BUSINESS

RESEARCH
YEARBOOK
Balancing Profitability and Sustainability:
Shaping the Future of Business
VOLUME XVIII 2011
NUMBER 1
MARGARET A. GORALSKI
H. PAUL LEBLANC, III
MARJORIE G. ADAMS
Publication of the International
Academy of Business Disciplines
Cover Design by Tammy Senath ISBN 1-889754-16-1
GORALSKI
LEBLANC
ADAMS
EDITORS
BUSINESS
RESEARCH
YEARBOOK
Volume
XVIII
2011
Number 1
International
Academy of
Business
Disciplines
BUSINESS RESEARCH YEARBOOK
BALANCING PROFITABILITY AND SUSTAINABILITY:
SHAPING THE FUTURE OF BUSINESS
VOLUME XVIII 2011
NUMBER 1
Chief Editor
Margaret A. Goralski
Quinnipiac University

Associate Editor
H. Paul LeBlanc III
University of Texas at San Antonio
Managing Editor
Marjorie G. Adams
Morgan State University
A Publication of the
International Academy of Business Disciplines
I A B D
Copyright 2011
by the
International Academy of Business Disciplines
International Graphics
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All rights reserved
Printed in the United States of America
Co-published by arrangement with
The International Academy of Business Disciplines
ISBN
1-889754-16-1
i


PREFACE


Each year in April, members of the International Academy of Business Disciplines
(IABD) and invited guests come together to share their research and ideas to explore thoughts
with other academics, business leaders, policy makers, and students. This internationally refereed
publication is a glimpse into that research. It has been our pleasure as Editors to work with the
authors whose work appears in this issue of the Business Research Yearbook and the active track
chairs who have encouraged them along the way.

We are truly an international body with members traveling from, England, Spain, the
Middle East, India, Japan, China, and other countries worldwide to join us in personal,
community, and world growth. The objectives and far-reaching visions of the IABD have created
interest and excitement. We have evolved into a strong global organization due to the immense
support of many dedicated individuals and institutions.

The International Academy of Business Disciplines is a worldwide, non-profit
organization established to foster and promote education in all of the functional and support
disciplines of business. The objectives of IABD are to stimulate learning and understanding and
to exchange information, ideas, and research studies from around the world. The Academy
provides a unique global forum for professionals and faculty in business, communications, and
other social science fields to discuss common interests that overlap career, political, and national
boundaries. IABD creates an environment to advance learning, teaching, research, and the
practice of all functional areas of business.

The Business Research Yearbook is published to promote cutting edge research. We
thank the Board of Directors of the International Academy of Business Disciplines for their
dedication to the advancement of knowledge.

Margaret A. Goralski
H. Paul LeBlanc III
Marjorie G. Adams
ii


INTERNATIONAL ACADEMY OF BUSINESS DISCIPLINES
2011 REVIEWERS


Ahmad Tootoonchi, Frostburg State University
Amiso M. George, Texas Christian University
Antonio Noguero, University of Barcelona
Azam N. Foda, Decizens, Inc.
Becky McDonald, Ball State University
Bonita Dostal Neff, Valparaiso University
Cheryl O. Brown, University of West Georgia
Chulguen Yang, Southern Connecticut State
University
Chun-Sheng Yu, University of Houston-Victoria
Dale Steinreich, Drury University
Daniel W. Smith, Penn State University at Beaver
Darwin L. King, St. Bonaventure University
David Zoogah, Morgan State University
Diane Bandow, Troy University
Durriya H. Z. Khairullah, St. Bonaventure University
Enric Ordeix-Rigo, Ramon Llull University
Erich B. Bergiel, University of West Georgia
Felix Abeson, Coppin State University
Firhana Saifee, Western University
Habte-Giorgis, Berhe Rowan University
Hakan Altintas, Uludag University, Turkey
Harold W. Lucius, Rowan University
J. Gregory Payne, Emerson College ,
Jeff Rooks, University of West Georgia
John C. Tedesco, Virginia Polytechnic Institute and
State University
John Mark King, East Tennessee State University
June Lu, University of Houston-Victoria
Kathy Kabbani, California State University - Fresno
Kayong Holston, Ottawa University
Louis K. Falk, University of Texas at Brownsville
Majidul Islam, Concordia University
Margaret A. Goralski, Quinnipiac University
Marjorie G. Adams, Morgan State University
Marty Mattare, Frostburg State University
Michael J. Mitchell, International School of
Management, Paris
Mike Monahan, Frostburg State University
Mohammad Bsat, National University
Mohamed Khalil, Kennedy School of Government,
Harvard University
Nathan Austin, Morgan State University
Omar M. Al Nasser, University of Houston-Victoria
Omid Nodoushani, Southern Connecticut State
University
Paul A. Fadil, University of North Florida
Paul. B. Gwamna, Iowa Wesleyan College
Bisi Gwamna, independent editor and consultant,
Iowa
Spencer Kimball, Kimball and Associates
Steve Ugbah, California State University- East Bay
Stevina Evuleocha, California State University - East
Bay
Philemon Oyewole, Howard University
Philip Fuller, Jackson State University
Rabiz N. Foda, Hydro One Networks, Inc.
Raquel Casino, Independent Communications
Professional
Robert Page Jr., Southern Connecticut State
University
Samantha R. Dukes, University of West Georgia
Shakil M Rahman, Frostburg State University
Talha Harcar, Penn State University at Beaver
Tricia Hansen-Horn, University of Central Missouri
Wafa Elgarah, Al Akhawayn University, Morocco
Zahid Y. Khairullah, St. Bonaventure University
Ziad Swaidan, University of Houston-Victoria
iii
TABLE OF CONTENTS
CHAPTER 1: ACCOUNTING HISTORY ....................................................................... 1
The CPA Exam Past and Future
P. Michael Moore, University of Central Arkansas ....................................................... 2
The Annual Report and Corporate Social Responsibility
Annette Hebble, TUI University
Vinita Ramaswamy, University of St. Thomas .............................................................. 9
CHAPTER 2: ADVERTISING AND MARKETING COMMUNICATION............... 15
Social Networks - The Dark Side
Hy Sockel, DIKW Management Group
Louis K. Falk, University of Texas at Brownsville ..................................................... 16
Travelers Perceptions of Tennessee: Its a Rocky Top State (Of Mind)
Lisa Fall, University of Tennessee
Charles A. Lubbers, University of South Dakota ........................................................ 22
Adaptive Selling in the Public Arena: An Exploratory Investigation
George A. Kirk, Southern University
Richard L. McCline, Southern University
George M. Neely, Sr., Southern University ................................................................. 29
A Critical Theoretical Exploration of Municipal Budgets as Marketing Tools
Staci M. Zavattaro, University of Texas at Brownsville .............................................. 36
CHAPTER 3: APPLIED MANAGEMENT SCIENCE & DECISION SUPPORT
SYSTEMS.................................................................................................. 42
Economic Evaluation of Renewable Energies in Iranian Power Plant Industries Utilizing
Merit Rate Method
Seyed Mohammad Seyedhosseini, Islamic Azad University
SarahYousef,IranUniversityofScienceandTechnology ......................................... 43

An Information Systems Encounter with the Six Sigma Method
Roger L. Hayen, Central Michigan University ............................................................ 48
Ethical Decision Making Among Addicted and Non-Addicted Internet Users
Kimberly S. Young, St. Bonaventure University
Carl J. Case, St. Bonaventure University .................................................................... 55
iv
A Hybrid Fuzzy Mathematical Programming - Fuzzy ANP Model for R & D Project
Portfolio Selection
S.M. Seyedhosseini, Iran University of Science and Technology
S.M. Ghoreyshi, Iran University of Science and Technology ..................................... 62

CHAPTER 4: COMMUNICATION AND TECHNOLOGY ........................................ 70
A Web-based Multilingual Meeting System: Breaking The Language Barrier
Milam Aiken, University of Mississippi
John Wee, University of Mississippi
Mahesh Vanjani, Texas Southern University ............................................................... 71
Daimlers Bribery Crisis: A Casuistic Analysis of Daimlers Online Crisis Communication
Roxana Maiorescu, Purdue University ........................................................................ 77
Public Relations and Technological Advances: Consumers And An EcoCAR Campaign
Rachel Dobroth, Virginia Tech
Kaitlyn Redelman, Virginia Tech
John C. Tedesco, Virginia Tech.................................................................................... 83
Developing NFC Based Applications and Services: Innovation and Research Directions
ngeles Sandoval Prez, University of Vigo
Irene Garrido Valenzuela, University of Vigo
Paloma Bernal Turnes, University Rey Juan Carlos .................................................... 89
CHAPTER 5: COMPUTER INFORMATION SYSTEMS ........................................... 96
Balancing Between Using Open Source and Commercial Software in a Technology Program
Azad Ali, Indiana University of Pennsylvania ............................................................ 97
PredictionofCustomerBehavioronRFMTModelUsingArtifcialNeuralNetworks
Qeethara Kadhim Al-Shayea, Al-Zaytoonah, University of Jordan
Ghaleb Awad El-Refae, Al-Zaytoonah, University of Jordan ................................... 103
CHAPTER 6: CROSS CULTURAL COMMUNICATION ....................................... 109
A Research Model for Multilingual Electronic Meeting Systems
David Pumphrey, University of Mississippi
Milam Aiken, University of Mississippi
Mahesh Vanjani, Texas Southern University ............................................................. 110
v
Analysis of the Effectiveness of Corporate Responsibility as a PR Strategy
by Catalan Soccer Team Clubs
Xavier Ginesta, University of Vic
Enric Ordeix, Ramon Llull University ...................................................................... 116

WesternEuropesMystifcationofTurkeyandTheTurks
Raquel Casino, Independent Communications Professional ..................................... 122
CHAPTER 7: CROSS CULTURAL MARKETING ................................................... 128
Review of Culture and Materialism
Ziad Swaidan, University of Houston-Victoria ......................................................... 129
Problems of Counterfeit International Pharmaceutical Products
Branko Cavarkapa, Eastern Connecticut State University
Michael G. Harvey, University of Mississippi & Bond University (Australia) ........ 135
CHAPTER 8: ECONOMICS ......................................................................................... 142
Customers Demand Aversion to Polluting Product and Firms Output/Pricing Decision
Muhammad Rashid, University of New Brunswick
Basu Sharma, University of New Brunswick
Muhammad Jamal, Concordia University ................................................................. 143
P/E Ratio as a Market Timing Indicator for Twenty-Year Periods
Gary L. DeBauche, Drury University
Rodney A. Oglesby, Drury University ....................................................................... 149
CHAPTER 9: ENTREPRENEURSHIP AND SMALL BUSINESS ........................... 157
A Comparative Study on Native-Born and Foreign-Born Female Entrepreneurs:
A Narrative Approach
Chulguen (Charlie) Yang, Southern Connecticut State University
Margaret A. Goralski, Southern Connecticut State University .................................. 158
CHAPTER 10: ETHICAL AND SOCIAL ISSUES ........................................................ 164
Increasing Honor & Integrity in Classrooms: A Case Study
Amiee J. Shelton, Roger Williams University
Mary Concannnon, Roger Williams University ........................................................ 165
Toyota: An Example of Unethical Communication
Ashe Carolyn, University of Houston-Downtown .................................................... 171
vi
The First Step in Restoring Academic Integrity: Creating an ethical Guideline
Diane D. Galbraith - D.Ed. Slippery Rock University
Susan L. Lubinski - JD - Slippery Rock University .................................................. 177
American CEOs Perceptions of Suggested Strategies that Sustain Globalization
Marjorie G. Adams, Morgan State University
Abdalla F. Hagen, Wiley College .............................................................................. 183
CHAPTER 11: FINANCE ................................................................................................ 190
Valuing Distressed Private Companies: The Case of Furniture Manufacturing Company in Brazil
Ronald Jean Degen, International School of Management
K. Matthew Wong, St. Johns University .................................................................. 191
Stochastic Analysis of Margin Buying in Spain
Paloma Bernal Turnes, Universidad Rey Juan Carlos
Jos Luis BeltrnVarandela, Universidad de Vigo
Irene GarridoValenzuela, Universidad de Vigo ......................................................... 197
CHAPTER 12: GLOBAL CORPORATE PR, SOCIAL RESPONSIBILITY
AND CULTURE ..................................................................................... 203
Public Relations Excellence In Spain: A Quantitative Analysis
Assumpci Huertas, Universitat Rovira i Virgili, (Taragona-Spain)
Enric Ordeix, Universitat Ramon Llull (Barcelona-Spain)
Natalia Lozano, Universitat Rovira i Virgili (Tarragona-Spain) ............................... 204
Management For Business Excellence: Public Relations Strategy
Rosa M. Torres, Alicante University ......................................................................... 210
The ABC (Argentina, Brazil, & Chile) Of Public Relations In Latin America
Macarena Urenda S, DuoUC Via del mar, Chile ..................................................... 217
Essentials of Managing Social Commitment As A Strategy To Establish Principles Of The
Organizational Culture
Enric Ordeix, Department of Communication-Ramon Llull University
Jordi Xifra, Department of Communication-Pompeu Fabra University ................... 223
News Tendencies In Political Communication: Lobbies & Think Tanks
Antonio Castillo Esparcia, University of Mlaga, Spain
Ana Almansa Martnez, University of Mlaga, Spain ............................................... 227
vii
CHAPTER 13: GLOBAL ENVIRONMENT AND TRENDS ....................................... 233
Revisiting Hofstedes Dimensions: The Evolving Cultures of the United States and Japan
Jonathan Wood, University of West Georgia
Christy Rabern, University of West Georgia
Jon Upson, University of West Georgia .................................................................... 234
From the Inside-Out: Internal Marketing and the Global Firm
Blaise J. Bergiel, University of West Georgia
Cheryl O. Brown, University of West Georgia
J Robert Field, Nicholls State University .................................................................. 240
Students Attitudes Towards Business Codes of Ethics: The Impact of Gender
Faramarz Parsa, University of West Georgia
Nabil Ibrahim, Augusta State University ................................................................... 246
The Evolution and Future of Cellular Telephony
KenGriffn,UniversityofCentralArkansas
Steven Zeltmann, University of Central Arkansas
Mark McMurtrey, University of Central Arkansas .................................................... 252
ShadesofGreen-ExploringVariousApproachestoGreenIT
Summer E. Bartczak, University of Central Arkansas
KenGriffn,UniversityofCentralArkansas
Steven Zeltmann, University of Central Arkansas .................................................... 257
CHAPTER 14: HUMAN RESOURCES MANAGEMENT .......................................... 263
Linkages between Perceived Occupational and Organizational Commitments of General
Employees in Japanese Organizations
Kaushik Choudhury, Reitaku University
Paul A. Fadil, University of North Florida ................................................................ 264
Application of a Medical Protocol to Worker Layoffs
C. W. Von Bergen, Southeastern Oklahoma State University ................................... 271
CHAPTER 15: INSTRUCTIONAL & PEDAGOGICAL ISSUES............................... 279
Clickers Technology Attitudinal Differences Of Native-Born And Immigrant Students:
What Are The Pedagogical Implications?
Kellye Jones, Clark Atlanta University ..................................................................... 280
viii
Clickers Technology Attitudes Of Business School Faculty: Outcomes, Evaluations
And Insights
Kellye Jones, Clark Atlanta University
Amiso M. George, Texas Christian University .......................................................... 287
Etextbook: A Framework to Understanding their Potential
Saurabh Gupta, University of North Florida
Charlene Gullett-Scaggs, University of North Florida .............................................. 294
One More Time: The Relationship Between Time Taken to Complete an Exam and
the Grade Received
James E. Weber, St. Cloud State University
Howard Bohnen, St. Cloud State University
James A. Smith, St. Cloud State University .............................................................. 301
Business Students Reported Perceptions of Faculty Consideration
Randall P. Bandura, Frostburg State University
Paul R. Lyons, Frostburg State University ................................................................ 307
Service Learning: Does It Change Student Perspectives?
Paula S. Weber, St. Cloud State University
Kenneth R. Schneider, St. Cloud State University
James E. Weber, St. Cloud State University .............................................................. 313
Using Classroom Exercises to Teach Sustainable Business and Strategic Communication
Writing in a Consumer Culture
Stevina U. Evuleocha, California State University
Amiso M. George, Texas Christian University .......................................................... 318











CHAPTER 1

ACCOUNTING HISTORY
1


THE CPA EXAMPAST AND FUTURE

P. Michael Moore, University of Central Arkansas
mikem@uca.edu


ABSTRACT

Fortune magazine once published a cover story proclaiming that modern society is
dependent on three great professions: medicine, law, and public accounting. A study of the
history of the accounting profession discloses that the development of a recognized designation
(CPA) which required a competency exam (CPA Exam) was an integral requirement for the
establishment of the profession. It is the CPA Exam which marks the birth of the profession in
the U.S. and it is the CPA examination which is the thread of continuity in the early development
of the profession. This paper reviews the history and development of the CPA examination from
its inception until the present with an overview of changes effective with the 2011 exam.

AMERICAN ASSOCIATION OF PUBLIC ACCOUNTANTS

In the United States in the late 1800s, many public accountants were Chartered
Accountants who immigrated from England, Wales, and Scotland. The need for auditors and
public accountants grew as American commerce grew. As the number of accountants increased,
groups or societies were formed to discuss mutual problems and matters of interest. One such
group was the American Association of Public Accountants, later renamed the American
Institute of Certified Public Accountants, which was founded in New York in 1887 (Carey,
1969).
The primary leader of the organization was Edwin Guthrie, a Chartered Accountant from
London who was in New York for his firm. The model he promoted was that of the Institute of
Chartered Accountants in England and Wales (Edwards & Mirant, Jr., 1987). This organization
had started an entrance examination for Chartered Accountants in 1882 (Carey, 1969).
When the American Association was formed, there were no regulations governing public
accountants or auditors. The Association, desiring to upgrade the standing of the profession,
attempted to start a school of accountancy. In 1892 the Board of Regents of the University of
New York granted the Association a provisional charter for two years to operate the New York
School of Accounts. The school failed, but continued efforts by the Association were
instrumental in the passage of the first accounting law in the U.S. in 1896 (Edwards, 1960).

FIRST CPA LAW

On April 17, 1896, the Governor of New York signed into law "An Act to Regulate the
Profession of Public Accountants." This was the first legislation in the U.S. to use the
professional designation "Certified Public Accountant" (Edwards, 1960, p. 68). The law
prohibited anyone from using this title unless he had a certificate issued by the Regents of the
University of New York (Broaker & Chapman, 1978)
Under the New York law, the Regents of the University of New York were authorized to
make rules for examining prospective CPAs. In addition, the Regents were given the authority to
2


grant certificates by waiver for individuals who were practicing as public accountants at the time
the law was passed. A total of 126 certificates were issued by waivers in 1896 and 1897. None
were issued by examination. Certificate #1 was presented to Frank Broaker, who had made great
contributions in getting the first CPA law passed. It was not until 1898 that six certificates were
issued by examination (Edwards, 1960).
The law called for the CPA examination to be given each year in June and December.
The examination covered commercial law, theory of accounts, practical accounting, and auditing
(Webster, 1944). Each part was designed for a three-hour session. Candidates had to pass all four
subjects during a single examination to be certified. Candidates had to be at least 25 years old
and have three years of satisfactory experience in the practice of accounting in order to receive
the CPA certificate (Edwards, 1960).

THE FIRST CPA EXAM

The Regents appointed three prominent accountants as the Board of Examiners to
administer the first exam: Frank Broaker, Charles E. Sprague and Charles Waldo Haskins
(Edwards, 1960). The first CPA examination was given on December 15 and 16, 1896 in Buffalo
and New York City. The first session covered the theory of accounts; candidates were required to
answer five obligatory questions and were allowed to choose five of ten possible remaining
questions. Question number one asked the candidate to distinguish between the essential
principles of double-entry bookkeeping as opposed to single-entry. Other questions dealt with
distinguishing between accounts such as revenue account and trading account. Some questions
asked candidates to define various terms including fixed assets, cash, stock, capital, and loan
capital (Accountancy in the States, 1897).
The afternoon session tested the candidates in the area of practical accounting. This
section contained two obligatory questions. One required the candidates to prepare a statement of
affairs, and the other was a partnership problem. Also in the second session, the nominees had to
choose two of four questions covering the preparation of a balance sheet, partnership liquidation,
foreign exchange, or a joint venture problem.
The second day of the first CPA examination tested the candidates on auditing in the
morning session and commercial law in the afternoon. The subject matter of the auditing session
pertained to an auditor's duties, and the important areas of concern while auditing a corporation.
Next the questions turned to specific auditing procedures such as cash payments and receipts.
This section of the examination asked the applicants to answer five required questions and
choose five of seven other remaining questions. The fourth section covered commercial law.
Each of the four sections had 100 points possible, and a score of 75 on each section was
necessary for a passing mark (Accountancy in the States, 1897).

NEED FOR A UNIFORM EXAM

Other states followed New York's lead in passing CPA laws. Similar legislation was
passed by Pennsylvania in 1899; Maryland, 1900; California, 1901; Illinois, 1903; Washington,
1903; New Jersey, 1904; Florida, 1905; and Michigan, 1905. Thirty-one states had adopted CPA
laws by 1913 and all had such legislation by 1921 (Chatfield, 1968).
By the early 1900s the accounting profession in the United States had progressed, but it
was in need of a unifying factor which would enable it to be accepted and respected throughout
3


the nation. The development of a uniform CPA examination did more to satisfy that need than
any other factor.
As each state adopted CPA legislation, state boards of accountancy were set up. Because
each state prepared its own examinations, the difficulty and quality of the exams varied greatly.
In one state, CPA waiver certificates were granted to anyone who had bookkeeping experience
(Carey, 1969). The situation was described aptly in the following excerpt from an editorial by
Edward S. Meade in the July Journal of Accountancy, It has long been a reproach to the
Accountancy profession in the United States that the examinations proposed for admission into
the profession are exceedingly elementary and in no way comparable with the examinations for
admission into the other learned professions (Meade, 1915, p. 194).
Because accounting dealt with firms which conducted business across state lines, it was
recognized that the practice of accounting was largely of an interstate nature. However, since the
granting of CPA licenses was done on a state-by-state basis, many states were reluctant to grant
reciprocity to CPAs from other states. It was felt that only a national organization could provide
the leadership necessary to develop national standards. The American Association was national
but it had no authority over the individual state boards and could not dictate standards for them.
However, in 1916, the American Association was reorganized as the American Institute of
Accountants (now the AICPA) and new members could be admitted only after passing an
examination testing their technical competence and meeting experience requirements. A Board
of Examiners was selected to be responsible for the preparation and grading of the examinations
(Carey, 1969).

FIRST UNIFORM CPA EXAM

John F. Forest is credited with giving birth to the idea of a uniform examination for all
states (Carey, 1969). He suggested that since the Institute was going to prepare an examination
anyway, why not make it available to any of the states which wished to adopt it? This practice
would relieve individual states from the burden of preparing and grading an exam. If a candidate
passed the uniform examination given by the Institute, he could become a CPA in his home state
and a member of the American Institute, assuming he met the experience requirement (Menders,
1944).
The first uniform CPA examination was given in 1917 to 34 candidates from New
Hampshire, Oregon and Kansas (Menders, 1944). The examination consisted of auditing,
commercial law, theory and practices (two parts) and was administered over two days. A high
school education was required unless the Board granted waivers. The fee was $25 (Journal,
1916). All of the questions were either essay questions or long problems. There were no multiple
choice questions.
In order to participate in the program, cooperating states had to agree to administer the
exams simultaneously. The Board of Examiners insisted on grading the examinations in order for
the scores to count toward determining membership in the Institute (Uniformity of Examinations,
1917). By 1919, 22 states had adopted the Institute's examination as their own. It took thirty
years, however, before every state adopted the exam. During this period ten states quit using the
exam and later readopted it (Edwards, 1960).
National recognition of the CPA certificate was greatly facilitated by the widespread
adoption of the uniform examination. For example, certified public accountants were allowed to
enroll to practice before the U.S. Treasury without further examination. Before the adoption of
4


the uniform exam, such terms of enrollment were only available to lawyers. Reciprocity between
the state boards of accountancy was one of the most important contributions of the uniform
examination, because it promoted the practice of accounting on an interstate basis. Without such
a concession the accounting profession would not have developed to the extent it has today in
serving business and industry on a national and international basis (Menders, 1944).

EDUCATION REQUIRMENTS

The first exam given by New York in 1896 had no formal education requirement. With
the first uniform CPA exam in 1917, candidates were required to be a high school graduate. In
1939, New York became the first state to require a collegiate baccalaureate degree. Beginning in
1950, the AICPA lobbied states to require a college degree as the education requirement and
soon after most states made the adoption. In 1979, Florida passed legislation to require 150 hours
of college coursework in order to take the CPA exam. The 150 hour requirement went into effect
in 1983 in Florida. The AICPA and the National Association of State Boards of Accountancy
(NASBA) lobbied for all states to adopt the 150 hour requirement. By 2010, 47 states and
jurisdictions had adopted the 150 hour rule. The following five jurisdictions have not adopted the
150 hour rule: Colorado, Delaware, New Hampshire, Vermont, and the Virgin Islands. California
is the latest state to adopt; the rule goes into effect in 2014. There appears to be a trend to allow
candidates to take the exam after 120 hours of coursework, but to not be licensed without the 150
hours. Twenty-two states have adopted this model.

COMPOSITION OF THE EXAM

Beginning with the first uniform exam in 1917, the exam consisted of Theory and
Practice (two parts), Auditing and Business Law and was administered over two days. In 1942,
Theory was separated from Theory and Practice and the exam was given over two and one half
days. Practice consisted of two parts over two days but was assigned one grade. Major subject
topics appeared frequently, and minor topics were rotated in such a manner as to cover the entire
subject matter in a five year cycle. The difficulty of the exam was set at a level to test the ability
of a candidate to qualify as a senior accountant (Webster, 1943)
In 1994, the exam was reduced to two days again with the following parts, Financial; Tax
Managerial, and Governmental; Auditing; and Business Law. Since 1994, writing skills have
been graded; prior to that time they were not graded. Until 1996, CPA exams and unofficial
answers were published approximately three months after they were given. Since 1996, the
exams have been non-disclosed
The last major change in composition occurred in 2004 when the exam became
computer-based. The current parts are Financial Accounting and Reporting; Regulation;
Auditing; Business Environment and Concepts.
Until 2004, candidates were required to take all failed parts and in most jurisdictions had
to make a minimum of 50 on all parts in order to receive credit for any passed part. Since 1896
the passing score on every part has been 75. Beginning in 2004 with the introduction of
computed-based testing, candidates can take one part at a time.



5


TECHOLOGY CHANGES

Prior to 1994, no computation instruments, including slide rules, were allowed.
Beginning in 1994, four-function calculators were provided to candidates. In 2004, the currently
used computed based testing (CBT) system was introduced. For the first time, candidates take
the exam on a computer, can take the exam one part at a time, and can schedule to take any part
whenever they want tosubject to space availability and during eight specified months.

PASS RATES

There has been a noticeable increase in pass rates since the introduction of the computer-
based exam. For example, the pass rates for Auditing and Practice in 1985 was 31% and 34%. In
2009 the pass rates for Auditing and Financial Accounting and Reporting (FAR) was 50% and
49%. There are several explanations for the increased pass rates. Since the 150 hour requirement
has been adopted by most states, almost all candidates have had more accounting courses than
candidates taking the exam prior to the adoption of the 150 hour rule. With the adoption of CBT,
candidates can choose to take only one part at a time, thus their study preparation is
concentrated. Prior to 2004, candidates had to take and prepare for all failed sections. In many
states, a minimum grade of 50 was required in order to conditionally pass other parts, thus these
candidates had to prepare for all sections taken.
The passing score of 75 is not a percentage of correct answers. It is a score based on an
arbitrary decision as to what constitutes a minimum amount of knowledge and ability required to
function as a CPA. The AICPA can set the pass rate at any level. An examination of pass rates
for 30 years prior to 2004 indicates the pass rate on each part for each exam ranged from 30 to
35%. Beginning with the first CBT exam in 2004, the pass rates have increased approximately
50%. While the preceding paragraph provides two explanations for increased pass rates, the
author believes the AICPA may have arbitrarily increased pass rates to appease candidates who
have undertaken increased costs to meet the 150 hour requirement. If pass rates had not
increased, an argument could be made that the increased cost of more education fails to exceed
the benefits of that education.
Because of the changes in the exams administered in 2011, the AICPA has rescored the
75% threshold beginning with the 2011 exams. An increase in the number of candidates in the
fourth window of 2010 indicates that some believe the AICPA may decrease the percentage of
passing candidates in 2011.

EXPERIENCE REQUIREMENTS

Each state establishes its experience requirement to become a licensed CPA in that state.
These requirements range from very specific and carefully controlled requirements to general
and liberally interpreted requirements to none. In the early days of the profession, experience
was of extreme importance, because of the lack of courses in accounting offered in the schools.
As the education requirements to sit for the exam were increased, the experience requirement
became less important. The National Association of State Boards of Accountancy (NASBA) has
recommended that the experience requirement be one year. The trend has been to reduce or
eliminate the experience requirement as the 150 hours requirement has been adopted.

6


CHANGES IN 2011

The CPA exam has several changes in content and format beginning in 2011. The four
sections remain: Financial Accounting & Reporting (FAR), Auditing & Attestation (AUD),
Regulation (REG), and Business Environment & Concepts (BEC). For the first time the exam
will test an understanding of the FASB Codification and International Financial Reporting
Standards (IFRS). IFRS may be tested on all sections and the Codification will be tested on
research simulations. Operations management and strategic planning will be tested for the first
time in BEC. Also, ethics and professional responsibilities will be covered in AUD rather than
REG.
Historically, FAR, AUD, and REG have had two major simulations. Beginning in 2011,
the three sections will have 7 smaller task-based simulations. This will enable the examiners to
test more topics. There will be less emphasis on multiple choice questions and more on
simulations. The mix of multiple choice questions to simulations for FAR, AUD and REG have
been 70% to 30%. In 2011, the mix will be 60% to 40%. BEC will change from 100% multiple
choice to 85% multiple choice and 15% essay. Essay questions will be in BEC only.

CONCLUSION

Few professions have achieved the status and recognition enjoyed by public accounting.
The reason for the ascension to widespread public recognition is largely the result of the CPA
examination. The exam has provided a common denominator of entry level competence required
of all entrants into the profession. This common denominator has generally kept incompetents
out of the field and has established and maintained respect from every element in the business
community. Our laws require that corporations registered with the stock exchanges have to be
audited by a CPA. There are many other factors, of course, which have led to the development of
the public accounting profession; however, no other single factor has been more important in
contributing to the profession's growth than the CPA Examination.

REFERENCES

Accountancy in the States. (1897, January). The Accountant, 23, 52-56.
Broaker, F., & Chapman, R. M. (1978). The American Accountants Manual. New York: Arno
Press, p. 11.
Carey, J. L. (1969) The Rise of the Accounting Profession from Technical to Professional. New
York: AICPA.
Chatfield, M. (1968). Contemporary Studies in the Evolution of Accounting Thought. Belmont,
CA: Dickinson Publishing Co.
Edwards, J. D. (1960). History of Public Accounting in the United States. East Lansing, MI:
Michigan State University Business Studies.
Edwards, J. D., & Mirant, Jr., P. J. (1987, May). The AICPA: A Professional Institution in a
Dynamic society. Journal of Accountancy, pp. 22-41.
Meade, E. S. (1915, July). Established Preliminary Examinations in Law and Economics.
Journal of Accountancy, p. 194.
Menders, H. E. (1944, April). The Development of Uniform Examinations. The Accounting
Review, pp. 139-141.
Uniformity of Examinations. (1917, August). Journal of Accountancy, p. 54.
7


Webster, N. E. (1943, April). Planned Examinations. Journal of Accounting, p. 348.
Webster, N. E. (1944, April). Some Early Accountancy Examiners. Accounting Review, 135-139.
8


THE ANNUAL REPORT AND CORPORATE SOCIAL RESPONSIBILITY

Annette Hebble, TUI University
ahebble@tuiu.edu

Vinita Ramaswamy, University of St. Thomas
vinitar@stthom.edu


ABSTRACT

Certified Public Accountants (CPAs) have been involved with the preparation of
corporate annual reports since the inception of the profession. In addition to mandatory financial
reporting, we now hear calls for expanded corporate social responsibility reporting (CSR) from
various external groups. Should the two areas be combined into one report or kept separate? A
brief probe of the annual reports of 46 S&P100 companies indicates that integration is currently
limited. Some companies do include some CSR data in their annual report. What should be the
role of the CPA in any potential integration schemes?

INTRODUCTION

The annual report conveys not only financial information, but also serves as a corporate
communication tool aimed at various interest groups. The Web has speeded up the inclusion of
additional information in reports and new types of reports provided by companies. In spite of
continuous growth in sustainability reporting and a multitude of new reporting formats, the
annual report continues to serve as the main report to stakeholders. The document is typically
readily available on the corporate homepage for anyone interested. Trites (2008) confirms that
Web reports include additional topics, such as sustainability and governance, but the latter topics
are often covered in separate reports.
We typically associate annual reports with publicly held companies, but all types of
organizations issue these types of reports. Until the last decade, most reports were printed and
distributed to shareholders and other interested parties. The Annual Reports Library (n.d.) states
that the oldest printed annual report dates back to 1600, i.e. The Vatican's Annuarium
Statisticum.

THE PROFESSION

The first law creating the CPA designation was passed in New York in the year 1886
(Flesher, Previts & Flesher, 1996). The predecessor of the American Institute of Certified Public
Accountants (AICPA) was formed in 1887; a year after the New York law was passed (AICPA,
n.d.). Industrialization had a significant impact on our nation during the first part of the century
and its pace was accelerated after the Second World War. A changing economy, the passage of
the 1913 income tax legislation and the Securities Acts of 1933 and 1934 created an ever-
increasing need for the CPAs' skills. Since that time, the annual report has become a widely
distributed document including the basic financial statements and an attestation by the profession
(Dennis, 2000). It is probably fair to say that there is a strong association between the CPA
9


profession and the annual report. This is the case even though the annual report often includes
information beyond the traditional financial statements.

TRENDS

Stakeholders are demanding supplementary information apart from the traditional
financial statement. The International Federation of Accountants (IFAC, 2010) calls for a
narrative format in addition to the existing standardized format for financial information. Calls
for corporate social responsibility (CSR) reporting are heard from various constituents. Triple
Bottom Line Accounting (TBL) is a term that has become synonymous with CSR reporting. John
Elkington (1997) first used this term to describe a report that would measure information on
financial, environmental and social aspects of periodic corporate progress. It is an approach that
enables organizations to measure and communicate its success on three separate dimensions. The
triple bottom line accounting model is not designed to replace, but rather to enhance and
supplement the information found in the financial statement.
A generally accepted format for triple bottom line reporting is the Global Reporting
Initiative's (GRI) G3 Guidelines. This non-profit organization provides transparent reporting
standards for a three-dimensional model of reporting. GRI provides rigorous standards and uses a
consensus-based approach for developing the criteria for inclusion. The standards can be used by
any size or type of organization regardless of origin. More than 800 organizations self reported
the use of GRI standards during 2010.
Other organizations are also implementing principles and standards for CSR reporting.
One example is The International Organization For Standardization (ISO), which implemented
its new voluntary social responsibility standard ISO 26000 on November 1, 2010. The United
Nations Global Compact (n.d.) is another effort to provide guiding principles for companies
wanting to act responsibly. The Global Compact consists of ten principles that cover human
rights, labour, environment and anti-corruption issues.
Another innovative approach to financial and sustainability reporting is recommended by
the IFAC. This international body recommends the use of a narrative approach to supplement the
traditional financial information and the need for new types of sustainability information (2010).
Additional information not easily disseminated within the traditional financial statements can be
captured using a narrative approach. The PricewaterhouseCoopers 2007 survey of the Fortune
Global 500 companies' narrative reporting found that companies adding narrative information to
explain performance and prospects provided superior reports. A narrative approach could also be
used to inform stakeholders of progress on sustainability related criteria. Such an approach may
shed additional light on the effect of sustainability efforts on corporate success and values.

CSR REPORTING

Porter and Kramer (2006) describe the potential benefits of CSR. Reporting additional
information can provide an opportunity for innovation and put the organization at a competitive
advantage. It should not simply be seen as a drain on corporate resources. Organizations who are
good corporate citizens are involved in shaping societal issues as opposed to merely distributing
funds to philanthropic causes. Every other year KPMG publishes a survey using public
information. It is considered one of the more comprehensive surveys available on this topic. The
2008 KPMG International Survey of Corporate Responsibility Reporting indicates that CSR
10


reporting is increasing, but the majority of such information is published in a separate report and
not as a part of the annual report. Further, it is established that CSR reporting is becoming the
norm instead of the exception for multinational corporations. Today, about 80 percent of the
large corporations include CSR in their reporting as opposed to only 50 percent three years ago
(KPMG, 2008, p. 2). More than three-quarters of the G250 and nearly 70 percent of the N100
use the GRI Guidelines for their reporting (KPMG, 2008, p. 4), which indicates significant
acceptance of this type of reporting by multinational corporations. Data from the survey leads
KPMG to predict that traditional financial report readers will increase the demand for
sustainability disclosures.
What is the role of accountants in TBL and CSR reporting as the demand for such
reporting continues to grow? Resources are limited, so people are trying to conserve resources,
increase efficiency, and identify and encourage those who are taking a lead. Markets, free
enterprise and competition determine whether a business is successful. This places a substantial
burden on the accounting profession to measure performance accurately and fairly on a timely
basis, so that scarce capital resources are effectively and efficiently allocated as investment
capital.
Does a relationship between sustainability reporting and financial reporting exist?
Sustainability reporting communicates a wide range of subject matter about environmental,
social and economic impacts arising from an entitys activities, products and services. Financial
reporting provides information about an entitys accountability for its monetary resources. But
both types of reporting communicate information about the entitys performance in creating
value for investors, the risks and other intangibles that affect valuation. The two types of
reporting can provide supplementary and complementary information so that the end user gets a
complete picture of the companys activities.
Starting in June of 2010 companies listed on the Johannesburg Stock Exchange will have
to integrate their sustainability reports with their annual reports (Temkin, 2010). South Africa is
among the first countries in the world to implement integrated reporting. Another country,
Denmark, already made a similar mandate in December of 2008 (Anonymous, 2009) for its
largest companies, public and private. It appears that Denmark was the first country to do so. The
Danish proposal suggests that a reputation as a socially responsible business community will also
make it more competitive on a global basis. An Indian proposal is more far reaching. This
proposal suggests that companies have to spend two percent of their average net profit and
disclose how the funds are spent in the annual report (Justmeans, 2010). These initiatives show
some actual examples of making sustainability information available as part of the annual report,
as suggested by the KPMG report.

REVIEW OF ANNUAL REPORTS

As we have noted, there are ongoing discussions and calls for integrated annual reporting.
In some cases, these trends are based on mandates. In other cases, the reporting is voluntary.
Currently, we have no mandate for integrated annual reports in the U.S. How are domestic
companies doing in this respect? S&P100 is an index that includes 100 multinational
corporations. Do S&P100 companies issue integrated annual reports? If not, what type of CSR
information do they include in the reports? We review a random sample of S&P100 corporate
annual reports to probe the current status of integrated reporting in the U.S. The list of S&P
companies was obtained from Mergent database.
11


In view of the current developments, this study examines the annual reports of the 46
randomly selected S&P100 companies. This analysis looks for information as to whether or not
these companies cover CSR activities in their annual reports. We scan the reports for references
to triple bottom-line accounting and CSR activities. Specifically, we look for certain terms that
fit into four categories that describe possible CSR activities. The CSR terms listed are included
in The A to Z of Corporate Social Responsibility (Visser, Matten, Pohl, & Tolhurst, 2008).
This comprehensive CSR guide lists and explains common CSR terms. The categories from
above and the terms for those categories are listed in Table 1.

TABLE 1.
FOUR GROUPS OF COMMON CSR TERMS USED IN ANALYSIS OF ANNUAL REPORTS
Environment Community Ethics & Governance
Employee &
Consumer Concerns
Pollution Community Governance Consumer rights
Greenhouse Volunteer Code Product Stewardship
Carbon Donations Ethics Affirmative Action
Eco Public Relations Moral Responsibility Diversity
Environment Equal Opportunity
Gender issues
Health/Safety

We make no qualitative judgments or an attempt to rank the terms since the primary
interest was to determine whether or not the annual report is used to communicate CSR of
information. For each of term within a grouping, we count the number of occurrences in the
annual report to probe the coverage of these topics in the annual report.

ANALYSIS AND FINDINGS

The reports reviewed are those found on the companies' own websites. Once located, the
annual reports were scanned for the terms listed in Table 1. The number of occurrences for each
term was counted and recorded. Next, all occurrences within each group was added. The total,
maximum and minimum for each category are shown in Table 2.

TABLE 2.
INCIDENCE OF CSR TERMS FOUND IN ANNUAL REPORTS
Words from List Environment Community
Ethics &
Governance
Employee &
Consumer
Concerns
Total 1,145 204 1,099 197
Average 25.44 4.53 24.44 4.66
Maximum 154 21 323 54
Minimum 0 0 0 0

All annual reports did not follow the same format. Today, some companies still provide a
traditional thick annual report with a lot of corporate data in addition to the financial statements.
12


Others only provided the 10-K with a few introductory pages. We treat all the reports, regardless
of format in the same manner for purpose of this analysis.
Table 2 shows that environmental topics are most commonly discussed in the annual
reports. Ethics and governance issues come in a close second. However, some of the companies
discussing the latter topics put a lot of emphasis on it as evidenced by a maximum of 323 words
by one organization. As a contrast, the companies with the most emphasis on the environment
only used 154 of the listed terms. Some companies did not include these terms at all in their
annual reports. It may be mentioned here that environmental and governance disclosures are
mandatory for most companies. Issues pertaining to the community, and employee and consumer
concerns receive much less attention. The average of terms included for the latter categories was
about one fifth of the average for environmental and, governance and ethics concerns.

SUMMARY

The analysis of a sample of annual reports does show limited inclusion of overall CSR
concerns and are limited to those of the environment, and governance and ethics. The idea of
integrated reporting dates back to Elkington's call for Triple Bottom Line Accounting in 1997. At
this point in time our brief probe indicates that integration is not the norm. New calls for
integration are emerging. One example is the report put forth by Lydenburg, Rogers & Wood
(June, 2010) from The Hauser Center for Non-Profit Organizations at Harvard University.
Previously, we have noted that such integration is mandated in Denmark and on the
Johannesburg Stock Exchange.
U.S. accountants who have hereto been the main purveyors of information about a company can
take a leading role in this emerging field by providing advisory services on developing systems
and strategies, certification of environmental and employee friendly policies, due diligence
services, benchmarking and assurance services. There are however some milestones that should
be accomplished before public accountants can provide such services such as (i) development of
generally accepted criteria for sustainability reporting (ii) setting up information systems to
gather necessary data (iii) sufficient knowledge and expertise on the part of accountants (iv) a
well developed marketing strategy for accountants to position themselves as providers of
assurance services. Accountants may then be able to integrate all sources of information about a
company (both financial and non-financial) into one set of reports.

REFERENCES

American Institute of CPAs, (nd). AICPA Mission and History. Retrieved from
www.aicpa.org/about/missionandhistory/Pages/MissionHistory.aspx
Anonymous. (2009, February). Enviromation, 55; 474.
The Annual Reports Library (n.d.). Trivia from the Annual Reports Library. Retrieved from
www.zpub.com/sf/arl/arl-triv.html
Dennis, A. (2000, June 1), No One Stands Still In Public Accounting. Journal of Accountancy.
Retrieved from www.allbusiness.com/accounting/565228-1.html
Elkington, J. (1997) Cannibals with forks: the triple bottom line of the 21
st
century business.
Capstone, Oxford.
Flesher, D., Previts, G., & Flesher, T. (1996). Profiling the New Professional Industrials: The
First CPAs of 1896-97 Business and Economic History, 25(1), 252-66.
13


Global Reporting Initiative. (2010, September 25). GRI List Who is reporting? Retrieved from
www.globalreporting.org/ReportServices/GRIReportsList/
Lydenburg, S., Rogers, J., & Wood, D. (June, 2010). From Transparency to Performance:
Industry-Based Reporting on Sustainability Issues. The Hauser Center for Non-Profit
Organizations at Harvard University. Retrieved from hausercenter.org/iri/wp-
content/uploads/2010/05/IRI_Transparency-to-Performance.pdf
International Federation of Accountants (2010). Enhanced Transparency Using Narrative
Reporting. Retrieved from web.ifac.org/sustainability-framework/ip-enhhanced-
transparency-reporting
International Organization for Standardization. (2010, October 29). 1 November launch of
ISO26000 guidance standard on social responsibility. Retrieved from
www.iso.org/iso/pressrelease.htm?refid=Ref1366
Justmeans. (2010, August 16). Indian industries oppose mandatory CSR reporting. Retrieved
from www.justmeans.com/Indian-industries-oppose-mandatory-CSR-
reporting/26759.html
KPMG. (2008). KPMG International Survey of Corporate Social Responsibility Reporting 2008.
Retrieved from
www.kpmg.com/LU/en/IssuesAndInsights/Articlespublications/Pages/KPMGInternation
alSurveyonCorporateResponsibilityReporting2008.aspx
Mergent Online. (2010, September 29). Houston Public Library, Houston, TX. Retrieved from
www.mergentonline.com/compsearch.asp
Porter, M., & Kramer, M. (2006). Strategy and Society. Harvard Business Review. Retrieved
from www.globalcompactnamibia.org/pdf/CSR%20-%20Porter%20Kramer%20-
%20CSR%20along%20the%20value%20chain.pdf
PricewaterhouseCoopers. (2007). A survey of the Fortune 500 Global Companies' Narrative
Reporting. Retrieved from www.pwc.com/gx/en/corporate-reporting-services/fortune-
global-500-companies-survey.jhtml
Temkin, S. (2010). Annual Report Must Include Sustainability. Business Day.
Trites, G. (2008, September). Corporate reporting on the Web. CA magazine, 141(7), 16-17.
Retrieved from ABI/INFORM Global, (Document ID: 1554991541).
United Nations Global Compact. (n.d.) The Ten Principles. Retrieved from
http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html
Vissser, W., Matten, D., Pohl, M., & Tolhurst, N., eds. (2008). The A to Z of Corporate Social
Responsibility: The Complete Reference of Concepts, Codes and Organisations. West
Sussex, England: Wiley.


14










CHAPTER 2

ADVERTISING AND MARKETING COMMUNICATION

15


SOCIAL NETWORKS - THE DARK SIDE

Hy Sockel, DIKW Management Group
hysockel@yahoo.com

Louis K. Falk, University of Texas at Brownsville
Louis.Falk@utb.edu


ABSTRACT

Social Networking has become phenomenally popular over the last few years. The uses
have run from business applications (where various expertise have been shared), to private
individuals using Social Networking within a group of friends. As with any new form of
communication there are many issues that need to be addressed for this medium to be completely
successful. As the masses began to utilize Social Networking - unintended consequences were
realized. This paper explores the uses of Social Networking, the unplanned issues associated
with it, and possible solutions on how to manage Social Networking.

INTRODUCTION

While the Internet had its humble beginning in the United States, it is a global
phenomenon that is not limited to any one country or region. It has become a platform of
communication, commerce, and community. The social aspects of the Internet are notorious. The
public is tuned in to the scale and access for both the beneficial and the harmful (and
inappropriate) side of online content. There are websites dedicated to a variety of what one
would call anti-social behavior: terrorism, bomb building, criminal hacking, drugs, sex
It should be no surprise that the Internet causes passionate discussion as it relates to
threats and opportunities, particularly for the young. The Internet is not limited to any particular
age group. In a recent study for the United Kingdom (UK) Parliaments Office of
Communications (OFCOM), face-to-face computer aided interviews were held with 653 parents,
653 children (aged 5-17 years from the same household), and 279 non-parents. OFCOM key
findings are: (UK Parliament OFCOM report, 2008).
The Internet is used and valued by children and parents as well as the non-parent
adults.
Overall, 99% of children aged 8-17 say that they use the Internet,
80% of households with children aged 5-17 have Internet access at home (compared
to 57% of households without children).
TV remains the dominant medium for children aged 5-15,
The use and importance of the Internet to the child increases with age both in terms of
hours of use and in its status as the medium the child would miss the most.
The average hours of use of the Internet by children has increased greatly over the
past two years (from 7.1 hours/week in 2005 to 13.8 hours/week in 2007 for 12-15-
year-olds).
Almost two-thirds of the population is online,
16


Overall, 16% of children have a computer with Internet access in their bedroom (a
rise from 1% of 5-7-year-olds, to 12% of 8-11-year-olds and 24% of 12-17-year-
olds); parents also tend to underestimate their child's access to the Internet at a
friend's house.
Over the years, the Internet has gradually grown from being a tool used mainly by
scientists and academics to one of people and commerce. This was not a radical change in web
technologies but rather results of cumulative changes in the ways software developers and end-
users use the Web (Sockel and Falk, 2010). Social networks are a byproduct of the Internet and
the World Wide Webs new horizons.

WEB 2.0

The term Web 2.0 describes the range of user-controlled publishing and networking
websites that have emerged over the past five years, allowing people greater connectivity,
autonomy, and voice in online activities. This capability stands in contrast to older, less
interactive, what one might call Web 1.0 sites that limit users to passive viewing and
information retrieval and whose content only the sites owners could modify (OReilly, 2005).
With the newer approach, there is an embodied blurring of the boundaries between Web users
and producers, consumption and participation, authority and amateurism, play and work, data
and the network, reality and virtual-reality (Zimmer, 2008, p. 1).
User generated web content, such as blogs, wikis, social networking sites, and RSS (real
simple syndication) feeds, are rapidly creeping into a large percentage of organizations, offering
suppliers, employees, customers, and users new ways to collaborate and communicate. Gartner
Inc. of Stamford, Connecticut estimates that the size of the enterprise social software market will
triple; growing from $317.5 million in worldwide sales in 2007 to $939.4 million in 2012.
The nature of these increasingly interactive participative environments enrich the users
experience and contribute to Web 2.0 ecology which includes social networking, media sharing
and manipulation sites, data/web mashups, conversational arenas, virtual worlds, social
bookmarking, blogs, wikis, and other collaborative editing sites (Crook, 2008).

SOCIAL MEDIA

More people are using the social media for entertainment, escape, work, keeping up with
friends, looking for work, researching issues, dating, and general communications. Facebook,
Twitter, LinkedIn, Blogs, MySpace, YouTube, Flickr, Wikipedia and others are all part of what
is now known as social media. Social media provide new innovative means for people to
communicate.
What differentiates a social networking site from the run of the mill typical Web site?
CareerBuilder (2009) indicates that a typical website is controlled by a small group of
individuals (or perhaps just one person) with centralized control, for the purpose of simply
pushing out information; while social networking sites invite users to contribute to the content.
In true social media, much of the content comes from the public. Users become active members,
by contributing content, and suddenly have a stake in the success of the site.
However, being a content provider, posting opinions, asking questions can come with
risks. Oftentimes the site literally mines the data provided to create media data databases that
contain enormous amounts of information about individuals, in addition to the persons name,
17


address and other contact data. They often contain much more personal information such as
where one lives, age, specific areas of interest, and even photos.
PC Tools Newsletter (2010) indicates that 32% of social network users are willing to put
themselves at risk. Some Web users will sit in front of their computer for hours and will get into
a state known as the flow totally losing track of what is happening. People in the flow state
can make poor decisions, for example: too much personal data may be volunteered online,
without considering the repercussions of this action. This has the potential of making the
criminals job easier. Things people would not tell a close friend end up being shared with the
whole world.

The Social Network Phenomena
Thanks to the global popularity of social networking an estimated 600 million people
have personal online profiles friends, prospective employers and enemies alike are able to
access photographs, videos and blogs that may have been long forgotten with a few simple clicks
of a mouse (Taylor, 2010). Many organizations are concerned about employees wasting time,
playing games, doing personal things on such sites. Some organizations have considered
blocking access to these sites altogether. Social networks play an important role for an
organization as part of their routine business practices. CareerBuilder (2009) points out that from
grocery stores to alumni associations, and even the local hair salon, nearly every type of
organization today is finding a way to market its business, products, and services using social
networking sites or what is now most commonly referred to as simply social media. Basically, by
encouraging interaction among users, these sites create an interactive experience that users do
not get from a typical Web site.

What is Social media?
Charlene Li and Josh Bernoff, in their book Groundswell: Winning in a World
Transformed by Social Technologies, describe social networking as a social trend in which
people use technologies to get the things they need from each other, rather than from traditional
institutions like corporations (CareerBuilder, 2009, p. 5).
CareerBuilder goes on to indicate that
People are central to social media and its success
They are the creators and the drivers of the platform, and
Organizations that successfully use social media understand how to use this space to
interact with users on a personal level (CareerBuilder, 2009, p. 7).

Facebook
Facebook (2010) says it is a social utility that helps people communicate more
efficiently with their friends, families and coworkers (p. 2). It further states on its website that it
develops technologies that facilitate the sharing of information through the social graph, the
digital mapping of people's real-world social connections. Anyone can sign up for Facebook and
interact with the people they know in a trusted environment. As the second most trafficked Web
site in the world, Facebook claims to have more than 400 million active users, of which 50% log
on to Facebook on any given day. Withers (2008) indicates That the soaring popularity of social
networking sites such as Facebook and MySpace underlines how attitudes towards privacy and
information-sharing are changing, especially among the younger generation (p. 17)
18


This type of social networking site indicates that it has over 900 million objects that
people can interact with (pages, groups, events and community pages). Additionally, this type of
site claims that there are more than 30 billion pieces of content (web links, news stories, blog
posts, notes, photo albums, etc.) shared each month (Facebook, 2010).

Twitter
According to Twitter.com/, Twitter is a real-time information network powered by people
all around the world that lets them share information. Twitter tries to answer a simple question
whats happening now? It does this by allowing users to send and receive very short messages
called tweets. A tweet can be a maximum of 140 characters. Twitter was launched in 2008 as a
free micro-blogging site that enables users to maintain a web log (blog). Its popularity has grown
exponentially; it now has more than 17 million registered users.

LinkedIn
LinkedIn is a free professional networking site that enables members to post their
resumes, recommendations from friends, and to connect with other industry professionals. With
over 53 million members in over 200 countries and territories around the world LinkedIn is a
powerful resource for those that need help with employment. According to a LinkedIn site search
(conducted December 1, 2010) a new member joins every second of every day.

Blogs
Blogs are an acronym form Web Log, in this regard it can be viewed as a multiuser or a
participatory diary. Blogs have at least one owner, but many have several commentators
contributing to site content. Its success is typically measured by the number of (unique) readers,
and by its ability to generate meaningful reader comments, as well as links from other blogs and
Web sites.

RISK FACTORS

Security
While there are many security issues using social media a few stand out and can be
applied across the medium. According to a Federal Trade Commission (FTC) Announcement
posted at blog.twitter.com, there have been two different security incidents concerning Twitter.
In January and April 2009, these breaches affected a total of 55 accounts - public and nonpublic
information was accessible and at least one users password was reset.
Anthony Bettini of McAfee (2010) points out that much of the increased ability for
attackers to plague the general public is due to decreased privacy in combination with enhanced
desire to use web enable devices. In a relatively new use of this technology (in an attempt to
make the reservation check process more palatable) many restaurants have adopted wireless
applications such as Foursquare and Twitter based services for allowing patrons to check in. In
affect the consumers via Foursquare/Twitter were publicly broadcasting that they were not home.
Posting of personal information is another issue. Sites like LinkedIn encourage
individuals to post resumes online. Many different organizations warn users not to be too
flamboyant when it comes to posting a resume on a public site like LinkedIn; keep in mind that
your profile can be seen by everyone - including your current boss, discretion is encourage at all
times.
19


Online social networks, perhaps because of the ambiguity and lack of transparency, can
be infested with malware such as: Trojans, Viruses, Worms, and Key-loggers. Security incidents
are rising at an alarming rate every year. As the complexity of the threats increases, so do the
security measures required to protect networks. Being careful is no longer enough. Malware has
gone from the days of ego based individuals creating havoc just to see how the news reports it, to
those that are only thinking of the dollar $igns. A relatively new threat in malicious software is
known as drive-by Malware. Drive-by infects a machine just by landing on a web site. The
problem is that while the cyber world has become more dangerous, the impetus to get online has
gotten stronger.

Addiction
Within the mental health community there is a debate whether or not individuals are
using the Internet too much, too often, and for too long. Today, Web surfing has become a social
pastime and has taken the place of other activities such as bar hopping or going to the movies. As
the web has become a part of mainstream life, some mental health professionals have noted that
a high percentage of people are using the web in a compulsive and out-of-control manner. They
purport that the Internet usage for some individuals exhibit the characteristics of addiction. In a
true addiction, a person becomes compulsively dependent upon a particular kind of stimulation
to the point where obtaining a steady supply of that stimulation becomes the sole and central
focus of their lives. In a true addiction the addicts increasingly neglect work duties,
relationships, and ultimately even health in the drive to remain stimulated (Bursten &
Dombeck, 2004, para. 2).

CONCLUSION

Eric Schmidt, the chief executive, who alongside the founders Sergey Brin and Larry
Page runs Google, the world's largest search engine company told the Wall Street Journal
that he doesnt believe that society understands the ramifications of having huge amounts of
information available, knowable and recorded by everyone all the time. Schmidt issued a stark
warning over the amount of personal data that people post on the Internet. He states that
someday many of them will be forced to change their names and identity in order to escape their
cyber past. His statements have sparked debate on the sheer amount of information we give away
about ourselves online and how most of that data is virtually un-erasable (Taylor, 2010).
In an article discussing privacy concerns generated by Google's data mining capabilities,
CNet's reporters published Mr. Schmidt's salary, named the neighborhood where he lives, some
of his hobbies and political donations. All the information had been gleaned from Google
searches (Taylor, 2010).

REFERENCES

Bettini, A. (2010). Social Networking Apps Pose Surprising Security Challenges. McAfee
Labs; White Paper Social Networking Apps Pose Surprising Security Challenges;
Retrieved from
http://www.digitaleragroup.com/component/rokdownloads/downloads/mcafee/169-
social-networking-apps-challenges/download.html
20


Bursten, J., & Dombeck, M. (2004, Apr 16). Introduction to Internet Addiction. Mentalhelp.Net
Internet Addiction and Media Issues; Retrieved from
http://www.mentalhelp.net/poc/view_doc.php?type=doc&id=3830
CareerBuilder (2009). Logging on: What is Social Media? Retrieved from
http://www.careerbuildercommunications.com/pdf/socialmedia.pdf
Crook, C. (2008). Web 2.0 Technologies for Learning: The Current Landscape - Opportunities,
Challenges and Tensions. Retrieved from http://partners.becta.org.uk/upload-
dir/downloads/page_documents/research/web2_technologies_learning.pdf
Facebook (2010, August). Retrieved from http://www.facebook.com/press/info.php
LinkedIn (2010). Retrieved from http://press.linkedin.com/about/
O'Reilly, T. (2005, September 30). What is Web 2.0: Design patterns and business models for
the next generation of software. Retrieved from
http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html
PC Tools Newsletter (2010, August 22). Retrieved from
http://www.pctools.com/news/view/id/283/
Sockel, H., & Falk, L. K. (2010). Social Networking - Whats In It for Me? American Society of
Competitiveness Presentation; Washington, D.C. October 2009.
Taylor, J. (2010 Aug 18). Google Chief My Fears for Generation Facebook. Retrieved from
http://license.icopyright.net/user/viewFreeUse.act?fuid=OTU3NTg3Mg%3D%3D
UK Parliament OFCOM report (2008 July 31) Select Committee on Culture, Media and Sport
Minutes of Evidence. Retrieved from http://www.publications.parliament.uk/cgi-
bin/newhtml_hl?DB=semukparl&STEMMER=en&WORDS=global&ALL=Global&AN
Y=&PHRASE=&CATEGORIES=&SIMPLE=&SPEAKER=&COLOUR=red&STYLE=
s&ANCHOR=muscat_highlighter_first_match&URL=/pa/cm200708/cmselect/cmcumed
s/353/8051302.htm
Withers, K. (2008, December). Power to the People? The Implications of the Social Network
Revolution. Challenge Europe; ISSN-1783-2462. Retrieved from
http://www.epc.eu/documents/uploads/859856090_Challenge%20Europe%20Issue%201
8.pdf#page=17
Zimmer, M (2008, March). Critical Perspectives on Web 2.0. First Monday, 13, (3-3). Retrieved
from http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2137/1943

21


TRAVELERS PERCEPTIONS OF TENNESSEE:
ITS A ROCKY TOP STATE (OF MIND)

Lisa Fall, University of Tennessee
lfall@utk.edu

Charles A. Lubbers, University of South Dakota
chuck.lubbers@usd.edu


ABSTRACT

Visitors to Tennessee welcome centers were asked to complete a five-page survey,
including an opportunity to provide terms that come to mind when they hear the word
Tennessee. A total of 763 individuals completed the survey and this report presents the
information concerning their perceptions of the State of Tennessee, as disclosed in their first, or
top-of-mind term. The responses were used to create theme-based categories, and the category
responses were compared with the travelers generation cohort and sex. Suggestions for travel
and tourism practitioners and for future research are provided.

INTRODUCTION AND REVIEW OF LITERATURE

The travel, tourism and hospitality fields have an enormous economic impact. The U.S.
Travel Association (USTA) (2010) estimates that travel in the United States alone resulted in
spending of over $755 billion in 2010, a growth of 7.3% over 2009. The organization also
estimates that US travel will increase by 5.2% in 2011 to a total of $794.9 billion. The website,
The Power of Travel (2010), estimates that in 2009 travel in the US also resulted in tax
receipts of $113 million and the employment of 7.4 million people. The numbers quantify the
importance of the travel, tourism and hospitality industries in the United States.
Travelers perceptions help to determine their beliefs about what is available and are also
a measure of the effectiveness of current advertising and marketing efforts. With so much money
at stake, it is critical that advertising and marketing professionals develop messages that will be
effective given the potential travelers current perception. McCartney, Butler and Bennett (2008),
noted, while there may be a mix of personal communication, public relations, marketing, and
advertising actions within destination campaigns, the challenge for marketers is to isolate those
media (and messages) that cause changes in the travelers image perceptions (p. 186) The first
step in the process is to understand their current perceptions.

Market Segmentation and Generational Cohort Analysis
The history of segmentation dates back to 1955 when Wendell R. Smith initially
formalized segmentation as a marketing concept (Smith, 1956). In 1964, Daniel Yankelovich,
founder and president of Yankelovich Market Research and chairman of Public Agenda, gave
segmentation his blessing as an effective technique for conducting audience analyses
(Yankelovich, 1964). As a research analysis tool, segmentation allows practitioners to better
understand their targeted audiences behaviors, wants and needs to more acutely structure
messages and develop strategies and tactics aimed at these particular audiences. Segmentation
22


can serve as a viable technique for defining potential publics as well as learning more about the
present publics we already know are important to our organization.

Generational Cohort Analysis as a Viable Segmentation Strategy
Cohorts represent a form of lifecycle segmentation. Generational cohorts are defined
by Straus and Howe (1991) as a groups fixed peer personalities and boundaries whose span of a
phase approximates its length. Strauss and Howe (1991) refer to each generational cohorts traits
and attitudes as its peer personalities and explain that each generation has its own typology.
The generational influences model (Smith & Clurman, 1997, p. 5) delineates individuals
based on the generational cohorts to which they are born. It is a valuable framework practitioners
should consider when designing targeted messages and communication campaigns. The model is
derived from 30 years of research collected via the Yankelovich MONITOR, a national annual
study that tracks Americans' lifestyles and values, and it illustrates that our individual value
systems are affected by an array of environmental conditions we experience as children.
Members of a generation are linked through shared life experiences of their formative years.
Specifically, generational influences model explains that peoples lifestage, in combination with
current conditions, aids in the development of their cohort experiences. These cohort experiences
play an important role in developing core values, which influence their preferences. These
preferences serve as guideposts for their marketplace behaviors (Smith & Clurman, 1997).
Although there are numerous generational typologies and models, the more dominant
ones, which have been developed based on empirical research, share some common groups. The
most mainstream, research-based cohorts, although named differently among various
researchers, represent Matures (born 1900-1945); Baby Boomers (born 1946-1964); Generation
X (born 1965-1976); and Millennials (AKA: Echo Boomers/ Gen Y) (born 1977-1994). For a
detailed discussion of the four cohorts see Fall and Lubbers (2009). These cohort designations
represent the same periods used by Yankelovich Market Research, the U.S. Census Bureau, and
the U.S. Travel Association. Therefore, these cohorts were used for our study. Note: those born
after 1994 also represent their own cohort (AKA: Multi-tasking Generation, Digital Generation,
Generation Z, etc.) were not included in this study due to their age (less than 18 years old).

Statement of Purpose
Results from this report are part of a greater research initiative that examines travel-
related behaviors and demographic characteristics of travelers passing through or visiting the
state of Tennessee. Specifically, the purpose of this investigation is to ascertain travelers
perceptions of Tennessee and to compare those perceptions to traveler characteristics. This
investigation will address the following research questions:
RQ1: How do travelers perceive the State of Tennessee?
RQ2: Do the members of the various generational cohorts hold significantly different top-of-
mind perceptions of the state of Tennessee from other cohort groups?
RQ3: Do male and female travelers top-of-mind perceptions of Tennessee differ?

METHOD

Selection and Sampling of Participants
The sampling frame consists of a convenience sample of visitors to five different
welcome centers located throughout the eastern region of the state of Tennessee. Data were
23


collected the first two weekends in April 2007. Determining how to reach respondents for this
study was a key concern. In the hospitality industry, purposive sampling is suitable for studies
that seek to examine "known characteristics" (Clark, Wiley, Wilkie & Wood, 1998), and surveys
at welcome centers have been found to be reliable data collection measures in previous travel
research (e.g., Fesenmaier, 1994). Also, they allow the researcher to examine respondents in a
comfortable, non-threatening environment that is complimentary to their travel habits. Finally,
nearly 90 percent of this states visitors travel to/within the state via automobile, according to the
states annual tourism marketing report. In short, the decision to collect data among travelers at
welcome centers was strategic and supports the objectives of the study. Further, the researchers
wanted to survey respondents while they were in action doing what was actually being studied.

Instrument/Administrative Procedures
This study employed a self-administered, five-page questionnaire as the research
instrument. Prior to launching the survey, the questionnaire was pre-tested among 15 people who
were not part of the sample to assess how long it would take someone to complete the
questionnaire and to provide the researchers with feedback about the clarity of the content.
Minor revisions were then made. The questionnaires were given to visitors at the respective
welcome centers; researchers were on hand to answer any questions. Respondents were advised
that they must be 18 to participate and only one questionnaire per family was to be completed.

Operationalization of Variables
Demographics. Nine demographics were examined in the study, including sex, gross
annual household income, employment status, level of education completed, race, marital status,
number of children under the age of 18 living in the household, residency, and age. However,
age and sex are of special relevance to the objectives for this article. Rather than asking
respondents to check an appropriate age "category," they were asked to numerically describe
their age. These results enabled the researchers to develop age factors based on generational
cohort criteria defined by Yankelovich Research, which is derived from its Travel MONITOR
studies. These cohorts are complementary to the United States Census Bureau cohorts, which
were discussed in the earlier literature review.
Perceptions of Tennessee. Respondents were asked to write down up to three words that
come to mind when they hear Tennessee. The first response for each participant was coded as
the top-of-mind response. The top-of-mind responses of the 763 survey respondents were first
entered into frequency tables and responses of various spelling or tenses were combined. For
example, Smokey Mtn., Smoky Mountains, and Great Smoky Mountains were combined.
After combining the versions, the response categories were grouped around common themes.
Efforts were undertaken to make the categories as mutually exclusive as possible. To be
considered viable, a theme must contain a minimum of 15 responses, 2% of the overall sample.
Additionally, the researchers attempted to create categories so that no more than 10% of the total
responses would be left uncategorized. This rule of up to 10% in an other category was
developed in an effort to make the overall evaluation as exhaustive as possible, without requiring
artificial response placement to account for all responses.
Data Analysis. To answer research questions 2 and 3 the age cohort groups (RQ2) and
gender (RQ3) were cross-tabulated with the top-of-mind theme categories. Also, a chi square
value was computed to see if the observed frequencies differed significantly from what would be
24


expected. To increase the minimum expected cell frequencies for the chi square analysis, only
the six largest theme categories were included in the analysis.

RESULTS AND DISCUSSION

Profile of Respondents
A total of 763 surveys were collected. A total of 52% of the respondents are female and
48% are male. Eighty-four percent are Caucasian and more than three-quarters of the
respondents are married. Just under half are Baby Boomers (46%) while 30% are Matures, 16%
are Gen Xers and 7% are Echo Boomers. More than three-quarters of respondents have some
form of college education. Approximately 24% have some college but no degree, 10% have an
Associates degree, 22% have a Bachelors degree, and 15% have a Masters degree or higher.
More than three-fourths report that their recent trip is for pleasure, while 6% said it was
for business and 6% said it was for both business and pleasure. Nearly three-fourths were
traveling to their destination and 29% were returning from their destination. Among those
respondents, 47% indicated Tennessee as their final destination. A total of 33% said they were
just passing through and 20% said that Tennessee was not their final destination but that they
plan to spend some time in Tennessee along the way. An overwhelming majority (91%) said that
this was not their first time to Tennessee.
RQ1: How do travelers perceive the State of Tennessee?
The researchers developed
several iterations of theme-based
categories. Those efforts led to the
creation of nine viable thematic
categories with at least 2% of the
overall responses in each, and the
nine included 700 (91.7%) of the
responses. The remaining 63
(8.3%) responses were not
categorized. Those responses were
grouped into the other category
and were excluded from analysis.
Table 1 includes the
descriptions, names and frequency
counts for the nine thematic
categories. The first three
categories have a frequency count
of over 100. Nearly one-fourth of
the respondents (n=118, 24.6%)
made reference to the mountains
and hills in the State, making that
easily the largest of the theme. The
second largest category included
references to specific locations in Tennessee, including cities, e.g. Nashville, or tourist
destinations, e.g. Dollywood or aquariums. The third largest category included the 108
TABLE 1Thematic Category Descriptions and Frequency Counts
Thematic Category and Description N
% of
Total
Mountains /Smoky /Hills/Peak: General or specific
references to mountains, hills and peaks.
188 24.6
Specific Tourist Destinations and Cities: Includes Nashville,
Gatlinburg, Dollywood and Memphis.
115 15.1
No Response: Respondent chose not to answer. 108 14.2
Adjectives Terms describe the State of Tennessee or how it
makes the traveler feel. Common answers include beautiful,
fun, scenic and friendly.
82 10.7
Spectator & Participant Activities and UT-Vols: Sports and
outdoor activities, including references to the Univ. of
Tennessee and their athletic program.
69 9.0
Music-Country/Bluegrass/Blues: References to music in
general or genres of music, and the song, Rocky Top.
62 8.1
Home/Family/Friends: References to home, family and
friends in general or to specific family members
38 5.0
People/Celebrities: Eleven historic and contemporary
people are identified, with Dolly Parton and Elvis Presley
being the most common answers.
23 3.0
Nature/Outdoors/Animals/Trees: 16 2.1
Other Not categorized 62 8.1
Total 763 100
25


respondents (14.2%) who chose not to answer the question. This is included as a theme, since the
decision to not respond, is, in fact, a response.
The fourth category included adjectives, nearly all of which positively describe the State.
The first three of the 21 responses in this category (beautiful, fun, scenic) include 50 of the 82
total category responses. Unlike describing the State, the 69 responses in the fifth category listed
sports or activities in which one could either observe or participate. This category also includes
references to the University of Tennessee and all references (Vols, Orange) to the UT athletic
programs. The sixth category is the last of those with over 8% of the total responses, and it
includes 62 responses related to music or categories of music. However, musicians (e.g. Dolly
Parton) and music venues (Grand Ole Opry) are in other categories (people and tourist
destinations, respectively). The final three categories are smaller, together accounting for only
about 10% of the total responses. These categories include references to home, family and
friends, as well as to famous Tennesseans and the outdoors.
RQ2: Do the members of the various
generational cohorts hold significantly
different top-of-mind perceptions of the
state of Tennessee from other cohort
groups?
To determine if there are differences
in the age cohort groups top-of-mind
perception of Tennessee, a cross-tabulation
(see table 2) with the cohort groups was
created. Approximately 6% of the
respondents (47) did not indicate their age,
creating missing data for age cohorts. Also,
the six largest categories account for 624
(81.8%) of the total responses. The cross-
tabulation included 583 valid responses.
The Pearson chi-square value is
statistically significant at the .002 level,
indicating significant differences between
the observed and expected cell frequencies.
A review of the cell frequency counts in
table 2 helps to identify which cells
contributed the most to the chi-square
value. The largest top-of-mind category,
mountains/ hills, exhibited differences
between observed and expected in all four age cohorts. Echo Boomers and Matures, at the
opposite ends of the age line, were less likely to indicate this as their response, while the two
middle age cohorts, Gen-X and Boomers, had larger observed frequencies than expected. The
results for the no response theme are interesting because there are no dramatic differences
between the expected frequencies and those observed. The slight differences were tied to
whether the respondents age cohort. The two younger age cohorts were slightly less likely to
choose no response than would be expected, and the respondents in the two older age cohorts
were slightly more likely to not respond.
RQ3: Do male and female travelers top-of-mind perceptions of Tennessee differ?
TABLE 2 Top-of-Mind Perception Category * AgeCohorts
Top-of-Mind
Perception
Category
Age Cohorts
Echo
Boomers
Gen-
X Boomers Matures Total
Mountains/
Hills
6 38 104 37 185
9.8 33.6 94.9 46.6 185.0
Cities/
Destinations
5 29 48 29 111
5.9 20.2 56.9 28.0 111.0
No Response
3 12 48 25 88
4.7 16.0 45.1 22.2 88.0
Adjectives
1 9 37 28 75
4.0 13.6 38.5 18.9 75.0
Activities/
Univ. of TN
8 8 35 15 66
3.5 12.0 33.8 16.6 66.0
Music
8 10 27 13 58
3.1 10.5 29.7 14.6 58.0
Total Count 31 106 299 147 583
Expected Count 31.0 106.0 299.0 147.0 583.0
% of Total 5.3% 18.2% 51.3% 25.2%
100.0
%
Pearson X
2
=36.321
a
;

df= 15; Sig.= .002; Valid N = 583

a
4 cells (16.7%) have expected count less than 5.
26


Table 3 presents the results of the cross-tabulation of
the top-of-mind perception categories and the travelers
gender. The Pearson chi-square value of 24.104 is
statistically significant at the .000 level, indicating there
were significant differences between the observed and
expected cell frequencies. Reviewing the frequency numbers
in the cells of table 3 helps identify those cells contributing
the most to the chi-square value. Females and males clearly
differ in several of the categories. Just as in the previous
table, the largest top-of-mind category, mountains/hills,
exhibited differences between observed and expected
frequencies. Substantial differences were also found in the
categories of adjectives, activities and no response. In
general, women were more likely to use terms referring to
mountains and adjectives that describe Tennessee (beautiful,
scenic, etc.), while men are less likely than expected to use
terms from those two categories. Men, however, are more
likely to use terms from the activities category, and they
were also less likely to respond to the question.

CONCLUSIONS AND RECOMMENDATIONS

The travel industry is a major contributor to the United States economy. The results of
this investigation offer travel industry professionals a glimpse of the perceptions of Tennessee
held by travelers. The current research found that age and gender may have some connection to
those perceptions, but future research should extend this analysis to determine if there are
predictors for the preferences of the travelers.
The results demonstrate that over one quarter of people associate Tennessee with the
states mountains and natural beauty. This information can offer some insight on how to better
target current and potential travelers coming to, and passing through, the state. Since travelers
already know about Tennessees natural beauty, promotional campaigns should use this theme to
bring focus to other attractions or features that state tourism officials want to promote. For
example, Gatlinburg tourism officials may understand that travelers visit the Great Smoky
Mountains, but they may not be actually staying in Gatlinburg. As a way to promote staying in
Gatlinburg and engaging in the many attractions it has to offer, Gatlinburg might use a slogan
such as: When you visit the mountains, it only makes sense to stay in the mountains, with each
promotional message highlighting a certain Gatlinburg feature or attraction.

REFERENCES

Clark, M. A., Wiley, M. J., Wilkie, E., & Wood, R.C. (1998). Researching and Writing
Dissertations in Hospitality and Tourism. London: International Thomson Business
Press.


TABLE 3 Top-of-Mind Perception
Category * Gender
Top-of-Mind
Perception
Category
Gender Total
Male Female Male
Mountains/
Hills
69 115 184
85.2 98.8 184.0
Cities/
Destinations
55 59 114
52.8 61.2 114.0
No Response
53 41 94
43.5 50.5 94.0
Adjectives
30
35.7
47
41.3
77
77.0
Activities/
Univ. of TN
45 22 67
31.0 36.0 67.0
Music
24 36 60
27.8 32.2 60.0
Total
Count
276 320 596
Expected
Count
276.0 320.0 596.0
% of Total
46.3
%
53.7% 100%
Pearson X
2
=24.104
a
;

df= 5; Sig.= .000;
Valid N = 596 *0 cells (.0%) have
expected count less than 5.
27


Fall, L., & Lubbers, C. A. (2009). Does a generational divide create a fork in the road?: A year-
long segmentation analysis to determine IMC information course usefulness among
Matures, Boomers, Gen X and Gen Y vacation travelers, International Journal of
Integrated Marketing Communications, 1(2), 31-42.
Fesenmaier, D. (1994). Traveler use of visitor information centers: Implications for development
in Illinois. Journal of Travel Research, 33(1), 44-50.
McCartney, G., Butler, R., & Bennett, M. (2008). A strategic use of the communication mix in
the destination image-formation process. Journal of Travel Research, 47(2), 183-196.
The Power of Travel. (2010). Retrieved from http://poweroftravel.org/statistics/
Smith, J. W., & Clurman, A. (1997). Rocking the Ages: The Yankelovich Report on Generational
Marketing. New York: Harper Business.
Smith, W. R. (1956, July). Product differentiation and market segmentation as alternative
marketing strategies. Journal of Marketing, 21, 3-8.
Strauss W., & Howe, N. (1991). Generations: The History of America's Future, 1584 to 2069.
New York: William Morrow and Company.
U.S. Travel Association (USTA). (2010). Travel Forecast. Retrieved from
http://www.ustravel.org/sites/default/files/page/2009/09/ForecastSummary.pdf
Yankelovich, D. (1964). New criteria for market segmentation. Harvard Business Review, 42,
83-90.

28


ADAPTIVE SELLING IN THE PUBLIC ARENA:
AN EXPLORATORY INVESTIGATION

George A. Kirk, Southern University
george_kirk@subr.edu

Richard L. McCline, Southern University
drmccline@msn.com

George M. Neely, Sr., Southern University
dr_neely@yahoo.com


ABSTRACT

This manuscript will detail the results of a pilot study undertaken to determine if there is
the potential for public sector customer service representatives to engage in adaptive selling
behavior. The pilot study focused on unemployment counselors. The results indicated that while
counselors collect information to adapt and have confidence in their ability to adapt client
encounters, they are somewhat reluctant to apply adaptation.

INTRODUCTION

Adaptive selling was first proposed by Weitz, Sujan and Sujan (1986) as a means to
increase sales productivity. The basic premise is that information obtained during a selling
encounter can be used to modify or tailor a sales presentation to increase the likelihood of
success. Subsequent research has shown that adaptive selling is related to both job satisfaction
and job performance. Eveleth and Morris (2002) broadened the scope of adaptive selling and
examined adaptive selling in a customer service/inside sales setting and found that adaptive
selling could be utilized with positive results even in lean communications settings (i.e., no
face to face contact). While adaptive selling has been well researched by both outside and inside
sales/customer service representatives in the private sector, little or no research has examined the
usefulness of adaptive selling behavior in public sector service jobs. Increasingly, due to
economic conditions more and more people are interacting with public sector customer service
representatives. Examples include unemployment counselors, financial aid representatives and
guidance counselors/advisors from higher education to name but a few.
In many ways, there are job similarities between inside sales representatives and
unemployment counselorsmany clients with limited time with each client. Moreover, like
outside sales jobs, unemployment counselors have face to face contact with the clients they
serve. This begs the question, can adaptive selling be applied in the context of unemployment
counseling services? The prolonged economic downturn has had dramatic impact on both
unemployment rates and the composition of job seekers. Historically, there was a strong negative
correlation between educational attainment and unemployment. Between 2008 and 2009 the
percentage of unemployed individuals holding a bachelors degree or better increased by 77
percent (Eveleth & Morris, 2002). Added to the challenge of the new class of unemployed is the
length of time it takes to locate jobs for these candidates. The rate of discouraged workers has
29


also increased in the past several years (Giacobbe, Jackson Jr., Crosby, & Bridges, 2006).
Moreover, unemployment counselors are also being faced with older job seekers who like many
others, have held long term jobs and due to the economy are also displaced. The new realities of
the job market are requiring that unemployment counselors change the way that they interact
with job seekers.
Adaptive Selling was first proposed by Weitz, Sujan and Sujan (1986) as a means to
increase sales productivity. To implement adaptive selling, the sales representative adapts or
modifies a given sales presentation based upon information obtained during the sales encounter.
For example, if a client is experiencing problems with product reliability, then the sales
representative will alter the sales presentation to focus on the reliability/track record of the
product that he/she is selling. Likewise, if a client is concerned about product cost then the sales
presentation will focus on the cost benefit of the product.

ANTECEDENT CONDITIONS FOR ADAPTIVE SELLING

A number of factors have been examined in the literature as impacting adaptive selling.
These factors can be broadly divided into individual characteristics and organizational
characteristics and include but are not limited to, empathetic ability (Giacobbe, Jackson Jr.,
Crosby & Bridges, 2006, Spiro & Weitz, 1990); motivation (Spiro & Weitz, 1990); experience
(Giacobbe et al., 2006; Robinson Jr., Marshall, Moncrief & Lasek, 2002; Siguaw, 1993; Spiro &
Weitz, 1990; Tanner, 1994) and listening (Pelham, 2009).
Empathy refers to the ability to put ones self into the position of another individual.
Spiro and Weitz (1990) hypothesized the empathic response would be related to the practice of
adaptive selling. Giacobbe et al. (2006) found that empathy did contribute to intentions to adapt
during sales presentations. It would also seem that empathic response would be a useful tool for
getting clients to both open up and provide more information as well as helping the client to
identify with the sales or customer service representative. It seems logical that empathy would
enhance adaptive behavior and provide a basis for the adaptation of the presentation based upon
the needs and perspective of the client.
In the context of adaptive selling, motivation has been viewed as recognizing that a client
encounter can be handled in multiple ways; confidence in the ability to use different techniques
as well as confidence to alter presentations during a given client encounter. To a certain extent,
job counselors already engage in adaptive behaviors. Often information regarding job skills,
education level, job experience and interests are used by counselors to match applicants with
appropriate jobs. The use of adaptive behaviors however is not limited to qualifying applicants
for open positions. Quite frequently, job counselors must try to convince job seekers to
undertake additional job training or earn a GED. Likewise, many clients already possessing
advanced skills may need to be convinced to take jobs that they feel are beneath them. It is clear
that at times, persuasion is required of job counselors.
A key question regarding motivation is willingness to engage in adaptive behavior. In a
professional sales context, reward systems are in place based upon sales performance. Public
sector customer service representatives are not normally given rewards or bonuses beyond
performance based annual raises. That said, in the day of outcome based assessment it is
reasonable to assume that unemployment counselors have, albeit at a reduced rate, motivation to
engage in adaptive selling.
30


Of the various individual factors discussed in the literature, experience is by far the most
researched. In a recent meta analysis, Franke and Park (2006) found that sales experience was
related to adaptive selling behavior. Experience brings the ability to practice, exposure to a
number of opportunities and, depending upon the outcome of adaptive selling behavior,
confidencea key factor identified by Spiro and Weitz (1990).
Listening is requisite condition for adaptive selling behavior (Pelham, 2009). Almost by
definition, adaptive selling requires that sales presentations be modified based upon information
gathered during the sales encounter. In addition to information gathering, listening has also been
linked with establishing trust (Ramsey & Sohi, 1997). While there are many different levels of
listening, it is generally thought that active listening is best suited for adaptive selling behavior.
Going further, Comer and Drollinger (1999) proposed active empathic listening (AEL) as a
method of listening for sales representatives. As opposed to simple active listening, AEL
combines empathya concern for the speaker. They defined AEL as a process whereby the
listener: receives verbal and non-verbal messages, processes them cognitively, responds to them
verbally and non-verbally (Comer & Drollinger, 1999, p. 18). Active empathetic listening
strengthens the listening process by adding respondingeither verbally or non-verbally to
statements made by the buyer. This would seem to encourage revealing more information as well
as increasing the comfort level of the client.
Organizational factors also can influence whether or not sales or customer service
representatives practice adaptive selling behavior. In the literature, market/customer orientation
and reward systems have often been examined. In the adaptive selling literature usually the
customer orientation of the sales representative has been examined. Pelham (2009) argues that
the customer orientation of the organization can also influence adaptive selling behavior. Pelham
suggests that employees will seek to display behaviors consistent with the expectations/desires of
their supervisors and subsequently, higher management. Numerous studies have shown that
employees will behave in manners that have the support of management. Romn and Iacobucci
(2010) found that sales representatives perceptions of the firms customer orientation had a
positive impact on the confidence of the sales representative to practice adaptive selling. To draw
a parallel, in the ethics literature simply having a corporate code of ethics is not enough to illicit
ethical behaviorsmanagement must walk the walk and talk the talk. In other words, most
if not all companies will indicate that they are customer focused. Employees will evaluate the
importance of customer orientation from the observed actions of management.
It appears that it is very likely that most if not all of the antecedent conditions for
adaptive selling are present within the scope of job counselors. The question remains, can
unemployment counselors practice adaptive selling?

METHODOLOGY

To assess motivation and capability to practice adaptive selling, a modified version of
Spiro and Weitzs (1990) ADAPTS scale was used. To assess listening and empathy a modified
version of Drollinger, Comer and Warringtons (2006) Active Empathic Listening scale (AEL)
was used. The ADAPTS scale (Spiro & Weitz, 1990) measures five facets of adaptive selling
defined by Spiro and Weitz (1990). These facets include recognition that selling situations differ,
confidence in the ability to use different techniques, confidence in the ability to alter a sales
presentation, collection of information necessary to adapt a sales presentation and the use of
adaptation during a sales call. The ADAPTS scale contains a total of sixteen items.
31


Recognition that selling situations differ is measured using two items and is a necessary
condition for adapting a sales or customer service encounterfirst, the representative must be
aware that adaptation is an option. Collection of information necessary to adapt the encounter is
also measured by two items. Information about the client or the selling/customer service situation
is also an important requirement of adaptive selling. Confidence is measured at two levels
confidence to use a variety of styles and confidence to adapt each are measured by two items.
The final facet, actual use of adaptation, is measured by seven items.
The AEL scale contains three dimensions that measure respondents sensing, processing
and responding to information gathered during a sales call. Sensing refers to the respondents
ability to sense both what clients are saying and just as importantly, what they are not saying.
Processing refers to understanding and interpreting what clients are saying and finally,
responding refers to both verbal and non-verbal acknowledgement of what clients are saying.
Each of the dimensions is measured using three items, for a total of nine items. Drollinger et al.
(2006) developed and purified the scale using rigorous means and reported acceptable
measurement properties. Respondents were measured on a five point Likert scale with responses
ranging from strongly disagree to strongly agree.
The sample consisted of unemployment counselors from several major regions of a major
southern state. In all, 55 unemployment counselors were surveyed. Two of the respondents
basically submitted blank questionnaires and were thus omitted from the analysis. The resultant
sample size was 53. The unemployment counselors represented major regions within the state.
Exhibit 1 provides a summary of the respondents years of experience both with the
unemployment agency and prior customer service experience outside the agency. As shown,
64.71 percent of respondents held between 4 and 5 years of experience with the agency and
66.67 percent of respondents held an additional 4 to 5 years of customer service experience. The
specific nature of pre-agency customer service experience is not known thus it is impossible to
determine if previous experience was limited to the public sector or the private sector. It is also
not known the extent of prior customer service training that the respondents may have received.

EXHIBIT 1.
EXPERIENCE IN CUSTOMER SERVICE
Years of
Experience With the agency Prior years of customer service experience (not counting the agency)
1 to 2 23.53% 13.73%
2 to 3 3.92% 5.88%
3 to 4 5.88% 11.76%
4 to 5 64.71% 66.67%
5 plus 1.96% 1.96%

RESULTS

Exhibit 2 displays the descriptive statistics for the ADAPTS scale and the AEL items. As
shown, respondents scored very highly on collection of information to adapt and confidence to
adapt. The means for the remaining ADAPTS scale summates are close to the agree point on the
scale. With respect to the AEL scale, respondents scored very highly on responding as well as
processing.
32



EXHIBIT 2.
DESCRIPTIVE STATISTICS
N Mean Std. Deviation Std. Error Mean
Collection of information to adapt 53 4.415 0.552 0.076
Confidence in ability to adapt 53 4.252 0.562 0.077
Confidence to use adaptation 53 3.877 0.635 0.087
Use of adaptation 53 3.656 0.476 0.065
Recognition of differing situations 53 3.840 0.892 0.123
Sensing 53 3.972 0.627 0.086
Processing 53 4.123 0.493 0.068
Responding 53 4.553 0.448 0.062

Exhibit 3 provides the correlation matrix for the ADAPTS and AEL scale. As shown, the
resultant correlations are low and most were not significant. There was however significant
relationships between collection of information necessary to adapt and confidence to adapt a
presentation and between confidence to adapt and confidence to use a variety of approaches.
Surprisingly, there were no significant correlations with actual use of adaptation. This may
indicate that the respondents are somewhat reluctant to engage in adaptive customer service
behavior due to organizational restraints.

EXHIBIT 3.
ADAPTS AND AEL CORRELATIONS

Collect
information
to Adapt
Confidence
to adapt
Confidence
to use a
variety of
styles
Actual
use of
adaptation Responding Sensing Processing
Collect
information 1
Confidence
to adapt 0.349* 1
Confidence
to use a
variety of
styles 0.052 0.376** 1
Actual use
of adaptation 0.043 0.199 0.222633 1
Recognize
different
situations -0.067 -0.014 0.160 0.243* 1
Sensing 0.187 0.254* 0.136 -0.106 0.17736 1
Processing 0.198 0.297** 0.208 0.005 -0.033 0.218936 1
Responding 0.492** 0.625** 0.288** 0.350** 0.074 0.411** 0.509**
* Significant at the .10 level
** Significant at the .05 level



33


EXHIBIT 2.
DESCRIPTIVE STATISTICS
N Mean Std. Deviation Std. Error Mean
Collection of information to adapt 53 4.415 0.552 0.076
Confidence in ability to adapt 53 4.252 0.562 0.077
Confidence to use adaptation 53 3.877 0.635 0.087
Use of adaptation 53 3.656 0.476 0.065
Recognition of differing situations 53 3.840 0.892 0.123
Sensing 53 3.972 0.627 0.086
Processing 53 4.123 0.493 0.068
Responding 53 4.553 0.448 0.062

Exhibit 3 provides the correlation matrix for the ADAPTS and AEL scale. As shown, the
resultant correlations are low and most were not significant. There was however significant
relationships between collection of information necessary to adapt and confidence to adapt a
presentation and between confidence to adapt and confidence to use a variety of approaches.
Surprisingly, there were no significant correlations with actual use of adaptation. This may
indicate that the respondents are somewhat reluctant to engage in adaptive customer service
behavior due to organizational restraints.

EXHIBIT 3.
ADAPTS AND AEL CORRELATIONS

Collect
information
to Adapt
Confidence
to adapt
Confidence
to use a
variety of
styles
Actual
use of
adaptation Responding Sensing Processing
Collect
information 1
Confidence
to adapt 0.349* 1
Confidence
to use a
variety of
styles 0.052 0.376** 1
Actual use
of adaptation 0.043 0.199 0.222633 1
Recognize
different
situations -0.067 -0.014 0.160 0.243* 1
Sensing 0.187 0.254* 0.136 -0.106 0.17736 1
Processing 0.198 0.297** 0.208 0.005 -0.033 0.218936 1
Responding 0.492** 0.625** 0.288** 0.350** 0.074 0.411** 0.509**
* Significant at the .10 level
** Significant at the .05 level



33

EXHIBIT 2.
DESCRIPTIVE STATISTICS
N Mean Std. Deviation Std. Error Mean
Collection of information to adapt 53 4.415 0.552 0.076
Confidence in ability to adapt 53 4.252 0.562 0.077
Confidence to use adaptation 53 3.877 0.635 0.087
Use of adaptation 53 3.656 0.476 0.065
Recognition of differing situations 53 3.840 0.892 0.123
Sensing 53 3.972 0.627 0.086
Processing 53 4.123 0.493 0.068
Responding 53 4.553 0.448 0.062

Exhibit 3 provides the correlation matrix for the ADAPTS and AEL scale. As shown, the
resultant correlations are low and most were not significant. There was however significant
relationships between collection of information necessary to adapt and confidence to adapt a
presentation and between confidence to adapt and confidence to use a variety of approaches.
Surprisingly, there were no significant correlations with actual use of adaptation. This may
indicate that the respondents are somewhat reluctant to engage in adaptive customer service
behavior due to organizational restraints.

EXHIBIT 3.
ADAPTS AND AEL CORRELATIONS

Collect
information
to Adapt
Confidence
to adapt
Confidence
to use a
variety of
styles
Actual
use of
adaptation Responding Sensing Processing
Collect
information 1
Confidence
to adapt 0.349* 1
Confidence
to use a
variety of
styles 0.052 0.376** 1
Actual use
of adaptation 0.043 0.199 0.222633 1
Recognize
different
situations -0.067 -0.014 0.160 0.243* 1
Sensing 0.187 0.254* 0.136 -0.106 0.17736 1
Processing 0.198 0.297** 0.208 0.005 -0.033 0.218936 1
Responding 0.492** 0.625** 0.288** 0.350** 0.074 0.411** 0.509**
* Significant at the .10 level
** Significant at the .05 level



33



EXHIBIT 2.
DESCRIPTIVE STATISTICS
N Mean Std. Deviation Std. Error Mean
Collection of information to adapt 53 4.415 0.552 0.076
Confidence in ability to adapt 53 4.252 0.562 0.077
Confidence to use adaptation 53 3.877 0.635 0.087
Use of adaptation 53 3.656 0.476 0.065
Recognition of differing situations 53 3.840 0.892 0.123
Sensing 53 3.972 0.627 0.086
Processing 53 4.123 0.493 0.068
Responding 53 4.553 0.448 0.062

Exhibit 3 provides the correlation matrix for the ADAPTS and AEL scale. As shown, the
resultant correlations are low and most were not significant. There was however significant
relationships between collection of information necessary to adapt and confidence to adapt a
presentation and between confidence to adapt and confidence to use a variety of approaches.
Surprisingly, there were no significant correlations with actual use of adaptation. This may
indicate that the respondents are somewhat reluctant to engage in adaptive customer service
behavior due to organizational restraints.

EXHIBIT 3.
ADAPTS AND AEL CORRELATIONS

Collect
information
to Adapt
Confidence
to adapt
Confidence
to use a
variety of
styles
Actual
use of
adaptation Responding Sensing Processing
Collect
information 1
Confidence
to adapt 0.349* 1
Confidence
to use a
variety of
styles 0.052 0.376** 1
Actual use
of adaptation 0.043 0.199 0.222633 1
Recognize
different
situations -0.067 -0.014 0.160 0.243* 1
Sensing 0.187 0.254* 0.136 -0.106 0.17736 1
Processing 0.198 0.297** 0.208 0.005 -0.033 0.218936 1
Responding 0.492** 0.625** 0.288** 0.350** 0.074 0.411** 0.509**
* Significant at the .10 level
** Significant at the .05 level



33


DISCUSSION

Although counselors are collecting information to adapt and have confidence in their
ability to adapt, their level of agreement on actual use of adaptation is lower. It also appears that
the respondents are listening carefully and responding to clients. This is somewhat interesting
because although the counselors are taking the time to collect information and have the
confidence to adapt presentations they seem reluctant to do so. There are numerous potential
explanations. One possible explanation could be how the counselors are evaluated. The
counselors may feel that they are restricted to the operating procedures that they are given and
are afraid to engage in adaptive behavior. Also, arguably, adapting a client encounter does
require more time than simply following a standardized approachif the counselors are
evaluated using a head count or number of clients seen, they may be encouraged to spend
minimal time with each client to meet performance expectations. A second possible explanation
is the observed vs. stated customer orientation of management. While management has expressed
a strong interest in providing maximal customer service, the counselors may feel that at the end
of the day, management is more interested in the throughput of clients as opposed to the quality
of the output.

LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH

This study has several limitations. First, this was a pilot study and as such the sample size
was low. Second, both the ADAPTS and AEL scale make use of self-report data and there is
potential for respondents to answer in a socially responsive way. Future studies should
incorporate an assessment tool such as a short version of the Crowne-Marlow Social Desirability
Scale (Reynolds, 1982). Also, actual job performance data and managerial ratings were not
incorporated into the data collection. Future research might consider matching performance
ratings with self report data.

REFERENCES

Comer, L. B., & Drollinger, T. (1999, Winter). Active Empathetic Listening and Selling Success:
A Conceptual Framework. Journal of Personal Selling & Sales Management, 19, 15-29.
Drollinger, T., Comer, L. B., & Warrington, P. T. (2006, February). Development and Validation
of the Active Empathetic Listening Scale. Psychology & Marketing, 23, 161-180.
Eveleth, D. M., & Morris, L (2002, Winter). Adaptive Selling In A Call Center Environment: A
Qualitative Investigation. Journal of Interactive Marketing, 16, 25-39. Retrieved from
ftp://ftp.bls.gov/pub/special.requests/lf/aat7.txt
Franke, G. R., & Park, J. (2006, November). Salesperson Adaptive Selling Behavior and
Customer Orientation: A Meta-Analysis. Journal of Marketing Research, 43, 693-702.
Giacobbe, R. W., Jackson Jr., D. W., Crosby, L. A. & Bridges, C. M. (2006, Spring). A
Contingency Approach To Adaptive Selling Behavior And Sales Performance: Selling
Situations And Salesperson Characteristics. Journal of Personal Selling & Sales
Management, 26, 115-142. Retrieved from
http://www.bls.gov/news.release/empsit.t12.htm

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Pelham, A. M. (2009, February). An Exploratory Study of the Influence of Firm Market
Orientation on Salesperson Adaptive Selling, Customer Orientation, Interpersonal
Listening in Personal Selling and Salesperson Consulting Behaviors. Journal of Strategic
Marketing, 17, 21-39.
Ramsey, R. P., & Sohi, R. S. (1997). Listening to your customers: The Impact of Perceived
Salesperson Listening Behavior on Relationship Outcomes. Journal of the Academy of
Marketing Sciences, 25, 127137.
Reynolds, W. M. (1982, January). Development of Reliable and Valid Short Forms of the
Marlowe-Crowne Social Desirability Scale. Journal of Clinical Psychology, 38, 119
125.
Robinson, Jr., L., Marshall, G. W., Moncrief, W. C., & Lasek, F. G. (2002, Spring). Toward a
Shortened Measure of Adaptive Selling. Journal of Personal Selling & Sales
Management, 22, 111119.
Romn, S. & Iacobucci, D. (2010, Summer), Antecedents and Consequences of Adaptive Selling
Confidence and Behavior: A Dyadic Analysis of Salespeople and Their Customers.
Journal of the Academy of Marketing Science, 38, 363-382.
Siguaw, J. (1993). An Examination of Adaptive Selling Antecedents and Outcomes. In Michael
Levy & Dhrvu Grewal, (Eds.), Developments of Marketing Science: Proceedings of the
Annual Conference of the Academy of Marketing Science, 16, (p. 295). Miami: Academy
of Marketing Science.
Spiro, R. L., & Weitz, B. A. (1990, February). Adaptive Selling: Conceptualization,
Measurement, and Nomological Validity. Journal of Marketing Research, 27, 6169.
Tanner, J. F. (1994, Spring). Adaptive Selling at Trade Shows. Journal of Personal Selling &
Sales Management, 14(2), 1523.
Weitz, B. A, Sujan, H., & Sujan, M. (1986, October). Knowledge, Motivation, and Adaptive
Behavior: A Framework for Improving Selling Effectiveness. Journal of Marketing, 50,
17491.

35


A CRITICAL THEORETICAL EXPLORATION OF
MUNICIPAL BUDGETS AS MARKETING TOOLS

Staci M. Zavattaro, University of Texas at Brownsville
staci.zavattaro@utb.edu


ABSTRACT

Municipalities are turning into commodities through business-based governance
interventions. As such, they are taking many available avenues to sell themselves to potential
customers. One way is by turning budget documents, commonly policy tools, into marketing
pieces. The paper offers a theoretical exploration of this practice, using the four Ps of marketing
product, price, place and promotion to see how budgets fit in the marketing mix. The paper
finds six ways cities tell stories with the budget: managers/mayors letter language, overall
design, strategic priorities and performance measures, photos, a theme, and branding.

