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The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No.

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Volume 19, Number 1 Printed ISSN: 1077-1158


PDF ISSN: 2326-3709

Journal of Applied Management


and Entrepreneurship

Jane W. Gibson, Editor


Nova Southeastern University

The Journal of Applied Management and Entrepreneurship is owned and published by Nova
Southeastern University. Editorial content is controlled by Nova Southeastern University, a
private, not-for-profit University in Fort Lauderdale, Florida.

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Editorial Review Board

Jane Whitney Gibson, Editor Fred Luthans


Nova Southeastern University University of Nebraska

Barry Barnes, Executive Interview Co-Editor Terrell Manyak


Nova Southeastern University Nova Southeastern University

John James Cater III, Executive Interview Co-Editor Richard T. Mowday


University of Texas at Tyler University of Oregon

Steven Harvey, Production Editor Bahaudin G. Mujtaba


Nova Southeastern University Nova Southeastern University

Lam Nguyen, Book Review Editor Jennifer D. Oyler


Bloomsburg University of Pennsylvania Texas A&M UniversityCommerce

Kathryn M. Bartol Stephanie S. Pane Haden


University of MarylandCollege Park Texas A&M UniversityCommerce

Arthur G. Bedeian John A. Parnell


Louisiana State University University of North CarolinaPembroke

Shawn Carraher Peter B. Petersen


Indiana Wesleyan University Johns Hopkins University

Russell Clayton Lyman W. Porter


University of North Carolina at Asheville University of CaliforniaIrvine

W. Jack Duncan Robert Preziosi, Founding Editor


University of Alabama at Birmingham Nova Southeastern University

Robert Ford Brandon Randolph-Seng


University of Central Florida Texas A&M UniversityCommerce

Regina A. Greenwood Shelley Robbins


Nova Southeastern University Capella University

Mario Hayek Joseph C. Santora


Texas A&M UniversityCommerce ENPC, School of International Management

John Humphreys Sonia Taneja


Texas A&M UniversityCommerce Texas A&M UniversityCommerce

Roland E. Kidwell Dana V. Tesone


University of Wyoming University of Central Florida

Donald F. Kuratko David D. Van Fleet


Indiana University Arizona State University

David Lamond Alex Williams


Victoria University Texas A&M UniversityCommerce

Franz Lohrke Daniel A. Wren


Samford University University of Oklahoma

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Table of Contents

A Message from the Editor ............................................................................................................. 1


Managing Healthcare Alliance Portfolios: A Theory-based Typology .......................................... 3
Mario Hayek, Texas A&M University-Commerce
Leigh Ann Bynum, Belmont University
Jack Smothers, University of Southern Indiana
Wallace A. Williams Jr., Texas A&M University-Commerce
Type of Entrepreneur and Growth of New Ventures: Testing and Validation of a Typology of
Software Entrepreneurs in India ................................................................................................... 18
Madhushree Nanda Agarwal, Management Development Institute
Leena Chatterjee, Indian Institute of Management
Assessing Strategic Philosophy in Iraq ......................................................................................... 44
John A. Parnell, University of North Carolina at Pembroke
Adel. H. H. Al-Baghdadi, University of Babylon
Fadi Hassan Jaber, Kufa University
Donald L. Lester, Middle Tennessee State University
Extrinsic and Intrinsic Job Factors: Motivation and Satisfaction in a Developing Arab Country
The Case of Lebanon .................................................................................................................... 66
Hussein Ismail, Lebanese American University
Lama El Nakkache, Lebanese American University
Strategic Planning for Community-based Small Nonprofit Organizations: Implementation,
Benefits, and Challenges ............................................................................................................... 83
Qian Hu, University of Central Florida
Naim Kapucu, University of Central Florida
Lauren O'Byrne, University of Central Florida
Executive Interview .................................................................................................................... 102
A Millennial in IT Management: A Conversation with Michael Sabado ................................... 102
Belal A. Kaifi, Trident University International

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Education Status and Development Strategies in Afghanistan: A Perspective from Dr. Saif R.
Samady, Former Deputy Minister and Chairman of the Independent High Commission of
Education .................................................................................................................................... 110
Bahaudin Mujtaba, Nova Southeastern University
Engaging Government Employees: Motivate and Inspire Your People to Achieve Superior
Performance ................................................................................................................................ 121
Victoria Geyfman, Bloomsburg University of Pennsylvania
Personality Power: Discover Your Unique Profile And Unlock Your Potential For
Breakthrough Success ................................................................................................................. 124
M.J. Park, Bloomsburg University of Pennsylvania
The Star Factor-Discover What Your Top Performers Do Differently-and Inspire a New Level of
Greatness in All........................................................................................................................... 127
Christina Force, Bloomsburg University of Pennsylvania
Asias Entrepreneurs: Dilemmas, Risks and Opportunities ........................................................ 130
Daniela Feenstra, Penn State University

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A Message from the Editor

Happy New Year and welcome to the January, 2014 issue of JAME. We begin the year
with an article written by Hayek, Bynum, Smothers, and Williams entitled Managing
Healthcare Alliance Portfolios: A Theory-based Typology. The authors look at individual
strategic alliances as well as overall alliance portfolios that health care organizations enter in an
effort to gain strategic advantage. They present a 2 x 2 typology of stragetic alliances with
resource congruence with mission and value of resources obtained from alliances as the two
variables. This typology is presented as a tool managers can use to assess the overall
effectiveness of their strategic alliance portfolios.
Next, Agarwal and Chatterjee have authored an article entitled, Type of Entrepreneur
and Growth of New Ventures: Testing and Validation of a Typology of Software Entrepreneurs
in India. The authors used survey data from 107 founders of software ventures in India in an
attempt to find a typology associated with performance of new ventures. They found that the
skills and motivations of their subjects clustered in five groups: Opportunists, Push Types,
Managerial, New Craftsmen, and Idea Driven Opportunists. While Managerial Entrepreneurs
were found to generate maximum annual employment numbers, New Craftsmen were
responsible for highest growth rate of employment. Practical implications as well as avenues for
further research are presented.
Our third article, Assessing Strategic Philosophy in Iraq, is written by John A. Parnell,
Adel. H. H. Al-Baghdadi, Fadi Hassan Jaber, and Donald L. Lester and looks at the individual
differences in making strategic decisions for organizations in Iraq. The latter country has been
the subject of very little prior research in the area of strategic management, but this article
focuses on strategic philosophy in three areas, (1) whether strategy is perceived as an art or a
science, (2) the importance of seeing strategy as a flexible or rigid process, and (3) whether
strategy should occur as a bottom-up or top-down process. While there are many interesting
findings, one that stood out to me was that classifying strategy as an art was correlated with
respondents in high-performing organizations.
Next, we look at another Middle Eastern country, Lebanon, in an article entitled,
Extrinsic and Intrinsic Job Factors: Motivation and Satisfaction in a Developing Arab
CountryThe Case of Lebanon, by authors Hussein Ismail and Lama El Nakkache. Referring
to previous studies on intrinsic and extrinsic factors in overall job satisfaction and motivation,
the authors specifically examine these factors in terms of Lebanon which has received little
previous research attention in this area. Based on 100 respondents, the authors concluded that
extrinsic factors had a more significant relationship with motivation and satisfaction in general,
but that in cases where extrinsic job factors were met, intrinsic factors had a stronger effect on
overall motivation.

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Our final article in this issue is by Qian Hu, Naim Kapucu, and Lauren OByrne and is
entitled, Strategic Planning for Community-based Small Nonprofit Organizations:
Implementation, Benefits and Challenges. Their research examined how managers in these
types of organizations perceived the importance of strategic planning and strategic management.
Resting on the assumption that many of these organizations are too small to embrace the costs
and time required for strategic planning, the authors reinforce the benefits of strategic planning
in terms of present and future effectiveness.
Thanks to our Executive Interview team, John James Cater III and Barry Barnes for
providing two executive interviews for this issue. The first written by Belal A. Kaifi, provides
the millennial perspective in an interview with Michael Sabado, an IT professional in the health
care industry. The second, written by Bahaudin Mujtaba, focuses on education and development
in Afghanistan through the eyes of Saif Samadi, former Deputy Minister and Chair of the
Independent High Commission of Education.
Thanks also to our Book Review Editor, Lam Nguyen, for providing us with four book
reviews: (1) Engaging Government Employees: Motivate and Inspire Your People to Achieve
Superior Performance, reviewed by Victoria Geyfman; (2) Personality Power: Discover Your
Unique ProfileAnd Unlock Your Potential for Breakthrough Success, reviewed by M. J. Park;
(3) The Star FactorDiscover What Your Top Performers Do Differentlyand Inspire a New
Level of Greatness in All, reviewed by Christina Force, and (4) Asias Entrepreneurs: Dilemmas,
Risks and Opportunities, reviewed by Daniela Feenstra.
Finally, my greatest thanks are reserved for our Production Editor, Steve Harvey, without
whose work this publication would not be possible!

Jane Whitney Gibson


Ft. Lauderdale, FL
gibson@nova.edu

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Managing Healthcare Alliance Portfolios: A Theory-based Typology


Mario Hayek, Texas A&M University-Commerce
Leigh Ann Bynum, Belmont University
Jack Smothers, University of Southern Indiana
Wallace A. Williams Jr., Texas A&M University-Commerce

Executive Summary
The dynamic environment which characterizes most competitive industries in todays
marketplace necessitates a critical examination of the strategies organizations are using to
manage their alliance portfolio, and leveraging those key relationships to gain access to resources
and generate a sustainable competitive advantage. Healthcare organizations, in particular, face
intense competitive pressure as well as frequent changes in the regulatory demands, but little
insight into strategic alliance portfolio management has been proffered to date. Therefore, this
paper integrates resource dependence theory (RDT) and the resource-based view (RBV) to (1)
derive the options of strategic alliances that healthcare administrators can form based on the
value and congruence of the resources that various alliance relationships can provide, (2)
explicate the options that administrators can use to manage the coordination, communication,
and bonding of the formed strategic alliances, and (3) explain how effective management of the
individual dyadic relationships and the overall alliance portfolio is important for establishing a
competitive strategic position within the healthcare industry.

