PROCEEDINGS of the VIRTUAL CONFERENCE 2021 March 6-7, 2021 ISSN 1934-0583

PROCEEDINGS OF THE VIRTUAL CONFERENCE 2021 March 6-7, 2021 ISSN 1934-0583

Conference Chair Wali I. Mondal National University

Proceedings Editor Pani Chakrapani University of Redlands

Conference Chair and Editor’s Note ASBBS is an interdisciplinary conference. As such, we have preserved preferences of each author regarding formatting and referencing of individual paper. We thank all participants for their valuable contributions.

ASBBS Proceedings of the 28th (Virtual) Conference

INDEX

KEYNOTE SPEECH THE RISE OF AUTHORITARIANISM: VIGILANCE IS REQUIRED ------Meyer, C. Kenneth 4 KEYNOTE SPEECH HIDDEN SYMPTOMS OF THE COVID-19 VIRUS: TECHNOSTRESS IN HIGHER EDUCATION ------Boyer-Davis, Stacy 13 ORGANIZATIONAL SAFETY AMIDST A PANDEMIC: THE CHALLENGE OF DEVELOPING A VIRUS POLICY ------Alvarez, Isabella, and Findley, Henry 26 UTILIZING MEDIATION TO RESOLVE CAMPUS CONFLICT: THE SKY IS NOT THE LIMIT----- Brown, Anne L., Bienstock, Joshua E. and Swid, Amr 41

COVID-19 AND HUMAN RESOURCE MANAGEMENT LITIGATION: WHAT SHOULD EMPLOYERS DO?------Calvasina, Gerald E. Beggs, Joyce M 50

FAIR INFORMATION PRACTICES: AN EMPIRICAL REVIEW OF THE FORTUNE 500 ------Case ,Carl J.and King, Darwin L. 60 THE HOMOGENIZATION OF THE HOMO SAPIENS THE WORLD OVER ------Demirdjian , Z. S. Andrew and Mokatsian, Zara 68

LET THE GOOD TIRES ROLL ---- Dittfurth, Ed, Joiner, Sue and Lewis, Kevin 77

CURRENT EXPECTED CREDIT LOSS (CECL): THE OTHER SIDE OF THE STORY ----- Grealis, Tara, Henderson, Katelyn and Tomolonis, Paul A 83

COLLABORATIVE ONLINE INTERNATIONAL LEARNING IN A BUSINESS COURSE DURING THE COVID-19 PANDEMIC ----- Hartling, Xu 93

COVID-19 AND THE HEALTH INDUSTRY: A TEST OF MARKET EFFICIENCY ----- Howell, Nicholas, Bacon, Dr. Frank 99

POLITICAL ECONOMY OF THE PANDEMIC: HOW AN EPICENTER MANAGED IT…SO FAR ------Jesmin, Rubayat 104 UNDERSTANDING THE STATE AND THE ROLE OF COOPERATIVES IN SOUTH AFRICA: A PROFILING APPROACH ------Kalitanyi, Vivence 116

HEALTHCARE SURCHARGES AND RELATIVE PRICE DIFFERENTIALS ------Mattea, Annette M and Gordon, David M 131

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REPORT ON A CONTINUOUS IMPROVEMENT PROJECT WITH A VA SURGICAL SERVICE LINE ------McCall, John E. and Militello, Jack 136

ONE THING MANAGERS NEED TO DO TO INSPIRE, EXCITE, MOTIVATE AND RETAIN RETAIN EMPLOYEES – RECOGNIZE STRONG WORK PERFORMANCE----- Petak, Trish 143

THE CY 2021 PDGM 30-DAY HOME HEALTH PROSPECTIVE PAYMENT SYSTEM RATES FOR HOME HEALTH SERVICES Rivera Jr., Gonzalo and Holt, Paul 159

EFFECTS OF ISLAMIC BELIEFS ON FOSTERING ENTREPRENEURIAL ACTIONS: AN EXPLORATORY STUDY………………Roberts, Ridwaan B 168

CONTRASTING FEMALE AND MALE RATINGS OF LEADERS: LOOKING THROUGH A LEADER-MEMBER EXCHANGE LENS ------Stemple, Nathaniel, Garger, John and Jacques, Paul H. 185

EXAMINATION OF THE EFFECTS OF CHANGES IN THE FEDERAL FUNDS RATE TARGET ON THE SHORT-TERM EQUITY MARKET ------Sumner, Jacob A. and Bacon, Frank W. 192

LOW-COST METHODS FOR PREVENTING EMPLOYEE FRAUDS IN SMALL BUSINESSES ----- Treadwell, Gregory W. 196

A TEST OF MARKET EFFICIENY: HURRICANE KATRINA’S EFFECT ON OIL COMPANY STOCK PRICES ------Williams, Casey A. Bacon, Frank 204

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THE RISE OF AUTHORITARIANISM: VIGILANCE IS REQUIRED Keynote Speech Meyer, C. Kenneth Drake University

C. Kenneth Meyer is Thomas F. Sheehan Distinguished Professor of Public Administration, Department of Public Administration, Drake University, Des Moines, Iowa. Previously, he held teaching, research, and administration positions at The University of Oklahoma, Winona State University, State University of New York, and the University of South Dakota. His research covers the areas of violence and the police, social indicator and quality of life measurement and evaluation, voting behavior, human resource management, and public and private management--areas in which he has over 450 publications. In addition, he has done extensive consulting in the areas of public policy analysis and administrative organization and development at the state and regional levels of government. He previously served on the Executive Council of the National Association of Schools of Public Affairs and Administration (NASPAA), and presently serves on a number of national committees with the American Society for Public Administration. Among the 28 books that he has co-authored, the most notable are: The Sources of Violence in America, Practicing Public Management, Managing People as Assets, Human Relations in Action, Experiencing State and Local Government, Understanding Nonprofit Organizations, Public Personnel Administration, and The Craft of Public Administration, 12th Edition, forthcoming). He formerly directed the largest MPA program in the U.S. with 26 sites worldwide. He inaugurated a study at home/study abroad course, now in its 22nd year, that introduces graduate students to international best management practices in all three economic sectors. He was recognized by the British House of Parliament with “Green Apple Award for Environmental Best Practices.” He is military veteran, an eternal optimist who values inclusiveness, loyalty and commitment to democratic ideals.

It is a distinct honor to present this keynote address to the 28th Annual Conference of the American Society of Business and the Behavioral Sciences (ASBBS) and welcome participants from all over the world to an exciting day of high quality research paper presentations. To this end, I wish to commend Dr. Wali Mondal for his continuing ability to present this conference and maintain its intellectual and academic integrity, even during a pandemic. I would be remiss if I did not mention the salient role Dr. Mondal has played for many of us in the behavioral sciences and in our professional endeavors as a mentor, colleague, distinguished professor of economics, and always as a trustworthy and loyal friend.

A Personal Reflection: During 54 years of research and teaching, I have taught thousands of students in the U.S and around the world. I always reassured them that the basic institutions and structures of government would “hold steady” when under a state of siege, for the roots of our

ASBBS Proceedings of the 28th (Virtual) Conference government run deep in theory, practice and in tradition, and the leadership would “...support and defend the Constitution against all enemies, foreign and domestic….” I talked about the tenets of democracy as being only superficially accepted and embraced, and that our civic knowledge of these principles and processes was like a veneer on a table. That is, it was a thinly disguised coated layer that could be easily blemished or deeply marred. Although the U.S. was the longest lasting constitutional republic in history, there was no assurance that would remain inviolate over a protracted period of history and become unstable. That it had survived the Civil War, World Wars I and II, Korea and Vietnam and another nearly 35 other skirmishes and police actions, but that it could be usurped by those who were not deeply committed to its basis underpinning—those who would give up democracy for autocracy and power and an “unswerving loyalty” to a strong person (man) or a charismatic cult leader. I always talked about the basic pillars of a democratic order: Knowledge of the actors of government (policy makers), the structure of government, the actual policies of government, and how to effectively communicate with those in representative positions. Today, these fundamentals are in jeopardy and a majority of the citizenry cannot answer any of these questions with accuracy. Further, I asked that as we collectively study public administration, and analyze the daily news and political events, etc., to ask if those in the executive, judicial and legislative branches are holding true to the sacred oath, which they have sworn to uphold.

Additionally, I exhorted the students to think about what they have experienced, what they are learning, and what they are observing on a day-today basis, and asked them how they would react if the fundamental ideas of our democracy came under attack—would they sound an alarm or merely comment on the music that the band leader has selected as the ship of state begins to take on water, begins to list, and even sink. The U.S. Constitution does not come in an unabridged edition—we do not have the option to hunt and pick only those items that suit our fancy. Indeed, there is a long and established, somewhat complicated democratic process by which we collectively agree on what is inviolate in this sacred document: The Constitution of the United States of America.

As a youthful graduate student I recall how interested I became in utopian literature and reading the Utopia of Sir Thomas More, some of the communalists, and even those who espoused one or another societal design that was anarchistic, socialistic or even that of primitive communism. The book that left a lasting effect was the dystopian society imagined by George Orwell’s 1984, (1949), a democratic socialism essay, and his strident opposition to anything totalitarian. I also remember the duality of oppositional values that were emblazed in my memory: “War is peace. Freedom is slavery. Ignorance is strength.” Also, the notion of “Big brother,” and “doublethink”—having two contradictory beliefs and accepting them both, simultaneously, and that of “Newspeak”—euphemistic, “babblefab,” and the popular propaganda associated with pseudo-evaluation and obfuscation.

Anecdotally, the lyrics in Dylan’s “The Times They Are A-Changin” served as an anthem for civil rights and anti-war movement of the 1960s are instructive as they were then, to the political elite now—don’t block progress; to parents and elders alike—get with the times or get out of the way; and a paraphrase of the biblical injunction— “So the last shall be first, and first last.” However, the political idiom of authoritarianism that obfuscates the meaning of language and understanding is now commonly found in the new language of doublespeak: “Just is Unjust, White is Black, Good is Bad, Noble is Ignoble, Desirable is Undesirable, Equal is Unequal, Fair is Unfair, Legal is Illegal, Normalcy is Chaos, Facts become Alternative Facts, Virtue is Vice, Night is Day, Truth is Lie, Unity is Division, Truth is Irrelevant. Civility is Incivility, Honesty is Dishonesty, Trustworthiness is deceit, Special Interest is Public Interest,” and other aphorisms too numerous to mention. A casual walk-through the garden of authoritarian literature reveals a nearly unexhausted listing of traits, trends, tendencies and characteristics when studied overtime. The lists of countries that have

ASBBS Proceedings of the 28th (Virtual) Conference or had authoritarian regimes is instructive at this point of the discussion: Angola, Bahrain, Belarus, Vietnam, Cambodia, Saudi Arabia, Syria, Turkey, Uganda, People’s Republic of China, Egypt, Ethiopia, Iran, Laos, North Korea, Qatar, Russian Federation and many additional nation states. To the casual observer of present societal and political change, these contradictions may not be obvious especially as society begins to embrace, perhaps unconsciously so, some of the anti-democratic tenets embedded in authoritarianism and totalitarianism. A tentative list includes some of the following characteristics: 1. Hampering of free and fair elections and the political positioning that the elections are a fraud and electoral corruption dominates the process, which instills a loss of trust and legitimacy in the democratic process. 2. Engagement in or encouragement of electoral fraud 3. Interference with opposition campaigning 4. Lack of an independent third party 5. Manipulation of information as a control mechanism, especially use of conspiracy theories 6. Tendency to create the appearance of good and effective government performance 7. Threatening the rule of law 8. Minority rights become jeopardized 9. Separation of powers comes under attack between independent branches of Government 10. Judiciary becomes packed with illiberal judges and the uneven administration of justice 11. Freedom and independence of the press is thwarted 12. In conflict, tendency to increase the use of social control rather than use diplomacy, mediation, dialogue or compromise 13. Regime uses lies and fear and reward of economic prosperity 14. Threat to the actual use of libel judgments against opposition 15. Mobilization of citizens through political party organization or other forms of mass organizations 16. The powers of executive branch become distorted and blurred 17. The legitimacy of the (regime) government is based on emotional appeal 18. The gradual erosion of civil liberties and protections 19. Dominance of personal power over traditional instructional norms of behavior and the appearance of a cult of personality 20. Manipulation of electoral districts and voting laws to accomplish personal political goals, especially the granting of the franchise to those who have the right traits (race, religion, gender, etc.) associated with being loyal to the regime and denial of the vote to those who are viewed as being “dangerous” to the governing elite, political party, or regime. This tentative list is illustrative of the many factors and tendencies that undergird the formation of authoritarian regimes or governments. Some of these attributes are apparent in the following examples of how powerful administrators in the national government of the United States, especially at the presidential level, behave, the statements they utter, and the values they embrace which give way to citizen anger, deception, and destruction of integrity, truthfulness and trustworthiness. These attitudes. actions, and behavior, if they remain unchecked, thwart the legitimacy of our basic governmental institutions and are epitomized by these following statements and actions. An interesting exercise is to place one or more the twenty tenets of authoritarianism, by number, next to each bulleted statement:

ASBBS Proceedings of the 28th (Virtual) Conference

• Justice is undermined as citizens are told that the system is rigged and corrupt; that absentee balloting corrupts the electoral systems and is rifled with fraud. • Abuse of power and retaliation against those who are loyal to the Constitution rather than giving loyalty to the presidency • Abuse of the oath to protect and defend the Constitution is routinely violated • Seeds of discord and polarization between races are intentionally sown; • Transparency gives way to lying, assault, intimidation, and harassment of political opponents; • De-legitimization of credible news and media as the enemy of the people; • Suppression of vote and popular electoral participation through voter registration laws, gerrymandering, and manipulation of election information (robotic calls); • Discrediting scientists, journalists, the 4th Estate, intelligence, etc., as dangerous to democracy and the enemy of the people (Hints of Franco and Mussolini); • Loss of ethical and moral way and the belief that personal interest is national interest; • Degeneration of democratic processes, norms, and implicit support of patriarchy and white supremacy; • Lawlessness of officials who hold positions of public trust; • Erecting a wall on the Mexican border with funds diverted from authorized programs and activities--several hundred miles of existing wall were refurbished, but only a few miles of new walls were actually built (SC ruled that the diversion of appropriated dollars from defense budget was unconstitutional). • Executive and congressional attacks on the CIA, FBI, DOJ, DOS, and he CDCP, and EPA as constituting the “deep state” • Attack on the “rule of law” and the regular obstruction of justice; • Violation of the “separate but equal” standard of the Constitution as applied to three branches of government and refusal to comply with congressional subpoenas and oversight—see Article I, Section 8, U.S. Constitution • Corruption in the Whitehouse, among the aids, staff members, and among campaign workers; • Placing an immigration ban on seven selected countries which were largely Muslim in religious orientation; • Practice of presidential and congressional staff supporting and perpetuating the lie, thereby serving as collaborators, accomplices, and co-conspirators; • Twitting neo-Nazi and extreme information that was fabricated; • Attack of a federal judge on basis of ethnicity; • Illegally requesting voter information and violating rights to privacy; • Fabrication of story (lie) that presidential candidate was born in foreign country; • Violation of federal emolument clause; • Countenance of Russian, Ukrainian, Iranian, and to a lesser extent, Chinese meddling in U.S. national and other elections which were more dangerous than 9/11, and foreign government use of Facebook and other social media to spread propaganda and undermine democratic politics; especially noteworthy, the Russian interference in the 2016 and 2020 national elections in support of the Trump presidency and use of social media to sew social, racial and electoral disinformation and doubt; • The use of foreign powers to disrupt national electoral politics by providing misinformation on opposition candidate for president, leading to impeachment of the president; • Violence directed toward journalists, grant of approval to build concentration camp in China for dissident Muslim sect, and placing human rights protection in jeopardy; 7

ASBBS Proceedings of the 28th (Virtual) Conference

• Granting presidential favors to dictators that are liked in return for self-interest request; • Disruption of long established mechanisms for transatlantic peace with strong European allies, and the withdrawal from WHO, Climate Change Treaty, and the general weakening of alliance with Canada, Japan, South Korea, Japan, and countries in Oceania; • Use of nepotism to fill high leadership positions in national government, counsel and diplomacy; • Dismissal of diplomats, diversion of national diplomatic relations and interests to self-interest and self-aggrandizement; termination of U.S. district attorneys (NYSD), inspector generals (DOD, HHS, DOS, etc.), for political reasons, rather than on a record of performance, subverting the independence of the judiciary, and politicization of the department of Justice. • Use of nearly 30,000 lies, deceitful and deceptive practices to misinform the citizenry, resulting in the unravelling of democracy. Examples of lies include, Veteran’s Choice was signed into law by Obama—not Trump; National energy policy that spurned development was initiated by Obama—not Trump; supporting the medical coverage for pre-existing conditions, while attempting to rescind the Affordability and Protections Act (Obama Care); and that China was paying massive billions for imposed tariffs when U.S. consumers paid the tariffs. • Use of anti-Semitic slogans and symbols to characterize political opponents and parties, and the tweeting of fascist symbols in political messages; • Prolific anti-scientific expressions, behavior, and attacks against scientific authority, specialized, expert knowledge in relation to climate change, vital statistics, health care and pandemic facts, and by the politicization of government reported scientific studies and reports (NIH, CDCP, EPA, and USDA). The altering of meteorological maps during a hurricane to the denial of scientific and vital facts related to employment, trade, and the pandemic; • Use of special government force comprised of Bureau of Federal Prison, Secret Service, Immigration and Custom Enforcement, and TSA personnel to squash legitimate protestation and demonstration by using the threat of violence and employing non-lethal projectiles and various gases to control and move legitimate speech and assembly; • Solicitation of a foreign hostile power to interfere in national election and jeopardize national security through “dirty oppositional research” and trade relations that were not in the nation’s interest • Use of scapegoating practices to cover-up fraud, waste, abuse of authority and mismanagement (China, WHO, UN, WTO, to multilateral alliances); • Ineffective cyber security policy, unrepresentativeness of representative democracy (gerrymandering, and many, different strategies to undermine universal suffrage—the New Jim Crow laws. • Widespread self-dealing and other corruption, conflicts of interest, and undermining of the Constitution, and weakening democracy at home and around the world; • Use of white supremacy, nativism, Nazism, neo-protectionism, xenophobic and jingoistic, totalitarian etc., language and memes that diminish democratic mores, norms, customs, and other standards of behavior; • Personalization of foreign policy “…it is what I say it is” rather than what is in the national and public interest; • Placing asylum seekers and their children in detainment “shelters,” “cages,” etc., in violation of national and international law, and basic human rights. • Support and furtherance of conspiracy theories that undermine the legitimacy and trust in established governmental institutions, structures, and processes, such as democratic elections,

ASBBS Proceedings of the 28th (Virtual) Conference

the independence of the judiciary, administrative competence and expertise (the deep state), and public policies, such as fair housing, voting rights, immigration and naturalization, social and human services, health care, energy, housing, climate change and policies toward eliminating inequality. • The development and deployment of a national, paramilitary, police force, that is camouflaged, anonymous, autonomous and makes arrests of protestors/demonstrators on the city streets, without probable cause, and is not held accountable. The special police force is largely made up of Department of Homeland Security personnel and was initially used to “quell riots and demonstrations,” although its role has been largely changed to deal more generally with violent crime and gang activity. Further, these officers do not wear badges, name tags, insignias, etc., and operate with secrecy using unmarked vehicles and violate both substantive and procedural constitutional principles. • Executive pronouncements that jeopardize the long established norms, laws, and practices of presidential succession and threaten to undermine the legitimacy of elections by questioning absentee and mail in ballots. Also, the corrupt use of foreign policy that puts self-interest above the national interest, thereby promoting distrust of government through disinformation, misinformation, untruthfulness and using simple solutions and slogans to solve complex problems, such as Law and order, “Only I can fix it…” and blaming systemic problems on socialists and anarchists. • September 23, 2020, President Trump was the first president in U.S. history to state that he would not comply with the peaceful transition of power after the November 3, 2020 national election. What took 244 years to build in terms of a legitimate democracy, it took President Trump only four years to dismantle and put into jeopardy. The groundwork for delegitimizing the standard, national commitment to the supremacy of the ballot in a democracy and the rule of law has been on the political agenda for years and “Cult of Trump’s Personality” has begun, without doubt, to replace a legitimate political party. Republican politicos will not speak out against authoritarianism and their silence shows compliance, and some day they will seek forgiveness. It is amazing to watch those who gather at Trump’s political rallies (protestations) and amidst a pandemic refuse to defy their messianic leader by wearing a face covering and maintaining appropriate social distancing. “Without the ballot, there will be a peaceful transition of power,” Trump states. Without the mailed in ballot, Trump declares that he will win; with the mailed ballot, Trump will be defeated. Then what: Reliance on the state legislature manipulation of the Electoral College and a packed SCOTUS. • The demeaning and “othering” of those who are not of the Christian faith, LGBQT+, immigrants and refugees, etc., and targeting violent acts against them. • $1.9 billion dollars made by Trump’s commercial property transactions and revenue gained from foreign countries in operating hotels and selling real estate in violation of the emolument clause Not placing his property and wealth in a blind trust. Renting out commercial property to a foreign country that does not occupy the property in return for preferential treatment. • The participation of acolytes, disciples, enablers, perhaps co-conspirators, willing to commit sedition, undermine the precious “franchise” in order to maintain power; to deny the basic tenet of democracy—“…government of, by and for the people.” On December 10, 2020, a majority of the Republicans in the U.S. House of Representatives abandoned democracy and accepted autocracy. Our key political institutions, I thought, would hold during this period— they did not (Congress, federal level executive departments and agencies, selected news organizations, and the Republican Party). The military and judiciary held.

ASBBS Proceedings of the 28th (Virtual) Conference

• January 6, 2021, the seditious and insurrectionist act of sieging the national capital, assaulting law enforcement officers, vandalizing, and looting, and attempting to stop the peaceful transition of power and thwart the national electoral process. In summation, under Donald Trump, the nation’s presidential leadership lacked basic leadership and management policy-making and competency, was ill informed, amoral and unethical; the president was shown to be a demonstrable narcissistic, pathological liar, whose public decisions were moored in self-dealing and personal interest, rather than the national interest. Also, the president’s political inability to inspire and unite a citizenry, who governed by divide and conquer strategies, and placed many cronies in public trust positions who, like their head of government, have limited understanding of the basic organs and instruments of governance and the Constitution that they took an oath to support and defend. Widely understood that Trump presided over an economic collapse, the maladministration of Covid-19 pandemic, and the corresponding death toll that is greater than all soldiers lost in WW I,WW II, and Vietnam. As Senator Moynihan observed years ago, the president epitomizes the maxim of “…defining deviance down.” In brief, the 2020 election is no longer about Democratic versus Republican candidates for Congress and the President; the vote is either for democracy or for autocracy. What was unthinkable has become thinkable and doable. The existential question remains unanswered: Will the United States survive Donald Trump and those who enabled him as he attempts to destroy the sanctity of the democratic electoral processes, institutions, and democratic order? Even a qualified yes to this question leaves us with some major institutional rebuilding that will need to be done in our country during the next decade and an understanding of what was once considered truthful, factual, and trustworthy, which no longer has a shared national consensus, will need to be learned. The big lie has now been repeated and replicated with a fervor that is unmatched except for its pronouncement in the most despotic and autocratic regimes. It is a contagion that supports the cult of personality and loyalty to a person who places oneself above the rule of law…and some of his followers yell YEAH, USA! Without repeating everything I wrote about democratic theory nearly fifty years ago, I suggest the following simple statement: Democracy is an ideal, enshrined in a culture that embraces a process by which public choices are made, and exacts a form of behavior in society which we call “democratic.”

What is the legacy of this tale that I have unraveled and the rise of authoritarianism?

As historians are prone to say when queried about the relevance of history in predicting the future, history does not repeat itself, but the present rhymes with the past, like Mark Twain said, but if it is not repetitious, it certainly is repeated over and over by historians. At this point in our discussion, it is not useful to repeat what has already been stated! What will these anti-democratic, despotic, fascistic and authoritarian actions, policies, behaviors, etc., bode for the future? It has been stated with confidence, especially by those in political positions of power, that what the United States has just experienced is “…not who we are as Americans.” Unfortunately, what has been carefully sowed is now reaped and the harvest of hatred, racism, de-legitimization of our governmental institutions is plentiful.

Riled up for at least a decade and turbocharged for the last five years, with the clever use of the social media and a denial of truthfulness stemming from many of our most influential institutions and sectors, ranging from the world of religious authorities, businesses and corporations, Alt-Right media in its sundry different but influential forms, over75 millions would slowly, but inevitably, accept the Big Lies and conspiracy theories of would be dictators. It Was predictable that bolstered by a constant, reinforced gusher of lies, untruths, misinformation, and disinformation, augmented with magical

ASBBS Proceedings of the 28th (Virtual) Conference fantasies of reality that the end result would not only be chaotic and tumultuous, but violent. The cumulative impact of denying the legitimate birthright of a president, the conspiracy theories linking democratic, liberal funding (George Sorus) to massive invasions from central and south America (mass murder of Latinx in El Paso; Massacre of Jews at Tree of Life Synagogue), the legitimization of white privilege-supremacy-nationalism, QAnon, the “America First Movement.” These trends were augmented by the “counter-culture conspiracy enterprise,” ad infinitum, leading eventually to the denial of the legitimacy of the franchise in the 2020 national election. The refusal to accept the decisions of judicial procedures at all levels of jurisprudence (nearly 60 failed lawsuits), the complicit participation of nearly 150 Republican members of Congress in refusing to accept the official electoral college vote, and, then, the president of the United States inciting insurrection. At last, when all legitimate political and judicial resolutions failed to produce the totalitarian desires of the president and his co-conspirators, the Trump Mob of domestic terrorists raging uncontrollably through the Mall to eagerly and violently break into and enter, pillage, threaten, and urinate all over the halls and rooms of the “Citadel of Democracy—the Capitol of the United States of America.” For QAnon, the Oath Keepers, The Proud Boys, Boogaloo Boys, Nationalist Socialist Club (NSC), KKK, Three Percenters (Threepers), sundry militia groups and thousands of marauders, stood by upon entering the capitol for orders to lynch the vice-president, speaker of the house, etc., but the orders never arrived from their false prophet. In short, there was no “Great Awakening!” This was not a rag- tag mob! It was made of up violently crazed insurrectionists who came to Washington, D.C. to rally for the “Steal the Vote” falsehoods. These seditious lies were maliciously spread and endorsed by the sitting president, the cabinet and administration, prominent members of the Republican establishment and key members of Congress, such as minority leader Representative Kevin McCarthy (R), Senator Ted Cruz (R), Senator Josh Hawley (R), Senator Lindsey Graham (R), and many others, and then, embraced by the many followers of Trump. What should be done to refurbish the democratic principles and restore the United States to its once prominent role in canons of democratic governance? Thinking aloud for a moment, there are three things that rise to the level of immediacy if faith in our cherished institutions is to be restored and the nefarious, despotic and autocratic genie put back into the bottle: 1. The Congress had no choice but to impeach Donald J. Trump for “high crimes and misdemeanors” as quickly as the legislative process permitted; Donald J. Trump must never be allowed to hold a position of national trust; he must be held accountable; 2. Members of U.S. House of Representatives and Senate must disassociate themselves with the Big Lie of a corrupt, illegal 2020 national election; national legislation must be passed to insure the right to vote regardless of citizens categorical characteristics (race, gender, ethnicity, religion, socio-economic status, etc., to serve as a deterrent to the nearly 250 voter suppression laws under active consideration at the state level of government; 3. The Republican Party must disassociate itself with the legacy and presidency of Donald Trump; 4. The thousands of insurgents must be identified and criminally prosecuted to the fullest extent of the law; those insurgents who are active duty or retired paramilitary, law enforcement, and military must, if prosecuted and convicted, be stripped of all retirement, health care, commissary, space-A travel, etc., benefits and terminated from ever holding government employment, including all organizations, public, plural, or private, that receive federal grants or funding—for that is the earned fate of terrorists;

ASBBS Proceedings of the 28th (Virtual) Conference

5. The inauguration of President-Elect Biden and Vice-President Elect Harris must proceed as constitutionally mandated under national emergency security provisions, if required, to insure their personal safety and the continuity of government. Immediate areas of concern are: Covid- 19 eradication, economic revitalization and full employment, stabilization and improvement of health care delivery system, and rebuilding a professional public service in all agencies of government. Most important of all of these is to deal with the legacies of racial, economic, and environmental injustice brought about by centuries of purposive destruction; and, deal with police brutality and criminal justice reform; 6. Congress must establish a national “Blue Ribbon” commission, akin to the 9-ll Commission, to investigate and report, within ninety days, on the activities, intelligence reports, and all those involved, regardless of rank, position, or authority, that led to the insurrection, sedition and treasonous behavior; 7. The elimination or substantial modification of the filibuster rule in the U.S. Senate—aa rule used to thwart popular participation in the democratic life of the U.S.; with a divided government, major electoral reform will become unlikely in the future; and, 8. The establishment of a national truth and reconciliation commission charged with fostering a sense of well-being, justice, truthfulness, peacefulness and community

It is important to understand that for a transformation of belief in the democratic ideal, trust and community will not take place by merely flipping a switch. The damage done by Donald Trump and his collaborators and enablers and those who supported and continue to support the Big Lie that destroys the trust and integrity of our elections will take years, if not decades, to transform. Overcoming treason, sedition, hatred, lynching, anti-Semitism, voter suppression, homophobia, racism, violence and the many other “…isms” that contribute to the demise and death of democracy will take protracted action— this job will not be easy to accomplish. I recently wrote to a friend the following brief statement: The “Big Lie” eventually lead to the rise of a dictator in Germany (the lie that Germany had not lost WWI and corresponding blame on socialists, communists and Jewish bankers/financiers and the lies that led to the rise of Franco in Spain). The survey research and other polling data show that roughly 75 percent of the Republican Party adherents believe that the national election was a hoax and that Trump is the winner. In addition, the level of trust in our foundational democratic institutions is rapidly eroding as the legitimacy of these institutions is now being seriously questioned (Pew Research). In short, democratic ideals have an universal attraction and the maxims of democracy recognize winners and those that are defeated. These ideals are not subject to negotiation in some type of transactional/bargaining game, and it is exactly for the reason I have written this essay. In short, refugees from around the world fixed their sights and future on “…a shining city on the hill”…a democratic regime; they did not seek comfort and refuge in autocracy. For many, those were the exact conditions from which they sought refuge and freedom. In the final analysis, authoritarian regimes precipitate, augment, implement violent activities in the name of the state—a state that is synonymous with the autocrat. In their personification of the state, autocrats become heroes, patriots, defenders of the “realm” and have a messianic appeal to the masses.

ASBBS Proceedings of the 28th (Virtual) Conference

HIDDEN SYMPTOMS OF THE COVID-19 VIRUS: TECHNOSTRESS IN HIGHER EDUCATION

Boyer-Davis, Stacy Northern Michigan University [email protected]

Keynote Speech

Stacy Boyer-Davis is an Assistant Professor of Accounting at Northern Michigan University, teaching undergraduate and graduate students. She serves as the Assistant Department Head and the MBA Director for the AACSB-accredited College of Business; “Dr. Stacy” is also the online learning scholar for the University as a whole (2019-2021). Stacy received her Ph.D. in Business from Capella University. She earned three Masters’ degrees from Keller Graduate School of Management: Human Resources, Business Administration, and Accounting and Financial Management, and a BS degree in Accounting from Clarion University of Pennsylvania. She has over twenty years of professional progressive accounting and leadership experiences serving governmental, for-profit, and not-for-profit organizations including a state system University in Pennsylvania as the Director of Accounting Services and one of the largest healthcare linen textile companies in the United States as a divisional compliance manager. Stacy has published articles in various journals including the Journal of Accounting and Finance, the Journal of Business and Educational Leadership, and the Journal of Business and Accounting. Her research interests include the implications of the human-technology interface in the accounting field, high-impact teaching practices (HITP) in accounting programs, and the scholarship of teaching and learning (SoTL) as it relates to synchronous and asynchronous course design and delivery. Stacy has received several research and teaching awards. Her other professional achievements include: NMU College of Business Outstanding Research Award (2020), Outstanding Graduate Professor (2019), and Outstanding Undergraduate Professor (2018), NMU University-Wide: Global Campus Excellence in Online Teaching (2018), Vice-chair of the MICPA Educators’ Task Force, President of the Institute of Management Accountants (IMA) Upper Peninsula Chapter, and Treasurer and Board Member of the Marquette West Rotary organization

ABSTRACT

The purpose of this research study is to advance the understanding of technostress in higher education before and during the COVID-19 pandemic. A survey of 307 college and university professors predominantly teaching in various business-related disciplines was conducted to determine if there is a difference in the level of technostress creators perceived by educators before and during the COVID-19 pandemic. A Paired Samples t-test was performed to compare overall technostress scores of faculty currently teaching in postsecondary institutions. Results show a significant difference in overall faculty perceived technostress scores before the COVID-19 pandemic and during the health crisis. This Proceedings is a summary of the results published in the November 2020 issue of the Journal of Business and Accounting (Boyer-Davis, 2020).

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INTRODUCTION COVID-19, a novel coronavirus (SARS-CoV-2) contagion that surfaced in late 2019, has spread around the world at a devastating rate. As of the time of this paper, the virus has plagued the world with over 75 million COVID cases and nearly 1.7 million deaths (World Health Organization, 2020). The United States declared a state of emergency in mid-March. As the virus raged out of control, most colleges and universities across the country made the decision to close their campuses, shutter dorms, and pivot the rest of the semester to remote learning. While this solution enabled students to complete coursework and avoid delays in their academic progress, faculty were provided with very little notice, some merely days, to transition in-person classes to the online environment.

At the time of the sudden shift to distance learning, roughly 55% of faculty across the nation had never taught an online course, over 70% preferred face-to-face teaching, and 36% claimed that virtual instruction does not yield equivalent learning outcomes as compared to in-person delivery (Bauer- Wolf, 2019; Inside Higher Ed & Gallup, Inc., 2019). Prior to the pandemic, 6 in 10 faculty reported that they were uncomfortable with and inexperienced to use classroom technologies including the learning management system and 40% stated they did not have adequate onsite technical support or professional development to guide the design and delivery of online courses (Inside Higher Ed & Gallup, Inc., 2019).

Institutions who decided to open their doors had to rethink their fall operations and creatively reconfigure classroom capacities to meet physical distancing requirements. Some schools phased in classes with an online start followed by modified in-person classes after a week or two of adjustment whereas others opted to begin with face-to-face instruction from the start. Many modified their academic calendars to minimize breaks during the term along with the possibility of travel, and virus spread. Of the colleges and universities with in-person classes, blended or hybrid learning classroom configurations were the norm. Again, faculty were confronted with an abrupt transformation of the teaching landscape and had to precipitously adapt, the success of which was dependent upon their proficiency to merge and align information and communication technologies (ICTs) with teaching design and delivery strategies in distanced or blended learning ecosystems. Faculty who historically elected not to teach online have now been thrust into e-learning, a choice not of their own.

LITERATURE REVIEW Since the first online courses were offered in the 1980’s, colleges and universities have taken a quantum leap in teaching and learning pedagogies through the adoption of innovations in ICTs. These technological tools not only include computers and the internet but also interactive digital whiteboards, tablets, smartphones, smart pens, video conferencing, applications, learning management systems, augmented reality, 3D printing, and cloud computing. While ICTs generate substantial tangible and intangible benefits for institutions of higher learning including expanded student access, flexibility, and convenience along with an enhanced quality of the educational experience online or otherwise, an increased use of them can escalate the stress suffered by their users.

To implement these classroom technologies effectively, faculty feel duty-bound to invest their time and efforts, often with an impairment to work-life balance, to upgrade their knowledge and skills. With altered work patterns, higher performance demands, role ambiguities, and subsequent role overload, outside of a health crisis, faculty are exposed to an increased risk of technology stress on a regular basis. Technostress, also known as computer stress, technological stress, and technophobia, is a maladaptive disorder that originates from and is aggravated by an inability to adapt to or cope with new technologies in a healthy way (Brod, 1984; Fuglseth & Sorebo, 2014). First reported as a disease, technostress was later described as the adverse effects that technology has on the mind and body of a user (Weil & Rosen, 1997, p. 5). 14

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Technostress Technostress, not unlike COVID-19, is a worldwide pandemic (Bozionelos, 1996; Khan, Rehman, & Rehman, 2013; Lee, Lee, & Yung, 2016; Tu, Wang, & Shu, 2005). The aftermath is widespread, echoing throughout the entire global economy. In the United States alone, the estimated annual value of stress, itself, is more than $300 billion owing to lost productivity, absenteeism, job turnover, and workplace accidents (American Institute of Stress, 2007). Of the 550 million workdays lost in the U.S. each year to absenteeism, stress is responsible for 50% of them (2007). The literature has yet to value the annual impact that technostress has but the losses are almost certainly considerable.

Tu et al. (2005) described technostress as the harmful effects on the thoughts, attitudes, and behaviors rising from technology use. A variety of physical and emotional symptoms may be exhibited by faculty who are techno-stressed such as anxiety, worry, irritability, headache, fatigue, inability to concentrate, fear, increased cortisol production, frustration, suspicion, obsessive thoughts, and depression (Cox, Griffiths, & Rial-Gonzalez, 2000; Mahalakshmi & Sornam, 2012; Riedl et al., 2012; Wang, Shu, and Tu, 2008). Researchers have embarked on a scholarly mission to investigate the causes and antecedents of this techno-user virus from a range of contexts (Ayyagari et al., 2011; Bradshaw & Zelano, 2013; Boyer-Davis, 2019a, 2019b, 2018; Day, Scott, & Kelloway, 2010; Doll & Torkzadeh, 1989; Ennis, 2005; Jena, 2015; Lu & Wang, 2020; Ragu-Nathan, Tarafdar, Ragu- Nathan, & Tu, 2008; Tarafdar, Pullins, & Ragu-Nathan, 2011, 2014; Tarafdar et al., 2007; Tarafdar & Tu, 2011a, 2011b; Wang & Li, 2019).

Technostress can exacerbate role overload, or the conflict between work demands and the resources (time, skills, and fitness) available to fulfill them (Maslach & Jackson, 1982; Tarafdar et al., 2011). Role overload has been identified as a precursor of poor work performance (Kahn, Wolfe, Quinn, Snoek, & Rosenthal, 1964; Lazarus, 1991). Technostress has also been linked to decreased productivity, job satisfaction, organizational commitment, innovation, and creativity (Brillhart, 2004; Burke and Greenglass, 1995; Hung, Chang, & Lin, 2011; Krinsky, Kieffer, Carone, & Yolles, 1984; Moore, 2000; Muir, 2008; Ragu-Nathan, et al., 2008; Shropshire & Kadlec, 2012; Simmons, 2009; Tarafdar et al., 2007, 2010, 2011). With prolonged exposure to technostress, faculty can burn out (Shropshire & Kadlec, 2012). Job burnout is evidenced to have a direct relationship with demotivation, performance problems, and job turnover (Simmons, 2009).

RESEARCH METHODOLOGY Existing studies have evaluated technostress experienced by faculty in higher education but not from the hypothesized angle of how the COVID-19 pandemic may serve as a channel to further increase misalignment between person and environment (Wang & Li, 2019). To extend the literature related to technostress and its prospective impact on educators teaching within institutions of higher learning, the following overarching research question was investigated.

RESEARCH QUESTION. In institutions of higher learning, is there a statistically significant difference in the level of technostress perceived by educators before and during the COVID-19 pandemic?

Sampling and Research Instrument A survey was administered to the members of the American Society of Business and Behavioral Sciences (ASBBS), an interdisciplinary professional organization comprised of faculty members in business and behavioral sciences disciplines including, but not limited to, accounting, finance, management, marketing, organizational behavior, and computer information systems. The same survey was distributed to the Management and Organizational Behavior Teaching Society (MOBTS). Both professional organizations are well known and highly respected within the social sciences academic arena. In addition, the survey was channeled through another educational panel, one with 15

ASBBS Proceedings of the 28th (Virtual) Conference a wider disciplinary net. The survey instrument was circulated electronically to thousands of college and university professors and instructors currently teaching in undergraduate or graduate programs with 307 respondents completing the survey. The instrument consisted of a seven-point Likert-scale survey containing questions from the Technostress Creators scale (Tarafdar et al., 2007). Demographic questions were also incorporated into the questionnaire.

A minimum total sample size of 128, or 64 participants per group, was estimated using G*Power 3.1.9, assuming an a priori power analysis, α = 0.05, β = 0.80, and a medium effect size (Cohen, 1988). A total sample size of 307 exceeded the expected range required by the study. A random sample of the data population was obtained from the sampling procedure. Technostress observations were measured using the Tarafdar et al. (2007) Technostress Creators scale. The Technostress Creators scale is comprised of 23 questions, grouped into five constructs: (a) Techno-overload, (b) Techno-invasion, (c) Techno-complexity, (d) Techno-insecurity, and (e) Techno-uncertainty. Aggregated, the construct scores measure technostress. An instrument should demonstrate a reliability of α = 0.70 or greater (Babbie, 2010). The Technostress instrument has been tested and retested to yield a reliability of 0.71 α to 0.91 α (Tarafdar et al., 2007). In addition, each of the Technostress Creators was analyzed for significant differences in the scores before and during the COVID-19 pandemic.

Techno-overload is described as a condition in which university faculty are forced to work more and faster.

HYPOTHESIS 10. There is not a statistically significant difference in the level of techno-overload perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic. HYPOTHESIS 1a. There is a statistically significant difference in the level of techno-overload perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic.

Techno-invasion occurs when ICTs infringe upon and compel professors to stay connected during non-teaching, research, and service hours, upsetting the work-life balance.

HYPOTHESIS 20: There is not a statistically significant difference in the level of techno-invasion perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic. HYPOTHESIS 2a. There is a statistically significant difference in the level of techno-invasion perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic.

Techno-complexity is a product of the increased time and effort spent by educators to update their skills and learn how to operate new technologies in the classroom.

HYPOTHESIS 30. There is not a statistically significant difference in the level of techno- complexity perceived by educators teaching in institutions of higher learning before and during the COVID-19 pandemic. HYPOTHESIS 3a. There is a statistically significant difference in the level of techno-complexity perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic.

Techno-insecurity arises from faculty concerns that those with more advanced technological skills will replace them. 16

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HYPOTHESIS 40. There is not a statistically significant difference in the level of techno- insecurity perceived by educators teaching in institutions of higher learning before and during the COVID-19 pandemic. HYPOTHESIS 4a. There is a statistically significant difference in the level of techno-insecurity perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic.

Techno-uncertainty is the apprehension that can perpetuate from the high-speed turnover of technology and the indeterminate future outcomes than can result such as university closures and budget cuts. For example, MacMurray College in Jacksonville, Illinois close in May after 174 years of operation (Hobson & Hagan, 2020).

HYPOTHESIS 50. There is not a statistically significant difference in the level of techno- uncertainty perceived by educators teaching in institutions of higher learning before and during the COVID-19 pandemic. HYPOTHESIS 5a. There is a statistically significant difference in the level of techno-uncertainty perceived by educators teaching in institutions of higher learning before and during the COVID- 19 pandemic.

ANALYSIS AND RESULTS Paired Samples t-tests and descriptive statistics, including gender, age, and faculty rank were analyzed.

Descriptive Statistics Faculty self-reported their gender as 68% male, 31% female, or 1% gender neutral, gender fluid, or no gender category selection was made. Faculty conveyed their age (in years) as follows: 25-34 (54%), 35-44 (22%), 45-54 (16%), 55-64 (5%), or 65 and older (1%). Faculty identified their academic rank as instructor/lecturer (17%), assistant professor (33%), associate professor (24%), full professor (23%), clinical professor (2%), or no response (<1%). Table 1 provides detailed information with respect to sample demographics.

Table 1 Demographic Information Frequencies and Percentages (N = 307)

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Qty % Gender Female 95 30.9% Male 208 67.8% Gender-fluid 1 0.3% Gender-neutral 1 0.3% Not reported 2 0.7% 307 100.0% Age (in years) 25 to 34 167 54.4% 35 to 44 66 21.5% 45 to 54 48 15.6% 55 to 64 17 5.5% Greater than 65 4 1.3% Not reported 5 1.6% 307 100.0% Rank Instructor/Lecturer 51 16.6% Assistant Professor 102 33.2% Associate Professor 74 24.1% Full Professor 70 22.8% Clinical Professor 8 2.6% Not reported 2 0.7% 307 100.0%

Statistical Analysis IBM SPSS Statistics 27 software was used to conduct the statistical analysis. A Paired Samples t-test was selected for this study to measure the differences in technostress, in total and per individual sub- construct, between teaching before and during the COVID-19 pandemic. The dependent variable, technostress, and paired measurements were collected and recorded in separate variables. The comparative subjects in each group, ‘before COVID-19’ and ‘during COVID-19’ were the same.

Assumptions Observations were independent as the data collection process was random without replacement. A histogram was produced and inspected to test approximate normality and outliers were evaluated with boxplots. Of the outliers, 7 cases were removed because survey questions were left blank without responses.

Figure 1 Histograms, Faculty Technostress Perceptions, All Cases

Figure 2 Histograms, Faculty Technostress Perceptions, Outliers Removed

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Data Analysis The Paired Samples t-test was performed to compare overall technostress scores of faculty currently teaching in undergraduate and/or graduate programs in higher education. Results show a significant difference in overall faculty perceived technostress scores before the COVID-19 pandemic (M=77.09, SD 16.725) and during the health crisis (M=81.71, SD 15.118); conditions t(-5.791), df=299, n=300, p=<0.05, 95% CI for mean difference -6.194 to -3.052. Faculty technostress creators sub-scores increased nearly 5 points during the COVID-19 pandemic. These results suggest that faculty were more technologically stressed once the pandemic took over the world. Table 2 Paired Samples t-Test for Differences between Technostress Sub-Constructs Before and During the COVID-19 Pandemic (n = 300)

Table 3 Paired Samples t-Test Correlations of Technostress Sub-Constructs Before and During the COVID- 19 Pandemic (n = 300)

Table 4 Paired Samples Statistics of Technostress Sub-Constructs Before and During the COVID-19 Pandemic (n = 300)

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The Paired Samples t-test was also conducted to compare each technostress creator sub-score, pre- and post-COVID19. Results show a significant difference in faculty perceived technostress sub- scores before the COVID-19 pandemic and during the health crisis as per below.

Techno-Overload Results show a significant difference in techno-overload before the COVID-19 pandemic (M=17.33, SD 4.111) and during the health crisis (M=18.42, SD 3.841); conditions t(-5.057), df=299, n=300, p=<0.05, 95% CI for mean difference -1.523 to -0.670. Faculty technostress creators sub-scores increased over 1 point during the COVID-19 pandemic.

Techno-Invasion Results show a significant difference in techno-invasion before the COVID-19 pandemic (M=13.27, SD 3.583) and during the health crisis (M=14.21, SD 3.381); conditions t(-5.391), df=299, n=300, p=<0.05, 95% CI for mean difference -1.279 to -0.595. Faculty technostress creators sub-scores increased about 1 point during the COVID-19 pandemic.

Techno-Complexity Results show a significant difference in techno-complexity before the COVID-19 pandemic (M=16.51, SD 4.788) and during the health crisis (M=17.34, SD 4.584); conditions t(-4.318), df=299, n=300, p=<0.05, 95% CI for mean difference -1.208 to -0.452. Faculty technostress creators sub- scores increased over 1 point during the COVID-19 pandemic.

Techno-Insecurity Results show a significant difference in techno-insecurity before the COVID-19 pandemic (M=16.11, SD 4.699) and during the health crisis (M=17.09, SD 4.467); conditions t(-5.117), df=299, n=300, p=<0.05, 95% CI for mean difference -1.362 to -0.605. Faculty technostress creators sub-scores increased over 1 point during the COVID-19 pandemic.

Techno-Uncertainty Results show a significant difference in techno-uncertainty before the COVID-19 pandemic (M=13.87, SD 3.672) and during the health crisis (M=14.64, SD 3.546); conditions t(-4.537), df=299, n=300, p=<0.05, 95% CI for mean difference -1.114 to -0.440. Faculty technostress creators sub- scores increased nearly 1 point during the COVID-19 pandemic.

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Table 5 Summary of Hypothesis Testing Results Hypothesis Variable p- value Results H0 Technostress 0.000 Rejected

H1 Techno-Overload 0.000 Rejected

H2 Techno-Invasion 0.000 Rejected

H3 Techno-Complexity 0.000 Rejected

H4 Techno-Insecurity 0.000 Rejected

H5 Techno-Uncertainty 0.000 Rejected

The null hypothesis was rejected as there are significant differences in faculty technostress creators, comparing perceptions before and during the COVID-19 pandemic. Likewise, H1, H2, H3, H4, and H5 were also rejected as faculty identified as suffering higher levels of techno-overload, techno-invasion, techno-complexity, techno-insecurity, and techno-uncertainty after the coronavirus infection spread and forced stay at home orders across the country.

DISCUSSION The aim of the study was to investigate technostress and its effects on faculty in higher education both before and during the COVID-19 environment. The results showed that faculty experience significantly more technostress during the COVID-19 crisis than before the existence of the virus. This research topic was probed when the pandemic unfolded, to witness the impact and document the observations of this devastating event in real time. Implications for Research The implications of this examination are highly important to both theoretical paradigms that guide the study of technostress. For one, the pandemic caused a major upheaval in the teaching environment for faculty and complete and utter chaos for life in general. This analysis is the first pre- and post-study of its kind to scrutinize how changes in the environment can induce variations in technostress. Furthermore, the severe state of affairs at the onset of the pandemic and thereafter and the intensification of technostress as a result supports the transaction theory. A research gap was filled vis-à-vis this scientific inquiry and perhaps a connection was made that could unify both person- environment fit and transaction frameworks as the occurrence, event, or incident provokes a ripple effect, ensuing disruption through the environment and the person, augmenting technostress perceptions.

Implications for Faculty The results emphasize that another silent disease began inflicting its ravaging forces upon faculty across the country at the onset of the pandemic at the point in time when reeling from the shock of a sudden world transformed. While faculty hurriedly flipped their face-to-face courses to the virtual domain, they were struggling with the torment that is technostress far more ominously than before the pandemic.

Even when institutions closed down, faculty rose to the occasion to serve their students, despite their level of expertise with online teaching. Instructors with significant online course design and delivery proficiency were not immune to the techno-overload as all faculty were up against the clock to pivot under extreme time constraints, having to rethink and redesign their entire course structures and

ASBBS Proceedings of the 28th (Virtual) Conference pedagogic practices if not already e-teaching. The workload was overwhelming, especially because the online course shift was, for most, at the midpoint of the semester. Moving forward and until inoculation exists, colleges and universities that remain open run the risk of closing once again if not sporadically while unprotected from the virus if positive cases climb beyond a safe threshold. Once again, faculty will feel the pain of role overload.

However, lessons have been learned since the first shift. Faculty may be far more prepared to transition to virtual learning if the need arises. The trial by fire ignited by the COVID-19 pandemic may have seared faculty with the blistering plague that is technostress. Yet, during that time, faculty rose from the technophobic ashes like phoenixes, learning all that they could about online pedagogy and the technology that supports it to continue to conduct the business of higher education and fulfill our student stakeholder responsibilities.

While technology enabled faculty to work from home and continue to do their jobs during stay at home orders and beyond to support physical distancing safety precautions, work and life bled into one another, blurring the balance between home and the job. Faculty work is not 9-to-5 as a rule but COVID completely disrupted whatever stability may have been in place. The balance between work and home will continue to be a tightrope walk due to the technologic spillover at home until life can return to the pre-COVID homeostasis. Until then and thereafter, faculty should methodically strive to separate the two, schedule downtime, step away from the computer and connected devices, and invest in their mental and physical health. A similar strategy should be embraced by faculty who teach entirely online, vulnerable to techno-invasion on a regular basis, apart from the contagion.

CONCLUSION Through the lenses of the P-E fit and transaction theories and the technostress creators framework, faculty were discovered to be statistically more techno-stressed attributable to the increased role overload, insecurity, complexity, uncertainty, and invasion brought about from the COVID-19 pandemic. Armed with this information, institutions of higher learning should expand their instructional design, professional development, and counseling services budgets and staffing. This investment is critical now and into the future to support their faculty to cope during this incomprehensible health crisis event with the technological stressors imposed upon them because of the unforeseen need to convert in-person classes to those delivered in online and blended learning environments with only a moment notice. Furthermore, faculty should also stage a personal intervention for themselves now to minimize the impact of technostress creators on their lives or suffer the continued consequences. The seismic aftershock of the tsunami that is COVID-19 will persist for our entire way of life for years if not decades to come. REFERENCES American Institute of Stress. (2007). Job stress. http://www.stress.org/job.htm Ayyagari, R., Grover, V., & Purvis, R. (2011). Technostress: Technological antecedents and implications. MIS Quarterly, 35(4), 831-858. Babbie, E. R. (2010). The practice of social research (12th ed.). Belmont, CA: Wadsworth Cengage. Bartik, A. W., Bertrand, M., Cullen, Z. B., Glaeser, E. L., Luca, M., & Stanton, C. (2020). How are small businesses adjusting to COVID-19? Early evidence from a survey. HKS Faculty Research Working Paper Series RWP20-012, May 2020. Bauer-Wolf, J. (2019). Report: majority of faculty, students prefer face-to-face instruction. Education Dive. https://www.educationdive.com/news/report-majority-of-faculty-students-prefer-face- to-face-instruction/568983/ Boyer-Davis, S. (2020). Technostress in higher education: An examination of faculty perceptions before and during the COVID-19 pandemic. Journal of Business and Accounting, 13(1), 42- 58.