INTRODUCTION

As commodification makes its way into the public sector via business-based governance
interventions such as New Public Management (NPM), Total Quality Management (TQM), and
Reinventing Government, cities are finding myriad ways to sell themselves and set themselves
apart from the competition. Budget documents might not seem like a normal or usual place
where selling takes place, but budget documents have the ability to shape and promote an image
of the city. Budget documents, its core, are policy tools indicating how the organization intends
to allocate its limited funds. City budgets are the focus of this research, as cities are the
government entities closest to the people in their everyday lives. While some budgets still focus
on giving information, other municipalities are recognizing that everything about an organization
can talk (Kotler & Levy, 1969), and this includes documentation. Budgets in cities, especially
those using business-based modes of governance, are coming to reflect sleek, well-designed,
tailored marketing tools. Instead of launching into a broad discussion about the marketing
potentials of budget documents, this research uses the four Ps to theoretically examine how cities
are using budgets as marketing tools (Kotler & Lee, 2007). Qualitative Media Analysis (QMA)
(Altheide, 1996) was chosen to examine budget documents, which resulted in finding six
mechanisms cities use to tell stories: managers/mayors letter language, overall design, strategic
priorities and performance measures, photos, a theme, and branding.

Commodification, Marketing and Budgeting
The call for changing/fixing/reinventing government ushered in business-based values
and rhetoric into the public sector, and such movements may or may not have changed what
government does, but few would argue that is has not changed how government does (Kelly,
2005, p. 76, emphasis in original). Government services, policies and provisions into saleable
goods commonly called commodification. Citizens are socially constructed as customers
within these models, emphasizing the public choice aspect of the reinvention movements.
Traditional business customers are put in passive, non-dialogic relationships take the
product/service or leave it. Similar problems arise in the public sector (Box, 1999; Fox, 1996;
36


Patterson, 1998; Ventriss, 2000), though the social construction still takes place. When cities are
commodified, developing and selling its product is seen as the ultimate goal.
One way to look at image construction is turning a critical eye toward what is
traditionally seen as a rational tool expressing costs and revenues the annual budget book.
Examining budgets in a way that sheds light on their alternative purposes is found within critical
and postmodern theories (Herzog, 2006; Sementelli & Herzog, 2000). Symbols are created to be
manipulated. Public budgeting, though done internally within the agency, becomes public at
some point, which forces the agency administrator to be attentive to several different public
audiences (Anton, 1967, p. 29). Audiences include internal employees, politicians, public, other
administrators, etc. Each group will use and manipulate different symbols to achieve desired
budgetary goals (Anton, 1967; Sementelli & Herzog, 2000). The budget itself is a symbol of
Responsibility (Anton, 1967, p. 39), so turning the document into a marketing tool is a way to
showcase that responsibility to interested stakeholders. Accounting and budgeting getting
myriad organization stakeholders to agree on resource allocation may be more of a social
invention complicit in the construction of social reality, than a rational reflection of a technical
rationality (Covaleski & Dirsmith, 1988, p. 20). Budgets have numbers (rational) but the
document itself can be twisted and manipulated to paint a different picture (symbolic). A critical
examination such as the one presented here is possible because of the realization that language is
not a pure reflection of reality (Miller & Fox, 2007). Symbolic phrases delivered by government
officials become the publics understanding of reality of government activity, or a simulation of
reality with no referent other than symbols themselves (Beresford, 2000, p. 481). Delineating
between facts and images is mostly a moot point, as each take on a life of their own and can
often morph into each other without distinction or clarity (Gamson, Croteau, Hoynes, & Sasson,
1992). Often, agencies impart subliminal meanings about their images without being conscious
of the process.
Twenty cities were examined, and each was selected on a purposive basis (Berg, 2001)
and not meant to generalize to the entire population of U.S. cities. One could attack the selection
for not controlling for factors such as monetary resources, population, location and others.
Shortcomings are recognized but acknowledged as unnecessary for a theoretical examination, not
a scientific, controlled one. The research does not attempt to imply correlation or causation
between budgets as marketing tools and certain factors, such as overall budget dollars a city has
to allocate. Instead, the research builds theory by turning an eye toward a city-produced
document that is not often viewed as a marketing tool and reorienting it within that already-
established framework. A theoretical, qualitative approach lends itself to discovering and
yielding patterns, rather than explaining them (Arndt, 1983; Desphande, 1983; Eisenhardt &
Graebner, 2007).

The Four Ps in Action Budget Documents
This paper examined documents and imagery, as they are complex tools created to
communicate messages to readers. Among the elements used in developing documents are prose,
images, font types, color, and spatial relationships (Marsh & White, 2003, p. 647). QMA is
grounded in an ethnographic approach to studying documents, whereby the researcher heavily
invests his or herself within the analysis. Fiscal Year 2010 budgets were used throughout this
research to establish continuity. Altheides 12 steps were followed, resulting in finding six key
areas that tell a story and shape the budget as a viable public relations and marketing device
managers/mayors letter language, overall design, strategic priorities and performance measures,
37


photos, a theme, and branding. The letter is how the top official transmits the budget and is prime
space to craft a story. Design incorporates layout, colors, font, text, graphics, etc. Strategic
priorities and performance measures indicate what the city finds important, and the story the
budget presents is linking those to funding and customer feedback. Photos depict the overall
place feeling, while the theme fits in with design (for example, one city did an earth, water, fire
theme that spanned three budget cycles). Finally, branding is how the budget fits in with the
citys overall brand, carrying through with brand imagery and discourse (Ankeny, Iowa; Coral
Springs, Florida; Tamarac, Florida; and Anaheim, California are good examples of this point).
Each fits in with marketings four Ps, which are showcased below.

Product
The first P is product, which may or may not be tangible objects because a product is
frequently defined as anything that can be offered to a market to satisfy a want or need
(Kotler & Lee, 2007, p. 33-34). Cities showcase and highlight value addeds to attract people,
visitors, and business owners to gain a competitive advantage. Cities turn toward marketing
tactics as global competition heats up (Kotler, Haider & Rein, 1993). Without selling the city as
a product (commodity), risks ensue, including image devaluation. Negative images may reduce
the likelihood of inward investment, undermine business community activities and have a
detrimental effect on the number of visitors, thereby exacerbating urban decline (Trueman,
Klemm & Giroud, 2004, p. 317). Budget documents showcase a product via imagery and
language. The product being sold is the city as a whole, so the budget documents design is the
first way cities can highlight its product. Budgets not being used as marketing tools have
comparatively simple designs without flourish. Those cities still are giving information about the
budget rather than tying it to image-generating practices. Second, language is used to shape the
city as a product. In this way, the best realization of language use is the mayor or managers
letters. The letters themselves reflect the overall design of the budget document, which, again
ties back into the citys branding statement. Design ties into the overall theme and branding of
the budget. (For example, one city studied Ankeny, Iowa carried its triangular logo and brand
slogan, Bringing it all together, throughout the budget document.) The purpose of this
language is to highlight a product that is open and available to all customers.

Price
Price is not only the price someone pays for a good or service, but also other values that
consumers give up in the exchange process (Kotler & Lee, 2007, p. 34). Monetary and non-
monetary costs, then, are included in the overall price framework. The budget document is an
organizations best articulation of price the price that people pay in taxes and where that money
goes. The idea is to align customer desires with services provided, all at a perceptually driven
fair price. The mantra takes place all the time people want more goods and more services,
yet are unwilling (usually) to pay more taxes to receive the service increase. Budget documents
portray the price the person has to pay to live and work in the city (taxes) as fair and a good
match for the services. Bar graphs, pie charts, line graphs and more are used to achieve this
purpose. Savvy cities will design those directly into the budget document and transmittal letter.
Another handy trick is to have comparisons between your city and neighboring cities, showing
your city provides the best bang for the buck, so to speak. The comparative element is a
graphical way to showcase efficiency and effectiveness, both central tenets of the market-based
movements in governance. Price is, naturally, depicted in the budget numbers as a whole but is
38


reinforced with the language used in the mayor and managers letters. As noted, price is about
showcasing how much of your tax dollars the city receives, and what is done with that money.
A city uses words and charts to showcase price. Charts illustrate how little of your tax bill goes
toward the city, so thus resources are naturally scarce. Language backs this up, explaining to
readers (in budgets as marketing tools) the economic climate of the city overall and the extreme
difficulty of allocating funds. The Price factor highlights value for the dollar, and related
language will emphasize no interruptions to service delivery, low taxes compared to neighbors,
low utilization of taxes collected, and allocations of scare resources in line with public opinion.
To this end, performance measures also are used to shape and tell the story. The measures show
the efficiency and effectiveness of the government, illustrating how performance drives
whatever the city does. Indicators met and exceeded show the government going above and
beyond. (In one city studied, Parkland, Florida, performance measures are explained in great
detail and showcase what areas departments achieve and where more resources are necessary.
That is an important story told in budgets where resources are allocated are based on need and
community desires. Linking the two becomes paramount.

Place
The third P is place, thought about as the distribution channel. Place embodies physical
and psychological aspects (Kotler & Lee, 2007). This is exactly the point of place branding to
creative positive, affective appeals and connections. The best spot to look to get an immediate
sense of place are the covers of the budget books. Most cover pages showing pictures of people
living and having fun in the place the city. For example, one city studied, Boston,
Massachusetts, showed people skating and enjoying life in Boston. Another city, St. Paul,
Minnesota, did not have a cover page until Fiscal Year 2010. That cover again shows people
skating and enjoying winter weather in the city. That St. Paul did not have a cover page indicates
a city that is moving toward generating images of itself to market and sell. The cover page is the
first item budget readers see, and it serves as prime real estate to shape and promote an image.
The overall look and feel is transmitted through the covers, so the marketing capabilities of the
budget document are evident from the beginning. The idea is to create a unique sense of place
(Aravot, 2002; Jiven & Larkham, 2003); via illustrations picked. Sense of place, which is the
desired result of placemaking, was regarded as a human need, essential for well being and
feelings of safety, security and orientation, and a remedy against feelings of alienation and
estrangement (Aravot, 2002, p. 202).

Promotion
Promotion involves persuasive communications that includes everything from direct
marketing to public relations. The arguments so far have been leading up to, and intertwine with,
this final P. Promotion is how the city sells itself, and that includes the overall marketing and
public relations plan. Those plans could involve branding campaigns, media relations, in-house
publications, press releases, magazines, town hall meetings, community surveys, annual reports,
pens, stickers, fliers, bumper stickers, banners, and on and on and on. Promotion is the ultimate
end to a commodified city. In commodified cities, everything needs promotion rather than, say,
education or simple distribution. The city brand will be featured prominently on all promotional
materials to lend a sense of continuity. Lacking continuity causes confusion regarding the brand,
what it means, and how it is used (Stahl, 1964). Cities using and recognizing budgets as
marketing tools work hard to have this visual continuity amongst its promotional materials. The
39


budget, when covered with the brand statement and marketing rhetoric, becomes part of the
visual milieu of the city. Promoting the brand permits the city to develop emotive connections
and establish that sense of place (Batra & Homer, 2004). Distinct brands go beyond the
perceived quality of the brand on functional product and service criteria and deal instead with
intangible properties of the brand (Batra & Homer, 2004, p. 318).

CONCLUSION AND DISCUSSION

As commodification has infiltrated public administration, cities are turning to marketing
and selling tactics to keep up with neighbors and competition. Marketing principles attempt to
build the organization-public relationship while selling the city as a product with distinct
differences (value-addeds) from like places. Cities sell themselves to gain competitive
advantage, build a tax base, attract tourists, lure businesses and residents, and more. Marketing
comes into play via place branding, which is using branding and marketing tactics toward the
place (city, in this case) as a whole. Cities with this self-promotional bent will use each available
avenue to promote itself, and this research turned an eye toward budget documents to fit in with
that marketing mix. Budgets, at its core, are policy tools transmitting information about the
upcoming years expenditures. When elevated to a marketing level, budgets take on an image
that reflects the citys overall socially created identity. Budget documents that appear as
marketing tools will use six tools to shape and tell the socially constructed story:
managers/mayors letter language, overall design, strategic priorities and performance measures,
photos, a theme, and branding. Each characteristic works together to paint a picture of the way
the city wants to be perceived. Budgets as marketing tools will have sales-driven language in
transmittal letters; make reference to the overall city brand; strategic priorities and performance
measures to indicate accountability; photos to sell a product and create a sense of place; and
deploy an overall theme via the language and images. All together, the budget document
becomes a packaged representation of the citys generated social reality, as well as a means to
market the city to interested audiences.

REFERENCES

Altheide, D. L. (1996). Qualitative Media Analysis. Thousand Oaks: Sage Publications.
Anton, T. J. (1967). Roles and symbols in the determination of state expenditures. Midwest
Journal of Political Science, 11(1), 27-43.
Aravot, I. (2002). Back to phenomenological placemaking. Journal of Urban Design, 7(2), 201-
212.
Arndt, J. (1983). The political economy paradigm: Foundation for theory building in marketing.
Journal of Marketing, 47(4), 44-54.
Batra, R., & Homer, P. M. (2004). The situational impact of brand image beliefs. Journal of
Consumer Psychology, 14(3), 318-330
Beresford, A. D. (2000). Simulated budgeting. Administrative Theory & Praxis, 22(3), 479-497.
Berg, B. L. (2001). Qualitative research methods for the social sciences (4
th
ed.). Boston: Allyn
& Bacon.
Box, R. C. (1999). Running government like a business. American Review of Public
Administration, 29(1), 19-43.

40


Covaleski, M. A., & Dirsmith, M. W. (1988). The use of budgetary symbols in the political
arena: An historically informed field study. Accounting Organizations & Society, 13(1),
1-24.
Desphande, R. (1983). Paradigms lost: On theory and method in research in marketing. The
Journal of Marketing, 47(4), 101-110.
Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and
challenges. Academy of Management Journal, 50(1), 25-32.
Fox, C. J. (1996). Reinventing government as postmodern symbolic politics. Public
Administration Review, 56(3), 256-262.
Gamson, W. A., Croteau, D., Hoynes, W., & Sasson, T. (1992). Media images and the social
construction of reality. Annual Review of Sociology, 18, 373-393.
Herzog, R. J. (2006). Performance budgeting: Descriptive, allegorical, mythical and idealistic.
International Journal of Organization Theory & Behavior, 9(1), 72-91.
Jiven, G. & Larkham, P. J. (2003). Sense of place, authenticity and character A commentary.
Journal of Urban Design, 8(1), 67-81.
Kelly, J. M. (2005). The dilemma of the unsatisfied customer in a market model of public
administration. Public Administration Review, 65(1), 76-84.
Kotler, P., Haider, D. H., & Rein, I. J. (1993). Marketing places: Attracting investment, industry
and tourism to cities. New York, NY: The Free Press.
Kotler, P., & Lee, N. (2007). Marketing in the public sector: A roadmap for improved
performance. New Jersey: Wharton School Publishing.
Kotler, P., & Levy, S. J. (1969). Broadening the concept of marketing. The Journal of Marketing,
33(1), 10-15.
Marsh, E. E., & White, M. D. (2003). A taxonomy of relationships between images and text.
Journal of Documentation, 59(6), 647-672.
Miller, H. T., & Fox, C. J. (2007). Postmodern Public Administration, Revised edition. New
York: M.E. Sharpe.
Patterson, P. M. (1998). Market metaphors and political vocabularies: The case of the
marginalized citizen. Public Productivity and Management Review, 22(2), 220-231.
Sementelli, A. J., & Herzog, R. J. (2000). Framing discourse in budgetary processes: Warrants
for normalization and conformity. Administrative Theory & Praxis, 22(1), 105-116.
Stahl, G. (1964). The marketing strategy of planned visual communications. The Journal of
Marketing, 28(1), 7-11.
Trueman, M., Klemm, M., & Giroud, A. (2004). Can a city communicate? Bradford as a
corporate brand. Corporate Communications, 9(4), 317-330.
Ventriss, C. (2000). New Public Management: An examination of its influence on contemporary
public affairs and its impact on shaping the intellectual agenda of the field.
Administrative Theory & Praxis, 22(3), 500-518.


41











CHAPTER 3

APPLIED MANAGEMENT SCIENCE & DECISION SUPPORT
SYSTEMS

42


ECONOMIC EVALUATION OF RENEWABLE ENERGIES IN IRANIAN POWER
PLANT INDUSTRIES UTILIZING MERIT RATIO METHOD

Seyed Mohammad Seyedhosseini- Islamic Azad University, Tehran/Iran
Seyedhoseini@yahoo.com

Sarah Yousefi, Islamic Azad University, Tehran/Iran
Sy2000ir@gmail.com


ABSTRACT

According to existing statistics, the demand for electric energy in Iran during the last
decade has had an accelerating rate. Such rate has forced the energy politicians of Iran to plan for
installation of new power plants. When talking about the development of power generation, the
different technologies of power plants shall be evaluated to manage the governmental and private
capital toward the most desirable technology. Because of its multi-criterion nature, evaluation of
renewable technologies of power generation shall be preferably done using multi aspect decision
making methods. In this paper the Merit Rate, a powerful tool for decision making, has been
utilized for evaluation of nine types of power plants in comparison with each other.

INTRODUCTION

Economic substructures are highly related to energy and any upheaval in energy
industries has a direct effect on economic growth and development of human societies. Among
the different types of energies, electricity has a special place.
Many studies have been performed in Iran regarding the power generation industry. Most
of them were focused on technology development and technology transfer. Therefore, a research
that assesses the different type of technologies, with respect to the economic and environmental
criteria, can lead to new policies in this industry (Shirzad Sibeni, Norouzi, & Sadeghian, 2006).
Moreover, taking into account the limitations and mortality of fossil fuels and growing share of
renewable energies in the world, as well as the suitable potential of the Iranian geography for
utilization of renewable energy resources, highlight such a research.
With respect to the considerable share of electric energy in the total consumption of
different type of energies, attention to diversity of electric generators has a noticeable
importance. Nowadays, many studies are concentrated on the different technologies of renewable
energies for generation of electric energy (Abbaspour & Atabi, 1994; Gianni, Amanabadi, &
Maghsoudi, 2006; Novales, Fernndez, & Ruiz, 2009; Reid, 2001). That is, evaluation of
different types of renewable energies in comparison with fossil-fueled power plants can lead to
discovery of the best alternative for fossil-fueled power plants in Iran and also create a big step
toward the restriction of global warming and the production of greenhouse gasses.

ESTIMATION OF FUTURE DEMAND FOR ENERGY IN IRAN

According to United Nations estimations, Iranian demand for energy will reach from 690
Million Barrel Oil Equivalent (mboe) in year 2000 to 1695 mboe in year 2020 (Atomic Energy
Organization of Iran [AEOI], 2002; Tatyana, 2000). That is; with 4.4% annual rate of increase,
43


the energy consumption during the future 10 years will experience an up to 160% increase. Since
a considerable share of this energy will be in the demand for electricity, a comprehensive plan
for development of generation capacity shall be prepared (Abdoli & Khamsei, 2007; Porkhial &
Kahrobaeian, 2004). The upcoming evaluation will show which kind of technologies has more
preference when taking into account the economic and environmental criteria.

ECONOMIC EVALUATION

Because of multi-criterion nature of economic evaluations, evaluation of renewable
energies shall also be performed by Multi Attribute Decision Making (MADM) methods. In this
paper nine type of power plants consisting of 5 renewable technologies including Wind, Solar,
Biomass, Geothermal and Hydro-Power Plants and 4 Fossil-Fueled ones including Combined
cycle, Gas turbine, Diesel and Nuclear-Power Plants, for which statistical data were available,
are studied. For economic evaluation 30 economic criteria related to power plants were listed in a
questionnaire which has been submitted to professionals and investor of this field of industry so
that each criterion can be weighted. Then nine the most weighted criteria, which afterward would
be the base for economic evaluation, were maintained. Then the raw weights were imported to
Expert Choice software so that the normalized weight is achieved using Analytical Hierarchy
Process (AHP) algorithm. The statistical value of each parameter for each type of power plant
has been gathered and a 9*9 matrix has been achieved. Then the normalized weight vector is
augmented to the matrix and finally the resulted matrix is subjected to Merit Rate algorithm.

INTRODUCTION TO MERIT RATE ALGORITHM

In the MA decision making theory the aim is to select the most desirable choice when
more than one criterion is affecting the decision. Different methods are introduced to process the
decision making according to the above mentioned manner. One of the most effective and
precious methods is Merit Rate algorithm which first was introduced by Seyed Hosseini
(Seyedhosseini, 2006). This method based on the following principles:
1- Comparison of each single pair of alternatives and then rejection of the least favorite
choice in each step.
2- Presentation of the preference of two alternatives in a rational number.
This method has the advantage that there is no need for the criteria to be compared on the
same measuring unit.
In this algorithm all the weights are normalized using the AHP technique (Seyedhosseini,
2009). Then all the quantitative or qualitative criteria for each alternative form an augmented
matrix, the leftmost column of which consists of normalized weights vector. Table 1 shows a
typical form of the matrix:

TABLE 1. THE PARAMETERS USED IN MERIT RATE ALGORITHM







Alternatives
Normalized weight Criteria
X
n
X
2
X
1

a1
Xn
a1
X2
a1
X1
w
1
Criterion 1
a2
Xn
a2
X2
a2
X1
w
2
Criterion 2

am
Xn
am
X2
am
X1
w
m
Criterion m
44


In the above table, n is the number of alternatives and m is the number of criteria. It shall
be mentioned that in the above table the weights w

are derived from AHP method and the

parameters om
Xn
are derived from valid statistics and information. This table is the beginning of
analysis process in the Merit Rate theory. According to the above table, the preference rate of
alternative X
1
with respect to X
2
will be calculated as:

HR
X2
X1
= j
u1
X1
u1
X2
[
w
1
j
u2
X1
u2
X2
[
w
2
_
u
m
X1
u
m
X2
_
w
m

or

(1)
HR
X2
X1
= _ _
o
k
X1
o
k
X2
_
w
k
m
k=1

(2)

In general the preference rate of 2 alternatives X
1
and X
2
is determined as the following:

HR
X]
X
= __
o
k
X
o
k
X]
_
w
R
m
k=1
(3)

If the preference ratio NR
Xj
XI
is less than 1 then the alternative X
]
is more preferred and
vice versa. Then, if the preference ratio of another alternative X
k
to X
]
is bigger, X
k
is preferred.
This chain will be continued upon determination of the most dominant alternative. It shall be
noted that in the table 1 all the values related to cost-natured criteria (Criteria that are less
preferred if they have bigger values) should be inversed. Moreover, all the qualitative parameters
shall be changed by quantities.

COMPARISON OF POWER PLANTS

As stated before, the alternatives were different type of power plants as presented in
Table 2.
TABLE 2. THE CANDIDATE POWER PLANTS

The normalized weights are the result of AHP process over the raw weights that have been
achieved through the questionnaire which was filled by 12 specialists. The AHP process has
been utilized using Expert Choice software. The criteria and their normalized weights are as
tabulated in Table 3.





X
1
X
2
X
3
X
4
X
5
X
6
X
7
X
8
X
9

P.V.
( Photovoltaic)
Wind Hydro Geothermal Biogas Diesel
C.C.
(Combined
Cycle)
Nuclear Gas Turbine
45


TABLE 3. THE CRITERIA AND THEIR NORMALIZED WEIGHTS







As stated before the normalized weights are determined using Expert Choice

software.
Figure 1 depicts the output of the software.

FIGURE 1. DETERMINATION OF NORMALIZED WEIGHTS USING EXPERT CHOICE

In order to perform 324 necessary calculations a code is designed in VB environment of
MS Excel. The code performs serial calculations according to equation (3) and compares each
pair individually. As a result 36 vulgar fractions will be achieved that shows the result of
comparison of pairs. The preference factor of each alternative is tabulated in Table 4:

TABLE 4.THE RESULT OF EVALUATION USING MERIT RATE ALGORITHM
Rank 1 2 3 4 5 6 7 8 9
Type of
Power
Plant
(P.P)
X
2
X
1
X
3
X
8
X
4
X
5
X
7
X
9
X
6

Wind P.P P.V. P.P Hydro P.P
Nuclear
P.P
Geother-
mal P.P
Biogas
P.P
C.C. P.P
Gas
turbine
P.P
Diesel
P.P
Preference 1.000000 0.898987 0.763320 0.608426 0.463653 0.417641 0.353967 0.312652 0.308032


Criteria Measuring Unit Normalized weight
Efficiency % w
1
0.089
Job Creation Qualitative w
2
0.107
Life Time Years w
3
0.052
Capital Cost $/kW w
4
0.150
Environmental Effects Qualitative w
5
0.260
Repair & Maintenance Qualitative w
6
0.046
Construction Period Years w
7
0.073
CO2 Emission Grams/kWh w
8
0.166
Marginal Cost Cents/kWh w
9
0.057
46


CONCLUSION

The Merit Rate algorithm is a very reliable method for decision making in multi-criterion
aspects. In this paper 9 types of power plants are evaluated in comparison to each other. As a
result; wind power plant has been determined as the most dominant type of power plant with
respect to economic, environmental and energy criteria.

REFERENCES

Abbaspour M., Atabi F. (1994). A mathematical (1994) model to evaluate wind energy potential
in Iran. World renewable energy congress.
Abdoli, M. A., & Khamsei, S. B. (2006). Economic and Environmental Assessment of Energy
Consumption and CO2 Emission in Iranian Development Vision, Iran, Tehran.
Atomic Energy Organization of Iran [AEOI]. (2002). Renewable energies: their present and
future forecasts. A report prepared by CRERA, Tehran, Iran.
Gianni, M., Amanabadi, M., & Maghsoudi, E. (2006). Utilization and Development Rate of Wind
and Solar Energy in Iran and in the World, Iran, Tehran.
Novales A., Fernndez, E. & Ruiz, J. (2009). Economic Growth (Theory and Numerical Solution
Methods), 2nd Edition, Springer.
Porkhial S., & Kahrobaeian A. (2004). Status of geothermal energy in Iran. 19
th
world energy
congress.
Reid F. (2001). The future for renewable energy. Women leaders on the uptake of renewable
energy seminar.
Seyedhosseini, S. M. (2006). Engineering Economic & Decision making Analysis, Iran
University of Science and Technology, Tehran.
Seyedhosseini, S. M. (2009), Production Management, IMS Publication, 3th Edition.
Shirzad Sibeni, A., Norouzi, A., & Sadeghian, A. (2007). Economic comparison of Wind Power
Plants and Fossil-Fuelled Plants, Iran, Tehran.
Tatyana P. S. (2000). Beyond Economic Growth (An Introduction to Sustainable Development),
2nd Edition, The International Bank for Reconstruction and Development.



47


AN INFORMATION SYSEMS ENCOUNTER WITH THE SIX SIGMA METHOD

Roger L. Hayen, Central Michigan University
Roger.hayen@cmich.edu


ABSTRACT

This research examines an application of the Six Sigma methodology to a business prob-
lem that emerges with an information technology (IT) solution as the best alternative. A
Time/Leave Reporting Process, which supports a payroll function, is investigated using the
methodology. This case application demonstrates the Six Sigma approach to business process
problem solving, wherein an existing process with a 2.06 -value was re-designed and imple-
mented to be a controllable process with an 8.65 -value. This accomplishment used a project
team lead by a Six Sigma black belt and a business process owner, rather than an IT driven pro-
ject team. When IT is the solution, the Six Sigma project takes a detour, which is a project dis-
ruption. Control is relinquished to the IT department while the solution is prepared. This
disruption resulted in a near record setting four year schedule extension for this Six Sigma
project.

INTRODUCTION

Business problems or opportunity do not wear labels: Im an IT problem or Im an
operating process problem. That is, they are business-driven or IT-driven. Life would be so
much easier if business problems were pre-labeled and identified neatly by category. However,
they are just business problems that must be sized up and then tackled with an appropriate solu-
tion. Six Sigma has emerged as a popular business problem solving approach for this. Ever since
its conception at Motorola in the mid 1980s, Six Sigma programs have grown by leaps and
bounds worldwide (Antony, 2007; Antony, Kumar, & Madu, 2005). Some Six Sigma projects
may lead to an IT solution; however, every Six Sigma project does not result in such a solution.
Rather, Six Sigma methodology provides a very robust tool set for addressing business-driven
problems or opportunities in order to formulate a best solution, which may or may not involve an
IT solution. The purpose here is not to review all the possible tools of Six Sigma methodology,
but rather to examine an application and its analysis where an IT solution emerged as the
preferred solution option.
The Six Sigma methodology focuses on a process owner (the customer) by listening to
the needs of that owner and then making improvements to the process (Douglas & Erwin, 2000).
Different projects are likely to apply a different tool set. And, the project could lead to a change
in manual business processes, an automated solution, or some combination. Clearly, these
projects are a business-centric approach. This is different from a more traditional IT approach
that examines new and evolving technology and then searches for opportunities to deploy that
technology -- a technology-driven approach (Vitt, Luckevich, & Misner, 2002). This represents a
push arrangement wherein the technology-driven solution is pushed by IT as an opportunity to
address a business issue. On the other hand, Six Sigma is a pull process with the methodology
identifying a potential IT application opportunity from the business problem analysis. Hence, it
is important for information professionals to have an understanding of the Six Sigma approach.
48


This allows them to leverage the Six Sigma analysis as they embark on the intermediate spin-off
IT project.
The purpose of this research is to provide an example of how Six Sigma methodology
can lead to an IT project. This research portrays only one arrangement of Six Sigma tool usage
with an IT solution. Other IT solutions may use different tool sets. The results are presented as
an overview of the Six Sigma process and their deployment in that process with an examination
of the IT solution impact.

SIX SIGMA METHODOLOGY

The core of Six Sigma is relentless problem solving. Typically (Dow, 2003), the meth-
odology is arranged as the five phase: define, measure, analyze, improve, control (DMAIC). In
addition, a realization phase is included for project assessment. The process phases utilized are:
Define Identify the project opportunities.
Measure Identify the key internal process that influences the critical project characteristics.
Analyze Understand the root causes driving the defects by identifying key variables.
Improve Confirm the key variables and quantify their effect on the business process.
Control Ensure that the modified process enables key variables to stay within an
acceptable range.
Realization Assess the sustainability and impact of the project after its implementation to
insure the continuity of the revised process for the long run.
The phases are carried out by a Six Sigma project team. For this project, these are a black
belt (in-training), a green belt, a process owner (same as green belt), a local champion, a
financial representative, and a master black belt. The team interacts with other departmental
users as needed to conduct the project and obtain their input to the solution.

SELECTED SIX SIGMA TOOL USAGE

A number of different tools are available for use with the Six Sigma method. Those tools
that were most useful with this project are listed in Table 1. The table indicates the primary
phases in which each tool is used. Some tools are used in more than one phase. This occurs
when the tools are used to assess both the old process and the new process. Examples of some of
these tools are presented here to provide an overview of several more prevalent ones. Details of
other tools are found in (Dow, 2003, 2004a, 2004b, 2004c, & 2004d).

Project Charter

The project charter for the Time/Leave Reporting Process (Figure I) summarizes the
nature and scope of the project. The charter results from several meetings with the project team
during the Define Phase. The Opportunity Statement is a key component of the Project Charter
that is used in developing the proposed solution.
49


TABLE 1. SELECTED SIX SIGMA TOOL USAGE
Six Sigma Tool Define Measure Analyze Improve Control
A delta T 3 3
Brainstorming 3 3
Cost-Time Profit
Analysis/Cost Benefit
3 3
Cpk (Process Capability) 3 3
Cycle time reduction 3 3
Defect 3 3 3
Defect per million
opportunities (DPMO)
3 3 3
Defect per opportunity 3 3 3
Document flowchart 3 3 3 3
Hidden factory 3
Measurement plan 3 3
Morphological box 3
Opportunity statement 3 3
Process map 3
Project charter 3 3
Risk management 3 3
Risk-Benefit
Analysis/Risk
Analysis/Benefit Analysis
3 3
Root cause 3
Sigma value 3 3
Value added/non-value
added
3 3

Defect Opportunities
A defect is defined and evaluated during the Measure Phase (Dow, 2004a). For this
project it is the amount of labor time required in completing the Time/Leave Reporting Process
with the cycle time as the amount of labor time required per employee paid. Defects occur,
creating errors that must be corrected. The current relative quantity of these errors should not be
increased and are a constraint of this project. A measure of this constraint records the overall
effectiveness of the process and is calculated as follows:
Voided item defect per opportunity (DPO) =
Number of voided items from process errors / number of employees paid

50


TABLE 1. SELECTED SIX SIGMA TOOL USAGE
Six Sigma Tool Define Measure Analyze Improve Control
A delta T 3 3
Brainstorming 3 3
Cost-Time Profit
Analysis/Cost Benefit
3 3
Cpk (Process Capability) 3 3
Cycle time reduction 3 3
Defect 3 3 3
Defect per million
opportunities (DPMO)
3 3 3
Defect per opportunity 3 3 3
Document flowchart 3 3 3 3
Hidden factory 3
Measurement plan 3 3
Morphological box 3
Opportunity statement 3 3
Process map 3
Project charter 3 3
Risk management 3 3
Risk-Benefit
Analysis/Risk
Analysis/Benefit Analysis
3 3
Root cause 3
Sigma value 3 3
Value added/non-value
added
3 3

Defect Opportunities
A defect is defined and evaluated during the Measure Phase (Dow, 2004a). For this
project it is the amount of labor time required in completing the Time/Leave Reporting Process
with the cycle time as the amount of labor time required per employee paid. Defects occur,
creating errors that must be corrected. The current relative quantity of these errors should not be
increased and are a constraint of this project. A measure of this constraint records the overall
effectiveness of the process and is calculated as follows:
Voided item defect per opportunity (DPO) =
Number of voided items from process errors / number of employees paid

50


FIGURE 1. FINALIZED PROJECT CHARTER

Sigma Value

The sigma value, defects per million occurrences (DPMO), and capability value (Cpk)
are measures of process capability. The sigma value is a quality level. It is related to the
statistically calculated standard deviation of the data; however, that standard deviation is only
one input to a formula that is then used to calculate the long-term capability in the Improve
phase. Six-sigma performance produces 1 defect per million opportunities, over the short term
(Dow, 2004a).
The overall error rate, as measured in voided items, is not to increase as a result of any
changes in the Time/Leave Reporting Process revision. The current number of voided items per
million employee payments (DPMO) is 2,200. This translates to a -value of 4.35, which is less
than the target level value of 6.00 six sigma performance.
A small number of voided items could still be very time consuming in making the needed
corrections. As a result, the cycle time is judged to be a better measure of the defect. For cycle
time the DPMO is 289,000, which represents a -value of 2.06. This is the number of items
where the cycle time is greater than the theoretical limit. It provides a focus on the cycle time as
a key process activity that is to be addressed through the project.
AT
The AT (A delta T) technique is used in the Analysis Phase to calculate the non-value
added time in a process. With cycle time reduction (CTR), value adding process steps are
identified in evaluating process efficiency. A non-value added activity is one that is not essential
for meeting requirements. Then the root causes for non-value adding time undergo further
examination for possible process improvement for CTR.
The AT measure is calculated as follow:
AT ratio = Actual (time) / Theoretical (time)
Where Theoretical (time) = Value Added
Actual (time) = Theoretical (time) + (time)
(time) = Non-value Added (time) including Rework (time)
The AT for the existing payroll processing time is calculated as 3.84. For this project,
the actual time is nearly four times the theoretical time. Or, nearly 75 percent of the actual time is
consumed by non-value added processes. These non-values added processes are candidates for
Project Impact/Strategic Alignment: Support the educational institutions academic mission by improving the
time/leave reporting process.
Opportunity Statement: Current process is fragmented. Paper timesheets/time rosters require processing and
handling by the initiating department and Payroll Services. Considerable time is used in finding and correcting
error conditions that would result in a voided item (the issuance of an incorrect pay check).
Project Scope & Boundaries: The paper-based time/leave reporting systems for all employee groups that
encompasses the main campus and all satellite campuses.
Goal/Objectives: Developed an improved time/leave reporting process that is more efficient, reduces voided
items, and meets the institutions reporting requirements.
Timeline: Completion of Control Phase by March 1.
Deliverables: Revised process to improve efficiency and reduce labor effort in reporting process. This should
provide a soft dollar saving, which is still being determined. Documentation and training will be provided for a
revised system. Other changes will be assessed at the end of the analyze phase.
Project Charter
Project Impact/Strategic Alignment: Support the educational institutions academic mission by improving the
time/leave reporting process.
Opportunity Statement: Current process is fragmented. Paper timesheets/time rosters require processing and
handling by the initiating department and Payroll Services. Considerable time is used in finding and correcting
error conditions that would result in a voided item (the issuance of an incorrect pay check).
Project Scope & Boundaries: The paper-based time/leave reporting systems for all employee groups that
encompasses the main campus and all satellite campuses.
Goal/Objectives: Developed an improved time/leave reporting process that is more efficient, reduces voided
items, and meets the institutions reporting requirements.
Timeline: Completion of Control Phase by March 1.
Deliverables: Revised process to improve efficiency and reduce labor effort in reporting process. This should
provide a soft dollar saving, which is still being determined. Documentation and training will be provided for a
revised system. Other changes will be assessed at the end of the analyze phase.
Project Charter
51


elimination in making changes to the revised system. After that elimination and re-design, the
AT is determined for the replacement process to assess the efficiency improvement.

IT and Six Sigma

When an IT solution emerges as the best method for mitigating the business problem with
an improved process that solution instantiates a robust control arrangement; it removes old ways
of carrying out the business process. This elimination, or burning bridges, insures the continu-
ation of the new process. This sustains the gain which means that changes/improvements are
successfully implemented and stay implemented forever. Here, forever is defined as that time
until there is a significant change in the business process (Dow, 2004c). That is, business events
or conditions make the change irrelevant. For example, a manufacturing plant is shut down or the
impacted product is no longer sold. Sustainability does mean considering foreseeable future
events that could threaten the improved process. This includes changes in volume, personnel and
customer expectations.

IMPLEMENTATION DISRUPTION

A disruption is a challenge that interrupts an implementation. It is like a major detour
during road construction and is similar to a black hole into which the Six Sigma project enters
until the IT solution has been implemented. A disruption results in shifting direction from a Six
Sigma project to an IT project for its procurement and installation. Once remediation is deter-
mined to be an IT solution; the Six Sigma project interfaces with the IT project. That is, the
actual acquisition and installation of IT assets requires requesting those IT resources for imple-
mentation. Until this point in the project, control of the project is with the process owner and the
other members of the Six Sigma project team. Project control changes when the implementation
shifts to the IT staff. IT resources must be allocated and tasked for that implementation. The Six
Sigma project must be aligned with other projects within the IT services organization.
What attributed to delay? It was the delays encountered in scheduling and conducting the
IT project. Whereas small projects may receive nearly immediate IT resources, large projects
require additional approvals, budgets and scheduling by the IT staff. While this is taking place,
the direct control of the Six Sigma project is turned over to the IT staff. The Six Sigma project
team should be prepared for a shift in control during the Improve Phase when the solution is IT
based. This shift in responsibility caused a substantial delay that changed the planned Six Sigma
project timeline from six months to an actual time span of four years; one of the longest time
requirements ever for the master black belts organization.

SELECTED IT SOLUTION

TimeLink (2005) was the IT solution selected by the process owner and IT staff using
ITs methods for the evaluation, selection, and contracting for this software. TimeLink is a web-
based solution that interfaces with the SAP ERP Enterprise software that handles the payroll pro-
cessing within the human relations (HR) application module. This is the same HR module that
does the entire payroll processing that produces all employee paychecks for the organization
institution. TimeLink is a comprehensive family of workforce management solutions that
includes the time and attendance reporting needed for payroll processing.
52


When the implemented solution is an IT solution, the chance or risk of reverting back to
the old manual processes are minimized. This is different from when changes are often made to
manual processes. With manual process changes, increased diligence is required to insure that
employees do not cross the line and return to the old ways. An IT solution removes the old way.
It is very difficult to return to the old manual processes. The non-value added process steps no
longer exist in the business process. Employees cannot use the old manual system with its non-
value added steps. Clearly, the IT solution brings a discipline to the Time/Leave Payroll Process
that simply must be followed for an employee to receive a paycheck.

PROCESS COMPARISON

Key process parameters are compared to show the change from the old process to the
new process. There was a reduction in the non-value added steps in the payroll process. The
amount of personnel processing time needed to pay one employee during one payroll cycle was
reduced from 5.3 to 3.0 minutes per employee. While this may not seem to be a large decrease
when that time is multiplied by the number of employees, this becomes a significant saving.
The sigma level of the new process at 8.6 achieves the Six Sigma level of performance.
And, the Cpk is now greater than one, which indicates the new process is a controllable process.
The old process did not meet this Cpk process control threshold. Further, the DPMO constraint
was met. The process comparison of improvement (Figure II) shows the probability density
curves which support this analysis. The curves illustrate the non-controllability of the old process
with is large variance, whereas the new process has a much smaller variance. As shown, there is
virtually no probability the new process will exceed the established goal for project
improvement.

FIGURE 2. PROCESS COMPARISON OF IMPROVEMENT
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
-10 -5 0 5 10 15 20
P
r
o
b
a
b
i
l
i
t
y

D
e
n
s
i
t
y
Old
New
70% Limit
(Goal UCL)
Mean Old
Mean New
Reduction in mean
process time
Outsideof
established
limit
53



CONCLUSION

This research effort examined the use of the Six Sigma methodology in providing an IT
solution to a business problem. The Time/Leave Reporting Process was observed in applying this
methodology to that business problem. An existing primarily manual process was replaced with
an IT solution that provided a sigma value of 8.6. The re-designed process became a controllable
process as delineated by its Cpk of 2.9 that exceeds the threshold for being controllable. The Six
Sigma project was a pull process for its IT solution that was driven by a project team organized
around a process owner and conducted with the assistance of a Six Sigma black belt. Following
the data-driven, five-phased approach of Six Sigma, an IT solution emerged as the best method
for mitigating the business problem with an improved process. An IT solution instantiated a
robust control arrangement, because it removes old ways of carrying out these business
processes. This elimination, or burning bridges, insured the continuation of the new process
until there is a change in how business is conducted. Future research should examine additional
Six Sigma projects that result in IT solutions to illuminate the synergy among the techniques of
these business problem solving approaches and examine the impact of an IT solution on the
project schedule.

REFERENCES

Antony, J. (2007), Is Six Sigma a management fad or fact? Assembly Automation, 27(1), 17-19.
Antony, J., Kumar, M., Madu, C.N. (2005a), Six Sigma in small and medium sized UK
manufacturing enterprises: some empirical observations, International Journal of Quality
& Reliability Management, 22(8), 860-74.
Douglas, P. C., Erwin, J. (2000). Six Sigma's focus on total customer satisfaction. The Journal of
Quality and Participation, 23(2), 45.
Dow. (2003). Dow Six Sigma black belt certification - Orientation. Midland, MI: The Dow
Chemical Company.
Dow. (2004a). Dow Six Sigma black belt certification - Measure. Midland, MI: The Dow
Chemical Company.
Dow. (2004b). Dow Six Sigma black belt certification - Analyze. Midland, MI: The Dow
Chemical Company.
Dow. (2004c). Dow Six Sigma black belt certification - Improve. Midland, MI: The Dow
Chemical Company.
Dow. (2004d). Dow Six Sigma black belt certification - Control. Midland, MI: The Dow
Chemical Company.
TimeLink, (2005, January). TimeLink Enterprise 6. Larchmont, NY: Author.
Vitt, E., Luckevich, M., Misner, S. (2002). Business intelligence: Making better decision faster.
Redmond, WA: Microsoft Corporation.


54


ETHICAL DECISION MAKING AMONG ADDICTED AND NON-ADDICTED
INTERNET USERS

Kimberly S. Young, St. Bonaventure University
kyoung@sbu.edu

Carl J. Case, St. Bonaventure University
ccase@sbu.edu


ABSTRACT

Research has found that addictive use of the Internet in the workplace accounts for poor
job productivity and increased corporate liability. This study surveyed 451 Internet users
classified as addicted and non-addicted online users. Respondents answered questions related to
applications they most utilized, time spent online per week, and six ethical online decision
dilemmas. Results suggested that addicted users spent nearly 2.5 times the minutes of non-
addicted users per week and were more likely to gamble online, use instant messaging, and play
online games. Both groups rated cybersex, downloading free music at work, and online
pornography at work as significant types of employee misuse. Both groups viewed sending
electronic jokes, chatting in chat rooms, and checking personal email at work as lesser forms of
misuse. As firms continue to utilize newer Internet technologies, this research will assist in
developing a decision framework in dealing with incidents of employee Internet abuse.

INTRODUCTION

Internet abuse in the workplace is an issue in corporations creating problems in poor job
productivity and increased corporate liability. Previous research has suggested that employees
who are addicted to the Internet are more likely to abuse workplace technologies. However, this
research has not examined the types of Internet applications addicted users are more likely to
misuse at work than non-addicted users. Furthermore, previous research has focused on ways to
monitor and control employee Internet abuse through the implementation of software monitoring
and acceptable Internet use policies, yet it has not examined decision making attitudes among
users for abusing or non-abusing workplace technologies. This study employs a survey research
design to examine Internet applications between addicted Internet users and non-addicted users.
It also examined ethical attitudes related to Internet misuse at work between the two groups. The
results have implications on the effectiveness of current policy and business practices.

LITERATURE REVIEW

A nationwide study conducted by a team from Stanford Universitys School of Medicine
had estimated that nearly one in eight Americans exhibited at least one possible sign of
problematic Internet use (Aboujaoude, Koran, Gamel, Large, & Serpe, 2006). Studies have also
documented Internet addiction in a growing number of countries such as Italy (Ferraro, Caci,
D'Amico, & Di Blasi, 2007), Pakistan (Suhail & Bargees, 2006), and Czech Republic (Simkova
& Cincera, 2004). Reports also indicate that Internet addiction has become a serious public
55


health concern in China (China imposes online gambling curbs, 2007), Korea (Hur, 2006), and
Taiwan (Lee, 2007).
As employee access to the Internet has grown, firms have seen an increase in the
incidence of employee Internet abuse at work such as viewing online pornography, instant
messaging friends, playing online games, shopping online, or using Facebook (Young & Case,
2004). Increases in corporate liability related to software piracy, music and movie downloading,
inappropriate and illegal online use have also emerged (McCarthy, Halawi, & Aronson, 2005).
The reliance on Internet technologies in the workplace has also raised questions about
information privacy and security among employees and how ethical they are in protecting the
integrity and accessibility of corporate data (Thompson, 2001).
Employee Internet abuse has forced companies to adopt acceptable Internet use policies
to combat unproductive use of the computer (Johnson & Ugray, 2007). Companies have also
monitored employee use of the Internet during work hours. Three-quarters of companies monitor
employees' website connections in large part due to concern about inappropriate Internet surfing,
according to a survey by the American Management Association (AMA, 2007). It is estimated
that two-thirds of the US companies have an acceptable Internet Use Policy to combat employee
misuse, yet the effectiveness of these policies have been questioned as a 2007 survey by the
AMA which found that over half of employees have been fired for email and Internet abuse. The
28% of employers who have fired workers for e-mail misuse did so for the following reasons:
violation of any company policy (64%); inappropriate or offensive language (62%); excessive
personal use (26%); and, breach of confidentiality rules (22%).
Studies have examined employee Internet abuse, which resulted in significant drains on
worker productivity despite having acceptable Internet use policies in place (Johnson & Ugray,
2007). This is especially troublesome for companies because misuse behaviors such as
downloading illegal or inappropriate material such as child pornography or copyright protected
music/software files can result in significant corporate liability (Young & Case, 2009).
As previous studies on Internet addiction have relied upon student surveys, this study
examines the general population of Internet users. Specific questions can be addressed such as: Is
the general population of Internet users more likely to become addicted to the same type of
interactive applications as student populations? Do addicted users spend more time online each
week than do non-addicted Internet users? Do addicted users utilize the Internet differently than
non-addicted Internet users? Finally, utilizing six ethical workplace scenarios, this study
examines and investigates employee decisions related to potential Internet misuse at work. If
addicted Internet users spend increasing amounts of time online, and this behavior accounts for
significant social withdrawal and more emotional problems, then would addicted users be more
likely to engage in ethical misconduct online than non-addicted users?

RESEARCH DESIGN

The study employed a survey research design. Participants were 451 subjects who
responded to the Internet Use Survey posted online. Candidates were screened using the Internet
Addiction Diagnostic Questionnaire (IADQ) (Young, 1998). The IADQ is a widely utilized
screening instrument in the literature examining compulsive Internet use. The instrument is an
eight-item questionnaire that examines symptoms of Internet addiction such as a users
preoccupation with Internet use, ability to control online use, extent of hiding or lying about
online use, and continued online use despite consequences of the behavior. Respondents who
56


met five or more of the criteria were classified as Addicted users and those who did not meet at
least five of the criteria were classified as Non-addicted users. The survey gathered demographic
(gender, age) information and questions involving employee Internet use. Respondents were
prompted to assess minutes spent per week on various Internet activities such as viewing
personal email at work, Internet gaming, viewing pornography, and so on. In addition, six ethical
decision scenarios were developed to assess the users perceptions of Internet misuse.
Individuals rated the level of misuse from 0 (no misuse) to 7 (strong misuse). Survey data
collected was converted into a computer-based database management system to improve the ease
of tabulation. A program was written to summarize and filter data. Data were analyzed and
percentages with frequencies were calculated for the dichotomous items.

RESULTS

A sample of 451 usable surveys was obtained. Table 1 indicates that 118 users were
classified as addicted based upon the IADQ and 333 were classified as non-addicted. Among the
118 addicted users, 51% of the respondents were male and 49% of the respondents were female.
Among the 333 non-addicted users, 46% of the respondents were male and 54% were female.
The average age for addicts was 30 years. The average age for non-addicts was 28 years.

TABLE 1. Response Rate by Internet Usage Classification
Addicted Non-Addicted
Male 60 (51%) 146 (46%)
Female 58 (49%) 187 (54%)
Total 118(100%) 333 (100%)

Table 2 outlines the Internet applications in minutes per week utilized among addicted
and non-addicted users. Overall, addicted users spent 140% more time per week than non-
addicted users, 48 versus 20 hours, respectively. Although addicted users spend considerable
amounts of time in all applications, the majority of their time is spent gambling online (839
minutes), using instant messaging (734 minutes), playing interactive online role-playing games
(773 minutes), viewing online pornography (479) and chatting in chat rooms (438 minutes). The
most utilized applications for non-addicted users were to play online games (412 minutes), use
instant messaging (343 minutes), and chat in online chat rooms (266 minutes). The least utilized
applications for non-addicted users were stock watching (36 minutes), shopping (45 minutes),
and gambling (46 minutes). Compared to student users, instant messaging and online gaming are
consistent with prior findings that found interactive online applications being more problematic
or addictive. Internet gambling contradicts previous findings using student surveys that
suggested only interactive applications were more problematic and offers a new perspective
related to addictive applications among the general population of Internet users.

TABLE 2. INTENT APPLICATIONS UTILIZED BY ADDICTS AND
NON-ADDICTS IN MINUTES PER WEEK
Online Activity
Addicts
Non
Addicts
Chat Rooms
438 266
Instant messaging
734 343
57


Pornography 479 165
Gambling 839 46
Gaming 773 412
Auction Houses 287 145
Shopping 224 45
Stock Watching 327 36
Download Music 340 199
Personal Email 338 136
Total 2878 1203

Table 3 outlines the six ethical decision scenarios that were given to respondents. Each
respondent was prompted to rate each scenario on an 8-point Likert-style scale with regard to the
degree of misuse. The first ethical dilemma related to personal use of the Internet at work. The
second scenario related to downloading music at work. The third scenario related to
electronically distributing online jokes at work. The fourth scenario related to downloading
pornography at work. The fifth scenario related to using chat rooms at work. The sixth scenario
related to using sex chat rooms and engaging in cybersex while at work.

TABLE 3. ETHICAL DECISION SCENARIOS
Dilemma
1 Chris uses the Internet at work during lunch hour to check stocks, transfer money at the bank, and
write letters to friends. Chris gets positive employee evaluations because Chris completes job
responsibilities as required by the company.
2 Robin uses KaZaa at work to download music files. Robin believes that playing music at work
improves productivity and relieves stress.
3 Fran is the office clown and enjoys a good laugh. Whenever Fran receives a joke, Fran distributes
the joke electronically to friends and co-workers.
4 Pat travels one week per month for the company. During travel, the company provides Pat with a
notebook computer and Internet access so that Pat can perform job responsibilities. After 7 p.m., one
lonely evening, Pat downloads pornography.
5 Jan is a professor at the local university. Jan teaches a class entitled "Psychology of the Internet." Jan
regularly visits chat rooms while at the university.
6 Dr. Jones is a physician. While at the hospital, Dr. Jones engages in cybersex with Kelly. Kelly is
Dr. Jones' spouse and a lab assistant at the same hospital.

Table 4 details the degree of the ethical attitude by Internet user type. Results indicate
that almost half (46%) of addicted users and one-third (39%) of non-addicted users feel that
personal use of the Internet at work during lunch time is not misuse. Over ninety percent of
respondents in both groups indicated the misuse as low. Low relates to the rating range of 0 to 3.
In terms of downloading free music files at work, 6% of addicted users and 4% of non-addicted
users indicated there was no misuse. Moreover, 37% of addicted users and 33% of non-addicted
users indicated the misuse as low. In terms of distributing electronic jokes, 12% of addicted users
and 9% of non-addicted users indicated there was no misuse. Fifty-four percent of addicted users
58


and 60% of non-addicted users indicated the misuse as low. In terms of downloading
pornography at work 10% of addicted users and 4% of non-addicted users indicated there was no
misuse. Forty-one percent of addicted users and 39% of non-addicted users indicated the misuse
as low. In terms of visiting chat rooms at work, 19% of addicted users and 19% of non-addicted
users indicated there was no misuse. Seventy-one percent of addicted users and 76% of non-
addicted users indicated the misuse as low. In terms of engaging in cybersex at work, 9% of
addicted users and 5% of non-addicted users indicated there was no misuse. Thirty-five percent
of addicted users and 34% of non-addicted users indicated the misuse as low.

TABLE 4. DEGREE OF MISUSE AMONG ADDICTED AND NON-ADDICTED USERS
Dilemma Internet Misuse
0 = No misuse
7 = Strong misuse
0 1 2 3 4 5 6 7
1 Addicts 46% 24% 10% 12% 2% 1% 3% 3%
Personal use Non-Addicts 39% 26% 10% 21% 3% 2% 1% 1%
2 Addicts 6% 8% 8% 15% 9% 20% 14% 19%
Music Non-Addicts 4% 3% 5% 21% 9% 16% 17% 27%
3 Addicts 12% 6% 14% 22% 11% 15% 10% 8%
Jokes Non-Addicts 9% 11% 8% 32% 16% 12% 6% 6%
4 Addicts 10% 8% 4% 19% 7% 9% 10% 32%
Pornography Non-Addicts 4% 4% 7% 24% 7% 7% 11% 36%
5 Addicts 19% 15% 12% 25% 8% 6% 7% 7%
Chat rooms Non-Addicts 19% 15% 10% 32% 9% 6% 7% 2%
6 Addicts 9% 5% 2% 19% 12% 8% 11% 34%
Cybersex Non-Addicts 5% 3% 4% 22% 7% 10% 12% 32%

DISCUSSION

A total of 451 respondents were evaluated on the Internet Addiction Diagnostic
Questionnaire with 118, or 26%, classified as Addicted and 333 classified as Non-Addicted.
Demographically, subjects tended to be equally distributed between gender and age. Addicted
users were likely to use instant messaging, view online pornography, and gamble online,
spending over 700 minutes per week engaged in each of these activities. Overall, addicted users
spent 48 hours or nearly 2.5 as much time per week online than did non-addicted users.
Compared to student samples, Internet gambling was found to be a problematic Internet
application among the general population of Internet users. This is in addiction to interactive
applications such as online gaming and instant messaging, which were also found to be
problematic or addictive online applications among student samples. With the deployment of
Internet applications at work, these applications should be most watched for potential abuse.
Results also showed that addicted users and non-addicted users had similar views among
the six ethical decision scenarios. Both groups rated cybersex, downloading free music at work,
and online pornography at work as significant types of employee misuse. Both groups viewed
sending electronic jokes, chatting in chat rooms, and checking personal email at work as lesser
forms of misuse. Yet, addicted users spend over twice as many minutes per week online.
59


Results suggest that there are similar ethical decision attitudes between the two groups of
Internet users, although their duration of Internet use during the week varies considerably. Some
online activities, for example, such as gambling, shopping, and stock watching were rarely
performed among non-addicted users during the week. Among addicted users, it is clear that the
access to the Internet created the opportunity to engage in recreational or non-work related online
activities. With this in mind, several implications from this study can be outlined.
The first implication is that while most companies have acceptable Internet use policies,
employees may not be adhering to them. The results strongly suggest that employees do not
follow Internet use policies and that companies need to implement enforcement strategies to
closely monitor employee Internet use. This is especially troublesome for companies because
misuse behaviors such as downloading illegal or inappropriate material such as child
pornography or copyright protected music/software files can result in corporate liability.
The second implication is that perhaps Internet use policies are not being properly
communicated. It is a common practice that employees must sign an acknowledgement that they
have read an acceptable Internet use policy, but it may be that without continual reinforcement of
the policy, it is easily forgotten. This may be especially important as younger individuals enter
the workforce and as previous findings suggest, college students tend to have a more permissive
perspective relative to Internet behavior at work than do the general population of Internet users.
Finally, companies may need to reconsider what constitutes employee Internet misuse.
Results suggest that addiction and misuse are an important issue as 26% of the respondents can
be classified as addicted and each spent nearly 48 hours per week on activities that could be
considered misuse. Decisions related to ethics are a personal choice and therefore, how
workplace ethics are governed depends upon the personal ethics of those who are in authority
over that workplace and also those who work in that environment. When it comes to Internet use,
the results show that some forms of Internet misuse were seen as less unethical than other forms.
Managers need to set personal standards on what they perceive as productive use of the Internet.
If a manager uses the corporate Internet to read the news, blog, or socialize on Facebook, forcing
employees to adhere to acceptable Internet use policies is more difficult. Managers must set an
example and provide a framework for daily decision making relative to what is permissible and
what constitutes appropriate Internet usage at work.
The limitations of this study are primarily a function of the sample, sample size and type
of research. Although responses were relatively equally distributed among age and gender, a
larger sample size, more equal demographic distribution of respondents, and use of additional
measures would increase the generalizability and robustness of results. Another limitation relates
to the self-reported nature of the survey. To increase reliability of the data, other factors should
be considered including actual Internet use logs utilized by firms, the incidence of Internet
misuse reported by firms, and managers perspective of Internet misuse in the workplace.
Future research should examine how companies update their Internet use polices to stay
current with new technologies in the workplace. For instance, a firm moves from Intranet-based
email access to a wireless system, supplying employees with Blackberry devices to access web
accounts. Employees may engage in more ethical misuse given the greater accessibility to the
Internet and limited monitoring of portable devices. The company must then modify its Internet
acceptable use policies to incorporate these new applications. However, companies often
upgrade workplace technologies without updating policies, leaving themselves at great corporate
risk if an employee abuses the new technologies and no policy specifically mandates its misuse.

60


REFERENCES

Aboujaoude, E., Koran, L. M., Gamel, N., Large, M. D., & Serpe, R. T. (2006). Potential
Markers for Problematic Internet Use: A Telephone Survey of 2,513 Adults CNS
Spectrum, The Journal of Neuropsychiatric Medicine, 11(10), 750-755.
American Management Association (AMA). 2007 Electronic Monitoring & Surveillance Survey:
Over half of all employers combined fire workers for email and Internet abuse. Retrieved
from http://press.amanet.org/press-releases/177/2007-electronic-monitoring-surveillance-
survey/
China imposes online gaming curbs. BBC News. Retrieved from
http://news.bbc.co.uk/1/hi/technology/4183340.stm
Ferraro, G., Caci, B., D'Amico, A., & Di Blasi, M. (2007). Internet Addiction Disorder: An
Italian Study, CyberPsychology & Behavior, 10(2), 170-175.
Hur, M. H. (2006). Internet addiction in Korean teenagers. CyberPsychology & Behavior, 9(5),
14-525.
Johnson, J. J., & Ugray, Z. (2007). Employee Internet abuse: policy versus reality. Issues in
Information Systems, 8(2), 214-219.
Lee, M. (n.d.) China to limit teens' online gaming for exercise. Retrieved from
http://www.msnbc.msn.com/id/19812989/
McCarthy, R.V., Halawi, L., & Aronson, L. (2005). Information Technology Ethics: A Research
Framework. Issues in Information Systems, 4(2), 2005, 64-69.
Simkova, B., & Cincera, J. (2004). Internet Addiction Disorder and Chatting in the Czech
Republic. CyberPsychology & Behavior, 7(5), 536-539.
Suhail, K., & Bargees, Z. (2006). Effects of Excessive Internet Use on Undergraduate Students
in Pakistan. CyberPsychology & Behavior, 9(3), 297-307.
Thompson, P. (2001). Privacy, secrecy, and security. Ethics and Information Technology, 3(1),
13-19.
Young, K. S. (1998). Internet addiction: The emergence of a new clinical disorder.
CyberPsychology and Behavior. 1, 237-244.
Young, K. S. (2007). Cognitive-Behavioral Therapy with Internet Addicts: Treatment outcomes
and implications, CyberPsychology & Behavior. 10(5), 671-679.
Young, K. S., & Case, C. J. (2009). Computer Ethics; Gender Effects and Employee Internet
Abuse. Issues in Information Systems, X(2), 598-603.


61


A HYBRID FUZZY MATHEMATICAL PROGRAMMING FUZZY ANP MODEL FOR
R&D PROJECT PORTFOLIO SELECTION

S.M. Seyedhosseini, Iran University of Science and Technology
Seyedhosseini@iust.ac.ir
S.M. Ghoreyshi, Iran University of Science and Technology

Ghoreyshi@iust.ac.ir


ABSTRACT

One of the most important issues that many organizations face in a competitive business
environment is how to select the portfolio mix of their R&D projects out of many candidate
projects. They should select the best alignment of the projects with respect to existing
constraints. On the other hand, each project has some attributes that affects the selection process.
Due to their nature, some of these attributes cannot be quantified. Also some of decision makers
prefer to express their opinion in the form of linguistic variables. All of these issues cause one to
deal with imperfect or subjective knowledge about a problem in real world situations. To
overcome these problems, in this paper, a hybrid decision model is proposed to select the best
projects in which a fuzzy ANP method is used first to derive fuzzy weights of the candidate
projects, and then a Zero-One Possiblistic Linear Programming model is formulated to select the
best projects. The model is also able to schedule the selected projects over the planning period.
Finally, an illustrative example is provided to validate the developed model.

INTRODUCTION

Many companies - especially those dealing with high technologyall around the
worldare dependent on their R&D projects to grow in the competitive business environment.
These companies invest a large amount of money in R&D projects every year and must select a
limited number of R&D projects out of many candidates according to many criteria and rare
resources. The selected projects must be aligned with strategic goals and predetermined criteria
of enterprise and must be chosen carefully according to available resources, forecasted benefits,
planning horizons and other constraints. The selection process is a critical task for these
companies, because the right portfolio mix can lead the enterprise into a good position in the
market. Otherwise, they would face the consequences of losing market share, decreasing net
profit, and even bankruptcy. The difficulties of R&D project selection can be summarized in the
existence of different criteria, both qualitative and quantitative, different decision makers with
different opinions, limiting constraints that must be considered in the decision making process
and finally lack of a standard, global and comprehensive decision making process in the
organization that can address the above mentioned problems. There is a wide range of ways
concerning the problem of project selection. Many of them are focused only on the mathematical
solutions and consider only the quantitative aspects of a problem, on the other hand, some have
tried to classify and analyze criteria of project selection and propose decision models. Their
focus is on the qualitative aspects of a problem. Both of these approaches are not comprehensive.
62


According to Tian, Ma, and Liu (2002), there is an urgent need to integrate mathematical
methods and decision models in the practical applications. Henriksen and Traynor (1999)
reviewed literature and classified the decision models into seven categories: Scoring models,
Mathematical programming methods, Economic model: engineering economics indices and
methods like NPV, IRR, ROI, Cost-Benefit Analysis, Decision analysis methods: multi
attribute utility theory (MAUT), Decision Trees, risk Analysis, AHP and ANP, Interactive
method, such as Delphi, Artificial intelligence, like fuzzy sets and expert systems, and
Portfolio optimization methods. As it can be understood from the above classification, the
MADM methods are very popular in project selection due to their simplicity and efficiency in
real world problems. There are several MADM methods which have been used in the literature
such as AHP, TOPSIS and MAUT, but due to the fact that the criteria in the real world R&D
project portfolio selections are not completely independent from each other, the hierarchical
methods based on pair wise comparisons are more efficient to tackle this type of problem.
Analytic Network Process (ANP) proposed by Thomas L Saaty (1996), provides a general
framework to deal with decisions without considering any assumptions about the independence
of higher level elements from within and lower level elements. In fact, the ANP uses a network
without specifying levels as in a hierarchy. Influence is also a central concept in this method.
ANP is a more general form of Analytic Hierarchy Process (AHP). In ANP, decision makers use
a network to build the decision model instead of hierarchy structure. Because of above
mentioned characteristics, ANP has been used in different areas in recent years, but the focal
point of all is the ability of ANP to consider interdependencies and feedback structure. In many
cases ANP has been used in combination with other methods. For a broad review of applications
of ANP, the reader can refer to Mohanty, Agarwal, Choudhary, and Tiwari (2005). In the project
selection, Lee and Kim (2000) applied an integrated approach using Delphi, ANP and ZOGP in
information system project selection. Meade and Presley (2002) and Mohanty et al. (2005) used
ANP in R&D project selection. They proposed a decision model for R&D project selection and
used ANP to derive the weights of candidate projects. Mohanty et al. (2005) developed the
decision model proposed by Meade and Presley (2002) and used fuzzy ANP to derive the weight
of each project, then applied a fuzzy NPV method to select the best projects. As mentioned
before, most of the previous attempts to project selection were focused on one of the qualitative
or quantitative aspects of the project selection problem, but in the real world problems usually
deal with situations affected by both qualitative and quantitative criteria. Moreover most of these
situations are structured in an uncertain environment. So, a comprehensive model that considers
all kinds of criteria with uncertain context is one of the crucial needs of managers. In this paper,
a new mathematical framework is developed which includes all aforesaid aspects. In the
proposed model, a new fuzzy ANP method is used to derive fuzzy weights of the candidate
projects, and then a Zero-One Possibilistic Linear Programming (ZOPLP) is formulated to select
the best projects with respect to the effective constraints. Also, the proposed model is able to
schedule the projects in a planning period. The organization of this article is as follows: in the
next section the conceptual decision model is described. The third section includes fuzzy ANP
and in the fourth section the zero-one possibilistic linear programming model is developed. In
section five a numerical example is provided to illustrate the efficiency of the proposed model.
Finally, conclusion is remarked.



63


CONCEPTUAL DECISION MODEL

The conceptual decision model used here is derived from Meade and Presley (2002), and
Mohanty et al. (2005), and is depicted in the figure 1. The goal is to choose the best R&D project
options according to all aforesaid four levels. Subject to interdependencies between deferent
levels of the conceptual model, a fuzzy ANP method is used to consider these relations. This
method is described in the next section.

FIGURE1. THE CONCEPTUAL DECISION MODEL

FUZZY ANALYTIC NETWORK PROCESS

Due to complexity and convergence problems, a few papers in the literature have
extended fuzzy sets theory to ANP method (Huang & Tzeng, 2007; Kaharaman, Ertay, &
Buyukozkan, 2006; Mikhailov & Singh, 2003; and Mohanty et al., 2005). The Fuzzy ANP
Sub attributes
Attributes
Phase of
project
Project
Attribute
R&D Project
Selection
Value Risk Category
Basic Applied Development
Organizational
Attributes
Market
Attribute
Environment
al Attributes
1. Expected
utility
2. Strategic
need
3. product life
4. potential
technical
interaction
with existing
products
5. potential
market
interaction
with
previous
products
1. competence
and
experience
on similar
products
2. knowledge/
skill
available
3. research staff
availability
4. raw material
available
5. facilities
available
1. potential
market size
2. expected
market share
3. degree of
competence
4. competitors
effect in
similar areas
1. Government
Policy
2. Economic
regulations
3. social ambience
4. safety
considerations
5. environmental
policy
1. technical risk
2. Commercial
risk
3. Economic risk
1. Fundamental
research
2. Advanced
research
3. Engineering
research
4. Management
and support
related search
Alternatives
Basic Applied Development
Factors
Management
Personnel
Marketing
Personnel
Technologists
64


method used here provides fuzzy weights for alternatives instead of crisp ones. The algorithm is
described in the following steps:

Step 1. Derive fuzzy local weights using developed methods in the literature such as the
fuzzy geometric mean method (Buckley, 1985), the fuzzy logarithmic least square
method (Van Laarhoven & Pedrycz, 1983), and the fuzzy least square method
(Wagenknecht & Hartmann, 1983).
Step 2. Form the fuzzy supermatrix as follows:
[ ]
m m
ij
W S

=
~ ~
Where:
ij
W
~
is an eigenvector which its elements are triangular fuzzy numbers.
Step 3. Calculate [ ] ] 1 , 0 [ ;
~
=

ij
W S where

ij
W is level cut of
ij
W
~
.
Step 4. Let 1 = l . Choose randomly a crisp value

ij
l
ij
W Z such that 1
1
=

=
m
i
l
ij
Z , then form the
crisp super matrix
l
S . Derive the crisp weight vector ] ,..., , [
2 1
l
m
l l l
W W W W = of alternatives using
Saatys ANP method [9].
Step 5. Repeat step 4 for N times that N is a sufficiently large number.
Step 6. Calculate ] , [
~
max min
i i i
W W W =

, where:
min max
l
{ }, { }
l l
i i i i
l
W Min W W Max W = =
Step 7. Repeat Steps 3-6 for different ] 1 , 0 [ and estimate
i
W
~
according to intervals
] , [
~
max min
i i i
W W W =

.
In the next section, derived fuzzy weights are used to formulate a possibilistic zero-one
linear programming.

POSSIBILISTIC ZERO-ONE LINEAR PROGRAMMING MODEL

The dynamic conditions of the real world lead to uncertain data, information and
knowledge in each decision making process, especially in the project selection problem. In these
situations, deterministic models are inefficient, so utilizing these models leads to an increase in
the risk of companies. Therefore the development of a new method to deal with R&D project
selection in the context of uncertain data and environment is one of the most necessary needs of
managers. In this section, a new possibilistic zero-one linear programming is developed in which
65


objective function focuses on maximizing the total expected benefit of decision makers
according to fuzzy preferences obtained in the previous section.
Model indices:
i: Projects, t: Time periods
Model parameters:
N number of proposed projects
T the number of time periods in planning horizon
i
W
~
the fuzzy weight of candidate project i
C
~

The maximum allowed cost.
i
c
~
The expected cost of candidate project i.
B
~

The minimum expected benefit for projects.
i
b
~
The expected benefit of the candidate project i (NPV).
i
D The duration of project i.
m
S Group of mandatory projects.
Decision variables:
1 .
0
ij
if the candidate project i starts in the time period j
X
Otherwise

Hence, the proposed mathematical model is as follows:

= =
=
N
i
ij
T
J
i i
X b W Z Max
1 1
~ ~
Subject to:
1
1

=
T
j
ij
X
i (1),
1
1
+ +

=
T D jX
i
T
j
ij

i (2)
1
1
=

=
T
j
ij
X
m
S i (3),
C X c
ij
N
i
T
j
i
~
~
1 1

= =

(4)

B X b
N
i
ij
T
j
i
~ ~
1 1

= =

(5),
} 1 , 0 { =
ij
X
j i, (6)

Constraint (1) assures that each selected project starts just one time, and constraint (2) assures
that each selected project finishes in the planning horizon. Mandatory projects must execute in
the planning horizon, the constraint (3) guarantees this. Total cost of selected projects must be
less than the maximum allowed cost (constraint 4). Projects must be selected according to their
expected benefits and human resource requirement. Finally, constraint (5) assures that benefits
gained by each of the selected projects is more than the minimum acceptable benefit.

The model (1)-(6) can be solved using the common methods described in the literature.

NUMERICAL EXAMPLE

In this section a numerical example is provided to illustrate the efficiency of the proposed
approach. Suppose that a company wants to form its R&D projects portfolio out of ten candidate
66


projects. The company has some limitations in providing financial resources in each planning
period and also wants each project to satisfy the minimum acceptable benefit. These amounts
and other information of the problem are depicted in Table 1. According to pair-wise
comparisons done by the company's CEO and using the proposed fuzzy ANP method, the fuzzy
weights of each alternative is calculated as table 2:
Using derived fuzzy weights, a possibilistic zero-one linear programming is formulated
and the selected projects are obtained as follows:
Project 2 (starts in period 1), Project 4 (starts in period 1), Project 6 (starts in period 2),
Project 8 (starts in period 1), Project 9 (starts in period 3), Project 10 (starts in period 1)

TABLE 1. PROBLEM INFORMATION

Alternatives Cost Benefit Duration Mandatory?
1 (90,100,110) (100,110,150) 1 No
2 (50,60,75) (140,150,175) 2 No
3 (75,90,100) (125,135,140) 3 No
4 (130,135,145) (230,240,250) 2 No
5 (150,165,185) (210,215,230) 4 No
6 (170,195,210) (255,280,325) 5 No
7 (75,80,95) (145,150,165) 2 No
8 (110,130,165) (210,250,290) 3 No
9 (90,100,115) (145,150,175) 3 No
10 (145,150,175) (200,210,250) 4 No
Maximum Allowable Cost = (700,800,850) Minimum Expected Benefit = (1100,1250,1500)
Total Planning Horizon Periods: 8


67


TABLE 2. FUZZY WEIGHTS OF ALTERNATIVES
Alternatives Fuzzy Weight
1 (0.0355,0.0509,0.0673)
2 (0.0362,0.0540,0.0685)
3 (0.0417,0.0548,0.0777)
4 (0.0342,0.0462,0.0659)
5 (0.0395,0.0509,0.0694)
6 (0.0335,0.0442,0.0604)
7 (0.0427,0.0564,0.0762)
8 (0.0316,0.0421,0.0583)
9 (0.0363,0.0543,0.0775)
10 (0.0316,0.0438,0.0616)

CONCLUSION

In real world situations, there are many variations that affect the problem parameters. In
order to deal with these uncertainties, fuzzy sets theory can be used. In this paper, a two step
approach is used to deal with such circumstances: A possibilistic zero-one linear programming
model is formulated to select the best projects in which project preferences are depicted in the
form of triangular fuzzy numbers and derived from the proposed fuzzy ANP method. To
illustrate the effectiveness of the proposed model, a numerical example was also presented.

REFRENCES

Buckley, J. M. (1985). Fuzzy hierarchical analysis. Fuzzy Sets and Systems, 17, 233-247.
Henriksen, A. D., & Traynor, A. J. (1999). A practical R&D project-selection scoring tool. IEEE
Transactions on Engineering Management, 46, 158170.
Huang, J., & Tzeng, G. H. (2007). A Constrained Fuzzy Arithmetic Method for the Fuzzy
Analytic Network Process. Proceeding of Fourth International Conference on Fuzzy
Systems and Knowledge Discovery, 401-405.
Kaharaman, C., Ertay, T., & Buyukozkan, G. (2006). A fuzzy optimization model for QFD
planning process using analytic network approach. European Journal of Operations
Research, 171, 390-411.
68


Lee, J. W., & Kim, S. H. (2000). Using analytic network process and goal programming for
interdependent information system project selection. Computers & Operations Research,
27, 367-382.
Meade L. M., & Presley A. (2002). R&D Project Selection Using the Analytic Network Process.
IEEE Transactions on Engineering Management, 49, 59-66.
Mikhailov, L., & Singh, M. G. (2003). Fuzzy analytic network process and its application to the
development of decision support systems. IEEE Transactions on Systems, Man, and
Cybernetics, 33, 33-41.
Mohanty, R. P., Agarwal, R., Choudhary, A. K., & Tiwari, M. K. (2005). A fuzzy ANP-based
approach to R&D project selection: a case study. International Journal of Production
Research, 43, 51995216.
Saaty, T. L. (1996). Decision Making with Dependence and Feedback, the Analytic Hierarchy
Process. Pittsburgh, PA: RS Publications.
Tian, Q. J., Ma, J., & Liu, O. (2002). A hybrid knowledge and model system for R&D project
selection. Expert Systems with Applications, 23, 265271.
Van Laarhoven, P. J., & Pedrycz, W. (1983). A fuzzy extension of Saatys priority method.
Fuzzy Sets and Systems, 11, 229-241.
Wagenknecht, M., & Hartmann, K. (1983). On fuzzy rank-ordering in polyoptimization. Fuzzy
Sets and Systems, 11, 243-251.




69










CHAPTER 4

COMMUNICATION AND TECHNOLOGY
70


A WEB-BASED MULTILINGUAL MEETING SYSTEM:
BREAKING THE LANGUAGE BARRIER

Milam Aiken, University of Mississippi
maiken@bus.olemiss.edu

John Wee, University of Mississippi
jwee@bus.olemiss.edu

Mahesh Vanjani, Texas Southern University
vanjanim@tsu.edu


ABSTRACT

This paper describes how a Web-based meeting system incorporating automatic
translation can be used to support multinational groups meeting synchronously or
asynchronously, and in the same or different locations. Results of an experiment with the
technology show that group members thought the software was easy to use and useful for a
multilingual meeting and estimated that an equivalent oral meeting with a human interpreter
would take about five times longer. Most importantly, the participants comprehension of
translations met the minimum standard they required.

INTRODUCTION

Multinational meetings are becoming more common as organizations operate more
frequently around the world. Although many of these meetings are conducted in a common
language such as English, most participants prefer to use their native tongues, and therefore,
human interpreters are often used (Jenkins, 2007). For example, the European Directorate
General for Interpretation provides services for about 50 to 60 meetings per day in up to 23
different languages, requiring at least 69 interpreters per session (DirectorateGeneral, 2009).
Nearly 500 staff and 300 to 400 freelance interpreters are used each day, for a total of about
135,000 interpreter-days per year and a cost of approximately 100,000,000 in 2005.
Using electronic meetings with integrated machine translation (MT) can improve the
productivity of many of these oral meetings (Morikawa, Suo, Miyata, Ishida, & Shi, 2008). A
large body of research has shown how electronic meetings can increase the productivity of
groups using a single language, and, with automatic translation, these benefits can be brought to
multinational groups. Although less accurate than human interpreters, automated translations are
much faster, transcripts can be recorded in each language simultaneously, and anonymity can be
preserved.
In this paper, we describe a new Web-based system that provides automatic translations
among 51 different languages. First, we discuss prior multilingual meeting research, and, then
describe the prototype. An analysis of translations of phrases from 50 languages to English
shows that the accuracy varies considerably. An experiment with the meeting software illustrates
the efficiency and effectiveness of the technology for use by groups. The paper concludes with
directions for future research.
71



WEB-BASED MACHINE TRANSLATION

Research into multilingual meetings with fully automatic translation began in 1992 with a
system that supported only two languages. Subsequent systems provided support for additional
languages, and comprehension of the results varied from 46% to 100%. Semi-automatic
translation with electronic meetings (in which a human manually copies text from a program and
pastes it into the editor) was also studied and comprehension also varied considerably (40% to
100%).
Recent research into multilingual meetings has been aided with the introduction of
several free Web-based translation services such as Babelfish, introduced in 1997 and based
upon SYSTRAN, Freetranslation, Online-translator, Reverso, and Worldlingo. However, we
believe Google Translate (GT) (http://translate.google.com/) might be more accurate (NIST,
2005; NIST, 2006) and it certainly provides support for more languages than the others, currently
51 in 2,550 combinations (Och, 2009). The increased accuracy is due in part to GTs use of
statistical machine translation (SMT) (Lopez, 2008). With this technique, a learning algorithm is
applied to a large body of previously translated text in multiple languages to learn what phrases
and sentences are equivalents (Hutchins, 2007). For example, developers of GT acquired billions
of words of text from the United Nations, where the same document is normally available in six
official UN languages (Arabic, Chinese, English, French, Russian, and Spanish). After the
software is trained with multiple languages, it is then prepared to translate new text based upon
its prior learned knowledge.
Although GT achieves good results for most languages, some can be translated better
than others because of similarities among the sentence structures or the greater availability of
texts for modeling. In an attempt to determine how accurate GTs translations to English are, we
selected 15 random phrases in three sets of five (see Table 1) for each of 50 languages (see Table
2) from Omniglot (http://www.omniglot.com/) and translated them back to English with GT.

TABLE 1. ENGLISH-EQUIVALENTS USED IN THE LANGUAGE RANKINGS
Comments
Set 1 Set 2 Set 3
How much is this? Pleased to meet you. Please say that again.
Where is the toilet? My hovercraft is full of eels. This gentleman will pay for everything.
Would you write it down? One language is never enough. Where are you from?
Would you like to dance? I dont understand. Whats your name?
Please speak more slowly. I love you. Leave me alone.

TABLE 2. FIFTY LANGUAGES OTHER THAN ENGLISH
Dutch Estonian Macedonian Russian Latvian Malay Indonesian Maltese Thai
Danish Slovenian Czech Spanish Korean Catalan Chinese Swahili Yiddish
Swedish Portuguese Croatian Romanian Albanian Serbian Hindi Galician
Belarusian Icelandic Hungarian French Italian Ukrainian Vietnamese Lithuanian
German Polish Bulgarian Filipino Turkish Finnish Irish Arabic
Norwegian Afrikaans Slovak Hebrew Welsh Greek Japanese Persian

Two objective evaluators with high inter-rater reliability (see Table 3) analyzed the
comprehension, acceptability, and meaning of the resulting text using the following metrics
(Guyon, 2003):

72



WEB-BASED MACHINE TRANSLATION

Research into multilingual meetings with fully automatic translation began in 1992 with a
system that supported only two languages. Subsequent systems provided support for additional
languages, and comprehension of the results varied from 46% to 100%. Semi-automatic
translation with electronic meetings (in which a human manually copies text from a program and
pastes it into the editor) was also studied and comprehension also varied considerably (40% to
100%).
Recent research into multilingual meetings has been aided with the introduction of
several free Web-based translation services such as Babelfish, introduced in 1997 and based
upon SYSTRAN, Freetranslation, Online-translator, Reverso, and Worldlingo. However, we
believe Google Translate (GT) (http://translate.google.com/) might be more accurate (NIST,
2005; NIST, 2006) and it certainly provides support for more languages than the others, currently
51 in 2,550 combinations (Och, 2009). The increased accuracy is due in part to GTs use of
statistical machine translation (SMT) (Lopez, 2008). With this technique, a learning algorithm is
applied to a large body of previously translated text in multiple languages to learn what phrases
and sentences are equivalents (Hutchins, 2007). For example, developers of GT acquired billions
of words of text from the United Nations, where the same document is normally available in six
official UN languages (Arabic, Chinese, English, French, Russian, and Spanish). After the
software is trained with multiple languages, it is then prepared to translate new text based upon
its prior learned knowledge.
Although GT achieves good results for most languages, some can be translated better
than others because of similarities among the sentence structures or the greater availability of
texts for modeling. In an attempt to determine how accurate GTs translations to English are, we
selected 15 random phrases in three sets of five (see Table 1) for each of 50 languages (see Table
2) from Omniglot (http://www.omniglot.com/) and translated them back to English with GT.

TABLE 1. ENGLISH-EQUIVALENTS USED IN THE LANGUAGE RANKINGS
Comments
Set 1 Set 2 Set 3
How much is this? Pleased to meet you. Please say that again.
Where is the toilet? My hovercraft is full of eels. This gentleman will pay for everything.
Would you write it down? One language is never enough. Where are you from?
Would you like to dance? I dont understand. Whats your name?
Please speak more slowly. I love you. Leave me alone.

TABLE 2. FIFTY LANGUAGES OTHER THAN ENGLISH
Dutch Estonian Macedonian Russian Latvian Malay Indonesian Maltese Thai
Danish Slovenian Czech Spanish Korean Catalan Chinese Swahili Yiddish
Swedish Portuguese Croatian Romanian Albanian Serbian Hindi Galician
Belarusian Icelandic Hungarian French Italian Ukrainian Vietnamese Lithuanian
German Polish Bulgarian Filipino Turkish Finnish Irish Arabic
Norwegian Afrikaans Slovak Hebrew Welsh Greek Japanese Persian

Two objective evaluators with high inter-rater reliability (see Table 3) analyzed the
comprehension, acceptability, and meaning of the resulting text using the following metrics
(Guyon, 2003):

72



WEB-BASED MACHINE TRANSLATION

Research into multilingual meetings with fully automatic translation began in 1992 with a
system that supported only two languages. Subsequent systems provided support for additional
languages, and comprehension of the results varied from 46% to 100%. Semi-automatic
translation with electronic meetings (in which a human manually copies text from a program and
pastes it into the editor) was also studied and comprehension also varied considerably (40% to
100%).
Recent research into multilingual meetings has been aided with the introduction of
several free Web-based translation services such as Babelfish, introduced in 1997 and based
upon SYSTRAN, Freetranslation, Online-translator, Reverso, and Worldlingo. However, we
believe Google Translate (GT) (http://translate.google.com/) might be more accurate (NIST,
2005; NIST, 2006) and it certainly provides support for more languages than the others, currently
51 in 2,550 combinations (Och, 2009). The increased accuracy is due in part to GTs use of
statistical machine translation (SMT) (Lopez, 2008). With this technique, a learning algorithm is
applied to a large body of previously translated text in multiple languages to learn what phrases
and sentences are equivalents (Hutchins, 2007). For example, developers of GT acquired billions
of words of text from the United Nations, where the same document is normally available in six
official UN languages (Arabic, Chinese, English, French, Russian, and Spanish). After the
software is trained with multiple languages, it is then prepared to translate new text based upon
its prior learned knowledge.
Although GT achieves good results for most languages, some can be translated better
than others because of similarities among the sentence structures or the greater availability of
texts for modeling. In an attempt to determine how accurate GTs translations to English are, we
selected 15 random phrases in three sets of five (see Table 1) for each of 50 languages (see Table
2) from Omniglot (http://www.omniglot.com/) and translated them back to English with GT.

TABLE 1. ENGLISH-EQUIVALENTS USED IN THE LANGUAGE RANKINGS
Comments
Set 1 Set 2 Set 3
How much is this? Pleased to meet you. Please say that again.
Where is the toilet? My hovercraft is full of eels. This gentleman will pay for everything.
Would you write it down? One language is never enough. Where are you from?
Would you like to dance? I dont understand. Whats your name?
Please speak more slowly. I love you. Leave me alone.

TABLE 2. FIFTY LANGUAGES OTHER THAN ENGLISH
Dutch Estonian Macedonian Russian Latvian Malay Indonesian Maltese Thai
Danish Slovenian Czech Spanish Korean Catalan Chinese Swahili Yiddish
Swedish Portuguese Croatian Romanian Albanian Serbian Hindi Galician
Belarusian Icelandic Hungarian French Italian Ukrainian Vietnamese Lithuanian
German Polish Bulgarian Filipino Turkish Finnish Irish Arabic
Norwegian Afrikaans Slovak Hebrew Welsh Greek Japanese Persian

Two objective evaluators with high inter-rater reliability (see Table 3) analyzed the
comprehension, acceptability, and meaning of the resulting text using the following metrics
(Guyon, 2003):

72


TABLE 3. INTER-RATER RELIABILITIES FOR THE LANGUAGE RANKINGS
Measure Set 1 - Alpha Set 2 - Alpha Set 3 - Alpha
Comprehension 0.848 0.949 0.897
Acceptability 0.851 0.949 0.897
Meaning 0. 930 0.952 0.962

Comprehension
1. The text is clear, easy to understand and grammatically correct and does not require any
corrections.
2. The text contains minor errors such as incorrect prepositions or articles but is otherwise
impeccable.
3. The text is a mixture of minor errors and incorrect terms, but the meaning is still
understandable.
4. The text is a mixture of minor errors and incorrect terms, and it takes a definite effort to
understand the meaning.
5. The text is incomprehensible gibberish.

Acceptability
1. The text is perfectly acceptable.
2. The reader notices slight anomalies in the text.
3. The reader feels somewhat uncomfortable reading the text.
4. The reader has the impression that the text is not very serious.
5. The reader feels insulted to have been presented with such a text.

Meaning
1. The translation conveys the meaning of the original exactly.
2. Minor nuances are missing.
3. The translation more or less conveys the meaning of the original.
4. The translation does not convey the meaning of the original very accurately.
5. The translation does not convey the meaning of the original at all.

Summary results for the translations to English indicated that there were significant
correlations between comprehension and acceptability (r = 0.999, p < 0.001) and between
comprehension and meaning (r = 0.969, p < 0.001). The two reviewers were able to understand
all of the short, translated phrases, but the last four languages (Arabic, Persian, Thai, and
Yiddish) were particularly difficult, probably because of the scarce amount of text in the
languages to analyze (e.g., Persian and Yiddish) or because of the large differences from English
(e.g., Arabic and Thai). On the other hand, seven of the top eight (Dutch, Danish, Swedish,
German, Norwegian, Estonian, and Slovenian) are in the Germanic branch of the language tree
(as is English), and thus, were fairly easy to understand. Thus, an electronic meeting system
using GT for automatic translation could probably provide effective support for people from
these European countries.

A WEB-BASED MULTILINGUAL MEETING SYSTEM

We developed a Web-based electronic meeting system based upon GT that allows
individuals to exchange comments in any of 51 languages supported by the service. Although
73


translation accuracies can be poor (as discussed in the prior section), the tremendous increase in
speed might make up for this deficiency, especially in an electronic meeting involving multiple
languages with limited time (Funakoshi, Yamamoto, Nomura, & Ishida, 2009). Speed is based
upon the platform, so comparisons are difficult, but one MT program (Transclick) purports to
translate among several languages at 400 words per second with 80% to 100% accuracy
(Research In Motion [RIM], 2009), and Globalink Translator 6.4 provides 17 words per second
or 61,200 words per hour with consistent translations (Bass, 1999). GT is a little slower due to
transmission delays over the Web, and it averaged about 25 words per second in one study
(Aiken, 2009). However, these results are far better than any human could provide, as, another
study using Babelfish showed MT can provide results 195 times faster than an interpreter
(Ablanedo, Aiken, & Vanjani, 2007).
In an attempt to evaluate how groups actually use the multilingual meeting software, we
asked four groups (sizes of 8, 10, 16, and 32) of undergraduate business students to exchange
comments in English on the topic How can we solve the parking problem on campus? While
the first three meetings were face-to-face, the last included sub-groups in three separate
locations, all communicating simultaneously, as has been done in previous studies (e.g. Aiken &
Vanjani, 1997).
To simulate a multilingual meeting, the facilitator added comments in seven foreign
languages (Hungarian, Indonesian, Latvian, Lithuanian, Norwegian, Swedish, and Malay) at
random intervals during the allotted 10 minutes for each discussion. After the meetings, the
students completed the questionnaire shown in the Appendix.
As shown in Table 4, group members thought the system was easy to use and thought it
would be useful in a multilingual meeting. In addition, the students thought that the translations
should be fast and accurate.

TABLE 4. EXPERIMENT SUMMARY
Variable Mean Std Dev
Q1 actual comprehension 87.69 23.00
Q2 required comprehension 91.12 14.82
Q3 oral meeting estimate (mins) 51.23 55.51
Q4 ease of use 6.06* 1.00
Q5 usefulness in a meeting 6.08* 1.23
Q6 importance of speed 6.52* 0.73
Q7 importance of accuracy 6.83* 0.58
Comments per person 3.69 2.10
* = significantly different from neutral value 4 at = 0.05

Although the actual level of comprehension was slightly lower than that required for this
topic (87.69% versus 91.12%), there was no significant difference between these measures (t = -
1.22, p = 0.227). In addition, there were no significant differences in answers among the groups
except in terms of Q5 which asked how useful the software would be in a multilingual meeting
(F = 0.88, p = 0.046). Ratings for this variable in order by group were 6.23, 5.78, 5.44, and 6.45,
and thus, each group on average still believed the software was useful.
The participants thought an equivalent, oral meeting with human interpretation would
have lasted 51.23 minutes, 5 times more than the 10 minutes allowed for each of the electronic
meetings. However, there was a high amount of variation with a minimum estimate of 1 minute
and a maximum guess of 320 minutes. Eliminating three outliers over 120 minutes and 10
74


outliers at or below 5 minutes (we believe half the time was unrealistic) resulted in a mean
estimate of 48.92 minutes with a standard deviation of 28.26, close to the original average guess.
There were several significant correlations including that between the perceived and
required accuracies of the translations (Q1/Q2: r = 0.32, p < 0.01). Group members opinions of
the required accuracy for the topic might be influenced by their evaluation of text quality during
the meeting. Thus, future research should investigate whether there is a difference between
translation accuracy requirement opinions determined before and after the meeting.
A significant correlation between the perceived accuracy and usefulness of the software
would be in a multilingual meeting (Q1/Q5: r = 0.32, p < 0.01) is natural as the latter variable is
determined primarily by the former. Another correlation between the estimate of an interpreted
meetings length and the importance of speed (Q3/Q6: r = 0.28, p = 0.02) indicates that students
understood how slow oral meetings can be. Finally, the correlation between the importance of
speed and accuracy (Q6/Q7: r = 0.47, p < 0.01) shows that both are valued in an electronic
multilingual meeting.

CONCLUSION

Multilingual electronic meetings offer several advantages to groups. In an oral meeting,
people can be shy and must take turns speaking. Perhaps, most importantly, the time necessary
for a human interpreter to provide a written transcription of comments spoken during the
discussion can be prohibitive. Although electronic meeting translations are likely to be less
accurate, in informal, hurried sessions, perhaps the gist of an idea is necessary (Levin, 2009).
One or more electronic meetings can be held to quickly gather ideas, and slower, more accurate
interpreted, oral meetings can be conducted where the accuracy is more important.
In this paper, we have shown how a prototype multilingual electronic meeting system can
provide adequate translations much faster than an equivalent oral meeting. Further research is
necessary to determine how well the software performs with other language combinations, as
well as how multilingual electronic groups compare with oral groups.

REFERENCES

Ablanedo, J., Aiken, M., & Vanjani, M. (2007). Efficacy of English to Spanish automatic
translation. International Journal of Information and Operations Management Education,
2(2), 194-210.
Aiken, M. (2009). Transterpreting multilingual electronic meetings. International Journal of
Management and Information Systems, 13(1), 35-46
Aiken, M., & Vanjani, M. (1997). A comparison of synchronous and virtual legislative session
groups faced with an idea generation task. Information & Management, 33, 25-31.
Bass, S. (1999). Machine vs. human translation. Advanced Language Translation, Inc. Retrieved
from http://www.advancedlanguagetranslation.com/articles/machine_vs_human_translation.pdf
DirectorateGeneral (2009). Directorate General for Interpretation. What we do. Retrieved from
http://scic.ec.europa.eu/europa/jcms/c_6636/what-we-do
Funakoshi, K., Yamamoto, A., Nomura, S., & Ishida, T. (2009). Lessons learned from
multilingual collaboration in global virtual teams. Retrieved from
http://www.ai.soc.i.kyoto-u.ac.jp/ice/slides/kfHCII2003.pdf
75


Guyon, A. (2003). Machine Translation and the Virtual Museum of Canada (VMC). Retrieved
from
http://www.chin.gc.ca/English/Pdf/Digital_Content/Machine_Translation/Machine_Trans
lation.pdf
Hutchins, J. (2007). Machine translation: A concise history. In C. S. Wai (Ed.) Computer Aided
Translation: Theory and Practice. Chinese University of Hong Kong.
Jenkins, J. (2007) English as a lingua franca: Attitude and identity. Oxford, UK, Oxford
University Press.
Levin, R. (2009). Tools for multilingual communication. Multilingual Magazine, 16(2),
Retrieved from https://www.multilingual.com/articleDetail.php?id=715
Lopez, A. (2008). Statistical Machine Translation. ACM Computing Surveys, 40(3), 1-49.
Morikawa, H., Suo, Y., Miyata, N., Ishida, T., & Shi, Y. (2008). Supporting remote meeting
using multilingual collaboration tool. Institute of Electronics, Information, and
Communication Engineers Technical Report, 107(428), 19-24.
NIST (2005). Machine Translation Evaluation Official Results. Retrieved from
http://www.itl.nist.gov/iad/mig//tests/mt/2005/doc/mt05eval_official_results_release_200
50801_v3.html
NIST (2006). Machine Translation Evaluation Official Results. Retrieved from
http://www.itl.nist.gov/iad/mig//tests/mt/2006/doc/mt06eval_official_results.html
Och, F. (2009). 51 Languages in Google Translate. Google Research Blog. Retrieved from
http://googleresearch.blogspot.com/2009/08/51-languages-in-google-translate.html
Research in Motion (RIM) (2009). Transclick announces service upgrade to support global
travelers. Retrieved from http://press.rim.com/partner/release.jsp?id=2065

APPENDIX

Experimental Questionnaire
1. How much of the groups comments did you understand? (0 - 100%)
2. How much should be understood for a successful meeting? (0 - 100%)
3. How long do you think a human-interpreted, verbal meeting with this many people and this
many languages would take? (in minutes)
4. How easy was it to use this meeting software? (0 = extremely hard, 4 = neutral, 7 =
extremely easy)
5. How useful would this software be for a multilingual meeting? (0 = not useful at all, 4 =
neutral, 7 = extremely useful)
6. How important is speed of translation? (0 = not important at all, 4 = neutral, 7 = extremely
important)
7. How important is translation accuracy in a meeting? (0 = not important at all, 4 = neutral, 7 =
extremely important)

76


DAIMLERS BRIBERY CRISIS:
A CASUISTIC ANALYSIS OF DAIMLERS ONLINE CRISIS COMMUNICATION

Roxana Maiorescu, Purdue University
maiorescu@purdue.edu


ABSTRACT

Current literature on crisis communication foregrounds the importance of integrating new
media in crisis responses. In the area of Web 2.0, effective crisis communication implies that
organizations should dedicate enough time and resources to openly communicate with
disgruntled customers, employees, victims of the crisis, but also with mere strangers or detractors
who, in turn could make use of the social media to the detriment of the organization
(Anthonissen, 2008). The current study analyzes the online crisis communication of the German
corporation Daimler in the aftermath of a bribery scandal. The study makes use of casuistry
(Hearit, 2006), a rhetorical paradigm that helps to determine standards within a specific
discourse with the purpose of determining if Daimlers crisis response was ethical.

INTRODUCTION: DAIMLERS BRIBERY CASE

The history of Daimler, the second largest luxury carmaker after BMW, goes back 124
years, when its founders, Gottlieb Daimler and Carl Benz invented the automobile in 1886
(Daimler, 2010a). Mostly famous for its divisions of Mercedes-Benz Cars and Daimler Trucks,
Daimler has established a solid reputation with automobile brands such as Maybach,
Freightliner, and Mercedes-Benz. Throughout its history, the company has been reputed for its
refined quality, which derives from increased attention to details combined with the use of the
latest technology. Daimler has also been successful in meeting its stakeholders social and
environmental expectations by being the only automobile producer that invested in hybrid
drive, electric motors and fuel-cell systems, with the goal of achieving emission-free mobility in
the long term (Daimler, 2010a, para.2). In 2009, Daimler sold more than 1.6 million
automobiles and produced a profit of more than $90 billion. Daimler provided a safe workplace
for its 256,000 employees in a business environment dominated by a global economic crisis and
instability of ones workplace (Daimler, 2010a).
Yet, on April 1, 2010, the U.S. Justice Department (USDOJ) brought to light criminal
documents that rendered Daimlers business practices corrupt. Specifically, the documents
showed that Daimler had been bribing governmental officials in 22 countries, including Russia
and China between 1998 and 2008, in return for contracts with government customers who were
supposed to buy Daimlers vehicles (Savage, 2010). For example, in Russia, Daimler
overcharged for its automobiles on invoices and later passed the overpayments to a bank account
in Latvia (Savage, 2010). According to the department filing, Daimlers Chinese subsidiary also
paid approximately $25,000 to a Texas-based company, money that was later passed to the wife
of a Chinese governmental official who had been involved in contract negotiations that gained
Daimler an estimated $1.3 million (Savage, 2010).
Some other corrupt business practices that Daimler was accused and charged for involved
paying for luxury holidays in Europe, providing armored Mercedes automobiles for various
77


governmental officials, and giving a generous present for an official in Turkmenistan that
consisted of a golden box along with 10,000 copies in German of the officials personal
manifesto (Reuters, 2010). In sum, Daimlers alleged corrupt business practices involved paying
around $65 million in bribes that earned the company a revenue of $1.9 billion from which over
$90 million was considered illicit profit (Reuters, 2010).
As a result of the scandal, Daimlers subsidiaries in Russia and Germany pleaded guilty
in the charges brought against them while Daimler China agreed to be under a two-year deferred
prosecution agreement. As part of the settlement, Daimler also acquiesced to the supervision of
Louis J. Freeh, a former F.B.I. director that would verify the companys future compliance with
the bribery laws (Reuters, 2010).