Introduction
Organizations operating in dynamic industries are faced with a large amount of
uncertainty regarding strategic options, and thus, must maintain the flexibility to respond to
changes in the external environment and capitalize on the opportunities they provide (Teece,
Pisano, & Schuen, 1997). Increasingly, organizations are managing environmental uncertainty
and achieving strategic organizational goals by forming alliances with partners who offer
strengths not maintained by the primary organization (Schreiner, Kale, & Corsten, 2009).
Healthcare organizations, in particular, operate in an extremely dynamic environment due to
frequent changes in the regulatory demands. The dynamism has never been more evident than
with the recent passage of the Affordable Care Act. This act promotes an accountable care
organization (ACO) model that encourages hospitals, physicians and other healthcare providers
to collaborate to ensure cost effective delivery of patient care. Creating and maintaining these
ACO alliances in addition to the many other non-ACO alliances in a cohesive and efficient
manner is challenging as managers must account for not only the dynamics of each alliance, but
also for how each dyadic relationship influences the overall portfolio of alliances (Wassmer,
2010). Healthcare alliances have historically not been equipped to manage these types of
portfolios and to date no specific insight to healthcare strategic alliance portfolio management
has been proffered.

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In order to address this opening in the literature this paper sets out to examine the
phenomenon of healthcare alliance portfolios from two perspectives. First, we utilize resource
dependence theory (RDT) (Pfeffer & Salancik, 1978) to derive the options of strategic alliances
that healthcare administrators can form based on the value and congruence of the resources that
the alliance relationship could provide. Second, we use the resource-based view (RBV) (Barney,
1991) to explicate the options that administrators can use to manage the coordination,
communication, and bonding of the formed strategic alliances. We then integrate these two
perspectives and explain how effective management of the individual dyadic relationships and
the overall alliance portfolio is important for establishing a competitive strategic position within
the healthcare industry.
Analyzing portfolios of alliances requires hospital management to step back from the
day-to-day management of transactional contracts and adopt a broader perspective to ensure that
the overall portfolio configuration is congruent with the organizations strategic goals (Gulati,
Lavie, & Singh, 2009). Many organizations enter into alliance relationships without considering
the impact of the relationship on the overall portfolio or how the specific alliance improves the
alignment of the overall portfolio of alliances with the organizations strategic plan (Bamford &
Ernst, 2002). Healthcare reform and the surrounding legislation suggests the need for real and
significant changes to the way healthcare is delivered, yet leaves healthcare leaders in a quandary
as to how to make the necessary changes. In addition to the changing definitions of reform itself
there is a lack of knowledge and experience on the part of providers (McClellan, McKethan,
Lewis, Roski & Fisher, 2010 p.987) on the structure of the organization and the essential
relationships necessary to implement the changes required or encouraged by the reform
legislation. Similar to other organizational leaders, healthcare administrators may not fully
consider how newly forged ACO alliances may contribute to their current alliance portfolio.
With the ever-changing dynamic of the healthcare industry, not only the composition of the
portfolio but also the management of the relationships is increasingly difficult. The national
strategy for healthcare reform calls on ACOs to continue to examine the effectiveness of the
relationships they create both within and outside the patient care area with an eye on clinical care
and economic responsibility. Therefore, we examine each strategic alliance in terms of whether it
aligns with the core mission of the hospital, or if it contributes to more peripheral activities in
which the organization is involved. Based on this examination we identify the contribution of
each dyadic alliance relationship and contextualize it in light of the implications for the overall
alliance portfolio.
This examination is structured in the following manner. First, we provide a theoretical
framework for alliance portfolio management. Second, we develop a framework based on the
congruence of resources and value of the alliance relationships, and provide specific examples
from the healthcare industry. Finally, we discuss how to manage a portfolio of alliances, engage
in a discussion of the managerial implications and offer concluding remarks.

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Theoretical Framework: Managing the Dyadic Relationships


Alliances are defined as a medium- to long-term contractual arrangement in which two
or more independent organizations acknowledge their mutual interdependence and strive to pool
their resources to jointly create an outcome that neither of the exchange parties can easily attain
on its own (Schreiner, Kale, & Corsten, 2009, p. 1402). Alliance portfolios develop when
organizations engage in multiple dyadic alliance relationships (Wassmer, 2010), creating the
need for healthcare organizations to effectively manage multiple alliances simultaneously. The
engagement in multiple dyadic alliance relationships is called an alliance portfolio (Wassmer,
2010) and the capability needed for healthcare organizations to effectively manage multiple
alliances simultaneously is called a portfolio management capability (Barney, 1991).
Traditionally, alliance research has relied upon theories of organizational economics, such as
transaction cost theory and agency theory, to understand and explain the motives and
implications of alliance formation (Reuer & Ragozzino, 2006). The organizational economic
perspective is concerned with the contractual relationship formed between the exchange parties
under the assumptions of bounded rationality, opportunism and asset specificity (Coase, 1937;
Williamson, 1985). From this perspective, the contract serves as the appropriate governing
mechanism designed to reduce or eliminate the risk associated with opportunistic behavior under
conditions of bounded rationality and asset specificity. The extant literature also suggests that
alliances serve as a means for firms to adapt to their environment by matching the firms strategy
and resources to environmental changes (Hoffman, 2007); however, the organizational economic
perspective does not assign a significant role to partner firm resources in theorizing about
strategic alliances (Das & Teng, 2000, p. 34).
The tenets of resource dependency theory, however, allow for the inclusion of strategic
alliances when evaluating a firms resources (Ulrich & Barney, 1984). Resource dependence
theory assumes an open systems perspective of organizations by suggesting that organizations
are restricted by the conditions of their environment (Pfeffer & Salancik, 1978) and depend upon
exchange relations with other firms for survival. According to Ulrich and Barney (1984), this
theory is based on three assumptions: 1) organizations are comprised of social exchanges that
result in the formation of both internal and external coalitions with the intention of influencing
and controlling behavior; 2) environments are uncertain and contain scarce resources that are
valued by the organization and are essential for firm survival; and 3) organizations vie for power
through the attainment of resources which reduces their dependence on other organizations and
maximizes the dependency of other organizations on them. In this view, organizational success is
defined as the maximization of organizational power, while the connections among organizations
are viewed as a set of power relations based on the exchange of resources (Ulrich & Barney,
1984).
Analyzing healthcare alliance relationships in regards to the resource contributions of
each party involved is consistent with research on strategic alliances. For example, Ozcan and
Eisenhardt (2009) showed that not only do firms rely upon each other through interdependence,
but firms can also create a vision of interdependence. Additionally, Lomi and Patterson (2006)
suggested that dependencies extend across multiple networks, forming a multiplexity of

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interdependencies and exchange relationships. These current views of resource dependency


theory (and in particular, interdependencies) are especially relevant in healthcare portfolios
consisting of vast and varying ties with providers and physicians.
From a resource dependence perspective, managers serve three general purposes: 1) the
manager acts as a symbol (the manager may be seen as a center of emotion and personification
of the organization, as a scapegoat or someone to attribute success, or as a symbol of leadership);
2) the manager acts as a facilitator guiding and controlling the interaction between the firm and
the environment; and 3) the manager is responsible for understanding and staying abreast of
changes in the social environment (Pfeffer & Salancik, 1978). In other words, managers
primarily try to reduce uncertainty and dependence by increasing their control over important
resources and therefore increasing their power (Pfeffer & Salancik, 1978). This is different from
the assumptions of organizational economic theories, which maintain that managers are
opportunistic in nature and driven by economic self-interest.

Strategic Alliance Typology Quadrants


Grounded in resource dependence theory, the dimensions we consider in order to identify
appropriate strategies for each dyadic relationship are: level of resources offered by the
partnering organization or individual, and the importance or alignment of the resources with the
core mission of the organization. The diversity of relationships entered into by healthcare
organizations requires a broad conceptualization of what is defined as resources. Consistent with
Barneys (1991) conceptualization of resources, we consider resources to include physical,
human and organizational resources. This broad conceptualization allows us to account for the
wide array of partnering firms and individuals in the healthcare context. For example, a hospital
that has many physical assets would score high on resources while at the same time, a doctor
who is a specialist or who has a broad social network would also score high on assets. The
second dimension of the framework takes into consideration the level of congruence that the
partnering firm in the alliance has with the core mission of the organization. The assumption is
that the more central the other party is to the core of the organization, the greater value the
alliance will represent to the firm. The interaction of the value of the resources obtained from the
alliance and the resource congruence with the mission of the firm yields the proposed typology
consisting of four types of strategic alliances depicted in figure 1.
The alliance typology is the result of the interaction of the value of resources (high or
low) obtained from the target firm and the resource congruence (core or peripheral) with the
mission of a firm. The resulting typology quadrants yield relationships that we have titled
relational-incremental, relational-convenience, relational-strategic and relational-complementary.
In the following sections, we explain each type of relationship and offer examples from the
healthcare industry.

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Figure 1: Strategic Alliance Typology

Relational-Incremental Alliance
A Relational-Incremental alliance is a marginal alliance formed when a healthcare entity
enters into an alliance with a partnering firm or individual that possesses minimally significant
tangible or intangible resources. While the resources possessed by the partnering firm may align
with the mission of the organization, the benefit of this relationship is marginal, if not
insignificant, because the value of controlling the resource is incremental for the healthcare
organization.
In practice, many of these contracts may involve non-critical patient services. These
services are relatively standard and are often delivered at the direction of doctors or other
healthcare professionals who are closely related to critical care. While these medical services are
essential to the core business of the hospital, the contracting entity often has little more to offer
the hospital than human resources and customer service, which are typically generic due to the
numbers of providers of this service in larger markets. Furthermore, these services may have an
important impact on the quality of care, as is the case with the services of laboratory, physical or
occupational therapy, and some pharmacy or outpatient services. Thus, while these functions are
important to the performance of healthcare organizations, there is little scarcity for these valuable
resources. Therefore, from a resource dependence perspective, the value of controlling these
relationships only minimally reduces environmental uncertainty and does not significantly
impact firm survival.
Some of the healthcare-physician contracts also fall within this quadrant of the matrix.
For example, Management Services Organizations (MSOs) and Independent Physician
Associations (IPAs) may be considered marginally beneficial to the hospital. Under the MSO
model, hospital-operated management organizations provide billing and other administrative

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services for physicians working on the medical staff for a fee. Similarly, the IPA is a contractual
network whose purpose is to assist physicians in the negotiations of managed care contracts
(Cuellar & Gertler, 2006). While these relationships are typically exclusive, both the physician
and the hospital are legally and financially independent. Thus, these alliances contribute to the
hospitals mission of patient care, but aside from indirectly affecting physician-admitting
behavior, they do not facilitate access to valuable, rare, inimitable, and non-substitutable
resources to the hospital.