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Boyer-Davis, S. (2019a). Technostress in accounting professionals: A quantitative examination of the differences between managers and non-managers. Journal of Accounting and Finance, 19(2), 25-41. Boyer-Davis, S. (2019b). Technostress: An antecedent of job turnover intention in the accounting profession. Journal of Business and Accounting, 12(1), 49-63. Boyer-Davis, S. (2018). The relationship between technology stress and leadership style: An empirical investigation. Journal of Business and Educational Leadership, 8(1), 48-65. Bozionelos, N. (1996). Psychology of computer use: XXXIX. Prevalence of computer anxiety in British managers and professionals. Psychological Reports, 78, 995-1002. Bradshaw, R., & Zelano, J. A. (2013). Exploring themes of techno stress for end users working with hardware and software technology. http://www.g- casa.com/conference/Singapore12/papers?Zelano-1.pdf Brillhart, P. E. (2004). Technostress in the workplace: Managing stress in the electronic workplace. Journal of American Academy of Business, Cambridge, 5(1/2), 302. Brod, C. (1984). Technostress: The human cost of the computer revolution. Boston, MA: Addison- Wesley. Burke, M., & Greenglass, E. (1995). A longitudinal study of psychological burnout in teachers. Human Relations, 48(2), 187-202. Centers for Disease Control and Prevention (2020). COVID-19 forecasts: Deaths. https://www.cdc.gov/coronavirus/2019-ncov/covid-data/forecasting-us.html Chuang, A., Shen, C. T., & Judge, T. A. (2016). Development of a multidimensional instrument of person-environment fit: The perceived person-environment fit scale (PPEFS). Applied Psychology, 65, 66-98. Cohen, J. (1988). Statistical power analysis for the behavioural sciences (2nd ed.). Hillsdale, NJ: Lawrence Erlbaum. Cox, T., Griffiths, A., & Rial-Gonzalez, E. (2000). Research on work-related stress. European Agency for Safety and Health at Work. http://osha.europa.eu/en/publications/reports/203 Day, A., Scott, N., & Kelloway, K. (2010). Information and communication technology: Implications for job stress and employee well-being. In P. L. Perrewé & D. C. Ganster (Eds.). New Developments in Theoretical and Conceptual Approaches to Job Stress, (pp. 317-350), West Yorkshire, England: Emerald Group Publishing Limited. Doll, W. J., & Torkzadeh, G. (1989). End-user computing involvement: A discrepancy model. Management Science, 35(10), 1151-1172. Edwards, J. R., Caplan, R. D., & Harrison, V. R. (1998). Person-environment fit theory: Conceptual foundations, empirical evidence, and directions for future research. In C. L. Cooper (Ed.), Theories of Organizational Stress (pp. 28-67). Oxford, England: Oxford University Press. Ennis, J. A. (2005). The evolution of technostress. Computers in Libraries, 8(10), 10-12. Fuglseth, A. M., & Sorebo, O. (2014). The effects of technostress within the context of employee use of ICT. Computers in Human Behavior, 40, 161-170. Hale, T. (2018). How much data does the world generate every minute? IFL Science. https://www.iflscience.com/technology/how-much-data-does-the-world-generate-every- minute/ Hobson, J. & Hagan, A. (2020). Coronavirus may mark the end for many small liberal arts colleges. Here and Now. https://www.wbur.org/hereandnow/2020/05/13/coronavirus-small-college- closures Hung, W. H., Chang, L. M., & Lin, C. H. (2011). Managing the risk of overusing mobile phones in the working environment: A study of ubiquitous technostress. Proceedings on the 15th Pacific Asia conference on information systems, Brisbane. Hussar, B., Zhang, J., Hein, S., Wang, K., Roberts, A., Cui, J., Smith, M., Bullock-Mann, F., Barmer, A., & Dilig R. (2020). The condition of education 2020. National Center for Education Statistics. https://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2020144 23

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Inside Higher Ed, & Gallup, Inc. (2019). 2019 survey of faculty attitudes on technology: A study of by Gallup and Inside Higher Ed. Washington, DC: Gallup. Jena, R. K. (2015). Technostress in ICT enabled collaborative learning environment: An empirical study among Indian academician. Computers in Human Behavior, 51(B), 1116-1123. Kahn, R., Wolfe, D., Quinn, R., Snoek, J., & Rosenthal, R. (1964). Organizational stress: Studies in role conflict and ambiguity. New York, NY: Wiley Publishing. Khan, A., Rehman, H., & Rehman, S. U. (2013). An empirical analysis of correlation between technostress and job satisfaction: A case of KPK, Pakistan. Pakistan Journal of Library and Information Science, 14, 9-15. Krinsky, L. W., Kieffer, S. N., Carone, P. A., & Yolles, S. F. (Eds.) (1984). Stress and productivity. New York, NY: Human Sciences Press. Lazarus, R. S. (1991). Psychological stress in the workplace. Journal of Social Behavior and Personality, 6, 1-13. Lee, S. B., Lee. S. C., & Yung, H. S. (2016). Technostress from mobile communication and its impact on quality of life and productivity. Total Quality Management & Business Excellence, 27(7), 775-790. Li, L., & Wang, X. (2020). Technostress inhibitors and creators and their impact on university teachers’ work performance in higher education. Cognition, Technology & Work, 22(3), 1- 23. Mahalakshmi, K., & Sornam, S. A. (2012). Impact of technology on physical and mental health of library professionals in engineering colleges of Anna University, Tamilnadu. 4th International Conference on Computer Research and Development, 39(2012), pp. 1-5. Maslach, C., & Jackson, S. (1982). Burnout in health professions: A social psychological analysis. In G. S. Sanders, & J. Suls (Eds.). Social Psychology of Health and Illness (pp. 227-251). Hillsdale, NJ: Lawrence Erlbaum. Moore, J. E. (2000). One road to turnover: An examination of work exhaustion to technology professionals. MIS Quarterly, 24(1), 141-168. Muir, J. (2008). Surviving burnout. Journal of Property Management, 73(1), 16-17. Ragu-Nathan, T. S., Tarafdar, M., Ragu-Nathan, B. S., & Tu, Q. (2008). The consequences of technostress for end users in organizations: Conceptual development and empirical validation. Information Systems Research, 19(4), 417-433. Riedl, R., Kindermann, H., Auinger, A., & Javor, A. (2012). Technostress from a neurobiological perspective: Systems breakdown increases the stress hormone cortisol in computer users. Business & Information Systems Engineering, 4(2), 61-69. Shropshire, J., & Kadlec, C. (2012). I’m leaving the IT field: The impact of stress, job insecurity, and burnout on IT professionals. International Journal of Information and Communication Technology Research, 2(1), 6-16. Simmons, B. (2009). Secure attachment: Implications for hope, trust, burnout, and performance. Journal of Organizational Behavior, 30(1), 233-247. Tarafdar, M., Pullins, E. B., & Ragu-Nathan, T. S. (2014). Examining impacts of technostress on the professional salesperson’s behavioural performance. Journal of Personal Selling & Management, 34(1), 51-69. Tarafdar, M., Pullins, E. B., & Ragu-Nathan, T. S. (2011). Examining impacts of technostress on innovation and performance: The professional sales context. SIGHCI 2011 Proceedings. 17. https://aisel.aisnet.org/sighci2011/17 Tarafdar, M., Tu., Q., & Ragu-Nathan, T. S. (2010). Impact of technostress on end-user satisfaction and performance. Journal of Management Information Systems, 27(3), 303-334. Tarafdar, M., Tu, Q., Ragu-Nathan, B., & Ragu-Nathan, T. (2007). The impact of technostress on role stress and productivity. Journal of Management Information Systems, 24(1), 301-328. Tarafdar, M., & Tu, Q. (2011a). Technostress under different organizational environments: An empirical investigation. Computers in Human Behavior, 24(6), 3002-3013. 24

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Tarafdar, M., & Tu, Q. (2011b). Crossing to the dark side: Examining creators, outcomes, and inhibitors of technostress. Communications of the ACM, 54(9), 113-120. Tu, Q., Wang, K., & Shu, Q. (2005). Computer-related technostress in China. Communications of the ACM, 48(4), 77-81. Wang, X., & Li, B. (2019). Technostress among university teachers in higher education: A study using multidimensional person-environment misfit theory. Frontiers in Psychology, 10, 1- 13. Wang, K., Shu, Q., & Tu, Q. (2008). Technostress under different organizational environments: An empirical investigation. Computers in Human Behavior, 24, 3002-3013. Weil, M. M., & Rosen, L. D. (1997). Technostress: Coping with technology @work @home @play. New York, NY: Wiley. World Health Organization (WHO) (2020). WHO Coronavirus Disease (COVID-19) Dashboard. Retrieved from: https://covid19.who.int/?gclid=CjwKCAiArIH_BRB2EiwALfbH1KspWn5No8D8gIHawC 2zOE6kem1iuRWrzY8Wy0Vm3Mi4A2eYbGO1qhoCTg8QAvD_BwE

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ORGANIZATIONAL SAFETY AMIDST A PANDEMIC: THE CHALLENGE OF DEVELOPING A VIRUS POLICY Alvarez, Isabella Troy University [email protected]

Findley, Henry Troy University [email protected]

ABSTRACT

The challenges faced by companies have been changing their perspective on “safety”, creating new guidelines for workplace safety, following new legal guidelines, and developing such policies as to aide in their pursuit of a workplace that provides the most satisfaction possible to all stakeholders, despite the most-difficult of scenarios. Below is a recommended virus policy to outline general steps organizations should take to ensure the safety of their employees, followed by examples of organizations demonstrating their own policies for workplace safety and the challenges they face in doing so. Recommendations are also provided to offer solutions on how employers can make employees feel more comfortable living through the pandemic, both at home and in the workplace.

INTRODUCTION

The control and containment of uncertainty is a structure that is the most capitalized-on in today’s world. Even Hofstede himself recognized the value of Uncertainty Avoidance in culture. People fear what they do not understand: they fear the unexpected. Covid-19 has been one of the most unexpected events of the history of this generation. It has changed the way people look at the world, but more importantly, how businesses are viewed in the perspective of the global economy. While several businesses have been forced into ceasing operations, many essential businesses have had to adopt a new normal within the organization to stay open for people in need.

The manner in which people view safety has taken a complete 180 turn, as guidelines are now having to be put in place not just for operational safety, but to outline how individuals can maintain their health while being exposed to others in the work environment. Employers have been forced, in a sense, to create a new workplace environment, adopting such procedures as implementing a hybrid workplace so employees who are essential to the workplace may come to work feeling safer. Additionally, as stated in the recommended policy, “those who are able to do the majority of their work from home will have allotted days where they are at home.”

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RECOMMENDED VIRUS POLICY

Introduction

The following sections are organizational guidelines and policies to be followed regarding the changes to workplace safety. Due to COVID-19 response, the following legislation and safety guidelines will be provided to every employee/staff member in the organization. These are tentative guidelines that could be changed or updated at any point in time. This policy is to act as a supplement to the current organizational policy on safety, existing specifically as a virus policy. We appreciate your patience during this time as we navigate these new guidelines for health and safety. It is our mission to take care of our employees first and appreciate any feedback from your part as well. Please contact supervisors of each department for further console or any questions before contacting upper level management or the executive board. Best, [organization name] Board of Directors

Families First Coronavirus Response Act: Additional Compensatory Opportunity for FMLA

The following guidelines were given to the organization directly from the U.S. Department of Labor. Please approach your supervisor or HR with any additional questions regarding its provisions (adapted from the official U.S. Department of Labor site).

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s (Department) Wage and Hour Division (WHD) administers and enforces the new law’s paid leave requirements. These provisions will apply from the effective date through December 31, 2020.

Generally, the Act provides that employees of covered employers are eligible for:

• Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or • Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and • Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19. Covered Employers: The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers, and private employers with fewer than 500 employees.[1] Most employees of the federal government are covered by Title II of the Family and 27

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Medical Leave Act, which was not amended by this Act, and are therefore not covered by the expanded family and medical leave provisions of the FFCRA. However, federal employees covered by Title II of the Family and Medical Leave Act are covered by the paid sick leave provision.

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Eligible Employees: All employees of covered employers are eligible for two weeks of paid sick time for specified reasons related to COVID-19. Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.[2]

Notice: Where leave is foreseeable, an employee should provide notice of leave to the employer as is practicable. After the first workday of paid sick time, an employer may require employees to follow reasonable notice procedures in order to continue receiving paid sick time.

Qualifying Reasons for Leave:

Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19; 2. has been advised by a health care provider to self-quarantine related to COVID-19; 3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis; 4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2); 5. is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or 6. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury. Under the FFCRA, an employee qualifies for expanded family leave if the employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.

Duration of Leave:

For reasons (1)-(4) and (6): A full-time employee is eligible for 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period. For reason (5): A full-time employee is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave) at 40 hours a week, and

ASBBS Proceedings of the 28th (Virtual) Conference a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

Calculation of Pay:[3]

For leave reasons (1), (2), or (3): employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period). For leave reasons (4) or (6): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period). For leave reason (5): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period). [4]

[1] Certain provisions may not apply to certain employers with fewer than 50 employees. See Department FFCRA regulations (expected April 2020).

[2] Under the Act, special rules apply for Health Care Providers and Emergency Responders.

[3] Paid sick time provided under this Act does not carryover from one year to the next. Employees are not entitled to reimbursement for unused leave upon termination, resignation, retirement, or other separation from employment.

[4] An employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the first two weeks of partial paid leave under this section.

Workplace Safety: Additional Requirements Congruent with COVID-19 Prevention

OSHA COVID-19 Guidelines

The following guidelines were taken directly from OSHA and are meant to be a guide for the policies that our specific organization will follow. Please approach your supervisor or HR with any additional questions regarding its provisions (Nagele-Piazza, OSHA Fines more Businesses for Covid-19 Safety Violations).

OSHA has cited employers for failing to take the following coronavirus-related actions:

▪ Implement a written respiratory protection program. ▪ Provide a medical evaluation, respirator fit test, training on the proper use of a respirator and personal protective equipment (PPE). ▪ Report an injury, illness or fatality. ▪ Properly record an injury or illness. ▪ Comply with the general duty clause.

Staying Safe: Preventing the Spread of the Virus

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Our organization will be following the 6 feet social distancing procedure for those working on site and on any necessary outside jobs following the guidelines set in place by the CDC. For more information on these guidelines, please visit the official CDC website: https://www.cdc.gov/coronavirus/2019- ncov/prevent-getting-sick/prevention.html

• Distancing o In an attempt to comply with social distancing guidelines, we will be implementing a hybrid workplace setting. Those who are able to do the majority of their work from home will have allotted days where they are at home and 1-2 days working on-site. Those unable to work from home will have reconfigured work areas distanced from other employees in the workplace. o Chairs at desks should be distanced enough so if an employee must have a visitor at their desk, they are remaining 6 feet apart or more when sitting. o Breakroom/Eating areas: All breakrooms/eating areas will have tables that are distanced, and sanitizer will be provided for every employee upon entering and exiting the area. • Sanitization o There will be 2 sanitizing stations in each work area where employees may access hand wipes, disinfecting wipes/spray, and hand sanitizer to keep themselves and their work areas clean. o When possible, documents should be scanned and emailed to co-workers to reduce hand-on-hand contact as much as possible. o Computers, desks, keyboards, chairs, and entire workspaces must be regularly sanitized by employees to reduce the risk of/spread of germs. o Employees must wash hands as much as possible, specifically after touching unsanitary objects. • Facial Coverings o Face coverings must be worn at all times inside the building and anytime outside the building where social distancing requirements may not be met. ▪ Exceptions: when the employee is sitting at their desk alone or sitting down in any of the break areas to eat. o Face coverings include but are not limited to medical masks, cloth masks, face shields, etc. ▪ Covering one’s mouth with a hand or putting one’s shirt over one’s mouth does not exist as a proper facial covering under the CDC • Reporting Symptoms of the Virus o We will have temperature check points throughout our on-site location where employees will be required to have a temperature check before entering the designated areas. If showing a fever or other symptoms, additional testing will be required before allowing the employee to enter their work area. o If an employee/member of staff is feeling any symptoms, they must be reported to HR immediately. o Weekly surveys will be sent out to employees regarding mental health concerns and inquiries regarding showing symptoms of the virus. These will be distributed to all employees and results will remain confidential.

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o Testing: we will have on-site testing free to all employees in the event that an employee begins to show symptoms of the virus or has become exposed to someone with the virus. We will have certified medical professionals on-site to administer the tests and all employee information will remain confidential. ▪ Employees are highly encouraged to take tests regularly if remaining at home or away from the workplace and before returning to the workplace after a period of 2 weeks or more. • Feedback o Employees are highly encouraged to give regular feedback to their immediate supervisors about their progress with the guidelines set in place. o Surveys will be regularly given out to employees to express concerns and levels of satisfaction. All survey results will remain anonymous and confidential. ▪ Weekly meetings will be held for major employee concerns to be read aloud and discussed so solutions may be reached. • Incident Reporting o Any failure to follow the stated guidelines will be handled by HR o Any incidents that may jeopardize the safety of the workplace as a whole must be reported to the immediate supervisor which must then be reported to HR o Any complaints should be properly filed, and a copy given to the department supervisor and HR o Reporting of incidents will remain confidential and be properly placed in employee files

We are in this together. We are a strong organization because of all of you who make it that way. Let’s lean on one another during this time and do what we can to reduce the spread of the virus.

Best,

[organization name]

THE CHANGING PERSPECTIVE OF SAFETY

Maintaining a sense of security in the workplace has long been an obligation of every HR department of every organization. Employees wish to feel as though their job is safe, their income is secure, and their position is essential to the functioning of a business. Organizations who provide a feeling of safety for employees have record-low levels of turnover. Many organizations define safety in many ways, but every stakeholder can agree upon one definition: safety exists upon the receiving of intrinsic and extrinsic rewards that provide a sense of security for every member of the organization. Safety starts within an organization and moves outward to customers and users of products and services. If an employee does not feel a sense of security when performing a task, they are more likely to produce a less than satisfactory product or service. Defining safety has become even more difficult this year, as the pandemic has forced organizations to consider new definitions and add to their current procedures regarding safety.

The definition of safety now not only includes making an employee feel like their job, income, and benefits are safe, but also their health and overall well-being. The pandemic has brought much loss to many people, including those who have lost family members and friends, even those who 31

ASBBS Proceedings of the 28th (Virtual) Conference obtained lasting health problems after contracting the virus. The World Health Organization as well as OSHA and other health and safety organizations have brought many new guidelines and principles for following new safety procedures pertaining to the virus. Many businesses have had to implement training programs in previous years for safety issues as harassment, discrimination, equipment usage, and overall workplace safety guidelines. They are now being required to implement new training programs so employees can become familiar with the guidelines they are now to follow. Many companies like General Motors and other manufacturing companies are redefining safety by implementing several sanitation and physical training programs on how employees can protect themselves while at work.

NEW GUIDELINES FOR WORKPLACE SAFETY

Big corporations that are essential to our ability to function in everyday life such as General Motors (GM) have had to develop new policies and guidelines congruent with those of the big health associations such as the CDC. They have taken initiative by requiring all employees to apply hand sanitizer when they walk into the building, put on a medical mask, and practice social distancing at all times. They even have a check-in desk that every employee must visit before entering the facility so their temperature may be taken. They are also required to put on their PPE’s for added safety. Employees are encouraged to wash hands often, both in the workplace and leaving the workplace.

General Motors is not only concerned with protecting its employees but also those outside the organization, such as employee family members, from acquiring and spreading the virus. According to GM, they have already seen the positive effects of such protocol, as they made the statement that “We have already applied these protocols in the Kokomo, Indiana and Warren, Michigan facilities, where we’re producing ventilators and face masks, as well as in our Arlington, Texas facility and in our Customer Care and Aftersales operations that have remained open to support customer service and parts needs” (General Motors, Returning to the Workplace with Confidence). Soon after entering back into the workplace, GM monitored employees very closely and were able to have coronavirus testing kits on hand and accessible by on-site nurses. After close observation and communication with employees, many of the employees stated that “with all these protocols set in place [they] do feel safe coming in and working” (General Motors, Returning to the Workplace with Confidence).

When a potential COVID-19 case comes back positive, GM follows their procedure that “a medical staff member will gather information and provide guidance regarding any suspected or confirmed case of COVID-19. Privacy will be respected, and personal information will only be used as appropriate for case management and contact tracing. Based on the information obtained, medical personnel will notify the employee’s direct contacts and site HR as appropriate” (General Motors, Returning to the Workplace with Confidence). Safety starts with the protection of an employee’s individual rights, especially their right to keeping their medical situation private. GM values the rights of their workers and attempts to create a workplace that is as safe as possible. PCR viral tests are given to employees who show symptoms of the virus and they are then placed in isolation until their results come back negative. For workers who are anxious about coming to work or even about the pandemic in general, GM provides each member with a telephone number to call to receive necessary console during this period of stress.

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Retail corporations have faced different challenges with COVID-19 than other business, as many of them have been forced to close their doors if they are not labeled as “essential” to everyday people. Luxury retail businesses like Saks Fifth Avenue have come up with several options for customers of their multiple locations, whether in-person or pickup only. A standard option is for virtual shopping and services through the Saks Fifth Avenue website. Some locations offer curbside pickup and other options for home delivery as well. One option that they now offer is booking an appointment before or after store hours to offer contactless shopping, with just the client and the retail worker in the store. Saks offers mandatory health screenings for employees and requires face masks to be worn at all times. They are also required to continue sanitation practices, such as wiping down and disinfecting store shelves and registers, frequently to reduce the risk of spread. Hand sanitizer is placed throughout every store, and extra sanitation measures are taken with open dressing rooms as well. Upon reopening their restaurant L’Avenue at Saks in New York City, Saks made the statement upon the question of safety: “We are closely following all CDC and government mandates to ensure the safety of our guests. As per reopening guidelines, temperature checks and masks will be required to enter the restaurant” (adapted from the official L’Avenue at Saks webpage). Because an entity such as a university has an obligation to not only faculty and staff but to students as well, safety guidelines are more excessive when it comes to developing a virus policy. The top priority of the University is the safety of everyone who sets foot on campus. Troy set up guidelines for social distancing as much as possible and require that face masks be worn in all buildings or outdoors where social distancing is not possible. Vendors who visit campus must also comply with such guidelines. The University is attempting to stop the spread by not only encouraging that hands remain washed/sanitized, but also encouraging documents to be given to students virtually through programs such as Canvas so they may be printed by the students themselves. Any student should report any virus symptoms to the Dean of Student Services, who will then contact HR.

As far as procedure for students who show symptoms, “The names of students with symptoms will not be shared outside of Dean of Students staff and Human Resources staff. Per Center for Disease Control and Prevention guidelines, students may return to class 10 days after they first experienced symptoms, provided they have gone 24-hours with no fever without the use of fever-reducing medications” (adapted from the official Troy Coronavirus Information Center). Sanitization of work, study, and classroom areas has become a top priority of the University and extra measures are being made to disinfect such areas throughout the day. Social distancing procedures have also been heightened in classrooms, as classes are either being moved to larger rooms, pods so there are less students in the classroom, or hybrid classrooms with half virtual and half in-person class. Some clinicals and labs have been converted to virtual programs for necessary majors.

Dining areas are also participating in social distancing guidelines and extra sanitation requirements. Tables have been distanced or blocked off in several of the on-campus dining areas. All student organizations such as choir, band, the Student Government Association, and Greek life are also requiring face masks to be worn at all events and meetings while practicing social distancing. The athletic department has also taken extra precautions regarding guidelines for a virus policy as “Decisions regarding athletics, including competitive events and team activities, will reflect the most up-to-date information and guidance from ADPH, the Governor’s office, the Sun Belt Conference and the NCAA. TROY will work with these organizations to determine how the athletic competition and related athletic activities will operate” (adapted from the official Troy Coronavirus Information Center).

Troy University has also generated a “Commitment to Communication” to keep their stakeholders involved in the decisions made concerning Coronavirus policy. The University made an

ASBBS Proceedings of the 28th (Virtual) Conference announcement concerning notification of changes in operations stating “The University has established contingency plans for a swift move to all-online courses, if necessary. Staff members will receive notification from supervisors and/or Human Resources. While some employees may be able to operate remotely, others must or should remain on campus to ensure continuation of operations” (adapted from the official Troy Coronavirus Information Center). When developing any virus policy guidelines, it should be the top priority of the organization to keep all stakeholders informed of important updates/major changes made to policy.

VIRUS LEGISLATION: LEGAL ADDITIONS TO CURRENT SAFETY GUIDELINES

OHSA Virus Policy The Occupational Safety and Health Act made additions to their current workplace requirements with their addition to COVID-19 specific guidelines for workplace safety. Their current guidelines are as follows (Nagele-Piazza, OSHA Fines more Businesses for Covid-19 Safety Violations): • Implement a written respiratory protection program. • Provide a medical evaluation, respirator fit test, training on the proper use of a respirator and personal protective equipment (PPE). • Report an injury, illness or fatality. • Properly record an injury or illness. • Comply with the general duty clause.

OSHA remains dedicated to providing services to all organizations and provided such guidelines to make the formation of new virus policies a simpler process for all employers.

FFCRA: Provisions by the FMLA to Compensate Employees Affected by the Virus

The Family Medical Leave Act added the Families First Coronavirus Response Act (FFCRA) to assist employees who had to leave work to take care of family members affected by the virus.

The General Guidelines are as follows (adapted from the official U.S. Department of Labor site):

• Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID- 19 symptoms and seeking a medical diagnosis; or • Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and • Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

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This applies to all employees that work in the public sector and private employees in which the company has 500 employees or fewer.

Qualifying Reasons for Leave:

Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

CHALLENGES WITH NEW SAFETY GUIDELINES

It is impossible to ever be ready for a such situation as a global pandemic, as it changes the worldwide economy and affects every person no matter the culture. It can be implied that policies put in place will be faced with challenges, as change is not readily accepted by everyone. Mistakes are imminent and uncertainty is heightened, making the whole concept of “virus policy” seem like a more challenging feat than ever to most organizations. As stated in the recommended virus policy, it is imperative that organizations follow guidelines of multiple health organizations such as the CDC, as well as strictly follow rules set in place by OSHA to ensure employee safety. While many policies have proven beneficial to organizations, there have been challenges with employers and employees maintaining proper guidelines and following the new rules. OSHA has faced several issues with employer/employee violations, as “OSHA announced on Oct. 2 that the agency has cited 37 worksites for coronavirus-related violations and proposed a total of $484,069 in penalties since the pandemic began” (Nagele-Piazza, OSHA Fines more Businesses for Covid-19 Safety Violations).

Several workers have had to be removed from work areas due to risk of people in the workplace who contracted COVID-19 (refer to the graph “Workers Removed from COVID-19 Hazard” on page 14). However, organizations have done well in squashing most outbreaks or risks of outbreaks, as the number of COVID-19 related workplace incidents that have become closed cases has only increased since March of 2020 (refer to the graph “COVID-19 Closed Cases” on page 14). The virus guidelines established by OSHA were not to be utilized as a “virus policy” but merely guidelines to help employers know their limits in the workplace and aide them in creating their own organizational virus policy. Health care facilities across the United States received citations from OSHA for not having the proper medical masks, suits, or other kinds of PPE to protect their medical professionals.

Essential workers have also been negatively affected by the implementation failures, as meat- packaging plant workers in one state saw several cases, and “In a three-month period, 1,294

ASBBS Proceedings of the 28th (Virtual) Conference employees tested positive for COVID-19, 43 of those workers were hospitalized and four died from related complications” (Nagele-Piazza, OSHA Fines more Businesses for Covid-19 Safety Violations). It’s not just one worker that can be affected by OSHA guidelines anymore, as is the case with guidelines on handling heavy machinery, dangerous equipment, etc. The virus can be spread easily to other workers, and failure to follow every guideline to its specific qualifications can lead to several unhealthy workers and loss of life.

OSHA set their guidelines in place based off information given to the public from the CDC and suggest that both OSHA guidelines and CDC guidelines be thoroughly followed and maintained to ensure safety of all employees. As stated in the recommended virus policy, it is imperative an organization “have temperature check points throughout our on-site location where employees will be required to have a temperature check before entering the designated areas. If showing a fever or other symptoms, additional testing will be required before allowing the employee to enter their work area.” However, even the most “virus-prepped” employers cannot control one of the major challenges with the virus: it’s effects on the mental health of individuals. For workers who are struggling with the fear of coming to work, some employers are offering incentives for taking “safer” means of transportation, like Uber or Lyft. Many employers are also offering webinars on how to cope during the changes brought on by the pandemic to not only look out for employees’ physical health but mental and emotional health as well.

TAKING THE VIRUS TO THE COURTROOM: LEGAL ACTION TAKEN AGAINST POLICY VIOLATION: REVEREND KEVIN ROBINSON AND RABBI YISRAEL A. KNOPFLER v. PHILIP D. MURPHY, IN HIS OFFICIAL CAPACITY AS THE GOVERNOR OF NEW JERSEY, ET AL.,

Businesses all over the United States have been affected by legislation generated to reduce the spread of the virus, including that of places of worship. As certain legislation was created after the virus came to be, questioning of violation of rights was undoubtedly bound to occur. The case of Kevin Robinson and Rabbi Yisrael A. Knopfler v. Philip D. Murphy encompasses two different cases of “discrimination” and therefore violation of the constitutional right to freely worship. The case presents issues with the 25% capacity limit placed on places of worship in New Jersey, New Jersey law requires a cap of 25% capacity or a numerical cap, whatever is the lower number, to be placed on religious activity that poses the same risk as other secular activities. They also posed the question on whether the mask mandate hindered their freedom to practice their religious practices as. As it is not required when exercising or eating, the plaintiffs felt as though the church members should be allowed to remove their facial coverings in the building for more than just communion if social distancing may be achieved.

Reverend Kevin Robinson pastors at Saint Anthony of Padua and Rabbi Knopfler runs the synagogue, both in New Jersey. The problem exists with regulation set in place by the governor, as “Under the New Jersey Governor’s web of COVID-19 pandemic regulations, imposed solely by his will, houses of worship are strictly limited to the lesser of 25% of capacity or 150 people, but, strangely enough, never fewer than 10 people even if greater than 25% of capacity.” (Robin and Knopfler v. Murphy, pg. 2) Such a cap was placed on religious gatherings, but secular gatherings often have no

ASBBS Proceedings of the 28th (Virtual) Conference such gaps, being that “only 10 or 20 people at a time can attend Applicants’ religious services while hundreds or thousands can gamble at casinos, patronize superstores, work at meatpacking plants, attend schools, or pour into the streets to celebrate an election without the least observance of ‘social distancing.’” (Robin and Knopfler v. Murphy, pg. 5) Rabbi Knopfler’s issue resides in the fact that his 50 people church would only allow 6 people in at a time under the 25% capacity rule, as Jewish worship must be performed in a synagogue and in person. In comparison, businesses like schools have no capacity limits, as the proximity of students to one another in the classroom is comparable to those in a church sanctuary. The Court’s argument was that schools take further precaution than churches are able to do, as they are prepped with advanced hygiene systems like air filtration and most churches are not.

Robin and Knopfler have a case because they hold the argument that “Governor Murphy’s orders are neither neutral nor generally applicable because they are riddled with exemptions for secular activities endangering the government’s interest at least as much as tightly restricted religious activities.” (Robin and Knopfler v. Murphy, pg. 22). The district court held the argument that they have treated religious gatherings with more leniency than many secular activities, such as going to the movie theater. It can further be assumed that “What is good for schools, factories, homeless shelters, outdoor crowds, professional sports, and barber shops is good for worship, too.” (Robin and Knopfler v. Murphy, pg. 34). The plaintiffs therefore requested that they receive the same treatment as essential retail businesses, as a place of worship is still a business and essential to many, so they may receive at least 50% indoor capacity. Because the Court will most like grant certiorari and move the case from District court to the Supreme Court, Applicants respectfully request that this Court issue an injunction pending appeal (or after granting certiorari) that allows them to host indoor, in-person religious worship for their respective congregations on the same terms and conditions allowed for comparable secular activities.” (Robin and Knopfler v. Murphy, pg. 36) Such would allow for more people to attend church and place less restrictions on the constitutional right to freely worship. On December 15, CNN released an article announcing that the Supreme Court under Amy Coney Barrett decided in favor of the places of worship and Attorney General Gurbir Grewal decided that certain restrictions re necessary to uphold the safety of the individuals “‘ensuring religious activities receive at least as much protection as secular conduct, if not more.’” (de Vogue, CNN politics) Such matters were also decided to require facial coverings be worn inside the church building unless performing actions where it is not reasonable to wear covering, such as eating or performing communion.

It is recommended that applicants are granted equal rights by the governor as comparable to secular activities when limiting capacity and the requirement of facial coverings. In the end, the decision was not be restrictive because of the fact that it is a religious organization, as that would prove discriminatory, but instead act in the best interest and wellbeing of church attendees. I recommend further requirements for sanitization of church pews, doors, and bathrooms and even air filtration systems be installed so a church may receive the same if not similar treatment as that of an educational institution in every state. If such precautions are taken and reviewed by a court of law, it is likely that it will appeal in favor of a raised cap in church attendees and equal mask restrictions to that of restaurants and gyms across U.S. lower courts.

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RECOMMENDATIONS FOR MAINTAINING EMPLOYEE MORALE, GIVEN NEW WORKPLACE GUIDELINES Because living through a pandemic is a new concept to our generation, it is next to impossible to imagine that no mistakes will be made along the way. However, it is how such organizations handle and move on from the mistakes that allows for lessons to be learned and wisdom to be gained. One of the main challenges for organizations is employees feeling safe coming to work. For employers who are able to perform some of their operations online, it is recommended that work schedules be modified for a hybrid workplace in which some employees work from home on computers and the employees essential to practicing in-person tasks remain on-site. This provides an opportunity for work areas to become more distanced and give employees room to work and feel safe, as well as those at home feeling safer performing operations from a more-quarantined environment. When accounting for the individuals that are able to work from home versus those who are required to perform in-person operations, accommodations should be made for the workers in the workplace, so morale does not plummet. In an ideal, multi-talented workplace, employers could arrange a schedule where employees switch from online to in-person operations, so everyone is getting the same amount of time at home as in the workplace. However, because of the differing job specifications and talents in most organizations, some employees will have to be in the brick-and-mortar location more than others. These employees could be offered incentives or work premiums to encourage them to want to come to work. Many employees in today’s world are just grateful for employment and will try to do what they can to provide for themselves and their loved ones. It is also recommended that motivation practices be set in place to encourage employees to continue to perform tasks efficiently. Another issue regarding employee safety is maintenance of mental and emotional health.

Sometimes just reminding employees how essential they are to a company’s success and giving them reassurance of the value of their job can do more for motivation than all the bonuses in the world. Letting employees know they are appreciated and even giving them a chance to get to know their superiors and convey their ideas to supervisors makes them feel like they are needed, and their opinion valued. It is recommended that supervisors make themselves more accessible than ever to their subordinates, giving them console and advice on performing their jobs in a satisfactory manner. As stated in the recommended policy, incident reporting as well as symptom/virus reporting must be to supervisors and to an HR department; therefore, it is imperative an employee feel comfortable with his/her supervisor so reporting can uphold diligence and accuracy.

Also stated in the recommended virus policy, “Surveys will be regularly given out to employees to express concerns and levels of satisfaction. All survey results will remain anonymous and confidential. Weekly meetings will be held for major employee concerns to be read aloud and discussed so solutions may be reached.” Employees will have a greater willingness to follow CDC and new safety guidelines if they feel important and valued in the workplace. Making employee physical, mental, and emotional security a top priority in the organization will prove to trickle down to operational functions, which will then positively affect the production of products and services offered by a company.

CONCLUSION

As a society, we are used to planning for the future and doing as much as possible to avoid uncertainty in every part of our lives. The global pandemic was something that no one expected to 38

ASBBS Proceedings of the 28th (Virtual) Conference happen but has allowed businesses to show their true colors when it comes to their ability to efficiently respond to the unexpected. Organizations all over the world have had to respond to the pandemic with a new outlook on “safety.” With the birth of new legislation like the Families First Coronavirus Response Act under the FMLA and new COVID-19 guidelines under OSHA, businesses have certainly not had to make these tough decisions alone. Workplace safety now not only includes keeping an employee safe from incidents with equipment or avoiding discriminatory practices, it means preserving the physical, emotional, and mental wellness of the employees as much as possible.

Graphs:

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Challenges will arise and mistakes will be made, but what matters is businesses putting in an organizational good faith effort to offer protection to its human capital. When employees feel like they are secure in their job and their health is valued by their superiors, it will give them motivation to continue to put in their best effort, despite the looming fear felt by many. Policies and guidelines have been created and changed and will continue to develop as the world heals from the virus. Until then, it is the job of HR and the responsibility of the organization to look after its people and ensure a safe workplace, making them not only hold the title of “essential” but feel essential in the workplace as well. REFERENCES

Families First Coronavirus Response Act: Employee Paid Leave Rights. (2020). Retrieved December 04, 2020, from https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave

G.M. (2020). Employee Safety in Returning to the Workplace: General Motors. Retrieved December 04, 2020, from https://www.gm.com/masthead-story/return-work-safety-protocols.html

Saks Fifth Avenue. (2020). Saks Fifth Avenue: Saks at your Service. Retrieved December 2, 2020, https://www.saksfifthavenue.com/locations/services

Lisa Nagele-Piazza, J. (2020, November 09). OSHA Fines More Businesses for COVID-19 Safety Violations. Retrieved December 04, 2020, from https://www.shrm.org/resourcesandtools/legal- and-compliance/employment-law/pages/osha-fines-more-businesses-for-covid-19-safety- violations.aspx

Troy University. (2020). TROY CORONAVIRUS (COVID-19) INFORMATION CENTER. Retrieved December 04, 2020, from https://www.troy.edu/coronavirus/

CDC. (2020). How to Protect Yourself & Others. Retrieved December 04, 2020, from https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html

OSHA. (2020, December 4). Department of Labor logo UNITED STATESDEPARTMENT OF LABOR. Retrieved December 04, 2020, from https://www.osha.gov/enforcement/covid-19-data

Reverend Kevin Robinson and Rabbi Yisrael A, Knopfler v. Philip D. Murphy in His Official Capacity as the Governor of New Jersey, ET AL., Supreme Court Press 37 (November 20, 2020) (The Supreme Court of the United States, Dist. file).

Vogue, A. (2020, December 15). Supreme Court backs religious groups against Covid-19 restrictions in Colorado and New Jersey. Retrieved January 01, 2021, from https://www.cnn.com/2020/12/15/politics/supreme-court-colorado-new-jersey- covid/index.html

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UTILIZING MEDIATION TO RESOLVE CAMPUS CONFLICT: THE SKY IS NOT THE LIMIT Brown, Anne L. Bienstock, Joshua E. New York Institute of Technology Swid, Amr St. Edwards University ABSTRACT

Litigation, for a variety of reasons, has proven to be an imperfect platform to resolve conflicts arising on university campuses. Aside from the anxiety, wasted cost, and time associated with litigation, both students and university administrators run the risk of damaged relationships and very embarrassing publicity when they resort to litigating their conflicts. Litigation by its nature is adversarial and results in win/lose outcomes. Given these realities, universities have turned to mediation as an alternative conflict resolution tool: a tool which affords both parties the ability to resolve their conflict in an environment where confidentiality may be preserved and relationships salvaged. Mediation affords disputants the opportunity to voluntarily formulate win/win outcomes addressing their respective needs. However, mediation is not suited for all disputes arising on campus. For instance, in cases involving criminal assault, searching for a mutual agreement between the victim and the perpetrator is not feasible. Similarly, where a university expels a student for cheating or plagiarism, the university may have an institutional interest in proceeding to court so that it may vindicate its position and establish precedent for future disputes.

This paper will explore those instances where mediation is appropriate to resolve campus conflict and when it is not. We conclude with proposed study in which we will survey students and university administrators to shed light on which campus disputes they would be willing to resolve through mediation and which disputes they would prefer to address in court.

INTRODUCTION

This paper explores the boundaries and limitations of mediation to resolve campus conflict. We will examine three case studies and analyze the nature of the disputes arising in each, and assess the appropriateness of utilizing mediation to resolve those disputes. Then we will propose a study of students and university administrators to determine which campus conflicts they would be willing and unwilling to resolve in mediation.

LITERATURE REVIEW

We live in a society where the kneejerk reaction to a perceived wrong is to litigate (Bienstock, 2019b). Notably, of the approximately 40,000,000 lawsuits initiated in the United States every year, approximately 90% are resolved before going to trial by utilizing the alternative dispute resolution platforms of negotiation, mediation and arbitration.

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Conflict on U.S. college campuses is prevalent, making the U.S. college campus a breeding ground for litigiousness. Significantly, the very nature of the world of academia often promotes conflict, by encouraging intellectual inquiry through the use of debate, questioning and argumentation (Bienstock 2019a; Palmdesso 2017; Din, et al 2011). As West (2006, 187) explains, “debate and dissent are the lifeblood of free universities.”

Further, universities are unique in that they are comprised of many different stakeholders, i.e. administration, faculty, staff, students with potentially diametrically different perspectives (Bienstock and Swid, 2017; Katz & Kovack, 2016; Warters, 2000). Conflict among various campus stakeholders is inevitable and is often exacerbated by the multitude of conflict stakeholders. (Warters 1995).

Student and university disputants quickly discover that litigation is time consuming, costly, stress inducing, and may result in permanent damage to the relationships and reputations of both parties. Thus, universities and university students have a mutual interest in resolving and reducing conflict. It serves neither the students’ nor the universities’ interests to engage in time consuming, expensive, stressful and relationship damaging litigation. Both parties benefit from resolving their disputes as quickly and as efficiently as possible. Mediation serves all of these interests, while at the same time providing the parties with a win/win model of conflict resolution.

In contrast, litigation offers a “I win, you lose” model of conflict resolution. Further, litigation often lasts for years, during which time the stakeholders all struggle under a cloud of uncertainty. Inevitably, the public nature of litigation results in the public airing of sensitive matters, harming the litigants’ reputations. Further exacerbating matters in the win/lose model of litigation is the fact that the relationship of the parties is often irreversibly harmed. Litigants must abide by rigid court/law generated decisions that often fail to take into account the underlying interests of the litigants. Mediated settlements enjoy greater credibility: both parties, student and university, have the opportunity to control their destiny, by crafting solutions that address their individual and common interests and needs.

Mediation has become a much-favored platform for resolving campus conflict: as litigation has permeated the fabric of our society, mediation remains a favored means of resolving conflict. The business world, both domestically and internationally, has recognized the utility of mediation and its many advantages in resolving conflict more efficiently than litigation. Mediation is recognized as an effective and efficient way to resolve conflict in a wide variety of disputes, including: divorce; child custody; family matters; landlord/tenants; employer/employee or union; elder care; medical care; banking; business partners; and tort law (Mediation: What Cases are Eligible for Mediation?; Honeyman, 2011; Roberts, n.d.; Hualing and Choy, 2004; Kauth, 2019; Swanson, n.d.).

In mediation, the parties agree to engage in a non-binding dispute resolution process in which a neutral, with expertise in the subject matter of the dispute, seeks to resolve the dispute by exploring common interests (Warters 2000). As Fischer (2011) explains, the university and the student benefit from the mediation process: (1) privacy and confidentiality are maintained; (2) relationships can be preserved and even rebuilt; (3) the process is less formal, time consuming, costly and stressful than the court system; (4) the parties retain ownership of the issues and outcomes, thus the resolutions are predictable, customized and win/win, and (5) because the parties take part in creating the outcome, compliance with the settlement is more likely and the resolution is likely to promote lasting outcomes.

Conflict is no stranger to the college campus. Campus based disputes are complicated by the educational atmosphere, which encourages academic freedom and debate (Palmdesso 2017; Din, et al 2011; West 2006). Cultural diversity and personality differences may complicate campus relationships and generate friction resulting in thorny disputes, disputes which nevertheless can be effectively diffused in mediation (Volpe and Witherspoon 1992). Mediation of campus conflicts traces its origins to academic disputes such as student solution centers, counseling and wellness centers, 42

ASBBS Proceedings of the 28th (Virtual) Conference residence halls, as well as campus academic and service offices (“campus conflict resolution services”). (Palmdesso 2017; Girard, et al, 1985; Warters (1995). For instance, campus mediation has been used on campus extensively to support students as issues arise freedom concerning campus adjustment (Griffin, 2002).

Today mediation of campus disputes is addressing a greater range of disputes far beyond the boundaries of academic related issues and is considered a fundamentally necessary platform for campus conflict resolution (Douglas, 1998). For instance, mediation is used to resolve a plethora of issues concerning various campus stakeholders including students, staff and occasionally the community adjoining the campus (Bienstock 2019; Griffin, 2002). Mediators offer advice and strategies to resolve interpersonal conflicts (Griffin, 2002) and educate the campus stakeholders in alternative dispute resolution techniques (ADR) (Jameson, 1998). Mediation is also utilized in the field of athletics to help minimize disputes between players and players and coaches (Galton, 1998). Bienstock (2019a) has suggested that a wide array of campus disputes can be resolved through mediation, including academics, athletics, accidents, accommodations, class accommodations, campus accommodation for student clubs/groups and miscellaneous campus protests, community disputes, discrimination, disseminating material on campus, drug and alcohol abuse, employment, financial aid, freedom of expression, interpersonal disputes, intentional torts, harassment and student housing.

The relationship between students and institutions of higher education is unique in that the relationship begins with student enrollment, but frequently extends well past graduation as alumni often support the university financially and from a public relations and recruitment perspective. In this it would serve all interested parties to attempt to resolve the conflicts through mediation. The model for dispute resolution is collaborative and aims to achieve win/win resolutions, where both sides preserve and enhance their relationships and ultimately their reputations (Fisher, 2011).

Mediation is not appropriate to all campus conflicts: While there is extensive literature exploring the many campus-based conflicts that may be successfully resolved through mediation, little has been done to explore the limitations of its use, such as where the mediation platform is not acceptable to the disputants. Bienstock (2016) suggests that in certain disputes arising on campus, mediation would be contraindicated. For instance, if the institution of higher education determines that it needs a legally binding interpretation of the law or to clarify or validate a university policy to set precedent for future cases, mediation may not be viable. Likewise, where one of the parties to the conflict is accused of criminal and/or abusive behavior, mediation would not be appropriate. Or, when the interests of the student and university are diametrically incompatible, mediation will serve no useful purpose. Similarly, mediation will fail if one or both parties are not seeking relief, but rather retribution.

DISCUSSION

To explore when mediation is appropriate and when it is counter-productive, we examine three (3) case studies to shed light: Gomez-Jimenez v. New York Law School, Nungesser v. Columbia University, and Hernandez, et al v. Baylor University. The Gomez-Jimenez and Nungesser case studies provide excellent examples of matters of student conflict where litigation may have been avoided if the universities involved had utilized mediation when first faced with their students’ complaints. The Hernandez case study suggests a situation where mediation, despite its many advantages, may nevertheless have ultimately failed as a means of resolving an extraordinary, serious and wide spread conflict involving allegation of sexual assault and misconduct.

Gomez-Jimenez v. New York Law School, 103 A.D.3d 13 (1st Dept. 2012).

In the Gomez-Jimenez versus New York Law School case, the complaining students were upset, frustrated and angered by their inability to procure employment in the legal field following graduation. They felt misled by information regarding employment opportunities presented by the law school and blamed it for their inability to find employment. In essence, they were upset not simply by the alleged

ASBBS Proceedings of the 28th (Virtual) Conference misleading information, but also by the fact that their primary interest, finding employment, had not been recognized or met.

Putting aside the question of whether information provided by the law school was legally fraudulent or misleading, the fact remains that had the law school recognized and addressed the interest of the students to procure employment, it could have avoided litigation. If, on learning of the students’ complaint, the law school had applied the fundamental tenets of mediation, identifying and acknowledging the legitimacy of its opposition’s interests in addition to their own interests, it would have been able to discuss and address those interests. It could have investigated and discussed mutually beneficial solutions. It could have recognized that these students were angry, frustrated and most importantly, fearful because they needed jobs in their chosen field. It could have seen that was in its own interest to help these students find employment and it could have recognized the very real possibility that failing to work to find a solution would ultimately be harmful to its relationship and reputation with these students and the public. Instead, by failing to identify the interests of the parties, litigation resulted, and the dispute became known to the general public, including potential student applicants. The public at large was left with the impression the school was not fully forthright regarding post-graduation job opportunities for its students. Needless to say, it further cast the school in a poor light as the public now knows that not only could these New York Law School graduates not get jobs as lawyers, but also that these graduates lost a very high profile lawsuit; not necessarily the best reflection of the students’ legal judgment, nor of the law school’s educational superiority.

Had the parties first engaged in the mediation process, the law school might have made further efforts to assist the students in finding employment, these students might very well now be praising the law school for its help, and the public would never have had reason to doubt the law school’s competence.

Nungesser v. Columbia University, 169 F.Supp. 3d 353 (SDNY 2016)

In the Nungesser matter, Mr. Nungesser’s dispute with Columbia University began with an allegation of sexual assault lodged against him by a fellow student (Ms. Sulkowicz). Despite the University’s investigation of the charges against him and its refusal to take disciplinary actions against him, continuing doubt as to his conduct remained. Mr. Nungesser felt betrayed by the University and vilified by the public. His reputation and integrity were maligned. In his view, the University was largely responsible for this continuing vilification and the damage to his reputation, not only in the view of his campus community, but also by the public at large. Mr. Nungesser had an obvious, indeed, vested interest in restoring his reputation.

Columbia University, on the other hand, had a significant interest in protecting the ongoing integrity of its complaint process. Ms. Sulkowicz’s charges of sexual assault had been fully investigated by the University, a hearing was held and the University determined that disciplinary action against Mr. Nungesser was not merited. Nevertheless, the controversy remained and the University became the focus of a highly publicized dispute. Had the University applied basic mediation techniques, had it identified the parties’ interests, it may have been able to fashion a solution which would address not only Mr. Nungesser’s interest in defending his reputation, but also its own interests in upholding the integrity of its complaint process, avoiding litigation and protecting its relationships and reputation in the public eye. For example, in exchange for Mr. Nungesser’s agreement not to sue, the University could have issued a public statement defending its complaint process, reiterating that a full and fair hearing had been held and stating that Mr. Nungesser was not disciplined for his conduct in the matter. Such a statement could have alleviated the publics’ fears, helped restore Mr. Nungesser’s reputation

ASBBS Proceedings of the 28th (Virtual) Conference and protected the University from further harm to its relationship with its students and reputation in the community.

Hernandez, et al v. Baylor University, 274 F.Supp. 3d 612 (WDTX 2017)

In the Hernandez, et al v. Baylor University matter, the University was faced with a critical and potentially devasting situation. In a brief eight-month period in 2016, fourteen female Baylor University students filed four separate lawsuits against the University, alleging, in some variant, that the University harmed them by failing to fully and fairly investigate their charges that they had been sexually harassed or assaulted on campus. Unprecedented turmoil, extensive negative publicity and overall distrust of the University’s concern for the needs of its female student body, which have plagued the University since these student complaints became public knowledge, could have been avoided if the University had taken the time to examine the matter through the lens of mediation before any lawsuits were filed.

Permeating much of the controversy surrounding these student lawsuits is the general feeling (rightly or wrongly), by much of the public and student body, that the University turned a blind eye to the seriousness of the numerous allegations of sexual assault or harassment filed by female students because it wanted to protect its athletics department. Although the facts as they have been unfolding do not yet necessarily prove or disprove this supposition (not all of the underlying charges involved members of the school’s athletics department), the public’s perception that the University has favored its male athletes has nevertheless severely damaged the University’s reputation.

Had the University used mediation when it first received complaints from these students alleging its failure to fairly investigate their claims, the University could have foreseen the overwhelming hit to its reputation, which continues to unfold. Under a mediation model, the University would have identified its interest in providing fair, thorough investigations, not only so that these students would have confidence in the process, but to assure that these students were actually treated fairly. It could have identified the interests of all of its students to be treated fairly. Taking these interests into account, the University might have been able to provide solutions which may have satisfied these students’ interests, such as an agreement to reinvestigate the underlying claims, perhaps with a different University representative conducting the investigation. It might have offered to review its investigatory process and revise that process if needed. It could have solicited suggestions from the complaining students themselves, or the student body at large, for recommendations as to how to improve the investigatory process. Given the numerous allegations of sexual assault and misconduct involved, and the underlying serious, potentially criminal aspects of the allegations, efforts to mediate this crisis may have been unsuccessful. However, having failed to make any attempt to mediate the issue, the University will never know if any of the possible solutions offered herein might have been feasible. Had the University, using mediation, made the offer to explore alternative solutions, it may, or may not, have averted the publicity nightmare it now faces. Having failed to make any offer to mediate, the University will never know.

Developing Guidelines to Determine When Mediation is an Inappropriate Forum for Campus Conflict Resolution: The aforementioned cases offer some limited insight into when mediation of campus conflict may work and when it is appears doomed to fail. We propose a study to explore when mediation of campus conflicts would be out of bounds: whether because of the nature of the relief being sought; or because a power imbalance exists; or due to an abusive or criminal component; or for

ASBBS Proceedings of the 28th (Virtual) Conference institutional reasons; or perhaps the underlying interests of the disputants are completely incompatible or inconsistent.

By surveying students and university administrators we propose to identify those disputes that lend themselves to being resolved in mediation and those disputes that would more appropriately be addressed in court.

Figure 1. RESEARCH PROPOSAL: What campus disputes would either students or universities be unwilling to resolve through mediation?

ascertain disputes Establish student/univ guidelines for ersities when

would Determining mediation would be used assess mediate the university Willingness or use of unwillingness

Mediation of Ascertain in student students/univ conflicts Disputes ersities to Establish that resolve guidelines for students/uni disputes in when versities mediation mediation would not would not be mediate used

PROPOSED METHOD

Method: We will use a qualitative research approach. The surveys will explore the disputes that students and administrators would be willing to resolve through mediation, and, also identify the disputes that they would refuse to consider resolving in mediation. For all disputes for which the participants indicate an unwillingness to resolve through mediation, the participants will be asked to identify their favored platform for its resolution, i.e., negotiation, arbitration or litigation.

Participants: The focus group will be drawn from surveying 100 domestic and international students and 100 university administrators at two randomly selected universities in the New York City metropolitan area; one university in the public sector and one university in the private sector. The study will be conducted over a two-year period. The confidentiality of the participants will be preserved and data will be securely stored.

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Recruiting will commence in Fall 2020 and conclude in Spring 2021.

Analysis: Data analysis will be conducted in Fall 2021 and we anticipate reporting our findings in the Spring of 2022. We will be searching for disputes that where solely the student or solely the administrator would be unwilling to mediate the campus conflict and where jointly both student and administrator would reject mediation. We also will be looking to see whether any university administrators have written or unwritten polices setting forth which campus disputes are not subject to their mediation process

Contribution: We hope to utilize our findings to establish model guidelines outlining when mediation is an appropriate platform for campus conflict resolution and when it is not. These guidelines could provide insight to universities interested in implementing either a voluntary or mandatory mediation system to resolve campus-based student conflict.

Future Research: We suggest that future research focus on successful mediation cases, which might provoke more universities and students to pursue mediation rather than litigation. The understanding the key criteria for a successful mediation would help universities utilize their resources and processes for the mediation, thus saving, cost, time and effort required for a win-lose litigation. On the other hand, we also think that future research should investigate the drawbacks of mediation in higher education institution, thus helping university administration to avoid pitfalls and pursue a well-informed mediation process

REFERENCES

Bienstock, J.E. (2019a). Campus conflict resolution: The time has come for mandatory mediation. Journal of Business and Behavioral Sciences, 31(1), 36-47.

Bienstock, J.E. (2019b, March). Applying interest-based problem solving to the U.S. university complaint process: Preempting avoidable student-university litigation. Paper presented at 26th Annual American Society of Business and Behavioral Sciences, Las Vegas, Nevada.

Bienstock, J.E. & Swid, A. (2017). International students’ adjustment to U.S. universities: Utilizing a campus mediation approach. Proceedings of the 24th annual conference, American Society of Business and Behavioral Sciences. ISSN: 1935-0583, 56-65

Bienstock, J.E. (2016, November). Students’ lawsuits proliferate: Is mediation the cure? Paper presented at Nassau County Bar Association, Garden City, New York.

Din, S., Khan, B., Rehman, R. & Bibi, Z. (2011). An investigation of conflict management in public and private sector universities. African Journal of Business Management, 5(16), 6981-6990.

Douglas, J. M. (1998). Conflict resolution in the academy: A modest proposal. In Susan A. Holton (Ed.). Mending the Cracks in the Ivory Tower: Strategies for Conflict Management in Higher Education. Bolton, MA: Anker Publishing Company, Inc. Fisher, R., Ury, W.L. & Patton, B. (2011). Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. New York: Penguin. Galton, E. (1998). Mediation programs for collegiate sports teams. Dispute Resolution Journal, 53(4), 37.

Girard, K., Rifkin, J., & Townley, A. (1985). Peaceful persuasion: A guide to creating mediation dispute resolution programs on college campuses. Amherst, MA: The Mediation Project.

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Griffin, T. (2002). Similarities and differences between campus ombudsing and mediation. Conflict Management in Higher Education Report, 3, 1. doi:10.18411/d-2016-154

Honeyman, C. (2011, November 17). What mediation is and when it should be used. Retrieved from https://www.adrtimes.com/library/2011/11/17/what-mediation-is-and-when-it-should-be- used.html.

Hualing, F. and Choy, D.W. (2004). From mediation to adjudication: Settling labor disputes in China. China Rights Forum, 3, 17-22. Retrieved from https://www.hrichina.org/sites/default/files/PDFs/CRF.3.2004/From_Mediation_to_Adjucation _-_Settling_Labor_Disputes_in_China.pdf

Jameson, Jessica Katz (1998). Diffusion of a campus innovation: Integration of a new student dispute resolution center into the university culture. Conflict Resolution Quarterly, 16, 129-46. Katz, N. H. and Kovack, L.N. (2016). Higher education’s current state of alternative dispute resolution services for students.” Journal of Conflict Management, 4 (1), 5-37.