CASUISTRY

In this paper Daimlers responses are analyzed from the perspective of casuistry, an
approach to communication ethics that allows for a comparison of the corporate responses with
an ideal paradigm of ethics.
Literature in crisis communication emphasizes the need for companies to acknowledge
wrongdoing and engage in apologetic discourse if guilty of malfeasance or wrongdoing (Benoit,
1995; Coombs, 2007; Ulmer, Sellnow, & Seeger, 2007). The delivery of an apologetic discourse
increases the organizations chances of recovery after a crisis because it shows regret for a
certain act and sympathy toward the victims.
From the premise of casuistry, Hearit (2006) laid out a paradigm that helps to determine
the extent to which organizational responses to accusations of wrongdoing are ethical. Casuistry,
a procedure whose scope is to identify ethical decision making, is rooted in classical rhetoric and
its use can be traced back to the Middle Ages and the Renaissance (Hearit, 2006). However,
casuistry has been largely applied to journalism, medicine, public policy, and research ethics
(Hearit, 2006).
For the purpose of this analysis casuistry is perceived from the perspective of apologia,
the act of giving defense, as opposed to apology which most of the time refers to a delivery of
mea culpa (Hearit, 2006).
According to casuistry, an ethical response to a crisis should: acknowledge the
wrongdoing and accept full responsibility, express regret and acknowledge as well as address the
victims of the crisis. The response should also ask for forgiveness and seek reconciliation. In
addition, the discourse requires a full disclosure of information regarding the crisis. Yet, the
casuistic approach also makes allowances for the instances in which an organization cannot
disclose all the information out of liability concerns or confidentiality. However, Hearit (2006)
recommends that in such instances, which he names complicating circumstances, organizations
should still bring to light all the details that affect the victims. Concomitantly, for a crisis
response to be ethical, it needs to entail information concerning the expectations of all
stakeholders such as the implications of the crisis, how severe the transgression is, what caused
it, and what the responsibilities of the organization are. In other words, the crux of the discourse
needs to be the relevance that the crisis has for all types of stakeholders. Details about the
remedial work in which the organization is engaged as well as the way in which it plans to
compensate victims are the final characteristics that define an ethical apologetic discourse.
Finally, it is important to note that the casuistic paradigm represents the ideal of
apologetic discourse that organizations should employ when facing a crisis. Hence, it provides a
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useful tool for comparing the crisis response of an organization by checking for the existence or
omission of the elements aforementioned that make up an ethical apologia. Hearit (2006) points
out that even though one or more of the elements that make up an ethical response may be
missing, a discourse can still be considered ethical. However, what is paramount to point out in
discourse analyses is how deviant or distant the apologia is from the casuistic paradigm.

ANALYSIS

This paper focuses on the way in which Daimler made use of online media in order to
communicate its response to the bribery charges. Literature in crisis communication
(Anthonissen, 2008; Coombs, 2007) stresses the importance of taking advantage of the
multifarious opportunities that the Web 2.0 offers in times of crisis. More precisely, apart from
the drawback of significantly limiting the time for a crisis response, the new media offer a
plethora of ways in which corporations can engage in dialogue with their stakeholders, angry
consumers, potential customers, and other constituencies with the purpose of showing concern,
settle a crisis, and save reputation. This study analyzes Daimlers responses on Facebook and
Twitter as well as on the official website of the company.

Facebook
On the social network website, Facebook, Daimlers official presence comes under the
name of its most known products, Mercedes Benz. The website has more than 1.9 million
subscribers and offers interactive content that comprises videos, pictures, and press releases with
statements ranging from the release of the movie Sex and the City 2 to the financial results of the
company. Daimlers online strategy is to engage consumers directly. For example, one of the
questions asked on the website is What is your favorite Mercedes color, to which Daimler
received 2,100 responses and 760 likes.
On April 1, 2010, the day when USDOJ released the accusations of bribery against
Daimler the Facebook account of the company does not provide any details or statements about
the charges. The website makes no comments regarding the accusations. Instead, Mercedes
wishes everyone a Happy Easter and gets over 800 likes and 130 comments that include thank
you notes and no further inquiry on the bribery case. For example, one of the subscribers writes:
Mercedes-Benz Cars, are cars designed by Gods for human use only. The car that does what the
human wants. Therefore I cannot wish Gods a Happy Easter, but can only say Gods should
continue to be Gods.
On Facebook, Daimlers way of tackling the crisis by silence contravenes the principles
of ethical discourse required by the casuistic approach in that it fails to disclose any type of
information about the crisis. Furthermore, the company appears to pretend that no crisis had ever
taken place. However, managing a crisis by silence is a strategy that could later be detrimental to
the company if the scandal takes proportions. More precisely, stakeholders can later feel
betrayed and lied to, which increases the amount of time and the effort that a corporation needs
to invest in order to do remedial or recovery work. An ethical discourse from the perspective of
the casuistic paradigm would imply open communication, concern, and acknowledgement of
wrongdoing. Yet, Daimler conceals the crisis and chooses not to address it, thus failing to meet
the requirements of ethics from the perspective of casuistry.


79


Twitter
Daimler AG (Daimler) is the companys official Twitter account and provides constant
updates on the performance of the company and its financial results. Surprisingly, the account
has only slightly over 4,000 followers and very few retweets. More officially designed and
maintained than Daimlers Facebook group, the Twitter gives out information on the new models
released by Daimler and focuses mainly on the financial results of the corporation as well as its
commitment to going green. No tweets are present on April 1, the day when accusations of
bribery were brought against Daimler and the first statement appears after two weeks, on April
14 when the company writes that it would like to thank its employees for their steady
commitment through hard times. However, this is the only statement that can be viewed as a hint
at the bribery case and is followed by updates on sales and promotions that Daimler engaged in
during April 2010. From a casuistic perspective the statement is unethical to the extent to which
it conceals information by the use of strategic ambiguity. In other words, it remains unclear if the
hard times refer to the global economic crisis, to Daimlers bribery case, or to another possible
situation. Additionally, the companys Twitter account provides no further information on the
crisis and uses the same strategy of silence enacted by Daimler on the social network website
Facebook.

Daimlers Official Website
Contrary to the lack of communication about the crisis from the social network websites
Facebook and Twitter, Daimlers official website contains the companys responses to
accusations of bribery and dates April 1. The response comes in the form of a press release and
mentions that Daimler settled the dispute and agreed to pay a fine of $185 million. The company
also assures that sufficient funds are available to cover the sum, thus addressing a segment of the
stakeholders, namely, its shareholders, affiliates, and investors. Further on, the press release cites
Dr. Dieter Zetsche, Chairman of the Board of Management and a paramount figure in Daimlers
brand and image, who assures the public that the company will comply by the US bribery laws:
"Compliance has high priority at Daimler (Daimler, 2010b, para.3). He briefly acknowledges
that there has been a crisis, but fails to admit guilt and to provide concrete examples of the
indictments.

We have learnt a lot from past experience. Today, we are a better and stronger company, and we
will continue to do everything we can to maintain the highest compliance standards. (Daimler,
2010b, para. 3)

Additionally, the press release mentions the response of Bodo Uebber, Daimler's Chief
Financial Officer who also provides reassurances of the fact that the bribery crisis has had the
role of making the company stronger and thus taught a lesson meant to help the management to
make the company stronger:

We have reviewed all areas of our business and consequently improved our business practices:
accounting, financial reporting, internal control systems and compliance. For the future, we are
positioned very well. (Daimler, 2010b, para. 8)

From the perspective of the casuistic approach, Daimlers response on the companys
official website is ethical because the company engaged in corrective action (Combs, 2007), i.e.
80


it provided the media, and as a consequence, its stakeholders with a minute account of its future
plans. Not only did Daimler explain in detail how it planned to make all its international
subsidiaries and affiliates comply with its laws, but Daimler also provided detailed information
on the legal settlements it reached. For example, Mercedes-Benz in Russia pleaded guilty to
charges of bribery and Daimler North East Asia entered a deferred prosecution agreement with
the USDOJ. However, Daimlers online press release does not acknowledge the crisis directly,
but rather it makes use of ambiguity and corrective action (Coombs, 2007), in an attempt to
transcend the crisis so that the publics perceptions will be directed toward the future and the
positive changes that the crisis will engender in Daimlers culture. From the perspective of the
casuistic approach, the response is only ethical in so far as it provides a detailed plan of the
corrective action of which the company plans to engage. However, Daimler fails to address its
employees, investors, and other stakeholders affected by the crisis. Additionally, Daimlers press
release entails no excuses or regrets for bribery cases.

CONCLUSION

The analysis of Daimlers online crisis communication reveals that the company did not
make an extensive use of the social media in order to actively engage with its stakeholders. On
the contrary, the company avoided posting updates and information on the case and thus
managed to avoid a negative inflow of communication on the behalf of the stakeholders.
Additionally, Daimler only provided information on the crisis, its consequences and the measure
it planned to take on its official website which did not allow for a two-way flow of information
but was rather directed at stakeholders without allowing for further feedback. From the
perspective of the casuistic paradigm the crisis communication strategies enacted by Daimler
online can only be regarded as ethical if judged by the details that the corporation gives on future
measures it plans to take. However, the crisis communication strategies are characterized by
either hiding away information from stakeholders in media that allow for feedback and
interaction (e.g., Twitter, Facebook) or making use of strategic ambiguity to diffuse the crisis in
an online medium that promotes a one way flow of communication, i.e. from the corporation to
its stakeholders (e.g., Daimlers official website).
The Web 2.0 provides corporations with the opportunity to interact with their multiple
stakeholders in times of crisis and allows the latter to participate actively in the recovery process,
thus reducing the possible negative impact of crises. Failure to make appropriate use of the social
media could further damage the image of an organization by allowing various stakeholders to
engage in online communication and thus to control the crisis by being the first to define it. One
effective way to measure the degree to which a corporation engages in ethical online crisis
communication is the casuistic paradigm (Hearit, 2006) that provides an ideal model of a crisis
response.

REFERENCES

Anthonissen, P. F. (2008). Crisis communication. Great Britain: Kogan Page Limited.
Benoit, W. (1995). Accounts, excuses, and apologies: A theory of image restoration strategies.
Albany: State University of New York Press.
Coombs, W. T. (2007). Ongoing crisis communication. Planning, managing, and responding.
Thousand Oaks, CA.: Sage Publications Ltd.
81


Daimler. (2010a). About Daimler. Retrieved from http://www.daimler.com/company.
Daimler. (2010b). U.S. Department of Justice. Daimler Press Release. Retrieved from
http://media.daimler.com/dcmedia/0-921-656186-1-1285939-1-0-0-0-0-1-12635-614226-
0-1-0-0-0-0-0.html?TS=1298065873249
Hearit, K. M. (2006). Crisis management by apology. Corporate response to allegations of
wrongdoing. Mahwah, New Jersey: Lawrence Erlbaum Associates, Publishers.
Reuters (2010). Daimler Bribery Settlement is Approved. Retrieved from
http://www.nytimes.com/2010/04/02/business/02daimler.html.
Savage, C. (2010, March 23). Daimler is said to settle bribing charges. The New York Times.
Retrieved from www.nyt.com
Ulmer, R. R., Sellnow, T. L., Seeger, M. W. (2007). Effective crisis communication: Moving
from crisis to opportunity. London: Sage Publications.
82


PUBLIC RELATIONS AND TECHNOLOGICAL ADVANCES:
CONSUMERS AND AN EcoCAR CAMPAIGN

Rachel Dobroth, Virginia Tech
Rdobroth@vt.edu

Kaitlyn Redelman, Virginia Tech
Kaitr410@vt.edu

John C. Tedesco, Virginia Tech
Tedesco@vt.edu


ABSTRACT

As with any research or technological initiatives, there is a need for communicating the
project with outside publics. This paper analyzes the communication tactics employed by a team
of undergraduate and graduate Engineering and Communication students at Virginia Tech to
overcome such technical obstacles. The engineers are participating in an international
competition that challenges them to build a fully functional, sustainable hybrid vehicle. The
public relations tactics for the consumer audience is analyzed and discussed in terms of
effectiveness. In conclusion, recommendations for communicators faced with similar
information-gap challenges are highlighted.

INTRODUCTION

Communicators in technological fields are often faced with the difficulty of effectively
translating their organizations message to less knowledgeable publics. For example, the
communicators involved with Advanced Vehicle Technology Competitions, such as EcoCAR:
The NeXt Challenge, must carefully develop methods that are able to convey their teams
message to multiple publics while best representing the technical aspects of the material. This
article analyzes methods used by the outreach coordinators for the Hybrid Electric Vehicle Team
(HEVT) of Virginia Tech to best communicate the goals of their EcoCAR team.

COMMUNICATING TECHNOLOGY: A PUBLIC RELATIONS CHALLENGE

Paraphrasing John Kenneth Gailbraith, one of the 20
th
Centurys most influential
economists and business leaders, William Shaffer (1985) asserted that High tech companies are
conceived, founded, built, run and ruined by well-intentioned engineers unfettered by an
understanding of marketing or of marketing communications (p. 6). Shaffer highlights the
significant disconnect in high-tech public relations between the communication professionals on
the one hand and high tech engineer clients on the other hand. The artistic (public relations) and
mechanical (engineers) differences between the majority of professionals that inhabit these
seemingly divergent fields creates a dilemma as relationships between the two typically are
strained by their inability to understand each others needs. However, Shaffer was optimistic that
PR programs could be created to satisfy the high tech clients if PR practitioners learn the clients
83


technical language (awareness), demonstrate curiosity about their clients products or services
(inquiry), encourage mutual engagement (involvement), and remember to communicate
responsibilities and results (memory). Others have cautioned that new technology and new tools
to promote such technology do not necessarily change the nature of public relations (Bernays,
1987-88; Thompson, 1992-93) in that identifying target audience needs and wants remains the
essential crux of public relations. Some companies may have had better, more advanced
technologies than their competitors. But too often they failed to communicate with their target
audiences. They failed to find out what their customers really wanted (Thompson, 1992-93, p.
21). According to Thompson, it is not sufficient for todays technology companies to build better
products. They must ensure new developments and designs appeal to the target publics.
The relational perspective in public relations, especially relationship management,
focuses on the organization-public relationship (Broom, Casey, & Ritchey, 1997, 2000;
Ferguson, 1984; Ledingham, 2003), which helps to ensure that the organization and client
understand each others needs and wants. According to Ledingham, the relationship
management perspective holds that public relations balances the interests of organizations and
publics through the management of organizational-public relationships (2003, p. 181). Cutlip,
Center, and Brooms widely accepted definition of public relations also emphasizes the relational
perspective by focusing on mutually beneficial relationships between an organization and the
publics on whom its success or failure depends (2000, p. 6). Despite the many attempts to
operationalize relationships, no consistent measurement tool exists to assess the quality of
relationships between organizations and publics. Instead, a broad range of relationship
dimensions appear to pepper the literature in the field. For example, Ledingham and Bruning
(2000) noted 17 relationship dimensions exist across a broad range of academic disciplines. In
an effort to consolidate the dimensions, Ledingham and Bruning (p. 62) collapsed the
dimensions into five broad relational variables identified as trust, involvement, openness,
commitment, and investment. Similarly, Hon and Gruning (1999) identified trust, commitment,
exchange relationship, control mutuality, satisfaction, trust, and communal relationship as six
operational dimensions to measure relationships. Researchers have explored these relationship
dimensions collectively and in isolation (e.g., Baker, Tedesco, Baker, 2007; Ledingham, 2003).
Although the research also emphasizes that relationships are built and nurtured with time,
this essay presents a unique examination of public relations through an attempt to develop
relationships via a special event. Specifically, community citizens visiting the two-day Green
Living Expo at the Roanoke (Virginia) Civic Center were invited to hear a presentation on
advanced vehicle technology aimed to reduce the environmental impact of automobiles. The
following section describes the advanced vehicle technology project and the campaign to raise
awareness.

EcoCAR: The NeXt Challenge COMPETITION
EcoCAR: The NeXt Challenge is a three-year (2008-2011) advanced vehicle technology
competition that challenges 16 competitively selected universities across North America to
design and build a concept vehicle that has minimal environmental impact. The competition is
sponsored by the United States Department of Energy (DOE) and General Motors (GM), and is
managed by Argonne National Laboratory. In creating their vehicle, each team must meet certain
requirements, such as minimizing the vehicles fuel consumption and reducing emissions, all
while retaining the vehicles performance, safety, and consumer appeal. GM donates a vehicle to
each participating school and also provides the vehicles components, operational support, and
84


seed money to get each team started. The EcoCAR competition offers students a unique
opportunity to learn engineering practices through a hands-on experience. Each team also
receives funds to support public relations outreach personnel.
In the first year of the three-year competition, teams select a specific vehicle design that
meets the goals of competition. Teams use software to test their design and ensure their chosen
systems will function properly. In years two and three, teams take their chosen design and
transform it into reality to develop a working vehicle that meets the competitions set
requirements. At the end of each academic year, teams come together to compete in a variety of
events testing the vehicles quality and performance on dimensions measuring energy
consumption, energy efficiency, greenhouse gas emissions, and safety.
There are more than 25 sponsors involved in EcoCAR: The NeXt Challenge. These
sponsors aid by providing access to diagnostic technology, parts, and vehicle components.
Sponsors have the opportunity to meet and work with hundreds of talented engineering students,
many of whom they routinely recruit as future employees throughout the competition.

THE HYBRID ELECTRIC VEHICLE TEAM OF VIRGINIA TECH

The HEVT of Virginia Tech is Virginia Techs team of engineers competing in EcoCAR:
The NeXt Challenge. Their chosen vehicle design for this competition is a Range Extended Split
Parallel Architecture (SPA) hybrid vehicle. The vehicle hybrid, which the team has named the
VT
REX
, has two modes of operation: charge depleting and charge sustaining. In charge depleting
mode, the battery pack is used to power the rear traction motor until a minimum battery state of
charge is reached. After this limit is reached, the vehicle enters charge sustaining mode in which
the engine and rear traction motor will be used in combination to power the vehicle efficiently.

OUTREACH COMPONENTS OF EcoCAR COMPETITION

Winning the EcoCAR competition involves designing and creating a hybrid vehicle, but it
also involves outreach and public relations initiatives. Out of 1,000 points involved in different
aspects of the competition, 80 of those points are solely devoted to outreach and public relations
of the vehicle and its team. The deliverables concerning outreach include a communication plan,
three outreach progress reports, a website, a sponsor success story presentation and poster, media
placement of the sponsor success story, and a final outreach presentation.
The purpose of this outreach program is to educate and raise awareness about the benefits
of advanced vehicle technology and how it promotes sustainable practices that reduce the
negative impacts of transportation on the environment and the economy. Teams are to focus their
outreach efforts on three main target audiences: youth aged 11-14, automobile consumers and the
general public, and influencers. Influencers are political officials who carry influence on
transportation, energy, environment, economy, and automotive policy. This article focuses solely
on the consumer/general public audience.

METHODS AND STRATEGIES

HEVTs strategy to reach the consumer public and inform them on alternative and
advanced vehicle technologies is to plan and implement audience specific events highlighting
work through HEVT and the EcoCAR competition as a whole. This consumer public is defined
85


as the group of individuals who are somewhat willing and able to eventually purchase a
sustainable vehicle in the near future.
Partnerships with established organizations and local government(s), such as Sustainable
Blacksburg, Town of Blacksburg, and the local Clean Cities Coalition, helps ensure that HEVT
is reaching the largest possible audience of consumers with the message of sustainability and
green energy. At public events, HEVT highlights the attributes of the vehicle and specific vehicle
technologies and educates the public on green energy and sustainability in general. Not only does
HEVT educate the public through these collaborative events, but they also reach out to the youth
in hopes that the students will relay the message to parents and gain an understanding of
advanced vehicle technology and why they should choose a hybrid or electric vehicle when they
start driving and purchasing cars.

Measuring Special Event Responses
Since communication and public relations efforts must be unique and tailored to specific
audiences, several different techniques must be used to measure effectiveness. Therefore, the
results vary slightly from public to public, but the overall goal to communicate messages of
sustainability through technological advances remains the same.
The consumer public presents much different opportunities and challenges than those of
the youth publics. As mentioned, the consumer public consists of individuals who are legal to
drive and are potential consumers of hybrid or sustainable-technology vehicles. Therefore, the
goals of communication with this public are not only to inform and educate, but to persuade
these individuals of the benefits of sustainable vehicle technology.
The biggest communication challenge related to this public is the consumers lack of
previous and/or technical knowledge. This lack of background means that HEVT members must
first teach the ideas behind hybrid and sustainable technologies before they are able to talk about
the VT
REX
or the teams work. However, the majority of consumers that approach the exhibit are
patient and willing to listen to all of the relevant information. This patience allows team
members to cover all of the important aspects of the project: the importance of sustainable
technology and the specific technology that the engineers are incorporating in the VT
REX
.
At the majority of events that involve the consumer public, interaction tends to be one-
on-one with a team member and the consumer. Thus, it is appropriate to employ more formal
methods of surveying the effectiveness of communication tactics. Feedback surveys were placed
on an exhibit table and following an opportunity to speak with a consumer, team members
welcomed the public to complete the brief survey. The brief survey consisting of the following
statements using a seven-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly
agree), with 4 as the neutral response: 1) I would buy a hybrid vehicle, 2) The HEVT exhibit was
informative, 3) The HEVT exhibit was engaging, and 4) The representatives at the HEVT exhibit
were helpful and knowledgeable.
The first statement, I would buy a hybrid vehicle, is meant to gauge the individuals
feelings about hybrid technology in general, especially to see if this predisposition affects the
following responses. The second and third statements are very similar by design. The goal of
ranking informative versus engaging is to discover individuals overall impressions of the
exhibit and presentation. High informative responses suggest that the basic information is
coming across and has some staying power, while high engaging responses suggest that any
information was made relevant and stimulating. When attempting to forge new relationships,
information and engagement are critical public relations components. The final statement, The
86


representatives at the HEVT exhibit were helpful and knowledgeable, is meant to measure how
the public perceived the presenters and assesses whether communication at the event was
valuable to consumers. Each exhibit display includes the actual vehicle and several informative
posters and other literature so the publics response to the human component of the exhibit is
important.

RESULTS

TABLE 1: CONSUMER MEAN SCORE FEEDBACK FOR AN ECOCAR PUBLIC EVENT (N=26)
I would buy a hybrid vehicle. 5.00
The HEVT exhibit was informative. 6.24
The HEVT exhibit was engaging 6.28
The representatives at the HEVT exhibit were helpful and knowledgeable. 6.72

Although the EcoCAR sponsors would prefer that the highest score come from the purchase
intent question, the fact that the score is above the neutral mark indicates that the consumer
public is generally supportive of hybrid vehicles for their own personal use. In fact, only four of
the respondents disagreed with this statement and those who did strongly disagreed (score of 1 or
2), which reduced the overall average support. However, the questions that get at the relational
dimensions of information, engagement, and assistance were very favorable. The public was
nearly unanimous in its support for the HEVT exhibit. In fact, only one respondent scored the
exhibit as neutral (4) for informative, while that same respondent scored the exhibit as a neutral
for engaging and neutral with regard to the HEVT representatives, while the remaining
respondents scored the exhibit as a 6 or 7 for informative and a 5-7 for engaging. As Table 1
shows, the averages approach the perfect score of 7.0 on the dimension evaluating the
representatives they spoke with personally.

CONCLUSION

HEVT is effective in overcoming obvious technological barriers to communicate the
message of promoting sustainability through advanced vehicle technologies. Certainly this
success is a result of significant team efforts, both from the engineers as well as the outreach
coordinators. Significant effort by the engineers and outreach coordinators is made to ensure
each aspect of the team understands the needs of the other to communicate the goals of the
EcoCAR campaign. With continued success at informing and engaging the public, it is hoped that
the score for purchase intent will increase the likelihood that the public will strongly agree with
the statement, I would buy a hybrid vehicle.
Though HEVT has not always been successful with every attempt, time has allowed for the
development of solid communication techniques. The following recommendations are effective
for HEVT, but can also be used in any situation where highly technical information must be
communicated to less knowledgeable publics:

Relate difficult concepts to other well-known concepts. However, be careful not to make
lazy comparisons for the sake of time or ease. The metaphor should serve to enhance
learning, not cut corners, and should certainly be age appropriate.
Take the time to highlight the unique and interesting components. In the case of HEVT,
team members make sure to emphasize how the VT
REX
is different from other hybrids so
that the project sticks out in the listeners mind well after the presentation.
87


Ask the public questions to gauge their level of understanding. This can help to quickly
discover if they misunderstood or are missing a key concept.
Employ outsiders to double-check the messages and communication tactics. HEVT
employs outreach coordinators to make sure that the engineers work is accessible and
relevant to multiple publics.
Be open to suggestions and improvement. For example, if a young student suggests that
they want more hands-on activity, try to incorporate that idea into future efforts.

Overall, HEVT is happy with the success of communication strategies thus far. However,
the team plans to continue to improve on such tactics to encourage more interaction with varied
publics. As each new strategy is incorporated, HEVT will continue to measure feedback so that
only the best possible communication tactics are employed.

REFERENCES

Baker, E., Tedesco, J. C., & Baker, W. (2006). Consumer Privacy and trust online: An
experimental analysis of anti-phishing promotional effects. Journal of Website
Promotion, 2(1&2), 89-113.
Bernays, E. L. (1987-88). New tech, old tech. Public Relations Quarterly, 32(4), 14.
Broom, G. M., Casey, S., & Ritchey, J. (1997). Toward a Concept and Theory of Organization-
Public Relationships. Journal of Public Relations Research, 9(2), 83-98.
Broom, G. M., Casey, S., & Ritchey, J. (2000). Concept and Theory of Organization-Public
Relationships. In J. A. Ledingham & S. D. Bruning (Eds.), Public Relations as
Relationship Management. A Relational Approach to the Study and Practice of Public
Relations (pp. 3-22). Mahwah: Lawrence Erlbaum.
Cutlip, S. M., Center, A. H., & Broom, G. M. 2000). Effective public relations, 8
th
edition.
Upper Saddle River, NJ: Prentice Hall.
Ferguson, M. A. (1984). Building Theory in Public Relations: Interorganizational Relationships
as a Public Relations Paradigm. Paper presented to the Association for Education in
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Hon, L. C., & Grunig, J. E. (1999). Guidelines for measuring relationships in public relations.
Gainesville, FL: Institute for Public Relations. Retrieved from
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content/uploads/2010/05/Guidelines_Measuring_Relationships-Grunig-and-Hon-
1999.pdf
Ledingham, J. A. (2003). Explicating relationship management as a general theory of public
relations. Journal of Public Relations Research, 15(2), 181-198.
Ledingham, J. A., & Bruning, S. D. (2000). A Longitudinal Study of Organization-Public
Relationship Dimensions: Defining the Role of Communication in the Practice of
Relationship Management. In J. A. Ledingham & S. D. Bruning (Eds.), Public Relations
as Relationship Management. A Relational Approach to the Study and Practice of Public
Relations (pp. 55-69). Mahwah: Lawrence Erlbaum.
Shaffer, W. (1985). How to develop PR programs for high tech clients. Public Relations
Quarterly, 30(3), 6-9.
Thompson, G. W. (1992-93). Consumer PR techniques in the high tech arena. Public Relations
Quarterly, 37(4), 21-23.
88


DEVELOPING NFC BASED APPLICATIONS AND SERVICES: INNOVATION AND
RESEARCH DIRECTIONS

ngeles Sandoval Prez. University of Vigo.
sandoval@uvigo.es

Irene Garrido Valenzuela. University of Vigo
ireneg@uvigo.es

Paloma Bernal Turnes. University Rey Juan Carlos
paloma.bernal@urjc.es


ABSTRACT

The joint use of the world's most popular hardware device (cell phone), the most
widespread communication platform (Internet) and the most recent wireless short-range standard
(NFC) represents a very interesting challenge for the development of innovative applications and
services in a whole range of scenarios: nearby tourist services, banking, accessing public
transportation and facilities, information retrieval, marketing and CRM applications,
collaborative work, and more. The possibilities are as wide as the imagination.
This paper introduces an innovative proof-of-concept and pilot project that is being
developed at the University of Vigo (Spain) in order to explore new usages and practices based
upon NFC Standard. The project aims to research and develop smart university environments for
the remote management of NFC enabled services and combine a field trial and interview based
study with an experimental evaluation. We hope to infer some architectural lessons from our
research and innovation experiments and provide open fields of research and promising areas of
innovation in a wide range of vertical markets.

INTRODUCTION

At present, we can use mobile phones to access, by using the camera and free software
applications, a range of digital content: websites, video, etc, through 2-dimensional barcodes
(e.g., Datamatrix, QR code, Flashcode), mainly found in posters and magazines. 2D barcodes
have different functions, depending on the time they are used, so they become a "dynamic tool"
whose code is modified over time.
The next step is NFC (Near Field Communications), a new, short-range wireless
connectivity technology with the potential to standardize and simplify considerably this feature.
NFC makes it possible to set up intuitively simple and safe two-way interactions between
electronic devices. Just by holding them over about a 4-inch distance, we can access or send
digital content (using a wireless device such as a cell phone to read a smart object embedded
with an NFC tag), start an application, make contactless transactions, including those for
payment, access and ticketing, etc. Thus, NFC gives mobile devices
1
contact with the physical
world and allows people to exchange all kinds of digital content: music, games, business cards,

1
NFC can be used with a large variety of devices for touching connectivity: consumer electronics, mobile devices,
and PCs.
89


social networking information and so on. In addition, NFC tags are waterproof and can be
located in a variety of media, posters, classrooms, buildings, showcases, urban furniture, etc,
which opens the door to promising new possibilities for linking everyday life in the physical
world and the virtual world and to a greater volume of exchange, interaction and participation of
people in their environment.
NFC technology has a promising future for several reasons (Nokia, 2007):
1. It can be integrated into cell phones (widely established in society), which allows users to
access a wide range of services through their phones, many of them converted into true handheld
computers (smartphones) with powerful operating systems (iPhone, Symbian, Googles Android
Nexus, Microsoft WCE, Rim, Linux).
2. It is compatible with the structure currently used in contactless payment cards,
transportation, identification, etc. Consequently, mobile devices can read and write tags, but are
also able to emulate contactless cards and provide the means for establishing communication
peer-to-peer, whose main advantages are simplicity and speed in establishing the connections.
3. It does not require user configuration and can be used in a more intuitive and effective
way to run a huge variety of tasks, some of which will be investigated in this project.
4. It improves usability and user experience in accessing services and content available on
physical objects around them.
5. The main difference between NFC and other wireless technologies is that NFC has a very
short reading range to the extent that devices need to virtually "touch." This, though at first might
seem a limitation in practice, is an advantage because it requires clear action by the user to
activate a service or information sharing. It is also possible to incorporate multiple levels of
security on an NFC-enabled device.
In any case, despite optimistic predictions, NFC technology has yet to take off (Juntunen,
Luukkainen, & Tuunainen, 2010). There are some challenges which can constitute an
impediment to its immediate implementation:

1. Since we are talking about a new technology, the first problem can be the limited number
of NFC-enabled devices and cell phone handsets deployed in the world
2
.
2. NFC applications are handset dependent. Thus, neutral technology platforms need to be
provided that can hide specifics of the different NFC enabled devices (cf. Mobile Distillery,
www.mobile-distillery.com).
3. Multi-applications should be made possible onto a single NFC cell phone with high
security and easy management (cf. Nice Future Campus and Nice Future Container projects
at MBDS
3
).
4. The NFC APP Store concept. The successful concept of APP STORE for iPhone, with
both free and cheap applications, was followed by similar approaches like Android market for
Google, Mark Place for Microsoft, APP World for Blackberry. Location-based applications
available on an NFC APP STORE for a wide range of issues (shopping, learning, tourism, urban
life) could be proposed as well. The mentioned MBDS, which has a long experience in NFC

2
However, it should be noted that, according to recent press reports, various industries have begun to announce the
inclusion of the NFC technology in the next version of their operating systems for mobile devices in a short time
(see www.nearfieldcommunicationsworld.com).
3
Master MBDS (Mobicuit, Bases de donnes et Intgration de Systmes), University of Nice Sophia Antipolis.
France. www.mbds-fr.org
90


prototyping, is working on an NFC APP STORE open-source platform for both NFC users and
NFC developers.
5. Finally, the most significant obstacle can be found in the challenging business models
and processes needed to implement NFC services (Beny et al., 2006 & Beny, Vilmos, Frds,
Sdor, & Kovcs, 2009). In the NFC ecosystem there are a large number of stakeholders (Mobile
Network Operators -MNOs-, service providers, partners in the service delivery, device
manufacturers), each one having their own strategy. All these business and marketing interests
need to be harmonized, opening the road to an open NFC APP STORE (Kanniainen, 2009).
A workshop co-organized by the Information Society and Media Directorate-General of
the European Commission (DG INFSO) and the European Technology Platform on Smart
Systems Integration (EPoSS) was the first initiative in Europe to discuss challenges and
opportunities, both technological and market, and to suggest future uses of the Internet of
Things. The recommendations and conclusions of this workshop were the basis for the report
entitled "Internet of Things in 2020. A roadmap for the future," published in September 2008.
In turn, to promote NFC implementation and standardization and to ensure
interoperability between devices and services, the NFC Forum was formed in 2004 (www.nfc-
forum.org). This nonprofit organization, initially formed by Philips, Nokia, and Sony, currently
has 140 members from different areas of the NFC ecosystem. Their annual NFC Forum Global
Competition promotes the development and deployment of innovative and exemplary NFC
applications by both commercial and academic developers. Applications are evaluated based on
their innovation, commercial potential, usability, quality of design and implementation
(www.nfc-forum.org/events/2010_competition). Both finalists and winners have the global
coverage of the media, resulting in visibility among industry leaders and investors and the
opportunity to share ideas and build partnerships. This resulted in many applications that have
been developed in recent years in various areas (transportation cards, ski passes, electronic tolls,
etc), some of which are only an extension of previous applications. However, there is still a long
way to go in order to reach greater generalization and standardization and the development of
new innovative applications.

PROJECT GOALS

Our project was designed to provide information on the current and future potential of the
NFC technology (applications, business models, players and challenges). For this, first we need
to define a common methodology for managing multiple university NFC services, then,
demonstrate its use in real world applications, identify the main issues that should be considered
and, finally, draw from our experiments some insights and ideas on how to successfully
introduce NFC services.
Based on these considerations, the specific objectives are the following:
1. First, to design a generalizable multi application NFC environment that provides the
possibility of rapid implementation of standalone applications integrated in a particular
technology space (in our case the space of the University Campus). The modular architecture of
this environment will allow the integration of different services and functions in a homogeneous
structure of applications, without costly investments.
2. Second, to develop a prototype of an application framework based on prior specifications
and to demonstrate the use of such environment so that developers can easily design their
applications without any NFC device or top-level programming ability, focusing only on the
91


adequate design and implementation of the applications and the user interface. To do this, we
will use the tag and blog management platform, "MBDS2.0," developed by the aforementioned
Master MBDS of French University of Nice-SophiaAntipolis (UNS). The environment will be
used in concrete applications. This means that different objects and places will be labeled (NFC
and 2D). A reader integrated into a mobile device will allow the user to obtain information, to
emulate a card (e.g., payment, transport, access), to establish peer-to-peer communication or to
start a service designed so that it is adaptable to different users and contexts.
3. Assuming that the campus area is especially suitable for the development of NFC
applications, we analyzed different scenarios in the context of university life, with students being
the core of the NFC multiservice concept. In particular, the European Space for Higher
Education (EHEA) encourages students and teachers from different universities and countries to
move to other universities to interact and participate in various activities as if they were in their
own universities. In virtually all cases these people bring a cell phone with them. Based on these
considerations, we consider a priori two desirable actions:
a. With respect to students from other universities, to help them not only to integrate into
the host university but also, more broadly, to facilitate the understanding of the culture and
history of the city in which it is located: paths and emblematic buildings, entertainment (cultural
events and activities, restaurants, etc.), and services (street, consulates, medical services, etc.).
And, secondly, to provide the rest of citizens the localization of these students so that they can
interact with defined purposes. For example, improving knowledge and practice of language,
translations of texts.
b. For all students, our intention is to embed tags into concrete elements throughout the
campus, giving access to additional information on the course schedule, location of classrooms
and other aspects of university life (conferences, sports, etc.). Additionally, the adoption of the
more innovative teaching-learning models require incorporating other features aimed at
facilitating access to information for research, collaborative learning and knowledge transfer
among members of a group for the development and presentation of practical work research on
various topics.
We will select a manageable set of users of these new solutions, which will provide the
necessary feedback to analyze and adjust the quality of services, as well as to design and assess
other future applications. To do this, we will develop a set of indicators for evaluation of our
service development strategy and the ways to carry it out.
4. Finally, the results of this pilot will serve to develop a catalog of best practices that can
be presented to the university authorities for study and assessment of future applications.
Furthermore, the conclusions and lessons learned throughout the project will help us to better
understand the potential of NFC technology and to discover new opportunities and areas of
interest for the improvement of economic competitiveness and citizens' quality of life.

EXPECTED BENEFITS

In general terms, we can say that the project's results are intuitively appealing and its
potential impact is high to the extent it contributes to a better understanding of the NFC
ecosystem complexity, based on experimentation and proof of concepts with communities of
users in real life. At the same time, we consider crucial the collaboration and technology support
92


of the University MBDS laboratories that, under the direction of Professor Serge Miranda
4
, have
been highly productive in this field of mobiquitous
5
service engineering, with innovation and
research multidisciplinary projects in the areas of travel, m-tourism, healthcare, m-payment, m-
culture, m-government, m-education and fair trade. All the knowledge and lessons learned from
extensive NFC applications prototyped is a valuable starting point for our project.
Innovation lies in a bottom-up approach for new applications that, once implemented,
will offer new services, improve the quality of existing services, anticipate user needs and
provide them with appropriate contextual information. Objects and places (rooms, buildings ...)
will incorporate tags with information (stored or referenced) to be read by the mobile device,
always initiated by the user, but without them having to perform complex activities to configure
the system. Thus technology becomes invisible, available when needed and adaptable to different
users and contexts. Objects around us become "dynamic objects, tagged so that information
relating to each of them is easily accessible, which will be stored in remote databases. And the
result of request depends on the information stored in the user profile, i.e. the profile is processed
according to the information content of the tag and relevant information is delivered. This
information can include a web address, a few lines of text, an e-mail or other data. The main
point is that users are thus able to obtain "ubiquitous communication" (i.e. have the possibility to
establish ad hoc connections appropriate to their needs at anytime, anywhere).
An important part of the expected results of our project is precisely to assess the user
experience. Services cannot be structured at the design time for providing fixed usage scenario
because of multiple unknown dependencies of users and usage contexts. So, users will evaluate
the usefulness and ease of use, which will help us to better understand the gaps, to refine the
methodology and to detect new needs that can be fulfilled. They can also suggest ways of
improvement based on the strategic use of mobile NFC.
In addition, once the methodology is validated, the application framework may be used in
other environments considered of priority interest to the socio-economic development of our
region.
From the standpoint of technology, the pilot project will incorporate, among others, the
following elements:
1. Obtaining media information, by taking a photograph (2D Barcode) or touching (NFC) a
tag.
2. Native applications in the Smartphone, with augmented reality for users to visualize
different invisible thematic paths across the campus as well as multimedia content associated
with them.
3. Mobile blogging applications and social networks (e.g., Facebook, Twitter) interface to
provide the user with additional support in the process of information transmission to other
members of their social networks.
Innovation consists of developing services based on interaction with the web of data (semantic
web) by means of Web 2.0 applications (Social Web): This is for example to allow mobile
consultation and contribution to a web of data enabling the capture of context (geolocation,
bookmark the real world, people/data search contextualized in time and space, etc.).


4
Serge Miranda is Professor at the University of Nice Sophia Antipolis, President of University Foundation
"DreamIT" (www.dreamit-fr.org) and Founder of the Master MBDS (www.mbds-fr.org)
5
Mobiquitous is a recent word coming from the union of two words: mobile (of the cell phone) and ubiquitous (of
Internet).
93


CONCLUSIONS

We entered the Mobile Internet era with Near Field Communication (NFC)
revolutionizing the mobile services world. We can expect to see a lot of NFC-enabled mobile
devices coming out which will facilitate its widespread use by taking advantage of what is
inherently familiar to people. This generates high expectations for the development of innovative
information services that will be location-based and touch-based. Consumers will be able to
easily access a variety of services (payment, transport, travel, entertainment, culture, etc.) and
conveniently exchange information with a simple touch gesture utilizing NFC technology. They
will thus be able to use their cell phone as a method of payment, virtual vouchers and transport
tickets, couponing, a cultural information point, or a traceable or medical follow-up tool to name
a few possibilities. Thus, the cell phone becomes a real computer, a smart phone. Internet
becomes 2.0, local and mobile. Tagged objects become living (information + communication).
The spaces become intelligent (Ambient Intelligence Environment
6
).
To make this happen, we only need to acquire the essential technical basis and then to
explore different scenarios where NFC can be applied to a whole range of applications in new
and imaginative ways.
In our project we propose a set of university scenarios where NFC can be applied in
experimental projects involving end-users. University information services will be created which
will generate savings in terms of effort via touching interaction. They will make using content
services more intuitive and make it easier to discover, synchronize and share information. We
also study how NFC can bring the university to society. Analysis of user experience of services
usage in different situations will help to structure and then dynamically reshape services for
better usage efficiency. In addition to providing feedback on the trial services, participants will
be suggested to indicate other potential applications for NFC.
In summary, our field trial and our experimental pilot study first, will result in a
significant improvement in the possibilities of integration of students and visiting professors not
only within the university but also in the city where it is located. Lessons learned from the
experience will be used to build a knowledge base that promotes the development of smart
universities ambient located anywhere and offering university services at any time and,
ultimately, it will facilitate the design of a new working model of the university campus, adapted
to the European Higher Education Area (EHEA).
Finally, the innovative NFC service prototyping will serve to show how NFC technology
can be used to provide economic, versatile and easily scalable solutions both for academic and
professional purposes, thus contributing to enhancing their use.

REFERENCES

Beny, B, Vilmos, A, Frds, G, Sdor, B & Kovcs, L (2009). The StoLPan View of the NFC
Ecosystem, Wireless Telecommunications Symposium, 1-5.
Beny, B., Hatwgner, F., Heckenast, T., Kovcs, K., Varga ., & Varjasi, N. (2006): Design
and Implementation of Enum-Based Services. Journal of Universal Computer Science,
12(9), 1128-1138.

6
Ambient Intelligence Environment is where humans will be surrounded by intelligent interfaces supported by
computing and networking technology that is embedded in everyday objects, which should be aware of the specific
characteristics of the human and there should also be unobtrusive interaction (European Commission, 2003)
94


European Commission (2008). Internet of Things in 2020. A roadmap for the future. RFID
working group of the European Technology Platform On Smart Systems integration
(EPOSS).
European Commission (2003). Ambient Intelligence: From vision to reality. Information Society
Technologies Advisory Group ISTag. p. 31.
Gaonkar, S. (2008). Micro-Blog: sharing and querying content through mobile phones and
social participation. In MobiSys '08 Proceeding of the 6th international conference on
Mobile systems, applications, and services.
Juntunen, A., Luukkainen, S., & Tuunainen, V. K. (2010). Deploying NFC Technology for
Mobile Ticketing Services Identification of Critical Business Model Issues.
Proceedings of the Ninth International Conference on Mobile Business and 2010 Ninth
Global Mobility Roundtable (ICMB-GMR), 8290.
Kanniainen, L. (2009). Global overview of commercial implementations and pilots of NFC
payments during 2009. Mobey Forum Mobile Financial Services, 19-21.
Miranda, S., & Ishkina, E. (2010): NFC mobiquitous information service prototyping: Overview,
lessons, state of the art, innovation and research directions. In Proceedings 3
rd

International Conference on Information Systems and Economic Intelligence, SIIE 2010,
Sousse Tunisia.
Nokia. (2007). Near Field Communication. White Paper, 2. Retrieved from
http://www.nokia.com/NOKIA_COM_1/Press/Materials/White_Papers/pdf_files/White%
20paper_Nokia_Near%20field%20communication.pdf
Resatsch, F. (2010). Ubiquitous Computing: Developing and Evaluating Near Field
Communication. Germany: Gabler Verlag.



95










CHAPTER 5

COMPUTER INFORMATION SYSTEMS

96


BALANCING BETWEEN USING OPEN SOURCE AND COMMERCIAL SOFTWARE
IN A TECHNOLOGY PROGRAM

Azad Ali, Indiana University of Pennsylvania, azad.ali@iup.edu


ABSTRACT

Recent difficult economic times and calls for budget cuts have pushed different academic
departments to delay, postpone or simply to cancel requests for software upgrade. This led some
academic departments to fall behind the market in their use of technology. To stay too much
behind the market in the use of technology risks losing opportunities and may not help in the
repetition of the academic department. As a result, some academic departments are embarking on
new ideas on using free software as alternate to paying for software upgrade. But free software is
not totally a replacement to existing propriety software; instead some balance between the use of
the two types of software may need to be maintained in order to keep software up-to-date and to
work around the budget issue.
This paper illustrates a case of a faculty member who attempted to balance the use of free
and commercial software in his courses. A faculty at the department of Technology Support and
Training (TST) at Eberly College of Business and Information Technology (ECOBIT) - Indiana
University of Pennsylvania (IUP) submitted a request to upgrade some software. The purchase of
the new software was delayed and as a result, the software version in use at the department
stayed behind the market. At times, a faculty member resorted to using free software to cover
other contents that could be covered by such software. In other words, this faculty member
attempted to maintain a balance between the use of commercial software and free software in the
courses. This balance between free and commercial software is illustrated in this paper.

INTRODUCTION

Software upgrades are becoming more frequent. Major software vendors often announce
the release of new versions, patch, fix or any similar upgrade to its software. When software
companies release major upgrades, the question that repeats itself among academic institutions is
whether to spend money to purchase the upgrade and introduce the new software into the
classroom or whether to wait until additional versions are released Goldsborough (2003) noted
the following about this kind of decision:

Whenever major software is upgraded, it reintroduces questions about the
desirability of upgrading your own software. When does it make sense to
upgrade? What problems can upgrade cause? (p. 19)

At challenging economic times, the question that repeats itself often is about the
feasibility of spending money for the frequent purchase of software or whether there is another
method of delivery that can spare the cost of upgrade without jeopardizing content. Luckily, the
emergence of new brand of free and open source software helped with the cost issue of software.
But this kind free software is not for everyone. Instead, some courses are more suitable to use
commercial software, while others can use free software more effectively. Thus a balance
97


between the uses of the two kinds of software may be deemed necessary in order to save on the
cost of upgrades while maintaining quality of delivery for courses.
The department of Technology Support and Training (TST) at Eberly College of
Business and Information Technology (ECOBIT) - Indiana University of Pennsylvania (IUP)
teaches several technology courses. Due to budget constraints, some of the software was kept
behind the most recent version that is on the market. A faculty in this department introduced the
use of free and open source software that helped keeping the use of software up-to-date in
technology courses. The experience of this faculty and his effort to balance the use of the two
kinds of software is explained in the paper.
The remainder of this paper is divided into the following four sections: First, the paper
discusses the benefits and drawbacks from software upgrades. Second, an explanation of the two
types of software (open source and commercial) software is discussed. Third, the experience of
the faculty at the TST department in maintaining a balance between the two types of software is
detailed. A summary of this study is introduced at the end of this paper.

BENEFITS AND DRAWBACKS OF SOFTWARE UPGRADES

Software vendors frequently release new versions of their software and send them to the
market. These new releases often hold promises of better features, improved functionality, and
enhanced outlook (Paine, 2000). This kind of news puts pressure on academic institutions to
introduce the new software into their classrooms. Notess (2008) noted that software upgrades are
shaping the economy of many major companies and are shaping the IT economy in general.
Goldsborough (2003) noted that adopting new software could bring different benefits to the
organization including new features of the software, enhanced processing speed, improvement of
the organization features and increased productivity.
At the same time, there are different drawbacks associated with introducing or purchasing
new software. Notess (2008) noted that introducing new software upgrades brings many
challenges including the additional cost that the organization is to pay, the challenge of
learning/relearning the new version of the software, and the additional administrative procedures
associated with introducing the new software. Ellison and Fudenberg (2000) noted that one of
the major complains about software upgrades is that the software industry often releases upgrade
after upgrade that do not seem to be fully backward compatible and as a result create problems
with existing software/hardware.
The remainder of this section explains six benefits and drawbacks from introducing
software upgrades to academic organizations. The first three items pertain to the benefits of
software upgrades while the next three discusses potential drawbacks from software upgrades.

New Features
Software upgrades always bring new features (Albright, 2008). This can include simple
changes to existing features or totally new features that extend the use of the software to different
areas. The promise of new features can be extended further, opening new opportunities and uses
of the same software. For example, word processing software may include new features that
allow for editing images. This may allow the person using word processing software to use the
same software for things like image editing, brochure preparation, and media elements.
In academia, the introduction of new features of software is dependent on their use in the
market place. If there is a demand in the market for a specific new feature of software, then it
98


will be more feasible to introduce the software in the classroom. The introduction of the new
features also introduces a new set of skill sets that need to be filled. The departments that
fulfillment of this gap sooner may be deemed to get better use of new technology.

Enhanced Department Image
The extended use of newer technology in a given department may give the impression of
superior image use of technology. An academic department that teaches Windows 7 is
considered more superior in technology use than another that teaches Windows XP given
everything else equal. The extent of introduction of new technology is often considered a
measure of the modernity of the department. This kind of modernization is based on the
assumption that the new technology is going to be used more frequently. As a result, there will
be a shortage or a demand for people with this skill set. The modernity of a given department can
be compared to other similar departments within the university or comparable universities. A
department with more modern technology is considered more superior technologically than the
others given all other factors equal.

Enhanced Speed
Speed of the software often gets better as it advances in version. If the promise for a
better speed does not require hardware upgrades, then this will be more of a plus. However, the
use of the new software often requires upgrading hardware as well. In academic departments,
this may bring other opportunities for additional hardware upgrades as well as bringing a total
upgrade of the department technology.

Cost
Cost is always an issue in difficult economic times. Various departments may need to
provide justification for the money being spent on purchases. In regards to software upgrades,
studies report on money wasted on unnecessary software upgrades. For example, Hopkins and
Kessler (2002) report that U.S. Companies threw away $130 billion in the past two years on
unneeded software and other technology. The same study found that of 25 years of technology
spending worldwide, companies waste as much as 20% of the $2.7 billion spend annually. A
2004 Standish Group study reports that 71% of these IT projects did not meet top managements
expectations (The Standish Group, 2004). In academic departments, the issue of cost often takes
more importance because the department has to compete for the tuition revenue with other
departments and has to cover different associated costs of such investments.

Training/Retraining
Software purchase may require substantial training/retraining of existing staff. The
training/retraining amount is dependent on different factors such as the sophistication of the
users, the extent of the upgrade and the programs that use the technology. In the case of teaching
courses with the new technology, software upgrades may require introducing new textbooks,
new lesson plans, new assignments, and may also include total new delivery of course material.

Compatibility with Existing Software/Hardware
In some instances, the introduction of new software requires upgrading existing hardware
as well. In these cases, the use of the new software requires purchasing totally new hardware. In
other words, in order to meet the minimum requirement of the new software, the academic
99


department may need to purchase totally new hardware. In these cases, and others at academic
departments, a question is often repeated on whether to purchase the new hardware or not (Ali &
Murthy, 2010). In some cases, new software may create additional problems with other existing
software in different departments. In academic departments, this gets more complicated as the
number of software installed in a given lab, and the number of labs available to work in,
complicates the installation and compatibility issues further (Arteaga, 2005).

COMMERCIAL VS FREE SOFTWARE

This section details the two categories of software that have been reported so far in this paper:
Commercial software and Open Source Software.

Commercial Software
Commercial Software groups are those that are paid for. In other words, in order for the
academic department to teach the software, the department must pay a license fee for it. This
license fee can be based on number of uses (number of licenses) but it can also be a site license.
The software is paid for and future major upgrades need to be paid for in order to continue using
it. Commercial or propriety software often comes with help manuals and the companies that
produce them normally offer online help lines where faculty can call for answers when facing
problems during installation or use. Thus, emerging problems from these types of software can
be dealt with directly with experts from the companies that produce them. Installation,
troubleshooting, and use do not require technically savvy users. Instead, these tasks are well
defined and the procedures are established by the vendors (Ali & Murthy, 2010).

Open Source Software
Open source or free software is the newer form of software that has been introduced to
academic programs more recently. Since the introduction of Open Source Software (or OSS),
new terms and definitions have been introduced to describe this brand of software. Ye and
Kishida (2003) provided the following definition of OSS:

Systems that give users free access to and the right to modify source code. OSS
grants not only developers but all users, who are potential developers, the right to
read and change its source code. Developers, users and user-turned developers
from a community of practice. A community of practice is a group of people who
are informally bounded by their common interest and practice in a specific
domain. (p. 419)

The list of open source software has been increasing at a steady rate over the past years.
Lately, this list of open source software has increased so much that it is outnumbering the current
list of propriety software. Damicon (2007) provides a comparison list of commercial software
categories and the open-source equivalents. This list includes more than sixty commercial
software categories and hundreds of open-source equivalents.
With this kind of increasing use of open source and free software, and in light of
shrinking budgets at most institutions, some faculty find this a viable option for integrating Open
Source software into their courses. However, there is a price for such inclusion of open source
and free software: Installations, troubleshooting and maintenance are not easily achievable. Due
100


to the nature of the open source movement, this kind of software does not have help lines or
readily available manuals. Instead, for faculty members who face problems with open source
software, they have to work their way through chat sessions, blogs and visit various sites in order
to obtain solutions for their problems. The type of student that makes use of this software is the
technology savvy student who deals with these issues more frequently.

THE TST PROGRAM AT IUP

The Technology Support and Training (TST) department in the Eberly College of
Business and Information Technology (ECOBIT) at Indiana University of Pennsylvania (IUP)
offer two bachelor degrees. The first Bachelor degree is in Business Technology Support while
the second is in Business Education.
Recently, the TST department requested the purchase of new upgrades to Adobe CS5
software. There was a delay in upgrading the software for the TST department: a number of
years have passed since the TST department upgraded their software. This delay in upgrading the
software rendered some of it to be outdated. To overcome this issue with outdated software, a
faculty member in the department introduced the use of open source and free software to stay up-
to-date in regards to using technology in the classroom. This faculty member was selective in the
courses where the open source software was introduced so as to include students that can learn
more from this technology and to maintain a balance between the use of both types of software.
Table 1 below shows this balance in the use of both software types by this faculty member:

TABLE 1. A PARTIAL LIST OF SOFTWARE USED BY A FACULTY AT THE TST DEPARTMENT
Commercial Software Open source and free software
Dreamweaver
Flash
Photoshop
Sony Vegas
Word
Excel
Access
PowerPoint
Alice
PHP
MySQL
Ubuntu
OpenSUSE
Fedora
Squeak
SecondLife

RESEARCH SUMMARY

This paper explained the balance between commercial software and open source software
when it comes to using software in technology courses. It explained that recent budget cuts
forced academic departments to resort to non-conventional means of using or teaching software.
This led to an increased call to use Free and Open Source software. The paper explained the
benefits and drawbacks for software upgrades. It then explained the difference between
commercial software versus open source software. Last the paper emphasized the experience of
the TST department and how one faculty members in the department attempted to balance
between the use of commercial software versus open source software in order to overcome the
budget issue and to stay recent in technology upgrades.


101

to the nature of the open source movement, this kind of software does not have help lines or
readily available manuals. Instead, for faculty members who face problems with open source
software, they have to work their way through chat sessions, blogs and visit various sites in order
to obtain solutions for their problems. The type of student that makes use of this software is the
technology savvy student who deals with these issues more frequently.

THE TST PROGRAM AT IUP

The Technology Support and Training (TST) department in the Eberly College of
Business and Information Technology (ECOBIT) at Indiana University of Pennsylvania (IUP)
offer two bachelor degrees. The first Bachelor degree is in Business Technology Support while
the second is in Business Education.
Recently, the TST department requested the purchase of new upgrades to Adobe CS5
software. There was a delay in upgrading the software for the TST department: a number of
years have passed since the TST department upgraded their software. This delay in upgrading the
software rendered some of it to be outdated. To overcome this issue with outdated software, a
faculty member in the department introduced the use of open source and free software to stay up-
to-date in regards to using technology in the classroom. This faculty member was selective in the
courses where the open source software was introduced so as to include students that can learn
more from this technology and to maintain a balance between the use of both types of software.
Table 1 below shows this balance in the use of both software types by this faculty member:

TABLE 1. A PARTIAL LIST OF SOFTWARE USED BY A FACULTY AT THE TST DEPARTMENT
Commercial Software Open source and free software
Dreamweaver
Flash
Photoshop
Sony Vegas
Word
Excel
Access
PowerPoint
Alice
PHP
MySQL
Ubuntu
OpenSUSE
Fedora
Squeak
SecondLife

RESEARCH SUMMARY

This paper explained the balance between commercial software and open source software
when it comes to using software in technology courses. It explained that recent budget cuts
forced academic departments to resort to non-conventional means of using or teaching software.
This led to an increased call to use Free and Open Source software. The paper explained the
benefits and drawbacks for software upgrades. It then explained the difference between
commercial software versus open source software. Last the paper emphasized the experience of
the TST department and how one faculty members in the department attempted to balance
between the use of commercial software versus open source software in order to overcome the
budget issue and to stay recent in technology upgrades.


101


to the nature of the open source movement, this kind of software does not have help lines or
readily available manuals. Instead, for faculty members who face problems with open source
software, they have to work their way through chat sessions, blogs and visit various sites in order
to obtain solutions for their problems. The type of student that makes use of this software is the
technology savvy student who deals with these issues more frequently.

THE TST PROGRAM AT IUP

The Technology Support and Training (TST) department in the Eberly College of
Business and Information Technology (ECOBIT) at Indiana University of Pennsylvania (IUP)
offer two bachelor degrees. The first Bachelor degree is in Business Technology Support while
the second is in Business Education.
Recently, the TST department requested the purchase of new upgrades to Adobe CS5
software. There was a delay in upgrading the software for the TST department: a number of
years have passed since the TST department upgraded their software. This delay in upgrading the
software rendered some of it to be outdated. To overcome this issue with outdated software, a
faculty member in the department introduced the use of open source and free software to stay up-
to-date in regards to using technology in the classroom. This faculty member was selective in the
courses where the open source software was introduced so as to include students that can learn
more from this technology and to maintain a balance between the use of both types of software.
Table 1 below shows this balance in the use of both software types by this faculty member:

TABLE 1. A PARTIAL LIST OF SOFTWARE USED BY A FACULTY AT THE TST DEPARTMENT
Commercial Software Open source and free software
Dreamweaver
Flash
Photoshop
Sony Vegas
Word
Excel
Access
PowerPoint
Alice
PHP
MySQL
Ubuntu
OpenSUSE
Fedora
Squeak
SecondLife

RESEARCH SUMMARY

This paper explained the balance between commercial software and open source software
when it comes to using software in technology courses. It explained that recent budget cuts
forced academic departments to resort to non-conventional means of using or teaching software.
This led to an increased call to use Free and Open Source software. The paper explained the
benefits and drawbacks for software upgrades. It then explained the difference between
commercial software versus open source software. Last the paper emphasized the experience of
the TST department and how one faculty members in the department attempted to balance
between the use of commercial software versus open source software in order to overcome the
budget issue and to stay recent in technology upgrades.


101


REFERENCES

Albright, B. (2008). Ready to Upgrade? Behavioral Healthcare, 28(10) 28-29.
Ali, A., & Murthy, R. (2010). The Coordination between Faculty and Technical Support Staff in
Updating Computer Technology Courses A Case Example. Issues in Informing Science
and Information Technology, 7, 459-469.
Arteaga, C, & Lucas, T. (2005). So many labs, so little time. Proceedings of the 33rd annual
ACMSIGUCCS conference on User services. 192-196. Retrieved from ACM Digital
Libraryhttp://www.acm.org/dl
Damicon. (2007). List of open-source software links. Retrieved from
http://www.damicon.com/resources/opensoftware.html
Ellison, G., & Fudenberg, D. (2000). The neo-Luddite's lament: excessive upgrades in the
software industry. RAND Journal of Economics 31(2), 253-272.
Goldsborough, R. (2003). Computer Savvy. Community College Week, 15(18), 19-22.
Hopkins, J., & Kessler, M. (2002). Companies squander billions on tech. USA Today
05/20/2002. Retrieved from EBSCOHost.
Notess, G. R. (2008, November/December). The Downside of Upgrades. Online (Weston,
Conn.) 32(6), 42-44. Retrieved from Wilson Web.
Paine M (2000). Making Software Upgrades a First-Class Experience: Issues, opportunities and
speed bumps to consider for a smooth ride. Health Management Technology 21(4), 22-3.
The Standish Group (2010). Trends in IT Value Retrieved from
http://www.standishgroup.com/sample_research/index.php/ trends_itValue.pdf
Ye, Y., & Kishida, K. (2003). Toward and understanding of the motivation of open source
software developers. Retrieved from ACM Digital Library http://www.acm.org/dl






102


PREDICTION OF CUSTOMER BEHAVIOR ON RFMT MODEL USING ARTIFICIAL
NEURAL NETWORKS

Qeethara Kadhim Al-Shayea, Al-Zaytoonah University of Jordan
kit_alshayeh@yahoo.com

Ghaleb Awad El-Refae, Al-Zaytoonah University of Jordan
ghalebelrefae@yahoo.com


ABSTRACT

Nowadays huge amounts of data are available to companies about its customers. The goal
of this paper is to predict customer behavior using neural network. Artificial neural networks are
widely used in business disciplines. Feed-forward back propagation neural network is used as a
classifier to predict whether a customer will buy in this month or not. The results of applying the
artificial neural networks methodology to predict based upon Recency, Frequency, Monetary,
and Time (RFMT) model show the abilities of the network to learn the patterns corresponding to
RFMT of the customer. In this study, the data was obtained from University of California-Irvine
(UCI) Machine Learning Repository. The percent correctly classified in the simulation sample
by the feed-forward back propagation network is 75 percent. The results show that the proposed
predict neural network could be useful for identifying the buyer customer.

INTRODUCTION

The recent upsurge in research activities into Artificial Neural Networks (ANNs) has
proven that neural networks have powerful pattern classification and prediction capabilities
(Zhang, 2003). ANN have been applied to a variety of business areas such as accounting,
auditing, finance, management, decision making, marketing, and production.
Yeh, Yang, and Ting (2009) introduced a comprehensive methodology to discover the
knowledge for selecting targets for direct marketing from a database. This study expanded the
Recency, Frequency, Monetary value (RFM) model by including two parameters, time since first
purchase and churn probability. Using Bernoulli sequence in probability theory, they derive a
formula that can estimate the probability that one customer will buy the next time, and the
expected value of the total number of times that the customer will buy in the future.
Cheng and Chen (2009) proposed a new procedure, joining quantitative value of RFM
attributes and K-means algorithm into Rough Set theory (RS theory), to extract meaning rules,
that can effectively improve these drawbacks.
Sant'Anna and Ribeiro (2009) presented a new form of directly combining the values of
the RFM variables which is compared to an approach based on fitting a stochastic model. This
last model is a mixture of a model for the number of transactions and another for the value spent.
The new direct form of evaluation is based on computing the joint probability of maximizing
quality indicators.
Liou and Tzeng (2010) used the Dominance-based Rough Set Approach (DRSA) to
provide a set of rules for determining customer attitudes and loyalties, which can help managers,
develop strategies to acquire new customers and retain highly valued ones. A set of rules is
103


derived from a large sample of international airline customers, and its predictive ability is
evaluated. The results, as compared with those of multiple discriminate analyses, are very
encouraging. They prove the usefulness of the proposed method in predicting the behavior of
airline customers.
Chiu, Chen, Kuo, and Ku (2009) proposed a market segmentation system based on the
structure of decision support system which integrates conventional statistic analysis method and
intelligent clustering methods such as artificial neural network, and particle swarm optimization
methods. The proposed system is expected to provide precise market segmentation for marketing
strategy decision making and extended application.
Chen, Kuo, Wu, & Tang (2009) incorporated the recency, frequency, and monetary
(RFM) concept presented in the marketing literature to define the RFM sequential pattern and
develop a novel algorithm for generating all RFM sequential patterns from customers
purchasing data. Using the algorithm, they proposed a pattern segmentation framework to
generate valuable information on customer purchasing behavior for managerial decision-making.
Extensive experiments are carried out, using synthetic datasets and a transactional dataset
collected by a retail chain in Taiwan, to evaluate the proposed algorithm and empirically
demonstrate the benefits of using RFM sequential patterns in analyzing customers purchasing
data.
Chan (2008) presented a novel approach that combines customer targeting and customer
segmentation for campaign strategies. Additionally, he proposed using Generic Algorithm (GA)
to select more appropriate customers for each campaign strategy.
Li, Shue, and Lee (2008) proposed a Business Intelligence process for Internet Service
Provider (ISP) dealers in Taiwan to assist management in developing effective service
management strategies.

ARTIFICIAL NEURAL NETWORKS

An artificial neural network (ANN) is a computational model that attempts to account for
the parallel nature of the human brain. An (ANN) is a network of highly interconnecting
processing elements (neurons) operating in parallel. These elements are inspired by biological
nervous systems. As in nature, the connections between elements largely determine the network
function. A subgroup of processing element is called a layer in the network. The first layer is the
input layer and the last layer is the output layer. Between the input and output layer, there may be
additional layer(s) of units, called hidden layer(s). Figure 1 represents the typical neural network.
One can train a neural network to perform a particular function by adjusting the values of the
connections (weights) between elements.

104



FIGURE 1 A TYPICAL NEURAL NETWORK

The Proposed Prediction Model
The recency, frequency, monetary and time (RFMT) method is an approach used to
measure customer's loyalty and segment customers into various groups for future personalization
services. This study identifies customer behavior using the (RFMT) model.
Feed-forward neural networks are widely and successfully used models for prediction,
classification, forecasting, and problem solving. A typical feed-forward back propagation neural
network is proposed to predict the customer behavior. It consists of three layers: the input layer,
a hidden layer, and the output layer. A one hidden with 20 hidden layer neurons is created and
trained. The input and target samples are automatically divided into training, validation, and test
sets. The training set is used to teach the network. Training continues as long as the network
continues improving on the validation set. The test set provides a completely independent
measure of network accuracy. The information moves in only one direction, forward, from the
input nodes, through the hidden nodes and to the output nodes as shown in Figure 2. There are no
cycles or loops in the network.



FIGURE 2 FEED-FORWARD BACK PROPAGATION NETWORK

In a feed-forward neural network information always moves in one direction; it never
goes backwards. It allows signals to travel one-way only; from source to destination; there is no
feedback. The hidden neurons are able to learn the pattern in data during the training phase and
mapping the relationship between input and output pairs. Each neuron in the hidden layer uses a
transfer function to process data it receives from the input layer and then transfers the processed
105


information to the output neurons for further processing using a transfer function in each neuron.
The output of the hidden layer can be represented by
YNx1 = f(WNxM XM,1 + bN,1 ) (1)
where Y is a vector containing the output from each of the N neurons in a given layer, W
is a matrix containing the weights for each of the M inputs for all N neurons, X is a vector
containing the inputs, b is a vector containing the biases and f() is the activation function
(Freeman & Skapura, 1991).

EXPERIMENTAL RESULTS

Data Analysis
The data is obtained from UCI Machine Learning Repository. The data was adopted
from Blood Transfusion Service Center in Hsin-Chu City in Taiwan. The center passes their
blood transfusion service bus to one university in Hsin-Chu City to gather blood donated about
every three months. The main idea of this data set is to construct the neural network model,
which will perform the presumptive prediction of customer behavior. These donor data, each one
included R (Recency - months since last donation), F (Frequency - total number of donation), M
(Monetary - total blood donated in c.c.), T (Time - months since first donation), and a binary
variable representing whether he/she donated blood in March 2007 (1 stand for donating blood; 0
stands for not donating blood).
The data set contains 748 samples. Five hundred samples used in training the network
while 248 samples were used in testing the network. Table 1 presents the parameters which are
considered as predictor variables. The data set is processed using Microsoft Office Excel 2003 to
be appropriate to the neural network.
TABLE 1. PREDICTOR VARIABLE OF DATASETS USED IN THE STUDY
Blood Transfusion Service Center data
S. No. Predictor Variable Name
1 R (Recency - months since last donation)
2 F (Frequency - total number of donation)
3 M (Monetary - total blood donated in c.c.)
4 T (Time - months since first donation)

Performance Evaluation
A two-layer feed-forward network with 4 inputs and 20 sigmoid hidden neurons and
linear output neurons was created using the neural network toolbox from Matlab 7.9. Such net
can fit multi-dimensional mapping problems arbitrarily well, given consistent data and enough
neurons in its hidden layer as shown in Figure 2.
Levenberg-Marquardt back propagation algorithm was used to train the network.
Training automatically stops when generalization stops improving, as indicated by an increase in
the Mean Square Error (MSE) of the validation samples.
The results of applying the artificial neural networks methodology to distinguish between
buyer and non buyer customer based upon (RFMT) model showed very good abilities of the
network to learn the patterns corresponding to (RFMT) parameters. The network was simulated
in the testing set (i.e. cases the network has not seen before). The results were good; the network
was able to predict 75% of the cases in the testing set. Best validation performance is 0.073909
106


at epoch 8 as shown in Figure 3. The Mean Squared Error (MSE) is the average squared
difference between outputs and targets. Lower values are better while zero means no error.


FIGURE 3 BEST VALIDATION PERFORMANCE

Table 2 presents the result for training, validation and testing samples. Mean squared error
(MSE) and Regression (R) is illustrated in Table 2.

TABLE 2. THE MEAN SQUARE ERROR (MSE) AND REGRESSION (R) VALUES FOR THE
TRAINING, VALIDATION AND TESTING.
MSE R
Training 7.69076e-2 8.22864e-1
Validation 7.39092e-2 8.39809e-1
Testing 1.13412e-1 7.40844e-1

The percent correctly classified in the simulation sample by the feed-forward back
propagation network is 75 percent as shown in Fig. 4. The MSE value is equal to 1.04846e-1 and
the regression value is equal to 7.51475e-1.


FIGURE 4
107



DISCUSSION

This study aimed to test the neural network model with learning algorithm: the feed-
forward back propagation neural network with supervised learning in terms of their ability to
predict. The results of applying the supervised neural networks to predict the customer behavior
based upon the RFMT model showed that artificial neural networks are able to learn the patterns
corresponding to RFMT parameters. Artificial neural networks showed significant results in
prediction of the customer behavior.

REFERENCES

Freeman, J. A., & Skapura, D. M. (1991). Neural networks: algorithms, applications and
programming techniques. Redwood City, CA: Addison Wesley Longman.
Chan, C. C. H. (2008). Intelligent value-based customer segmentation method for campaign
management: A case study of automobile retailer. Expert Systems with Applications,
34(4), 2754-2762.
Chen, Y., Kuo, M., Wu, S. & Tang, K. (2009). Discovering recency, frequency, and monetary
(RFM) sequential patterns from customers purchasing data. Electronic Commerce
Research and Applications, 8(5), 241-251.
Cheng, C., & Chen, Y. (2009). Classifying the segmentation of customer value via RFM model
and RS theory. Expert Systems with Applications, 36(3), 4176-4184.
Chiu C., Chen, Y., Kuo, I., & Ku, H. (2009). An intelligent market segmentation system using k-
means and particle swarm optimization. Expert Systems with Applications, 36(3), 4558-
4565.
Li, S., Shue, L., & Lee, S. (2008). Business intelligence approach to supporting strategy-making
of ISP service management. Expert Systems with Applications, 34(3), 739-754.
Liou, J. H., & Tzeng, G. (2010). A Dominance-based Rough Set Approach to customer behavior
in the airline market. Information Sciences, 180, 22302238.
Sant'Anna, A. P., & Ribeiro, R. O. (2009). Statistical modeling and probabilistic composition in
the prediction of the customer lifetime value. Benchmarking: An International Journal,
16(3), 335350.
Yeh, I., Yang, K., & Ting, T. (2009). Knowledge discovery on RFM model using Bernoulli
sequence. Expert Systems with Applications, 36(3), 5866-5871.
Zhang, G. P. (Ed.) (2004). Neural Networks in Business Forecasting. Hershey, PA: Idea Group
Publishing.


108










CHAPTER 6

CROSS CULTURAL COMMUNICATION

109


A RESEARCH MODEL FOR MULTILINGUAL ELECTRONIC MEETING SYSTEMS

David Pumphrey, University of Mississippi
dpumphrey@bus.olemiss.edu

Milam Aiken, University of Mississippi
maiken@bus.olemiss.edu

Mahesh Vanjani, Texas Southern University
vanjanim@tsu.edu


ABSTRACT

The study of multilingual, electronic meetings is still in its infancy and there is a need to better
understand the impact of the supporting machine translation technology. This paper builds on a
previous model of electronic meeting research to create a new framework emphasizing the role
that interpretation and translation play in multilingual discussions. In addition, this study presents
a mathematical model for the comparison of oral and electronic meetings in terms of the number
of ideas generated and costs required when multiple languages are used. The paper concludes
with directions for further research.

INTRODUCTION

In todays global business environment, communication across widely distributed,
multinational workforces is a significant challenge. Although English has become the de facto
language of business in many countries, when given a preference, most people prefer their native
language to communicate most effectively. Because of this, many companies choose to arrange
interpreters for critical business discussions, but human interpreters are expensive and are,
typically, not available without prior planning, which inhibits their use for a large percentage of
multilingual deliberations (Fgen & Williams, 2007). With many employees spending 20% to
80% of their work hours in meetings, the logistical challenges of communicating globally
through interpreters can decrease productivity within multinational companies. Budgetary
constraints can also prevent many companies from providing the interpreters necessary for
meetings.
Multilingual, electronic meeting systems offer a cost-effective and readily available
alternative to human interpreters. However, little is known about the limitations of this relatively
new technology. For example, what is the maximum group size that is feasible in these meetings,
and how many different languages can be used? This paper compares the accuracy and speed
tradeoffs between multilingual, oral and electronic meetings, and presents a comprehensive
research model for future studies.

MATHEMATICAL MODEL

Much research has shown that for large groups needing to exchange opinions, computer-
based meetings can improve effectiveness and efficiency by increasing participation, the quantity
110


and quality of comments, and process satisfaction. However, the vast majority of this research
has been conducted with experiments using a single language, typically English. Although a few
studies have been conducted with electronic meetings incorporating automatic translation to
solve this inter-lingual communication problem, relatively little is known about how groups use
this new technology. In particular, the tradeoffs in costs and time between electronic and oral
meetings have not been explored. Accordingly, we attempt to develop a mathematical model to
explain the various interrelationships among group size, the number of languages, translation
speed, and other factors.

Simple Interpretation or Translation Model
A few mathematical models of electronic meetings have been developed in the past (e.g.,
Aiken & Vanjani, 2002; Valacich & Dennis, 1994), but none have incorporated language
translation as a factor. As shown in Figure 1, group members come to a multilingual meeting
with a preferred language for communication. During the meeting, a human or machine provides
interpretation in the case of an oral discussion, or, translation when ideas are typed, with varying
accuracy, speed, and cost, and group members attempt to comprehend each comment as it is
made. After the meeting, a transcript is provided in each of the group members languages, and
the participants attempt to comprehend the overall text.

FIGURE 1. INTERPRETED/TRANSLATED MEETING MODEL

Accuracy and Speed
Because the transformation of information from a source to a target language is the most
important part of the model, human or machine accuracy, speed, and cost are perhaps the most
important factors. Expert human interpretation is still superior to the best output from machines,
but humans can still make errors. Machine accuracy depends upon the software used, language
pair, and text complexity. Human comprehension of the results has varied from 40% to 100%.
On the other hand, most human interpreters perform well with 80% accuracy considered to be
acceptable (Fgen, Waibel, & Kolss, 2007).
However, machines are much faster than humans, and during an electronic meeting with
a limited duration, speed matters. For example, group members might not be willing to wait two
or three minutes for a human to interpret an utterance, as the conversation could be too far along
by that time. In addition, an interpretation provided after the meeting when the participants have
111


left is of no use. In many short, informal, idea-gathering meetings such as focus groups, only the
gist of an idea is crucial, and thus, fast, less accurate machine translation might be appropriate.
Nevertheless, there is probably some minimum accuracy below which group members
will not participate in a multilingual meeting, as very poor translations might prove to be too
confusing and frustrating. Also, there is probably some maximum time that group members are
willing to wait for a translation. Otherwise, the value of the transformed comment could be the
accuracy divided by the time. Accordingly, we propose the following step function to calculate
the value of translated comments:
If accuracy < minimum accuracy value = 0
If time > maximum time value = 0
Otherwise value = accuracy / time
For example, if the minimum required accuracy during a meeting is 50%, and the maximum time
limit for translation or interpretation is 2 minutes after an idea has been expressed with the
following language pairs, we have:
Swahili to English: 35% accuracy in .1 min value = 0 (too little accuracy)
German to French: 88% accuracy in .1 min value = 8.8
Spanish to Russian: 100% accuracy in 2.2 min value = 0 (too much time)

Comment Generation Rates
A single human interpreter is likely to take at least 15 to 20 seconds to translate a foreign
comment into each language used during a meeting and will be overwhelmed with the task once
the group size reaches five or six with more than two or three languages. In addition, oral group
members must take turns speaking, and the average number of comments per person per minute
has been estimated to be about 0.16 (Aiken & Vanjani, 2002).
During an electronic meeting, however, group members can all submit comments at the
same time, and prior studies have indicated that participants might be able to contribute about
0.38 comments per person per minute (Aiken & Vanjani, 2003; Aiken, Sudderth, & Motiwalla,
1997). Previous studies have shown a breakeven point of about seven when comparing the
number of comments generated by oral and electronic groups (Dennis & Williams, 2008), but
with the added time needed to interpret and write oral comments, there appears to be no
breakeven point for equivalent oral and computer-based meetings. More comments are
immediately possible with the latter technique, and the gap continues to widen as group size
increases.
Since more text is being generated in an electronic meeting, MT accuracy might be less
to reach the same value of the exchanged information. Assuming 100% accuracy for a human-
interpreted meeting with a generation rate of 0.25 comments per person per minute, the
equivalent accuracy for a machine translated meeting would need to be only 66% at a 0.38 rate.

Costs
In addition to accuracy and speed, interpretation or translation costs are also an important
factor, and these are affected by group size and the number of languages involved in a meeting.
The only extra cost associated with an oral, multilingual meeting is the expense of interpretation,
assuming one or more group members do not undertake the task for free. In a meeting with N
languages, N-1 interpreters are needed for each language pair.
It is difficult to estimate the cost to hire an interpreter, as the expense varies widely
depending upon experience, language, and availability. Some translation cost estimates are made
112


on a per word basis, e.g., $0.05. In 2009, the median hourly wage of salaried interpreters and
translators was US $18.34 (Collegegrad, 2010); others have made US $20 per hour. However,
these rates do not include travel or minimum charges. These charges might be reflected in the
substantially higher rates reported for some interpreters in Europe (between US $423 and $564
per hour) (Fgen et al., 2007).
In an electronic meeting, translation services can be provided free over the Web, e.g.,
through Google Translate (Aiken & Vanjani, 2009), and thus, costs are invariant with the
number of languages. However, group members need computers with wireless capabilities in
order to communicate.
In an oral meeting, the cost varies only by language as only one person can speak at a
time. In an electronic meeting, the cost varies only by group size, because each person needs a
computer to type comments. Assume each person in a meeting uses a different language with
human interpretation costs of US $18.34 per hour and laptop costs of $11.13 per hour. Using
these values, the breakeven point is between two and three people during a 90-minute meeting.
Furthermore, at a variety of meeting lengths, the breakeven point remains between two and three
people. In examples using higher interpreter costs or different equipment costs, these breakeven
points will change.

RESEARCH MODEL AND FUTURE DIRECTIONS

Multilingual Meeting Research Model
Different models have been developed over the years to enable researchers to understand
the complex relationships involved in computer-based meetings. Based upon an earlier electronic
meeting model (Aiken et al., 1997), we propose the model shown in Figure 2 and described
below to illustrate the activities that occur in multilingual, oral and electronic discussions.
This model has three phases (factors that are determined before, during, and after the
meeting) that coincides with the Input-Process-Output model used for other information system
and group research (Ilgen, Hollenbeck, Johnson, & Jundt, 2005; Sarker & Wells, 2003). Each
phase is described in detail below with possible directions for future research in the field on
multilingual meetings:


FIGURE 2. MULTILINGUAL MEETING RESEARCH MODEL
113


Future Research
Future research, classified by the variables impacted in the model, includes the following:
INPUT:
Group
Size: Is there an upper limit to the group size in a multilingual meeting? In an electronic
meeting, group members can meet asynchronously, in different locations. Thus, a computer-
based meeting has a theoretically infinite size.
Organizational level: Do upper-level managers have a higher expectation for translation
accuracy in a multilingual meeting?
Organizational Culture: Does the existence of a diverse workforce in a company contribute to
the acceptance or rejection of multilingual electronic meetings? Do group members
understand poorly translated comments better if they come from a diverse workforce that
uses different languages?
History: Does group history affect participants abilities to understand poor translations?
Over time with more experience with multilingual meetings, group members might better
understand what poorly translated comments mean.
Task
Type: Are different types of meetings more appropriate for translation?
Complexity: Does translation quality suffer as the technical jargon and other complexities
increases?
Technology
User interface: How does the design of the user interface in a multilingual system affect
users perceptions?
Technique: What affect does the meeting technique have on user perceptions in a
multilingual discussion?
PROCESS:
Meeting
Comment comprehension: What are better measures for the impact of speed and
comprehension on the value of information? How quickly must a comment be translated in
order to be used effectively?
Production blocking: What is the impact of slow translation on the production of new
comments?
Evaluator apprehension: What affect does translation have on anonymity? If a group member
sees a poorly-worded comment, he or she might suspect it has been translated, and thus, one
of the foreign group members would be suspected of writing it.
Translator
Speed: What processes can be used to increase the productivity of human interpreters? Will
their translation speed increase if they are allowed to use Web-based MT?
Accuracy: Can other techniques be developed to enhance MT accuracy? Does a human
interpreters accuracy decrease over time because of fatigue? What is the minimum amount
of information that group members expect to comprehend in a meeting?
Cost: What other factors affect the cost of a multilingual meeting?
OUTPUT:

114


Comments
Quantity: Does better translation accuracy increase the number of comments generated in a
meeting?
Quality: Does the comment quality increase with better accuracy?
Satisfaction
Comment: How does translation accuracy affect comment satisfaction?
Process: How does translation accuracy affect meeting process satisfaction?

CONCLUSION

This paper describes a mathematical model of multilingual meetings that enables
practitioners to make effective comparisons between oral and computer-based environments.
Electronic multilingual meetings, though less accurate, are much faster, possibly resulting in
greater information value for participants for nearly all group sizes. In addition, the paper
presents a research model with suggestions for possible future study.

REFERENCES

Aiken, M., Sudderth, T., & Motiwalla, L. (1997). A group support system cost-benefit analysis.
International Business Schools Computing Quarterly, 9(1), 1-6.
Aiken, M. & Vanjani, M. (2003). Comment distribution in electronic poolwriting and gallery
writing meetings, Communications of the International Information Management
Association, 3(2), 17-36.
Aiken, M. & Vanjani, M. (2002). A mathematical foundation for group support system research.
Communications of the International Information Management Association, 2(1), 73-83.
Aiken, M. & Vanjani, M. (2009). Polyglot: A Multilingual Group Support System. Issues in
Information Systems, 10(2), 101-106.
Collegegrad (2010). Career information: interpreters and translators. Retrieved from
http://www.collegegrad.com/careers/Interpreters-and-Translators.shtml#ear
Dennis, A. & Williams, M. (2008). Group size effects in electronic brainstorming. Encyclopedia
of E-Collaboration, Hershey, PA: IGI Global, 330-336.
Fgen, C., Waibel, A., & Kolss, M. (2007). Simultaneous translation of lectures and speeches.
Machine Translation, 21(4), 209-252.
Ilgen, D., Hollenbeck, J., Johnson, M., & Jundt, D. (2005). Teams in organizations: From input-
process-output models to IMOI models. Annual Review of Psychology, 56, 517-543.
Keranen, N., & Bayyurt, Y. (2006). Intercultural tele-collaboration: In-service EFL teachers in
Mexico and pre-service EFL teachers in Turkey. Retrieved from http://tesl-
ej.org/ej39/a1.html
Sarker, S., & Wells, J. (2003). Understanding mobile handheld device use and adoption.
Communications of the ACM, 46(12), 35-40.
Valacich, J., & Dennis, A. (1994). A mathematical model of performance of computer-mediated
groups during idea generation, Journal of Management Information Systems, 11(1), 59-
72.

115


ANALYSIS OF THE EFFECTIVENESS OF CORPORATE RESPONSIBILITY AS A PR
STRATEGY BY CATALAN SOCCER TEAM CLUBS

Xavier Ginesta, University of Vic
Xavier.ginesta@uvic.cat

Enric Ordeix, Ramon Llull University
enricor@blanquerna.url.edu


ABSTRACT

Organizational culture is a constantly evolving business. Currently, Corporate Social
Responsibility (CSR) is presented as an essential element for organizations to transmit their
values to society and to ensure respect for their stakeholders. Professional soccer has also had
this evolution and major sports clubs and corporations have created their foundations in order to
promote social projects in the same direction. In Catalonia, FC Barcelona, RCD Espanyol or the
Catalan Soccer Federation (FCF) devised their foundations to articulate certain social projects,
from grassroots management of the entity to the internationalization of the brand through the
sponsorship of solidarity (including the famous contract between FC Barcelona and UNICEF).
This article focuses on the analysis, through in-depth interviews with their communication
directors, of the communication structure of the foundations of professional Catalan soccer (FC
Barcelona, RCD Espanyol and the Catalan Soccer Federation) and aims to establish analysis
indicators to determine excellence in Public Relations (PR) management in the social area.

INTRODUCTION AND THEORETICAL FRAMEWORK

The purpose of PR is to achieve a significant complicity with public organizations in
order to have maximum adaptability to the interests of the community and avoid inefficiencies in
its management strategy of confidence. Thus, the legitimacy of organizations lies in their greater
ability to articulate the professional skills relating to communication skills, knowledge of the
environment, and the determination of organizational attitudes. It is commonly understood that
organizations, especially those with a significant social weight as the sports foundations that take
part in the sample of this research (FC Barcelona Foundation, Private Foundation RCD Espanyol
and Private Catalan Soccer Foundation), trying to find a lowest common denominator as
attitudes and social values are concerned, to swell the mainstreaming of the mark. The role of PR
in this process of legitimization is to demonstrate the ability of the entity to correspond to these
principles (Ordeix & Duarte, 2009). If on the one hand, advertising and marketing promise and
the organization undertakes, PR should boast as vehicles and justification of this promise and
also must develop activities that allow them to be present in the media in public debate as
opinion leaders of these concepts.
To understand this phenomenon we must take into account three significant changes in
the management of the values of the organizations in the new digital age: organizational changes,
communicative changes and attitudinal changes. In relation to the organizational changes, open
systems distributed organizational roles, responsibilities and power among members of an
organization in a holistic way, adaptable to the environment and with a clear focus to the mission
116


and vision of the organization (Mintzberg, 1995). Referred to the communicative changes,
Information and Communication Technologies, ICT (digital television, Internet, and mobile
telephony), have caused a fundamental change in communication processes, especially in
strategic areas such as human resources, public relations, and marketing. The horizontal
communication structures that combine horizontal and vertical flows, formal and informal
relationships between members of the organization are forced to work the viral messages with
much greater precision and taking into account the effects, positive or negative, that the actions
of public it may have on the organization (Freeman, 1984; Inkpen, 2001). Finally, the changes
mentioned above operate at the expense of substances change in attitudes. An entrepreneurial
attitude is an attitude more widely ethical (honesty, openness, humanity, commitment) than
previously. That is, just be ethical to be profitable in the medium and long term, as there is
greater public loyalty and improved construction of the principles that define the brand.
Therefore, one of the basic principles of good management of PR is to balance the private
interest of the organization with the interest of the stakeholders and society. Excellent PR has to
plan strategically and establish symmetrical communication programs, a basic premise to be
socially responsible (Grunig, 1992, p. 241). Modern organizations are undergoing substantial
changes as widely known as "the corporate" understood as its own definition as an entity: the
mission, vision and values. This phenomenon is also causing a rethink in the roles of PR
management and the strategic objectives conceived as communicative. The culture of immediacy
has transcended loyalty towards environment, which has led to greater sensitivity to change
management (Kotter, 1998; Moss, 2004). The modern PR, therefore, tend to foresee and to
mediate conflicts caused by such changes. In turn, it seeks a rapprochement with the opinion
leaders and stands as such in its sector and within the concepts that define organizational culture,
especially in the values that build brand, whether or not public interest concepts. It supervises
and guides the strategic communication policy to be consistent with the expectations generated is
another essential role that comes from changes in the management of public relations. Therefore,
managers should investigate trends and opportunities posed by the commitments of the
organization and the risks that may result from false expectations that cannot be met. The PR
director becomes a builder and keeps the organizational culture and the management of
institutional communication that refers to the brand values. He/she is an opinion leader and has
to generate a sense of belonging to the project, in order to appease both internal and external
audiences. We could divide, then, the management of public relations into four basic areas:

FIGURE 1. AREAS OF PUBLIC RELATIONS MANAGEMENT
Business Area Corporate Area
Marketing Communication
Product Public Relations
Celebrity events
Network loyalty with members and fans
Publicity Actions
Corporate policies
Brand values
Communication Guidelines
Institutional Relations
Journalistic Area Social Area
Publicity Actions
Press offices
Own media management
Content creation
Patronage and social and cultural sponsorship
Corporate Social Responsibility (CSR)
Community relations
Social marketing
117


In conclusion, management of PR has vital importance for the management of corporate
personality: it gets in touch organizations with recognized opinion leaders in areas of shared
interest, who are seeking the legitimacy of the organizations to swell the representation of values
or concepts and, ultimately, affect the social dimension of the organization thanks to the
conviction and involvement of people linked.

FOUNDATIONS AND SOCCER: ANALYSIS OF THEIR COMMUNICATION

Spanish sports foundations had a dramatic increase during the decade from 1995-2004,
especially from 2002 with the new Act 50/2002 on Foundations. FC Barcelona Foundation was
founded in 1994, RCD Espanyol in 1997, and the foundation of FCF in 2003. Although some
studies (Arvalo, 2006) suggest that there was no direct link between both clubs and their
foundations in the moment of the creation, the organization of these foundations does not leave
place for doubt about the link between club structures and the foundation. Among other things,
both clubs and the Federation have made the communication department and PR departments the
same across organizations. In all three cases, the PR activity is restricted to be purely technical
and protocol is associated with the organization of events. The strategic aspect of this profession
is included, in all three cases, in the functions of the communication department that in the
management of content and in the visibility of the message assumes a hierarchically superior
role. In the case of RCD Espanyol, even more significant is the relationship between club and
foundation bearing in mind that not only cross synergies in regard to the structure of
communication, but also in the sports area, because the club foundation has in managing the
education of youth soccer program one of the main reasons for being. Figure 2 summarizes the
main activities of the foundations:

FIGURE 2. CLASSIFICATION OF SOCIAL PROJECTS CATALAN SPORTS FOUNDATION
Training Public spirit Cooperation Culture
FCB Found.

XICS (International
Network of
Solidarity Centers)

JES (Sports
Outreach Days)
Online training
resources
"Jugala"

Program equip
Fem, Fem ciutat

Tournament for
immigrants "All
colous"
XICS (International
Network of
Solidarity Centers)

Programs of
cooperation with
the United Nations
(UNESCO,
UNICEF and
UNHCR)
Vzquez Montalbn Awards

Programme for the
Promotion of Culture Leters
in the stadium"
RCDE Found. XEF (Soccer
Schools Network)
Foundation Forums
Agreement with
universities
Campus Espanyol,
English & Soccer
Circle of Friends
of Espanyol
Publishing of books and
videos
FCF Found.

Patronage of
players

118


In conclusion, management of PR has vital importance for the management of corporate
personality: it gets in touch organizations with recognized opinion leaders in areas of shared
interest, who are seeking the legitimacy of the organizations to swell the representation of values
or concepts and, ultimately, affect the social dimension of the organization thanks to the
conviction and involvement of people linked.

FOUNDATIONS AND SOCCER: ANALYSIS OF THEIR COMMUNICATION

Spanish sports foundations had a dramatic increase during the decade from 1995-2004,
especially from 2002 with the new Act 50/2002 on Foundations. FC Barcelona Foundation was
founded in 1994, RCD Espanyol in 1997, and the foundation of FCF in 2003. Although some
studies (Arvalo, 2006) suggest that there was no direct link between both clubs and their
foundations in the moment of the creation, the organization of these foundations does not leave
place for doubt about the link between club structures and the foundation. Among other things,
both clubs and the Federation have made the communication department and PR departments the
same across organizations. In all three cases, the PR activity is restricted to be purely technical
and protocol is associated with the organization of events. The strategic aspect of this profession
is included, in all three cases, in the functions of the communication department that in the
management of content and in the visibility of the message assumes a hierarchically superior
role. In the case of RCD Espanyol, even more significant is the relationship between club and
foundation bearing in mind that not only cross synergies in regard to the structure of
communication, but also in the sports area, because the club foundation has in managing the
education of youth soccer program one of the main reasons for being. Figure 2 summarizes the
main activities of the foundations:

FIGURE 2. CLASSIFICATION OF SOCIAL PROJECTS CATALAN SPORTS FOUNDATION
Training Public spirit Cooperation Culture
FCB Found.

XICS (International
Network of
Solidarity Centers)

JES (Sports
Outreach Days)
Online training
resources
"Jugala"

Program equip
Fem, Fem ciutat

Tournament for
immigrants "All
colous"
XICS (International
Network of
Solidarity Centers)

Programs of
cooperation with
the United Nations
(UNESCO,
UNICEF and
UNHCR)
Vzquez Montalbn Awards

Programme for the
Promotion of Culture Leters
in the stadium"
RCDE Found. XEF (Soccer
Schools Network)
Foundation Forums
Agreement with
universities
Campus Espanyol,
English & Soccer
Circle of Friends
of Espanyol
Publishing of books and
videos
FCF Found.

Patronage of
players

118
In conclusion, management of PR has vital importance for the management of corporate
personality: it gets in touch organizations with recognized opinion leaders in areas of shared
interest, who are seeking the legitimacy of the organizations to swell the representation of values
or concepts and, ultimately, affect the social dimension of the organization thanks to the
conviction and involvement of people linked.

FOUNDATIONS AND SOCCER: ANALYSIS OF THEIR COMMUNICATION

Spanish sports foundations had a dramatic increase during the decade from 1995-2004,
especially from 2002 with the new Act 50/2002 on Foundations. FC Barcelona Foundation was
founded in 1994, RCD Espanyol in 1997, and the foundation of FCF in 2003. Although some
studies (Arvalo, 2006) suggest that there was no direct link between both clubs and their
foundations in the moment of the creation, the organization of these foundations does not leave
place for doubt about the link between club structures and the foundation. Among other things,
both clubs and the Federation have made the communication department and PR departments the
same across organizations. In all three cases, the PR activity is restricted to be purely technical
and protocol is associated with the organization of events. The strategic aspect of this profession
is included, in all three cases, in the functions of the communication department that in the
management of content and in the visibility of the message assumes a hierarchically superior
role. In the case of RCD Espanyol, even more significant is the relationship between club and
foundation bearing in mind that not only cross synergies in regard to the structure of
communication, but also in the sports area, because the club foundation has in managing the
education of youth soccer program one of the main reasons for being. Figure 2 summarizes the
main activities of the foundations:

FIGURE 2. CLASSIFICATION OF SOCIAL PROJECTS CATALAN SPORTS FOUNDATION
Training Public spirit Cooperation Culture
FCB Found.

XICS (International
Network of
Solidarity Centers)

JES (Sports
Outreach Days)
Online training
resources
"Jugala"

Program equip
Fem, Fem ciutat

Tournament for
immigrants "All
colous"
XICS (International
Network of
Solidarity Centers)

Programs of
cooperation with
the United Nations
(UNESCO,
UNICEF and
UNHCR)
Vzquez Montalbn Awards

Programme for the
Promotion of Culture Leters
in the stadium"
RCDE Found. XEF (Soccer
Schools Network)
Foundation Forums
Agreement with
universities
Campus Espanyol,
English & Soccer
Circle of Friends
of Espanyol
Publishing of books and
videos
FCF Found.

Patronage of
players

118


From this figure, we can consider that the main point of contact among the foundation's
activities is in the field of education, associated with the development of civic values. However,
since 2006 and the relaunch of the FC Barcelona Foundation, international cooperation
agreements with the United Nations agencies have focused on the activities of this foundation. It
is remarkable to see how cultural activity is at a residual level, so that the basic element of
excellence in PR management coined by Grunig (1992) in synergy with the environment is
limited to the promotion of universal values such as solidarity and citizenship, instead of
promoting more local settings such as might be cultural.
The social projection of projects which are reflected in Figure 2 would not be possible
without the support from the departments of communications and PR of clubs and the
Federation. In this sense, we must take into consideration the substantial changes marked in the
beginning of this paper which reflects the importance of new technologies in the communication
structures of organizations. Currently, the implementation of ICT in the management of
communication has allowed organizations to create a self contained area (to the traditional
corporate publications, it has created the web or a digital television), important enough to not
rely solely on the opinion rendered by the social media and to have greater control over the
content published.


From a standpoint of bidirectionality and public representation, we can see that the FC
Barcelona Foundation has built a sphere of influence and responsiveness in society bigger than
the other analyzed foundations. As an example, Bara TV works as a factory for different
audiovisual content for television channels and sells six hours of weekly content of FC Barcelona
to 144 clients (television channels and producers) worldwide (Ginesta, 2009).
Another remarkable concept in Figure 3, and related to the idea of the expansion of the
international message of sports organizations, is the use of ICT by these foundations. The
importance of ICT in corporate communication lies in two aspects: the internationalization of the
organization and the efficiency in the management of change. First, these foundations have in
web pages and their services (informational, social, educational and public relations) the most
efficient tool for its global and at the same time, local expansion. Analysis of Figure 3 follows
that the multimedia integration of the websites of FC Barcelona and RCD Espanyol is a fact,
especially, considering that both clubs have developed their own area of audiovisual
content. Related with the viewers, we must highlight the absolute domination of FC Barcelona,
with 26.3 million page views per month, against the 4 million page views per month of RCD
Espanyol (Ginesta, 2009, p. 352). Secondly, the use of ICT allows for greater communication
management demands arising from the management of organizational change and the principles
derived from the adaptation to the bases of knowledge management. To finish the conceptual
develop of Figure 3, make a notation on the importance of the official journals for the
transmission of values associated with the projects of the foundations. Such publications have
FIGURE 3. OWN MEDIA OF THE FOUNDATIONS
FC Barcelona Web (Bara TV Online, Radio B@ra), YouTube Channel, E-
Newsletter, Bara TV, Mobile Services, Bara Magazine, Junior
Bara Magazine, Bara Camp Nou Magazine, FCBusiness Magazine
RCD Espanyol Web (Espanyol TV), E-Newsletter, Mobile Services,
RCDE Magazine, Pericos Matx Magazine, Infoacci Magazine
FCF Web, Temps Afegit Magazine, Futbol Fundaci Magazine
119


From this figure, we can consider that the main point of contact among the foundation's
activities is in the field of education, associated with the development of civic values. However,
since 2006 and the relaunch of the FC Barcelona Foundation, international cooperation
agreements with the United Nations agencies have focused on the activities of this foundation. It
is remarkable to see how cultural activity is at a residual level, so that the basic element of
excellence in PR management coined by Grunig (1992) in synergy with the environment is
limited to the promotion of universal values such as solidarity and citizenship, instead of
promoting more local settings such as might be cultural.
The social projection of projects which are reflected in Figure 2 would not be possible
without the support from the departments of communications and PR of clubs and the
Federation. In this sense, we must take into consideration the substantial changes marked in the
beginning of this paper which reflects the importance of new technologies in the communication
structures of organizations. Currently, the implementation of ICT in the management of
communication has allowed organizations to create a self contained area (to the traditional
corporate publications, it has created the web or a digital television), important enough to not
rely solely on the opinion rendered by the social media and to have greater control over the
content published.


From a standpoint of bidirectionality and public representation, we can see that the FC
Barcelona Foundation has built a sphere of influence and responsiveness in society bigger than
the other analyzed foundations. As an example, Bara TV works as a factory for different
audiovisual content for television channels and sells six hours of weekly content of FC Barcelona
to 144 clients (television channels and producers) worldwide (Ginesta, 2009).
Another remarkable concept in Figure 3, and related to the idea of the expansion of the
international message of sports organizations, is the use of ICT by these foundations. The
importance of ICT in corporate communication lies in two aspects: the internationalization of the
organization and the efficiency in the management of change. First, these foundations have in
web pages and their services (informational, social, educational and public relations) the most
efficient tool for its global and at the same time, local expansion. Analysis of Figure 3 follows
that the multimedia integration of the websites of FC Barcelona and RCD Espanyol is a fact,
especially, considering that both clubs have developed their own area of audiovisual
content. Related with the viewers, we must highlight the absolute domination of FC Barcelona,
with 26.3 million page views per month, against the 4 million page views per month of RCD
Espanyol (Ginesta, 2009, p. 352). Secondly, the use of ICT allows for greater communication
management demands arising from the management of organizational change and the principles
derived from the adaptation to the bases of knowledge management. To finish the conceptual
develop of Figure 3, make a notation on the importance of the official journals for the
transmission of values associated with the projects of the foundations. Such publications have
FIGURE 3. OWN MEDIA OF THE FOUNDATIONS
FC Barcelona Web (Bara TV Online, Radio B@ra), YouTube Channel, E-
Newsletter, Bara TV, Mobile Services, Bara Magazine, Junior
Bara Magazine, Bara Camp Nou Magazine, FCBusiness Magazine
RCD Espanyol Web (Espanyol TV), E-Newsletter, Mobile Services,
RCDE Magazine, Pericos Matx Magazine, Infoacci Magazine
FCF Web, Temps Afegit Magazine, Futbol Fundaci Magazine
119

From this figure, we can consider that the main point of contact among the foundation's
activities is in the field of education, associated with the development of civic values. However,
since 2006 and the relaunch of the FC Barcelona Foundation, international cooperation
agreements with the United Nations agencies have focused on the activities of this foundation. It
is remarkable to see how cultural activity is at a residual level, so that the basic element of
excellence in PR management coined by Grunig (1992) in synergy with the environment is
limited to the promotion of universal values such as solidarity and citizenship, instead of
promoting more local settings such as might be cultural.
The social projection of projects which are reflected in Figure 2 would not be possible
without the support from the departments of communications and PR of clubs and the
Federation. In this sense, we must take into consideration the substantial changes marked in the
beginning of this paper which reflects the importance of new technologies in the communication
structures of organizations. Currently, the implementation of ICT in the management of
communication has allowed organizations to create a self contained area (to the traditional
corporate publications, it has created the web or a digital television), important enough to not
rely solely on the opinion rendered by the social media and to have greater control over the
content published.