Relational-Convenience Alliance
The Relational-Convenience alliance relationship is characterized by low access to new
resources that are typically of peripheral relevance to the organization. Contracts in this quadrant
consist of functions other than the treatment of patients such as food services, landscaping, and
various administrative services (e.g., hardware maintenance) that do not directly contribute to the
quality of patient care. While these relationships may impact the overall satisfaction of the
patients hospital experience, the service contracts in this area are tangential to the organizations
core mission.

Relational-Strategic Alliances
The Relational-Strategic alliance relationship is of paramount importance for the firm
because it offers a balance of power for both firms in the dyadic relationship. This alliance is
strategic because it provides unique access to valuable resources and it is highly related to the
organizations core mission. This form of alliance also leads to competitive forbearance because
it is likely that these two firms would compete were they not engaged in an alliance. Pfeffer &
Salancik (1978) labeled this type of alliance relationship as communalistic because it is formed
between firms that normally compete within the same niche, and this type of alliance can reduce
uncertainty by increasing each organizations control over resources within the industry.
In the healthcare context, Coles and Hesterly (1998) examined how hospitals chose
vertical boundaries related to both medical, laboratory, radiology and physical therapy services
and non-medical services such as housekeeping, food services and maintenance. The researchers
reasoned that hospitals had a strong incentive to integrate medical services as opposed to non-
medical services (Coles & Hesterly, 1998). Evidently, the medical services examined in this
research study were more central to the core of the organization and therefore were an attractive
target for alliance formation.
Relational-Strategic alliances are intended to benefit both partners. For instance, hospitals
can provide physicians with facilities, equipment, support staff, and supplies to care for patients,
while physicians possess the skills, knowledge, and abilities to care for those patients. The
balance within these alliances is, however, dynamic because there are economic pressures at
work which may place them against each other (Manko, 2005). Examples of balanced alliances
include direct employment relationships or fully integrated organizations (FIO) which typically

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employ physicians after purchasing the physicians entire practice (Cuellar & Gertler, 2006).
Under this arrangement, physician services can be billed by the hospital as non-facility services.
Significant growth of the hospitalist model, inpatient medicine, and physicians seeking
employment has collectively created an environment where physician employment is a very
common model.
Another example of a Relational-Strategic alliance is the hospital-owned clinic staff
model, often referred to as a physician hospital organization (PHO). This model is similar to a
balanced joint venture between two contracting entities in that the hospital owns the facility that
it staffs with the physicians through the establishment of a professional service agreement. The
hospital bills and collects for all the services provided in the facility and then reimburses
physicians based on the guidelines established within the contract. This arrangement allows
physicians to maintain separate and autonomous offices while remaining contractually bound to
the healthcare organization. These arrangements typically have centralized administrative
services allowing for the efficient negotiation of payment contracts. Other services that could be
provided in this model are emergency room, nursing, or radiology services.

Relational-Complementary Alliance
A Relational-Complementary alliance is a relationship formed with a firm endowed with
resources, which are tangentially congruent with the organizations mission. This type of alliance
relationship offers opportunities for the organization to broaden its service offering by gaining
access to capabilities that complement the organizations core competencies. In this way, firms
are able to reduce uncertainty by controlling requisite resources, while simultaneously depriving
competing firms from using these valuable resources. Thus, this approach to alliance formation
offers two advantages: 1) it complements a firms resources with other resources required within
the niche; and 2) it reduces the amount of resources available to other firms competing within the
same industry.
One example of this type of alliance is a hospitals partnering with a durable medical
equipment (DME) vendor. This relationship provides the hospital with equipment that may be
used within the hospital such as medical beds. By forming an alliance for these types of services,
hospitals can ensure quality and customer service. Furthermore, these alliances could lead to
complementary services such as the hospital obtaining reduced prices by allowing the DME
vendor to provide equipment for home use to the hospitals patients. While there are legal
considerations that assure that patients have a choice of medical equipment vendors, DME
companies associated closely with a hospital could easily increase sales volume through this type
of alliance.
Another service line that many hospitals consider complementary is long-term care.
Long-term care includes a range of health, personal care, social, and housing services provided
to patients with chronic health conditions, which limit their ability to carry out daily activities.
The services most closely associated with long-term care are nursing homes or nursing facilities

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(NFs). These institutions, which may or may not be hospital based, offer a broad array of
services.

Managing the Portfolio of Alliances


The resource-based view (RBV) suggests that firm-level factors rather than the external
environment drive organizational performance (Evans, Novicevic, & Davis, 2007). This
perspective defines resources as the tangible and intangible assets that are tied to the firm
(Wernerfelt, 1984) that may include knowledge, information and managerial skill (Barney,
Wright & Ketchen, 2001). Consistent with RBV, we contend that the strategic alliances that
hospitals maintain embody these tangible and intangible resources that can be bundled to create
value for the firm as long as the resources obtained from various alliances are heterogeneous
(Makadok, 2001). Further, the RBV proposes that responsibilities of the managerial role revolve
around the capability to identify and efficiently manage the optimal bundle of resources that may
enhance firm performance (Wernerfelt, 1984). Resources are heterogeneously distributed across
firms, and the mechanism for their profit-making potential is the managers ability to pick and
manage the appropriate combination of resources (Makadok, 2001). We apply the resource-
based view to healthcare alliance portfolios and posit that organizations are responsible for both
identifying the optimal bundle of alliances to maintain, as well as utilizing and structuring the
portfolio of these alliances in an effective manner through coordination, communication, and
bonding.
The shift in healthcare from managing single dyadic relationships to managing a portfolio
of alliances suggests that what matters is not the success or failure of a single alliance but that
the company will reach its strategic goals with the bundle of its alliances, thus placing the
structure and strategic orientation of the whole alliance portfolio at the center of interest
(Hoffmann, 2007, p. 828). The importance of the manager or administrators role should not be
understated: they have the primary responsibility for managing the alliance portfolio for their
organization. The typology we previously presented is a useful tool for todays healthcare
leaders, as it reflects the value of the resources that each relationship provides to the firm.
Healthcare administrators can use the typology to structure the portfolio of hospital alliances and
capitalize on it to optimize hospital performance. Furthermore, the dynamic-capabilities
extension of the resource-based view (Barney, Wright, & Ketchen, 2001) suggests that firms can
restructure alliance portfolios by recombining resources and alliances. Therefore, we contend
that healthcare organizations should focus not only on creating the optimal bundle of strategic
alliances, but also on restructuring this bundle adequately by recombining its resources and
capabilities to face environmental conditions. The RBV and dynamic capability view are
complementary perspectives indicating that the utilization of both of these approaches facilitates
the performance of the organization (Eisenhardt & Martin, 2000; Makadok, 2001).
The ability to form alliances is considered central to alliance management and is
considered a potential source of competitive advantage (Hoffmann, 2007; Schreiner, Kale, &
Corsten, 2009). In his seminal publication on the value of firm resources, Barney (1991)

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explained why some firms outperform others based on the value, rareness, inimitability, and
substitutability of their resources. Furthermore, Teece, Pisano, & Shuen (1997, p. 518) indicated
that competitive advantage of firms lies with its managerial and organizational processes,
shaped by its (specific) asset position, and the paths available to it. These processes are borne
from capabilities that are information-based, tangible or intangible processes that are firm
specific and are developed over time through complex interactions among the firms resources
(Makadok, 2001, p. 388). Alliance capabilities include coordination and know-how skills, as
well as the ability to establish alliances and forge relationships in order to create value through
relation- specific investments, knowledge sharing, complementary partner resources, and
informal safeguards (Gulati, Lavie, & Singh, 2009, p. 1214). The importance of these
capabilities lies in that close personal relationships and bond among individuals are responsible
for establishing norms of trust and reciprocity in economic exchange particularly in the face
of changing circumstances, interpersonal relationships secure the adaptation and execution of
long-term exchanges and foster continuity (Folta, 1998) (Schreiner, Kale, & Corsten, 2009, p.
1400).
Within a portfolio management context, a healthcare alliance portfolio capability includes
the ability to: 1) form new alliances that do not compete with other existing alliances in the
portfolio, 2) carefully select partners for a given alliance that are compatible with partners in
other extant alliances, 3) set up an appropriate firm-level mechanism to monitor various alliances
in its portfolio, or 4) coordinate activities and knowledge flows across individual alliances in the
portfolio, and others (Hoffmann, 2007; Schreiner, Kale, & Corsten, 2009). More specifically,
alliance management capability is a second-order multidimensional construct comprised of
coordination, communication and bonding skills. In this context coordination refers to the
ability to manage the interdependency between partners (Schreiner, Kale, & Corsten, 2009, p.
1401). It is imperative that those managing the alliances create an appropriate framework, policy
or procedure in order to guide interactions between partners (Luo, 2006). Kale, Dyer, and Singh
(2002) recognized the importance of coordination and suggest that organizations have a
dedicated alliance function to build a repository of coordination know how. Communication,
or the expedient exchange of information between organizations is a second critical component
of successful portfolio management. Poor communication between partners may lead to a
number of negative outcomes such as missed opportunities, and ineffective conflict resolution
(Schreiner, Kale & Corsten, 2009). Bonding refers to the affect and appreciation that develops
through proximal, continuous and recurring interaction between two parties (Granovetter, 1973;
Schreiner, Kale, & Corsten, 2009). This psychological connection between partners serves to
promote respect, trust and the foundation for cooperation, which are paramount for a successful
alliance. Together, coordination, communication and bonding are the basis for successful
alliance portfolio management.
Management of healthcare alliance portfolios takes into consideration the
interconnectedness between all of the members within the portfolio. Analyzing healthcare
alliances from an RBV perspective requires research to be performed at the interpersonal,
interunit, and interorganizational levels (Brass, Galaskiewicz, Greve, & Tsai, 2004). Given the