Kauth, K. (2019). Eldercare mediation: Setting families up for success. Mediate.com. Retrieved from https://www.mediate.com/articles/kauth-eldercare-mediation.cfm.

Klingel, S. and Maffie, M. (2011). Conflict management systems in higher education: A look at mediation in public universities. Dispute Resolution Journal, 66(3), 12-14,17. Retrieved from http://arktos.nyit.edu/login?url=https://search-proquest- com.arktos.nyit.edu/docview/905246263?accountid=12917 Mediation: What cases are eligible for mediation? FindLaw. Retrieved from https://adr.findlaw.com/mediation/mediation-cases-what-cases-are-eligible-for-mediation.html Palmdesso, N.S. (2017). Student mediators solving campus conflict: The efficient shift from discipline to dispute resolution. Dispute Resolution Journal, 72(3), 55-86.

Resolving nursing home liability cases with ADR. (March 5, 2013). Massachusetts Dispute Resolution Services. Retrieved from https://www.mdrs.com/using-adr-to-resolve-nursing-home-liability- cases.

Roberts, M. (n.d.). Resolving disputes through employment mediation. Mediate.com. Retrieved from https://www.mediate.com/articles/roberts2.cfm.

Sisson, V. S. and Todd, S.R. (1995). Using mediation in response to sexual assault on college and university campuses. NASPA Journal, 32(4), 262-269.

Spiller, D. (2002). ADR in the university: The limits of a problem-solving paradigm. ADR Bulletin, 5(8), 1-7.

Swanson, D.L. (n.d.). Mediating business disputes: Caucus format is unfortunate. Mediatbankry. Retrieved from https://mediatbankry.com/2019/08/13/mediating-business-disputes-caucus- format-is-unfortunate.

Ury, W.L., Brett, J.M. and Goldberg, S. (1988). Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflict. San Francisco: Jossey-Bass.

Volpe, M. R. and Chandler, D. (2001). Resolving and managing conflicts in academic communities: The emerging role of the ‘Pracademic.’ Negotiation Journal, 17, 245-55.

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Volpe, M. R., and Witherspoon, R. (1992). Mediation and cultural diversity on college campuses. Mediation Quarterly, 9(4), 341-351.

Warters, B. (1991). Mediation on campus: A history and planning guide. The Fourth R, 33, 4-5.

Warters, B. (1995). Making the case for campus mediation. http://files.eric.ed.gov.arktos.nyit.edu/fulltext/ED499548.pdf (originally published in The Fourth R., 55, Feb/March 1995).

Warters, W.C. (2000). Mediation in the Campus Community: Designing and Managing Effective Programs. San Francisco, CA: Jossey-Bass.

West. P.W.A. (2006). Conflict in higher education and its resolution. Higher Education Quarterly, 60(2), 187-197.

Yarn, Doug (2014). Designing a conflict management system for higher education: A case for design in integrative organizations. Conflict Resolution Quarterly 32(1):83-105.

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COVID-19 AND HUMAN RESOURCE MANAGEMENT LITIGATION: WHAT SHOULD EMPLOYERS DO?

Calvasina, Gerald E. Southern Utah University Beggs, Joyce M. University of North Carolina Charlotte

ABSTRACT

The COVID-19 Pandemic has created a multitude of problems for employers including novel employment law allegations. This was to be expected in light of the uniqueness of the situation and the variety of laws and regulations being promulgated and revised since the pandemic began. Basic Human Resource (HR) law and regulations have in some instances been amended to address the novel situations that employees and employers are confronting in light of the global COVID-19 pandemic. The purpose of this paper is to examine how new and existing law and regulation impact HR decision making and what employers should be doing to reduce their exposure to litigation while the pandemic continues.

INTRODUCTION COVID-19 is a disease caused by a novel (new) coronavirus previously not seen in humans. To be called a pandemic, a disease must be prevalent or widespread over a country or over the world. The disease is widely believed to have started in Wuhan, China, and reached a global death toll of 500,000 in six months. On February 9, 2021, the global death toll for COVID-19 increased to 2.4 million and the United States death toll reached 465,000 which was more than the number who died in World War 1 and Vietnam. The current situation would certainly meet the criteria for being categorized as a pandemic and has caused fear, anxiety, stress, and worry on a personal level and also about the likelihood of an economic disaster. The COVID-19 pandemic created a multitude of problems for employers including new employment law situations. As would be expected, a variety of laws and regulations were promulgated and revised. Basic Human Resource (HR) law and regulations were amended along with new regulations being enacted to address the unusual situations that employers and employees confront. The purpose of this paper is to examine new and existing laws and regulations that impact HR decision making and to provide policy recommendations for employers and employees to reduce their exposure to litigation.

LAWS INVOLVED The H1N1 pandemic of 2009 could have helped prepare the country for the COVID-19 pandemic of 2019. However, there is quite a myriad of laws, Executive Orders, and administrative agencies that affect HR management practices during the pandemic. There are the laws enforced by federal agencies such as the Equal Employment Opportunity Commission and the Occupational Safety and Health Administration, and those enforced by the Department of Justice. There are also guidelines such as those from the Centers for Disease Control and the World Health Organization. In addition, there are pandemic regulations from 50 states, one district, and territories. For example, states can regulate

ASBBS Proceedings of the 28th (Virtual) Conference whether businesses can be open, whether customers are allowed inside, whether employees must work at home, and whether unemployment compensation is available. Consideration of county level regulations further complicates the present state of regulation. There are 3143 counties, parishes, and districts. When all the levels of regulation and enforcement are considered, a very complex system of federal, state, and county or local regulatory authority is revealed. Moreover, there are the numerous ramifications created by different regulations being levied depending upon whether the workers are essential or non-essential.

EEOC All of the laws enforced by the Equal Employment Opportunity Commission (EEOC) continue to impact HR decision making during the pandemic (see Table 1). The EEOC also provides additional guidance as to applicability of these basic regulations (EEOC A & B, 2020).

Table 1 Laws Enforced by the EEOC

Title VII of the 1964 Civil Rights Act as Amended The Americans with Disabilities Act The Rehabilitation Act The Age Discrimination in Employment Act The Genetic Information Nondiscrimination Act

BASIC EEOC GUIDANCE The EEOC publication, Pandemic Preparedness in the Workplace, and the Americans with Disabilities Act furnish guidance to help employers implement strategies to navigate the impact of COVID-19 in the workplace (EEOC, 2020). Originally published during the H1N1 outbreak of 2009, it was updated in March of 2020 to address examples and information regarding COVID-19 specifically. Employers with 15 or more employees are subject to regulations of Title 1 of the ADA, and although there is a pandemic, the basic ADA restrictions still apply and must be followed. For example, the ADA has rules on making disability-related inquiries and requiring medical exams of job applicants or employees (see Table 2). During the pandemic, ADA covered employers may ask employees if they are experiencing symptoms of COVID-19. What would normally be a restricted medical inquiry is permitted if employers are relying on Centers for Disease Control (CDC) or other reputable sources of guidance for what COVID-19 symptoms are. Given CDC guidance, measuring an employee’s body temperature, which would normally be considered a medical exam under the ADA and prohibited, is also permitted during the COVID-19 pandemic (EEOC A & B, 2020).

Table 2 Other basic guidance issued by the EEOC Does the ADA allow employers to require employees to stay home if they have symptoms of the COVID- 19? YES Can the employer require a doctor’s note certifying fitness for duty? YES May an employer administer a COVID-19 test to detect presence of the virus to employees & job applicants? YES May an employer administer an antibody test to make decisions about returning persons to work? NO May an employer ask an employee coming into the workplace whether a family member has COVID-19? NO (EEOC A & B, 2020)

US DEPARTMENT OF LABOR 51

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In addition to EEOC law, laws enforced by the United States Department of Labor, US (DOL) also impact employers (see Table 3). The US DOL enforces more than 180 federal laws, and the mandates and regulations to implement the laws cover most workplace activities of about 150 million workers and 10 million workplaces (US, DOL, 2021).

Table 3 Major Laws Enforced by the US DOL The Fair Labor Standards Act Immigration and Nationality Act Occupational Safety and Health (OSH) Act Employee Retirement Security Act Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA) Health Insurance Portability and Accountability Act (HIPPA) Labor-Management Reporting and Disclosure Act Uniformed Services Employment and Reemployment Rights Act Family Medical Leave Act Worker Adjustment and Retraining Notification Act (WARN)

The US DOL has also developed and published a great deal of guidance and informative resources on the COVID-19 pandemic. The most notable is their Guidance on Preparing Workplaces for COVID- 19 (US, DOL Guidance, 2020). The guidance is a recommendation and is advisory in nature; it is not a standard or regulation. The guidance provides descriptions of mandatory safety and health standards applicable during a pandemic situation (US, DOL Guidance, 2020).

NEW FEDERAL LAW The Families First Coronavirus Response Act (FFCRA) is the newest piece of federal law and was signed into law on March 18, 2020. It was designed to alleviate some of the negative effects of COVID- 19 on employees and employers. Additional laws enacted include the Paycheck Protection Program, Health Care Enforcement Act, and the Consolidated Appropriations Act that added $900 billion in economic relief (Investopedia, 2021). This piece of legislation is hailed as the source of new litigation for employers particularly from employees seeking and/or using the FFCRA’s leave and sick pay provisions (Bernstein & Larson, 2020). According to the Fisher Phillips Employment Litigation Tracker, as of February 11, 2021,7, 2021, 1,606 case have been filed with the most common type of case involving remote work and leave conflict issues (Fisher Phillips, 2021) (see Table 4). While the healthcare industry has been the industry targeted most frequently, manufacturing, retail, government, and hospitality are also seeing a large number of cases (Fisher Phillips, 2021). Bernstein and Larson point out that the vast majority of the cases have not been adjudicated or resolved, but the allegations made so far provide employers with “a sense of where and how the conflicts tend to arise” (Bernstein & Larson, 2020).

Table 4 Types of Cases Cases % of Total Remote Work/Leave Conflicts 413 27.4% Employment Discrimination 351 23.3 Retaliation/Whistleblower 330 21.9 Wage & Hour 100 6.6

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RECENT CASES Three cases with a judicial track record include the Gomes v. Steere House (a nursing and rehabilitation center) case, the Constance v. Hollybrook Golf and Tennis Club Condominium, Ind. case, and the Kofler v. Sayde Steeres Cleaning Service, Inc. case.

In the Gomes v. Steere House case, Ms. Gomes was employed as a Licensed Practical Nurse (LPN) at Steere House, a nursing rehabilitation center from August 13, 2018 through May 22, 2020. She was exposed to the COVID-19 virus in April or May of 2020 and eventually contracted the virus (Gomes v. Steere House, 2020). The virus left her unable to work and she eventually applied for paid leave from Steere House under the Family Medical Leave Act (FMLA). Ms. Gomes also brought a claim of retaliation against Steere House alleging that she was terminated for invoking her rights under the FMLA. While the FMLA would normally not entitle an employee to paid leave, the FFCRA contained two acts that provided such relief under the FMLA (Gomes v. Steere House, 2020). Given Ms. Gomes termination on May 22, 2021 was so soon after her positive COVID-19 test, she was able to rely on the temporal connection between her request for FMLA leave and her summary termination. The court concluded that Ms. Gomes allegation that her former employer terminated her in retaliation for requesting leave under the FMLA could proceed because she has presented sufficient facts to support a prima facie case at this stage of the litigation (Gomes v. Steere House, 2020).

The Constance v. Hollybrook Golf and Tennis Club case also involves allegations of violation of the FFCRA for taking leave as a result of a COVIID-19 diagnosis and retaliation (Constance v. Hollybrook, 2020). In this case, the plaintiff is alleging that he notified his supervisor on March 27, 2020 that he was experiencing COVID-19 symptoms and then took time off for testing. Mr. Constance, a maintenance supervisor, had been employed at the club for over 21 years. Mr. Constance alleges that after his positive test was confirmed on April 5, 2020, he informed his employer of the results and voiced concerns for his coworkers. Mr. Constance alleges that he was told not to tell his colleagues about his positive test to avoid “Chaos” (Constance v. Hollybrook, 2020). Mr. Constance was told by his doctor to self-isolate and quarantine until the latter part of April in 2020. He made a full recovery and informed his employer on April 20, 2020 that his doctor had provided him with a letter of release permitting him to return to work. Mr. Constance was instructed to return to the Club’s office on April 22, 2020 where he was immediately terminated by the Club’s Facilities Director (Constance v. Hollybrook, 2020).

In the Kofler v. Sayde Steeves Cleaning Service, Inc. case, there is a decision on a motion to dismiss the case by the defendant, Sayde Steeves Cleaning Service – the motion was denied (Kofler v. Steeves, 2020). Ms. Kofler began working for Sayde as a residential and commercial cleaner on February 28, 2020. Shortly after being employed, she asked to take two weeks of unpaid leave in mid-April “to help care for her newborn grandchild”and Sayde agreed (Kofler v. Steeves, 2020). In March of 2020, Ms. Kofler’s “two minor children were affected by school closures due to COVID-19 and as a result were required to stay at home with [Kofler]” (Kofler v. Steeves, 2020). On or around April 1, 2020, Ms. Kofler requested paid leave in accordance with FFCRA requirements. The company did not respond to her request and instead terminated her on or around April 8, 2020 stating that she would be eligible for rehire in six months (Kofler v. Steeves, 2020). Kofler initiated her complaint against Sayde Steeves on June 26, 2020 alleging that Sayde Steeves retaliated against her for pursuing her rights under the FLSA and the FFCRA by terminating her employment (Kofler v. Steeves, 2020). One of Sayde Steeves’s arguments for dismissal of the complaint was that the company was not a covered employer because they were an employer with fewer than fifty employees, the threshold for coverage under the

ASBBS Proceedings of the 28th (Virtual) Conference statute. The court noted though, that the exemption is not a blanket exemption that applies to all small employers and that an authorized officer of the employer must make certain determinations for the exemption to apply (Kofler v. Steeves, 2020). An employer seeking the exemption “must document that a determination has been made pursuant to the criteria set forth by the Department in [Section] 826.40(b) (1)” (Kofler v. Steeves, 2020). The complaint includes no allegation that Steeves elected the exemption or satisfied the exemption’s requirements (Kofler v. Steeves, 2020).

In all three of the cases cited, retaliation is a key part of the complaints. In general, in EEO litigation, plaintiffs are not required to be successful on their top complaint; that is, that they were discriminated against, to be successful on their retaliation complaint (Walsh, 2019).

POLICY AND PRACTICE RECOMMENDATIONS – WHAT SHOULD EMPLOYERS DO? Policy and practice recommendations abound from numerous sources including the EEOC, the U.S. Department of Labor (DOL), and the legal experts on EEO. Much of the advice is general in nature and for the most part should not be new for employers and human resource practitioners. For example, employers have been advised by a variety of sources to develop plans of action for a multitude of potential situations such as the following: How should an employer respond to an employee’s request for leave if they show symptoms of or test positive for COVID-19? Whose guidance should be followed on opening or closing operations? Should the Centers for Disease Control (CDC) be followed? Or should the state and or local health agencies be followed?

To facilitate human resource management decision making and EEO compliance, guidance from the EEOC and the U.S. DOL have been on the books the longest; and consequently, HR practitioners should at least be somewhat familiar. The basic guidance from the EEOC regarding compliance with the Americans with Disabilities Act (ADA) is something employers covered by the ADA and their HR practitioners should also be familiar. Moreover, the additional guidance from the U.S. DOL publications have been available since the H1N1 outbreak of 2009. Since this guidance starts out with the recommendation that organizations should have plans in place for dealing with pandemics, the guidance is more of an update than any new advice. Employers who have not planned in advance to prepare themselves and their workers for a pandemic may be potentially worsening outbreak conditions (U.S. DOL, 2020). However, training in advance and stockpiling adequate resources for the present pandemic appeared to be sorely lacking at a variety of levels of American government and industry.

The Occupational Safety and Health Administration (OSHA) developed this COVID- 19 planning guidance based on traditional infection prevention and industrial hygiene practices. It focuses on the need for employers to implement engineering, administrative, and work practice controls and personal protective equipment (PPE), as well as considerations for doing so (U.S. DOL, 2020).

The latest information for employers on protecting workers can be found on the U.S. DOL web site under the heading Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID- 19 in the Workplace (https://www.osha.gov/coronavirus/safework). Specific guidance for workers is found in Table 5.

Table 5 What Workers Need to Know about COVID-19 Protections in the Workplace

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▪ The best way to protect yourself is to stay far enough away from other people so that you are not breathing in particles produced by an infected person – generally at least 6 feet (about 2 arm lengths), although this is not a guarantee, especially in enclosed spaces or those with poor ventilation. ▪ Practice good personal hygiene and wash your hands often. Always cover your mouth and nose with a tissue when you cough or sneeze or use the inside of your elbow and do not spit. Monitor your health daily and be alert for COVID-19 symptoms (e.g., fever, cough, shortness of breath, or other symptoms of COVID-19). ▪ Face coverings are simple barriers to help prevent your respiratory droplets or aerosols from reaching others. Not all face coverings are the same; the CDC recommends that face coverings be made of at least two layers of a tightly woven breathable fabric, such as cotton, and should not have exhalation valves or vents. ▪ The main function of wearing a face covering is to protect those around you, in case you are infected but not showing symptoms. Studies show that face coverings reduce the spray of droplets when worn over the nose and mouth. ▪ Although not their primary value, studies also show that face coverings can reduce wearers' risk of infection in certain circumstances, depending upon the face covering. ▪ You should wear a face covering even if you do not feel sick. This is because people with COVID-19 who never develop symptoms (asymptomatic) and those who are not yet showing symptoms (pre-symptomatic) can still spread the virus to other people. ▪ It is especially important to wear a face covering when you are unable to stay at least 6 feet apart from others since COVID-19 spreads mainly among people who are in close contact with one another. But wearing a face covering does not eliminate the need for physical distancing or other control measures (e.g., handwashing). ▪ It is important to wear a face covering and remain physically distant from co-workers and customers even if you have been vaccinated because it is not known at this time how vaccination affects transmissibility. ▪ Many employers have established COVID-19 prevention programs that include a number of important steps to keep workers safe – including steps from telework to flexible schedules to personal protective equipment (PPE) and face coverings. Ask your employer about plans in your workplace. U.S. DOL (https://www.osha.gov/coronavirus/safework)

The DOL web page has detailed guidance for employers to create an effective COVID-19 prevention program. The DOL reminds employers that under the OSHA regulations that they are responsible for providing a safe and healthy workplace free from recognized hazards likely to cause death or serious physical harm. The idea promoted is that the most effective programs engage workers and their representatives in program development and implementation. In addition to the three highlighted recommendations in Table 6, the DOL recommends establishment of an effective system for communicating with workers and educating and training workers on the organization’s COVID-19 policies and procedures (U.S. DOL Protecting Workers, 2021).

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Table 6 The Roles of Employers 1. Assignment of a workplace coordinator who will be responsible for COVID-19 issues on the employer's behalf.

2. Identification of where and how workers might be exposed to COVID-19 at work. This includes a thorough hazard assessment to identify potential workplace hazards related to COVID-19. This assessment will be most effective if it involves workers (and their representatives) because they are often the people most familiar with the conditions they face.

3. Identification of a combination of measures that will limit the spread of COVID-19 in the workplace, in line with the principles of the hierarchy of controls. This should include a combination of eliminating the hazard, engineering controls, workplace administrative policies, personal protective equipment (PPE), and other measures, prioritizing controls from most to least effective, to protect workers from COVID-19 hazards. Key examples (discussed in additional detail below) include: In addition to these general guidelines, more specific guidance is available for certain industries. A. eliminating the hazard by separating and sending home infected or potentially infected people from the workplace; B. implementing physical distancing in all communal work areas [includes remote work and telework]; C. installing barriers where physical distancing cannot be maintained; D. suppressing the spread of the hazard using face coverings; E. improving ventilation; F. using applicable PPE to protect workers from exposure; G. providing the supplies necessary for good hygiene practices; and H. performing routine cleaning and disinfection

In February 1, 2021, the updated DOL guidance emphasized five recommendations that are as follows: ▪ Conduct a hazard assessment. ▪ Identify control measures to limit the spread of the virus. ▪ Adopt policies for employee absences that don't punish workers. This can encourage potentially infected workers to remain home. ▪ Ensure that coronavirus policies and procedures are communicated to both English- and non- English-speaking workers. ▪ Implement protections from retaliation for workers who raise coronavirus-related concerns (Smith, (A) 2021).

Given the three recent cases highlighted earlier all dealt with retaliation, the last recommendation on retaliation protection for workers who raise coronavirus concerns is particularly important. Employer’s Guardian also reported that among the most common employment litigation cases dealing with COVID-19, retaliation cases are among the top three. Employer’s Guardian also noted that small and midsize employers are facing 66% of COVID-19 litigation, with 38% of all COVID-19 lawsuits being filed against employers with 50 or fewer employees (Employer’s Guardian, 2021). Smith also reported that the Executive Order issued by President Biden on January 21, 2021 required the Occupational Safety and Health Administration (OSHA) to consider the need for emergency temporary standards on COVID-19 such as requiring masks. Emergency standards may be issued quickly since they can skip the usual government requirements for comments and hearings (Smith, (B), 2021). 56

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SUMMARY AND CONCLUSIONS

In many instances, the COVID-19 pandemic enhanced the need for HR practitioners and managers to apply what they should already know. Basic elements of EEO compliance recommendations with respect to preventing retaliation when an employee attempts to exercise rights guaranteed under the law is a prime example. Of course, the pandemic has created some unique situations but the basic elements of EEO compliance are not that different. Risk assessment, policy and procedure development, communication, training, and control have been advocated for a long, long time. Another key developing issue for employers involves how to deal with vaccinations in light of the development of vaccines that may mitigate COVID-19. Should employers require as a condition of returning to work that employees get vaccinated? Should employers incentivize employees to get vaccinated? These two questions have both a variety of employee relations and legal issues that employers must consider (Smith, (C) 2021). The legal risks include possible litigation associated with the failure to make exceptions for employees who object and potential workers’ compensation liability for individuals who suffer side effects from the mandated vaccinations (Smith, (C), 2021). The H1N1 outbreak of 2009 should have taught HR practitioners and managers some important lessons. DOL recommendations first developed then should have been incorporated into organizational planning routines. The current situation should be a reminder that this situation could happen again, and planning and preparation lessons learned this time should be incorporated into future plans to manage such a crisis.

REFERENCES

Bernstein, Laura I. & Larson, Felhaber (2020). Employers facing ‘Onslaught’ of New Litigation Under FFCRA, retrieved 1/27/2021 from https://hrdailyadvisor.blr.com/2020/11/05/employers-facing-onslaught-of-new- litigation-under-ffcra/

Constance v. Hollybrook (2020). Randy Constance v. Hollybrook Golf and Tennis Club Condominium, Inc., United States District Court Southern District of Florida, Case 0:20-cv-61312-WPD, Document 1 Entered on FLSD Docket 07/01/2020Dock

Families First Coronavirus Response Act: Employer Paid Leave Requirements https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

Fisher Phillips (2021). COVID-19 Employment Litigation Tracker, retrieved 1/29/2021 from https://www.fisherphillips.com/covid-19-litigation

Gomes, Carol v. Steere House (2020). United States District Court for the District of Rhode Island, C.A. No. 20-270-JJM-PAS.

Investopedia (2021). How the Coronavirus Stimulus bills affect you, retrieved 1/29/2021 from https://www.investopedia.com/how-the-coronavirus-stimulus-bills-affect-you- 4800404

Kofler v. Steeves (2020). Deborah Kofler v. Sayde Steeves Cleaning Service, Inc., United States District Court Middle District of Florida Tampa Division, Case No. 8:20-cv- 1460-T33AEP, 8/25/2020.

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EEOC A (2020). What You Should Know about COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws, Updated December 16, 2020, retrieved 1/29/2021 from https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada- rehabilitation-act-and-other-eeo-laws

EEOC B (2020). Pandemic Preparedness in the Workplace and the Americans with Disabilities Act, Updated in Response to COVID-19 Pandemic – March 21, 2020, retrieved 1/29/2021 from https://www.eeoc.gov/laws/guidance/pandemic-preparedness- workplace-and-americans-disabilities-act

Employer’s Guardian (2021). New COVID-19 Employment Regulations Result in Litigation, retrieved 1/29/2021 from https://www.employersguardian.com/new-covid-19- employment-regulations-result-in-litigation/

Smith, Allen (A) (2021). OSHA Issues Worker Safety Guidance for Coronavirus Protection Programs, SHRM HR Daily Adviser, retrieved 2/2/2021 from https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment- law/Pages/coronavirus-OSHA-worker-safety- guidance.aspx?utm_source=marketo&utm_medium=email&utm_campaign=editorial ~HR%20Daily~NL_2021-2-2_HR-Daily&linktext=OSHA-Issues-Worker-Safety- Guidance-for-Coronavirus-Protection- Programs&mkt_tok=eyJpIjoiTURZeFltRXlNRE0wTkdJeiIsInQiOiJzVnBWSHRyQl drdGhhZ2pFVXNEbFZPR0tHYncwQUhzOUxmMmNqZHEzQUl4MExvY2FOVUl iV1VqMGFWNXdTbUJqbExVNmJwOGtBVFwvTFNINW1ybE8yZWhvejAyaUx WOW13VUtvYXdEaktDSmVmTDZ3REVpXC8yRVgwSXpFVHRZXC92YyJ9

Smith, Allen (B) (2021). President Issues Executive Order on Increased Worker Safety During Pandemic, SHRM Daily Adviser, retrieved 1/25/2021 from https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment- law/Pages/coronavirus-executive-order-increased-worker- safety.aspx?linktext=President-Issues-Executive-Order-on-Increased-Worker-Safety- During-Pandemic&linktext=President-Issues-Executive-Order-to-Increase-Worker- Safety-During- Pandemic&utm_source=marketo&utm_medium=email&utm_campaign=editorial~H R%20Daily~NL_2021-1-25_HR- Daily&mkt_tok=eyJpIjoiWVROa01qVXpaVFptTXpreiIsInQiOiJQN2tIak1QMVNk NGVDSmxENDNsUnZBNEx1bGJQTUJrbDQ2WktpUDd4WVo4azk2aGpMVVRE NzBRcmV2QlY4NmMwTEZ3ME1scTVUcDJ3SzdCN3ErTjhOSnY0dkgwOGk4Rjl FM1hKUVI4M0V3VkJ6eXpcL2xWNk9sem9jaE9OMkNPdFAifQ%3D%3D

US, DOL (2021). Summary of the Major Laws of the Department of Labor, retrieved 1/29/2021 from https://www.dol.gov/general/aboutdol/majorlaws

US, DOL Guidance (2020). Guidance on Preparing Workplaces for COVID-19, retrieved 1/29/2021 from https://www.osha.gov/Publications/OSHA3990.pdf

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US, DOL Protecting Workers (2021). Protecting Workers: Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace, retrieved 2/2/2021 from https://www.osha.gov/coronavirus/safework

Walsh, David J. (2019). Employment Law for Human Resource Practice, 6E, Cengage, 2019.

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FAIR INFORMATION PRACTICES: AN EMPIRICAL REVIEW OF THE FORTUNE 500 Case, Carl J. King, Darwin L. St. Bonaventure University

ABSTRACT Fair Information Practices, based upon the principles of notice, choice, access, and security, are utilized to ensure effective privacy protection for individuals. However, in the past five years, there has been a disturbing and increasing incidence of personal data losses of data collected and maintained at major corporations. As a result, this study was conducted to examine the policies of the largest companies, the Fortune 500, to determine if these principles are promoted. Findings demonstrate that nearly all the firms have their policies posted online and that most policies describe the four principles. However, although data collection is extensively used and detailed, there appears to be a disconnect with respect to security techniques.

Keywords: fair information practices, Fortune 500, empirical study

INTRODUCTION Since 2013, major corporation data losses have escalated to disturbing levels and have garnered considerable negative media attention. Data threats can be manifested in several forms such as targeted hacking, IP address hacking, ransomware, extortion, vendor or customer impersonation, and so on (Neustar, 2018). The chronology includes major hacks of Target Corporation (40 million debit/credit cards in 2013, estimated $252 million loss), Home Depot (56 million debit/credit cards in 2014, estimated $62 million loss), Experian (15 million Social Security Numbers in 2015), and Yahoo (500 million accounts from 2014-2016) (Liedtke, 2016;Weiser & Conn, 2017). In 2017, the Privacy Rights Clearinghouse found that there were over 2 billion individual records exposed in 829 data breaches in the U.S. (Shadel, 2018). In 2018, a Javelin Strategy & Research study further found that identity thieves victimized 14.4 million U.S. individuals, stealing $14.7 billion (Jenkins, 2019). Data breaches included companies such as MyFitnessPal (150 million accounts), Orbitz (880,000 customers), and Hudson Bay Company (5 million shoppers). By 2019, the Pentagon was thwarting a million malware attacks each hour and more than 25 million data records were lost or stolen from businesses each day (Stengel, 2019).

Victimization is not user age determined. Facebook, a social media giant with users of nearly all ages over 12 years old, reached 2.3 billion active monthly users in 2019 (Lazarus, 2019). And, by the end of 2018, Facebook had approximately 20,000 employees working on security and content review (Steinmetz, 2018). However, in 2015, Facebook released the data of 87 million users to Cambridge Analytica for political purposes. In 2018, it was also discovered that Facebook was sharing user data with its business partners without user permission. Moreover, a 2018 AARP Digital Identity Survey found that 52% of adults over the age of 65 feel their personal information is less secure than it was five years prior (Shadel, 2018). This is consistent with the U.S. Senate Committee on Aging report in 2019 that estimated that older Americans lose $3 billion to fraud each year (McLean, 2020). 60

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To assess data collection and vulnerabilities, RiskIQ examined websites of the Financial Times Stock Exchange (FTSE) 30, the companies listed on the London Stock Exchange with the highest market capitalization (RiskIQ, 2017). The examination found over 13,000 pages with personally identifiable information collection forms, and of those pages, 34% were doing so insecurely. Data, however, can be captured overtly, such as through a user supplied collection form, but can also be captured covertly via cookies and beacons. A cookie is a text file with tracking number that is downloaded onto a user’s computer hard drive and a beacon is a tiny graphic one pixel wide and one pixel deep embedded in a web page or email (Laudon and Traver, 2019). The beacon is transparent and is used to report the visitor’s IP address and cookie information. Interestingly, one researcher did find a positive relationship between information security disclosure (disclosures beyond those required by regulations) in the annual report concerning information security and security performance in financial institutions (Li, 2015). In other words, online security practices were positively related to security disclosure. Practices may include SSL (Secure Sockets Layer) and TLS (Transport Layer Security), standard security technologies for establishing an encrypted link between a server and a client—typically a web server (website) and a browser (Dodd, 2019).

These are important given the European Union’s General Data Protection Regulation (GDPR) implementation in 2018 (Langone, 2018). This act requires that corporations explicitly ask the individual for permission to collect his/her data, that the individual can inquire about data use, and the individual has the right to have the information permanently deleted.

In the U.S., the right to privacy was described in the Harvard Law Review in 1890. Louis Brandeis and Samuel Warren defined protection of the private realm as the foundation of individual freedom in the modern age (Warren and Brandeis, 1890).

Although not explicitly protected by the U.S. Constitution, privacy today involves the ability of an individual to control the conditions under which personal information is collected and used (Culnan & Armstrong, 1999). In this regard, fair information practice (FIP) principles have been recognized by U.S. government agencies since 1974. The Federal Trade Commission (FTC), for example, promotes adherence to the principles to insure effective privacy protection (Liu and Arnett, 2002).

The four FIP principles are:

• Notice/awareness – consumers have the right to know if personal information is being collected and how it will be used. Thus, data collectors must disclose their information practices before collecting information from consumers; • Choice/consent – consumers must be given options with respect to whether and how information collected from them may be used for purposes beyond those for which the information was provided; • Access/participation – consumers should be able to view and contest the accuracy and completeness of data collected about them and to correct errors; and, • Security/integrity – data collectors must take reasonable steps to assure that information collected from consumers is secure from unauthorized use during transmission and storage.

These corporate policies regarding online collection, use, and dissemination of personal information are commonly posted on company websites. Although developing and posting a policy does not

ASBBS Proceedings of the 28th (Virtual) Conference guarantee compliance, the absence of a policy violates “notice/awareness,” one of the fundamental FIPs.

Given the increasing data breaches of the major corporations, the study was conducted to examine if the fair information principles are promoted by the largest business, the Fortune 500. This empirical study examines several questions. Where, if at all, are privacy policies posted online? Do firms utilize third-party compliance logos on their website? What is the incidence of each of the FIPs in their policies? Are data collection and security techniques included in the policies? Are their additional information policies? And, have there been changes in policy composition since the data breach explosion beginning in 2013? Results are important in better understanding the state of FIP policies and determining if there is a need for further modification with respect to privacy and security.

PREVIOUS FORTUNE 500 PRIVACY POLICY RESEARCH

An initial study conducted in 2002 found that 52% of the Fortune 500 had a privacy policy posted on their website (Liu and Arnett, 2002). Of those with privacy policies, 11% also exhibited a seal program. These included 16 firms with TRUSTe, 10 firms with BBBOnLine, and 1 with ESRB. The majority, 87%, of policies were found on the home page. The remaining policies were found either through a site search or on subsequent pages. In terms of FIP, 92% explained information use and 91% detailed collection policies for customer information. In addition, 77% of policies addressed information disclosure, 58% provided a contact method to answer customer privacy concerns, 46% described security, 26% discussed access/correction, 26% detailed internal protection, 26% addressed children protection, and 9% detailed policy consent. Overall, 92% addressed notice/awareness, 27% addressed access/participation, and less than half complied with choice/consent and security/integrity.

A 2006 study found that 79% of the firms had a policy posted on its website with 86% of those firms with a link from the homepage, 14% with policies located elsewhere on the website, and 9% using a seal (Schwaig, Kane, & Storey, 2006). Of the firms with policies, 98% addressed notice, 61% addressed choice, 45% addressed access, and 71% addressed security.

Finally, A 2014 study by the authors found that 90% of companies had a posted privacy policy linked to the company homepage and 4% had a policy on a page not hyper-linked to the home page. In addition, 12% of companies utilized third-party privacy compliance firm logos such as the EU Safe Harbor logo, the TRUSTe logo, the BBBOnline logo, and the ESRB logo. (Case & King, 2015). A content analysis found that 91% of the firms provided notice/awareness within their policies, 81% included choice/consent, 76% described access/participation, and 70% detailed security/integrity. Policy composition, however, varied by firm size and industry sector (Case, King, & Gage, 2015). In terms of data collection and security techniques, 81% used cookies and beacons to collect data and 22% of firms used SSL/TSL to enhance security during transmission. In addition, 30% of firms included mobile application policies and 57% of firms described children data policies.

RESEARCH DESIGN

This study utilized the Fortune magazine website to obtain the Fortune 500 company directory and the corresponding company home page web address (Fortune, 2019). A two-step process was used to locate privacy policies and seal programs for each organization in November of 2019. First, each

ASBBS Proceedings of the 28th (Virtual) Conference company home page was examined for privacy policy links and seals. Next, if a privacy policy link was not found on the home page, the home page’s search engine was utilized to search for the policies. A content analysis of the posted privacy policies was then conducted to examine each firm’s use of the FIP principles, additional policies, data collection procedures, and security techniques.

RESULTS

A review of the Fortune 500 found that 97% of firms have an online policy. Specifically, 479 firms (96% of companies) have a posted privacy policy that is linked to the company homepage as indicated in Chart 1. In addition, 7 firms (1% of companies) have a policy on a page that is not hyper-linked to the home page.

CHART 1

No Policy Non-Home Page 3% 1%

Home Page Link 96%

In terms of privacy logos, Table 1 illustrates that less than one percent of firms display such a logo (2 firms display the BBBOnline logo and 2 firms display the TRUSTe logo. However, 490, or 98%, of firms display at least one social networking logo on their home page.

TABLE 1

Third-Party Logos

Third-Party Number of Percentage Firms of Firms

BBBOnline 2 1%

TRUSTe ESRB 2 1%

Social Media 490 98%

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Posted policies were subsequently evaluated in terms of content. Table 2 depicts that 91% of the Fortune 500 firms provide notice/awareness within their policies. Moreover, 79% include choice/consent, 76% describe access/participation, and 91% detail security/integrity.

TABLE 2

Fair Information Practice Principles

Principle Number of Percentage Firms of Firms

Notice/Awareness 455 91%

Choice/Consent 395 79%

Access/Participation 382 76%

Security/Integrity 456 91%

Policies were next examined to determine the prevalence of additional policies. Table 3 illustrates the inclusion of mobile application policies by 86% of firms and the description of children data policies by 97% of firms.

TABLE 3

Additional Policies

Policies Number of Percentage Firms of Firms

Mobile Application Policies 432 86%

Children Policies 485 97%

In terms of data collection and security techniques, two primary practices were described within the privacy policies. Table 4 illustrates that 95% use cookies and/or beacons to collect data. Moreover, 68% of firms use SSL/TLS to enhance security during transmission.

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TABLE 4

Data Collection and Security Techniques

Practice Number of Percentage Firms of Firms

Cookies/Beacons 473 95%

SSL/TLS 342 68%

CONCLUSIONS AND SUGGESTIONS FOR FUTURE RESEARCH

Results demonstrate that nearly all Fortune 500 firms post their privacy policies online, with the most common protocol of using the firm’s home page to link to the policies. However, although 97% of firms post privacy policies, less than one percent display third-party privacy logos. Of importance, the policies generally do cover the four fair information privacy principles. Usage varies from access/participation (76% of policies) to security/integrity (91% of policies). Results further indicate that companies detail additional policies such as those related to mobile applications and children. In terms of data collection techniques, 95% of policies describe the use of cookies/beacons. And, relative to security techniques, 68% employ SSL/TLS in the approach to establishing an encrypted link between their server and clients.

There are three important implications from the study. One implication relates to the use of visual logos on home pages. Although social media logos are ubiquitous (on 98% of home pages), less than one percent of home pages contained a compliance logo (down from 5% in 2014). This may imply that companies have determined that site users perceive little or no value in compliance (or the compliance logo).

A second implication is evident when comparing the current study to the 2014 study results. Chart 2 illustrates that although notice/awareness and choice/consent have decreased slightly in inclusion, access/participation and security/integrity have increased substantially. Access/participation increased by 17% and security/integrity increased by 30% during the five-year period. In addition, mobile application policy inclusion increased from 30% to 86% and children policies increased from 57% to 97% of policies. It is possible that this dramatic shift in policies is a result of the increasing trend of high profile and major user data breaches of the past five years. Moreover, even though there is no federal mandate in the U.S. comparable to the GDPR, the effects of the GDPR may be beginning to be seen with respect to privacy statements concerning user participation and data privacy. These trends may be a signal that the largest corporations are evolving and preparing for the increasing possibility that personal privacy may begin to be valued and legally protected in the U.S. in the future.

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CHART 2

Policy Trends

Notice/ 97% Awareness 94% Choice/ 86% Consent 81% 2014 Access/ 70% 2019 Participat… 79% Security/ 75% Integrity 94% 0% 20% 40% 60% 80% 100% Percent of Policies

The third implication relates to data techniques utilized by companies. Results demonstrate that although nearly all firms (95%) describe the use of cookies/beacons for data collection, only two-thirds (68%) detail the use of SSL/TLS security. This implies an important disconnect between collection and security practice. As evidence by this study’s findings and the increasing security breaches publicized in the media, it appears that firms are still lagging with respect to security and need to increase their vigilance. There have been strides (an increase from 22% of policies in 2014) but still nearly one-third of the largest firms are deficient in this technique. It is possible that these firms may have simply made an omission mistake in their policies but given the length and inclusiveness of their existing policies, this is not likely.

The limitations of this study are primarily a function of the sample. Only the Fortune 500 firms were examined. The use of additional size firms and firm locations (those outside the U.S.) would increase the robustness of results. This research does, however, provide insight into current practices and suggests a blueprint for companies of all size in designing their information policies.

REFERENCES

Case, C. J. & King, D. L. (2015). Fair Information Practices at The Fortune 500: An Examination by Organization Size and Industry Sector. Issues in Information Systems, 16.1, 2015, 7-14.

Case, C. J., King, D. L. & Gage, L. (2015). Online Privacy and Security at the Fortune 500: An Empirical Examination of Practices." ASBBS E-Journal, 11.1, 2015, 59-67

Culnan, M. J. & Armstrong, P. K. (1999). Information Privacy Concerns, Procedural Fairness, and Impersonal Trust: An Empirical Investigation. Organization Science, 10.1, 104-116.

Dodd, A. Z. (2019). The Essential Guide to Telecommunications. 6th Edition, Pearson: Boston, MA.

Fortune (2019). Fortune 500 2019, money.cnn.com. August, http://fortune.com/fortune500/

Jenkins, J. (2019). It’s Tax Season: Beware of Scams. AARP Bulletin, April, 60.3, 20.

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Langone, A. (2019). Online Privacy Gets a Boost in Europe - With Potential Benefits for Users Everywhere. Time, June 4, 191.21, 13.

Laudon, K. C. & Traver, C. G. (2019). E-Commerce. 15th Edition, Pearson: London, United Kingdom.

Lazarus, D. (2019). Facebook Is Laughing All the Way to the Bank as Americans Shrug Off Privacy Concerns. LATimes.com, February 4, https://www.latimes.com/business/lazarus/la-fi- lazarus-facebook-is-winning-the-privacy-war-20190204-story.html

Li, D. C. (2015). Online Security Performances and Information Security Disclosures. Journal of Computer Information Systems, Winter, 55.2, 20-28.

Liu, C. & Arnett, K. P. (2002). An Examination of Privacy Policies in Fortune 500 Web Sites. American Journal of Business, 17.1, Spring, 13-22.

Liedtke, M. (2016). Yahoo Hack Steals Personal Info From At Least 500M Accounts. APnews.com, September 22, https://apnews.com/13add0a9219744e6ad89996fcd55d8d0

McLean, B. (2020). Fraud International. AARP Bulletin, April, 61.3, 12-22.

Neustar (2018). Assessing the Cyber Threat Landscape, Today’s Reality, Tomorrow’s Risks. home.neustar.com, https://www.home.neustar/resources/whitepapers/security-leaders- assess-cyber-threat-landscape

RiskIQ (2017). The State of Enterprise Digital Defense, The Specter and Spectrum of Mitigating External Threats. riskiq.com, August 23, https://www.riskiq.com/press-release/idg-report- quantifies-growing-digital-threats/

Shadel, D. (2018). Inside the Dark Web. AARP Bulletin, September, 59.7, 10-18.

Steinmetz, K. (2018). Can Congress Rein in Big Tech? Time, April 23, 191.15, 46-47.

Stengel, R. (2019). The Global War on Truth. Time, October 7, 194.14, 36-39.

Schwaig, K. S., Kane, G. C., & Storey, V. C. (2006). Compliance to the Fair Information Practices: How Are the Fortune 500 Handling Online Privacy Disclosures? Information & Management, 43, 805-820.

Warren, S. D. & Brandeis, L. D. (1890). The Right to Privacy. Harvard Law Review, 4.5, 193-220.

Weiser, M. & Conn, C. (2017). Into the Breach. BizEd, January/February, 16.1, 49-53.

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THE HOMOGENIZATION OF THE HOMO SAPIENS THE WORLD OVER

Demirdjian, Z. S. Andrew California State University, Long Beach Mokatsian, Zara Director, Near East Museum, Yerevan

ABSTRACT Since ancient times, humankind has invented plenty of ideas that have changed the world. Despite the unintended consequences of all of these ideas, they have revolutionized progress on the planet Earth. Over the years ideas have changed the world in the areas of society, science, technology, politics, education, social relations, and so on. I tend to agree with most changes even though they may have had negative unintended consequences, except with one idea I have problems to accept and that is the homogenization of the world population through globalization, especially through the conscious and ardent efforts of the media and Hollywood in pushing interracial relationships. Racial equality is a great idea, but the pursuit of the racial melting pot is counterproductive for both the country as well as for the world. In this paper research-based arguments are presented against the bad idea of promoting racial mixture and encouraging cultural homogenization from both biological and social standpoint.

“It is time for parents to teach young people early on that in diversity there is beauty and there is strength.” ― Maya Angelou

INTRODUCTION When you want to read about ideas, invariably your search will take you to a plethora of articles written on "ideas that have changed the world." Most, if not all, present ideas that are benign toward changing society, science, technology, politics, education, social relations, and so on (Fernando-Armesto, Felipe, 2007). I tend to agree with most changes even though they may have had unintended consequences, except with one idea I have problems to accept and that is the homogenization of the world population through globalization (Jennings, Justin et al., 2010). Racial equality is a great idea, but the pursuit of the racial melting pot is counterproductive for both the country as well as for the world.

In this paper, after a brief introduction to some ideas that have changed the world, research-based arguments will be presented against allowing interracial homogenization of global society to do away with the importance of racial biodiversity in human life, followed by a conclusion consisting of my take on human diversity on the planet Earth.

Ideas That Have Changed the World Before you brand me as an ultra biased redneck, give me the opportunity to explain myself. Ideas that have influenced and changed the world are too many to mention (Neville, Laurence 2012). Narrowly, the list consists of political ideas, such as democracy, nationalism and socialism; it also includes technological, religious, and scientific ideas and movements. In the area of social movement, we had in the 1900s, the idea of the melting pot (the cultural homogeneity), the idea that the United States of America will be stronger if we all looked, thought, and acted the same way.

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Then, in the 1980s, the concept of diversity (multiculturism) was hailed as one of the greatest ideas for different cultures contributed vastly to the advancement of the United States based on their level of creativity (Sigal, Daniel and Handler, Richard, 2010). Since the beginning of the 21st century, the concept of diversity is giving way to racial homogeneity. The movers and shakers in our society are now promoting the melding of the population (racial homogeneity) through browning of America or Asianization of America allegedly to make the country stay strong, perhaps, to avoid division or for selfish reasons such as being politically correct (Hanneman 2014).

Against the background of increasing representation of interracial relations, such as friendship, marriage, and sex, by the media and Hollywood, it seems there is rebirth of the homogeneity of the population is taking place, but this time it is not just on cultural homogenization, but based on racial amalgamation (Nyong'o, Tavia, 2009). While the quest for world adoption of democracy is great, but the present trend of promoting racial mixture is a bad idea when some elements of society are intentionally influencing the idea of racial mixture. If a couple of different ethnic groups fall in love and form a family, it is fine. We just cannot go counter nature, but if we encourage or push mixed marriages as the media and Hollywood have been doing in recent years, that is where the problem lies.

I find it difficult to accept the change for two major reasons: biological and social implications (Fisher, A.J., 2011). Not all ideas are worth pursuing for their unintended consequences would adversely affect humankind. Let us first take a political idea as an example to show how it is changing the world for the better. In ancient times, most societies were governed by a small clique of oligarchs or just one person as a king (ruler). Democracy has been a revolutionary idea that everybody in society gets to have a say in how they are governed, who governs them and also it provides everybody the opportunity to participate. The evolution of democracy has been rather slow. Ancient Greece gave us some of the earliest experiments in participatory democracy. Aristotle, for example, shared with us his ideas of democracy in length.

In 1215, the King of England was forced to sign the Magna Carta to curtail his absolute power subject to approval by his citizens. It is only in the 20th century that we have the widespread adoption of universal democracies with all adults able to vote and take part in the political system of his or her country. The Western world has already been practicing democracy to some extent. The old country has been very sluggish in adopting it. The spread and universal adoption of this idea is beneficial for humankind for the preservation of human dignity. The Biological Effect of Forced Racial Homogeneity However, we cannot say the same thing about the idea of forced racial homogeneity from biological standpoint for changing the world. Biologists, anthropologists, and geneticists all tell us that interracial marriage has complications (Bornestein, Eran et al., 2020). Some even say it would be the end of the human species; Homo sapiens may become extinct like their Neanderthal predecessors. Different races have different reactions to virus, just like COVID-19 has reminded us that its impact is more serious on black Americans than on their white counterpart.

Animals do not mate with other animals outside their species. They strive to keep the same species not to be mixed with other animals. A virus can kill one species, but may not harm another. The tolerance and resistance to disease vary among different human races. Nature, if not God, has programmed us that way and to stay healthy, we should respect human differences.

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Social Implications of the Homogenization of the Human Race

Arguably, from biological standpoint diversity is important. Not all ideas are worth changing the world. From social, cultural perspective maintaining separate races intact has many advantages other than out of biological necessities. Homogenization of the human race through globalization is changing the world languages (Arfini, Luea, 2016). In Africa, a lot of languages are put on the list of extinction. English is replacing the language of the world. Hebrew and Hawaiian languages have only recently been taken off the list of extinction. The duality idea of subculture and dominant culture makes the country strong by enriching it in a myriad ways. Because of frequent immigration, United Staes ended up with the duality of cultures. Multiculturism has been the mark of the United States for many years. Without different cultures, traditions the world will become a boring planet. And now the trend is the "Browning"(Frey 2015) or "Asianization" (Hanneman 2014) of its population through interracial marriage. The media and Hollywood have been at the forefront of change by promoting this trend by showing black and white, Asian and white people in intimate relations. Currently, most couples in advertising are of mixed race. For example, Walmart's Instantcart TV ad in which an Asian woman is portrayed in a loving relation with a black man in what looks like a family room. Naturally, it is not only the media and Hollywood, which are the change makers encouraging interracial relations, corporations are making politically correct decisions in advancing the trend toward homogeneity, the demise of diversity (Houck 2020; Makow 2005). As a direct result of corporate world promotion, the people of the world will begin to eat hamburgers, drink Coca-Cola, wear blue jeans, and tennis shoes to conform to the cookie-cut style of life. The Effect of Forced Assimilation

In the 1980s, I wanted to buy a new house in California. The builder was delayed from building the houses for the environmentalists had blocked the plans to protect the habitat of a little mouse called Field Mouse. There are hundreds of different kinds of mice, and yet their heart was bleeding for the so- called "extinction" of this tiny mouse. But when it comes to the extinction of a human race, they become nonchalant about the whole thing. Is it not worth preserving the diversity in the animal kingdom when it also comes to Homo sapiens?

Well, right now there are many races in the world on the brink of extinction such as the Udis of the South Caucuses (Hagopian 2007). This race of people are dying from being in the millions they have dwindled to a mere 3,500 persons currently living in three villages (two of the villages are located in their ancestral lands in present-day Azerbaijan and one village is found in the Republic of Georgia). Maintaining diversity in the world is the best way to preserve humanity. Every race has its own beauty and we should make an effort to keep it that way. While ideas are the backbone of progress, overcoming diversity is the most shortsighted policy to pursue. The media and Hollywood should be stopped from zealously promoting interracial relationship. Likewise, we should stop former empires from executing plans of forced assimilation of their various minorities. Former empires, like Turkey (the Ottoman Empire) have ended up with many minorities within the confines of their vast territories (Bodette 2019). Naturally, for state- or nation-building, they follow the practice of forced assimilation to homogenize the population. In this way, they attempt to 70

ASBBS Proceedings of the 28th (Virtual) Conference avert the possibility of self-determination strife of minorities aspiring for freedom and independence (Fuller 2008). Some former empires even resort to genocide, deportation, and dispossession of their indigenous minorities if they resist assimilation. I have many friends of different races. I have good friends of Irish, Jewish, Indian, Bangladeshi, Pilipino, French, African, Arab, German, Turkish, and Mexican decent to cite a few. All are different in many ways, but to me they are interesting for they are ethnically different and represent varying views on important things and issues based on their rich culture and heritage. When our children realize that diversity of race is the desirable state of affairs, they tend to accept others as they are different from themselves. On the other hand, if our children grow up in an environment where homogeneity is promoted, they tend to forget about the importance of diversity. Research studies have established that diversity at the workplace contributes immensely to new ideas, innovation, and creativity. Diversity provides us with many advantages (Zojceska 2018). In addition to beauty and cultural richness, there is strength, synergy in diversity including the capacity to be creative. Kaleidoscope of the human race adds excitement to our daily life since each race has its own unique personality to be appreciated. As they say, variety is the spice of life.

Conclusion

Our children are impressionable and they should be protected from a bad idea to homogenize the population of a country or of the entire world. Each race has its own unique contributions to the richness and beauty of humankind on the planet Earth for they enrich our lives with their kind of food, music, literature, language, physical appearance to cite a few unique attributes of each race with which we live side by side in this world. Simply put, I find beauty in ethnic diversity.

Who would like to visit a country whose people look like the same on many dimensions? If France, had the same culture, food, music, buildings, including people who are the spit image of Americans, etc similar to the United States, no one would like to visit it. One's backyard would be more interesting of a place than to take the trouble to visit a virtually identical nation. Hindering the idea of homogenization from changing the world is the step in the right direction. Like animal biodiversity, human diversity on Earth should be protected at all cost from the amalgamation of the human race.

The world would turn to be a bleak, boring, place without diversity. Imagine of an African jungle with a biodiversity of only one kind of animal, all the same breed, shape, color, and activity. How dreary, how colorless, how uninteresting it would look? And yes, democracy is great for it has given me the right and the privilege to speak up my mind in expressing my dislike of some ideas that very well may change the world for the worst. No matter from which angle we look at it, diversity shines as the best alternative to keep humankind vital, vibrant, and dynamic on our tiny planet Earth.

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REFERENCES "75 Percent of Israeli Jews Oppose Intermarriage, New Poll Says". The Jewish Daily Forward. 22 August 2014. Retrieved 24 August 2020. After 40 years, interracial marriage flourishing. NBC News. 15 April 2007. Aidi, Hisham (2 April 2002). "Blacks in Argentina: Disappearing Acts". History Notes. The Global African Community. Retrieved 13 July 2020. Arfini, luea, 2016, "Does globalization Homogenize, Polarize or Hybridize Culture? https://www.young-diplomats.com/globalization-homogenize-polarize-hybridize-culture/ Bateman, David A. "Transatlantic Anxieties: Democracy and Diversity in Nineteenth-Century Discourse." Studies in American Political Development, 33 (October 2019), 139–177. doi:10.1017/S0898588X19000105 Bielski, Zosia; Chambers, Stephanie (9 February 2017). "Canada 150: A century and a half of marriage". The Globe and Mail. Retrieved 11 November 2019. Bland, L. (2005). "White Women and Men of Colour: Miscegenation Fears in Britain after the Great War". Gender & History. 17: 29–61. doi:10.1111/j.0953- 5233.2005.00371.x. "Bob Jones University Drops Interracial Dating Ban" (2018). Christianity Today. Bodette, Megan 2019, "Why the US Supports Turkey's Forced Assimilation of Kurds?" https://morningstaronline.co.uk/article/f/why-us-supports-turkeys-forced-assimilation-kurds "Border Love on the Rio Grande: African American Men and Latinas in the Rio Grande Valley of South Texas (1850-1940)". The Black Past. 10 June 2003. Bornstein, Eran; Eliner, Yael; Chervenak, Frank A.; Grünebaum, Amos (2020). "Racial Disparity in Pregnancy Risks and Complications in the US: Temporal Changes during 2007–2018". Journal of Clinical Medicine. 9 (5): 1414. doi:10.3390/jcm9051414. ISSN 2077-0383. PMC 7290488. PMID 32397663. Bratter, J. L.; King, R. B. (2008). "'But Will It Last?': Marital Instability Among Interracial and Same-Race Couples". Family Relations. 57 (2): 160–171. doi:10.1111/j.1741-3729.2008.00491.x. Center for Disease Control and Prevention (CDC) - Natality - Birth Records Documentation". CDC WONDER (Wide-ranging Online Data for Epidemiologic Research). Retrieved 12 July 2020. Chin, Gabriel and Hrishi Karthikeyan, (2002) Asian Law Journal vol. 9 "Preserving Racial Identity: Population Patterns and the Application of Anti-Miscegenation Statutes to Asian Americans, 1910–1950". Papers.ssrn.com. Retrieved 29 January 2019. Cook, Jonathan. "Israeli drive to prevent Jewish girls dating Arabs". The National. Croly, David G. (1864). Miscegenation; the theory of the blending of the races, applied to the American white man and negro. New York City, NY: H. Dexter, Hamilton & Co. LCCN 05009520. OCLC 2000728. Retrieved 12 July 2020.