From a standpoint of bidirectionality and public representation, we can see that the FC
Barcelona Foundation has built a sphere of influence and responsiveness in society bigger than
the other analyzed foundations. As an example, Bara TV works as a factory for different
audiovisual content for television channels and sells six hours of weekly content of FC Barcelona
to 144 clients (television channels and producers) worldwide (Ginesta, 2009).
Another remarkable concept in Figure 3, and related to the idea of the expansion of the
international message of sports organizations, is the use of ICT by these foundations. The
importance of ICT in corporate communication lies in two aspects: the internationalization of the
organization and the efficiency in the management of change. First, these foundations have in
web pages and their services (informational, social, educational and public relations) the most
efficient tool for its global and at the same time, local expansion. Analysis of Figure 3 follows
that the multimedia integration of the websites of FC Barcelona and RCD Espanyol is a fact,
especially, considering that both clubs have developed their own area of audiovisual
content. Related with the viewers, we must highlight the absolute domination of FC Barcelona,
with 26.3 million page views per month, against the 4 million page views per month of RCD
Espanyol (Ginesta, 2009, p. 352). Secondly, the use of ICT allows for greater communication
management demands arising from the management of organizational change and the principles
derived from the adaptation to the bases of knowledge management. To finish the conceptual
develop of Figure 3, make a notation on the importance of the official journals for the
transmission of values associated with the projects of the foundations. Such publications have
FIGURE 3. OWN MEDIA OF THE FOUNDATIONS
FC Barcelona Web (Bara TV Online, Radio B@ra), YouTube Channel, E-
Newsletter, Bara TV, Mobile Services, Bara Magazine, Junior
Bara Magazine, Bara Camp Nou Magazine, FCBusiness Magazine
RCD Espanyol Web (Espanyol TV), E-Newsletter, Mobile Services,
RCDE Magazine, Pericos Matx Magazine, Infoacci Magazine
FCF Web, Temps Afegit Magazine, Futbol Fundaci Magazine
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been important for foundations in order to publish corporate information through the genre of the
press report, that generally has no interest in the daily press, as this genre leaves the conflict
inherent in traditional soccer and betting on more social content.

FOUNDATIONS AND SOCCER: CELEBRITIES AS PR STRATEGIES

The foundations linked to soccer clubs have a particularly important asset that contributes
to the visibility of their projects and core values: soccer players. The visibility that these athletes
have achieved worldwide, considered commercial brands itself (Ginesta, 2009; Parry, 2003)
allow the foundations of FC Barcelona and RCD Espanyol to use the social knowledge of this
athletes as a tool to achieve their objectives. One paradigmatic case is the manner in which the
FC Barcelona Foundation has managed the promotion of XICS centres in different countries:
Mexico and Brazil. In each of these, the Foundation has sought out a local partner a foundation
led by one of their soccer stars when establishing the centre: it is the case of Rafael Mrquez
Foundation in Mexico or Jos Edmilson Foundation in Brazil. The local partner does not imply a
business relationship with the Foundation, but it knows the territory and is necessary for the
development of programs there. The campaign that launched the FC Barcelona Foundation,
along with UNHCR and Nike, with the theme MES, also had FC Barcelona soccer stars as the
main advertising banners and even Nike designed an exclusive shirt for the team which was
worn at Joan Gamper Trophy edition of 2009, and subsequently the club sold through a limited
edition together with a MES product line designed by Nike with the intention to recapture funds
for education and sports programs for refugee children.
In the case of RCD Espanyol, the organization of the Foundation Forums (the club had
organized eleven when the fieldwork was done), they have also received permanently the visit of
celebrities, not only soccer stars from the first squad of the club, but also historically linked
celebrities with the club: for example, RCD Espanyol former coaches such us Javier Clemente
and Jose Antonio Camacho; and the former player John Lauridsen or worldwide known soccer
celebrities such as Johan Cruyff.
The relationship between celebrities and activities of the foundations is a specific moment
where the different spheres of PR developed in Figure 1 meet each other: values of the
organization (corporate area), social action (activities of general interest), business expansion
(enlargement of the area of market for these clubs) and the generation of news (journalistic
area). Usually, we see that the activities of foundations analyzed essentially belong to the social
area that logically is the sphere which determines the action of public relations in the other
areas. The contradiction appears when the PR project essentially depends on the club or
federation and the foundation serves as a subsidiary activity.

CONCLUSIONS

We believe that PR on a technical level is very well covered from the communicative
activity of the club or federation. However, the strategic principles of public relations are more
precisely defined in the scope of foundations analyzed. On the one hand, the development of PR
in both clubs needs the foundation to justify their vocation as a social institution. On the other
hand, the FCF does not need it, because it is born as a member organization. Furthermore, there
is a clear process of mediatisation of the media, because the clubs have their own media to
influence public opinion more effectively and to give its own view of the facts. In this sense, the
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foundations analyzed in this article generates potentially publishable content and reaffirm the
corporate values of the institutions that support them. This process would not be possible without
the influence of ICT. While these technologies have created new direct channels of
communication between stakeholders and the organizations, these ICT have also contributed to
greater transparency of content, because of the more extensive networks created as a
consequence of the new digital age. The added value of the organization is also the added value
of the product, which makes a circle of dependent communication between commercial and
social areas by the way of the corporate. The journalistic sphere is the projector of this circuit, as
well as in service corporations. FC Barcelona and RCD Espanyol are also not immune to this
premise, because every company has business interests that support its budget. Thus, although
the function of the foundation is no less noble, we must not forget that it feeds the commercial
strategy of the entity. To sum up, foundations contribute to shaping the character of the
organizations they are associated with. They are a big frame of relationship in order to build
collective attitudes in symbiosis with the social environment, either locally (for example, with
the Espanyols soccer schools or the patronage of young players in the Federation) or
internationally (with the projects XICS of FC Barcelona). The better the project of public
relations of the organization, the better is the whole project of its foundation.

REFERENCES

Arvalo, M. (2006). Las fundaciones deportivas espaolas. Alcal de Henares: Universidad de
Alcal, Departamento de Didctica. PhD thesis.
Freeman, R.E. (1984). Strategic Management: A Stakeholders Approach. Boston: Pitman.
Ginesta, X. (2009). Les Tecnologies de la Informaci i la Comunicaci il'esport: una anlisis de
la Primera Divisi espanyola de futbol. Bellaterra: Universitat Autnoma de Barcelona,
Departament de Mitjans, Comunicaci i Cultura. PhD Thesis.
Grunig, J. (Ed.) (1992). Excellence in public relations and communication
management. Hillsdale, NJ: Lawrence Erlbaum Association.
Inkpen, A. (2001). Strategic Alliances. In M. Hitt, R. E. Freeman, and S. H. Jeffrey
(Eds.) Handbook of Strategic Management. Oxford: Blackwell Publishing, 409-432.
Kotter, J. P. (1998). Leading Change: Why Transformations Efforts Fail. In J. C. Collins and J. I.
Porras (Eds.). Harvard Business Review on Change (pp. 1-21). Boston, MA: Harvard
Business School Publishing.
Mintzberg, H. (1995). La estructuracin de las organizaciones. Barcelona: Ariel.
Moss, R. (2004). Confidence. New York, NY: Three Rivers Press.
Munt, J. (2009). In-depth interview with the secretary of the RCD Espanyol Private Foundation.
5th November. Cornell de Llobregat, Spain.
Ordeix, E., & Duarte, J. (2009). From Public Diplomacy to Corporate Diplomacy: Increasing
Corporation's Legitimacy and Influence. American Behavioral Scientist, 53(4), 549-564.
Parry, J. (2003). tica esportiva i educaci: nous reptes en l'era meditica. Communication to the
Olympism International Seminar (CIO-UAB). 10th to 12th November. Cerdanyola del
Valls, Spain.

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WESTERN EUROPES MYSTIFICATION OF TURKEY AND THE TURKS

Raquel Casino, Independent Communications Consultant
casinoraquel@gmail.com


ABSTRACT

The purpose of this paper is to introduce the reader to Western Europes century-old
mystification of the country of Turkey and its people. It aims to provide a brief overview of
Western Europes rigid and subjective creation of the image of the Turk; sometimes as a result
of a conscious effort to portray him as the other, sometimes as a product of mere ignorance and
imagination. By pointing out some of the processes and dynamics that have shaped the image of
the Turk for centuriesand still do so nowadayswe can observe how Western media,
diplomacy, scholars, and opinion leaders have constituted an authority able to shape and reshape
Western societys perception of the reality of the country. The creation of such images, which is
in many cases very far from reality, finds its way at a societal level in the form of distrust,
misunderstanding, and above all: prejudice. Considering the increasingly global, inter-cultural,
and multi-religious world of the 21
st
century, this article aims to challenge the reader to better
understand cultural diversity.

INTRODUCTION

Understanding Western European prejudice towards the Turks is not possible without
first making a solid historical study of its relationship with Ottomans. The Ottoman Empire was
the largest and most influential of the Muslim empires of the modern period. It was established
in the late 13
th
century as a small state in todays Turkey, and rose to become a super power with
borders extending to todays Austria, Southern Russia, the Middle East, and North Africa. The
Empire was at the center of interactions between Eastern and Western worlds for six centuries.
Throughout its existence, Ottoman Empire had prosperous economic and cultural relationships
with Western Europe as well as power clashes that constantly brought them head to head in the
battlefield. The empire came to an end in 1922, and was succeeded by the Republic of Turkey in
1923, which defeated the armies of France, Greece, the British Empire, Armenia, and Italy.
Turkey is a secular, democratic republic with an ancient cultural heritage.

ANATOLIAN DIVERSITY A CHALLENGE FOR WESTERNERS

By simply observing the geographical regions that the Ottoman Empire embraced during
its imperatorial leadership, the following question might arise in peoples minds: How did such
empire manage to last for so many centuries while being comprised of so many different nations
and cultures? Scholars such as Karen Barkey have indirectly responded to this question stating
that the Ottoman Empire served as an excellent example of a flexible empire, tolerant with its
various cultures and religions: Notwithstanding the numerous misconceptions about it that
remain to be clarified, the Ottomans were successful at maintaining imperial rule over a vast
territory for many centuries. This success was based on their intrinsic flexibility and ability to
adapt (p. 7). Barkeys studies also assess one of the main concepts of this paper: Contrary to
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the image of wild barbarians who conquered territory and then degenerated into unyielding
Asiatic forms of despotism, they [The Ottomans] showed tremendous adaptability (Barkey,
2008, p. 7).
That was the Ottoman Empire and that is Turkey today: a colorful melting pot in a
diverse land in constant development and symbiosis. A land that, as early as during Ottoman
rule, was characterized by a unique societal organizational culture shaped to some extent by the
ethical and social code of Islam. In fact, the coexistence of various religions in the Book of Islam
traditionally created a common space in which the foreign would be respected (values that
today are still perceptible in Turkey). Contrary to most categorizations, under Ottoman justice
minority groups were officially given referential privileges by the sultans, special taxes, and
freedom to organize religious unions. Anne-Marie and Pierre Chuvin (as cited in Monatgu, 1980)
once defined it as such: In Istanbul, beliefs and practices are free at home. Inquisition is
unthinkable, as well as persecutions are unthinkable. Turkish people dont violate private life
neither cultivate proselytism (p. 52). With this statement, the authors point out a differential
factor between Western Europe and Turkey: Western Europe, unlike the Ottomans, was
historically formed as a solid homogeneous society with a single religion. Hichem Djait (1990)
relates to this difference as one of the causes of Ottoman decadence: the weakness of Islam is to
have lived withand amongother cultures and religions for too long, during a time when the
West was becoming religiously homogenous (p. 130). For this reason, Turkeys historical
power and diversity have been two of the main and most difficult- historical challenges of
Western Europe.

WESTERN EUROPES CENTURY-OLD MYSTIFICATION OF TURKISH SOCIETY

A History of Written Works: Opinion Leaders and Media
The compilation of written works about Turkey by Western European authors is very
extensive, and dates back to the beginnings of the relationship between Ottomans and Western
Europe. Many reports, diaries and tales comprise a list of more thanonly from the 16
th
century
itselftwo thousand works. As writer Juan Goytisolo (2003) reveals in his book Estambul
Otomano, anybody interested in getting a close look of Turkey, needs to ingest a written corpus
that has life of its own, in which books support and feed each other, shaping a literary
genealogical tree which leaves and branches are polluted by a trunk of doubtful reports, second-
hand stories, fantasies, legends, and myths (p. 9). Historically, perceptions, descriptions and
observations about Turkish society dont vary much from text to text or from author to author.
Goytisolo (2003) ascribes this one-sided compilation to the confusion of writers during their
travels to the city of Istanbul, who struck by its richness and incapable of domesticating its
exotism, they renounce to their personal impressions and find refuge in the printed certainty of
previously written books (p. 10). A vast majority of works foster political rivalry and underline
nearly inexistent differences between cultures: setting up a journey of false pre-conceptions.

The Nature of Information: key traits and approaches
By observing the nature of Western writings about Turkey, remarks and approaches to
stories have traditionally been one-sided and many times consist of unconstructive themes.
Although nowadays public information professionals enjoy a larger range of information tools,
many of the following traditional traits are still present in reviews and story angles:

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a. Contradiction: From text to text, many stories depict opposite and contradicting
scenarios. As we will see below in a brief media case study, in some cases they are published by
the same media outlet, or even written by the same author.
b. Subjective and subliminal information: Massacre, barbarian, rude, poor, Arab,
problematic, or sexually compulsive are commonly-found words among writings about
Turkey that are generally based on subjective thoughts and little objectivity. Images, similarly to
words, also play a big role in shaping the subliminal image of the Turk and rarely illustrate
positive aspects of the country.
c. Offense and Impunity: negative comments that underrate, underestimate, and provide
negative insights about Turkey are as old as its relationship with Western Europe. A golden
example of this fashion is the successful movie Midnight Express and its denigrating portrayal
of Turkish society. The blockbuster film was shot in various locations outside Turkey, it was
based on a fictional literary work, and its cast was mainly comprised of Italian actors.
Nevertheless, the movie displayed many representations of Turkish society that evidenced
tremendous ignorance and substantial racist sentiments. The over-exaggerated portrayal of
violent behavior and other misinformation mistakes (such as movie characters wearing
traditional outfits that had not been used in the country for many years) are only some examples.

A brief case study on some of todays Spanish Media:
Two recent articles retrieved from Spanish newspaper El Pais serve as a perfect example
of all of the traits described above. In Article #1 the writer criticizes Turkeys sexual social
taboos. Also, subjectively states that more than 95% of women in Turkey are victims of some
sort of violence (Lopez, 2011B, para. 5). The author does not provide any type of source to
prove these numbers or information. No journalistic objectivity seems to be required by the
media outlet. El Pais is the best-selling non-sports related newspaper in Spain, and its impact in
Spanish society is notorious. Article #2 is written by the same author a few months later, and this
time tags Anatolia as a land with little entertainment and a large erotic literature history
(Lopez, 2011a, para. 3). Turkish peoples fury for sex and porn is emphasized, along with a
brief history of world-famous Turkish porn actresses from the 1970s and their sexual movie
adventures. Again, the information is provided without the support of any sources, and assures
that erotism is in Turkish peoples genes (Lopez, 2011a, para. 2).
Contradiction, subjectivity and offense without restraint Despite of the voices of some
critics, movies like Midnight Express and many one-sided media comments still shape
Westerners views of Turkish society. Contrary to Western ethics on cultural respect, failures of
cinematographic and journalistic objectivity are todays influential opinion leaders.

MYSTIFICATION AND PREJUDICE AT A SOCIETAL LEVEL

Defining Prejudice:
The word prejudice derives from the Latin word praejudicium, a judgment based on
previous decisions and experiences. Doctor Gordon W. Allport, in his classic text The Nature of
Prejudice defined this concept as an antipathy based upon a faulty and inflexible
generalization (Allport, 1979, p. 82). The author believed that such stereotyping and
prejudgment is a regrettable, but all too human, tendency fueled by feelings of hate, envy, fear,
and threat.
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This definition, applied to the study of Western Europes prejudice against Turks should
include the following: a feeling generated by centuries of biased information and the
reinforcement of concepts by opinion leaders who influence the general population at a
personal level. Social psychologist Henri Tajfel would wrap it up with the following: The
diffusion of public knowledge concerning laws which govern the physical, the biological, and
the social aspects of our world is neither peculiar to our times of mass communications nor to
our own culture. These public images are as old as mankind (Tajfel, 1990, p. 127).

Dehumanizing People: the Dynamics that Stimulate Prejudice
The Wolf-Turk was claimed to be a man-eating being, half animal half human, with a
wolves head and tail (Turkey, Sweden, and the EU, 2006, p. 7). Tales such as the Wolf-Turk
are very common in Western literature, especially that of the 16
th
century. The creation of the
image of the other, the Turk, the dirty, animal, Muslim, the Threat, the enemy, is
also the result of the successful execution of a socio- psychological process: dehumanization.
The traditional definition of the Turk has been for a long time detached from its human traits.
Research by psychological scientists, such as Dr. Nick Haslam, explain that once a person or
group of people are dehumanized, their uniquely human attributes are denied and they are
described as being coarse, uncultured, amoral, irrational. Once these attributes are denied, moral
standards are not applied to that group any more, and its members are not perceived in the same
category as rights-deserving-humans.

How are People at a Societal Level Affected by Prejudice?
Societies affected by prejudices are incubators of citizens without knowledge-based
opinions; citizens that when traveling to a foreign land, do so under the influence of
unconsciously forged perceptions and prejudices. These prejudices, in turn, conceal peoples
own unique and potential perceptions of reality. As a result, no matter the similarities of their
society to the one they are being exposed to, their pre-conceptions have a stronger credibility.
The writer of this paper has had first-hand experience observing Western European
tourists in the country of Turkey. After several observations, the author noticed that certain
reactions are usually common to all visitors:

a. Confusion: after witnessing numerous cultural similarities, the unpredicted richness of
the country and the character of its people, many visitors experience a surprising clash between
their previous thoughts and their first-hand observations.
b. Denial: no matter how positive or distinctive their first-hand observations are, an
unconscious mechanism of denial prevents them from completely detaching themselves from
their previous ideas of the country. This approach provokes the omission of positive experiences
and the exaggeration of not-so-positive experiences.
c. Comparison: visitors tend to observe the country through an evaluation-of-contrast
approach in which each visual information they receive is thoroughly compared to its equivalent
of their own country.
d. Superiority feeling: the comparative concept is intrinsically linked to an automatic
innocent feeling of disguised superiority. It is natural to humans to feel the need to prove that
ones own house is better than that of ones neighbor.


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CONCLUSIONS

Understanding Turkeys diversity has always been a challenge for Western Europeans.
Prejudices about Turkey are a historical reality, ongoing in the 21
st
Century.
When prejudices reach the societal level they can lead to harmful consequences.
Negativity is an inherent component of foreign portrayal of Turkey and its people.
Western journalistic objectivity is somewhat uncommon when defining Turks.
Knowledge! Not prejudice!

New global powers, new global trends: each society and culture organizes itself in a certain
way and has its own dynamics. Defining these dynamics through a direct comparison with
Western European standards is a failure of understanding that what might be an ideal role
model for many, might not be applicable in other societies. Each society has unique approaches
when defining concepts such as richness, organization, religion, beauty. It is when these
definitions to some extent- differ with others that cultural clashes takes place.

It is The Wests responsibility to understand other cultures

Across Europe, opinion on Turkey ranges from Lukewarm to downright hostile. Its never
easy to tell whether politicians who declare themselves against Turkish membership [of the
European Union] are motivated by objective considerations or by opportunism and
demagoguery (Merritt, 2005, para. 3). In the article Europe is going to need Turkey, Giles
Merritt brings out a new topic of discussion that serves as a great ending to the conclusion of this
paper. It also raises new questions for new research regarding the European Unions future
needs, versus the young, growing population of Turkey: A glance at a map says it all. Turkey
lies at the center of some of the worlds most volatile regions. In 15 years time, the Union
will then have shrunk to less than 5 per cent of the global population. Europe is going to need as
much blood as it can get (Merrit, 2005, para. 10).

REFERENCES

Allport, G. W. (1979). The Nature of Prejudice: 25th Anniversary Edition. Cambridge, MA:
Perseus Books Publishing.
Barkey. K. (2008). Empire of Difference: the Ottomans in Comparative Perspective. New York,
NY: Cambridge University Press.
Djait, H. (1990). Europa y el Islam. Madrid: Ediciones Libertarias
Goytisolo, J. (2003). Estambul Otomano. Barcelona: Ediciones Peninsula.
Lopez, B. (2011a, January 25). Sexo a la Turca. El Pais. Retrieved from http://www.elpais.com
Lopez, B. (2011b, January 06). La artista turca Sukran: Moral huye a Italia tras ser amenazada de
muerte. El Pais. Retrieved from http://www.elpais.com
Merritt, G. (2005, October 9). Europe is going to need Turkey. The New York Times. Retrieved
from http://www.nytimes.com
Montagu, L. (1981). LIslam au peril des femmes. Paris. Les dition FM/La Dcouverte.
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Turkey, Sweden, and the EU Experiences and Expectations. (2006). Swedish Institute for
European Policy Studies Report. Stockholm: Swedish Institute for European Policy
Studies.
Tajfel, H. (1981). Human Groups & Social Categories. Cambridge: Cambridge University Press.

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CHAPTER 7

CROSS CULTURAL MARKETING


128


REVIEW OF CULTURE AND MATERIALISM

Ziad Swaidan, University of Houston-Victoria
swaidanz@uhv.edu


ABSTRACT

This research lays the theoretical foundations to explore the relationship between culture
and materialism with emphasize on ethics. This study uses the past research that has explored
culture and materialism and their ethical implications to develop the hypotheses of this study.
The theory, literature review, and hypotheses of this study should prove valuable for marketers
because Hofstedes cultural model allows marketers to identify differences in material
orientations among consumers across different cultures and thus provides a theoretical base for
designing more effective global marketing strategies.

INTRODUCTION

A greater understanding of the relationship between culture and materialism will allow
firms to develop better global marketing strategies. Hofstede (1991) has defined culture as the
collective programming of the mind that distinguishes the members of one group of people from
another. Culture is measured along the original four dimensions of Hofstedes (1980) model (i.e.,
collectivism/individualism, masculinity/femininity, power distance, and uncertainty avoidance).
Christie, Kwon, Stoeberl, and Baumhart, (2003) have found that culture has a strong influence on
an individuals ethical attitudes and it is recognized as one of the most important variables
influencing ethical decision-making.
Sinkovics and Holzmller (2001) concluded that materialism is an important concept in
the enhancement of international and cross-cultural marketing research. Richins (2004) has
defined materialism as the importance ascribed to the ownership and acquisition of material
goods in achieving major life goals or desired states (p. 210. Materialism is assessed along the
three dimensions of Richins and Dawsons (1992) material values framework (i.e., centrality,
happiness, and success). Materialism typically contrasts with idealism. Materialism is associated
with lower ethical standards, extravagance, and lust (Muncy & Eastman, 1998). Richins and
Dawson (1992) have concluded that materialists are less sensitive to ethical problems, are more
concerned about self interests, and less concerned about the interests of other people. It is more
important for materialists to possess the product than to consider how the product was acquired.
Wan et al. (2009) have found that pirated CDs are more acceptable to materialistic consumers
because they have lower moral standards. Muncy and Eastman (1998) have concluded that more
materialistic consumers are less sensitive to ethical issues. Thus, the acquisition of the goods
may begin to take primacy over materialistic consumers ethical values. Lu and Lu (2010) have
found that Indonesians with high materialism were more likely to engage in questionable
consumer activities.




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LITERATURE REVIEW

Hofstede Model

This study lays the theoretical base to investigate the relationship between culture and
materialism. Culture has a strong influence on individuals attitudes toward both business ethics
in general and certain questionable business practices in particular. Paul, Roy, and
Mukhopadhyah (2006) have found a direct relationship between collectivism, uncertainty
avoidance, and an inverse relationship between masculinity, power distance, and marketing
ethics. They concluded that managers with low collectivism, low uncertainty avoidance, high
masculinity, and high power distance need to learn more about the importance of ethics in
business.
According to Hofstede (2001) individualism is evident in a society in which the ties
between individuals are loose. Individualists value personal independence, pleasure, individual
expression, and personal time. They tend to believe that personal goals and interests are more
important than group interests. In contrast, collectivism is evident in a society in which people
from birth onwards are integrated into strong, cohesive in-groups, which throughout peoples
lifetime continue to protect them in exchange for loyalty. Collectivism is characterized by a tight
social framework, in which people distinguish between in-groups and out-groups. Japan and
most other Asian countries are examples of high-collectivist cultures, whereas the United States
and Western European countries are examples of low- collectivist countries.
Several studies have reported that people in individualistic cultures are less concerned
with following formal moral rules. Verma (1985) reported a positive relationship between
individualism and the tendency of people to break rules. Akaah (1990) found support that
collectivists are more sensitive to ethical problems than individualists. Collectivists are more
likely to adhere to the marketing ethics chosen by their marketing in-group than are
individualists. Paul et al. (2006) have found a direct relationship between collectivism and
marketing ethics. These studies support the concept that collectivists are likely to be less
materialistic because they are more sensitive to ethical issues than individualists.
Masculinity and femininity refer to the dominant gender patterns in the society.
Masculine individuals are characterized as assertive, aggressive, tough, ambitious, competitive,
focused on material success and oriented toward money and material objects. In contrast,
feminine individuals are modest, tender, humble, nurturing and concerned with the quality of
life. Feminine consumers are not oriented toward money or material objects. According to
Hofstede (1980) Japan and Austria outranked all other countries in the measure of masculinity,
whereas Sweden and the Netherlands were at the bottom.
The materialism implications of masculinity center on the relationship between
aggressiveness and morally acceptable behavior. One problem is that assertive, masculine
individuals might be more tolerant of questionable aggressive behavior than feminine
individuals. Some of the most frequently cited reasons for unethical behaviors are greed and
competitiveness, traits that are characteristics of masculine and materialistic consumers. Cohen,
Pant, and Sharp (1995) hypothesized that feminine individuals are more concerned with ethical
issues, and less tolerant of aggressive, dollar-driven behaviors. As such, they are more sensitive
to ethical problems because unethical behavior leads to conflict and disruption. Getz and
Volkema (2001) have established that masculine cultures have higher levels of corruption. These
130


findings imply that consumers who score higher on the masculinity scale will be more
materialistic and less ethical than consumers who score lower on the same scale.
Hofstede (2001) has proposed that power distance represents the extent to which the less
powerful members of society expect and accept that power is distributed unequally. Individuals
who score higher on power distance accept the inequality of power in their society more than
individuals who score lower on the same scale. Hong Kong and France are examples of high-
power-distance countries, and Austria and Denmark are examples of low-power-distance
countries.
One important implication of power distance for ethical values relates to the likelihood
that subordinates would perform unethical actions in response to superiors pressure (Cohen et
al., 1995). Consumers with large power distance like formalization of authority, they prefer top-
down communication and, consequently, they pay less attention to ethical standards. Christie et
al. (2003) have ascertained that business managers from the USA viewed a questionable business
practice (i.e., complying with the superiors unethical order) as more unethical than business
managers from India and Korea. USA is a country with smaller power distance than India and
Korea. Yoo and Donthu (2002) have found that people with larger power distance exhibit lower
levels of marketing ethics. Getz and Volkema (2001) have concluded that cultures with large
power distance have a higher degree of corruption. These theories and findings support the
notion that consumers who score higher on the power distance scale will be more materialistic
than consumers who score lower on the same scale.
Hofstede (2001) has defined uncertainty avoidance as the extent to which the members of
a culture feel threatened by uncertain or unknown situations. Uncertainty avoidance signifies the
extent to which people in a society feel threatened by uncertain and ambiguous situations and the
extent to which they try to avoid these situations by adopting strict codes of behavior, a belief in
absolute truths, establishing formal rules and not tolerating deviant ideas or behaviors. In
contrast, individuals with low uncertainty avoidance are less concerned with security in life, rely
less on written rules and are more risk tolerant. People of certain countries, such as Greece and
Portugal, seem to be more uncomfortable with unclear, ambiguous, or unstructured situations
than people from India and Hong Kong.
Past research has shown that individuals who are low in uncertainty avoidance are more
likely to take risks (Hofstede, 1984). From an ethical perspective the tendency to take risks is
highly correlated with materialism and unethical behavior. On the other hand, individuals with
high uncertainty avoidance feel a greater need for written rules. Paul et al. (2006) have suggested
that cultures with low uncertainty avoidance tolerate behaviors that are more relativist,
negotiable, and contemplative. Consumers from these cultures do not like explicit rules and
ethical standards. Consumers from high uncertainty avoidance cultures like to follow ethical
standards more strictly. These findings provide evidence that consumers who score higher on the
uncertainty avoidance scale will be less materialistic and more sensitive to moral issues than
consumers who score lower on the same scale.

Materialism
Materialism is defined as the degree to which persons believe that the acquisition and
possession of material objects are important to achieve happiness in life or are an indicator of
their success in life (Richins & Dawson, 1992). For materialistic consumers, possessions are
central to their life in that they feel that increased consumption increases their satisfaction with
life. Materialism has been conceptualized as a consumer value with three components: centrality
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(acquisition centrality), happiness (acquisition as the pursuit of happiness), and success
(possession-defined success). Thus, in the Richins and Dawson conceptualization, the value of
possessions for the materialistic consumer lies in their ability to both confer status and to project
a desired self image.
On one hand materialism increases societys economic wealth and material possessions,
while on the other hand; materialism has negative overall effects on the quality of life and lowers
consumers ethical standards. Muncy and Eastman (1998) have found an inverse relationship
between materialism and consumer ethics. Richins and Dawson (1992) have found that those
who score higher on materialism were less willing to share what they have in terms of both
money and possessions. Fournier and Richins (1991) have found that most people describe
materialistic people in negative and socially undesirable terms. Rudmin and Richins (1992) have
argued that materialism is questionable from an ethical perspective. Barrett (1992) has associated
certain types of unethical behavior with greater amounts of materialism. Richins and Dawson
(1992) have suggested that materialistic consumers might be more willing to bend ethical rules to
gain possessions. Muncy and Eastman (1998) have concluded that there is a greater possibility
for materialistic consumers to engage in unethical behavior to obtain desired possessions. In
conclusion, it seems that consumers who are more materialistic show less concern for ethical
issues.

Hypotheses
Based on theory and literature review, this study predicts 1) a negative relationship
between collectivism and materialism and a positive relationship between individualism and
materialism, 2) a positive relationship between masculinity and materialism and a negative
relationship between femininity and materialism, 3) a direct relationship between power distance
and materialism, and 4) a negative relationship between uncertainty avoidance and materialism.

DISCUSSION AND IMPLICATIONS

The current study laid the theoretical foundations to explore the cultural orientations of
consumers along the dimensions of Hofstedes model. This research developed the theory to
study materialistic orientations of consumers along the dimensions of Richins and Dawsons
material values framework. In addition, this study created the basis to explore the ethical
implications of the relationship between culture and materialism.
Past research found that masculine consumers are more likely to engage in unethical
behaviors leading to personal gains (Chang and Ding, 1995). As mentioned, masculine
individuals are characterized as assertive, aggressive, ambitious, competitive, and more oriented
toward money and material objects. Modic (1987) found that ambition, personal financial gain,
and desire to win were the greatest contributors to unethical behavior. Rawwas, Swaidan, and
Isakson (2007) found that less masculine individuals tended to be more idealistic. This theory
and past findings have important marketing implications. Businesses that have more masculine
consumers should develop strategies to handle the unique characteristics (e.g., more likely to
engage in unethical practices) of their consumers. This could include special awareness programs
to handle these unique consumers. Development of tighter security could be another option to
control some of these consumers. Also, rewards and punishments could be used to encourage
ethical behaviors and curb unethical practices among this group of consumers.
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Rawwas et al. (2007) have found that uncertainty avoidance is the best predictor of
idealism. This finding supports previous research that suggested that individuals who are high in
uncertainty avoidance are less likely to take risks. The tendency to avoid risks is highly
correlated with ethical behavior. These consumers are less materialistic and more sensitive to
ethical issues. Past research has found that consumers with high uncertainty avoidance are more
concerned with security in life, feel a greater need for consensus and written rules and are
intolerant of deviations from the norm. Hofstedes model implies that consumers strong in
uncertainty avoidance need more directions and instructions to make their shopping activities
more convenient. Consumers high in uncertainty avoidance feel more comfortable shopping in
structured environments where they find clear guidelines to follow in carrying out their shopping
activities. These consumers may perceive the unstructured consumption environment
intimidating and unfriendly.
Consumers belonging to feminine cultures tend to be more people oriented, more caring
for others, and less interested in personal recognition. They determine achievement in terms of
close human relationships and human quality of life. It seems that feminine consumers are less
materialistic than masculine consumers. Organizations can use cause campaigns to resonate a
positive image with these consumers. Aligning a global firm with a specific cause and then
promoting that cause is likely to create a positive image with feminine-oriented consumers (less
materialistic consumers). Non-tangible benefits to the firm include credibility, enhanced
reputation, loyalty, and admiration internally and externally.

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134


PROBLEMS OF COUNTERFEIT INTERNATIONAL
PHARMACEUTICAL PRODUCTS

Branko Cavarkapa
cavarkapab@easternct.edu

Michael G. Harvey,
mharvey@bus.olemiss.edu


ABSTRACT

Counterfeiting of pharmaceutical products has become a very serious problem. The most
dramatic modification in counterfeiters' strategies involves the sale of fake industrial and medical
products, rather than solely focusing on nationally or globally branded consumer products. The
impact of counterfeit pharmaceutical products being sold in the United States could be
devastating to consumer confidence in the prescription drug industry. This paper discusses
different methods to reduce and limit availability of counterfeit pharmaceutical products in the
USA marketplace. This research explores supply aspects of fake pharmaceuticals and provides a
system for increased surveillance and monitoring of domestic channels of distribution of
pharmaceuticals to reduce the inflow of both international and domestic counterfeiting.

INTRODUCTION AND BACKGROUND TO THE PROBLEM

Counterfeiting is a problem that has grown significantly in the last decade and one which
has had a negative impact on United States businesses and the consuming public. Counterfeiting
is not a new problem for companies today, but counterfeiting pharmaceuticals was first identified
as an emerging problem in the mid-80s (Robinson, 1985). Counterfeit pharmaceuticals pose
potential dangers, including possible deaths that may affect a wide range of consumers. The
World Health Organization estimates that 10 percent of all pharmaceuticals sold are counterfeit
and that, in developing world, it can reach up to 60 percent (Sater, 2005). The problem of
counterfeit pharmaceuticals was made worse when more people started to buy pharmaceuticals
online internationally without the advice of doctors and not really knowing what they were
getting except that the prices were much lower, and for many consumers that was a critical factor
in making a decision (Berrong, 2009).
Counterfeiting is defined as the unauthorized copying of patented products or
copyrighted works and trademarks (Harvey, 1988). The word counterfeit once meant that money
could be counterfeit, now many other products from computers and car parts to jeans, jewelry,
pills and perfume may be counterfeit (Staake & Fleisch, 2009). Product counterfeiting is
estimated to be growing at a rate of 30 to 40 percent a year, and has reached an estimated 200 to
500 billion dollars a year in sales worldwide (Security Directors Report, 2006).
One reason why there is such an increase in counterfeiting is that the legislation directly
related to counterfeiting was not comprehensive enough to reduce counterfeiting significantly.
Two Acts, the Lanham Trademark Act 15 U.S.C. (known as Lanham Act) of 1946 and the
Trademark Counterfeiting Act of 1984 did little to threaten the unscrupulous counterfeiters,
particularly those who are located in foreign countries. The companies being infringed upon are
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not being protected adequately. The Lanham Act of 1946 is the primary structure of legal
protection in the United States, but the penalties given are not adequate to deter counterfeiters.
This civil law requires violators to stop using another company's trademarks or pay damages.
Importers caught violating a company's trademark results only in the seizure of the bogus goods
(Harvey & Ronkainen, 1985). Due to the lack of more severe penalties in the Lanham Act of
1946, new legislation was enacted in 1984 to try to help curtail the growing problem. It is
estimated that product counterfeiting accounts for more than 5% of global merchandise trade,
costing businesses between 200 billion to 500 billion US dollars and those figures are going up.
U.S. Customs confiscation of fake products increased by nearly 50% in the year 2006 (Security
Directors Report, 2006, p. 2).

THE PHARMACEUTICAL INDUSTRY AND COUNTERFEITING

Counterfeit drugs are not only found in the U.S. but also in many developing countries,
such as Nigeria (Enyinde & Tolliver, 2009), where legitimate pharmaceuticals are beyond the
reach of ordinary citizens. However, this problem is not new and some twenty years ago 1.26
million counterfeit birth control pills made their way into the U.S. marketplace, causing harm to
many consumers and forcing the authentic pill manufacturer to conduct a recall of all pills (Paul,
2007). It was never determined the source of counterfeit birth control pills, but there was concern
that at least a portion of the products supplied were counterfeit. The prevailing reason for the
infiltration of internationally produced counterfeit pharmaceuticals in the United States is the
industry's loosely controlled distribution system. It appears relatively easy to insert fake drugs
into the system at numerous points. A congressional subcommittee that studied this problem
concluded that the integrity of the United States drug distribution system is insufficient in
preventing the introduction of substandard, ineffective, or counterfeit pharmaceuticals (Milmo,
2010).
The distribution system in the pharmaceutical industry is simple, but it inadvertently
provides multiple opportunities for counterfeiters to access markets with very little opportunity
of being detected. Drug counterfeiters have three primary means of access to the system: 1.
direct sales to drug distributors; 2. sales to pharmacists (retailers) and 3. direct sale to customers
over the internet. The fact that distributors often sell to other distributors presents a major
problem in detection, which requires a systematic approach to curtail the problem. The
widespread use of drug distributors creates a difficult control situation in which drugs pass
through many hands before reaching customers, making them extremely difficult to trace. In the
case of the counterfeit birth control pills, the use of distributors was extensive and thus brought
the severity of the problem with distribution to the forefront.
Counterfeit pharmaceuticals can originate from either foreign or domestic manufacturing
sites. Both are easily inserted into the domestic distribution system and can create significant
problems for the entire prescription drug industry. Generic look-alike drugs from United States
or European manufacturers become available in the gray market in as little as two weeks after
they are marketed overseas. This would be a supply side problem of fake pharmaceuticals and
the knowledge or formula to produce look-alike pharmaceuticals which were often illegally
obtained (Harvey, 1996). The most recent trend is not so much to steal the know-how but to
conduct reverse engineering of legitimate pharmaceuticals to produce a substitute of an approved
and patented drug with a questionable validity (Staake & Fleisch, 2009). The potency of the
drugs is the only distinguishing factor between the originals and the copies (Hodgson, 1992).

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Any manufacturer with the capability of making tablets has the ability to make counterfeits and
insert the bogus products into the distribution system (Sigelman, 1992).

SYSTEMATIC CONTROL AND MONITORING OF DRUG DISTRIBUTION

As one can infer from the points made above, a solution to curtail domestic and
international pharmaceutical counterfeiting requires a cooperative effort among a number of
entities. Also, the potential impact of the problem on the industry as well as individual
companies should make it a priority even if the solution appears to be complex and costly. The
problem lies in the distribution system in the pharmaceutical industry. Unscrupulous
manufacturers, distributors, and retailers can either individually or in consort distribute
adulterated products. Complicating the problem, some distributors and retailers may not realize
that they are handling counterfeit products. In order to police the distribution chain effectively
and minimize bogus products from entering the system, a cooperative effort is needed between
each member of the chain. Channel of distribution members will need to be educated on the
problems and ramifications of pharmaceutical counterfeiting. A systematic approach involving
six interacting entities is needed to protect the distribution system from counterfeit drugs
entering the system. The six active participants included in the system are: (1) the United States
Government; (2) the Pharmaceutical Manufacturing Association (PMA); (3) pharmaceutical
manufacturers; (4) pharmaceutical distributors; (5) retailers (pharmacists); and (6) consumers.
The goal of the proposed monitoring system is to curtail pharmaceutical counterfeiting, and to
ensure that only legitimate drugs reach the consumer.

United States Governments Responsibilities
The United States Government should provide assistance to the pharmaceutical industry
to help curtail the growth of foreign, as well as domestic, counterfeit prescription drugs. The
passage of the 1984 Trademark Counterfeiting Act was a major step forward to interfere with
drug counterfeiting domestically but more sanctions need to be enacted. One important role of
the Government could be to propose an educational program to heighten consumers awareness
of counterfeit pharmaceutical products in the United States. Increased awareness of the
counterfeiting problem might provide the impetus to consumers to accept probability of higher
drug prices if they could be assured that the drugs were legitimate.
Many counterfeit pharmaceuticals are imported from other countries, especially from
developing countries which specialize in making less expensive generic drugs. There is a huge
problem with counterfeit pharmaceuticals in China, Indonesia, India, and Taiwan. A certain
percentage of these counterfeit drugs are being shipped to the USA, thus compromising the
integrity of the domestic drug industry (Cateora, Gilly, & Graham, 2009) Because of its size and
the prevalence of faked pharmaceuticals, China seems to pose a global threat (Ran, 2004). One
possibility to curb the flood of fake products coming from overseas is to reconsider the rights
granted to these nations that provide them with quotas and exemptions from duties under the
different bilateral and multilateral agreements, which could be used as a bargaining point if they
fail to protect copyrights, trademarks, and patents. In short, the government could keep other
products from these countries from entering the domestic market. The government could also
enlist the assistance of the World Trade Organization to provide additional pressure to reduce
pharmaceutical counterfeiting. The efforts of the United States government in the last ten to
fifteen years have resulted in several significant bilateral treaties and agreements to limit the
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growth of counterfeiting. As it was noted by Simone (1993), China's moves to improve its
intellectual property rights (IPR) regime is partly motivated by pressure from the US-government
and in 1993, the Standing Committee of the National People's Congress adopted the Anti-Unfair
Competition Law, which provides legal protection for unregistered trademarks, trade names,
product packaging, and trade dress. The fines and compensation standards provided under the
Anti-Unfair Competition Law appear more serious than those under the revised Implementing
Rules to the Trademark Law, but the deterrent power of prison greatly exceeds that of
administrative fines. The U.S. government completed significant bilateral trade agreements with
China and Singapore that led to these countries becoming members of the World Trade
Organization and to accept responsibilities to protect intellectual property rights. In 2003, new
trademark legislation entered into effect in Russia, thus effectively curbing open counterfeiting.
The Government of India has proposed new laws which may subject counterfeiters to the death
penalty (Cattaui, 2005).

Pharmaceutical Manufacturing Association's Responsibilities
The PMA's primary responsibility should be the position of industry coordinator of the
surveillance system to coordinate the various members at different levels of the channel of
distribution. As director of the program, the PMA should help to ensure that the various entities
of the channel system are carrying out their responsibilities in controlling counterfeiters.
Standardized quarterly reports should be obtained from all participants in the system to provide
follow-up on the functioning of the control process. Through gathering and evaluating
information, the PMA should be able to take action and make changes to help reduce the level of
counterfeiting in the pharmaceutical industry.
The PMA should also have a surveillance team like that of those at the FDA. Its
responsibilities would include monitoring the activities of both the manufacturers and drug
distributors in the industry. The PMA needs to maintain industry standards and monitor anti-
counterfeiting activities undertaken by the manufacturers (Harvey, 1988; Kakinukl, 1992). Close
surveillance of industry standards and activities can reduce the occurrence of illegitimate
intervention into the channel of distribution. The PMA's authority and effectiveness are reduced
at the distribution level, but the PMA may still work with manufacturers to maintain the
distribution of legitimate pharmaceuticals in the initial phase of distribution. The interaction
between the PMA and individual manufacturers should improve the communication level and, at
the same time, reduce counterfeiters' access to the initial stages of distribution. Another major
responsibility of the PMA is active lobbying at the state and Federal level.

Manufacturers' Responsibilities
Manufacturers in the pharmaceutical industry have responsibility to maintain product
standards of their industry and also to ensure that legitimate drugs are produced and delivered to
the final consumers. To do this, extensive interaction with distributors and retailers will be
required. In short, manufacturers need to actively monitor their distribution system, including
policing distributors, forcing compliance, and ensuring that distributors are fulfilling their
responsibilities instead of allowing counterfeit products into the channel of distribution to
enhance their profit margins. The manufacturer's relationship with distributors and retailers
should be one of both product/service supplier as well as "proctor." Manufacturers should offer
incentives (monetary) for counterfeit pharmaceuticals that are confiscated by channel members.
With both the PMA and the manufacturers looking for bogus goods, many counterfeiters would
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be unwilling to attempt to access the marketplace through legitimate distributors and retailers.
Manufacturers representatives need to be able to investigative and therefore provide a
manufacturers' surveillance team. They need to check the authenticity of theirshipmentsat both
the distributor and retail levels. This can be done in a number of different ways. Several
companies have developed methods by which a pharmaceutical manufacturer can mark his or her
products so they can be checked at a later date for legitimacy. While many of these anti-
counterfeiting technologies are not presently used by pharmaceutical manufacturers, there
appears to be a need to evaluate the application of such technologies to drug distribution and one
global manufacturer of pharmaceuticals is exploring Radio-frequency Identification (RFID) and
electronic product code technology to combat counterfeiting (GSK and Pfizer, 2005).
Although, some manufacturers are eager to explore using new technologies such as RFID to
combat counterfeiting, its adoption is very slow (Koroneos, 2006; Yoshida, 2007)

Distributors' Responsibilities
The distributors' responsibility in the surveillance system is to protect the most vulnerable
elements in the channel system. They need to monitor the retailers they service for their own
protection. Distributors' representatives need to affirm the authenticity of their shipments,
whether sold to retailers or sub distributors. Just as manufacturers monitor their channels,
distributors need to verify that no one is altering their shipments at the retail level of the channel
of distribution. Checking identifiable anti-counterfeiting characteristics used by the
manufacturers would be an appropriate method to augment the program.

Retailers' Responsibilities
Retailers have the responsibility of providing effective pharmaceuticals to the ultimate
consumer. To help them in this quest, pharmacists in retail outlets need to order drugs from
credible manufacturers and distributors. The use of questionable (secondary) suppliers should be
evaluated very carefully, and much more stringent random testing of products should be
undertaken by the retailer. As part of the distribution system, pharmacists should strive for
proper distribution of pharmaceutical products by making product confirmation checks on those
supplied by distributors. They should assess the packaging with anti-counterfeiting elements
attached and conspicuous deviations in that packaging to protect the integrity of the products
they sell to consumers. Retailers should also be concerned with both distributors who supply and
manufacturers who produce the product. In return, they should be compensated for confiscated
counterfeit products and for providing valuable information on distributors to the manufacturers.
The incentives should be enticing enough to interest retailers to be a major contributor to
preventing counterfeit pharmaceuticals. They could provide the most significant control due to
their close proximity to the final consumers of the product. If the retailers' monitoring efforts
were enhanced, access to the marketplace would be limited for the counterfeiters.

Consumer Responsibilities
Consumer involvement would be essential to enacting a proactive surveillance system in
the drug industry. Consumer education and awareness of the drug counterfeiting problem and
direct consumer-manufacturer interaction is essential to combating counterfeiting. Feedback
about the product and its effectiveness will provide invaluable information to the manufacturer
and enhance the effectiveness of the surveillance system to uncover channel members who
permit counterfeit products into the system. Communication between the manufacturers and
139


consumers could lead to detecting counterfeiters who have successfully entered the distribution
system. Also, such interaction could provide organizations with information to improve their
marketing/sales efforts as well as their products, thus enhancing the firm's position in the
industry. A problem with obtaining direct feedback from the ultimate consumer would center on
uncertainty of where the pharmaceuticals were manufactured. If manufacturers publicize the
possibility of counterfeits it could cause negative reactions toward their products and their
companies (from an investment standpoint). To fight possible negative reactions, consumers
should be made aware of systematic efforts undertaken by the manufacturers to curtail the
problem of pharmaceutical counterfeiting in the prescription drug industry as a whole. If the
publicity and public relation activities are handled appropriately, the respect for and image of the
drug industry, as well as a single company, could improve rather than be downgraded.

SUMMARY

The potential dangers of foreign and domestic pharmaceutical counterfeiting could be
devastating to consumers as well as to the pharmaceutical industry. The problems of curtailing
such counterfeiting activities are complex and involve many entities. Therefore, the adoption of
such a plan to increase the security of the distribution channels used to market prescription drugs
in the United States is the first step in reducing counterfeiting. The surveillance system in this
paper should be viewed as the first step in the eradication of pharmaceutical counterfeiting. By
using the systemic, multi-level surveillance system of each member of the distribution chain by
separate investigating parties, the system should effectively keep counterfeits from reaching the
final consumers. The system is not simple, nor is it inexpensive; but it needs to be considered
before additional tragedies occur.

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Enyinda, C., & Tolliver, D. (2009). Taking counterfeits out of the pharmaceutical Supply Chain
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GSK and Pfizer Adopt RFID Technology (2005, January). Pharmaceutical Technology Europe,
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Harvey, M. G. (1996, April). Intellectual property rights protection: What MNC managers
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Hodgson. M. (1992, June). Changes in UK Compulsory Patent Licenship Law. European
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Koroneos, G. (2006, April). RFID: A slow go in the pharmaceutical adoption: Proposed
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Milmo, S. (2010, February 1) Report from Europe, Pharmaceutical Technology.
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CHAPTER 8

ECONOMICS

142


CUSTOMERS DEMAND AVERSION TO POLLUTING PRODUCT AND FIRMS
OUTPUT/PRICING DECISION

Muhammad Rashid, University of New Brunswick
mrashid@unb.ca

Basu Sharma, University of New Brunswick
bsharma@unb.ca

Muhammad Jamal, Concordia University
mjamal@jmsb.concordia.ca


ABSTRACT

We argue in this paper that if customers in two distinct locations of sale have different
degrees of aversion to pollution loading of products, firms will maximize profit by price
discrimination between the two locations. We also show that the loss of profit to the firm by
setting the same price in the two locations (markets) is larger in each of the following two
situations: (i) demand curves are relatively more elastic, and (ii) the difference in the degrees of
aversion to pollution loading is wider.

INTRODUCTION

Environmental concerns among populations differ across countries. It is indicated that
individuals in Western European countries are more concerned about environmental quality and
the adverse consequences of pollution than individuals in the US (Kirkpatrick, 1990; Lampe &
Gazda, 1995). Similarly, relative to North America, populations in most developing countries are
less averse to pollution. Evidence is now abundant that individuals consumption preferences are
affected by their degrees of aversion to pollution loading of production. Eco-labeling, bio-food,
green energy, and environmentally responsible corporate behavior are some of the practices
firms use to attract environmentally conscious demand for their products. If a firm is selling the
same product in two markets and assuming that the two markets are segmented and customers
have differential aversion to pollution loading of the production of the commodity, it is rather
evident that the firm cannot ignore this information in its pricing (or output) decision. This paper
shows that in otherwise identical but segmented markets, and with differences in customers
preferences towards industrial pollution, firms optimization behavior requires setting up
different prices (or selling different levels of output) in those markets.
At the firm level, the literature examining the impact of environmental quality (or
pollution) on a firms behavior has been concerned with property rights and environmental
externalities (Rauch, 2005; Solakoglo, 2007), project evaluation (Tol & Lyons, 2008), financial
performance of being green (Ambec & Lanoie, 2007; Hart & Ahuja, 1996; King & Lenox, 2001,
among others), firms performance and environmental regulation (Lanoie, Thomas, & Fearnley,
1998), and the cost of marketable pollution permits and carbon pollution taxes (Taiyab, 2006;
Brown & Corbera, 2003). To the best of our knowledge, a companys green (or pollution) image
143


among its customers in distinct markets has not been investigated in terms of pricing policy. In
this paper, we investigate this phenomenon.

This paper represents an application of third degree price discrimination. The Standard cases of
third degree price discrimination involve the classification of customers into identifiable
different characteristics such as age, sex, ethnicity, etc. with different demand elasticities. Third
degree price discrimination also assumes independent demand functions. However, in this paper,
the customers are classified on the basis of their degrees of aversion to pollution loading of
firms production, and this classification is something new and unique. Secondly, the demand
functions are not independent as the customers in different markets are assumed to respond to
total level of pollution, produced by the level of output. Adachi (2005) introduces interdependent
demand functions in a case of third degree price discrimination by introducing network
externalities or a bandwagon effects. As a consequence of interdependent demand functions, the
standard result of third degree price discrimination of a higher price and lower volume in an
inelastic market does not follow. The result of a lower volume and lower price in an inelastic
market is more vivid in this paper due to an assumption of otherwise identical functions in the
two markets.

THE MODEL

It is assumed that a firm sells its products in distinct markets; and we shall call these markets 1
and 2. In order to focus on the impact of relative degrees of customers aversion toward pollution
in the two markets on the firms output/price decision; we assume that the two markets are
otherwise identical in their demand structures.
Customers aversion toward pollution in market 1 is captured by the following demand function:

P
1
= P
1
(Q
1
, Z (Q)) (1)

where P
1
= product price in market 1,
Q
1
, = output sold in market 1,
Z = quantity of pollution, produced by
total output, Q, and
Q = Q
1
+ Q
2
; Q
2
= output sold in market 2; and

P
1
/ Q
1
< 0, this is the inverse of the demand curve in market 1,

P
1
/ Z 0, this reflects the customers aversion to pollution in market 1, and

dZ/dQ > 0, quantity of pollution, generated by producing one extra unit of output. This
differential can be termed as the pollution loading of production.

Similarly, in market 2, the demand function is given by:

P
2
= P
2
(Q
2
, Z (Q)) (2)

where P
2
= product price in market 2, and
144



Q
2
, Z and Q as defined above; and

P
2
/ Q
2
< 0, this is the inverse of the demand curve in market 2,

P
2
/ Z 0, this reflects the customers aversion to pollution in market 2, and

dZ/dQ is the same pollution loading as in market 1.

Customers aversion to pollution in demand function (1) and (2) is captured by the
negative effect of pollution on the product price in each market. In the demand functions, we do
not view customers aversion toward pollution in absolute degree in which case, customers will
not buy a product which generates an undesirable level of pollution, whatever may be the price.
In our view, given an average degree of consumers aversion toward pollution in a market, there
will be some customers whose aversion will be lesser than the average aversion; there will be
some customers whose aversion will be more; and there will be a few customers who may not
buy the product at all. The overall effect will be a lower demand resulting in a lower output
price. Secondly, we relate the quantity of pollution, Z, to the production of total output, Q, not
to individual output sold in each market. This appears sensible as customers image about
pollution, generated by a firm, is mostly related to the total output.
In order to permit the two markets to be otherwise identical, we let P
1
/ Q
1
= P
2
/
Q
2
, that is the slopes of the demand curves in the two markets are the same. To allow for
differential degree of customers aversion, we specifically assume P
1
/ Z < P
2
/ Z, that is
customers in the second market have higher degree of aversion to pollution than the customers in
the first market.
The total costs of production are given by:

C = C(Q) (3)

where C = costs of production, and

dC/dQ > 0, that is marginal cost is positive, and

d
2
C/dQ
2
0, that is marginal cost is either constant or rising
The profit, to be denoted by , of selling the product in the two markets is given by the
following equation:

= P
1
(Q
1
, Z (Q)) Q
1
+ P
2
(Q
2
, Z (Q)) Q
2
, - C(Q) (4)

The firms problem is to maximize by choosing Q
1
and Q
2
.

RESULTS OF THE MODEL

For the derivation of the results, we assume linearity of functions given in (1), (2) and (3)
above. In addition, we let the pollution loading of production, dZ/dQ, be a constant, to be
denoted by . Finally, we assume that P
1
/ Z is a constant; minus c
1
and P
2
/ Z is a constant
145


equal to minus c
2
. And, as mentioned earlier, c
2
> c
1
, that is the degree of customers aversion
toward pollution in market 2 is higher than in market 1. We assume that in markets 1 and 2,
demand functions are respectively as:

P
1
= A - bQ
1
- c
1
Q (5)
P
2
= A bQ
2
- c
2
Q (6)

It may be noted that the two demand functions are otherwise identical but differ only in the
values of c
1
and c
2
. A linear cost function is:

C = B + c Q, (7)

where B and c are positive constants.

The profit function is:

= (A - bQ
1
- c
1
Q) Q
1
+ (A bQ
2
- c
2
Q) Q
2
B cQ (8)

The first order conditions of optimality require that

/ Q
1
= A 2 bQ
1
- 2 c
1
Q
1
- c
1
Q
2
- c
2
Q
2
c = 0 (9)
/ Q
2
= A 2 bQ
2
- 2 c
2
Q
2
- c
2
Q
1
- c
1
Q
1
c = 0 (10)

These equations solve for the following optimal levels of Q
1
and Q
2
:

Q*
1
= [(A-c)/D] [2b + (c
2
c
1
)], and (11)
Q*
2
= [(A-c)/D] [2b - (c
2
c
1
)], (12)

where D = 4 (b + c
1
) (b + c
2
) ( (c
1
+ c
2
))
2


For the model to make economic sense A-c must be positive and for the values of
parameters, , c
1
and c
2
,

to be assumed below, D > 0. Since b > 0, > 0, and (c
2
c
1
) is assumed
to be positive, it is evident from equations (11) and (12) that Q
1
*
> Q
2
*
. In other words, the firm
will maximize its profit if it will sell a lower level of output in the market which shows relatively
more aversion to pollution loading. This result can also be explained in terms of demand
elasticity. With c
2
> c
1
, the demand curve in market 2 becomes less elastic, therefore at optimal
levels, Q
2
must be lower than Q
1
.
The effect of more aversion to pollution loading in market 2 on the product price, P
2
,
relative to the product price in market 1, P
1
, is ambiguous. This is in contrast to the standard
price discrimination case where in the inelastic market the firm must charge a higher price and
sell a lower volume. In the model of this paper, the optimal P
2
, denoted by P
2
*
, is lower, equal or
higher than P
1
*
as given by:

c
2
c
1
b(Q*
1
- Q*
2
)/Z
*
(13)

where Q*
1
= optimal output sold in market 1,
146


Q*
2
= optimal output sold in market 2, and
Z* = the optimal level of pollution, generated by the
production of Q* = Q*
1
+ Q*
2
.

This equation is a result of the interdependence in the two markets. If c
2
is assumed to be
c
1
, then Q*
2
= Q*
1
and the both sides of the equation will be zero. In this situation, obviously P*
2

= P*
1
. In other words, with c
2
= c
1
, the two markets are exactly identical and the optimization
behavior must result in Q*
2
= Q*
1
and P*
2
= P*
1
.
We have already established that Q
1
*
> Q
2
*
, if c
2
> c
1
. In this situation it is still possible
that c
2
> c
1
, but c
2
c
1
< b(Q*
1
- Q*
2
)/Z as Q*
1
can be offsetting by larger than Q*
2,
although
differential between c
1
and c
2
will reduce the difference between Q*
1
and Q*
2
. This would mean
that P*
2
> P*
1.
But, otherwise P*
2
P*
1.

In the numerical illustrations of the model below, we assume c
2
c
1
> b(Q*
1
- Q*
2
)/Z
*
, which,
unlike the standard case of price discrimination, given not only a lower quantity sold in a
relatively a more inelastic demand market but also the firm has to set a lower price as well in this
market.
Given optimal levels of Q
1
and Q
2
in equation (11) and (12) respectively, the
corresponding optimal prices in markets 1 and 2 will be respectively as:

P
1
* = A bQ
1
* - c
1
(Q
1
* + Q
2
*), and (14)
P
2
* = A bQ
2
* - c
2
(Q
1
* + Q
2
*), and (15)

And, the maximum profit is given by:

* = P
1
*Q
1
* + P
2
*Q
2
* - (B + c (Q
1
* + Q
2
*) (16)

If the firm ignores the fact that c
2
> c
1
and perceives wrongly the same customers
aversion to its pollution loading in market 2 as in market 1, that is, it sets c
2
= c
1
and tries to
enforce the same price as it optimally obtains in one of the two markets in the other market, it
will not be able to sell the same volume in the other market. Suppose it perceives c
2
= c
1
, and
solves optimality conditions in the first market which will give the following output and price
levels:

Q
1
= (A-c) (2b- c
1
)/4(b
2
+ 2bc
1
), and (17)
P
1
= A- b Q
1
- c
1
(Q
1
+ Q
2
) (18)

By setting P
2
* = P
1
* in the second market, the firm will not be able to sell Q
2
* =
Q*
1
due to c
2
> c. Actually, Q
2
will decline substantially. Also, both Q
1
and Q
2
in equations (17)
and (18) are non-optimal due to non-optimal Q
2
and wrong value of c
2
. As a consequence, the
profit level will be lower as compared to what is given in equation (16) above.
Given the same differential degrees of aversion to pollution in the two markets for a
higher price elasticity of demand, that is a lower value of b, the loss of profit will be larger.
Secondly, given the same price elasticity of demand, a larger differential of degrees of aversion
to pollution in the two markets, the loss of profit is larger.


147


CONCLUSION

In a situation where customers aversion to pollution loading of production of a firm
differs in distinct, but otherwise identical, markets, this paper has shown that the firm maximizes
its profit if it sets different prices in the distinct markets. If the firm ignores information about
differential degrees of customers aversion to pollution in different markets, there would be a
loss of profit to the firm. The loss of profit is shown to be larger in the situation of more price
elastic demand functions, a higher differential in degrees of customers aversion to pollution
loading or both. These results of the model are based on the assumption that on the demand side,
the distinct markets are segmented.
In our view, the results of this paper have important implications for firms which sell
their products or services in different countries globally. The paper recommends to the firms to
assess customers concerns about levels of pollution of their product and use this information in
their output/pricing decisions. Not doing so will result in a non-optimal profit situation.

REFERENCES

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welfare. Economica 72, 171-178.
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evolving business and society interface. International Business Review, 4, 295-312.
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and Economics. Journal of Economic Literature, 43, 480-487.
Solakoglu, E. G. (2007). The effect of property rights on the relationship between economic
growth and pollution for transition economies. Eastern European Economics, 45, 77-94.
Taiyab, N. (2006). Exploring the market for voluntary carbon offsets. London: International
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projects supported by state development agencies. Working Paper No. 247, Economic
and Social Research Institute, Dublin, Ireland.

148


P/E RATIO AS A MARKET TIMING INDICATOR FOR TWENTY-YEAR PERIODS

Gary L. DeBauche, Drury University
gdebauche@drury.edu

Rodney A. Oglesby, Drury University
roglesby@drury.edu

ABSTRACT

Market timing is a strategy of making buy and sell decisions of financial assets, usually
equities, by attempting to predict future equity prices through measures of value, market
sentiment (bullish/bearish), or moving averages. This study examined the use of the price
earnings ratio (P/E) as a market timing indicator for ninety-one 20 year periods to determine if
trading by the P/E measure was superior to the traditional buy and hold strategy. The results of
this historical post-hoc examination determined that the starting valuation based on the P/E ratio
is an important predictor in determining future stock market returns.

INTRODUCTION AND LITERATURE REVIEW

The value of an individual stock is determined by two factors, value and sentiment
(Shefrin & Statman, 1994). Most textbooks on Corporate Finance will define a stocks value as
the present value of the expected dividend and terminal value discounted at an appropriate rate;
yet sentiment is more mushy and can be classified as either bullish or bearish. It is the
sentiment that causes the market to move away from value. We have seen what happens
when sentiment begins to deviate from value, markets can drop in spite of positive economic
news, and gain with negative news.
We recall the extremely bullish sentiment of the dot-com craze, and wonder how did
we go so wrong? However, being extremely bullish on technology stocks is not new. In the
early 1900s the wireless telegraph was the newest technology and investors threw caution to
the wind, trying to reap fortunes from the much heralded field it would be impossible to
estimate the amount of money that has been thrown away by usually sane people during the
past ten years (Shaw, 1908, p. 631). Following those years of bullish sentiment of the early
1900s was, of course, the bearish sentiment resulting from the crash in 1929.
Market timing involves the detection of changing sentiment and subsequently riding
the Bull or Bear to increase returns beyond those achieved through a traditional buy and hold
strategy. Fama (1970) and Friedman (1953) were among the first to research technical analysis
as a method for trading stocks and forecasting price movements. The forecasting of price
movement through the use of technical analysis continues to remain controversial in the
literature with influential studies concluding that technical analysis is not useful; while other
studies indicate a positive effect upon portfolio returns. Market timing (technical analysis) has
long been the subject of much debate and discussion. Various technical analysis decision rules
have been examined and tested on the stock market, with most indicating that the decision rules
do not result in returns higher than the buy and hold strategy. Further, that if we include
149


transaction costs, returns could actually be negative (Fama & Blume, 1966; Jensen & Benington,
1970).
The stumbling block for technical analysis is the efficient markets hypothesis. The
efficient markets hypothesis implies that technical analysis adds nothing to returns because the
current price reflects all available relative information. Investors compete to capitalize on their
unique understanding of the common knowledge of a stocks price history and in doing so they
drive stock prices to a point where the expected rate of return is commensurate with risk, i.e.
normal returns (Fama, 1970). The efficient market hypothesis would imply that technical
analysts can only achieve superior returns by identifying stocks that react slowly to market
information, providing a window of opportunity for the leveraging of returns, an impossible
condition if you are operating in an efficient market.
In examining whether a market timing strategy is ever a viable alternative to value
analysis or to the efficient market theory (where prices often exhibit a random behavior and are
not predictable with consistency) Malkiel (2004a) noted that the best predictor for a mutual fund
to consistently outperform the market, such as the S&P 500 was through low fund expenses and
low turnover rate, not a value approach or a market timing strategy. However, some other studies
have concluded that some simple investment market strategies will outperform a buy-and-hold
approach. Shen (2002) noted, with real-time price data from 1970 to 2000, that a low spread
between the P/E ratio of the S&P 500 and interest rates did outperform a buy-and-hold strategy.
In addition, Fisher and Statman (2006) noted that a Bullish Sentiment Index strategy between
1962 and 2002, switching from TSY Bills to stocks when the bullish sentiment index is lower
than its median and vice-a-versa, outperformed a buy-and-hold strategy, and resulted in a higher
Sharpe Ratio.
Even though theory and research suggests that there is no gain from the use of technical
analysis, Frankel and Froot (1990a) found that professional traders include technical analysis in
forecasting the market. This trend toward technical analysis is more clearly demonstrated by
visiting one of the many internet financial sites where technical analysis tools are just a click
away (http://finance.yahoo.com, 2010). Obviously the frequent upgrading of technical analysis
services is a response to the demand for technical analysis tools and competition among the
financial information service providers.
The main objective of technical analysis is to identify a market trend and invest
accordingly. Technical analysis results in an investor investing in the stock or market when it is
trending upward and selling a stock or being on the sidelines when the market is trending
downward. If the market begins to trend the technical analysis tools provide signals indicating
the direction of the trend. The investors action, driven by the indicators, reinforces the identified
trend. With so many investors relying on technical tools, it is possible for the technical traders to
move the market in the direction of the trend, providing a self- fulfilling prophesy. Froot,
Scharfstein, & Stein (1992), termed this self-fulfilling nature of technical trading, a speculative
bubble. Conrad and Kaul (1988) found that weekly returns were positively auto-correlated with
technical trading activities. In a related study Frankel and Froot (1990b) suggested that the
overpricing of the dollar (US) in the 1980s could be due to the influence of technical analysis.
Shiller (1984, 1989a) found that irrational investor behavior resulted in market volatility.
Further, Shiller suggested that the October 1987 world-wide stock market crash may have been
the result of technical analysis. Fama and French (1988) proposed a mean reverting model to
explain the movement of stock prices, finding that returns become strongly negative for a 35
year horizon. Evidence of technical analysis leveraging the direction of a stock movement was
150


provided by DeBondt and Thaler (1985, 1987) who found that stocks which experienced a
significant downward trend over a 3-5 year period experienced returns above the market during
following years. Further, that stocks which experienced strong returns tended to experience
returns below the market in following years.
Other studies have shown that some fundamental data like price earnings ratio, dividend
yields, business conditions and economic variables can predict to a large degree the returns on
stocks (Breen, Glosten, & Jagannathan, 1990; Campbell, 1987; Campbell & Shiller, 1988a,
1988b; Fama & French, 1989, among others). Lo, Mamaysky, and Wang (2000), examined
American share prices for the period 1962-1996 finding that technical patterns were unusually
recurrent and sufficient to lead to trading gains; a finding confirmed by Oglesby and DeBauche
(2009) who found that utilizing Exponential Moving Averages (EMA) to make trading decisions
yielded higher gains, provided the investor with lower risk, and a higher Sharpe Ratio.
Specifically, the market timing strategy based on EMA outperformed all other strategies tested
(P/E, Dividend Yield and buy-and-hold).

MEASUREMENT

Historically, compounded average growth rates (CAGR) for the stock market over very
long-term periods of 50 to 100 years have been significant when dividends are included. From
1900 to 2009, the S&P 500s CAGR was 9.52%, including dividends but not adjusted for
inflation, with a standard deviation of 19.91%. Without dividends and not adjusted for inflation,
the S&P 500s CAGR was 4.77% with a standard deviation of 21.39%.
Let us consider a P/E based market-timing rule that calculates the ratio of price at the end
of the year to earnings during the preceding year. The median P/E ratio during the 137-year
period was 14.35. P/E ratios above 14.35 imply a bullish sentiment and those P/E ratios below
14.35 imply bearish sentiment. Market timers, who act as contrarians, would switch from CDs
to the S&P 500 in years that begin with P/E ratios lower than the median of 14.35 and switch
from the S&P 500 to CDs in years when the median P/E is higher than 14.35, following this rule
since 1872 would have earned an annualized rate of return (GM) of 5.49% with a standard
deviation of 12.99% and coefficient of variation (CV) of 2.366, underperforming the buy-and-
hold strategy.
If we were to consider a P/E based market-timing rule that calculates the ratio of price at
the end of the year to earnings during the preceding ten years. The median P/E ratio during the
128-year period was 15.38. P/E ratios above 15.38 imply a bullish sentiment and those P/E ratios
below 15.38 imply bearish sentiment. Market timers, who act as contrarians, would switch from
CDs to the S&P 500 in years that begin with P/E ratios lower than the median of 15.38 and
switch from the S&P 500 to CDs in years when the median P/E is higher than 15.38. Following
this rule since 1881 would have earned an annualized rate of return (GM) of 5.19% with a
standard deviation of 12.05% and coefficient of variation (CV) of 2.322. In addition, its Sharpe
ratio of 0.044 was considerably lower than the buy and hold strategy.

How Long is Long?
Investors have been told to invest for the long-run lulling investors into thinking they
could ignore stock market fluctuations as long as they focused on the long-run. That may be true
if your investment portfolio time horizon is 50 to 100 years. However, for a majority of
investors, the long-term is closer to twenty years, when children are grown and the individual
151


is preparing for life after family and career, much shorter than 50 to 100 years. Therefore, this
paper defines an investors time horizon as the length of time over which investments are made
and/or held before it is utilized for the golden years of the typical investor, approximately twenty
years.
Using annual S&P 500 P/E ratio data by Ed Easterling (2005), author of Unexpected
Returns, this study divided the period from 1900 to 2009 into ninety-one, twenty-year periods.
For each period, a beginning P/E ratio and ending of period P/E ratio were assigned. Four
quartiles were determined for the data. The year-ended prices for the S&P 500 were utilized
without dividends, transaction costs or taxes and not adjusted for inflation. This approach, which
was popularized by Robert Shiller (2005), author of Irrational Exuberance, used the trailing ten-
year average earnings for the S&P 500 adjusted for inflation in his calculation for P/Es
(http://www.econ.yale.edu/~shiller/).
The studys hypothesis tests that higher returns for the S&P 500 are associated with
periods during which the P/E ratio increased, and lower or negative returns resulted from periods
when the P/E ratio declined. In other words, the P/E ratio is a measure of valuation reflected in
the relationship between price and earnings per share. Therefore, the true measure of the
probability of success is not price but the starting valuation based upon the level of the P/E ratio.
Analysts have debated for years the merits of using P/E ratios to make investment decisions.
Fisher and Statman (2006) found that the bullish sentiment indicator did better as a market-
timing tool than P/E ratios but both were not reliable. However, Katsenelson (2007) found that
starting valuations, based on P/E, is one of the most important predictors in determining future
stock market returns. His study observed a correlation between P/E at the time of the investment
and the returns that an investor received in five or ten years. That is, lower P/E ratios lead to
higher returns, and higher P/E ratios lead to lower returns.
John Hussman (2009), manager of Hussman Strategy Growth Fund (HSGFX), proposed
price to peak 10-year average earnings as a long-term stock market valuation model. His
strategy is to purchase equities when Price to Peak Earning is lower than 15 and sell when it
exceeds 19.5. Hussmans strategy from December 31,1970 to November 13, 2009 rendered an
annualized return of 8.02% with a Sharpe Ratio of .25. During this same time frame, the market
had a Sharpe Ratio of .15. The Sharpe Ratio is a measure of the excess return per unit of risk in
an investment strategy. The Sharpe Ratio is calculated as (r
p
r
f
)/
p
Where: r
p
= Expected
Portfolio Return, r
f
= Risk-free Rate of Return as measured by 90-day Treasury Bills, and
p
=
Portfolios Standard Deviation.
Blackman (2004) incorporated simple moving averages (SMA) of P/E ratios from 1920
through 2003 to generate buy and sell signals. His buy signals occurred when the two-year P/E
SMA crossed above the five-year P/E SMA and a sell signal when the two-year P/E SMA
crossed below the five-year P/E SMA. His findings were that the P/E SMA indicator had a 58%
better return than a buy-and-hold strategy over the 84 years. However, Blackman (2004) noted
that the major benefit of the P/E SMA indicator was found to be in keeping the investor out of
the market when it was less profitable.
Figure 1 illustrates the P/E ratio for the S&P 500 from 1900 through 2009. Over the time
horizon from 1900 to 2009, the mean P/E was 16.59. If stocks are purchased when the P/E ratio
is below the mean (16.59) or the quadratic equation of the second degree (Best Fit of Data),
eventually that P/E ratio will expand, which adds to a stocks return. On the other hand, if stocks
are purchased when the P/E ratio is above the mean (16.59) or quadratic equation of the second
degree, the P/E ratio eventually contracts with the financial consequences of diminishing returns.
152


Therefore, the starting valuation based upon the P/E at the time of purchase is an important
factor in determining future returns.
This study utilized the compounded annual growth rates for each of the ninety-one
periods in relation to its beginning P/E ratio. The mean (median) compounded rates of return for
the 1
st
Quartile, 2
nd
Quartile, 3
rd
Quartile and 4
th
Quartile were 6.81% (8.48%), 5.93% (7.5%),
5.14% (5.56%), and 2.51% (3.19%), respectively. The standard deviation for the 1
st
Quartile, 2
nd

Quartile, 3
rd
Quartile, and 4
th
Quartile were 4.63%, 3.66%, 3.04%, and 2.42%, respectively. The
coefficient of variation (CV) for the 1
st
Quartile, 2
nd
Quartile, 3
rd
Quartile, and 4
th
Quartile were
0.68, 0.62, 0.59, and 0.96, respectively.

From these descriptive measures, we determined that higher returns were associated with
those twenty-year periods where the P/E ratios at the beginning were less than 10.75. In
examining the relationship between returns for each of the ninety-one periods on the S&P 500
and the beginning P/E ratios we find that higher returns for the S&P 500 were associated with
periods during which the P/E ratio increased, and lower or negative returns resulted from periods
when the P/E ratio declined.
A simple linear regression was calculated predicting the return for the S&P 500 index
based on the beginning P/E value for the S&P 500. A significant regression equation was found
(F(1,89) = 16.033, < .05), with a R
2
= .153. Return predicted value for S&P 500 = 9.493
0.307 X (Beginning P/E)
Therefore, the beginning P/E ratio is very significant and provides clues as to what the
prospects for future returns might be over the next few decades. There is a statistically significant
relationship between returns and the value of the P/E at the start of each of the twenty-year
periods, higher returns for the S&P 500 are associated with periods during which the P/E ratio
increased from the beginning period (First Quartile), and lower or negative returns resulted from
periods when the P/E ratio declined (Fourth Quartile). Investors definitely want to eliminate
making investments in an environment where the P/E ratio is expected to contract, such as the
fourth quartile, because of the greater probability of negative returns.
Higher returns for the S&P 500 are associated with periods during which the P/E ratio
expanded, and lower or negative returns resulted from periods when the P/E ratio contracted.
However, the simple linear regression did not take into account any significant differences
between and among the means of the four quartiles. Therefore, a one-way ANOVA was
performed.
P/E Ratio for S&P 500*
1900 to 2009
Based Upon it's Long-term Trend with Economy
y = 0.0029x
2
- 0.2206x + 16.906
R
2
0
5
10
15
20
25
30
35
40
45
50
1900 1903 1906 1909 1912 1915 1918 1921 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
P/E Ratio Poly. (P/E Ratio)
Average P/E 16.59
Figure 1
153


Table 1 summarizes the descriptive statistics, including the means and standard
deviations for each of the four quartiles. The results of the one-way ANOVA yielded a
statistically significant F statistic of 6.313 (p< .05). As a result a Tukeys HSD was performed.
Table 2 presents the results of the Tukeys HSD post-hoc comparisons.

TABLE 1. ANOVA DESCRIPTIVE STATISTICS OF P/E RETURNS BY QUARTILE
P/E
N Minimum Maximum Mean Return Std. Deviation
1st Quartile < 10.75 23 .00 12.94 6.8074 4.63242
2nd Quartile 10.75 to 13.5 21 -.8 9.9 5.929 3.6564
3rd Quartile > 13.5 to 18.15 24 -.73 9.13 5.1396 3.03667
4th Quartile >18.15 to 25.3 23 -2.16 6.51 2.5148 2.41687
Valid N (listwise) 21


TABLE 2. MULTIPLE COMPARISONS OF PE QUARTILES EMPLOYING TUKEY POSTHOC TEST

(I) PE (J) PE
Mean
Difference
(I-J) Std. Error Sig.
95% Confidence Interval
Lower
Bound Upper Bound
<10.75 10.75 to 13.5 .88358 1.06324 .840 -1.9015 3.6686
13.5 to 18.15 1.66781 1.02792 .371 -1.0247 4.3603
18.15 to 25.3 4.29261
*
1.03880 .000 1.5716 7.0136
10.75 to 13.5 <10.75 -.88358 1.06324 .840 -3.6686 1.9015
13.5 to 18.15 .78423 1.05262 .879 -1.9730 3.5414
18.15 to 25.3 3.40903
*
1.06324 .010 .6240 6.1941
13.5 to 18.15 <10.75 -1.66781 1.02792 .371 -4.3603 1.0247
10.75 to 13.5 -.78423 1.05262 .879 -3.5414 1.9730
18.15 to 25.3 2.62480 1.02792 .059 -.0677 5.3173
18.15 to 25.3 <10.75 -4.29261
*
1.03880 .000 -7.0136 -1.5716
10.75 to 13.5 -3.40903
*
1.06324 .010 -6.1941 -.6240
13.5 to 18.15 -2.62480 1.02792 .059 -5.3173 .0677
*= p < .05

This analysis revealed that returns from beginning P/Es of less than 10.75 (m = 6.807, sd =
4.632) have a higher return than beginning P/Es between 18.15 and 25.3 (m = 2.515, sd = 2.417).
Returns from beginning P/Es between 10.75 to 13.5 (m = 5.929, sd = 3.656) have a higher return
than beginning P/Es from 18.15 to 25.3 (2.515, sd = 2.417).

CONCLUSION

The P/E ratio, which came into prominence during the 1930s by Benjamin Graham and
David Dodd, measures the amount of money investors are paying for a firms earnings. For
154

Table 1 summarizes the descriptive statistics, including the means and standard
deviations for each of the four quartiles. The results of the one-way ANOVA yielded a
statistically significant F statistic of 6.313 (p< .05). As a result a Tukeys HSD was performed.
Table 2 presents the results of the Tukeys HSD post-hoc comparisons.

TABLE 1. ANOVA DESCRIPTIVE STATISTICS OF P/E RETURNS BY QUARTILE
P/E
N Minimum Maximum Mean Return Std. Deviation
1st Quartile < 10.75 23 .00 12.94 6.8074 4.63242
2nd Quartile 10.75 to 13.5 21 -.8 9.9 5.929 3.6564
3rd Quartile > 13.5 to 18.15 24 -.73 9.13 5.1396 3.03667
4th Quartile >18.15 to 25.3 23 -2.16 6.51 2.5148 2.41687
Valid N (listwise) 21


TABLE 2. MULTIPLE COMPARISONS OF PE QUARTILES EMPLOYING TUKEY POSTHOC TEST

(I) PE (J) PE
Mean
Difference
(I-J) Std. Error Sig.
95% Confidence Interval
Lower
Bound Upper Bound
<10.75 10.75 to 13.5 .88358 1.06324 .840 -1.9015 3.6686
13.5 to 18.15 1.66781 1.02792 .371 -1.0247 4.3603
18.15 to 25.3 4.29261
*
1.03880 .000 1.5716 7.0136
10.75 to 13.5 <10.75 -.88358 1.06324 .840 -3.6686 1.9015
13.5 to 18.15 .78423 1.05262 .879 -1.9730 3.5414
18.15 to 25.3 3.40903
*
1.06324 .010 .6240 6.1941
13.5 to 18.15 <10.75 -1.66781 1.02792 .371 -4.3603 1.0247
10.75 to 13.5 -.78423 1.05262 .879 -3.5414 1.9730
18.15 to 25.3 2.62480 1.02792 .059 -.0677 5.3173
18.15 to 25.3 <10.75 -4.29261
*
1.03880 .000 -7.0136 -1.5716
10.75 to 13.5 -3.40903
*
1.06324 .010 -6.1941 -.6240
13.5 to 18.15 -2.62480 1.02792 .059 -5.3173 .0677
*= p < .05

This analysis revealed that returns from beginning P/Es of less than 10.75 (m = 6.807, sd =
4.632) have a higher return than beginning P/Es between 18.15 and 25.3 (m = 2.515, sd = 2.417).
Returns from beginning P/Es between 10.75 to 13.5 (m = 5.929, sd = 3.656) have a higher return
than beginning P/Es from 18.15 to 25.3 (2.515, sd = 2.417).

CONCLUSION

The P/E ratio, which came into prominence during the 1930s by Benjamin Graham and
David Dodd, measures the amount of money investors are paying for a firms earnings. For
154

Table 1 summarizes the descriptive statistics, including the means and standard
deviations for each of the four quartiles. The results of the one-way ANOVA yielded a
statistically significant F statistic of 6.313 (p< .05). As a result a Tukeys HSD was performed.
Table 2 presents the results of the Tukeys HSD post-hoc comparisons.

TABLE 1. ANOVA DESCRIPTIVE STATISTICS OF P/E RETURNS BY QUARTILE
P/E
N Minimum Maximum Mean Return Std. Deviation
1st Quartile < 10.75 23 .00 12.94 6.8074 4.63242
2nd Quartile 10.75 to 13.5 21 -.8 9.9 5.929 3.6564
3rd Quartile > 13.5 to 18.15 24 -.73 9.13 5.1396 3.03667
4th Quartile >18.15 to 25.3 23 -2.16 6.51 2.5148 2.41687
Valid N (listwise) 21


TABLE 2. MULTIPLE COMPARISONS OF PE QUARTILES EMPLOYING TUKEY POSTHOC TEST

(I) PE (J) PE
Mean
Difference
(I-J) Std. Error Sig.
95% Confidence Interval
Lower
Bound Upper Bound
<10.75 10.75 to 13.5 .88358 1.06324 .840 -1.9015 3.6686
13.5 to 18.15 1.66781 1.02792 .371 -1.0247 4.3603
18.15 to 25.3 4.29261
*
1.03880 .000 1.5716 7.0136
10.75 to 13.5 <10.75 -.88358 1.06324 .840 -3.6686 1.9015
13.5 to 18.15 .78423 1.05262 .879 -1.9730 3.5414
18.15 to 25.3 3.40903
*
1.06324 .010 .6240 6.1941
13.5 to 18.15 <10.75 -1.66781 1.02792 .371 -4.3603 1.0247
10.75 to 13.5 -.78423 1.05262 .879 -3.5414 1.9730
18.15 to 25.3 2.62480 1.02792 .059 -.0677 5.3173
18.15 to 25.3 <10.75 -4.29261
*
1.03880 .000 -7.0136 -1.5716
10.75 to 13.5 -3.40903
*
1.06324 .010 -6.1941 -.6240
13.5 to 18.15 -2.62480 1.02792 .059 -5.3173 .0677
*= p < .05

This analysis revealed that returns from beginning P/Es of less than 10.75 (m = 6.807, sd =
4.632) have a higher return than beginning P/Es between 18.15 and 25.3 (m = 2.515, sd = 2.417).
Returns from beginning P/Es between 10.75 to 13.5 (m = 5.929, sd = 3.656) have a higher return
than beginning P/Es from 18.15 to 25.3 (2.515, sd = 2.417).

CONCLUSION

The P/E ratio, which came into prominence during the 1930s by Benjamin Graham and
David Dodd, measures the amount of money investors are paying for a firms earnings. For
154


example, if the P/E ratio is 15, this means that investors are willing to pay $15 for each $1 that a
company earns. In other words, it is a valuation ratio of a companys current share price
compared to its earnings per share (Market Price Per Share/Earnings Per Share). Conventional
investment wisdom indicates that a high P/E suggests that investors are expecting higher
earnings growth in the future than companies with a lower P/E, which should correspond with
higher investment returns.
This study examined not only the aforementioned conventional wisdom that high P/E
valuations generate superior investment returns, but also on the starting P/E valuation for
determining future returns over the time period from 1900 through 2009. This time horizon was
divided into ninety-one, twenty-year periods. The results determined that the compounded
average growth rate (return) for beginning P/E valuations of less than 10.75 of 6.81%
outperformed beginning P/E valuations between 18.15 to 25.3 of 2.51%. Further, the return for
the beginning P/E valuation between 10.75 to 13.5 of 5.93% outperformed the beginning P/E
valuation between 18.15 to 25.3 of 2.51%. However, the return for the beginning P/E valuation
of less than 10.75 did not outperform the beginning P/E valuation between 10.75 to 13.5.
The results of the study bring us to the following conclusions:
That the P/E ratio is an effective indicator of future portfolio returns.
Further, that the starting market valuation based upon the P/E ratio is an important
predictor of portfolio returns for 20 year periods.
This study resulted in the following recommendations:
Since the study was based solely on P/E valuation, future research may want to focus on
other valuation methodologies, such as dividend yield and/or price to earnings growth.
Since the study utilized ninety-one, twenty-year periods, future research may want to
focus on smaller time horizons of five to ten years.
Since the study based the P/E valuation for the S&P 500 on its long-term earnings trend
with the economy, future studies may want to base earnings on the following periods: (1)
one-year trailing average (preceding four quarters), and/or (2) ten-year trailing average
(smooth out distortions).

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156










CHAPTER 9

ENTREPRENEURSHIP AND SMALL BUSINESS

157


A COMPARATIVE STUDY ON NATIVE-BORN AND FOREIGN-BORN
FEMALE ENTREPRENEURS: A NARRATIVE APPROACH

Chulguen (Charlie) Yang, Southern Connecticut State University
yangc1@southernct.edu

Margaret A. Goralski, Southern Connecticut State University
goralskim1@southernct.edu


ABSTRACT

This study investigates the effects of gender and ethnicity on the entrepreneurial
motivations and practices of native-born and foreign-born female entrepreneurs. From a narrative
psychological perspective, the sense-making process of female entrepreneurs situated in different
structural contingencies in a multi-ethnic society will be compared to deepen our understanding
of their developmental paths as risk-taking entrepreneurs. From the life stories of experienced
female entrepreneurs, some insights and practical implications for educating future female
entrepreneurs will be discussed to enhance the relevance and effectiveness of entrepreneurship
education.

INTRODUCTION

Derived from the French words entre, meaning between, and prendre, meaning to
take the word entrepreneur was created. Originally, the word was used to describe people who
take on the risks between buyers and sellers or undertake a task, i.e. start a new venture (Bolton
& Thompson, 2002). Entrepreneurs assemble and integrate resources: money, people, a business
model, a strategy, and the risk-taking capabilities to transform an opportunity into a viable
business (Sharma & Chrisman, 1999). According to the Global Entrepreneurship Monitor
(GEM) 2009 Executive Report, Business entrepreneurs drive and shape innovation, they speed
up structural changes in the economy, and they introduce new competition, thereby contributing
to productivity (Bosma & Levie, 2009, p. 8). In the United States, between 1996 and 2004,
approximately 550,000 small businesses were created every month and many rapidly grew into
big business (The United States of Entrepreneurs, 2009).
Female entrepreneurship, in particular, has attracted a considerable amount of attention in
recent years as womens valuable contribution to national economies has increased worldwide
(Carter, Henry, Cinneide, & Johnston, 2007). According to Muhtar Kent, chair and CEO of The
Coca-Cola Company, While statistics suggest that the rapid growth of nations like Brazil, China
and India will make them the most powerful economic forces of the future, it is women who will
drive the economic agenda for the 21
st
century (Kent, 2010, Coca-Cola World Fund at Yale
Lecture). Female entrepreneurs and business owners in the United States employ in the region of
28 million people and contribute over $3.6 trillion dollars to the U.S. Economy (Female
Entrepreneurs, 2010).
Although the businesses of female entrepreneurs grow more slowly than those that are
owned by men, women-owned businesses ultimately have a higher survival rate. Approximately
70 percent of women-owned businesses are retail or service oriented; however, according to the
158


Center for Womens Business Research agribusiness, communications, construction,
transportation, and utilities (which had previously been considered the domain of males) are
among the fastest-growing industries for women (Top Facts about Women-Owned Businesses,
2005).
In addition, major metropolitan areas in North America have become multiethnic and the
economic participation of foreign-born female entrepreneurs is now growing (Levent, Masurel,
& Nijkamp, 2003). Amidst increasing migration and globalization, an emerging body of
literature suggests that female entrepreneurs have a different set of goals, attitudes, and
challenges compared to their male counterparts (Carter et al., 2007). Studies have also revealed
that immigrant female entrepreneurs often experience double disadvantages due to their gender
and ethnicity in a host country (Levent et al., 2003).
This paper explores female entrepreneurship by focusing on the female voices and
experiences expressed in the autobiographical narratives told by two groups of female
entrepreneurs (i.e., native-born and foreign-born female entrepreneurs). By doing so, it is hoped
that this paper contributes to the knowledge base of the unique developmental paths of female
entrepreneurs. The paper has three major goals. First, there exists a knowledge gap in the
literature of entrepreneurship. Until now, researchers have done some comparative studies on the
differences between native-born and foreign-born female entrepreneurs, however previous
studies have been content to simply identify the differences that exist between cultures (Chance,
1965; Gordon, 1964, 1978; Padilla, 1980; Shackleton & Ali, 1990; Wong-Rieger, 1984); this
study seeks to show how those differences impact entrepreneurial women.
Second, from a methodological standpoint, the narrative approach will allow us to
understand how women make sense of their personal experiences to construct their self-identity
as risk-taking entrepreneurs. The narrative psychology suggests that we tell stories for many
reasons. One of the key functions of storytelling is to make sense of social events; we use
storytelling as a cognitive device to maintain a coherent self and a functional map of social
relationship (McAdams, 1993). A careful analysis of the autobiographical stories of female
entrepreneurs will highlight subtle but uniquely female ways of knowing, planning, and
performing various phases of the entrepreneurial process. Furthermore, we know little about the
effects of migration and the economic participation of female immigrants on their self-identify,
their changing perception of gender roles, and their status in a household. In this regard, this
project will contribute to the literature in that migration probably affects men and women
differently and female immigrant entrepreneurs may utilize social networks and ethnic resources
differently compared to their male counterparts.
Third, from an educational standpoint, we provide some clues for the effective training of
future female entrepreneurs, which may bridge the gap between the entrepreneurship curriculum
and field experiences. For instance, through collecting autobiographical narratives of regional
female entrepreneurs, we hope that the students will have opportunities to develop social
networks with successful mentors. This will facilitate the process of the students envisioning
themselves as future entrepreneurs and the actual preparation even before their gradation.

WOMENS VOICES NARRATIVE

As women, as female entrepreneurs, it matters what is said, to whom it is said, and who
says it. For a woman to have an opportunity to talk about her own life, to tell her own story,
interpreted in her own way, is an integral part of life. It allows one to lead life rather than be led
159


through life. As humans, life experiences are deeply influenced by the telling, the talking, and
the narratives that express a situation. Articulation of experience is part of existence. These
experiences and stories include the voices of inequitythe voices of all women and all female
entrepreneurs: African Americans, Asians, Hispanics, and others who considered themselves
voiceless in the past.
A position in society, which is shaped by and in turn shapes ways of knowing, structures
of power, and resource distribution, is referred to as feminist standpoint theory (Hennessy,
1993). It claims that there is an epistemological difference between womens lives and womens
experiences as the foundation for knowledge (p. 68). Postmodern theories of the subject-in-
language have provided feminist standpoint theory with useful frameworks for conceptualizing
woman as differentially and discursively constructed (Hennessy, 1993, p. 69). Belenky,
Clinchy, Goldberger, and Tarule (1997) stated:

What we had not anticipated was that voice was more than an academic
shorthand for a persons point of view it is a metaphor that can apply to many
aspects of womens experience and development. In describing their lives, women
commonly talked about voice and silence all having to do with sense of mind,
self-worth, and feelings of isolation from or connection to others. We found that
women repeatedly used the metaphor of voice to depict their intellectual and
ethical development; and that the development of a sense of voice, mind, and self
were intricately intertwined. (p. 18)

According to French philosopher Michel Foucault (1990):
Discourses are not once and for all subservient to power or raised up against it,
any more than silences are. We must make allowance for the complex and
unstable process whereby discourse can be both an instrument and an effect of
power, but also a hindrance, a stumbling-block, a point of resistance and a starting
point for an opposing strategy. Discourse transmits and produces power; it
reinforces it, but also undermines and exposes it, renders it fragile and makes it
possible to thwart it. (pp. 100-101)

In todays world, women have found that they must find their own voice and position of
power. Contrary to the conservative ideology on women and the family, the family can no longer
be a place where women are sure to find their material existence secured. Man-the-breadwinner
is still a dominant ideological concept; however, in reality it is a concept that is no longer a
viable option for many women who are single, divorced, widowed, or even married with need for
a second income in order to maintain a household (Mies, 1986). Single, widowed, and divorced
women with children must work to avoid poverty. Employment is not always a choice for
women; it is a necessity (Kerber & De Hart-Mathews, 1997, p. 370). Hence, women are
breaking free from traditional, gender specific roles and expanding their horizons within the
realms of businesssmall business and entrepreneurship.
Small business has offered women opportunities for economic expression through
entrepreneurship. For many women, entrepreneurship occurs after previous careers where they
have worked for others. One way to break the proverbial glass ceiling is to start ones own
company. For some women, a previous boss is the driving force that motivates them to pursue
entrepreneurship. For others, the constraints of motherhood require that they find opportunities to
160


work around the schedules of their children, or they may have passionate ideas for a new
enterprise, or a need to address philanthropic causes (Some Facts about Women Entrepreneurs,
n.d.). In some cases the reasons can be the same as for their male counterparts, in other cases the
reasons are purely female.
Our preliminary analysis of the autobiographical stories told by native-born female
entrepreneurs suggests that most have worked in middle management, saved their money, and
want to try their hand at entrepreneurship. They like the independence, the power of being their
own boss, and the flexible work hours. However, flexible work hours do not mean fewer work
hoursrarely mean fewer work hoursit only means hours that are constructed by the female
entrepreneur. Female entrepreneurs are strong and they consistently state that they do not like
working for others, taking orders from others, and being dependent on other people. They like
the self-sufficiency, independence, and power that come with entrepreneurship.
The stories told by immigrant female entrepreneurs are, in contrast, centered on the
theme of an evolving identity due to a shifting gender role expectation and the multi-tasking
responsibilities in an immigrant household (Berger, 2004). Apparently a majority of them have
been pushed into self-employment out of necessity rather than seeking independence and
power. In the midst of hardship due to migration, however, exceptionally successful immigrant
female entrepreneurs have constantly engaged in crafting and revising their life stories past,
present, and future to make sense of their circumstance and to maintain best fit between their
interests and business ideas under changing life circumstances (Oppedisano, 2000).

IMPLICATIONS FOR EDUCATING FUTURE FEMALE ENTREPRENEURS

For female and male undergraduate students, female entrepreneurship is a mystery. There
are many fictional writers who glamorize female entrepreneurship; however, in fact these
fictional characters are rarely indicative of true female entrepreneurs. The education of future
female entrepreneurs includes hearing the voices and stories of female entrepreneurs who are
either successful or striving to become successful and female entrepreneurs who have either
dissolved or sold their business.
For example, A Multidisciplinary Study of Female Entrepreneurship, a course taught
by the second author of this paper was originally designed to help students take storytelling
about and by historical and current practitioners and combine this with a distinct exchange
between participating entrepreneurs and the students to create an enhanced understanding of the
entrepreneurship career decision-making process and choice (Oppedisano & Laird, 2006, p. 2).
For their completion of the course, students have to interview two female entrepreneurs per
semester, write their stories, and present them to their classmates. The ages of female
entrepreneurs interviewed have ranged from twenty-year olds to one female entrepreneur who is
in her nineties. In addition, students watch videos on female entrepreneurs throughout history
and listen to the stories of female entrepreneurs who enter the classroom as guest lecturers and
future business mentors. Students are able to choose entrepreneurs in a field which they would
like to explore for their own future endeavors. Many students turn to their mothers for
information about female entrepreneurs, others begin to look at female owners of businesses to
distinguish who he or she would like to interview. In this way, parents, alumni, and the
community all combine to make this course successful for each student. Students also form
networks with women in the business community, who they can call on in the future if or when
they decide to become entrepreneurs themselves. Students analyze each business and begin to
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distinguish successful practices and processes from those that cause businesses to fail.
Ultimately, each student becomes a business analyst by the end of the semester and understands
the myriad reasons that an entrepreneur can survive or fail.

CONCLUSIONS

Careful analysis of the shared narratives of native-born and foreign-born female
entrepreneurs have highlighted the subtle yet unique ways that women know, plan, and perform
various phases of the entrepreneurial process. Their agreement to share those processes with
students have made the entrepreneurs and students stronger and built a framework for the future
of female entrepreneurship. In addition, by interviewing women in the community, students have
formed a bond that involves the school, alumni, students, parents, and business community. By
interacting with each other, each learns more about the other and comes to appreciate the
education process.
The learning process belongs to each student. As professors, we can introduce students to
many different people and many different ideas; however, we must give them time to think and
the courage to succeed on their own. By allowing students to hear the voices of female
entrepreneurs, discuss their interviews with each other as colleagues and future business people,
and with their parents and others in the community, each student will have the individual power
to know his or her own mind. Students will know that women have had a powerful impact on the
growth of the United States economy throughout history regardless of whether that female
entrepreneur was native-born or foreign-born. Each student will form a voice of his or her own.