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broad scope of relationships entered into in the healthcare industry, it is important to take into
consideration several different levels of relationships. Furthermore, these interconnected
relationships influence healthcare actors by providing both opportunities and constraints to the
different parties involved.
At an individual level, interpersonal relationships in the healthcare context are fostered
mainly by trust, reciprocity, and proximity within an organizational structure. This type of
relationship leads to positive outcomes such as job satisfaction, employment, increased
performance, increased citizenship behaviors, promotions and leadership. Within healthcare
organizations, inter-unit relationships result from interpersonal ties, functional ties,
organizational processes, and control mechanisms. The outcomes of these relationships in
healthcare have been found to result in increased performance, and innovation and knowledge
activities. Finally, the antecedents of inter-organizational relationships are motives, learning,
trust, norms and monitoring, equity and context. The consequences of these relationships tend to
be imitation, innovation, firm survival, and performance.
According to Brass et al. (2004) alliance portfolios are normally formed for the following
reasons: 1) firms ally with other firms with whom they share interdependence; 2) firms tend to
form alliances with firms with whom they have already had a relationship; 3) having third-party
indirect connections significantly enhances the possibility of forming alliances; and 4) firms that
are further apart in a network are less likely to form relationships. The healthcare manager
should consider all these benefits as many of these intangible benefits produce an additional
layer of value to the alliance relationship above the purely economic or resource-based
considerations.
The importance of alliances portfolio management in healthcare has increased greatly
during the last decade. Healthcare companies have formed different kinds of organizational
relationships in order to improve their resource endowment and manage uncertainty (Hoffmann,
2007). The research performed by Uzzi (1997) indicated that organizations tend to have two
general types of relationships with other organizations, either arms-length ties or closer
relationships that can be considered embedded relationships. His study suggested that firms
typically tend to have more arms-length or market relationships than embedded relationships that
involved more trust, information transfer and joint problem solving. Beyond these three
advantages of being involved in an embedded relationship, Uzzi (1997) suggested that this
special form of social tie increases decision-making speed, allows managers to make satisficing
decisions instead of maximizing decisions, and enhances organizational reputation. Essentially,
he posited that organizations are influenced by their social context and relational structures
impact organizational behavior. Building a sustainable competitive advantage through the
formation of strategic relationships is a process that takes time and requires the delicate
management of both the dyadic relationships with each strategic partner as well as effective
management of the entire alliance portfolio. The synergy created through the alliance portfolio is
the source of competitive advantage for healthcare organizations operating in the dynamic
environment that characterizes the healthcare industry.

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Discussion
While physician-hospital alliances are not the only potential contractual relationship
considered by hospital leadership, they are arguably the most critical to the hospitals core
mission. Extant research indicates that the quality of the relationship between physicians and
their hospital influences both patient and nurse satisfaction (Burns & Muller, 2008). This
relationship should ideally benefit both parties because hospitals provide the physicians with the
facilities, equipment, support staff and supplies in order to provide quality care while the
physicians have the knowledge, skills and abilities to care for the patients. However, economic
pressures often exist, pitting both parties against one another (Manko, 2005).
As organizations within the healthcare industry have evolved from highly bureaucratic
organizations with centralized decision-making to organizations with more fluid boundaries
formed by alliance portfolios, healthcare leadership has struggled to shift from a transactional
relationship structure to a more relational structure. Additionally, hospital leadership may be
unaware of the performance of their alliances or if a particular alliance even supports the
organizations central mission. For example, Bamford and Ernst (2002) highlighted that a failure
to identify and correct recurring problems of this nature could be costly. Furthermore, they offer
an example of a leading pharmaceutical company that experienced a number of slow launches
due to poor alliance management leading to losses of up to $500 million a year from missed sales
opportunities. Therefore, it is important for hospital leadership to recognize these issues and
address them. Costly oversights can be avoided with greater managerial communication and
careful coordination of the contracts between alliance members.
We do not suggest that the economic aspect of alliance relationships is not important; as
within any alliance relationship the development of detailed economic understanding is critical.
However, we suggest that the previous focus on economic integration has occurred at the
expense of communication, coordination and bonding with the alliance membership. Further it
has been noted that the focus on economics between physicians and hospitals is not sufficient on
its own to improve clinical quality or create an integrated healthcare delivery system (Burns &
Muller, 2008). The economic focus has distracted healthcare leadership from the overarching
goal of clinical integration and strategic relationship building.
Research on healthcare alliances has resulted in a number of prescriptions focused on
improving the dyadic relationships, but in todays environment of healthcare reform, it has
become clear that no one-size fits all solution will suffice. The framework proposed in this
paper recognizes that reality and provides the tools necessary for developing the appropriate
alliance portfolio given the existing environmental conditions. Healthcare leadership can benefit
by using this tool to develop a comprehensive business strategy based on their unique market
position. Often portfolios grow in a seemingly random manner with little or no thought to the
contribution of a given alliance to the overall corporate strategy. In the turbulent healthcare
environment the overarching strategy may change frequently yet, the alliance portfolio may not.
Healthcare leaders must develop a set of alliance priorities and ensure that the correct
alliances are receiving the necessary attention. Those relationships critical to the core mission of

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the organization and those with complementary key resources (i.e. strategic alliances) should
receive more of the leaders communication, bonding and coordination effort and resources than
convenient alliance relationships that offer services that are not core to the mission and provide
little resource contribution. Based on the fit between a hospitals overall strategy and the
typology developed in this article, hospital leaders can develop a coherent alliance portfolio
strategy and focus on relationships that are more relational-strategic in nature.

Conclusion
The current environment of changing regulatory pressures, increasing managed care, and
decreasing reimbursements has led to a myriad of contractual arrangements for hospital
leadership to manage. In this article, we suggest that effective healthcare leadership requires not
only the transactional functions of managing contracts, but also the transformational functions of
strategically managing the firms alliance portfolio to gain access to critical resources and reduce
the firms risk exposure to environmental uncertainty. Appropriate use of communication,
coordination, and bonding across the alliance portfolio based on the healthcare institutions
overarching strategy will facilitate the acquisition of critical resources and likely result in a more
resilient competitive advantage.

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About the Authors


Mario Hayek is an assistant professor in the College of Business and Entrepreneurship at
Texas A&M University-Commerce. He obtained a Ph.D. in Management from the University of
Mississippi. His research interests include management history, entrepreneurial cognition, social
responsibility and ethics. He has published in the Journal of Applied Management and
Entrepreneurship, Journal of Family Business Management, Journal of Management History and
Journal of Management Research. He has been teaching entrepreneurship and strategic
management at the undergraduate and graduate levels for over 13 years. In addition, he has
acquired over 15 years of experience as an international entrepreneur.
Jack Smothers is an Assistant Professor of Management at the University of Southern
Indiana. Before working at USI, Jack obtained a Ph.D. in Management at the University of
Mississippi, an MBA from the University of Tennessee at Martin, a BSBA from Union
University, and worked in higher academic administration at Union University. His research
interests include entrepreneurship, innovation, business history, leadership, personnel selection,
and business education. Jack has published in the Journal of Leadership and Organizational
Studies, the Journal of Applied Management and Entrepreneurship, Leadership, and the Journal
of Management History.
Leigh Ann Bynum is an Assistant Professor in the College of Pharmacy at Belmont
University. She earned a Ph.D. in Pharmacy Administration from the University of Mississippi.
Her research interests include human resource management and equity in healthcare, the impact

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The Journal of Applied Management and Entrepreneurship, 2014, Vol. 19, No. 1 17

of medication synchronization on patient adherence and employee job satisfaction, and the
impact of pharmacy faculty members work related attitudes on their performance. She teaches
courses on healthcare delivery, human resource management and entrepreneurship in healthcare.
In addition to her academic experience, Leigh Ann has over 10 years of progressive leadership
experience in healthcare organizations.
Wallace (Alex) Williams is an assistant professor in the College of Business and
Entrepreneurship at Texas A&M University - Commerce. He earned his Ph.D. in Management at
The University of Mississippi. His research interests include Leadership & Management History.
He has published papers in Management and Organizational History, Leadership & Organization
Development Journal, Journal of Management History, and Business Horizons. Additionally, he
has over 10 years of experience as both a social entrepreneur and a business professional.

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Type of Entrepreneur and Growth of New Ventures:


Testing and Validation of a Typology of Software
Entrepreneurs in India
Madhushree Nanda Agarwal, Management Development Institute
Leena Chatterjee, Indian Institute of Management, Calcutta

Executive Summary
Strong theoretical linkages suggest that a combination of skills and motivations of the
entrepreneur may yield a typology of entrepreneurs that is robust and has high explanatory power
(Agarwal and Chatterjee, 2007). It is argued that this may be a more stable typology which
would a) lead to higher generalizability of research findings in entrepreneurial studies, and b)
have a stronger and more consistent association with entrepreneurial action, and hence,
performance of the venture.
Operationalization of the entrepreneur as a combination of skills and motivations has not
been attempted in earlier studies. An exploratory study of 107 founders of new ventures in the
software services industry in India resulted in the identification of a typology that was found to
be stable and valid, with strong links to previous research. The 5-cluster solution was
demonstrated to have high internal and external validity. Moreover, the type of entrepreneur was
also found to be significantly associated with employment creation and growth in employment
size. It is suggested that the skill-motivation-set may be used as a more robust operationalization
of the entrepreneur as an empirical construct. The identification of a typology of entrepreneurs
that is strongly correlated to performance of the new venture can form a more robust basis for the
evaluation of the entrepreneurial human capital of the venture.

Introduction
While academics and practitioners agree that young and small firms suffer from a
liability of newness (Stinchcombe, 1965), there are yet few satisfactory answers to the
question of why some young firms become outstanding successes while the majority of startup
companies sputter and die along the way. This is the fundamental question that gives rise to a
further related question: If the role of the founder entrepreneur in the performance of startups is
acknowledged to be important, what are those distinguishing factors that separate successful
from unsuccessful founder-entrepreneurs?
Research in the area of entrepreneurship has emphasized the critical role played by the
entrepreneur in the performance of the new venture (Kets de Vries, 1977; Brockhaus, 1980;
Mintzberg and Waters, 1982; Timmons, 1990). Early researchers in the area of entrepreneurship
tried to study direct relationships between entrepreneurial characteristics and new venture
performance. This yielded very few significant findings (Herron and Robinson, 1993).