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Downing, Karen; Nichols, Darlene; Webster, Kelly (2005). Multiracial America: A Resource Guide on the History and Literature of Interracial Issues. Lanham, Maryland: Scarecrow Press. p. 9. ISBN 978-0-8108-5199-3. Fernandez-Armesto, Felipe (2007), Ideas That Changed the World, DK Publishing. Fisher, A.J., 2011, "Biological Problems with Mixed-Race families, Marriages Relationships, Adoptions," https://sociobiologicalmusings.blogspot.com/2011/10/problems-with-mixed-race- marriages-and.htm Foster, Mary. "Interracial Couple Denied Marriage License in La". Associated Press. 16 October 2009. Fredrickson, G. M. (2005). "Mulattoes and metis. Attitudes toward miscegenation in the United States and France since the seventeenth century". International Social Science Journal. 57 (183): 103– 112. doi:10.1111/j.0020-8701.2005.00534.x. Frey, William 2015, "The Browning of America," Milken Institute Review. https://www.milkenreview.org/articles/charticle-3 Fuller, Liz 2008, " Do Azerbaijan's Ethnic Minorities Face Forced Assimilation? https://www.rferl.org/a/Azerbaijan_Ethnic_Minorities_Forced_Assimilation/1145552.html Gallup Poll, "Record-High 86% Approve of Black-White Marriages". Retrieved 13 September 2020. Gold, Katherine J.; DeMonner, Sonya M.; Lantz, Paula M.; Hayward, Rodney A. (2010). "Prematurity and Low Birth Weight as Potential Mediators of Higher Stillbirth Risk in Mixed Black/White Race Couples". Journal of Women's Health. 19 (4): 767–773. doi:10.1089/jwh.2009.1561. ISSN 1540-9996. PMC 2867623. PMID 20235877. The perinatal mortality [stillbirth] rate among black women has been consistently higher than that of white women over time. ... [in] 2003, the risk for non-Hispanic black mothers was 2.34 that of non-Hispanic whites. Although some of this difference appears to be related to differences in maternal health, infection, use of prenatal care, and socioeconomic factors, the etiologies are not entirely understood. Stress in the maternal environment, including that caused by racism, may play a role in the increased morbidity and mortality in birth outcomes for black mothers. "Groundbreaking Interracial Marriage". ABC News. 14 June 2020. Hagopian, Tatul 2007, "Armenia's Vanishing Udis," https://iwpr.net/global-voices/armenias- vanishing-udis Hanneman, Mary 2014, "The Asianization of America," https://digitalcommons.tacoma.uw.edu/ias_pub/147/ Houck, Richard 2020, "The War Against Whites in Advertising," https://counter- currents.com/2018/03/the-war-against-whites-in-advertising/ "In online dating, blacks more open to romancing whites than vice versa". Berkeley.edu 11 February 2011. "Interracial and Cross Cultural Dating of Generation Y". St. Cloud State University.

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"Israeli press review: Minister calls marriages with non-Jews 'a second Holocaust'". Middle East Eye. Jean-Aimé Rakotoarisoa; Razafindrazaka, H.; Pagani, L.; Ricaut, F.-X.; Antao, T.; Capredon, M.; Sambo, C.; Radimilahy, C.; et al. (6 January 2014). "Genome-wide evidence of Austronesian– Bantu admixture and cultural reversion in a hunter-gatherer group of Madagascar". Proceedings of the National Academy of Sciences. 111 (3): 936–941. Bibcode:2014PNAS..111..936P. doi:10.1073/pnas.1321860111. PMC 3903192. PMID 24395773. Jeffrey S. Passel, Wendy Wang and Paul Taylor (2016), Marrying Out: One-in-Seven New U.S. Marriages Is Interracial or Interethnic Archived 11 June 2016 at the Wayback Machine. (PDF). Pew Research Center. 4 June 2010 John Tomlinson. Cultural Imperialism: A Critical Introduction. Continuum. pp. 45–50, 108– 13. Jordan, Miriam (17 February 2012). "More Marriages Cross Race, Ethnicity Lines". The Wall Street Journal. Theosophical University Press. Retrieved 18 February 2019. Julitta Rydlewska; Barbara Braid, eds. (2014). Unity in Diversity, Volume 1: Cultural Paradigm and Personal Identity, Volume 1. Cambridge Scholars Publishing. p. 14. ISBN 978-1443867290. Justin Jennings (8 November 2010). Globalizations and the Ancient World. Cambridge University Press. p. 132. ISBN 978-0-521-76077-5. Retrieved 4 February 2020. Karthikeyan, Hrishi; Chin, Gabriel (2002). "Preserving Racial Identity: Population Patterns and the Application of Anti-Miscegenation Statutes to Asian Americans, 1910–1950". Asian Law Journal. 9 (1). SSRN 283998. Katie Willis (11 January 2013). Theories and Practices of Development. Taylor & Francis. pp. 193–. ISBN 978-0-415-30052-0. Retrieved 4 February 2019. Korea's ethnic nationalism is a source of both pride and prejudice, according to Gi-Wook Shin Archived 20 July 2011 at the Wayback Machine. Aparc.stanford.edu. Retrieved 11 December 2020. Kyros, Katharine Franks (2011). "Using marriage to protect White supremacy and heterosexual privilege : a historical analysis of marriage law in the United States". Smith ScholarWorks. Langhorne Folan, Karyn (2010). Don't Bring Home a White Boy: And Other Notions That Keep Black Women from Dating Out. Simon and Schuster. p. 11. ISBN 978-1-4391-5475-5. "Love and Race in Modern Russia". The Moscow Times. 14 February 2017. "Love Isn't Color-Blind: White Online Daters Spurn Blacks". Time. 22 February. 2011 Major new study reveals the rise of mixed-race Britain. Some ethnic groups 'will disappear', The Observer, 18 January 2009 Makow, Henry 2005, "Hollywood Pushes Racial Intermarriage," https://www.savethemales.ca/001240.html Maria P. P. Root (2001). Love's Revolution: Interracial Marriage. Temple University Press. p. 180. ((ISBN 978-1-56639-826-8.

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"Marrying Out". Jeffrey S. Passel, Wendy Wang and Paul Taylor, Pew Research Center. 4 June 2010. McClain DaCosta, Kimberly (2007). Making multiracial: state, family, and market in the redrawing of the color line. Stanford University Press. p. 9. ((ISBN 978-0-8047-5546-7. Mie Hiramoto (9 May 2012). Media Intertextualities. John Benjamins Publishing. p. 76. ((ISBN 978-90-272-0256-7. Retrieved 4 February 2020. "More black women consider 'dating out'". USA Today. 8/5/2007. "Most Americans Approve of Interracial Dating". Gallup.com. 7 October 2005. Neville, Laurence June 16 2012), "Top 25 Lists: 25 Ideas That changed the World," Global Firance. https://www.gfmag.com/magazine/25th-anniversary/top-25-lists-25-ideas-that-changed-the- world "New generation doesn't blink at interracial relationships". USA Today (2 August 2006). Nyong'o, Tavia, 2009, The Amalgamation Waltz: Race Performance, and the Ruses of Memory. https://www.upress.umn.edu/book-division/books/the-amalgamation-waltz Oxford English Dictionary (3rd ed.). Oxford, UK: Oxford University Press. 2002. Retrieved 11 July 2020. Coined by David Goodman Croly and George Wakeman in an anonymously published hoax pamphlet circulated in 1863, which implied that the American Republican party favoured mixed- race relationships .... Park Chung Myth of Pure-Blood Nationalism Blocks Multi-Ethnic Society Archived 25 July 2011 at the Wayback Machine. The Korean Times. 14 August 2019. Paul Hopper (19 December 2007). Understanding Cultural Globalization. Polity. p. 91. ISBN 978-0-7456-3558-3. Retrieved 4 February 2020. Peter Clarke (6 November 2008). The Oxford Handbook of the Sociology of Religion. Oxford Handbooks Online. pp. 492–. ISBN 978-0-19-927979-1. Retrieved 4 February 2020. "Practical Amalgamation". digital.librarycompany.org. Retrieved 22 October 2019. "Protecting' Jewish girls from Arabs". The Jerusalem Post. 18 September 2009. "Racism in Israel". Open Democracy. Rebecca Chiyoko King-O'Riain; Stephen Small; Minelle Mahtani, eds. (2014). Global Mixed Race. NYU Press. pp. 65–66. ISBN 978-0814770474. Archived from the original on 10 September 2015. Retrieved 17 January 2019. "Sex tourism in full boom". Ottawa Citizen. 8 January 2007. Archived from the original on 18 October 2020. "Sex tourism: When women do it, it's called 'romance travelling'" Archived 18 October 2007 at the Wayback Machine". Canada.com. 27 January 2007. Sigal, Daniel and Handler, Richard (2010), "U.S. Multculturalism and the Concept of Culture," https://www.tandfonline.com/doi/abs/10.1080/1070289X.1995.9962517

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Skidmore, Thomas E. (April 1992). "Fact and Myth: Discovering a Racial Problem in Brazil" (PDF). Working Paper. 173. Swanbrow, Diane (23 March 2000). "Intimate Relationships Between Races More Common Than Thought". University of Michigan. Retrieved 15 July 2020. Thangaraj, K.; Singh, L.; Reddy, A. G.; Rao, V. R.; Sehgal, S. C.; Underhill, P. A.; et al. (2003). "Genetic Affinities of the Andaman Islanders, a Vanishing Human Population". Current Biology. 13 (2): 86–93. doi:10.1016/S0960-9822(02)01336-2. PMID 12546781. S2CID 12155496. "The Ottoman Empire’s Life-or-Death Race". ((Smithsonian. 22 March 2012 "Tiger Woods alienates black community with white lovers". Daily News (New York). 6 December 2009. "What Inter-Ethnic Marriage in Mauritius Tells Us About The Nature of Ethnicity" (PDF): 15. Archived from the original (PDF) on 18 May 2014. Retrieved 17 May 2019. "What Inter-Ethnic Marriage in Mauritius Tells Us About The Nature of Ethnicity" (PDF): 16. Archived from the original (PDF) on 18 May 2014. Retrieved 17 May 2019. "Where were Interracial Couples Illegal?". LovingDay. Retrieved 13 July 2020. Yancey, George (22 March 2007). "Experiencing Racism: Differences in the Experiences of Whites Married to Blacks and Non-Black Racial Minorities". Journal of Comparative Family Studies. 38 (2): 197–213. doi:10.3138/jcfs.38.2.197. Yen, Hope (26 May 2010). "Interracial Marriage Still Rising, But Not As Fast: Report". HuffPost. Associated Press. Zojceska, Anja 2018, "Top 10 Benefits of Diversity in the Workplace,"

https://www.talentlyft.com/en/blog/article/244/top-10-benefits-of-diversity-in-the-workplace.

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LET THE GOOD TIRES ROLL

Dittfurth, Ed Joiner, Sue Tarleton State University

Lewis, Kevin Texas Tech University

ABSTRACT Small businesses make up 99.9% of all businesses in the United States (SBA, 2019). COVID 19 restrictions and reactions have devastated thousands of small businesses. Lockdowns have many times prevented them from serving their customer base. Yelp reports that 60% of the businesses that reported closure due to the COVID 19 virus and its ramifications will not reopen (CNBC, 2020). According to Anjali Sundaram, as of December 2020, this represents 97,966 businesses that report that their closings are permanent (2020).

In this paper, we analyze franchise fees, royalty fees, advertising fees, purchase prices, expected monthly revenues, and potential bottom line profits in the tire industry, Big O Tires, Tuffy Tire & Auto Service and RNR Tire Express. In the auto aftermarket category, 15 companies were listed and only three tire-centric franchise programs made the list which included these three franchises. Key words: tire franchise, entrepreneur, small business

INTRODUCTION Lean, economic times driven by an economy crippled by COVID 19 pandemic cause consumers to reconsider their essential purchases. Prior to the economic down turn, people were more likely to purchase luxury items or services that make their lives easier. The rise of unemployment and the uncertainty of the future have caused many to become much more conservative with their spending. This downturn in spending places a burden on entrepreneurs to find creative ways to provide essential services to their customer base.

The government has offered loans through the Paycheck Protection Program (PPP) to provide capital to struggling businesses. This assistance does little to help a small business that is located in an area that is denied the ability to open due to state or local government restrictions (Pofeldt, 2020). When there are not opportunities to reengage their customer base, many businesses have been forced to become creative and innovative in order to survive. They found different ways to meet the needs of their clients. Some began home delivery, while others provided curbside service. One restaurant, in addition to serving food to go, added a market where customers could purchase dry goods and paper products while picking up their meal order.

Other businesses took the opportunity to reimagine the investment into a service business that is sustainable and essential. A business that can provide a product or service that is essential, reputable, and reproducible can be effective during uncertain and economically lean times. Yelp’s vice president of data science, Justin Norman, reported that small businesses that provide automotive or professional services have been particularly positioned to maintain profitability during the pandemic (Sardana, 2020). The tire business is particularly attractive because it serves the need to maintain dependable 77

ASBBS Proceedings of the 28th (Virtual) Conference transportation. Reliable transportation is needed to get goods to market. It is also necessary for workers to get to and from their places of employment. Automobile tires are a very expendable commodity. Edmunds report on car maintenance explains that tires need replacing every 3 or 4 year intervals or at forty to fifty thousand miles (Montoya, 2018). The need for good tires for reliable transportation makes the tire business both essential and sustainable.

Tire businesses can gain recognition in the community it serves one of two ways. They can do business reliably and dependably for many years. This method attracts the attention of consumers. They will support the retailer because of the recognition of being in the community and supportive for many years. This trust sometimes takes decades to establish. An alternative method is beginning a franchise that specializes in tire repair and replacement. The name recognition provides a confidence to the automobile owner that the work will priced fairly and the repair or installation will be completed professionally.

There are many benefits that a tire business owner receives when choosing to operate under the umbrella of a franchise name. In addition to a proprietary name, is the trust the business owner will benefit from nationwide trademark recognition. The tires and necessary inventory can be purchased at a price that has been negotiated corporately by the franchise. The franchisee will benefit by investing in state of the art equipment that has been tested and found reliable. They will have the assurance that the equipment will perform as intended and with a process that has been perfected. Training for the business owner and their staff is also a tremendous benefit of teaming up with a franchise. Safety, efficiency, and profitability are key pieces that make up the fabric of what a tire franchise offers to its constituents.

In addition to selling tires to the automobile owner or fleet manger, the tire business can sell services of repair and maintenance. Selling road hazard plans is a great way to invite future business beyond the initial sell of the tires. A road hazard warranty would allow the recipient to have their tires inspected or repaired for free. Repairing failing tires provides the opportunity for the franchisee to examine the wear on the tires and recommend replacement or repair when warranted.

Every community, regardless of size, needs a tire business to keep commodities delivered and commerce active. An entire economy rides on the proficiently of transportation. Dependable transportation requires maintained tires for vehicles to stay on the road and stay effective at delivering workers and goods to their respective locations of business.

According to Tire Business (2020), Big O Tires, Tuffy Tire & Auto Service, and RNR Tire Express were named in the Entrepreneur Franchise 500 in 2020. In the auto aftermarket category, 15 companies were listed and only three tire-centric franchise programs made the list. Big O Tires was listed number 92 overall, Tuffy Tire & Auto Service was listed 222, and RNR Tire Express was listed 265.

Table 1 lists key researched financial data for Big O Tires, Tuffy Tire & Auto Service, and RNR Tire Express. This table will identify (1) monthly fees: royalty fees and advertising fees, and (2) purchasing expenses: purchase price, liquid capital, franchise fee, projected annual revenues, and lease agreement terms.

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TABLE I BASE-LINE FEES & EXPENSES Big O Tires Tuffy Tire & RNR Tire Auto Service Express Monthly Fees Royalty % Fee 2% of sales 5% of sales 5% (monthly gross) Advertising Fee 0.9% of sales 5% of sales 4% (Marketing) (monthly gross) Purchasing Expenses Purchase Price Between Between Between $311,000 and $224,00 – $500,000 - $1.1 M (varies) $413,500 $1,000,000 (varies) Liquid Capital $100,000 $150,000 $500,000 Required Franchise Fee $10K – $35K $30K $35K Projected Annual $1.826 million $998,240 $2.253 million (Revenues) Lease Agreement 10 years 15 years (initial) 10 years Term with 5 years renewal

Table I represents a summary of top three tire franchise opportunities. This table presents different monthly fees and purchasing expenses. In order to review bottom line profits, the fees and expenses are used in this comparison analysis. In this paper, local mom and pop tire shops were not considered. Researched data will be used on the three selected tire franchises (Table I) to define generic profit and loss (P&L) statements which allow projected bottom line profits.

BIG O TIRES -- TRADITIONAL FRANCHISE-FEES & MONTHLY BOTTOM LINE

Big O Tires was founded in 1962 and became a franchisee in 1982. Big O Tires is now one of the largest independent retail tire franchisors in North America and currently has 450 independently-owned and operated locations in 25 states. Big O Tires provides full service of tire and wheel repair and its slogan is known as “The Team You Trust” (Business View Magazine June 18, 2015). Big O Tires became a part of the TBC Corporation—a marketer and distributor of tires for the automotive replacement market in 1996. Big O Tires franchise also offers opportunities for veteran and first responder discounts as well as conversion opportunities for existing tire businesses.

The total estimated initial investment of Big O Tires varies from $311,000 - $1,138,300 according to their website. The initial franchise fee is a low of $10,000 to a high of $35,000 for a 10 year legally binding franchise agreement. In addition to the purchase cost and franchise fee, Big O Tire franchise must also pay ongoing monthly fees. A monthly royalty fee of 2% of the monthly sales/revenues for that particular store is required. In addition, an ongoing advertising/marketing fee of 0.9% of monthly sales/revenues per store is due to corporate Big O Tires. This money is used for signs and grand opening advertising for Big O Tires. The average annual revenue for Big O Tires is $1.826 million as reported by Big O Tires. Table I outlines the expenses and fees for Big O Tires. These fees, expenses, and revenues is used to predict monthly bottom line profits. This analysis shows the monthly profits an entrepreneur could possible make if they decide to franchise.

ASBBS Proceedings of the 28th (Virtual) Conference

TUFFY TIRE & AUTO SERVICE -- TRADITIONAL FRANCHISE-FEES & MONTHLY BOTTOM LINE

Charles Amy founded Tuffy Tire & Auto Service in Detroit, Michigan in 1970. Originally known as Tuffy Muffler shop, Tuffy Tire & Auto Service became a franchise one year later in 1971.

According to Tuffy Tire & Auto Service website, the mission is “To Provide the Best Automotive Repair Service in the Industry Through a Continuous Commitment to Quality and Customer Service.” Tuffy Tire & Auto Service’s slogan “Done Right. Period” came from the philosophy of doing things the old-fashioned way—the right way.

Using the same approach that was used in analyzing Big O Tires, Tuffy Tire & Auto Service reviews the fees and expenses of franchising a traditional tire service (Table I). The total estimated initial investment of Tuffy Tire & Auto Service varies from 224,000 – 418,500 according to their website. The initial franchise fee is $30,000 for a 15 year legally binding franchise agreement. In addition to the purchase cost and franchise fee, Tuffy Tire & Auto Service franchise must also pay ongoing monthly fees. A monthly royalty fee of 5% of the monthly sales/revenues for the particular store is required. In addition, an ongoing advertising/marketing fee of 5% of monthly sales/revenues per store is due to corporate Tuffy Tire & Auto Service. The average annual revenue is $998,240 as reported by Tuffy Tire & Auto Service. Table I outlines the expenses and fees for Tuffy Tire & Auto Service. These fees, expenses, and revenues is used to predict monthly bottom line profits. This analysis shows the monthly profits an entrepreneur could possible make if they decide to franchise.

RNR TIRE EXPRESS -- FEES & MONTHLY BOTTOM LINE

RNR Tire Express was established in 2000 as Rent-n-Roll and has grown to over 100 locations in 23 states. RNR Tire Express is a national franchise that was established by Larry Sutton in Tampa, Florida. RNR also offers rent-to-own payment options to attract customers which will increase profit for franchisees. According to Franchise Direct (2020), RNR Tire Express was ranked the #1 category leader for Tires in Entrepreneur magazine’s 2016, 2017, and 2018 Franchise 500.

Using the same approach as Big O Tires and Tuffy Tire & Auto Service reviews the fees and expenses of franchising a traditional tire service (Table I). The total estimated initial investment of RNR Tire Express varies from 500,000 - $1,000,000 according to their website. The initial franchise fee is $35,000 for a 10 year legally binding franchise agreement. In addition to the purchase cost and franchise fee, RNR Tire Express franchise must also pay ongoing monthly fees. A monthly royalty fee of 5% of the monthly sales/revenues for the particular store is required. In addition, an ongoing advertising/marketing fee of 4% of monthly sales/revenues per store is due to corporate RNR Tire Express. The average annual revenue is $2,253,000 as reported by RNR Tire Express. Table I outlines the expenses and fees for RNR Tire Express. These fees, expenses, and revenues is used to predict monthly bottom line profits. This analysis shows the monthly profits an entrepreneur could possible make if they decide to franchise.

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SUMMARY AND CONCLUSIONS

The tire industry will always be in demand. As tires wear down, they will need to be repaired or replaced. A tire franchise is an excellent opportunity for entrepreneurs who want to take advantage of a business that will continue to grow. According to Pilon (2020), the United States tire industry is worth $35 billion and United States drivers spend approximately $3 billion each year from on tires due to damage from potholes alone.

Franchise tire dealerships provide opportunities to serve a continuous need for communities to move goods and position the work force. The commerce and efficiency of a community rest on its ability to have reliable transportation. Owning a franchise in a community to serve this need has distinct challenges of location and a workforce. A mortgage must be maintained and high visibility location procured. When a proper location is obtained it must have high visibility for signage. This allows the community to be drawn to services the franchise provides. The personnel must be hired trained and maintained in order to have a successful tire dealership. Owning a franchise simplifies the processes and creates an environment for the business to have a direct and positive impact on the community it serves.

Franchisees can benefit from a national recognition when promoting their business in a community. To provide the necessary services the equipment, inventory, and manpower must be in place and prepared to meet the needs of the customer. The benefit of the franchise is access to inventory, training employees, repair and installation equipment, as well as a national advertising campaign. These services all support the successful launch and upkeep of a new tire business.

REFERENCES Auto Repair Franchise Investment. (2021, February 3). Tuffy Franchising. Retrieved February 5, 2021, from https://tuffyfranchising.com/auto-repair-franchise-investment/ Big O Tuffy Tire RNR Among Entrepreneurs Top 500 Franchises. (2020, January 29). Tire Business. Retrieved January 5, 2021, from https://www.tirebusiness.com/news/big-o-tuffy-tire-rnr-among- entrepreneurs-top-500-franchises CNBC (2020) retrieved February 10, 2021 from https://www.cnbc.com/2020/09/16/yelp-data-shows- 60percent-of-business-closures-due-to-the-coronavirus-pandemic-are-now-permanent.html Learn Which Franchises Can Make You Rich. Retrieved from https://www.franchisechatter.com/tag/biggby-coffee/ Montoya, R. (2018). How Old and Dangerous Are Your Tires? Retrieved February 10, 2021, from https://www.edmunds.com/car-maintenance/how-old-and-dangerous-are-your-tires.html Murphy, K. B. (2006). The franchise investor's handbook: A complete guide to all aspects of buying, selling or investing in a franchise. Ocala, FL: Atlantic Pub. Group. Pilon, A. (2020, September 21). 10 Best Tire Repair Franchise Opportunities. https://smallbiztrends.com/2020/09/tire-repair-franchise.html Pofeldt, Elaine (2020). Fear and desperation on Main Street as small businesses struggle to survive despite PPP and other federal loan programs. Retrieved February 10, 2021 from https://www.cnbc.com/2020/05/11/small-businesses-struggle-to-survive-despite-federal-loan- programs.html 81

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RNR Tire Express. (2020). Be The Boss. Retrieved January 5, 202, from https://www.betheboss.com/franchises/rnr-tire-express/ Sardana, Saloni (2020) https://markets.businessinsider.com/news/stocks/yelp-business-closures- permanent-covid-report-2020-9-1029598577 SBA (2019) cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142610/2019-Small-Business- Profiles-States-Territories.pdf

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CURRENT EXPECTED CREDIT LOSS (CECL): THE OTHER SIDE OF THE STORY

Grealis, Tara Henderson, Katelyn Tomolonis, Paul A. Western New England University

ABSTRACT Current Expected Credit Loss (CECL), FASB’s new accounting standard effective January 2020, is a direct response to the 2008 financial crisis. FASB’s intent is for bank management to extend the estimation horizon of the loan loss provision in order to provide a “more accurate” picture of their expected uncollectibility over the entire life of the loans held in portfolio. While this new standard requires the banks to incorporate additional information in their modeling process for their loan loss provision, it also opens up additional opportunities for managerial discretion in the estimation process. We measure this additional discretion using Jones Model discretionary accruals, adapted for the banking sector. Our financial statement data comes from FDIC Call Reports that include both public and private banks and are prepared at the bank level only, unlike SEC financial reports which include financial information of the bank holding companies and other subsidiaries in addition to the bank. We used quarterly Call Report data across the implementation window that includes the advent of CECL (Q1, January – March 2020) to discern the difference in discretionary accruals. Due to the confounding effect of COVID-19, there is only one quarter of relatively unaffected data so we compare Q1 2020 to prior quarters and years. Comparing the periods prior to implementation and post implementation allows us to observe any difference in discretionary opportunities for management. We find additional discretion opportunities available to management in post CECL implementation, which is contrary to FASB’s intent.

INTRODUCTION Banks operate by taking in depositors’ money and lending it out to qualified borrowers. Many deposit accounts are interest bearing where the bank pays interest to the depositor for depositing their money. The banks can then make a profit on this deposited money by lending those funds out to borrowers at a higher interest rate. Many people also deposit their funds into a bank account for security and assurance that their funds will be returned to them or for use in the payments system. Banks heavily rely on trust from the public since depositors want to confidently know that their money is safe, as well as available for them when they want to withdraw it. The Federal Deposit Insurance Corporation (FDIC) insures depository accounts up to $250,000 if the bank were to ever be in financial distress. Banks have the incentive (profit) to take risks with depositor’s funds, which creates the need for regulation. If a bank takes too many risks, it could be harmful to the bank’s financial sustainability so they are heavily regulated by the FDIC and Federal Reserve to ensure this customer safety and satisfaction. While, as a society, we want banks to take risks to invest in the economy, excessive risk taking can be deleterious to the financial systems used by all economic agents.

An example of this regulation is the monitoring of financial results for public and private banks by the FDIC. Like US GAAP financial reports that require estimations to align current period income with expense, the FDIC Call Report requires the same standards including the loan loss provision

ASBBS Proceedings of the 28th (Virtual) Conference estimation. This expense, similar to bad debt in other types of institutions, is recorded to account for the loan balances that the bank estimates it will not see returned or paid. These provisions are recorded in the bank’s financial statements as well as Call Reports, which are regulated by the FDIC and issued quarterly by all FDIC insured banks. This uncollectible estimate can result from expected and unexpected economic downturns, financial distress experienced by the borrower, or any other reason for non-performance of the loan (non-payment). This expense estimation is then updated and revised throughout the term of the loan as the bank is recognizing interest revenue and usually seeing principal returned throughout the term of the loan, changing the uncollectibility estimate. In the previous method of estimating credit losses (before CECL), banks analyzed historical trends, current financial condition of the borrower, and current economic environments, amongst other factors, for all of the loans they held in portfolio to determine their loan loss provision over a period of time where banks believed good estimations could be made. Under this prior standard, the inputs to the forecast were decided by the individual bank and often used past trends in addition to current conditions to extrapolate predicted performance (or non-performance) of each loan.

Recently (effective January 2020), the standards of estimation for loan loss provisions have changed with the Financial Accounting Standards Board (FASB)’s issuance of ASU 2016-13: Measurement of Credit Losses on Financial Instruments. With this new accounting standard, Current Expected Credit Loss (CECL), the FASB is requiring banks and financial institutions to project and prepare a loan loss analysis over the entire life of loans, regardless of how long the loan term is. In contrast to the previous standard, CECL requires estimates that are more long-term projections of what could happen with the loans in the future. The bank is now required to take current estimations of what could happen with loan repayment and project this out for the life of the loans to come up with a future estimate of the uncollectible portions. This extends the prior standard to explicitly required forecasts of uncollectibility to include all risk over the life of all loans in portfolio, but each bank is still encouraged to use their own method in the analysis and determination of the loan loss estimation. According to the FASB update, this change is “to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.” FASB’s assumption is that by requiring banks to extend the range of support for these estimations to be much broader and more reasonable over time as banks project uncollectible amounts over the entire life of loans, they will more accurately be able to reflect loan loss information in their financial statements (FASB ASU 2016-13 pg. 1).

From the bank’s perspective, this may be overly ambitious, as markets and industries are constantly fluctuating and changing, it is impossible to accurately predict the long run future of loans. Financial hardships and economic downfalls can be unforeseen (e.g. COVID-19), which can make the estimation process for uncollectable balances difficult to predict as well as more dependent on assumptions about the future. While it is widely believed that some banks were taking on too much risk during the 2008 financial crisis, CECL, as issued by the FASB in direct response to the crisis as a means to remedy this, would not have changed much for the big banks since these loans were securitized into MBS. These new loan loss provisions are presumed by FASB to give a more accurate representation of what banks should estimate for future loan losses. On the other hand, CECL could also provide more opportunity for bank management to manipulate these estimates through discretionary accruals in order to smooth earnings reports for investors and regulators.

The required increase in the level of assumptions and estimations gives bank management the opportunity to take less (or more, since earnings management can be done in both directions) loan loss provision, which would cause net income to possibly be overstated (understated) and make the banks’ profit look more appealing to financial statement readers by smoothing the profit growth over time. In 84

ASBBS Proceedings of the 28th (Virtual) Conference other words, CECL is meant to use future predictions to make the provisions more accurate now, however, it could make these estimations significantly less accurate if management is incorrect in their assumptions and estimations (mistakes) or takes advantage of the increased opportunity for earnings management. So that presents the question: Does CECL result in more discretion from managers for financial reporting? To address this question, we tested the amount of discretion management has over the estimates (accruals) in the before and after period around the regulation change using a bank specific modified Jones model. We gathered the data for our regressions from the 2018, 2019, and 2020 FDIC Call Reports. After running these regressions and analyzing the residuals, we find that CECL creates a higher magnitude of discretionary accruals in the bank’s financials from 2019 to 2020 (the CECL implementation discontinuity). Increases in the magnitude of discretionary accruals present the opportunity for earnings management and is consistent with less accurate accrual estimates.

LITERATURE REVIEW Managerial discretion in reporting on financial statements arises from accrual accounting, which seeks to match the revenue (recognized at the time of the sale) to the costs of earning that revenue. This means that accountants often must estimate an economic transaction without the benefit of an explicit cash flow at the time of the estimate. For example, how likely is a loan made by a bank going to be uncollectable? Since these estimates are made under the direction of management, who might be judged based on the results, it is natural to wonder how much discretion managers have.

Estimating managerial discretion in accounting is nothing new since accrual accounting is based on estimates and managers are often paid for their performance based on accounting metrics. Healy (1985) makes the initial attempt to measure discretion by the level of accruals. Jones (1991) in her dissertation paper on import relief, created a regression specification for separating non- discretionary accruals from discretionary ones by using a dependent variable of total accruals based on working capital changes, sans cash and regressing this on non-discretionary accrual drives (firm size, change in sales, and the level of fixed assets); with the error term thereby containing discretionary accruals by default. Dechow, et al. (1995) modified the Jones model to compensate for managerial discretion in sales by subtracting the change in receivables (making sales that have yet to be collected). We begin with this modified Jones accrual model and make some industry specific adjustments since banks are unique among firms. Our purpose is to measure the change in the level of discretionary accruals across the discontinuity of regulatory change (the advent of CECL for banks).

We looked for similar applications of Jones style accrual separation for banks. Here is a brief review of what we found. Abbas et al. (2008) use the modified Jones model to investigate the relationship between bank firm value and discretionary accruals for Pakistani banks. Their finding was a negative relationship between firm value and the level of discretionary accruals. Onalo etal. (2014) made modifications to the Jones model for their investigation into the switch to IFRS in Nigerian and Malaysian banks. Specifically, they replace the change in receivables with the change in non- performing loans. They find a reduction in discretionary accruals with the advent of IFRS and conclude that this has improved reported earnings quality. Meisel (2012) uses the balance sheet method of calculating total accruals (working capital changes) and a modified Jones approach to separating discretionary accruals with an indicator variable for merging banks to find that banks about to undergo M&A have higher levels of discretionary accrual activity in the two years prior to the merger. Yasuda et al. (2004) found that discretionary accruals are negatively correlated with Japanese banks risk taking, especially before the late 1990’s bank crisis. They use a modified Jones model with an income statement and cash flow approach to total accruals with non-discretionary accruals being driven by size, changes in operating income, and PPE. Mohammad et al. (2011) investigate earnings management (via the opportunity from discretionary accruals) in the face of bank risk, the loan loss provision, and dividend payouts using an unmodified Jones model with total accruals from the income statement approach.

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They conclude that discretionary accruals are positively associated with Malaysian banks idiosyncratic risk (LLP), but not the systemic risk (uncorrelated) nor the dividend paid per share. Amiolemen et al. (2017) consider the relationship between disclosure quality and earnings management (again proxied by the opportunity created with higher levels of discretionary accruals) for a sample of Nigerian banks using a standard modified Jones model. They find that disclosure quality is negatively associated with discretionary accruals. These applications of the Jones model concept support its use in our context and provide some insight into the choice of non-discretionary accrual drivers.

The extant research on the new CECL rules from FASB is prospective since the standard has only been recently implemented (Q1 2020). Chae et al. (2018) investigate the “pro-cyclicality” of loan loss provisions using a model of losses that may be applied but they use prior period data on the California mortgage market. The results when comparing a current style model to a CECL model is that pro-cyclicality is reduced (a goal of FASB since they define pro-cyclical to be lagging the economic cycle so banks are under estimating losses at the peak, leading to too much lending, and over provisioning at the trough, leading to too few loans at that point in the economic cycle). Yet, the authors are cautious since the new rule will result in a lack of comparably to prior period loan loss provisions, despite the required “catch up” on previously stated loan loss allowances (allowing for management discretion increases in the new regime). Loudis & Ranish (2019) agree with Chae et al. that the effect of CECL will be to smooth the credit available to the economy (slowing in times of expansion, increasing in economic downturns). They base this conclusion on their look retrospectively on applying a CECL style model to past bank performance to observe the effect on regulatory ratios and capital adequacy of banks. A word of caution for both of these studies is that the future cannot be as easily predicted as it may be assumed looking backwards in time, especially given that the banks will respond to this new rule in ways that mitigate its effect, as in Mahieux et al. (2020), who concur that banks will have more timely changes to credit policy, but because of that they find that banks will be more likely to take more risk since they now have, what the bank believes, is a clearer picture about the future risks in the economy.

Continued support for the economic effect of the rule change using the same data source as our paper is Jordan & Sanchez (2019), who, in their working paper. retrospectively apply a CECL model to banks in two different periods (2015-2018 & 2008-2011) for an economic cycle comparison of the new rules. Using FDIC Call Report data on loan loss provisions and loan write-offs (as a percent of the loan portfolio), they compare CECL to the actual loan loss models used in the respective time periods. They find that in the 2015-2018 “expansionary” period that loan loss provisions were greater than actual write-offs (over provisioned) and that in the 2008-2011 “recessionary” period loan loss provisions were understated compared to actual write-offs by between 50% (small banks) and 500% (the largest banks).

Lastly, Tunay (2018) in an analysis commissioned by Accenture (consultants) concludes that CECL, since it will require forecasting over the life of the loan, will result in longer term loans looking less profitable, which may reduce the supply of such long dated maturities, shortening duration and increasing the risk of financing. Further, any forecasting errors (economic cycle) or loss prediction errors might make CECL more “pro-cyclical” than the current regime since they are more likely biased towards recent events. Also, based on Fannie Mae and Freddie Mac datasets for 30-year mortgages a variety of “acceptable” CECL models that banks may use are tested. The finding was that lifetime loss rates could vary by a factor of two depending on the model and methodology chosen by the bank. It is in this uncertain world of CECL application that we will use a bank modified Jones model to consider the level of discretionary accruals from before the CECL implementation to just after it. As is perennially the case, if we had better foresight and could trust the discretion of management, we would see more accurate financial reports. The question here is: can we regulate banks into better forecasts by allowing greater discretion in estimation, or are we merely providing managers with another opportunity to manage their earnings. 86

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DATA

The data we used is obtained from the Federal Financial Institutions Examination Council (FFIEC) Central Data Repository, which allows users to download Reports of Condition and Income (Call Reports) and Uniform Bank Performance Reports (UBPRs) for most FDIC-insured institutions. The quarterly periods we examined extend from 2018 through 2020, covering over 5,000 commercial banking institutions each year. Financial data was attained from FDIC Call Reports by using Schedule RI – Income Statement, Schedule RC – Balance Sheet, and Schedule RI-A – Changes in Bank Equity Capital for each institution via a bulk data download for each of the quarters.

FDIC data is collected at the operating subsidiary, bank only, level rather than holding company level (i.e., a public company’s 10-K). This allows the user to access financial data that is only recorded by the bank itself. A public bank’s 10-K that is filed with the Securities and Exchange Commission (SEC) contains financial data that is consolidated at the holding company level, which results in presenting financial data generated by the holding company, the bank, and all other subsidiaries to the holding company consolidated together. SEC financial data can only be obtained for publicly traded banks, whereas FDIC Call Report data can be obtained for both public and private banks regardless of size or location, giving the user of the data a significantly larger number of observations. In addition, the FDIC Call Report is a standardized filing that requires all banks to complete the report in a uniform manner, similar to an IRS tax form, while SEC data is less organized and inconsistent from firm to firm. The bank’s process and results presented in the Call Report are audited by the FDIC and the Federal Reserve for accuracy. For these reasons, the FDIC Call Report data has greater reliability and consistency than SEC financial statement data in addition to a broader collection of banks. The bulk downloads of Call Report data obtained from the FFIEC are text files that are easily imported into Excel with sensible labels and formats, and contain more granular data than public company financial statements.

METHODOLOGY

To understand the effects of the change to the CECL method for estimating loan loss provision, we collected data from FDIC Call Reports from before (Q1 2018, Q1 2019, Q4 2019) and after (Q1 2020) the implementation of this new method. We compared (Q4 2019 to Q1 2020 and Q1 2019 to Q1 2020, along with Q1 2018 to Q1 2019 as a control). We used this comparative data to analyze discretionary accruals across the banks on a quarter-to-quarter basis as well as a year over year basis using a bank specific modified Jones model approach.

The Jones model was developed to comparatively measure how much management has the opportunity to subjectively control accounting with discretionary accruals by separating total accruals into non-discretionary (coefficients) and discretionary (error term). The original specification of the modified Jones model from Dechow, et al. (1995) is:

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Where: TA = Total Accruals = Net Income – Operating Cash Flow Assets = Previous period Total Assets ∆ = change in the variable REV = Revenue AR = Receivables PPE = Gross Property, Plant, and Equipment (i.e. depreciable assets at cost)

Our banking (financial sector) modification is shown in the following equation:

Where: TA = Total Accruals = Comprehensive Income – (Change in Cash + Cash Dividends) ATA = Average Total Assets = (previous period + current period)/2 DEP = Change in Net Deposits BOR = Change in Borrowings Gross PPE = Property, Plant, and Equipment, at cost (i.e. depreciable assets) e = residuals: discretionary accrual estimate for further analysis

Our decision to use comprehensive income, instead of net income, in measuring TA is due to the possibility of high balances of discretionary accruals contained in other comprehensive income (OCI) particularly for the larger banks. According to FDIC Call Report instructions OCI includes changes in net unrealized holding gains (losses) on available-for-sale securities, changes in accumulated net gains (losses) on cash flow hedges, foreign currency translation adjustments, and pension and other postretirement plan-related changes other than net periodic benefit cost.

We chose non-discretionary drivers (independent variables) appropriate for what makes a bank grow (size and the liabilities that fund operations since they are not choices a bank can avoid). Deposits cannot be refused and borrowings are used to fund the risk management function between deposits and loans (hedged by investments). We included Gross PPE to be consistent with the modified Jones model, but did not expect significance since banks are shedding PPE costs (closing branches) especially with growing on-line banking options.

After estimating the bank modified Jones model for all four quarters in our event window (Q1 2018, Q1 2019, Q4 2019, Q1 2020) and collecting the residuals for each, we investigated the resulting distributions for average magnitude (absolute value) and distributions. Finding very similar distributions, we performed a t-test of mean difference in average magnitude of residuals (an estimation of discretionary accruals).

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We hypothesized that this new bank credit loss estimation process (CECL), while intended to force banks to make more accurate estimations of loan losses, actually increases their discretionary accruals (opportunity to manage earnings through estimates). Thus, we expected the magnitude of the average level of discretionary accruals to increase across the change from periods before the change (2018 Q1 and 2019 Q1) to after it (2020 Q1). Our event window focused on Q1 2020 to avoid the confounding effects of COVID-19 on subsequent quarters, which included some substantial increases in expected loan loss due to the pandemic.

RESULTS We used our version (banks) of the modified Jones model to investigate the discretionary accrual levels on either side of the implementation of CECL. We initially compared Q4 2019 to Q1 2020 to determine if there was a difference in the magnitude of discretionary accruals from adjacent quarters. The Q4 results appeared to be confounded by end of year adjustments (for the purposes of the FDIC Call Report, all fiscal year ends are the calendar year end). Our regression specification (same model for all) Adjusted R-squared for Q1’s was between 0.216 and 0.266; however, for Q4 it was only 0.023 (see table) and the residual plot was much more volatile. We concluded that the year-end effects rendered Q4 results incomparable with Q1 data. All three of the Q1 residual distributions were smooth and similar, so we felt comfortable comparing the mean magnitude of residuals (an estimate of discretionary accruals) with a t-test of mean difference.

In Q1 2020 (the “treatment” period after the change) our bank modified Jones model regression resulted in an adjusted R-squared of 0.22 with high significance on our main drivers of non- discretionary accruals (Δ Deposits and Δ Borrowings), showing a good separation of non-discretionary (~22% of total accruals) and discretionary accruals (the residuals). We had similar results in our comparison (“control”) period: Q1 2019 and in the reference period: Q1 2018. Across these three groups, we found no increase in the number of outliers at various Z-score levels, and the histogram of residuals for all three was similar as well as smooth (normally shaped). When comparing the residuals, we did find a statistically significant increase of 28% in the average level of residuals in the “after” period (post CECL) compared with the “before” period of a year ago quarter (Q1 2019). In order to determine if there was a trend, we then compared Q1 2019 results to Q1 2018. The residual distribution was statistically indistinguishable from 2018 to 2019 (t-test of mean difference failed), supporting our hypothesis that CECL was the cause of the increase in the level of residuals (discretionary accruals) from 2019 (Q1) 2020 (Q1).

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Regression results from bank modified Jones model accrual estimation: Quarter Ended

3/31/202 3/31/201 3/31/201 0 9 8 12/31/2019

Adjusted R-Squared 0.216012 0.265983 0.220802 0.023444

Intercept 0 0 0 0.01**

1/ATA -13.2 39.4 -29.4 -190.6**

DEP/ATA -0.42** -0.38** -0.37** -0.08**

BOR/ATA -0.24** -0.11** -0.22** 0.06

GPPE/ATA -0.01 0 0.07 0.12*

Average Residual 0.0248 0.0194 0.0198

Standard Deviation 0.0354 0.0251 0.0331

0.0054* Residual Difference * -0.0004

% Difference 27.8%** -2.0%

T-test (p-value) 0 0.399

**p<0.01

* p<0.05

CONCLUSION The required increase in the level of assumptions and estimations under the new CECL rules gives bank management the opportunity to alter loan loss provisions, smoothing the banks’ profit growth over time. CECL is meant to make the provisions more accurate, however, it could make these estimations significantly less accurate if management is incorrect in their projected future assumptions and estimations or takes advantage of the increased opportunity for earnings management. We find that CECL creates a statically significant increase in the magnitude of discretionary accruals in the bank’s financials from 2019 to 2020 (the CECL implementation discontinuity). Increases in the magnitude of discretionary accruals present the opportunity for earnings management and is consistent with less accurate accrual estimates, contrary to the FASB’s stated objective in issuing the new standard.

The opportunity to manage earnings does not mean that banks will take the risk. Regardless if they do or not, the new CECL requirements required such additional forecasting that might result in mis-estimations or simply mistaken assumptions, thereby reducing the accuracy of the estimation for loan loss provision rather than augmenting it. This simple analysis, while consistent with less accuracy, should be extended to include a longer trend analysis of the before period (relatively consistent economic environment) as well as an attempt to measure the longer run implications of the change if it is possible to decouple the effect of COVID from CECL. Several market participants in this sector have speculated that banks went so far in over-provisioning for the COVID effect purposely to create “cookie 90

ASBBS Proceedings of the 28th (Virtual) Conference jar reserves” or estimates that will be reversed into earnings (raising them) in future periods while “washing away” expenses in the current period under the guise of both COVID as well as the changes to CECL. We are working on extending this analysis in both directions, but do not expect any materials different results to emerge.

REFERENCES

Abbas, Zaheer, Amanullah M. Khan, and Muhammad Faisal Rizwan. 2006. Abnormal accruals and firm value, panel data analysis of banking industry of Pakistan. European Journal of Scientific Research 14 (4): 445-54.

Chae, Sarah, Robert Sarama, Cindy M. Vojtech, and James Wang. 2018. The impact of the current expected credit loss standard (CECL) on the timing and comparability of reserves.

Dechow, Patricia M., Richard G. Sloan, and Amy P. Sweeney. 1995. Detecting earnings management. The Accounting Review 70 (2): 193-225, http://www.jstor.org/stable/248303.

Healy, Paul M. 1985. The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics 7 (1): 85-107.

Healy, Paul M., and James M. Wahlen. 1999. A review of the earnings management literature and its implications for standard setting. Accounting Horizons 13 (4): 365-83.

Jones, Jennifer J. 1991. Earnings management during import relief investigations. Journal of Accounting Research 29 (2): 193-228, http://www.jstor.org/stable/2491047.

Jordan, Dan J., and Jacques Sanchez. 2019. The potential impact of CECL effect on the banking industry: Using portfolio duration estimation. Available at SSRN 3397306.

Kusuma, Hadri, and Hanifah Dina Zain. 2017. Corporate governance and discretionary accruals: Evidence from Iindonesian Iislamic banks. Corporate Ownership & Control: 259.

Loudis, Bert, and Benjamin Ranish. 2019. CECL and the credit cycle.

Mahieux, Lucas, Haresh Sapra, and Gaoqing Zhang. 2020. CECL: Timely loan loss provisioning and banking regulation. Available at SSRN.

Meisel, Scott I. 2007. Detecting earnings management in bank merger targets using the modified jones model. Journal of Accounting, Ethics & Public Policy 7 (3): 301.

Mohammad, Wan Masliza Wan, Shaista Wasiuzzaman, and Rapiah Mohd Zaini. 2011. Panel data analysis of the relationship between earnings management, bank risks, loan loss provision and dividend per share. Journal of Business and Policy Research 6 (1): 46-56.

Onalo, Ugbede, Mohd Lizam, and Ahmad Kaseri. 2014. The effects of changes in accounting standards on earnings management of Malaysia and Nigeria banks. European Journal of Accounting Auditing and Finance Research 2 (8): 15-42.

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Petroni, Kathy R., Stephen G. Ryan, and James M. Wahlen. 2000. Discretionary and non-discretionary revisions of loss reserves by property-casualty insurers: Differential implications for future profitability, risk and market value. Review of Accounting Studies 5 (2): 95-125.

Tunay, Soner. 2018. Impacts of CECL. Available at SSRN 3183416.

Uwuigbe, Uwalomwa, Omoike Osereme Amiolemen, Olubukola Ranti Uwuigbe, Osariemen Asiriuwa, and Jimoh Jafaru. 2017. Disclosure quality and earnings management of selected Nigerian banks. The Journal of Internet Banking and Commerce: 1-12.

Yasuda, Yukihiro, Shin'ya Okuda, and Masaru Konishi. 2004. The relationship between bank risk and earnings management: Evidence from japan. Review of Quantitative Finance and Accounting 22 (3): 233-48.

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COLLABORATIVE ONLINE INTERNATIONAL LEARNING IN A BUSINESS COURSE DURING THE COVID-19 PANDEMIC Hartling, Xu Salem State University Abstract Collaborative Online International Learning (COIL) is a pedagogical method to provide students international and multicultural learning experiences through digital technology without traveling abroad. During the COVID-19 pandemic, study abroad programs in the universities all over the world were exceptionally limited due to travel restrictions. An innovative COIL program is developed in a business course to enrich students’ intercultural learning by observing global operations through a cross cultural lens, working collaboratively to address globally relevant issues, developing effective communication skills, and exploring self-awareness and appreciation for cultural diversity. Students from Salem State University (USA) pair with students from Xi’an University of Posts and Communications (China) to work on an assigned course project over a five-week period. Students choose which technology or technology platform to use for communication and collaboration purpose. Students from both universities are graded based on the rubrics in their enrolled courses from their home universities. This COIL effort has potential to show promising progress and fruitful results. Without traveling abroad, students have meaningful and valuable engagement with peers in another country. It is a practical way to prepare students for diversity and multi-culture while still helps fulfill academic program goals in their home universities. Additionally, the COIL project helps faculty leverage the utility of online learning technologies and structure the course in support of the social and emotional well-being of students during the COVID-19 pandemic. Keywords: collaborative online international learning, international collaboration, diversity, interdisciplinary, intercultural, study abroad, COVID-19 INTRODUCTION It has been more than a year since the World Health Organization (WHO) declared that the novel coronavirus (COVID-19) was a public health emergency of international concern. March 11 in 2021 marks the one-year anniversary of the declaration of the pandemic (WHO, 2020). Every aspect of human life has been largely affected by this COVID-19 pandemic. In order to control the spread of the virus, many countries restricted travel both inbound and outbound. For example, starting from January 26 in 2021, the Centers of Disease Control and Prevention (CDC) requires all air passengers entering the United States to present a negative COVID-19 test which has to be taken within three calendar days of departure (Travel.State.Gov, 2021). Also, any U.S. citizen returning to the United States who has been in China in the previous 14 days may be subject to up to 14 days of quarantine. The limited international travel affected almost all study abroad programs or student exchange programs in the U.S. universities and universities all over the world.

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While the pandemic and travel restriction continue, there should not be a pause or stop of intercultural learning because students need that. It is also important to understand that the social and emotional well-being of students benefit from their international and multicultural learning experiences. Collaborative Online International Learning (COIL) is a pedagogical method to provide students international and multicultural learning experiences through digital technology without traveling abroad. COIL connects faculty with an international collaborator to develop a project that students use online tools to work on together across time zones, language differences, and geographical distance (SUNY COIL, 2021). The recommended length for a COIL project is five weeks, although it can be longer or shorter depending on the project scope and course content. At Salem State University, the Center for International Education sponsored a Faculty Learning Community during the fall semester in 2020 to help faculty develop a COIL component to one of their courses. The COIL component would be implemented in the spring semester in 2021 with a partner at an international university. This paper documents a COIL component developed in ODS 333 Operations and Logistics Management, a quantitative business core course in the Bertolon School of Business. The COIL project will be implemented in March 2021.

METHODOLOGY This COIL project brings students valuable international learning experience without traveling abroad. It encourages students to respect multicultural diversity and collaborate with foreign students for problem solving and task completion. More importantly, one goal of developing a COIL component in ODS 333 was to engage students in more social and interactive activities during the pandemic. The COIL project is a collaborative effort between Salem State University (USA) and Xi’an University of Posts and Communications (China). From Salem State University side, ODS 333 is the course that hosts the COIL component. This course is offered in an asynchronous online format with 63 students enrolled in three sections in spring 2021. The majority of students are juniors and seniors. The courses from Xi’an University of Posts and Communications participated in this project was Introduction to Management and Business Etiquette and Negotiation, out of which there are 65 students. The start and end of semesters in the U.S. and in China are different. There are eight weeks overlapping in the spring semester of 2021. The COIL project will launch at the end of March and last for 5 weeks. The U.S. faculty started the project preparation since September 2020 through the Faculty Learning Community at Salem State University. In the 3-month preparation phase from September to December 2020, the U.S. faculty participated in four two-hour meetings with 11 other faculty. These meetings helped these 12 faculty from different academic departments with many aspects of developing a COIL project including exploring COIL resources, establishing goals and objectives of the COIL component, engaging in the discussion of intercultural competence, and so on. Constant email exchanges discussing this collaborated effort between the U.S. faculty and the faculty from China occurred during the project preparation period. The COIL project will officially launch starting from the week of March 22 in 2021. The project length is 5 weeks. Students from both universities are randomly paired in 20 teams for collaboration purpose. Approximately, there are 3 students from Salem State University and 3 students from Xi’an University of Posts and Communications in each team. The contact information (name and email address) of each team member is shared within the team. Students will be given the flexibility to choose how they

ASBBS Proceedings of the 28th (Virtual) Conference communicate with each other through phone calls, emails, social media, video conferences, shared documents, and so on. Students are given one assignment each week. Canvas is the Learning Management System (LMS) used at Salem State University. Assignments are posted on Canvas at the beginning of each week. Students from Salem State University submit their work through Canvas. Although separate submission and evaluation (with different rubrics) are managed at Xi’an University of Posts and Communications, this project is 20% of the total grade in ODS 333 at Salem State University. Below is a detailed description of five assignments. (1) Week 1 Assignment 1: introduce yourself to your team members from your home university In this week, you will get to know your team members at Salem State University. You have the flexibility to choose your preferred way of communication, such as phone calls, emails, social media, video conferences, and shared documents. Please feel free to share some pictures or videos with each other. Below is a list of suggested talking points to help you facilitate this process. For submission purpose, please summarize what you have leaned from your team members in a WORD document and upload the file on Canvas. Good luck everyone!

• Name, major, what year you are in at Salem State University. • Which country/state and city you are from. Please share some detailed information of your country/state and city. Examples include geographical information, demographic information, history, latest development, and so on. • Your family (pets included). • Your job and work life (if any). • Your hobby/hobbies. • What is your daily routine? • What's your favorite food, drink, book, movie, or sports, etc.? • What do you want to do the most when the pandemic is over? • What international travel or intercultural experience do you have (if any)? • What do you plan to do this summer?

(2) Week 2 Assignment 2: introduce each other in each team In this week, you will get to know your team members from Xi’an University of Posts and Communications (Xi’an, China). You have the flexibility to choose your preferred way of communication, such as phone calls, emails, social media, video conferences, and shared documents. Please feel free to share some pictures or videos with each other. Below is a list of suggested talking points to help you facilitate this process. For submission purpose, please summarize what you have leaned from your team members in Xi’an University of Posts and Communications in a WORD document and upload the file on Canvas. Good luck everyone!

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• What do you want to do the most when the pandemic is over? • What international travel or intercultural experience do you have (if any)? • What do you plan to do this summer?

(3) Week 3 Assignment 3: team work In Schroeder and Goldstein's textbook (Operations Management in the Supply Chain: Decisions and Cases, 8th Edition by Roger Schroeder and Susan Goldstein. ISBN: 978-1260368109.), Chapter 2 Operations and Supply Chain Strategy, five operations strategic objectives are introduced: Cost, Quality, Delivery, Flexibility, and Sustainability. Sustainability is important in operations: (1) it minimizes or eliminates environmental impact of operations, and (2) it provides social and financial viability of the firm for future generations (Schroeder & Goldstein, 2020). The triple bottom line (three dimensions) of sustainability is environmental, social, and economic sustainability. Environmental sustainability may include:

• Curtailing air, water, landfill pollution • Reducing energy consumption • Minimizing transportation and total carbon footprint • Working with suppliers to use recyclable and biodegradable packaging • Incorporating product reuse, end-of-life return, recycling. Think of examples (in your home countries) you have seen in person or in the media that illustrate how operations is closely tied to environmental sustainability and discuss with your team members. Each team chooses one example and write a report on what operations strategies were implemented to promote environmental sustainability and how was the outcome. Please make one submission per team.

(4) Week 4 Assignment 4: team work In Schroeder and Goldstein's textbook (Operations Management in the Supply Chain: Decisions and Cases, 8th Edition by Roger Schroeder and Susan Goldstein. ISBN: 978-1260368109.), Chapter 18 Global Logistics, logistics is defined as "Plans, implements, and controls the efficient, effective forward and reverse flows and storage of goods and related information between the point of origin and consumption in order to meet customer requirements". Critical logistics decisions include: what modes of transportation to use? what types of warehousing to use? where should factories and warehouses be located? should logistics be outsourced to third-party provider (3PL)? what is the strategic role of logistics in creating and supporting competitive advantage (Schroeder & Goldstein, 2020)? During the COVID-19 pandemic, food logistics/delivery is experiencing rapid growth in the U.S. and China. Grubhub, DoorDash, Uber Eats, and Instacart are among popular food delivery services in the U.S.. Meituan Waimai, Ele.me, and Baidu Waimai are popular food delivery apps in China. There are similarities and differences of food delivery services in different counties. Please compare and contrast the following aspects (suggested but not limited to). Summarize your findings in a report and upload the file on Canvas. Please make one submission per team.

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• How do they operate (for example, modes of transportation)? • How do orders come in? • How do they pack and storage food? • Is there any warehousing? If so, where does it locate? • Do they have in-house capacity (for example, fleet, people) or do they outsource to third party? • What are the competitive advantages? • Others.

(5) Week 5 Assignment 5: project report This is the last week of this COIL project. In this week, please complete the following three tasks. Thank you very much for your participation in COIL. Hope you enjoyed this COIL project and learned valuable lessons. I wish you the best of luck for the rest of the semester!

• summarize your intercultural and interdisciplinary experience in this project in a report; • upload the report on Canvas for submission purpose; • fill out an anonymous survey.

CHALLENGES AND DISCUSSION During the project preparation period, several challenges were discovered. (1) Typically, a Zoom meeting can be scheduled for all students from both universities to meet for the first time. Due to the fact that there are over 120 students participated in this project, the Zoom meeting does not seem manageable to schedule or hold. It is also noted that the time difference between U.S. and China is 12 hours. Scheduling a Zoom meeting during an agreeable time period is not practical. (2) Salem State University uses Canvas as the LMS, but Xi’an University of Posts and Communications does not. Enrolling students (from China) in the Canvas course of ODS 333 is challenging because of the license agreement at Salem State University. Additionally, the duration of the COIL project is five weeks and students from China are not taking the whole course of ODS 333. As a result, there is no common LMS used in this project. (3) Instead of requiring students using certain communication tools, students are given the flexibility to choose what tools they would like to use. This is partially because certain websites or tools are prohibited in China, such as Google, Facebook, and so on. The lack of some commonly used websites or tools inspires students to be creative. For example, students may use WeChat, one of the most popular social media in China to communicate. (4) Because there is no common LMS used in this project, assignment submission is managed separately at Salem State University and Xi’an University of Posts and Communications. In this COIL project, students take different courses: ODS 333, Introduction to Management, and Business Etiquette and Negotiation. Each course has its own goals and objectives so adopting the same rubric is not necessary. Therefore, evaluation is also managed separately at both universities. (5) During the last week of the project, one task for students to complete is an IRB approved anonymous survey. The application of IRB only includes the U.S. students as the objects. The faculty at Xi’an University of Posts and Communications developed a separate survey for students in China. The survey has the same content but in Chinese so students in China may express themselves more accurately. Survey results from U.S. and China will be analyzed. (6) Other challenges identified but not unique to this COIL project include language barriers for students whose first language is not English, culture differences, and personality differences.

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Schroeder, R. G., & Goldstein, S. (2020). Operations Management in the Supply Chain: Decisions and Cases. SUNY COIL. (2021). What is COIL? Retrieved from SUNY COIL: https://online.suny.edu/introtocoil/suny-coil-what-is/ Travel.State.Gov. (2021). Retrieved from https://travel.state.gov/content/travel/en/traveladvisories/ea/covid-19-information.html WHO. (2020). Retrieved from https://www.who.int/emergencies/diseases/novel-coronavirus-2019

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COVID-19 AND THE HEALTH INDUSTRY: A TEST OF MARKET EFFICIENCY Howell, Nicholas Bacon, Frank Longwood University ABSTRACT

The purpose of this study is to test for semi-strong form market efficiency. Will returns in the healthcare industry show excess gains in the event period of the COVID-19 announcement? While we can infer a link between pandemics, epidemics, outbreaks and the market, this link has not been heavily studied. We have seen before that markets can heavily decline in value because of an impending pandemic, epidemic, or outbreak. In the efficient market theory, Eugene Fama proposes that in semi-strong form efficiency all public information is taken into the market and no investor can achieve an above normal return when adjusted for risk. BACKGROUND & PURPOSE

SARS-CoV-2 is the name of the virus that causes the disease commonly known as coronavirus (COVID-19). As of now it has afflicted more than 62 million worldwide (WHO, 2020). It has also slowed production to multiple countries across the world (Bachman, 2020). As well as quarantining individuals and/or countries for a minimum of two weeks. It has caused fear across the world for a little more than a year now. Recently, vaccines have been announced; however, this is out of the view of this event study. The purpose of this study is to test the semi-strong form efficient market theory. This will be done by analyzing the risk adjusted rate of return of 10 randomly selected healthcare firms stock prices. This study tests how fast a company’s stock is affected by new information regarding COVID- 19. LITERATURE REVIEW

Market efficiency is generally defined as how fast the market reacts to new information. Eugene Fama (1970) suggested that there are three kinds of market efficiency, strong form, semi- strong form, and weak form. In strong form, the market reacts to all public and private information that no investor can earn an above normal return. This form means that insiders cannot earn an above normal return because the market has reacted to this private information. In practice this makes no sense because insiders have more information than the market does. Semi-strong form efficient means that the market reacts to all public information so that no investor can earn an above normal return. If someone was to invest on the announcement of an event, that person could not earn an above normal return. Tung & Marsden (1998) provided a controlled environment and performed trading behavior tests which resulted in a positive relationship between information quality and market trading profits. In short, supporting the existence of semi-strong form efficiency within markets. Weak form efficient markets are those in which the market reacts to all past information so that no investor can earn an above normal return. If an investor were to see a historical rise in returns per stock, they could not earn that above normal return because the return has already normalized.

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Regarding literature specific to pandemics and their effects on the efficiency of markets, there are few studies to be found. Barker & Bacon (2015) found that the Ebola outbreak of 2014 had a significant negative impact on a sample of airline firms. They also found that the market was efficient in the semi-strong firm, showing declining returns roughly 15 days before the event date. COVID-19 has similar fear amidst it that followed Ebola in 2014. Because COVID-19 is a respiratory illness it is easy to contract it from person to person. This can lead to many working within hospitals becoming infected and crippling part of the healthcare workforce. Another area of the COVID-19 pandemic is the quarantines both mandatory and voluntary. This reduces the nations consumption, which will lower the nations GDP and lower returns across the stock market. These quarantines, also known as lockdowns, are helpful with containment of the virus, it is not so helpful with investment. One thing we see with COVID-19 that we have not seen with many earlier is the increased use of online investment services and online shopping. METHODOLOGY

This study involves 10 healthcare related companies that the COVID-19 pandemic could have impacted. The purpose of this study was to test how fast and how much these firms stock prices were affected by the announcement of the pandemic. The firm’s stock prices were analyzed against the S&P 500 from 180 trading days before March 11, 2020 to 30 trading days after (June 21, 2019 – April 23, 2020). The following hypotheses were proposed in to test both the firm’s stock prices and the semi-strong market efficiency theory on the WHO’s pandemic announcement:

H10: The risk adjusted rate of return of the sample of healthcare firms is not significantly affected by this information on the event date.

H11: The risk adjusted rate or return of the sample of healthcare firms is not significantly negatively affected by this information on the event date.

H20: The risk adjusted rate of return of the sample of healthcare firms is not significantly affected by information during the event period.

H21: The risk adjusted rate of return of the sample of healthcare firms is not significantly negatively affected by information during the event period. Using the standard risk adjusted event study methodology, the stock market’s response will be tested to the event date of March 11, 2020. All the historical data was, S&P 500 and all firm stock prices, were pulled from Yahoo! Finance. This data was the stock prices of the firms and S&P 500 from 180 days before to 30 days after the event date, 30 days before to 30 days after the event date of March 11, 2020 is defined as the event period.

The daily holding period returns of the companies (R) and S&P 500 (Rm) were calculated using the following formulas where “f” is the current day for each firm’s stock price and “i” is the current day for the S&P 500.

퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒 −퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒 R = 푓 푓−1 퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒푓−1

퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒푖−퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒푖−1 Rm = 퐴푑푗푢푠푡푒푑 퐶푙표푠푒 푃푟푖푐푒푖−1

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A regression analysis was then performed on the daily returns for each company against the S&P 500 over the pre-event period, 180 to 31 days before the announcement. This regression analysis yielded the alpha and beta for each company over the pre-event period as shown in Table 1. The risk-adjusted method was used to calculate the normal expected return for each firm over the event period. The formula is as follows:

ER = Alpha + Beta(Rm) Afterwards the excess return (ER) was calculated by taking the actual return (R) and subtracting the previously calculated expected return ER. Average Excess Return (AER) was taken as the average of all the firm’s ER over the event period. N is defined as the number of firms from the sample.

∑ 퐹푖푟푚′푠 퐸푅 표푣푒푟 푡ℎ푒 푒푣푒푛푡 푝푒푟푖표푑 AER = 푁 Daily cumulative excess returns (CAER) were calculated by adding the AER’s over the event period. The graphs of both AER and CAER were plotted for each day over the event period. QUANTITATIVE TESTS & RESULTS

Did the market react to the WHO’s announcement of the COVID-19 pandemic? Was the information within the event period significant? If the information were significant then the AER graph (Exhibit 1) would be significantly different from 0 and the CAER. This was tested using a paired t-test of AER and CAER and it did accept the hypothesis that these firm’s stocks were significantly affected by the announcement of the COVID-19 pandemic. Using the CAER graph (Exhibit 2), the market can be tested for its efficiency to information. The graph reveals only one portion of negative returns that ended at roughly 24 days prior to the announcement date. Afterwards the general trend has been positive returns. Table 1 – Firm Alpha and Beta

Ticker Alpha Beta CVS 0.001093 0.846031 UNH 0.001156 1.161639 MCK 0.000613 0.967867 ABC 0.000607 0.947664 CI 0.001214 1.243417 CAH 0.00103 0.91316 WBA -0.00038 0.777588 ANTM 0.000111 1.240209 JNJ 0.000744 0.703115 CNC 0.001582 1.172555

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Exhibit 1 – AER over the Event Period

Time VS AER 0.05 0.04 0.03 0.02 0.01

0 3 6 9

-9 -6 -3

12 15 18 21 24 27 30

Returns

-12 -27 -24 -21 -18 -15 -0.01 -30 -0.02 -0.03 -0.04 -0.05 Relative Days

Series1

Exhibit 2 – CAER over the Event Period

Time VS CAER 0.2

0.15

0.1

0.05

Cumulative Cumulative Returns 0 -30 -27 -24 -21 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18 21 24 27 30 -0.05 Relative Days

Cumulative AER

CONCLUSION

This study examined the effect of the COVID-19 pandemic announcement on risk-adjusted rate of return on 10 healthcare industries stock prices. Statistical tests reject our hypothesis that the market is not statistically negatively affected by the announcement of the COVID-19 pandemic. Based on the CAER graph, the healthcare industry has had positive returns from before the announcement date. This does support semi-strong form of market efficiency with the increase in return continuing after the event date.

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REFERENCES

Bachman, D. (2020). The Economic Impact of COVID-19 (Novel Coronavirus). Retrieved from Deloitte Insights: ww2.deloitte.com/us/en/insights/economy/covid-19/economic- impact-covid-19.html Barker, L., & Bacon, F. (2015). The Ebola Outbreak: A Test of Market Efficiency. Allied Academies International Conference: Proceedings of the Academy of Accounting & Financial Studies (AAFS), 20(1), 2-6. Fama, E. F. (1970). Efficient Capital Markets: A review of Theory and Empirical Work. Journal of Finance (Wiley-Blackwell), 25(2), 383-417. doi:https://doi- org.proxy.longwood.edu/10.2307/2325486 Tung, Y. A., & Marsden, J. R. (1998). Test of Market Efficiences Using Experimental Electronic Markets. Journal of Business Research, 41(2), 145-154. WHO. (2020). Coronavirus Disease (COVID-19). Retrieved from World Health Organization: www.who.int/emergencies/diseases/novel-coronavirus-2019

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POLITICAL ECONOMY OF THE PANDEMIC: HOW AN EPICENTER MANAGED IT…SO FAR

Jesmin, Rubayat Binghamton University

ABSTRACT Undoubtedly, the COVID-19 pandemic has reimaged many of today’s “taken-for-granted” systems and processes in every sphere of human life – from individual to national to global. In broader senses, these include individualistic lifestyle, public policies especially regarding economic activities, education processes and healthcare systems, and international coordination and cooperation. The United States – one of the most developed and industrialized countries of the world – has become the epicenter of the 2020 coronavirus outbreak. Till to-date, the country continues to top both in terms of the number of positive cases and deaths from COVID-19. At one point, New York City became the ‘city of the dead’ with more than 3,000 deaths per day. Based on secondary information, this paper aims to explore the causal effects of political economy factors in managing the COVID-19 pandemic in New York State. It also focuses on the ‘trickle-down effects’ of state-level policy decisions in a small, rather remote city within the New York State. This chosen city, located in Upstate New York, has not been battered by the pandemic like other parts of the State. Yet, the city has been maintaining and managing all the necessary rules and procedures suggested by the State authorities in line with the relevant federal and global agencies. Consequently, this paper highlights some best practices and lessons learned from the lens of political economy and socioeconomics for the others who are still struggling to manage the spread of the pandemic and restrain its adverse impacts as much as possible. Keywords: Pandemic; COVID-19; Political economy; Socioeconomics; New York City

INTRODUCTION

On 11 March 2020, the World Health Organization (WHO) declared that COVID-19 had the characteristics of a pandemic (WHO, 2000a). Throughout the history, humankind have been battered by pandemics from time-to-time. Some of the deadliest ones recorded include the Plague of Justinian (541-542), the Black Death (1346-1350), the Sixth cholera pandemic (1899-1923), Spanish flu (H1N1; 1918-1920), Asian flu (H2N2; 1957-1958), Hong Kong flu (1968-1969), Swine flu (H1N1; 2009-2010), and COVID-19 (2020-until today). Among these, experts consider the Spanish flu pandemic to be the most severe pandemic in human history. It claimed 100 million lives. Nonetheless, the COVID-19 pandemic probably has the most widespread impacts in terms of social, economic, political, health, and education – to name a few.

The ongoing COVID-19 pandemic has claimed 2.63 million lives as of March 21, 2021 (Centers for Disease Control and Prevention-CDC, www.cdc.gov). This disease set off at the fag-end of 2019 in China and has started to spread throughout the world until today. To contain the spread of this disease, governments around the world have adopted numerous defensive and preventive measures, including restrictions on movements (even lockdown), temporary closing of restaurants, markets, and places of entertainment, and encouraging working from home (except for essential services). Simultaneously, governments have been facilitating various fiscal and monetary supports so to help the populations hit hard by the loss of their livelihoods. This pandemic is still continuing. And, it will be quite some time before one can fully assess the multidimensional but interconnected impacts of this pandemic.

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Meantime, it is worthwhile to highlight some best practices and lessons learned from the lens of political economy for the benefit of the others who are still struggling to manage the spread of the pandemic and restrain its adverse impacts as much as possible.

METHODOLOGY

Within the political economy framework, this paper applies an interdisciplinary lens to understand what has worked (and how) as well as what did not work (and why not). The political economy framework will help to draw upon economics, sociology, and political science in explaining how political institutions, the political environment, and the economic systems as well as smaller social groups and social networks have influenced and being influenced (Weingast and Wittman, 2008) by the COVID- 19 pandemic. The reiteration of lessons learned, so far, from the spread and the management of the pandemic will help to better assess and address these varied underlying, interconnected forces. Consequently, this study employed a qualitative inquiry method to understand how race, gender, socioeconomic level, and other major components have impacted as well as being impacted by the ongoing pandemic. That is, the interdisciplinary qualitative inquiry lens has helped to assess how particular groups are represented in discourses, practices, and social systems amid the pandemic (Cannella and Lincoln, 2015).

The paper is mostly based on secondary sources. Secondary data analysis within a qualitative approach has been a matter of discourse for the concerns regarding potential methodological and ethical problems (Ruggiano & Perry, 2019; Szabo & Strang, 1997). The major concern with secondary data analysis is that such interpretation may not capture the social, cultural, and political realities that are evident at the time of subjective data collection (Mauthner, Parry, & Backett-Milburn, 1998). Still, some scholars (for example, Barnett-Page & Thomas, 2009; Hinds, Vogel, & Clarke-Steffen, 1997; Morrow, Boddy, & Lamb, 2014; Ruggiano & Perry, 2019) argue in favor of this approach on the ground of easy access, coast-effectiveness, reuse of the already collected data, and the possibility of having a different (extended or refined) focus from the original study.

Furthermore, secondary data analysis can be considered “trustworthy’ if it uses broad review questions to guide the study, depends on reliable sources other than bibliographic databases, distinguishes between primary and secondary analyses, and applies well-practiced inductive and interpretive strategies (Barnett-Page & Thomas, 2009; Dixon-Woods et al., 2006; Morrow et al., 2014). Aligned with these views and methods, the personal experience of the researcher is also shared here to highlight how global and/or regional level policy decisions have “trickled down” and helped to limit the spread of the pandemic and its associated adversities.

CONCEPTUAL FRAMEWORK

The political economy framework will help to capture the political behavior in the economy that is shaped by three “I”s: (1) interests (of individuals and groups who can influence policy), (2) ideas (those influence policies), and (3) institutions (that shape and implement policies). Thus, from an interdisciplinary standpoint, political economy focuses on economics, sociology, and political science to understand how economic systems, political institutions, and the environment affect and influence each other; the dynamics within states/regional governance as well as within smaller social groups and social networks because these regimes influence and are influenced by the organization of both social and economic capital; and the relationships between individuals and society as well as between markets and the state. This study also applied the rationales of Nurkse’s (1953) ‘Model of Vicious Circle of Poverty and Economic Development’. Although Nurkse’s model opts to explain macro-level economic

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Within this conceptual framework, this study opted to delve into what worked well (and why) to ‘flatten the curve’ of the number of infections and deaths in the USA, in general, and in New City, in particular. Now, why selecting the United States? Despite income and wealth disparities, the United States is one of the top developed and industrialized countries in the world (Central Intelligence Agency-CIA, 2021; UN, 2020; UNDP, 2020). It accounts for approximately one-fourth of global gross domestic product (GDP), and is the world’s largest economy by nominal GDP (CIA, 2021; UNDP, 2020). The country has maintained high socioeconomic performance over the years and ranked 17th in the Human Development Index in 2020 (UNDP, 2020). That said, only after a few weeks of the worldwide spread of the COVID-19 pandemic, the United States became and has continued to be at the top in terms of confirmed cases and deaths (Figure 1).

Figure 1: COVID-19 situation, updated as of 03/21/2021 from CDC and WHO. Confirmed % of the % of the Country Country Deaths cases total total USA 29,594,892.00 25% USA 538,006.00 20% Brazil 11,950,459.00 10% Brazil 292,752.00 11% India 11,599,130.00 10% Mexico 197,827.00 8% Russia 4,456,869.00 4% India 159,755.00 6% UK 4,291,271.00 4% UK 126,122.00 5% Total World 118,819,904.00 Total World 2,633,079.00

This paper has selected New York City (NYC) as a case study mainly on the basis of the rationales given by Schmitt-Grohé, Teoh, and Uribe (2020): First, NYC is the most populous city in the United States with an estimated 2019 population of 8,336,817 (U.S. Census Bureau, 2020). It also is one of the world’s most populous mega cities (Lankevich 2012). Second, NYC is the most densely populated (28,317 people per square mile), most ethnically diverse, religiously, and culturally varied cities in the United States (Lankevich 2012; www.usa.gov). The City, for instance, has more Jews than Tel Aviv and more Irish than Dublin (Lankevich 2012)! Third, not only in the United States but also across the world, New York State remained the epicenter of the pandemic for months. Until today, it continues to be a topper among all the states and territories in the United States both in terms of confirmed cases and deaths (Figure 2). Fourth, the residents across New York City are subject to the same health policies and regulations - throughout the local, state, and federal levels. Fifth, income per capita in New York City displays significant variation across zip codes. Last, but not least, data across all zip codes in New York City is produced by the same statistical agencies, ensuring reliability and guaranteeing cross- sectional comparability.

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Figure 2: COVID-19 situation in the USA, updated as of 03/21/2021 from CDC and WHO. States Confirmed cases % of the total Deaths % of the total California 3,530,055.00 12% 55,372.00 10% Texas 2,747,693.00 9% 46,478.00 9% Florida 2,011,217.00 7% 33,408.00 6% New York 1,787,677.00 6% 49,158.00 9% Illinois 1,223,083.00 4% 23,379.00 4% Total USA 29,594,892.00 538,006.00

SITUATIONAL ANALYSIS

The virus that started causing infections in Wuhan, China at the end of 2019, did not take much longer to spread globally. At one stage, following the recommendations of the WHO, more than one-third of the world’s population was placed under lockdown. Simultaneously, many countries - including the United States, the United Kingdom, Germany, India, Japan, and China - closed their borders for a certain period of time to contain the spread prompted by international travels. Perse, the COVID-19 pandemic has changed many social, political, economic, environmental, education, and healthcare determinants in almost all the countries and territories in the world.

Overview of the pandemic situation across the United States As the COVID-19 pandemic swept across almost every corner of the world, it has affected the human population in unimaginable, unpredictable ways - from work patterns to commercial supply chains, to the modes of interaction in personal and professional lives. It heightened human suffering in terms of being a victim, a curer, a support service provider, or even a resource provider. That is, the ongoing pandemic prompted unprecedented policy responses, unsettled major aspects of social organization, and economic fallouts. This paper focused on some of such socio-economic-politico aspects of the pandemic in the United States – from a macro perspective to micro as well as individualistic lens.

Soon after the spread of the COVID-19 pandemic, the U.S. has become the global epicenter of this pandemic (Coronavirus Resource Center, 2021). Research, so far, has asserted, particularly where data is available, that both the spread of COVID-19 and its impacts reflect inequalities, structural racism, and other injustices prevalent in societies (Bailey and Moon, 2020). In the United States, the COVID- 19 related activities initially were marked by government gaslighting, inaction, politicization, and xenophobia – reflected in different public policies, particularly in the areas of the public health community and immigration (Adolph et al., 2020; Bailey and Moon, 2020; Tellis, Sood, and Sood, 2020). For example, the research found that, all else equal, states led by Republican governors had been slower to implement five social distancing policies during a critical window of early COVID-19 response (Adolph et al., 2020; Tellis, Sood and Sood, 2020). On the other hand, in many official communications, the then US president dubbed COVID-19 as “Chinese Virus”, labeled it as a “Democratic hoax” and “just the flu” (Franck, 2020; Lipton et al., 2020; Rogers, Jakes, and Swanson 2020; Viala-Gaudefroy, and Lindaman, 2020; Yamey and Gonsalves, 2020). These bigoted rhetoric, politicization, racialization, and other discriminatory dimensions of the COVID-19 pandemic have translated as disjointed responses into people’s lived realities.

The other significant issue that this pandemic’s spread and authorities’ responses unfold is the deep- seated structural inequities, to be precise, structural racism (Bailey and Moon, 2020; Chowkwanyun and Reed, 2020; Lipton et al. 2020; Tellis, Sood, and Sood 2020). The National Institute of Health (NIH) has also acknowledged this by stating that, “Structural racism has resulted in persistent health disparities, poor health status, and premature mortality as demonstrated by the current 107

ASBBS Proceedings of the 28th (Virtual) Conference disproportionate burden of morbidity and mortality from COVID-19” (www.nih.gov). People of marginalized racial/ethnic groups are overrepresented in socially and economically segregated communities (Bailey and Moon, 2020; Bump, 2021). As such, they usually live in areas with substandard and crowded housing conditions and unsafe or limited water supply alongside inadequate various other civic benefits (Bailey and Moon, 2020). They are prone to chronic health conditions, such as diabetes, hypertension, and renal diseases due to the lack of resources accompanied by unhealthy food habits. On the other hand, many essential workers either belong to the marginalized group and/or live within the most frequent proximity to low-wage workers of color (Bump, 2021). These communities are trapped into a vicious cycle, in many cases, of “generational poverty” (Payne, 2013) as shown in Figure 3.

Figure 3: The vicious cycle for the marginalized group

Poor household More children, sick elderly, more dependents

Less and/or unhealthy food; Unsafe water; Low/no income Lack of quality education; Poor

Low productivity; No/low level education & skills

It is, therefore, challenging, if not impossible, for these communities to maintain even the basic preventive safety guidelines such as staying at home and/or self-isolation required against the spread of COVID-19 (Tsai and Wilson, 2020). Additionally, because of the already existent underlying health conditions, they are more vulnerable to COVID-19 (REF). All of these put the marginalized groups at a heightened risk of COVID-19 contamination and fatality. In brief, COVID-19 has not spread over a level playing field across the United States nor other parts of the world. Nonetheless, the inequities in both the spread and the impact of COVID-19 are more evident in societies with embedded structural racism - such as the United States (Bailey and Moon, 2020). Despite data inadequacy by race/ethnicity, research done so far show that Black, Latinx, and Brown Americans are overrepresented among COVID-19 hospitalizations and/or deaths (Dyer, 2020; Kaur, 2020; Laurencin and McClinton, 2020). The recent report of APM Research Lab (2021) revealed that African Americans in the US have died at a rate of 50.3 per 100,000 people, compared with 22.9 for Latinos and 22.7 for Asian Americans, 20.7 for whites. This pattern also reconfirms the underpinned inequality in opportunity and access to education, healthcare, and wealth. On the economic front, the COVID-19 pandemic has affected all businesses - from small saloons to multinational corporations (Thorbecke, 2020). The business entities, regardless of their size, have been forced to change their modus operandi amid a series of partial to full lockdown orders (Thorbecke, 108

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2020). The travel industries, especially airlines and hotels, have faced massive losses leading to full or partial employee lay-offs. On the other hand, government-mandated social distancing measures followed by working from home have resulted in skyrocketing demand for video conferencing software such as Zoom (Thorbecke, 2020). On the other front, closure and/or restrictive opening of shops have boosted online shopping and home delivery services (Thorbecke, 2020). Nevertheless, the impact of the pandemic has also displayed a disproportionate economic burden on people of color (Parker, Igielnik, and Kochhar, 2021). This population has suffered from loss of employment, (or reduction in) income, and access to employer-sponsored health insurance and benefits as well as lack of safety net. Thus, the risks of economic disruption have disproportionately affected people in lower-paid jobs, particularly in the service sector, where many marginalized people are employed.

In a nutshell, the toll of COVID-19 within the United States has been regressive - the poor and marginalized people suffering disproportionately more than the rich and the privileged. Earlier the Human Development Report 2020 anticipated that Black, African American, Hispanic, and Latino people in the USA to be nearly three times as likely to test positive for Covid-19 and five times as likely to be hospitalized as White people (UNDP, 2020). The recent findings, mentioned throughout this paper, are almost in line with this anticipation.

The political economy of COVID-19 in the New York State and New York City New York State had its first case of novel coronavirus on March 1, 2020 (Hasan and Narasimhan, 2020). The second confirmed case was on March 2 and was thought to be the first caused by community spread (Hasan and Narasimhan, 2020). As of March 19, 2020, New York City had 2,469 confirmed cases, and the state had 4,152 (Hasan and Narasimhan, 2020). At the close of March 2020, New York City became the epicenter of the pandemic within the United States as well as in the entire world (Coronavirus Resource Center, 2021; Mckinley, 2020). No sooner, the once-lively streets of New York City became empty, while hospitals started vibrating with the swooshes, beeps, and footsteps of patients and health workers.

New York City is one of the places in the United States that has a highly diverse population of 8.3 million people spread across five boroughs (Wadhera et al., 2020; U.S. Census Bureau, 2020). In this context, racial/ethnic minorities, non-citizens, and those without health insurance have been at increased risk as they are unable to and/or discouraged to avail themselves appropriate medical care (Brondolo et al., 2008; Derose et al., 2007). Additionally, low-income households with high rent burdens cannot afford to be out of work for long and are, thus, forced to leave their homes for sheer earning and survival purposes. This, in turn, puts them at greater risk of infection. Thus, communities with particular demographic and socioeconomic characteristics, unintentionally and being left with no choice, may put both individuals and neighborhoods at greater health risks during this pandemic.

Earlier research has found inequality between wealthy and poor neighborhoods in New York City in terms of mortality from HIV/AIDS, diabetes, and liver disease as well as wide disparities in infant mortality and increased risk of low birth-weight infants (Freeman et al., 2011; Grandy and Ramirez, 2008; Haile, Padilla and Parker, 2011; Karpati et al., 2006; Sohler et al., 2003). The discussion below reaffirms this larger narrative regarding socio-economic inequalities and health in New York City.

Research during the COVID-19 pandemic has indicated that wealthier, whiter neighborhoods have disproportionately greater access to testing per capita (Borjas, 2020; Buchanan et al., 2020; Cordes and Castro, 2020; Hicks, 2020; Schmitt-Grohé, Teoh, and Uribe, 2020; Thompson et al., 2020). In contrast, low-income communities of color, particularly in western Queens and the South Bronx, bear heavier impacts of the pandemic (Afridi and Block 2020; Borjas, 2020; Cordes and Castro, 2020; Schmitt- Grohé, Teoh, and Uribe, 2020; Thompson et al., 2020). These areas are marked by food-insecure, rent- 109

ASBBS Proceedings of the 28th (Virtual) Conference burdened, crowded households (Institute for Children 2017; Schmitt-Grohé, Teoh, and Uribe, 2020). Also, the concentration of service workers and low-waged workers is higher in these localities.

A study by Arthur et al. (2017) showed that places that are near one another may experience similar calamities or challenges because of the proximity as well as probable enhanced social and cultural ties/interactions. This pandemic has exhibited such clustering patterns (Cordes and Castro, 2020). Given the primary transmission of coronavirus by respiratory droplets (CDC, 2020), people relying on public transportation (such as subways and buses) to commute found to be at increased risk compared to people using their own transportation (Cordes and Castro, 2020). Additionally, Thompson et al. (2020) found out that, hospitalization rate and death rate, by borough, had been consistently highest in the Bronx and lowest in Manhattan.

The nexus of economic disadvantage with racial inequalities, therefore, have contributed to the increasing vulnerability of the marginalized populations in New York City in the face of this pandemic. Black/African Americans, for instance, have been found to have higher COVID-19 infection and mortality rates that can be underpinned by higher housing density, a higher use of public transportation, higher burden of co-morbidities, and lack of the option to be out of work and/or able to social distance (Cordes and Castro, 2020; Yancy, 2020).

The researcher’s experience about this pandemic while living in a small, remote city in Upstate New York supports the fact that conformity of policies throughout different tiers of political entities can help to tackle a disease outbreak rather effectively. During the surge of the COVID-19 outbreak in March 2020, this city followed the State’s guidelines: all the educational institutions very quickly adopted to online mechanism instead of in-person modality (some came back to hybrid mode depending on the situation), readjustment in the academic calendar, people started working from home, except for the essential workers, all the places of entertainments were closed, focus on public awareness on testing, strictly maintaining health and hygiene guidelines (e.g., use of mask and social distancing), regular contact tracing in collaboration with the county health department, maintaining travel restrictions in/outside the county, and so on.

DISCUSSION

The above situation analyses reiterate that a pandemic has significant economic impacts in terms of employment and income loss as well as of loss in productivity due to mental health challenges experienced during this difficult time. Also, a pandemic can intensify pressure on healthcare systems by raising the demand for certain treatments requiring certain expertise and resources. People with acute COVID-19 symptoms, for instance, are in need of ventilators and beds in intensive care. This may result in a short supply of resources for others who need this equipment. There may also be resource deviation. Companies such as General Motors and Ford Motor Co., for example, undertook a historic redeployment of their factories and workers and started producing ventilators to fight against the USA’s ventilator shortage (Albergotti and Siddiqui, 2020). Organizations, big or small, have adopted changed practices (e.g., wearing masks, hand sanitization, and reduced hours to allow for deep-cleanings of the stores) in their everyday businesses to navigate the ‘new normal’ (Thorbecke, 2020). All these have cost implications.

Furthermore, research done so far has highlighted the ‘ism’matic (e.g., racialism, classism, ageism, and sexism) aspects of this pandemic. So far, data from different sources showed that the highest rates of cases – infected, hospitalized, and deaths - were concentrated in communities of color, low-paid workers, high-poverty areas, and among persons aged ≥75 years or with underlying conditions (Bailey et al., 2020; Bialek et al., 2020; Wadhera et al., 2020; Webb Hooper, Nápoles, and Pérez-Stable, 2020).

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Alike many places, this is evident in New York City (see, for example, Afridi and Block 2020; Bialek et al., 2020; Borjas, 2020; Cordes and Castro, 2020; Schmitt-Grohé, Teoh, and Uribe, 2020; Thompson et al., 2020; Wadhera et al., 2020). For instance, the Bronx, which has the highest proportion of racial/ethnic minorities, the most persons living in poverty, and the lowest levels of educational attainment had higher rates of COVID-19 related hospitalization and death than the other 4 boroughs. These trends indicate that long-term policies, practices, attitudes, and cultural messages fall short in alleviating inequities, eliminating racism, and establishing social justice.

Simultaneously, the sufferings and/or loss of lives coupled with a loss of employment and income have taken a toll on peoples’ mental health (Jones, 2021; Parker, Igielnik, and Kochhar, 2021). In many cases, one or both parents are strained form juggling between work and childcare (including remote learning) during the pandemic (Jones, 2021). The symptoms of anxiety and depression, thoughts of suicide, and substance use have spiked over the year (Jones, 2021).

Based on the above discussion, some lessons learned are as follow: • Politicization of the pandemic led to gaslighting and inaction at the federal level and leaving the State to emphasize preventive measures. In the absence of fast containment and lack of testing, surveillance, and protective measures (e.g., personal protective equipment -PPE - especially for health and other essential workers) the authorities had to emphasize mitigation measures of physical distancing (e.g., stay-at-home and work-from-home) and personal preventive measures (e.g., using of masks and handwashing). • Racial aspect of the pandemic made policymakers revisit the existing policy recipes. The research found out that clusters with less testing and low proportion positive tests had higher income, education, and white population, whereas clusters with high testing rates and high proportion positive tests were disproportionately black and those without health insurance. • Economic impact has been disproportionate between the small businesses and big corporations, between the service sector and manufacturing. So, there should be plans, for example, for the inevitable loss of employees because of exposures and closures of entities, for childcare-related support systems, and for stock and supply losses because of the closure of factories. • Collaboration between public health and health care systems as well as other private sector businesses is vital. For example, in the closed NYC public schools, the city opened enrichment centers where the children of first responders could go during the day, so their parents would still be able to do their jobs. • In the face of a pandemic, the global network matters. In the same way, clinicians in NYC have learned from experiences in China, Italy, and Seattle. The pandemic, therefore, has exposed and compounded structural inequalities at local to macro levels. Simultaneously, emergency situations must be the main priority while addressing public health issues. This pandemic has once again unfolded the differences in health outcomes among racial and ethnic groups. This is due to long-term, deep-seated structural racism which exists from centuries of discriminatory policies and practices across institutions and prevents communities of color from accessing crucial resources (e.g., health care and housing) and opportunities (e.g., education and employment). To better address this situation, it requires to have considerations for exploring both the ruptures and continuities in economic and political realms. In the future, the focus should be on both reviving and reimagining the socio-economic-politico structures and systems.

CONCLUDING THOUGHTS

Throughout human history, pandemics have had long shadows of socio-economic-politico repercussions: shaping politics, worsened tensions among economic classes, and subverting the social

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The risks from the COVID-19 pandemic still are high as the recent mutations of the virus could pose additional challenges. Prompt and, in many cases, extensive state intervention is required to tackle this health emergency and the associated economic fallout. The post-corona world, thus, offers a window of opportunity to revisit some of the precepts and to reshape the policies that have been left on autopilot in a manner that reconstructs economic life around more sustainable and equitable principles – establishing social justice.

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literally-breaking-inside-as-covid-19-leaves-millions-jobless-and-struggling-the-mental- health-toll-rises/ Karpati, Adam M., Mary T. Bassett, and Colin McCord (2006). “Neighbourhood mortality inequalities in New York City, 1989-1991 and 1999-2001.” Journal of Epidemiology and Community Health, 60 (12), 1060–1064. DOI: 10.1136/jech.2006.047100. Kaur, Harmeet (2020). “The coronavirus pandemic is hitting black and brown Americans especially hard on all fronts.” CNN Kochhar, Rakesh (2021). “Hispanic women, immigrants, young adults, those with less education hit hardest by COVID-19 job losses.” URL: https://www.pewresearch.org/fact-tank/2020/06/09/ hispanic-women-immigrants-young-adults-those-with-less-education-hit-hardest-by-covid- 19-job-losses/ Lankevich, George (2012). New York City. URL: https//www.britannica./place/New-York-City/ Laurencin, Cato T, and Aneesah McClinton (2020). “The COVID-19 Pandemic: A Call to Action to Identify and Address Racial and Ethnic Disparities.” Journal of Racial and Ethnic Health Disparities, 7 (3), 398-402. DOI: 10.1007/s40615-020-00756-0 Lipton, Eric, David E Sanger, Maggie Haberman, Michael D. Shear, Mark Mazzetti, and Julian E Barnes (2020). “He could have seen what was coming: Behind Trump’s failure on the virus.” The New York Times. Mauthner, Natasha S., Odette Parry, and Kathryn Backett-Milburn (1998). “The data are out there, or are they? Implications for archiving and revisiting qualitative data.” Sociology, 32 (4), 733– 745. URL: https://doi.org/10.1177/0038038598032004006 McKinley, Jesse (2020). “New York City Region is Now an Epicenter of the Coronavirus Pandemic.” The New York Times. URL: https://www.nytimes.com/2020/03/22/nyregion/Coronavirus-new- York-epicenter.html Morrow, Virginia, Janet Boddy, and Rowena Lamb (2014). “The Ethics of Secondary Data Analysis: Learning from the Experience of Sharing Qualitative Data from Young People and their Families in an International Study of Childhood Poverty.” URL: http://sro.sussex.ac.uk/id/eprint/49123/ Parker, Kim, Ruth Igielnik, and Rakesh Kochhar (2021). “Unemployed Americans are feeling the emotional strain of job loss; most have considered changing occupations”. URL: https://www.pewresearch.org/fact-tank/2021/02/10/unemployed-americans-are-feeling-the- emotional-strain-of-job-loss-most-have-considered-changing-occupations/ Payne, Ruby K. (2013). A Framework for Understanding Poverty: A cognitive approach. Highlands, Texas: Aha! Process, Inc. Rogers, Katie, Lara Jakes, and Ana Swanson (2020). “Trump Defends Using ‘Chinese Virus’ Label, Ignoring Growing Criticism.” The New York Times. Ruggiano, Nicole and Tam E. Perry (2019). “Conducting secondary analysis of qualitative data: Should we, can we, and how?” Qualitative Social Work, 18 (1), 81-97. DOI: 10.1177/1473325017700701 Schmitt-Grohé, Stephanie, Ken Teoh, and Martín Uribe (2020). “COVID-19: Testing Inequality In New York City.” National Bureau of Economic Research (NBER) Working Paper 27019. URL: http://www.nber.org/papers/w27019 Sohler, Nancy L., Peter S. Arno, Chee Jen Chang, Jing Fang, Clyde Schechter (2003). “Income inequality and infant mortality in New York City.” Journal of Urban Health, 80 (4), 650– 657. DOI: http://dx.doi.org.ezp-prod1.hul.harvard.edu/10.1093/jurban/jtg071. Szabo, Vivian and Vicki R. Strang (1997). “Secondary analysis of qualitative data.” Advances in Nursing Science 20 (2), 66–74. Tellis, Gerard J, Nitish Sood, and Ashish Sood (2020). “Why Did US Governors Delay Lockdowns Against COVID-19? Medical Science vs Learning, Cascades, and Political Polarization.” USC Marshall School of Business Research Paper. DOI: https://ssrn.com/abstract=3575004 or http://dx.doi.org/10.2139/ssrn.3575004 114

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Thompson, Corinne N. et al (2020). “COVID-19 Outbreak: New York City, February 29 - June 1, 2020.” Morbidity and Mortality Weekly Report, 69 (46), pp. 1725–1729. DOI: 10.15585/mmwr.mm6946a2 Thorbecke, Catherine (2020). “How businesses are adapting to a coronavirus pandemic economy.” ABC News. Tsai, Jack and Michal Wilson (2020). “COVID-19: A Potential Public Health Problem for Homeless Populations.” The Lancet Public Health, 5 (4), 186–e187. United Nations - UN (2020). World Economic Situation and Prospects. New York: UN. UNDP – United Nations Development Programme (2020). Human Development Report 2020. New York: UNDP. U.S. Census Bureau (2020). “QuickFacts: New York City, New York.” URL: https://www.census.gov/quickfacts/newyorkcitynewyork. Viala-Gaudefroy, Jerome and Dana Lindaman (2020). “Donald Trump’s ‘Chinese virus’: the politics of naming.” The Conversation. Wadhera, Rishi K. et al. (2020). “Variation in COVID-19 Hospitalizations and Deaths Across New York City Boroughs.” JAMA, 323 (21), 2192-2195. DOI:10.1001/jama.2020.7197 Webb Hooper, Nápoles Monica, Anna Maria, and Eliseo J. Pérez-Stable (2020). “COVID-19 and Racial/Ethnic Disparities.” JAMA, 323 (24), 2466-2467. DOI: 10.1001/jama.2020.8598 Weingast, Barry R. and Donald Wittman, eds, (2008). The Oxford Handbook of Political Economy. Oxford, New York: Oxford University Press. Yamey, Gavin and Gregg Gonsalves (2020). “Donald Trump: a political determinant of COVID-19.” BMJ, 369. DOI: https://doi.org/10.1136/bmj.m1643 Yancy, Clyde W. (2020). “COVID-19 and African Americans.” JAMA, 323 (19), 1891-1892. DOI: 10.1001/jama.2020.6548.

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UNDERSTANDING THE STATE AND THE ROLE OF COOPERATIVES IN SOUTH AFRICA: A PROFILING APPROACH Kalitanyi, Vivence University of Johannesburg ABSTRACT

A study was conducted in the Gauteng Province - South Africa- to profile the formal and informal SMMEs, as well as the cooperatives. The current study analyses and presents the findings about the state and the role of cooperatives in the province. A brief overview of the SMMEs in South Africa has been provided, while the history of the cooperatives has been unveiled. The study adopted a descriptive approach as a design, while data collection was done through interviews with the use of the questionnaire. Findings reveal that SMMEs lack government support in general, while cooperatives suffer a number of challenges including lack of start-up and growth strategies in particular. The true profile of the cooperatives has been exposed through a number of variables such as gender, source of income, location of the business, success rates among others. The study ends with recommendations geared towards government interventions and necessary training to up the required skills. Key words: cooperatives, Gauteng Province, SMMEs, economic development.

INTRODUCTION: GAUTENG PROVINCE

The Gauteng Province is the smallest, most populous with highest fiscal revenue in the country especially due to being a host of the two main Metropolis (Johannesburg and Pretoria). Gauteng Province is the main gateway for business to Africa in general and to South Africa in particular, and contributes 38% of South Africa’s GDP, 60% of its fiscal revenue (Stats South Africa, 2016). In this process of contributing to the national economy, the private sector of the province plays a significant impact. This sector produces goods and services for mainly local consumption and some for export purpose. Within the private sector however, cooperatives, especially in the previously disadvantaged rural areas, continue to be a relevant player towards the economy of the province. Unfortunately, there seems to be a confusion of the real state of the SMMEs in general and that of the cooperatives in particular. In an attempt to respond to this challenge, the Province established the Gauteng SMME Policy Framework (2010-2014) and the Gauteng SMME Development Strategy (2011). The aim of the Gauteng SMME Policy Framework is to mobilize the relevant stakeholders in the economy in order to create wealth and reduce the unemployment rate in the province. On the other side, the role of the Gauteng SMME Development of Strategy is “to provide a set of action- oriented, measurable and strategically focused interventions ensuring the achievement of the province’s long-term vision and policy aim for the SMME sector and respond to their major challenges and priorities for the SMME development in the province”. The baseline study (2016) focused on profiling the SMMEs and their analysis in order to understand whether the provincial economic development policies and strategies were

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ASBBS Proceedings of the 28th (Virtual) Conference aligned to promote this growth and make recommendations concerning the needs for strategic orientation. This study focuses on cooperatives and outlines their current status in South Africa in general and in the province in particular to report on the role they are playing in the provincial economy. The next section of the article discusses the SMMEs in informal economy, followed by the methodology used to carry out the study, before discussing the findings. The article ends with the conclusion and recommendations. LITERATURE REVIEW: INFORMAL ECONOMIES Brief background of SMMEs history in South Africa Due to a plethora of legislation aiming at suppressing any meaningful economic development among black people, very few formal black businesses were established during the apartheid regime (Mahambehlala, 2019). This problem was exacerbated by the fact that these oppressive legislations were prohibiting black people to own land of their own and freely traveling, which could help in expanding these businesses. Boddy-Evans (2018) ascertains that the Land Act of 1913 legally prohibits any black South African to own or rent land outside the designated areas. These designated areas were rural, underdeveloped and without infrastructure. As a result, black small businesses suffered lack of space to operate in to ensure long-term financial sustainability, though they were the mainstay of financial income for the vast majority of the black people in South Africa. Subsequent to that, a number of informal businesses in a form of SPAZA shops emerged in numbers. Spaza shops are defined as an informal convenience shop business in South Africa, usually run from home. They serve the purpose of supplementing the household income of the owners, selling everyday small household items. A proper description of these businesses is that they are mainly survivalist, with very low turnover and profit margin. Against the above backdrop, the newly established government in 1994 identified the informal sector as a strategic growth area to be developed for employment creation purpose. Ramukumba (2014) appends with the above government move, and articulates that SMME’s role in poverty alleviation is extremely important. To cement the above government’s position on SMMEs, South African government established the Ministry of Small Business Development in 2014, with the aim of placing the economy and job creation at the center stage and with a vision of unblocking and facilitating the achievement of inclusive economic growth and sustainable employment, particularly for women, youth and people with disabilities. Minister Zulu (2014) articulates further, “a mind shift from a nation of job seekers to a nation of job creators in needed”. From a broader perspective, Nieman (2006) highlights the following as the main reasons of importance of SMMEs: • Ability to create and provide employment • Creation of competitive markets • SMMEs adapt quicker to a changing economic environment • Use of local-labour and resources, in other words, contribute to the local economy • Provision of opportunities for young and aspiring entrepreneurs and those who are unemployed, under-employed or retrenched.

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There are enormous challenges emanating from these informal businesses’ owners: Currently in South Africa, small businesses belonging to South African nationals suffer another setback of competition from foreign-owned SMEs. Charman, Petersen and Piper (2012) cite an example of Delft (One of the townships in Cape Town); foreign traders over time displaced the local traders. In late 2010, this area counted 30 Spaza shops. South African nationals owned 17 (57%), while 13 (43%), were owned by foreign nationals. However, Business Tech Survey (2014) reports a difference reality reflecting a shift in the above statistics, whereby in July 2012, there was a decrease of 22% in the total number of Spaza businesses operating in the Delft area (dropping from 30 to 23), but with a 31% growth in foreign owned Spaza (from 13 to 18). Many foreign-owned shops had chosen to position themselves to compete directly against those established Spaza owned by South African nationals (Business tech Survey, 2014). Besides the challenge of completion, Charman, Petersen and Piper (2012) have highlighted further challenges: • Lack of business management skills • Insufficient turnover • Lack of long-term vision for the business • However, a point to highlight here is a distinction between white-owned SMMEs and black- owned SMMEs. As pointed out by the Bureau for Economic Research (2016), most of the small, micro and medium enterprises that operates in the formal sector are white-owned ones, while those owned by blacks are the survivalist ones and operating in informal sector. On the African continent, particularly in SADC and East Africa, we briefly note the following of SMMEs:

In Malawi, Kamuzu Banda - President of the Republic of Malawi 1966-1994 - built a market in Lilongwe for the informal sector to sell their products to tourists. He recognised the importance of the informal market and created a market linkage intervention. In Dar-es-Salaam, Tanzania, the informal market is lined up in Soweto Road. These businesses offer construction, carpentry, food services and more, and are open to buyers and not harassed by authorities. This is the Jua kali informal sector which has made a huge contribution to the Tanzanian economy. In Uganda, the informal sector businesses line the street from Entebbe airport to Kampala and these sell foods to foot traffic, vegetables, curios and so forth. These businesses open from 08:00 and close past midnight. These businesses are thriving and vibrant! Source: Bbenkele, In Zambia 2 016.the Soweto market exists where the informal sector sells products from water to the most expensive boerewors from South Africa to spare parts for cars. This is a As pointed out by Mahambehlala (2019), in South Africa, the government has passed a number of policiesplace where and peoplelegislations go for in anything an attempt they need.to support the growth and prosperity of the SMMEs: • The National Small Business Act of 1996 • Cooperatives Act No 6 of 2013

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In similar veins, Ramukumba (2014) lists the following as the main challenges of SMMEs in South Africa: • Lack of managerial skills • Inability to access finance and obtaining credit • Access to markets and developing relationships with customers • Appropriate technology and low production capacity • A quality product • Support for the role that they play in the economy • Access to markets • Poor networks • The Financial Advisory and Intermediary Services Act (No 37 of 2002) • The South African Micro-Finance Apex Fund (SAMAF) • Small Enterprise Finance Agency (Sefa) • Companies Act • Industrial Development Cooperation Act • Small Enterprise Development Agency (SEDA) • The Municipal Bylaws For the purpose of this article, we mainly focus on cooperatives by discussing their current state and their contribution towards economic development of the Gauteng Province of South Africa. COOPERATIVES Cooperatives Act No 6 of 2013 In South Africa, it requires a minimum of five or more people to register a cooperative (RSA, 2013). This act allowed the establishment of: • A primary Cooperative, which aimed at providing employment and services to enhance community development • A secondary Cooperative, which is formed by two or more primary cooperatives to provide sectorial services • A tertiary Cooperative, which is formed by multi-sectorial cooperatives whose members are secondary cooperatives, and which is aimed at policy advocacy with government and the private sector • Worker Cooperatives consist of primary cooperatives in pursuit of the collective objectives of labour with regard to self-managed enterprises. To clarify further the above hierarchy in cooperatives, Godfrey and Oelofse (2017) articulate that, a group of cooperatives (primary or worker) can tie up together to form secondary or tertiary cooperatives, with a purpose of job creation as they provide other services even if they are not related to the core business of the primary cooperatives. The figure below shows the different levels of cooperatives in South Africa.

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Figure 1: Levels of cooperatives in South Africa.

Tertiary coops

Secondary coops

Source: Muswema Primaryet al. 2018. coops

Tertiary cooperatives are at the pick of the pyramid and provide services to both primary and secondary cooperatives, such as medical insurance, savings and credit, or advocacy (The dti, 2009). The above cooperatives Act was calling for the establishment of a single National Apex Cooperative to motivate the government and private sector to act on policy recommendations that could support and grow the cooperatives. The National Apex Body could be formed by a minimum of three operational tertiary cooperatives at national level, and a minimum of five operational multi-sectorial cooperatives at the provincial or district or local level. It is also envisaged that a Cooperatives Development Agency and Tribunal that would be established in the financial period of 2015/2016 would do the administration and oversight of cooperatives. The businesses in a form of cooperatives might have started due to lack of jobs. In the view of Bbenkele (2016), 31% of cooperatives opened due to the opportunity pursuance, which compares very well with other types of businesses. What is the current state of cooperatives in South Africa? Cooperatives in their current form have gone through a number of stages: • Before 1994, they were part of the national department of agriculture (The dti, 2009). • As a result of a consultative process, the cooperatives’ mandate was transferred to the department of trade and industry (The dti) in 1997, and this was underpinned by the desire to support other forms of cooperatives besides the agricultural ones (The dti, 2004; Okem, 2016). • In 2014, the responsibility of SMMEs and cooperatives development was transferred to the Department of Small Business Development (DSBD) (Balkaran, 2017). In South Africa, responsible government departments (at national, provincial and local levels), provide support to the cooperatives. Financial support through cooperative incentive scheme (CIS) is one of these supports (Okem, 2016). The scheme was initially operating under The dti and was providing grants at 90:10 of up to R300 000 for cooperatives. In 2014, the scheme’s affairs were moved into the DSBD and the grant formula of 90:10 was amended to 100% grant of R350 000. By the year 2015, the number of new registration of all types of cooperatives had reached 107 266 compared to just 4 652 in the year 2005. This exponential growth is attributed to a number of factors, such as wider accessibility of citizens to this “successful” model of business (Schoeman, 2006). Other factors include:

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• Enactment of the 2005 Cooperative Act (RSA, 2005) • Policy in terms of Cooperative Development Policy of 2004 (The dti, 2012) • Broad-Based Black Economic Empowerment (BBBEE) • Access to various grants i.e. the Empowerment Investment Grant (The dti, 2009; Godfrey et al, 2017). Despite the enormous challenges such as high mortality rates, limited support from the government, Cooperatives can contribute to job creation as they are in proximity with the people (The Dti, 2012, 2013). A study by Muswema, Okem, Von Blottnitz and Oelfse (2018) reveals that the mortality rates of cooperatives in all sectors is very high with only 12% of them survive. In a specific sector of waste management, this survival rate of the Cooperatives is even lower at 8.1%. Challenges of cooperatives in South Africa The baseline study of 2016 highlights the following two as the main challenges faced by the cooperatives in South Africa: a. Poor support from national government and b. Lack of understanding of the cooperative business model amongst members. Poor support from national government • Lack of statistics on the social and economic impact of the cooperative sector • Poor coordination between the different government spheres on their roles and lack of clarity • Limited and unfocused/uncoordinated support for cooperatives • Limited understanding by development funding institutions on the cooperative business model and what support it requires • Poor accessibility to registration at province and local levels, leading to delays (i.e. delays and red tape so swap out inactive members) • Limited understanding of the value of (community-based- enterprise) and how the cooperative model works • Red tape and administrative requirements which discourage informal groups (i.e. stockvels) from registering as cooperatives • Poor access to fiancé because development finance institutions do not understand the cooperatives business model (i.e. the sharing of surpluses). • Limited access to appropriate technologies for their businesses to improve their outputs (scales, bailers, compactors). • Lack of business premises, with cooperatives operating from their homes rather than a business or commercial address. Lack of understanding of the cooperative business model amongst members. • Poor business and management skills among members, since the unemployed and low skilled individuals without prior business experience start most cooperatives. Furthermore, most of them are located in impoverished areas. The cooperative members lack sector-specific training, business skills, fiscal management, and information communication and technology (ICT) computer skills (which are integral to taking advantage of opportunities offered by the fourth industrial revolution (4IR) discussed later) and marketing. • Poor financial trust between members, no shared vision and strong social cohesion, no shared approach. 121

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• Poor and sometimes undemocratic decision making, boards failing to communicate with members resulting in unnecessary tensions. • Limited cooperation between different cooperatives resulting in isolation, missed opportunities to collaborate and learn from each other. • Strong and overriding individual interests, greed and moving away from servicing the collective interest. • Poor self-reliance, there is a need for support in the early stages but the cooperatives need to work towards self-sufficiency. • Poor compliance with legislation, for instance, less than 1% submit financial reports.

METHODOLOGY A team of researchers who met to discuss the way to carry out the study collected descriptive data. The data was used to contextualize the study with the purpose of profiling the cooperatives in the Gauteng province. Sampling Sampling was done by identifying the total number of both SMMEs and cooperatives operating in the province. Out of a total number of 1 053 818 SMMEs, a sample of 1000 SMMEs and cooperatives, composed of both formal and informal was decided upon. Five municipalities; West Rand, Sedibeng, Metsweding, City of Johannesburg, Tshwane (Pretoria) and Ekurhuleni provided information. Officials from the economic development cluster of these municipalities, provided information on how to get hold of the interviewees, which was to book an appointment and meet them at their workplaces. The sampling technique used was purposeful or judgmental. Questionnaire design Members, who met to discuss the design of the study, drafted the questionnaire. To ensure the content validity of the draft questionnaire, it was sent to the provincial department of economic development to be examined for inclusion of all the necessary information. A suggestion from the Gauteng Department of Economic Development (GDED) was to mostly use closed questions to reduce the duration of the interview, this meant that respondents were denied the opportunity to express themselves on why certain things happened in this or that way. Data collection Data collection was done through face-to-face interviews. This method was preferred as interviewees could pose questions for clarifications so that difficult questions could be handled. The study used experienced interviewers who worked long hours as they had to check the completeness of the filled questionnaires. Both teams, researchers and field- workers for ensuring the capturing of the correct information did data capturing. Data processing and analysis Once the data has been collected, it was handed to STRATKON for capturing and producing statistics for analysis. The analysis of the data was done by Under Hill Business Solutions, and with the use of SPSSX22, data was first cleaned to ensure its integrity.

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RESULTS PRESENTATION AND ANALYSIS Table 1 below provides data on survival rates of cooperatives across all nine provinces of South Africa, with Northern Cape, Eastern Cape, Western Cape and Free State reporting the highest mortality rates compare to the national level of 88%. Mortality rate of Kwa-Zulu Natal and Mpumalanga reported a mortality rate similar to the national average of 88%. Kwa-Zulu Natal province has had the highest number of registered cooperatives (in fact, it had the highest for both registered and surviving) (Mswema et al, 2018). Table 1: Comparative analysis of registered cooperatives in CIPC and The dti Baseline study, mortality and survival rate (The dti, 2012). # of # of # of dead Survival Mortality registered surviving coops rate rate coops coops % % National Picture 22 619 2 644 19 975 12 88 Northern Cape 798 20 778 3 98 Eastern Cape No data 287 3 957 7 93 Western Cape No data 69 934 7 93 Free State 900 71 829 8 92 Kwa-Zulu Natal 8 697 1 044 7 653 12 88 Mpumalanga 1 496 187 1 309 13 88 North West 1 257 167 1 090 13 87 Gauteng 2 366 394 1 971 17 83 Limpopo 1 879 405 1 474 22 78 Source: Muswema, 2018. From the table above, it is noted that a similar high mortality rate is experienced across all the provinces of the country. Table 2 below reflects the state of cooperatives across various industries.

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Table 2: Sector analysis of cooperatives (The dti, 2012). Sector/Industry CIPC 2009 The dti Survival # of dead Mortality Baseline rate coops rate (%) study Trading 2 708 47 2 2 661 98.30 Transport 856 50 6 806 94.20 Multipurpose 3 160 187 6 2 973 94.10 Recycling& waste 85 7 8 78 91.80 management Services 4 209 357 9 3 852 91.50 Consumer 128 11 9 117 91.40 Food and agri 6 086 671 11 5 415 98.00 Manufacturing 1 093 137 13 956 87.50 Mining 78 12 15 66 84.60 Financial/credit 233 36 16 197 84.50 services Construction 1 280 202 16 1 078 84.20 Textiles 1 247 272 22 975 78.20 Home industry 334 83 25 251 75.10 (baking) Other 328 89 27 239 72.90 Social 311 90 29 221 71.10 Burial 65 19 29 46 70.80 Arts and crafts 340 103 30 237 69.70 Housing 78 25 32 53 67.90 Source: Muswema, 2018. Figure 2: Age distribution in the cooperatives

For those who are familiar with the cooperatives, the findings in the table above about the age distribution in the running the cooperatives are not a surprise. The people aged from 35 and above run a big majority (84%) of the cooperatives. This however raises a concern of why

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Form the figure 3 above, we read that 63% of cooperatives members are females while 37% of them are men. Figure 4: Sources of income to finance the cooperatives

There are various sources of income in running the cooperatives: figure above reflects sources from other businesses, pension (which explains the high involvement of elder people) and investments. However, the baseline study highlights other sources (27%) such as government grants, spouses, other businesses and pension (16%). Figure 5: Persons operating the business

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Figure 5

Figure 5 above reflects a positive picture of collaboration in business, where 78% of people who run a cooperative work in a team. Figure 6: Where cooperatives operate from

Table above indicate that 56% of the cooperatives run their businesses from business parks while 31% operate from home. However, this is mostly the case in the start-up of the business. It is also important to note that no single cooperative operated from shopping mall.

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Figure 7: Reasons for opening business for cooperatives and other businesses

Figure 7 above reflects an interesting picture, where 40% of respondents started the cooperatives because they were unemployed, with 30% conforming that they entered the business because they saw opportunity. In a country where unemployment is high (29.1% last quarter of 2019), such as South Africa, it looks encouraging that some people decide to go for entrepreneurship, while others can still notice opportunities in the environment. Figure 8: Cooperatives compared to all sectors

The figure above reflects various problems faced by SMMEs in general. However, on cooperatives side, the most pronounced issue is funding. This is due to the fact that cooperatives have not been well supported previously in terms with the institutional frameworks and programmes oriented to cooperatives. The good news however, is that currently; the GED together with other government agencies are recognizing these businesses as potential engines of growth. With regard to the success of the cooperatives in the table below, 63% reported a relative success, which is in line with the fact that the entire informal sector is generally struggling. The figure below depicts this. 127

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Figure 9: Cooperatives’ success rate

Like many other SMMEs in the country, cooperatives are also struggling at 82% as reflected on the above figure. Given the role of cooperatives in the economic development, we recommend that their specific challenges be identified and addressed as a matter of urgency. Once this is addressed, it is hoped that this will constitute a motivation for other people to enter the business. Figure 10: Registration of the cooperatives

From the figure above, it is reflected that only 14% of the cooperatives are registered. However, during the interviews, it was observed that some were still in the process of registering. It is recommended that provincial government could make this process as smooth as possible in order to encourage these business owners and many more to venture in them. Banking practice Eighty-four percent of the cooperatives use dedicated business bank accounts. It is assumed that this positive attitude results from the progressive conditions that the members have to comply with in the establishment of cooperatives. By using bank accounts, cooperatives are making a meaningful contribution to the economic growth of the country.

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CONCLUSION AND RECOMMENDATIONS In this profiling study, various observations, recommendations, areas for further research as well as points that need further thoughts have been made throughout the study. The methodology adopted ensured the integrity of the description of the cooperatives. The study provided the statistics of the cooperatives in all the provinces, in terms of the failure and survival rates in various provinces of the country. Furthermore, the various industries within which cooperatives operate have been highlighted, together with the challenges faced by the cooperatives. And lastly, the study presented the profiling of the cooperatives using variables of age, gender, sources of income, person responsible for running the cooperatives, location of the business, reasons for opening the cooperatives, challenges in comparison to other types of SMMEs, success rates, registration status as well as banking practice. • Cooperatives as well as other various types of SMMEs need government support although paired with some political directives. We therefore recommend that start-up and growth strategies to support and promote cooperatives be introduced. • The study revealed that men run 55% of the cooperatives while only 33% female are involved. The study recommends the women empowerment in this regard. • SMMEs suffer lack of subsidy and it has been proven throughout the study. It is recommended that government subsidies be meaningfully extended to cooperatives to ensure their long-term sustainability. • Many SMMEs use family income to start and run. However, there is no training to run family business. It is recommended that this task be undertaken, and we recommend the University of Johannesburg short course on that topic. REFERENCES

Balkaran, S. (2017) ‘Radical Economic Transformation - Government Prioritising State Resources for Small Business Development (SBD)’, Journal of Management & Administration, 1(I), pp. 105–128. Online. Available at: http://journals.co.za/docserver/fulltext/jomad_n1_2017_a6.pdf? [Accessed: 16 February 2020]. Boddy-Evans, A. 2018. Pre-Apartheid era laws: Natives Land Act No 27 of 1913. https://www.thoughtco.com/pre-apartheid-era laws. Bureau for Economic Research. 2016. Business Tech Survey 2014. Inside South Africa’s informal economy. https://businesstech.co.za/news/general/65658/insie=de-south-africas-informa-economy/ Charman, A., Pertersen, C. and Piper, D. 2012. From local survivalism to foreign entrepreneurship: the transformation of Spaza sector in Delft, Cape Town. Transformation 78 (2012). Godfrey, L. K. and Oelofse, S. 2017. Evaluation of co-operatives as a developmental vehicle to support job creation and SME development in the waste sector Technical report : Case Studies. Midrand. Online. Available at: http://www.sagreenfund.org.za/wordpress/wpcontent/uploads/2016/04/GreenFund-Waste-co-operativesreport_CSIR-final.pdf. Accessed: February 6, 2020.

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Mahambehlala, T. 2019. Small, Medium and Micro Enterprise Development challenges in a post-apartheid South Africa: Lessons learnt. Unpublished thesis. University of the Western Cape. https://etd.uwc.ac.za/ Manzhura, O. V. (2018) ‘Development of a cooperative model of a national economy in the context of european integration’, Scientific bulletin of Polissia, 1(13), pp. 129–134. doi: 10.25140/2410-9576-2018-1-1(13)-129-134. Muswema, AP., Okem, A., Von Blottnitz, H. and Oelofse, S. 2018. Cooperatives in waste and recycling: A recipe for failed waste hierarchy implementation? [Online]. Available: http://www.wastecon.co.za/programme.html. Accessed, February 29, 2020. Okem, A. E. (ed.) .2016. Theoretical and Empirical Studies on Cooperatives: Lessons for Cooperatives in South Africa, Theoretical and Empirical Studies on Cooperatives. SpringerBriefs in Geography. Springer, Cham. doi: 10.1007/978-3-319-34216-0. Ramukumba, 2014. RSA. 2013. Cooperatives Amendment Act (Act No 6 of 2013). Republic of South Africa: Government Gazette 36729, 5 August 2013. Online. Available: http://uscdn.creamermedia.co.za/assets/articles/attachments/45736_act_6.pdf Accessed: February 4, 2020). Schoeman, N. F. 2006. The Co-Operative as an Appropriate Form of Enterprise for Black Economic Empowerment. University of the Free State. Available at: https://www.schoemanlaw.co.za/wpcontent/uploads/nf_schoeman_llm_-_aug_2007.pdf [Accessed: 8 February 2020]. The dti 2004. A Cooperative Development Policy for South Africa. Online. Available at: http://www.copac.org.za/files/ A Co-operative Development Policy for South Africa 2004.pdf (Accessed: 4 February 2020). The dti (2009) The dti baseline study of co-operatives in South Africa. Johannesburg, South Africa. Online. Available at: http://led.co.za/sites/default/files/baseline_study_of_co- operatives.pdf (Accessed: 4 February 2020) The dti (2012) Integrated Strategy on the Development and Promotion of Cooperatives. Pretoria, South Africa: the dti. Available at: http://www.dti.gov.za/economic_empowerment/docs/coops/legis_policy/coop-strategy.pdf. Accessed, February 4, 2020. The dti (2013) Guidelines for Reducing Municipal Red Tape: How Municipalities can Improve Service Delivery that Supports Small Business. the dti. Available at: http://led.co.za/sites/default/files/cabinet/orgnameraw/document/2013/red_tape_reduction_b ooklet.pdf. Accessed: 4 February 2020.

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HEALTHCARE SURCHARGES AND RELATIVE PRICE DIFFERENTIALS Mattea, Annette M. Gordon, David M. University of Saint Francis (IL) ABSTRACT

Recent proposed changes in federal healthcare laws by leading U.S. political parties will lead to higher prices for consumers and heftier profits for retailers especially in monopolistic markets. This is due to the way that the surcharges are proposed to be levied which is as a percentage of the base price of the healthcare service. This paper explains how prices are formed by a profit maximizing firm under the assumption of a production function that is homogeneous of degree one. This paper also demonstrates the relationship between markups and the price elasticity of demand. An analysis of how the newly proposed healthcare rules would impact relative prices in markets of varying levels of competition is then performed.

INTRODUCTION

Recent changes in healthcare laws have led to the distinct possibility of higher prices for consumers and heftier profits for retailers especially in markets that are less competitive. Several politicians are proposing types of surcharges that could be levied as a percentage of base prices. This, of course, is not just relevant in an election year, but at any time when healthcare laws and regulations are being changed.

The rising cost of health care in the United States has been a major economic issue for years. The U.S. continues to spend more per capita on health care than any other developed nation. Often the consumer may equate a higher cost with better service and better outcomes. However, there is a surplus of data that does not support this belief. In fact, comparing the numbers of adults with health risk factors such as heart disease, asthma, diabetes, hypertension, kidney disease, chronic obstructive pulmonary disease, and depression demonstrates increases in all categories. Prior to the Covid-19 pandemic, hospital occupancy and average length of stay were decreasing; yet, the average cost of inpatient care continued to rise. According to the Kaiser Family Foundation, in 2018, $3.6 trillion dollars was spent on healthcare with one third of that being paid out to hospitals and 20 percent going to physicians and clinics. This is in addition to the continued rising cost of pharmaceuticals. Although prevention of illness has been identified in the medical and nursing communities as being as an integral piece of improving and maintaining overall health, there has been limited federal healthcare dollars and public education dedicated to preventative services. In the past decade, there has been increased focus on moving more healthcare services to less costly outpatient options; however, this remains focused on early recognition and treatment versus prevention. Americans are not buying better healthcare services leading to improved outcomes but instead, they are buying services that continue to become more expensive. Both political parties focus on access to healthcare but has this really improved? Will overall health improve under current or proposed healthcare laws or leave the

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American people with limited monopolistic options and rising healthcare insurance costs that can bankrupt their life savings?

RETAILER MARKUPS UNDER PROFIT MAXIMIZATION

It is assumed that all retailers in the healthcare market are interested in maximizing their profits and face a constant returns to scale production function. The general case is assumed where total revenue (TR) is equal to the product of the quantity of services or output (Q) produced or provided and subsequently sold and also the price (P) of the product/service. Total cost (TC) is assumed to be a function of the quantity of output produced or service provided. Profit (π) is always the difference between TR and TC. In mathematical terms the profit function can be shown as:

(1) π = TR – TC = PQ – TC(Q)

In order to find the profit maximizing quantity of output/service we need to differentiate (1) with respect to Q. This generates equation (2) below.

dπ/dQ = (dP/dQ)Q + P – (dTC/dQ) {where dTC/dQ) is the marginal cost (MC)}

(2) P = MC – (dP/dQ)Q

We can consider the term -(dP/dQ)Q a retailer markup (m) which would be positive assuming the customary assumption about (dP/dQ) being negative.

(3) P = MC + m

Taking into consideration the assumption of constant returns to scale equation (3) can be written as (4).

(4) P = AC + m

The price elasticity of demand measures how sensitive quantity demanded is to a change in price and is shown in equation (5) as a non-negative value.

(5) E = -(dQ/dP)(P/Q) ≥ 0

This can then be presented in terms of P and inserted into the term for retailer markup (-(dP/dQ)Q) to arrive with equation (6).

(6) m = P/E

The major significance of (6) is that it shows an inverse relationship between m and E. The more elastic the demand for the good/service the lower the potential markup by the retailer. The more inelastic the demand the higher the potential markup.

PRICE ELASTICITY AND MARKET STRUCTURE

The price elasticity of demand is a function of four variables: the number of available substitutes, the time one has to make demand decisions, the durability of a product and the proportion of total expenditures the good absorbs. The more substitutes that are available the more elastic the demand becomes. The more time one has to make a demand decision the more elastic the demand. The more 132

ASBBS Proceedings of the 28th (Virtual) Conference durable a product the more elastic the demand. (The purchase of a durable product can be postponed for a period of time or the good can be repaired thus delaying the purchase of a replacement item.) The greater the percentage of the budget that the good takes up the more elastic the good will be.

There are four different market structures that are normally identified in economics: perfect competition (or the slightly different pure competition), monopolistic competition, oligopoly and monopoly. Perfect competition is characterized by having many sellers, homogeneous products/services, easy entry into the market (no barriers to entry) and perfect information. Each firm is a price taker under perfect competition. Monopoly is the polar opposite of perfect competition. Only one seller exists in this market. There is assumed to be no close substitutes for the good/service being sold or provided by the monopolist and there are prohibitive legal and/or economic barriers to entry that prevent any competition. Oligopolies and industries categorized as monopolistically competitive are a hybrid of perfect competition and monopoly. For purposes of this paper these two market structures will be identified collectively as imperfect competition. Prices become higher and output becomes lower as we advance from perfect competition to imperfect competition and then finally to monopolies where prices will be the highest and output the lowest of any type of market structure.

RELATIVE PRICE DIFFERENTIALS

As a market becomes more competitive three results take place. First, the more competitive a market is the more substitutes that will be available for consumers to choose from. Secondly, a higher level of competition furnishes consumers with more time to make choices, since they will not be as worried about the supply of the good running out as quickly as it might if only one firm was producing the item. Finally, competition can foster the availability of firms that repair durable goods, thus extending the life of a durable good. These three results imply the price elasticity of demand will tend to be much more elastic under perfect competition than under imperfect competition or monopoly. The ranking of price elasticity in markets from relatively more elastic to relatively more inelastic would be perfect competition – imperfect competition – monopoly. The markups have the following relationship:

Mm > Mo > Mc where Mm is the markup for a monopolist, Mo the markup under imperfect competition and Mc the markup for a perfectly competitive firm. This follows from equation (6).

If we assume that each firm faces an identical cost function we generate the following base price (BP) equations.

(1) BPm = AC + Mm (2) BP0 = AC + Mo (3) BPc = AC + Mc

Given the information on the relative markups under each type of firm/market we have the following:

BPm > BPo > BPc

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Consumers would pay higher prices when markets are less competitive. This is due to the higher markups afforded by the varying demand elasticities.

The recently proposed changes in laws governing healthcare will make this difference between competitive prices and monopolistic prices even greater. This is due to the way the healthcare surcharges are applied. Each firm applies the surcharges as a percentage of the base prices. For each base price the actual price paid by consumers (P) will be BP(1 + i) where “i” is the percentage surcharge applied to the base price.

(4) Pm = BPm(1 + i) (5) Po = BPo(1 + i) (6) Pc = BPc(1 + i)

Since the percentage surcharge is assumed to be the same regardless of market structure the nominal differences in the consumer prices will be now larger than the nominal differences in base prices. For example, Pm – Pc > BPm – BPc.

POLICY IMPLICATIONS AND CONCLUSION

This paper demonstrates that recently proposed changes in laws regarding healthcare surcharges will increase prices in retail markets and alter relative prices among different market structures as well. The increases in prices were shown to vary depending on the level of competition within the market. In markets where less competition exist consumers will be burdened more than in more competitive markets. Consumers living in rural areas, for example, tend to be faced with less competitive markets thus they will be impacted more adversely by the recent legal changes.

REFERENCES

Campbell, Colin D. and Rosemary G. Campbell, An Introduction to Money and Banking, 5th Ed., Dryden Press, New York, NY, 1984. Cecchetti, Stephen G., Money, Banking and Financial Markets, 2nd Ed., McGraw-Hill, New York, NY, 2008. Centers for Medicare and Medicaid Services. (2020, December). National Health Expenditures by Type of Service and Source of Funds, CY 1960-2019 https://www.cms.gov/Research-Statistics-Data-and- Systems/Statistics-Trends-and- Reports/NationalHealthExpendData/NationalHealthAccountsHistorical Kamal, R., McDermott, D., Ranirez, G., Cox, C. (2020). How has U.S. Spending on Healthcare Changed Over Time? Person-KFF Health System Tracker. https://www.healthsystemtracker.org/chart- collection/u-s-spending-healthcare-changed-time/#item-start Keat, Paul G. and Philip K. Y. Young (2009). Managerial Economics, 6th edition. Upper Saddle River, New Jersey: Pearson Prentice Hall.

Landsburg, Steven E. (2011). Price Theory and Applications, 8th edition. Mason, Ohio: South-Western Cengage.

Samuelson, Paul A. (1947). Foundations of Economic Analysis. Cambridge: Cambridge University Press.

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Silberberg, Eugene and Wing Suen (2001). The Structure of Economics, 3rd edition. New York: McGraw- Hill.

Thomas, Christopher R. and S. Charles Maurice (2011). Managerial Economics, 10th edition. New York: McGraw-Hill.

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REPORT ON A CONTINUOUS IMPROVEMENT PROJECT WITH A VA SURGICAL SERVICE LINE

McCall, John E. Militello, Jack University of St. Thomas ABSTRACT

A continuous improvement program must come to terms with the reality of its environment. This program was crafted to be symbiotically compatible with the VA culture. It must account for the difficulty of creating change in an environment where change is hard and where innovating can be threatening to the accepted standards of the status quo. Further, the environment is constrained in terms of the types of rewards and incentives that can be offered for participation in a continuous improvement effort. Continuous improvement is fueled by the desire to constantly seek ways to provide better health care service to veterans. Aside from better facilities, technologies, and equipment, the improvements must come from working more productively and that entails changing the way work gets accomplished. This paper is a report on a process developed to bring continuous improvement to the Surgical Service Line in a local VA hospital. Engagement must be sustained through a sound design that stresses learning and involving the good will and strong work ethic of service providers. Short term testing was able to achieve both goals and positively affect the work culture of the organization.

INTRODUCTION

The purpose of this paper is to report on a continuous improvement demonstration project within the surgical department of a regional Veterans Administration (VA) Hospital. The project is, in part, a response to a series of independent reports critical of the VA’s health care service delivery. Our intention is to show what might be accomplished in the short term to improve logistical delivery of care at a VA location. It is assumed that what is learned from these demonstration projects can be applied in hospital settings other than that of the VA. The challenge to the VA had come from a set of public reports targeting the need for innovation and change. The Joint Commission Summary Report of Special Focused Surveys of Veterans Health Facilities conducted from October 2014 to September 2015 noted improprieties related to timely access to care. The Veterans Choice Act, 2014, mandated a review of staffing and productivity. The Final Report on the Commission of Care, 2016 confirmed that the overall goals of the VA include to improve veteran access to needed health care. These reports offer workable pathways to addressing issues of access, quality, and satisfaction that are detailed in the VA Mission Act, 2018. Our project attempts to address the concerns of these studies by enhancing access to VA services by demonstrating the improvement of workflow without sacrificing quality on any level. It was done through short-term testing and personal engagement with service providers. PROJECT APPROACH The success of the demonstration project hinged on two variables. The first was an intervention design that clearly stated its goals and tested the viability of those goals in the short-term. This test of 136

ASBBS Proceedings of the 28th (Virtual) Conference feasibility of logistics would give the institution confidence to continue its improvement path. The second was to engage the behaviors of professional providers in the activities with the hope that value is recognized for both the institution and the participating medical personnel. Project Design The Institute for Healthcare Improvement advises its healthcare constituents that an organization can best develop innovative change through a design process that includes a ninety day test cycle that enables leaders to test processes more thoroughly and gain deeper knowledge of what does and does not work. It is acknowledged that larger innovation initiatives can be costly and can take providers away from valuable time with patients. Short-term testing provides guidance as to what, if any, resources are needed to move a project forward. Numerous health care organizations have espoused the value in pilot testing as a learning tool. (Van Telijilingen and Huntley; Krisin and Silverstein; Beebe; Drummon; Kong and Kong). The overall approach to program design included the following factors: • Select opportunities that have the greatest potential access benefit to veterans • Emphasize the benefit to veterans/patients from process improvement • Identify opportunities where process failure results in frustration, low morale, unplanned overtime, and other unpleasant outcomes. Capitalize on people’s self-interest to be supportive of change. • Design and execute limited-scope trials for 90 days followed by assessment and adaption where appropriate. • Design trials with limited risk and carefully controlled conditions to maximize the success potential. The trials were in fact highly controlled, idealized conditions conducive to success. • Repeat the cycle each year, over time building a track record of success, organizational confidence, and competence, and gradually assimilating continuous improvement into the culture. Engaging the Behaviors of Professional Providers Studies have begun to analyze the health care system considering lessons learned from behavioral economics (Loewenstein; Volpp; Andrews). The goals of these efforts range from preventing medical errors to improving the patient experience. Given the assumption that project participants have full information and can fully leverage that information to make a rational choice, behavioral economics may play a significant role in forming health care decisions. We believe that physicians choose the right course of treatment subject to information and facilities to which they have access. Therefore. engaging participating physicians gained buy-in to our testing because they had a hand in the design and rewards in project success. Their involvement, start to finish, was key to project design. Staff at the VA test site has had in place over a decade various forms of quality training including Lean and Six Sigma programs. Over that period, key positions have changed; many new and untrained employees have appeared; a lot has been forgotten. It has been difficult to create staying power in any program initiative despite an intrinsic desire to be involved in quality. The creation and subsequent loss of institutional knowledge was a challenge. The cultural persistence of previous programs subsided early as leadership priorities changed and disciplines faded from lack of use. A long-term effective continuous improvement initiative needed to take hold irrespective of changes to leadership or staffing and can only do so when it becomes embedded in the culture.

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IMPLEMENTING CONTINUOUS IMPROMENT TESTING An analysis of all surgical procedures over a three-year period was conducted. Over 23,000 procedures were evaluated covering 1754 CPT codes, the top 32 accounting for 57% of total number of procedures and 53% of total OR time. High volume procedures were preferred targets as they represented the greatest potential impact on patient access. Those procedures were then compared to a list of procedures with the lowest mean procedure time and lowest coefficient of variance (COV). COV is important as a measure of the level of certainty to a specific procedure time, providing some confidence that scheduling multiple procedures in a day would only infrequently encounter complications that might cause significant overtime.

No. of Average Standard Procedure SPECIALTY Procedures Procedure Time Deviation COV TOTAL KNEE ARTHROPLASTY ORTHOPEDICS 879 2.40 0.47 19.8% CATARACT SURG W/IOL 1 STAGE OPHTHAMOLOGY 3002 0.48 0.20 42.5% Chart 1 – Coefficient of Variation Two candidates rose above the rest: total knee arthroplasty and cataract surgery. Over an 11- quarter period: Procedure Total Procedures % of Total Total Op Time % of Total Cataract replace 3000 13.1 1427 2.6 Knee arthroplasty 879 3.8 2109 3.9

Chart – 2 Candidate Procedures Historically, the Service Line had performed anywhere from 3-5 cataract replacement surgeries per day and 1 total knee replacement. In both cases, there were exceptions where demand or urgency provided the impetus, but in those cases significant overtime was required. Given an analysis of best practices over this same period, there appeared to be justification for setting a goal of 8 cataract surgeries and 2 knee replacements per day shift. The day shift constraints were to begin at the normal start time, allow adequate time for uniform changes, turnovers, and breaks, and have the patient depart the OR with 30 minutes left in the shift to clean and prep the OR for the next day and change clothes. The next step was to address the composition of the surgical teams. Data analysis had indicated a disparity in time performance across the spectrum of surgeons, residents, scrub nurses, and circulating nurses. Those who performed most consistently were placed on a candidate list. Attending surgeons were invited to express interest, and two came forward quickly. The OR Nurse Manager and Director, CRNA assigned team members from the list with concurrence of the participants. Team formation was accomplished. The next step was to meet with each supporting department not in the Service Line and discuss the trial design to garner their operational support. This included representatives from sterile processing, housekeeping, and radiology. All agreed to place a priority on the execution of the trials. For each of the two procedure trials, the target timeline for the hypothetical successful day shift was mapped out minute by minute using a project planning software application that broke down the day into minute increments. The design team, which included the surgeon and nursing staff, were key participants and there was ample discussion of various activities that were on the critical path during

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ASBBS Proceedings of the 28th (Virtual) Conference the day. Arrangements were made as well as adjustments to assure that all critical path tasks were executed on time. Small improvements, such as providing spare inventories in the event of contamination and advance communications to housekeeping and radiology to assure tasks were done as soon as possible, helped keep the trial days on schedule. Also, the surgeons and their coordinators attempted to filter out prospective surgery candidates that posed some risk of complications, such as special anesthesia requirements or other health conditions, in order to create the ideal trial conditions that would provide the best chance of success. A third trial was added to the roster to evaluate the workability and benefits of reserving one OR each day for urgent procedures. The level of urgent and emergency procedures has been 7.3%, roughly 1 in every 14. That is typically 2 per day with a high level of variation and a broad definition of urgency where some cases require surgery in the next day or two, some in the next week. The thought behind the third trial, the wild card OR, was to test if reserving 1 out of 11 OR’s would insulate the other 10 from last minute disruptions. TRIAL RESULTS The trials ran from April through June. The time period was selected for a number of reasons. That time of the year is representative of demand. The resident staff is well along in their training and there are no new residents coming on board. With the holiday season behind it and the vacation season ahead of it, there would be no staffing issues. It also allowed the assessment to take place during the summer months when there are staffing issues and new residents arriving. After assessment, implementation occurs in the fall when things have returned to normal and the program shifts to the next cycle of design and trial for the following year. All trials kept minute by minute logs of each surgery day. Knee Arthroplasty Trial The goal in this trail was to complete the procedure in 90 minutes or less, with the patient in and out of the OR in less than 2 hours, 30 minutes, a total of 7.5 hours. This allowed 30 minutes at the beginning of the day to start up and at the end of the day, the target completion point. The team consistently performed the procedure in approximately 90 minutes and the patient turnaround was accomplished in less than 2.5 hours on all but four days of the trial. On those days, only two procedures were performed either because there were only two scheduled or in two cases, there were complications that precluded starting a third procedure. The latter point reaffirmed that despite efforts to bring only simple cases into the trial, that ability is limited and complications will arise from time to time. The trial was successful in demonstrating, under ideal conditions, the ability to normally schedule three procedures in a normal day shift and that was implemented in the fall.

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Graph 1 – KNEE

Graph 2 – KNEE

Cataract Trial The target for the cataract trial was to perform 8 cataract surgeries in a normal day shift. As in the knee trial, the target was to finish the day by 3PM to allow sufficient time to clean and restore the OR and to change clothing. The target for procedure time was 25 minutes and patient turnover in less than 50 minutes, allowing 10 minutes on either side of the procedure for patient transport, anesthesia, and room turnover. The trial began with scheduling 7 procedures in order to build up to 8 over the course of the trial. The trial successfully demonstrated the feasibility of performing 7 procedures but not without having encountered complications on two days. The trial confirmed that the ability to predict complications for this procedure was limited and provisions need to be made for that possibility in terms of scheduling. On most trial days, the scheduled procedures were completed well in advance of the target, making 8 feasible.

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Graph 3 – Cataract

Graph 4 – Cataract OR Wild Card Trial This trial had mixed results. On a majority of days, it was not required and subsequently used for late elective procedure additions. When needed, it was effective in insulating the other ORs from disruptive schedule changes. The conclusion was to continue testing it to see how it worked over the longer term. However, it may well wind up being more of a scheduling improvement than a resource utilization benefit. CONCLUSIONS The trials were determined to be successful, and the process and scheduling improvements were implemented. Success in this instance is multi-dimensional. Technically, the trial proved that the institution could improve productivity in these two areas by employing better coordination of services, more timely communications, and better adherence to the timetable. The patients involved in the trial were blind participants and were surveyed using the normal patient satisfaction tool, and found to have the same relative perceptions of their experience as non-trial patients, confirming that there were no major negatives to the trial atmosphere or pace.

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On a cultural level, the trial was successful in bringing together effective teams and creating enthusiasm for a shared goal. It also brought to light the value of collaboration across different functions. Most important, however, it revealed the opportunities to improve by working smarter, reinforced the group’s confidence in their ability to orchestrate change, and changed the perception of change in a more positive way. As the Service Line continues with the next round of improvement projects, the goal is to make this a normal part of the annual cycle and, hopefully, people will embrace it as part of the culture of continuous improvement. REFERENCES

Andrews, Kenneth (1963) “Uncertainty and the Welfare Economics of Medical Care” the American Economic review Vol LIII, no 5. Beebe, Lora Humphrey (2007) “What can we learn from pilot studies?” Psychiatric Care 2007 Vol 43, Issue 4

Drummond, Avril (2017) “Feasibility and pilot studies; why are they important?” British Journal of Occupational Therapy Vol80, Issue 6.

Institution of Healthcare Improvement 2014“IHI Innovation System Institute for Health Care Improvement” ihi.org. Kistin, Caroline and Silverstein, Michael (2015) “Pilot Studies: A critical but potentially misused component of Interventional Research” JAMA; 314(15): 1561-1562.

Kong, Kelvin and Kong, Sarah (2013) “A quality improvement project in a hospital in rural Nepal – improving infection control practice using the ‘Plan, Do, Study, Act’ (PDSA) cycle” St George’s Hospital, London, UK; Int J Infect Control 2013, v9:i3.

Loewenstein, George et al. (2013) “Behavioral Economics Holds Potential to Deliver Better Results for Patients, Insurers, and Employees.” Health Affairs”, Vol 32, No. 7 2013.

Ryan, Andrew et al.(2017) “Association Between Hospitals’ Engagement in Value-Based Reforms and Readmission Reduction in Hospital Readmission Reduction Program.” JAMA Internal Medicine, vol 177, no 6. E. Van Teijilingen, E and V. Hundley, V. (2011) “The importance of pilot studies” Journal of Advanced Nursing 34: 289-295

Volpp, K. et al. “Mortality among patients in VA hospitals in the first 2 years following ACGME resident duty tour reform” JAMA 298. (9) 984-992.

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ONE THING MANAGERS NEED TO DO TO INSPIRE, EXCITE, MOTIVATE, AND RETAIN EMPLOYEES – RECOGNIZE STRONG WORK PERFORMANCE Petak, Trish Kansas Wesleyan University

ABSTRACT

Organizations benefit from having inspired, excited, and motivated employees, as well as employees that see longevity with their perspective organization. The study investigated the effect of an employee’s inspiration, excitement, motivation, and retention with the organization when management recognizes strong work performance. The literature review provides findings that organizations benefit from inspired, excited, and motivated employees, as well as organizational retention. The selected instrument for this study was a survey which was designed to reveal data to measure correlation among variables. The study amounted to 63 voluntary participants.

Key Words: Inspired, excited, motivated, motivation, retain, retention, feedback, management, work performance

INTRODUCTION The purpose of the study was to determine if employees were more inspired to work, more excited about work, more motivated at work, and more likely to retain with their organization when their managers recognize strong work performance. Inspiration, excitement, motivation, and retention are all positive additions to an organization. This study aims to find strong positive correlations with employee inspiration, employee excitement, employee motivation, and employee retention after a manager recognizes an employee’s strong work performance.

LITERATURE REVIEW The literature review section will focus on five main components—inspired employees, excited employees, extrinsically motivated employees, employee retention, and management recognizing strong work performance. It is important to note the research did not aim to include much evidence regarding employee engagement. While employee engagement has been a widely studied research topic for longer than a decade, the researcher aimed to itemize some specific feelings and behaviors that do ultimately lead to employee engagement. Thus, the feeling of being inspired, the feeling of being excited, and the feeling and behavior of being motivated all lead to employee engagement (Popli & Rizvi, 2016, Kroth & Boverie, 2001, and Delaney & Royal, 2017). Recent research also supports engaged employees are far more likely to retain within their perspective organizations (Al-Emadi, Schwabenland, & Qi, 2015). This study investigates whether one managerial behavior could ignite the positive additives that can collectively lead to overall engagement. For this purpose, employee engagement is bypassed in research, as inspiration, excitement, motivation, and plans of retention are all integrals of employee motivation; meaning, these feelings and behaviors are necessary for an employee to maintain engagement. Ultimately, the research aims to showcase a strong positive correlation of managerial recognition leading to three ingredients of the overall recipe of employee engagement-- inspiration, excitement, and motivation—and an outcome of employee engagement, employee retention. Inspired employees outperform satisfied employees by more than 100%, in terms of productivity (Horwich and Callahan, 2016). When employees are inspired, they feel a desire to want to

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ASBBS Proceedings of the 28th (Virtual) Conference work as opposed to having to work, generating an intrinsic motivation (Morgan, 2017). Inspiring an employee comes from the ability of a manager to increase the positive emotions of his or her subordinates (Bass, 1985). Inspiring employees positively trigger organizational human capital, or workers, to want to achieve or accomplish organizational tasks (Avolio, Waldman, & Yummarino, 1991). While the literature review focused mainly on delving into how leaders can help inspire their employees, meaningful and challenging work contribute to employees feeling inspired (Bass, 1997). While recent peer-reviewed research states employee engagement is a derivative of inspiration (Popli & Rizvi, 2016), a leader can help inspire his or her employees by communicating frequently while working to instill confidence in his or her employees (Bass, Avolio, & Atwater, 1996). There is a gap in relevant and recent literature regarding inspired employees; rather, many researchers have focused on the very popular and leadership-seeking term known as employee engagement, or engaged employees. Over the past 15 years, employee engagement has been a highly studied and researched human resource management topic. Kahn, in 1990, originated the concept of employee engagement (Kahn, 1990). Since around the mid-1990s, academic research has taken a step back on employee inspiration and employee excitement, while focusing more on employee engagement. Employee engagement leads to many positives in the workplace, such as commitment to the organization, higher productivity from the engaged employee, and overall less turnover (Xu & Payne, 2018). According to a study by Popli and Rizvi, leaders contribute to employee engagement by inspiring their employees (Popli & Rizvi, 2016). More so, an employee feels inspired after confidence in their abilities is expressed by their manager (Popli & Rizvi, 2016). Therefore, inspiration is an important driver for an employee to feel engaged. While some literature concludes a transformational leader is the leadership style to inspire his or her employees (Callahan, 2017) researchers Horwitch and Callahan (2016) carved out 33 distinct characteristics a leader could possess to statistically create inspiration in their employees (Horwitch & Callahan, 2016). Their findings culminate when a leader simply possesses 4 of the 33 characteristics (a random set of 4; not a fixed set of 4 specific characteristics) it could precipitate a leader to have the ample mix of traits to inspire subordinates (Horwitch & Callahan, 2016). Furthermore, the likelihood to inspire employees increased for each characteristic one possessed; when a leader had 4+ characteristics out of the pool of 33, he or she had a 91% chance of the ability to inspire (Horwitch & Callahan, 2016). This particular study aims to address the void of research regarding what can contribute to inspiring employees, which has recently been ignored likely due to the extreme popularity of employee engagement. Excited employees tend to be passionate about their work, enthused about their work, and productive while working (Kroth & Boverie, 2001). While the research about employee excitement is scarce, workplace excitement refers to a worker’s enthusiasm, positivity, and commitment to his or her work (Simms, Erbin-Roesemann, Darga, & Coeling, 1990). The research indicates when workers are more excited about their work, they are more creative, more accepting of learning new things, more adaptive to organizational change, and are more likely to take on new opportunities within the organization (Simms, et. al, 1990). A recent study maintains work excitement occurs when employees are provided with sufficient resources, leading them to accomplish their work tasks and are provided opportunities to learn in their perspective roles (Halcomb & Ashley, 2017). This particular study aims to address the void of research regarding what can contribute to excite employees, which has recently been ignored likely due to the extreme popularity of employee engagement. Motivation in the workplace refers to factors that influence behavior, enthusiasm, and ultimately fulfilling daily tasks (Faletar, Jelačić, Sedliačiková, Jazbec, & Hajdúchová, 2016). Employee motivation is comprised of two main branches, intrinsic and extrinsic. Since the researcher hypothesizes a positive relationship between employee motivation and receiving recognition from management based on strong work performance, the motivation section of the literature focuses on extrinsic motivation. Extrinsic motivation is centered on behaviors by employees in an effort to obtain external rewards and avoid workplace punishment (Kremen, Fiszdon, Kurtz, Silverstein, & Choi, 2016). 144

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Motivation in the workplace is not an independent performance-based goal; however, extrinsic motivation is crucial in achieving high productivity (Berumen, Pérez-Megino, & Arriaza Ibarra, 2016). Since the study aims to see if there is an increase in extrinsic motivation after the dependent variable of a manager recognizing strong work performance occurs, literature review based on motivation dependent on managerial feedback or recognition was conducted. Motivated employees have characteristics non-motivated do not. Some of the most obvious characteristics include increased productivity, employees being passionate about their work, employees caring about the organization (colleagues, clients, patients, customers), and employees exploring more efficient ways to complete tasks (Sabir, 2017). A somewhat recent article focusing on financial and non-financial rewards acknowledged feedback as an imperative non-financial reward (Yousaf, Latif, Aslam, & Saddiqui, 2014). The researchers found when employees receive feedback from managers, a trust-based relationship and participatory feeling occurs (Yousaf, et. al, 2014). Feedback also allows confusion and misunderstanding to be diminished, ultimately increasing employee motivation (Yousaf, et. al, 2014). Inspirational motivation involves effective communication and feedback in an attempt to increase overall employee engagement (Bass, Avolio, & Atwater, 1996). Additionally, inspirational motivation happens when managers focus on motivating employees by inspiring them as human capital, and not just employees; thus, leading them to produce at an even greater level of production (Ghasabeh, Reaiche, & Soosay, 2015). Another recent finding proposed a manager offering short-term tangible rewards do not excite employees; rather, long-term leadership motivates employees (Sabir, 2017). Sabir (2017) acknowledges managers must lead by example and know what their employees want, in an effort to motivate employees. One thing employees want from their managers is feedback on their performance (Tucker, 2017). In fact, in Hackman and Oldham’s 1976 study, which is one of the most notorious managerial studies on motivation, the researchers conclude feedback is a highly weighted item within a motivating potential score calculation, meaning a manager can increase an employee’s motivation simply due to providing feedback (Hackman & Oldham, 1976). Recent research regarding employee retention has aimed to find important themes or elements that help create or increase employee retention (Al-Emadi, Schwabenland, & Qi, 2015; Allen, Peltokorpi, & Rubenstein, 2016; Ruvimbo & Hlanganipai, 2016). Employee retention has been studied and categorized for different industries and different locations. While this study aims to see if there is a desire of an employee to retain his or her current position after management has recognized his or her strong performance, or vice versa, the literature review section of retention will focus mainly on how management can benefit an employee’s desire to retain. Smith and Galbraith (2012) conducted a study regarding retention as it pertains to the millennial generation. Their survey respondents acknowledged 33% of millennials admitted their manager is 1 of the top 2 reasons as to why they would retain at an organization whereas only 9% of supervisors felt millennials would respond in that manner (Smith & Galbraith, 2012). In a recent study titled Total rewards that retain: A study of demographic preferences, a total of 6 attributes, such as learning, career advancement, remuneration, benefits, work-life balance, and performance and recognition were tested to see relative importance amongst various demographics (Pregnolato, Bussin, & Schlechter, 2017). The study illustrates performance and recognition rank as the second most sought after attribute that leads to retention, pulling a weight value of 20%; the highest was attribute was benefits, with a weight value of 35.2% (Pregnolato et. al, 2017). Suazo, Martinez, and Sandoval (2009) linked when leaders provide feedback to an employee, regarding the employee’s performance, the employee feels more committed to the organization. Likewise, receiving feedback that is conducted more as “supervisory coaching” may enable an employee to be more committed to an organization, thus increasing retention (Spell, Eby, and Vandenberg, 2014). Strong work performance indicates an employee has achieved his or her work objectives (Griffin & Hesketh, 2004) and perhaps exceeded those objectives. The summation of employees’ accomplished tasks factor into an organization’s overall performance; therefore, individual employee’s work performance is valuable. Individual performance is a collection of an employee’s activities assigned to them in an effort to fulfill their short-term strategies and long-term goals, ultimately leading to meeting organizational objectives (Kocak, 2006). Many researchers sought to discover whether 145

ASBBS Proceedings of the 28th (Virtual) Conference organizational commitment leads to strong work performance; however, findings are inconclusive and contradictory. Some researchers (Mathieu and Zajac, 1990; Williams and Anderson, 1991; Caruana, Ramaseshan, & Ewing, 1997; Meyer, Stanley, Herscovitch, & Topolnytsky, 2002) discovered there is a weak positive relationship between organizational commitment and work performance whereas other researchers (Allen and Meyer, 1996; Bashaw and Grant, 1994; & Baptiste, 2008) prove there is a moderate to strong positive relationship between organizational commitment and work performance. Research has failed to include how employees react to recognition of strong work performance. This study hypothesizes a manager recognizing an employee’s strong work performance will have positive effects in the workplace. Managerial to subordinate feedback has been researched for decades. There are many positive organizational additives and employee benefits when a manager provides feedback to an employee. First, it allows managers to communicate expectations to employees and allows for employees to learn of opportunities for improvements as well as other incentives in the workplace (McCauley, Moxley, & Van Velsor, 1998). Second, it allows managers to be open and transparent to employees, preparing them for the possibility of promotion or leadership positions (Alimo-Metcalfe, 1998). Third, it enables managers to provide positive reinforcement or redirects, allowing employees to continue performing at high levels or making changes for improvement (Wohlers, Hall, & London, 1993). Overall, respectful feedback from a manager to an employee should be beneficial. This particular study focuses on discovering whether managerial feedback recognizing strong work performance benefits employees and is a key driver of value-added aspects to organizations such as employee inspiration, employee excitement, employee motivation, and employee retention. A published book classified as an international bestseller titled Help Them Grow or Watch Them Go dives into what employees really want and more so what managers can provide to retain great employees. The authors indicate feedback regarding employee development is one of the single most important things that will lead to retaining employees (Kaye & Giulioni, 2019). Recent research has proven employees who are committed to an organization have a stronger work performance than those that do not seem to be committed to the organization (Tran, Nguyen, Dang, & Ton, 2019). Moreover, while the concept of leadership has received considerable attention from researchers, and more specifically the research regarding transformational leaders, Neilsen, Randall, Yarker, & Brenner (2008) indicate a transformational leader that recognizes strong work performance provides positive effects to his or her subordinates. While recent research neglects some of the main foci of this study (there are gaps in research regarding mainly employee inspiration and employee excitement) this research and study add to the field of management by discovering a manager simply recognizing strong work performance can inspire an employee, excite and employee, increase motivation in an employee, and lead to retention of an employee.

RESEARCH METHODOLOGY The data consists of survey responses from 63 participants. Participants consisted of full-time business professionals, that were currently employed in their respective positions for a minimum of one year, and employed by a for-profit organization. The survey was available online via SurveyMonkey and the survey was a custom set of questions. The responses this study used from the survey included 8 demographic questions and 6 Likert-scale questions. The first 8 questions were categorization questions as outlined below in the tables. This allowed the researcher to comprise trends and outliers in the data. The remaining 6 questions provided data to assess an employee’s inspiration, excitement, motivation, and plans of retention as it relates to their current position and the dependency of those items on an employee’s managers’ recognizing or not recognizing strong work performance. The research methodology and data set of questions allowed the researcher to analyze different conceptual frameworks in an effort to best present the data. The empirical findings of the data are outlined below, in the next section.

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THE DESCRIPTIVE STATISTICS AND DATA Below illustrate 13 tables. The first 8 tables are the results from the categorization questions; the final 5 tables are graphical presentations providing data from the Likert-Scale questions, followed by detailed analysis based on the data.

Table 1: Participants’ industry in which they work Tota Percentag Industry l e Accommodation and food services 5 7.94% Agriculture 3 4.76% Arts and entertainment 3 4.76% Construction 3 4.76% Education 6 9.52% Finance and insurance 11 17.46% Healthcare and social assistance 11 17.46% Manufacturing 7 11.11% Mining 0 0.00% Retail 6 9.52% Transportation 1 1.59% Other 7 11.11% Total 63 100%

Table 2: Participants’ current job title Tota Percentag Current job title l e Owner 1 1.59% President/CEO 3 4.76% Vice president; executive 11 17.46% Department manager 18 28.57% Supervisor; shift leader 7 11.11% Employee with no subordinates 20 31.75% Other 3 4.76% Total 63 100%

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Table 3: Participants’ current department in which they are employed Tota Percentag Department l e Finance and accounting 11 17.46% Marketing and communication 7 11.11% Human Resources 4 6.35% Education 4 6.35% Customer service 7 11.11% Transportation 4 6.35% Manual labor 8 12.70% Patient care 7 11.11% Hospitality 3 4.76% Other 8 12.70% Total 63 100%

Table 4: Participants’ number of years working in their current position Tota Percentag Number of years l e 1-3 years 17 26.98% 3-5 years 22 34.92% 5-7 years 15 23.81% 8-9 years 2 3.17% 10 years or more 7 11.11% Total 63 100%

Table 5: Participants’ current salary range Tota Percentag Salary range l e 0 - $24,999 5 7.94% $25,000 - $34,999 6 9.52% $35,000 - $44,999 15 23.81% $45,000 - $54,999 14 22.22% $55,000 - $64,999 10 15.87% $65,000 - $74,999 5 7.94% Over $75,000 8 12.70% Total 63 100%

Table 6: Participants’ highest level of education Tota Percentag Education l e Some high school 0 0.00% High school diploma or GED 7 11.11% Some college 3 4.76% Associate degree 18 28.57% Bachelor degree 22 34.92% Master degree 11 17.46% Doctoral or terminal degree 2 3.17% Total 63 100%

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Table 7: Participants’ age Tota Percentag Age l e 18-22 3 4.76% 23-27 4 6.35% 28-32 20 31.75% 33-37 10 15.87% 38-42 6 9.52% 43-47 4 6.35% 48-52 5 7.94% 53-57 6 9.52% 58-62 1 1.59% Over 62 4 6.35% Total 63 100%

Table 8: Participants’ gender Tota Percentag Gender l e Male 27 42.86% Female 36 57.14% Total 63 100% The next section organizes and illustrates the data collected. The researcher broke down the data in regards to how a participant, or worker, scored the Likert-scale question that posed management within my organization recognizes strong work performance. Respondents chose one of the following: strongly agree (5); agree (4); neither agree or disagree (3); disagree (2); or strongly disagree (1). The remaining five Likert-scale questions all have the same options of response with the same scoring allocation.

Analysis 1 Of the 63 participants who completed the survey, a total of 17 respondents, or 26.96%, chose strongly agree (5) when answering the question: Management within my organization recognizes strong work performance. Of the 17 respondents, below outlines how they responded to the additional Likert- scale questions:

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I foresee I am I am When I I get myself inspired determined think about excited working for to meet to give my work, I about this my best effort think going to organization goals at at work positive work one year work each day thoughts from today Strongly Agree 5 5 5 5 5 Total Responses 11 13 7 3 13 Percentage 64.71% 76.47% 41.18% 17.65% 76.47% Agree 4 4 4 4 4 Total Responses 4 2 7 12 3 Percentage 23.53% 11.76% 41.18% 70.59% 17.65% Neither Agree/Disagree 3 3 3 3 3 Total Responses 1 1 2 1 1 Percentage 5.88% 5.88% 11.76% 5.88% 5.88% Disagree 2 2 2 2 2 Total Responses 0 1 1 1 0 Percentage 0.00% 5.88% 5.88% 5.88% 0.00% Strongly Disagree 1 1 1 1 1 Total Responses 1 0 0 0 0 Percentage 5.88% 0.00% 0.00% 0.00% 0.00%

Of the respondents who chose strongly agree (5), it should be noted that the following responses occurred: 88.24% of the respondents agree or strongly agree they are inspired at work; 88.24% of the respondents agree or strongly agree they are determined to give their best effort at work each day; 82.35% of the respondents agree or strongly agree they get excited about going to work; 88.24% agree or strongly agree they think positive thoughts about work; and 94.12% agree or strongly agree they foresee themselves working for their organization one year from survey completion.

Of the respondents who chose strongly agree (5), it should be noted that the following responses occurred: 5.88% of the respondents disagree or strongly disagree they are inspired at work; 5.88% of the respondents disagree or strongly disagree they are determined to give their best effort at work each day; 5.88% of the respondents disagree or strongly disagree they get excited about going to work; 5.88% disagree or strongly disagree they think positive thoughts about work; and 0.00% disagree or strongly disagree they foresee themselves working for their organization one year from survey completion.

Therefore, based on the survey results, employees who strongly agree management within their organization recognizes strong work performance, many employees admit to employee inspiration, excitement, motivation, and retention.

Analysis 2 Of the 63 participants who completed the survey, a total of 29 respondents, or 46.03%, chose agree (4) when answering the question: Management within my organization recognizes strong work performance. Of the 29 respondents, below outlines how they responded to the additional Likert-scale questions:

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I foresee I am I am When I I get myself inspired determined think about excited working for to meet to give my work, I about this my best effort think going to organization goals at at work positive work one year work each day thoughts from today Strongly Agree 5 5 5 5 5 Total Responses 8 8 2 1 12 Percentage 27.59% 27.59% 6.90% 3.45% 41.38% Agree 4 4 4 4 4 Total Responses 21 20 13 20 17 Percentage 70.00% 68.97% 44.83% 68.97% 58.62% Neither Agree/Disagree 3 3 3 3 3 Total Responses 0 1 14 8 0 Percentage 0.00% 3.45% 48.28% 27.59% 0.00% Disagree 2 2 2 2 2 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00% Strongly Disagree 1 1 1 1 1 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00%

Of the respondents who chose agree (4), it should be noted that the following responses occurred: 97.59% of the respondents agree or strongly agree they are inspired at work; 96.55% of the respondents agree or strongly agree they are determined to give their best effort at work each day; 51.72% of the respondents agree or strongly agree they get excited about going to work; 72.41% agree or strongly agree they think positive thoughts about work; and 100.00% agree or strongly agree they foresee themselves working for their organization one year from survey completion.

Of the respondents who chose agree (4), it should be noted that the following responses occurred: 0.00% of the respondents disagree or strongly disagree they are inspired at work; 0.00% of the respondents disagree or strongly disagree they are determined to give their best effort at work each day; 0.00% of the respondents disagree or strongly disagree they get excited about going to work; 0.00% disagree or strongly disagree they think positive thoughts about work; and 0.00% disagree or strongly disagree they foresee themselves working for their organization one year from survey completion.

Therefore, based on the survey results, employees who agree management within their organization recognizes strong work performance, many employees admit to employee inspiration, excitement, motivation, and retention.

Analysis 3 Of the 63 participants who completed the survey, a total of 8 respondents, or 12.70%, neither agree or disagree (3) when answering the question: Management within my organization recognizes strong work performance. Of the 8 respondents, below outlines how they responded to the additional Likert-scale questions:

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I foresee I am I am When I I get myself inspired determined think about excited working for to meet to give my work, I about this my best effort think going to organization goals at at work positive work one year work each day thoughts from today Strongly Agree 5 5 5 5 5 Total Responses 2 1 0 0 2 Percentage 25.00% 12.50% 0.00% 0.00% 25.00% Agree 4 4 4 4 4 Total Responses 3 4 3 4 3 Percentage 37.50% 50.00% 37.50% 50.00% 37.50% Neither Agree/Disagree 3 3 3 3 3 Total Responses 1 2 4 1 3 Percentage 5.88% 25.00% 50.00% 12.50% 37.50% Disagree 2 2 2 2 2 Total Responses 1 0 1 3 0 Percentage 12.50% 0.00% 12.50% 37.50% 0.00% Strongly Disagree 1 1 1 1 1 Total Responses 1 1 0 0 0 Percentage 12.50% 12.50% 0.00% 0.00% 0.00%

Of the respondents who chose neither agree or disagree (3), it should be noted that the following responses occurred: 62.50% of the respondents agree or strongly agree they are inspired at work; 62.50% of the respondents agree or strongly agree they are determined to give their best effort at work each day; 37.50% of the respondents agree or strongly agree they get excited about going to work; 50.00% agree or strongly agree they think positive thoughts about work; and 62.50% agree or strongly agree they foresee themselves working for their organization one year from survey completion.

Of the respondents that chose neither agree or disagree (3), it should be noted that the following responses occurred: 25.00% of the respondents disagree or strongly disagree they are inspired at work; 12.50% of the respondents disagree or strongly disagree they are determined to give their best effort at work each day; 12.50% of the respondents disagree or strongly disagree they get excited about going to work; 37.00% disagree or strongly disagree they think positive thoughts about work; and 0.00% disagree or strongly disagree they foresee themselves working for their organization one year from survey completion. Therefore, based on the survey results, employees who neither agree or disagree management within their organization recognizes strong work performance, many employees admit to employee inspiration, motivation, and retention, but lack excitement when going to work.

Analysis 4 Of the 63 participants who completed the survey, a total of 7 respondents, or 11.11%, chose disagree (2) when answering the question: Management within my organization recognizes strong work performance. Of the 7 respondents, below outlines how they responded to the additional Likert-scale questions:

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I foresee I am I am When I I get myself inspired determined think about excited working for to meet to give my work, I about this my best effort think going to organization goals at at work positive work one year work each day thoughts from today Strongly Agree 5 5 5 5 5 Total Responses 1 1 0 0 0 Percentage 14.29% 14.29% 0.00% 0.00% 0.00% Agree 4 4 4 4 4 Total Responses 0 1 0 0 2 Percentage 0.00% 14.29% 0.00% 0.00% 28.57% Neither Agree /Disagree 3 3 3 3 3 Total Responses 2 1 1 2 3 Percentage 28.57% 5.88% 14.29% 28.57% 42.86% Disagree 2 2 2 2 2 Total Responses 4 4 4 3 1 Percentage 57.14% 57.14% 57.14% 42.86% 14.29% Strongly Disagree 1 1 1 1 1 Total Responses 0 0 2 2 1 Percentage 0.00% 0.00% 28.57% 28.57% 14.29%

Of the respondents that chose disagree (2), it should be noted that the following responses occurred: 14.29% of the respondents agree or strongly agree they are inspired at work; 28.57% of the respondents agree or strongly agree they are determined to give their best effort at work each day; 0.00% of the respondents agree or strongly agree they get excited about going to work; 0.00% agree or strongly agree they think positive thoughts about work; and 28.57% agree or strongly agree they foresee themselves working for their organization one year from survey completion.

Of the respondents that chose disagree (2), it should be noted that the following responses occurred: 57.14% of the respondents disagree or strongly disagree they are inspired at work; 57.14% of the respondents disagree or strongly disagree they are determined to give their best effort at work each day; 85.71% of the respondents disagree or strongly disagree they get excited about going to work; 71.43% disagree or strongly disagree they think positive thoughts about work; and 28.57% disagree or strongly disagree they foresee themselves working for their organization one year from survey completion.

Therefore, based on the survey results, employees who disagree management within their organization recognizes strong work performance, many employees lack employee inspiration, excitement, motivation, and retention.

Analysis 5 Of the 63 participants that took the survey, a total of 1 respondent, or 1.59%, chose strongly disagree (1) when answering the question: Management within my organization recognizes strong work performance. Of the 1 respondent, below outlines how they responded to the additional Likert-scale questions:

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I foresee I am I am I get When I myself inspired determined excited think about working for to meet to give my about work, I think this my best effort going to positive organization goals at at work work thoughts one year work each day from today Strongly Agree 5 5 5 5 5 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00% Agree 4 4 4 4 4 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00% Neither Agree/Disagree 3 3 3 3 3 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00% Disagree 2 2 2 2 2 Total Responses 0 0 0 0 0 Percentage 0.00% 0.00% 0.00% 0.00% 0.00% Strongly Disagree 1 1 1 1 1 Total Responses 1 1 1 1 1 Percentage 100.00% 100.00% 100.00% 100.00% 100.00%

Of the respondents that chose strongly disagree (1), it should be noted that the following responses occurred: 0.00% of the respondents agree or strongly agree they are inspired at work; 0.00% of the respondents agree or strongly agree they are determined to give their best effort at work each day; 0.00% of the respondents agree or strongly agree they get excited about going to work; 0.00% agree or strongly agree they think positive thoughts about work; and 0.00% agree or strongly agree they foresee themselves working for their organization one year from survey completion.

Of the respondents that chose strongly disagree (1), it should be noted that the following responses occurred: 100.00% of the respondents disagree or strongly disagree they are inspired at work; 100.00% of the respondents disagree or strongly disagree they are determined to give their best effort at work each day; 100.00% of the respondents disagree or strongly disagree they get excited about going to work; 100.00% disagree or strongly disagree they think positive thoughts about work; and 100.00% disagree or strongly disagree they foresee themselves working for their organization one year from survey completion.

Therefore, based on the survey results, the employees who strongly disagree management within their organization recognizes strong work performance, employees completely lack employee inspiration, excitement, motivation, and retention.

Analysis 6 The final analysis includes correlation coefficients dependent upon the above data. All of the following correlation coefficients have the survey results from the question management within my organization recognizes strong work performance as the dependent variable, whereas the remaining five questions each representing the independent variable. Below outline the questions and its correlation coefficients: I am inspired to meet my goals at work, .5677; I am determined to give my best effort each day, .6190; I get excited about going to work, .7244; When I think about work, I think positive thoughts, .6849; and I foresee myself working for this organization one year from today, .6913

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Based on the correlation coefficients, there is a moderately strong positive relationship between employee inspiration and management recognizing strong work performance; a moderately strong positive relationship between employee excitement and management recognizing strong work performance; a very strong positive relationship between employee motivation and management recognizing strong work performance; and nearly a very strong positive relationship based on plans of employee retention and management recognizing strong work performance.

CONCLUSION Organizations benefit from having employees who are inspired, excited, and motivated, as well as employees who see longevity with their perspective organization. The study investigated what happens to an employee’s inspiration, excitement, motivation, and plans of retention with the organization when management recognizes strong work performance. The literature review provided several findings that organizations benefit from inspired, excited, and motivated employees, as well as organizational retention. The selected instrument for this study was a survey which was designed to reveal data in order to find correlation among variables. The study amounted to 63 voluntary participants. The findings reveal there is a moderately strong positive relationship between employee inspiration and management recognizing strong work performance; a very strong positive relationship between employee excitement and management recognizing strong work performance; a moderately strong positive relationship between employee motivation and management recognizing strong work performance; and a nearly very strong positive relationship based on plans of employee retention and management recognizing strong work performance.

The overall conclusion of the study proves managers recognizing an employee’s strong work performance is an imperative positive reinforcement tool that leads to many added positives in an employee’s workplace feelings and behaviors, such as inspiration, excitement, motivation, and retention.

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Yousaf, S., Latif, M., Aslam, S., & Saddiqui, A. (2014). Impact of financial and non-financial rewards on employee motivation. Middle-East journal of scientific research, 21(10), 1776-1786.

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THE CY 2021 PDGM 30-DAY HOME HEALTH PROSPECTIVE PAYMENT SYSTEM RATES FOR HOME HEALTH SERVICES

Rivera Jr., Gonzalo Texas A&M University-Kingsville Holt, Paul University of Central Oklahoma

The purpose of this paper is to discuss an overview of the new updated PDGM 30-Day Medicare HHPPS rates for CY 2021. For Medicare covered home health services beginning January 1, 2021, this finalized rule titled “Medicare and Medicaid Programs: CY 2021 Home Health Prospective Payment System Rate Update” discusses the new changes for the HHPPS payment rates. This proposed CY 2021 rule includes the current changes from the 60-day to the 30-day episode payment rates, and the national per-visit rates for home health services.

HH PPS STANDARDIZED NATIONAL 60-DAY EPISODE RATE Beginning October 1, 2000, as required by the Balanced Budget Act (BBA) of 1997 and its related amendments, BBA changed the way it reimbursed home health agencies for Medicare covered home health services using a new reimbursement method called the Home Health Prospective Payment System (HH PPS). Under HHPPS, all home health costs for Medicare covered services including medical supplies are paid using a basic unit of payment known as the 60-Day Episode. This HHPPS 60-day payment rate included the six home health service disciplines (skilled nursing, physical therapy, occupational therapy, speech therapy, home health aide, and medical social services). For home health services beginning October 1, 2000, Medicare computed the first HHPPS standardized national 60-day episode rate of $ 2,115.30 as presented by the following table (1) (HHPPS 1999).

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FY 2000 Standardized National 60-Day Episode Payment Calculation (Table 1) HHA discipline Average cost per visit Average number of HHA Type / Non-Routine from PPS audit visits for episodes prospective Supplies sample / Average cost with >4 visits from payment (NRS) per episode (NRS…) CY 98-episode file rate Skilled Nursing $94.96 14.08 $1,337.00 Home Health Aide $41.75 13.4 $559.45 Physical Therapy $104.05 3.05 $317.35 Occupational $104.76 .53 $55.52 Therapy Medical Social $153.59 .32 $49.15 Service Speech Therapy $113.26 .18 $20.39 NRS - cost report $43.54 $43.54 NRS – Part B $6.08 $6.08 Part B Therapies $17.67 $17.67 Initial OASIS cost $5.50 $5.50 Cont’d OASIS cost $4.32 $4.32 $2,416.01

Total non- Standardized Budget Outliers Final standardized 60- standardized factor - wage neutral- adjust- day episode rate Oct. payment index & case- ity factor ment 2000 mix factor $2,416.01 / .96184 * .88423 / 1.05 $2,115.30

The standardized 60-day episode payment rate was further updated for each of the following years as noted on table (2) below (HHPPS 2001; HHPPS 2002).

National Standardized HHPPS Episode Updated FY 2001-2003 (Table 2) National 60-Day Episode Rate National standardized Amount Updated FY 2001- 2003 60-day For Episodes Ending Between episode rate

October 1, 2001- September 30, 2002 $ 2,274.17

October 1, 2002 - September 30, 2003 $ 2,159.39

MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003 The Medicare Prescription Drug, Improvement and Modernization Act of 2003(DIMA) updated the national home health standard prospective payment system (HHPPS) rates for 60-day episodes ending October 1, 2003-December 31, 2004 and the bill required updated payment increases to be computed on a calendar year basis beginning January 1, 2005. The following table (3) reflects the updated standardized

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60-day episode rates that was required by the 2003 DIMA for the following periods (Medicare Prescription 2003); (HHPPS 2004; 2005; 2006).

HHPPS National Standardized 60-Day Episode Rates Updated by DIMA (Table 3) MSA (Metropolitan Service Area) MSA National standardized Episodes Ending Between 60-day episode rate (DIMA)

October 1, 2003 - March 31, 2004 $ 2,230.65

April 1, 2004 - December 31, 2004 $ 2,213.37

January 1, 2005 - December 31, 2005 $ 2,264.28

January 1, 2006 - December 31, 2006 $ 2,327.68

January 1, 2007 – December 31, 2007 $ 2,339.00

HHPPS NATIONAL 60-DAY EPISODE PAYMENT RATE FOR EPISODES BEGINNING IN CY 2008 For 60-day episodes beginning in 2008, the Medicare HHPPS national standardized rate was updated by a new 153 case mix grouping called home health resource groups (HHRGs) and a new wage index value was determined by the site of the home health services. The August 29, 2008 ( 72 FR 49792) and November 30, 2008 (72 FR 67656) Federal Registers discussed the new changes under the “Home Health Prospective Payment System Refinement and Rate Update For Calendar Year 2008” rule which included the adjustments to the rebasing and revising of the home health market basket, resulting in new labor portion percentage of 77.082 and non-labor portion percentage of 22.918; this rule updated the LUPA (Low Utilization Payment Adjustments) per-visit payment rate, and the inclusion of an new additional payment for NRS ( Non-Routine Supplies) (HHPPS 2008). The following table (4) reflects the calculations used to update the national standardized payment rate under the Medicare HHPPS for 60-day episodes beginning and ending CY 2008 (HHPPS 2008).

CY 2008 Medicare HHPPS National 60-Day Episode Standardized Payment Rate (Table 4) CY 2007 Multiplied Multiplied Adjustments HH PPS CY National by the by outlier for LUPA, 2008 Standardized Home adjusted SCIC, NRS, National 60- 60-day episode Health national Outliers, and Day payment rate Market payment 0.0275 Standardized Update rate reduction for Episode 3.0 percent case mix Payment Rate changes $ 2,339.00 X 1.030 X 1.05 -259.31 $ 2,270.32

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WEIGHTS FOR NON-ROUTINE MEDICAL SUPPLIES (NRS)—SIX-GROUP APPROACH EFFECTIVE CY 2008 The Home Health Prospective Payment System Refinement and Rate Update for Calendar Year 2008 included an additional payment for Non-Routine Supplies (NRS). The NRS payment amounts were computed by multiplying the relative weight for a particular severity level by the NRS conversion factor. The NRS conversion factor was updated by the home health market basket update of 2.9 percent and reduced by the 2.75 percent reduction. The CY 2008 NRS conversion factor for was $52.35. The following table (5) computed the new additional payment for NRS (Non-Routine Supplies) incurred in home health services for CY 2008 60-day episodes. The additional payment amount was based on the severity level of the patient care (HHPPS 2008).

CY 2008 Additional Payment for NRS (Table 5) Severity Points Relative Conversion Payment Level Scoring Weight Factor Amount

1 0 0.2698 $ 52.35 $ 14.12 2 1 – 14 0.9742 52.35 51.00 3 15-27 2.6712 52.35 139.84 4 28-48 3.9686 52.35 207.76 5 49-98 6.1198 52.35 320.37 6 99+ 10.5254 52.35 551.00

HOME HEALTH PROSPECTIVE PAYMENT SYSTEM UPDATES TO THE NATIONALIZED STANDARDIZED 60-DAY PAYMENT RATES The following table (6) reflects the HHPPS updates to the nationalized 60-day episode payment rates for each of the following years (excluding NRS): (HHPPS 2009; 2010; 2011; 2012; 2013; 2014; 2015; 2016; 2017;2018).

National 60-Day Episode Amounts Updated for Calendar Years 2009-2019 (Table 6) MSA (Metropolitan Service Area) MSA National standardized Episodes Ending Between 60-day episode rate

January 1, 2009 - December 31, 2009 $ 2,271.92

January 1, 2010 - December 31, 2010 $ 2,312.94

January 1, 2011 – December 31, 2011 $ 2,192.07

January 1, 2012 – December 31, 2012 $ 2,112.37

January 1, 2013 – December 31, 2013 $ 2,138.52

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January 1, 2014 – December 31, 2014 $ 2,869.27

January 1, 2015 – December 31, 2015 $ 2,961.38

January 1, 2016 – December 31, 2016 $ 2,965.12

January 1, 2017– December 31, 2017 $ 2,989.97

January 1, 2016 – December 31, 2016 January 1, 2018 – December 31, 2018 $ 3,039.64

January 1, 2019 - December 31, 2019 $ 3,151.22

HH PPS NATIONAL 30-DAY NATIONAL PAYMENT FOR EPISODES BEGINNING IN CY 2020 For home health services beginning January 1, 2020, the finalized rule titled “Medicare and Medicaid Programs; CY 2020 Home Health Prospective Payment System Rate Update “includes the new change from a 60-day episode to a 30-day episode unit of payment, and a new patient 432 HHRG case-mix grouping named Patient-Driven Groupings Model (PDGM) (HHPPS 2019). This new PDGM will determine LUPAs and eliminate the need for a separate NRS calculation. To calculate the CY 2021 30- day national standardized payment rate, the following adjustments were applied to the CY 2020 national standardized payment rate: wage index neutrality factor of 0.9999; and a home health payment update factor of 1.020. The following table (7) reflects the HHPPS national standardized 30-day episode payment rate for CY 2021 (HHPPS 2020).

CY 2020 30-Day Episode National Standardized Payment Amount (Table 7) CY 2020 30-Day Episode National Neutrality HH CY CY 2021 30-Day Episode National Standardized Payment Factor 2021 Standardized Payment Wage Payment Index Update $ 1.864.03 X .09999 X 1.020 $ 1.901.12

NATIONAL PER-VISIT PAYMENT AMOUNTS USED TO PAY LUPAS FOR CY 2021 The HHPPS 2020 finalized rule updated the national per-visit rate. This national per-visit rate is used in paying low- utilization payment adjustments (LUPAs). LUPAs are defined as 30-day episodes with four or fewer visits. The payment per- visit amount is based on the type of home health visit or home health service discipline. There are six home health (HH) disciplines as noted on Table 8 below. In determining the CY 2021 national per-visit amounts used for LUPA episodes, the CY 2020 per-visit amounts were calculated for each home health service discipline by the following adjustments: a wage index budget neutrality factor of 0.9997; and an updated 2020 HH payment update factor of 2.0 percent. The CY 2021 national per-visit rates for each HH discipline are shown below in Table 8 (HHPPS 2020).

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CY 2021 National Per-Visit Home Health Discipline Type Payment (Table 8) Per-Visit Neutrality HH Payment Per-Visit Payment Payment Factor Update CY 2020 Amount Home Health Discipline CY 2020 Wage CY 2021 Type Index

Home Health Aide $67.78 x .09997 x 1.020 $69.11

$239.92 x .09997 x 1.020 $244.64 Medical Social Services

Occupational Therapy $164.74 x .09997 x 1.020 $167.98

Physical Therapy $163.61 x .09997 x 1.020 $166.83

Skilled Nursing $149.68 x .09997 x 1.020 $152.63

Speech Pathology $177.84 x .09997 x 1.020 $181.34

LOW UTILIZATION PAYMENT ADJUSTMENT (LUPA) ADD-ON FACTORS CY 2021 The Table 8 per-visit rates computed above are before an additional payment is added to the LUPA payment. Beginning in CY 2021, home health agencies with LUPAs payments for episodes billed as the only episode or the initial episode are to be paid an additional amount (Add-on Factor). For CY 2021, the additional amount paid to LUPAs billed as initial episodes in a sequence of adjacent episodes or as the only episode is based on the following three factors: SN 1.8451; PT 1.6700; and SLP 1.6266 (HHPPS 2020).

COMPUTING THE CY 2021 HHPPS 30-DAY EPISODE PAYMENT RATE FOR A HOME HEALTH AGENCY As stated in the Medicare HHPPS rules effective January 1, 2020, the new basic unit of payment is a 30- day episode national standardized rate. This standardized rate is adjusted for by a PDGM HHRG case- mix weight and a wage index value based on the site of service. To help account for geographical wage differences, a part of the wage index value is applied to a labor related portion and non-labor related portion. The example below demonstrates a sample computation using the national home health standardized prospective payment system (HHPPS) rates for the 30-day episodes beginning CY 2020. 164

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The example computation includes the CY 2021 PDGM case-mix weights for a city with the Core Based Statistical Area (CBSA) codes for labor wage indexes. The wage index is adjusted with the labor portion of 76.1 percent and the non-labor portion of 23.9 percent. The total 2021 HHPPS payment a community home health agency receives for providing Medicare covered services in Corpus Christi, Texas based on the information below amounts to $ 2,165.27.

Corpus Christi, Texas 1. CBSA Number Site of Service (See Table 10) 18580 2. PDGM HHRG 1FC11 Case Mix Weight (See Table 11) 1.1798

3. 2021 National 30 Day PPS Rate (See Table 7) $ 1,901.12 4. PDGM HHRG Weight 1FC11 (See Table 11) 1.1798 5. Case Mix Adjusted PPS (Line 3 * Line 4) $ 2,242.94 6. Labor Rate Percentage 0.761 7. CBSA Labor Wage Index – 18580 (See Table 10) 0.9545 8. CBSA Labor Wage Adjusted Rate PPS (Line 5 * Line 6* Line 7) $ 1,629.21 9. National PPS Rate -Non-Labor Rate % 0.239 10. Case Mix PPS Rate – Non-Labor Rate % (Line 5 * Line 9) $ 536.06 11. Adjusted PPS Rate (Line 8 + Line 10) $ 2,165.27

Medicare HHPPS CY 2021 Wage Index (Table 10) * CBSA Urban CBSA Name CY 2021 /Rural Area Wage Index 18580 Urban Corpus Christi, Texas 0.8569 0.9545

99945 Rural Texas .82.82.82

0.8211

11100 Urban Amarillo, Texas 0.8409 0.8131

HHPPS CY 2021 Case-Mix Weights (Table 11) *

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CY 2021 PDGM LUPA THRESHOLD AND CASE MIX WEIGHT FOR EACH HHRG PAYMENT GROUP Visit Threshold CY Clinical Group and Functional Timing and Admission (10th percentile or HIPPS 2021 Level Source 2 - whichever is Weights higher) 1FC11 Behavioral Health - High Early - Community 4 1.1798 1FC21 Behavioral Health - High Early - Community 4 1.2305 1FC31 Behavioral Health - High Early - Community 4 1.3271 2FC11 Behavioral Health - High Early - Institutional 4 1.3599

* Medicare and Medicaid Programs; CY 2021 Home Health Prospective Payment System Rate Update.

CONCLUSION Home health agency administrators, supervisors, and financial officers need to calculate and evaluate the Medicare HHPPS payment amounts expected to be received for each of their patients admitted for home health services. These financial administrators should prepare standardized payment tables for each of their sites of services. These tables should reflect the current HHPPS payment amount for a patient assigned a particular PDGM HHRG payment group within each of the 30-day episode based on the site of service. Under the CY 2021 HHPPS rule, home health agencies are to be reimbursed one total for all home health services, including routine and non-routine medical supplies, provided to their patients within each 30-day episode. Home health agencies need to calculate their per-patient costs for each type of home health service. By obtaining the per-patient cost for each of the different home health services, an agency will be able to determine the total number of visits financially feasible within the 30-day episode.

REFERENCES

Medicare Program. Prospective Program Payment System for Home Health Agencies 1999, 42 FR Vol. 64 Parts 409, 410, 411, 413, 424, and 484. Medicare Program. Update to the Prospective Program System for Home Health Agencies FY 2000, 2001, F.R. Vol. 66, No. 126. Medicare Program. Update to the Prospective Program System for Home Health Agencies FY 2002, F.R. Vol. 67, No. 125. Medicare Program. Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L.: 108-173, Section 701. Medicare Program. Home Health Prospective Payment System Rate Update for Calendar Year 2005, FR Vol. 69, No. 204. Medicare Program. Home Health Prospective Payment System Rate Update for Calendar Year 2006, FR Vol. 70, No. 216. Medicare Program. Home Health Prospective Payment System Rate Update for Calendar Year 2007, FR Vol. 71, No. 149. Medicare Program. Home Health Prospective Payment System Refinement and Rate Update for Calendar Year 2008, FR Vol. 72, No. 230. Medicare Program Home Health Prospective System Rate Update For Calendar Year 2009, FR Vol. 73, No. 213.

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Medicare Program. Home Health Prospective System Rate Update For Calendar Year 2010, FR Vol. 74, No. 216. Medicare Program. Home Health Prospective System Rate Update For Calendar Year 2011, FR Vol. 75, No. 221. Medicare Programs. Home Health Prospective Payment System Rate Update for CY 2012, FR Vol. 76, No. 214. Medicare Program. Home Health Prospective Payment System Rate Update for Calendar Year 2013. FR Vol. 77, No. 217. Medicare and Medicaid Programs. Home Health Prospective Payment System Rate Update for CY 2014, FR Vol. 78. No. 231. Medicare and Medicaid Programs. Home Health Prospective Payment System Rate Update for CY 2015, FR Vol. 79. No. 215. Medicare and Medicaid Programs. CY 2016 Home Health Prospective Payment System Rate Update, 80 FR 39839. Medicare and Medicaid Programs. CY 2017 Home Health Prospective Payment System Rate Update, FR Vol. 81. No. 213. Medicare and Medicaid Programs. CY 2018 Home Health Prospective Payment System Rate Update, FR Vol. 82. No. 214. Medicare and Medicaid Programs. CY 2019 Home Health Prospective Payment System Rate Update, FR Vol. 83. No. 134. Medicare and Medicaid Programs. CY 2020 Home Health Prospective Payment System Rate Update, FR Vol. 84. No. 217. Medicare and Medicaid Programs. CY 2021 Home Health Prospective Payment System Rate Update, FR Vol. 85. No. 214.

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EFFECTS OF ISLAMIC BELIEFS ON FOSTERING ENTREPRENEURIAL ACTIONS: AN EXPLORATORY STUDY

Roberts, Ridwaan B University of Johannesburg

Abstract The purpose of the paper is to offer insights into the effects of Islamic beliefs on fostering entrepreneurial actions. This paper is based on Islamic literature on the religion. Islam’s views on Shariah. Islamic entrepreneurship, insights of models of Islamic entrepreneurship. The areas of Muslim family SMEs or larger private business and their involvement in entrepreneurship. The aim is to explain how they apply Shariah and how they acquire Spiritual capitial. This paper recognises the view of Islam as both a faith and human actions. It professes that this view ought to be the starting point of clinical analysis on the crossroads of Islam and Entrepreneurship. It also found the integration Muslim family business and Islamic entrepreneurship. Based on the premise of Islam as a belief system and a entrepreneurship as part human actions, it thus ,provides future directions for critical research to explore the questions of “ what , why, and how” how Islam can contribute to the fostering entrepreneurial theory and practice.

Keywords: Islamic identity; entrepreneurship; family firms; Shari'ah

Introduction Islam, like other religions, places great importance on servitude and society as the primary unit in Islam, not the market or the state. Shari'ah principles (Islamic doctrines) imply that the real wealth of societies is their people. Human beings are motivated to pursue their "self-interest within the constraints of the economic well-being, the application of a‘moral filter’. Neither 'the invisible hand' of the "free market "nor' central planning' could succeed in achieving economic goals. Muslims have a way of life and value system (Shari'ah) based on Islam, including Muslim entrepreneurs in family businesses (Razak, 2017). Shari'ah ethical tools are the cornerstones of Islamic entrepreneurship. It is proposed that the SME sector would derive much benefit from these tools, as they include concepts, such as trust (amanah), justice ('adl'), sincerity (ikhlas), truthfulness (sadiqun), and benevolence (ihsan). In essence, religious beliefs are drivers for strategic renewal. They give rise to religious values that lead to a religious identity. This religious identity allows private family firms to accumulate spiritual capital, as well as knowledge and other resources. This spiritual capital motivates the family to work harder and maintain their identity and legacy. They use the capital to create strategic renewal in family firms, which may also utilise it for conflict resolution and resource allocation.

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Next, the authors below proposed several limitations, arguments and future research options. For example, does religious beliefs apply to public family firms, or the nature of spiritual capital, religious identity as a standard for doing business (Sondos & Zahra, 2019)? The overall aim of this study was to gain a deeper understanding of Muslim family businesses, with specific reference to the effects of Shari'ah on these businesses. Pascual and Hay (2018) listed some questions that this study pursued. The specific objective of this study was to explore how Islam, through Islamic entrepreneurship, has the potential to provide a similar way in the development of entrepreneurship. In another study, Smith, Conger, McMullen, & Neubert, (2011) also highlighted the role of religion in entrepreneurial action. They deduced that religion as a factor is marginalised from entrepreneurial research. Research focused on how religion shapes and is shaped by entrepreneurship only has been extremely limited. Therefore, researchers may have overlooked an important driver of both individual and collective entrepreneurial action in modern life. Furthermore, the scholars above made exhaustive statements about the issues of entrepreneurship and religion. For example, they contended entrepreneurship had obtained relevance but that more progress and cutting-edge research will require entrepreneurship scholars to consider a different route to the discipline, which they ought to engage in less incremental and more transformational research to generate new questions and insights. The integration of religion and entrepreneurship provides one such avenue, without which scholars would continue to have an incomplete understanding of the science of entrepreneurship Smith, Conger, McMullen and Neubert, (2011). They also noted that religious doctrines might influence the worldview of individuals, including Muslim entrepreneurs. The doctrines affect their priorities in life, their socialisation and their preferences, especially in the economic sphere. They mentioned that entrepreneurs' religious beliefs also determine the values and norms that may affect their behaviour, define what the entrepreneurs are permitted to accomplish and influence the development of attitudes and entrepreneurial intentions. Therefore, the doctrines change their values and contribute to the content and core of a better perspective of entrepreneurship. In a Brazilian study of entrepreneurial intention and the Theory of Planned Behaviour (TPB), Sousa, Paiva, Santos, Rebouças and Fontenele (2020) said entrepreneurial intention is connected to the individual by an inherent mental process. The latter is a reference to explaining and predicting behavioural intentions in multidisciplinary contexts related to the field of scientific knowledge, especially to applied social sciences. In short, the TPB relates to the explanation of the process of intention formation, since it permits the identification of how the phenomenon occurs in the field of entrepreneurial intention. The TPB has three dimensions: personal attitudes, subjective norms and perceived behavioural control (Da Santos et al., 2020). In addition, the author above found a gap in the literature when considering the alignment of TPB and religious beliefs. This research addresses the gap and contributes to improving knowledge about Muslim entrepreneurship, specifically in the study of entrepreneurial aims. The research results may broaden the understanding of the influence of religious beliefs on entrepreneurial aims or actions. Literature Review and Theoretical Framework Entrepreneurship Entrepreneurship is context based. The conceptual used lens could vary. I will describe it from a cultural lens and its importance of entrepreneurship. The study will not have an exhaustive

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ASBBS Proceedings of the 28th (Virtual) Conference explanation of who or what an entrepreneur is. As this concept had been clearly defined in the past by scholars such as, Since Cantillon, 1730, Gartner, 1990 and beyond. They also identified two main theories that explain the role of the entrepreneur in economic development. One, Schumpeterian (1934), whose central tenant was innovation and based on opportunity discovery. Two, the evolutionary of Kirznerian, of the Austrian school of economics, theories of entrepreneurship. The central theme was “uncertainty’. This theory was very relevant to the development of emerging economies, such a Japan, Hong Kong, Singapore and Taiwan. It may be applied to South Africa (SA) context that is an emerging economy by ‘creative imitation and or adaptation. Small Medium Enterprises SME’s and Entrepreneurship In essence, SME’s are mostly is applied to developing countries such as SA, whose aim is economic development and not about economic growth. For example, SMEs are the lifeblood the lifeblood of developing economy. As the benefits include, job-creation, training for the unskilled, they provided a mechanism for equitable pay. In addition, SME has, implied fewer than 100 employees, including community-based firms. They use the local networks for capital inputs and for their sustainability of their local economies. In contrast to large firms, their challenges are gigantic Also, their quality, their small size and outputs are not always recognised. Another perspective is the various approaches toward entrepreneurship. Briefly, Kayed (2006 49-68) mentioned six approaches. For this the cultural perspective versus the institutional approach will be explored. To date scholars were increasing utilizing cultural factors to explain entrepreneurship development in the different parts of the world. Hence, they linked entrepreneurship development due to their cultural factors as espoused by Hofstede dimensions (1980). The question posed by the scholars was and relevant to this study is: To what extent do cultural values and religious beliefs influence the entrepreneurial drivers of nations? In essence, Kayed,(2006: 63) highlighted entrepreneurship that entrepreneurship is country specific. He developed a model to explain entrepreneurship from an Islamic dimension was aimed at Islamic development. Culture and entrepreneurship AS such, the discussions by various scholars on culture, for example by Mazonde and Carmichael (2015, their study examined Hofstede’s (1980) Initially the five cultural dimensions as a theory. These dimensions were expanded into nine dimensions. As each entrepreneurial context had its own set of complexities In another study known as the, The Global Leadership and Organizational Behaviour Effectiveness (GLOBE, 2012,) which included Global Entrepreneurial Monitor (GEM) emerged a new study which integrated various cultural models include was Hofstede’s dimensions. GLOBE maintained the labels Power Distance and Uncertainty Avoidance, Collectivism was split into Institutional Collectivism and Group Collectivism; Masculinity Femininity into Assertiveness and Gender Egalitarianism. Long Term Orientation and Short – term Orientation. They included two new dimensions; Humane Orientations and Performance Orientation. These nine dimensions thus had an influence on business development in the various countries. As they mentioned that culture is not static. Thus, Mazonde and Carmichael (2015) study mention that Hofstede’s Value Survey model1994 (VSM94) which is used to measure cultural values between two groups, could not be used in South African context to measure.

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Therefore, based on the Mazonde and Carmichael (2015) and of Shariah literature, I make some assumptions of Hofstede’s extended dimensions that may apply specifically to Muslim businesses and entrepreneurs in South Africa. Namely, Power Distance , it would score high South Africa. Uncertainty Avoidance , the stress of an unknown future due to a factors such as COVID 19 would be high for South Africa . As such, Muslim businesses would score low as they belief the destiny rests with God(Allah). Individualism versus Collectivism: Collectivism would score s high within Muslim businesses, due to the importance of community and family values. This aspect promotes business interests too. Masculinity and Femininity, for Muslim entrepreneurs , would had a low score due to Gender Egalitarianism, but it would encourages Muslim female entrepreneurship. Long-term-term versus short-term, high for Muslim entrepreneurs in South Africa. Performance orientation would low for female entrepreneurs in general, as they receive scarce support institutional or family support. The same would be for Power distance, high thus again this encouraged female entrepreneurship. Indulgence versus Restraint, high for Muslim entrepreneurs due to their beliefs as per Quran (Holy Book) and Shariah principles mention in this study. Assertiveness; medium, as South Africa is newly rated assertive country. However, Uncertainty Avoidance, low, thus it will encourage risk-taking and opportunity taking; this is also encourage by Shariah. Human orientation; high for the Muslim entrepreneurship due heir religions obligation, such as paying of Zakat (charity) and creating Waqhs (socio-economic entities for their communities ENTREPRENEURSHIP AND ISLAMIC PERSPECTIVE In such, there are dichotomous views from various scholars on how the role of religion shaped or not shaped entrepreneurial development. However, the scholars said this phenomenon is culture and context based, not a Western versus an Eastern culture debate. Kayed,(2006). However, as the theory on Islamic entrepreneurship is nascent in a country like South Africa (Kayed 2006, 79). That religion itself is not an impediment to growth. This facet as it encouraged by the Holy Quran, that one ought to strive for self–determination and interdependence. Kayed (2006) Also highlighted some claims and counter claims about why and what the causes for lack of development in Muslim countries. In brief, firstly, traditional values are an impediment. Secondly, that their economies could be explained in cultural terms only. For example, an interest free (riba) financial system add more costs and inefficiencies to the transactions. Thus, it demotivates Muslims from development time an entrepreneurial mindset. Thirdly, the rigorous Islamic practices, such as five daily prayers, fasting in the month of Ramadan etc. Fourthly, the Islamic education and their learning system, discourages creativity and innovation.. Lastly, many Muslim countries, there is a lack of support for entrepreneurs and a lack of a modern legal framework to enhance entrepreneurship.

Thus a basic model had to be developed which implied that there should the allocation and distribution of scarce resources amongst an infinite population.. A general entrepreurship development model (Kayed 2006:72) depicted that. Furthermore, the question postedas, is there a need for an Islamic entrepreneurial model? Scholars had explained the aims of both system are unique.. The Western entrpreneship model or culture is largely” a money making machine” to enhance economic growth. In contrast, the Islamic model, the vision is, ‘human well-being. Which based on a spiritual/ humanitarian and socio-economic basis for the well- being in the life year–after. Thus, a need for a different model was devised by Kayed , see figure 3.4 Islamic entrepreneurship model, Kayed (2006:116) 171

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Spiritual capital and entrepreneurship In a recent study as shown in Error! Reference source not found. below, Sondos and Zahra (2020) illustrated the connection between religious identity and strategic renewal in firms. For example in the Qur’anic verse (62.10), and when you prayer is over, disperse in the world and search for the

Religious Spiritual Stregic values Religious capital renewal identity •speed •scope

Figure 1. Religious identity and strategic renewal in family firms. Sondos and Zahra. (2020:778) bounty of Allah. Thus many scholars mention by Kayed (2012, 95-96) concluded that Islamic culture toward human and economic development is still relevant end needed this century. Another aspect is motives and incentives In Islamic entrepreneurship, the motives are mainly religious, serving God (Ibadah) and altruistic, advancing humanity or social cohesion, not profit maximisation only. Needless, entrepreneurship like democracy needs an enabling and supporting environment. Another important aspect related to the aspect above, is the role of Islamic finance in entrepreneurship development. Briefly, first, these composed of finance or capital rising beyond culture, geography only as context mattered. Secondly, the processes and conditions imposed by financial institutions could have either positive or negative outcomes for the entrepreneur. (Kayed 2012, 100-02). Thirdly, the Islamic financial system is not only limited to the notion interest free (riba) but also included area areas, such as, risk sharing , individual rights, property rights and the fulfilment of contracts. Fourthly, in the Islamic context, a partnership, would dictated the ‘rate of return and the profit or loss. As they had to do the work and share the risk and not pre-determine fixed interest rate plus the borrowed capital and irrespective of the outcome. As such, scholars said that all major faith and ethical ones, denounced all interest bearing instruments or banking in the interst market as unethical and immoral. For example the housing bubble in the USA in 2009, which led to high foreclosures and shrank emerging economic output and low investments in those markets. Another example is the ongoing Covid 19 global pandemic. In South Africa, had led to many business SME’s losses and closures, this led to increased human and economic suffering. The SA and many emerging debt based investment economies are debt–ridden to their GDP, with future generation likely to pay this debt. Next, the desire to add to add value to society by means of entrepreneurial deeds is high entrepreneurial intention. Thus, persons who have a higher entrepreneurial intention than those who had a religious influence affecting their attitudes, norms and behaviour control. For example, religious 172

ASBBS Proceedings of the 28th (Virtual) Conference beliefs exert a positive influence on students y entrepreneurial intention (see H1 in Figure 2 below). Sousa, Paiva, Santos and Rebouças (2020:206) In the same way, there is a relationship between the owners' systems of religious beliefs and why SME’ use Islamic financial products. Thus, religion is a catalyst for the economic directions among socio-economic groupings. However, Sousa, Paiva, Santos and Rebouças, (2020:206) inferred or reinforced the relevance of the TPB in measuring entrepreneurs' intentions by their attitudes, subjective norms and perceived behaviour control. Santos et al.'s model of research that analyses the influence of religious beliefs (H1) and the dimensions of TPB (H2) on entrepreneurial intention is presented in Figure 2 below to clarify the relationships between beliefs and attitudes, norms and controls (H2a, H2b and H2c, respectively).

Figure 2. The influence of both religious beliefs and TPB dimensions in the entrepreneurial intention (Santos et al., 2020:207).

The above model found that the family beliefs of entrepreneurs contributed to the development of their entrepreneurial intention due to this significant association. In addition, the results confirms that favourable attitudes (H2a) to entrepreneurship positively influence entrepreneurial intention. More significant was the family entrepreneurial variable, which indicates that individuals with entrepreneur parents have twice as much chance of becoming entrepreneurs. In the final analysis, the findings indicated that religious beliefs influence entrepreneurial intention in a positive and significant way. This explains the prevalence of university students with religious beliefs over those with no beliefs, mainly in relation to the tasks given by God. (Santos et al., 2020:207). The TPB is appropriate to expand the field of study that aligns religious beliefs and entrepreneurial intention (Santos et al., 2020:213). Shari'ah and Entrepreneurship Muslims derive their ethical system, Shari'ah, from a model that has been used for more than 1400 years. It is based on four sources: (1) Islam's holy book, the Qur'an, which was revealed by God to Prophet Mohammed (peace be upon him) in the seventh century in Arabia; (2) the Sunnah, which are the customs and sayings of Prophet Muhammad (PBUH) and the hadith, his deeds. Next, (3) Islamic law (fiqh) or jurisprudence; and (4) an individual's conscience when the path has not been made obvious by the first three sources. The main aims of Shari'ah, including interpretive jurisprudence (ijtihad), is an attempt to address all questions facing individuals in a dynamic society (Rice, 1999). This doctrine is more than justice is; it is also morals, with some aspects of it written into civic law, e.g., many of the 40 Muslim majority 173

ASBBS Proceedings of the 28th (Virtual) Conference countries apply succession, and it. Thus, Shari'ah has remained unsurpassed as a statement and source of social justice and ethical principles. Families in Entrepreneurship Sondos & Zahra, 2020) noted several anomalies, limitations and the family firms' religious identity and strategic renewal. An insular or private or a pluralistic public identity motivates family firms and, therefore, it would be beneficial to study the multitudes of contexts religious identity, the values that underlie them and how they transition over time. For example, how do changes in ownership, family succession and external stakeholders affect the stability and changes in religious identity. Models of Islamic Entrepreneurship Previous studies found that family businesses are amongst the leading organisational forms of business in the global business environment. Besides their economic goals, they encompass other factors, such as emotions, altruistic behaviour, family values and beliefs (Kavas, Jarzabkowski & Nigam, and 2017:276). Hence, the family business context is ideal for studying the role of religion in business, and the interaction of business and religion. By going beyond the so-called separation thesis, Jarzabkowski et al. (2017:276) explored the processes and tools by which religion-based spirituality drives the business activities in Muslim family firms. Islamic entrepreneurship is a new approach. Razak (2017:12-13) discussed Figure 3 below as a possible model cited by Bhuiyan (1996:25). Razak questioned whether the model in Figure 3 is sufficiently aligned with the Muslim purpose in life and the Muslim worldview. Figure 3. An Islamic entrepreneurship model (Bhuiyan, 1996:25) Figure 4 below is based on a model proposed by Hamid and Sa'ari (2011:114). In this model, the entrepreneur is positioned as the central actor in the ecosystem of the following three relationships: (1) Allah (God)) (Subhanahu wa ta'ala), (2) nature and (3) humankind. Here, entrepreneurial development is based on the concepts rububiyah and uluhiyyah (concepts); therefore, the government is the main driver of the ecosystem. For example, established Muslim businesses would have to adhere to the practice of infaq (donations) by paying business duties, assisting with loan payments, providing loans to the needy or providing business rescue packages.

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Figure 4. Model based on a proposition by Hamid and Sa'ari (2011:114).

A similar model (shown in Figure 5) was proposed by Ramadani (2015). Figure 5. A proposed model for Islamic entrepreneurship Ramadani, V., Dana, L. P., Ratten, V. & Sudush, T. (2015, 2015:250). In this diagram, Ramadani et al. (2015:250) framed the eight components of Islamic entrepreneurship, namely (1) the environment or context wherein God, Allah(God) gave life to (2) the Qur'an, as the rules of the game; (3) the hadith, i.e., advice and practices of God's messenger, Prophet Mohammed (PBUH), which emphasise (4) faith, i.e., taqwa or fear of Allah(God) and (5) avoiding what is unlawful, i.e., haram. In this model, the fear of God is strongly related to (6) knowledge and wisdom, which give rise to (7) entrepreneurial behaviour, which in turn leads to (8) success and rewards. In essence, "there is no room for an indolent brain in Islam". Ramadani et al. (2015:247-8) confirmed that entrepreneurship is a local, regional and global phenomenon that led innovation, risk-taking, technology, growth and organisation renewal. They predicted this process could lead to new venture creation and new ways of thinking.

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Some aspects of Figure 5 above require further explanation.

(1) Faith (taqwa), lawful acts (halal) and unlawful acts (haram).

(a) A Muslim entrepreneur has to be honest and must have faith (taqwa). This trait is related to three broad types of act: halal (lawful, permissible), haram (unlawful, not permissible) and mushtabeh (doubted) (i) Halal has three aspects, namely, (1) wajib (duty, obligatory acts), which is described as the "core halal", for example, being honest and transparent in transactions; (2) mandoob, which are preferable but not obligatory acts, for example, being helpful and going the extra mile; if the entrepreneurs do not conduct them, there is no sin; (ii) And (3) makroohare (undesirable acts), which are discouraged by Islam. (iii) Haram are acts that are unlawful and condemned, explicitly or implicitly, by Islam as a religion; these acts or behaviour are treated as sins. Examples include dealing with prostitution, illegal drugs, gamb ling, alcohol, speculation and usury. (iv) Mushtabeh (doubtful acts) are questionable and Muslim entrepreneurs should refrain as much as possible from them; they might be haram or lead to haram acts. In addition, other stakeholders, like employees or their bookkeeper, could perceive these acts as unscrupulous. (b) Most religions divide human actions into three categories: commanded, permitted and forbidden. Islam divides them into five categories: commanded, recommended, permitted, disapproved and forbidden.

(2) Knowledge and wisdom are important traits for Muslim entrepreneurs, enabling them to function or exist in this world. Muslim entrepreneurs ought to be skilled and developed; they must inculcate wisdom (hikmah): a strong memory and being knowledgeable, intelligent, modest, honest, just, prudent and strong-willed. (3) Opportunity identification: In the Quran 15:5, it is said that Allah (God)) created opportunities for everything. However, the Muslim entrepreneur must evaluate an opportunity, and pursue and control it optimally, because it is not there for its own sake. One person may see a situation or thing as an opportunity but the others may not; for example, a Frenchman may see a glass of wine as a good drink, an Irishman may prefer beer, an Egyptian Muslim may not drink beer, and a French Muslim may prefer beer to wine.

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(4) Innovativeness and risk-taking with innovation (bi-dah), changes are encouraged in products or services but restricted to sinful risk-taking. In the Muslim religion, the concept of risk-taking has different connotations. Shari'ah, Quranic or hadith, does not prohibits all forms of risk because risk alone does not warrant prohibition. However, risks related to uncertainty (gharar), like insurance (maysir) or betting are forbidden in Islam. (5) The use of resources. Based on the Quran 7:31, Muslim entrepreneurs ought to manage and monitor the cost and benefits of all resources, including time. (6) Financing: Although Islam encourages entrepreneurship and business loans, it prohibits borrowing money with interest (usury). The Qur’an says usury is forbidden because the principle of risk is for both parties to enjoy the profits and losses equally. For this reason, some banks or other financial institutions only provide products and services compliant with Shari'ah for homeownership or construction and the creation of local stock markets. (7) Ethics and responsibility. Islamic ethics are based on eight principles that bind a Muslim entrepreneur. For example, the Creator (Khaliq) and the creation (makhluq) should always be in a good relationship because ethics in Islam is transcendental. Thus, what is ethical and what is not, or what is proper and what is not is determined by Allah (God) S.W.T. With regard to decision-making, the Muslim entrepreneur must depend on Allah (God) S.W.T. for the outcome of any actions (takwakul). However, decision-making should be accompanied by thoughtful effort

In the table below are examples from the Quran and hadith of Islamic principles related to modern business practices.

Islamic principles based on the Qur'an Corresponding modern business practices

"And follow not. say not or do not or witness not) Honesty and truthfulness; investigation and that of which you have no knowledge" (17:36). verification before action; right and ethical conduct; true witness.

"…the best of men for you to hire is the strong, the Merit and competency should be the standard for trustworthy" (28: 26). selection and hiring.

"And observe the weight with equity and do not Truthfulness, sincerity and honesty in business make the balance deficient" (55:9; 83:1-3). dealings.

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"And those who answer the call of their Lord and Consultative decision-making. establish prayer and who conduct their affairs by mutual consultation" (42:38).

"O you who believe! Fulfil your obligations" (5:1). Responsibility cannot be avoided.

Written contract and bearing witness.

Islamic principles based on hadith (sayings of the Corresponding modern business practices Prophet)

"He who cheats is not one of us." Defects of an item are to be disclosed.

"God likes that, when someone does anything, it Excellence and quality of work, no scope for must be done perfectly well." negligent behaviour.

"Don't outbid one another in order to raise the No artificial price increase; fairness in contract price." negotiation.

"Don't enter into a transaction when others have Need for fair play. already entered into that transaction."

"Whoever takes money of the people with the No deception or plundering with public money. intention of repaying it, God will repay it on his behalf (should he fail to do so); and whoever takes it in order to spoil it, then God will spoil him."

"One who employs a labourer and takes full work A fair wage for a fair day's labour. from him but does not pay him for his labor shall face God's wrath in the Day of Judgment."

(8) Success and rewards. In Islam, entrepreneurship is measured both qualitatively (faith in God) and quantitatively (financially and by obtaining other enhancements), and the measurement depends on the environment or the context. Ramadani et al. (2015:25) noted that acting entrepreneurially is culture-bound because entrepreneurs cannot act in a vacuum: The context they operate in is a key variable for success or failure.

Figure 6 below shows a model developed by Smith et al. (2020) to show that the role of religion in entrepreneurial actions has three cardinal aspects: prior knowledge plus motivation leads to four outcomes.

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Figure 6. The role of religion in entrepreneurial action (Smith et al., 2020).

Some Challenges for Muslim Entrepreneurs Involved in Entrepreneurship: Some of the major challenges facing all entrepreneurs and small and large businesses. A recent example is the current Coronavirus pandemic effects. However, there are others: • A challenge for many modern-day Muslims is their misconceptions and misapprehensions about, and lack of confidence in the Islamic system. • In addition, some Muslim countries are not exemplars of this system. • Another challenge is brought by the bad connotations of the word Islam (an Arabic word derived from salam, meaning "peace"), which led many non-Muslims' perceptions to be skewed due to the actions of terrorists, many from the Middle East, whom Muslim leaders have condemned. • "Religiosity" is a major threat to or weakness in national competitiveness. • Another important consideration is a lack of training in and development of the al Quran and as- Sunna included in the business context. • In contrast, many Muslim entrepreneurs who practice conventional (non-Shariah) entrepreneurship said they found their choices less complex and more rewarding.

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Conclusion and Future Research Directions In short, a religious perspective on entrepreneurship is distinct, as it commonly entails speciﬁc and detailed narratives and practices, a deﬁned scriptural source and “a clearer vision distinct meta- physical objective" (Gümüsay, 2014:199). This study aimed to prove that a more holistic approach to entrepreneurship research is needed and should incorporate religion to enhance or complement existing entrepreneurship theory and practice (Gümüsay, 2014:199). For Muslims, their religion/faith, has an important role in their life" (Gümüsay, 2014:199), specifically in their socio-economic life. For example, Sondos and Zhara (2020) said that the religious identity in family firms referred to their collective sense of being, which was consistent with founders' and family long-held religious values and beliefs and was pivotal or central to their firms, and that these factors would affect how family firms operate and compete. Hence, the Muslim family firm context was ideal for studying the effects of religion in business interactions, thus refuting the separation thesis that business and religion are separate factors. The models discussed provided a theoretical contribution to, though not a complete perception of, entrepreneurship derived from the faith of Islam. Today, many Muslim companies practise capitalism, use almost all capitalist tools, and compete in local, regional and international markets. A fundamental consideration is that Islam does not question or prohibit women from being entrepreneurs (Ghoul, 2015). Many Muslim women are engaged in and support the Islamist and Shari'ah principles that a good life is where a person strives to assist, to make the world ethically better, rather than striving for consumption and social standing only. Islamic trade prohibits hoarding, adulterating, short measuring and other forms of exploitation. Practical Managerial Implications and Recommendations In South Africa, supportive entrepreneurial government agencies, the Department of Small Business and private sector actors should amend their entrepreneurial policies to include diversity. Higher education institutions should also expand the review of management studies because the importance of considering the interests of Islamic entrepreneurship and business as a specific context in Southern Africa is increasingly realised. Other research questions and recommendations for further studies are: • To what extent do Muslim entrepreneurs consider the Islamic principles of entrepreneurship and business practice in Islamic countries? • Which are the main challenges of Muslim entrepreneurs in non-Islamic countries? • How do they collaborate with entrepreneurs of other religions? • How do they collaborate with Muslim and non-Muslim female entrepreneurs? Islam as a religion has given great attention to entrepreneurship and business. Muslims have a unique value system based on Islam. In essence, they need to formulate and implement direct entrepreneurial and business strategies in order for them to realise the economic or spiritual outcomes they seek. All the models of the Islamic perspective of entrepreneurship discussed above clearly added a new and major dimension to the concept of entrepreneurship whose roots were propagated by the glorious religion of Islam. Challenges or barriers to Shari'ah were the validity and reliability of its acceptance by Muslims themselves. The transition from "knowledge" to "work-integrated knowledge" is ineffective for the ordinary Muslim, let alone the entrepreneurs (Had it been effective, many would be scholars on the subject). Many precepts or practices are neglected. As stated earlier,

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REFERENCES Abdelgaward and Zahra (2019). Boulven, M. A., Abdullah, S., Bahari, A., Ramli, A. J., Hussin, N. S., Jamaluddin, J. and Ahmad, Z. (2018). Model of Islamic social entrepreneurship: A study on successful Muslim social entrepreneur in Malaysia. MATEC Web of Conferences 150: 05093. MUCET 2017. Doi: 10.1051/matecconf/201815005093 Dewi, A. C. E. & Dhewanto, W. (2012). Key success factors of Islamic family business. International Conference on Asia Pacific Business Innovation and Technology Management, 57: 53-60. Available online at www.sciencedirect.com Elfakhani, S. & Ahmed, Z. U. (2013). Philosophical basis of entrepreneurship principles within an Islamic ethical framework. Journal of Transnational Management, 18(1): 52-78. Doi: 10.1080/15475778.2013.752780 Ghoul, W. A. (2015). Entrepreneurship within the framework of Shari'ah. International Journal of Business and Globalisation, 15(3): 262-272. Available from https://www.inderscienceonline.com/doi/abs/10.1504/IJBG.2015.071904 Gümüsay, A. A. (2015). Entrepreneurship from an Islamic perspective. Journal of Business Ethics, 130: 199-208. Doi: 10.1007/s10551-014-2223-7 Hofstede, G (1980), Cultural Consequences: International Differences in Work-related Values. Beverly Hills, Sage Publications. Junaid, M., Durrani, M., Mehboob-ur-Rashid., & Nasir, S. (2014). The role of faith and cultural norms in sustaining family entrepreneurship in turbulent times: The case of Hindko speaking entrepreneurs in Peshawar. Journal of Managerial Sciences, 8(1): 1-26. Kavas, M., Jarzabkowski, P. & Nigam, A. (2017). Islamic family business: The constitutive role of religion on business. Academy of Management Annual Meeting Proceedings, 1. Doi: 10.5465 Kayed (2006) Islamic entrepreneurship, a case study of the kingdom of Saudi Arabia. Doctoral dissertation .Massey University, Palmerston North, New Zealand. Jones, J. & Buame, S. (2019). Passing on the baton: A succession-planning framework for family- owned business in Ghana. Journal of emerging economies 12(2): Available from: http://ugspace.ug.edu.gh/handle/123456789/33951 181

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Mazonde, N.B and Carmichael, T (2015). Culture and Entrepreneurship: Developing a Country perspective. A paper presented at the 10th Europen Conference on Innovation and Entrepreneurship, ICIE 2015, at the University of Genoa, Italy, from the 17th -18th September, 2015 Ramadani, V, Dana, L. P; Ratten, V. & Sudush, T. (2015). The context of Islamic Entrepreneurship and business: concept, principles and perspectives. Int. J. Business and Globalisation, Vol. 15, No. 3, Retrieved 8 January 2019. Https: www. Interscience Enterprises Ltd. Razak, K. A. (2017). Islamic entrepreneurial model. Paper presented at the 4th International Muamalat and Entrepreneurship Conference held in Sydney. Conducted by the Australian Sports Medicine Federation Ltd. Sydney: Sports Federation. 1-22. Rice, G. (1999). Islamic ethics and the implications for business. Journal of Business, 18: 345-358. Smith, B. R., Conger, M. J., McMullen, J. S. & Neubert, M. J. (2011) Why believe? The promise of research on the role of religion in entrepreneurial action. Journal of Business Venturing Insights, 11. Doi: 10.1016/j.jbvi.2019.e00119 Sondos G. Sondos & Shaker A. Zahra, 2020. "Family Firms’ Religious Identity and Strategic Renewal," Journal of Business Ethics, Springer, vol. 163(4), pages 775-787. http://link.springer.com/10.1007/s10551-019-04385-4 Sousa, E. da S., Paiva, L. E. B., Santos, A. R., Rebouças, S. M. D. P. & Fontenele, R. E. S. 2020). The influence of religious beliefs on entrepreneurial intention: An analysis from the perspective of the Theory of Planned Behavior. Cad. EBAPE.BR, (18) 1,212-215. Available from: https://www.Interscience Enterprises Ltd.

Glossary of Arabic Terms adalah justice adq contract akhlaqiyat character, morals Allah (God) amanah trust aqaid beliefs bai'ud dain selling a debt bai'ul mu’ajjal delayed or deferred sale fahish major fardu kifayah obligatory fiqh al muamalat Islamic commercial jurisprudence fiqh jurisprudence gharar deception or uncertainty Hajj pilgrimage Hanabali relating to Imam Ahmed ibn Hanabal 182

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Hanafi relating to Imam Abu Hanifah haram forbidden. Haram are the acts that are forbidden and sentenced explicitly or implicitly by Islam as a religion. These acts are treated as sins. Examples include dealing with prostitution, illegal drugs, gamost families Theory of Planned Behaviour ling, alcohol, speculation and usury (Hassan & Hippler, 2014). Allah (God) (S.W.T.) says: “O ye people! eat of what is on earth, lawful and good; and do not follow the footsteps of the evil one, for He is to you an avowed enemy” (Holy Qur’an, 2:168). hikmah wisdom. Beside knowledge, wisdom (hikmah) is very important in Islam. hiwalah transfer of debt ibadat worship ihsan benevolence ijarah leasing ijma consensus ikhlas sincerity Imam means leader and is used as an honorary title, particularly for the founders of a school of thought in Islamic jurisprudence infaq (donations) Injil the Holy Bible, the divine book revealed to Jesus Christ, son of Mary (Maryam). istisna’ a sale where a product is requested to be manufactured or constructed jahalah unknown or uncertain kafalah guarantee Khali Creator khalifa trusteeship Makhluq creation makroohare acts that are not preferable and are discouraged by Islam. They are usually seen as a last resort and should be avoided by entrepreneurs, if possible. Maliki relating to Imam Malik mandoob acts that are preferable but not obligatory; if the entrepreneurs do not perform them; it is not considered a sin. Mandoob are considered the supplementary Halal. muamalat dealings mu’asharat social activities mudarabah a special form of partnership involving investment from one partner and management from the other mudarib the manager in a Mudarabah murabahah a sale wherein the cost and profit of the merchandise is disclosed musawamah a sale wherein the cost and profit of the merchandise is not disclosed musharakah a joint venture where all the partners share in profit and loss mushtabeh acts that are questionable; entrepreneurs should refrain as much as possible from them because they might be haram or lead to haram acts. These acts could be perceived as unscrupulous by stakeholders. mutanaqisah diminishing partnership qiyas analogy Qur’an divine book of Islam rabbul mal the investor in a Mudarabah rahn pledge, mortgage riba interest 183

ASBBS Proceedings of the 28th (Virtual) Conference riba al-fadi the exchange of six usurious items riba al-nasi’ah interest on a loan riqabah supervisory rububiyah and salam a sale where cash is paid for the future delivery of specific merchandise sadiqun truthfulness salah prayer Shafi’i relating to Imam Shafi’I Shahadah testimony (in the oneness of Allah (God) Shari’ah Islamic law shirk partner shirkah partnership sukuk plural of Sakk Islamic bonds, deed, document Sunnah practices of the Holy Prophet (MESSENGER, PROPHET MOHAMMAD (PBUH)) surah chapter of the Qur’an sawam fasting, especially in the month of Ramadaan takaful Islamic insurance Taurah Torah, the divine book revealed to Moses tawarruq to buy or spot and sell or deferred payment or vice versa to facilitate cash liquidity tawhid unity takwakul the outcome of any actions (Takwakul) uluhiyyah concepts wa’d oath, promise wadi’ah safe custody wajib duty, obligatory acts - described as the Core Halal. Should entrepreneurs fail to implement them, they commit a sin and cannot be seen as Shari’ah-compliant. wakalah agency yasir minor Zabur Psalms, the divine book revealed to David Zakah Discharging 2, 5% of specific wealth annually

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CONTRASTING FEMALE AND MALE RATINGS OF LEADERS: LOOKING THROUGH A LEADER- MEMBER EXCHANGE LENS Stemple, Nathaniel Rhode Island College Garger, John The Science Survival Academy Jacques, Paul H. Rhode Island College ABSTRACT Leadership research suggests that male and female followers have differing expectations of leadership from one another. This study explores the dyadic nature of the leader/follower dynamic and tests the hypothesis that female ratings of leadership relational quality as measured by Leader–Member Exchange will be higher than male ratings. The study used subjects exclusively in a workplace setting. The sample breakdown was male leaders and female followers (n = 56) versus ratings of male leaders by male followers (n = 86). Findings were that ratings of relationship quality were significantly higher when male leaders were rated by female followers than when male leaders were rated by male followers. Discussion and implications for enhancing leader-follower relations are presented. Keywords: male, female, leader, follower, sex, leader–member exchange, dyadic relationship attitudes toward leadership, leadership intentions, workplace professionals INTRODUCTION A workplace is a competitive environment and there is a constant struggle for advancement and achievement. As today’s workplace is becoming more diverse than ever, it is necessary for organizations to be able to address the needs of both male and female employees in the workplace. To maximize outcomes in a host of domains in a workplace, there must be effective leadership characteristics present within the organization. These leadership characteristics must be effective when leading increasingly diverse members of the workforce. As the prevalence of females in the workplace increased at all levels in organizations, it is more important than ever that leaders in the workplace do not alienate the various diverse elements of the workforce in the organization through their leadership styles. Of particular interest is the largest subgroups – the portion of the workforce that is male and the portion that is female. The analysis of differing leadership perceptions by sex can also help prevent harmful and abusive leadership strategies that are very detrimental to team culture as well as to managers and employees themselves (Lopez et al., 2020). The purpose of the study is to assess the difference in ratings of leadership given to different sex pairings, specifically in regard to levels of Leader-Member Exchange Theory (Graen & Cashman, 1975; Graen & Scandura, 1987). Leader-Member Exchange measures the quality of the leader–follower relationship and is positively correlated with indicators of performance related to respect, trust and obligation, especially, ‘‘…mutual respect for the capabilities of the other, the anticipation of deepening reciprocal trust with the other, and the expectation that interacting obligation will grow over time…’’ (Graen & Uhl-Bien, 1995, p. 237). Leader-Member Exchange theory states that followers do not receive leader behaviors equally but that leadership as the interaction among a leader, a subordinate and a situation is dyadic. The absence of Leader-Member Exchange in a relationship could lead to negative effects in the workplace such as job withdrawal behaviors from either the leader or employee end of the dyadic relationship.

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(Maslyn, & Uhl-Bien, 2001). Results of this study could be instrumental in preventing these undesired workplace results. Previous literature suggests that males and females have differing perceptions of their ideal leader (Bellou, 2011) however the effect that these perceptions have on each sex’s ratings of Leader-Member Exchange Theory has yet to be explored. The study will provide an in-depth examination on the relationship between different sex-pairings and their ratings of Leader Member Exchange Theory. Employees in a company respond to leaders with whom they have a positive relationship with. While males and females both have differing perceptions of ideal leadership it is of great benefit for organizations to encourage their leaders to have favorable relations with their followers regardless of the sex-pairings. The implications of this study are applicable to a wide range of organizations as well as give insight on the differences in ratings of Leader-Member Exchange regarding the different sex pairings within the leader-follower dyadic relationship, a topic that has not been widely researched. LITERATURE REVIEW Throughout the 21st century, women have become a prominent part of the workforce representing about 46.8% of the civilian labor force in 2016. (Department of Labor, 2016) These women are not only occupying entry level subordinate roles, but also prominent management and leadership positions as well. This is a promising trend that will hopefully continue in the future; however, work must also be done to ensure that healthy and professional relationships are maintained in the workplace regardless of the different sex pairings that are found in a leader/follower relationship. Current research on perceptions of female leaders has shown that followers are more likely to show prejudice towards a female in a leadership position than a male in the same position. (Garcia-Retamero, & López-Zafra, 2006). Prejudice towards a leader is certain to negatively affect the levels of Leader- Member Exchange in the dyadic relationship. To remedy this, there must be increased effort on both ends of the Leader-Member dyad put forward to improve the relationship between the two and thus reducing levels of prejudice and raising levels of Leader-Member Exchange. Previous literature also shows that when asked to rate leaders, both male and female participants expressed their belief that males have more leadership qualities compared to females, especially when it comes to decision making and empowering employees. (Aziz, et al., 2017). Additionally, it has also been found that men are much more likely to give themselves positive feedback as opposed to women. (Paustian-Underdahl et al., 2014) It is not unreasonable to believe that this increased self-esteem in males may result in males receiving higher leadership ratings as opposed to females. Another interesting theory to note in developing a hypothesis is the Theory of Role Congruity, this theory states that “perceived incongruity between the female sex role and leadership roles leads to 2 forms of prejudice: (a) perceiving women less favorably than men as potential occupants of leadership roles and (b) evaluating behavior that fulfills the prescriptions of a leader role less favorably when it is enacted by a woman” (Eagly & Karau, 2002). This results in unfavorable attitudes towards women in leadership roles as well as an increased difficulty for women to obtain leadership positions. While this could be attributed to the fact that throughout history, workplaces have traditionally been male dominated and these perceptions are most likely a result of years of societal conditioning that have convinced the participants that males are better suited for leadership roles, the literature still provides us with useful information in the formation of our hypothesis: Hypothesis: The sex pairings of Male Leader and Female Follower will exhibit the highest levels of Leader-Member Exchange.

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METHOD Subjects: Workplace professionals from the Northeast United States were chosen through modified snowball sampling. Participants included various employees from a multitude of industries including representation from manufacturing as well as service companies. Female followers returned 56 completed surveys rating male leaders and male followers returned 86 completed surveys likewise rating the subject’s male leader. The sex of the respondent was not indicated in 8 of the returned questionnaires and, hence those records were not included in the analysis. Measures: Leader-Member Exchange was measured with 7 items on a five-point scale using the recommended measure from Graen and Uhl-Bien (1995). These items were designed to measure effort put towards relationship development by both ends of the manager/supervisor-employee relationship dyad that constitutes Leader-Member Exchange Theory. Results: Sample sizes, means, standard deviations, standard errors, and confidence intervals are shown in Table 1. The ANOVA results are shown in Table 2. In support of the hypothesis, these two tables show a difference in ratings between the two sexes. As shown in Table 1, the mean difference between the raters as grouped by sex is 0.029 and as shown in Table 2, that difference is statistically significant (p = 0.031) with females’ ratings of their male leaders being higher (more positive) than that of males’ rating of their leaders Table 1 ______Samples, Means, Standard Deviations, Standard Errors and 95% Confidence Intervals

N Mean SD SE Lower Upper Bound Bound M Leader/ M Rater 86 3.86 0.787 .085 3.69 4.02 M Leader/ F Rater 56 4.15 0.788 .105 3.94 4.36 Total 142 3.97 0.798 .067 3.84 4.10

Table 2 ANOVA results ______ANOVA

Sum of Df Mean F Sig. Squares Square Between Groups 2.952 1 2.952 4.763 .031 Within Groups 86.772 140 0.620 Total 89.724 141

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Figure 1 Plot of mean sex pair ratings

4.2

4.1

Member Exchange Member -

3.9 Leader

3.8 Male Leader/Male Rater Male Leader/Female Rater Leader-Rater Sex Pairs

DISCUSSION The purpose of this study was to examine the effects of different sex pairings on levels of Leader- Member Exchange Theory withing Leader/Follower relationships in the workplace. The proposed hypothesis related to the outcome of this relationship was supported by the study. Previous research had supported the concept that different sexes have differing perceptions of the ideal leader (Bellou, 2011). This study however provides additional insight in to how those differences in perception affect levels of Leader-Member Exchange in the dyadic relationship. The uniqueness of this study was its focus on which sex pairing exhibited the optimal level of relationship quality. The results should also be applicable to a wide variety of workplaces as the sample population consisted of workplace professionals from numerous industries. The positive correlation between pairings of Male Leaders and Female Followers and the existence of high levels of relationship quality in the workplace has potential for practical implications in a variety of industries. Since it has been shown by this study that Leader- Member Exchange Theory is more prevalent in pairings with a male leader and female follower, it could be beneficial for organizations to study this pairing and see why it is that members of this pairing seem to put forth more effort towards relationship development as opposed to other sex pairings in the same roles. One effective way to achieve improved perception of male leaders by male followers would be if, on both ends of the relationship, the reasons for the unfavorable perceptions could be determined. Of note, this study includes the finding that these unfavorable perceptions is directly related to the lower levels of Leader-Member Exchange were found in the male leader/male follower pairing. An important dimension of Leader-Member Exchange is the effort put towards relationship development on both ends of the relationship. (Maslyn, & Uhl-Bien, 2001). The absence of this important dimension of Leader-Member Exchange Theory is almost certainly a major factor in the unfavorable perceptions in 188

ASBBS Proceedings of the 28th (Virtual) Conference this specific sex pairing. To remedy this, organizations could benefit from encouraging both management and other employees to put forward significant effort towards relationship development and possibly facilitate this through training programs and various workshops. Developmental/intervention activities that could be incorporated to this end include schedule brief, informal update meetings where progress on important tasks is discussed, but more importantly, where perceptions are exchanged, seeking constructive feedback for BOTH parties, recognize and reinforce good work, supervisors becoming skilled at coaching and to coach their subordinates, prioritize employee career goal attainment, and recognizing and reinforce employee behaviors that are consistent with a healthy lifestyle and a healthy work-life balance. Companies may find that it is beneficial for them to use the results of this study as a model for relationship development within their own organizations for both management and employees. Ensuring that prominent leaders, regardless of sex, can maintain healthy and mutually beneficial relationships with their followers will be instrumental in setting the workplace up for success as it allows for greater job satisfaction and reduced workplace withdrawal behaviors as well as better relations between managers and their subordinates. According to Leader-Member Exchange Theory, this improved relationship will lead to the follower taking on increased responsibility and experiencing higher levels of job satisfaction. Management could even further improve their Leader-Member Exchange by taking part in self-assessments and reflective assignments with their subordinates to better understand one another. These improved relationship skills will strengthen the organization as a whole and it will help create new leaders from within the organization. Overall, findings from the present study represent and support the practical significance of the impact of different sex pairings on quality leader–follower relationships from an organizational perspective. It is instrumental for organizations to recognize this impact as the workplace becomes even more diverse in the near future. The ideal leadership perceptions and needs of both sexes in the workplace must be recognized and attended to in order to maintain a cohesive and healthy work environment. LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH There is little extent research on the effects of sex on levels of Leader-Member Exchange, especially in a workplace environment. The results of the administered survey did collect data on sex pairings of female leaders and female followers as well as female leaders and male followers however neither of these pairings were prevalent enough to yield statistical significance. Future research should expand and diversify the sample size in order to further explore these sex pairings and attempt to achieve statistical significance. One significant limitation of the performed study is that the survey did not inquire as to the exact positions that the subject held in their respective workplaces. It may have been useful for research purposes to have a sense of the role in the workplace that the subject held. For example, whether the participant was an entry level employee, or a senior executive may have had an impact on how they answered the survey. This clarification was not necessary for us to inquire as the participant was asked to answer the questions as if they were about the leader in their career that they had deemed to be most influential to them. Meaning that any workplace professional at any level would be able to complete the survey, however it could have been useful to have a sense of the role that the subjects had in their organization in order to see if the results varied amongst organizational positions. Although, this study was limited to quantitative research as the primary method of data collection, other methods of data collection were available to utilize at the time. However, in future studies qualitative research may have been an effective method of gaining deeper insight into the respondent’s answers. Perhaps this could have be done by interviewing select participants at random and inquiring about their experiences with Leader-Member Exchange. Although this study produced significant results and new data in a topic that has been scarcely studied, it is evident that the study and the results themselves represent ample opportunity for future research. 189

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REFERENCES Aziz, F., Kalsoom, Q., Quraishi, U., & Hasan, S. (2017). ”Perceptions on gender-based differences in educational leadership.” Management in Education, Volume 31, Issue 2, 75-81. doi:10.1177/0892020617696628

Bellou, V. (2011). “Do women followers prefer a different leadership style than men?” The International Journal of Human Resource Management, Volume 22, Issue 13, 2818- 2833. doi:10.1080/09585192.2011.599677

Eagly, A. H., & Karau, S. J. (2002). “Role congruity theory of prejudice toward female leaders.” Psychological Review, Volume 109, Issue 3, 573-598. doi:10.1037/0033- 295x.109.3.573

Garcia-Retamero, R., & López-Zafra, E. (2006). “Prejudice against Women in Male-congenial Environments: Perceptions of Gender Role Congruity in Leadership." Sex Roles, Volume 55, Issue 1-2, 51-61. doi:10.1007/s11199-006-9068-1

Graen, G. B., & Cashman J. F. (1975). “A role-making model of leadership in formal organizations: a developmental approach.” In J. G. Hunt and L. L. Larson (Eds.) Leadership Frontiers (pp. 143-165). Kent, OH: Kent State University, from https://www.researchgate.net/publication/245048689_A_RoleMaking_Model_of_Lea dership_in_Formal_Organizations_A_Developmental_Approach/citation/download

Graen, G. B., & Scandura, T. A. (1987). “Toward a psychology of dyadic organizing.” Research on Organizational Behavior, Volume 9, 175-208, from https://www.researchgate.net/publication/232576635_Toward_a_Psychology_of_Dya dic_Organizing/citation/download

Graen, G. B., & Uhl-Bien, M. (1995). “Relationship-based approach to leadership: Development of Leader– Member exchange (LMX) theory of leadership over 25 years: Applying a multi-level multi-domain perspective.” The Leadership Quarterly, Volume 6, 219–247. https://doi.org/10.1016/1048-9843(95)90036-5

Lopez, Y. P., Dohrn, S., & Posig, M. (2020). “The effect of abusive leadership by coaches on Division I student-athletes’ performance: The moderating role of core self- evaluations.” Sport Management Review, 23(1), 130-141. doi:10.1016/j.smr.2019.07.001

Maslyn, J. M., & Uhl-Bien, M. (2001). “Leader–member exchange and its dimensions: Effects of self-effort and others effort on relationship quality.” Journal of Applied Psychology, 86(4), 697-708. doi:10.1037/0021-9010.86.4.697

Paustian-Underdahl, S. C., Walker, L. S., & Woehr, D. J. (2014). “Gender and perceptions of leadership effectiveness: A meta-analysis of contextual moderators.” Journal of Applied Psychology, 99(6), 1129–1145. https://doi.org/10.1037/a0036751

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Women in the Labor Force. (n.d.). Department of Labor. Retrieved February 20, 2021, from https://www.dol.gov/agencies/wb/data/facts-over-time/women-in-the-labor- force#civilian-labor-force-by-sex

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EXAMINATION OF THE EFFECTS OF CHANGES IN THE FEDERAL FUNDS RATE TARGET ON THE SHORT-TERM EQUITY MARKET Sumner, Jacob A. Bacon, Frank W. Longwood University ABSTRACT There have been countless studies proving that the efficient market theory does not allow an investor to earn above average returns on the S&P 500 index with information that is readily available to the general populace. Yet, there have still been many instances where cunning investors were able to do just that within days after changes to the interest rates. This study raises the question of whether the market is truly efficient within the short-run and if not, is it possible for an investor to earn above average returns within this period? Our results show that there is a statistically significant negative correlation between target changes for the federal funds rate and the S&P 500 index in the short run. As previous studies have shown, the market is not efficient in the short-run; if the federal funds rates were lowered, an investor who purchased and held S&P 500 index for a 5-day period would enjoy greater than average returns. As time progresses, this negative correlation decreases lowering the possible returns. BACKGROUND Determining the reasoning behind market equity prices at any given time is a difficult task due to the multiple economic factors that affect it. Although this remains true, a good determinant to the U.S.’ economy’s health is the current level of interest rates. The prevailing interest rate is a current interest rate benchmark selected by the treasurer of state that banks are willing to pay to hold deposits for a specific time period. The Federal Open Market Committee, which sets these rates, meets eight times a year to determine the near-term direction of monetary policy and interest rates. When these interest rates are changed, the business world reacts. Changes in these rates are the usual determinants to investor’s willingness to take risks. Things such as emotions, news, and speculation can also have a major impact on an investor’s confidence in the stock market. Low interest rates will encourage an investor, thus creating a bullish market. While higher interest rates lead to uncertainty and hesitation from investors, creating a bearish market. The Efficient Market Hypothesis suggests that markets are always efficient in the long run, however, there have been numerous situations in which a certain economic factor or a piece of news have caused major price shifts in the short run. RESEARCH PROBLEM As economist Michael C. Jensen says, “I believe there is no other proposition in economics which has more solid empirical evidence supporting it than the Efficient Market Hypothesis”. This study mainly focuses on semi-strong from market efficiency, which states that an investor cannot make an above average return by acting solely on information readily available to the public. Nonetheless, there is evidence that suggests a cunning investor may be able to make a profit on traded S&P 500 securities by holding them for a short period after an interest rate lowering. This raises the question, is it possible for an investor to make a profit on one of these securities if they were to buy long, then sold short on the S&P 500 market index each time the federal funds target rate was either lowered or raised?

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PURPOSE The purpose behind this study is to determine if the announcement of a federal funds rate change affects stock prices in the short run. In this study, we hypothesize that any changes in the federal fund rate create chances for investor to gain profit in the market due to an increase in equity prices. LITERATURE REVIEW The correlation between changes in rates and stock pricing has been covered by many different economists. One such review comes from Oliver Blanchard (1981), who studied the interaction between asset values and output. This study, unlike my own, argues that asset values, rather than interest rate changes are the main determinants in current and anticipated stock output. Like other studies, Blanchard’s acknowledges that changes to monetary or fiscal policy have significant effects on the market. Other studies, such as Mark Flannery’s (1984) delve into how these rate changes affect the common Period After Alpha Beta Correlation Announcement Coefficient Coefficient Coefficient R2 P-Value F-Value 5-Day 0.0010 -1.8573 -0.236 0.057 .0412 5.06 10-Day 0.0025 -1.5332 -0.186 0.031 .1269 2.35 15-Day 0.0039 -1.6247 -0.153 0.019 .2096 1.61 stock returns for financial institutions. He concludes that the co‐movement of stock returns and interest rate changes is positively related to the size of the maturity difference between the firm's nominal assets and liabilities. Yet again, this study acknowledges that interest rate change announcements have a positive effect on stock prices in the short term. METHODOLOGY The first step in figuring out whether there is a positive or negative correlation between changes in the federal funds rate and the equity market, we must choose a time frame. For this study we will be looking at all changes since the February 2, 2000. Since this date, there have been 56 rate changes, with 28 of them being a decrease to rates. In order to test this correlation, we use the following null and alternate hypotheses:

▪ H0: Since 2000 there is not a negative correlation between changes for the federal funds rate and the S&P 500 index in the short run. ▪ Ha: Since 2000 there is negative correlation between target changes for the federal funds rate and the S&P 500 index in the short run. Next, we must collect the data on each of the 56 federal fund rate changes and the corresponding historical closing values for the S&P 500 market index at their given times. We must calculate immediate short-term changes each time a rate change occurred. Due to the market on being open during weekdays, we choose to calculate the market’s regression and holding period returns (HPR) for 5,10, and 15-day periods. QUANTITATIVE TEST AND RESULTS We analyze the data on each of the 56 federal fund rate changes and the corresponding historical closing values for the S&P 500 market index at their given times. We calculated the HPR for 5-days, 10-days, and 15-days after the initial rate changes.

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Table 1. Linear Regression As you can see in table 1, our R-value moves closer to zero as time progresses after the change. Yet, as R moves closer to zero, P continually increases over time. This suggests there is opportunity for an investor to earn greater returns within a short period after the rate changes. Our F-values indicate that as time goes on, an investor’s chances to earn returns significantly decreases. Table 2. Mean HPRs Since 2000

Time After Interest Mean HPR for all 28 Mean HPR for all 56 Rate Change rate decreases since rate changes since Announcement February 2000 February 2000 5-day 0.553% 0.217% 10-day 0.502% 0.458% 15-day 1.042% 1.051% Table 2 depicts the mean HPRs for the 5, 10, and 15-day periods after the rate changes. The data suggest that the period for the greatest return is shortly after the announcement and change of the interest rates. CONCLUSION As shown in the tables, the data proves that we reject our null hypothesis and accept the alternative. Since 2000 there is negative correlation between target changes for the federal funds rate and the S&P 500 index in the short run. If an investor were to purchase and held the S&P 500 index for a 5-day period following the announcement, they could have greater than average returns. Although the semi- strong from market efficiency theory states that this should not be possible for an investor, data indicates that an investor can if they hold and sell within a short period after rates have been lowered. Thus, the market is only efficient in the long-run, not the short-run.

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REFERENCES

Blanchard, O. (1981). “Output, the stock market, and interest rates”. The American Economic Review,

132-143.

Flannery, M. (1984). “The effect of interest rate changes on the common stock returns of financial

institutions”. The Journal of The American Finance Association, 1141-1153

Lobo, B., (2002). “Interest Rate Surprises and Stock Prices.” The Financial Review, 37, 73-91.

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LOW-COST METHODS FOR PREVENTING EMPLOYEE FRAUDS IN SMALL BUSINESSES Treadwell, Gregory W. Cameron University

ABSTRACT

Small businesses are a target for desperate and disgruntled employees. These businesses typically have a limited workforce, offer too much employee trust, and often provide inadequate employee oversight. Also, many small businesses have insufficient funds or an unwillingness to spend existing funds to prevent employee fraud. Because of these issues, many small business employees can misappropriate business assets. In response, small businesses need low-cost methods to help prevent, detect, or deter employee fraud. If adopted, these methods could help employers identify employees motivated to commit fraud, how employees conceal fraudulent activities, and what opportunities enabled these frauds to occur. Recommendations for low-cost fraud reduction methods include adopting a code of conduct, implementing acceptable hiring practices, and hiring office workers with fraud training. Management could also elect to implement a fraud reporting system and require managers to question why documents are missing or manipulated. Also, managers should learn to listen and look for frauds and use exit interviews to reduce fraudulent activities.

INTRODUCTION Without a doubt, most small business employees are trustworthy. Many of these employees diligently work to support family members, maintain lifestyles, and build personal wealth. Unfortunately, good employees can encounter personal or professional problems. Some will ask family or friends for help; however, others will choose to misappropriate employer assets to solve the problem. The employees that choose to misappropriate employer assets are responsible for approximately 80% of organizational fraud losses (Boyle Boyle, & Mahoney, 2015). While large organizations commonly have the resources and knowledge to prevent, detect, or deter frauds, small businesses need help. When a small business fraud occurs, it is often the result of insufficient anti-fraud controls, limited resources, a lack of awareness, and a tendency to place too much trust in employees (ACFE, 2020). These frauds commonly occur in financial services, municipalities or governments, manufacturing, real estate or construction, labor unions, healthcare, retail, or telecom businesses (Hiscox, 2017). Additionally, 77% of the perpetrators work in operations, accounting, executive management, sales, customer service, administrative support, finance, or purchasing (ACFE, 2020). Alternatively, outsider knowledge of fraudulent activities may also harm businesses. That harm can emerge as brand damage, loss of market position, employee morale, or the loss of future opportunities (PwC, 2020). Damages can also occur when managers of defrauded businesses decline to prosecute alleged perpetrators. This decision commonly focuses on the belief that internal discipline is sufficient or that litigation would be too costly (Brody, 2010). However, when defrauded businesses choose to dismiss an alleged perpetrator, that person can quickly move on to steal from other unsuspecting business managers. Co-workers may view management’s lack of action as an enticement to commit fraudulent acts. As a result, small businesses need help preventing, detecting, or deterring motivated employees from committing

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LITERATURE REVIEW Most small business managers concentrate on providing services, manufacturing products, or ensuring customers are satisfied. Often these managers believe employee fraud is something that occurs at other businesses. Employee fraud is possible in many small businesses because of inadequate funds to implement proactive fraud detection methods (Ruggieri, 2012). This lack of resources may also reduce these businesses’ ability to provide a thorough oversight (Hrncir & Metts, 2012). Even when small businesses have sufficient controls, managers may have received ineffective or inadequate training on the controls to detect or prevent employee fraud (Sims, 2010). Small business managers need to recognize that believing fraudulent acts cannot happen [at their business] is an ineffective method for preventing fraud (Henry, 2016). In 1953, Cressey identified motivation, opportunity, and rationalization as the key components necessary for [non-sinister] employees to commit fraud (Cressey, 1953). While business managers control opportunities to commit fraud, they can do little to prevent employee motivations and rationalizations. Therefore, many small business managers make it easier for motivated employees to commit and conceal fraudulent acts because they relied on trust. These small business managers quickly learn that employees have needs, access to assets, and know where control weaknesses exist. As a result, estimates from the Association of Certified Fraud Examiners (ACFE) suggest organizations lose 5% of revenues to fraud, and the globally total fraud losses could exceed $4.5 trillion annually (ACFE, 2020). Undeniably, hiring honest employees is one of the most prudent ways for employers to protect assets, revenues, and sensitive data (Brody, 2010). However, small business managers need to understand there are predatory and accidental fraudsters. Predators accept job offers with the sole intent to misappropriate assets. They have previously committed frauds and only need an opportunity to commit another fraud (Kapp & Heslop, 2011), which often depends upon convincing an unsuspecting manager to hire them. There are also accidental fraudsters that, for various reasons, encounter a non-shareable financial problem after accepting a job. To solve this emerging problem, they may develop a perceived opportunity to misappropriate assets and a morally defensible excuse for stealing employer assets to solve the problem (Dorminey, Fleming, Kranacher, and Riley, 2012a). Therefore, small business managers need to understand that personal or professional motivations compel good employees to misappropriate assets. For example, an employee may become motivated to commit fraud if they recognize management has placed an overwhelming amount of trust in them (Hrncir & Metts, 2012). The motivation may also intensify if the employee recognizes that management is untrained to identify fraudulent acts or has insufficient time to monitor employee activities. An employee’s motivations may also include a need to reward themselves. For example, suppose an employee expected but failed to receive a promotion, pay raise, or bonus. In that case, the employee may become motivated to misappropriate assets to acquire the pay raise or revenge. Some employees commit fraud to project the appearance of being wealthy. So they misappropriate assets to buy expensive clothing, autos, and homes. Motivations can also emerge if an employee feels unappreciated or overworked. Some employees believe they are smarter than the boss; so, they attempt to demonstrate their superior intellect by stealing assets (Ulmer & Noe, 2013). Desperate employees may also steal employer assets to fulfill an obligation, including making loan payments or satisfying a court order. Some employees may be unable to delay the need for self-gratification; so, they use credit to purchase homes, cars, jewelry, or other luxury items. However, when creditors demand payment, some of these employees are willing to risk criminal embezzlement charges to avoid the embarrassment of repossessions or 197

ASBBS Proceedings of the 28th (Virtual) Conference foreclosures. Financial problems may result from excessive gambling, legal or illegal drug usage, or extramarital affairs. In effect, employee motivations to misappropriate employer assets may emerge when there are inadequate controls, poor training, poor supervision, ineffective anti-fraud programs, or weak ethical cultures (Dorminey, Fleming, Kranacher, & Riley, 2010). Perpetrators of employee fraud are commonly first-time criminals who do not see themselves as criminals but as victims of circumstances. However, they must rationalize fraudulent behaviors before committing fraud (Dorminey et al., 2010). Rationalization is the employee’s mental process for justifying a fraudulent act. It enables an honest employee to replace customary beliefs or practices with thoughts or actions that appear to be more rational. In effect, rationalization is probably the most dangerous element of the fraud triangle since it is nearly impossible for management to eliminate how an employee thinks (Coenen, 2008). When an employee becomes sufficiently motivated and can rationalize committing a fraudulent act, they only need the opportunity to commit fraud. Motivated employees often wait for an opportunity to misappropriate assets to avoid job losses and the possibility of prosecution (Dorminey et al., 2010). In large businesses, fraud opportunities can emerge if management uses obsolete, ineffective, non-existent, or inadequate internal controls. Opportunities may also result from intentional overrides of internal controls by a rogue employee acting individually or in collusion. However, in small businesses, managers may create opportunities for fraud by not providing sufficient oversight. Insufficient oversight can include inadequate training, insufficient supervision, a history of not prosecuting perpetrators, ineffective anti-fraud programs, or a weak ethical culture (Dorminey et al., 2010). Managers of small businesses understand that employees need access to assets to perform assigned job duties. However, an employee’s access to assets also provides them with an opportunity to misappropriate those assets. Additionally, seasoned employees may identify concealment methods when ineffective controls or governance systems are present (Dorminey, Fleming, Kranacher, & Riley., 2012b; Kapp & Heslop, 2011). The ability to conceal misappropriations also decreases the likelihood of management detecting the fraudulent acts. Methods of concealment can include an employee’s consumption of inventory items while at work. Instead of consuming the items, the perpetrator may choose to place the items in store sacks or bags and carry the items out the door just like they would carry out actual purchases. In this situation, the concealment is the store sack or bag. Employees may also conceal items in purses or lunch boxes. Some employees may choose to conceal stolen items by placing them in the trash and retrieving the items after work and under cover of darkness. However, when an employee misappropriates cash, concealment methods can include false journal entries, the creation of fictitious source documents, or the destruction of original documents. Some employees may choose to conceal the theft by blaming the storage on customer thefts. In effect, concealment is necessary for the non-sinister employee since they want to continue working and receiving a paycheck, and so they can continue misappropriating assets. However, predatory fraudsters will abscond with the misappropriated items. They are not concerned about concealing the misappropriation since they immediately start looking for another unsuspecting manager that needs to hire a new employee. Finally, employees often demonstrate warning signs before they misappropriate assets (Hrncir & Metts, 2012). Common warning signs of fraud can include living beyond their means, a substantial lifestyle change, becoming too possessive of work records, reluctant to share tasks, apprehensive about using vacations or time off, always being the first in the office and the last out, showing signs of substance abuse, or holding grudges against employers—whether justified or not (Klein, 2015).

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Consequently, management needs to be alert for behavioral changes in employees. The Report to the Nations indicated that at least one warning sign or red flag was present in 85% of cases, and multiple red flags were present in 49% of the cases (ACFE, 2020). (See Chart #1) Chart #1: Behavioral Red Flags Displayed by Perpetrators Behaviors Percentages Living beyond means 42% Financial Difficulties 26% Unusually close association with vendor/customer 19% No behavior red flags 15% Control issues, unwillingness to share duties 15% Irritability, suspiciousness, or defensiveness 13% “Wheeler-dealer” attitude 13% Divorce/family problems 12% Addiction problems 9% Complained about inadequate pay 8% Refusal to take vacations 7% Excessive pressure from within the organization 7% Past employment-related problems 6% Social isolation 6% Complained about last of authority 5% Past legal problems 5% Excessive family/peer pressure for success 4% Instability in life circumstances 4% Others 4% Source: 2020 ACFE Report to the Nations

DISCUSSION Many small business managers rely on trust and oversight to prevent employee fraud. Unfortunately, an abundance of trust and insufficient oversight may only motivate employees to misappropriate assets. Additionally, small business managers may have insufficient funds or an unwillingness to spend limited funds on fraud controls. To help small business managers with these issues requires the implementation of low-cost fraud prevention methods. Initially, small business managers should create, adopt, and promote a code of conduct. The emerging code should express specific practices and behaviors that all employees must follow. The code should discuss management’s attitude toward fraud and what actions will occur if an employee commits a fraudulent act. In effect, the code should reduce employees’ motivations to commit fraud by purposefully sending a no tolerance fraud message to all employees. The emerging ethical tone should also permeate throughout the business and create a standard for all employees to follow. Small business managers could also adopt procedures that limit poor hiring practices. For example, poor hiring practices often include blindly accepting a current employee’s recommendation to hire a friend, relative, or acquaintance. While an employee’s recommendation may produce a highly qualified employee, it may also produce a new employee that owes the recommending employee a favor. The resulting favor may include collusion to override controls, making it easier for a recommending employee to misappropriate assets. Alternatively, reasonable hiring procedures often include using internets job sites or local employment agencies to identify quality employees. After identifying an acceptable candidate, small business managers should verify that candidate’s employment, education, certifications, credit, and references. If lapses of employment emerge, the candidate should explain the circumstances surrounding the lapse.

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Similarly, suppose a small business is looking for accounting or management employees. In that case, they should attempt to hire a qualified candidate that has completed a collegiate fraud examination course, forensic accounting course, or both. The successful completion of either course should enable a new accountant or manager to identify employees that may be motivated to misappropriate assets, recognize the red flags of fraud, and possibly help identify targeted assets. Also, an accountant or manager equipped with fraud knowledge could train other managers and accountants to identify the methods employees commonly use to misappropriate assets and understand how employees conceal those thefts. (See Chart #2) Chart #2: Asset Misappropriation Methods Method Percentages of Median Loss Cases in Report Billing 20% $100,000 Non-Cash 18% $78,000 Expense Reimbursements 14% $33,000 Skimming 11% $47,000 Cash on Hand 10% $26,000 Check and Payment Tampering 10% $110,000 Payroll 9% $62,000 Cash Larceny 8% $83,000 Register Disbursement 3% $20,000 Source: 2020 ACFE Report to the Nations

They may also help existing managers and accountants prevent future fraud by recommending additional low-cost fraud controls. Hence, education is an essential element that can help prevent criminal activities (Groot & van den Brink, 2010). Also, employees armed with fraud knowledge can educate [existing managers] about the risks of fraud and fraud deterrence methods (Peterson, 2003). Managers may also create a fraud reporting mechanism that would enable all employees to report suspicious activities. In support, employee tips were responsible for uncovering over 40% of the frauds reported in the 2020 Report to the Nations (ACFE, 2020). The envisioned system could begin with one or more reporting boxes with a hinged top and locking mechanism. The top of each box would have a small slit that would enable employees to submit written notes anonymously that describe suspicious activities. The reporting boxes would need to be firmly attached to a wall or sturdy piece of furniture to prevent theft and positioned in a secluded area. Once the boxes are in place, a specific manager would lock the boxes and retain the sole key. Periodically, that same manager would return to the reporting boxes, retrieve any deposited notes, review the notes, and decide if any action is necessary. Also, all employees would receive a briefing on the purpose and use of the boxes’ before their placement. Once in place, all employees should recognize that management is on the lookout for suspicious activities; thus, fewer fraudulent acts should occur. Furthermore, management may also choose to enhance the reporting mechanism by enabling employees to receive monetary rewards for accurately reporting suspicious activities. Small business managers should also recognize that most employees will not commit fraud if they cannot conceal the fraudulent activities. The concealment represents the deliberate actions to hide the fraud (Dorminey et al., 2012a). They include manipulating, hiding, or destroying documents; or suppressing a material fact with intent to defraud an employer. Manipulated documents can include the falsification of documents with forged signatures or forced balances. Without the ability to conceal the fraudulent act, management might detect the fraudulent acts, which could cause job losses and legal issues for the perpetrator. Thus, small business managers need to question why documents are missing or manipulated. Management could also reduce employees’ ability to conceal fraudulent acts by requiring all employees to take annual vacations. This action would also enable a substitute worker to have one or

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Table #3: Cash Concealment Methods Method Percentage Created Fraudulent Physical Documents 40% Altered Physical Documents 36% Altered Electronic Documents or Files 27% Created Fraudulent Electronic Documents or Files 26% Did Not Attempt to Conceal the Fraud 12% Source: 2020 ACFE Report to the Nation

To prevent cash concealments commonly requires a separation of duties in areas where management keeps cash, prepares records, authorizes transactions, and performs reconciliations. If sufficient employees are not available to separate duties, management should provide an abundance of oversight in areas where cash enters and leaves the business. These areas can include where employees open the mail, where sales occur, and where a reconciliation of cash received and deposited occurs. Small business managers should also identify signals (red flags) that indicate fraudulent activity may be occurring. In support, a former police officer and certified fraud examiner stated that inside fraud information comes from watching, listening, and evaluating others under ordinary circumstances (Nance, 2003). The act of looking and listening for fraud opportunities, motivations, concealment methods, or red flags can include management by wandering around (MBWA). MBWA is a method used by managers to get out of the office, exercise, and talk with workers about what is occurring (Katopol, 2018). For fraud detection purposes, the MBWA practice could enable managers to watch or listen for fraudulent acts or make themselves available for any worker who wants to discuss suspicious activities. For example, a manager could walk through the factory and overhear an employee talking about their financial, tax, legal, or other tense situations. If managers hear of an employee’s stressful situation, they should consider themselves warned and consider strengthening controls in vulnerable areas (Nance, 2003). Finally, small business managers could use Exit Interviews to obtain ongoing fraud information from departing employees. Management would conduct these interviews, not a direct supervisor who may be motivated to intimidate the departing employee. During the exit interview, the departing

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CONCLUSION Without a doubt, [small business] managers may place an overwhelming amount of trust in employees (Hrncir & Metts, 2012). While management’s trust in employees is a positive attribute that can enhance working relations, the small business manager must maintain skepticism (Kapp & Heslop, 2011). Skepticism is necessary since any employee can develop personal needs, addictions, or vices that motivate them to misappropriate employer assets. Unfortunately, small businesses do not have the resources required for a comprehensive set of internal controls. Therefore, small business managers need low-cost procedures that can help identify suspicious activities. Once identified, management needs to investigate and then decide on the appropriate action.

REFERENCES

ACFE, (2020). The 2020 Report to the Nations. Association of Certified Fraud Examiners. Austin, TX.

Boyle, D.M., Boyle, J.F. & Mahoney, D.P. (2015). “Avoiding the Fraud Mindset.” Strategic Finance, Volume 97, Number 2, 41-6.

Brody, R. G. (2010). “Beyond the Basic Background Check: Hiring the ‘Right’ Employees.” Management Research Review, Volume 33, Number 3, 210-223. doi 10.1108/01409171011030372

Coenen, T. L. (2008), Essentials of Corporate Fraud. John Wiley & Sons, Inc., Hoboken, New Jersey.

Cressey, D. R. (1953). Other People’s Money. Montclair: Patterson Smith.

Dorminey, J.W., Fleming, A.S., Kranacher, M., Riley, R.A. (2010). Beyond the Fraud Triangle. CPA Journal, Volume 80, Number 7, 16-23.

Dorminey, J.W., Fleming, A.S., Kranacher, M., Riley, R.A. (2012a). Financial fraud: A New Perspective on an Old Problem. CPA Journal, Volume 82, Number 6, 61-65.

Dorminey, J.W., Fleming, A.S., Kranacher, M., &Riley, R.A. (2012b). The Evolution of Fraud Theory. Issues in Accounting Education, Volume 2, Number 2, 555-579, doi:10.2308/iace-50131

Groot, W. & van den Brink, H.M. (2010). The Effects of Education on Crime. Applied Economics, Volume 42, Number 3, 279-289, doi:10.1080/00036840701604412

Henry, L. (2016). Fraud Prevention. Internal Auditor, Volume 72 Number 2, 17-19.

Hiscox, (2017). The 2017 Hiscox Embezzlement Study: A Report on White Collar Crime in America. Retrieved from: https://www.hiscox.com/documents/2017-Hiscox-Embezzlement-Study.pdf

Hrncir, T., &Metts, S. (2012). Why Small Business Fall Victim to Fraud: Size and Trust Issues. Business Studies Journal, Volume 4, Number 1, 61-71.

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Katopol, P.F. (2018). The Truth is Out There: Management by Walking Around. Library Leadership & Management, Volume 32, Number 4, 1-5.

Klein, R. (2015). How to Avoid or Minimize Fraud Exposures. CPA Journal, Volume 85, Number 3, 6-8.

Kapp L.A., & Heslop, G. (2011). Protecting Small Businesses from Fraud. CPA Journal, Volume 81, Number 10, 62-67.

Nance, J. (2003). Conquering Deception. 2nd Edition. Kansas City: Irwin-Benham.

Peterson, B.K. (2003). Fraud Education for Accounting Students. Journal of Education for Business, Volume 78, Number 5, 263-267. doi:10.1080/08832320309598612

PwC. (2020). 2020 Fighting Fraud: A Never-Ending Battle. PwC’s Global Economic Crime and Fraud Survey. Retrieved from: www.pwc.com/fraudsurvey

Ruggieri, L. (2012). From horses to log cabins-A $9 million embezzlement case: How did the owner not know? Journal of Business Case Studies (Online), Volume 8, Number 6, 575-584.

Sims, M. (2010). National culture effects on groups evaluating internal control. Managerial Auditing Journal, Volume 25, Number 1, 53-78, doi.10.1108/02686901011007306

Tschakert, N., Needles, B., & Holtzblatt, M. (2016). The Red Flags of Fraud: Internal auditors’ Knowledge of the Business Makes them Ideal Candidates to Detect Unethical Behaviors. Internal Auditor, Volume 73, Number 5, 60-65.

Ulmer, J.L., & Noe, K. (2013). Embezzlement in the library. Journal of Business Case Studies (Online), Volume 9, Number 2, 157-163.

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A TEST OF MARKET EFFICIENY: HURRICANE KATRINA’S EFFECT ON OIL COMPANY STOCK PRICES Williams, Casey A. Bacon, Frank W. Longwood University ABSTRACT

This study is testing market efficiency by investigating the effect on oil company stock prices caused by the landfall of Hurricane Katrina. We should expect that oil firms with significant investments interests in Katrina’s path would have negative stock price returns in a certain time frame. Ten oil companies’ stocks who have interests in the Gulf of Mexico are analyzed and examines the effect of Hurricane Katrina on stock price’s risk adjusted rates before and after event date of August 23, 2005. The results show that stock prices began to drop significantly before the hurricane made landfall, displaying the market’s semi-strong form of efficiency. The statistical tests were run to show that the information about the storm made significant impacts on the difference between the actual average rates of return of the sample stocks and the corresponding risk adjusted average expected returns. Results shows that oil company stock price returns started a downturn atleast nine days before Hurricane Katrina made landfall.

INTRODUCTION

Natural disasters affect the stock market and have significant impacts. This study wanted to take a closer look at how fast the market will respond to such a disaster. If the market can take in all the available information, then the stock markets may be a possible predictor of how much devastation the population can expect. This study examines the markets ability to obtain and analyze the information to predict the impact of Hurricane Katrina by analyzing the risk adjusted rate of return of the ten selected oil companies.

Hurricane Katrina was one of the worst disasters in US history causing an estimated 1,800 people to lose their lives and billions of dollars’ worth of damage. Katrina moved towards land as a category 5, but weakened to a category 3 when it made landfall through the Gulf, with winds peaking at 175 mph (Reid, 2020). As was expected, the aftermath was devastating for many, specifically the oil companies who had operations in the Gulf. Katrina had one of the largest impacts on the US economy that created a devastating loss of millions for many companies. The purpose of this study is to analyze the risk adjusted rate of return for the event period as defined as the 30 days before landfall and 30 days after the event on August 23, 2005.

LITERATURE REVIEW

When a disaster is expected to hit the US, some research will predict that the stock market will have a devastating negative trend when actually it has a positive trend. For example, when hurricane Irma hit it was the cause for the largest evacuation in history, yet stock prices were increasing. The predictions of the expected damage were higher that what actually happened,

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Days after Katrina hit, President Bush urged Americans to carpool and cut all non-essential travel to conserve gasoline (Brown, 2005). The storm had disrupted the capacity to make and distribute gasoline. Bush announced the decision to release oil from the nation’s Strategic Petroleum Reserve to help the refineries that were flooded, destroyed, or struggling from the storm (Bush, 2005). Even though this immediate decision was made, stock prices for oil companies such as Exxon Mobil, Apache, and Anadarko all had spiked. This was a very short term spike, making investors understand that disasters tend to have short-term effects on stock prices (Bromels, 2017). These firms are in high demand for their products so they can expect to see above average returns for the period after the hurricane until the supply and demand are stable again. Katrina drove oil prices up due to the damage resulting in many of the refineries having to close. Firms who were struggling from the storm saw negative trends in their stock prices because they are responsible for repairing their own machines (Ro, 2017).

METHODOLODY AND STUDY SAMPLE

This study sample (described in Table 1) includes ten different oil and gas refining companies located in the Gulf that were potentially impacted by Hurricane Katrina. Some of these firms are the largest in the industry, but they all suffered direct effects from Hurricane Katrina. The stock price reactions of the companies to Hurricane Katrina, with the event date of August 23, 2005, are tested in this study. The event period includes the stock prices for 10 sample firms and the S&P 500 for 180 days prior to the event and 30 days after the event.

Table 1. Description of Sample

Ticker Firm Name COG Cabot Oil & Gas Corporation APA Apache Corporation COP Conoco Phillips DVN Devon Energy Corporation MRO Marathon Oil Corporation RRC Range Resources Corporation XOM Exxon Mobil Corp BP BP RDS-B Royal Dutch Shell CVX Chevron Corporation

To test market efficiency, especially for oil companies, in response to landfall of Hurricane Katrina and the time period surrounding its landfall, this study presents the following null and alternate hypothesis:

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H10: The risk adjusted rate of return of the stock price of the sample oil firms is not significantly affected by the event.

H11: The risk adjusted rate of return of the stock price of the sample oil firms is significantly affected by the event.

H20: The risk adjusted rate of return of the stock price of the sample oil firms is not significantly affected by this type of information around the event date as defined by the event period.

H21: The risk adjusted rate of return of the stock price of the sample oil firms is significantly negatively affected by this type of information around the event date as defined by the event period.

By using the standard risk adjustment event study methodology, this study tests the market’s response to the event date August 23, 2005, the landfall of Hurricane Katrina. The required historical data, the stock price and S&P 500 index over the event period, was collected from the Internet website https://finance.yahoo.com.

1. The historical stock prices of the 10 sample companies and the S&P 500 index were collected for the event study duration of -180 to +30, with the event period being defined as -30 and +30 days around the event date of 0.

2. Next, holding period returns of the companies (R) and the corresponding S&P 500 index were calculated using the following formula:

Current Daily Return= (current day close price- previous day close price)

previous day close price

Using the holding period returns, a regression analysis was performed with the actual daily return for each company as the dependent variable and regressing it on the corresponding S&P 500 Index, the independent variable. The analysis was done over the pre-event period (day -180 to day - 31) to obtain the intercept alpha and the standard coefficient beta. Table 2 shows the alphas and betas for each firm.

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Table 2. Stock Sample’s Alphas and Betas

Firm Name Alpha Beta

COG 0.0022779 1.44713665

APA 0.001631267 1.166599914

COP 0.001968086 1.272783733

DVN 0.002391239 1.183839626

MRO 0.002527296 1.21577724

RRC 0.003415795 1.2583247

XOM 0.000883446 1.404519172

BP 0.000636755 0.863548405

RDS-B 0.000746971 0.755067751

CVX 0.000915865 1.105795643

3. The risk adjusted (market model) method was used to calculate the normal expected returns. The expected returns for each stock, for each day of the event period were obtained with the formula:

E(R)= alpha+ Beta (Rm)

Rm= return on the market calculated with the S&P 500 index

4. Then, the excess return (ER) was calculated as:

ER= actual return – E(R)

5. Average Excess Returns were found for each day by averaging the Excess Returns for each firm on a given day.

AER= Sum of Excess Returns/n

N= number of sample firms (10)

6. In addition, cumulative AER was calculated by adding the AERs for each day of the event period, days -30 to +30.

7. For the event period, graphs of AER and CAER were plotted to show their movement over time. Graph 1 models AER plotted against time, and Graph 2 models CAER plotted against time.

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RESULTS

Did the hurricane have an effect on the market making the information surrounding the event significant? In the past, the market has reacted to events similar to the hurricane. Consequently, one would expected a significant difference between the actual average daily returns during the event period of day -30 to day +30 and the risk adjusted expected average daily returns during the same time period. A significant difference supports the hypothesis that the risk adjusted rates of return around the event date are affected by the event. In order to test for the difference, a paired sample t-test is conducted. The results of the test prove there is a significant difference at the 1% level between the actual average daily return and the risk adjusted average expected returns. As a result, hypothesis H21 is supported because there is significant evidence that the risk adjusted rates of return surrounding the event date are affected by information about the event. With this information, we can conclude that information about the event caused stocks to react, thus making Katrina impactful.

Another reason for this teat was the answer the question, “Did the market show weak, semi- strong, or strong market efficiency?” The key to finding this answer was to examine the AER (Average Excess Return) and CAER (Cumulative Average Excess Return) in both a statistical test and graphs. Using a T-test, it is possible to find if the AER and CAER deviate from zero. After conducting the tests, it confirmed that the AER and CAER are significantly different from zero, at the 1% level. When observing the CAER it confirms that starting at approximately Day -9, there is a visible negative trend in the CAER, proving the information about the hurricane affected the stock price prior to the event date of August 23, 2005.

Graph 1: Average Excess Returns Over the Event Period

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Graph 2: Cumulative Average Excess Returns over the Event Period

CONCLUSION

This studied examined the effect of Hurricane Katrina on the risk adjusted rate of return for a sample of 10 oil firms’ stocks that were affected by the event. After conducting the appropriate statistical tests, results confirmed that information about Hurricane Katrina had a significant negative effect on the risk adjusted rate of return of the sample’s stock prices. Specifically, the results show the stock returns dropping significantly prior to the hurricane reaching land. Graphically, the CAER is shown to drop at least nine days before the hurricane made landfall on August 23, 2005. We can conclude that the market is reacting with semi-strong efficiency because the stock prices began to drop in reaction to information regarding the hurricane’s expected damage. Although the selected stocks experienced temporary decline, the CAER shows that there was a positive trend that happened during reconstruction, after the hurricane had diminished.

REFERENCES Archer, S. (2017). Insurance stocks are rising as Hurricane Irma damage is likely to be less than expected (FNF, PGR, FAF, ACGL, CB, ALL, NAVG, SIGI, CINF, KINS). Markets Insider. Retrieved November 11, 2020, from https://markets.businessinsider.com/news/stocks/hurricane- irma-insurance-companies-are-rising-as-hurricane-damages-seem-less-than-expected-2017-9- 1002358841 Bromels, J. (2017, August 29). What Hurricane Harvey Means for Oil Stocks. Retrieved November 11, 2020, from https://www.fool.com/investing/2017/08/29/what-hurricane-harvey-means-for-oil- stocks.aspx Brown, J. (2005, August 31). Hurricane Katrina's Effect on the Oil Industry. Retrieved November 11, 2020, from https://www.pbs.org/newshour/show/hurricane-katrinas-effect-on-the-oil-industry Bush: U.S. ready to release oil from SPR. (2005). Retrieved November 11, 2020, from https://money.cnn.com/2005/09/26/news/economy/bush/

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Reid, K. (2020, May 12). 2005 Hurricane Katrina: Facts, FAQs, and how to help. Retrieved November 11, 2020, from https://www.worldvision.org/disaster-relief-news-stories/2005-hurricane- katrina-facts Ro, S. (2017, September 8). What Hurricane Irma Could Mean for Stocks. Retrieved from

https://finance.yahoo.com/news/hurricane-irma-mean-stocks-105038376.html

Spradlin, K. (n.d.). A Test of Market Efficiency: Hurricane Harvey's Effect on Oil Company Stock Prices.

Farmville, VA.

Weiderman, I. (n.d.). Hurricane Katrina's Effect on Oil Companies' Stock Prices. Farmville, VA.

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