REFERENCES

Belenky, F. M., Clinchy, M. B., Goldberger, R. N., & Tarule, M. J. (1997). Womens Ways of
Knowing The Development of Self, Voice, and Mind. New York: Basic Books.
Berger, R. (2004). Immigrant women tell their stories. New York: The Haworth Press.
Bolton, B., & Thompson, J. (2002). Entrepreneurs. Oxford: Butterworth-Heinemann.
Bosma, N., & Levie, J. (2009). Global Entrepreneurship Monitor 2009 Executive Report.
Retrieved from
http://www.gemconsortium.org/download/1294589900084/GEM%202009%20Global%2
0Report%20Rev%20140410.pdf
Carter, N. M., Henry, C., Cinneide, B. O., & Johnston, K. (Eds.) (2007). Female
entrepreneurship: Implications for education, training, and policy. New York:
Routledge.
Chance, N. A. (1965). Acculturation, self-identification, and personality adjustment. American
Anthropologist, 67, 372.393.
Female Entrepreneurs. (2010). Retrieved from http://femaleentrepreneurs.org/
Foucault, M. (1990). The History of Sexuality Volume I: An Introduction. New York: Vintage
Books.
Gordon, M. N. (1964). Assimilation in American life. New York: Oxford University Press.
Gordon, M. N. (1978). Human Nature, Class, and Ethnicity. New York: Oxford University
Press.
Hennessy, R. (1993). Materialist feminism and the politics of discourse. New York: Routledge.
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Kent, M. (2010, October 4). Who Will Drive the 21
st
Century Agenda? Women. Coca-cola
World Fund at Yale lecture.
Kerber, L. K., & De Hart-Mathews, J. (1987). WOMENS AMERICA Refocusing the Past, 2
nd

edition. New York: Oxford University Press.
Levent, T. B., Masurel, E., & Nijkamp, P. (2003). Diversity in entrepreneurship: ethnic and
female roles in urban economic life. International Journal of Social Economics, 30(11),
1131-1161.
McAdams, D. P. (1993). The stories we live by: Personal myths and the making of the self. New
York: The Guilford Press.
Mies, M. (1986). Patriarchy and Accumulation on a World Scale Women in the International
Division of Labour. London: Zed Books Ltd.
Oppedisano, J., & Laird, K. (2006, October) Role Modeling as a Pedagogical Strategy in
Entrepreneurship Education for Women and Girls: An Interactive Model of
Transformational Learning. New England Journal of Entrepreneurship, 1-15.
Padilla, A. M. (1980). The role of cultural awareness and ethnic loyalty in acculturation. In A.
M. Padilla (Ed.) Acculturation: Theory, Models and Some New Findings, (pp. 47-87).
Boulder, CO: Westview.
Paludi, M. A. (1998). The Psychology of WOMEN. Upper Saddle River, NJ: Prentice Hall.
Shackleton, V. J., & Ali, A. (1990). Work-related values of managers: A test of the Hofstede
model. Journal of Cross-cultural Psychology, 21(1), 109-118.
Some Facts About Women Entrepreneurs. (n. d.). Go4Funding. Retrieved from
http://www.go4funding.com/Articles/Entrepreneur/Some-Facts-About-Women-
Entrepreneurs.aspx
The United States of Entrepreneurs America still leads the world. (2009, March 14-20) The
Economist, Special Report, 9-13.
Top Facts about Women-Owned Businesses. (2005). Center for Womens Business Research.
Retrieved from http://www.nfwbo.org/topfacts.html
Wong-Rieger, D. (1984). Testing a model of emotional and coping responses to problems in
adaptation. International Journal of Intercultural Relations, 8, 153-184.


163










CHAPTER 10

ETHICAL AND SOCIAL ISSUES

164


INCREASING HONOR & INTEGRITY IN CLASSROOMS: A CASE STUDY

Amiee Shelton, Roger Williams University
ashelton@rwu.edu

Mary Concannon, Roger Williams University
mconcannon488@g.rwu.edu


ABSTRACT

A public relations campaign was executed in 2006 in order to increase honor and
integrity in the classroom. The campaign, undertaken by a group of public relations students,
would go on to win a Silver Spur Award in internal public relations by the Texas Public
Relations Association. What made this campaign unique was its focus on the instructors in each
class, understanding that these individuals were trust agents for students. This case study
analyzes what made the campaign successful and provides a guide for administrators and faculty
alike for creating awareness of honor and integrity at their universities. This campaign proves
that the use of opinion leaders, creative thinking and determination of the best target public
makes a difference between parity and superior performance.

INTRODUCTION

According to research by the Gallup Organization, two leading problems facing the
nation are education and ethics. Conjunction of the two issues occurs every day on U.S. college
and university campuses. The institutions seek to prepare students for a literate, productive
lifetime of contributions to society, of personal achievement and success in chosen careers. A
growing body of empirical literature indicates that cheating is prevalent on college campuses for
many reasons. Some of which include an increase in competitive pressures and new technology,
the cultural influence of advertising, a confusion of societal values, growth in enrollment,
development of higher education as big business, a decrease in faculty time devoted to teaching,
and a general feeling among faculty that seeking justice is not worth tackling the bureaucratic
maze involved in enforcement (McCabe, Butterfield, and Trevino, 2001).
The erosion of student ethics on campuses across the nation is widely recognized. An
increase in cheating by students and a growing acceptance of such peer behavior by students who
do not cheat is well documented (McCabe, et. al. 2001). The problem is receiving headline
attention from national and local media. Concerns of future employers and the public, as well as
educators, are escalating as well. To combat this dilemma, universities around the country are
adding honor codes to their curriculums, student handbooks and faculty contracts following
recommendations of several high profile research reports (Thornton and Peterson, 2000;
Bernardi, Metzger and Bruno et al. 2004). Although developing Honor Codes is an important
factor and may indeed be an important step in reducing cheating, it does not necessarily
eliminate cheating fully. Tibbets (2001) argues that a better way to change the climate in colleges
and universities it to conduct active campaigns against academic dishonesty.
Texas State University realized its own need for a comprehensive Honor Code in
November 2000. President Jerome Supple appointed a task force to recommend ways to
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strengthen campus commitment to academic honesty, and to identify ways to address incidents
of academic dishonesty more effectively. The resulting new honor code was set in place in
October 2004. The Texas State Honor Code acts as a guideline for both student and faculty
behavior. It incorporates ideals such as respect, honesty, integrity, and responsibility into the
normal classroom agenda. The task force worked to inform the university regarding
implementation and use of this new code should cheating arise, but never came up with a PR
plan to publicize it to the university community as a whole.
A group of five public relations students in the College of Journalism and Mass
Communications, along with their advisor, worked on an internal communication plan for Texas
State University to help increase awareness, gain acceptance, and eventually have widespread
adherence to the newly developed honor code. This campaign would win second place in the
National Bateman Competition, sponsored by the Public Relations Student Society of America,
and a Silvers Spur Award for Excellence in Public Relations from the Texas Public Relations
Society.
Before the campaign, Texas States new honor code had drawn mixed reactions from
students and faculty alike. While the new code focused mainly on students, faculty would play a
significant role in adhering to and enforcing the honor code. Faculty members are opinion
leaders and must strongly believe in the honor code in order to pass those feelings onto students.
Reactions of faculty members were of initial dismay that another demand had been added to their
jobs. The idea that the code would change student behavior was distrusted among faculty. Yet,
what students learn as acceptable behavior in the classroom, impacts their expectations of what
is acceptable professionally (Ammen, Guffey, & McMillian, 1996, as cited in Eastman and
Reisenwitz, 2008, pg. 7). This then set the tone for the campaign.

Honor Code Impact of Students
Research by the Center of Academic Integrity details the value of honor codes. This
study found that on most campuses, over 75% of students admit to cheating. Over 2,100 students
on 21 campuses across the country admitted to serious cheating and over half admitted to one or
more instances of serious cheating on written exams (McCabe, 1999).
Studies have also provided evidence that those students who do well academically tend to
cheat less than other students. After reviewing the results of five studies concerning
undergraduate college students propensity to cheat, Zastrow (1970) concluded, cheating is less
prevalent among students with high grades (p.157). In addition, the Center for Academic
Integrity conducted longitudinal comparisons that found significant increases in self-reporting of
non-permitted collaboration at nine medium to large state universities. These instances increased
from 11% in a 1963 survey to 49% in 1993. This trend seems to be continuing: between 1990
and 1995, instances of non-permitted collaboration at 31 small to medium schools increased
from 30% to 38% (McCabe, 2005). Other studies point towards a belief in students that
unethical behavior is the norm in the business world and lead students to question the need to
act ethically in order to advance their careers (Lawson, 2004, p.198).

Faculty Response to Code
A Duke University study found only 15 percent of University professors reported
handing out different versions of the same exam, while 42 percent do at other schools with honor
codes, and 49 percent of professors did so at schools with no honor code at all. A national survey
published in Education Week, as cited on plagiarism.org, also found that 47% of students believe
166


that their teachers sometimes choose to ignore those who cheat, and although many instructors
are aware of the problem, most feel powerless to stop it. Furthermore, McCabe found that 55%
of faculty would not be willing to devote any real effort to documenting suspected incidents of
student cheating, (as cited in Cizek 1999, 161) and admitted many, and probably most, students,
faculty, and administrators at non-code campuses are convinced that an honor code would never
work at their university.

INSTUTIONAL RESPONSE

Academic honor codes effectively reduce cheating. Surveys conducted in 1990, 1995,
and 1999; involving over 12,000 students on 48 different campuses, demonstrated the impact of
honor codes to control academic dishonesty. Serious test cheating on campuses with honor codes
is typically 1/3 to 1/2 lower than the level on campuses that do not have honor codes. The level
of serious cheating on written assignments is generally 1/4 to 1/3 lower (McCabe, 2005).
McCabe (2001) also found the 45 percent of the survey respondents on campuses with no honor
code admitted to one or more incidents of serious test or examination cheating; only 29 percent
did so on the campuses with a modified honor code (p. 19). The lowest levels of cheating were
found on campuses where students had exclusive responsibility for the campus honor code.
According to institutions that have honor codes in place, these codes have proven to reduce
cheating. In addition to the positive effects of University honor codes on students, it is believed
that honor codes give faculty members better attitudes towards the institutions judicial process
for dealing with cheaters (McCabe & Tervino, 1993).

CAMPAIGN RESEARCH

Illuminating Integrity conducted extensive primary research, both quantitative and
qualitative, to determine if faculty should be the target public for this campaign. Simple
observation uncovered that many faculty members do not follow current procedures for handling
incidents of academic dishonesty described in the Student/Faculty Handbook. Other observations
included torn-down honor code posters and a lack of honor code discussion by faculty on the
first day of class. Furthermore, it was found that when professors did discuss the topic of the
honor code at Texas State University, it was very brief, and very rarely did the discussion include
the consequences of violating the honor code.
The team completed the following primary research in addition to observations:
A pilot survey to 75 students to solicit feedback for improvements
500 surveys to faculty members
Three focus groups with both adjunct and full time faculty members
Interviews with 20 faculty members
The primary instrument of the study was a four-page survey containing 30 questions
subdivided into 4 parts. Part one measured faculty members feelings toward the honor code,
while part two ascertained how they teach the code and their opinions of teaching the subject in
general. Part three measured how faculty members learned of teaching materials, and the honor
code, and part four asked general demographic questions, primarily to create groups for which to
run statistical tests. Survey questions were adopted in part from a survey conducted by Kansas
State University in 1999 and 2003. Questions were also taken from the 2002 Marcoux
Dissertation Survey, also from Kansas State University.
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Five focus groups were conducted during the first week of December 2004. The focus
groups were homogenous and consisted of freshman and transfer students. Each group contained
13-15 students. Each student was provided with a college class scenario involving several
students and one teacher displaying unethical behavior. Participants were asked to rate the
hypothetical persons behavior on a scale of 1-5, with 1 being most unethical and 5 being most
ethical. After reading and rating the scenario on paper, a discussion was conducted as to why
they rated each of the scenarios in the way they did. Listed below are some of the overall results:
Students are not likely to report cheating to their professors for fear of retaliation by
other students
Students feel that it is not their place to report these findings if they are witnesses
Most students are unaware of the consequences of cheating
Faculty members touch on the subject of the honor code on the first class day and
rarely discuss it afterwards
The information received from twenty interviewees helped to determine the campaigns
key target publics. Overwhelming evidence was found to prove that faculty members would
consider implementing a thirty-minute ethics presentation in the classroom if provided the
materials. Most faculty members who were interviewed believed that ethics can play a
significant role in the classroom. After careful consideration of previously published works, and
the primary research conducted by the team, it was concluded that the faculty would be the best
primary target public for this campaign.

CAMPAIGN IMPLEMENTATION

Based on the research conducted, the following central messages were communicated
throughout the program in varying forms:
Integrity, ethics, honor, respect, and pride combined are the essence of who I am.
Ethical behavior is my moral obligation to society.
By signing the faculty contract, I am involved in making a difference in my students
lives.
As a faculty member, I am enriching my students lives by teaching honor and
integrity in the classroom.
The messages enforced throughout the campaign were chosen to illustrate the traits of an
ethical thinker. Thus, Illuminating Integrity was the theme of the campaign, as integrity leads
to the culmination of being an ethical citizen. The tactics and strategies chosen for
implementation by Illuminating Integrity were selected in an effort to boost the interest and
excitement of Texas State University faculty. The overall strategy of the campaign involved
encouraging the faculty to help make the newly developed Texas State Honor Code an integral
part of their teaching, with the help of pre-created materials. Objectives of the campaign
included:
To increase awareness of the Texas State Honor Code in faculty and student
organization members by 40% by Feb. 28.
To reinforce the positive attitude of all faculty members currently teaching ethics in
the classroom by the end of February.
For 15% of faculty to implement ethics exercises/assignments in classrooms by Feb.
28.
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Throughout the campaign, as with any, several challenges emerged. Overall management
of these situations was greatly reduced due to the fact that most were anticipated prior to the
implementation of the campaign. The biggest challenge facing the team was that faculty, busy
with creating lesson plans, teaching, and grading, did not want to take on the extra work of
integrating new materials into their lesson plans. To overcome this, pre-created materials were
created to make implementation as easy as putting a CD into a disk drive. Another challenge was
that faculty members receive several messages a day. Competing with those messages was a
challenge. To combat this, mutually beneficial relationships were created with various opinion
leaders to carry and reinforce messages to the target publics.
All pre-campaign publicity and networking activities were essential to campaign success.
These materials were used to raise awareness and gain support for the program. E-mails were
sent out to faculty members and student pre-professional organization leaders to introduce the
upcoming campaign. Letters to administrative assistants were created to ask for help distributing
packets to faculty members. Support from administrative assistants was crucial to the campaigns
success. They made sure the faculty that wanted packets received them, and that faculty
members signed their names on a sign-in sheet.
Illuminating Integritys teaching packet was designed to make it easy for faculty
members to incorporate ethics into their classrooms without requiring them to teach. Instead,
they simply had to put aside time to implement. Included in the packet were various materials
designed for each discipline. Because every faculty member teaches differently, several tailored
exercises were created. Packets contained an introduction and instruction letter, an ethics flier
and a returnable contract in addition to the three primary items found in each packet.
Administrative assistants gave out 300 packets out in randomly selected departments on campus.
They served as familiar faces to faculty members, and were in good positions to distribute
packets to faculty members as well as pick up information. To further encourage the faculty to
participate, a raffle to win one of two grand prizes was created. Prizes included a free dinner for
two at the Oasis Restaurant located in Austin, Texas, and a free rental car from Advantage for a
weekend. To enter, faculty members simply had to use the pre-created teaching materials.

CAMPAIGN EVALUATION

The campaign informed a full 100% of all faculty members and 100% of pre-professional
organizations. The informational objective of informing target publics of the pre-created teaching
materials was exceeded by a margin of 55%. In additional the team exceeded the objective to
increase awareness of honor code by 40%, by over five percent. Three hundred packets were
produced and fully distributed. Forty-five percent of faculty members were reached. The overall
success of the campaign was determined by evaluation methods including: counting the number
of items produced, counting the number of items distributed and measuring message exposure. In
regards to the objective concerning creating or reinforcing positive attitudes among 25% of
target publics, it was determined that the objective was met. In a post-campaign survey, it was
found that most faculty members agreed or strongly agreed that they would have used all of the
materials if they were given earlier in the semester. The majority of respondents found the
materials relevant to their classes.



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CONCLUSION

The campaign showed faculty, staff and administration that there must be something
done to further students knowledge of an honor code. Texas State President, Denise Trauth,
announced that the University committed to use the campaign resources to continue this program
in the future. The success of this campaign proved that use of opinion leaders, resourcefulness
and the most effective target public differentiate between average and exceptional performance.

REFERENCES

Bernardi, R., Metzger, R., and Bruno, R., et al (2004). Examining the decision process of
students cheating behavior: An empirical study. Journal of Business Ethics, 50, 397-414.
Cizek, G. (1999). Cheating on tests: how to do it, detect it, and prevent it. Mahwah: Lawrence
Erlbaum.
Eastman, J., & Reisenwitz, T. (2008). The impact of unethical reasoning in different types of
academic dishonesty: An exploratory study. Journal of College Teaching & Learning,
5(12), 7-16.
Lawson, R. (2004). Is Classroom cheating related to business students propensity to cheat in the
real world? Journal of Business Ethics, 49,189-199.
McCabe, D. (1999). 1999 McCabe KSU Study (Students and Faculty) Retrieved from Kansas
State University, Honor System web site: http://www.k-state.edu/honor/researchlinks/
McCabe, D., Butterfield, K.D., & Trevino, L.K. (2001). Cheating in Academic Institutions: A
Decade of Research. Journal of Ethics and Behavior, 219-232
McCabe, D., Butterfield, K.D., & Trevino, L.K. (2003). Faculty and Academic
Integrity: The influence of current honor codes and past honor code experiences. Research in
Higher Education, 44(3), 367-385
McCabe, D. (2003). 2003 McCabe KSU Study (Students, Faculty, GTAs). Retrieved from
Kansas State University, Honor System web site: http://www.k-
state.edu/honor/researchlinks/
McCabe, D. (2005). Levels of cheating and plagiarism remain high: Honor codes and modified
codes are shown to be effective in reducing academic misconduct. Retrieved Oct. 28,
2005, from http://www.academicintegrity.org/cai_research.asp
Marcoux, H. E. (2002). Kansas State faculty perspective, opinions and practices concerning
undergraduate student academic dishonesty and moral development. (Doctoral
dissertation, Kansas State U., 2002). www.kstate.edu/honor/researchlinks
Tibbets, S. (2001). To Cheat or not to cheat? Spotlight on Stephen G. Tibbetts. Journal of
College and Character, 2(8), 1.
Thornton, J., Peterson, B. (2000). Codes of conduct and ethical perceptions: A Comparison of
accounting and military students. Accounting Educators Journal, XII, 124.
Zastrow, C. (1970). Cheating among college graduate students. Journal of Educational
Research, 64(4), 157-160.
170


TOYOTA: AN EXAMPLE OF UNETHICAL COMMUNICATION

Carolyn Ashe, University of Houston-Downtown
ashec@uhd.edu


ABSTRACT

In early 2010, more than two million Toyota vehicles were recalled due to gas pedal
issues which had resulted in multiple accidents and even deaths in some cases. Toyota officials
knew of the issue in-house but failed to communicate their findings to the public. As a result,
pandemonium ensued claiming that Toyota operated in an unethical manner in not notifying
Toyota owners of the defect earlier. Findings indicate that numerous accidents and deaths have
lead to lawsuits with Toyota defending its actions. In addition, Toyotas brand name has declined
as did loyalty and the trust of consumers. This exploratory research takes a look at consumer
confidence in Toyota due to perceived unethical communication.

INTRODUCTION

Toyotas recall for the sticking accelerator pedals and floor mat pedal entrapment
affected both Toyota and non Toyota owners. The lack of communication in providing vital
safety information to the public in a timely manner with regards to the runaway cars has been
deemed immoral. Toyotas unethical behavior has caused numerous preventable accidents, and
unfortunately, deaths due to their irreprehensible act of not informing the public immediately of
the complications and defects of Toyota vehicles. This issue placed doubts into the minds of
consumers who are so dependent on these trusted automobile manufacturers to provide safe
vehicles. Toyota suffered a decline in their sales as well as their stocks.
Although Toyota made an effort to rectify the situation, stakeholders including Toyota
owners and investors, as well as, the government still have concerns that Toyota or any other
automobile manufacturer does not make another effort to save itself by putting lives at risk due
to a preventable automobile malfunction. One of the worlds top automobile manufacturers has
not yet recovered from its unethical decision making.

PURPOSE

The purpose of this exploratory study was to determine if consumer confidence
deteriorated because of Toyotas perceived unethical communication and carelessness regarding
the 2010 sticking accelerator pedals and floor mat entrapment that could lead to unexpected
sudden acceleration.

METHODOLOGY

A survey was conducted with 100 participants from the general population in a large,
metropolitan city. The number of participants was grouped into three different categories:
Toyota owners 40 participants
Non Toyota owners 40 participants
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Toyota employees 20 participants

SURVEY INSTRUMENTS

Three survey instruments were developed for the study. Each group of participants
(Toyota owners, non owners, and employees) responded to questions that relate directly to their
situation. Each of the surveys had two similar questions regarding how well they felt Toyota
handled the recall and if Toyota communicated in a prompt manner.

Recall Details
Toyota initiated the second largest recall due to unexpected acceleration complaints
(Carty & Healey, 2010). During the second recall, Toyota revealed that the earlier complaints
about unexpected acceleration were actually due to problems with the accelerator pedal
mechanisms and not car mats that were stuck to the accelerator pedal. The company based their
earlier conclusion on accusations made after accidents and the mats were found in the trunk.
After the first recall in 2009, the company advised customers to remove the mats until their cars
were called for inspection. Of course, accidents continued to occur due to this unfounded
observation and determination regarding the cause for the acceleration of the vehicle.
It is unknown when Toyota first knew of problems with acceleration in certain Toyota
vehicles manufactured in the United States. However, the National Highways Traffic Safety
Administration (NHTSA) investigation concluded that Toyota had been aware of these problems
since September 2009, four months before announcing the first recall related to the accelerator
pedals (Crawley, Bailey, Woodall, & Kim, 2010). April 2010, the NHTSA fined Toyota $16.4M
for delaying to report the accelerator pedal defect. United States law requires that automakers
disclose realized defects within five business days to the agency (Bensinger & Vartabedian,
2010).
According to Toyota Recall Timeline (2010), the delay in communicating and rectifying the
problem is as follow:
August 29, 2009: Lexus crash kills four people
September 29, 2009: Toyota recalls 3.8 million vehicles due to floor mats
November 25, 2009: Toyota announces redesign of floor mats and design of a brake
override system
January 21, 2010: Recalls RAV4, Corolla, Camry, and Highlander for sticking
accelerator pedals
January 26, 2010: Sales and production of popular models halted
January 27, 2010: Recall is widened to include more models
January 29, 2010: Recall in Europes Toyota models
February 1, 2010: Toyota announces plan to fix gas pedals
February 2, 2010: Toyota safety is criticized by U.S. Transportation Secretary, Ray
LaHood
February 3, 2010: Ray LaHood informs Toyota owners not to drive recalled vehicles
February 5, 2010: Akio Toyoda, CEO and President of Toyota, publically apologizes
February 23, 2010: Congressional testimony of recall begins
May 18, 2010: Toyota pays a fine of $16.4 million due to the slow nature of recall of
vehicles with faulty gas pedals

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Recall Effect on Stocks
Amid Toyotas recall of more than nine million vehicles (Fackler & Tabuchi, 2010), its
stock price and sales have predictably shown a noticeable decline in the U.S. and global market.
Financial analysts estimate that Toyotas market share will continue to decline as its earnings
take a hit from mounting lawsuits and other recall expenses. The fallout from the massive recall
sent Toyotas market share in the U.S. to about 13 percent in the January-March quarter from 17
percent before the recalls began (Navellier, 2010).
Stock analyst Clive Wiggins points out that Toyotas market share this year will drop
1.2 percentage points from its previous forecast of 17.9 percent, translating to an implied
144,900 fewer cars sold and $3.3 billion in lost sales (Hosaka, 2010, p. 12).

Recall Effect on Sales
The marked decrease in automobile sales experienced by Toyota post recall is further
evidence that the companys goodwill and reputation have been tarnished. Market analyst James
Bell predicts, the impact of this recall nightmare on Toyota could be substantial on future sales
as well as intangible factors such as market perception (Bell cited in Box, 2010, p. 17). In late
January 2010, Toyota increased its recall to include eight of its highest selling models due to
unintended acceleration; the productions on the models were temporarily halted. As a result, the
company posted a 16 percent decrease in sales for January 2010. Tellingly, all of the vehicles
included in the recalls posted significant sales drops (Evans, 2010, p. 1).
Consequently, the decrease in vehicle sales points to erosion of consumer and investor
confidence in the Toyota brand. Toyotas woes could serve as a costly example of what can
occur when organizations attempt to stifle external communication channels and use unethical
business practices to mislead stakeholders.

Consumer Reaction to Recall
Toyotas mission statement reads To attract and attain customers with high-valued
products and services and the most satisfying ownership experience in America, and their vision
statement is To be the most successful and respected car company in America (What are
Toyotas Mission, 2010, p. 1). How well Toyota is maintaining or meeting their mission and
vision can be reflected in the consumer reaction to the recall. Expert opinions and national
surveys provide valuable insight regarding consumers perception of Toyotas recall and remedy
efforts.

FINDINGS

While there are consumer surveys that show results focusing on consumer reaction to
quality and safety, the surveys included in this study focus on ethical communication. The
primary objective is to see how consumers rate Toyotas ethical communication efforts and
whether these efforts affect consumer confidence in the automaker and/or automobile industry.
The participants were asked: In your opinion, how well did Toyota handle the recall?
Using a scale of very poor, poor, neutral, good, and very good, 28 out of 40 Toyota owners
chose poor when answering how Toyota handled the recall, while 32 out of the 40 non Toyota
owners also chose poor. Fourteen out of 20 Toyota employees also believe Toyota did a poor job
handling the recall. Figure I displays these results.

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FIGURE 1. HOW WELL TOYOTA HANDLED RECALL?

Very Poor

Poor

Neutral

Good

Very Good

The participants were also asked: Do you feel that Toyota communicated in a prompt
manner in alerting Toyota owners about the potential danger of faulty parts? Forty percent of
the participants answered yes, while 60 percent of the participants answered no. The Toyota
owners were split in their opinion of Toyotas prompt response. Thirty-two out of forty of the
non Toyota owners did not think that Toyota was prompt, and only eight of the Toyota
employees believed they were not prompt. Although handled poorly, the employees felt that
Toyota communicated to them the recall in a prompt and open manner. Figure II shows the
percent of participants that believe Toyota was or was not prompt in their communication
response efforts.

FIGURE 2. WAS TOYOTA PROMPT IN COMMUNICATING PROBLEM?



Yes

No

When surveying the Toyota owners, it was found that 36 people surveyed did not have
their vehicles involved in the recall. All of the Toyota owners replied that they feel safe in their
current vehicle since the recall. Thirty-eight people surveyed received their information
regarding the recall from the news media. Of the 40 Toyota owners surveyed, only four received
the news directly from Toyota.
Twenty-four out of the 40 Toyota owners spoke to the dealership regarding the recall.
Only eight Toyota owners were somewhat satisfied based on the results.
Thirty-eight of the Toyota owners would still buy a Toyota as their next vehicle, and all
40 surveyed would recommend Toyota to others. Thirty-eight would not invest in Toyota stock,
but stated that was not due to the recall.
Forty participants were surveyed that were not Toyota owners. Of this number, 32 would
still not buy a Toyota for their next vehicle. However, this was not a result of the Toyota recall.
When the Toyota owners responded to the question, Did the Toyota recall make you lose or gain
confidence in your present automakers focus on safety and communication? Four people did not
174


lose nor gain confidence in Toyota after the recall. On the other hand, 28 participants indicated
that the recall made them lose confidence in their own automaker, while 10 gained confidence.
Sixteen of Toyota employee participants own a Toyota and believe Toyota cars are the
best on the market. The news of the recall was communicated internally to the Toyota
employees and they felt informed by upper management. Eighteen participants surveyed felt the
media went overboard with the recall and portrayed Toyota unfavorably. Of the 20 Toyota
employees, the majority still trusts the Toyota brand despite the recall.

CONCLUSION

Toyotas lack of communication and delayed response was unethical. Customer loyalty is
not only something that many automakers like Toyota take pride in, but it is also a strong factor
in customer retention. The type of recall and how the recall was handled affects consumer
confidence, which consequently affects the desire to remain loyal to a brand. According to a
Consumer Report survey conducted April 2010, Toyotas brand loyalty decreased by 13 percent.
In the early months of the recall between December and February, there was a drop of 10 percent
(Barlett, 2010). This survey relays the importance of not only ensuring quality and safety, but
also the importance of a prompt response and solution to help combat the large decrease in
customer loyalty that can occur in the first few months of a crisis. Like many companies, Toyota
relies on customer loyalty because it ensures that their vehicles will be purchased now and in the
future, that customers will not be swayed by competitors, and that customers will refer friends
and family, all of which enhance profits.

REFERENCES

Barlett, J. (2010, May 13). Survey: Toyota Down, Ford and Honda Up in Brand
Loyalty.ConsumerReports.org. Retrieved from
http://blogs.consumerreports.org/cars/20 10/05/consumer-reports-brand-Ioyalty-survey-
toyota-down-ford-and-honda-up.html
Bensinger, K. & Vartabedian, R. (2010, April 19). Toyota agrees to pay fine for delaying
disclosure of gas pedal defects. Los Angeles Times (Online). Retrieved from
http://articles.latimes.com/2010/apr/19/business/la-fi-toyota19-2010apr19
Box, T. (2010, February 9). Ford and GM Gain Sales as Toyota Tumbles off Pedestal.
TheDallasMorning News. Retrieved from
http://www.dallasnews.comlsharedcontentldws/bus/stories/020910dnbusnewworldautos.3
d97338.html
Carty, S. & Healey, J. (2010, January 22). Toyota Recall: Gas Pedal Issue Affects more than 2M
Vehicles. USA Today. Retrieved from http://www.usatoday.comlmoney/autos/2010-01-
21-toyota-recall-gas-pedaLN.html
Crawley, J., Bailey, D., Woodall, B., & Kim, S. (2010, April 5). Update 2 U.S. fining Toyota
$16.4 million over recall delay. Reuters (Online). Retrieved from
http://www.reuters.com/article/idUSN0517107120100405
Evans, S. (2010, February 2). January 2010 Sales: Toyota Sales Slip 16% on Recall Woes,
Sales Freeze. MotorTrend. Retrieved from
http://wot.motortrend.com/6636540/industry-news/j anuary- 201 O-sales-toyota-sales-
slip-16-on-recall-woes-sales- freeze/index.html
175


Fackler, M., & Tabuchi, H. (2010, February 4). Toyota Posts Profit in Quarter before Recalls.
The New York Times. Retrieved from http://www.nytimes.com/20 1 0/02/05/business/
global/05auto.html
Hosaka, T. (2010, March 16). Toyota Recall: How Much will it End Up Costing the
Automaker. The Huffington Post. Retrieved from
http://www.huffingtonpost.com/2010/03/16/toyota-recall-how-much-wi _ n
_500446.html
Navellier, L. (2010, April 22). Toyota Stalling before Earnings. Blogging Stocks. Retrieved
from http://www.bloggingstocks.com/201O/04/22/toyota-stalling-before-earnings/
Toyota Recall Timeline. (2010). MSNBC. Retrieved June 15,2010, from
http://www.msnbc.msn.com/id/35240466/ns/business-autos
Valdes-Dapena, P. (2010, January 22). Toyota Recall: 2.3 million cars. CNNMoney.com.
Retrieved from http://money.cnn.com/2010/01/21/autos/toyotaJecall
What are Toyota's Mission and Vision Statements? (2010). Retrieved from
http://www.toyota.com/help/faqs/company-
what_are_toyotas_mission_and_vision_statements.html
176


THE FIRST STEP IN RESTORING ACADEMIC INTEGRITY:
CREATING AN ETHICAL GUIDELINE

Diane D. Galbraith - Slippery Rock University
diane.galbraith@sru.edu

Susan L. Lubinski - Slippery Rock University
susan.lubinski@sru.edu


ABSTRACT

Academic integrity, specifically in the college classroom, has seemingly deteriorated to mirror
society's diminishing values. Students freely admit observing peers cheating, plagiarizing, lying,
etc. Research has shown that this behavior, if unabated, re-surfaces in organizations, as a
continuation of unethical behavior in the workplace. Former studies have exposed the
proliferation of fraudulent activity, although a gap remains in determining a solution. This paper
will seek to explore some historical data and the role that universities can play in shaping the
students' behavior in preparation for their respective careers. The outcome will proffer a solution,
based on the development and implementation of an inclusive policy that may improve the
learning environment and the ethical climate on university campuses.

INTRODUCTION

If you have integrity, nothing else matters. If you don't have integrity, nothing else matters.
Alan K. Simpson (former Wyoming Senator)

While universities strive to build strong learning cultures, cheating has become pervasive,
undermining the college experience, adversely impacting the school's reputation and ultimately
threatening the future productivity and success of the student in his/her prospective career.
Research by Miller, Shoptaugh & Parkerson (2008) has shown that academic dishonesty reached
an alarming rate ranging up to 89% of students over time. The authors studied both high school
and college populations. The adage that "everyone is doing it" is the prevailing attitude. Campus
communities are facing the reality of devalued diplomas, unethical environments, a student
entitlement mentality and possible accreditation implications.
Academic dishonesty was uncovered during the first tests when "scholars found cheating
more than 1,000 years ago, during Chinese Civil Service exams, when the penalty was death.
Other studies have shown that students may start cheating as early as first grade" (Bushway &
Nash, 1977, p. 623).

IMPLICATIONS

Individuals who perpetrate dishonest acts apparently are able to delude themselves into
believing they are still honest overall. Moral relativism is rationalized, according to Goldstone
and Calvin (1993), in that honesty is relative to the circumstance. This may account for the fact
that Accenture (2003) reported that 1/4 of Americans surveyed believe that insurance fraud is
177


acceptable. 'Soft fraud' is usually conducted by individuals with no criminal history that believe
that they are not hurting anyone by, for example, padding insurance claims (Bingham, Lucker, &
Masud, 2006). Self-profit from fraudulent activities at the expense of corporate Return on
Investment (ROI), is considered justifiable.
Findings by Crittendon, Hanna & Peterson, (2009), have provided evidence that a
cheating culture is not just a capitalistic challenge, but it can be driven by gender, country
corruption and the socioeconomic environment. Global business students surveyed may be
influenced by scandals and corruption, learning to combine business practices within a cheating
culture (p. 337). A proliferation of cheating web sites even encourage students by providing
ways to secure exam copies, using body parts, communicating with others in code, etc. Sadly, the
evidence points toward the proclivity for those who cheat in a university setting to extend the
behavior into the professional workplace. The research by Mazar, Amir & Ariely (2008), has
shown that people who have been dishonest in academic environments may still characterize
themselves as 'honest' people.
The good news is that: "unethical people instinctively refrain from inappropriate behavior
in the presence of an ethical person", according to FBI special agent, Schafer, (2002, p. 17).
"Modeling ethical behavior can motivate others to act ethically" (Schafer, 2002, p.15).

BEST PRACTICES

Although there is some major disparity between student and faculty interpretation of
cheating, there are some valuable guidelines that can be implemented (McCabe, Trevio, and
Butterfield, 2001).

Managing Cheating in the Classroom: The Students Perspective:
Clearly communicate expectations (e.g., regarding behavior that constitutes appropriate
conduct and behavior that constitutes cheating)
Establish and communicate cheating policies and encourage students to abide by those
policies
Consider establishing a classroom honor codeone that places appropriate
responsibilities and obligations on the student, not just the faculty member, to prevent
cheating
Be supportive when dealing with students; this promotes respect, which students will
reciprocate by not cheating
Be fairdevelop fair and consistent grading policies and procedures; punish
transgressions in a strict but fair and timely manner
When possible, reduce pressure by not grading students on a strict curve
Focus on learning, not on grades
Encourage the development of good character
Provide deterrents to cheating (e.g., harsh penalties)
Remove opportunities to cheat (e.g., monitor tests, be sure there is ample space between
test takers)
Assign interesting and nontrivial assignments
Replace incompetent or apathetic teaching assistants

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To magnify the issue of cheating, faculty has often underestimated, ignored and/or
overlooked the issue. Faculty members cite a number of reasons for failure to report including
lack of support, non-tenure status and ignorance of the university guidelines or procedures. Some
important principles that faculty can proactively implement are outlined below by (McCabe and
Pavela, 1997):

Managing Cheating in the Classroom: 10 Principles of Academic Integrity for Faculty:
1) Affirm the importance of academic integrity
2) Foster a love of learning
3) Treat students as an end in themselves
4) Foster an environment of trust in the classroom
5) Encourage student responsibility for academic integrity
6) Clarify expectations for students
7) Develop fair and relevant forms of assessment
8) Reduce opportunities to engage in academic dishonesty
9) Challenge academic dishonesty when it occurs
10) Help define and support campus-wide academic integrity standards

RESULTS

The first step in restoring academic integrity is to create an ethical guideline upheld by
administrators, faculty and the student population. The individual university leadership sets the
stage by defining a culture of integrity whereby the campus stakeholders are aligned and
supported. MacDonald & Carroll (2006), have proven that this type of a holistic institutional
approach that upholds the faculty is most effective, particularly in plagiarism cases. McCabe,
Trevino and Butterfield (2002), affirm that schools that prioritize academic integrity, utilize an
honor code, have a standard policy with reporting guidelines and have a judicial board in place
with student input and/or leadership, have lowered the cheating incidents. Roberts and Hai-Jew,
(2009) have highlighted a successful institutional strategy, implemented at Kansas State
University that exemplifies the need for a policy or code and a unified campus community
founded on the basic values of honor, integrity, respect and responsibility.
Attached as Appendix A is a copy of an outline that will serve as a template for an
Academic Integrity Policy, so university leadership can begin to restore honesty as a core value
in the collective learning environment on their respective campus. Included are implications for
the various university stakeholders that indicate the essential nature of having an official ethical
guideline in place.

CONCLUSION

Character is doing the right thing when nobody's looking. There are too many people who think
that the only thing that's right is to get by, and the only thing that's wrong is to get caught.
J.C. Watts

The notion that "everyone is doing it, [the wrong thing] or no one will notice' is a fallacy
that is ingrained in many people today. Cheating is widespread, but often is not viewed as
dishonorable, but rather, 'a means to an end'. In contrast, effective schools often have virtuous
179


qualities that contribute to their success (Sergiovanni, 1992, p. 99). Integrity is woven into the
fabric of the culture and a moral authority governs the practices.
Students must possess character and courage to choose right over wrong. Designing a
well-written document is a first step in curbing endemic cheating and encouraging ethical
decision making. Accountability at every level is an imperative and the campus culture must
support the overall effort to reduce the amount of incidences. All stakeholders will benefit when
cheating and fraudulent behavior is minimized in academic institutions.

REFERENCES

Accenture. (2003). One-Fourth of Americans Say its Acceptable to Defraud Insurance
Companies. Retrieved from
http://www.accenture.com/xd/xd.asp?it=enweb&xd=_dyn%5Cdynamicpressrelea
se_577.xml]
Bingham, K., Lucker, J., & Masud, M. (2006, March/April). A Hard Look at Soft Fraud.
Contingencies Magazine, American Academy of Actuaries.
Bushway, A., & Nash, W. R. (1977, August). School Cheating Behavior. Review of Educational
Research, 47(4), 623.
Crittenden, V. L., Hanna, R. C., & Peterson, R. A. (2009) Business Students Attitudes toward
Unethical Behavior: A Multi-Country Comparison. Marketing Letters, 20(1), 1-14
Crittenden, V. L., Hanna, R. C., & Peterson , R. A. (2009). The Cheating Culture: A Global
Societal Phenomenon. Business Horizons, 52(4), 337-346.
Goldstone, R. L., & Calvin, C. (2001). Dishonesty in Self-Report of Copies Made: Moral
Relativity and the Copy Machine. Basic and Applied Social Psychology, 14(1), 19-32.
Macdonald, R. & Carroll, J. (2006). Plagiarism - A Complex Issue Requiring a Holistic
Institutional Approach. Assessment & Evaluation in Higher Education, 31(2), 233-245.
Mazar, N., Amir, O., & Ariely, D. (2008). The Dishonesty of Honest People: A Theory of Self-
Concept Maintenance. Journal of Marketing Research, XLV, 633-644
McCabe, D. L., & Pavela, G. R. (1997). Ten Principles of Academic Integrity. The Journal of
College and University Law, 24, 117118.
McCabe, D. L., Trevio, L. K., & Butterfield, K. D. (2002). Honor Codes and other Contextual
Influences on Academic Integrity: A Replication and extension to Modified Code
Settings. Research in Higher Education. 43(3), 357-378
Miller, A., Shoptaugh, C., & Parkerson, A. ( 2008). Under Reporting of Cheating in Research
Volunteer College Students. College Student Journal, 42(2), 326-339.
Roberts, C.J., and Hai-Jew, S. (2009). Issues of Academic Integrity: An Online Course for
Students Addressing Academic Dishonesty. Merlot Journal of Online Learning and
Teaching, 5(2), 182-196.
Schafer, J. (2002, May). Making Ethical Decisions - A Practical Model. FBI Law Enforcement
Bulletin, 14-18.
Sergiovanni, T. J. (1992). Moral Leadership: Getting to the Heart of School Improvement. San
Francisco, CA: Jossey-Bass.
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Appendix A

Outline of Proposed Academic Integrity Policy

Purpose of Academic Integrity Policy:
A. Definition of Academic Integrity:
B. Describe the Requirements for Each Course and the Overall Degrees:
C. Discipline:
1. Pre-emptive Discipline and the Learning Process
2. Corrective Discipline and the Learning Process

I. Implications To Various Stakeholders
A. Implications to the Student:
The student is deprived of the totality of the learning process and lacks the knowledge
needed to succeed.
The student subsequently misrepresents his/her qualifications to employers, graduate
schools etc. and is not as qualified to perform certain tasks as represented.
The student invalidates the assessment tool used to evaluate the class and deprives the
faculty from truly evaluating the effectiveness of the assessment instrument.
The student is temporarily rewarded by a good grade but induces others, directly or
indirectly, to engage in dishonest behavior.
The student will have conditioned themselves to taking shortcuts when pressures
mount thus this behavior will be repeated when they are in the professional world.
The student receives an unfair advantage, relative to other students who conduct
themselves in an ethical manner.

B. Implications to the University:
Interns, graduates, etc. will not be qualified to function in their respective professions
thus lowering the value of a Slippery Rock University degree and thus making SRU
less attractive as a school for employers to recruit interns or prospective employees.
The perception of the public will be that Slippery Rock University is a 4.0 school or
engages in grade inflation.
Alumnae/government funding may decrease and/or the ability to generate additional
revenues or resources..
Slippery Rock University will lose qualified students for seats occupied by those not
qualified but who engaged in dishonest behavior.
Slippery Rocks ability to recruit top performing students will be negatively impacted
as the reputation becomes tarnished.

C. Implications to Prospective Employer or Employers who provide Internships:
The student will have engaged in resume/transcript fraud thus employers will think
they are getting a well-educated employee who cannot perform at the level they
represent, when in fact, this is false.
Employers who have bad experiences with Slippery Rock University graduates will
not recruit from the University or provide internship opportunities.
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Employers will have wasted resources on graduates who are not qualified to do the
job.
Students who have legitimately attained a moderate to high QPA may be overlooked.

D. Each student is to commit to the learning process by:
Taking responsibility for your actions-that are both positive and negative.
Understand the consequences to all stakeholders: yourself, the institution, the faculty
and management, the assessment process, and fellow students for both your positive
and negative behaviors.
Engage in actions to change behavior that is negative.
Change your thinking at a deep level, act differently and go in a different direction.
Become a positive role model for others by the actions you engage in.

II. Rights and Responsibilities of Course Instructor:
The instructor, in accordance with the provisions of the Family Educational Rights and
Privacy Act of 1974, as amended, must treat as strictly confidential any information
relating to an alleged violation of the Universitys Academic Integrity Policy or to the
outcome of a judicial hearing.

III. Rights and Responsibilities of the University

IV. Rights and Responsibilities of the Student

V. Procedures for Violation:
A. No sanctions imposed
B. Sanctions imposed:

1. Student accepts sanctions
2. Student does not accept sanctions

VI. Academic Integrity Incident Report Form


182


AMERICAN CEOS PERCEPTIONS OF SUGGESTED
STRATEGIES TO SUSTAIN GLOBALIZATION

Marjorie G. Adams, Morgan State University
marjorie.adams@morgan.edu

Abdalla F. Hagen, Wiley College
afhagen@wileyc.edu


ABSTRACT

Globalization continues to be a subject of much debate. Many economists and business
leaders tend to focus on the benefits of globalization. It seems to be necessary to view
globalization, concurrently, from a positive, as well as a negative perspective. This study
explores arguments considering globalization in its positive and negative impacts, major forces
behind globalization, and strategies that will sustain globalization. In addition, this study
examines perceptions of business leaders toward these forces and strategies. Finally, the study
examines potential differences between the rank order of the suggested forces and strategies of
business leaders and those suggested in this study.

INTRODUCTION

Business entities, in that not too distant past, could be successful by focusing only on
making and selling goods and services within its national boundaries. International
considerations were minimal. Profits earned from exporting products to foreign lands were
considered frosting on the cake but not really essential to corporate success. During the 1960s,
most American companies organized themselves around a number of product divisions that made
and sold goods only in the United States. One international division typically managed all
manufacturing and sales outside the United States. An international assignment was usually
considered a message that the person was no longer promotable and should be looking for a job
(Wheelen & Hunger, 2004).
In the 21
st
century, globalization, the internationalization of markets and corporations, has
changed the way modern organizations do business. To reach the economies of scale necessary
to achieve competitive, low costs and low prices, companies are thinking of global (worldwide)
markets instead of national markets. Instead of using one international division to manage
everything outside the home country, large corporations are now using matrix structure in which
product units are interwoven with country or regional units. International assignments are now
considered the key for anyone interested in reaching top management (Wheelen & Hunger,
2004).
Some scholars (Gills, 1997; Khan, 2003; Weidenbaum, 2002) attempted to explain
globalization as a political concept, while others (Farrell, 2004; McGrew, 1992) elucidate the
concept within the framework of recent economic, political, and environmental developments.
However, there is no consensus among scholars as to the definition of globalization, or its effects
on our lives and behavior. As a process of change, globalization extends beyond the realm of
politics and economics to embrace science, culture and lifestyles (Griffin & Khan. 1992). As
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such, globalization is a multi-dimensional phenomenon applicable to a variety of forms of social
actions (economic, political, legal, cultural, military, and technological) and environmental
(Khan, 1998; Peraton, 1997). Globalization reflects a business orientation based on the belief that
the world is becoming more homogeneous and that distinctions between national markets are not
only fading for some products, but will eventually disappear (Bonvin, 1997).
On the other hand, some scholars (Gills, 1997; Sen, 1997) focus on the positive effects of
globalization; still others (Stone, 1992) emphasize its adverse effects on income and social
inequality, women, and the poor. Similarly, Ohmae (1996) underscores the impact of
globalization on the nation states, and argues that nation states have already lost their role as
meaningful units of participation in the global economy of today's borderless world. Khan (1998)
also focuses on the contradictory forces of integration and fragmentation occurring in the post-
modern world.
This study briefly explores debates concerning both of the bright side and the dark side
of globalization, and the politicians' debate on this issue. The study also explores major forces
driving globalization and major factors behind it. Finally, the study investigates the perceptions
of American business leaders of multinational corporations (MNCs) toward these strategies.

CONTROVERSIAL DEBATE ON GLOBALIZATION

There are conventional sides of the globalization debate. Some favor globalization as the
bright sun and others consider it the dark side of the moon. In addition, some prominent
politicians are involved.

Globalization and its Positive Impact
Many researchers have supported globalization. Their support is briefly provided by the
following arguments for globalization.
Globalization will continue to escalate, transferring technologies, bringing cultures and
societies closer, and creating a community of peace loving, and intelligent citizens
(Hagen, Hassan, & Wilkie, 2003; Zahra, 1999).
Globalization will foster cooperation and promote good intentions among nations, and
will be an instrument of growth, progress, and prosperity in the future (Hagen & Lodha,
2004; Zahra, 1999).
Globalization creates flows of international trade and investment, which stimulates
economic growth and generates higher living standards (Farrell, 2004; Hagen & Lodha,
2004).
Rising living standards generated by globalization increase the willingness of a society to
devote resources to the environment and other important social issues (Farrell, 2004;
Weidenbaum, 2002).
Global competition keeps domestic businesses on their toes, forcing them to innovate,
improve product and service quality and industrial productivity (Weidenbaum, 2002).
Global competition helps developing economies create a new middle class, and that is the
bulwark of support of personal liberty and economic freedom (Farrell, 2004;
Weidenbaum, 2002).
Both economic political and economic isolationism do not work. The most striking case
was sixteenth-century China, where one misguided emperor abruptly cut off trade and
commercial intercourse with other nations. China had been the wealthiest, most
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technologically advanced, and arguably the most powerful nation on the face of the
globe. Yet it promptly went into a decline from which it has yet to fully emerge (Khan,
2003; Weidenbaum, 2002). The demised Soviet Union is a recent example (Hagen,
Hassan, & Wilkie, 2003; Khan, 2003).

Globalization as an Issue of Concern

By the same token, other researchers have not supported globalization. They provide the
following arguments against globalization:
Workers feel threatened by unfair competition from low-cost sweatshops overseas.
Citizens generally worry about the conditions in those foreign sweatshops, especially the
presence of children in the workplace (Hutton & Giddens, 2000; Weidenbaum, 2002;
Straubhaar & Wolter, 1997).
Opponents of globalization say that the huge business conglomerates see the
underdeveloped nations as an ample supply of cheap labor. The workers are paid minimal
salaries, worked excruciating hours and the businesses have no social responsibility.
Workers of developing poor countries are working harder and longer hours, for fewer
wages because of the push for global markets. In turn, the industrialized nations are
reaping the benefits (McMurtry, 2002).
Poor countries, on the other hand, have been hurt by the outflow of their skilled labor to
the rich calling it the brain drain. They feel the foreign domination, resist globalization,
and believe that trade with the rich is harming their nascent industrialization and
development (Hutton & Giddens, 2000; Mandle, 2000).
Some are deeply concerned that globalization will increase the gap between rich and poor
nations by creating enduring and stable dependencies. There is a growing inequality of
income around the world. Apparently, the poor are getting poorer while the rich are
getting richer (Birdsall, 2003; Khan, 2003; Stone, 1992; Weidenbaum, 2002).
Globalization can have a devastating effect on developing countries and especially on the
poor citizens of those countries such as mass starvation in African countries (Cruz, 2003).
Some countries cannot absorb emerging technologies or compete on a global level
because they lack basic infrastructure and limited resources. Due to their limited
resources, they are unable to escape the vicious cycle of their underdevelopment; and
they are doomed to prolonged underdevelopment; (Khan, 2003; Stone, 1992). Some
nations do not have a choice other than to tie their futures to those of advanced nations
and hope for the best. Government officials fear the loss of their sovereignty (Hutton &
Giddens, 2000; Khan, 2003; Stone, 1992).
Those who accept this view have also come to the conclusion that globalization will
eventually destroy some local cultures and wipe out the political and economic
independence of poorer countries (Hutton & Giddens, 2000; Mandle, 2000; Ohmae,
1996; Stone, 1992).
People who care about the environment see the pollution caused by the long distance
movement of goods as well as the shift of production to overseas locations with low or no
environmental standards (Downling, 2000; Hutton & Giddens, 2000; McMurty, 2002).
The global corporate system is casing in the destruction of the environment of many
nations without any repercussions (McMurtry, 2002).
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The witness of global financial crises and widespread recession (Weidenbaum, 2002;
Khan, 2003). Over the past decade, Mexico, Korea, Thailand, Indonesia, Russia, Brazil,
Ecuador, Turkey, and most recently Argentina all faced financial difficulties that were
caused or made worse by their economies exposure to global financial markets. Weak
local markets can cause financial crisis triggered by panicked withdrawals of capital
(Birdsall, 2003; Downling, 2000).

Politicians Views of Globalization
The debate on the effect of globalization in the 21
st
century has attracted some prominent
politicians across the political arena (Graham, 1996).
Conservatives fear globalization will undermine the integrity of a countrys political and
social institutions and may weaken its cultural structure.
Leftists are concerned about the prospect of political, technological and economic
dependence.
Others are concerned over our growing reliance on technology to address complex social
and cultural problems. They believe that quick techno-fixes do not solve enduring
problems; their best hope is to work together toward a common future.

MAJOR FORCES BEHIND GLOBALIZATION

There are several factors that lie behind the emergence of globalization. These factors are
briefly discussed below:

1. Growth of global financial markets. Recently, international finance has increased more
rapidly than world trade, and has become an important element and the driving force behind
global integration. Capital movements rather than trade in goods and services have become the
engines and driving force of the world economy (Yeung & Lo, 1996). Facilitated by deregulation
and the liberalization policy of western countries, international capital has increased both its
mobility and its turnover (The Economist, 1997).
With an emerging Eurocurrency now in place as the Euro and the accelerated growth of
private capital, the traditional understanding of capital as being related to a particular country has
lost its meaning. In other words, capital has become so internationalized that it has lost its
national color, making it very difficult to control and regulate the flow of finance between
nations (Khan, 2003).
2. The demise of the Soviet System and the end of the Cold War. The collapse of the former
Soviet Union and the end of the Cold War has led to the widening of global markets and
deepening of economic linkages. Today, except for North Korea, almost all countries of the
world are integrated into and have become part of the global market. Even Cuba, which is ruled
by a hard-line communist party, to a certain extent, has allowed foreign investment to play a
substantial role in the economy of the country (Khan, 2003).
Consequently, the world is no longer divided into a bipolar political order as it had been during
the Cold War era when the United States and the Soviet Union were competing for ideological
influence. Today, the competition between nations is no more for ideological supremacy but for
market and scarce resources. In today's global economy geo-politics is out and geo-economics is
in (Khan, 2003).
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3. The growth of corporate activities. Global integration is the result of the growing activities of
MNCs. Today, the number of MNCs and the capacity of their influence have expanded. To
reduce the cost of production, maximize profit, and to have competitive edge over others in
conquering market, MNCs are transcending their national boundaries and are investing in other
nations. Consequently, foreign investment has increased dramatically in recent years. This is
partly facilitated by the revolution made in communication and transportation technology (World
Investment Report, 2004).
The revolution in technology has made it possible to breaking down the production process
into different stages at different localities without losing efficiency and profitability. The high
level of specialization has changed the structure of manufacturing in such a way that the
production process allows different parts to be produced in different countries. The final goods
are produced or assembled in a completely different country, thereby creating what is called a
global factory (Bosier, 1997). The growth of world trade has outstripped that of world output by
4.2 times between 1990-1995 (Cook & Kirkpatrick, 1997).
4. Information, communication and transportation technology. The revolution made in
information, communication and transportation technology is the most important driving force
behind globalization, which has reduced telecommunication as well as transportation, costs, and
thereby diminished the importance of distance in economic activity (Bosier, 1997). The dramatic
reduction in telecommunication and transportation costs has, in turn, permitted closer integration
between markets, consumers, producers and suppliers (Cook & Kirkpatrick, 1997). Business
activities, including selling and buying of goods and services, as well as other financial
transactions can be conducted at a distance using telecom networks as the Internet.
The decrease in transportation and communication costs means considerably narrowed space
and shortened time that has made goods and factor markets very close and more interlinked
(Straubhaar & Wolter, 1997). It also means greater mobility of people within and between
regions. In developing countries, the relative decline in transportation costs combined with the
push of miserable conditions at home and the pull of higher standards of living abroad are
leading tens of millions of people to move from poor countries to rich countries just when
unskilled labor is not needed in the wealthy industrial world (Thurow, 1996).

CONCLUSION

Competition in the 21
st
centurys global economy will be complex, challenging, and filled
with competitive opportunities and threats. Forces of globalization will continue to escalate,
bringing about critical changes in the traditional boundaries of countries, industries, and markets.
Globalization creates numerous opportunities and critical challenges for firms and their
executives. What will be different in the 21
st
century is how top managers will compete
successfully in this globalization era. The changing competitive global landscape challenges
traditional rules of competition. Global markets in the 21
st
century will reward organizations that
accept and value the new rules of global competitiveness.
As the various sides in the debate on globalization continue to harden their positions, any
movement to the high middle ground will become increasingly difficult. The development of a
feeling of trust, or at least common understanding, is a badly needed precondition. In this study,
the authors acknowledge that they have only covered some of the numerous contentious issues
that eventually need to be dealt with.
187


More persons need to understand and deal with both sides of the globalization issue. Real
improvement in government policies on international commerce will not take place until people
respond constructively to the genuine concerns of the other voices in the globalization debate.

REFERENCES

Bonvin, J. (1997). Globalization and Linkages: Challenges for Development Policy.
Bosier S. (1997). The Elusive Goal of Regional Development: Between the Black Box and the
Political Agenda. Stantiago-Chile: Edificio CEP AL.
Birdsall, N. (2003, Spring). Asymmetric Globalization: Global Markets Require Good Global
Politics. The Brookings Review, 22.
Cook, P., & Kirkpatrick, C. (1997). Globalization, Regionalization and Third World
Development. Regional Studies, 31(1), 55-66.
Cruz, E. (2003, February). Framework. Business World, 11.
Downling, R. J. (2000, November 6). A Hard Look at Global Capitalism. Business Week, (3706),
1.
Farrell, D. (2004). The Case for Globalization. Washington. 18(1), 52-56.
Gills, K. B. (1997). Globalization and the Politics of Resistance. New Political Economy, 2(1),
11-15.
Graham, E. (1996). Global Corporations and National Governments. Washington, DC: Institute
for International Economics.
Griffin K., &. Khan, R. A. (1992). Globalization and the Developing World: An Essay on the
Structural Dimensions of Development in the Post Cold War Era. Geneva: UNRJSD.
Hagen, A., & Lodha, S. (2004). How Do CEOs Perceive Suggested New Rules of Global
Competitiveness in the Twenty-First Century? American Business Review, 22(1): 62-70.
Hagen, A., M. Hassan, & Wilkie, M. (2003). Catalyst, 1(1), 46-60.
Hutton, W., & Giddens, A. (2000). Global Capitalism. New York: The New Press.
Kessler E. H., & Chakrabarti, K. A. (1996). Innovation Speed: A Conceptual Model of Context,
Antecedents, and Outcomes. Academy of Management Review, 21, 143-191.
Khan, H. (2003). Globalization: Challenges and Opportunities. American Society of
Competitiveness Conference. Washington, D.C.
Khan, H. A. (1998). Technology Development and Democracy: Limits to National Innovation
Systems in the Age of Postmodernism. Aldershot, U.K.: Edward Elgar.
Mandle, J. R. (2000). Trading Up: Why Globalization Aids the Poor. Commonwealth, 27(11):
15-18.
McGrew, A. (1992). The Third World in the New Global Order. Oxford: Oxford University
Press
McMurtry, J. (2002). Why the Protestors are Against Corporate Globalization. New Jersey:
Princeton.
Ohmae, K. (1996). The End of the Nation State. London: Harper Collins Publishers.
Peraton, J. (1997). The Globalization of Economic Activity. New Political Economy, 2(2): 257-
277.
Sen, G. (1997). Globalization, Justice and Equity: A Gender Perspective. Development, 40(2):
21-26.
Straubhaar, T., & Wolter, A. (1997). Globalization, Internal Labor Markets and the Migration of
the Highly Skilled. Intereconomics, 32(4): 174-180.
188


Stone, R. D. (1992). The Nature of Development. New York, NY: Alfred A. Knop.
The Economist. (1997). Mahathir, Soros, and the Currency Markets: Amoral May be, but
Currency Speculators are Both Necessary and Productive.
Thurow, L. (1996). The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's
World. Penguin Books: New York.
Weidenbaum, M. (2002). Globalization: Wonder Land or Waste Land. Vital Speeches of the
Day, 68(9), 273-278.
World Investment Report. (2004). Growth of World Direct Investment. New York: United
Nations.
Wheelen, T. L., & Hunger, J. D. (2004). Strategic Management and Business Policy. New York:
Addison-Wesley.
Yeung, Y., & Lo, F. (1996). Global Restructuring and Emerging Urban Corridors in Pacific
Asia. Tokyo: United Nations University Press.
Zahra, S. A. (1999). The Changing Roles of Global Competitiveness in the 21
st
Century.
Academy of Management Executive, 14, 36-42.

189










CHAPTER 11

FINANCE

190


VALUING DISTRESSED PRIVATE COMPANIES:
THE CASE OF A FURNITURE MANUFACTURING COMPANY IN BRAZIL

Ronald Jean Degen, International School of Management
Degen@lomasnegras.com

K. Matthew Wong, St. Johns University
Wongk@stjohns.edu


ABSTRACT

This paper examines the case of valuing a distressed privately held company in Brazil.
With the global financial crisis, many such companies are in financial distress and they
sometimes present good opportunities for acquisition. The company in question is a furniture
manufacturing company that exports 90 percent of its furniture to Europe and the US. Three
valuation approaches--discounted cash-flow valuation, relative valuation and contingent claims
valuation--are applied and their shortcomings in the valuation of distressed privately held
companies in the real world are noted.

INTRODUCTION

The financial crisis of 2007-9, the economic recession and the appreciation of the
Brazilian real in relation to the dollar have negatively affected many Brazilian exporting
manufacturing companies. They saw an abrupt decrease in overseas demand for their products
and at the same time lost competiveness to Chinese and other Asian manufacturers due to the
appreciation of reals. The purpose of this paper is to analyze the acquisition process and the
valuation approach used for one of these distressed companies. The target company was a
privately held exporter of pine furniture to the US and Europe.
The acquisition process of the privately held company was adapted from that proposed
by DePamphilis (2003) to the specific situation of the target company and the way the sellers
proposed to conduct the sale. The process was structured into seven phases. Each of these
phases and the interactions among them will be discussed in sequence.

EVALUATING THE STRATEGIC POSITION

The explosive demand for pine furniture in the US market due to the housing boom in
2005-6 and the devaluation of the reals against the dollars in 2008 had increased the
competiveness of Brazilian exports against Chinese and other Asian competitors. Motivated by
this apparently favorable scenario, the owners of the target company decided in the second half
of 2008 to expand and modernize their production capacity to supply the expected growth in
demand, taking advantage of declining interest rates to finance the investment.
These expansions were concluded in the first half of 2009. The timing of the investment,
however, was very unfortunate. The economic crisis that had exploded after the bankruptcy of
Lehman Brothers caused an immediate worldwide contraction in demand for furniture exported
from Brazil and the slow devaluation of the dollars against the reals during the first half of 2009.
191


Consequently, the target company had a huge overcapacity in equipment and personnel,
along with a substantial debt from the investments made into building this surplus. The debts
were also personally guaranteed by the owners of the company. Additionally, because the
production cost in reals was now higher in dollar term, the export contracts made during the
second half of 2008 and first months of 2009 that were priced in dollars had to be honored at a
loss. This situation generated monthly losses to the company, which drove the owners to put the
company up for sale. They especially feared the possibility of a concordata (Chapter 11
bankruptcy filing in Brazil) and the prospect of losing their personal wealth, which they had
given as collateral to the banks.
The Brazilian pine furniture company, however, appeared to be competitive in two basic
factors of production: the average pine trees in southern Brazil grow five times faster than those
in the northern hemisphere. This gives Brazilian pine a substantial cost advantage over northern
hemisphere pine. The target company has its own timberland, which guarantees its supply of
pine for the manufacturing of furniture. The companys timberland is also Forestry Stewardship
Council (FSC) certified, which has become a basic requirement for any US or European client
that wishes to be seen as socially responsible.

FORMULATING THE RESTRUCTURING PLAN

The marketing and technical evaluation of the target company identified (besides the
overcapacity and the exchange rate structural problems mentioned before) the following
operational problems: sales in the US and in Europe conducted by commissioned agents who
received their commission independent of whether or not the sale was profitable, dependence on
sales agents with no loyalty to the company, no direct relationship with its clients, filling
production over capacity with small, unprofitable orders, overstaffing for the present production
load due to the high cost of severance pay (in Brazil this is one months salary plus 40 percent of
a months salary per years worked ) and excessive integration of the production process that
reduced the flexibility to adapt to changing production loads.
The restructuring plan addressed these identified problems: the creation of a small direct-
sales organization with sales representatives in the US and Europe to build direct relationships
with the clients, a sales representative incentive plan based on the direct margins of orders,
rightsizing of the staffing to the production requirements and outsourcing standard production
processes to increase flexibility. The cost and savings of the restructuring plan were included in
the valuation of the acquisition of the target company.

VALUING THE COMPANY

Authors like Arzac (2008), Bruner (2004), Copeland, Koller, and Murrin, (1990), Crystal
and Mokal (2006), and Damodaran (1994) recommend three general approaches to the valuation
of a company. The first, discounted cash-flow valuation (DCFV), relates the value of a company
to the present value of expected future cash flows generated by the company. To save space, we
will only focus our discussion on the DCFV herein. The second, relative valuation, estimates the
value of a company by looking at the pricing of comparable companies on a common variable
like earnings, cash flow, book value or sales. The third, contingent claim valuation, uses option
pricing models to measure the value of a company that shares option characteristics. The
valuation of a company with each of these approaches can be significantly different. In practice
192


all three are used (when possible), and based on the reasons for the different outcomes, one
approach ends up determining the valuation of the company.

Discounted Cash-Flow Valuation
The value of a company is defined simply as the present value of its expected future free
cash flow. The biggest problem in using DCFV to value privately held companies is the need to
estimate risk to incorporate into the discount rate. Since securities of privately held companies
are not traded, there are no risk parameters to be estimated from the historical prices of their
securities. A solution is to estimate the risk of comparable companies that are publicly traded.
Another is to relate risk to the history of the available accounting variables of the company.

WACCfortheCompanyinBrazil
The WACC used in the DCFV approach is computed by weighting the cost of equity and
the after-tax cost of debt by the target debt and equity ratios.
The cost of equity in Brazil (r
CEBR
) for an international investor, writes Damodaran
(2002), can be calculated using CAPM with the addition of the countrys risk rate (r
BR
). The r
BR

is usually the average rate of the securities in the Embi+ (Emerging Market Bonds Index from JP
Morgan) for Brazil (dos Santos, 2005; Martelanc, Pasin, & Cavalcante, 2005). As a result,

; where
CE
is the companys
equity beta.

In addition, the country risk rate for a particular Brazilian company (r
PBR
) needs to be
further adjusted by the percentage of the sales of the particular company that are exposed to the
country risk relative to the percentage of the countrys total internal GNP exposed to its country
risk (Martelanc et al., 2005).

Valuing the Target Company

Estimating the value of the target company using DCFV and relative valuation, we
implicitly assume that the company is a going concern and that the present financial stress is
temporary. This assumption is based on the evaluation of the strategic position of the target
company and the proposed restructuring plan. We also consider a 10 percent real chance that the
restructuring plans will fail ( ) and that the company will not survive to reach its
terminal value stage.
The valuation of the company for a foreign investor using the DCFV approach was
calculated as follows:






193




where the debt ratio is 0.55, tax is 0.34, r
f
is 0.06, r
MP
is 0.12, r
BR
is 0.08, r
d
is 0.23,
CE
is 3.0,
zero growth rate after the fifth year, companys sales in the domestic market are 10 percent and
Brazil exports an average 16% of GNP. These values are historical averages for similar
acquisitions in Brazil before the crisis of 2007-09. Using these numbers, r
PBR
is 0.01, r
CEBR
is
0.25, WACC
PBR
is 0.22 and the company value is 1.8 million reals.
The estimated target company value calculated with the DCFV approach is 84 percent
composed of the terminal value in the fifth year, which depends directly on an exit of the
proposed restructuring plan. Because the target company is a distressed company and there is a
10 percent chance that the restructuring plan will fail, this chance must be included in the
valuation of the target company (Damodaran, 2006), as follows:



where the value as a going concern is 1.8 million reals, the chance that the restructuring plan will
fail ( ) is 10 percent, and the value of the distress sale is 1.0 million reals. The company
value considering the chance of failure ( ) is 1.7 million reals. Subtracting from
the companys debt of 2.4 million reals, the value of the equity is negative by
0.7 million.

STRUCTING A DESK TOP FINANCING PLAN

Analyzing the debt structure of the target company and noting that 90 percent of its sales
are generated by exports to Europe and the US, the possibility of substituting expensive domestic
loans in reals for international loans in dollars was evaluated. This possibility could substantially
reduce the companys interest cost. The reduction of the debt cost from 23 percent to 13 percent
a year would reduce WACC from 22 percent to 19 percent. Unfortunately, due to the high debt
ratio (0.55) and the losses of the target company, the proposal of substituting debt is impossible
to implement. The only feasible solution is substituting part of the existing debt with equity and
then substantially reducing the cost of the remaining debt.
The solution to rehabilitate the target company is to capitalize it by 1.0 million reals,
reducing the debt ratio to 0.32. This would make refinancing the remaining debt of 1.4 million
reals feasible at an estimated cost of 13 percent a year. The WACC is 11 percent, and the
company value is 6.3 million reals. Taking into account of the possibility of failure, the
companys value is 5.7 million reals.

NEGOTIATING THE DEAL

Based on the conclusions that the value of the equity of the target company (with the
projected restructuring plan) was negative by 0.7 million reals, the value of distressed sale was
1.0 million reals and a capitalization of 1.0 million reals was necessary to make the company
profitable, the acquiring company made an offer to buy the companys equity from its current
owners for 0.3 million reals. The rationale for this value was that it represented the difference
between the value of distressed sale and the negative equity value. The buyer also offered to
194


replace the collateral given to the Brazilian banks by the present owners and take full
responsibility for all possible liabilities presented in the disclosure document.
The largest liability described in the disclosure document was a legal dispute with the
Brazilian tax authority valued at 0.5 million reals. Attached to the document was a legal opinion
from defense lawyers claiming a 70 percent chance that they would win the case.
The sellers considered the offer too low. After some negotiation on price, the acquirer
and sellers reached a compromise value of 1.0 million reals for the equity of the target company.
A binding sales document between the buyer and the sellers containing the target companys
liability disclosure document was signed. The agreement stipulated that all liabilities not
disclosed in the disclosure document would be deducted by the buyer from the purchasing price.
For this purpose the seller was to create an escrow account of 0.2 million reals to guarantee the
possible deductions. The document also contained a clause that if any liability that exceeded the
escrow amount was uncovered during due diligence, the document would be void.

PERFORMING DUE DILIGENCE

The work executed by the due diligence team was documented in executive summaries
prepared by the experts and documented with the work papers, check list and other resources
used in the process. The findings, conclusions and recommendations of the specialists were then
further summarized into the due diligence report, which contained the key points, the final
conclusion and recommendations on the acquisition of the target company.
All of the findings and conclusions about the issues of the target company resulted in
immaterial differences with the liabilities disclosure document presented by the sellers and
integrated into the sales agreement. The only exception was the dispute with the Brazilian tax
authorities.

DECISION: CLOSE OR WALK AWAY

The tax expert found during the due diligence that the eventual tax liability was 1.0
million Brazilian reals. This value was double of the value (0.5 million reals) given in the
disclosure document attached to the sales agreement. Additionally, the legal expert performing
the due diligence considered unrealistic the estimated probability of winning the case of 70
percent provided by the lawyers of the target company. In the legal experts opinion, the chance
of winning the case was only 20 percent because of the poor defense prepared by the target
companys lawyers. These findings automatically voided the sales agreement because the
amount of undisclosed liability was greater than the agreed-upon maximum of 0.2 million reals.
Based on these due diligence findings, the buyer offered to buy the company for 1 real
and an additional 1.0 million reals if the case with the Brazilian tax authorities was solved in
favor of the target company. This offer was rejected by the seller, who argued that they had no
control over the future of the case and thus no guarantee that the best effort would be made to
win the case. Because the buyer and the seller could not find a solution to the tax issue, the
negotiations were closed and the buyer walked away from the deal.

REFERENCES

Arzac, E. R. (2008). Valuation for Mergers, Buyouts, and Restructuring. New York: John Wiley.
195


Bruner, R. F. (2004). Applied Mergers and Acquisitions. New York: John Wiley.
Copeland, T., Koller, T., & Murrin, J. (1990). Valuating: Measuring and Managing the Value of
Companies. New York: John Wiley.
Crystal, M., & Mokal, R. J. (2006). The Valuation of Distressed Companies: Conceptual
Framework (Monograph).
Damodaran, A. (1994). Damodaran on Valuation: Security Analysis for Investment and
Corporate Finance. New York: John Wiley.
Damodaran, A. (2002). Investment Valuation: Tools and Techniques for Determining the Value
of Any Asset (2nd Ed.). New York: John Wiley.
Damodaran, A. (2006, January). The Cost of Distress: Survival, Truncation Risk and Valuation
(Monograph). Retrieved from http://pages.stern.nyu.edu/~adamodar///.pdf
DePamphilis, D. (2001). Mergers, Acquisitions and Other Restructuring Activities: An
Integrated Approach to Process, Tools, Cases, and Solutions. San Diego: Academic
Press.
dos Santos, J. O. (2005). Avaliao de Empresas: Um Guia Prtico. Calculo e Interpretao do
Valor das Empresas [Valuation of Enterprises: A Practical Guide. Calculation and
Interpretation of the Value of Enterprises]. So Paulo: Saraiva.
Martelanc, R., Pasin, R., & Cavalcante, F. (2005). Avaliao de Empresas: Um Guia para Fuses
e Aquisies e Gesto de Valor [Valuation of Enterprises: A Guide for Mergers and
Acquisitions, and Value Management]. So Paulo: Pearson Prentice Hall.



196


STOCHASTIC ANALYSIS OF MARGIN BUYING IN SPAIN

Paloma Bernal Turnes, Universidad Rey Juan Carlos
paloma.bernal@urjc.es

Jos Luis Beltrn Varandela, Universidad de Vigo
jlbeltran@uvigo.es

Irene Garrido Valenzuela, Universidad de Vigo
ireneg@uvigo.es


ABSTRACT

The Ministerial Order of March 25, 1991 regulates the Margin Buying System in Spain.
This Ministerial Order provides the legal limits to the operational control. The Law specifies
that it is necessary to contribute only a small percentage on total cash value, as an initial outlay,
to guarantee the margin buying operation. The subsequent quotation evolution will mark
additional cash payments that will work as additional guarantees. However, the Spanish law
framework does not clearly regulate the Additional Guarantees.
For this reason, it is necessary to design a new measuring system to determine, in a more
realistic way, the formula to define the contribution of Additional Guarantees. This paper is a
descriptive exploratory study that develops the fundamental probabilistic formula to calculate the
reliable amount of additional guarantees.
After developing the formula, it is possible to obtain from it all the answers to the
questions arising from the randomness that exists in this form of operation. The concept of the
density function represents an ideal instrument to describe the continuous random variable,
which is necessary in order to establish the lower and upper limits of the total probability space
in which it is defined.

INTRODUCTION

In Spain buying and selling stocks on margin is regulated primarily by the Ministerial
Order of March 25, 1991. This law deals with providing credit purchasing and shorting
securities. More than twenty financial intermediaries are authorized by the CNMV (Spanish
Securities Market Commission) to provide margin accounts.
The Margin Buying System is a spot market, because the shares are bought and sold at
daily rate and the operation is performed at the same date that the operation takes place (Cachn,
1998). However, sellers and buyers get a payment deferral by implementing the delay in the
obligations arising from the operation.
Nowadays, there is only one remarkable bank that has developed this practice in Spain
called RBC Dexia Investor Services Spain, which has designed the Credibolsa system (Bancoval,
2010). Every broker who wants to offer to its customers the possibility of operating with
CrediBolsa, has to be duly authorized by the CNMV. Credibolsa allows brokers to invest, or
short, the stocks when the market is rising, or falling, respectively.
197


CrediBolsa is the lending system designed by RBC Dexia Investor Services Espaa that
allows clients to engage in spot buying and selling of securities in the stock market. This system
consists of extends credits up to the 75% of the cash value of a buying and shorting orders.
It is important to highlight that CrediBolsa multiplies the investment capacity four times,
because investors only pay out a fourth of the total worth of stock using margin buying, and it
involves to assume a loan from broker of three fourth of the rest of the cost of the stocks. It also
allows the investor with the bearish expectations to take advantage of the falling value. However,
margin buying is a dangerous investment if the stock prices plunge, because the loss is for the
full cost of the stocks.
The individual or institutional investors that maintain stable portfolios of assets quoted on
the Spanish Stock Exchange Ibex-35, which is formed by the thirty-five most liquid securities
with the highest capitalization, are able to use the lending programme of RBC Dexia Investor
Services Espaa, to obtain a higher and complementary return from their investments
(www.bolsamadrid.es) This additional profitability is obtained in two different ways: the first
one is the exemption of any custody commissions, and the second one is the return of the
securities actually loaned.
RBC Dexia Investor Services Espaa analyzes the entire securities portfolio before
offering them to the market. Standard & Poor's, the credit rating agency, has issued the credit
rating for RBC Dexia Investor Services Espaa, which is being graded with an AA-. The AA-
rating means that RBC Dexia Investor Services Espaa is a private corporation with a
remarkable quality, very stable and with low risk, which guarantees its reliability
(www.rbcdexia-is.es).
RBC Dexia Investor Services Espaa acts as a buyer or seller when a buying or selling
order is made by the client, respectively. The securities lent are tax-free to the seller, because the
loans are not considered as a purchase agreement of securities, until the operation is not being
performed.

TABLE 1. THE ANNUAL EVOLUTION OF CREDIT MARKETS IN SPAIN (2001-2010)
(NUMBER OF SHARES IN MILLIONS AND VALUE TRADED IN MILLIONS OF EUROS)
Trading Volume Outstanding Balance*
Purchases Sales Purchases Sales
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
2001 38,04 400,48 7,83 108,07 3,25 35,90 0,50 6,67
2002 31,37 284,24 8,51 89,49 3,51 28,26 0,72 6,72
2003 28,80 251,71 12,89 119,94 3,04 26,16 1,09 11,42
2004 36,10 317,13 8,04 91,43 4,13 37,92 1,06 14,17
2005 26,50 328,36 7,82 115,70 2,89 40,03 1,51 25,94
2006 20,87 360,00 17,99 325,15 3,14 49,94 3,65 70,79
2007 19,24 307,48 27,32 517,40 3,30 37,17 6,07 109,53
2008 9,84 84,84 49,33 596,03 0,51 0,39 2,03 18,59
2009 8,24 65,13 35,10 461,57 0,77 7,24 2,27 21,84
Jan-Sept 10 6,31 39,45 29,95 252,55 0,39 3,36 1,99 19,06
Note: * Outstanding balance at closing session of the time period.
Source: Bolsas y Mercados Espaoles (2009), Gmez, I. (2010) and www.bolsasymercados.es.

198


CrediBolsa is the lending system designed by RBC Dexia Investor Services Espaa that
allows clients to engage in spot buying and selling of securities in the stock market. This system
consists of extends credits up to the 75% of the cash value of a buying and shorting orders.
It is important to highlight that CrediBolsa multiplies the investment capacity four times,
because investors only pay out a fourth of the total worth of stock using margin buying, and it
involves to assume a loan from broker of three fourth of the rest of the cost of the stocks. It also
allows the investor with the bearish expectations to take advantage of the falling value. However,
margin buying is a dangerous investment if the stock prices plunge, because the loss is for the
full cost of the stocks.
The individual or institutional investors that maintain stable portfolios of assets quoted on
the Spanish Stock Exchange Ibex-35, which is formed by the thirty-five most liquid securities
with the highest capitalization, are able to use the lending programme of RBC Dexia Investor
Services Espaa, to obtain a higher and complementary return from their investments
(www.bolsamadrid.es) This additional profitability is obtained in two different ways: the first
one is the exemption of any custody commissions, and the second one is the return of the
securities actually loaned.
RBC Dexia Investor Services Espaa analyzes the entire securities portfolio before
offering them to the market. Standard & Poor's, the credit rating agency, has issued the credit
rating for RBC Dexia Investor Services Espaa, which is being graded with an AA-. The AA-
rating means that RBC Dexia Investor Services Espaa is a private corporation with a
remarkable quality, very stable and with low risk, which guarantees its reliability
(www.rbcdexia-is.es).
RBC Dexia Investor Services Espaa acts as a buyer or seller when a buying or selling
order is made by the client, respectively. The securities lent are tax-free to the seller, because the
loans are not considered as a purchase agreement of securities, until the operation is not being
performed.

TABLE 1. THE ANNUAL EVOLUTION OF CREDIT MARKETS IN SPAIN (2001-2010)
(NUMBER OF SHARES IN MILLIONS AND VALUE TRADED IN MILLIONS OF EUROS)
Trading Volume Outstanding Balance*
Purchases Sales Purchases Sales
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
2001 38,04 400,48 7,83 108,07 3,25 35,90 0,50 6,67
2002 31,37 284,24 8,51 89,49 3,51 28,26 0,72 6,72
2003 28,80 251,71 12,89 119,94 3,04 26,16 1,09 11,42
2004 36,10 317,13 8,04 91,43 4,13 37,92 1,06 14,17
2005 26,50 328,36 7,82 115,70 2,89 40,03 1,51 25,94
2006 20,87 360,00 17,99 325,15 3,14 49,94 3,65 70,79
2007 19,24 307,48 27,32 517,40 3,30 37,17 6,07 109,53
2008 9,84 84,84 49,33 596,03 0,51 0,39 2,03 18,59
2009 8,24 65,13 35,10 461,57 0,77 7,24 2,27 21,84
Jan-Sept 10 6,31 39,45 29,95 252,55 0,39 3,36 1,99 19,06
Note: * Outstanding balance at closing session of the time period.
Source: Bolsas y Mercados Espaoles (2009), Gmez, I. (2010) and www.bolsasymercados.es.

198


CrediBolsa is the lending system designed by RBC Dexia Investor Services Espaa that
allows clients to engage in spot buying and selling of securities in the stock market. This system
consists of extends credits up to the 75% of the cash value of a buying and shorting orders.
It is important to highlight that CrediBolsa multiplies the investment capacity four times,
because investors only pay out a fourth of the total worth of stock using margin buying, and it
involves to assume a loan from broker of three fourth of the rest of the cost of the stocks. It also
allows the investor with the bearish expectations to take advantage of the falling value. However,
margin buying is a dangerous investment if the stock prices plunge, because the loss is for the
full cost of the stocks.
The individual or institutional investors that maintain stable portfolios of assets quoted on
the Spanish Stock Exchange Ibex-35, which is formed by the thirty-five most liquid securities
with the highest capitalization, are able to use the lending programme of RBC Dexia Investor
Services Espaa, to obtain a higher and complementary return from their investments
(www.bolsamadrid.es) This additional profitability is obtained in two different ways: the first
one is the exemption of any custody commissions, and the second one is the return of the
securities actually loaned.
RBC Dexia Investor Services Espaa analyzes the entire securities portfolio before
offering them to the market. Standard & Poor's, the credit rating agency, has issued the credit
rating for RBC Dexia Investor Services Espaa, which is being graded with an AA-. The AA-
rating means that RBC Dexia Investor Services Espaa is a private corporation with a
remarkable quality, very stable and with low risk, which guarantees its reliability
(www.rbcdexia-is.es).
RBC Dexia Investor Services Espaa acts as a buyer or seller when a buying or selling
order is made by the client, respectively. The securities lent are tax-free to the seller, because the
loans are not considered as a purchase agreement of securities, until the operation is not being
performed.

TABLE 1. THE ANNUAL EVOLUTION OF CREDIT MARKETS IN SPAIN (2001-2010)
(NUMBER OF SHARES IN MILLIONS AND VALUE TRADED IN MILLIONS OF EUROS)
Trading Volume Outstanding Balance*
Purchases Sales Purchases Sales
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
N shares
Value
Traded
2001 38,04 400,48 7,83 108,07 3,25 35,90 0,50 6,67
2002 31,37 284,24 8,51 89,49 3,51 28,26 0,72 6,72
2003 28,80 251,71 12,89 119,94 3,04 26,16 1,09 11,42
2004 36,10 317,13 8,04 91,43 4,13 37,92 1,06 14,17
2005 26,50 328,36 7,82 115,70 2,89 40,03 1,51 25,94
2006 20,87 360,00 17,99 325,15 3,14 49,94 3,65 70,79
2007 19,24 307,48 27,32 517,40 3,30 37,17 6,07 109,53
2008 9,84 84,84 49,33 596,03 0,51 0,39 2,03 18,59
2009 8,24 65,13 35,10 461,57 0,77 7,24 2,27 21,84
Jan-Sept 10 6,31 39,45 29,95 252,55 0,39 3,36 1,99 19,06
Note: * Outstanding balance at closing session of the time period.
Source: Bolsas y Mercados Espaoles (2009), Gmez, I. (2010) and www.bolsasymercados.es.

198


Table 1 shows the evolution of this operation during the last decade (2001-2010) either in
cash or outstanding balance. The Table reflects a severe trend change during the last recent
decade. During the first five years considered, the purchasing orders dominate the market, as an
unquestionable representative of an upward trend of the markets. However, during the period
from 2006 to 2010, the markets are dominated by selling orders, as a clear reflection of the
bearish speculation in a downward trend market.

THE BUYING MARGIN THEORICAL FRAMEWORK: ISSUES REGARDING TO
THE ADDITIONAL WARRANTIES

The credit transactions have merely speculative purposes. Any buyer on credit trusts that
the securities he has acquired will experience an increase by the deadline of the transaction. This
aspect will allow the investor to repay the loan with the money obtained by selling the securities
and making some profits (Mateos, 1987). Furthermore, any short seller on credit trusts that the
securities, which had sold, will reduce their prices by the fixed period of the operation, and this
fact will not only allow him or her to buy the securities, but also to get some profits (Pisn,
2001).
The economic nature of credit transactions is the same as the traditional term operations
(Palomo & Mateu, 2004). However, the first one is considered safer than the second one,
because of the fact that as an opposite party, it intervenes a securities company to protect the
market from the speculators (Amat, 2010). This securities company has got a deep knowledge
of the market and, it is able to estimate reasonably the financial solvency of the buyer or seller on
credit.
The initial guarantee required nowadays for this kind of operations reaches 25% of the
total cash of the operations, in both, buying or selling operations. However, this percentage has
been adapted as the economic and financial circumstances have required (35%, 50 %, ...).
The Ministerial Order of 25 March 1991, Article 4, paragraph 2, regulates the additional
guarantees recoverable by law for the investor (M.O. 03/25, 1991). The investor will provide
additional guarantees at the moment when the decrease (during the purchase) or the increase
(during a sale) in the quotation value of the securities purchased or sold is higher than 10%.
The total amount of guarantees must cover 25% of the cash value (buying or selling) in
every moment, plus the loss derived from the difference between the operation price and the
initial price of the transaction (Suarez, A., 2005). These variations in the rates affect both the
initial and additional guarantees highlighting the fragility of the law framework concerning the
objective quantitative measurements to prevent risks. Consequently, it seems necessary to
arbitrate a measurement system to evaluate the variable, which defines the contribution of
additional guarantees, collecting the variability that exists in determining them in order to get a
more realistic and reliable measure of complementary guarantees.

THE DENSITY FUNCTION AS A STOCHASTIC DETERMINATION OF
ADDITIONAL GUARANTEES

For the determination of the measurement system to calculate a more reliable measure of
complementary guarantees, we will start observing to the limits imposed by the Ministerial Order
of 25 March 1991 and the contributions established by the corresponding governing entity.
199


Thus, in the case of a purchase, borrowers must to provide additional guarantees for the
purchase positions, qualified as outstanding payments, corresponding to the securities of which
prices have fallen down more than 10%. The dates to calculate the additional guarantees could be
the date when the operation began or the date when the last replacement of guarantees was
provided. The value of this guarantee is given by the difference between the "current loss" and
the "difference of guarantees.
In order to express this in an analytical formula, the additional guarantee is assumed to be
a random variable that can be determined by the classical concept of the density function and its
intervals to limit its development.
In light of the afore stated, it leads to concrete behavior of the variable "Additional
Guarantee" by the following density function:


Where,
X is the random variable "additional guarantee"
X
0
is the value of the operation at the considered date (the initial date or the date when the
last replacement of guarantees was provided)
Xt is the value of the transaction in a subsequent moment from X
0

Source: Own elaboration.

Likewise, in the case of a sale, the Ministerial Order of 25 March 1991 states that the
seller must provide the additional guarantees right from the date on which an increase in the
price of the securities sold higher than 10% regarding to the last price calculated. The value of
these guarantees is given by the sum of the "current loss" and the "difference of guarantees". In
this case, the density function is as follows:


Where,
X is the random variable "additional guarantee"
X
0
is the value of the operation at the considered date (the initial date or the date when the
last replacement of guarantees was provided)
Xt is the value of the transaction in a subsequent moment from X
0

Source: Own elaboration.

FUNCTIONAL APPLICABILITY OF THE MEASUREMENT SYSTEM PROPOSED

Once, the instrument of measurement has being defined, it is possible to obtain from it
the whole set of answers to the questions arising from the randomness that exists in this type of
operation.
Thus, there is a special interest to define for the expected values of the additional
guarantees. From the investor point of view, it means the availability of a non-deterministic
information system, which draws a field of action in which the average value of the global
contribution is defined (as a set of contributions).
This definition of the expected values of additional guarantees for buying and selling for
each level of Xo, depending on the concept of mathematical expectation, applied to the variable
200


X through the density function defined, and it could be done by the properties mathematical
expectancy, as follows:
FOR PURCHASES OPERATIONS


Where,
X
0
is a parameter
Xt is the random variable giving the value of trading motivated by the dynamics of the
market
X is the random variable additional guarantees, which is the direct function of Xt by
virtue of the parameter X
0
.
Source: Own elaboration.

FOR SALES OPERATIONS



Where,
X
0
is a parameter
Xt is the random variable giving the value of trading motivated by the dynamics of the
market
X is the random variable additional guarantees, which is the direct function of Xt by
virtue of the parameter X
0
.
Source: Own elaboration.

In a similar way to the application of the concept of mathematical expectation, it is
possible to develop other uses derived from the knowledge of the probability density function,
which could be valid to extend the notion of knowledge of this operation.

CONCLUSIONS

The credit system of the market appears as a financial instrument of increasing use in the
International Financial System, and as a consolidated consideration in the framework of the
Spanish Financial System.
The late adaptation of this instrument to the financial mechanics of the Spanish market,
places its law framework in a context in which development is still subjected to clarification.
In this regard, the concept of additional guarantees requires special interest for both the
financial and scientific communities. The additional guarantees main aspects to highlight are:
201


1. The evaluation through the rough limits of Additional Guarantees quota limit, as it is
established by the Ministerial Order of 25 March 1991, is acceptable from the law
perspective, but not enough from the investors point of view.
2. It seems appropriate to propose a stochastic analysis context for the variable additional or
complementary guarantees, due to the evolution of the stock variables.
3. The concept of the density function is the ideal instrument to describe the performance of
the random variable complementary guarantees, adding the lower and upper limits of the
total probability field in which it is defined.
4. Once the density function is defined, we know the type of information required by the
investors in order to operate in the market will be evident. The concept of the overall
expected value of additional contributions to calculate the guarantee constitutes the main
goal of this research, to improve the decision-making process in the investment activity.

REFERENCES

Amat, O. (2010). La Bolsa: Funcionamiento y Tcnicas para Invertir, 8th Edition. Barcelona:
Deusto S.A. Ediciones.
Bancoval (2010). Credibolsa: Crdito al Mercado de Operaciones Burstiles, Folleto
Informativo, Madrid: Ediciones Bancoval.
M.O., (1991). Ministerial Order of March 25th 1991 regarding to the Credit System in Stock
Market Cash Operations, Madrid: Boletn Oficial del Estado, 8482, 10610-10612.
Retrieved from http://www.boe.es/boe/dias/1991/04/09/pdfs/A10610-10612.pdf
Bolsas y Mercados Espaoles (2009). Informe Anual de Bolsas y Mercados Espaoles de 2009.
Bolsas y Mercados Espaoles. Retrieved from
http://www.bolsasymercados.es/esp/inf_legal/economico/2009/BME_InformeAnual09_
esp.pdf
Cachn, J.E. (1998). La Bolsa y sus Operaciones: Manual Prctico Sobre la Inversin en Bolsa.
Madrid: Dyckinson.
Gmez, I. (2010). La Prima de Riesgo: Ni Tanta Ni Tan Baja, Renta Variable Revista de Bolsas
y Mercados Espaoles. Estadsticas, 185, 38-46. Retrieved from
http://www.bolsasymercados.es/esp/publicacion/revistaOnLine/index.htm
Mateos, P. (1987). Especulacin en los Mercados Burstiles: Crdito al Mercado, Opciones y
Futuros. Perspectivas del Sistema Financiero, 17, 87-107.
Palomo, R. J., & Mateu, J.L. (2004). Productos Financieros y Operaciones de Inversin. Madrid:
Instituto Superior de Tcnicas y Prcticas Bancarias Ed.
Pisn, I. (2001). Direccin y gestin financiera de la empresa. Madrid: Pirmide Ed.
Suarez, A. (2005). Decisiones ptimas de Inversin y Financiacin de la Empresa. Madrid:
Pirmide Ed.

USEFUL LINKS
Organization Internet Address
Spanish Stock Exchange http://www.bolsamadrid.es
Spanish Stock Exchange
Ibex-35
http://www.bolsamadrid.es/esp/contenido.asp?menu=4&enlace=/
esp/indices/ibex35/ibex35.htm
Bolsas y Mercados Espaoles http://www.bolsasymercados.es
RBC Dexia Investor Services http://www.rbcdexia-is.es/
202


1. The evaluation through the rough limits of Additional Guarantees quota limit, as it is
established by the Ministerial Order of 25 March 1991, is acceptable from the law
perspective, but not enough from the investors point of view.
2. It seems appropriate to propose a stochastic analysis context for the variable additional or
complementary guarantees, due to the evolution of the stock variables.
3. The concept of the density function is the ideal instrument to describe the performance of
the random variable complementary guarantees, adding the lower and upper limits of the
total probability field in which it is defined.
4. Once the density function is defined, we know the type of information required by the
investors in order to operate in the market will be evident. The concept of the overall
expected value of additional contributions to calculate the guarantee constitutes the main
goal of this research, to improve the decision-making process in the investment activity.

REFERENCES

Amat, O. (2010). La Bolsa: Funcionamiento y Tcnicas para Invertir, 8th Edition. Barcelona:
Deusto S.A. Ediciones.
Bancoval (2010). Credibolsa: Crdito al Mercado de Operaciones Burstiles, Folleto
Informativo, Madrid: Ediciones Bancoval.
M.O., (1991). Ministerial Order of March 25th 1991 regarding to the Credit System in Stock
Market Cash Operations, Madrid: Boletn Oficial del Estado, 8482, 10610-10612.
Retrieved from http://www.boe.es/boe/dias/1991/04/09/pdfs/A10610-10612.pdf
Bolsas y Mercados Espaoles (2009). Informe Anual de Bolsas y Mercados Espaoles de 2009.
Bolsas y Mercados Espaoles. Retrieved from
http://www.bolsasymercados.es/esp/inf_legal/economico/2009/BME_InformeAnual09_
esp.pdf
Cachn, J.E. (1998). La Bolsa y sus Operaciones: Manual Prctico Sobre la Inversin en Bolsa.
Madrid: Dyckinson.
Gmez, I. (2010). La Prima de Riesgo: Ni Tanta Ni Tan Baja, Renta Variable Revista de Bolsas
y Mercados Espaoles. Estadsticas, 185, 38-46. Retrieved from
http://www.bolsasymercados.es/esp/publicacion/revistaOnLine/index.htm
Mateos, P. (1987). Especulacin en los Mercados Burstiles: Crdito al Mercado, Opciones y
Futuros. Perspectivas del Sistema Financiero, 17, 87-107.
Palomo, R. J., & Mateu, J.L. (2004). Productos Financieros y Operaciones de Inversin. Madrid:
Instituto Superior de Tcnicas y Prcticas Bancarias Ed.
Pisn, I. (2001). Direccin y gestin financiera de la empresa. Madrid: Pirmide Ed.
Suarez, A. (2005). Decisiones ptimas de Inversin y Financiacin de la Empresa. Madrid:
Pirmide Ed.

USEFUL LINKS
Organization Internet Address
Spanish Stock Exchange http://www.bolsamadrid.es
Spanish Stock Exchange
Ibex-35
http://www.bolsamadrid.es/esp/contenido.asp?menu=4&enlace=/
esp/indices/ibex35/ibex35.htm
Bolsas y Mercados Espaoles http://www.bolsasymercados.es
RBC Dexia Investor Services http://www.rbcdexia-is.es/
202

1. The evaluation through the rough limits of Additional Guarantees quota limit, as it is
established by the Ministerial Order of 25 March 1991, is acceptable from the law
perspective, but not enough from the investors point of view.
2. It seems appropriate to propose a stochastic analysis context for the variable additional or
complementary guarantees, due to the evolution of the stock variables.
3. The concept of the density function is the ideal instrument to describe the performance of
the random variable complementary guarantees, adding the lower and upper limits of the
total probability field in which it is defined.
4. Once the density function is defined, we know the type of information required by the
investors in order to operate in the market will be evident. The concept of the overall
expected value of additional contributions to calculate the guarantee constitutes the main
goal of this research, to improve the decision-making process in the investment activity.

REFERENCES

Amat, O. (2010). La Bolsa: Funcionamiento y Tcnicas para Invertir, 8th Edition. Barcelona:
Deusto S.A. Ediciones.
Bancoval (2010). Credibolsa: Crdito al Mercado de Operaciones Burstiles, Folleto
Informativo, Madrid: Ediciones Bancoval.
M.O., (1991). Ministerial Order of March 25th 1991 regarding to the Credit System in Stock
Market Cash Operations, Madrid: Boletn Oficial del Estado, 8482, 10610-10612.
Retrieved from http://www.boe.es/boe/dias/1991/04/09/pdfs/A10610-10612.pdf
Bolsas y Mercados Espaoles (2009). Informe Anual de Bolsas y Mercados Espaoles de 2009.
Bolsas y Mercados Espaoles. Retrieved from
http://www.bolsasymercados.es/esp/inf_legal/economico/2009/BME_InformeAnual09_
esp.pdf
Cachn, J.E. (1998). La Bolsa y sus Operaciones: Manual Prctico Sobre la Inversin en Bolsa.
Madrid: Dyckinson.
Gmez, I. (2010). La Prima de Riesgo: Ni Tanta Ni Tan Baja, Renta Variable Revista de Bolsas
y Mercados Espaoles. Estadsticas, 185, 38-46. Retrieved from
http://www.bolsasymercados.es/esp/publicacion/revistaOnLine/index.htm
Mateos, P. (1987). Especulacin en los Mercados Burstiles: Crdito al Mercado, Opciones y
Futuros. Perspectivas del Sistema Financiero, 17, 87-107.
Palomo, R. J., & Mateu, J.L. (2004). Productos Financieros y Operaciones de Inversin. Madrid:
Instituto Superior de Tcnicas y Prcticas Bancarias Ed.
Pisn, I. (2001). Direccin y gestin financiera de la empresa. Madrid: Pirmide Ed.
Suarez, A. (2005). Decisiones ptimas de Inversin y Financiacin de la Empresa. Madrid:
Pirmide Ed.

USEFUL LINKS
Organization Internet Address
Spanish Stock Exchange http://www.bolsamadrid.es
Spanish Stock Exchange
Ibex-35
http://www.bolsamadrid.es/esp/contenido.asp?menu=4&enlace=/
esp/indices/ibex35/ibex35.htm
Bolsas y Mercados Espaoles http://www.bolsasymercados.es
RBC Dexia Investor Services http://www.rbcdexia-is.es/
202










CHAPTER 12

GLOBAL CORPORATE PR, SOCIAL RESPONSIBILITY,
AND CULTURE

203


PUBLIC RELATIONS EXCELLENCE IN SPAIN: A QUANTITATIVE ANALYSIS

Assumpci Huertas, Rovira i Virgili University, (Taragona-Spain).
sunsi.huertas@urv.cat

Enric Ordeix, Ramon Llull University (Barcelona-Spain)*
enricor@blanquerna.url.edu

Natalia Lozano, Rovira i Virgili University (Tarragona-Spain)
lozano.nlm@gmail.com

ABSTRACT

This article summarizes the analysis of Spains implementation of the main research
parameters carried out in the U.S. by Davis researchers Dozier, James Grunig, and Larissa
Grunig (2002) and published in the book Excellent Public Relations and Effective Organizations
(2002) which explains degrees of excellence in public relations practice in Canada, Great Britain
and the United States. The selected parameters are: symmetrical communication system,
organizational structure, strategic planning and situational theory of publics. In general, one can
say that the results are arguably positive, more accepting these parameters as in the application
itself. Before we can say that the profession enjoys a high level of training, although the
journalism training is dominating, this causes a debate on the current curriculum. In what
concerns our results regarding the parameter symmetry, bidirectional communication is
essentially symmetrical (90%), thanks to the implementation of online communication
systems. In reference to organic and strategic planning, there is a fluid and regular
communication with management, as well as recognition of the strategic functions and
capabilities of the professional activities of public relations. However, in reality, most of the
activities performed by the professionals interviewed are routine ones and the percentage of
participation in strategic planning is not as high as desired. Finally, the main weak point is
delivered by the analysis of public situational theory, showing that in Spain there are insufficient
detailed studies of publics, and even less regarding lobbyists and activists. Thus, although the
Spanish organizations did not acquire indices as high as those reported in the study of
Excellence, it can be seen that the theory and models of public relations raised are widely
accepted both by professionals public relations as the top management. This research has been
done under the umbrella of Repsol-URV Chair of Excellence in Communication and with the
collaboration of Maria Neicu.

INTRODUCTION

Grunig's theory (1992) on communicative excellence assumes that public relations are not
only communication activities, but also managerial and organizational ones. Therefore,
communication professionals should be part of the organizational boards and influence the
strategic decisions taken therein. For this to happen, senior managers must believe in the
functions of public relations and follow the advice of professionals. According to the theory of
Grunig's excellence, public relations can contribute to improving the efficiency of the
organizations, helping reconcile the objectives of the organizations with the expectations of their
204


audiences, especially of the most strategic ones. This contribution has a tangible financial value
for organizations, as they create higher quality and establish lasting relationships with their
audiences. This establishes a two-way symmetrical communication with them, creating a balance
between the interests of both parties and effective relationships that have an improving effect on
the organization, its good functioning and its benefits.

THEORETICAL FRAMEWORK: THE PARAMETERS OF EXCELLENCE

Excellent public relations determines a management that is intentional, structured and
strategic, a developing management level that depends on the organization's most influential
group (dominant coalition), and integrates multidisciplinary functions and activities, but is
separated from roles of other communication disciplines. This entails a knowledge management
system that includes management expertise but which, in turn, allows strategic communicative
symmetry to open up dialogue and understanding between the parties. Public relations also
require excellent communication symmetry with internal audiences as a sign of quality public
relations processes. They must commit to the principles of ethics and social responsibility, which
are extrapolated to the diversity of components of social and organizational environment. In
short, Elizabeth Toth (2009) summarizes the basic principles as follows: 1. The involvement of
public relations in strategic management. 2. The empowerment of the dominant coalition to
public relations or direct relationship with the CEO. 3. The integration of the role of public
relations in the organization. 4. The role of public relations management is separated from other
functions. 5. The public relations unit headed by the director and not by a technician. 6. The use
of two-way symmetrical model of public relations. 7. The knowledge needed to create a
department that can assume both the role of management, as well as symmetrical public
relations. 8. The use of a symmetrical system of internal communication. 9. Acceptance of the
diversity in all functions of the organization. 10. The concern for ethics and social responsibility.
For better development, they have been grouped into four key indicators that define the essence
of the researchers of excellence (Grunig 1992, pp. 16-17): the system of symmetrical
communication, organizational structure, situational theory and strategic planning.
The distribution of the organizations surveyed varies from small to large companies. We
choose most of the organizations from Madrid and Barcelona, as these are the two largest
economic centres of the country, as well as those of Catalonia, where the study was
performed. The type of businesses and institutions selected for the sample is representative of the
various existing economic sectors, equally to the ones represented in the study of Grunig. The
sample of private companies includes the following areas: food, consumer products, energy,
tourism, insurance, banking, pharmaceutical, construction, automotive, logistics, chemical,
communication and entertainment. Public institutions are divided into: policy, education and
health- whether national, regional or local. Finally, non-profit organizations include charitable
and non-governmental organizations, churches and interest groups. Each questionnaire was
addressed to a different figure in the organization: the first was completed by the director of the
organization, or, in his/her absence, by one of the heads of the organization. The second
questionnaire was for the director of communication and the third was directed to one or more
employees, officers or members of the organization. A total of 257 organizations were contacted
by telephone, of which 101 responded to questionnaires. Thus, the final sample of this particular
study is divided into 56 companies, 31 institutions, 5 professional associations and 9 non-profit
205


organizations. The total number of received questionnaires is 277, of which 92 questionnaires are
public relations directors, 74 CEOs and top officials and 111 employees.

RESULTS

It appears that the level of education of the professionals of the organizations surveyed is
not very high and, moreover, these are mostly graduates of journalism. To this we add the low
percentage of membership in professional associations and the minimum subscription to
professional journals. All this shows that the Spanish organizations analysed, in general, do not
have a high rate of excellence with respect to its employees. The relationship between the public
relations department of communication and management of the organization is another key
variable for communication excellence communicative in organizations. Excellent organization
will allow the director of public relations to be part of the ruling coalition of the organization, to
communicate with the public and with the senior management acting as a mediator between them
and participate in making important business decisions, especially strategic ones. The results of
our study show the existence of smooth and regular communication between directors and top
management. The directors of communication (86.4%) and the senior management (by 80.8%)
recognize that the public relations department reports regularly to the management for company's
maximum liability. The issues that the department reports to management are: external
communication (25.8%), internal communication (19.1%) or commercial aspects and customer
service (10.1%). The remaining percentage (44.9%) corresponds to different topics.
Another aspect analysed refers to the extent that the public relations department
contributes to the important functions of the organization. Both top managers and the media
agree that the majority of the department functions are routine operations (85.5%), for example
with regard to the media or the maintenance of internal communication. In a smaller proportion
than the functions responding to social problems (70%), they participate in strategic planning
(68%) or make decisions and participate in major initiatives (68%) and the launch of new
products or services. Thus, although the communication department maintains a smooth and
regular communication with top managers, most of their duties are routine and the percentage of
participation in strategic planning is not as high. However, the communication directors consider
the participation in important decisions of the organization by 75.3%, while the top managers do
consider these in a 70.3%. On the other hand, both directors of communication, like CEOs,
believe that public relations department has the support of management by 86%.
Communication managers say they receive more support from the directors of the
organization in relation to the functions of the media (23.2%), organization of events (18.4%) in
customer service (12.3%) in marketing functions (11.3%), prevention and crisis management
(10.9%) in corporate social responsibility activities (9.4%) and internal communication
(0.4%). Surprising is the low level of support they receive for conducting internal
communications functions in the organizations analyzed, when it comes to one of the largest
public relations activities used by all types of companies and institutions, and having a great
influence for the good functioning of the company. For their part, top executives affirmed that
they spend 6.9 hours a week on topics of internal communication and 8.3 hours for external
communication. 90.5% of CEOs surveyed believe the public relations department of
communication contributes to achieving organizational success. Thus, the results of our study
show that the senior managers fully recognize the importance of public relations for the
effectiveness of their organization; for their part, the communication directors are keeping
206


consistently informed their top executives. However, the percentage of communication managers
who participate in major strategic decisions of organizations is reduced. It seems that CEOs
overwhelmingly believe in the public relations function, but their decision to participate in the
strategic decisions of the ruling coalition decreases in percentage for the organizations surveyed.
Other variables are excellent communication programs, how to carry out and deliver public
relations activities and their relation to various communication models.
According to the theory of Excellence, excellent departments are those that design their
communication programs in the two-way symmetrical model, i.e., those who try to balance the
interests of the organization with the public. The results of our study show that 64.4% of the
communication directors believe that the purpose of public relations is to get publicity, which is
also believed by the senior managers but in a lesser proportion (52.9%). Similarly, in the same
percentages, both sides are saying that public relations and media presence are synonymous
terms. For their part, the communication directors considered (by 97.8%) that the public relations
activity is entirely related to the actions with the media. Thus, it appears that the functions of
media relations are essential in the practice of public relations for the Spanish organizations
analyzed, or at least be considered by the directors of both communication and
general. Considering the importance of the relations with media, it should be emphasized that
there is a low percentage of organizations that are active in communication only from the
perspective of the press agent model.
This model seems central because in public relations it develops a persuasive function,
where the communicators disseminate information through the media always in the interest of
the organization. The results of our study show that only 4.3% of managers surveyed admitted
that communication, among its functions, should be for convincing a journalist to publicize
something about your organization. In addition, only 26.4% acknowledged their attempts to
prevent bad news from reaching the media, and recognizes that accurate information must be
disseminated and unfavourable information should not be offered. Instead, the public
information model is widely used by the organizations analyzed. This is characterized by the fact
that the purpose of public relations is to dissemination of information which is always true and
complete. 73.6% of communication managers say one of the core functions of public relations is
to provide objective information to media organizations.
However, the percentage of organizations surveyed that perform public relations in the
public information model is not very high. 42.3% believed that public relations are more like one
channel of information than a mediator between management and publics of an
organization. And 64.4% of the directors of communication and 52.9% of the senior
management believes that making clipping is the only way to determine the success of public
relations activities. As noted, this model has very high percentages, especially because it implies
a lack of interest in research in public relations practice and knowledge of public and
organizational settings. The results of our study show that only 18.5% of the directors of
communication and 13.9% of CEOs agree that public relations workers have so much work
writing news or producing publications that they can barely do any research. This low percentage
demonstrates the importance of public relations professionals to provide research in order to
better understand the environment and public organizations. In contrast, the two-way
asymmetrical model is the most used by the organizations surveyed. Research is one of the most
valued by the organizations surveyed. 81.5% of the directors of communication and 86.1% of
CEOs believe that research should be done to better determine public relations programs to
communicate and to evaluate them.
207


The results show that communication activities mainly carried out by the organizations
surveyed belong to the two-way symmetrical model. This is the ideal model of public relations,
which are considered an intermediary between the organization and its publics. According to this
model, through research organizations understanding their public and seek mutual
understanding. In our study, 95.7% of the directors of communication and 97.2% of CEOs
believe that the purpose of public relations is to develop a mutual understanding between the
management of the organization and the publics that can affect or be affected by it. Also, with
the same percentage, it is believed that the purpose of public relations is to change attitudes and
behaviour of management, in the same way to change attitudes and public behaviour. A smaller
percentage (81.5% of communication managers and the senior management 86.1%) believe that
before starting a public relations program, attitude surveys should be developed to find out how
our publics understand the organization and how organisation understand themselves. In reality,
this understanding of the relationship between public and organization is seen as the basis of
mediation between them and negotiation in resolving conflicts.95.7% of the directors of
communication and 87.5% of CEOs find that the public relations department should help
management to mediate with the public in the negotiation of conflicts, and to negotiate with
activist groups. From this it follows that the highest percentages in the opinion of both
management and communication general managers indicates preference for the two-way
symmetrical model. Although great importance is attached to public information model, because
of the functions of media relations, which remain widely used by all public relations
professionals of the organizations surveyed, the widely accepted model, with which they
identify generally (over 90% of the respondents) is the two-way symmetrical model.

CONCLUSIONS

After evaluating the different variables that make up the index of excellence of the organizations
from the theoretical perspective of James Grunig, it must be said that the analysed Spanish
organizations are not outstanding in the field of public relations and communication as
initially might seem to be (Cavia & Huertas, 2006). The first variable analyzed, referring to the
profile of professionals engaged in the practice of public relations, shows that although the
degree of higher education is not very low, most of practitioners have a diploma in journalism,
and to a lesser extent in public relations. In addition, members generally have little professional
associations and have minimum subscriptions to magazines and trade publications. Thus, there is
a professional linkage to the field of journalism. We also observe a low level of association, and
a lack of continuous updating of professionals through the latest publications, studies and
theories of the discipline and profession. The second variable looks at the importance of public
relations in the organization through its communication with the senior management and the
importance of public relations departments in the strategic decision-making. The relationship
between public relations and organizational leadership is salient to communication excellence. In
the Spanish organizations, as already mentioned, there is a flow-like and regular communication
between public relations managers and top management. In addition, the majority view is that
public relations departments have the support of management. In this sense, the Spanish
organizations themselves possess excellent rates for this variable. However, in practice, public
relations departments perform mostly routine tasks, and to a lesser extent involved in strategic
planning. Thus, the Spanish organizations have faith in the importance and functions of public
relations more in theory than in practice, because the PR departments participate in strategic
208


decisions of organizations to a lesser degree. The third variable refers to the model used by
public relations organizations (Grunig, 2006). According to the theory of Excellence, excellent
organizations are those that act as two-way symmetrical model. Our results show that the
analysed Spanish organizations are identified mainly with two-way symmetrical model.
However, importance is also given to the public information model by the fact that media
relations are still considered important communicative functions, and two-way asymmetrical
model also has high percentages. But without doubt, far more than 90% of communication
managers and general managers are identified by the two-way symmetrical model. Thus, this
variable does have some excellent high rates in the Spanish organizations analyzed.
Instead, they fade slightly positive results when testing another variable of the theory of
Excellence, the one that refers to the relationship between organizations and activist groups and
pressure. The study found that Spanish organizations analyzed carry very little research about
their publics and environments. This shows that, despite believing in the two-way symmetrical
model, in practice it is not carried out as often. These results are consistent with the opinion of
other authors (Ordeix, 2009), whereby two-way symmetrical model is actually more like an ideal
and normative model of public relations, than an empirical reality. Although the analysed
Spanish organizations have indices not as high when compared to the theory of Excellence, it
does appear that the theory and models of James Grunig's public relations are widely accepted
both by public relations professionals and by the top management. In the practice of
communication may not have been fully implemented, but have been supported as guiding
models. Thus, one might think that in the future, the practice of public relations will advance the
Grunig model of excellence as a guideline to follow.

* Enric Ordeix, is a Member of Research Group on Creativity and Advertising Strategies -
Blanquerna School of Communication-URL

REFERENCES

Cavia, F. J., & Huertas, A. (2006). Centre and periphery: two speeds for the implementation of
public relations in Spain. Public Relations Review, 32(2), 110-117.
Grunig, J. E. (Ed.). (1992). Excellence in Public Relations and Communication Management.
New Jersey: Lawrence Erlbaum Associates.
Grunig, L., Grunig, J. E., & Dozier, D. (2002). Excellent Public Relations and Effective
Organizations. A Study of Communication Management in Three Countries. Mahwah, NJ:
Lawrence Erlbaum Associates, Inc.
Grunig, J. (2006). Furnishing the Edifice: Ongoing Research on Public Relations as a Strategic
Management Function. Journal of Public Relations Research, 18(2): 151-176.
Ordeix, E. (2009). The Excellence Study in Internal Public Relations, An International Paradigm.
Trpodos, 24(1): 41-52.
Toth, E. (Ed.) (2009). The Future of Excellence in Public Relations and Communication
Management: Challenges for the Next Generation. Mahwah, New Jersey: Lawrence
Erlbaum Associates.


209


MANAGEMENT FOR BUSINESS EXCELLENCE: PUBLIC RELATIONS STRATEGY

Rosa M. Torres, Alicante University
rosa.torres@ua.es


ABSTRACT

The present article provides the view of a relational excellence model appropriate for the
business strategy due to its practical application in potential conflicts prevention tasks, in
decision-making and human resources, in marketing strategies for products and services, or in
institutional relations for public/ private cooperation.
This article, based on research studies about business excellence factors, quality systems
implementation, and the role of information and communication policies in quality and
excellence processes, intends to provide the keys to strengthen the management of internal and
external business relations. The techniques for social research consisted of surveys, personal
interviews, corpus research, and group dynamics.

INTRODUCTION

The excellence in business management can be defined as the willingness to do things well. This
categorical assertion does hold some complexity, because doing things right in Management
implies the combination of certain elements such as the culture of the business, the management
styles and the Public Relations.
Public Relations is defined as the management of information and communication
between organizations and their publics, and responds to the philosophical maxim: do the things
right and let the public know. This philosophy of relationism impregnates the internal and
external levels of business organizations.
Public Relations, as a discipline based on Social Sciences, has methodology, techniques
and tools that contribute to establish a relation between the organizations and a great variety of
social actors and special groups of interest, providing the organizations with reliable and steady
social presence.

QUALITY AND PUBLIC RELATIONS. From ISO norms to PR professional activity in a
context of excellence.

To place the professional activity of the Public Relations in an excellence context means to
tackle quality principles from the point of view of this discipline and its practical application in
the strategic management of the organizations.
The satisfaction of needs of external publics as clients as well as the satisfaction of needs
of such internal publics like workers and shareholders, or the relational management with
providers have to do with the effort to meet the above-mentioned interest publics. In the words of
Grunig, we are talking about The Symmetrical model of Public Relations, and in terms of Van
Ruler, we are talking about the reflective role of public relations/communications management
(Gold Paper number 13, 2000).
210


PR NEEDS
PR RESULT

CLIENTS
ASSESSME
NT
CLIENT
CLIENT
FUNCTION
DE RR PP

PR PERFORMANCE ANALYSIS
AND IMPROVEMENT
DEL RENDIMIENTO
IMPLEMENTATION
PR ASSESSMENT

DE RR PP
FUNCTION
DE RR PP
PROPOSAL PLANNING
PROGRAMME
PRODUCTION
DESCRIPTION
REPORTS
BRIEFING PROCESS
On the other hand, Gold paper 10 (1994) of International Public Relations Association,
IPRA, was dedicated entirely to quality: Quality Customer Satisfaction Public Relations: New
directions for organizational communication.
The paper dedicates a section to the application of quality to communications (How
quality applies to communications) and states that quality for public relations means to know
who the publics are, their needs, what features respond to their needs, and from their role in the
communication management to be able to product those features.
In this way, quality turns into a communicative concept for the organization, and covers:
9 The intention of the sender (persuasive communication)
9 The strategic seizure of target groups.
9 The context of the situation and the prevention of potential conflicts.
9 The context of the message.
9 The choice of media.
9 The effects feedback.
9 Public image and social presence.
9 The evaluation of activities and results.

Thinking in terms of quality management is to think about procedures or about the way in which
things can be done. Regarding quality norms philosophy, it means to try certain ways of doing
things so that the organization could reach the quality target: effectiveness, competitiveness and
profitability. Gold paper 10 formulated a proposal to explain and to apply what is called public
relations quality loop (Figure 1).

FIGURE 1. QUALITY LOOP IN PUBLIC RELATIONS




















SOURCE: GOLD PAPER, 10 IPRA, QUALITY SATISFACTION PUBLIC RELATIONS. 1994.
211


From a managerial perspective it is possible to relate the interpretation of 12 general
principles for excellence in Public Relations and Management (Grunig, 1992) to the fundamental
activity of the discipline in organizations as it is shown in the following table (Table 1).

Excelence Public Relations PR Fundamental activity in organizations
1. Adequate MIX
between symmetric and
asymmetric models
Formative and evaluative research
Negotiation between organization and publics
Balance
2. Strategic
management
Bidirectional communication
Conflicts prevention
Conflicts management
3. Participates in
Management.
It is part of the Decision-making Organs or at least
cooperates with them.
4. Management
function of technical
application.
Leadership management by means of communiation
tasks and skills.
Decisison-making process.
Management to optimize resources.
5. Asymmetric scheme
of Strategic Management
with models of bidirectional
communication.
Communication management to understand publics
attitudes and to modify attitudes of these publics.
6. Symmetric scheme
of Strategic Management
with models of bidirectional
communication.
Management of mutual understanding communication
to encourage co-orientation and cooperation and to
consolidate relations network identity. The organization
strategically adapting itself to environment.
7. Marketing
distinctive function.
Organization Publics.
8. Function with its
own identity in its relation
with publics.
Proactive and flexible management to organize
resources according to changes in environment.
9. Promotes equal
opportunities
Social and Public Responsability.
10. Management
support
Legitimation of decisions.
11. Operates more in
the participative culture of
the organization than in the
authoritarian culture.
Communication management based on active listening
and on delegation.
12. Capacity of dealing
with turbulence
environment.
Proactive Public Relations and the prevention of
potential conflicts.
212


A TRANSLATION FROM THE THEORETICAL CONCEPTION OF PUBLIC
RELATIONS TO ITS IMPLEMENTATION

Theoretical Conception
The action of relating comprises, from a theoretical- practical point of view, three key
elements, namely (Noguero, 1995)
a) The study of relations.
b) The technique of relations.
c) The politics of relations.

By study of relations we understand the management of previous processes, which allow
the person in charge of relating to diagnose situations of informative-communicative symmetry
and therefore of balance and vice versa, so that potential conflicts could be avoided. We talk
about the formative research, which will provide at least the basic information to define and to
shape the politics of relations.
By technique of relations, we understand the set of techniques used in Public Relations
discipline on the base of the Social Sciences, through which the professional activity enjoys
efficacy and efficiency in its social function of doing things right and let them know, looking
over the public image of the company.
By politics of relations, we understand the strategy and norms for the suitable
management of information and communication with the publics to achieve reliable social
presence thanks to the generated relational capital.

The translation of the theoretical conception into a process
The strategic Public relations management might be represented in accordance with a
logical pattern and essential components in the following way:
Do things right Let them know Do things right
and let them
know
FIGURE 2. OWN ELABORATION.

213


The flowchart shows the process in stages and its correspondence with the philosophical
maxim of Public Relations, that is to say, first to do it right and then, when it corresponds, to let
them know about it, so that false expectations are avoided. So it shows the evolution of the
RACE (Research, Action, Communication, Evaluation) approach to ROSIE approach which
includes (Objectives, Strategies, and Implementation) (Seitel, 2002).
In the evaluation phase it is highlighted that this one must be orientated not only to the
traditional ROI system (Return On the Investment), whose financial indicators are sales,
expenses or benefits, but also to ROE (Return On the Expectations) based on non-financial
indicators such as credibility, trust, and reputation. The use of the appropriate techniques of
social research should facilitate information of the cause-effect relation, before and after the
application of Public Relations programs.

The translation from process to implementation.
All the communicative actions that appear in a company come from the application of the
strategic decisions taken and agreed in team taking into account a number of social variables
(Arceo, 2004).
The relevance of Public Relations in the above-mentioned strategy for the public image
through the informative-communicative management is demonstrated since on the one hand,
organizations need to create bonds and strategic alliances with groups of interest in order to
reach its targets without impediments bearing in mind the considerations of ethics and of good
governance. On the other hand, Public Relations develop strategic and tactical approaches that
contemplate the use of techniques and tools to generate the above mentioned bonds and alliances
and to reach the targets for relational capital that the organization needs. The correspondence
between the organizations targets and needs and the contribution of Publics Relations theory
and techniques is shown in Figure 3.



















FIGURE 3. SOURCE: OWN ELABORATION.

Public Relations
Strategies
Tactics
Techniques
Tools
Bonds
Trust
Strategic Alliances
Social actors
and
Groups of interest
Organization

Business targets and
Relational Capital
targets.
Convergence between theories
214


Modern theories of management and good governance recommend strategies for creation
of networks and strategic alliances based on trust and on the establishment of bonds with social
actors and groups of interest. As far as design or formulation of strategies is concerned, the
relational strategies are a point worth considering. All Publics with which organizations build
relationships, form an opinion that will influence their attitude towards the organization (Rios,
2001). In this sense, the strategy for excellence in communication, in order to generate
sustainable relational capital, passes through the reflection of issues related to current social,
political, and cultural moments (Costa, 2010).
In essence, we relate to achieve the interest, confidence, and identification of our public
(Mercado, 2002), and public relations theories and models offer appropriate strategies, tactics,
techniques, and tools (Wilcox, Ault, Agee, & Cameron, 2001) to achieve targets, trust and to
establish bonds with social actors and groups of interest for the organization, thanks to its role of
prevention of potential conflicts when the power relations are unbalanced and the
communication is eminently asymmetric. Public relations contributes to the development of
business through the generation of important relational capital when the unbalance is avoided or
the balance is recovered.
The application of Public relations in business strategy can be summarized as a practical
conclusion, in Table 2 Public Relations in Business Strategy.

BOOK REFERENCES

Arceo Vacas, J. L (2003). Perfil de los profesionales de la comunicacin persuasiva en Espaa.
ICIE. Universidad Complutense de Madrid.
Costa, J (2010). La comunicacin. 10 voces esenciales. Barcelona: CPC Editor.
Grunig, J., & Hunt, T (2000). Direccin de Relaciones Pblicas. Barcelona: Gestin 2000.
MERCADO, S. (2002). Relaciones Pblicas Aplicadas. Un camino hacia la Productividad.
Mxico Thompson Learning.
Noguero, A. (1995). La funcin social de las Relaciones Pblicas: Historia, Teora y Marco
Legal. Barcelona: Coleccin Comunicacin y Relaciones Pblicas. ESRP.
Noguero, A (1998). Programacin y Tcnicas de Relaciones Pblicas. Comunicacin y
Relaciones Pblicas. PPU. Barcelona.
Ries, A & Ries, L (2003) La cada de la publicidad y el auge de las Relaciones Pblicas.
Barcelona: Ediciones Urano S.A.
Rios, S. J. (2001). Relaciones Pblicas. Su Administracin en las Organizaciones. Trillas,
Mxico
Seitel, F. (2002). Teora y Prctica de las Relaciones Pblicas. Madrid. Pearsons Education.
Wilcox, Ault, Agee, & Cameron (2001). Relaciones Pblicas. Estrategias y Tcticas. Pearson
Educacin. Madrid. Sexta edicin.

ARTICLE REFERENCES

INTERNATIONAL PUBLIC RELATIONS ASSOCIATION. IPRA
Gold Paper number 10: Quality Customer satisfaction Public Relations. 1994.
Gold Paper number 13: Challenges in Communication. 2000.

215


PUBLICS RELATIONS IN BUSINESS STRATEGY
What? Why?/What for? How? What tools?
STRATEGY TACTIC TECHNIQUE TOOL
Excellence
Proactivity
Service Quality
Optimize resources


Prevention
Identify common and
different interests.
Transversal
management
Type: Management
Planning
Negotiation.
Management procedures
design, agreed.
Activities Program
Prevention of potential
conflicts. Quality
management guide.
Certification and letter
of services.

Co-orientation with
actors and groups of
interest
(Publics)
Getting to know
publics.
Classify publics
special attention to
opinion leaders.

Pulsar Public Opinion.
Type: Management and
Written
Formative research. Documentary research:
Social communication
media, specialized and
field publications.
Questionnaires.
Protocols for group
dynamics and interviews.
Publics map.
Dynamize actors.
(Publics)





Raise awareness.

Social Responsibility
and Public interest.

Social capital
construction.
(Relational)
Type: Management and
audiovisual
Institutional relations.
Implication.

Special Events




Information/communication
Cooperative Network
for the Exchange of
experiences.
Associations meetings:
Citizen participation
conferences.
Recreational/
Educational Activities.
Social communication
media and on line
resources.


Social Presence






Combination of
symmetric and
asymmetric models of
bidirectional
communication.

Not routine actions
(to avoid
conventional models)


Type: Management,
written, and audiovisual.
Socio-cultural intervention
Special Events.

Information /
communication. (let them
know).



Evaluative research.

Associations meetings:
Activities that combine
useful with expressive
actions
Social communication
media and online
resources.

Control systems and
evaluation of the
perception of business
social presence by
actors and publics


Source: Own elaboration

The chart reflects the implementation of Public Relations strategy in the field
of the Business management, on having associated strategy-tactic-technique and
tools in the Management for the Business excellence frame.








216


PUBLICS RELATIONS IN BUSINESS STRATEGY
What? Why?/What for? How? What tools?
STRATEGY TACTIC TECHNIQUE TOOL
Excellence
Proactivity
Service Quality
Optimize resources


Prevention
Identify common and
different interests.
Transversal
management
Type: Management
Planning
Negotiation.
Management procedures
design, agreed.
Activities Program
Prevention of potential
conflicts. Quality
management guide.
Certification and letter
of services.

Co-orientation with
actors and groups of
interest
(Publics)
Getting to know
publics.
Classify publics
special attention to
opinion leaders.

Pulsar Public Opinion.
Type: Management and
Written
Formative research. Documentary research:
Social communication
media, specialized and
field publications.
Questionnaires.
Protocols for group
dynamics and interviews.
Publics map.
Dynamize actors.
(Publics)





Raise awareness.

Social Responsibility
and Public interest.

Social capital
construction.
(Relational)
Type: Management and
audiovisual
Institutional relations.
Implication.

Special Events




Information/communication
Cooperative Network
for the Exchange of
experiences.
Associations meetings:
Citizen participation
conferences.
Recreational/
Educational Activities.
Social communication
media and on line
resources.


Social Presence






Combination of
symmetric and
asymmetric models of
bidirectional
communication.

Not routine actions
(to avoid
conventional models)


Type: Management,
written, and audiovisual.
Socio-cultural intervention
Special Events.

Information /
communication. (let them
know).



Evaluative research.

Associations meetings:
Activities that combine
useful with expressive
actions
Social communication
media and online
resources.

Control systems and
evaluation of the
perception of business
social presence by
actors and publics


Source: Own elaboration

The chart reflects the implementation of Public Relations strategy in the field
of the Business management, on having associated strategy-tactic-technique and
tools in the Management for the Business excellence frame.








216


THE ABC (ARGENTINA, BRAZIL AND CHILE) OF PR IN LATIN AMERICA

Macarena Urenda S, DUOC-Universidad Catlica, Via del mar, Chile
murenda@duoc.cl


Latin America is a vast continent, complex and diverse in is political, socioeconomic and
cultural aspects. Because of this, it is difficult to make an exact diagnosis of what the birth,
evolution and development of Public Relations in this region has been. For the following
presentation regarding the state of the art of PR in Latin America, three countries have been
considered: Argentina, Brazil and Chile, which given their development allow a clear global idea
of the evolution of this discipline in the continent even if partial and therefore not susceptible to
generalizations. Indeed, a look over the historical development in this three countries allows to
recognize the presence of certain common variables that have influenced (and sometimes
coincided) in the origin, unfolding and actual state of this discipline. This presentation, which
aims to describe in a very brief way the characteristics that the profession has acquired in
Argentina, Brazil and Chile since it first began in the 1950's, up to its actual state, has its main
limitation in the difficult access to sources, owing to the scarcity of written information,
particularly in Argentina and Chile, to account for the discipline's development.

ARGENTINA: HISTORIAL APPROACH

During the 1960's, the Argentinean companies' public relations departments functioned in
a manner very similar to the present time. In almost all of these departments there was an internal
communications area that was dedicated to generating in-house publications, given the large
amounts of employees companies usually had, which became characteristic of PR during that
time. There was the beginning of an intense academic activity in the Public Relations area. The
first National Public Relations Congress was organized and the first Public Relations school was
founded, with a learning program that would later constitute the basis for university level
education in the discipline (Lpez, 2000). From the School emerged the second entity that
nucleated PR experts, the Argentinean Public Relations Professionals' Circle, and then the
Graduated College. There was also the apparition of the first specialized books and journals. The
60's constitute a hinge for Public Relations in educational matters, when the career is first offered
at a university level. The two pioneering higher learning institutions were UADE, in 1964, and
J.F. Kennedy University, in 1968. Gradually other institutions started offering the degree as they
understood the need of forming professionals in this area. Currently, the degree is offered as a
Graduation in Public Relations (4 to 5 year degree, equivalent to a M.Sc or M.A.). The following
institutions offer the degree, in addition to the previously mentioned: Universidad Nacional de
Lomas de Zamora, Universidad de Morn, Universidad Siglo 21(Crdoba), Universidad
Champagnat(Mendoza), Universidad de Palermo, Universidad Catlica de Salta(Salta),
Univesidad Catlica de La Plata(La Plata), Universidad de Belgrano, Universidad de la Marina
Mercante, Universidad Nacional de la Matanza, Universidad del Salvador and Universidad de
Ciencias Empresariales (Consejo Profesional de las relaciones pblicas argentinas, 2009).
Between 1979 and 1983, the practice of Public Relations was strongly limited by the
situation the country was going through. Economical instability accentuated the importance of
217


companies' financial departments, eclipsing the role played by communications in enterprise
management (Lpez, 2000).
However, as of the 1980's this panorama would change since the democratic context, a
freer trade and an increase privatization resulted in a sophistication of Public Relations activities.
In addition to this, there was the opening of local offices by the world's leading public relations
consulting firms. Handling of press relations appears as the primary activity, financial
communications came in second place, then strategic planning, crisis administration, in fifth
place the organization of events, consulting and lastly training.
Although the first Argentinean Public Relations consulting firm was created in 1961, the
largest development in this area began in the 1990's. The privatization policy exercised by the
government resulted in the arrival of foreign capitals. Numerous multinationals arrived in the
country and, with them, international public relations consultants. New national consulting firms
where created in parallel and existing ones strengthened their position. At the moment there are
more than eighty consulting firms in the market , and the thirty most important and prestigious,
national and international, are active members of the Argentinian Public Relations Professional
Council (Consejo Profesional de Relaciones Pblicas de la Repblica Argentina, 2009).
Being that business firms are the initial motor of the profession in this country, in the last
year there has been corroboration of a change in the life of companies, which have intensified the
importance of institutional communications in the corporate world. The communication directors
(DirComs) have requested and obtained larger resources for the development of communication
strategic plans. Currently, it is acknowledge than during times of uncertainty the most important
intangible asset of an organization is its image and therefore companies have prepared
professional teams to plan, project and protect it.
Summing up, public relations are a relatively new activity in Argentina, which for the
moment does not have precise figures describing its size. Professionals work in companies or in
consulting firms gathered mostly in Buenos Aires. A significant number works for leading
businesses or in the public sector. The most common practice is the handling of press relations.
A limited number of consulting firms offer a wide variety of services that are actually not as
specialized as those offered in the United States. The most important areas are media relations,
lobbying and financial communications. On the other hand, crisis administration, event
organization and training are amongst the less required. Public relations are still oriented more to
the realization of specific actions rather than to the development of mid or long term strategies.
Proactive public relations are still to become institutionalized. Women represent about 90% of
university students in the area, but there aren't many female top company executives. However, a
large amount of women can be found in middle management or in charge of their own consulting
firms.

BRAZIL: HISTORIAL APPROACH

Brazil stands out as a pioneer in the practice of public relations in comparison to other
Latin American countries for its history and trajectory. Between the 1910's and the 1940's
exercise in the field was restricted to a few international companies and the creation of some
public information sectors in governmental organisms. During the 1940's courses administered
by the Getulio Vargas foundation at the Pontifical Catholic University of Rio de Janeiro
(Pontifcia Universidade Catlica do Rio de Janeiro) started being promoted, with the objective
of training the professionals practicing public relations at the time in public and private
218


enterprises. From the courses' attendants emerged a group that in 1950 decided to form the
ABRP, the Brazilian Public Relations Association (Associao Brasileira de Relaes Pblicas).
The Association had a preponderant role in the development of the activity in Brazil, bringing in
foreign specialists such as Harwood L. Childs, Eric Carlson and Neville Sheperd. As stated in
2003, 'Nobody can deny the important role of the ABRP in the development, consolidation and
institutionalization of PR in Brazil'.
In the 1950's and 60's there is a period of great governmental economic activity. There's a
sprout of public relations departments in organizations like the national steel company
(Companhia Siderrgica Nacional, 1950), General Motors Brazil(1962), Pirello (1963), the
Federal Railway Network (Rede Ferroviria Federal, 1968) and Sanbra, the brazilian north-
eastern cotton society (Sociedade Algodoeira do Nordeste Brasileiro , 1969) amongst others. At
the beginning of the 1960's there where important happenings in Brazil that have marked PR
activity till present day. In 1962 Cndido Teobaldo de Souza Andrade released the first PR book
in Latin America entitled 'To Understand Public Relations' ('Para entender las Relaciones
Pblicas'). This work, fruit of his work in Brazil since the 1950's, tried to synthesize the primary
concepts of the activity. At the time, a newspaper in Sao Paulo commented the book thus:
'Teobaldo de Souza is the indigenous pioneer of Public Relations in Brazil'.
According to Pazito (2000), the 60's were also known as the Lead Years because of the
instauration of authoritarian regimes. The military governing Brazil since 1964 resolved to
control the country's whole communications system through the dictation of laws and decrees,
seemingly with the objective of protecting the exercise of communication activities. On
December 11th, 1967, the government created the law n5,377 which disciplined the exercise of
Public Relations. Its purpose was to define the profession, regulating who did what. In the
remaining Latin American countries in which PR practice had already started there were no such
professional regulations. So, under military rule, Brazil became the first country in the world to
adopt a legislation specific to Public Relations. That same year, the school of arts and
communications of the Sao Paulo University instituted the first university level PR course with a
duration of four years. With the exception of Brazil, which created the University course by
governmental decree in 1967, all the other Latin American countries would institute technical
courses.
This way the twentieth century ended with a large influence of the globalization
phenomenon and the technological advancement which speed up organizational processes by
accelerating the transmission of data and information. This influences provided a development in
electronic tools of communication in companies as well as new areas of performance, giving new
spaces to PR professionals. In relation to University formation, statistics show a vertiginous
increase in superior courses offered by Brazilian universities. Being an 80% institutions of a
private character. In 1993 there were 53 courses being offered, raising to 72 courses in 2003 and
106 courses in 2007. Conforming to data from the Ministry of Education, the courses have also
provided a foundation for the sustenance of professional exercise.

CHILE: HISTORIAL APPROACH

According to Brbara Dlano (1992), in Chile the exercise of Public Relations as a liberal
profession dates back to 1950, when two pioneers in the matter, Mario Illanes Peafiel and
Ramn Corts Ponce, contributed the first advancements in the field, one in the PR department
of the Branden Cooper Company and the other in a particular Public Relations consulting office,
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which attended to important clients, mainly private industries. As early as 1954 the discipline
was amply known and deserved the respect of important institutions. It must be noted that the
organic Couriers and Telegraphs law of 1958 contemplates the mandatory existence of a PR
department, fixating its duties by law.
As a result of this consolidation process, in September 1959, the Republic's Comptroller
General dictated that the title of licensed journalist entitled its possessor to exercise PR related
positions in any public, semi public, municipal or autonomously administrated institution. The
1970's and 80's where decades marked by the military dictatorship which influenced the
development and practice of Public Relations. For some, the military period was positive
because it made possible the legitimation of PR since the economic openness helped the country
move from a closed trade model to an open and globalized one, in addition to considering
privatization as a strategic force which detonated growth. That is the view of Brbara Delano,
who asserts that the big transformations begin during the military government when it decides to
insert itself in the international context as part of its economic policy. 'It must be remembered
that in the 70's there was practically no exportation. Nowadays on the other hand there are
exports to the rest of Latin Amrica, Europe and the United States, each comprising about one
third of total exports. Today an insertion in international commerce has been accomplished that
is based largely in that policy of economic internationalization (Urenda, 2006). The superior
education law from the beginning of the 80's also gave a strong impulse to the
professionalization of the Public Relations career, as it facilitated the formation of professionals
in institutes and universities. The great political transformations towards the end of the 1980's
and the 90's also accelerated to process of privatization, which brought foreign companies of
international prestige and experience. Such transformation propelled organizations on one side to
incorporate new models of enterprise management and, on the other, to incorporate
communications as part of their strategy. Those companies that are inserted today in the
international market, required a path that implied not only a specific technical competence, but
also a communicational expertise. Therefore it is possible to recognize the existence of a political
and communicational labour during the mentioned period (Urenda, 2006)
A explosive growth provoked among other consequences, that some tasks could no
longer be assumed internally by the companies, having to resort to external consulting. Thus it
emerged a new development field for communications which paradoxically will not always be
filled by professionals from the PR area (Eyzaguirre, 1997). Despite the fact that, as was already
mentioned, the Public Relations career was imparted for the first time by the International
Education Institute in 1965, it was in 1980 with the creation of the new Superior Education
System, that professional formation of PR professionals became systematized and began to be
offered by professional institutes and private universities. (According to data from the Superior
Education Council, in the Ministry of Education website, 2004, there are 21 higher education
centres offering the career). The 1990's also promoted growth in the communications sector,
which attracted an important number of international consulting firms which established in Chile
to attend, together with the growth of local agencies, not only large companies but also mid and
small sized ones, which was furthered by the openness of the Chilean market and the forming of
trading relations with Asian countries. The principle that underlies the establishing of these
consultants is the understanding of communication as a tool of business management. Starting
from this basic premise, consulting firms state that in an increasingly complex, globalized and
competitive market, companies and institutions need to relate properly to different target publics,
which continually evaluate their commercial and corporate behavior. From this it follows that the
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adequate management of corporate image and reputation of businesses is a primordial asset on
which is sustained, to an important degree, the accomplishment of institutional and commercial
goals. This management cannot always be tackled in its entirety by a company's PR department,
since it requires a multidisciplinary team composed of professionals coming from the
communications field such as publicists, journalists, PR executives, etc, and also of diverse
specialization areas such as statistics, law, history and others. The need of professional
management in the communications area previously signaled is referred mainly to the large and
middle sized companies. Statistics indicate that in Chile only 0.7% of companies can be
considered large, and they generally have a PR department, which depends from the Public
Affairs department and this, in turn, from the Corporate Affairs Management. Those companies
or entities that qualify as SMEs, comprising 10.4%, generally don't posses a Public Relations
department (Yaez, 2003).
In virtue of all this it is possible to assert that the communications industry in Chile
continues to be atomized, since even if there are more than 60 companies dedicated to this field,
there are few likely to consolidate due to not all of them have the capacities of the sophisticated
international level industry, namely: Direct communication, community work, internal
communications, Crisis handling, Lobbying, etc. Lobby for example is a capacity which is only
offered by the consulting firm of Enrique Correa, former Minister and expert international
consultant (Rojas & Urenda, 2004; Urenda, 2005). Seemingly, only the larger consultants with
international alliances such as Burson Extend or Hill & Knolton Captiva, to name the most
famous, can offer a wide variety of service comparable to what is common in the United States.
Despite observed advances, according to Matas Cartajena, strategic communication is 'super
prehistorical in Chile'. Nowadays in the national market there are a large number of companies
dedicated to consulting which only work in media relations (Urenda, 2005). Another weakness
of the Chilean communications industry is that there's still a lack of ability to make its work
tangible as the advertising industry does (Urenda, 2006). The intangible is all the corporate
image work and the relation with stake holders. 'If you decide to measure it, is expensive, and the
local industry is not mature enough to do it. There's a lot of work in this on both the quantitative
and qualitative levels of research.

CONCLUSIONS

From the facts examined in the preceding historical reviews it can be said, as a first
conclusion, that even though the profession has made great advancement in this three countries,
its development has yet to reach a mature state. There is, in effect, still a long way to go and it is
possible that phenomenon, such as globalization and the intercommunication amongst different
countries, will bring about a sizable growth in the profession.
On the other hand it must be noted that historical and political context has strongly
marked the evolution of the profession in the three countries mentioned, being the 1960's in
Brazil, 70's in Argentina and 80's in Chile the hardest decades since due to the authoritarian
government regimes that were in place on those three countries, the development of Public
Relations became more difficult than before.
Foreign influence has come particularly from the United States, especially in Chile and
Argentina. Actually, the North American way of doing PR invaded the industry, in particular
through the arrival of the great companies since its inception and more recently with the
globalization phenomenon, with consulting firms and large international firms. An exception
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must be made for Brazil, the only country that developed research of its own which allowed it, if
not to break with completely, at least to differentiate the North American way of doing PR from
what is gathered by their own cultural studies.
Professional associations in Chile and Argentina are not strong and don't attract
membership, especially amongst the younger generations. In the case of Chile, with the changes
in legislations dealing with kind of organizations, there has been a loss of power of guilds over
their affiliated membership. Brazil stands out in the Latin American context for its bigger
theoretical production and for a stronger professional association. It is, in fact, the only Latin
American country that has exerted its influence on the academic development of southern
countries.
The professional market is diverse and it is composed of many professionals coming
from other disciplines. Particularly in Chile and Argentina, professionals from other fields can
still be observed carrying out Public Relations tasks, a phenomenon likely originated in the way
the profession emerged in these countries.
Finally, regarding theoretical research on the discipline, the case of Chile seems to be the
most critical. There is no evidence of a local circuit of theoretical production in this country and
there are scarce publications about the profession. This is probably due to the fact that in Chile
the profession is established mainly in superior education institutes as opposed to universities.
This institutions orient the academic development of Public Relations to a more tactical and
operative vision, rather than a strategic and investigative one, aiming to form professionals that
will occupy middle management positions. Consequently, in Chile the professional market of
managerial level or strategic consulting is still filled to a large degree by individuals coming
from other professions.

REFERENCES

Consejo professional de relaciones Pblicas de la Repblica Argentina. (2009). Brochure
Institucional retrieved from www.rr.pp.org.ar
Dlano, Brbara (1992). Las Relaciones Pblicas en Chile: fundamentos prcticos y tericos.
Santiago de Chile: Editorial Universitaria.
Eyzaguirre, P. (1997). Manual de Relaciones Pblicas. Santiago de Chile: Editorial Calicanto
Lpez A. M. (2000). La historia de un Boom. Revista Imagen: Year 5, 43, 140-160.
Ministerio de educacin de Chile. Retrieved from www.mineduc.cl
Pazito, B. E. (2000). Desafo de las Relaciones Pblicas en Brasil ponencia presentada en el VII
congreso iberoamericano de communicacin y RR.PP. Espaa.
Rojas, G. & Urenda, M. (2004). Plan de desarrollo carrera Relaciones Pblicas documento
Interno. Santiago: DuocUC.
Urenda, M. (2004) Orientacin de Valores y Responsabilidad Social Empresarial: una nueva
mirada de las Relaciones Pblicas? II Symposiu on Public Relations and Business
Communication in buenos Aires.
Urenda, M. (2006). Relaciones pblicas en Chile document interno Via del mar carrera RR.PP.
DuocUC.
Yaez; Eugenio (2003) Manual De Etica De Relaciones Publicas. Documento Vicerrectora
Acadmica, Direccin de Formacin General. Santiago de Chile: DuocUC. Versin
A/2003.
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ESSENTIALS OF MANAGING SOCIAL COMMITMENT AS A STRATEGY TO
ESTABLISH PRINCIPLES OF THE ORGANIZATIONAL CULTURE

Enric Ordeix, Department of Communication-Ramon Llull University
enricor@blanquerna..url.edu

Jordi Xifra, Department of Communication-Pompeu Fabra University
jordi.xifra@upf.edu


ABSTRACT

The research wants to discover a bit about what drives the philosophy of an organization
when it faces the daily collective work and what is behind the general behavior of solving
situations which affects the whole company or institution. In this sense, the present work would
like to find the links between the corporate philosophy and the social commitment when dealing
with employees and how these links affect the social support and legitimacy of the organization.
This topic has a central point of analysis: the alignment between corporate and social values; and
how this alignment improves the tight and symbiosis with both sides: the organization and the
community.
This society-company symbiosis, when is successful, is often driven by the employees,
more than any other components of the company, like the CEO. In spite of it, a basis and
facilities is required. When this happens and values are aligned, means that the company uses
excellence parameters in its work. We want to know what are excellent and what are not, as well
as the principals of internal relations. We think the public relations practice is a good way to
approach us to these principals, when working with the Excellence Study directed by James
Grunig (1992).

DISCUSSION

Our main goal is going through many components that set the culture of an organization.
We want to set the management factors, as well as the social, political, economical and
environmental factors as much as possible. Due to the unlimited elements that affects the
personality of a company or organization it will be difficult to analyses them all. Our goal is to
identify only those that are related to the building of the values and the corporate commitment.
So then, the specific goals of the research are:
To relate Public Relations within human resource and employee management
To consider Public relations as a way to build up the identity and common values in a
organization
To study reasons why organizations should develop excellent public relations from deep
inside towards the external publics.
To link organizational culture principals with the Public Relations practice
To approach values and commitment with organizational attitude as the first step of the
organizational philosophy.
To set the reason why a company needs to be socially committed

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METHODOLOGY

Once we have explained the most important tendencies and challenges to front in the
management field, it is required to discuss about the system theory and the link with the
corporate and organizational culture essentials. Nevertheless, we are considering the internal and
the external side of the commitment as the basis of the corporate building and linked with the
knowledge management, competence management and Corporate Social Responsibility, among
other issues.
From this point, the research sets the indicators to find the essentials of the commitment
as a first step to define the questionnaire for a practical and field analysis. This list of indicators
would not have any sense without the comparison with other indicators that analyze similar areas
of the organizational commitment and the personality building. Therefore we cannot avoid a very
important study in the Public Relations field that framed and inspired our research: The
Excellence Study directed by James and Larissa Grunig and David Dozier. In this manner, we
are finishing the present research with getting the most significant parts of this study to enlarge
our own.
In this sense, we have made an approach to the hypothesis by using the Excellence
Study. We reviewed the principal literature of the field related to Organizational Culture,
Internal Public Relations and Organizational Management. We followed up the most important
theories that imply the corporate personality building and how this effects the organization
internally and externally.

HYPOTHESIS

This research is based on the consideration that the character of the organization depends
on so many elements and conditions related to public relations practice. The practice of PR can
help on building the organizational culture, which enlarges the personality and the internal
employees cohesion. The research defends the idea that managing essentials of commitment can
help us achieve for what we call The Corporate Personality Building or, equivalent, the
organizational culture principals.
The singularity of this study lies in the conversion of the components of organizational
culture, already profiled by a number of academics and business consultants in specific elements
of analysis that constitute a model of efficient management of internal relations, associated the
basic approach of the principles of "Excellence in Public Relations and Communications
Management (Grunig, 2000). This study, funded by the foundation of the International
Association of Business Communicators has been discussed and studied by most researchers and
educational institutions that provides university profiles of Public Relations. Therefore, the
analysis model proposed arises from relevant international and academic - while the sides feature
the country's socio-apply, and the terminologies and concepts derived from the framework.
The context or frame of reference is tied to public relations and, consequently, to
corporate communication. The research flows and lines of thought in which is based in the
present study are curly and specifically inspired by the theories raised in the "Excellence Book,"
project that deserves a worldwide recognition in the academic public relations and marking the
foundation of the management of internal relationships and communication in organizations
(Grunig, 2006). The scientific perspective is within the social sciences and especially in the
context of sociology, a view that joins this author with his research director.
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The inertia of the market environment and also affect the interest shown by the
investigator, because in the past ten years, companies have more department of communication
and public relations departments, than ever before, to make specific range of applications and
functions within of internal communication. This study makes a brief approach to the most
recent studies indicate that so with the intention of showing the inertia and the communicative
activities in the emerging field of internal relations.
This paper therefore seeks to bring order to the multitude of articles and research which
aims to influence the attitude of internal entities, its relationship between its members, its
communication channels and processes. A sea of research using, often without an order of names
that seem contradictory but with many conceptual similarities (Heath & Coombs, 2006; LEtang
& Pieczka, 2006). We hope to better organize this activity informative and analytical standards
from international research in this academic area, and, in turn, these standards do not adequately
adjust for a changing reality and a unique environment.

GENERAL CONCLUSIONS

We stated as hypothesis: The practice of PR can help on building the organizational
culture, which enlarges the personality and the internal employees cohesion. The research
defends the idea that managing essentials of commitment can help us to achieve for what we call
The Corporate Personality Building or, equivalent, the organizational culture principals. But
we still not have enough information to approve this statement, but it seems to happen,
somehow. Anyway, this drives us to set some other subjects as topics to discuss in further
researches.
Nevertheless, we stated that a review of the theoretical framework should be reviewed.
See some points to consider:
A companys commitment is linked to its level of responsibility. The first level of
commitment is linked to basic company management, while the second level is linked to
citizens.
We do not understand an organization to have established social commitments without it
beforehand having had the attitude to fulfil internal commitments with its employees
(Oglesby & Adams, 2008).
The role of internal relationships is therefore fundamental in bearing testimony to an
organizations public responsibility and a step towards solid and coherent social
responsibility (Miller, 1995).
Professional management of internal relationships is a field of unquestionable value for
organizations wanting to bring cohesion to their organizational culture so as to better develop
its attributes or differences.
Is required to have a high knowledge of the principles, characteristics and processes of the
companies to create a solid organizational culture, often supported on the pillars of social
responsibility.
The new models of participation allowed by new information technologies require greater
transparency and commitment, promote greater symbiosis between organizations and their
environment (Shah, Cho, Eveland, & Kwak, 2005), and establish a two way effect to bring
consensus.
Cultural cohesion and consensus contribute to the balance and symbiosis of interest within
the organization and its publics members.
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Globalization means localization: the involvement of local opinion leaders is always a good
way to achieve global legitimacy. And in fact, the better we combine the local language and
values with general global messages and broad corporate values, the more excellent we can
consider the practice of this profession to be (International Associations of Business
Communicators, 1999).
Most companies should be seen not only as a profit making entity but as members of the
community and the stakeholder network. We conceive it as a symbiotic commitment.
Public Relations thus play a pivotal role in helping dialogue with those affected by the
decisions made and helping corporations interact with society to better understand and adapt
to the social values and principles.
Corporate citizenship. New companies role by having a wider participation in the decision
making process and by means of a wide range of strategies (for example, the creation of
foundations or through public-private partnerships) to take over some of the traditional
functions of the state (Ordeix & Duarte, 2009). Corporations engaged in Corporate
Diplomacy actively add new roles to the traditional role of the corporations.

During recent years, the sociological sphere of influence of organizations has grown
considerably with the institutionalization of relationships with opinion leaders or key people
(from the cultural, financial, or political ambit) that spread the message to third parties, thus
reaching public opinion and creating a favourable attitude.
This phenomenon is known as Third-Party Endorsement. So, the social functions of
public relations, or, in other words, the sociological role of public relations in an organization is
to make organizations more permeable and more sensitive to their social surroundings in order
for both parties to benefit, in terms of investment, public awareness and legitimacy.

REFERENCES

Grunig, J. (Ed) (1992). Excellence in Public Relations and Communication Management,
Hillsdale, NJ: Lawrence Erlbaum Associates.
Grunig, J. (2006). Furnishing the Edifice: Ongoing Research on Public Relations as a Strategic
Management Function. Journal of Public Relations Research, 18(2), 151-176.
Heath, R., & Coombs, W. T. (2006). Todays public relations: An introduction. Thousand Oaks,
CA: Sage.
International Association Business Communicators. General Conference. Washington, June
1999.
LEtang, J.; & Pieczka, M. (Eds). (2006). Critical Debates and Contemporary Practice. London:
Routledge.
Miller, K. (1995) Organizational communication: Approaches and Processes. New York:
Wadsworth.
Oglesby, R., & Adams, M. (Eds.). (2008). Business Research Yearbook. Global Business
Perspectives. 16(1). Beltsville, MD: International Academy of Business Disciplines.
Ordeix, E.; Duarte, J. (2009, December). From Public Diplomacy to Corporate Diplomacy:
corporations legitimacy and influence. American Behavioural Scientist, 43(4), 549-564.
Shah, D. V., Cho, J.; Eveland, W. P. & Kwak, N. (2005) Information and Expression in a Digital
Age: Modeling Internet Effects on Civic Participation. Communication Research, 32(5),
pp. 531-565.
226


NEWS TENDENCIES IN POLITICAL COMMUNICATION:
LOBBIES AND THINK TANKS

Antonio Castillo Esparcia, University of Mlaga, Spain
acastilloe@uma.es

Ana Almansa Martnez, University of Mlaga, Spain
anaalmansa@uma.es


ABSTRACT

To the citizens organizations, the communication ecosystem carries out a remarkable
role in the constrainer processes of the movements and in the interpretation of isolated events,
like being part of the action of an association that pursues perceptive changes in the society. This
way, to those organizations that integrate numerous citizens, the fact of to penetrate and to
consent in the dynamics, generated by the informative media, allows to transmit their
restlessness and demands to the society, with the propensity of mutate social perceptions.
The organizations need to penetrate in some media that, in the growing tendency, they are
integrated by spectacular news that appeal to the sensations and not to the rational reflection. As
they know about that tendency, they appeal to activities and spectacular communication actions
with the pretense of finding accommodation in the communication space

LOBBIES AND THINK TANKS IN POLITICAL COMMUNICATIONS

Communicative action with the aim of making their research public, so that other private
and public bodies can take into account the studies made regarding their own particular spheres
of interest. Thus, documents and reports would be the principal tools of these organizations. This
capacity for communication would extend into the organization of workshops and seminars, with
the aim of making direct contact with interested individuals. Nevertheless one of the main areas
in which they work is gaining access to the media, given that this opens up the possibility reach a
wide audience, and confers social presence and influence. Equally, nowadays the role performed
by the internet has meant that it has been necessary for them to employ the web as a
communications tool, and in this way reach their target audience more directly (without having
to go through the media). The company that aspires to maintain a presence in the media should
create and carry out a set of initiatives that permit it to remain regularly and constantly in the
mass media (Dupuy & Cintas, 1990).
So called organizations possess, more and more, a more remarkable presence in the
societies of our days. In our country, the constant appearances in the media have facilitated that
the citizens have known their existence. However, that knowledge is a helping factor but, in no
way, essential so that people show interest in some of these organizations. That makes a scarce
associative affiliation because the economic resources are not excessive. With the aspiration of
getting the highest self-financing degree is pursued to possess the highest number of partners and
sympathizers. To that effect, one of the main instruments appealed is the constant presence in the
media. Similarly, for Almansa (2003) a communication department should organize and
coordinate all communication acts and should depend on upper management. It is relevant to
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point out that communication should be an activity planned and coordinated by management and
all messages should be in agreement with the objectives and goals of the organization.
The action for the organizations appeal to the media is based on the special configuration
of the media for the creation process of the reference framework to each one of these
organizations, because the social perception is ostensible and deeply influenced by the treatment
that the media confer them. The media, consequently, are decisive to frame, to locate and to
define the associations, as well as to assert their objectives and pretenses.
To the citizens organizations, the communication ecosystem carries out a remarkable
role in the constrainer processes of the movements and in the interpretation of isolated events,
like being part of the action of an association that pursues perceptive changes in the society. This
way, to those organizations that integrate numerous citizens, the fact of to penetrate and to
consent in the dynamics, generated by the informative media, allows to transmit their
restlessness and demands to the society, with the propensity of mutate social perceptions.
The organizations need to penetrate in some media that, in the growing tendency, they are
integrated by spectacular news that appeal to the sensations and not to the rational reflection. As
they know about that tendency, they appeal to activities and spectacular communication actions
with the pretense of finding accommodation in the communication space.
Political action related to those who have a specific objective of influencing political
decisions through definitive proposals regarding the implantation of public politics. In this sense,
Rich (2004) highlights the importance of the participation of experts in the taking of decisions.
The think tanks have a distinguishing eye witness character, given that they investigate and draw
up concrete plans of action. Within this aim, we find think tanks which have distanced
themselves somewhat from an autonomous objective, and are initiated by the power of politics,
as they are created and financed, either partly or completely, by political parties, and are bodies
which set out specific proposals based on party policy. In this aspect, they fit in perfectly with
the expression laboratory of ideas, given that one of their main functions is to produce
proposals which will be included in the electoral program of the parties. Stone (1996) defines the
think tanks as independent research institutes whose main purpose is researching public policy,
nonprofit, nongovernmental organisations, independent of the government, political parties or
interest groups (p. 16). On the other hand, Boucher and Royo (2006) point to the birth of the
think tanks with the Fabian Society, created in Great Britain in 1884.

McGann and Weaver (2000) stress the research element, and indicate three main categories:
- as a university, defined as universities without students. Such as institutions dedicated
to research, and which operate on funds from foundations, corporations and individual
donors. They are different from traditional universities in that there is no regulated
teaching. This typology has been partially modified with the organization of postgraduate
and specialized courses

- responding to private demands and defined as contract research organizations. They
are research bodies motivated by a particular reason and at the request of another party
(contracted, for considerations, or paid for their services). They have a marked purposeful
character, and act, on many occasions, as businesses which undertake a contract (research
or study) with the interests of the contractor (client) in mind. The clients may be public or
private.

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- as defenders of their own ideas (advocacy tank). Linked or not to political parties,
they have a distinct character of influence, and their actions are defined by their capacity
of communication, for which they develop specific communication strategies. It could be
said that their main objective is to actively participate in the political process with
proposals, while research plays a secondary role in respect to the main objective.

COMMUNICATIONS AND SOCIETY, STRATEGIES OF COMMUNICATIONS

The communication departments of our days are the result of a long developmental
process within the company, allowing their importance and presence in the company to grow
progressively. For Harold Burson (Burson cited in Farnel 1994: pp. 29-30) communication
departments have passed through three stages:
a) Assisting managers to guide them in the expressive content of messages. This would
be the pure communication phase or how to say it. In this arrangement, they are the
managers themselves who deal with identifying the audience and the content of
information, but they refer and go to communication specialists to assure its
dissemination.

b) The utilization of communication professionals to identify groups, increasingly more
numerous, who receive messages. The phrase that sums up this vision would be what
to say and to whom. The communicative task consists in dominating the appropriate
techniques and a hermeneutic function of the social reality, according to the companys
classification. The incursion of management is still maintained as a function of the
departments.

c) Concept in which managers completely hand over communication tasks to the
specialists. The intention is to directly involve the communication professionals in the
realization of the companys objectives. Not only should they participate in the final
phase, but rather from the start, summed up in the expression what can I do? In this stage
the company classification and acts come from the contributions of communication
professionals.

McGann (2007, p. 6) points to a growing globalization of the think tanks, caused by a
series of factors such as:
1. The world of communication has increased the volume and circulation of ideas
and information.
2. The governments no longer have the monopoly over information.
3. An increase in the complexity of technology, and of political problems, which
makes decision making more difficult.
4. An increasing involvement of government in the social sphere.
5. Globalization, which boosts the number of non governmental agencies.
6. The necessity of taking public decisions as quickly as possible.

The current importance of these communicative groups can be perceived transparently in
the level of access to the mass media and the abundance of economic and company news, thanks,
in part, to the appropriateness of company information and the productive techniques of
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journalists. The utilization of these techniques has facilitated the insertion of the products of
these departments, as highlighted by a 1983 Swiss study that compared information inputs in
press conferences with information outputs that appeared in the media (Bentele, 1992). The
author of the study, Ren Grossenbacher, points out that in the face of the communications and
acts carried out by communication departments, the medias principal function is reduced to the
compression of the input, allowing Grossenbacher to confirm that whatever reaches the media
system through communication departments has a good chance of being published without the
message being altered, although it may be cut (Bentele 1992: 40).
The contemporary importance of communication departments as news-story generators is
unquestionable, as they have proven to be important suppliers of events about the groups
themselves. The decade of the 70s was the scene for the third evolution of these bodies, and
they emerged under the umbrella of the increase of social organizations, national and
international. Defined as advocacy think tanks they have a marked character of defending their
research approach, and the purpose of the externalization and influence of their platforms. This
results in an increase in different strategies of communication, given that they dont only
undertake research, but also look for ways of spreading the results and getting them known, and
finally receive the acceptation of the government and public opinion for their proposals.
The great importance communication departments have in setting the medias agenda
causes the information to tend toward a certain uniformity because the message reaches
numerous places, impregnating all of the news sources.
Organizations completely turn to the mechanisms of communication departments so that
they can project their concerns, opinions, and demands to the mass media. No longer are the days
when managers prepared and carried out the responsibility of communicating with the media,
based more on illusion and goodwill than on competence. At the present, all connections with the
mass media are elaborated from within the internal structures of these specialized groups. The
responsibilities of a communication department cover multiple activities such as:

- sending statements, press releases, regarding themes the group is interested in
communicating to the media. They should be painstakingly written, organized
formally in journalistic language making it impossible for the media to change them,
and following the rules of journalistic writing and organization exactly. There has
been an increase in strategies such as the sending of digital statements through
electronic mail, which allows one to send the same text to various mediums in little
time; the insertion, from the beginning, of text into the journalists computers saving
her or him from having to retype the statement and insert text, sound and images in
the same file. This implies a generalized use of communication technology at the
service of the communication departments.

- organization that takes part in diverse activities such as press conferences, document
presentations, research or group studies. This allows the placement of issues that
distinguish the group and project its image in society.

- become the permanent source of information for the media in the face of any event
where concrete references are desired. This should not be carried out only at the
request of the media, but rather the department should maintain a constant
relationship with the media, in order to establish fluid channels of communication.
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One of the fundamental premises of a good communication department is the
inexistence of lies or the contribution of false documentation, which only gives short-
term results and will lead to, on the long-term, indifference on the medias part
regarding future information the department may offer.

- truth is the principal material that groups possess and if that characteristic is lost, a
great part of an associations influence will be lost.

- establishment of stable channels of communication with the media, with the goal of
understanding the news policies of each medium and their journalists concerns. At
the same time, understanding the general and specific foundations of the media allows
the possibility of noticing, for example, the best days and times for celebrating group
acts or activities. Likewise, discovering and maintaining frequent contacts with
journalists who report about the sectors a group works in, may entail the prior
anticipation or petition of information that may be negative to the pressure groups
activities.

Normalized relationships between the organizations and the media is shown as direct
illation among both institutions. The bunch of strategies executed by these associations on the
media, we should group succinctly, in the following parameters (Castillo, 2010):
1. Expand their requests, proposals and demands on the whole of the citizens (Spreading
Function).
2. Mobilizer aspect over their partners and sympathizers (Mobilizing Function).
3. A Psychological side linked to their members, so it contributes with an image of
psychic sustenance. (Function of Psychic Cohesion).
4. To present and to exhibit to the public authorities a representation of social support,
through media appearances that allow to show that the group has a great social
presence (Function of Social Support).
5. To settle down and to present the instructive instruments about internal and external
problems to the grouping (Educational Function).
6. To put in action awareness elements of the society on the associative subjects, in
connection with the individual and collective perceptions (Awareness Function).
7. Possibility to restrict the access of the proposals of other groups, due to the agenda-
setting subjects limitation. So, the association may limit the concurrence of divergent
interests to its partners (Restrictive Function).
8. To improve the image of the group by means of positive appearances in the media
(Public Relations Function).
9. To keep a constant activity in the media about the pressure groups developed matters
(Monopolizing Function).
10. Each group that maintains a certain presence, in a positive way, in the media increases
its genuineness in the face of the public powers, the own members, the rest of the
citizens and even, the media (Legitimized Function).

These organizations need the media to be known, with the intention of reach public
awareness and to educate people on the matters of their competition. Thanks to the media they
can reveal to the public their intentions and demands. But besides these functions, the think tanks
231


need the participation of the mass media to establish differences among these organizations. We
should think that the term think tanks embraces a great diversity of associations with very
divergent restlessness, settling down among them, a fight to be shown in the most positive way
to the public and also to created a fine public image.
This perspective implies a dispute for the appearance in the mediatic ecosystem and also
implies the intention of selling a characteristic organization trade mark that, at the same time,
allow the media give to the organization an specialized mention in a concrete subject ; even the
spectators perceives that it is being carried out a frequent and beneficial work. It is pursued, from
these groups, to offer different products to be able to be distinguished of the other groups,
reinforcing this way the stereotypes and the marks about the function and specialization of each
pressure group.

REFERENCES

Almansa, A. (2003). Teora, Estructura y Funcionamiento de los Gabinetes de Comunicacin,
Doctoral Thesis, Mlaga: Universidad de Mlaga.
Bentele, G. (1992). Alemania: las relaciones entre los Public Relations y los periodistas
Cuadernos para el debate. 68, 38-47.
Boucher, S. & Royo, M. (2006). Les think tanks. Paris: Le Felin.
Castillo, A. (2010). Relaciones Pblicas y Think Tanks en Amrica Latina. Revista Razn y
Palabra, ITESM, Mxico.
Dupuy, E. & Cintas, Y. (1990). Communiquer avec la presse. Paris: Les Editions dOrganisation.
Farnel, F. J. (1994). Le lobbying. Strategies et techniques dintervention, Paris: Les Editions
dOrganisation.
McGann, J., & Weaver, K. (2000). Think-tanks and Civil Societies, catalysts for Action, New
Brunswick [N.J.]: Transaction Publishers.
McCann, J. (2007). The Global Go-to Think Tanks. The Leading Public Policy Research
Organizations in the World. Philadelphia, PA: Foreign Policy Research Institute.
Rick, A. (2004). Think Tanks, public politics and the politics of expertise. Cambridge, MA:
Cambridge University Press.
Stone, D. (1996). Capturing the political imagination. Think Tanks and the Policy Process.
London: Frank Cass & Co. LTD.



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CHAPTER 13

GLOBAL ENVIRONMENT AND TRENDS

233


REVISITING HOFSTEDES DIMENSIONS: THE EVOLVING CULTURES OF THE
UNITED STATES AND JAPAN

Jonathan Wood, University of West Georgia
jwood4@my.westga.edu

Christy Rabern, University of West Georgia
crabern@westga.edu

Jon Upson, University of West Georgia
jupson@westga.edu


ABSTRACT

It has been over forty years since Geert Hofstede initiated his groundbreaking study
assessing the influence of culture on values in the workplace. Since then, there have been drastic
changes to the global landscape influenced by political, environmental, and technological factors.
This study suggests that the influence of these factors has directly impacted global culture.
Utilizing Global Convergence Theory we suggest that increased similarities can be observed in
numerous cultures. Specifically, those cultures with strong international relations like the United
States and Japan. To illustrate this, specific propositions are developed and discussed based on
Hofstedes updated Value Survey Module (2008).

INTRODUCTION

During the 1960s and 1970s the impending influence of globalization could no longer
go unnoticed. Hofstede was one of the first to recognize the need for preparing for globalization
through education and cultural understanding. He proposed that understanding the cultural norms
and social values of countries you are doing business with would be essential in maximizing
business relationships. Therefore Hofstede conducted a study he titled the Value Survey Module
(VSM) to assess the different values possessed by various cultures. The results of the survey
would provide individuals with a means of interpreting the values of cultures and subsequently
the ability to adapt to better interact with those cultures. Hofstedes work is the most
comprehensive research on culture to date, providing a theoretical foundation for international
business and a framework for thousands of subsequent studies. Yet while it appears that
Hofstede has continued to advance cultural research and even update the VSM, international
researchers have failed to keep up. One would be remiss to assume that increased globalization
and the monumental events of the past decades would not in some way impact culture. Cultures
evolve, and as the world becomes flatter increased interaction between countries causes the
distinctiveness between cultures to become less noticeable. Countries with strong international
ties like the United States and Japan will undoubtedly inflict their own values and beliefs on the
evolving culture of the other. This study will attempt to address this issue by proposing that
globalization has caused a convergence of cultures between the United States and Japan. This is
accomplished by using the most recent VSM (2008) which includes two new dimensions that
have yet to be assessed.
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CULTURAL CONVERGENCE

There are two opposing views of change within cultures. One view is that culture is very
stable within a society and when cultures change they do so independently of each other
(Barkema & Vermeulen, 1997). An opposing view of cultural change is Global Cultural
Convergence. This theory argues that different cultures become more similar over time (Axelrod,
1997). It is based on the premise that culture is affected by outside influences and external
changes. For example, two cultures that become intermingled through trade or communication
can influence each other. This concept is predominately based on technological advancements.
Such advances have caused the amount of shared experience between cultures to increase and are
the root of cultural change. Additionally, advances in transportation and logistics have made the
movement of people and products much more efficient. These changes have influenced cultures
by allowing more interaction between individuals in different cultures and more exposure to
foreign products and services. Therefore, with respect to cultures, convergence indicates that
each culture is becoming more like the other over time. In the context of this study, this
definition suggests that in the midst of great technological change, the U.S. culture is becoming
more like Japanese culture while at the same time the Japanese culture is becoming more like the
U.S. culture.

EVOLVING CULTURES

Societies have evolved into groups with distinguishable characteristics that set them apart
from other groups (House, Javidan, Hanges, & Dorfman, 2002). One distinguishing
characteristic is culture. The traditional U.S. culture is strong in entrepreneurial and individual
efforts. However, there are signs that the U.S. culture may be influenced by other cultures. One
such way is the increasing prevalence of teams and groups in organizations. Employee
compensation is often tied to a group effort, thereby minimizing the role of the individual.
Society has also been receptive to collectivist efforts recently in healthcare, unemployment, and
welfare. Such examples may indicate that the U.S culture is changing as well. The traditional
Japanese culture has been often viewed as very masculine, collectivist, and long term oriented.
These assumptions are based on a view of Japan from feudal times, mostly focused on the
influence of the samurai. Samurai followed a code of conduct called bushido which often varied
from family to family, but usually included guarding the honor of the family and protecting the
warriors face. Many changes have occurred since this time, but much of the hierarchy and
structure remains. However, many years of interaction between Japan and western countries may
have led them to become more individualistic, short term oriented, and feminist. By utilizing
Hofstedes cultural dimensions as a framework, we are able to explore and analyze this
convergence of cultures.

PROPOSITIONS

Hofstede released the most recent Values Survey Module in 2008 (VSM 08). In this
survey, Hofstede measured his five dimensions of culture, and also introduced and included two
additional dimensions he derived from Michael Minkov (Hofstede, Hofstede, Minkov & Vinken,
2008, p. 2). We argue that the U.S. and Japanese cultures are becoming more similar over time
235


with respect to each of Hofstedes seven cultural dimensions. The following propositions
incorporate these arguments.

Power Distance
According to Hofstede (1984), power distance is the extent to which the less powerful
individuals in a society accept inequality in power and consider it as normal. Japan is near the
world average in power distance, according to Hofstedes studies. However, recent trends
suggest that the Japanese are beginning to question those in power more frequently. The recent
victory of the Democratic Party of Japan in the 2009 elections was a significant event as the
party vowed to diminish the power of the bureaucrats. Faith in bureaucrats is at a historical low
and many Japanese businessmen will state openly that the biggest problem afflicting their
country is lack of political leadership (Harris, 2010). Culture in the U.S. regarding power
distance has been slower to change in recent years than in Japan but there are signs of
acceleration. First, although offices without walls is the norm in Japan (In the Workplace,
1996), the U.S. has begun to imitate this practice. This has led to closer interaction in the
business environment between superiors and subordinates. Although U.S. culture has social
norms requiring respect when questioning authority, it is considered culturally normal and
acceptable to point out errors and ask hard questions to those with power.

Proposition 1: The U.S. and Japan have become more similar in power distance.

Individualism
The individualism dimension reflects the degree to which a society views its members as
individuals or as members of a group (Hofstede, 1984). In individualistic societies, individuals
are primarily concerned with their own interests and the interests of their immediate family. In
contrast, collectivist societies integrate individuals, from birth onwards, into strong, cohesive in-
groups from which they are not easily separated. Japan has tended to lie toward the collectivist
end of this dimension. A major factor of Japans collectivism was its ability to provide full
employment to its citizens (Root or Branch, 1994). However, there are signs that this provision
has become less automatic. Many blue collar employers are closing down and relocating to other
countries, while other employers are becoming increasingly reliant on temporary workers
(Toyotas Silent Revolution, 1994). As the Japanese worker has to rely more on his or her own
skills to remain employed, the worker may become less faithful to the firm and more
individualistic. The U.S. has historically been a very individualistic society focused on
entrepreneurial effort and individual success, but there has been a shift away from the self-made
man image that America grew up on. Now U.S. culture depends heavily on communal
assistance such as social security and welfare. Also, its more prevalent to see U.S. students and
employees in teams and groups (Townsend, DeMarie, & Hendrickson, 1998). We believe that
both countries are moving toward a central position on the individualism scale.

Proposition 2: The U.S. and Japan have become more similar in individualism.

Masculinity
Masculinity is the extent to which men (not women) are expected to be ambitious,
assertive, and competitive while striving for material success and respecting things big, strong,
and fast (Hofstede, 1984). In masculine cultures, women are expected to serve and to care for
236


children, the weak, and lifes non-material qualities. In contrast, feminine cultures lack distinctly
defined gender roles in favor of overlapping gender roles. Japan is one of the most highly
masculine countries in the world. In fact, according to Hofstedes original data, Japan is number
one in the world in this dimension, but this too is changing. One reason occurred in 1986, when
the equal employment opportunity legislation removed many legal barriers to women in the
workplace. It is becoming much more acceptable in both countries for women and men to
perform the same tasks. This may be part of a global cultural trend toward femininity that is
affecting both cultures.

Proposition 3: The U.S. and Japan have both become more feminine.

Uncertainty Avoidance
Uncertainty avoidance is the degree to which a people in a culture generally prefer
structure to risk (Hofstede, 1984). Cultures high in uncertainty avoidance are made anxious by
situations that are unstructured, unclear, or unpredictable. Japanese tend to avoid uncertainty but
the current and future work environments may be affecting their tolerance for uncertainty. One
possible cause of this change is that manufacturers are leaving Japan. This has limited job
opportunities domestically and effectively made Japan a one-shot society: students have one
shot to find employment upon graduation or they are frozen out of the market. This will
effectively decrease the number of employees that are loyal to a firm and cause an increase in
entrepreneurship which by its nature is risky. Traditionally, the U.S. is a bit more risk-seeking;
however, recent trends may cause its citizens to avoid risk. The stock market decline, housing
bubble bust, and recession of 2007-2009 have caused many to seek secure, safe returns with their
investments (Whats next: Boomers, 2010). Further, the threat of other rising nations may
cause Americans to develop a defensive and conservative stance in which they seek to avoid
uncertainty (Zweig & Jianhai, 2005).

Proposition 4: The U.S. and Japan have become more similar in uncertainty avoidance.

Time Orientation
Time orientation refers to the preference for instant reward versus delayed reward
(Hofstede & Bond, 1988). Long-term orientation focuses on qualities leading to future rewards
(e.g. thrift and perseverance). As such, long-term orientation suggests a culture is patient and
willing to wait for reward, while short term orientation suggests a culture prefers instant
gratifications (Hofstede, 2001). Traditionally a long-term oriented society, Japan is facing
factors that may cause its orientation to become more short-term. One major factor is the aging
of society. Japans working-age population has been in decline for almost 15 years. Meanwhile,
the population has become the oldest in the world. From 1980 to 2000, Japans population age
sixty-five and older nearly doubled (World Economic and Social Survey, 2007). The effects of
an aging society will therefore be felt greater in Japan than in most countries. Fewer working
individuals will be taking care of an increasing number of elderly citizens. It is likely that
retirement benefits will decrease. Younger workers may begin to focus on life in the short-term
as the long-term becomes less attractive.

Proposition 5: The U.S. and Japan have become more similar in time orientation.

237



Indulgence
The indulgence dimension refers to the value that a society places on relatively free
gratification of some desires and feelings (Fontaine, Duriez, Luyten, Corveleyn, & Hutsebaut,
2005). This includes such activities as leisure, amusement with friends, spending, consumption,
and sexual activity. Opposite indulgence is restraint, or the values which control such
gratification and place limits on individuals enjoyment behaviors. Two factors, both responses
to a stagnant economy, may affect the indulgence dimension in the Japan culture. First, the
Japanese are known as savers (Hayashi, 1986), so much so that the government is considering
financial services and social security reforms focused at persuading the elderly to release some of
their 1,500 trillion in household savings (Into the unknown, 2010). If effective, these reforms
will result in greater acceptance of indulgence. The second factor is that Japan is loosening its
visa requirements as it looks to attract more revenue from tourism (Into the unknown, 2010).
As the Japanese society embraces tourism, more Japanese are likely to desire to travel
themselves. This will increase their indulgence. The U.S. is a country where it is not frowned
upon to enjoy oneself. Overspending on cars and luxury is considered part of life and we do not
believe this trend will reverse.

Proposition 6: The U.S. and Japan have become more similar in indulgence.

Monumentalism
Monumentalism refers to the cultural dimension characterized by self-enhancement (a
tendency to seek positive information about oneself) and self-stability or self-consistency (a
conviction that one should have unchangeable values, beliefs and behaviors that are not
influenced by shifting circumstances) (Heine, 2003). In monumentalist societies, the human self
is like a proud and stable monolithic monument (Hofstede, Hofstede, Minkov & Vinken, 2008).
Pride in ones nation, seeking to make ones parents proud, and deep religious convictions tend
to be present in monumentalists. At the other extreme are flexhumble cultures. Flexhumility is
characterized by humility, flexibility and adaptability to changing circumstances (Hofstede,
Hofstede, Minkov & Vinken, 2008). Japan has a traditionally flexhumble culture. Individuals in
Japan attribute success to external factors and failure to internal factors. In other words, success
is the result of luck or effort and failure is the result of lack of ability or talent. In the U.S.,
success is the result of ability or talent and failure the result of bad luck, others errors, or lack of
effort. This means that individuals from the U.S. tend to overestimate their own uniqueness.
Americans are also very proud of their heritage which includes firm, unwavering beliefs and
personal freedoms. Therefore, the U.S. should fall toward the monumentalism end of the scale.
Because this dimension has no previous measurement, we cannot judge the movement of this
cultural dimension over time. However, we do make propositions as to where the U.S. and Japan
will fall on the scale in relation to one another.

Proposition 7a: Japan will have high flexhumility (self-effacement).

Proposition 7b: The U.S. will have high monumentalism (self-esteem).




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DISCUSSION AND CONCLUSION

Cultures will continue to evolve and change. As both researchers and practitioners it is
essential to monitor and study these changes so as to better interact with different cultures. The
next step in this research is to test the aforementioned propositions and observe the influence that
globalization has had on the convergence of the United States and Japanese cultures.

REFERENCES

Axelrod, R. (1997). The dissemination of culture: A model with local convergence and global
polarization. Journal of Conflict Resolution, 41, 203226.
Barkema, H. G., & Vermeulen, F. (1997). What differences in the cultural backgrounds of
partners are detrimental for international joint ventures? Journal of International
Business Studies, 28, 845-864.
Fontaine, J. R. J., Duriez, B., Luyten, P., Corveleyn, J., & Hutsebaut, D. (2005). Consequences
of a multidimensional approach to religion for the relationship between religiosity and
value priorities. International Journal for the Psychology of Religion, 15, 123143.
Harris, T. (2010, April 18). Japanese lose faith in DPJ leadership. The Australian.
Hayashi, F. (1986). Why is Japan's saving rate so apparently high? NBER Macroeconomics
Annual, 1, 147-210.
Heine, S. J. (2003). An exploration of cultural variation in self-enhancing and self-improving
motivations. In: V. Murphy-Berman and J. J. Berman, (Eds.) Cross-cultural differences
in perspectives of the self: (pp. 101128). Nebraska symposium on motivation, vol. 49.
Lincoln, NE: University of Nebraska Press.
Hofstede, G. (1984). The cultural relativity of the quality of life concept. Academy of
Management Review, 9, 389-398.
Hofstede, G. (2001). Cultures consequences: Comparing values, behaviors, institutions, and
organizations across nations (2nd ed.). Thousand Oaks, CA: Sage Publications.
Hofstede, G., Hofstede, G. J., Minkov, M., & Vinken, H. (2008). Values Survey Module 2008
Manual. Geert Hofstede BV. Retrieved from
http://stuwww.uvt.nl/%7Ecsmeets/ManualVSM08.doc
Hofstede, G., & Bond, M. H. (1988). The Confucius connection: From cultural roots to
economic growth. Organizational Dynamics, 16, 421.
House, R., Javidan, M., Hanges, P., & Dorfman, P. (2002). Understanding cultures and implicit
leadership theories across the globe: An introduction to project GLOBE. Journal of
World Business, 37(1), 310.
In the workplace: Offices without walls. (1996, February 14). BusinessWorld, p. 20.
Into the unknown: A special report on Japan. (2010, November 20). Economist, pp. 1-16.
Root or branch? (1994, February 26). Economist, p. 64.
Townsend, A. M., DeMarie, S. M., & Hendrickson, A. R. (1998). Virtual teams: Technology and
the workplace of the future. Academy of Management Perspectives, 12(3), 17-29.
Toyota's silent revolution. (1994b, January 29). Economist, p. 66.
What's next: Boomers face changed landscape. (2010, December 29). Telegram & Gazette, p.
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World Economic and Social Survey. (2007). New York, NY: United Nations.
Zweig, D., & Jianhai, B. (2005). China's global hunt for energy. Foreign Affairs, 84(5), 25-38.
239


FROM THE INSIDE-OUT: INTERNAL MARKETING AND THE GLOBAL FIRM

Blaise J. Bergiel, University of West Georgia
bbergiel@westga.edu

Cheryl O. Brown, University of West Georgia
cbrown@westga.edu

J Robert Field, Nicholls State University
J.Field@Nicholls.edu


ABSTRACT

With an increase in global competition among firms today, it is important that the
marketing efforts of the firm are realized and implemented by all members. To be successful
globally businesses can no longer just be faster and more convenient and hope to maintain a
competitive advantage. Businesses that do not have engaged employees cannot expect to have
satisfied customers. Internal marketing is looking at employees as internal customers. It involves
a marketing strategy aimed at the employee to get them engaged in the buyer-seller relationship.
Internal marketing is a real business strategy aimed at increasing satisfaction among the internal
customers (employees) of an organization. This paper will provide insight into the internal
marketing concept, the benefits of employee engagement, and how it relates to external success
(customer satisfaction) for the global firm.

INTRODUCTION

The global marketplace is constantly changing. The competition is no longer just in the
same town. The increase in globalization allows more choices for the consumer and therefore
heightened competition for business. The Internet has also given rise to the availability of
products and services to the consumer. Businesses must realize that just having the product or
service is not enough to ensure long-term success.
An objective of organizations is to market the company in a manner most appropriate to
achieve its corporate goals. To do this, organizations use vehicles such as advertising, personal
selling, sales promotion, and public relations directed at their customers; however, organizations
are learning that focusing on traditional marketing techniques is no longer enough. Today there
are many more factors influencing our marketplace. Marketing is everything a company does and
employees can make or break a global marketing campaign so why not market to the employees
first (Hein, 2009)?
For most businesses, the aim of marketing is to carry the organizations message to the
customer. This is not done for altruistic reasons; they want to entice the public to buy the product
or services that they sell. A key mistake is that companies do not realize that the message is
carried by employees as much as by traditional marketing methods.
Most people would not argue with the saying: Customer service is dead. A lot of
todays businesses have become devoid of great purchasing and/or service experiences between
them and their customers. For most businesses, convenience and speed for carrying out
240


objectives have overshadowed everything else. This shortcoming, however, gives other
businesses an opportunity to exceed expectations, stand out, and create a differential advantage
over competitors. Marketing to the customers is something most companies spend millions of
dollars on, but marketing to their employees is something you dont see as often.
Obtaining a high level of customer service quality is becoming a necessity for long-term
success, particularly for business in the service industry, but employees need to be motivated to
provide good service. Management can provide the motivation and the desire for employees to
work smarter through internal marketing programs.
Just like an organizations customers, its employees have an image of the organization
they work for. An organizations work force that is enthusiastic has an increase in productivity,
reduced turnover, and better customer relationships. Internal marketing must precede traditional
marketing campaigns if the latter are to be successful. Negative employee attitudes and behavior
will affect and negate any traditional marketing efforts or marketing to the customer.

INTERNAL MARKETING

The concept of internal marketing originated in the field of marketing research in the
service industry, emphasizing that organizations should value and respect their employees and
regard them as internal customers (Berry, 1981). Gronroos (1981), the scholar first credited
with introducing the term Internal Marketing, defined the term as the behavior of selling a
corporation to its internal customers (employees) under the principle that highly satisfied
employees will help create a market-oriented and customer-centered corporation and,
consequently, encourage employees with customer-oriented awareness. Internal marketing is the
management philosophy of treating employees as customers, as well as a development strategy
of offering the product (or jobs) that meet employees demands in order to win employee loyalty
and organization commitment (Farzad, Nasim, & Caruana, 2008).
Basically, internal marketing is the application of the basic principles of marketing within
an organization. Internal marketing involves treating employees as internal customers with the
goal of increasing employees motivation and customer focus.
People tend to become very angry on the road when a driver pulls out in front of their
vehicle. If that vehicle was a UPS delivery truck, people would tend to get angry with the
company and not necessarily the driver. Or when someone is greeted by an annoyed and
unpleasant receptionist versus a happy and helpful receptionist, then his or her attitude towards
that organization will typically be a negative one. Neither of these two examples have anything
to do with the job that the marketing department did in promoting the company; however, both
definitely can affect the image of the company.
Customers perceptions of companies are constantly changing and can include a wide
range of experiences (Croft, 2007). How the staff behaves in the presence of customers is a
major influence on the customers perception of that brand. Therefore, it is extremely important
that staff is informed and educated on company origin, history, meaning, and how employee
behavior impacts the company. Having formal methods in place for marketing the company
image to employees is just as important for a firm as having formal methods in place for
marketing the company image to customers. Developing a marketing plan for employees is the
basis of internal marketing.
Internal Marketing is what businesses do to train and motivate client-contact employees
and support staff to work as a team to ensure client satisfaction (Hammond, 2006). Doug
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MacMillan, president of the MacMillan Marketing Group, believes that all employees who
interact in any way with a customer (or potential customer) should be deemed a marketer for
their firm (Roberts-Lombard, 2010). Employees need to be taught how to be efficient stewards of
their firms image and any firm viewing marketing as just another department in the organization
will be in danger. In order for an internal marketing campaign to be effective, employees must
first buy into the program. They must have a positive attitude about the company and want to
strive for complete customer satisfaction. In order to ensure employee buy-in, firms must nurture
their employees as they would with any other investment.

EMPLOYEE ENGAGEMENT

Internal Marketing rests in a firms ability to hire, train, and motivate employees who
have a desire to provide customers with the best service possible. Employees who are happy in
their organization and passionate about their work will be more likely to focus on fulfilling the
needs of the customer. These employees are referred to as engaged employees. An engaged
employee is fully involved in, and enthusiastic about, his work; he works with passion and is
connected to his company (Nittala & Kameswari, 2009).
Julie Gebauer, managing director of Towers Perrin, studied 50 global companies across a
12-month period, including both firms with highly engaged employees and firms where
employee engagement was low. During the 12-month period, net income increased 13.7% for
those companies with highly engaged employees (Tools & Metrics: Ask the Expert, 2007, page
14). Recent research by Gallups showed that engaged employees are more productive, more
profitable and more customer-focused (Nittala & Kameswari, 2009).
Internal marketing and employee engagement both have a direct impact on the other. An
efficient internal marketing campaign can increase employee engagement, but also, for an
internal marketing campaign to succeed, employee engagement must be high. Both also directly
impact a firms bottom-line. In her article, Profitability is in the People, Sheri Whitley mentions
a study conducted by James Oakley, assistant professor of marketing at Purdue University,
which found that employees who are satisfied with their jobs will positively impact a firms
bottom line (Whitley, 2006, page 63). Other important findings of the study include:

Organizations that succeed in engaging their employees will generate customers who use
their products more.
Having a strong communication system that allows interaction from the top of the
organization to the bottom (and vice versa) is a vital necessity for creating employee
satisfaction.
Employee satisfaction is the most important key for creating employees who are engaged
with their firms.

Starbucks realizes the importance of engaging its employees. In 2000, Starbucks
developed an educational program, Coffee Master, in which employees were offered the
opportunity to attend extended training to heighten their coffee making skills. Starbucks found
that the more knowledgeable its employees are about coffee making, then the more engaged they
will be with their jobs. When employees are excited about the work they are doing, customers
feel that excitement, and it impacts final sales. In 2005 Starbucks sales increased by 10% from
242


the previous year, marking 2005 the 14
th
consecutive year of growth at 5% or greater (Whitley,
2006).
John Keller of The Alexander Group conducts interviews with customers of Commerce
Bank in Scottsdale, Arizona to gauge their satisfaction level. The surveys are regularly
conducted in the bank environment to test how employee attitudes correlate with customer
satisfaction. In instances where the employees seem happy, the customer experience rate is
higher. There is employee engagement, says Keller. Flip it around, and if employees are
unengaged, unfulfilled and feel disenfranchised, this tends to reflect on the customer side as a
feeling of impersonal service. So employee engagement does tend to align with customer
satisfaction and a positive customer experience (Keller cited in Casison-Tansiri, 2007).
Employing people who are happy with their work is a vital part of establishing an internal
marketing campaign. Appreciation and communication are the two most important factors for
building a strong team of employees and it is consistently happy employees, rather than company
principals, that keep customers returning (Roberts-Lombard, 2010).

BUILDING AN INTERNAL MARKETING CAMPAIGN

An internal marketing campaign is implemented just as an external marketing campaign
would be by conducting research, setting goals, forming a detailed communications plan,
budgeting, and evaluating the results. The campaign should begin with a research session geared
at gathering information from employees, such as what they like and dislike about the
organization (Hammond, 2006).
Research should also be conducted on customers negative perceptions of the
organization. Knowing what customers dislike about the company will help the organization to
train their employees on how to overcome those negative attitudes. The organization should also
make sure that customers are experiencing what the company says they should experience and if
not, employees need to understand what they are doing wrong and should be educated on how to
fix it (Croft, 2007).
A training program should be designed focusing on educating all employees on the firms
marketing efforts and goal of the organization. The effort will boost marketing enthusiasm and
create a marketing mentality within the firm (Hammond, 2006). The more employees
understand about what their firm does, the more likely they will be to pay attention to providing
customers with the best service possible. Employees should be encouraged to not focus on one
single sale but rather the focus should be on building long-term customer loyalty.
Darren Keen with The Marketing Store emphasizes that a marketing campaign should
not be all just about training. Training is part of the solution, but the working environment,
incentives and rewards and corporate status are all factors that make a person feel good about the
company they work for and that lead to them becoming natural brand ambassadors (Keen cited
in Croft, 2007, page 39).
Institutions such as Bank of America, Umpqua Bank, Commerce Bank, and Wachovia
all know the positive impacts of employee incentive programs. Umpqua believes that they can
ensure their customers will be treated well by first treating their employees well. They go beyond
compensation to make their employees feel valued by using performance recognition programs.
Some of these programs include an annual awards gala for employees, on-the-spot employee-to-
employee recognition rewards, ongoing training and development opportunities, and a paid-time
volunteer program. In 2007 Umpqua Bank placed 34
th
in Fortune magazines 100 Best
243


Companies to Work for list, proving that employees truly feel valued by Umpqua (Casison-
Tansiri, 2007).
Commerce Bank uses a similar program titled, Destination Wow Campaign, where
branches are given points for various positive behaviors. Prizes are awarded to the branches with
the most points. Employees receive constant reinforcement throughout the campaign and each
branch is staffed with a senior retail market manager to drive sales and service and to develop
talent. And providing proof that the campaign is working, J.D. Power and Associates ranked
Commerce Bank as the highest in customer satisfaction for their region (Casison-Tansiri, 2007).
Aside from employee incentive programs, other activities can be implemented in an
internal marketing campaign to boost employee engagement. Doug MacMillan, president of
MacMillan Marketing Group, provides the following suggestions:

Communicate the companys plans and successes, through staff meetings, e-mail
bulletins, internal blogs, etc. Company news should be spread internally first in order to
create a cohesive team built on trust.
Celebrate employee milestones, through advertisements in local papers and employee
newsletters.
When stress levels are high, provide flexibility (flexible hours, job sharing, inner-office
daycare).
Be a good corporate citizen. Find out what charities are important to your employees and
support them.
Review corporate goals with employees and provide them with an annual evaluation
process and opportunities for two-way feedback.

Beverly Kaye and Sharon Jordan-Evans (2006) document similar beliefs in their article,
Give Employees the Space They Need. Their first tip is for firms to embrace telecommuting.
They mention how one firm allowed a valued employee to work from home two days a week and
actually saw a 10% increase in her productivity. Offering a flexible dress code is another way to
give employees their needed space. Microsoft is an example of a successful firm that has no
established dress codes in many of their departments. Providing flexible work schedules is an
additional way to provide employees with options to best fit their individual needs. Kaye and
Evans note that research found that todays emerging workers are seeking employment where
work schedules are flexible (Kaye & Jordan-Evans, 2006).
Humor can also be used to obtain employee engagement. Loyalka (2006) suggests that
humor produces happier employees, enhances our ability to retain information, allows people to
cooperate with one another, and reduces stress. When employees are bored with their jobs, they
turn to diversions such as daydreaming, playing games, and surfing the web to pass the time. If
the organization itself brings humor into the workplace, it can at least maintain some control.
Southwest Airlines realizes the importance of humor in its organization. Spokeswoman
Brandy King says that the company hires individuals based on their personalities then provides
training for the necessary skill. Ben and Jerrys formed a group of staff members to plan holiday
celebrations, themed meals, funny skits and other morale-building activities. Adding humor to an
organization can help create a sense of unity among employees and can foster relationships that
encourage better business (Loyalka, 2006).


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CONCLUSION

Someone once said: If you take care of your employees, they will take care of your
customers. The organizations that want to develop a differential advantage realize how true the
statement is. It has been called internal marketing, marketing within, or employee marketing, but
in the end, its all about making sure the organizations employees are company advocates.
Company advocacy goes beyond being service oriented to the first customer. Its about being a
committed employee to the organization; otherwise, its just a job. Internal marketing is not
about building employee loyalty or retaining your best employees, even though these may be
side benefits. Its about developing a marketing campaign so compelling that people want to
work for you and those who do, do a much better job with customer satisfaction.
An organization that is completely focused on fulfilling its company promise from the
top of the organization all the way to the bottom of the organization will be a very powerful one.
With such a highly competitive business environment today, employee involvement in fulfilling
marketing goals is a necessity for firms to remain competitive. Organizations must realize the
importance that all employees have in marketing the firms image.

REFERENCES

Berry, L. L (1981, March 3). The Employee as Customer. Journal of Retail Marketing, 25-28.
Casison-Tansiri, J. (2007, October). Solid Returns. Manage Smarter. Retrieved from
http://www.managesmarter.com/msg/search/article_display.jsp?vnu_content_id=1003649
197
Croft, M. (2007, March). Training and Development: Brand Ambassadors. Marketing Week,
39(1).
Farzad, A., Nasim N., & Caruana, A. (2008). The Effect of Internal Marketing on Organizational
Commitment in Iranian Banks. American Journal of Applied Science, 5(11), 1480-1486.
Gronroos, C. (1981). Internal Marketing - Theory and Practice. American Marketing Association
Service Marketing Conference Proceedings, 41-47.
Hammond, K. W. (2006, June). Marketing Professionals have the Ability to Assist Management
with Accomplishing Strategic Marketing Directives. Intermountain Contractor, 62(6),
81(1).
Hein, K. (2009). Internal Relations. Brandweek, 50(7), 8-11.
Kaye, B., & Jordan-Evans, S. (2006, April). Give Employees the Space They Need. Fast
Company. Retrieved from http://www.fastcompany.com/resources/talent/bksje/041006
Loyalka, M. D. (2006, April). Laughing your way to Success. Fast Company. Retrieved from
http://www.fastcompany.com/articles/2006/01/laugh
Nittala, R., & Kameswari, A. V. (2009). Internal Marketing for Customer Satisfaction in Retail
Sector. AIMS Internal Journal of Management, 3(3), 207-220.
Roberts-Lombard, M. (2010). Employees as customers An Internal marketing Study of the
Avis Car Rental Group in South Africa. African journal of Business Management. 4(4),
362-372.
Tools & Metrics: Ask the Expert. (2007, July). B to B, 92(9), 14(1).
Whitley, S. (2006, January). Profitability is in the People. Black Enterprise, 36(6), 63(1).

245


STUDENTS ATTITUDES TOWARDS BUSINESS CODES OF ETHICS:
THE IMPACT OF GENDER

Faramarz Parsa, University of West Georgia. Carrollton, Georgia
fparsa@westga.edu

Nabil Ibrahim, Augusta State University, Augusta, Georgia
nibrahim@aug.edu


ABSTRACT

This paper extends previous research by investigating the basis for attitudes toward codes
of business ethics. A total of 853 students enrolled in seven universities in the northeastern and
southeastern United States participated in the study. The analysis of the data was conducted in
several stages. A multivariate analysis of variance (MANOVA) and a series of analyses of
variance (ANOVA) revealed significant differences between the female and male students.
Overall, the female students were more sanguine about the efficacy of codes of business ethics.

LITERATURE REVIEW

Codes of Ethics
Several organizational variables help shape ethical behavior. Some companies legitimize
the consideration of ethics as an integral part of decision making by providing strong guidance
and continuously reminding managers of what is ethical. Codes of ethics are an increasingly
popular tool. Businesses rely on them to reduce ambiguity, promote ethical practices, and
establish a strong ethical environment. These are formal documents, expressed in language
anyone can understand, that state an organizations primary values and the ethical rules and
principles employees are expected to adhere to (see, e.g., Adams, Tashchian, & Shore, 2001).
It must be remembered that codes of ethics have limits because they cannot anticipate
every situation that may arise. Also, in some cases, they are principally public relations
statements. Their effectiveness depends heavily on whether they are current and robust, whether
they are strictly implemented, and how employees who break the codes are treated. Most
importantly, they require managements genuine commitment and their explicit and unequivocal
support.

Gender
A sizeable academic literature has investigated students attitudes toward business ethics.
One important stream of research is in response to calls for the study of a persons demographic
characteristics as antecedent variables (e.g., Kelley, Ferrell, & Skinner, 1990). As a growing
number of women graduate from business schools and rise to managerial and executive levels,
the ethics literature has appreciated the value of examining the influence of gender. According to
Robin and Babin (1997), gender and age are the two most heavily researched variables in this
literature. The purpose of such research is to investigate differences and commonalities of
attitudes based on the gender of respondents.
246


When gender was included as an independent variable, the results have been
inconclusive. One area which has been largely overlooked is whether there are differences with
respect to attitudes toward codes of business ethics. The current study attempts to partially fill
this void. One important longitudinal study examining business students attitudes toward ethics
codes was conducted by Peppas (2003). He assessed opinions of ethics codes and what their
reasonable enforcement would accomplish via an instrument developed by Becker and Fritzsche
(1987) to survey managers in Germany, France, and the U.S. Peppas study was conducted in
1998 and 2002 to compare attitudes at two different points in time. The findings indicated that,
with one exception, attitudes toward codes of ethics were not significantly different in 2002 from
what they were in 1998. That is, they did not change following the highly publicized reports of
corporate unethical conduct and scandals. While this study has made important contributions to
our understanding of attitudes toward codes of ethics, no attempt was made to examine
differences between female and male students in spite of the possible influence of gender on
ethical attitudes as reported by other studies. This concern warrants further investigation.
Therefore, this paper extends previous research by taking its point of departure in Peppas
appeal that the findings of (his) study beg for further research ... to shed light on and to examine
the basis (italics mine) for attitudes toward codes of ethics... (p.85). Specifically, its purpose is
to examine students attitudes with regard to codes of ethics.

METHODOLOGY

Data were collected as part of a larger cross-national study of business ethics. A total of
874 graduating undergraduate students from seven universities in the southeastern and
northeastern U.S. were surveyed. A demographic section gathered data on the respondents
gender, age, and years of work experience. The questionnaire included an additional section
designed to assess attitudes toward ethics codes for professional pharmacists. This profession
was selected primarily due to its innocuous character, and because it does not tend to elicit
negative reactions and is not afflicted by disapproving opinions or attitudes. The eight items in
this section were inspired by the research of Becker and Fritzsche (1987) and Peppas (2003).
Respondents were asked to assume that an Ethical Practices Code had been developed for
professional pharmacists. Then they were requested to indicate on a five-point Likert scale (1=
Strongly Disagree, 5 = Strongly Agree) the extent to which they disagreed or agreed with eight
statements relating to the possible consequences of such a code in this profession. Table 1 shows
the eight statements. The eight items were treated as the dependent variables in the analysis,
while academic major (business/non-business) constituted the independent variable.

RESULTS

Fifty-five percent of the students were male. The average age was 25 years. Overall, they
had 4.7 years of work experience. Two t-tests showed no significant differences between the
genders with respect to age and years of work experience, respectively. A multivariate analysis
of variance (MANOVA) procedure was considered to be the most appropriate analytic technique
for exploring differences in scores between the business and non-business students.
247



The MANOVA revealed significant differences between the two groups (Wilks =
0.48, p = 0.029). That is, overall, the two groups provided different responses.
Finally, to understand the underlying contributions of the variables to the significant
multivariate effect, each of the eight dependent variables was tested using a one-way analysis of
variance (ANOVA) with the two groups treated as our two levels of the independent variable.
The results, depicted in Table 1, show that differences between the two groups were significant
on seven of the eight variables.

DISCUSSION

Surprisingly little attention has been given to students perceptions of business codes of
ethics. A particularly critical subject concerns similarities and differences between female and
male students with respect to these codes. This study led to several insights about this
relationship with important implications for practitioners and educators. First, when the results
shown in Table 1 are analyzed, several patterns emerge. Overall, the male students felt that the
pharmacists would welcome the code (mean = 4.44) and that it would help them by clearly
defining the limits of acceptable conduct (mean = 3.50); however, many believed these same
pharmacists would violate the code whenever they thought they could avoid detection (mean =
3.97). Indeed, their average scores were even lower for the code would raise the ethical level of
business (mean = 2.95), the code would be easy to enforce (mean = 2.87), and in situations
of severe competition, the code would reduce unethical practices (mean = 2.81). Interestingly,
the mean scores for these three items were below the midpoints of the scales. That is, although
________________________________________________________________________________________________________________________

TABLE 1. ANOVA Results for Differences between Female and Male Students
a

______________________________________________________________________________________________________________________
Females Males


(n = 384) (n = 469)
________ ________
Dependent Variables Mean Mean F p
________________________________________________________________________________________________________________________

The code would raise the ethical level of business in this profession 3.12 2.97 4.44 .003
(1.19) (1.11)

The code would be easy to enforce 3.18 2.87 4.12 .043
(0.81) (0.88)

In situations of severe competition, the code would reduce unethical practices 2.91 2.86 32.49 .000
(0.99) (1.07)

Individuals working in this profession would welcome the code 4.58 4.36 0.23 .634
(1.33) (1.41)

The code would protect inefficient pharmacists 3.10 3.54 128.82 .000
(1.14) (1.22)

The code would reduce the profitability of pharmacies 3.01 3.68 66.36 .000
(1.28) (1.44)

The code would help pharmacists by clearly defining the limits of acceptable conduct 3.86 3.50 149.18 .000
(1.51) (1.39)

People would violate the code whenever they thought they could avoid detection 3.55 3.97 54.61 .000
(1.42) (1.21)


a
Standard deviations are in parentheses.
248


they believed that the code would be well received by pharmacists and that it would help clarify
the limits of acceptable behavior, in their opinion its impact would be modest. Finally, the male
students scores for the code would protect inefficient pharmacists and the code would reduce
the profitability of pharmacies were well above the midpoints of these two scales (means = 3.54
and 3.68, respectively).
The female students felt that the pharmacists would welcome the code (mean = 4.50) and
that the code would help pharmacists by clearly defining the limits of acceptable conduct
(mean = 3.86), but believed that these same pharmacists would violate the code whenever they
thought they could avoid detection (mean = 3.55). Their average scores for the code would raise
the ethical level of business (mean = 3.14), the code would be easy to enforce (mean = 3.18),
and in situations of severe competition, the code would reduce unethical practices (mean =
2.96) were slightly above or slightly below the midpoints of the scales and well below their
overall feeling that the pharmacists would welcome the code (mean = 4.50). Finally, the
females scores for the code would protect inefficient pharmacists and the code would reduce
the profitability of pharmacies were slightly above the midpoints of these two scales (means =
3.10 and 3.01, respectively).
When the mens scores are compared with those of the female students, the ANOVA
results show that, in general, the latter were more positive with respect to the impact of codes of
ethics - they were more confident that the code would raise the ethical level of business (F
1,851
=
5.80, p = .02). In addition, the females were more optimistic about the ethical impact of the code
in situations of severe competition (F
1,850
= 4.44, p = .04) and regarding their perception that
the code would be easy to enforce (F
1,851
= 28.13, p < .00). Also, the female students were
more confident that the code would help pharmacists by clearly defining the limits of acceptable
conduct (F
1,849
= 11.47, p < .00). On the other hand, male students were more certain that the
code would reduce the profitability of the industry (F
1,841
= 50.48, p < .00), would protect
inefficient pharmacies (F
1,851
= 29.13, p < .00), and would be violated whenever pharmacists
thought they could avoid detection (F
1,851
= 21.74, p < .00). Finally, no significant differences
between the female and male students with regard to the code being welcomed by individuals
working in this profession (F
1,846
= 0.40, p = .53).
Taken as a whole, these results corroborate previous research showing that gender has a
significant impact on students attitudes toward business ethics. Overall, the females were more
sanguine with respect to the codes influence on the pharmacists behavior and efficiency, its
impact on the profitability of their industry, and the ease of its enforcement. One potential
explanation may be found in the literature on the socialization process. Gilligan (1982) and
Gilligan and Attanucci (1994), for example, concluded that men and women perceive ethical
matters from distinctly different perspectives. They contend that these differences can be
attributed to the early socialization process which fosters an ethic of caring in women.
Nevertheless, both groups agreed that the code would be difficult to enforce and that it would not
reduce unethical practices when competition is intense.
For practitioners, these results evoke a greater urgency for the need to advance
organizational ethics. Although female students were more sensitive to codes of ethics, this study
demonstrates both genders' skepticism regarding their efficacy. Business leaders must recognize
that codes of ethics alone are necessary but insufficient. Some rely exclusively on codes of ethics
to reduce ambiguity, promote ethical practices, and establish a strong ethical environment.
Merely having standards is not enough; a company must make the standards understood, and
ensure their proper dissemination within the organizational structure (Palmer & Zakhem, 2001,
249


p. 83). Codes are more effective when supported by formalized training programs that promote
ethical conduct. The purpose of such training is to sharpen the written ethical code, demonstrate
its relevancy, and bring it to life (Valentine & Fleischman, 2008).
For educators, these results provide additional momentum to calls for requiring business
ethics courses in the business curriculum. There is evidence that these classes do have an impact
upon ethical behavior by reinforcing and strengthening the ethical beliefs of some or, for others,
calling the inadequacy of their beliefs into question. Although this topic is discussed in depth in
separate courses, and often arises in the ordinary course of teaching other business subjects,
Albrecht and Sack (2000) report that one of the most frequent criticisms of business curricula
and course content is we do not deal enough with values, ethics, and integrity (p. 512). The
results seem to offer proponents of greater emphasis on societal issues and ethical conduct in
business education support for their normative suggestions.
Caveats must be offered regarding the conclusions generated by this research. First,
additional research with larger national samples from each group would be necessary to confirm
these findings. As Shaub (1994) points out, an individuals ethical perspective could be
influenced by geographical and cultural location. Another caveat concerns the generalizability of
these results. A study such as this one is based largely on aggregate measures. However, it opens
a line of inquiry on whether these results are valid when only those operating in particular
industries are surveyed. This would ensure a greater homogeneity within the group being
studied. Finally, a comparison of business students and practitioners would be another productive
avenue. For example, it would be useful to examine differences between future managers,
younger managers, and managers with more extensive work experience. This type of analysis
would yield insight into the perceptions of these three generations attitudes toward codes of
ethics.

REFERENCES

Adams, J., Tashchian, A., & T. Shore. (2001). Codes of ethics as signals for ethical behavior,
Journal of Business Ethics, 29(3), 199211.
Albrecht, W. S., & R. J. Sack. (2000). Accounting education: Charting the course through a
perilous future, Accounting Education Series, 16 (American Accounting Association,
Sarasota, Florida).
Becker, H., & Fritzsche, D. (1987, Winter). A comparison of ethical behaviour of American,
French and German managers, Columbia Journal of World Business, 19, 87-95.
Gilligan, C. (1982). In a Different Voice: Psychological Theory and Womens Development.
Cambridge, MA: Harvard University Press.
Gilligan, C., & Attanucci, J. (1994). Two moral orientations: Gender differences and similarities.
Merrill-Palmer Quarterly, 34, 223-237.
Kelley, S. W., Ferrell, O. C., & Skinner, S. J. (1990). Ethical behavior among marketing
researchers: An assessment of selected demographic characteristics, Journal of Business
Ethics, 9(8), 681-688.
Palmer, D., & Zakhem, A. (2001). Bridging the gap between theory and practice: Using the 1991
Federal Sentencing Guidelines as a paradigm for ethics training, Journal of Business
Ethics, 29(1/2), 77-84.
Peppas, S. (2003). Attitudes toward codes of ethics: The effects of corporate misconduct,
Management Research News, 26(6), 77-99.
250


Robin, D., & Babin, L. (1997). Making sense of the research on gender and ethics in business: A
critical analysis and extension. Business Ethics Quarterly, 7(4): 61-90.
Shaub, M. (1994). An analysis of the association of traditional demographic variables with the
moral reasoning of auditing students and auditors, Journal of Accounting Education,
12(1), 1-26.
Valentine, S., & Fleischman, G. (2008). Ethics programs, perceived corporate social
responsibility and job satisfaction, Journal of Business Ethics, 77(2), 159-172.
251


THE EVOLUTION AND FUTURE OF CELLULAR TELEPHONY

Ken Griffin, University of Central Arkansas
keng@uca.edu

Steven Zeltmann, University of Central Arkansas
stevenz@uca.edu

Mark McMurtrey, University of Central Arkansas
markmc@uca.edu


ABSTRACT

Cellular telephony has come a long way in twenty short years. With the home to cell
phone portability now live, cutting the wire-line is sure to come. The world is going wireless and
as new technology is introduced the transformation will accelerate. A cell phone could be your
new best friend as they interact with appliances and serve as laptops, calendars and PDAs.

INTRODUCTION

Everyone knows that cellular telephones have advanced significantly over the years, but
many people dont actually understand basic cellular telephony or its evolution. In this paper we
address some of the basic misconceptions of cellular telephones with an emphasis on their
evolution. We also address some potential changes coming as cellular telephones and networks
continue to evolve.

CLARIFYING SOME MISCONCEPTIONS

1. Cellular telephones dont work like hand-held radios or ham radios or AM/FM radios for that
matter. They all use radio frequencies, but all of these radios use basic transmitter-to-receiver
communications. Repeaters are used in some cases, but the basic concept is the same with these
radios. So what makes cellular radio (telephony) different? It is the cells and the way they are
interconnected. A cellular telephone is communicating with a cell tower, not the party on the
other telephone. This is a huge advancement because the tower now controls what happens to
your voice and your data.

2. Cellular conversations are not completely wireless. We have established that when one person
is talking on his cellular telephone with another person on her cellular telephone, that each
person is actually communicating with a cellular tower. The towers are connected using
traditional telephone system technology (cables and microwave systems). The only traditional
radio piece of a cellular system is between the tower and a cellular telephone.

3. Cellular telephone systems are not completely separate from traditional landline systems. The
cellular towers and interconnections are owned (or leased) and managed by the cellular
telephone company. But most of the voice and data traffic on a cellular system will leave that
252


network and go onto traditional voice and data networks owned by other companies. These
include traditional telephone companies, long-distance carriers, and Internet service providers. In
fact, cellular telephony is very much integrated with traditional networks (Panko & Panko,
2011).

ZERO GENERATION

The approach of using cells that were hexagonal in nature has been around since 1947
and was developed by Bell Labs for AT&T. In the 1960s Bell labs refined the concept and hand
held cellular devices have been in use since 1983. Martin Cooper of Motorola is considered to be
the inventor of the first functional mobile phone, placing the first call in 1973. That first phone
cost approximately $1,000,000 to develop. The first automatic mobile phone system appeared in
1981 and represented the 1G or first generation of mobile phones (Teixeira, 2010).

FIRST GENERATION

First generation cellular systems used the cellular concepts discussed above with
traditional analog radio communication between the tower and the telephone. These systems
were limited to voice and suffered from noise associated with analog radio. Dropped calls were
common as these systems became saturated with new customers. Companies needed new
frequencies and more towers, or they needed to use their facilities more efficiently. From this
need was born the second generation.

SECOND GENERATION

Second generation cellular systems used digital radio between the tower and the cellular
telephone. Digital radio is much less noisy and much more efficient with the use of limited radio
frequencies. Second generation cellular was conceived as a digital voice technology, but limited
digital services could be provided such as texting and limited Internet access. Music and video
on these systems were not even considered. However, it became apparent that digital services
were becoming more in demand and that we needed networks designed for voice and data. From
this need was born the third generation.

THIRD GENERATION

The digital radio systems designed for third generation cellular systems facilitate voice
and data as two distinct digital streams. The voice channel continues to use circuit-switching
technology and the data channel uses packet-switching technology familiar in data networks.
Third generation cellular telephones changed to accommodate the new data technology
and incorporated larger displays. Internet access was expected with these telephones and
services, as were cameras. Actually, third generation cellular telephones became much more than
just telephones. These handsets are small computers with the ability to make telephone calls.
They can also take still photographs and video, so they replace digital cameras for many people.
They perform the duties of personal digital assistants, so they replace those devices for others.
But the desire to stay connected all of the time, and to access the Internet for entertainment
(music, TV, movies) and everything else is what has most burdened third generation networks.
253


So cellular telephone companies need more capability yet again, and the fourth generation is
being born.

FOURTH GENERATION

Fourth generation cellular systems focus on data. Its not about voice anymore! The exact
technology to support fourth generation cellular is still being formulated. For now, fourth
generation cellular is more about capabilities than specific technologies. Advanced antennas and
packet switching for both voice and data are expected components of fourth generation cellular
transmission. It appears that making a telephone call on a fourth generation cellular device will
be more like making a telephone call on a computer than on a telephone!
The goal of fourth generation cellular is to provide connection speeds associated with
desktop computers in homes and offices. People keep demanding more from their cellular
telephones and relying on these devices for more and more capability. Desktop capability in a
small, mobile and continuously-connected device is what many people want today. As cellular
devices evolve to desktop capability, then perhaps we will need a fifth generation network
(SearchMobileComputing, 2010)!

THE FUTURE

What does the future look like for the cell phone as technology continues to advance
allowing new applications for this device?
The cell phone of the future will support fast charging and reduce the time to charge a
cell phone battery to about 10 seconds. Researchers at MIT are pursuing this possibility
by tweaking the internal pathways of the ion flow in lithium ion batteries. Also, a
secondary benefit will be that the number of recharge cycles will be significantly
increased. All of this isnt new technology, just improving on existing technology and
maybe in a couple of years this will be available (Fastcompany, 2009).
Another concept of charging cell batteries is the use of piezoelectric generators (already
in use in some cell phones). This technology charges your phone using kinetic energy.
This means as the phone is used more you charge the battery more. If your battery is
about to be depleted, you can move around and always get one more message out of the
phone (Inhabitat, 2009).
Cell phones of the future will be more durable. They will be made from material that is
shape memorizing that is rubber-like. You will be able to roll the phone up like a ball
or fold it like a billfold and put it in your pocket. Dropping the phone on the floor will no
longer be a problem with its rubber properties (Cellphones.org, 2010).
The cell phone of the future will be your credit card. Simply bring your phone close to a
sensor and it reads the information from the phone. Your phone and bank are already
linked and you are charged and on your way. Since its a two way communication, the
transaction can be password protected. Trials are underway in Japan ( New York Times,
2009).
In combination with RFID, GPS, cameras and web connection you will be able to point
and find a building, monument, advertising or a product in a store. You will be able to
scan products you are interested in to find the price, what its made of, calories and other
254


information. This is currently being tested in the United Kingdom (Cellphones.org,
2010).
NASA has developed a technology called Silent Speech that is being adapted for cell
phone use. This technology allows users to speak without making a sound. The
technology uses the physical signs of speech, the movement of the throat and larynx, to
determine what is being said. You will be able to talk in libraries, church or other quite
areas (Cellphones.org, 2010).
The cell phone of the future may well be worn on your wrist. This device is being
developed by NTT DoCoMo, Japans largest cellular company. You call by inserting
your finger in your ear and sound travels by bone and cartilage from your wrist to your
finger and then vibrates through the ear. A sensor mounted on the underside of your wrist
includes both a speaker which points toward the skin and a microphone. You can start or
terminate a call by tapping your second finger and thumb together in different rhythms
while the same system will eventually be used to dial a number (Willams, 2010).
Speed, speed, and more speed. All of these future applications will need speed to be able
to handle the enhanced data traffic. South Korea has created a national plan for 1GB
(1,000,000,000 bits/sec) by 2012. How fast is this connection? One can download a High
Definition 90 minute movie in 3 minutes and 36 seconds, Tolstoys War and Peace in
.002 seconds or a standard definition movie in 12 seconds. In the United Kingdom,
Britain will usher in the era of super-broadband by 2015 (Taylor & Hudson, 2010).

CONCLUSION

In almost 20 years mobile phones have become an inexpensive piece of equipment that
has permeated most segments of our life today. In most countries cell phones outnumber land
lines. In the United States 50% of the children own cell phones and many individuals own a cell
phone instead of a land line at their residence. According to the CIA World Factbook, the United
Kingdom has more cell phones than people.
It is interesting that early cellular technologies only accommodated voice in the true
sense of telephony. Cellular systems today are transforming into wireless data connection
systems which can also accommodate voice. In fact, voice is technologically a minor capability
on these telephones. So we call them cellular telephones, but they are becoming cellular-
connected wireless hand-held computers with cameras and telephone connectivity.
We expect that desktop and laptop computers will begin losing favor as consumer staples
to the cellular telephone. Most people will probably continue to own a traditional computer for
the time being, but we suspect that it will be used less and less, and upgraded less frequently.
This might also be true for large-screen televisions. Especially for younger people, the large-
screen experience might return to the movie theater while the small-screen experience is
available anywhere and anytime on the cellular telephone. But the old desktop is still much better
for typing papers than a typewriter whats a typewriter?

REFERENCES

Cellphones.org (2010, February 11). Retrieved from http://cellphones.org/blog/8-future-cell-
phone-innovations
255


Fastcompany (2009, May 12). Retrieved from http://www.fastcompany.com/blog/kit-
eaton/technomix/invention-means-future-cellphones-charge-seconds
Inhabitat (2009, April 16). Retrieved from http://www.inhabitat.com/2009/04/16/kyocera-
unviels-kinetic-flexible-oled-cell-phone
New York Times (2009, January 25). Retrieved from
http://www.nytimes.com/2009/01/25/business/
Panko, R. R. & Panko, J. L. (2011). Business Data Networks and Telecommunications, Eighth
edition. Upper Saddle River, NJ: Prentice Hall.
SearchMobileComputing (2010). Retrieved from
http://searchmobilecomputing.techtarget.com/feature/1G-2G-3G-4G
SearchMobileComputing (2006) Retrieved from
http://searchmobilecomputing.techtarget.com/news/1237031/Mobile-computing-in-2006-
A-look-back
Taylor, R. & Hudson, A. (2010, October 15). BBC News. Retrieved from
http://news.bbc.co.uk/go/pr/fr/-/2/hi/programmes/click_online/9093991.stm
Teixeira, Tania (2010, April 23). BBC News. Retrieved from http://news.bbc.co.uk/go/pr/fr/-
/2/hi/programmes/click_online/8639590.stm
Willams, M. (2010, October 10). Retrieved from
http://www.pcworld.com/article/31342/cell_phone_of_the_future_fits_on_the_wrist.html
256


SHADES OF GREENEXPLORING VARIOUS APPROACHES TO GREEN IT

Summer E. Bartczak, University of Central Arkansas
sbartczak@uca.edu

Ken Griffin, University of Central Arkansas
keng@uca.edu

Steven Zeltmann, University of Central Arkansas
stevenz@uca.edu


ABSTRACT

As concerns about the environment increase, organizations are taking a variety of actions
to become more eco-friendly. Many of these actions are centered on information technology (IT)
and focus on greening various facets of the IT life cycle to include design, manufacture, use,
and disposal (Murugesan, 2010). For organizations just beginning to contemplate Green IT,
however, it proves difficult to quickly uncover simple ways to think about greening IT and
practical examples of what it really means. Using Murugesans (2008) Green IT Strategies
framework as foundational theory, the practitioner literature was scoured for examples of Green
IT efforts. A collection of various initiatives were identified and the best examples subsequently
categorized according to the framework. As a result, this paper addresses a void in the current
literature by providing a Green IT strategy/practical example matrix that can be used as a quick
reference guide by organizations just beginning their green IT journey.

INTRODUCTION

Undoubtedly, there are increasing concerns about the environment and sustainability
across societies, governments, and organizations. As such, many of these entities are taking steps
to green a spectrum of activities that will not only benefit the environment, but that may also
add to their eco-friendly reputation and, ultimately, financial bottom line (Wati & Koo, 2010).
One area of focus for greening is IT. Green IT can be defined as the practice of using,
designing, manufacturing, and disposing of computer hardware, software, and communication
systems efficiently and effectively with minimal impact on the environment (Murugesan, 2010,
pg. 4). Given that during the life cycle of IT there can occur significant energy and material
consumption, toxic waste production, and the creation of greenhouse emissions; it makes sense
that IT has become a new imperative for CIOs and IT professionals (Thibodeau, 2007). Because
Green IT is newer area of endeavor, many charged with the task, however, find it difficult to
quickly uncover simple mental models for thinking and planning for it. Moreover, they may
also find it difficult to identify practical examples or benchmarks that align closely with their
particular organizational situation and/or constraints. This paper attempts to identify and
summarize existing theory with regard to Green IT approaches/strategies and, using a more
popular framework, provides a match with some practical examples of current efforts (Table 1).


257


LITERATURE REVIEW

Again, Green IT involves practices associated with the IT life cycle--use, design,
manufacture, and disposalthat are focused on reducing impacts to the environment
(Murugesan, 2010). Green IT involves many focus areas and activities including power
management, data center design/layout/location, use of biodegradable materials, regulatory
compliance, green metrics and green labeling, carbon footprint assessment tools/methodology,
and environment-related risk mitigation (Murugesan, 2010, pg. 4). Green IT is also about using
IT for environmental sustainability, as it can be employed to support and enable other
environmental initiatives as well as help create green awareness (Murugesan, 2008, pg. 32-33).

Green IT Research
In conducting research regarding Green IT, it is becoming common to also find
references to Green IS. Although these topics are intimately related, Green IS has been touted as
a more encompassing term that not only incorporates the narrow focus of Green IT on
information technologies but is expansive enough to include a greater variety of possible
initiatives to support sustainable businesses processes (Watson, Boudreau, & Chen, 2010).
Whether focusing on Green IT or Green IS, the call for increased research and publications in
these related areas has been put forth to the IS academic community (Watson et al., 2010). It is
also evident through multiple calls for papers in publications such as IT Professional and
Communications of the ACM as well as the creation of the Special Interest Group on Green IS
(SIGGreen). The evidence reveals that Green IT/IS is a burgeoning interest, as well as, research
area.

Green IT Strategies/Approaches
Although the Green IT literature is evolving at a rapid pace, at the time of this research it
was still difficult to find rigorous work on the subject of Green IT strategies. A brief review of
what was uncovered is provided below.
The most commonly cited framework identified is offered by Murugesan (2008, 2010).
His practitioner-oriented research resulted in the development of three basic strategies identified
as 1) tactical incremental, 2) strategic, and 3) deep green. A tactical incremental approach to
greening IT involves an organization understanding the need to make improvements in their
corporate culture in order to help the environment. An example could be simply shutting down
computers at night. With a strategic approach, a company develops an actual companywide plan
to green most areas in IT. Usually, they start with an audit of their IT department and figure out
ways they could implement new strategies towards a cleaner, more efficient output. Companies
in the deep green category are the front runners of green IT. These companies are not only
adapting green ideas into their IT, but creating new ways to achieve the least amount of
environmental harm possible.
The Wall Street Journal, in collaboration with Prof. Leslie Willcocks of the London
School of Economics as cited in Techdirt (2010), categorized approaches, using very different
criteria, into four categories: 1) No-brainers, 2) Promising but Pricey, 3) Business Opportunities,
and 4) Distractions. The first is called the No Brainer in which companies recognize a cheap,
easy green technology to establish at their place of business. Examples of this would be turning
lights off or shutting down computers at night. The second category, Promising but Pricey
involve investing in technologies that might pay off, but there is a small amount of risk involved
258


in getting them established. An example of a Promising but Pricey green IT effort could be
consolidating data centers which sounds good in theory, but if the company were to take on a
substantial amount of business, they might be left shorthanded. The third area goes by the name
of Business Opportunities. A business opportunity is when a company can adopt a green IT
technology that will also attract a new customer base. A company could start planting trees,
which could persuade a fresh new wave of eco-friendly customers to do business with them. The
last approach is called Distractions. Distractions are technologys that might receive some
attention from the public, but could also be less productive than the original technology. Solar
panels can be very good for companies trying to create more renewable energy, but are
sometimes harmful to the corporation (TechDirt, 2010).
The final source identified comes from research being done at the Copenhagen Business
School. Based on a study of Green IT in Denmark, Hedman and Henningsson (2010) identify
three strategies for dealing with Green IT: 1) Storefront, 2) Tuning, and 3) Redesign. The
Storefront strategy is described as creating a facade indicating a devotion to Green IT. The
Tuning strategy refers to seeking efficiency improvements in existing processes. And, finally, the
Redesign strategy is about fundamental procedural and structural changes to leverage the
transformation potential of Green IT (Hedmann & Henningsson, 2010, pg. abstract).

METHODOLOGY

The method used in this research was a literature review combined with content analysis
(Krippendorf, 2004). Both academic and practitioner literature was gathered using internet and
library searches. Key words such as green IT, green IS, green computing were used as
well as exploring references/links offered by SIGGreen researchers. The literature was first
reviewed for existing Green IT strategy frameworks. Murugesans framework (2008, 2010) was
chosen as it appeared to be quite popular and often cited. Next, in order to identify good,
practical examples of Green IT efforts, three ranking lists of the top Green IT companies in
America were chosen. These lists included the 2009 ComputingWorld Top Green IT
Departments/Vendors (de Morsella, 2009), Ten Major Companies that Take Going Green
Seriously (Big Ideas For The Planet, 2009), and 25 Companies that are Going Green by
Business Pundit (Ryan, 2008). These lists were taken and examined for overlap, looking for the
instances where the same companies were identified on multiple lists. This approach was used in
order to lend support for the practical examples that would ultimately be chosen. Using the
reduced pool of examples that were identified across multiple lists, coding was conducted using
Murugesans strategy framework as a categorizing tool. Finally, three examples that best
represented the different Green IT strategies, and could foreseeably provide good benchmarks
for organizations just embarking on Green IT, were chosen to complete the matrix offered at the
conclusion of this paper.

RESULTS

The lowest level strategy proposed by Murugesan (2008) is the tactical incremental
approach. With this approach organizations stay with existing IT infrastructure and policies, yet
look for simple ways to achieve their green goals. Efforts that align with a tactical incremental
approach include reducing energy consumption in easy ways, assessing power management,
switching off computers when not use, using energy efficient light bulbs, and temperature
259


control (Murugesan, 2008). It was found that Citigroup has taken the tactical incremental
approach toward Green IT by reducing energy use throughout the company. Specifically, it
created a program to market the benefits of virtual servers to individual business managers that
can save 40% to 60% per month in IT chargeback costs and has led to a 73% reduction in power
demand for each data center. Citigroups electronics recycling program has also recycled
112,000 devices in the past two years and generated $30,000 in income that was donated to
charity. Citigroup is also in the process of consolidating its data centers with plans to reduce
from 54 to 24 in 2010 (de Morsella, 2009). Bank of America is also taking a tactical incremental
approach as they are working to reduce the amount of paper consumption within the company. It
reduced paper use by 32% from 2000-2005. Bank of America also runs an internal recycling
program that recycles 30,000 tons of paper each year. Finally, Dupont is the next making the
move to Green IT by reducing greenhouse emissions. As such, DuPont is drastically lowering its
emissions of airborne carcinogens/greenhouse gases. DuPonts seriousness is reflected in the
appointment of an ex-Greenpeace head as an adviser to their board (Ryan, 2008).
Murugesans strategic approach to Green IT addresses and broader & more effort-
intensive approach. It involves organizations conducting an audit of their IT infrastructure and
their environmental perspective. Subsequently, they develop more comprehensive plans and
distinctive new initiatives such as deploying new energy-efficient computing systems or
developing new policies on procurement, operation, or disposal. The strategic approach can also
deal with branding, image creation and marketing (Murugesan, 2008). Some organizations that
can be said to be taking a strategic approach include Hewlett-Packard, State of Indiana and
General Electric. Hewlett Packard is ahead of most companies with their efforts in going green.
Hewlett Packard expects that by the end of 2010 to have energy consumption across operations
reduced by 20%. The computers at Hewlett Packard are all 100% recyclable. Hewlett Packard
also maintains several e-waste recycling plants. Finally, Hewlett Packard also audits the supplies
it procures to ensure they are eco-friendly (Big Ideas For The Planet, 2009). The State of
Indiana can also be seen as using a more strategic approach. They have consolidated the Office
of Technology operations by consolidating seven data centers into one. They have also used
server virtualization to reduce the total server count by one third. They procured 30,000 Dell
machines using Intel Corps vPro chip which enables IT to manage all PCs over the network and
eliminates the need to travel to 800 sites they serve. The vPro chip also provides power
management capabilities that cuts the energy consumption and is also Energy star compliant.
Finally, the State of Indiana publishes a monthly newsletter for employees that keeps them
informed of green efforts and how they can contribute (de Morsella, 2009). General Electric is a
final example that can be seen as taking a strategic approach towards green IT. Since 2006, the
company has sold over $12 billion of its solar panels and other products alike. This company has
also gone to great effort eliminate polychlorinate biphenyls (PCBs) from the Hudson River
which have been a by-product of manufacturing (Ryan, 2008). Also, in 2010, GE invested $1.5
billion into clean research and development.
Murugesans (2008) deep green approach characterizes organizations that go the extra
mile to adopt additional measures such as implementing a carbon offset policy to neutralize
greenhouse gas emissions, planting trees, buying carbon credits from carbon exchanges, or using
green power generated from solar wind energy. Other deep green measures involve offering
benefits to employees who go green in different ways at home & outside of work. Some good
examples of organizations taking a deep green approach include Sun Microsystems, State Street,
and Burts Bees. Sun Microsystems looks to cut its carbon emissions by 2012. 55% of its
260


employees gave up their offices in order to emissions related to commuting and office energy
consumption which is estimated to save over 30,000 tons of carbon each year (Big Ideas For The
Planet, 2009). State Street is taking the deep green approach by buying wind power to
optimize efficiency in the company. This year State Street will extend its Environmental
Management System, the framework for its green program, into Asia. It has also replaced 90% of
its CRT monitors with energy efficient flat screen technology. Interestingly, the company is
required by law to periodically purge information which is saved on magnetic tapes. Today,
these tapes are burned and the heat is converted into electricity that is supplied back to the
commercial electric grid (de Morsella, 2009). The final example, Burts Bees, also is taking steps
go green. Its mission is to be the greenest personal care company on earth. As such, Burts
Bees aims to be carbon free and operating on 100% renewable energy by 2020. It also wants to
cease depositing waste in landfills and have all its facilities LEED-certified. As an interesting
effort, they are currently looking at ways to use hot air generated by the data center to heat its
buildings (de Morsella, 2009). To achieve such high goals, Burts Bees has tied them employee
incentive pay, sales, profits. They also use sustainability metrics that measure reductions in waste
output, energy, water use. Finally, they are heavily engaged in community outreach activities.

TABLE 1. A MATRIX OF STRATEGIC APPROACHES & PRACTICAL EXAMPLES OF GREEN IT
Tactical/Incremental Strategic Deep Green
CitiGroup

x Server virtualization
x Electronics recycling
x Consolidating data
centers

Hewlett Packard

x 100% recyclable
machines
x E-waste recycling plants
x Audits supplies for eco-
friendliness

Sun Microsystems

x Cut emissions
x Employees give up their
personal offices to cut
energy costs
Bank of America

x Reducing paper
consumption
x Recycling program
x Offer cash back to
employees who buy
hybrid vehicles

State of Indiana

x Consolidating data
Centers
x Server virtualization
x Installed vPro chip
x Green newsletter for
employees

State Street

x Buying wind power
x Server consolidation
x Converts extra heat into
electricity and feeds it
back to the power grid

DuPont

x Lowering greenhouse
gases
x Lowering the amount of
airborne carcinogens

General Electric

x Cleaning up rivers
x Solar Panels
x Invested $1.5 billion into
clean R&D

Burts Bees

x Company mission to be
green
x Facilities LEED certified
x Goals tied to
incentives/metrics


261

employees gave up their offices in order to emissions related to commuting and office energy
consumption which is estimated to save over 30,000 tons of carbon each year (Big Ideas For The
Planet, 2009). State Street is taking the deep green approach by buying wind power to
optimize efficiency in the company. This year State Street will extend its Environmental
Management System, the framework for its green program, into Asia. It has also replaced 90% of
its CRT monitors with energy efficient flat screen technology. Interestingly, the company is
required by law to periodically purge information which is saved on magnetic tapes. Today,
these tapes are burned and the heat is converted into electricity that is supplied back to the
commercial electric grid (de Morsella, 2009). The final example, Burts Bees, also is taking steps
go green. Its mission is to be the greenest personal care company on earth. As such, Burts
Bees aims to be carbon free and operating on 100% renewable energy by 2020. It also wants to
cease depositing waste in landfills and have all its facilities LEED-certified. As an interesting
effort, they are currently looking at ways to use hot air generated by the data center to heat its
buildings (de Morsella, 2009). To achieve such high goals, Burts Bees has tied them employee
incentive pay, sales, profits. They also use sustainability metrics that measure reductions in waste
output, energy, water use. Finally, they are heavily engaged in community outreach activities.

TABLE 1. A MATRIX OF STRATEGIC APPROACHES & PRACTICAL EXAMPLES OF GREEN IT
Tactical/Incremental Strategic Deep Green
CitiGroup

x Server virtualization
x Electronics recycling
x Consolidating data
centers

Hewlett Packard

x 100% recyclable
machines
x E-waste recycling plants
x Audits supplies for eco-
friendliness

Sun Microsystems

x Cut emissions
x Employees give up their
personal offices to cut
energy costs
Bank of America

x Reducing paper
consumption
x Recycling program
x Offer cash back to
employees who buy
hybrid vehicles

State of Indiana

x Consolidating data
Centers
x Server virtualization
x Installed vPro chip
x Green newsletter for
employees

State Street

x Buying wind power
x Server consolidation
x Converts extra heat into
electricity and feeds it
back to the power grid

DuPont

x Lowering greenhouse
gases
x Lowering the amount of
airborne carcinogens

General Electric

x Cleaning up rivers
x Solar Panels
x Invested $1.5 billion into
clean R&D

Burts Bees

x Company mission to be
green
x Facilities LEED certified
x Goals tied to
incentives/metrics


261

employees gave up their offices in order to emissions related to commuting and office energy
consumption which is estimated to save over 30,000 tons of carbon each year (Big Ideas For The
Planet, 2009). State Street is taking the deep green approach by buying wind power to
optimize efficiency in the company. This year State Street will extend its Environmental
Management System, the framework for its green program, into Asia. It has also replaced 90% of
its CRT monitors with energy efficient flat screen technology. Interestingly, the company is
required by law to periodically purge information which is saved on magnetic tapes. Today,
these tapes are burned and the heat is converted into electricity that is supplied back to the
commercial electric grid (de Morsella, 2009). The final example, Burts Bees, also is taking steps
go green. Its mission is to be the greenest personal care company on earth. As such, Burts
Bees aims to be carbon free and operating on 100% renewable energy by 2020. It also wants to
cease depositing waste in landfills and have all its facilities LEED-certified. As an interesting
effort, they are currently looking at ways to use hot air generated by the data center to heat its
buildings (de Morsella, 2009). To achieve such high goals, Burts Bees has tied them employee
incentive pay, sales, profits. They also use sustainability metrics that measure reductions in waste
output, energy, water use. Finally, they are heavily engaged in community outreach activities.

TABLE 1. A MATRIX OF STRATEGIC APPROACHES & PRACTICAL EXAMPLES OF GREEN IT
Tactical/Incremental Strategic Deep Green
CitiGroup

x Server virtualization
x Electronics recycling
x Consolidating data
centers

Hewlett Packard

x 100% recyclable
machines
x E-waste recycling plants
x Audits supplies for eco-
friendliness

Sun Microsystems

x Cut emissions
x Employees give up their
personal offices to cut
energy costs
Bank of America

x Reducing paper
consumption
x Recycling program
x Offer cash back to
employees who buy
hybrid vehicles

State of Indiana

x Consolidating data
Centers
x Server virtualization
x Installed vPro chip
x Green newsletter for
employees

State Street

x Buying wind power
x Server consolidation
x Converts extra heat into
electricity and feeds it
back to the power grid

DuPont

x Lowering greenhouse
gases
x Lowering the amount of
airborne carcinogens

General Electric

x Cleaning up rivers
x Solar Panels
x Invested $1.5 billion into
clean R&D

Burts Bees

x Company mission to be
green
x Facilities LEED certified
x Goals tied to
incentives/metrics


261


CONCLUSION

This research identified a number of Green IT strategy approaches, as well as an
abundance of practical examples that represent each. In conducting the exercise of assigning the
different practical examples to the various categories, it became clear that the categories are not
strictly distinctive and, as described, leave gray areas between. In the same vein, it was found
that organizations may be executing green IT efforts that fall in more than one category. More
than anything, this research identified a fast developing body of research that will undoubtedly
grow. Fortunately, as it does, organizations looking to green their IT will have a rich
knowledge base from which to quickly draw ideas and explore lessons learned so that they may
be more successful on their Green IT journey.

REFERENCES

Big Ideas For The Planet: Ten Major Companies That Take "Going Green" Seriously. (2009). CNBC.
Retrieved from http://www.cnbc.com/id/21657383/?photo=5
de Morsella, T. (2009, May 4). ComputerWorld Announces List of Top Green IT Departments and
Vendors. Retrieved from http://greeneconomypost.com/computingworld-top-green-it-
departments-green-it-vendors-2410.htm
Hedman, J., & Henningsson, S. (2010). Three Strategies for Green IT: Storefront, Tuning and
Redesign. IT Professional. Retrieved from
http://doi.ieeecomputersociety.org/10.1109/MITP.2010.141
Krippendorf (2004). Content Analysis An Introduction to Its Methodology. Thousand Oaks, CA:
SAGE Publications.
Murugesan, S. (2008, January/February). Harnessing Green IT: Principles and Practices. IT Pro,
24-33.
Murugesan, S. (2010, March/April). Making IT Green. IT Professional, 4-5.
TechDirt. (2010, Feb 1). Categorizing Your Green IT Efforts. Retrieved from
http://www.techdirt.com/blog/itinnovation/articles/20100126/1841157911.shtml
Thibodeau, P. (2007, October). Gartners Top 10 Strategic Technologies for 2008.
Computerworld, 9.
Ryan (2008, Jul 29). 25 Big Companies That Are Going Green. Retrieved from
http://www.businesspundit.com/25-big-companies-that-are-going-green/
Wati, Y., & Koo, C. (2010). The Green IT Practices of Nokia, Samsung, Sony, and Sony
Ericsson: Content Analysis Approach. Proceedings of the 43
rd
Hawaii International
Conference on Systems Sciences, Koloa, Kuai, Hawaii 5-8 January (pp. 1-10).
Watson, R. T., Boudreau, M., and Chen, A. J. (2010). Information Systems and Environmentally
Sustainable Development: Energy Informatics and New Directions for the IS Community. MIS
Quarterly, 34(1), 23-38.

262










CHAPTER 14

HUMAN RESOURCES MANAGEMENT

263


LINKAGES BETWEEN PERCEIVED OCCUPATIONAL AND ORGANIZATIONAL
COMMITMENTS OF GENERAL EMPLOYEES IN JAPANESE ORGANIZATIONS

Kaushik Chaudhuri, Reitaku University, Japan
kchaudhu@cs.reitaku-u.ac.jp

Paul A.Fadil, University of North Florida, USA
pfadil@unf.edu


ABSTRACT

This paper explores the linkages between three forms of organizational commitments,
(affective, continuous and normative) and occupational or career commitment as perceived by
general employees in Japanese organizations. Data were collected from the 227 non-managerial
employees associated in 16 companies at Kanto region of Japan in October 2008 to February
2009. Hierarchical OLS regressions indicate employees occupational commitment have
significant positive relationships with their affective and normative organizational commitments,
but a significant negative relationship with their continuous organizational commitment. The
research findings contributed to the extant of literatures in organizational behavior and employee
psychology.

INTRODUCTION

Commitment exists in multiple forms and drives employees to exert superior efforts for
high performance in organizations (Meyer & Allen, 1997). However, instability of organizational
life and uncertainties and dissatisfaction associated with the working environment could shift
individuals commitment from organization to his/her occupation or career (Blau, 2003). Is there
a conflict between occupational or career commitment and organizational commitment of
employees? The majority of the previous studies probing this issue were conducted in USA or
Europe, in a single industry or among professionals engaged in a single occupation, showed
inconsistent results. It is also not known empirically how well these findings can be generalized
in diverse professions or workplaces especially in non-western settings. This study aims to
bridge these gaps with an intention to assess the relationships between the three forms
organizational commitment, (Meyer & Allen, 1991) the affective (AC), continuous (CC) and
normative commitments (NC), and occupational commitment, (OC), (Blau, Paul & St. John,
1993) as perceived by the 227 general employees in 16 Japanese organizations to answer the
prime research question of this paper.

LITERATURE REVIEW

Organizational and Occupational commitment
Organizational commitment is the psychological link between an employee and his or her
organization. Individuals who have very low organizational commitment tend to have high levels
of absenteeism and usually voluntarily leave the organization (Meyer & Allen, 1997). As an
extension of organizational commitment, occupational commitment (OC) is also a psychological
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state that characterizes the employees attachment to the occupation and has implications for the
decision to continue in the occupation. Blau (1985, p.311), defined OC as ones attitude,
including affect, belief, and behavioral intention, toward his/her occupation. The binding
force, that is the essence of commitment can occur in many different dimensions or forms. Such
dimensions recognize the complex motivations people have, making sense of their lives and
evaluating different reasons for taking or continuing a certain course of action. The most
widespread model which was developed by Meyer and Allen (1991, 1997) distinguishes between
three mindsets that cover three forms of commitment dimensions: attachment based on emotional
attitudes; loyalty or affective commitment (AC), the sense of obligation towards the organization
or normative commitment (NC), and the perceived cost of leaving the organization, stability,
availability of alternative and side-bets or continuous commitment (CC). The antecedents and
implications vary across these dimensions. The same scale to study organizational commitment
was used to study OC (Meyer, Allen & Smith, 1993).

Relationship between Organizational and Occupational commitment
Howell and Dorfman (1986), Kalleberg and Berg (1987) are some of the authors who
posited a conflict between commitment to professions or occupations or careers and commitment
to organizations. Kalleberg and Berg claimed by the zero-sum game concept, an increase in the
level of commitment to profession, will result in a decline in commitment to organization, and
vice versa. This was refuted by Podsakoff, Williams, and Todor (1986), Aranya, Kushnir and
Valency (1986). Baugh and Roberts (1994) suggest that the simultaneous occurrence of high
levels of both forms of commitment may be desirable for the organization, and can act as a
check and balance tool for each other. High professional commitment, for instance, may absorb
some of the dysfunction of high commitment to the organization, such as the organization man
syndrome. Likewise, high career commitment, alone, without the support of a reasonable level
of organizational commitment, can be of less utility, as it may result in high quality work, which
is not maximally attuned to the organizations needs. Recent studies also suggest there is an
absence of any conflicts between the two forms of commitment (Kim & Chang, 2007; Lee,
Carswell, & Allen, 2000; Mathieu & Zajac, 1990; Rahman & Hanifiah, 2002; Wallace, 1993;).

Commitments in Japan
Markus and Kitayama (1991, p. 227) stated that in Japan, ones behavior is determined,
contingent on and to a large extent organized by what the actor perceives to be the thoughts,
feelings, and actions of others in the relationship. Japanese commitment existed in a complex
form having a strong relation with the Japanese culture of om and giri. Once om, referred to as
favor, is rendered, a sense of reciprocation is supposed to follow in the form of obligation on the
part of the recipient of the om. Giri is the obligation, or an act of social expectations that
reciprocate the favor and an act deemed appropriate from his or her position in relation to the
social structure. Giri is linked to the honor and personal integrity and is often dependent to what
people might say or think. In a collectivist society like Japan, what is expected is more important
than enjoying what is done. Obligation is emphasized and showing obligation is socially
demanded and monitored in Japan. They have to be committed in order to maintain harmony
within the group and to maintain consistency to the interdependent construal of the self. Both
being have to commit and want to commit could have a close inter-linkage in the collectivist
culture of the Japanese society. Japanese people would relate commitment to the notion of
connection, membership, responsibility, cooperation and interest (Guzley, Araki, & Chalmers,
265


1998). There are also studies, which have emphasized organizational commitment as the
resultant output of Japanese companies philosophy (Taka, 2010); organizational citizenship
behavior, practice of lifetime employment in Japanese organizations, involving employees in
decision making process as the quality circles and ringi system (Lincoln & Kalleberg, 2003);
various employee participatory programs and less stressful working conditions (Chaudhuri,
2010). Low labor mobility in Japanese organizations (Japan Institute of Labor, 2009) indicates a
strong relationship between occupation and organizational commitment. Therefore, it is
predicted Japanese employees OC should be positively related to their emotional attachment,
loyalty and obligations towards their organizations. Hence the first hypothesis:

Hypothesis 1(H1): OC is positively and significantly related to AC and NC in the
perceptions of the general employees in Japanese organizations.

Widely accepted work commitment model of Morrow (1993), Carmeli and Gefen (2004),
Snape, Lo and Redman (2008), constructs suggest CC is having negative correlation to career
commitment or OC. Hofstede (1991) has also claimed the organization-employee relationship in
collectivist cultures is linked to moral terms rather than calculative terms existed in
individualistic cultures. Japanese employees side-bets may not be positively related to their
occupational or career commitment. Hence the prediction of the second hypothesis:

Hypothesis 2 (H2): OC is negatively and significantly related to CC in the perceptions of
the general employees in Japanese organizations.

RESEARCH DESIGN AND MEASURING INSTRUMENT

Responses from non-managerial employees were collected from multiple sources,
including the HR heads of 16 Japanese companies and representative union members (Nihon
Rodo Kumiai So Rengo Kai), and affiliated organization Soubu Chiiki Kyogikai. The
respondents were asked to fill out questionnaires in most cases, while in some others, the
completed questionnaires were returned to the first author in prepaid self-addressed envelopes,
(provided by the author). As the target was native Japanese speakers, all the questions were
translated into Japanese, initially by the authors, following the general conventions of back
translation as proposed by Brislin (1990) and then modified with the help of two academic
guides of the first author, Prof. H. Oba and Prof. C. Nakano. Both are native Japanese speakers
and faculties in Economics at Reitaku University. A 6 point Likert scale (very accurate = 6,
accurate = 5, partially accurate = 4, partially inaccurate = 3, inaccurate = 2 and very inaccurate =
1) was applied to all measurement of all the variables used in the study, without any neutral
point, to avoid the inclination of Japanese respondents towards neutrality (Lincoln & Kalleberg,
2003). A seven item scale originally derived by Meyer and Allen (1991) was adapted, following
Chaudhuri (2010), Taka (2010) for measuring AC. Cronbach alpha was 0.86 (Mean = 29.3,
S.D.= 6.3). A three item scale adapted from Meyer and Allen (1991) for CC produced 0.62
(Mean = 12.7, SD= 3.0). Low but generally acceptable generally considered adequate in social
studies (Slater, 1995). To measure NC, three items were also adapted from the Meyer and
Allens scale which showed Cronbach alpha of .61 (Mean = 9.47, SD = 3.07). A Principal Axis
Factoring method with varimax rotation was used on three factors in all the total 13 items of
organizational commitment used in this study. Eigen value of 3.63 with 27.93% variance was
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explained on Factor 1, AC. Eigen value of 1.39 with 10.70% variance on Factor 2, CC and an
Eigen value of 1.35 with 10.40% variance on Factor 3, NC, were obtained. OC was measured by
six items adapted from Blau et al. 1993 resulting Cronbach Alpha of .75 (Mean = 24.0, SD= 5.5).
Principal Axis Factoring on a single scale of 6 items in OC produced an Eigen value of 2.15 with
a variance of 35.86%.

SAMPLE

Data were collected between October, 2008, and February, 2009, from 16 companies
ranging from large conglomerates to small companies involved in various industries in the Kanto
region of Japan. In total, 250 responses (52%) from non-managerial employees were collected,
of which 23 were rejected owing to incomplete responses. Finally, 227 samples were found
suitable for analysis and sufficient for a social science study (Roscoe, 1975). All the respondents
in the study were native Japanese males (98%) and 73% of the respondents were married.
Average respondents were divided within 5 age groups (mean = 2.39, SD = 0.95) of 30 - 39
years old, which were the largest at 48%, followed by age group 40 - 49 with 21%. Respondent
groups below the age of 29 years and between 50 and 59 each comprised 15% and 1% in the age
group above 60 years. All respondents were permanent non-managerial employees in their
organizations. Their areas of work were production (41%), maintenance (30%), administration
and others (17%), sales and marketing (11%), IT and software development (only 1%). High
school graduates were 46% and 40% were university graduates, as well as some graduates of
professional schools, and other forms of education. 43% of respondents worked (mean= 2.43,
SD=1.724) in organizations employing more than 5000 people, while 26% worked in
organizations employing between 1000 and 4999 people. The rest worked in medium and small
sized organizations ranging from 300-999 at 5%, 100-299 at 7%, 50-99 at 9%, and 10-49 people
at around 10%. 66% of the respondents were the main bread earners in their family (mean= 0.66,
SD = 0.476) and 75% had dependants (mean= 3.03, SD = 1.376) in their family. About 42% of
the respondents had more than 16 years of service in the current organization (mean = 1.86, SD=
0.886). A large proportion (74%) had no experience in working in other organizations, according
to figures for years of service in other organizations apart from the one where he/she was
currently employed (mean = 0.255, SD = 0.437). About 70% of the respondents had a monthly
salary of between 250,000 and 350,000 yen (approximately US$2500-3500) while 18% earned
above 350,000 yen and 12% below 250,000 yen monthly.

CONTROL VARIABLES (DEMOGRAPHIC)

Following Chaudhuri (2010), six controlled demographic variables were used in this
study. They are: (1) Employee age (in terms of birthday) into 5 Age groups (1= Age within 29
years; 2= Age ranging from 30-39 years; 3= Age ranging from 40-49 years, 4= Age ranging from
50 to 59 ; and 5=60 and above); (2) years of service in the current organization (the actual
number of years of each respondent); (3) years of service in other organizations (1 was assigned
when a respondent had never experienced job-hopping, while a 0 was assigned when one had
not); (4) the number of employees in the workplace (company size) (measured in terms of the
number of employees in each establishment); (5) being the main bread earner (1 for yes, 0 for
no); and (6) the number dependants (actual number).

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ANALYTICAL TOOLS

Hierarchical OLS regressions were conducted using SPSS 13 software. The control
variables were initially entered followed by mean OC in the second step to predict AC, CC and
NC. Finally, all six items of OC were entered simultaneously in the same process to predict the
three forms of organizational commitment.

FINDINGS

None of the demographic (control) variables resulted in any significant relationship with
OC, except number of employees, which were negatively related in the regression with CC. AC
showed significant positive relationship ( =.62, t= 11.32, p<.001). The overall regression
equation produced R
2
= .39, R
2
= .36, F = 19.68, (p<.001), F = 128.17 ( p<.001). NC also
showed a positive significant relationship having ( =.43, t= 6.70, p< .001), with overall equation
produced R
2
= .18, R
2
= .17, F = 6.86, (p<.001), F = 44.85 (p<.001). The results supported to
hypothesis H1. CC produced significant negative relationship with OC ( = -.16, t= -2.39,
p<.05), Overall the equation in this model produced R
2
= .08, R
2
= .02, F = 2.59, (p<.01), F
= 5.70 ( p<.01). This result supported the hypothesis H2. Item of OC as, no money need still
continue this job, ( =.20, t= 3.70, p<.001); like this occupation too well to give up, ( =.15, t=
2.14, p<.05); and ideal occupation, ( =.41, t= 5.75, p<.001) produced significant relationship
with AC without any significance relationship of demographic variables. The model produced R

2
= .46, R
2
= .44, F = 15.40, (p<.001), F = 29.01 ( p<.001), showing supports to H1.
Dissatisfied with jobs (reverse rated), ( =.16, t= 2.21, p<.05) and ideal occupation, ( =.32,
t= 3.76, p<.001) were the two items of OC which positively and significantly related to NC. The
equation that produced was R
2
= .24, R
2
= .23, F = 5.70, (p<.001), F = 10.84 (p<.01). When
CC was predicted, none of the items of OC was significantly related. The overall result of the
regression obtained as R
2
= .10, R
2
= .05, F = 1.95, (p<.001), F = 1.82 (p>.05), indicating
weak support to H2.

DISCUSSION

Overall the results of the study showed supports to the previous findings of OC, having
strong and positive relationships with organizational commitment notably, AC and NC, (Lee et
al., 2000; Mathieu & Zajac, 1990; Rahman & Hanifiah, 2002; Vuuren, Veldkamp, Jong &
Seydel, 2008; Wallace, 1993). However, CC having significant negative relationship with OC, is
also supported by previous authors (Morrow, 1993; Randall & Cote, 1991; Carmeli & Gefen,
2005). The strong relationship of AC and NC with OC could be due to the perceived value
congruence of occupation or career and organizations goal of general employees. Organizational
commitment depends upon the perceived match between employees own beliefs, and values, a
perceived fit with that of organization, which initiate reciprocity. Hall (1976) stated that the
greater the value of the occupation to an organizational survival the more likely the organization
is to develop an organizational value system consistent to the occupational value system.
Employees having low attachment to their occupation may not fit in the employment settings,
which values that occupation or career. This poor fit of occupation results in lower attachment to
the organizations. Thus, such employees having low perceptions of OC would likely have low
perceptions of organizational commitment. Similarly, when employees perceive their
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occupations are valued in the organizations and feel their interests are looked upon and are
important for the organizations missions and success would have stronger occupational and
organizational commitment. In a collectivist society such as Japan, benefits in a company are
based on long-term or time-indifferent criteria, calculating costs and benefits in the short term,
indicative of CC, is not relevant in these contexts and the calculation of economic benefits the
costs associated with leaving are thought to be unacceptable in these settings. North American
research has typically conceptualized costs associated with leaving as material or economic costs
but not the normative or social costs of quitting, salient for maintaining a reputation for loyalty,
crucial asset in relationship-oriented collectivist societies (Chang, 1999). This study did not show
any strong relationships with any of the demographic characteristics of the respondents with
organizational commitments similar to previous studies which have also resulted inconsistencies
(Meyer & Allen, 1991; Mathieu & Zajac, 1990). This paper has validated the existing
commitment models tested in Western set ups, by an empirical study in Japanese organizations.
Further comparative studies should be directed between Western and Asian cultures to probe
how the working environments and cultures influence the inter-linkages and antecedents of the
perceived forms of organizational and occupational commitment.

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APPLICATION OF A MEDICAL PROTOCOL TO WORKER LAYOFFS

C. W. Von Bergen, Southeastern Oklahoma State University
Cvonbergen@se.edu


ABSTRACT

Organizational downsizing has increased exponentially. It is one thing to speak abstractly
of the need to reduce costs and quite another to actually tell a worker that he or she has been laid
off. This paper offers practical advice to managers on conducting layoff conversations with
employees based on a widely used medical modelthe SPIKES protocol. This strategy has been
extensively employed by health care professionals who frequently communicate negative
information to patients and is offered as an approach that can be easily and effectively adapted
by managers when they must tell a person he or she has been terminated. Although breaking the
bad news of a cutback will never be easy, having a plan of action that entails sound business and
medical advice can help firms carefully manage and execute reorganizations.

INTRODUCTION

In the Oscar-nominated best movie for 2009, Up in the Air, Ryan Bingham, played by
actor George Clooney, is a corporate layoff expertTermination Facilitator in his words
whose job is to fire people from theirs (Up in the Air, 2009). When corporations need to
downsize quickly but hate the mess, Bingham flies in and breaks the news to the now former
employees. The anguish, hostility, and despair of his clients has left him unconcerned about
others, falsely compassionate, and living out of a suitcase. Throughout the movie one is left
wondering if there is a better, more humane way to conduct a downsizing.
In response to the disheartening realities of terminating individuals illustrated in this
movie, in the popular press, and in the professional literature, this paper provides executives with
guidelines on how to effectively and compassionately break bad news to workers that their job
has been eliminated because of a downsizing. Downsizing is also sometimes referred to as
reduction in force (RIF), layoff, restructuring, reorganization, resizing, retrenchment, involuntary
redundancy, closing, displacement, or termination. All of these euphemisms refer to the
voluntary actions of organizations to reduce expenses by shrinking headcount. Displacing people
is a wrenching experience. For instance, Grunberg, Moore, and Greenberg (2006) collected data
from 410 managers (none of whom were layoff targets themselves) who either had or had not
been in the position of having to inform subordinates about a layoff. The researchers found that
the more managers were personally responsible for conducting a layoff, regardless of their age,
gender, or marital status, the more likely they were to report physical health problems, to
seek treatment for these problems, and to complain of disturbed sleep (p. 176). The following
approach is offered to assist managers conduct a RIF.

THE TERMINATION MEETING

Often, it is just assumed that employees to be terminated will plainly be told that their
services are no longer needed and then escorted off the premises. This overly simplistic view
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may be incorrect because how the termination interview is conducted and the bad news of a job
loss is delivered can have a significant effect, positive or negative, not only on persons being laid
off but also on those who carry onthe so-called survivorsas well as the entire firm.
In one interesting study, Lind, Greenberg, Scott, and Welchans (2000) interviewed a large
number of laid off workers. Many of these individuals considered legal action following their
termination, and almost a quarter of them went so far as to speak to an attorney. The single best
predictor of willingness to take legal action was the treatment former employees received at the
time of their discharge. Among those who felt unjustly treated, Lind et al. (2000) found that a
full 66 percent contemplated litigation. Among those who felt justly treated, this dropped to just
16 percent when an apology was added. Although legal and human resource personnel advise
against apologizingan apology can be seen as an admission of guiltthese results suggest that
an apology may help promote feelings of interactional justice in which individuals are treated
with dignity, courtesy, and respect (Cropanzano, Bowen, & Gilliland, 2007) and that such
concerns actually reduce the risk of litigation.
Unfortunately, most executives have difficulty identifying elements of an effective
downsizing interview beyond protecting the organization from litigation. Indeed, Wood & Karau
(2009) argue that most organizations approach termination interviews from a defensive, legalistic
framework. This legalistic orientation might result in procedures that communicate a lack of
respect for the downsized worker, which, they argue, could make it more likely that the terminee
will engage in the very types of behaviors that the employer seeks to minimize. This seems to be
the case in an investigation by Karl and Hancock (1999) who found that manager termination
training was positively related to increased victim hostility. The reason, the authors suggest is
most termination training focuses on litigation prevention strategies that may be inconsistent
with favorable employee reactions, raising the possibility that practices designed to reduce legal
action may actually increase anger, hostility, and other negative outcomes because such
defensive-legalistic approaches likely communicate a lack of respect for the victim.
But what procedures should managers follow? We believe that the medical literature can be
helpful since breaking bad news is one of the most difficult and frequent tasks physicians have to
do. Bad news is defined as any information which adversely and seriously affects an
individuals view of his or her future (Buckman, 1992, p. 15). This phenomenon has been
widely researched yielding valuable guidelines (Buckman, 1986, 1992).
A review of procedures from the medical communities delivery of bad news provides
insights to managers and executives on ways to more effectively convey to workers the bad news
inherent in a discharge. Framing termination interviews within the medical context of breaking
bad news provides managers vivid examples of conversations which many may have
experienced either as patients or as part of a relationship with a loved one and thus provides
realistic insights into the very real and unpleasant situation of individuals losing their jobs.

PRINCIPLES GLEANED FROM THE MEDICAL LITERATURE

Six key elements have been used as a strategy that medical professionals have found useful in
delivering bad news to patients (Buckman, 1986). These six elements are summarized in the
acronym SPIKES which stands for Setting, Perception, Invitation, Knowledge, Empathy, and
Summarize. Each element of the SPIKES protocol is defined in Table 1 below.


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TABLE 1. SPIKES: A SIX-STEP MEDICAL PROTOCOL FOR BREAKING BAD NEWS

SSetting. This step involves establishing the right surrounding, including the physical setting of the discussion.
Here it is important to allocate adequate time for the meeting and manage interruptions so that privacy is maintained.
Patients prefer receiving bad news from a physician whom they know. The clinician should establish rapport with
the patient by maintaining comfortable eye contact, sitting at eye level with the patient, or touching the patient on
the arm or holding a hand (if the patient is comfortable with this).

PPerception. This guideline involves finding out what the patient already knows or suspects. The medical
practitioner should be able to construct a fairly accurate picture of the patients perception of the situationin
particular, how they view the seriousness of their condition. This knowledge is vital because it helps physicians
assess the, often unexpectedly wide, gap between the patients expectations and the actual medical situation. The
most effective method of conducting this conversation is by using open-ended questions.

IInvitation. It is useful to identify what level of detail the patient desires. For instance, a physician might say,
Some patients want every medical detail, but others want only the big picturewhats your preference? This
establishes that there is no right answer, and that different patients have different styles. Physicians should check
frequently to make sure that they and their patient are both thinking in similar ways. While the majority of patients
express a desire for full information about their illness, some do not

KKnowledge. Most authors suggest using simple language rather than more technical words; e.g., spread
instead of metastasized. Nevertheless, some researchers have argued that it is important to inform patients of the
specific terminology associated with their illness so that they can gain information on their own. The use of
euphemisms is somewhat problematic. While some researchers found that the use of the word cancer as opposed
to illness increased anxiety, suggesting that using euphemisms is beneficial to patient mental health, others caution
that using less offensive synonyms, for example, slow or developmentally delayed instead of mental
retardation, often deter understanding and often prevent people from grasping the full significance of the condition.

EEmpathy. This principle requires responding to the patients reactions and acknowledging all reactions and
feelings and reacting with compassion and understanding. Communication requires empathy and caring in addition
to skill. As emotions and reactions arise during the discussion, acknowledge them and respond empathetically. Such
empathy may involve touching the patients arm or hand.

SSummarize. Here the meeting is concluded. Before it ends, the information is summarized and the patient is
given an opportunity to voice any concerns or questions. If the physician does not have time to answer these
concerns, then the patient can be told that these issues can be discussed in detail at a following meeting. The
clinician and their patient should leave the conversation with a clear plan of the next steps that need to be taken.

SPIKES APPLIED TO DOWNSIZING IN ORGANIZATIONS

Delivering bad news is never effortless or painless, but to ease the level of uncomfortable
feeling, the delivery must be made with care which is exactly what the SPIKES protocol does.
This section illustrates the application of the SPIKES protocol to business with two slight
modifications indicating that there are important activities both before and after the actual
discussion that must be addressed.

Pre-SPIKES Interview Considerations

The Worker Adjustment and Retraining Notification Act (1989) requires employers of 100 or
more employees to give 60 days advance notice before closing a facility or starting a layoff of
50 people or more to employees who will (or who might reasonably be expected to) experience a
layoff. Thus, some consideration must be given to this regulation.
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Apart from such legalities, Marks and De Meuse (2005) recommend preparing employees
in advance for the impending change in head count. While some executives fear raising
employee stress and distraction from work, in actuality there are usually already rumors of
impending layoffs or closings and these tend to be much more frightening than reality. For
example, at one organization Marks and De Meuse (2005) noted that rumors indicated that 3,000
jobs were to be reduced at headquarters when in fact only 1,000 people worked there!
Downsizing without preparation can make managers look incompetent (Mishra, Spreitzer, &
Mishra, 1998), and thus some time spent in planning this discussion is essential. It is impossible
to make giving unpleasant news enjoyable but practice can help. This can help an individual
learn how to transmit negative messages constructively, without being hurtful.
Before conducting an actual termination interview, it is important to ensure that all legal
and human resource concerns have been addressed. It would be prudent to have a letter for the
terminated employee outlining specific things the organization will do for the employee.
Managers conducting the interview should recall the words of widely respected authority on
leadership, John Kotter, who famously said that executives undercommunicate on important
issues by a factor of ten (1996). In other words, managers should give considerable attention to
how information is to be communicated to downsized workers.

Setting
Patients want their physician to be honest, compassionate and caring, hopeful, and
informative. They want to be told in person, in a private setting, at their own pace with time for
discussion by a familiar person. The implication for managers is that the organization should not
allow management to treat downsized individuals as mere objects or production units but should
be considerate and respectful to them. Just as it is encouraged that a patients personal physician
deliver bad news to a patient rather than an outside specialist, most experts agree that the
workers immediate supervisor should be the one who delivers the bad news of a layoff.
Most knowledgeable persons agree that the best place to conduct a termination interview is in a
neutral location, such as a conference room or an empty office. This allows the manager to exit
gracefully after the termination interview and gives the downsized employee a few moments to
collect himself or herself in privacy (Rothman, 1989). Unless there is established privacy and a
distraction-free environment, information may be missed or not be transmitted effectively. Poor
locations include public areas, employees desk, or any area where a third party is present.
The manager conducting the layoff interview should be the employees direct supervisor
because he or she typically knows the employee best. De Valck, Bensing, and Bruynooghe
(2001) found that employees prefer a direct supervisor-employee relationship style of talk.
Managers must tell the truth and overcommunicate (Mishra et al., 1998). They should
carefully and thoroughly explain the criteria for layoffs and clarify the role of performance
evaluations or other key criteria in the layoff decision-making process (Leana & Feldman, 1992).
The supervisor should also develop a script that highlights the positive characteristics and
contributions that the employee has demonstrated during their time with the organization. While
some may believe that such positive scripts have the danger of being perceived as insincere,
Wood and Karau (2009) found that the focus on positives can have a favorable impact.
Another consideration impacting respect and dignity with regard to the setting involves
the presence of a third party, for example, a human resources representative or a security guard.
Wood and Karau (2009) found that having a third party present during the termination interview
resulted in lower perceptions of being treated respectfully, and feeling of anger were highest
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when a security guard was present during the termination interview. Karl and Hancock (1999)
likewise reported employee hostility increases when two or more people are present. These
findings suggest that third party presence may add insult to injury and should be avoided.
There does appear to be some support for terminating employees at the end of the work
day. Rothman (1989) suggests, If at all possible, you should allow the employee the courtesy of
being able to clean out a locker or desk when other employees are not present. The best time for
this would probably be at the end of the workday (p. 34). Nelson and Burke (1998) recommend
that laid-off workers and survivors should be allowed to grieve and say goodbye to each other
suggesting perhaps late in the day but still early enough for good-byes to be made. There does
appear to be some evidence that the magnitude of an employees hostility is greater when he or
she is terminated early in the week rather than later in the week (Karl & Hancock, 1999).

Perception
In most cases workers have begun to hear rumblings through the rumor mill and thus it is
appropriate to ask the employee what he or she already knows or suspects. In using the data
gathered from the individuals perception, the supervisor can correct misinformation and
determine the methodology in which the bad news should be delivered. The most effective
method of conducting this conversation is by using open-ended questions. This will help create a
reasonably accurate picture of how the employee perceives the organization and situations that
have caused the meeting. Examples of open-ended perception questions might include: What
have you been told about the organizations situation to this point? What is your understanding
of the reasons why the company is implementing a reduction in force program?

Invitation
This step involves offering employees who are affected by a layoff decision to present
information they consider relevant to the decision. This is known as voice (Lind & Tyler, 1988)
and it has been shown to lead to perceptions of justice (Folger & Greenberg, 1985) as well as to
positive reactions such as perceptions of fairness (Kanfer, Sawyer, Early, & Lind, 1987).
Interestingly, the opportunity to voice ones opinions regarding a decision increases the
perceived fairness of the process, even if one does not influence the decision (Folger, 1977)
because the opportunity to voice ones opinions is a desired end in itself (Korsgaard & Roberson,
1995) and because it validates employee self-worth (Tyler & Lind, 1992). Simply being able to
speak ones mind and voice his or her opinions causes employees to be more favorable toward
management actions. Getting workers involved can be achieved by asking open-ended questions
(e.g., How would you prefer that I give you the information about the organizations decision
on implementing the RIF? or Are you the kind of person who prefers to know all the details
about what is going on.

Knowledge
Wise executives tell everyone the same unvarnished story. Nevertheless, beneficial as
candor may be, great unintentional harm can be done when people speak honestly about difficult
subjects, hence caution is advised. Clearly explain the termination decision. Too often, when
people are terminated they claim that they had no idea why it happened (Coulson, 1981).
Supervisors should explain the issues factually and truthfully explain what is happening and
what the employees rights are in clear terms. Then after explaining the decision and
emphasizing that it is final, they should move on to practical matters like severance pay.
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Business research shows that perceptions of organizational justice, that is, being treated
fairly amid layoffs, can ease workplace tension, reduce the risk of lawsuits, and improve job
performance among workers who were not terminated (Cropanzano et al., 2007). Unfortunately,
certain aspects of downsizing are inherently unfair. The key for managers is to recognize that
organizational justice comes in several parts during the termination interview and business
leaders reap rewards even if they get only one of these components right.
Two kinds of organizational justice seem particularly important during these discussions:
procedural justice and interactional justice. Procedural justice involves peoples perceptions of
the fairness of the procedures used to determine the outcomes they receive (Cropanzano et al.,
2007). A just procedure is one that is applied consistently, free of bias, accurate, representative
of relevant stakeholders, and consistent with ethical norms. During layoffs, this means an
organization should consider factors such as seniority, job performance, and salary, and then
establish a process that managers can apply consistently to all. In a layoff conversation managers
should spend some time explaining the processes used in applying the downsizing rubric. A
person is interactionally just if he or she appropriately shares information and avoids rude or
cruel remarks. In other words, there are two aspects of interactional justice with one referring to
whether one is truthful and provides adequate justifications when things go badly. The second
part refers to the courtesy, respect, and civility with which one treats another.
For example, in one study, Skarlicki and Latham (1996) trained union leaders to behave
more interactionally just. Among other things, these leaders were taught to provide explanations
and apologies (informational justice) and to treat their employees with courtesy and respect
(interpersonal justice). When work groups were examined three months later, individuals who
reported to trained leaders exhibited more helpful organizational citizenship behaviors in which
people go beyond what is formally expected of them to contribute to the well-being of their
organization and those in it (e.g., being tolerant to temporary inconveniences without
complaining) than individuals who reported to untrained leaders.

Empathy
Be sympathetic to the laid off workers feelings. When one loses a job, the resulting
feelings of uncertaintyboth personal and financialare quite unsettling. This is bad enough, so
managers should not make the situation worse by being insensitive and uncaring. Compassion
and empathy are precisely what is needed most at this time.
The ability to use empathy effectively during a termination interview is likely to be an
important factor in how the employee views the experience. Moreover, showing empathy to the
downsized employees helps maintain the trust and empowerment of survivors (Mishra et al.,
1998). Indifferent, insensitive, or self-serving motives are likely to trigger negative reactions in
the terminated employee.
Von Bergen and Shealy (1982) provide a simple approach to expressing empathy.
Briefly, they indicate that an empathetic response conveys to the worker an understanding of
both the content and the feeling of a message. Empathy requires one to show an understanding of
a workers experience by responding to his or her feelings. The following types of formats will
be helpful in expressing empathy to the worker:
You feel (feeling) because (content).
When (content) it made you feel (feeling).
Its really (feeling) when (content).
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These responses let the worker know that the supervisor is trying to understand both what the
employee is saying and the emotions felt.

Summarize
In this stage the supervisor closes the discussion and communicates to the employee what
he or she can next expect. In most cases a detailed letter outlining the benefits the organization
will provide for the worker (e.g., severance packages and ways the firm will help employees with
job transition). More mundane matters might involve telling the worker that his or her computer
access will be terminated at a certain time and day, information regarding use of the company
telephone, and available printing resources. Managers should provide laid-off workers with fair
recommendations to future employers. Providing outplacement assistance for employees is a
critical part of managing the transition process. It is important that employees understand the
resources that the company will make available to them and what benefits they will receive and
for how long.
After summarizing the conversation and telling the employee the next steps,
consideration should be given to the mode of exit from the termination interview since such
dynamics are likely to affect perceptions of respect and trust. Individuals may be allowed to
leave individually or may be escorted, and the exit from the building may be either private or
public. For example, in the case of security escorts, a guard may be able to take the terminated
employee down a back hallway or use a service elevator that allows the employee to leave in a
discrete manner. Alternatively, a guard may escort the laid off employee through the work area
and directly out the front door with everyone watching.

Post-SPIKES Interview Considerations
A key activity associated with the interviews with terminated employees is reassuring
surviving employeesthose who were not fired. When someone gets downsized the word tends
to spread quickly. Survivors cannot help but wonder what the future holds for them. To the
extent that uncertainty may breed distrust and spin off rumors, it is wise for supervisors to
provide appropriate reassurances about the future. Such explanations can not only help layoff
survivors feel better about their futures, but can also help the company (Caplan & Teese, 1997).

REFERENCES

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MD: Johns Hopkins University Press.
Caplan, G., & Teese, M. (1997). Survivors: How to keep your best people on board after
downsizing. Palo Alto, CA: Davies-Black.
Coulson, R. (1981). The termination handbook. New York: The Free Press.
Cropanzano, R., Bowen, D. E., & Gilliland, S. W. (2007). The management of
organizationaljustice. Academy of Management Perspectives, 21, 34-48.
De Valck, C. Bensing, J., & Bruynooghe, R. (2001). Medical students attitudes towards
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Folger, R. (1977). Distributive and procedural justice: Combined impact of voice and
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of instrumental and non-instrumental voice in performance appraisal discussions. Journal
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Leana, C. R., & Feldman, D. C. (1992). Coping with job loss: How individuals, organizations,
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Interview: An Empirical Examination. Journal of Business Ethics, 86, 519-534.


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CHAPTER 15

INSTRUCTIONAL & PEDAGOGICAL ISSUES

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CLICKERS TECHNOLOGY ATTITUDINAL DIFFERENCES OF NATIVE-BORN AND
IMMIGRANT STUDENTS: WHAT ARE THE PEDAGOGICAL IMPLICATIONS?

Kellye Jones, Clark Atlanta University, Atlanta, Georgia
kjones@cau.edu


ABSTRACT

This study examines the clickers technology attitudes of native-born and immigrant
Business Administration students. Whether these attitudes differ is also explored. An ANOVA
analysis reveals that native-born students held more positive attitudes toward the technology.
The empirical results shed light on the continuing role of technology in the classroom.
Pedagogical implications associated with the differential attitudes of these students are discussed.

INTRODUCTION

Technology continues to pervade the university experience. A vast majority of college
campuses in the US are specifically using classroom technology in order to enhance student interest,
learning, and participation. One widely used technological tool is known as a Student Response
System (SRS) or, clicker. The clicker provides an opportunity for instructors to gauge student
responses to a question. More specifically, clickers are a small hand-held device that allows students
to respond to a multiple choice question displayed on a projection system as posed by the instructor.
The receiver within the system collects the data, tallies responses, and displays the responses in
graph format on the projection screen. Both the instructor and students are able to view and discuss
the results.
Technology is not only pervasive on college campuses but it is ubiquitous in US society.
Practically every aspect of the contemporary experience in the US is influenced by technology.
Subsequently, exposure to technology occurs at a very young age. The Wall Street Journal (2011)
reveals data that illustrate young childrens exposure to technology. Among four or five year old
children, 14% could tie their shoelaces while 21% could play or operate a smart-phone application.
Moreover, among US children two to five years of age, 25% can make a mobile phone call; 61%
can play a computer game; 30% can operate a smart-phone application; and 67% can operate a
computer mouse.
Technology exposure among older children is also prevalent. Approximately 87% of 15
year olds instant message and more than half of 12-14 year olds have a mobile phone. When
examining the technology exposure of 14-21 year olds, more than 75% have a mobile phone.
Moreover, young people 12-17 years old spend 20 or more hours per week online. For the same age
group, 88% of boys own a game console compared to 63% of girls. Fifty-five percent of these boys
would rather play video games than watch television (Young consumers are the first, 2005).
Ethnic diversity within the US continues to grow. Reports indicate that approximately one-
third of the demographic increase is attributed to immigrants. Around 12% of the US population
was born elsewhere and this roughly translates into about 34 million people (Suarez-Orozco,
Suarez-Orozco, & Todorova, 2008). The majority of immigrants coming to the US in 2000 were
born in either Asia or Latin America. Perreira, Harris, and Lee (2007) reveal that around 60% of
Asians and 40% of Latinos were born elsewhere.
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Immigrant children encounter the early socialization process prior to entering the US. As
such, many of these young people have internalized traditional values with respect to attitudes
toward educational achievement as communicated by their parents. Additionally, these young
people tend to lack the early technology exposure as compared to their counterparts in the US.
This study examines native-born and immigrant Business Administration student
attitudes toward clickers technology. The study also explores whether differences in their
attitudes exist. The study first examines the nature of clickers technology in the U.S. Second,
clickers technology and motivations for clickers use is examined. Third, student attitudes toward
the technology are addressed. Fourth, immigrants and U.S school systems, and immigrant values
and parenting styles is explored. Next, assimilation and optimist theory theories are briefly
discussed. The remaining sections include the methodology, results, and discussion.

CLICKERS TECHNOLOGY USES AND MOTIVATIONS

Clickers technology has been used in various settings. The majority of studies
investigating clickers have been conducted within the science discipline. Physics, biology,
chemistry, nursing, and pre-med education are the academic areas most widely studied (Cue,
1998; Draper & Brown, 2002; Roschelle, Penuel, & Abrahamson, 2004). While many studies
report using the technology primarily in large lecture courses with upwards of 200 students,
studies have reported usage in smaller classes with as few as 15 students (Cue, 1998; Draper,
2002). Clickers have also been used in first year, introductory courses for non-majors as well as
upper division major courses (Halloran, 1995; Knight & Wood, 2005).
Research studies report on the uses and outcomes associated with using clickers
technology. Caldwell (2007) describes the various rationales associated with the way clickers are
used. She reports the technology has been used to: increase interaction among students
particularly in large classes; conduct experiments on human subjects; and liven up lectures by
gauging student understanding of material. Additional studies discuss the impact of clickers on
student learning (Judson & Sawada, 2002); attendance (Cue, 1998); and responsiveness (Wood,
2004).
There are several motives associated with clickers usage. In attempts to enhance the
typical lecture method, clickers serve to move beyond the one-way style of communication. By
facilitating an interactive, two-way, instructional environment, there should be greater levels of
student concentration (Draper, 1998). Reducing attrition rates by increasing opportunities for
participation is another rationale associated with introducing clickers (Burnstein & Lederman,
2001). Clickers also enable the opportunity for using peer instruction methods in the classroom.
Peer instruction allows students to spend class time discussing lecture material and responding to
questions posed during the lecture (Hake, 1998).
While the literature is ripe with studies suggesting that clickers technology is beneficial,
scholars caution that more studies are needed in order to definitively report on the benefits
associated with using the technology (Roschelle et al., 2004). Of greatest concern is whether a
Hawthorne Effect (Mayo, 1977) is present when using the technology. This condition may
influence the positive outcomes associated with the technology since students are accorded
special treatment while using the device.
Awareness of clickers technology and its benefits is particularly salient given the
challenges that college students encounter. Many students experience difficulty in grasping
complex material found in introductory required courses. Moreover, too many students fail to see
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the significance of attending class regularly. When in class many students struggle with focusing
on the lecture and lack a genuine interest in learning. Subsequently, investigating student
attitudes toward the technology may reveal significant insights that can improve the classroom
experience.

STUDENT ATTITUDES TOWARD CLICKERS TECHNOLOGY

Studies reveal student perceptions of clickers. Students approve of clicker technology and
believe it is helpful, enjoyable, and should be used (Beekes, 2006; Draper, 2002). Elliot (2003)
reports that student responses are generally positive when asked if the technology helps
concentration. Students felt that instructors using the technology had a greater awareness of their
needs and that the teaching style was warm and friendly (Knight & Wood, 2005). Caldwell
(2007) reports that students believed peer learning improved their understanding of material and
was beneficial. Students also enjoyed the anonymity of the technology and the ability to compare
responses with their classmates (Bunce, Van den Plas, & Havanki, 2006; Jackson & Trees,
2003).

IMMIGRANTS AND US SCHOOL SYSTEMS

Increases in immigration to the US have an impact on school systems. Both first and second
generation immigrants comprise a good number of students matriculating in public schools. For the
purposes of this study, immigrant generation definitions are: First generation immigrant
immigrant youth who migrated to the US; Second generation immigrant US born children of at
least one foreign-born parent; Third generation immigrant US born children of two US born
parents, where at least one grandparent is foreign-born. Suarez-Orozco et al. (2008) report that one-
fifth of all school aged children are immigrants or the children of immigrants. Moreover, the fastest
growing and most ethnically diverse segment of the US child population is school-aged immigrants.
Suarez-Orozco et al. (2008) reveal that in 1997 the US had approximately 3 million foreign-born
children under the age of 18 and approximately 11 million US born children under the age of 18
lived with at least one foreign-born parent.

IMMIGRANT PARENT VALUES AND PARENTING STYLES

Parents of immigrant children often come to the US in order to improve their station in life.
The US is often viewed as the land of opportunity and as such, these parents are often desirous of
increasing the educational and professional options for themselves and their offspring. Studies on
the educational achievement of immigrant children in primary and secondary schools indicate that
these children have an advantage as compared to their native-born peers of similar ethnicity and
socio-economic characteristics (Kao & Thompson, 2003). This advantage may be due, in part, to a
family environment that communicates and enforces traditional educational values. Gonzalez,
Miguelina, and Su (2008) report that the behaviors and expectations of immigrant parents raises
their childrens expectations of academic achievement and future college attendance as compared to
other children.
The parenting approaches of immigrants are distinct. These parents are more inclined to
embrace traditional and cultural values as they relate to their children. As such, these parents
exercise an authoritative approach with their children. Consequently, there are distinct rules that are
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enforced and children are expected to adhere. Discipline of offspring is essential and these parents
demand respect from their children. Godina (1991) reports that immigrant parents are in fact more
authoritative than native-born parents.
Above all, academic achievement within these households is required and falling short of
excellence is generally not tolerated. The importance of learning and academic excellence is
paramount. In their efforts to fully communicate academic values to their offspring, these parents
are involved in their academic experiences and progress (Gonzalez et al., 2008). Immigrant parents
believe in exercising control over their children by establishing firm boundaries for behavior. Great
demands in terms of academic performance and accomplishment are placed on these children. The
overwhelming rationale associated with this approach is to properly groom children to be successful
in future endeavors.
Parental expectations influence the classroom experience of immigrant children. Gonzalez et
al. (2008) reports that immigrant school children work harder in school when parents are involved
with their matriculation. Suarez-Orozco et al. (2008) reveal that immigrant students hold more
positive views of school and school authority figures as compared to non-immigrant students.
Moreover, they report that Anglo students complain of boredom and are more ambivalent in their
attitudes toward school. Conversely, immigrant student attitudes were appreciative of school and
they were gratified by the experience. Immigrant students also displayed optimism and faith that
through high performance, success in life would be possible.

IMMIGRANT EDUCATION AND THEORY

Assimilation theories serve to shed light on the relationship between immigrants and
educational outcomes. Traditional assimilation theory suggests that first-generation immigrants are
typically restrained by their newcomer status and are not expected to be in socio-economic parity
with the native-born. Their social and economic outcomes are expected to be less than the native-
born as a result of economic, social, language, and social support deficiencies that occur during
immigration. Segmented assimilation theory posits that there are different approaches to
assimilation resulting in upward or downward mobility of immigrants. Subsequently, immigrant
status may not be problematic economically or socially. This theory may shed light on why some
immigrant school children may thrive academically despite reported deficiencies.
Optimist theory (Ngo, 2006) examines educational outcomes of immigrants and examines
immigrants generationally. In essence, the theory purports that new immigrants have greater faith in
education to improve upward mobility than their second or third generation counterparts. Moreover,
the researchers intimate that immigrant youth may have greater educational motivations and may
more readily recognize the salience of education as compared to their US born peers.
In review, technology exposure occurs very early in the lives of most US children and is
on-going throughout the lifecycle. Similarly, technology usage on college campuses is increasing
and opportunities for usage in the classroom continue to emerge. Subsequently, awareness of
student attitudes toward technology is important. Diversity in the composition of the student
body has evolved in the US and there are greater numbers of immigrant students in university
classrooms than ever before. Many of these students were not introduced to technology during
the formative years, nor did they fully matriculate in primary or secondary school systems in the
US. As such, these students may continue to embrace homeland values and attitudes with respect
to education and technology.

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SAMPLE AND METHODS

A total of 106 sophomore and junior students majoring in Business Administration
participated in the study. The students attended a large state school in the Southwest. Participants
were registered for either a Principles of Management or Principles of Marketing course during
the Fall, 2009 or Spring, 2010 semesters. Both courses are required for Business Administration
majors. Fifty-six of the students were sophomores and 50 were juniors. In terms of birthplace, 54
were native-born and 52 were immigrants.
The participants attended a section of either Principles of Management or Principles of
Marketing that used clickers technology. In total, three sections of Principles of Management and
two sections of Principles of Marketing were surveyed. Instructors in these sections were
familiar with the technology and had previously taught at least one semester using the
technology.
During lectures throughout the semester, instructors inserted three to five clickers
generated questions. Students responded to the questions via clicker during each class. At the end
of the semester, students completed a self-assessment instrument that examined their attitudes
toward clickers technology. Demographic information was also collected.
The questionnaire is a modification of the instrument used by Crossgrove and Curran
(2008). Attitudes are assessed with four constructs including: engagement, understanding,
learning, and benefit. In total, the four constructs were measured by 11 items using a Likert scale
ranging from strongly disagree to strongly agree.
Four hypotheses about differences in attitudes were generated:

H1: Native-born students will perceive that the clicker enables better engagement in the
classroom.
H2: Native-born students will perceive that the clicker enables greater understanding of
course material.
H3: Native-born students will perceive that the clicker enables greater learning of course
material.
H4: Native-born students will perceive a high degree of benefit associated with the clicker.

RESULTS

The results of the ANOVA analysis were significant at the .01 level and all hypotheses
were supported. The dependent variables are the attitude constructs of engagement,
understanding, learning, and benefits. The dimensions include: ENG involvement, ENG
attention, ENG interaction, ENG participation, UBU understanding, USH score higher, LMOT
motivated to learn, LCON connect ideas, BCON continue use, BINT interesting, BENJ
enjoyable. The independent variable is origin of birth, which is either US, or elsewhere.
Table 1 illustrates the mean differences for the study. With respect to the first hypothesis,
native-born students had a higher perception about clickers facilitating engagement in the
classroom. For the second hypothesis, native-born students believed that clickers would enable
greater understanding of course material. With respect to hypothesis three, native-born students
also had a more positive attitude about being motivated to learn given the assistance of the
clicker. In terms of the last hypothesis, native-born students were more favorable about the
benefits associated with the clicker.
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DISCUSSION

The results of the study yield many pedagogical insights. First, the results reveal that
students do not have similar attitudes about technology in the classroom. Native-born students
believed that clickers enabled more involvement, interaction, and participation in the classroom.
They also believed that clickers facilitated greater understanding of course material and would
assist them in scoring higher on exams. Having an increased motivation to learn and connect
ideas was also attributed to the technology by the native-born students. These findings suggest
that native-born students use the external device of the clicker to inspire and motivate their
classroom behavior. This may be due, in part, to the role that technology has played in their
lives. The majority of these students have been wired since youth and this connectivity pervades
their lives. Much of the connectivity that these students have experienced has been for
entertainment purposes. As such, they may see the classroom as yet another stage from which to
be entertained when clickers are in use. Moreover, much of the popular entertainment that
students enjoy is interactive so when clickers are introduced, the perception of entertainment
may encroach upon academics.
The immigrant students, however, held less favorable attitudes toward the technology.
This outcome may be the result of less exposure to technology during their youth coupled with
the intense focus on traditional attitudes toward education and learning as communicated by
parents. These students may deem the technology as primarily entertainment and of limited value
with respect to achievement and excellence in the academic realm. Many of these students have
embraced the philosophy that academic success is based on hard work, diligence, and
conscientiousness. These values are typically not associated with ideas of entertainment and fun.
Given the attitudinal differences reported, instructors should be more conscious of
potential differences among students and how to reduce the variance in attitudes. In light of the
results of this study, and as the number of immigrant students on college campuses increase,
instructors should assess how clickers are used. Instructors should consider whether the clickers
experience is relatively meaningful for all students. The findings of the study suggest that when
using clickers, instructors may need to clearly connect the dots for immigrant students in order to
emphasize that while given the appearance of entertainment, the technology has sound academic
merit.

REFERENCES

Beekes, W. (2006). The Millionaire Method for Encouraging Participation. Active Learning Higher
Education 7(1), 25-36.
Bunce, D., Van den Plas, J., & Havanki, K. (2006). Comparing the Effectiveness on Student Achievement
of a Student Response System Versus Online WebCT Quizzes. Journal of Chemistry Education
83(3), 488-493.
Burnstein, R., & Lederman, L. (2001). Using Wireless Keypads in Lecture Classes. Physics Teacher 39,
8-11.
Caldwell, J. (2007). Clickers in the large classroom. CBE Life Sciences Education 6, 9-20.
Crossgrove, K., & Curran, K. (2008). Using clickers in nonmajors and majors level biology courses. CBE
Life Sciences Education 7(1), 146-154.
Cue, N. (1998). A universal learning tool for classrooms? Proceedings of the First Quality in Teaching
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Draper, S. (1998). Niche-based success in CAL. Computing Education 30, 5-8.
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Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Draper, S., & Brown, M. (2002). Use of the PRS handsets at Glasgow University. Interim Evaluation
Report: March 2002.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
Godina, V. (1991). Hidden tendencies and unintentional impacts in family socialization: The example of
authoritarian vs. Non-authoritarian family socialization type. Journal of Comparative Family
Studies 22, 359-366.
Gonzalez, N., Miguelina, G., & Su, K. (2008). Mexican American adolescents cultural orientation,
externalizing behavior and academic engagement. American Journal of Community Psychology
41, 151-164.
Hake, R. (1998). Interactive-engagement Versus Traditional Methods: A Six-Thousand Student survey of
Mechanics Test Data for Introductory Physics Courses. American Journal of Physics 66(1), 64-
74.
Halloran L. (1995). A Comparison of Two Methods of Teaching: Computer Mandated Instruction and
Key Questions Versus Traditional Classroom Lecture. Computing Nursing 13(6), 285-288.
Jackson, M., & Trees, A. (2003). Clicker implementation and assessment. Retrieved from
www.comm.colorado.edu/mjackson/clickerreport.htm
Judson, E., & Sawada, D. (2002). Learning From the Past and Present: Electronic Response Systems in
College Lecture Halls. Journal of Computer Math Science Teaching 21, 167-181.
Kao, G., & Thompson, J. (2003). Racial and ethnic stratification in educational achievement and
attainment. Annual Review of Sociology 29, 417-442.
Knight, J., & Wood, W. (2005). Teaching More by Lecturing Less. Cell Biology Education 4, 298-310.
Mayo, E. (1977). The human problems of an industrial civilization. New York: Arno Press, 55-98.
Ngo, B. (2006). Learning from the margins: the education of Southeast and South Asian Americans in
context. Race Ethnicity and Education 9, 51-65.
Perreira, K., Harris, K., Lee, D. (2007). Immigrant youth in the labor market. Work Publications 34. Sage
Publications
Roschelle, J., Penuel, W., & Abrahamson, L. (2004). The Networked Classroom. Educational Leadership
61(5), 50-54.
Suarez-Orozco, C., Suarez-Orozco, M, & Todorova, I. (2008). Learning in a new land: Immigrant
students in American society. Cambridge and London: The Belknap Press of Harvard University
Press.
Wall Street Journal (January 19, 2011). Learning to play Angry Birds before you can tie your shoes.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.
Young consumers are the first technology everywhere generation (2005, December 5). Business Wire, 1-
2.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, BENEFIT, BY
BIRTH
Birth ENGINV ENGATT ENGINT ENGPAR UBU USH LMOT LCON BCON BINT BENJ
.00 Mean
2.1604 2.2956 2.3148 2.0926 4.1296 4.2593 4.3704 4.4444 4.3148 4.370 4.351
N
54 54 54 54 54 54 54 54 54 54 54
Std. Deviation
1.0435 1.3343 1.0608 1.20171 .80203 .67810 .65290 .57188 .57705 .5595 .5548
1.00 Mean
4.3269 4.3654 4.2500 4.3269 1.8269 1.7692 1.8077 1.7115 3.566 3.692 3.711
N
52 52 52 52 52 52 52 52 52 52 52
Std. Deviation
.83363 .65765 .65305 .73354 .80977 .61406 .68709 .66676 .77552 .8293 .7231
Total Mean
4.3491 4.3396 3.2642 3.1887 3.0000 3.0377 3.1132 3.1038 3.5283 4.037 4.037
N
106 106 106 106 106 106 106 106 106 106 106
Std. Deviation
.71770 .61546 1.311 1.4999 1.407 1.406 1.4496 1.50510 1.05296 .77980 .71613
286


Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Draper, S., & Brown, M. (2002). Use of the PRS handsets at Glasgow University. Interim Evaluation
Report: March 2002.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
Godina, V. (1991). Hidden tendencies and unintentional impacts in family socialization: The example of
authoritarian vs. Non-authoritarian family socialization type. Journal of Comparative Family
Studies 22, 359-366.
Gonzalez, N., Miguelina, G., & Su, K. (2008). Mexican American adolescents cultural orientation,
externalizing behavior and academic engagement. American Journal of Community Psychology
41, 151-164.
Hake, R. (1998). Interactive-engagement Versus Traditional Methods: A Six-Thousand Student survey of
Mechanics Test Data for Introductory Physics Courses. American Journal of Physics 66(1), 64-
74.
Halloran L. (1995). A Comparison of Two Methods of Teaching: Computer Mandated Instruction and
Key Questions Versus Traditional Classroom Lecture. Computing Nursing 13(6), 285-288.
Jackson, M., & Trees, A. (2003). Clicker implementation and assessment. Retrieved from
www.comm.colorado.edu/mjackson/clickerreport.htm
Judson, E., & Sawada, D. (2002). Learning From the Past and Present: Electronic Response Systems in
College Lecture Halls. Journal of Computer Math Science Teaching 21, 167-181.
Kao, G., & Thompson, J. (2003). Racial and ethnic stratification in educational achievement and
attainment. Annual Review of Sociology 29, 417-442.
Knight, J., & Wood, W. (2005). Teaching More by Lecturing Less. Cell Biology Education 4, 298-310.
Mayo, E. (1977). The human problems of an industrial civilization. New York: Arno Press, 55-98.
Ngo, B. (2006). Learning from the margins: the education of Southeast and South Asian Americans in
context. Race Ethnicity and Education 9, 51-65.
Perreira, K., Harris, K., Lee, D. (2007). Immigrant youth in the labor market. Work Publications 34. Sage
Publications
Roschelle, J., Penuel, W., & Abrahamson, L. (2004). The Networked Classroom. Educational Leadership
61(5), 50-54.
Suarez-Orozco, C., Suarez-Orozco, M, & Todorova, I. (2008). Learning in a new land: Immigrant
students in American society. Cambridge and London: The Belknap Press of Harvard University
Press.
Wall Street Journal (January 19, 2011). Learning to play Angry Birds before you can tie your shoes.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.
Young consumers are the first technology everywhere generation (2005, December 5). Business Wire, 1-
2.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, BENEFIT, BY
BIRTH
Birth ENGINV ENGATT ENGINT ENGPAR UBU USH LMOT LCON BCON BINT BENJ
.00 Mean
2.1604 2.2956 2.3148 2.0926 4.1296 4.2593 4.3704 4.4444 4.3148 4.370 4.351
N
54 54 54 54 54 54 54 54 54 54 54
Std. Deviation
1.0435 1.3343 1.0608 1.20171 .80203 .67810 .65290 .57188 .57705 .5595 .5548
1.00 Mean
4.3269 4.3654 4.2500 4.3269 1.8269 1.7692 1.8077 1.7115 3.566 3.692 3.711
N
52 52 52 52 52 52 52 52 52 52 52
Std. Deviation
.83363 .65765 .65305 .73354 .80977 .61406 .68709 .66676 .77552 .8293 .7231
Total Mean
4.3491 4.3396 3.2642 3.1887 3.0000 3.0377 3.1132 3.1038 3.5283 4.037 4.037
N
106 106 106 106 106 106 106 106 106 106 106
Std. Deviation
.71770 .61546 1.311 1.4999 1.407 1.406 1.4496 1.50510 1.05296 .77980 .71613
286

Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Draper, S., & Brown, M. (2002). Use of the PRS handsets at Glasgow University. Interim Evaluation
Report: March 2002.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
Godina, V. (1991). Hidden tendencies and unintentional impacts in family socialization: The example of
authoritarian vs. Non-authoritarian family socialization type. Journal of Comparative Family
Studies 22, 359-366.
Gonzalez, N., Miguelina, G., & Su, K. (2008). Mexican American adolescents cultural orientation,
externalizing behavior and academic engagement. American Journal of Community Psychology
41, 151-164.
Hake, R. (1998). Interactive-engagement Versus Traditional Methods: A Six-Thousand Student survey of
Mechanics Test Data for Introductory Physics Courses. American Journal of Physics 66(1), 64-
74.
Halloran L. (1995). A Comparison of Two Methods of Teaching: Computer Mandated Instruction and
Key Questions Versus Traditional Classroom Lecture. Computing Nursing 13(6), 285-288.
Jackson, M., & Trees, A. (2003). Clicker implementation and assessment. Retrieved from
www.comm.colorado.edu/mjackson/clickerreport.htm
Judson, E., & Sawada, D. (2002). Learning From the Past and Present: Electronic Response Systems in
College Lecture Halls. Journal of Computer Math Science Teaching 21, 167-181.
Kao, G., & Thompson, J. (2003). Racial and ethnic stratification in educational achievement and
attainment. Annual Review of Sociology 29, 417-442.
Knight, J., & Wood, W. (2005). Teaching More by Lecturing Less. Cell Biology Education 4, 298-310.
Mayo, E. (1977). The human problems of an industrial civilization. New York: Arno Press, 55-98.
Ngo, B. (2006). Learning from the margins: the education of Southeast and South Asian Americans in
context. Race Ethnicity and Education 9, 51-65.
Perreira, K., Harris, K., Lee, D. (2007). Immigrant youth in the labor market. Work Publications 34. Sage
Publications
Roschelle, J., Penuel, W., & Abrahamson, L. (2004). The Networked Classroom. Educational Leadership
61(5), 50-54.
Suarez-Orozco, C., Suarez-Orozco, M, & Todorova, I. (2008). Learning in a new land: Immigrant
students in American society. Cambridge and London: The Belknap Press of Harvard University
Press.
Wall Street Journal (January 19, 2011). Learning to play Angry Birds before you can tie your shoes.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.
Young consumers are the first technology everywhere generation (2005, December 5). Business Wire, 1-
2.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, BENEFIT, BY
BIRTH
Birth ENGINV ENGATT ENGINT ENGPAR UBU USH LMOT LCON BCON BINT BENJ
.00 Mean
2.1604 2.2956 2.3148 2.0926 4.1296 4.2593 4.3704 4.4444 4.3148 4.370 4.351
N
54 54 54 54 54 54 54 54 54 54 54
Std. Deviation
1.0435 1.3343 1.0608 1.20171 .80203 .67810 .65290 .57188 .57705 .5595 .5548
1.00 Mean
4.3269 4.3654 4.2500 4.3269 1.8269 1.7692 1.8077 1.7115 3.566 3.692 3.711
N
52 52 52 52 52 52 52 52 52 52 52
Std. Deviation
.83363 .65765 .65305 .73354 .80977 .61406 .68709 .66676 .77552 .8293 .7231
Total Mean
4.3491 4.3396 3.2642 3.1887 3.0000 3.0377 3.1132 3.1038 3.5283 4.037 4.037
N
106 106 106 106 106 106 106 106 106 106 106
Std. Deviation
.71770 .61546 1.311 1.4999 1.407 1.406 1.4496 1.50510 1.05296 .77980 .71613
286


CLICKERS TECHNOLOGY ATTITUDES OF BUSINESS SCHOOL FACULTY:
OUTCOMES, EVALUATIONS AND INSIGHTS

Kellye Jones, Clark Atlanta University, Atlanta, Georgia
kjones@cau.edu

Amiso M. George, Texas Christian University, Fort Worth, Texas
a.george2@tcu.edu


ABSTRACT

This study investigates whether clickers technology attitudes differ by faculty rank.
Additionally, course evaluations of clickers based and non-clickers courses are examined.
Whether differences exist in evaluations of clickers based and non-clickers courses based on
faculty rank is also explored. An ANOVA analysis reveals that assistant, associate, and full
professors differ in their clickers technology attitudes. Clickers based courses were evaluated
more favorably, and differences in the evaluation of clickers based and non-clickers courses by
faculty rank exist.

INTRODUCTION

Many US colleges and universities are operating with tighter budgets. Subsequently,
available resources are closely scrutinized in order to increase efficiencies. One area prone to
examination and change is class size. As such, a vast number of courses are taught in large sections.
This is particularly true for the core courses in a major. Tweaking core courses to accommodate
large enrollments may address budget concerns but it presents a different set of challenges for both
instructors and students. Instructors are often confronted with capturing and maintaining the
attention of students and gauging levels of student comprehension and learning. Instructors also
grapple with motivating students and facilitating engagement. For students, larger enrollments pose
challenges for their attendance, engagement, motivation to learn, and attention (Steinert & Snell,
1999).
Given these circumstances, many instructors are increasingly interested in reducing the
challenges posed by large sections. One approach aimed at improving the classroom experience is
clickers technology. Clickers technology, also known as an Audience Response System, provides
instructors the opportunity to pose questions to students during a lecture and receive immediate
feedback. The technology is relatively easy to use and requires an intermediate level of computer
skill (Cue, 1998). Clickers technology consists of a handheld device equipped with software that
transmits data to a wireless receiver that is connected to a computer. In essence, once questions are
presented to students via clicker they respond by selecting correct answers through the handheld
device. Upon receipt of the answers, instructors can reveal the responses and proceed accordingly.
While clickers technology has been widely accepted (Deal, 2007), varying attitudes about
the technology exist. Studies have explored student attitudes (Beekes, 2006; Draper, 2002) however,
few studies investigate instructor attitudes. More specifically, little is known about Business School
Faculty attitudes. This population is of particular interest and given their discipline, there should be
287


a heightened sensitivity to supporting innovation, recognizing the need for and embracing change,
and understanding the significance of responding to stakeholder needs.
Increased awareness of instructor attitudes is also important given the ranking scheme
within academic institutions which typically demonstrates a generational hierarchy. Assessing
instructor attitudes would yield useful insights regarding technology teaching strategies. Differential
attitudes about clickers technology may be due, in part, to ones exposure to and comfort with
technology in general. In fact, studies reveal that both exposure to and attitudes toward
technology are shaped by generational values (Stone, 2010).
The focus of this study is to examine instructor attitudes toward clickers technology and
whether differences based on instructor rank exist. Evaluations of clickers based and non-
clickers courses are also explored. Whether differences in evaluations exist based on instructor
rank is another area of investigation. First, the study discusses generations and technology use.
Next, implementing clickers technology is covered. Third, the motivations for clickers use are
examined. Instructor attitudes toward clickers, and clickers and course evaluations are the last
areas of exploration. Diffusion theory, methodology, results, and discussion are the remaining
areas of coverage.

GENERATIONS AND TECHNOLOGY USE

Young people are more tech savvy than older generations (Perez, 2009; Stone, 2010).
This is due, in part, to the accelerated pace in which technological changes are introduced. Fast-
paced changes have created a series of mini-generation gaps where young people are heavily
influenced by the technological tools available in their formative years (Stone, 2010). In an
examination of multi-tasking and free time behavior, where free time was watching television,
and tasking included texting, instant messaging, and Facebooking, 16-18 year olds perform an
average of seven tasks; 20 year olds perform about six; and 30 year olds perform about five
(Stone, 2010).
The technology generational gap has also been examined in the workplace. Perez (2009)
reports on a study that reveals technology and software usage. Baby-boomers aged 44-60,
members of Generation X aged 29-43, and members of Generation Y aged 28 and younger
comprised the study. Marked differences were found between Boomers and Generation Y. In
fact, two-thirds of Boomers believe that PDAs and mobile phones contribute to the decline in
workplace etiquette, and using a laptop during a meeting is distracting while less than half of
Generation Y agreed. Twenty-eight percent of Boomers find blogging about work related issues
acceptable as compared to 40% of members from Generation Y. Members of Generation Y were
more inclined to access a social network from work as compared to Boomers, 62% and 14%
respectively. Generation Y also reported spending about 10 hours a day online compared to
about five hours for Boomers. Another study reporting on the technology use of professional
Boomers asserts that using technology creates efficiencies in operations. As such, a reluctance to
adopt technology will create a disadvantage making their firms less competitive than their wired
counterparts (IOMA, 2009).

IMPLEMENTING CLICKERS TECHNOLOGY

Deal (2007) identifies three basic approaches to implementing clickers technology. The
most basic approach entails classroom monitoring. Within this context the technology is used to
288


take attendance and encourage participation. Very few instructional changes are made with
respect to the discussion and delivery of course material. At the next level, the instructor uses the
technology to ascertain comprehension of concepts. Given student responses, assessments are
made as to whether the lecture should proceed or, if further explanation of a concept is required.
Students, by way of the technology, signal their level of confusion or understanding. The last
approach entails examining teaching strategies and philosophies. At this level there is enhanced
interaction as students respond to the clickers question and the instructor re-directs the discussion
with additional engagement of students.

MOTIVATIONS FOR CLICKERS USE

Technological tools have been used in order to facilitate the engagement of students in
classes with large enrollments. Clickers, in particular, have been secured in order to move
beyond a one-way communication style that is prevalent in lecture halls. Shortcomings of the
traditional one-way method of lecturing include limited student motivation to attend and pay
attention in class, and the inability of students to learn complex and difficult course material
(Draper, 1998). Introducing clickers technology is designed to address the aforementioned
limitations by engaging students, making them more active in class, and providing an
opportunity for personal involvement (Wood, 2004).
Increased student participation, attention, and understanding are specific rationales
associated with using clickers. Despite increased class sizes, students are able to weigh-in on
questions posed by an instructor. This interaction tends to be compromised in a more traditional,
large lecture environment since too many students refrain from contributing to a discussion.
Sources of their reluctance include: fear of making a mistake when articulating thoughts, fear of
providing an incorrect response, fear of public embarrassment, and peer pressure not to engage in
the classroom (Draper, 1998). Clickers may also be used to jumpstart a students focus and
attention. By inserting questions throughout a lecture, instructors may reduce mental fatigue and
enhance recall. This is particularly salient at the beginning of class. In his study, Burns (1985)
reports that the first five to 15 minutes of a lecture is the most memorable and the latter parts of a
lecture become increasingly fuzzy. Moreover, the average attention span is about 20 minutes and
recall drops precipitously after about 20 minutes.
Enhanced understanding of course material can be achieved with clickers technology. By
inserting questions in the lecture, students are able to gauge their understanding, or lack thereof,
of material and adjust accordingly. This is not only beneficial for the student, but the instructor
too. The instructor also becomes aware of whether students are grasping the material as well as
the degree of mastery (Wood, 2004). Subsequently, the instructor can course correct in order to
respond to the level of understanding. Likewise, the instructor may surprisingly discover that a
topic has been given sufficient coverage and the instructor can proceed with additional material.
When using clickers to gauge understanding, the instructor needs to demonstrate flexibility.
Since the responses are generated and received in real time, the instructor will need to handle the
unexpected and proceed accordingly.

INSTRUCTOR ATTITUDES TOWARD CLICKERS

In general, instructor attitudes toward clickers are favorable. Instructors indicate that
clickers assist the learning process by gauging understanding. Draper (2002) reports that
289


instructors modify their teaching based on student responses thereby providing what students
believe they need with respect to instruction. Beekes (2006) finds that students appear to be more
receptive to technical material. Elliot (2003) suggests that the technology stimulated student
interest and their ability to concentrate which improved their class performance. Beatty (2004)
reports that students are more attentive during class and that fewer students slept during lectures.
Wood (2004) reveals that instructors found the technology to be far more enjoyable than the
traditional approach to teaching.
While instructor attitudes toward clickers tend to be positive, there are concerns about the
technology. Less than positive attitudes are attributed to technology issues, preparation time, and
decreased lecture time. Proper support from information technology (IT) departments is critical.
When the system encounters problems instructors believe that IT should have the capability to
quickly trouble-shoot and problem solve (Brewer, 2004). When this does not occur, instructors
become disenchanted with the technology. Moreover, some instructors dread the training
required prior to usage. Interestingly, the source of apprehension may be that they are either tech
savvy and believe the training to be a waste of time or, they are tech challenged and believe the
training will be overwhelming. Increased preparation for clickers based courses is another area of
discontent among instructors. It seems that some instructors believe that the process of creating
questions and placing them in the proper format is somewhat onerous and contributes to their
course preparation time. Another concern among instructors is the decreased lecture time and
subsequently, the limited coverage of material (Simpson & Oliver, 2006). Believing that less
time will be devoted to course material creates apprehension about the value of the technology
and the outcomes associated with using it.

CLICKERS AND COURSE EVALUATIONS

Studies indicate that clickers technology have a positive impact on course evaluations.
Miller (2003) reports that students who attended a course with clickers technology rated both the
lecture and the speaker higher than students not using the technology. Similarly, Copeland
(1998) finds that lectures using clickers technology were rated higher than lectures not using the
technology. Instructor evaluations yield similar results. Instructors using clickers were rated
more favorably than those not using the technology. Interestingly, the results remained consistent
even when an instructor taught one course with the technology and another course without it
(Copeland, 1998).

DIFFUSION THEORY

Numerous studies have examined diffusion theory and the factors that help or hinder
adoption of an idea. One of the most frequently discussed theories is the Diffusion of Innovations
concept developed by Everett Rogers (1995). Specifically, Rogers describes five constructs that
may be used to explain the adoption or rejection of an innovation: (1) relative advantage, (2)
compatibility, (3) complexity, (4) trialability, and (5) observability.

SAMPLE AND METHODS

A total of 54 instructors of Business Administration participated in the study. The
instructors taught at one of two large state schools in the Southwest. Instructors taught either a
290


Principles of Management or Principles of Marketing course during Fall 2009 or Spring 2010
semesters. Both courses are required for Business Administration majors. Twenty-one of the
instructors were assistant professors, 18 were associate professors, and 15 were full professors.
The instructors taught a section of either Principles of Management or Principles of
Marketing that used clickers technology. Instructors also taught a section of either Principles of
Management or Principles of Marketing that did not use the technology. In total, 56 sections of
Principles of Management and 52 sections of Principles of Marketing were surveyed. Instructors
taught from common syllabi. Each instructor created clickers questions that were used during the
semester. All instructors were familiar with clickers technology and had previously taught at
least one semester using the technology.
During lectures throughout the semester, instructors inserted three to five clickers
generated questions. Students responded to the questions via clicker during each class. At the end
of the semester, instructors completed a self-assessment instrument that examined their attitudes
toward clickers technology. Demographic information was also collected. Course evaluation data
were supplied by Department Chairs. Scores on the course evaluation instrument range from one
(least effective) to five (most effective).
The questionnaire is a modification of the instrument used by Crossgrove and Curran
(2008). Attitudes are assessed with four constructs including: engagement, understanding,
learning, and strategy. In total, the four constructs were measured by 13 items using a Likert
scale that ranges from strongly disagree (1) to strongly agree (5).
Four hypotheses were generated about differences in attitudes and two hypotheses
examine outcomes:

H1: The perception that the clicker enables better engagement in the classroom will
differ by faculty rank.
H2: The perception that the clicker enables greater understanding of course material
will differ by faculty rank.
H3: The perception that the clicker enables greater learning of course material will
differ by faculty rank.
H4: Instructor technology strategy will vary by faculty rank.
H5: Evaluations of instructors teaching with clickers will be higher than instructors
not teaching with a clicker.
H6: Evaluations of instructors teaching with clickers will vary by rank.

RESULTS

The results of the ANOVA analysis were significant at the .01 level and all hypotheses
were supported. The dependent variables are the attitude dimensions of engagement,
understanding, learning, and strategy. The constructs include: ENG involvement, ENG attention,
ENG interaction, ENG participation, UBU understanding, USH score higher, LMOT motivated
to learn, LCON connect ideas, SINTT, interactive teaching, SINLRN, interactive learning,
SACLAS active classroom, SSDIS shift discussion, SCLAST, devote class time to questions.
The independent variable is faculty rank which is either, assistant, associate, or full professor.
Table 1 illustrates the mean differences for the study. In addressing the first hypothesis,
assistant professors felt to a greater degree that clickers technology enables engagement of the
students. In terms of hypothesis two, associate professors had a greater perception that clickers
291


facilitate understanding. With respect to hypothesis three, assistant professors more highly
perceived that clickers enhance learning. In terms of hypothesis four, assistant professors more
favorably embraced clickers as a technology strategy. For the fifth hypothesis, instructors using
clickers had higher evaluations than their non-clicker use counterparts. With respect to the sixth
hypothesis, associate professors using clickers had the highest evaluations.

DISCUSSION

The results of the study indicate that instructor attitudes toward clickers vary by rank.
The findings are consistent with research revealing generational differences with respect to
technology. The greatest variance in attitudes occurred between both assistant and associate
professors and full professors. Assistant and associate professors felt that the clickers technology
improved the atmosphere of the class due to increased participation and interaction with students.
These instructors also found the technology beneficial for students as it could assist their
understanding and learning of course material. With respect to clickers as a technology strategy
assistant professors held more favorable attitudes than their counterparts. They had greater belief
that the technology enhances both interactive teaching and learning and that the technology
promotes an interactive classroom. Moreover, these instructors are more inclined to shift the
class discussion based on clicker results and devote class time to exploring clickers questions.
The findings also indicate that full professors were less favorable toward the technology.
Since most full professors are part of the Baby-Boomer generation they may be less inclined to
adopt new technology. Their perceptions may be that clickers are difficult to use, waste valuable
class time, and they facilitate no real learning. These ideas speak to the idea of relative advantage
as discussed by Rogers (1995). A particularly interesting result reveals that full professors in the
study were overwhelmingly less favorable to using class time to explore clickers based
questions. This activity requires flexibility based on student responses. Subsequently, the
instructor cant necessarily maintain the fixed agenda for the class session. The idea of not
covering allotted material seems to be a source of discomfort which gravely impacts attitudes
toward the technology.
With respect to evaluation, instructors using clickers received higher evaluations than
their counterparts. Interestingly, associate professors using the clicker were evaluated more
favorably. This finding may be the result of these professors having a combination of both
academic experience and facility with the technology.

REFERENCES

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Burns, R. (1985). Information impact and factors affecting recall. National Conference on Teaching
Excellence and Conference of Administrators. Austin, TX.
Copeland, H. (1998). Making the continuing education lecture effective. Journal of Continuing Education
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Crossgrove, K., & Curran, K. (2008). Using clickers in nonmajors and majors level biology courses. CBE
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292


Cue, N. (1998). A universal learning tool for classrooms. Proceedings of the First Quality in Teaching
and Learning Conference. Hong Kong SAR, China.
Deal, A. (2007). Classroom response systems. Carnegie Mellon White Paper, 1-14.
Draper, S. (1998). Niche-based success in CAL. Computing Education 30, 5-8.
Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
IOMA Law Office Management & Administration Report (November, 2009). Boomers showing how to
use the new web, (9), 11.
Jackson, M. & Trees, A. (2003). Clicker implementation and assessment.
www.comm.colorado.edu/mjackson/clickerreport.htm
Miller, R. (2003). Evaluation of an audience response system for continuing education of health
professionals. Journal of Continuing Education Health Profession 23, 109-115.
Perez, S. (2009). The technology generation gap at work is oh so wide. Read Write Archives.
Rogers, E. (1995). The diffusion of innovations. 4
th
edition, New York: Free Press.
Simpson, V., & Oliver, M. (2006). Using electronic voting systems in lectures.
www.ucl.ac.uk/learningtechnology/examples/electronicvotingsystems.pdf
Steinert, Y., & Snell, L. (1999). Interactive lecturing: strategies for increasing participation in large group
presentations. Medical Teacher 21, 37-42.
Stone, B. (January 9, 2010). The children of cyberspace: Old fogies by their 20s. New York Times.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, STRATEGY,
EVALUATION BY RANK
R
A
N
K
ENGI
NV
ENG
ATT
ENG
INT
ENG
PAR
UB
U
US
H
LM
OT
LC
ON
SINT
EAC
SINL
EA
SICL
ASS
SSDI
SC
SCL
AST
EVAL
CLK
EVA
LNC
LK
1.0 Mea
4.57 4.66 4.33 4.61 4.04 3.80 3.90 4.04 4.66 4.33 4.47 4.52 4.00 3.80 3.36
N
21 21 21 21 21 21 21 21 21 21 21 21 21 21 21
Std.
Dev
iatio
n
.507 .4830 .6248 .4976 .740 .813 .624 .589 .4830 .6582 .5117 .6015 .8366 .3238 .38403
2.0
0
Mea
n
4.55
56
4.555
6
4.277
8
4.222
2
4.16
67
3.94
44
3.22
22
3.27
78
4.222
2
3.833
3
4.222
2
4.111
1
3.277
8
4.122
2
3.5444
N
18 18 18 18 18 18 18 18 18 18 18 18 18 18 18
Std.
Dev
iatio
n
.511 .5113 .4608 .4277 .785 .872 .646 .669 .7320 .7071 .6467 .7584 .4608 .1957 .24307
3.0
0
Mea
n
3.60 3.466 3.333 3.200 2.73 2.40 2.40 2.53 2.600 2.266 2.266 2.066 1.533 2.573 2.1733
N
15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
Std.
Dev
iatio
n
.507 .7432 .7237 .7746 .703 .632 .632 .743 .7367 .8837 .7988 .7988 .6399 .2548 .17915
To
tal
Mea
n
4.29 4.296 4.000 4.092 3.72 3.46 3.25 3.37 3.944 3.592 3.777 3.703 3.074 3.570 3.0926
N
54 54 54 54 54 54 54 54 54 54 54 54 54 54 54
Std.
Dev
iatio
n
.662 .7679 .7268 .8072 .959 1.02 .872 .896 1.071 1.124 1.143 1.253 1.210 .6902 .64832
293

Cue, N. (1998). A universal learning tool for classrooms. Proceedings of the First Quality in Teaching
and Learning Conference. Hong Kong SAR, China.
Deal, A. (2007). Classroom response systems. Carnegie Mellon White Paper, 1-14.
Draper, S. (1998). Niche-based success in CAL. Computing Education 30, 5-8.
Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
IOMA Law Office Management & Administration Report (November, 2009). Boomers showing how to
use the new web, (9), 11.
Jackson, M. & Trees, A. (2003). Clicker implementation and assessment.
www.comm.colorado.edu/mjackson/clickerreport.htm
Miller, R. (2003). Evaluation of an audience response system for continuing education of health
professionals. Journal of Continuing Education Health Profession 23, 109-115.
Perez, S. (2009). The technology generation gap at work is oh so wide. Read Write Archives.
Rogers, E. (1995). The diffusion of innovations. 4
th
edition, New York: Free Press.
Simpson, V., & Oliver, M. (2006). Using electronic voting systems in lectures.
www.ucl.ac.uk/learningtechnology/examples/electronicvotingsystems.pdf
Steinert, Y., & Snell, L. (1999). Interactive lecturing: strategies for increasing participation in large group
presentations. Medical Teacher 21, 37-42.
Stone, B. (January 9, 2010). The children of cyberspace: Old fogies by their 20s. New York Times.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, STRATEGY,
EVALUATION BY RANK
R
A
N
K
ENGI
NV
ENG
ATT
ENG
INT
ENG
PAR
UB
U
US
H
LM
OT
LC
ON
SINT
EAC
SINL
EA
SICL
ASS
SSDI
SC
SCL
AST
EVAL
CLK
EVA
LNC
LK
1.0 Mea
4.57 4.66 4.33 4.61 4.04 3.80 3.90 4.04 4.66 4.33 4.47 4.52 4.00 3.80 3.36
N
21 21 21 21 21 21 21 21 21 21 21 21 21 21 21
Std.
Dev
iatio
n
.507 .4830 .6248 .4976 .740 .813 .624 .589 .4830 .6582 .5117 .6015 .8366 .3238 .38403
2.0
0
Mea
n
4.55
56
4.555
6
4.277
8
4.222
2
4.16
67
3.94
44
3.22
22
3.27
78
4.222
2
3.833
3
4.222
2
4.111
1
3.277
8
4.122
2
3.5444
N
18 18 18 18 18 18 18 18 18 18 18 18 18 18 18
Std.
Dev
iatio
n
.511 .5113 .4608 .4277 .785 .872 .646 .669 .7320 .7071 .6467 .7584 .4608 .1957 .24307
3.0
0
Mea
n
3.60 3.466 3.333 3.200 2.73 2.40 2.40 2.53 2.600 2.266 2.266 2.066 1.533 2.573 2.1733
N
15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
Std.
Dev
iatio
n
.507 .7432 .7237 .7746 .703 .632 .632 .743 .7367 .8837 .7988 .7988 .6399 .2548 .17915
To
tal
Mea
n
4.29 4.296 4.000 4.092 3.72 3.46 3.25 3.37 3.944 3.592 3.777 3.703 3.074 3.570 3.0926
N
54 54 54 54 54 54 54 54 54 54 54 54 54 54 54
Std.
Dev
iatio
n
.662 .7679 .7268 .8072 .959 1.02 .872 .896 1.071 1.124 1.143 1.253 1.210 .6902 .64832
293


Cue, N. (1998). A universal learning tool for classrooms. Proceedings of the First Quality in Teaching
and Learning Conference. Hong Kong SAR, China.
Deal, A. (2007). Classroom response systems. Carnegie Mellon White Paper, 1-14.
Draper, S. (1998). Niche-based success in CAL. Computing Education 30, 5-8.
Draper, S. (2002). Evaluating effective use of PRS: Results of the evaluation of the use of PRS in Glasgow
University.
Elliot, C. (2003). Using a personal response system in economics teaching. Int. Rev. Econ. Ed. 1, 80-86.
IOMA Law Office Management & Administration Report (November, 2009). Boomers showing how to
use the new web, (9), 11.
Jackson, M. & Trees, A. (2003). Clicker implementation and assessment.
www.comm.colorado.edu/mjackson/clickerreport.htm
Miller, R. (2003). Evaluation of an audience response system for continuing education of health
professionals. Journal of Continuing Education Health Profession 23, 109-115.
Perez, S. (2009). The technology generation gap at work is oh so wide. Read Write Archives.
Rogers, E. (1995). The diffusion of innovations. 4
th
edition, New York: Free Press.
Simpson, V., & Oliver, M. (2006). Using electronic voting systems in lectures.
www.ucl.ac.uk/learningtechnology/examples/electronicvotingsystems.pdf
Steinert, Y., & Snell, L. (1999). Interactive lecturing: strategies for increasing participation in large group
presentations. Medical Teacher 21, 37-42.
Stone, B. (January 9, 2010). The children of cyberspace: Old fogies by their 20s. New York Times.
Wood, W. (2004). Clickers: A Teaching Gimmick That Works. Developing Cell 7(6), 796-798.

TABLE 1: MEAN DIFFERENCES OF ENGAGEMENT, UNDERSTANDING, LEARNING, STRATEGY,
EVALUATION BY RANK
R
A
N
K
ENGI
NV
ENG
ATT
ENG
INT
ENG
PAR
UB
U
US
H
LM
OT
LC
ON
SINT
EAC
SINL
EA
SICL
ASS
SSDI
SC
SCL
AST
EVAL
CLK
EVA
LNC
LK
1.0 Mea
4.57 4.66 4.33 4.61 4.04 3.80 3.90 4.04 4.66 4.33 4.47 4.52 4.00 3.80 3.36
N
21 21 21 21 21 21 21 21 21 21 21 21 21 21 21
Std.
Dev
iatio
n
.507 .4830 .6248 .4976 .740 .813 .624 .589 .4830 .6582 .5117 .6015 .8366 .3238 .38403
2.0
0
Mea
n
4.55
56
4.555
6
4.277
8
4.222
2
4.16
67
3.94
44
3.22
22
3.27
78
4.222
2
3.833
3
4.222
2
4.111
1
3.277
8
4.122
2
3.5444
N
18 18 18 18 18 18 18 18 18 18 18 18 18 18 18
Std.
Dev
iatio
n
.511 .5113 .4608 .4277 .785 .872 .646 .669 .7320 .7071 .6467 .7584 .4608 .1957 .24307
3.0
0
Mea
n
3.60 3.466 3.333 3.200 2.73 2.40 2.40 2.53 2.600 2.266 2.266 2.066 1.533 2.573 2.1733
N
15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
Std.
Dev
iatio
n
.507 .7432 .7237 .7746 .703 .632 .632 .743 .7367 .8837 .7988 .7988 .6399 .2548 .17915
To
tal
Mea
n
4.29 4.296 4.000 4.092 3.72 3.46 3.25 3.37 3.944 3.592 3.777 3.703 3.074 3.570 3.0926
N
54 54 54 54 54 54 54 54 54 54 54 54 54 54 54
Std.
Dev
iatio
n
.662 .7679 .7268 .8072 .959 1.02 .872 .896 1.071 1.124 1.143 1.253 1.210 .6902 .64832
293


ETEXTBOOK: A FRAMEWORK TO UNDERSTANDING THEIR POTENTIAL

Saurabh Gupta, University of North Florida

s.gupta@unf.edu

Charlene Gullett-Scaggs, University of North Florida
charlene.gullett-scaggs@unf.edu


ABSTRACT

With the proliferation of digital content, the use of etextbooks has become more popular
in academia. However, limited research in the use of etextbooks has shown equivocal results
regarding their impact on student learning. The paper provides a framework for analysis of the
various etextbooks platforms. The framework outlines three critical dimensions of etextbooks:
knowledge integration, collaboration and personalization. Drawing from literature review, the
paper also discusses the different impacts each of these dimensions has on student learning. The
study also reports observations from a small action research study validating the framework.

INTRODUCTION

Since the invention of the printing press in 1440, published works have played an
important role in dissemination of knowledge across the globe. For most of its history, printing
press technology had not seen a significant change. However, the last couple of decades have
seen the emergence of digital technology as the major source of knowledge dissemination. This
growth in digital technology and the Internet has led to an increasing interest in delivering these
books through electronic means; i.e., as an ebook. Advantages of digital access include
flexibility, ability to link various texts, ability to display content in different formats, ability to
link multimedia, ability to search, and enhanced ability to share knowledge (Gordon, 2002).
Many new endeavors are being undertaken to exploit these advantages in academia.
Textbook publishers have set up online access portals like coursesmart.com as well as
downloadable software like ciberscribe or vitalsource. Institutional authorities are also setting up
electronic portal websites to collect textbooks such as The Orange Grove to enhance access to
textbooks. Hardware vendors are also looking at digital textbooks marked with tremendous
interest in releasing new reading platforms such as the Sony Daily Edition, Kindle DX, iPad, etc.
All of these advances are promising a revolution similar to the printing press revolution in
discovery and dissemination of knowledge.
In spite of this promise, the textbooks of today are not much different than the ones
created by Gutenbergs press (Rowlands, Nicholas, Jamali, & Huntington, 2007). Additionally,
much of the focus of research on ebooks and ebook readers has been in the field of library
science and not in a classroom setting (Tedd, 2005). The limited research in using ebooks/ebook
readers as a textbook has resulted in equivocal results. One of the primary reasons for such
results is the wide variety of devices on which digital books can be read. These devices include
PCs, mobile phones, ebook readers and netbooks to name a few. Additionally, given the nature
of technology, new features / devices are constantly emerging.
294


Thus, this paper aims to provide a framework to help accomplish the following
objectives: 1) provide a way to classify the various etextbooks, 2) help understand existing
research, and 3) draw hypotheses regarding the effectiveness of the enhancements to etextbooks.
The rest of the paper is organized as follows - the next section summarizes the existing research
on etextbooks. Section 3 discusses the framework and develops the hypothesis. Finally, section 4
provides the conclusion in terms of future directions.

ETEXTBOOK LITERATURE REVIEW

Textbooks are codified knowledge on a specific topic for formal education. Although a
subset of an ebook, a textbook has some unique characteristics. First, a textbook is a coursebook,
a formal manual of instruction on a specific subject, especially one for use in schools or colleges.
Secondly, it is a common book across all participants of a class. Third, they provide references
and knowledge pointers to reference books. And finally, they also provide a rich set of exercises.
While the above characteristics lend themselves very well to digital technologies, limited
research examining its effectiveness exists. As mentioned earlier, much of the research
examining the use of ebooks in higher education has been in the area of library sciences. The
primary focus of this research has been on enhancing access to a wide range content available
through electronic means to a wide audience. Textbooks represent a different kind of resource in
an academic setting. While the library represents a source of additional / reference information,
textbooks are mandatory and provide continued guidance as the student gains knowledge
regarding a specific topic. Thus, to understand the impact of textbooks, a definition that
encompasses the context of their use is very important. We define etextbooks as a combination
of hardware/software capabilities used to access content of a mandatory coursebook in a
classroom setting. We have restricted our literature review to studies that have examined ebooks
as textbooks or studies that have examined the comparison of etextbooks with traditional
textbooks. A review of the studies provides us with the following insights.
First, while students in some studies showed increased learning outcomes (Chen, Wei,
Wang, & Lee, 2007; Ravid, Kalman, & Rafaeli, 2008), other studies found decreased satisfaction
among students (Wilson, Landoni, & Gibb, 2003) (Carlock & Perry, 2008). Second, etextbooks
have also been used in a variety of ways, ranging from delivery of material (Carlock & Perry,
2008; McFall, 2005) to using them for collaboration (Ravid, et al., 2008). Third, a survey of
faculty members using ebooks found the lack of ability to integrate customized content, as well
as lack of reliable access as a major issue in usage (Carlock & Perry, 2008); however, research
also acknowledged the growing popularity of this medium (Rowlands, et al., 2007). Finally,
research in this area also suggests that the context of usage is also very important. Etextbooks
need to be flexible enough to allow for customization to the course and personalization for the
students to be successful (Leo, 2005; McFall, 2005).
In summary, the results of using etextbooks have been equivocal. Etextbooks have been
used in a variety of ways in academia making the comparison difficult. Additionally, as
technology evolves, new and different features are emerging across different platforms. Thus, in
the next section, we present a framework that helps classify various etextbooks as well as
provides us with the ability to understand the impact of various elements of the framework.



295


ETEXTBOOK FRAMEWORK

Etextbooks are designed to be used by knowledge workers to gain knowledge regarding a
specific topic(s). In some aspects, etextbooks have the potential to provide students with a portal
to knowledge, going well beyond the traditional role of static information display for textbooks.
Thus, a framework for etextbooks needs to accommodate this additional role. Additionally, any
framework for etextbooks also needs to provide direction for the future as well as provide a
hypothesis regarding the impact of different abilities of etextbooks.
To accomplish these objectives, we draw on a recent framework developed to explain
organizational portals. This framework is based on the work done in the knowledge management
area and can be expanded to include new contexts such as etextbooks. The framework argues
that there are three critical dimensions for evaluating knowledge tools: Knowledge integration,
collaboration and personalization. Dimensions represent some cognitive aspect or characteristic
of the knowledge tool. These dimensions can be manipulated through technology features such
as the ability to borrow from the library, taking notes, etc. (Gupta & Bostrom, 2009). Table 1
summarizes the features that can manipulate each of these dimensions. Please note that this is not
an exhaustive list, but does provide an illustration regarding the kind of features that should get
incorporated.

TABLE 3: ETEXTBOOK DIMENSIONS AND CHARACTERISTICS

In subsequent paragraphs we discuss how these dimensions of a knowledge tool can be
applied in an etextbook context and the underlying features for each of these dimensions. We
also provide a hypothesis regarding the effectiveness of each of these dimensions.
Dimensions Knowledge Integration Collaboration Personalization
Current
Features
Able to read PDFs without
conversion
Internet connection with
hypertext support
Text to speech
Compatibility with non-
proprietary file formats
Library sharing

Peer to peer lending
Note sharing for
study groups
Features to connect
users for global study
groups
Get feedback from
instructors on
exercises
Minimal customization of
information based on user
feedback
Ability to take notes in
margins of eBooks
Personalize screensavers
with user photos
Ability to quickly adjust the
size of the display using
eInk
User adaptive program for
mobile education
Ability to move chapter
information based on user
or professors preferences
does not exist. No user
friendly customization to
allow users to tailor
learning to their particular
level or learning style.
296


ETEXTBOOK FRAMEWORK

Etextbooks are designed to be used by knowledge workers to gain knowledge regarding a
specific topic(s). In some aspects, etextbooks have the potential to provide students with a portal
to knowledge, going well beyond the traditional role of static information display for textbooks.
Thus, a framework for etextbooks needs to accommodate this additional role. Additionally, any
framework for etextbooks also needs to provide direction for the future as well as provide a
hypothesis regarding the impact of different abilities of etextbooks.
To accomplish these objectives, we draw on a recent framework developed to explain
organizational portals. This framework is based on the work done in the knowledge management
area and can be expanded to include new contexts such as etextbooks. The framework argues
that there are three critical dimensions for evaluating knowledge tools: Knowledge integration,
collaboration and personalization. Dimensions represent some cognitive aspect or characteristic
of the knowledge tool. These dimensions can be manipulated through technology features such
as the ability to borrow from the library, taking notes, etc. (Gupta & Bostrom, 2009). Table 1
summarizes the features that can manipulate each of these dimensions. Please note that this is not
an exhaustive list, but does provide an illustration regarding the kind of features that should get
incorporated.

TABLE 3: ETEXTBOOK DIMENSIONS AND CHARACTERISTICS

In subsequent paragraphs we discuss how these dimensions of a knowledge tool can be
applied in an etextbook context and the underlying features for each of these dimensions. We
also provide a hypothesis regarding the effectiveness of each of these dimensions.
Dimensions Knowledge Integration Collaboration Personalization
Current
Features
Able to read PDFs without
conversion
Internet connection with
hypertext support
Text to speech
Compatibility with non-
proprietary file formats
Library sharing

Peer to peer lending
Note sharing for
study groups
Features to connect
users for global study
groups
Get feedback from
instructors on
exercises
Minimal customization of
information based on user
feedback
Ability to take notes in
margins of eBooks
Personalize screensavers
with user photos
Ability to quickly adjust the
size of the display using
eInk
User adaptive program for
mobile education
Ability to move chapter
information based on user
or professors preferences
does not exist. No user
friendly customization to
allow users to tailor
learning to their particular
level or learning style.
296

ETEXTBOOK FRAMEWORK

Etextbooks are designed to be used by knowledge workers to gain knowledge regarding a
specific topic(s). In some aspects, etextbooks have the potential to provide students with a portal
to knowledge, going well beyond the traditional role of static information display for textbooks.
Thus, a framework for etextbooks needs to accommodate this additional role. Additionally, any
framework for etextbooks also needs to provide direction for the future as well as provide a
hypothesis regarding the impact of different abilities of etextbooks.
To accomplish these objectives, we draw on a recent framework developed to explain
organizational portals. This framework is based on the work done in the knowledge management
area and can be expanded to include new contexts such as etextbooks. The framework argues
that there are three critical dimensions for evaluating knowledge tools: Knowledge integration,
collaboration and personalization. Dimensions represent some cognitive aspect or characteristic
of the knowledge tool. These dimensions can be manipulated through technology features such
as the ability to borrow from the library, taking notes, etc. (Gupta & Bostrom, 2009). Table 1
summarizes the features that can manipulate each of these dimensions. Please note that this is not
an exhaustive list, but does provide an illustration regarding the kind of features that should get
incorporated.

TABLE 3: ETEXTBOOK DIMENSIONS AND CHARACTERISTICS

In subsequent paragraphs we discuss how these dimensions of a knowledge tool can be
applied in an etextbook context and the underlying features for each of these dimensions. We
also provide a hypothesis regarding the effectiveness of each of these dimensions.
Dimensions Knowledge Integration Collaboration Personalization
Current
Features
Able to read PDFs without
conversion
Internet connection with
hypertext support
Text to speech
Compatibility with non-
proprietary file formats
Library sharing

Peer to peer lending
Note sharing for
study groups
Features to connect
users for global study
groups
Get feedback from
instructors on
exercises
Minimal customization of
information based on user
feedback
Ability to take notes in
margins of eBooks
Personalize screensavers
with user photos
Ability to quickly adjust the
size of the display using
eInk
User adaptive program for
mobile education
Ability to move chapter
information based on user
or professors preferences
does not exist. No user
friendly customization to
allow users to tailor
learning to their particular
level or learning style.
296


Knowledge integration dimension: Knowledge integration refers to the
comprehensiveness and accessibility of codified knowledge (Gupta & Bostrom, 2005;
Sambamurthy, Bharadwaj, & Grover, 2003). In an etextbook context, it refers to the ability to be
able to access multiple sources of information, in different formats as well as the quality of
content integration. Evidence from library sciences literature suggests that access to an
increasing amount of content is perceived as useful (Thompson & Sharp, 2009). Similar
inference can be drawn regarding etextbooks (Carlock & Perry, 2008).
Although etextbook publishers have not yet focused on this area, hardware and software
support for such integration is fast rising. For example, the Sony eReader can not only read
etextbooks formatted in Sonys proprietary format, but can also read PDFs, txt, rtf and ePub file
types. It can also borrow books from the local public library to have a more integrated
knowledge source. Similarly, Amazons Kindle integrates a context sensitive dictionary that can
be accessed along with the etextbook. However, most textbook publishers, such as
coursesmart.com, are still relying on the ubiquity of the PC to access information outside the
textbook. While the PC does allow for knowledge integration, such integration has not yet been
built into the etextbook software itself.
Literature from trade publications as well as initial research in the use of etextbooks does
show that knowledge integration tools, although in their infancy, do help enhance the perceived
usefulness of etextbooks (Rowlands, et al., 2007). Table 2 also offers some prospective features
that are included in the etextbooks, enhancing their ability to increase knowledge. Interestingly,
no evidence regarding its ability to enhance learning was present. We suspect this is because
most of the etextbooks are focused on content access rather than content integration. Thus, we
hypothesize:

H1: Etextbooks that have a high level of knowledge integration will have a positive effect
on perceived usefulness.

Collaboration dimension: Collaboration is the ability to conduct a conversation while
maintaining a common frame of reference (Schrage, 1997). Collaboration brings together the
explicit knowledge within the eBook with the tacit knowledge that individual MBA students
possess (Nonaka, 1994; Polanyi, 1967). The extensive literature in knowledge management has
always emphasized the importance of collaboration in knowledge creation (Alavi & Leidner,
2001). Academic environments using textbooks; i.e., a classroom, has an intrinsic advantage in
this case as the set of people are pre-defined as classroom participants. Thus, etextbooks have the
potential to serve as a common frame of reference in a classroom. Etextbooks in their current
form also do not allow for interaction between instructor and students. Given the importance of
feedback in instruction, such collaboration would substantially enhance learning outcomes.
Two studies provide strong evidence regarding the impact on learning outcomes. While
both provided limited collaboration capabilities, ranging from finding names for study groups
(Ravid, et al., 2008) to accessing discussion boards (Chen, et al., 2007), both studies provide
evidence regarding the utility of collaboration tools in enhancing learning outcomes. Commercial
etextbook providers are now beginning to provide these capabilities. For example,
Coursesmart.com now provides downloadable software to help share class notes with the entire
class or study group. Similar examples exist for Cafescribe as well as other textbook providers.
The Barnes and Noble reader, the Nook, uses another feature to enhance collaboration by
allowing for peer-to-peer lending. Tremendous potential still exists in developing this dimension
297


and Table 2 provides examples of some features that can be used to enhance this dimension.
Based on literature, we argue:

H2: Etextbooks with high levels of collaboration capabilities lead to significantly higher
levels of cognitive learning outcomes.

Personalization dimension: Personalization is the extent to which the device can be
customized to fit a specific users needs (Gupta & Bostrom, 2005). Personalization significantly
impacts the ability to transfer knowledge since it presents presorted knowledge based on
individual needs (Ho, Davern, & Tam, 2008; Mayer, Fennell, Farmer, & Campbell, 2004).
Technology supporting creating dynamic textbooks based on student feedback and comments
also exists for PC versions of the reader but is currently not in use.
The first study introduced adaptive learning (Martn & Carro, 2009), and the second
study focused on reading comprehension (Chen, et al., 2007). In both cases student satisfaction
(an important learning outcome) was considerably increased. This is also consistent with the
personalization and training literature that argues in favor of personalization to enhance
knowledge retention. Recently MacMillan Publications has launched dynamic books that allow
for faculty members to create dynamic books by substituting/appending materials to an existing
textbook. Hardware, such as the Sony Reader, allow for personalization by allowing students to
take notes on the textbooks. In all cases, it seems that the primary factor influenced by
personalization is learner satisfaction. Thus, we argue:

H3: Etextbooks with high levels of personalization capabilities lead to significantly
higher levels of effective learning outcomes.

CONCLUSION

There has been little study to determine the usefulness of etextbooks for academia. It has
generally been assumed that the advantages of digital text would directly translate into
etextbooks. Reports have even estimated that in five years 18% of all textbooks would be
etextbooks (Reynolds & Ioffe, 2010). However, as the framework discussed in this paper
suggests, to really gain an advantage of using etextbooks beyond simple accessibility, three
dimensions have to be focused on: knowledge integration, collaboration and personalization.
As discussed in the framework, each of these dimensions has a different impact, with
literature supporting the use of collaboration in enhancing learning outcomes. Unfortunately, this
is also the dimension that has been least supported by etextbook publishers. Knowledge
integration and access, however, have been the most supported features and, as shown by our
point, has its impact on perceived usefulness. Finally, personalization as a feature is starting to
catch up, with publishers allowing for content restructuring and note taking.
The framework also provides practitioners and education professionals to examine the
capabilities of the etextbooks being used in their class. Additionally, the framework also
provides etextbook publishers with a template of features that need to be enhanced for successful
exploitation of etextbook capabilities.


298


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300


ONE MORE TIME: THE RELATIONSHIP BETWEEN TIME TAKEN TO COMPLETE
AN EXAM AND THE GRADE RECEIVED

James E. Weber, St. Cloud State University
jweber@stcloudstate.edu

Howard Bohnen, St. Cloud State University
hbohnen@stcloudstate.edu

James A. Smith, St. Cloud State University
jasmith@stcloudstate.edu


ABSTRACT

Interest in the relationship between the grade a student receives on an exam and the time
a student takes to complete the exam has existed among researchers for a majority of the last
century. A number of different reasons have been proposed for why scores may vary by time, but
the primary rationale for the importance of the issue is the potential for the association of time
taken with increased test anxiety and its adverse effects. The current study departs from most
previous studies in reexamining time-grade relationships from different perspectives. Results are
sharply at odds with prior studies showing no time-grade relationship. Implications for practice
and suggestions for future research are discussed.

INTRODUCTION

The potential relationship between the grade a student receives on an exam and the time a
student takes to complete the exam has been the topic of formal and informal research for over
80 years, having been widely discussed before Freeman wrote his article on the topic (Freeman,
1923). Various rationales have been given for why scores may vary by time, but the primary
reasoning for the importance of the issue is the potential for those taking more time to experience
increased test anxiety and its adverse effects. Students, seeing others turn in their exams much
sooner than they will, may feel that they are too slow and need to hurry or that they are stupid for
not keeping up, adding to anxiety and decreasing performance (Herman, 1997).
If one were to characterize the majority of prior studies of the time-grade relationship,
one could say that most studies concentrated on the order in which students handed in exams
rather than the time they took (Bridges, 1985; Burack, 1967; Foos, 1989; Freeman, 1923;
Michael & Michael, 1969; Paul & Rosenkoetter, 1980), that the subjects in the sample were
enrolled in undergraduate psychology classes (Bridges, 1985; Burack, 1967; Foos, 1989;
Freeman, 1923; Herman, 1997; Johnston, 1977; Lester, 1991; Michael & Michael, 1969; Paul &
Rosenkoetter, 1980; Wierzbicki, 1994), that researchers looked for linear time-grade
relationships rather than non-linear (Burack, 1967; Freeman, 1923; Lester, 1991; Terranova,
1972), that tests given were objective, multiple choice exams (Beaulieu & Frost, 1994; Bridges,
1985; Herman, 1997; Johnston, 1977; Lester, 1991; Michael & Michael, 1969; Paul &
Rosenkoetter, 1980; Terranova, 1972), and that the sample sizes were relatively small (median
size < 50). Results of these studies, with a small number of exceptions, have been mostly
unsupportive of the existence of a time-grade relationship. Significant findings include Beaulieu
301


& Frost (1994), who measured time taken to complete multiple-choice tests, and who found
significant differences in only two of the 27 tests examined. Michael and Michael (1969) also
found a significant order-score relationship for only one of 11 samples studied on multiple-
choice tests. Finally, Johnston (1977) found differing variances in scores for both early and later
finishers. A number of explanations for the lack of findings have been advanced, including
differences in personal tempo in test taking, test wiseness, and caution among test takers (Nevo
& Spector, 1979). Suggestions for future research vary, ranging from none is necessary (Herman,
1997) to the observation that research thus far has focused on untimed, objective tests, leaving us
uncertain about potential relationships in timed, non-objective tests that might focus on problem
solving (Bridges, 1985). The current study departs from most previous studies in examining time
rather than just order, using undergraduate and graduate business students as subjects, looking
for both linear and nonlinear time-grade relationships, employing larger sample sizes, and in
using a variety of multiple choice, essay, and other questions that require actual computational
problem solving.

METHOD

This study used four different samples to examine potential time-score relationships. In
sample one, 96 undergraduate business students completed a 5-question, 2.5 hour essay exam.
All students finished the exam, making this an essentially untimed test. In sample two 154
undergraduate business students took a 60-item multiple choice test where half the questions
required computation. One third of students were still working on the exam when the 2.5 hours
were finished. In sample three, 71 graduate business students completed a 10-question, 5-hour
open-book essay exam. All students finished before time ran out. In sample four, 93
undergraduate business students completed a 2.25 hour test comprised of 10 conceptual multiple-
choice questions and 5 computational problems. All students finished within the time allotted for
this exam. These four samples emphasized a number of alternatives to the traditional, objective,
multiple-choice exams that prior literature had concentrated on.
As each student finished an exam, their time of completion was noted. Raw scores on the
exam and time to complete the exam along with the gender of each student were obtained from
each professor providing a sample. No other, identifying information was provided to researchers
in order to preserve student anonymity. A description of the samples appears in Table 1.

TABLE 1. DESCRIPTION OF SAMPLES
Sample Sample Level Type Timed/Untimed
1 N = 96
Male = 60
Female = 36
Undergraduate Essay Untimed
2 N = 154
Male = 79
Female = 75
Undergraduate Multiple Choice
30 conceptual
30 computational
Timed
3 N = 71
Male = 43
Female = 28
Masters Level Essay Untimed
4 N = 93
Male = 56
Female = 37
Undergraduate Multiple Choice (10%)
Computational Problems (90%)
Untimed
302

& Frost (1994), who measured time taken to complete multiple-choice tests, and who found
significant differences in only two of the 27 tests examined. Michael and Michael (1969) also
found a significant order-score relationship for only one of 11 samples studied on multiple-
choice tests. Finally, Johnston (1977) found differing variances in scores for both early and later
finishers. A number of explanations for the lack of findings have been advanced, including
differences in personal tempo in test taking, test wiseness, and caution among test takers (Nevo
& Spector, 1979). Suggestions for future research vary, ranging from none is necessary (Herman,
1997) to the observation that research thus far has focused on untimed, objective tests, leaving us
uncertain about potential relationships in timed, non-objective tests that might focus on problem
solving (Bridges, 1985). The current study departs from most previous studies in examining time
rather than just order, using undergraduate and graduate business students as subjects, looking
for both linear and nonlinear time-grade relationships, employing larger sample sizes, and in
using a variety of multiple choice, essay, and other questions that require actual computational
problem solving.

METHOD

This study used four different samples to examine potential time-score relationships. In
sample one, 96 undergraduate business students completed a 5-question, 2.5 hour essay exam.
All students finished the exam, making this an essentially untimed test. In sample two 154
undergraduate business students took a 60-item multiple choice test where half the questions
required computation. One third of students were still working on the exam when the 2.5 hours
were finished. In sample three, 71 graduate business students completed a 10-question, 5-hour
open-book essay exam. All students finished before time ran out. In sample four, 93
undergraduate business students completed a 2.25 hour test comprised of 10 conceptual multiple-
choice questions and 5 computational problems. All students finished within the time allotted for
this exam. These four samples emphasized a number of alternatives to the traditional, objective,
multiple-choice exams that prior literature had concentrated on.
As each student finished an exam, their time of completion was noted. Raw scores on the
exam and time to complete the exam along with the gender of each student were obtained from
each professor providing a sample. No other, identifying information was provided to researchers
in order to preserve student anonymity. A description of the samples appears in Table 1.

TABLE 1. DESCRIPTION OF SAMPLES
Sample Sample Level Type Timed/Untimed
1 N = 96
Male = 60
Female = 36
Undergraduate Essay Untimed
2 N = 154
Male = 79
Female = 75
Undergraduate Multiple Choice
30 conceptual
30 computational
Timed
3 N = 71
Male = 43
Female = 28
Masters Level Essay Untimed
4 N = 93
Male = 56
Female = 37
Undergraduate Multiple Choice (10%)
Computational Problems (90%)
Untimed
302

& Frost (1994), who measured time taken to complete multiple-choice tests, and who found
significant differences in only two of the 27 tests examined. Michael and Michael (1969) also
found a significant order-score relationship for only one of 11 samples studied on multiple-
choice tests. Finally, Johnston (1977) found differing variances in scores for both early and later
finishers. A number of explanations for the lack of findings have been advanced, including
differences in personal tempo in test taking, test wiseness, and caution among test takers (Nevo
& Spector, 1979). Suggestions for future research vary, ranging from none is necessary (Herman,
1997) to the observation that research thus far has focused on untimed, objective tests, leaving us
uncertain about potential relationships in timed, non-objective tests that might focus on problem
solving (Bridges, 1985). The current study departs from most previous studies in examining time
rather than just order, using undergraduate and graduate business students as subjects, looking
for both linear and nonlinear time-grade relationships, employing larger sample sizes, and in
using a variety of multiple choice, essay, and other questions that require actual computational
problem solving.

METHOD

This study used four different samples to examine potential time-score relationships. In
sample one, 96 undergraduate business students completed a 5-question, 2.5 hour essay exam.
All students finished the exam, making this an essentially untimed test. In sample two 154
undergraduate business students took a 60-item multiple choice test where half the questions
required computation. One third of students were still working on the exam when the 2.5 hours
were finished. In sample three, 71 graduate business students completed a 10-question, 5-hour
open-book essay exam. All students finished before time ran out. In sample four, 93
undergraduate business students completed a 2.25 hour test comprised of 10 conceptual multiple-
choice questions and 5 computational problems. All students finished within the time allotted for
this exam. These four samples emphasized a number of alternatives to the traditional, objective,
multiple-choice exams that prior literature had concentrated on.
As each student finished an exam, their time of completion was noted. Raw scores on the
exam and time to complete the exam along with the gender of each student were obtained from
each professor providing a sample. No other, identifying information was provided to researchers
in order to preserve student anonymity. A description of the samples appears in Table 1.

TABLE 1. DESCRIPTION OF SAMPLES
Sample Sample Level Type Timed/Untimed
1 N = 96
Male = 60
Female = 36
Undergraduate Essay Untimed
2 N = 154
Male = 79
Female = 75
Undergraduate Multiple Choice
30 conceptual
30 computational
Timed
3 N = 71
Male = 43
Female = 28
Masters Level Essay Untimed
4 N = 93
Male = 56
Female = 37
Undergraduate Multiple Choice (10%)
Computational Problems (90%)
Untimed
302


Each of the four samples was analyzed separately. Two procedures were used to look for
linear relationships between time to complete and exam scores. First, correlation coefficients
between the two items were calculated. Next, SPSSs General Linear Model, simulating Analysis
of Covariance (ANCOVA), was used to see whether gender and time exhibited a relationship
with the exam score. Two procedures were also used to look for nonlinear relationships between
time to complete and exam scores. First scatterplots of the two variables were plotted to allow
researchers to visually examine the data. Second ANOVA using tertile splits of time scores was
calculated to look for differences in the means of early, middle and late exam finishers.
Researchers, upon finding significant nonlinear relationships in two of the samples, used SPSSs
curve estimation function in attempt to clarify the nature and magnitude of relationships found.

RESULTS

Correlation coefficients were calculated to examine the linear relationship between time
and score variables. These coefficients and significance levels for all four samples appear in
Table 2. Note that samples one and two show moderate, significant correlations between the two
variables, with 13-16% of the score on the exam being related to the time taken to turn the exam
in. In samples three and four, correlations were small in magnitude and not significant.

TABLE 2. CORRELATIONS BETWEEN TIME TO COMPLETE EXAM AND SCORE ON THE EXAM
FOR FOUR SAMPLES
Sample 1 Sample 2 Sample 3 Sample 4
Correlation Coefficient .418** .359** -.075 -.035
**Correlation is significant at the 0.01 level (2 sided)

Table 3 shows the results of the ANCOVAs for the four samples, with score on the exam
as the dependant variable, gender as a fixed factor, and time entered as a covariate. It confirms
the results of the correlation analysis, extending those results to say that for samples one and two,
with gender taken into account, the time taken on the exam explained roughly 13-18% of the
variance in scores on the exam. In sample two, gender exhibited a significant relationship with
score, i.e. males did better on the exam than females.

TABLE 3. ANCOVA RESULTS FOR THE FOUR SAMPLES, SCORE AS DV, GENDER AS FIXED
FACTOR, TIME AS COVARIATE
F Sig. Partial eta-square Observed Power
Sample 1
Gender
Time

1.487
19.866

.226
.000

.016
.176

.226
.993
Sample 2
Gender
Time

8.622
21.879

.004
.000

.054
.127

.831
.996
Sample 3
Gender
Time

0.873
0.202

.353
.655

.013
.003

.151
.073
Sample 4
Gender
Time

0.851
0.236

.359
.628

.009
.003

.149
.077
303


Each of the four samples was analyzed separately. Two procedures were used to look for
linear relationships between time to complete and exam scores. First, correlation coefficients
between the two items were calculated. Next, SPSSs General Linear Model, simulating Analysis
of Covariance (ANCOVA), was used to see whether gender and time exhibited a relationship
with the exam score. Two procedures were also used to look for nonlinear relationships between
time to complete and exam scores. First scatterplots of the two variables were plotted to allow
researchers to visually examine the data. Second ANOVA using tertile splits of time scores was
calculated to look for differences in the means of early, middle and late exam finishers.
Researchers, upon finding significant nonlinear relationships in two of the samples, used SPSSs
curve estimation function in attempt to clarify the nature and magnitude of relationships found.

RESULTS

Correlation coefficients were calculated to examine the linear relationship between time
and score variables. These coefficients and significance levels for all four samples appear in
Table 2. Note that samples one and two show moderate, significant correlations between the two
variables, with 13-16% of the score on the exam being related to the time taken to turn the exam
in. In samples three and four, correlations were small in magnitude and not significant.

TABLE 2. CORRELATIONS BETWEEN TIME TO COMPLETE EXAM AND SCORE ON THE EXAM
FOR FOUR SAMPLES
Sample 1 Sample 2 Sample 3 Sample 4
Correlation Coefficient .418** .359** -.075 -.035
**Correlation is significant at the 0.01 level (2 sided)

Table 3 shows the results of the ANCOVAs for the four samples, with score on the exam
as the dependant variable, gender as a fixed factor, and time entered as a covariate. It confirms
the results of the correlation analysis, extending those results to say that for samples one and two,
with gender taken into account, the time taken on the exam explained roughly 13-18% of the
variance in scores on the exam. In sample two, gender exhibited a significant relationship with
score, i.e. males did better on the exam than females.

TABLE 3. ANCOVA RESULTS FOR THE FOUR SAMPLES, SCORE AS DV, GENDER AS FIXED
FACTOR, TIME AS COVARIATE
F Sig. Partial eta-square Observed Power
Sample 1
Gender
Time

1.487
19.866

.226
.000

.016
.176

.226
.993
Sample 2
Gender
Time

8.622
21.879

.004
.000

.054
.127

.831
.996
Sample 3
Gender
Time

0.873
0.202

.353
.655

.013
.003

.151
.073
Sample 4
Gender
Time

0.851
0.236

.359
.628

.009
.003

.149
.077
303

Each of the four samples was analyzed separately. Two procedures were used to look for
linear relationships between time to complete and exam scores. First, correlation coefficients
between the two items were calculated. Next, SPSSs General Linear Model, simulating Analysis
of Covariance (ANCOVA), was used to see whether gender and time exhibited a relationship
with the exam score. Two procedures were also used to look for nonlinear relationships between
time to complete and exam scores. First scatterplots of the two variables were plotted to allow
researchers to visually examine the data. Second ANOVA using tertile splits of time scores was
calculated to look for differences in the means of early, middle and late exam finishers.
Researchers, upon finding significant nonlinear relationships in two of the samples, used SPSSs
curve estimation function in attempt to clarify the nature and magnitude of relationships found.

RESULTS

Correlation coefficients were calculated to examine the linear relationship between time
and score variables. These coefficients and significance levels for all four samples appear in
Table 2. Note that samples one and two show moderate, significant correlations between the two
variables, with 13-16% of the score on the exam being related to the time taken to turn the exam
in. In samples three and four, correlations were small in magnitude and not significant.

TABLE 2. CORRELATIONS BETWEEN TIME TO COMPLETE EXAM AND SCORE ON THE EXAM
FOR FOUR SAMPLES
Sample 1 Sample 2 Sample 3 Sample 4
Correlation Coefficient .418** .359** -.075 -.035
**Correlation is significant at the 0.01 level (2 sided)

Table 3 shows the results of the ANCOVAs for the four samples, with score on the exam
as the dependant variable, gender as a fixed factor, and time entered as a covariate. It confirms
the results of the correlation analysis, extending those results to say that for samples one and two,
with gender taken into account, the time taken on the exam explained roughly 13-18% of the
variance in scores on the exam. In sample two, gender exhibited a significant relationship with
score, i.e. males did better on the exam than females.

TABLE 3. ANCOVA RESULTS FOR THE FOUR SAMPLES, SCORE AS DV, GENDER AS FIXED
FACTOR, TIME AS COVARIATE
F Sig. Partial eta-square Observed Power
Sample 1
Gender
Time

1.487
19.866

.226
.000

.016
.176

.226
.993
Sample 2
Gender
Time

8.622
21.879

.004
.000

.054
.127

.831
.996
Sample 3
Gender
Time

0.873
0.202

.353
.655

.013
.003

.151
.073
Sample 4
Gender
Time

0.851
0.236

.359
.628

.009
.003

.149
.077
303


Researchers detected no easily identifiable evidence of nonlinear relationships between the
two variables on initial visual examinations of the scatterplots of time and score variables.
ANOVAs for each sample, using tertile splits of time scores were calculated to look for
differences in the means of early, middle and late exam finishers. Table 4 shows the results of
those ANOVAs.

TABLE 4. ANOVA RESULTS FOR THE FOUR SAMPLES, SCORE AS DV, TERTILE SCORES OF
TIME AS A FIXED FACTOR
F Sig. Partial eta-square Observed Power
Sample 1 10.891 .000 .190 .989
Sample 2 9.880 .000 .116 .982
Sample 3 0.228 .797 .007 .084
Sample 4 0.054 .947 .001 .058

Interestingly, both samples that displayed significant linear relationships also showed
significant nonlinear relationships, as indicated by the ANOVA and examination of the tertile
means. Table 5 shows the tertile scores for the four samples.

TABLE 5. MEAN SCORES ON THE EXAMS, DIVIDED INTO TERTILES BY TIME
Scores on the exam, divided into tertiles by time
1
st
Tertile 2
nd
Tertile 3
rd
Tertile
Sample 1 92.25 106.18 106.94
Sample 2 24.86 30.27 31.85
Sample 3 91.70 92.10 91.10
Sample 4 84.87 84.16 84.10

After reexamination of the scatterplots for samples 1 and 2, along with an examination of
the tertile means for the same samples, a number of curves were fit to the data from the two
samples. A cubic curve proved best for describing data from sample 1, while a power curve best
described data from sample 2. Table 6 shows data from the linear correlations calculated, along
with nonlinear relationships shown by the curve fitting process. The equivalent correlation for the
cubic r
2
for sample 1 is r = .49, while the equivalent correlation for the power r
2
in sample 2 is r =
.38. It seems that the degree of nonlinear relationship is more pronounced in sample 1 than in
sample 2, though similar shapes are exhibited by graphs in both samples, with exams that were
turned in early receiving lower scores, in general, than exams turned in later.

TABLE 6. FOR SAMPLES ONE AND TWO, VARIANCE EXPLAINED BY LINEAR AND NONLINEAR
ESTIMATES OF FIT.
Linear Relationship Nonlinear Relationship
r r
2
Quadratic r
2
Cubic r
2
Power r
2

Sample 1 .418 .174 .234 .241 .178
Sample 2 .359 .129 .140 .140 .146

DISCUSSION

The results found in this study differ sharply from those found in prior studies of the time-
score relationship. The current study found linear and nonlinear relationships in two of the four
304


samples studied. The few, positive findings in prior research occurred at a rate that barely
exceeded chance. The current study found linear and nonlinear relationships in two of the four
samples studied. It could also be argued that one of the nonsignificant samples in this study
doesnt belong in this analysis. The graduate students in that sample are arguably more motivated
than undergraduates, and given a longer amount of time on an open-book examination they could
all be expected to do well. Supporting this argument is the fact that the variance in exam scores
for this sample was only one third of the smallest variance in the other three samples. Omitting
this sample from the analysis gives us two of three samples of undergraduate business students
that displayed significant linear and nonlinear effects for the time-score relationship.
Care needs to be taken to not over-generalize this studys findings. The time-score
relationship, in its various forms, is a much-studied phenomena. The fact remains that of the 42
samples analyzed by researchers cited in this study, only three were found to demonstrate
significant time-score relationships. There are several possible explanations for the difference
between the current study and those others. First, the sample sizes used in the current study were
higher than most used in prior studies. It is possible that some of those prior studies simply
werent large enough to detect a modest relationship. Alternatively, for those prior studies that did
not examine nonlinear effects, it is possible that the time-score relationship was significant, but
that the linear portion of it captured by those studies was not significant. Of course, it is possible
that the findings of the current study are a result of chance and that the prior studies represent the
population of time-score relationships more accurately. It seems more likely, however, that the
increased sample size and different analytical technique have allowed researchers to find
differences in a type of test not studied extensively in prior studies. An additional possible
criticism remains for one of the samples. Suppose that the instructor grading an essay exam
simply gave lengthier exams a higher grade, and that those longer exams required more time. In
this instance, there would be an actual time-score relationship, but not based on actual student
performance on the exam. Without independent confirmation of grades on the essay exams, that
hypothesis remains untested.
It is interesting to examine the type and magnitude of the time-score relationships found in
this study. First, since the nature of the nonlinear relationship was examined using pre-defined
terms (quadratic, cubic, power), the calculated r
2
constitutes a lower bound on the magnitude of
the relationship. An individually developed fit equation would explain more of the variance, but
runs the risk of capitalizing on chance in any particular sample. Thus the r
2
statistics presented in
Table 6 are conservative estimates of the magnitude of the actual time-score relationships. If time
spent on the exam is associated with approximately 14-24% or more of the variance in score as
indicated in Table 6, time is an important variable. This should be communicated to students. In
addition, if we look at the shape of the curves fitted to the data and look at the means of the tertile
scores, what the samples have in common is that early finishers perform more poorly, on average,
than later finishers. This should lay to rest concerns by students that others are finishing earlier
and therefore are doing better than the student finishing later. At least for these tests requiring
something more than answering objective multiple-choice questions, taking longer is a good
thing.
There is a risk of trying to over-interpret findings of this nature. One interpretation,
however, is that early finishers may have just given up on the test. Middle and mid-to-late
finishers tended to perform best, and perhaps they knew the information better and needed a
substantial amount of time to convey what they knew. The last finishers tended to score slightly
lower (hence the fit of the quadratic, cubic and power curves) and these might constitute students
305


who were struggling to convey what they knew or were trying on the exam, but really didnt have
a firm grasp of the principles and information. Without further research, this line of reasoning is
purely speculative.
A number of areas for further research seem indicated. First, follow up questions for
students in future research should clear up the reasons that they handed in exams early, late, or in
the middle of the time allotted. Depending on the results of that research and given the magnitude
of the relationship found in this study, consideration should be given to how to communicate this
test-taking and scoring information to students so that they might benefit. Secondly, these results
found in this study should be replicated. Given the preponderance of negative findings found in
prior research, replication is a necessity before generalizing these results. Last, additional types of
exams should be studied. This study found significant results in an untimed essay exam and in a
timed multiple-choice exam, where half of the items required the test taker to perform
calculations, then choose the correct answer in a multiple-choice format. Fill-in-the-blank,
matching, and other response forms were not studied, leaving us unsure of the relationship in
those types of tests. These alternative forms of examination deserve study.
The authors would like to thank Dr. Gary Yoshimoto for his helpful advice and for providing a
sample for use in this study.
REFERENCES

Beaulieu, R. P., & Frost, B. (1994). Another look at the time-score relationship. Perceptual and Motor
Skills, 78, 40- 42.
Bridges, K. R. (1985). Test-completion speed: Its relationship to performance on three course-based
objective examinations. Educational and Psychological Measurement, 45, 29-35.
Burack, B. (1967). Relationship between course examination scores and time taken to finish the
examination, revisited. Psychological Reports, 20, 164.
Foos, P. W. (1989). Completion time and performance on multiple-choice and essay tests. Bulletin of the
Psychonomic Society, 27(2), 179-180.
Freeman, F. N. (1923). Note on the relation between speed and accuracy or quality of work. Journal of
Educational Research, 7(1), 87-90.
Herman, W. E. (1997). The relationship between time to completion and achievement on multiple-choice
exams. Journal of Research and Development in Education, 30(2).
Johnston, J. J. (1977). Exam-taking speed and grades. Teaching of Psychology, 4(3), 148-149.
Lester, D. (1991). Speed and performance on college course examinations. Perceptual and Motor Skills,
73, 1090.
Michael, J. J., & Michael, W. B. (1969). The relationship of performance on objective achievement
examinations to the order in which students complete them. Educational and
Psychological Measurement, 29, 511-513.
Nevo, B., & Spector, A. (1979). Personal tempo in taking tests of the multiple-choice type. Journal of
Educational Research, 73, 75-78.
Paul, C. A., & Rosenkoetter, J. S. (1980). The relationship between the time taken to complete an
examination and the test score received. Teaching of Psychology, 7(2), 108-109.
Terranova, C. (1972). Relationship between test scores and test time. The Journal of Experimental
Education, 40(3), 81-83.
Wierzbicki, M. (1994). Relation between order of completion and performance on timed examinations.
Psychological Reports, 74, 411-414.


306


BUSINESS STUDENTS REPORTED PERCEPTIONS OF
FACULTY CONSIDERATION

Randall P. Bandura, Frostburg State University
rbandura@frostburg.edu

Paul R. Lyons, Frostburg State University
plyons@frostburg.edu


ABSTRACT

Recent attention has been given to classroom incivilities reflecting student behavior,
however, instructor care and respect toward students has received little attention. We examine
perceptions of two groups (undergraduate accounting students, MBA students) regarding
instructor care and respect and report our findings, which some may find surprising.

INTRODUCTION

When students perceive that they are not treated with care and respect there may be
untoward consequences, and as faculty, we should have some knowledge and understanding of
those consequences for student learning and for the quality of our relationships with our students.
Recent research shows that the topic is important in the minds of students, if not instructors, as a
substantial proportion of students can readily report instances where they were treated in an
uncaring and/or disrespectful manner by their instructor. The whole matter of care and respect is
not a one-way issue as there are many examples of student behavior that clearly demonstrates a
level of incivility towards instructors.
As instructors, we need to do the best job possible in terms of our skills, knowledge, and
dispositions to help our students learn and grow. Demonstration of care and respect falls into the
last category dispositions. Treating students well is the right thing to do. In a practical and self-
interest sense, instructors have to demonstrate positive behavior toward students because, in most
colleges and universities, the students rate the instructors performance; students vote with their
feet and as consumers, our students have many opportunities to seek education from a variety of
sources.
In this paper we will clarify the issue of care and respect of college instructors toward
students by (1) defining and explaining the behavior that may demonstrate caring and respectful
behavior as well as the lack of that behavior; (2) providing information from two distinct
samples of adult learners (undergraduate accounting students, MBA students), (3) exploring and
categorizing the various forms of behavior that students regarded as (a) caring and respectful, as
well as (b) uncaring and disrespectful; and finally (4) a specification of several actions and
behaviors in which instructors may engage that send the message to students that they are
respected and cared about, and which also help in building positive classroom environments.




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BACKGROUND

The study reported in this article began a few years ago. A colleague received an email
from a student ten weeks into a semester course in which the student, a woman who was
returning to collegiate schooling after a gap in time of several years, asked him to please not
give up on her in the course. When asked if she had been given up on in past courses, her
response was a resounding yes. She said she could report several different instances in which
such perceptions were experienced and reinforced.
This somewhat unexpected response gave rise to an interest in exploring the issue of
students perceiving that they may have been given up on by an instructor and what consequences
such perception had for the students. We believe the information provided in this paper serves as
an alarm for instructors because it reveals that our students are paying strict attention in terms of
their perceptions and expectations of instructor behavior. The questions asked of samples of
students that bring this research to life are: 1. Have you ever had the feeling that an instructor
had given up on you and your learning in a course? 2. What did the instructor do or not do to
give you that feeling? 3. What did you do as a result of that feeling or perception? 4. What are
ways that an instructor can communicate to you that she/he has not given up on her/his
commitment to you and your learning in a course?
In later discussions with the students, those who reported feeling as though they had been
given up on at some point in their academic career almost unanimously attributed the giving up
by their instructors to a lack of caring and respect for the student and the students learning on
the part of their instructors. While most instructors would take it for granted that they and their
peers, in general, do care for and respect students, the proportion of students who report a lack of
care and/or respect is of a magnitude to demand our attention. Failure to demonstrate care and
respect for students may have several undesirable consequences. Research completed by Buttner
(2004) documented a large number of undesirable outcomes.
Given the student focus on respect and care, it seems reasonable to explore the respect
and care literature as it may inform us about the dominant theme in the student responses. The
literature is reviewed next, followed by the data and information provided by students to the four
questions listed above.

CARING FOR STUDENTS IN THE PEDAGOGICAL SENSE

There is little information in the literatures of the business disciplines, education,
psychology, or philosophy that explicitly addresses the matter of caring in the teaching-learning
context, although there are some exceptions. In their study, Hawk & Lyons (2008) found only
two citations dealing with ethics and care in three leading business ethics journals (Business and
Society Review, Business Ethics Quarterly, and Business and Society).
There is a large body of literature that embraces the concept of care, not in the
pedagogical context, but in-general. To fully explore that literature is beyond the scope of this
paper. However, we present some fundamental ideas to introduce the student instructor
relationship with regard to care and respect. The work of Gilligan (1982), Noddings (2002), and
Tronto (1993) expresses that caring is more of a process than it is a product or result. Care occurs
in a context and is largely relational.
As Hawk & Lyons (2008) report, within the broad umbrella of an ethic of care, there is a
smaller literature on an ethic of care within the learning/teaching context, or pedagogical caring.
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The contextual and relational characteristics still prevail. In this framework, the instructor or
teacher is the one caring and the student is the one cared for.
Hult (1980, pp. 242-3) identifies three levels of recognition in the pedagogical
relationship: (1) the teacher recognizes and understands the student as a unique individual self;
(2) the teacher recognizes the student as a person in the sense of being a member of the category
of all persons having certain ethical rights which the teacher is obligated to respect; (3) the
teacher recognizes the student as student, as one who has certain needs and expectations that a
pedagogical service is to be delivered, and has rights which protect and guarantee that these
expectations are fulfilled.
The first level, above, leads the teacher to discover what is unique or novel regarding
each student. The second level asks or requires the teacher to respect each of the students as a
person. The third level, that suggests a contractual relationship to an extent, leads the teacher to
regard both the student and himself as role occupants. In the role as teacher, the teacher evaluates
the students performance as well as his/her own performance. In the faculty - student
relationship, class size may or may not limit or constrain caring behavior as the caring
relationship could manifest in a one-to-one exchange or in a one-to-several exchange. Within
some reasonable limits to class size, the caring relationship is not necessarily constrained by
class size.

DEMONSTRATING RESPECT IN THE PEDAGOGICAL CONTEXT

The literature on respect in the university classroom is even thinner than the literature on
caring. The respect literature, however, also embraces the notion of civility to some extent. The
first two levels of pedagogical recognition proposed by Hult (1980, pp. 242-3, and in the section
immediately above) correspond to the concept of recognition respect and the third to the
concept of appraisal respect introduced by Darwall (1977). Recognition respect is owed to
virtually all individuals who should be taken seriously by others, in this instance, course
instructors. Darwall (1977) suggests that the other form of respect, appraisal respect, is an
attitude toward a person for whom we seek to help express their excellence in some specific
pursuit. A caring and respectful instructor would have such an attitude toward students.

STUDY METHODS AND RESULTS

We identified two distinct types of students to survey with the four questions. The student
groups represent samples of opportunity and the questioning took place over several semesters in
a mid-Atlantic, public university in the United States. Nearly all participants fell within the 20 to
30 age range and the proportion of men and women per each sample was nearly equal. As the
samples of students are from the same university, it is possible to assume that the results of the
survey are reflective of that university, only.
We found that more than one-third of the accounting students reported having been given
up on by an instructor and even more (44 per cent) of MBA students report the same thing.
These figures seem somewhat alarming to us, and we realize that other observers may believe
that the results are not particularly alarming. Also, the results may reflect conditions at the
university where students were sampled and are not reflective of higher education institutions, in
general. Students who reported perceptions of having been given up on by an instructor were
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asked to give a description or example of the behavior that they believed supported their
perception. In both samples, all participants provided descriptions of the behavior.
For this exploratory research, we decided to treat the two groups of participants as a
single group of adult learners without making distinctions regarding how each separate group
responded. We then assembled all of the descriptions the participants supplied, and by means of
a hand sort, we independently placed all of the descriptions into 13 indicators. We had to
reconcile small differences in our interpretations as well as eliminate duplicate responses. Insofar
as possible we kept the response language in the words of the participants. Intuitively, we
believed that these descriptors were not equally influential for students. Having categorized the
given up descriptors into 13 categories, we next ranked the descriptors as to level of severity:
mild, moderate, and strong. This ranking was determined by us through consensus and with input
from faculty colleagues. Obviously, this is not a highly scientific process and placement of
behaviors into the various categories is open to interpretation.
The student response categories follow: The instructor: (Mild) had no enthusiasm for the
course material, was detached from the class/didnt really teach the subject, showed little/no
concern for helping me catch up after a lengthy but legitimate absence; (Moderate) showed a
lack of compassion, made no attempt to determine whether students were struggling, did not
speak or communicate with me, declined to call on me in class, did not attempt to help with my
requests for assistance, exhibited a generally discouraging attitude; (Severe) told me I would not
be able to pass the course no matter what I did, failed to return graded assignments, would not
answer my questions, and the instructor became irritated when students asked questions; insulted
students.
Our third question was about consequences. That is, we asked participants to tell us what
they did as a result of their perception or belief that an instructor had given up on them and their
learning. In a manner similar to that regarding question 2 above, we extracted through a hand
sort four response categories for the participants answers to the question. We identified four
response categories that range from (1) doing nothing, (2) passive coping, (3) active coping, and
to (4) approaching the instructor.
The last question asked of our sample participants required them to identify the specific
ways in which an instructor can demonstrate or communicate to the participants that she/he has
not given up on them and their learning in a course of study. All sample participants, regardless
of whether they had or had not perceived that they had been given up on by an instructor were
encouraged to respond to this question. Virtually all of the participants responded to this
question.
Once more, with mutual agreement, we distilled all 24 of the response types into six
categories: (1) instructor preparation and enthusiasm, (2) establishing an encouraging and safe
environment, (3) recognizing participant learning differences, (4) involving students, (5)
providing constructive and/or developmental feedback, and (6) instructor availability to learners.
The titles of the six categories are somewhat arbitrary and open to interpretation.

DISCUSSION OF RESULTS

With regard to pedagogical caring and respect, the learners who responded to Question 2
provided their own interpretations of the behaviors they said they experienced. The primary
interpretation was that the instructor had given up on them and their learning in the course of
study. Our results clearly support this interpretation.
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Our information may be interpreted to suggest that if instructors desire for the classroom
environment to be one of mutual caring and respect, instructor-learner, then instructors may have
to take the initiative to create opportunities for learners to offer feedback on how well the
learning is taking place in the course. This initiative may also help avoid classroom incivilities
(see Bjorklund & Rehling, 2010; Clark, 2009). Instructors may take initiative to encourage
students to be active seekers of feedback (Ashford, Blatt, & Vande Walle, 2003) for the learners
own growth and to help learners move beyond passivity and conventionality when it comes to
inquiring about what is done in the classroom. In the next and final segment of this article, we
provide suggestions and guidance to instructors that flow from the information identified in our
surveys.

BEHAVING IN CARING AND RESPECTFUL WAYS TOWARD LEARNERS

Demonstrating or modeling pedagogical caring and pedagogical respect are the
appropriate actions for an instructor. Caring helps us to reach all of our students. Students who
experience an environment of care may be more committed to study in a course and may be
more motivated to perform.
Depending on the sample under consideration, the questions placed before the learners in
the present study reveal that a substantial percentage of them believe that one or more instructors
had given up on their learning in a course of study. Nevertheless, there is a constructive side to
the inquiry. The responses to our fourth question present a number of behavioral indicators that
learners felt were characteristic of instructors who had not given up on their learning. Many of
those indicators are the mirror opposites of the indicators offered in question two. The six broad
groupings of response to question four of: (1) instructor preparation and enthusiasm, (2)
encouragement and providing a safe environment, (3) recognition of diversity of student learning
approaches, (4) checking on comprehension, and (5) constructive feedback are congruent with
the characteristics of pedagogical caring and respect. These groupings also parallel, at least
partially, the accounts reported in Buttner (2004).
The foregoing information and analysis suggests that there are a number of specific
actions that instructors can take to model and cultivate pedagogical care and respect in their
courses. Our review of the literature, the results from Buttner (2004), Hawk & Lyons, (2008), the
results from our own surveys reported earlier in this work, and what we have learned from our
own classroom practices offer a number of practical suggestions. Instructors should: (1) make
sure course performance expectations and learning requirements are clear, (2) strive to provide
an encouraging and supportive environment for students to risk their ideas and questions, to offer
their voices, to listen carefully, and to reflect on what is happening in class and in their own
learning; (3) get to know our individual students through the use of beginning-of-course
questionnaire and/or personal interaction; (4) recognize that it is likely necessary to provide
different approaches to instruction because students do not all learn in the same way, (5) provide
much constructive feedback on student performance, (6) be available for outside of class
consultation and encouraging students to use that availability, and (7) model caring and
respectful behavior to all students.




311


CONCLUSION

One thing that emerges from this research and the research of others is the inference
derived from student comments and reported perceptions that students want instructors to create
and moderate somewhat inclusive and democratic classrooms. These classrooms embrace
openness, mutual respect in terms of recognition and appraisal respect, and focus on helping
students achieve instructional and personal goals.
Future exploratory research in the domain of pedagogical care could focus more on care
effects by gender, differences among learners in different disciplines, and on various aspects of
student performance to include participation and involvement in class discussions, absenteeism,
performance on tests and quizzes, and grades. Instructors have the opportunity to model an ethic
of care in their classrooms, in their relationships with their students, and in their relationships
with their discipline, their colleagues, and themselves. Students who experience that modeling
may be more willing to adopt an ethic of care in their own lives and become models for others.

REFERENCES

Ashford, S. J., Blatt, R., & Vande Walle, D. (2003). Reflections on the looking glass: A review
of research on feedback-seeking behavior in organizations. Journal of Management,
29(6), 773-799.
Bjorklund, W. L., & Rehling, D. (2010). Student perceptions of classroom incivility.
CollegeTeaching, 58(1), 15-18.
Buttner, E. H. (2004). How do we Dis students?: A model of (Dis)respectful business instructor
behavior. Journal of Management Education, 28(3), 647-673.
Clark, C. M. (2009). Faculty field guide for promoting student civility in the classroom. Nurse
Educator, 34(5), 194-197.
Darwall, S. L.(1977).Two kinds of respect. Ethics, 88(1), 36-49.
Gilligan, C. (1982). In a Different Voice. Cambridge, MA: Harvard University Press.
Hawk, T. F., & Lyons, P. (2008). Please dont give up on me: When faculty fail to care. Journal
of Management Education, 33(4), 316-338.
Hult, R. E. (1980). On pedagogical caring. Educational Theory, 29(3), 237-243.
Noddings, N. (2002). Starting at home: Caring and social policy. Berkeley, California:
University of California Press.
Tronto, J. (1993). Moral boundaries: A political argument for an ethic of care. New York:
Routledge, Chapman, and Hall.
312


SERVICE LEARNING: DOES IT CHANGE STUDENT PERSPECTIVES?

Paula S. Weber, St. Cloud State University
psweber@stcloudstate.edu

Kenneth R. Schneider, St. Cloud State University
kschneider@stcloudstate.edu

James E. Weber, St. Cloud State University
jweber@stcloudstate.edu


ABSTRACT

This chapter provides insight on the perceptions of students who have completed service
learning projects as part of a strategic management course versus their peers who completed
traditional library research projects. In this exploratory study, students perceptions were
evaluated with pre- and post-measures at the beginning and end of the semester. Students
completed scales measuring attitudes toward civic participation, self-efficacy toward service, and
the role of business schools in civic education. Our research shows that students who completed
the service learning projects had heightened levels of civic participation and an increased
emphasis on the role business schools should play in civic development, while students who
were not involved in these projects did not.

INTRODUCTION

Service learning has been popularized as a methodology for providing students with an
opportunity to practice what they are learning; to marry classroom with community service; to
connect academic world with the real world (Jones, 2003). But, once those connections are
made, do they have an impact on students perceptions? What changes in attitude might result
from their service learning experiences? Prior research has shown that service learning has a
positive effect on student personal development (Austin & Sax, 1998; Eyler & Giles, 1999;
Vogelsang & Austin, 2000). However, relatively few studies have empirical pre- and post- data
with a control group nor do they focus on business student perspectives. Our research explores
whether or not business students involved in service learning projects have different perspectives
at the end of the semester than their classmates who did not participate in service learning
projects.

METHODOLOGY

Undergraduate students in a large, mid-western university were the subjects of the study.
154 students (55.2% male) completed pre- and post- surveys in strategic management courses
taught by the same professor. The surveys included demographic data and scales that examined
students attitudes toward civic participation (Weber, Weber, Sleeper, & Schneider, 2004); self-
efficacy toward service (Weber, Weber, Sleeper & Schneider, 2004); and the role of business
313


education in civic development (Sleeper, Schneider, Weber & Weber, 2006) at the beginning and
end of the semesters.
The civic participation scale was a 5-item measure with scores ranging from a minimum
of 5 to a maximum of 25. A sample item from the civic participation scale is: I am concerned
about local community issues. The self-efficacy toward service scale was a 6-item measure with
scores ranging from 6 to a maximum of 30. A sample item from this scale is: I can have a
positive impact on social problems. The business education role in social issues scale was a 6-
item measure with scores ranging from 6 to a maximum of 30. A sample item from this scale is:
Colleges of business must prepare students to be civic leaders as well as business leaders.
The pre-measure was administered on the first day of the class prior to any discussion of
syllabi or course content. After the pre-survey was administered, students were given the choice
of working in teams on a service-learning project or on a traditional research project. One
hundred and five students selected the service learning project, which involved selecting a not-
for-profit community organization and working with that organization to help them develop a
strategic plan and make strategic recommendations. (Community organizations volunteered for
this project by responding to a request the university issued asking for organizations interested in
assistance with their strategic planning efforts.)
The traditional library research project was chosen by 49 students, and it entailed
selecting an organization, researching their industry and situation using secondary data, and
developing a strategic plan and strategic recommendations for that organization. The post-
measure was administered at the end of the semester after students had completed their course
projects.
We wondered if students who completed a service learning project would become more
aware of community needs and the importance of contributing to the less fortunate versus their
classmates who conducted more traditional strategic management projects. We believed that
completion of a service-learning project would enhance the students view of the value of
becoming involved in their communities. Therefore, we hypothesized that:

H1: Students who complete a service-learning project will experience a heightened sense
of their own level of civic participation; those who complete the library research project
will not.

We also wondered if students who worked on service learning projects would recognize
the value of their efforts and realize that they have the ability to help others. We expected that
direct involvement with the community through a service-learning project could enhance
students sense of their ability to make a difference and empower them to believe they can make
a difference in the future. Therefore, we hypothesized that:

H2: Students who completed the service-learning project will experience a heightened
sense of self-efficacy their ability to have a positive impact on community problems;
those who completed the library research project will not.

We also wanted to explore student views on the role colleges of business should play in
the development of student perspectives on civic involvement. We thought that for many
business students, a service learning experience could impact their attitude about business
schools role in developing well-rounded citizens. Therefore, we hypothesized that:
314


H3: Students who completed the service-learning project will experience a heighted
sense that business school should teach corporate social responsibility; those who
completed the library research project will not.

LIMITATIONS

The primary limitation of this study is that students were not randomly assigned to the
projects. So, there could be a selection bias in that those who worked on the service learning
projects may have pre-existing views on the value of community engagement. However, this is
somewhat addressed in that students attitudes were measured at the beginning of the semester so
data on potential incoming biases were gathered.

RESULTS

Summed results of the civic participation (CP) scale items were analyzed for both the
service learning and library research participants. A matched samples test was used with each
student in each group having answered the CP scale once at the beginning and once at the end of
the semester. Summed scores for students who completed a service learning project increased a
mean change of +.748 points from the average at time period one (M1), at the beginning of the
semester; to time period two at the end of the semester (M2), which was significant at the .01
level. The change in mean scores on this scale for students in the library research project was not
significant. Thus, Hypotheses 1 was supported. At the end of the semester, students who
completed the service-learning project reported a heightened perception that they should work
toward the betterment of their community. Means, standard deviations and significant
differences for the CP, SETS and BERSI scales for each assignment are shown in Table 1.

TABLE 1. PRE AND POST-TEST DIFFERENCES ON CP, SETS AND BERSI SCALES FOR SERVICE
LEARNING VERSUS LIBRARY ASSIGNMENTS

Service Learning Assignment Library Assignment
Pre-test Post-test Sig Dif Pre-test Post-test Sig Dif
CP
Mean
Std. Dev.

22.873
3.28

23.621
2.92

t = 2.91
p = .004

23.40
2.51

23.77
2.51

t = 1.17
p = ns
SETS
Mean
Std. Dev.

19.87
2.90

20.23
2.55

t = 1.21
p = ns

19.97
2.40

20.48
2.63

t = 1.60
p = ns
BERSI
Mean
Std. Dev.

20.79
4.02

22.66
2.86

t = 4.85
p < .001

21.71
2.31

21.93
3.60

t = .057
p = ns

The mean change in summed scores on the self-efficacy toward service scale (SETS) for
students who participated on the service learning project was positive, however, the pre and post
difference was not statistically significant. Surprisingly summed scores from students who
participated in the library research project also increased from time 1 to time 2 on this scale,
though again the change was not statistically significant. Therefore, H2, students who chose the
315


service-learning project would report a higher level of self-efficacy toward service while students
who chose the library assignment would not, was not supported.
The mean on the BERSI scale for students involved in the service learning project
increased significantly from pre- to post- measures, while summed scores for students on the
library research project on the CERSI scale increased only slightly, and not significantly.
Therefore Hypothesis 3 was supported. Students who completed the service-learning project
reported higher scores on the need for colleges of business to prepare students for civic
responsibilities, while students completing the library project did not.

CONCLUSION

Students involved in service learning projects reported a higher sense of the importance
of civic participation, while students involved in a library project did not (H1 was supported).
This is an important outcome for students and a critical justification for the faculty commitment
needed to design, arrange, and manage student groups completing a community-based service-
learning project. This finding is consistent with the arguments made by proponents of service
learning that students attitudes towards contributing to their community are enhanced by their
participation in a service-learning project.
Students in both groups reported an increase in their self-efficacy toward service from the
beginning of the semester to the end of the semester but neither difference was statistically
significant (H2 was not supported). One plausible explanation may be that despite the social
outreach inherent in the project, the fact that students were enrolled in a class -- replete with a
professor, academic requirements and a final course grade may have interfered in the
development of their personal sense of self-efficacy. Having the professors support in their
interactions with the local organization may have weighted the experience towards an academic
effort as opposed to a community service effort. The lack of a significant change in the
development of self-efficacy may have been tempered by the academic context in which the
service was performed.
Hypothesis 3 was strongly supported. During the course of the semester, students
involved in the service learning projects dramatically changed their perspective on the role of
business educations involvement in social responsibility. Moreover, their peers involved in the
library research project showed little change in this area. This result clearly demonstrates the
impact a service-learning project had on the students perspective of the importance of business
education involvement in community projects. This significant finding may highlight the
difference between business students and students in education or social sciences, who may see a
strong role for college education in the civic development of students. This finding should be
explored by future research to see if student attitudes towards the role of colleges in civic
development changes following service learning projects across a variety of academic
disciplines.

REFERENCES

Astin, A.W., & Sax, L.J. (1998). How undergraduate are affected by service participation.
Journal of College Student Development, 39(3), 251-263.
Eyler, J., & Giles, D.E. (1999). Wheres the learning in service-learning? San Francisco: Jossey-
Bass.
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USING CLASSROOM EXERCISES TO TEACH SUSTAINABLE BUSINESS AND
STRATEGIC COMMUNICATION WRITING IN A CONSUMER CULTURE

By Stevina U. Evuleocha, California State University, East Bay
stevina.evuleocha@csueastbay.edu

Amiso M. George, Texas Christian University, Fort Worth
a.george2@tcu.edu


ABSTRACT

Anyone who has purchased a DVR or any product that needs assembly can identify with
the attendant frustration of reading all the instructional steps outlined in the manual, only to
discover that the product does not resemble the one in the picture. Even more frustrating is a
scenario in which the product is missing parts, has spare parts that are unaccounted for in the
manual of operation or the instructions do not lead to the expected result. In a business
environment, the scenario described above can significantly slow down operations and result in
unbudgeted costs. It would be accurate to say that when a reader encounters product assembly
related frustration, the writer of the document has not shown consideration for the needs of the
reader. This article examines the origins of the You Attitude and argues that in todays savvy
consumer culture, adapting messages to the needs and interests of the receiver is a justifiable
business goal. The article also describes two in-class exercises that enhance students awareness
of the need for clarity while providing readers with a set of instructions to perform a task. The
exercises are also useful for beginning technical writers who are tasked with turning complex
technical jargon to useable and accessible language for the ordinary consumer.

INTRODUCTION

Communication in clear and simple language is imperative for organizations. Business
and strategic communication writers today must possess excellent communication skills to
compete in the global marketplace. More importantly, writing must be effective in meeting the
needs of business and avoiding the costly mistakes that are often the attendant results of poor
communication. The outcome of poor written communication includes lost revenue, company
prestige, reputation and customers. When technical writers work with subject matter experts to
fully understand the product or the process for which they will write guidelines, test the product
and document the process, including failures and successes, it makes for a clearer and easy to use
document for the reader. When writers keep the focus on the prospective user of the manual, they
exemplify an authentic application of the You Attitude. The You Attitude is a style of writing
that looks at things from the readers perspective in technical and strategic communication
writing in practical ways. Incorporating exercises into the business and strategic communication
curriculum serve the function of highlighting the relevance of the You Attitude.




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LITERATURE REVIEW

The concept of You Attitude can be traced back to work on advertising during the first
decade of the 20th century and was presented at the time as a business writing principle by G. B.
Hotchkiss in his 1916 textbook (Hagge, 1989, p. 36). Subsequently, the You Attitude has
become one of the business communication principles that Hagge says are "essentially
folkloristic, having passed through the rhetorical tradition without much thought to their real
validity" (p. 49).
The concept of You Attitude has been characterized in textbook treatments by
considerable inconsistency about what the term includes, and by vagueness about the means of
achieving it. Two fairly traditional, if vague, approaches to You Attitude are exemplified by
Sigband (1989), who defines You Attitude as "viewing a situation from the other person's point
of view" (p. 161), and by Bowman and Branchaw (1984), who define it as "putting your readers
and their problems first" (p. 266). Hence, these approaches see You Attitude as somehow
countering the natural inclination to view the world from one's own perspective, but they do not
provide guidelines on how such a You Attitude might be expressed in texts.
Various textbook writers have defined the You Attitude so broadly that it seems to
include all characteristics of effective business writing. For example, Treece (1980) equates You
Attitude with "all of the desirable qualities of communication," including "consideration,
courtesy, completeness, conciseness, clearness" (p. 82). And a current very broad definition is
provided by Locker (2009), who extends the You Attitude to include such matters as being
complete, arranging information to meet the reader's needs, and using headings and lists to help
the reader find key points. It appears that by expanding the referents of the You Attitude too far;
however, we lose the benefits of having the separate concept of a You Attitude.
You Attitude concerns the reader as a participant in a transaction that can be viewed
from more than one perspective; it views the reader as one who may be affected by a real-world
situation about which a document communicates. In other words, while document design and
readability require writers to view a document from the reader's perspective, you-attitude
requires writers first to view a real-world situation from the reader's point of view and
subsequently show in the text of the document sensitivity to the reader's perspective.
Textbooks are even less helpful in being explicit about how the you-attitude can be
expressed in a discourse. A particularly poor example is Batteiger (1985), which suggests that
writing with a You Attitude is as simple as using the second person pronoun more often than the
first, and will be a natural consequence of understanding the reader's situation. While simply
using "you" and "yours" rather than "I" and "mine" will sometimes help to express a You
Attitude, it would be both simple-minded and incorrect to equate You Attitude with the
dominance of "you" in a text. As Bovee and Thill (2010) note: "It isn't just a matter of using one
pronoun as opposed to another; it's a matter of genuine empathy. You can use you 25 times in a
single page and still ignore your audience's true concerns. In the final analysis, it's the thought
that counts, not the pronoun" (p. 145). Mulvihill (1990) also notes that in the student work he has
examined, even though the "you" may be there, the You Attitude is not. In fact, most textbooks
offer no specific guidelines.

Why the You Attitude is Important in Business and Strategic Communication Writing
Regardless of the conceptual difficulties in defining You Attitude, business
communication scholars generally agree that the You Attitude is an approach to communication
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in which the sender adapts his or her message to the needs and interests of the receiver (Cullinan,
1993; Guffey, 2007; & Locker, 2009). One of the primary obligations of the sender of any
message then, is to ensure that the receiver has the capability to decode the message he or she
has received. This capability becomes more crucial in technical writing.
Business and strategic communication writers today must possess good communication
skills to compete in the global marketplace. More importantly, writing must be effective in
meeting the needs of business and avoiding the costly mistakes that are often the attendant
results of poor communication. Incorporating exercises into the business communication
curriculum will serve the function of highlighting the relevance of the You Attitude in technical
writing in very practical ways. This article describes in-class exercises that enhance student
awareness of the need for clarity while providing readers with a set of instructions to perform a
task.
Writing instructions are an essential part of the job for many professionals employed as
computer programmers, engineers, managers, scientists, technical writers and professionals in
other fields with specialized vocabulary. These professionals write long complex procedures in
manuals, brochures or reports. On a daily basis, these professionals write hundreds of memos to
provide instructions to co-workers for operating office equipment, and providing customer
support with toys and other gadgets (Pfeiffer, 2002). Poorly written instructions can be both
costly and hazardous, and as such should be written with the readers abilities, knowledge and
needs firmly in mind. We use a classroom exercise in a business communication course to
demonstrate the value of considering the needs of the receiver when a sender crafts a message.

INCORPORATING EXERCISES INTO THE CURRICULUM

This exercise can precede or succeed the memorandum or business letter lecture, or a
lecture on You Attitudes in Business Writing. If placed before lecture on any of these topics, the
exercise can serve as a lead-in for classroom discussion, and a type of learning by doing activity.
This is accomplished by explaining the rules and objectives, gathering data generated by the
exercise, and letting students derive the relevance of the activity themselves. On the other hand,
running the exercise after lecture serves as a reinforcement of the material covered during lecture
(Netusil & Haupert, 1999).
Students can work individually, or in teams of up to five people. The estimated time for
completing this exercise is anywhere from 20-30 minutes. It is important for students to receive
clear instructions on what the exercise involves. For the exercise to achieve the desired goal, it
must be completed on a task that can be easily replicated in a classroom setting.

Case 1: The Paper Plane/Fortune Cookie Exercise Format of Exercise
Students are assigned teams using two specific criteria:
knowledge of how to make a paper plane
knowledge of how to make a paper fortune cookie
Teams are a minimum of four students and a maximum of six. Each team is asked to write a
memo to another team and provide them with instructions on how to make a paper plane or a
fortune cookie. At the end of the exercise, the teams exchange memos and use the instructions
provided by the other team to build a paper plane or fortune cookie. User reliability is maintained
by calling on teams that wrote on paper planes to build fortune cookies and vice versa. In the
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final stage of the exercise, the teams critique the instructions they have utilized. The checklist
provided for the exercise asks students to:
Indicate exactly what they are instructing the reader(s) to do
Analyze readers needs and expertise
Provide any general background information readers may need
List necessary materials, and delineate operating conditions
Highlight warnings or cautions
List instructions in chronological order
Use terms reader(s) will understand or provide glossary
Use active verbs
List one action per step
Use visual aids if necessary to illustrate hard to visualize points
TEST INSTRUCTIONS on team members

To keep this exercise manageable, no more than 30 students should participate at one time. It is
important to be flexible about the time needed for the exercise and follow-up discussion. If the
class period is long enough, this exercise may be finished in time to allow for follow-up
discussion. If this is not possible, the discussion can be carried over to a subsequent class
meeting.

Case 2: Preparing a Guideline for an Online Application Process Format of Exercise:
Twelve students in a strategic communication writing class are asked to use a poorly
written guide to register for an online writing workshop. Based on the challenges they faced in
their attempt to navigate the registration process, they are told their experiences mirror those of
individuals who are unable to follow instructions to complete a task as a result of poorly written
guidelines. The students are then divided into two teams of six each and asked to write a step-by-
step guide for a brochure that would enable clients of a nonprofit organization to register online
to receive benefits. The clients are mostly low income; their highest educational level is high
school. Most of them are not comfortable with operating computers. The students are told that
they would exchange their completed guide with members of the other team who would attempt
to follow the written instructions to register. To provide a more authentic experience, a member
of the target audience would be invited to test the guideline. The idea is to ascertain the clarity of
the instruction. If the registration experience is different from the instruction both for the testing
team and the representative of the target audience, then the guidelines are reviewed to ascertain
the areas that need clarification. The instructions are rewritten and tested again until they are
clear and easy to follow. The students are debriefed after the exercise.

In addition to the checklist provided for Case 1, students are also encouraged to:
Use icons to represent specific actions
Show what computer screen looks like at different stages of the registration
process
Show what computer screen looks like when the user misses a step or hits the
wrong button
Show what computer screen looks like when the user successfully completes
registration.

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Why these Exercises Work
Exercise debriefs indicate that students are sensitized to the necessity to be explicit when
providing instructions that would assist others to complete a task. The exercises also work
because students are able to test their own instructions for validity, and still subject them to
additional tests by other teams and in some cases, a member of their target audience. The tests
provide user reliability that is validated.
Student self-reports indicated that a majority were pleasantly surprised that what started
out as a very mundane exercise soon culminated in a heart-racing competition for the best
instructional memo. Students admitted that the exercise also exposed them to the tedious nature
of technical writing and the value of practicing the You Attitude in business and strategic
communication. In follow-up discussions students who received problematic instructions also
admitted that having an ineffective set of instructions was frustrating, irritating, and time
consuming.

CONCLUSION

One of the understated values of these exercises is that they enable students to learn what
they must do to successfully implement the You Attitude: an ability to put themselves in
someone elses shoes. Incorporating exercises such as the ones described enhance students
involvement with the material, develops interpersonal communication skills, sharpens critical
thinking, and breaks up the monotony of a standard lecture. Business education is one of the
areas of learning that aptly lends itself to this pedagogical eccentricity. Using exercises and
activities in teaching can serve a utilitarian function in the learning process for students and
teachers alike. For students, experiments can serve to enhance the understanding of theoretical
constructs or concepts discussed in class. Instructors for their part can use exercises to enable
students to visualize hard to illustrate points, and to allay the occurrence of occasional boredom
in the classroom. While the two cases cited are classroom exercises, the benefit to technical
writers for products and processes cannot be overstated.

REFERENCES

Barreiger, R. P. (1985). Business writing: Process and forms. Belmont, CA: Wadsworth.
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Hagge, J. (1989). The spurious paternity of business communication principles. Journal of
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Locker, K. O. (2009). Business & Administrative Communication. San Francisco: Irwin
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Mulvihill, P. (1990). So that's who you are: An exercise that moves students from "I" to "You" in
persuasive writing. The Bulletin, 53(3), 57-59.
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Netusil, N. R., & Haupert, M. J. (1999). Teaching Experiments: A Classroom Primer. Business
Education Forum, 53(3), 40-42.
Pfeiffer, W. S. (2002). Technical Writing: A Practical Approach. Englewood Cliffs: Prentice
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Sigband, N. B. (1989). Communication for Management and Business, (2nd ed.). Glenview, IL:
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Balancing Profitability and Sustainability:
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