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Recognizing that trait theories can make conclusions restricted only to the trait under study, and
not the entrepreneur, and that a search for averages tends to ignore differences within the set of
entrepreneurs that may be significant (Gartner, 1985), many researchers have tried to study the
differences between entrepreneurs in a systematic way. Sarasvathy (2004: 707) suggests that we
throw away our obsession with dividing the world into entrepreneurs and nonentrepreneurs and
focus instead on categories within entrepreneurs. This leads to the stream of typology
research, which tries to differentiate between types of entrepreneurs on the basis of some
common, meaningful characteristics. Although policy makers and researchers agree on the
importance of identifying different entrepreneurial types, no meaningful typology of
entrepreneurs has emerged that has demonstrated a strong and consistent association with
performance.
One of the classifications most commonly studied in the 80s and 90s was the craftsman-
managerial-opportunistic typology. Smith (1967) identified two types of entrepreneurs through
detailed interviews with manufacturing entrepreneurs. Craftsman entrepreneurs were found to
have a narrow education and training, and were less socially aware than opportunistic
entrepreneurs, who exhibited greater breadth in education and training, and more confidence in
their ability to deal with their immediate environment. Opportunistic entrepreneurs tended to be
more flexible and better adapted to their environment and, consequently, had higher growth
orientation. Moreover, firms founded and headed by craftsman entrepreneurs tended to be more
rigid than those founded by opportunistic entrepreneurs. Although it was implicit in this
categorization that the craftsman entrepreneur was technically skilled but relatively poor at
administrative skills, the concept of skills did not explicitly enter Smith's framework. Smiths
(1967) original typology was developed to include an administrative type of entrepreneur,
(Filley and Aldag, 1978), who are professional, rational builders, associated with skills and
motivations that are normally referred to as managerial. Thus a three-way classification of
craftsman-managerial-opportunistic entrepreneurs emerges from earlier literature, and later
studies assume a priori a similar distinction (Lafuente and Salas, 1989; Cooper and Dunkelberg,
1986).
However, careful reading of these studies revealed that they have operationalized the
construct of the entrepreneurial type in different ways. It is suggested here and elsewhere
(Agarwal and Chatterjee, 2007) that inconsistencies in operationalizing the basis for differences
between entrepreneurs has been at least partly responsible for the inconsistent empirical findings
in this area. For instance, Smith (1967) categorized entrepreneurs on the basis of their education,
background and work experience. However, Lafuente and Salas (1989) operationalized the same
construct of craftsman-managerial entrepreneurs using work motivations. Predictably, this has
led to weakening of the construct, and has also slowed down the process of theory building
because of low generalizability across these studies. As a result of this, most of these studies
have not been able to report consistent associations between the entrepreneurial human capital
and the performance of the venture (Agarwal and Chatterjee, 2007).
Much of the previous work in this area has been focused on identification of
entrepreneurial traits that are associated with success of their ventures. However, although

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anecdotal evidence emphasizes the role of the individual entrepreneur, empirical research has not
supported this (Sandberg and Hofer, 1987). Therefore, the link between new venture
performance (NVP) and entrepreneurial traits and capabilities has remained elusive (Agarwal
and Chatterjee, 2007). Moreover, entrepreneurs cannot be distinguished from each other on the
basis of single traits. An individual is a complex combination of various traits, abilities and
knowledge, and it would be simplistic to represent individual entrepreneurs by any one of them
alone. Recent studies have tried to test more complex models to identifying the effect of
entrepreneurial human capital on performance of the venture. Baum et al. (2001) tested a
multidimensional model for new venture growth, and found that the CEOs competencies and
motivations had strong direct as well as interaction effects on growth of the venture. Sambasivan
et al. (2009) found a relationship between personal qualities and management skills of the
entrepreneur, and NVP. Dunkelberg et al. (2013) find that differences in entrepreneurial goals
significantly influence the resource allocation decisions made by the founders of new firms.
These decisions would be expected to have an impact on the performance of the new ventures.
Is it then possible to have a combinatorial basis for distinguishing between entrepreneurs
that would be significantly associated with future performance of their business ventures? Are
there different types of entrepreneurs out there, who can be distinguished from each other on
the basis of some representative combinations that are also related to the performance of the
venture? These were the ideas and questions that led to this research.
This research follows a taxonomic approach to explore differences between
entrepreneurs, while also trying to establish a more consistent categorization of these differences.
Moreover, this paper suggests that an operationalization of the entrepreneur, based on a
combination of entrepreneurial skills and motivations, may be a more robust and theoretically
justified way of capturing differences between individual entrepreneurs. This is expected to
contribute to the process of theory building in the area of entrepreneurship by formulating a
standardized operationalization of the entrepreneur as an empirical construct, which may be
more clearly and consistently linked with NVP.
In the following section we present the argument justifying a combination of skills and
motivations as a basis for differentiation between different entrepreneurial types. We will then
move on to the actual details of the research, including derivation, testing and validation of the
typology. Finally, the results of the research and its implications will be discussed.

Conceptual Framework

The Entrepreneur as a Combination of Skills and Motivations


Literature on psychological job testing suggests that the relationship between traits and
performance is not a direct one, but is moderated and mediated by other variables (Herron and
Robinson, 1990).Herron and Robinson (1993) suggest that personality traits do not have a strong
direct effect on behavior and performance, but are mediated by motivations and moderated by

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abilities, or skills of the entrepreneur. Thus, personality, background, or experience of the


entrepreneur, which are used more often in entrepreneurship research, may not have a direct
impact on organizational outcomes, but may be mediated by the entrepreneurial skills developed
as a result of these characteristics. Haber and Reichel (2007) find that managerial skills were the
strongest contributor to small business performance amongst other measures of entrepreneurial
human capital. Davidsson and Honig (2003) argue that human capital is a result of education,
training, experience and practical on-the-job learning. Entrepreneurs come from different social
backgrounds, have varied education, training and work experience, all of which result in the
development of different skill sets which form part of the entrepreneurial human capital (Gimero
et al, 1997). The entrepreneur employs her own skills to "shape a new organization out of
complexity and chaos" (Herron, 1990, quoted in Herron and Sapienza, 1992: 50). Hence, the
entrepreneurs knowledge, and abilities acquired by them through their education, training and
work experience, will be manifested in their individual skill sets, or individual competencies
(Baum et al., 2001), and this is expected to be a major source of variation among entrepreneurs.
Moreover, as Locke (2000) points out, all human action is a function of human
motivation, ability, intelligence and skills. Entrepreneurs create new ventures for a variety of
reasons, and to satisfy a number of personal objectives. Motivational structures will be very
different for the entrepreneur who wants challenging work and for one who chooses self-
employment as a more desirable form of earning a living (Chell, Haworth, and Brearley, 1991).
Reasons for starting a business have been found to be related to the behavior of the entrepreneur,
and hence, growth orientation, and performance of ventures created by them (Kolvereid, 1996;
Amit, and Muller, 1996). Shane et al. (2003) make a convincing argument about the importance
of considering variations in motivations of entrepreneurs in building theories of
entrepreneurship. Dunkelberg et al. (2013) find that the entrepreneurial goals are a significant
predictor of entrepreneurial behavior and outcomes. Hence we expect entrepreneurial
motivations to be a major factor in distinguishing between different types of entrepreneurs.
Although both skills and motivations have been studied separately, the individual
entrepreneur is a combination of different skill-motivation sets, and using a combination of both
skills and motivations would be a more accurate representation of an individual entrepreneur
(Agarwal and Chatterjee, 2007). Moreover, these differences impact entrepreneurial decisions
and can be expected to be associated with the performance of firms created by the entrepreneurs
(Baum et al., 2001). Using a configuration approach allows us to test for associations with new
venture performance in an integrated way (Korunka et al., 2003), without having to isolate
specific traits for testing. Gartner et al (1994) advocate the use of a combination of work ability
and motivation to capture the effect of the entrepreneur on the performance of his venture. They
suggest the use of measures of specific knowledge and skills rather than general measures like
number of years of experience in industry or number of years of education.
Gimero et al. (1997) operationalized entrepreneurial human capital as a combination of
general human capital (education and experience leading to general skills that can be applied
across situations), specific human capital (industry or technology specific knowledge and
abilities) and psychic income from entrepreneurship (personal reasons for satisfaction with self-

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employment) (1997:756-758). Baum et al. (2001) have studied direct as well as interaction
effects of entrepreneurial traits, competencies and motivations as individual level predictors of
venture performance. Although Smiths (1967) early categorization of entrepreneurial types
implicitly included skill dimensions, other empirical studies have not either implicitly or
explicitly incorporated the skills or competencies of individual entrepreneurs in defining a
typology. Thus, it is suggested that a combination of motivations and abilities will yield a more
robust basis for differentiating between types of entrepreneurs on the basis of entrepreneurial
human capital.

Methodology

Sample Characteristics
Although the effect of entrepreneurial human capital on venture performance has been
widely studied (Cooper et al., 1994, Haber and Reichel, 2007), we expect that the effect will be
most significant in the early stages of the ventures life (Miller, 1983). Hence we decided to
study a group of young ventures.
Following Sarasvathys (2004) recommendation to bound the population under study, the
sample for this study was defined as young, independently founded firms which were less than
seven years old, in the software industry in India. In addition, keeping in mind the importance of
employment creation as a vital function of entrepreneurship, self-employed professionals were
not considered part of the sample. In order to qualify, the firms in the sample had to have at least
one employee. Using VanderWerf and Brushs (1989) recommendation on complete sample
specification, the variables controlled for in the sample selection are: (1) Age: one to seven
years old (Eisenhardt and Schoonoven, 1990; Carter et al., 1994; McDougall and Robinson,
1990), (2) Ownership and relationship to parent company: subsidiaries or joint ventures set up by
large companies were excluded from the sample, (3) Industry: one with a high rate of
entrepreneurial opportunity (Shane and Venkataraman, 2000), and (4) Context: Industry structure
and environment have been controlled by selecting a single-industry sample in one country so
that political and business environment remained constant. Other context variables like
organization structure were not considered in this study as organization structure is not expected
to be an important contingency variable in the early stages of the organization where structures
and processes are expected to be simple and flexible (Mintzberg et al, 1995).
The software services industry was identified as it met most of the industry criteria. The
recent boom in the industry, especially in India, translated into a high rate of startup, and the low
entry barriers of the industry were expected to improve chances of finding all kinds of
entrepreneurs in the industry, as more types of individuals would be able to take the plunge,
even without substantial investment in resources.

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Final Sample
A total of 500 companies were contacted on email and telephone in the first round, using
listings of software companies from various sources. After eliminating those companies that did
not meet all sample selection criteria, 107 companies were located that met the following
criteria: 1) they were between 1 and 7 years old at the time of response, 2) they were not
subsidiaries of larger parent corporations, 3) they were exclusively in the software services
business, and 4) they were willing to be part of this research. The primary entrepreneurs (i.e., the
individual who first conceptualized the start-up) were met individually and the questionnaire
administered personally by the first author to each respondent.

Instrument Design and Pretesting


The following skills were identified from literature: 1) Technical/Functional skill, 2)
Industry knowledge, 3) Interpersonal skill, 4) Networking and political skill, 6)
Administrative/Managerial skill, 7) Opportunity recognition, and 8) Drive (Katz, 1974; Chandler
and Jansen, 1992; Pavett and Lau, 1983; Timmons, Smollen, and Dingee, 1977). Each type of
skill identified was operationally defined in the form of double-ended questions, which were
framed in a way that social desirability of responses was minimized. Reasons for starting new
ventures were adapted from Scheinberg and MacMillans (1988) study on motivation patterns for
starting new businesses across 11 countries. This set of reasons has been extensively used by
SARIE in cross-national and cross-cultural research on entrepreneurial motivations (Birley and
Westhead, 1994; Shane, Kolvereid and Westhead, 1991; Kolvereid, 1996). These dimensions
were discussed and judged for face and content validity by a group of professors, MBA students,
and entrepreneurs. Finally, a total of 30 skill items and 31 items measuring work motivations
were retained in the final questionnaire with responses ranging from Strongly agree to
Strongly disagree.
Since job creation is an important economic functions of new businesses (Dyer, 1994), it
was decided to include both employment size as well as employment growth measures as
indicators of the performance of the new venture (Cooper, Woo and Dunkelberg, 1989;
Robinson, Kunkel and Hofer, 1994). The questionnaire also collected information on personal
and background information of the entrepreneur. A copy of the questionnaire used is available
with the first author.
The instrument was pretested with a sample of ten founders who met all the criteria used
in the sample selection. Respondents were asked to fill up the questionnaire in the presence of
the researcher, so that any ambiguity or redundancy in the questionnaire might be picked up.
Respondents were asked for feedback about the language, content, readability, layout and
comprehensibility of the questionnaire as well as the content. Any additional inputs provided by
the respondents were then incorporated into the questionnaire.

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Analysis Plan
Skills and motivations were first factor analyzed separately using an R-mode Principal
Components Analysis (PCA) to reduce the items into a smaller number of independent
orthogonal components. The factor scores obtained from the factor analysis were used as inputs
for the subsequent cluster analysis to identify entrepreneurial "types". It was expected that the
cluster analysis would yield clusters similar to the craftsman-opportunistic-administrative types
defined in literature.

Sample Demographics
Some of the salient sample characteristics are presented in Table 1.

Average age of founder 33.84 years (range from 16 to 55 years)


Average prior work experience of
8.15 years (range from 0 to 29 years)
founder
Average age of organization 3.44 years (range 1 to 7 years)
Average employment size 34.8 employees (range from 1 to 450)
Average founding capital 94 lakhs (range from 0.05 to 5500 lakhs)

Table 1: Characteristics of sample

Data Screening
Items that do not correlate with any of the factors, items that correlate with other items
over and above the factors, and items that correlate with more than one factor are considered
unsuitable for factor analysis. These were screened out by examining the inter-item correlation
matrix and the anti-image correlation matrix of the items measuring skills and motivations. A
total of 13 skill items and 7 motivation items were dropped from further analysis after this
exercise.
In addition, the following tests were carried out (Hair, Anderson, and Tatham, 1987) to
test whether the data set was appropriate for factor analysis:
Scree Plots in both cases were found to contain two sharp breaks. The presence of at least
one sharp break in the plot signifies that factoring is appropriate.
Bartletts test of sphericity tests the hypothesis that the correlation matrix comes from a
population of independent variables. Rejection of the hypothesis for both data sets (skill items as
well as motivation items) signified that the data was appropriate for factor analysis.
The Kaiser-Meyer-Olkin measure of sampling adequacy measures the extent to which the
variables are related, and are thus appropriate for factor analysis. The MSA (Measure of
Sampling Adequacy) should be at least 0.5 or higher to lie in the acceptable region. The MSA
was found to be 0.666 and 0.767 for skill and motivation items respectively.

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Analysis of Skill Items


The Scree Plot showed two distinct breaks in the plot, at 3 and 6 factors. Since in this
case, parsimony is of equal importance as obtaining theoretically meaningful constructs, the
three-factor solution explaining 49.45% of the total variance was retained. Table 2 below shows
the retained variables with factor loadings of greater than 0.4 for the three-factor solution, after
VARIMAX rotation. The reliability figures for each factor and the percentage of variance
explained by the four-factor solution are also mentioned.
Skill Item Component

1 2 3
Communication .681
Encourage differences of opinion .679
Encouraging employees .639
Long term investments .636
Prefer working in group .604
Customer and employee relations .580
Goal communication .456
Idea conversion .452
Involving people in decisions .407
Technical tasks delegated .798
Industry reputation non technical .750
Coordination tasks .652
Administrative tasks .601 -.414
Generalist rather than functional specialist .537
Understanding industry and market .690
Opportunity spotting .682
Planning skills .646
Monitoring political and economic situations .585

Number of items with factor loading > .4 9 5 4


Reliability (Cronbachs alpha) .73 .72 .61
% of Variance Explained 19.37% 16.84% 13.24%

Table 2: Rotated Component Matrix for Skill Items

The three factors identified can be described as below:


Factor 1: Team leadership skills: The skill dimensions loading on the first factor describe
effective group behavior, building cooperation, and supporting positive group dynamics. This
factor reflects managing customer and employee relationships, as well as motivating employees
through personal interaction. It also involves having a visionary and far reaching idea of the
business direction and goals, and corresponds well with Katzs (1974) conceptual skills
Factor 2: Administration skills: Factor 2 describes managerial or administrative skills
like operational decision-making within the organization, allocation of finances, people, and

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time, budgeting, forecasting, cash flows, performance reviews. Coordinating between different
parts of the organization also loads on this factor. It involves ensuring smooth operations within
the business through efficient coordination and resource allocation.
Factor 3: Environmental skills: The third factor is clearly a measure of external skills like
market and industry information, planning for the future, spotting opportunities and responding
to them. This corresponds well with Timmons, Smollen and Dingees (1987) Opportunity
Recognition, which is defined as an ability to scan the environment, spot attractive opportunities
or niches previously not catered to, and convert these into actual businesses.
The factor scores of the retained factors are a parsimonious measure of three different
skill dimensions. These factor scores were subsequently used as inputs for the cluster analysis.

Analysis of Motivation Items


The 24 items that were retained after the data was screened were subjected to Principal
Components analysis with VARIMAX rotation. A sharp break in the plot was observed in the
region of 4 factors. Keeping in mind the importance of parsimony, the four-factor solution
explaining 50% of the total variance was retained. Table 3 below gives the four factor solution
after VARIMAX rotation, with items which have factor loadings > 0.4. The item descriptions
and the factor loadings are given below, along with the reliability figures and the percentage of
variance explained by the four-factor solution.

Component
Motivation Item
1 2 3 4
Indirect benefits .662
Difficulty in finding job .660
Keep occupied .657
Work in location of choice .630
Flexibility for personal life .499
Welfare of relatives .410
Be own boss .741
Lead rather than be led .660
Freedom for own approach to work .651
Avoid unreasonable boss .400 .627
Use training better .606
Work with people I choose .582
Frustrations in earlier job .479
Desire for high earnings .729
Respected by friends .688

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Component
Motivation Item
1 2 3 4
Status of family .433 .668
Take advantage of business opportunity .505
Financial independence .411 .494
Recognition for achievement .487 .441
Develop new product/service idea .738
Return to society .667
To be innovative .583
Follow example of person I admire .529
Build something from nothing .499
Number of items with factor loading > .4 9 7 6 6
Reliability (Cronbachs alpha) .82 .78 .77 .67
% of variance explained 14.3% 13.3% 12.0% 10.4%

Table 3: Rotated Component Matrix of Motivation Items

The components correspond closely with earlier studies in the area of reasons for starting
new businesses (Birley and Westhead, 1994; Scheinberg and Macmillan, 1988), and are
described below:
Component 1: Comfort-survival considerations: This factor included reasons leading to
start-up such as wanting to work in a desirable location, flexibility in personal life, as well as
difficulty in finding a good job. This corresponds well with the push factors leading to
business creation (Amit and Muller, 1996, Cooper and Dunkelberg, 1986), described as those
factors creating dissatisfaction and frustrations in the earlier place of employment, which leads
individuals to underperform, thereby pushing them into self-employment. A desire to take
advantage of tax cuts and other indirect benefits was also reflected in this factor.
Component 2: Need for autonomy: This factor corresponds with the Need for
Independence factor identified by Scheinberg and MacMillan (1988), and Shane, Kolvereid, and
Westhead (1991). It encompasses a need for freedom with ones own approach to work, to be able
to use ones skills and training better outside the straitjacketed roles in a larger organization, and a
need to own the direction the company and technology are taking. This factor was also closely
linked to discomfort with authority, and a high need for freedom at the workplace.
Component 3: Perceived instrumentality of wealth: This component corresponds to
Scheinberg and MacMillans (1988) factor in their eleven-country study of reasons leading to
start-up, as well as Birley and Westheads (1994) perceived instrumentality of wealth, and
hence it was decided to retain the nomenclature. Items loading on to this factor indicated a strong
concern with recognition and external approval (Birley and Westhead, 1994), as well as the
importance of position and status in society. These reasons are primarily concerned with the

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wealth considerations associated with the act of entrepreneurship, as well as the instrumentality
of wealth reflected in the high need for status and recognition, rather than a need for personal or
professional development.
Component 4: Need to build on product/service idea: The last factor corresponds to
Birley and Westheads (1994)Need for personal development factor, and Scheinberg and
Macmillans (1988) Learning factor. These reasons were strongly related to a desire to develop
an idea for a product or service, to be innovative and at the forefront of technological
development. There is also an association with Welfare considerations (Birley and Westhead,
1994), reflected in the societal welfare considerations like the desire to create something from
nothing, and to return something to the society at large.

Clustering
The factor scores of the seven dimensions (three skill factors and four motivation factors)
obtained from the earlier factor analyses were used as the input variables in a cluster analysis. As
clustering techniques are especially sensitive to the presence of outliers, the factor scores were
examined for the presence of outliers. Eight cases were dropped from subsequent analysis for
having values greater than two and a half deviations from the mean.
The remaining 99 cases were cluster analyzed using a two-stage clustering process (Punj
and Stewart, 1983). An agglomerative hierarchical clustering (Wards Minimum Variance
Method) was carried out to indicate the number of clusters to be retained. The resulting
dendrogram indicated a 5 cluster solution. The centroids for the five cluster solution were then
used as the initial seeds for an iterative partitioning method (SPSS QuickCluster) to refine the
clusters.

Interpretation
Plotting the centroid scores of each factor for each cluster identified, we see the certain
combinations of skills and motivations emerging, as represented in Figure 1.

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1.50
Team Leadership skills

1.00
Administration skills

Environmental skills
.50

Comfort-survival reasons
.00
Need for Autonomy

-.50
Perceived instrumentality of
wealth
-1.00 Need to build on product idea

-1.50
Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5
-2.00

Figure 1: Entrepreneur Profiles

Cluster 1 shows a high need for financial gains and a desire to build an organization
based on a product/service concept, coupled with high environmental skills. This corresponds
well with the Opportunistic profile identified earlier. Cluster 2 scores are high on comfort-
survival as well as need for autonomy, and extremely low on the desire to build and develop a
concept. These could be the push type of entrepreneurs (Solymossy, 1997; Amit and Muller,
1996). Cluster 3 corresponds with the Managerial entrepreneur described earlier, with high team
leadership, environmental and administration skills, coupled with a high desire for wealth
creation. Cluster 4 has high scores on need for autonomy and development of a product/service
idea, and fairly high scores on team leadership. Their scores are low on administrative and
environmental abilities, which could be a reflection of high specialization or technical skills. In
that case this profile would correspond fairly well with the Craftsman entrepreneur (Smith, 1967;
Smith and Miner, 1983). The deviation is that these entrepreneurs are also found to have high
scores on team leadership. Cluster 5 is found to have high administrative abilities, for creating
concept driven organizations, as well as a high desire for wealth and its perceived
instrumentality. This cluster could not be easily identified by correspondence to earlier literature,
and may be a type explained by the sector in which the research is carried out. The item scores
measuring skills and motivations were used to build a more detailed profile for each type of
entrepreneur.

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Profiling
Since the skills and motivations factors used for identifying the clusters explain only
49.45% and 50 % of the variance in the data respectively, the raw item scores are used to profile
the clusters. The item scores on all the skill and motivation dimensions were compared for
significant difference across means for the identified clusters. In order to label the clusters
appropriately, the cluster means of all the significant items were compared to the global mean for
that variable. The combination of variables that contribute to the cluster were then examined and
used to build a detailed profile or description of the clusters as below.
Cluster1: The Opportunists (28.3% of sample): This cluster contains 28.3% of the sample
and was characterized by high scores on items measuring desire for financial gains, taking
advantage of a business opportunity, desire for wealth and its perceived instrumentality, and a
need for recognition and external approval. These entrepreneurs appear to be good at scanning
the market and recognizing opportunities. At the same time, they also have high scores on
reasons involving welfare and status of family, and a high need for external approval. They have
a good knowledge of the industry and market, and are quick to spot and exploit opportunities.
Moreover, they also have fairly high technical skills, and are also found to have a high desire to
build an organization based on a product/service concept.
Cluster 2: The Push Entrepreneur (13.1% of sample):This cluster shows scores
significantly lower than the global mean on almost all skill items, except for using personal
connections in business and frequently checking on employees. Taken in conjunction with their
high scores on comfort-survival and autonomy reasons, the description matched extremely
closely with the push entrepreneurs described in earlier studies (Amit and Muller, 1996). Amit
and Muller (1996) describe push entrepreneurs as those who were pushed out of their earlier
jobs because of frustrations and dissatisfactions at the workplace, which affects their
performance, leading to the decision to start their own business. This decision, therefore, has
little to do with intrinsic pull factors which include the challenges and anticipation of higher
returns associated with entrepreneurship, or the spotting of opportunities. This cluster also
corresponds somewhat with the Security cluster of entrepreneurs identified by Lafuente and
Salas (1989).
Cluster 3: The Managerial Entrepreneur (32.3% of sample): This cluster exhibits
significantly high scores on all items measuring conceptual, interpersonal, administrative, and
environmental skills. This builds a profile of a managerial type of entrepreneur. These
entrepreneurs, moreover, are low on technical skills themselves, preferring to delegate technical
tasks wherever possible. They are able to see the big picture, as indicated by their high
conceptual skill scores, and not get bogged down by technical details. They also have the lowest
scores on items measuring commitment and drive, thereby supporting the idea that
entrepreneurship is just an alternative career to these founders. These respondents are not driven
by product/service ideas or technological obsessions, but rather by the challenge of managing a
startup, and wanting to build an organization from scratch.

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Cluster 4: The New Craftsman (16.2% of sample): This group corresponds well with the
craftsman entrepreneur identified earlier in entrepreneurship literature earlier (Smith, 1967;
Smith and Miner, 1983). These founders exhibit high technical skills and an extremely high
commitment to the business. They also show a strong inclination towards wanting to be
innovative and develop a product/service concept. Their scores are also high on need for
autonomy at work, discomfort with authority, and a need to have sufficient freedom with their
own approach to work. Financial considerations do not seem to count for much. At the same
time, they show significantly low scores on managerial and administrative skills, which are the
lowest for this category. However, they also show fairly high team leadership skills, as well as
market knowledge. This appears to be a redefined craftsman entrepreneur in the context of the
knowledge based industry in which the study was carried out, as well as the current social and
business scenarios in India.
Cluster 5: The Idea Driven Opportunists (10.1% of sample): On closer inspection of the
skill and motivation items, it is seen that these respondents score significantly high on desire to
develop new product/service idea, idea conversion, and goal communication. Cluster
members of this group score higher than other groups on the desire to build on a product/service
concept. They reflect a high idea orientation, rather than a need for autonomy or independence.
The scores on need for independence are, in fact, the lowest for this group. They are driven by
challenge and achievement, and also have higher interpersonal and administrative skills than
other groups. At the same time, these founders are also found to have significantly high scores on
societal or need for approval items like the desire for welfare of relatives, status of family
and to be respected by friends.
As the above combination suggests, this cluster seems to be a mixed type, with some
characteristics in common with Opportunistic and the Managerial types, combining the idea
driven approach of the former with the administrative skills and team leadership abilities of the
latter.

Cluster Validation
Significance of the Cluster Solution: Table 4 lists F-ratios and levels of significance
comparing the differences between group factor means for the five clusters identified in the
iterative process. The results show that the clusters are fairly well separated based on Euclidean
distance from their centers on all the identified dimensions. Hence all the seven factors are seen
to vary significantly between clusters.

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Cluster Error
Mean df Mean df F Sig.
Factor
Square Square
Team leadership skill 4.002 4 .658 94 6.079 .000
Administration skill 10.525 4 .603 94 17.454 .000
Environmental skill 6.306 4 .650 94 9.701 .000
Comfort-survival reasons 7.443 4 .595 94 12.509 .000
Need for Autonomy 5.418 4 .593 94 9.142 .000
Perceived Instrumentality of Wealth 11.041 4 .520 94 21.238 .000
Need to build on product idea 13.718 4 .481 94 28.517 .000

Table 4: ANOVA of Factors Used in Cluster Analysis

Internal Validation: The appropriateness of the five-cluster solution was tested using a
split sample (Speece, McKinney and Appelbaum, 1985). The second method used for validation
is discriminant analysis (Birley and Westhead, 1994).
Validation using split sample: A random split of the sample data was carried out and a
new data set was generated with approximately two-thirds of the sample. This sample was then
reclustered following the same two-step method described above. The resultant cluster
membership was then compared to the original cluster membership. The degree of agreement
between the two sets of memberships was calculated using a kappa coefficient. This method
demonstrated that the five-cluster solution was stable, with 76% of cases maintaining their
original cluster membership. This signified the stability of the 5 factor solution. This was
supported by the kappa coefficient, which measures the degree of agreement between the
original classification and the reclassification clusters. In this case the kappa coefficient (.688)
was found to be highly significant.
Discriminant analysis: The second technique used to cross-validate the five-cluster
solution was discriminant analysis. The cluster membership obtained in the original analysis was
used as the group membership in a random sample of 50% and 67% of the sample. The raw item
scores for these respondents were analyzed using the SPSS Discriminant analysis. The final
results of the analysis are shown in the table below. The hit rate for 50% and 67% of the sample
were 82.6% and 88.9% respectively, with 8 cases being misclassified in each case. The kappa
coefficient was .768 and .852 respectively.
The degree to which the assignment made by the discriminant analysis agreed with the
original assignment was compared with the proportional chance criterion (C-pro) = .2476 0r
24.76%, and the maximum chance criterion (C-max) = .32 or 32% (Hair, Anderson and Tatham,
1987). Hair, Anderson and Tatham (1987) suggest that to accept a solution for meaningful
interpretation, classification accuracy should be at least 25% greater than that achieved by
chance. As C-max is .32, the discriminant analysis should have a hit rate of 1.25 x .32 = 40%.

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As the classification in both cases is significantly higher than C max, this signifies the
stability of a five-cluster solution. Bearing in mind that the hold-out sample method has not been
followed, and that these criteria have to be revised upwards to allow for the predictive accuracy
(Hair, Anderson and Tatham, 1987: 90), the high degree of classification accuracy still allows us
to go ahead with the 5 cluster solution.
External validation: The ultimate test of clusters lies in its usefulness (Punj and Stewart,
1983). Thus, the cluster analysis should demonstrate that clusters are related to variables other
than those used to generate the solution. The data on personal characteristics of the sample of
entrepreneurs was analysis for identifying differences between the cluster types. The results of
tests of significance of difference (One-way ANOVA or chi-square tests, as appropriate), showed
that the clusters vary significantly on personal characteristics like age, background, education,
and experience (Table 5). Moreover, the number of employees in the organization and the
founding capital were also found to differ significantly across clusters.

Push New Idea Driven


Cluster Type Opportunists Managerial Overall
type Craftsman Opportunists
Mean Mean Mean Mean Mean Mean
Individual Characteristics SD SD SD SD SD SD
% % % % % %
Age 32.68 8.23 38.46 6.85 34.06 7.94 34.56 7.93 28.10 4.72 33.73 7.92
Age at startup of current
28.25 7.33 35.38 6.60 30.34 8.74 31.44 7.50 25.10 4.43 30.06 7.89
business
Age at startup of first
24.57 5.16 32.69 6.16 28.50 6.14 30.63 7.21 22.80 2.15 27.71 6.52
business
Parents from business
25.0% 38.5% 21.9% 0% 70% 26.3%
background
Educational Qualification
Postgraduation 35.7% 61.5% 68.8% 75.0% 60.0% 58.6%
Technical
education 64.3% 46.2% 37.5% 37.5% 20.0% 44.4%
Work experience
Number of years of work
6.55 6.67 12.81 5.75 8.48 7.33 8.66 7.05 3.70 2.50 8.05 6.87
experience
Previous work experience
57.1% 53.8% 46.9% 81.3% 20.0% 53.5%
in private firms
Previous experience with
large firms (> 1000 59.3% 75.0% 55.2% 91.7% 20.0% 60.0%
employees)
Number of shareholders at
1.89 0.79 2.46 1.13 2.88 2.24 2.63 1.31 1.80 0.92 2.39 1.56
startup
Number of employees at
4.90 4.41 5.38 3.69 11.65 17.57 8.44 8.49 4.90 4.09 7.72 11.24
startup
Number of employees
16.71 13.90 14.46 8.79 62.59 101.90 41.25 34.18 22.70 18.45 35.81 63.08
(current)
Founding capital 9.82 16.31 4.42 5.05 234.06 968.69 130.51 240.86 6.5350 6.2161 100.77 562.35

*p <0 .1, ** p< .05, *** p< 0.01


Table 5: Relationships with External Variables

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Type of Entrepreneur and NVP


The typology identified was now analyzed for association with New Venture
Performance (as measured by employment creation and employment growth). This was tested by
a one-way ANOVA. The results of the ANOVA are presented in Table 6. A significant
difference was found in annual employment creation between clusters at a 0.05 level of
significance.

Mean
Sum of Squares df F Sig.
Square
Annual Between Groups 728.990 4 182.248 2.575 .043
employment Within Groups 6086.889 86 70.778
creation
Total 6815.879 90
% growth in Between Groups 60.327 4 15.082 .770 .548
employment
Within Groups 1685.435 86 19.598
Total 1745.762 90
Annual % Between Groups 12.973 4 3.243 .991 .417
growth in
employment Within Groups 281.476 86 3.273
Total 294.449 90

Table 6: ANOVA of New Venture Performance for Types of entrepreneur

It was found that the hypothesis that the clusters generate equal employment annually
could be rejected at a 0.05 level of significance. The means plot presented in Figure 2 shows that
Managerial entrepreneurs generate maximum annual employment, followed by New Craftsman
entrepreneurs, and Push entrepreneurs have the lowest rate of employment creation. New
Craftsman entrepreneurs were seen to have the highest rate of growth of employment. This trend
was further tested using pair-wise t-tests.

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Figure 2: Type of Entrepreneur and NVP

The pair-wise t-test comparisons between cluster means showed that:


i. Managerial and New Craftsman entrepreneurs were significantly higher employment
generators than Push and Opportunistic entrepreneurs (p=0.001)
ii. Push entrepreneurs have an annual employment growth rate that is significantly
lower than that of Managerial and Idea Driven Opportunists at a 0.05 level of significance. At a
0.1 level of significance, the annual employment growth rate of Push entrepreneurs is
significantly lower than that of New Craftsman as well as Opportunistic types.
Therefore the data suggests that Managerial and New Craftsman types tend to be larger
employers, and Push entrepreneurs have the lowest employment growth among the 5
entrepreneurial types.

Discussion and Implications

Type of Entrepreneur
One of the most significant findings of this study was that the operationalization of the
entrepreneur as a combination of skills and motivations was found to be robust and have high
explanatory power. This cluster solution was found to be internally stable, as demonstrated by
the two validation methods discussed. The external validity of the clusters was also high, as
shown by the significant associations between variables not used in the cluster analysis. The

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entrepreneurial types were also found to be significantly associated with new venture
performance differences.
Moreover, the entrepreneurial types that emerged from the research proved to have
close linkages with earlier research, or lend themselves to some interesting explanations and
interpretations.
The Push Entrepreneur: The Push type of entrepreneur identified in this study is
closely associated with Amit and Mullers (1996) definition. The finding that Push
entrepreneurs tend to have the lowest employment growth rate also has support in Amit and
Mullers (1996) study. Examining the demographic variables associated with this type of
entrepreneur, it was found that the Push entrepreneurs tended to be older than the other types
of entrepreneurs, both in terms of starting their first business venture, as well as starting the
current one. This is consistent with the fact that these entrepreneurs have been pushed into
entrepreneurship. On the other hand, intrinsic pull factors towards the act of new venture
creation, such as opportunity spotting, or the expectation of financial returns, probably drive the
other types to become entrepreneurs at an earlier age (Cooper and Dunkelberg, 1986).
The New Craftsman Entrepreneur:The New Craftsman entrepreneur is similar in some
respects to the Craftsman type defined in previous research (Smith, 1967; Smith and Miner,
1983; Filley and Aldag, 1978, Lafuente and Salas, 1989), in that they are technically skilled,
have low administrative skills, and are driven by a high need for autonomy at work and the
freedom to pursue an idea. However, this profile has been redefined in the context of the
dynamic nature of the industry the research was conducted in. Many highly qualified
professionals in the software industry assume the risk associated with starting a venture because
of the low entry barriers, industry growth, and the nature of the knowledge based industry that
allows personal and professional growth in a small business setting. These entrepreneurs exhibit
high team leadership skills, which distinguish this type from earlier definitions. This may be
attributed to the increasing popularity of business management education in India, and
widespread use of concepts like participative management and team building. The New
Craftsman, therefore, is a good leader, has good market knowledge, and is not driven by
comfort-survival needs as the earlier studies suggest.
These skills of New Craftsman entrepreneurs may also be linked to their professional
qualifications and previous experience with large private firms. A significant relationship was
found between educational qualification and type of entrepreneur, with New Craftsmen reporting
highest post graduation levels and Opportunistic entrepreneurs the lowest. This may be a
reflection of different orientations towards time. For the New Craftsman, entrepreneurship may
be a means of achieving professional freedom and fulfillment rather than financial returns. Hence
education may be seen as a long-term investment in ultimately fulfilling that goal. Opportunists,
however, have financial gains of entrepreneurship as the primary motivator, and hence opt for
starting a new business earlier than other types.
Another interesting finding was that although Push entrepreneurs have the maximum
number of years of work experience, the New Craftsman type reports the maximum number of

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organizations worked in. Cooper and Dunkelberg (1986: 56) have explained this behavior as
linked to difficulty in relating to authority figures, which drives individuals to become job-
hoppers, staying for short periods at many jobs. This hypothesis is supported by the fact that the
Push entrepreneurs also report a high number of organizations previously worked in,
suggesting that Need for autonomy, as defined in this study, is strongly linked with job-hopping.
All of the above contribute to a broad definition of the New Craftsman type, which
constitutes the highly qualified entrepreneur coming from a professional background and
experience, but at the same time possessing a degree of discomfort with authority which leads
him to start his own business.
The Opportunistic Entrepreneur: The Opportunist type of entrepreneur, as identified in
this research, is driven by opportunity recognition and a strong desire for wealth and status. This
definition has some correspondence with the promotion type of entrepreneur described by
Filley and Aldag (1978). This type of entrepreneur, like the promotion type, is driven by
external approval and need for personal achievement, and is likely to have a more personal than
professional style of leadership. Examining linkages with demographic variables, it was found
that the largest proportion of respondents who were students prior to startup come from the
Opportunist category. The Opportunists also have the lowest post graduation degrees. This fits in
well with the fact that the rationale behind startup in this case is spotting an opportunity and
expectation of financial gain, rather than a planned move.
The Managerial Entrepreneur: The Managerial type of entrepreneur corresponds to the
administrative type identified by Filley and Aldag (1978), as well as the managerial type by
Lafuente and Salas (1989) in that they are professional, rational builders, who are associated with
skills and motivations that are normally referred to as managerial. They are also highly
qualified (68.8% have postgraduates degrees), and come primarily from non-business
backgrounds. Given their high administrative and conceptual skills, these entrepreneurs are
likely to be rational decision makers, who can build processes and systems, and run their
businesses more professionally than other types.
The Idea Driven Opportunists proved to be the most difficult to interpret, with high
administrative and leadership skills, and high need for instrumentality of wealth and pursuit of an
idea. Examining the background of these entrepreneurs, it is found that they are the youngest to
start a business, and have the highest prior entrepreneurial experience. Moreover, the majority of
these entrepreneurs (70%) come from business backgrounds, and the highest percentage (80%)
report previous experience in own or family businesses. