275 .116 .262 Maximize business growth .537 -.096 .340 .391 Create my own job .478 .469 .321 .040 Maintain my personal freedom .195 .770 .154 .157 Make my own decisions .405 .611 .244 .116 Be my own boss .535 .587 .217 -.099 Be closer to my family .041 .584 -.047 .486 Have fun -.233 .543 .362 .099 Meet the challenge .050 .085 .772 .159 Prove I can succeed .163 .208 .760 .015 For my own satisfaction .207 .195 .619 -.076 Gain public recognition .078 .078 .600 .288 Provide jobs for family .043 .073 .182 .762 Build a business to pass on .037 .099 .087 .733 Build up equity for retirement .427 .084 .006 .521 To always have job security .336 .317 .054 .440 Eigenvalues 5.759 1.709 1.611 1.290 Explained variance 31.99% 9.49% 8.95% 7.16% Cronbach’s Alpha .780 .780 .722 .685

64 Journal of Management Policy and Practice vol. 14(3) 2013 Comparing Factors and Scores While eigenvalues represent the importance of each factor in explaining the total variance related to the variables included in the model, the relative importance of the factors has to be distinguished from the actual importance given by entrepreneurs to the actual motive which is associated to each factor. This level of importance can be computed by calculating the mean scores of the variables that are forming each factor: these results are summarized in table 7. As can be seen, Independence has the highest score in both Canada and the U.S., while Extrinsic/Income motives receive the highest score in Mexico. This is very consistent with the fact that a higher proportion of Mexican respondents have declared they went into business by necessity. The second most important motive for both U.S. and Canadian respondents were Extrinsic/Income reasons, which is consistent with previous studies. In terms of scores, intrinsic motives arrive in second position in Mexico, and in third position in Canada and the U.S., while Family and Security motives are in fourth position in the three countries. Looking at the frequencies histogram for the Family/Security Factor scores, it was found that, while the three distributions displayed an almost perfect Gaussian pattern, except for the Canadian one, which was bimodal: it included a group of 55 respondents with a mean score of 5. There is no doubt that it is this relatively large group of respondents which was the source of the large factor loadings obtained by the variables associated with the Family/Security Factor.

Hypotheses Verification – Motives Two hypotheses were about motives. The first hypothesis was that both intrinsic and extrinsic motives would be displayed by entrepreneurs in the three countries. The data have shown that this was the case, albeit in different ways. Extrinsic/Income motives came with the highest scores among Mexican respondents before Intrinsic motives, while Intrinsic and Extrinsic motives ranked second and third among Canadian and American entrepreneurs. The second hypothesis was that entrepreneurs in Canada and the U.S. would display more similar motives than entrepreneurs in Mexico. This hypothesis was confirmed despite the fact that Canadian respondents displayed a pattern of motives which was slightly different from the two other countries in the factor analysis. In Canada, the first factor was the one labeled as “Family/Security”, which explained 44% of the total variance, as compared to 8.70% and 7.96% in the U.S. and Mexico respectively. However, the data also demonstrated that Canadian entrepreneurs had scored the Family/Security Motive last, as did their counterparts in the two other countries. Canadians were similar to U.S. entrepreneurs in terms of motives by putting Independence first, while Mexicans put Extrinsic Motives first. The Extrinsic/Income factor came a distant second in Canada (7.60%), while it came first in the U.S. (35.19% of the variance) and in Mexico (31.51%). The level of variance explained by the two other motivational factors, Independence and Intrinsic, did not differ greatly among the three countries as compared to the first two factors. Readings were as follows, for Independence, 11.80% for the U.S., 9.53% for Mexico, and 7.29% for Canada; for Intrinsic, 10.43% (U.S.), 10.81% (Mexico), and 6.90% (Canada). The similarity of the results between the U.S. and Mexico also contradict those from an earlier study by Kantis, Ishida and Komori (2002, p. 16), which identified the desire for independence to be extraordinarily high in Mexico as compared to other regions in the world.

Journal of Management Policy and Practice vol. 14(3) 2013 65 TABLE 7 MEAN SCORES FOR MOTIVATION FACTORS

Canada U.S. Mexico Factors Mean St. D. Mean St. D. Mean St. D. Independence 4.25 0.76 4.12 0.71 3.70 .84 Intrinsic 3.84 0.86 3.94 0.78 3.72 .84 Family 3.33 1.11 2.91 1.01 3.37 .93 Extrinsic 4.10 0.78 3.97 0.69 4.12 .74

Performance Expectations and Evaluations Table 8 summarizes the Performance Expectations and Evaluations mean scores obtained within the three countries. Financial returns in terms of profits and sales were the only item showing no significant difference of mean score between any of the three countries. The scores obtained were between 4.24 and 4.37 on a scale maximum of 5; in Canada and the U.S. these scores were the highest among those for the eight performance variables. There were two variables where Mexico differed significantly from the two other countries, with significantly lower scores: “How would you describe your business success?” and “To what extent are you satisfied with your business success?” While results in Mexico were only slightly above the “average” and “somewhat dissatisfied” marks, scores in Canada and the U.S. express more generalized satisfaction (“very successful” and “very satisfied”).

TABLE 8 PERFORMANCE EXPECTATIONS AND EVALUATIONS: MEANS AND STANDARD DEVIATIONS

Canada U.S.A. Mexico Variables Mean Std. D. Mean Std. D. Mean Std. D. Performance Evaluations Business level of success 3.75 .825 3.73 .691 3.43 .769 Satisfaction with bus. level/success 3.94 .898 3.86 .847 3.64 .887 Performance Expectations Financial returns (profits, sales) 4.37 .880 4.25 .730 4.24 .836 Money drawn from the business 3.95 1.100 3.68 .896 3.61 1.111 Achieving work-family balance 3.78 1.131 3.93 .988 4.09 .964 Reaching personal or org. goals 4.12 .932 3.97 .883 4.34 .801 Being recognized by clients 3.84 1.104 3.36 1.209 3.74 1.149 Personal satisfaction 4.30 .894 4.05 .906 4.21 .907

Number of respondents 374 563 272 Mexico: Bolded means represent a significant difference with both Canada and the U.S.; underlined means represent a significant difference with Canada only; italicized means represent a significant difference with the U.S. only. Canada and U.S.: Bolded and italicized means represent a significant difference between these two countries only. Significance levels are all at p<.001 (t-tests for equality of means, 2-tailed).

66 Journal of Management Policy and Practice vol. 14(3) 2013 The third hypothesis was that there would be a relation between the performance expectations considered as important by entrepreneurs and their motives in the three countries. In order to test this hypothesis, principal components analyses were performed for the six variables measuring the entrepreneurs’ performance expectations in order to examine how they would be distributed between Intrinsic and Extrinsic expectations of performance on the part of the entrepreneurs in each country. Correlations were also computed between the Motive factors and the performance measures as well as the two Performance Evaluation variables that were part of the instrument. These results appear in tables 9 and 10.

TABLE 9 FACTOR ANALYSES ON PERFORMANCE EXPECTATIONS

Canada U.S. Mexico Performance Expectations Extrinsic Intrinsic Extrinsic Intrinsic Extrinsic Intrinsic Financial returns - profits and sales .878 .807 .683 Money drawn from the business .896 .816 .832 Work-Family balance .544 .479 .349 .660 Personal or organizational goals .798 .779 .767 To be recognized .851 .777 .694 Personal satisfaction .841 .792 .842

Eigenvalues 1.808 2.387 1.131 2.453 1.129 2.383

Explained variance % 30.14 39.78 18.85 40.89 18.81 39.71

Cronbach alpha .77 .77 .56 .71 .59 .67

Two factors have appeared in each country, one associated with extrinsic or financial expectations, the other with intrinsic ones. While every country group had both extrinsic variables (“Financial returns” and “Money drawn”) loading together, the “Work-Family balance” variable loaded differently across countries: in Canada, it loaded as expected with the group of intrinsic variables; in Mexico, it loaded with the extrinsic variables, while in the U.S. it was crossloaded below the acceptable threshold on both factors. The factorial model was effective, as it explained 69.9% of the total variance in Canada, 59.7% in the U.S., and 58.5% in Mexico.

Hypothesis Verification – Motivation and Performance In order to verify the third hypothesis, it is necessary to compare results obtained with both Motivation and Performance factors. The comparison is based upon the three correlation tables computed for each country. Positive significant correlations between the four Motivation Factors (Independence, Intrinsic, Family, Extrinsic), the two Performance Expectations Factors (Intrinsic and Extrinsic), and the two Performance Evaluation variables (Subjective Success Evaluation and Subjective Satisfaction Level) would show that the groupings of variables they represent move in the same direction. The verification of this hypothesis had to be conducted in three stages: first, correlations between Motivation Factors and Performance Expectations Factors were examined; secondly, correlations between Motivation Factors, Performance Expectations Factors, and the Subjective Success Evaluation Variable were examined, and third, Correlations between Motivation Factors, Performance Expectations Factors, and the Subjective Success Evaluation Variable were examined.

Journal of Management Policy and Practice vol. 14(3) 2013 67 Correlations Between Motivation Factors and Performance Expectations Factors In the three countries, the four Motivation Factors were positively related to both Intrinsic and Extrinsic Performance Expectations. The only exception was for the U.S., where the correlation between Intrinsic Motives and Extrinsic performance Expectations was close to zero. As it can be expected, in the three countries the correlations ranked highest or second-highest between Intrinsic Motives and Intrinsic Performance Expectations on one side, and between Extrinsic Motives and Extrinsic Performance Expectations on the other (from .355 to .547). In the three countries, correlations with Extrinsic Performance Expectations were much lower with the Independence, Family, and Intrinsic Motivation Factors. Conversely, correlations between these three Motivation Factors were higher with Intrinsic Performance Expectations, except in the case of Mexico, where the Independence and Family Motivation Factors were more strongly correlated with Extrinsic Performance Expectations than with Intrinsic Performance Expectations.

Correlations Between Motivation Factors, Performance Expectations Factors, and the Subjective Success Evaluation Variable In terms of Performance Evaluations, a positive correlation between a Motivation Factor or Performance Expectation Factor and the Subjective Success Evaluation variable would suggest that respondents evaluate their performance positively, or feel more successful, in relation to each category of Motivation Factor or Performance Expectation Factor. In the three countries, respondents motivated by Independence as well as those with an Intrinsic Performance Expectation showed a positive correlation with their evaluation of Success. This indicates that in both cases, these factors were related to feeling more successful. Correlations with the Success Evaluation variable included the Extrinsic Motive in the U.S. and Mexico (.21 and .18), the Family Motive (.19 and .21) in Canada and Mexico, the Intrinsic Motive in the U.S. (.15), and Extrinsic Performance Expectations in Mexico (.24).

Correlations Between Motivation Factors, Performance Expectations Factors, and the Subjective Satisfaction Level Variable The second aspect of Performance Evaluations that was measured was through the Subjective Satisfaction Level variable. A positive correlation between a Motivation or Performance Expectation Factor and the Subjective Satisfaction Level variable would suggest that respondents were more satisfied with their level of success in relation to each category of Motivation Factor or Performance Expectation Factor. In the three countries, respondents with an Intrinsic Performance Expectation showed a positive correlation with their Subjective Satisfaction Level. This indicates that in the three countries business people trying to reach intrinsic goals had a tendency to be more satisfied with their business performance. To the contrary in Canada and the U.S., respondents with an Extrinsic Performance Expectation showed a small negative correlation (-.018 and -.057) with their Subjective Satisfaction Level. Correlations with the Subjective Satisfaction Level variable included the Independence Motive in the U.S. and Mexico (.14 and .15), the Extrinsic Motive in the U.S. (.14), the Family Motive (.18 and .16) in Canada and Mexico, the Intrinsic Motive in the U.S. and Mexico (.16 and .18), and Extrinsic Performance Expectations in Mexico (.19). While the above results do verify the third hypothesis, it is important to determine to what extent and how respondents converged and differed on the relations between their motives and their performance expectations and evaluations. These issues are discussed in the following section.

68 Journal of Management Policy and Practice vol. 14(3) 2013 TABLE 10A CORRELATIONS BETWEEN MOTIVATION FACTORS, PERFORMANCE EXPECTATIONS AND EVALUATIONS FOR CANADA

Intrinsic Extrinsic Subjective Subjective Motivation and Performance Performance Success Satisfaction Performance Factors Expectations Expectations Evaluation Level Independence .399** .399** .129* .098 Extrinsic .382** .537** .067 .061 Family .496** .374** .186** .177** Intrinsic .489** .329** .080 .084 Intrinsic Performance .201** .177** Expectations Extrinsic Performance .037 -.018 Expectations **Significant at p<.01. *Significant at p<.05.

TABLE 10B CORRELATIONS BETWEEN MOTIVATION FACTORS, PERFORMANCE EXPECTATIONS AND EVALUATIONS FOR THE UNITED STATES

Intrinsic Extrinsic Subjective Subjective Motives and Performance Performance Success Satisfaction Performance Factors Expectations Expectations Evaluation Level Independence .341** .121** .155** .138** Extrinsic .286** .355** .208** .142** Family .311** .141** .082 .069 Intrinsic .467** .073 .147** .161** Intrinsic Performance .094* .153** Expectations Extrinsic Performance .081 -.057 Expectations **Significant at p<.01. *Significant at p<.05.

TABLE 10C CORRELATIONS BETWEEN MOTIVATION FACTORS, PERFORMANCE EXPECTATIONS AND EVALUATIONS FOR MEXICO

Intrinsic Extrinsic Subjective Subjective Motives and Performance Performance Success Satisfaction Performance Factors Expectations Expectations Evaluation Level Independence .333** .344** .142* .149* Extrinsic .246** .446** .184** .071 Family .264** .405** .207** .159** Intrinsic .502** .247** .108 .182** Intrinsic Performance .128* .165** Expectations Extrinsic Performance .245** .189** Expectations **Significant at p<.01. *Significant at p<.05.

Journal of Management Policy and Practice vol. 14(3) 2013 69 DISCUSSION

Similarities and Differences Between Canada, Mexico, and the U.S. Subjective Perceptions of Motives and Performance Among Entrepreneurs It is worthy to note that respondents were consistent in their answers by indicating a preference for financial or extrinsic financial expectations when they had extrinsic motives. Conversely, those who had intrinsic financial expectations were also those with intrinsic motives. These results suggest that using subjective measures to evaluate the performance of small and medium-sized businesses can be a way of obtaining conclusive results when trying to compare and match motivational to performance variables. As owners and managers of their firms, for researchers to recognize that entrepreneurs’ real or achieved success may be more subjective than objective, could be the key to unlock the mechanisms of their motives/rewards cognitive system.

Mexico The above results lead to a number of observations about the motives and the attitudes of business respondents in the three countries considered. Mexican respondents rated their success lower than their Canadian and U.S. counterparts, and were also satisfied at a significantly lesser level. Not surprisingly, their performance expectations were not as strictly primarily extrinsic but were a mix of personal or intrinsic as well as extrinsic expectations. This is consistent with the fact that 34.6% of them had started their business due to economic necessity, and that Mexican respondents had significantly stronger motives than their Canadian and/or U.S. counterparts in areas directly or indirectly contributing to secure an income and maintain it. Particularly important for them were Motivation variables such as increasing one’s income, creating one’s job, always have job security and provide jobs for one’s family. Other strong motives of increasing sales and profits and maximizing business growth were consistent with these personal and family-oriented extrinsic motives among Mexican respondents. The burden related to economic survival in an environment devoid of job assistance has the effect of setting aside motives factors such as Independence and Intrinsic, which is also very consistent with the Maslowian hierarchy of needs (basic needs must be satisfied in the long term before one can contemplate satisfying higher-level ones). In terms of performance as it is related to motives, Mexican business people with intrinsic motives did not see themselves as successful as compared to those who were pursuing other motives, whatever they were. To confirm what has been observed above, those with Extrinsic Performance Expectations had the highest association with being successful, as well as those who were motivated by family reasons. These two groups also had the highest association in terms of satisfaction levels. An interesting statistic comparison can be made for Mexico between this research and a previous one (Samaniego, 1998): while the proportion of entrepreneurs motivated by economic necessity was 65% in the late Nineties, the proportion observed in Mexico in 2010-2011 was down to 34.6% in Guadalajara and Monterrey. This comparison must, however, be considered with caution as, like most other studies on Mexican entrepreneurs, the Samaniego (1998) one is based upon macroeconomic statistics (in that case, the 1996 National Survey of Micro-Enterprises and the National Employment Survey for cities of over 100,000 population).

Canada and the U.S. Not surprisingly, Canadian and U.S. respondents rated the Independence Motive as highest and the Extrinsic Motive as second, followed by the Intrinsic and Family Motives. However, in the U.S. the Family Motive appeared unrelated to both their evaluation of success and their level of satisfaction, while in Canada it was the Extrinsic Motive that had no such correlation. These diverging results are consistent with the factor analysis. The Independence Motive was positively related to Success Evaluation, meaning that people motivated by a desire of independence had more of a tendency to feel successful, however only the U.S. respondents also had a tendency to express more satisfaction with their success. In both countries, Extrinsic Performance Expectations were not seen related to actual performance perceptions,

70 Journal of Management Policy and Practice vol. 14(3) 2013 which is consistent with the idea that they represent an obligation if one wishes to remain in business. In both countries, respondents put a positive association between Intrinsic Performance Expectations and their feeling of both having achieved success and being satisfied by it. In other words, extrinsic expectations are a given, while intrinsic ones are the real bonus for being in business.

Instrument Regarding the instrument, it is notable that while reliability levels were highest for Canada, they had a tendency to be lower in the U.S. and Mexico. Factor groupings obtained were very similar to those from previous studies (Kuratko, Hornsby, Nafzinger, 1997; Robichaud, McGraw & Roger, 2001; Benzing, Chu, and Kara, 2009) using the same instrument or similar instruments. This is very encouraging for researchers in the field of entrepreneurial motivation across various countries and cultures.

Other Considerations It must be noted that data from each country comprised sub-samples from two distinct regions. Time and space constraints prevented from reporting on each of the six regions, particularly on specific contextual aspects such as urban as opposed to rural areas (in Canada and the U.S., as most of the Mexican respondents were located in large cities), necessity and opportunity entrepreneurs, gender aspects, and other characteristics such as poverty and other social and demographic descriptors. As most of the published studies about Mexico deal with macroeconomic measures, it will be interesting to examine if new realities are appearing among entrepreneurs in that country through the empirical data obtained in Guadalajara and Monterrey through this study. Several of these potential aspects will be reported upon separately by various teams of researchers from the participating institutions. The data bank obtained through this project is very promising and should provide more fruitful results in the near future.

CONCLUSION

In conclusion this study contributes to the burgeoning and impressive research on entrepreneurial motivation. Our multicounty research endeavor was guided by the need to better understand the multidimensional nature of motivation for business ownership. Findings suggest that entrepreneurial motivation is indeed complex although the motivational constructs of extrinsic, independence, intrinsic and family security were consistently displayed by small business owners across Mexico, Canada, and the United States, similarly to entrepreneurs from other parts of the world. Perhaps more interesting is that the degree of motivation exhibited as well as the linkages to business performance appears to systematically vary across country contexts. Findings underscore and illustrate the importance of multicounty studies in deepening our understanding of motivation and the relationship to business performance in management research.

ACKNOWLEDGEMENTS

The authors thank Professor John Gruidl at Western Illinois University for contributing to the data collected for this study. The authors thank Professor Yves Robichaud from the Faculty of Management at Laurentian University for kindly reviewing and suggesting improvements to this paper, and Christine Tellier, who formatted the final version of this paper. This research was partially funded by the federal governments of Canada, Mexico, and the United States via the North American Mobility in Higher Education Program; it was also partially funded by CGA Canada.

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The Need for Lean Training

Jim Keyes University of Wisconsin – Stout

BACKGROUND OF LEAN MANUFACTURING

Manufacturers have been forced, through competition and the increased competitive awareness of their customers, to continuously improve their operations. These improvements have taken different forms during the past twenty years. Manufacturing Resource Planning, Just-in-Time Manufacturing, Total Quality Management, Theory of Constraints, ISO 9000, Cellular Manufacturing, World Class Manufacturing and Six Sigma are some of the more popular implementation strategies companies have adopted. However, the end mission of each of these programs has been relatively the same: to improve the operation and in turn to enhance the manufacturer’s profitability. Lean manufacturing is a current manufacturing strategy that has gained prominence and has been shown to deliver results. Lean is a war against waste of both manufacturing inefficiencies and underutilization of people (Bodek, 2004). Lean manufacturing, as it is generally understood today, was developed and implemented in Japan during the 1950s with the development of the Toyota Production System (Ohno, 1988). Although some aspects of lean had been reported by some authors such as Hall (1983) and Schonberger (1982), it was brought to light in the United States with the book The Machine That Changed the World, which popularized the terms “lean production” and “lean manufacturing” (Womack, Jones, & Roos, 1990). During the past two decades, many manufacturers have implemented lean manufacturing as their primary source of process improvement. Lean manufacturing is an operational strategy oriented toward achieving the shortest possible cycle time by eliminating waste (Liker, 1997; Lee, & Allwood, 2003). Lean is focused on meeting customer requirements -- it starts and ends with customer service (Bodek, 2004). The objective is to increase the value-added work by eliminating waste and reducing unnecessary tasks.

78 Journal of Management Policy and Practice vol. 14(3) 2013 DEFINITION OF LEAN MANUFACTURING

Womack et al. (1990) define lean in terms of a manufacturing operation to represent a system that utilizes fewer inputs to create the same or more outputs than those created by a traditional mass production system, while increasing the range and type of goods offered to customers. The benefits of lean manufacturing are generally lower costs, higher quality, and shorter lead times (Liker, 1997). Lean is a process, implementing change and continuous improvement to develop leaner operations. Hines, Holweg, & Rich (2004) indicate that lean is one of the most influential paradigms in manufacturing, providing improvement beyond the original focus, which was on heavy industrial shop floors, to improving the entire business operation. The objective of lean is to improve manufacturing operations, increase productivity, reduce lead time to customers, and reduce costs and improve quality (Sanchez & Perez, 2001). These improvements are achieved by improving product flow, eliminating non-value-added activities, shortening manufacturing lead times, and establishing a process of continuous improvement (Labow, 1999). Simply put, lean manufacturing is about doing more, adding more value to products, improving customer satisfaction and generating additional income while utilizing fewer resources.

ORIGINS OF LEAN MANUFACTURING

Henry Ford, of the Ford Motor Company, and Alfred Sloan, with General Motors, moved manufacturing from a craft industry to a model of mass production in the early part of the twentieth century. In the mid-twentieth century, the Japanese manufacturer Toyota developed an improved production technique known as the Toyota Production System that has now come to be known as lean manufacturing (Womack & Jones, 1996). Henry Ford developed the auto industry during its infancy. His focus was on manufacturing excellence, which led to the development of mass production as a cost reduction strategy. The mass production model that was popularized in the automobile industry during the 1920s was quickly adapted in nearly every industrial sector in North America and Europe (Womack et al., 1990). Mass production was developed as a result of Henry Ford’s effort to create true efficiency, developing and using the best methods possible, leading to the assembly line model of manufacturing (Ford, 1926). Following World War II, the Japanese industrial base needed to redevelop itself. It had been decimated by the war efforts and its productivity was far behind the United States. Toyota identified their mission to catch up with American productivity within three years. At that time, American manufacturers were nine times more productive than their Japanese counterparts (Ohno, 1988). Taiichi Ohno is credited with developing the Toyota Production System, which focused on waste reduction and was the genesis of lean manufacturing. Using waste reduction as the tool to lessen the productivity gap between Japan and the United States, Toyota developed many of the techniques that are now associated with lean manufacturing. Toyota did not have the resources or market share that Ford enjoyed, so they needed to develop tools to provide them with a competitive advantage. The techniques and tools Toyota developed have become synonymous with lean manufacturing: kanban, methods for pull scheduling, mistake proofing, just-in- time inventory delivery, asking why five times for problem solving, and kaizen for process improvement. Each of these focuses on waste elimination and represents an alternative model to capital-intensive mass production (Hines et al., 2004). In the period between World War II and the 1970s, these new changes allowed Toyota and other Japanese manufacturers to make great strides in their manufacturing productivity. Soon, the United States was facing tough competition from Asian manufacturers (Hall, 1987). Productivity increased in Japan at a rate 400 percent higher than the United States over the postwar years (Ouchi, 1981). In 1986, Toyota, working in conjunction with General Motors, re-opened an assembly plant in Fremont, California utilizing the Toyota lean principles. The Fremont plant immediately showed the auto industry the difference Toyota techniques could deliver, such as improved productivity, reduction of

Journal of Management Policy and Practice vol. 14(3) 2013 79 defective production and reduced inventory (Womack et al., 1990). Ten years following the Japanese publication date, Toyota Production System was translated and republished in the United States, popularizing the Toyota management tools with United States manufacturers. Following this, The Machine That Changed the World was published in 1990, introducing the term “lean”: Lean production (a term coined by IMVP researcher John Krafcik) is “lean” because it uses less of everything compared with mass production -- half the human effort in the factory and half the engineering hours to develop a new product in half the time. Also it requires keeping far less than half the needed inventory on site, results in many fewer defects and produces a greater and ever growing variety of products. (p. 13)

NEED FOR LEAN TRAINING

Lean manufacturing is implemented in an attempt to reduce unnecessary steps and simplify the movement of materials and information, expecting to reduce waste within the manufacturing system. This reduction of waste improves operational efficiency, which converts into increased opportunities for profitability and an enhanced position among the competition. A survey conducted in July 2003 by DemandStream, a leading supplier of enterprise automation software, indicated American corporations are rapidly adopting lean manufacturing principles in order to insure global success. The study involved approximately 280 manufacturers and indicated that 40% of U.S. manufacturers described lean manufacturing as their primary business strategy. Additionally, the survey stated that 60% have adopted or have taken steps to adopt "continuous flow production" practices in their factories, where machines and operators handle uninterrupted flow of material at a given rate (Society of Manufacturing Engineering, n.d.). Students graduating in business, engineering and technology disciplines will in most cases be employed by manufacturing companies that utilize lean techniques to improve their operations. Providing course work that is dedicated to exploring and practicing lean tools will provide students with a unique set of skills to offer future employers. The graduates of University of Wisconsin Stout in programs of Business, Supply Chain Management, Engineering Technology and Technology Management were surveyed to identify their primary operational strategy of their present employer. This survey of students who graduated from the University of Wisconsin-Stout between 1995 and 2009 was conducted in 2010; they were asked questions related to the operational strategies applied by their employer. The results indicated that a significant number were employed by an entity that used lean as their principal strategy to improve their operations and thus reduce operational costs. The response to the question “Do you currently use lean as a strategy within your organization?” indicated that 48% of the employers use lean, further, 81% reported that using lean had provided a tangible financial return to their organizations (Harvey, 2010). Employers are in a mode of cost management, hiring reduction and are experiencing increased competition. This has lead employers to be all the more selective in their hiring practices. Understanding which operational tools potential employers are using provides an opportunity for higher educational programs to tailor their curriculum to best meet employers’ needs. This will provide students with a competitive advantage as they enter the job market.

DEVELOPMENT OF THE LEAN ENTERPRISE COURSE

The Manufacturing Extension Partnership (MEP) is a nationwide network of not- for-profit centers whose purpose is to provide small and medium sized manufacturers with access to technology for improved productivity. The National Institute of Standards and Technology (NIST) created MEP to serve as regional centers for technology transfer of manufacturing knowledge, with the objective of enhancing manufacturing productivity and technological performance in the United States (Manufacturing Extension Partnership, n.d.).

80 Journal of Management Policy and Practice vol. 14(3) 2013 The Manufacturing Extension Partnership offers a variety of services to manufacturers that allow them to evaluate and implement manufacturing improvement processes. The primary services offered are: environmental friendly manufacturing, growth planning, lean manufacturing, measurement systems, nanotechnology, radio frequency identification, strategic management and quality systems management. The lean manufacturing services offered through MEP focus on producing more with existing resources by elimination of non-value-added activities and creating flow throughout the entire company (Manufacturing Extension Partnership, n.d.). The Northwest Wisconsin Manufacturing Outreach Center (NWMOC), which is the MEP office serving northwestern Wisconsin, has recently developed a successful lean program to provide the training and consultation required for companies to begin their lean transformation. This training program and the associated lean-flow certification program NWMOC offers is the genesis for the lean enterprise course developed for students at UW-Stout. The outline of the NMMOC program is as follows: 1. Established a lean manufacturing implementation team 2. Trained the team members in the principles of lean manufacturing 3. Defined product families for process grouping and work center development 4. Chose a project within the manufacturing process to begin the lean implementation 5. Established goals and benchmarked present metrics

Furthermore, the course development has made use of the five primary elements of lean manufacturing: specifying value, identifying the value stream, flow, pull, and perfection (Womack & Jones, 1996). Specifying value refers to knowing what the customer values in the products they purchase. Value is a product related measure. Value is defined as the activities the customer pays for willingly, because it is truly necessary to solve the problem or required to produce the product (Womack & Jones, 2005). How the product performs, what the product costs, how the product is delivered and how the product is serviced are a few points that may define the value of a product. The value stream is defined by Womack and Jones (1996) as the set of actions required to bring a product through the physical transformations from materials into a salable product. In other words, the value stream is the series of activities or processes supporting the daily production needs of the organization. The crucial element of lean manufacturing is value. Value is defined by the customer. It is expressed in terms of a product that meets the customer’s needs at a specific price and a specific time (Womack & Jones, 1996). Manufacturing has two types of operations, those that add value and those that do not. In the past, using traditional thinking, manufacturers have focused on improving the value-added operations, while allowing the non-value-added operations to continue to exist (Conner, 2001). Lean manufacturing turns this traditional thinking around and focuses on the elimination of wasteful non-value-added operations, resulting in improved value for customers (Sahin, 2000). Non-value-added operations are waste. Waste can be found in excess motion or transportation, excess production, production of defective parts, and underutilization of abilities. Waste includes items the customer neither wants nor expects to pay for (Bodek, 2002).

LEAN ENTERPRISE COURSE OBJECTIVES

The objective of this new course is to provide students the ability to function as a leader with in a lean environment through the understanding and practice of the philosophy, process, people and problem solving systems utilized within a lean enterprise. Upon completion students will be able to: • investigate the systematic differences between mass production and lean techniques • develop a value stream • analyze 5s systems for work place organization • develop quick changeover and set-up reduction techniques • determine lean strategy and justify specific projects • organize project teams

Journal of Management Policy and Practice vol. 14(3) 2013 81 • apply leadership and communication skills to lean management • develop Kaizen activities • identify and calculate Takt time • analyze the benefits of flow processes • develop pull systems for replenishment

SUMMARY

Due to the need to support operations objectives to reduce costs and improve value to customer’s experience companies are implementing lean tools at an increasing rate. To provide relevant and timely education related to the principles and use of these lean tools undergraduate as well as graduate students need to be exposed to lean training prior to leaving campus. This training will likely provide these students with a competitive advantage as they enter the increasingly competitive job market.

REFERENCES

Bodek, N. (2004). Kaikaku: The power and magic of lean – A study in knowledge transfer. Vancouver, WA: PCS Press.

Bodek, N. (2002). Lean manufacturing. Manufacturing Engineering, 129(3), 17-18.

Conner, G. (2001). Lean manufacturing for the small shop. Dearborn, MI: Society of Manufacturing Engineers.

Ford, H. (1926). Today and tomorrow. Garden City, NY: Doubleday, Page & Company.

Hall, R. W. (1983). Zero inventories. Homewood, IL: Dow Jones-Irwin.

Hall, R. W. (1987). Attaining manufacturing excellence. Homewood, IL: Dow Jones-Irwin.

Harvey, T. K. (2010). Assessing the Percentage of Business and Industry Utilizing Lean Strategies Where University of Wisconsin-Stout Graduates are Employed. Retrieved October 15, 2011, from: http://www2.uwstout.edu/content/lib/thesis/2010/2010harveyt.pdf

Hines, P., Holweg, M., & Rich, N. (2004). Learning to evolve: A review of contemporary lean thinking. International Journal of Operations & Production Management, 24(10), 994-1011.

Labow, L. (1999). The last word: On lean manufacturing. IIE Solutions, 31(9), 42-46.

Lee, W. L., & Allwood, J. M. (2003). Lean manufacturing in temperature dependent processes with interruptions. International Journal of Operations & Production Management, 23(11/12), 1377-1401.

Liker, J. (1997). Becoming lean: Inside stories of U.S. manufacturers. Portland, OR: Productivity Inc.

Manufacturing Extension Partnership. (n.d.). Retrieved July 21, 2005, from: http://www.mep.nist.gov

Ohno, T. (1988). Toyota production system: Beyond large scale production. Cambridge, MA: Productivity Press.

Ouchi, W. (1981). Theory Z. Philippines: Addison-Wesley.

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Sahin, F. (2000). Manufacturing competitiveness: Different systems to achieve the same results. Production and Inventory Management Journal, 41(1), 56-65.

Sanchez, A. M., & Perez, M. P. (2001). Lean indicators and manufacturing strategies. International Journal of Operations & Production Management, 21(11), 1433-1452.

Schonberger, W. (1982). Japanese manufacturing techniques. New York: The Free Press. Society of Manufacturing Engineers. (n.d.). Retrieved May 24, 2006, from: sme.org/cgi-bin/get- press2003

Womack, J. P., & Jones, D. T. (2005). Lean solutions. New York: Free Press.

Womack, J. P., & Jones, D. T. (1996). Lean thinking. New York: Simon & Schuster.

Womack, J. P., Jones, D. T., & Roos, D. (1990). The machine that changed the world. New York: Macmillan Publishing Company.

Journal of Management Policy and Practice vol. 14(3) 2013 83

Servant Leadership and Public Administration: Solving the Public Sector Financial Problems Through Service

Robin B. Weinstein Wilmington University

INTRODUCTION

The recession that began in December 2007 has affected every sector of the economy, including the public sector. Since 2009, all levels of government are dealing with declining revenues and increasing fixed costs, leaving many policy makers in a quagmire as to how to overcome the fiscal realities facing budgets ("The fiscal survey of states," 2009; Hogler & Henle, 2011). The recession is particularly devastating to state and local entities, which are many times required by legislation to have a balanced budget (Befort, 2011). The choices facing policy makers have great implications on the services provided to their citizens, as well as each citizen’s tax responsibility. One of the chief concerns for policy makers as they seek to balance their budgets is the cost of employees (Befort, 2011; Hogler & Henle, 2011). Within the public sector, a significant portion of employee costs is regulated by collective bargaining agreements. In 2011, there were approximately 7.56 million unionized public sector employees in the United States, which represents 37% of the total unionized workforce in the nation (Greenhouse, 2012). Although this number has decreased due to layoffs happening throughout the public sector, the number of unionized employees has presented unique public policy challenges to lawmakers. Governments have implemented layoffs, furloughs, wage freezes, and hiring freezes, along with other measures in an effort to balance their budgets (Befort, 2011). Traditionally, terms and conditions of employment are negotiated in the collective bargaining process. However, the economic hardships facing state and local governments have caused some states to bypass collective bargaining through the legislative process (Fisk & Olney, 2011; Hogler & Henle, 2011). Normally, an employer is prohibited from making unilateral changes in the terms and conditions of employment in a unionized environment; however, when the employer has legislative authority and makes changes through the legislative process, then it has the ability to make unilateral changes in employment (Befort, 2011). According to Befort (2011), if the state is not classified as an employer under the applicable state statue, then they are only bound by the contract clause in the United States

84 Journal of Management Policy and Practice vol. 14(3) 2013 Constitution. The United States Supreme Court has upheld a state’s ability to supersede contracts when it is in the best interest of the public. Accordingly, there are states that have taken the opportunity to unilaterally alter the terms and conditions of employment, fostering an adversarial relationship between public sector employees and their employer, in addition to villianizing employers in the political process (Fisk & Olney, 2011). Some argue that the unilateral actions of states are not necessary, but spurred by political agendas (Fisk & Olney, 2011). Nonetheless, the impact of these debates may have increased the divide between employees and management, thereby greatly reducing the ability to foster cooperative action between the unions and lawmakers. Fisk and Olney (2011) do not believe that collective bargaining is the problem affecting states. Rather, collective bargaining could be a source of solutions if done properly. This paper seeks to explore whether the servant leadership management paradigm would be applicable in the public sector, specifically in addressing the fiscal challenges facing state and local governments and their correlating relationship with unions. Could servant leadership foster innovative collaboration between policy makers and unions that create solutions to the budgetary issues facing governments, without vilifying either side or taking unilateral actions? Servant leadership is a management paradigm, which is emerging throughout literature and in application in various organizations worldwide. Proponents of the servant leadership model state that it has universal applicability across cultures, religions, and organizational models. The servant leadership model fills the void of morality that some suggest exists in other leadership paradigms. The servant leadership concept, while not explicitly stated, is derived from a Judeo-Christian foundation (Kezar, 2001; McCuddy & Cavin, 2008; Sen Sendjaya & Sarros, 2002), the concept rooted in Jesus Christ’s teachings to his disciples that, in order to be a leader, one must be a servant. Building on this foundation, proponents of servant leadership assert that leaders motivated by an intrinsic desire to serve have a positive effect on his/her followers, as well as the organizational health and success (Sen Sendjaya, Sarros, & Santora, 2008). Unionized organizations must address a variety of issues that arise in the workplace which do not exist to the same level in non-union counterparts. Specifically, the union-management relationship within a unionized context may be frequently described as adversarial. The adversarial nature of the relationship between union and management derives from the process in which unions are formed, as well as from the collective bargaining process – from development to implementation. At the bargaining table, in which union and management work to reach an agreement on terms and conditions of employment, there are often competing forces at play which cause an adversarial tension. Over the long-term, this tension has the ability to erode trust in the other party, thereby expanding the divide between union and management interests. When trust erodes between the parties, it has the potential to polarize the positions that each party represents, which in turn creates conflict. Each party is concerned with avoiding the perception of appearing weak because of their need to satisfy the goals of their constituents. A unionized workforce, like all other organizations, requires trust as a means of advancing the overall goals and objectives of the organization. However, in an adversarial environment, the development and maintenance of trust proves difficult. When trust is lacking it can result in strikes, excessive grievances, and arbitrations. This is costly for both the union and the organization. Without trust, both sides may utilize power in an attempt to avoid the appearance of vulnerability in response to the motives and actions of the other party. This paper hypothesizes that servant leadership has the ability to transform the union-management relationship in the public sector from adversarial to cooperative by fostering an environment of trust. As both seek to trust the other side, open communication can occur without hidden agendas. Each side, in trusting the pure motives of the other, is able to seek to achieve broad organizational goals that would benefit both the employee and the employer. Applying the servant leadership paradigm in the public sector may improve the long-term union-management relationship, thereby creating an environment no longer characterized as adversarial, but an environment that fosters teamwork and innovation among parties for the common good.

Journal of Management Policy and Practice vol. 14(3) 2013 85 THE ROLE OF TRUST IN ORGANIZATIONS

Trust is the foundation of all positive human interactions, whether it is in the purview of one’s home or workplace. Trust is what allows for both short-term and long-term human interactions, which advance common goals and objectives. In a rapidly changing economic landscape, trust is needed to allow for businesses to remain competitive by fostering an environment of collaboration and engagement (Reina & Reina, 2006). Kramer and Lewicki (2010) define trust as “a psychological state characterized by several components, the most important of which is some sort of positive expectation regarding others’ behavior” (p. 247). Trust promotes openness through mutual vulnerability in believing that one’s motive is positive and altruistic. Trust has been demonstrated to have a relationship with organizational success. Tony Simon’s (2002) study, “The high cost of lost trust”, demonstrated that hotel workers were more productive and the hotel was more successful when the employees trusted their leaders. The study noted that, when an inconsistency developed between what leaders said and what they did, the employees’ responded through loss of trust, commitment, and dedication (Simons, 2002). Fraser’s (2010) study put forward the most frequently cited factors that lead to a breakdown in trust in an organization: 1. Disrespectful behaviors: discounting people of their contributions, disregarding feelings and input, and blaming other people for problems; 2. Communication issues: not listening to others, not working to understand the other party, and breakdown in communication around major changes; 3. Unmet expectations: broken promises, breaches in the psychological contract, breach of confidentiality, and breach of rules; 4. Ineffective leadership: punishing those who challenged authority, poor decisions, favoritism, or unwillingness to address major issues; 5. Unwillingness to acknowledge: taking no responsibility for mistakes or issues, not owning issues or the violation itself, placing self before the group; 6. Performance issues: unwilling or unable to perform basic job duties, making mistakes, issues of general competence; 7. Incongruence: misaligned with or not honoring core values, mission, practices; actions do not match words; and 8. Structural issues, including changes in systems and procedures, lack of structure or too much structure, and misalignment of job duties and authority.

These factors will erode trust over time, making it difficult for employers to inspire a cooperative environment because it will lead to higher employee turnover and lower productivity (Reina & Reina, 2006; Simons, 2002). This has led for some to call for new methods in building and maintaining trust in the workforce (Olekalns & Smith, 2008).

Leadership and Trust The servant leadership paradigm evolved from the transformational leadership paradigm, which dominated most of the latter part of the 20th century. Transformational leadership involves engaging managers in actions designed to enlist subordinates as partners in organizational objectives (Burns, 1978). The behaviors which foster this type of leadership emerge from within the leader, rather than as a reaction to the actions of the subordinate (Bugenahagen, 2006). The behaviors that support the transformational leadership concept include: idealized influence, inspirational motivation, intellectual stimulation, and individual consideration (Avolio, Waldman, & Yammarino, 1991). Each of these behaviors is designed to invest in subordinates who will then invest themselves into the organizational goals and objectives. This leadership model recognizes personnel as resources of the organization through the creation of a participatory management philosophy. One of the critiques of the transformational model of leadership is that, while it may spur organizational transformation, it does not encourage trust in the organization or the leader (Ekvall, 1991).

86 Journal of Management Policy and Practice vol. 14(3) 2013 Joseph and Winston (2004) state that the “relationship between leader behavior and organizational behavior is well established” (p. 8). The lack of trust is hypothesized to be related to the focus of the leader. In the transformational model of leadership, the focus is on the organization and the leader’s objectives; whereas, “servant leaders focus more on the people who are the followers” (Stone, Russell, & Patterson, 2003, p. 349). According to Washington et al. (2006), “honesty and integrity build trust, which is an essential component of servant leadership and is critical in establishing credibility of servant leadership” (p. 710). Under the pure transformational leader model, employees may distrust the leader; they may perceive that his or her investment in them as people is only being done to advance his or her agenda and organizational objectives (Whetstone, 2002). Transformational leaders are prone to self-aggrandizement and may take credit for the work of their followers. While the environment fosters creativity and commitment, it may either create an amoral environment at best and at worst an immoral environment in which fear and distrust permeate the culture (Whetstone, 2002).

Servant Leadership and Trust Robert Greenleaf recognized that the transformational leadership model was lacking in moral and ethical motivations which would promote long-term trust among members of the organization (Farling, Stone, & Winston, 1999). While both the transformational and servant leadership models promote organizational success through investment in the followers, for Greenleaf the distinction is motivation: The servant-leader is servant first. It begins with the natural feeling that one wants to serve. The conscious choice brings one to aspire to lead. The best test is: do those served grow as persons; do they, while being served, become healthier, wiser, freer, more autonomous, more likely themselves to become servants? (Greenleaf, 1998, p. 1)

The servant leadership model evolved from the understanding that, while the transformational model of leadership proved effective in bringing forth tangible results, it did so at the expense of organizational trust because of the perceived motivation of the employer. The servant leader places ultimate value on the human component of an organization and seeks to improve the lives of the employees, without any other motive (Smith, Montagno, & Kuzmenko, 2004). The leader recognizes that, by serving the members of the organization, it “will carry [him/her] beyond the material rewards otherwise proffered to the mere job holder” (Kalwies, 1988, p. 117). The motivation of the servant leader is what sets his/her management approach apart from other leadership styles (Smith et al., 2004). According to Kent Keith (2008), Executive Director of the Greenleaf Center for Servant Leadership, servant leaders “are motivated to make life better for others, not just for themselves” (p. 10). In turn, a work environment grounded in self-sacrificial service will spur greater innovation and productivity because it creates an environment in which a follower is a partner in the organization’s success (Graham, 1991; Greenleaf, 1998; Keith, 2007). The leader engaging in the servant leadership model does so because it is morally right to invest in other people, while the transformational leader invests in others because it is the right choice for the company. The servant leader appears to be guided by a higher sense of calling rather than organizational commitment. In turn, proponents of servant leadership suggest that the sacrificial servant leader investment in human capital will meet and exceed the financial goals of the organization and will have a multiplier effect in creating other servant leaders. The emphasis is not on the return to the organization, but the growth of individuals. The altruistic nature of servant leadership has led some to believe that this leadership paradigm has the ability to create and support trust within an organization. In Joseph and Winston’s (2004) study analyzing the correlation between servant leadership, leader trust, and organizational trust, they draw the conclusion that servant leadership positively impacts followers’ levels of trust in their leaders and the organization practicing this paradigm of leadership.

Journal of Management Policy and Practice vol. 14(3) 2013 87 Organizational Trust in the Context of Collective Bargaining Collective bargaining is widely considered an adversarial process in which management and labor unions negotiate various terms and conditions of employment (Jensen, 1963). Unionized governmental entities did not start that way, but through a unionization campaign the workers unite, despite organizational efforts to prevent the unionization of its workforce. Accordingly, the birth of the collective bargaining process within an organization is in an adversarial environment (Chaison & Plovnick, 1986). This adversarial atmosphere will many times persist as both union and management seek to represent their interests. The process of collective bargaining has been characterized by protracted meetings in which each party “tests the position of the other, and if skillful, finds out where the other will settle short of striking or taking a strike” (Jensen, 1963 p.552). Throughout this process, both parties engage intellectual and emotional tactics designed to understand the true position of the other side (Olekalns & Smith, 2008). The extent and degree to which either party utilizes the tactics of deception is correlated with the level of trust that the parties have with one another (Olekalns & Smith, 2008). While the collective bargaining process is inherently an adversarial process, there are proponents that suggest the process does not have to remain this way, but instead can be transformed into a cooperative partnership (Chaison & Plovnick, 1986; Olekalns & Smith, 2008). When unions recognize that the organization is interested in the welfare of the employees, as well as the overall organizational health, then the process can become a means in which both parties seek to aid in the success of the other. Recognizing the symbiotic relationship that union and management have to one another and how this relationship affects overall performance can transform the collective bargaining process into an incubator of organizational development, thus moving beyond the traditional discussions of terms and conditions of employment. However, the transformation of the collective bargaining process requires substantive actions, including the demonstration of a willingness to trust the other side and a commitment to demonstrating that it is worthy of trust. Trust needs to be cultivated before, during, and after the collective bargaining process. Organizations that promote shared sacrifice and shared rewards throughout the structure lend themselves to higher levels of trust in the collective bargaining process (Chaison & Plovnick, 1986). Additionally, Chaison & Plovnick (1986) note that the personalities of those involved in the collective bargaining process are also important in generating a collaborative, trusting environment. According to Washington, Sutton and Feild, (2006) the attributes of a servant leader are directly related to the leader’s values and personality. Russell (2000) notes that the values of the leader “ultimately influence organizational performance” (p. 81). The values of “care for followers, integrity, and competence are all necessary to foster interpersonal trust – an essential ingredient in servant leadership” (Washington, Sutton, & Feild, 2006, p. 701). One of the central arguments in favor of servant leadership is that the values of the leader demonstrated through particular attributes will bring about greater trust, which in turn spurs greater productivity and innovation. Those participating in the collective bargaining process need to have the ability to believe in the sincerity of the other party’s claims in order for negotiations to move forward. Olekalns & Smith (2008) found that, when there are high levels of trust and optimism, there was a decrease in the use of deception during the negotiations. The foundation of one’s ability to ascertain the sincerity of the other is hypothetically correlated to the degree of trust that has been cultivated by each party, which is linked to the values and attributes of the participants.

CONCLUSIONS AND DIRECTIONS FOR FUTURE RESEARCH

The impact of the state governments’ unilateral employment actions in unionized environments erodes the foundation of trust necessary to foster cooperative action between the parties in the collective bargaining process. These actions within the public sector environment have long lasting implications between various constituencies in their respective jurisdictions. Rather than cooperatively facing the fiscal challenges, both sides have vilifying the other, resulting in a loss of trust and productivity. While the unilateral actions of the government may be able to alleviate short-term fiscal issues facing the

88 Journal of Management Policy and Practice vol. 14(3) 2013 jurisdiction, it does so at the expense of trust, which will be needed to address long-term needs. Fisk and Olney (2011) propose that a new plan of action needs to be proposed in addressing the fiscal crisis affecting state and local governments. Might servant leadership be the answer to addressing the concerns facing governments? This paper highlighted the need for continued research and discussion as to the universal applicability of the servant leadership paradigm, specifically within the public sector. A cursory review of the literature does support the idea that the servant leadership paradigm would be applicable in a public sector unionized setting and could provide a relationship of trust to address the problems affecting governments. While initially the implementation of servant leadership may be perceived as a weakness on the part of the party engaging the paradigm, it does have the ability to create sustainable trust within the relationship. If indeed the servant leadership model develops sustainable trust, then it would prove beneficial for both the government and the unions in the collective bargaining process by promoting an environment of open communication and collaborative problem solving. The literature does demonstrate that when there is trust between union and management in the negotiations of collective bargaining agreements, the process becomes less adversarial and more productive in achieving mutual goals (Plovnick & Chaison, 1985). Further research is needed to empirically support the hypothesis that servant leadership could transform the adversarial and protracted nature of the union-management relationship in the public sector. Perhaps the servant leadership model could transform the adversarial nature of collective bargaining into a sustainable incubator of innovation through collaboration, which could address the problems confronting state and local governments.

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Journal of Management Policy and Practice vol. 14(3) 2013 91

Emerging Oligopolies in Global Markets: Was Marx Ahead of His Time?

Jerry Kopf Radford University

Charles Vehorn Radford University

Joel Carnevale Radford University

INTRODUCTION

The implications of globalization and the interconnectedness of firms, capital and people around the world have received extensive discussion over the past couple of decades. While there are different interpretations of the term, “globalization,” this paper uses the definition Harman has in Zombie Capitalism: Global Crisis and the Relevance of Marx “the world, organized according to the free flows of capital, without any intervention by governments” (2010). We are describing globalization as the acts of governments lowering their trade barriers and firms moving from traditional domestic operations to multinational or transnational entities (Johansson, 1994). The globalization movement has been accompanied by an increase in worldwide capitalism and free markets. Most discussions of these trends focus on the benefits of global, capitalistic, free markets. Some of the benefits attributed to capitalism include increases in innovation, competition and efficiency, among other things. It is assumed that global capitalism will create even more efficiencies resulting in lower prices, higher quality, and increased standards of living for countries around the globe (Machan, 2010; Zupan, 2011). Even though free markets have done a great job promoting competition and efficiency over the past 200 years, even the most radical proponents will acknowledge there have also been the potential for negative side effects. In general these fall in two major categories: externalities and the inevitable trend toward monopolies. In national economies these problems have been managed through regulation. What has not been widely discussed is the fact in a global economy these national level regulations lose

92 Journal of Management Policy and Practice vol. 14(3) 2013 their effectiveness and there are not yet any international bodies capable of setting and enforcing international regulations. The purpose of this paper is to examine the trends toward global industry concentration and the implications of the lack of effective global regulators for the global economy. The paper will be separated into five main parts. Part one will review Karl Marx criticism of capitalism, particularly his conclusion that the inevitable result of capitalism is a monopoly. Part 2 will examine Marx’s hypothesis in light of the evolution of capitalism in the United States from the late 1800’s until the mid-1900s. We will describe the circumstances that lead America to enact laws aimed at increasing competition, regulating monopolies and using controlling externalities. Part 3 will then discuss the new era of global industry consolidation that is taking place as competition shits from competition within domestic markets towards global competition. This section focuses on the time period from the mid 1900’s until today. Part 4 will provide a discussion of antitrust laws within a global economy. Part 5 will provide concluding remarks.

LITERATURE REVIEW

Marx Criticisms of Capitalism Marx’s fundamental criticism of capitalism is that capitalism’s greatest strength, the ability to insure that only the most effective and efficient producers survive, is also its greatest weakness because it inevitably leads to monopolies (Dowd, 2002). No matter how many producers there are in a market initially, or how fiercely competitive the market may be, as more innovative and efficient producers drive less innovative and efficient producers out of business, over time the number of producers will decline until eventually the industry becomes an oligopoly and, ultimately, a monopoly. Literature on Marx is very extensive, and encompasses many different conceptual frameworks and quantitative tests. Some of the literature questions the capability and/or sustainability of globalized industry and capitalism. Amin and Luckin (1996) use Marxist analysis in discussing historical capitalism and globalization. They discuss the recent challenges created by globalization and the implementation and functionality of its alternatives. Others, such as Dowd, have recently attempted to modernize Marx literature, emphasizing relevant aspects to current trends in capitalism (2002). Others, such as Friedman in, “The World Is Flat: a Brief History of the 21st Century,” which gives an in-depth analysis on globalization in the 21st century and explains what he considerers to be the “ten forces that flattened the world” (2006), have argued that history has proven Marx wrong. We will attempt to go a step further than Dowd (2002) by hypothesizing that Marx may have been prematurely discredited and that, as history repeats itself on a global basis; his criticisms are once again a major concern.

Historical Synopsis of Monopolies and Antitrust Laws Capitalism has been described as “a system whose specificity by comparison with previous systems lies precisely in the dominance of economic authority, “the law of value not only dictates economic life but all aspects of social life” (Amin & Luckin, 1996). The industrialization of the late 19th century propelled a very capitalistic environment and marked a turning point for the capitalist mode of production. Often referred to as “modern industry”, evolution to the current capitalist system can largely be accredited to establishment of the mechanized factory in the nineteenth century (Amin & Luckin, 1996). One could even argue that with the concentration of power seen among industries during this period, Marx’s concerns for capitalism may have been coming to fruition. By the early 1900s the United States was plagued with monopolies in almost every industry. The explosion of the industrial revolution beginning in the last part of the 18th century produced, among other things, market power never seen before. The growth among firms and industries developed to such an extent that various socio-economic issues began to take place. At the forefront of these mega-industries were the steel and railroad industries (Epstein & Greve, 2004). Demand in the steel industry flourished between 1860 and 1900 due to the technological advances enabling firms to shift towards new low-cost methods of making steel. Even with the increased efficiencies in the production process, the industry still faced high fixed costs (Rogers, 2009). This

Journal of Management Policy and Practice vol. 14(3) 2013 93 problem, combined with the influx of new entrants, and output steadily exceeding demand resulted in price-fixing and mergers among firms. This collusion on price and production has been referred to as “trusts”, and often these trusts were highly coordinated. Rogers gives an example of the extent to which the steel industry colluded: The pool organized controlled the behavior of its members through a financial incentive. To be in a price-fixing pool, a firm had to deposit a fund of money in the organizations bank account or “pool” when it first joined and replenished it periodically. If the member firm lowered price or produced beyond its quota, it was fined, and the fine was taken out of its deposit in the pool (2009). These actions resulted in not only the obvious outcome – price fixing, but also blocked potential entrants from entering the market. The results of such actions were of course seen in the form of market inefficiencies, such as higher prices than what would have been seen in a competitive market and constrained supply. The U.S. railroad industry during this period of industrialization is another example of early industry consolidation; according to Carstenson and Farmer: “the United States railroad industry has indeed mirrored the overall trend of substantial merger activity following regulatory reform” (2008). While there was some consolidation among neighboring railroad companies before the civil war, it wasn’t until 1869 (connection of the railroad from east to west) that the railroad companies power reached beyond regional, becoming national, subsequently leading to their high concentration (Conigliaro, Elman, Schreiber, & Small, 1996). The railroads power seemed to result not only in horizontal mergers but vertical mergers as well, “As companies grew larger, they began to take over other related fields. Soon, large trusts were formed that controlled many aspects of both the economy and society; as more and more areas became controlled by the octopus of the railroad industry, it became apparent that regulation was imperative” (Conigliaro et al., 1996). Harman connects theories of Marx and the monopolization of the late 19th century, “the capitalist firm which exploits the worker is therefore, necessarily in competition with other capitalist firms. If it cannot out compete them, eventually it will be forced out of business” (2010). Industry concentration was not only occurring in the United States. Harman gives examples of other consequences of that era consistent with Marxist ideology: A quarter century of falling profit rates led to massive pools of poverty in London and other cities and to mass unemployment in the mid-1880’s. It was not surprising that Frederick Engles could feel that the logic of Marx’s model was working itself out right in front of his eyes in England as “the decennial cycle of stagnation, prosperity, overproduction and crises” seemed to give way to “a permanent and chronic depression (2010). The growth of industry monopolies during this period also resulted in the birth of industry regulation in the form of antitrust policies. As Kwoka and White note, “the first law to be enacted – the Sherman Act of 1890 – was a reaction to widespread discontent with business during the industrial revolution” (1985). This discontent arose largely out of unreasonable prices for certain tangible and nontangible commodities as a result of collusion among industries. Not only wealth but the land itself seemed to be caught in some centralizing system. In the 1865–1885 period people began to speak of “land monopolies” as well as the “money trust.” There were many dimensions to both. Speculators and railroads preempted free land and forced the price up (Piott, 1985). The trusts formed by these industries, and others, caused inefficiencies in the market, antitrust policy was a form of correction for these inefficiencies. As Epstein and Greve note, “The antitrust laws, in contrast, are designed to preserve the functioning of competitive markets that, at least presumptively, produce allocative efficiency” (2004). Prevention of collusive and/or monopolistic behavior that results in supply constraints and/or price fixing is the main purpose of antitrust law, it intends “to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacture and sale of goods at reasonable prices” (West’s Encyclopedia of American Law, 1997). There are three principal federal antitrust laws that mark the foundation for competition policy, the Sherman Act, the Federal Trade Commission Act and the Clayton Act (FTC, 2008; Mueller, 1996). The Sherman act marks an important time in antitrust history, as it was the first law to completely outlaw trusts (Mueller, 1996). Within the law contained two arguably broad based sections. Section 1 forbade

94 Journal of Management Policy and Practice vol. 14(3) 2013 any form of collusion that would restrict interstate or foreign commerce, Section 2 restricted attempts to monopolize, as stated by West’s Encyclopedia of American Law (1997). The Sherman act largely operated as a temporary fix, since, firms found loopholes in the law and continued to monopolize to an extent. To counter the shortcomings of the Sherman Act, the Federal Trade Commission Act was established, creating the FTC. Primarily, “the Federal Trade Commission Act bans, "unfair methods of competition," and, "unfair or deceptive acts or practices," which is similar to what the Sherman Act does. The FTC acts as a means of enforcement since violators of the Sherman Act are also in violation of the FTC Act (FTC, 2008). The Clayton Act was another policy enacted to address weaknesses of antitrust law. One of the main reasons the Sherman Act was limited in preventing collusive behavior was the generalized nature of its restrictions. The Clayton Act took a more micro approach at competition policy, since it, “addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates (that is, the same person making business decisions for competing companies),” (FTC, 2008). The interpretations of these laws and degrees to which they are enforced have fluctuated over the past century. Since the monopolization of industry that began forming around the turn of the century, the U.S. has taken a less restrictive approach to antitrust enforcement. As World War I and the 1920s reversed the outlook of previous years, antitrust policy was characterized by the hands-off policies of President Calvin Coolidge, who declared, "The business of America is business." Economic trends created and supported this attitude; prosperity seemed a worthwhile reward” (West’s Encyclopedia of American Law, 1997). In part, the relaxation of the enforcement of antitrust laws was the result of a second major force that reversed the Marx effect.

The Era of Global Industry Consolidation The First Wave of Globalization Although antitrust law was, and remains, a major solution to the monopolies of the last century, antitrust laws are not the only reason the power of monopolies receded. The 2nd major influence on national monopoly power was a first wave of globalization that started in the early part of the 20th century. Advances in transportation and technology made it easier and easier for companies to compete on a global basis. Instead of competing with other national companies for domestic market share, companies were increasingly competing with other major companies from other countries for global market share. The move from national markets to global markets increased the number of producers in a given industry leading to increased competition and many of the positive effects of competitive markets. For example, in the U.S. the automobile market went from a national market dominated by three, and almost two, firms to a more competitive market with strong competitors from Europe, Japan, and South Korea. As monopolization started to happen in the U.S. once could conclude that Marx’s theory on capitalism was partly correct. One way to describe Marx’s theory on capitalism is with an inverted U hypothesis of globalization1. Globalization leads to increased efficiency and increased competition initially (as a result of lenient trade policies etc.), until it reaches a steady state, then, any increase in globalization will ultimately lead to decreased competition and higher concentration (from the consolidation of firms at the global level).

Second Era of Globalization While changes in technology and transportation paved the way for global emersion of business and trade, it wasn’t until recently that the globalization of nations would reach full force. Some consider the current time period as the “second era of globalization,” starting from 1989 to the present. According to Amin & Luckin, “the dominant economic actors of the current day – large multinational firms – are capable of developing global strategies of their own, which to a great extent free them from the tutelage of states’ national policies” (1996). Friedman largely accredits the causes of globalization to two events – the fall of the Berlin wall, symbolizing a “seamless” world thereafter, and the birth of the internet, allowing the sharing and spreading of ideas (Friedman, 2006). The creation of the worldwide web was a

Journal of Management Policy and Practice vol. 14(3) 2013 95 fundamental step for capitalism to reach its full capacity; Marx describes capitalism within his framework as “the need and ability to “nestle everywhere, settle everywhere, and establish connections everywhere.” Even at a time when the world was seemingly larger, or less interconnected than today, Marx still foresaw the force of which capitalism could/would propel itself. While attempting to “update” and reconcile some of Marx’s theories to present times, Dowd discusses the differences that distinguish this era of globalization from the previous. In Marx’s time, centralization, “was thus a narrower concept than today, and its reference point was national. Our time, in contrast, has seen not only an intensification of all forms of “M&A’s,” but their becoming intersectoral (including those between all other sectors and finance); that in turn evolved naturally into an explosion of transnational corporations, themselves crossing not only all borders but all forms of combination.” (2002). The extent to which mergers and acquisitions have increased can be seen almost weekly in newspaper articles, according to Merced and Kane of the New York Times, “Global dollar volume in announced mergers and acquisitions rose 23.1 percent in 2010, to $2.4 trillion” (2011). As shown in figure 1, worldwide merger activity more than doubled from around 2002 up until approximately 2007, where merger and acquisition activity began to drop off, mainly believed to be a result of the recent recession. Even still, global M&A activity is on the rise once again. Unlike earlier parts of the 20th century, when the U.S. was virtually the only thriving economy, many segments of the world are doing just as well economically; some may argue they are doing better. While the U.S. still “accounts for 34% of global deal volume, the biggest theme in mergers and acquisitions in 2010 was the growth in emerging markets. In the Asia-Pacific region, deal volume jumped 43.5 percent, according to Merced and Cane (2011).

FIGURE 1

Retrieved from: http://dealbook.nytimes.com

REGULATION IN A GLOBAL WORLD

With firms branching out into global competition and countries lowering their trade barriers to promote such competition, the absence of effective global regulation once again raises Marx concerns. Because of strong federal governments, national governments were able to pass and enforce, through the uses of military or police force where necessary, laws that regulated externalities, such as pollution, and antitrust. At the moment there is no strong federal government at the global level and, therefore, no one to pass and enforce laws that effectively regulate externalities or antitrust. Epstein and Greve raise a Marx like concern, “when firms have international market power, one would expect them to behave as monopolists just like domestic firms with market power” (2004). Therefore, without any dominant form of regulatory governance, industry concentration could very well replicate what was seen in the late 19th

96 Journal of Management Policy and Practice vol. 14(3) 2013 century, though, globally instead of nationally. Carstensen & Farmer discusses this tendency towards M&A’s: The transformation of formerly regulated or noncompetitive industries to competition is closely linked with merger movements. The historical record demonstrates that once faced with competition, leading firms in these industries began to merge. This has been the pattern in airlines, banks, railroads, electric and gas utilities, health care and, with great prominence, telecommunications (2008). While some may argue that reaching that level of concentration is unlikely, one should consider current industries that hold a considerable global market share. “Although it may be more difficult to establish and maintain market power internationally, there is no reason to believe that it is impossible or, for that matter, rare. Industries such as pharmaceuticals, passenger aircraft, and software illustrate the phenomenon” (Epstein & Greve, 2004). There are actually quite a few firms who have emerged into the global market that hold what can be considered a significant share within global industries, ranging from manufacturing, financial intermediation, and transport service along with other service industries. For example, The European Aeronautic Defense and Space Company and The Boeing Company combined hold more than 50% market share within the global civil aerospace products manufacturing industry. Goldman and Sachs hav2 20.20% market share within the global investment banking and brokerage industry and Vivendi holds 20.10% within the global music production and distribution industry. United Parcel Service holds 23.80%, within the global logistics – couriers industry (IBISW, 2011). We do not intend to imply that the monopolization that had plagued the United States in the late 19th century has emulated itself at the global level, creating one dominant firm controlling an entire global industry. However, it does appear that a number of industries are starting to exhibit Marx, “inevitable move toward a monopoly.” The increase in oligopoly power at the global level presents unprecedented challenges. Reaching a cross-country consensus on competition policy is a difficult. Epstein & Greve discuss some of the issues that arise when attempting to unite foreign and domestic competition policy. Competition policy embodies imprecise normative judgments that invite controversy and defection rather than consensus and commitment. Because its scope extends to such a wide range of economic activity, it has the potential to inflict significant costs on many transactors. In particular, competition policy tempts states both to impose nominally neutral policies that favor local producers and consumers at the expense of global welfare, and to administer their policies in a discriminatory fashion to similar ends” (2004). While more and more countries are adopting competition policies, this seemingly positive step towards unification of trust law has its negative effects. “Nearly one hundred jurisdictions now have antitrust laws” according to Epstein & Greve, this raises increasing issues of “jurisdictional overlaps” since many countries will assert their “jurisdiction over extraterritorial conduct that has a domestic impact” (2004). Antitrust enforcement agencies around the world have tried to cope with the increased power of global corporations by staying in regular and increasing contact with one another on individual merger cases as well as on general issues of mutual enforcement interest. Through instruments such as the 1995 Recommendation of the Organization for Economic Co-operation and Development (OECD) that its 29 members cooperate with one another in antitrust enforcement and bilateral agreements like that which exists between the United States and the European Community, the antitrust agencies notify one another when a case under investigation affects another's important interests and they share what information they can and otherwise cooperate in the investigation and resolution of those cases (1999). Richard Parker, Senior Deputy Director of the Bureau of Competition FTC, presenting on global merger enforcement, discussed the implementation of the Organization for Economic Co-operation and Development (OECD) and concluded with examples of global merger enforcement. While attempts at unified standards of competition policy are underway, the efforts of the OECD are considered to have substantial limitations on enforcing global merger laws. Epstein and Greve state: Information sharing or “soft” cooperation has also been pursued at the Organization for Economic Co-operation and Development, which has generated several aspirational texts. None of these impose obligations on states,

Journal of Management Policy and Practice vol. 14(3) 2013 97 and they are not intended to do so. Their goals are modestly limited to improving communication on competition issues. History shows us that even with a strong federal government with the ability to enforce laws through the use of force where necessary, such as the United States federal government has on its states, firms are very good at ignoring or getting around antitrust laws. If the U.S. government did not have strong federal power over states, and it was up to the states to reach agreements on antitrust laws, one can easily imagine that there would likely be problems resulting in less strenuous competition policy. Take for example state control over age discrimination laws. When these laws originated, states chose whether to enact policies aimed at protecting workers rights. By 1960 only 8 states had age discrimination laws until the federal government enacted such regulations as the Age Discrimination Employment Act of 1967 (ADEA). This, along with the Department of Labor in 1979 giving administrative authority to the U.S. Equal Employment Opportunity Commission (EEOC), established unified laws protecting individual employment rights (Lahey, 2007). Without this dominant authority of the federal government, fair employment practices may still continue to be a regionally dependent right. In the current era of globalization, where industry’s actions domestically can be felt by all corners of the globe and vice versa, without a global entity with strong “federal” powers capable of monitoring and enforcing competition policy, it seems reasonable to conclude that Marx may in fact be proven correct: the inevitable result of the efficient market is increasing concentration of power resulting in global oligopolies or, eventually, monopolies.

CONCLUSIONS

Over 100 years before globalization, largely led by capitalism, reached a point at which the world would be interconnected in virtually every way Marx felt the need to write on the short comings and flaws of capitalism. Around the time of his death, with the consolidation of industry (among other things) there was increased evidence of the validity of some of his beliefs and concerns regarding capitalism. However, the ability of the U.S. federal government to establish and enforce domestic antitrust laws and other regulations and the increased competition that resulted from the transition from national to global markets made it appear Marx concerns might not be as critical as he believed. Today, however, no one can deny the fact that the world is indeed smaller than it once was, allowing industries, firms and even people to create a significant impact on the world. Although intervention has been largely successful at the domestic level, since there is no global entity capable of establishing unified standards, laws or guidelines for global firms to follow, and, as far as we know, there are no inter galactic competitors ready to enter world markets, the possibility of history repeating itself in emerging global industries should be of grave concern. If global monopolies and externalities develop globally, as they did in the US during the 1800s, and there is no strong federal government to control externalities or regulate antitrust, Marx nightmares could come back to haunt us all with significant negative impact not only on world economies but on the world’s environment and standards of living.

REFERENCES

Amin, S., Luckin, D. (1996). The Challenge of Globalization. Review of International Political Economy, 3, 216-259.

Carstenson, P.C., Farmer, S. B. (2008). Competition Policy and Merger Analysis in Deregulated and Newly Competitive Industries. Northampton, MASS: Edward Elgar Publishing’s, Inc.

Conigliaro, A., Elman, J., Schreiber, J., Small, T. (1996). The Danger of Corporate Monopolies: History of American Railroads. Computers, Ethics, and Social Responsibility at Stanford University. Retrieved from:

98 Journal of Management Policy and Practice vol. 14(3) 2013 http://www-cs-faculty.stanford.edu/~eroberts/cs201/projects/corporate- monopolies/development_rr.html

De La Merced, M. J., Cane, J. (2011). Confident Deal Makers Pulled Out Checkbooks in 2010. The New York Times. Retrieved from: http://dealbook.nytimes.com/2011/01/03/confident-deal- makers-pulled-out-checkbooks-in-2010/

Dowd, D. (2002). Depths Below Depths: the Intensification, Multiplication, and Spread of Capitalism’s Destructive Force from Marx’s Time to Ours. Review of Radical Political Economics, 34, 247-266.

Epstein, R. A., Greve, M. S. (Eds.). (2004). Competition Laws in Conflict: Antitrust Jurisdiction in the Global Economy. Washington, D.C.: The AEI Press.

Federal Trade Commission. (2008). The Antitrust Laws. Retrieved from: http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm

Friedman, T. L. (2007). The World Is Flat: A Brief History of the Twenty-first Century. New York, NY: Farrar, Straus and Giroux.

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Managing the Link Between Bribery and Wealth Based on Corruption Perception Index (CPI) and Gross National Product (GNP) per Capita

Bahaudin G. Mujtaba Nova Southeastern University

Peter Williamson Liverpool John Moores University

Frank J. Cavico Nova Southeastern University

Bob McClelland Liverpool John Moores University

INTRODUCTION

This paper is designed to explore several cultural, legal, and economic concepts in an attempt to address the seminal question of “Is there a relationship between GNP and CPI?” And if so, then “why” is there a relationship between GNP and CPI? What explanations can be advanced to explain the reason for the relationship observed, and as a sequel, does this relationship retain its strength when all global nations are included in the analysis? Gross National Product (GNP) represents the total value, in dollar amounts, of a country’s overall goods and services sold or provided to consumers that are produced in a given year. These products and services must have been owned by the country’s citizens and it includes incomes that are earned abroad.

100 Journal of Management Policy and Practice vol. 14(3) 2013 So GNP is a measure of the output of a country’s citizens’ overall national and international businesses and entrepreneurship in a given year. For 2011, United States had a GNP value of $15,097,083 (or a little over $15 trillion). However, Gross Domestic Product (GDP) is a measure of the output of a country’s overall national (within the country’s borders) businesses and entrepreneurship in a given year. As of June 2012, United States had a GDP of $15.586 trillion. In this paper, the corruption perception index (CPI) data was taken from Transparency International data list for 2009 and 2010 (Transparency International, 2009/2010). The GNP per capita data came from IMF World Economic Outlook Database 2010. The one exception is Somalia’s data which was taken from the CIA Factbook. The data is presented as US $ per capita for each country, based on the GDP divided by the population. As demonstrated by researchers (Mujtaba, McClelland, Cavico, and Williamson, 2012), the CPI and GNP data from 2009 and 2010 years among the ten ASEAN countries (Singapore Brunei Malaysia Thailand Indonesia Vietnam Philippines Laos Cambodia Myanmar) generally show a positive correlation between the variables of wealth and corruption: that is, the poor countries are perceived as being more corrupt; and, as a corollary, the perception of corruption decreases as countries become wealthier. Of course, having wealth and low corruption perception is not a phenomenon of the Western countries. Nonetheless, many political leaders would like to increase their quality of life similar to the average person living in the West. But, as mentioned by researchers, “it is not straightforward to transform what was for decades a closed club of Western capitalist economies into a more inclusive and heterogeneous organization” because dependence on the West can prove to be sticky, while also limiting an organization’s capacity to respond to the needs of others (Clifton and D´ıaz-Fuentes, 2011a/b). This paper sets out, therefore, not to challenge or dispute the relationship, which is extremely strong, but to follow several lines of conjecture as to why this relationship might exist, and what it might mean in terms of a country’s development. However, it is first necessary to address culture and then the cultural component of corruption, focusing on one major form of corruption – bribery of government officials.

CULTURE IN ASIA

Culture can be generally defined as the shared values, beliefs, ideas, practices, symbols, and artifacts of a distinct group of individuals. Resanond (2002) relates that “the word ‘culture’ comes from Latin cultura, which is related to cult or worship. In its broadest sense, the term refers to the result of human interaction. Culture is acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behaviors....” (p. 13). Culture can form the foundation for ethics and ethical behavior by determining what is moral or immoral. According to Kini, et al (2004), “the culture of a country maintains a dominant influence on the development of an individual’s moral judgment.” (p. 94). Cross cultural comparisons can show differences in morals, ethics, values, and ethical beliefs and practices of people of different cultures (Venezia, 2004; Pitta, 1999). According to Hofstede (2001), ethical values are an integral part to culture. Hodgetts and Luthans (2003) defined international management as “the process of applying management concepts and techniques in a multinational environment” (p. 5). They further said that “culture is acquired knowledge that people use to interpret experience and generate social behavior (p. 5).” Of course, this acquired knowledge forms people’s morals and values, creates their attitudes, and influences their behavior in a predictable pattern (Hodgetts and Luthans, 2003, p. 108). Hofstede (1980) defined culture as the collective programming of the mind through locally held value systems, which distinguishes one group of people from another. Hofstede (2001) designated Taiwan as a “collectivist culture” whereas the U.S. was deemed to be an individualistic one. In an individualistic culture, one is primarily concerned with and committed to one’s own development, quality of life, rewards, and success; whereas in a collectivist culture, group awareness, welfare, and satisfaction are the primary concerns and objectives of a person (Venezia, 2004). Today’s managers possess diverse value systems; and thus are truly global managers; and also they mostly manage people of diverse beliefs in an international environment. Consequently, global managers

Journal of Management Policy and Practice vol. 14(3) 2013 101 frequently must act in a perplexing “grey zone” that emerges when two different cultures meet. As such, understanding culture plays a critical role in international management (Mujtaba and Shuaib, 2010). Khruasuwan (2000) emphasizes that “cultural interpretation and adaption are a prerequisite to the comparative understanding of national and international management practice. It is also a prerequisite for establishing effective international human resources development, and the development of appropriate skills and competence on which the achievement of corporate success (depends upon)” (p. 97). For an organization to operate in several countries with different cultures, it is important for the “management team” to understand the culture of these countries in order to efficiently and effectively operate interdependently among them. The norms and practices of one culture, including moral beliefs and precepts, may not be the norms and practices of another. Generational and gender differences and discrimination naturally affect the employment setting, but cultural differences are also an important reality of today’s workforce. Cultural differences, such as languages spoken, clothing designs, and music played, are often apparent among people living in different cities, countries, or continents. Yet, certain cultural differences, such as beliefs, values, and morals are not always apparent at the “surface” level, but they are practiced among different human groups. People’s views regarding morality and ethics, age, aging, and older workers, as well as views of the “opposite sex,” emerge as prime examples of such cultural differences that “lie beneath the surface,” but which are experienced “on the ground” in day-today activities. Employers in the United States, as well as globally, consequently are dealing with such views; and thus are confronting the challenges and opportunities which come with an increasingly diverse and international workforce. Therefore, it is incumbent on employers, managers, and educators to be not only culturally aware and sensitive but also culturally mature and competent. Huang (2006) explained that “East and West cultures differ tremendously in many ways. The differences are reflected in attitudes, values, and norms of the society where they have been developed or are limited in their applicability elsewhere... For example, in the West individualisms is a dominant attitude among people while collectivism is prevalent in the East” (p. 17). Significant differences between Eastern and Western cultures arise in the workplace. Accordingly, Western individualists “...decide and act on the basis of whether an action leads to personal gain whereas collectivists (East) consider their actions from the group viewpoint. In addition, individualists value independence and self-sufficiency. Conversely, collectivists value social relationships and sharing of material as a means of maintaining a social network of reciprocation” (Huang, 2006, p. 20). Eastern cultures value the future, that is, a long- term orientation, whereas Western cultures values the past and present, that is, a short-term perspective. This Eastern future-oriented mentality, as exemplified in Taiwan, Hong Kong, and South Korea, puts a premium on hard work, persistence, respect for status, thrift, an awareness of the constraints of time, and possessing a sense of shame. Another prominent distinction between Eastern and Western cultures involves the family, particularly the degree to which work is expected to result in separation from one’s family. U.S. culture, in particular, is characterized as one where career demands can, and should, override family concerns (Huang, 2006). An important Asian cultural practice, particularly to the Chinese, is the paramount influence of personal networks, called Guanxi (Xin and Pierce, 1996). Huang (2006) defines Guanxi “...as tight, close- knit networks...or interpersonal connections” (p. 22). Venezia (2004) defines Guanxi as a “...long-term traditional way of conducting business in Chinese society. It generates trust and some dependence between negotiators when doing business. Guanxi is established on mutual benefits” (p. 19). Huang (2006) emphasizes that it is very important to build personal relationships with key persons in order to successfully to business in Asian societies. Huang (2006) explains that “the increasing perceived trustworthiness is very beneficial in business interactions..., and guanxi is the beginning of building trust in Eastern cultures” (p. 22). However, Venezia (2004) also underscores that Guanxi can be “...ethically problematic if one of the parties engaged in the practice directly violates a significant fiduciary duty defined in local social norms. For example, it is a norm in Chinese for a company to conduct a new business efficiently through guanxi, but in America it may be treated as corruption or unethical” (pp. 19- 20). At times, there may be a “fine-line” between Guanxi and bribery. Guanxi is relationship building over an extended period of time, whereas bribery is a (presumably) one time practice to secure a deal.

102 Journal of Management Policy and Practice vol. 14(3) 2013 Guanxi is culturally accepted, whereas bribery has legal and ethical ramifications (Venezia, 2004; Lovett, Simmons and Kali, 1999). Related to Guanxi and the presence of influential personal networks in Eastern cultures is a notion that Huang (2006) calls “corporate hospitality” (p. 23). In a Western sense, this term implies corporate public relations efforts to promote a positive corporate image, for example, by engaging in community and charitable activities; whereas from an Eastern perspective, corporate hospitality refers to funds that managers can use to strengthen business relationships between the corporation and individuals (Huang, 2006). To illustrate, according to Huang (2006): “Taiwanese businessmen would prefer to discuss the details of a contract in conference room and leave the decisions to be made in informal places such as golf course, restaurant, or private club where entertainment is offered” (p. 23). Huang (2006) emphasizes that “understanding the corporate hospitality provides a perspective on how quanxi or personal network is built up and maintained in Confucian societies and how different people do business based on their cultural backgrounds between East and West business environment” (p. 23). Danon-Leva (2006) relates that developing a personal relationship is critical in China before business can be even discussed, and the establishing and maintaining of this personal relationship is the key to any successful business transaction. Regarding culture and ethics, Danon-Leva (2006) explains that “Americans tend to view business ethics as a moral judgment made by an individual based on the same general moral rules. In contrast, the Chinese tend to view business ethics as a decision governed by the social ties and obligations and corporate culture that an individual finds himself or herself in” (p. 25). Huang (2006) further explains how culture can affect business negotiations. In Western cultures, such as the United States, communication is direct and explicit; whereas in Eastern cultures, such as China, communication is indirect and implicit. Moreover, Eastern cultures place a high value on “social harmony and positive framing,” and thus the goal would be to establish social relationships and to main social harmony during the negotiations (Huang, 2006, p. 24). Accordingly, Huang (2006) recommends “a clear, structured negotiation procedure” for doing business in Eastern societies since it will be necessary to limit risk and reduce uncertainty (p. 24). Another business ramification to the Western-individualistic and the Eastern-collectivistic dichotomy is explained and illustrated by Danon-Leva (2006): “Americans tend to emphasize promptness and adherence to schedules when doing business as well as in every aspect of their lives. The individual is capable of changing his or her behavior by the exercise of free will. Because individualism is revered, in the U.S. there is more emphasis on the decision-making of individuals. In Hong Kong, as in Mainland China, individuality is suppressed from childhood and obedience without question is part of the tradition....Good ‘connections’ equate to good relations. Asking for and dispensing favors is the modus operandi generally in management and business....Consequently it has been observed in Chinese business that employees typically do not take responsibility, and authority is not shared. This circumstance leaves little room for employees to voice concerns or ask questions, thereby fostering an atmosphere that pays little attention to deadlines” (pp. 27-28). Yet Danon-Leva (2006) offers a final caveat when dealing with business ethics in China: “Relatively little has been written on the subject of business ethics in China. What seems to be somewhat consistent is that business ethics in China and Hong Kong are colored by complexity, contradictions, and perceptions” (p. 25). The Chinese during the Sixth century B.C. developed two different philosophical schools – Taoism and Confucianism. Huang (2006) points out that “these two philosophical thinking have had profound, immense influences on the Chinese culture, and to a broader extent, the East. They still dominate central ideologies of some Asian countries such as China, Taiwan, Japan, and Singapore” (p. 32). Venezia (2004) explains the major tenets of these philosophies: “Taoism was concerned with observing nature and the discovery of its way, referred to as Tao. Confucianism was the philosophy of social organization, of common sense, and practical knowledge. One of Confucianism’s main purposes was to form an ethical basis for the traditional Chinese family system” (p. 26). Venezia (2004) further explains: “Taoism emphasized seeking nature and quietism, rather than forcing to get what you want. It focused on teaching the proper way to live in accordance with nature and the importance of inner peace and being true to one’s nature” (p. 27). Taoism underscored selflessness as an essential quality of life; altruistic ideals are thus an integral part of the teachings of Taoism. The goal is to perfect oneself by the self-cultivation of

Journal of Management Policy and Practice vol. 14(3) 2013 103 virtue and also to benefit others in a selfless manner. Confucianism’s “main concern was to cultivate the living humanity of the individual and society in harmony, according to the Way of the ideal course of moral conduct” (Venezia, 2004, p. 27). Harmony and balance are exemplified by the superseding forces of Ying and Yang, which govern and hold together every aspect of life, including business, particularly negotiations where the Ying-Yang principle is viewed as a fundamental principle (Danon-Leva, 2006). A central tenet of Confucianism is the belief that “man” is essentially good (Venezia, 2004; Lau, 1979). A person, therefore, should learn, reflect on, and attain moral ideals. Another important principle of Confucian principle is proper role relationships, for example, between father and son, and husband and wife; and if everyone plays his or her role properly, for example, the father is kind to the son, and the son is dutiful to the father, then the entire society will remain in a harmonious state (Huang, 2006). Huang (2006) explained that “Confucius’ main concern was to cultivate the living humanity of the individual and society in harmony, according (to) the way or the ideal course of moral conduct” (p. 35). Virtuous behavior will bring about individual success and social harmony. Education, therefore, should inculcate moral learning and moral self-cultivation. Both the Confucian and Taoist philosophies have strongly influenced Chinese life, thought, and morals. In the Confucian system, the “family” is always there for the individual; and the individual person is always there for the whole. Yet Confucianism is not about one becoming “selfless”; rather, one becomes “your true self” by making worthwhile contributions to the entire web of relationships in the “family” network and to society as a whole (Ames, 2009). As opposed to the Western sense of individualism and individual identity, the Chinese are more “relationally constituted” people who continually act, reform, and become in accordance with the needs of the family and the community. Accordingly, there is a symbiosis between the particular and the totality and between the parts and the whole (Ames, 2009). Furthermore, in contrast to the Western emphasis on the “right to think,” the Chinese culture puts a premium on “right thinking,” that is, thinking about the network of relationships in one’s surroundings, the value of consensus building, mutual aid and support, and acting to benefit society as a whole. Whereas the “right to think” is a Western mind-set, whereby individualism, innovation, creativity, egoism, and the maximization of one’s own benefits are emphasized and practiced. Confucian consensus-building, however, is critical to creating harmony, which has been very important for China, a society composed of many different groups with varying customs and who speak different languages. Confucianism with its emphasis on harmony and the mutual accommodation of different cultures and peoples has also benefitted China globally in today’s diverse and international marketplace and workplace.

CULTURE AND CORRUPTION

Culture has a relationship to corruption; many forms of corruption are intrinsically bound up in the social norms and practices of a society. Corruption has many forms, encompassing ballot-stuffing, extortion, embezzlement, tax evasion, smuggling, currency manipulation, money laundering, a conflict- of-interest, insider-trading and -dealing, “kick-backs,” expense account “padding,” over-invoicing, favoritism, and nepotism (Mujtaba, McClelland, Cavico, and Williamson, 2012). However, bribery, particularly of government officials to secure government contracts, is a major and highly deleterious type of corruption. Moreover, bribery is a common way of doing business in many societies; and it is in many places an engrained, and perhaps acceptable, cultural practice. Some business executives may view bribery as just a “routine” way of doing business and the “price of entry” in today’s highly competitive global economy (Cavico and Mujtaba, 2011). Bribery, furthermore, is not “merely” a Western or Eastern problem, but rather a universal concern that impacts countries, societies, and people around the world. Nonetheless, bribery is typically viewed as being more prevalent in less developed countries and poorer countries, where jobs do not pay well, and thus it is considered to be customary for local government officials to “supplement” their typical “meager” incomes by taking such payments. Of course, there may be legal issues involved in the making of these payments. A country may have laws that prohibit its government officials from taking bribes; yet whether these laws are enforced is another question. For the U.S. business person, the key statute is the Foreign Corrupt Practices Act (FCPA), which has

104 Journal of Management Policy and Practice vol. 14(3) 2013 extraterritorial reach, and which is enforced by the Justice Department. The FCPA makes the payment of a bribe, or the transfer of something of value, directly or indirectly, to a foreign government official, by a business person, in order to wrongfully secure a government contract with the host county a serious criminal wrong. Although it is beyond the purposes of this paper to examine in detail the FCPA, the authors must emphasize that in order for there to be legal liability pursuant to the statute, the government must possess evidence of wrongful intent, that is, the bribe-giver must have had an “evil mind” and the corrupt motive, to, in essence, wrongfully direct the business to his or her firm, that is, to “purchase” the contract (Cavico and Mujtaba, 2011, 2010). Internationally, moreover, there is a treaty in the form of a convention by the Organization for Economic Cooperation and Development (OECD) which bans bribery. This treaty sets out criteria for national anti-bribery legislation, some of which provisions are very similar to the FCPA (Cavico and Mujtaba, 2010). However, in the FCPA as well as the OECD convention there is an exception, that is, a legal “bribe,” called the “facilitating and expediting” exception. This legal exception bears direct relevance to the central issue on examination for this paper. Pursuant to the “facilitating and expediting” exception, a business person can make relatively small payments or “gifts” to lower level foreign government officials, who possess merely ministerial clerk-like authority, to facilitate, that is, to make go more smoothly, and expedite, that is, to make to go more quickly, routine government actions, such as the processing of visas, custom forms, obtaining permits, licenses, and documents, and other “paperwork,” that the business person is legally entitled to. Yet the greater the sum of money paid to the foreign government official, and the higher his or her position is, and the more discretionary power he or she has, and the less “routine” the government actions, the risk is that the payment will be transformed, at least in the eyes of the Justice Department, from a legal “bribe” to an illegal and perhaps felonious one. Nevertheless, the “facilitating and expediting” exception was placed in the law by Congress to reflect a “real-world” view that in many countries, especially less developed and poorer ones, these payments are considered normal, and culturally acceptable, business practices, in order to afford additional compensation to inadequately paid lower level government officials (that is, “petty bureaucrats”) (Cavico and Mujtaba, 2011, 2010). Yet, despite the prevalence of corruption in many countries as well as the existence of a major statute and treaty outlawing a principal form of corruption - bribery, surprisingly, there is very little in the literature as to the specific effect of wealth as a discrete cultural component influencing corruption, particularly bribery, and especially concerning bribery in the form of “facilitating and expediting” payments. As such, in order to “reduce the area of ignorance,” the authors propose the following hypotheses:

Hypothesis 1: There is no relationship between GNP and CPI for a cluster of ASEAN countries.

Hypothesis 2: There is no relationship between GNP and CPI for a cluster of 66 countries.

RESEARCH METHODOLOGY AND ANALYSIS

In this study, the ASEAN Community scores for CPI were taken from the latest figures available by Transparency International for 2011 and previous research conducted by Mujtaba, McClelland, Cavico, and Williamson (2012). Furthermore, the authors took the CPI index scores listed for 66 countries (Appendix D) by Cavico and Mujtaba (2010, p. 37) and then compared them with the latest figures reported for each country’s GNP. The variables of GNP and CPI are well established in their particular domains; and there is no reason to suspect they are wildly inaccurate in terms of either reliability or consistency. There are several ways of measuring GNP, which yield differing, but not widely different results. The ASEAN data given herein is the “official” measure of wealth and population; and the data is calculated on the same basis for each member state using their latest data (or estimates in respect of

Journal of Management Policy and Practice vol. 14(3) 2013 105 population between censuses). Accordingly, the data must be considered as the most accurate measure of wealth that is practical to obtain for this region. The CPI is also a well-established measure, which has been developed and defined over several iterations, and has never been severely challenged as to the reliability, validity, or “solidity.” It is, however, and remains, a measure of perception; and perception is, by definition, subjective. This trait is not a criticism or apology for the measure, but more a fact of measurement in a very sensitive area. Just as with other “suspect” areas, such as the “underground economy” or illegal immigration, if they were measured objectively, they would not qualify for their subjective designation! Similarly with corruption, since it is an activity of questionable legality, it is never going to be openly disclosed or reported. While the corruption index may be a consolidation of impressionistic data, it is nevertheless probably “as good a measure as you are going to get,” and hence for this article is accepted as both valid and reliable.

RESEARCH RESULTS

In regards to the hypotheses, as can be seen from Table 1 and Table 2 evaluation, the 2-tailed significance values lead to the alternate hypotheses being supported for both the small cluster of ASEAN countries and larger dataset of 66 countries. It can be concluded that for hypotheses 1 and 2 there is a significant correlation between GNP and CPI (p < 0.05) for both smaller and larger datasets, a conclusion that also holds at the 1% level (p < 0.01).

TABLE 1 CPI AND GNP CORRELATIONS OF ASEAN COUNTRIES

Country CPI GNP per capita ($) Singapore 9.20 43929.00 Brunei 5.20 29915.00 Malaysia 4.30 8262.00 Thailand 3.40 4735.00 Indonesia 3.00 3023.00 Vietnam 2.90 1236.00 Philippines 2.60 2014.00 Laos 2.20 1045.00 Cambodia 2.10 731.00 Myanmar 1.50 715.00

CPI GNP Pearson Correlation 1 .950** CPI Sig. (2-tailed) .000 N 10 10 Pearson Correlation .950** 1 GNP Sig. (2-tailed) .000 N 10 10 **. Correlation is significant at the 0.01 level (2-tailed).

106 Journal of Management Policy and Practice vol. 14(3) 2013 TABLE 2 CPI AND GNP CORRELATIONS OF 66 COUNTRIES

CPI GNP Pearson Correlation 1 .887** CPI Sig. (2-tailed) .000 N 66 66 Pearson Correlation .887** 1 GNP Sig. (2-tailed) .000 N 66 66 **. Correlation is significant at the 0.01 level (2-tailed).

As there is significant correlation with the data another hypothesis test is undertaken for both datasets, it is that of regression as follows:

H0: β1 = 0 H1: β1 ≠ 0

The resulting ANOVA tables for both datasets (Appendix A, B and C) have significance values of 0.000, supporting the alternate hypothesis for both datasets (p<0.01). As such, we can conclude that there is a significant linear relationship between the independent variable GNP and the dependent variable CPI. This also applies when dependencies are switched (Appendix B and C demonstrates this for the 66 countries data). For the ASEAN countries, there is significant correlation r = 0.95; (R-square 0.903). Combining the Regression outcome supported and Adjusted R-square (89.1% explanatory), the data supports the existence of a potentially robust forecasting model for these ASEAN countries. For the 66 countries, Table 2, Figure 1 and Appendix B, shows that (when GNP is the dependent variable and CPI independent) there is significant correlation (p< 0.05), r = 0.887; (R-square 0.786). Therefore combining the Regression outcome supported and Adjusted R-square (78.3% explanatory), the data supports the existence of a potentially robust forecasting model for these 66 countries. Figure 2 and Appendix C show that this holds when dependencies are switched.

FIGURE 1 GNP (dep) V CPI (indep) DATA OF 66 COUNTRIES

Journal of Management Policy and Practice vol. 14(3) 2013 107 FIGURE 2 GNP (indep) V CPI (dep) DATA OF THE 66 COUNTRIES

ANALYSIS AND CONJECTURE

This paper was designed to address the question of “is there a relationship between GNP and CPI?” And if so, then explore “why” there is a relationship between GNP and CPI? What explanations can be advanced to explain the reason for the relationships observed; and as a sequel, does this relationship retain its strength when more global nations are included in the analysis? One construct that might be useful is to initially downplay any discussion of culture, including cultural differences, as an explanation. As was seen from the aforementioned cultural discussion, the ASEAN nations are generally both multicultural and multi-faith, from the devote Catholicism in the Philippines to Islamic and Buddhist cultures in Southeast Asia. It seems, a priori, not to be a viable variable for explanation. Nonetheless, this approach may not be totally correct, as three of the bottom four countries are majority Buddhist and three of the five top countries are majority Islamic. Consequently, it might be simplistic to conclude Buddhism “tolerates” corruption while Islamism does not; and this dichotomy may be confounded by examination of a wider cross-section of countries, including those which are devoutly Islamic and those (for example Turkey) where the religion is more “moderate.” As a starting point, therefore, there seem to be two alternative trains of thought. The first contends that as people become richer they have less need to be corrupt, which seems to be a logical progression. That is, their needs and wants are more than satisfied from legitimate sources of income; and hence there is less need or desire to indulge in activities which may be illegal, risky, and demeaning. There is a Need Theory, based on fundamental Maslow constructs, which suggests corruption only exists to satisfy the basic physiological needs. Put simply, people are only corrupt because they have to be corrupt in order to physically survive. Such would be the case of government officials who must take the payments, whether illegal bribes or legal “facilitating and expediting” payments, in order to supplement their insufficient government salaries. An alternative perspective might suggest that as a country’s wealth increases, and its tax revenues rise, its ability to police and enforce anti-corruption measures improves, and hence the level of corruption falls. This explanation, however, is based on a series of assumptions, to wit: notably that (a) there is a parallel rise in anti-corruption activity with increasing budgets (there is no reason why there should be); and (b) this deterrent activity is successful in reducing the level of corruption.

108 Journal of Management Policy and Practice vol. 14(3) 2013 After minimizing culture as a variable to fully explain the relationship, the authors return to this facet here to consider culture not as a collection of attitudinal and behavioral differences mediated by history, religion, law, etc., but cultural differences mediated by wealth. Is it correct that poor (i.e. relatively non- wealthy) people accept income from corruption as an acceptable norm of behavior (even if not legitimate or legal), but that more wealthy people do not? Countries with lower average wealth have, by definition, a higher proportion of disadvantaged people for whom this cultural norm may be appropriate, and hence this circumstance would be reflected in a lower overall CPI. Such arguments, however, can disintegrate when the reality is considered. While poorer nations, en masse, have a lower CPI, nevertheless intuition as well as direct reportage indicates corruption exists at all levels of wealth in such societies, and the differences are “simply” ones of size. Some might argue the wealthy become wealthy “merely” by either being more corrupt or being better at finding niches through which to develop corruption! An alternative on the wealth paradigm might be a consideration of the salary structures, relative to the overall distribution of a nation’s wealth, seen in the governmental services. The logic behind this conjecture is the origination of many (but admittedly by no means all) corrupt practices, which are often government official based, especially in the context of bribery. Salary, though, is a complex and difficult construct to measure; but the contention is that in countries where the government officials are relatively poorly paid compared to the private sectors and the countries salary structures as a whole, then in that scenario there will be an increased desire and rationalization to act “corruptly” to justify the perceived imbalance. This scenario is akin to the original need conjecture; but differs in that its prime motivation is not simply survival but more revenge and justification for a basic salary deemed “inappropriate.” One hears of anecdotal stories in business wherein low, basic salaries are accompanied by an informal assumption (by both employer and employee and business person and government official) of monetary “enhancement” to what is perceived as an “acceptable” level of compensation, whether in the form of gratuities, “tips,” or “good will” gifts. Returning, finally, to the basic relationship of congruence between perception of corruption and wealth, an alternative way of considering the data might be not to consider the overall relationship, but rather examine those countries which are most deviant from the relationship; and next ask why they are so. It is clearly not possible to accomplish this task with the small sample of ASEAN countries, but by using a global sample this objective would certainly be possible. The authors, accordingly, believe there is not a single factor which tends toward or away from the perception of corruption. Corruption plainly is a multi-faceted issue; yet there may be certain factors, which once combined together, can lead to greater or lower levels of CPI.

RECOMMENDATIONS

Using the full global results of the aforementioned two dimensions, the relationship between the two variables remains strong and highly significant, with 78.6% of the data from one variable explained by the other. The extended analysis also confirms a straight line is the best fit between them. The seminal question, therefore, is what accounts for the remaining 21.4% variation; and here cultural differences as well as generalized attitudes toward corruption might be important. This is the author’s conjecture, and at this point it is totally without empirical foundation, but this assumption might be amenable to empirical testing given further data and re-testing in the future. It is to be investigated. Each of the major cultures herein, as well as any culture, due to the norms and values of the culture, has an inherent bias toward or against corruption; and this fact represents a lower limit which it will not fall below; yet a level which might change over time; but at any point in time will be a constant, and represented by the intercept on the vertical axis, which in the context of the overall data is 2.4 (for 66 countries when CPI is the dependent variable). The contention is, therefore, that overall (at a hypothetical nil income level) the average CPI score is this figure, which then rises according to average wealth within an individual nation (Figure 1).

Journal of Management Policy and Practice vol. 14(3) 2013 109 Starting from this culturally defined base-point, and over time, as a country becomes wealthier, so will the CPI rise. The authors contention thus would be that the base point (i.e., the intercept on the vertical axis) would vary according to the nation’s cultural grouping; and also the rate of rise of the CPI with wealth from this point would not be uniform, but would be related to the level of the base point; and furthermore that the rise with wealth would be steepest where the initial starting point was higher. The logic behind this idea is that the culturally determined base CPI score will give a proclivity more or less toward corruption, and that as average wealth rises, so this proclivity will become more or less actualized. For example, one might consider countries whose majority culture was Judeo- Christian and had the highest average base CPI score. Hence, because of its “natural” cultural tendency to eschew corruption as immoral, as average wealth rises, so its rate of increase of CPI score is faster than average. Conversely, among those countries where the culture is more tolerant of corruption, and hence the base- point is lower, so the rate of increase in CPI score with wealth will be below average. Thus, one might speculate that over time (on the assumption average wealth for all increases over time), the differences between the CPI figures of the various cultural groupings would diverge; and also that whereas they might be very similar initially over time, they would vary markedly. How might this idea be proven – or at least demonstrated? Initially, researchers would need to select groups of countries where there is a predominant cultural similarity; and the authors would suggest that researchers utilize the Hofstede typologies described below; and then select those countries available within each groupings, and next use the regression model to determine where, as a group, they intercept the CPI axis, and then adjust for similar levels of average GNP. The aforementioned typologies are: 1. Anglo: Australia, United Kingdom, Canada, New Zealand, United States. 2. Germanic: Italy, South Africa, Switzerland (Germany, Austria, and Israel are missing). 3. Nordic: Denmark, Finland, Netherlands, Norway, Sweden. 4. More developed Asian: Japan, South Korea. 5. Less developed Asian: India, Pakistan, Philippines, Singapore, Taiwan, and Thailand. 6. Near Eastern: Greece, Iran, and Turkey. 7. More developed Latin: Argentina, Brazil, France, Spain, and Belgium. 8. Less developed Latin: Columbia, Mexico, Venezuela, Chile, Peru, and Portugal.

An alternative, instead of taking the multivariate Hofstede approach, might be to take averages from countries displaying a common dominant religious foundation, for example: • Judeo – Christian • Islamic • Buddhist.

This religious approach, however, would need to exclude many nations where there are multiple religions or no definitive religion (such as Russia, China, etc.), as well as nations which could not easily cope with the strength of religious belief – for example, in a situation where Islamic or Christian beliefs are held with far greater fervor and sincerity in some countries than others. Finally, cognizance must be taken that the results would likely be skewed severely toward the Christian nations, which generally have higher CPI scores. The next significant stage in this analysis, therefore, is to construct a series of regression lines based on the groupings above (and the authors expect a minimum of three countries per group); and then see whether the preceding ideas and assumptions have any validity. This approach should give values for both the intercept on the vertical axis and the slope of the line relative to increasing wealth. The results should be most informative and interesting indeed; and the results will achieve a further expanding of the body of knowledge in this important global, cultural, economic, and practical “corruption” area. Finally, there seems to be a base level of culturally determined proclivity toward or against corruption, and that this level of CPI rises with increasing wealth within a nation, but the rate of rise is dependent on the initial level of CPI - in other words if you are temperamentally / culturally non-corrupt, then as national wealth rises, your ascent to the higher levels of CPI will be faster than where there is a

110 Journal of Management Policy and Practice vol. 14(3) 2013 base tendency towards an acceptance of corruption. One can hypothesize that where a colonizing power has had a profound influence in shaping culture then this will be reflected in the values toward it. So the example one might examine can be Singapore, which in CPI terms, even allowing for a strong GNP per capita, “punches way above its weight” - and this might be explained by the strong continuous British Empire presence there over a couple of centuries, instilling a traditional high moral tone to the culture. This is just another thought as well as an avenue for future research.

CONCLUSION

Wealth creation is a motivation and expectation for countries as the creation of wealth is of course important for each citizen’s quality of life. However, some countries seem to have more wealth than others. Similarly, in some countries there are widespread instances of illegal and unethical behavior, engendering a “culture of corruption,” that prevents these countries from attracting foreign investors. Corruption typically is viewed in the context of culture. Yet, in this paper, the authors explored proposition that the wealth of a society could be another determinant in the growth or reduction of corruption. The authors found that there is a significant linear relationship between wealth generation of a country and the country’s level of corruption as demonstrated by the actual figures in the 10 ASEAN countries and the 66 regional countries. Wealth, therefore, as a component of a societal culture, emerges as a significant aspect of corruption. The implications of these findings were discussed and suggestions for future research were provided by the authors.

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Journal of Management Policy and Practice vol. 14(3) 2013 111 Huang, Chunlong (2006). Cross-Cultural Ethics: A Study of Cognitive Moral Development and Moral Maturity of U.S. and Japanese Expatriate Managers in Taiwan and Taiwanese Managers. Doctoral Dissertation. The H. Wayne Huizenga School of Business and Entrepreneurship. Nova Southeastern University.

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APPENDIX A

APPENDIX B

Journal of Management Policy and Practice vol. 14(3) 2013 113 APPENDIX C

114 Journal of Management Policy and Practice vol. 14(3) 2013 APPENDIX D

CPI AND GNP PER CAPITA (2010) FOR 66 COUNTRIES

Country CPI GNP Argentina 2.9 10959 New Zealand 9.4 35973 Egypt 2.8 2932 Denmark 9.3 59709 Indonesia 2.8 3512 Singapore 9.2 49271 Kazakistan 2.7 11167 Sweden 9.2 57638 Vietnam 2.7 1374 Switzerland 9 83073 Lebanon 2.5 9862 Finland 8.9 48783 Libya 2.5 5510 Netherlands 8.9 50216 Nigeria 2.5 1522 Australia 8.7 66371 Uganda 2.5 505 Canada 8.7 50496 Bangladesh 2.4 767 Iceland 8.7 43088 Pakistan 2.4 1199 Norway 8.6 97607 Philippines 2.4 2345 Hong Kong 8.2 34259 Azerbaijan 2.3 7106 Japan 7.7 45870 Russia 2.2 12993 UK 7.7 38811 Yemen 2.1 1343 United States 7.5 43328 Cambodia 2 853 France 6.9 44007 Laos 2 1320 UAE 6.5 63626 Tajikistan 2 836 Spain 6.1 32077 Kyrgyzstan 1.9 1070 Taiwan 5.6 20083 Venezuela 1.9 10630 Oman 5.5 23572 Haiti 1.8 738 Jordan 5 4618 Iran 1.8 6420 Poland 5 13469 Turkmenistan 1.8 5078 South Africa 4.7 8078 Uzbekistan 1.7 1559 Malaysia 4.5 10085 Iraq 1.5 3478 Cuba 4.4 5200 Myanmar 1.4 824 Turkey 4.4 10363 Afghanistan 1.3 589 Italy 4.3 36267 Somalia 1.1 200 Saudi Arabia 4.3 21196 Greece 3.8 26735 Brazil 3.7 12789 Colombia 3.7 7114 China 3.6 7417 Trinidad & Tobago 3.6 17060 India 3.4 1514 Thailand 3.4 5395 Mexico 3.3 10146 Domin. Republic 3 5545 Jamaica 3 5267

Journal of Management Policy and Practice vol. 14(3) 2013 115

CrisisΛ Vs. CrisisΩ: An Explorative View

Chandrika M. Kelso National University

Hugh D. Kelso, III National University

INTRODUCTION

The authors desire to make it clear that this paper is based purely on theory and is devoid of empirical and scientific data. We have written this paper in simple colloquial language to impress upon the reader that the scope of this paper is provide (minus empirical data) a more common sense, day to day approach, and interpretation of the issues surrounding conflict. The views offered by us are in no way meant to imply that they have been tested and tried in a research setting. We humans have an inherent need to communicate, whether it is verbally, non-verbally, by using symbols, body language, or gestures. When communication and messages are distorted, misunderstood in their context, meaning, interpretation or application it leads to conflict. According to Rummel (1976), it is through conflict that humans learn about themselves and the world in which they live. Organizational psychologist Morton Deutsch begins with the basic premise that any conflict is either cooperative or competitive. He also says that cooperation easily turns into competition but competition does not easily become cooperation. Cooperative conflict assumes that when one party helps themselves they help the other party. It makes sense that this type of co-operative conflict is marked by open discussions and a free exchange of information. The conflict will tend to be constructive. On the other hand competitive conflict exists where a party believes that whatever they do to help themselves they will end up somehow hurting the other party. Exchange of information is slight or non-existing. If the conflict is competitive it will tend to be destructive (Coltri, 2010). According to Lederach (2003), conflict affects our physical well-being, self-esteem, emotional stability, capacity to perceive accurately, and spiritual integrity. Indeed conflict, whether competitive or cooperative, is necessary for growth of a species, culture or even a story. A plot is defined as the building of tension or conflict between antagonists leading to a climax and movement toward an anticlimactic conclusion. No successful Hollywood film is without its principle conflict with its characters driven towards a climatic dissonance ultimately leading to harmonic

116 Journal of Management Policy and Practice vol. 14(3) 2013 resolution (happy ending). Without this critical conflict, no real story can be told. Likewise, without conflict constructive learning, whether through dynamic real time learning or from post-deconstructive learning, often does not occur. Even if it does, it is without the cogitative thought that accompanies collaborative fact finding and brain storming toward solutions. In fact, solutions garnered through the filters of shared experiences, including seeming failures, leads to more permanent, farther reaching, and broader in scope results. Eclectic output results from collaborative crisis circumspection and management. When negotiating within stressful environments, it is often the more successful approach to move the involved parties towards collaboration. Even under extreme stress, such as in a marital dissolution involving children, bringing the warring parties to a mutually beneficial vector point by emphasizing the child’s benefit is paramount can suspend the personal and emotional crisis points sufficiently to cooperate in formulating a uniform plan for the best interests of the child. This movement from individual crisis to an issue involving an innocent third party (or wider social crisis) moves the conflict from a micro to macro level of involvement and changes the perception of the crisis as personal to one that can now be seen by the combating parties as an external crisis that needs mutual cooperation to resolve - and the common grounds for overcoming the obstacles to that solution - namely a common good (innocent child’s best interests). Interestingly, the approach advocated by the authors appears to be an accepted methodology within the California court, at least as it appertains to marital dissolution involving minor children. While consenting adults have some freedom to choose a more self-interested approach and are often guided by less than altruistic motives in seeking court redress, once children are involved, there is a public policy to put the interests of the children first, thereby sanctioning a collaborative approach to the conflict - at least with regards to the combatants minor children.

CULTURAL ASPECTS OF CONFLICT

Human communication expresses four dimensions, namely, physical, socio-psychological, temporal and cultural. The physical context of communication is the tangible or concrete environment in which communication takes place; socio-psychological context includes status relationships amongst the participants; temporal context includes the time and day as well as the time in history in which the communication occurs; and cultural context relies on the beliefs, values, and ways of behaving shared by a group of people (Bram, 1953; Devito, 2003). Cultural mentality is the term used to describe the manner in which a society interprets reality, and is said to be divided into three sectors. The ideational mentality is the spiritual interpretation of reality, where the needs of man are believed to lie in high ideals, and truth is clear and absolute; Sensate mentality relates to physical pleasure, and according to German philosopher Friedrich Nietzsche, “ from the senses of pleasure come all trustworthiness” therefore, sensate culture will emphasizes pleasure and will lose its normative values of right and wrong; Idealistic mentality combines the elements of ideational and sensate mentalities (Wahrman & Denisoff, 1975). Each culture has its own unique aspects that may be misunderstood or misapprehended by those unfamiliar with them. Added to this is the confusion stemming from language barriers. Therefore, when dealing with conflicting situations that are culturally varied, flexibility appears to be a successful strategy. The natural ability to interpret someone's unfamiliar and ambiguous gestures the way that person's compatriots would to create a fruitful collaboration in situation where cultural differences play, is known as Cultural Intelligence (CI). A key factor that influences behavior across cultures is the means by which people influence others and use of power in relationships. Cultures can be egalitarian which have relatively permeable status boundaries, and empower their people to resolve conflict for themselves. Some cultures are hierarchical where the status boundaries are fixed, and in these cultures, people of lower status are expected to respect those of higher social status (Earley & Mosakowski, 2004; Zartman, 2010). For example, because Asian cultures emphasize the importance of saving face, Asians are less apt to use blame and rejection as conflict strategies (Devito, 2003). The importance of integrating knowledge and an open-minded attitude and putting them into adaptive and creative practice in everyday communication is emphasized by flexible intercultural communication (Toomey & Chung, 2005). Holding difference as a constant, mindful listening, consideration of

Journal of Management Policy and Practice vol. 14(3) 2013 117 fairness, and a win-win outcome need to be our focus when dialogue is started, because each culture exhibits both functional and dysfunctional aspects (Kelley, 1967; Toomey & Chung, 2005). The purpose of communication is to discover, to relate, to help, to persuade and to play. When an individual engages in communication with another, he or she learns about her/himself as well as others, and the individual’s self-perceptions are as a result of what he/she has gathered about him/herself from others. We have strong motivations to establish and maintain close relationships with others, and there are those whose roles allow them to consistently help others whether as apparent, a teacher or counselor, to name a few. We also spend a great deal of time persuading others to see our points of view along with play based communication (Devito, 2003). Further, appropriateness, effectiveness, adaptability and creativity are the main skills needed to manage multiple meanings in a communication exchange. Appropriateness is assessed by understanding the underlying ethics, ideals, social roles, expectations, and social scripts that govern the communication interaction. Effectiveness is the degree to which the parties communicating can find mutually shared meanings and integrate goal related outcomes. Adaptability is the ability to change to meet the specific needs of the communication as it happens. Creativity is the ability to combine the best of both cultures into a synergistic solution or conclusion (Toomey & Chung, 2005). Each cultural conclusion derived from its crisis management.

TYPES/LEVELS OF CONFLICT

Intrapersonal, interpersonal and intragroup conflicts are the types of conflicts that will be discussed in this paper. Intrapersonal conflict is that which one engages with one’s own self, such as an individual who is a teetotaler partaking drinks in a social circle though he/she does not want to do so. Interpersonal conflict, typically between two individuals, is seen in the work environments, and can be caused by individuals who are unable to find a mutually beneficial or working relationship. Also seen is a dearth of differed opinions and experiences, enhanced by lack of common ground and personalities that may not be on the same wave-length. Examples of interpersonal conflict are found in domestic relationships, house- mates or team mates. Intragroup conflict can occur as a consequence of lack of resources, coherence, communication and power dynamics within the group. It may involve multiple groups. There are three levels of conflicts. Latent conflicts are underlying tensions that have not fully developed and have not escalated into a highly polarized conflict. An example would be changes in relationships in which one party is not aware of the seriousness of the breach that has occurred. Emerging conflict is where the dispute is acknowledged, however a workable cooperative negotiation has not developed. Manifest conflicts are those where the parties are engaged in an active and ongoing dispute, may have started to negotiate and may have reached an impasse (Coltri, 2010; Rummel, 1976). The business climate, domestic or international, is fraught with crisis. From resourced management, employee relations, government regulations, human frailties, conflict management is an integral part of the management of a company’s future success and even survival. Successful conflict management is the outcome of successful crisis circumnavigation. By the methods utilized, positive team-building and moral can be achieved; competitive often leads to resentments and anti-moral behavior. Every transaction, every social interaction contains potential crisis. Crisis is often imagined, which makes the choice of perception contained in the opportunities that may result from the crisis critical.

FUNDAMENTAL ATTRIBUTION ERROR

In 1958, Heider postulated the Attribution Theory which basically explores how people interpret events and relate them to their thinking and behavior; and that behavior can be explained in two ways by attributing it to a person, or attributing it to a situation. Later, researchers like Kelley (1967) and Jones (1972) expanded on this theory to develop a theoretical structure that bifurcates the behavior attributes into two parts. When a behavior’ s cause is attributed to the individual self, personality, abilities, and traits of the person involved, it is called internal attribution; if the cause of the behavior is attributed to

118 Journal of Management Policy and Practice vol. 14(3) 2013 environmental constraints, other people’s actions, and properties of the situation, it is external attribution (Heider, 1958; Jones & Nisbett, 1972; Kelley, 1967; Reeder, 1982). Additionally, according to Kelley (1967) the Covariation model proposed by him states that the effect is attributed to one of the causes which co-varies over time, and it considers three major types of information to make an attribution decision and to observe a person's behavior. (a) The Consensus information refers to how people will respond to similar stimuli in similar situations, leading to a high (their reactions are shared by many) or low consensus (no one or only a few people share the reactions). (b) The Distinctiveness information explores how a person responds to different situations, and the distinctiveness is high if a person reacts differently in different situations, and the distinctiveness is low if the person reacts similarly in all or most of the situations. (c) The Consistency information is where the response of a person to different stimulus and in varied situations remains the same, leading to high consistency (Kelley, 1967). Also known as correspondence bias, Fundamental Attribution Error (FAE) describes the proclivity for observers to credit people’s behavior to internal or dispositional factors and to downplay situational causes, and that observers tend to explain behavior in terms of the actors internal disposition rather than the external situational factors (Amabile, Ross & Steinmetz, 1977; Gilbert & Malone, 1995; Kazdin, 2000). Fundamental attribution error is said to occur when the perceiver does not have full knowledge or background information of that situation, and the person will then depend on dispositional factors in order to explain and understand the particular event (Reeder, 1982; Gilbert & Malone, 1995). FAE has merits and demerits. On the positive side, FAE gives people a sense of control over their social environments; on the negative side, observers will feel indifferently if they believe a person’s behavior is a direct result of his/her internal dispositions. While FAE may also lead to misattribution in particular situations, it can also serve as a useful heuristic (Reeder, 1982). Dynamic approaches to crisis management include a constant attentiveness to the changing environment as conflict actors move from one perception to another based on internal and/or external attributes - inputs.

CRISIS MODE

When individuals are in the crisis mode, they are not receptive to resolving the conflict. While avoidance of conflict or the individuals representing the conflict is a possible strategy, it is not going to be productive in the long run, as the tension that created the disagreement will remain and hinder a participatory environment. In some situations, there are other forces obstructing the path to resolution. There are three categories of impediments to resolving conflicts, such as the forces that create independent motives against resolving conflicts; the forces that complicate the situation and make it harder to find a solution, and forces that reflect or produce perceptual distortions (Coltri, 2010, p. 38). When individuals are in the crisis mode, they are not receptive to resolving the conflict. In some events, there are other forces obstructing the path to resolution. Let us explore why and how conflict remains stagnated for extended periods of time. While engaged in conflict, if the feuding individual (s) is experiencing these feelings below, the conflict remains suspended in a state of agitation. Many crises do not involve direct human conflict, but are the result of external factors affecting the environmental framework wherein humanity exists. Water and air quality, as well as species extinction, and even global warming are examples of bi-products of human activity which left unchecked, evolve into crisis. The conflict between adherents to change and those who advocate stasis represent the transmutation of failure to act that arises to a critical imperative to act. Under threat of destruction or annihilation people tend to take a collaborative approach to crisis management. Heroism is an outcome of crisis management and often displays the positive outcome possible from collaborative crisis management modalities. Cowardice may be another form as it promotes a self-serving resolution of a conflict - confrontational crisis management. Fear invokes response and in a crisis that response may manifest in the so-called “fight or flight” response. Either may be a successful short-term conclusion to the crisis, but the motive behind the response utilized, if for self-preservation or whether it is for a common good, may determine whether or not the long-term result is positive.

Journal of Management Policy and Practice vol. 14(3) 2013 119 Communication involves symmetrical and complimentary transactions. Symmetrical and complimentary transactional thinking: when two individuals mirror each other’s behaviors, it is known as symmetrical transaction or relationship. They feed off of each other’s negative attitudes and expressions which will continue to flame the situation. In communication that is complimentary, the behavior of one serves as a stimulus for the complimentary behavior of the other, and the differences between the parties are maximized, one becomes superior to the other (Devito, 2003). While engaged in conflict, if the feuding individual (s) may be experiencing these feelings below, the conflict remains suspended in a state of agitation.

Confrontational; conniving/conspiring to gain an upper hand, where each party vies to win the conflict; being overly critical of the intentions, motivations and attitudes of others Revenge or retribution seeking; negative regard for the opponent; reactionary; rejection Isolation: prefer not to engage anyone; feels alone and abandoned but is reluctant to reach out to anyone for fear of being talked out of the conflict; general demeanor of irritability and annoyance. Shame and humiliation at the prospect of losing the fight; has a vested interest in winning this conflict, and is not about to concede, because concession is seen as a sign of weakness and failure. Increased negative regard for the others; hostility and resentment are expressed. Severance from the conflict/parties (I don’t care attitude).

The Great Philosopher Socrates believed that opinions and ignorance ultimately lead to wrong and faulty understanding. He professed that through knowledge, the existence of only one truth is attainable; this truth can be shared in a way to capture a morals true nature or essence (Encyclopedia Of World Biography, 2004).

CRISIS GROWTH

“Let us never negotiate out of fear, but let us never fear to negotiate” John F. Kennedy. To experience growth also means the individual has to be receptive to transforming power and the possible changes stemming from this acceptance. Moral truth is based on actions, postulated Immanuel Kant. He further opined that the successful creation of moral truth needs people to act from duty and that motives determine value of an action (Rosenstand, 2009). Conflict has an impact on the situations and tends to change things. These changes can be personal, relational, structural and cultural. When the changes are cognitive, emotional, perceptual, and spiritual aspects of human experience, the change is said to be on the personal dimension. In the relational dimension, the issues of emotions, power, and interdependence, and the communicative and interactive aspects of conflict are central. The structural dimension highlights the underlying causes of conflict, and stresses the ways in which social structures, organizations, and institutions are built, sustained, and changed by conflict. It is about the ways people build and organize social, economic, and institutional relationships to meet basic human needs and provide access to resources and decision-making. The cultural dimension refers to the ways that conflict changes the patterns of group life as well as the ways that culture affects the development of processes to handle and respond to conflict (Lederach, 2003). John Lederach coined the term conflict transformation in the early 1980s because of his belief that “conflict is normal in human relationships and conflict is a motor of change. And transformation is clear in vision because it brings into focus the horizon toward which we journey, namely the building of healthy relationships and communities, both locally and globally. This process requires significant changes in our current ways of relating.” Given that conflict and change are a part and parcel of human life, it is only fair that we attempt to understand the bonds that create this relationship (Lederach, 2003). So what do we do to lead us to the path of growth? For starters, reaching to find mutual goals and outcomes would help. To allow ourselves to be open to the communication that may be headed our way is another step. The great philosopher-monk Nagarjuna (C150-250) opined that things derive their being and

120 Journal of Management Policy and Practice vol. 14(3) 2013 nature by mutual dependence and are nothing in themselves. Negotiation, done in good faith, is the noblest of crisis management tools. When a mutually beneficial outcome is the determined goal, the result will be probative and truthful learning through managed conflict. Chaos is a state of being, and a positive crisis management modality promotes positive results through a continual resolution of the conflict that is natural in moving chaotic impulses to stable responses. Even opposed ideals will have common ground on which to build common rapport while each may still resolve specific crisis on an individual basis, but it will be without the resultant harm to the other party that is naturally found with combative and self- interested approaches. Open communication, honest exchange of information and goals will more often lead to common understanding and collaborative efforts at mutual beneficial outcomes. When a conflicting individual is in the growth mode, the feelings, views and experiences may be different. The individuals therefore may want to seek other forms of resolution, should they accept these definitions of the word Crisis (not necessarily in this order prescribed below).

Communication for common ground, leading to the path of compromise; the conflicting parties tend to look constructive/considerate/collaborative approaches to create change in perspectives. Reflective, respectful reconciliation and communication; recognize that others are only human; the individual will begin to accept the transgressions of the others as mere human failings Inclusion and integration of the other party’s feelings and needs, accepting and acknowledging the other party has feelings is by itself a big step, because when we attribute human qualities to others, it creates an additional responsibility in us to perhaps consider their feelings and emotions. Sympathize with the others, we may have empathy for the conflicting individual but not necessarily sympathy, these two are not always interchangeable. Empathy enables one to comprehend what the other is feeling, on an intellectual and emotional level, where as sympathy is feeling sorry for that person. Thus, if we are leaning towards a growth period derived from the conflict itself, we may extend our sympathy to the others for their losses as well. As we are aware, each conflict has wins and losses on both sides, though the quantitative and qualitative factors may be different. I-messages can be a means of transforming a conflict situation by arousing empathy leading to individual transformation, where one takes responsibility for the issue at hand and de-escalates the conflict; an inner change, self-actualization that allows us to see beyond the conflicting horizons, and view the individual as an individual and not merely as an enemy combatant. You refrain from attacking the person, but instead seek resolution of the conflict. You expect the best in others. Suspending evaluation and judgment of others; seeking symbiotic strength. Most human beings tend to be judgmental, whether due to environmental, transcendental, cultural, biological or other proclivities. To experience transforming power of the conflict growth, it is imperative that we abstain from scaling Mt. Olympus and seat ourselves in judgment of others.

What we bring forth to the tableau also makes a difference, our attitude can set the stage for disaster or jubilation. Poet John Keats (1795-1821) captured it well when he said “I would sooner fail than not be among the greatest.” This is the essence of human strength and valour in wanting to try something new, unique and clearly uncharted. To embark on a journey of transformation is by no means facile, the challenge lies not in the ease of the process but in starting the process itself, the strides one needs to take to reach out to the other conflicting individual can be stressful. Human egos are pendulous in nature, what is a sign of self-actualization and growth by some is seen as a sign of weakness and concession by others. This linear and narrow interpretational difference can preclude one from seeking change. We are capable of detecting and deciphering the goodness in those around us.

Journal of Management Policy and Practice vol. 14(3) 2013 121 Comparative Table at a Glance

Crisis Mode Crisis Growth Confrontational; conniving/conspiring to gain an Communication for common ground, leading to the upper hand, where each party vies to win the path of compromise; conflict Constructive/considerate/collaborative approaches to create change in perspectives. Revenge or retribution seeking; negative regard for Reflective, respectful reconciliation and the opponent; reactionary; rejection of others’ communication; recognize that others are only views human

Isolation: prefer not to engage anyone; feels alone Inclusion of the other party’s feelings and needs and abandoned but is reluctant to reach out to anyone for fear of being talked out of the conflict; general demeanor of irritability and annoyance.

Shame: feel humiliation at the prospect of losing Sympathize with the others’ situation; acceptance the fight of possible compromise or concession

Increased negative regard for the others; hostility I-messages; individual transformation; recognize and resentment are expressed. that he/she has the power to make a change

Severance from the conflict/parties (I don’t care Suspending evaluation and judgment of others; attitude) seeking symbiotic strength

CONCLUSIONS

The nineteenth-century German idealist, George Hegel saw man as an actor in the drama of history. Actors express opposing ideals and values and argue passionately that each is right. This process of competing idea systems he called Dialectical process, it refers to the competition of two opposing forces and the emergence of a new force from this clash. It starts with one force called a thesis, and is challenged by another called the anti-thesis, resulting in a third force, a synthesis that incorporates both. With each conflict, a synthesis is reached, and a better form of knowledge is born. Hegel thus welcomed conflict, because he felt progress would come only through struggle. Change is imminent, which means that the cause of the change is in the unit that is changing. Early sociologist August Comte believed that human beings exhibited natural tendency to move from an uncomfortable point of stress known as disequilibrium, to a point of harmonious plenty, called equilibrium. He believed in the face of adversity, people improved (Wahrman & Denisoff, 1975). Survival of the species may depend on how we approach the harmonization of self-interests (the ego and the id) and those of the society we live in or aspire to create. The bunker mentality, wherein we tend to look at survival as a personal success and divine right, is in opposite to Darwinism on a species level. Humans are societal creatures, needing the security and eclectic assistance of fellow man in developing the tools on which our survival depends. Mastering conflict management tools may include the ability to suspend the ego or to subvert it to the greater need of the species in order that even the individual may survive. Individual contributions to the collaborative team effort or brainstorming that is required to gain mass support of game changing ideas demands that the individual effectively rises above or attains a level of enlightenment in order to have personal self-esteem not dependent on constant reinforcement from outside stimuli. Me, me, me cultural attitudes tend to be counter-productive when large-scale conflicts

122 Journal of Management Policy and Practice vol. 14(3) 2013 arise. Suspension of personal feelings, while difficult, may ultimately have a biological imperative genesis: the common good outweighing the good of the individual when it comes to survival of the masses. This tends to be true in geo political and industrial environments. Alfred Lord Tennyson (1809- 1892) so poignantly said, Knowledge comes, but wisdom lingers. The wisdom gained from successfully resolving conflicts should thus serve humankind emancipate ourselves from being in a crisis mode for any other conflicts arising later, at least such is the hope of the authors anyways.

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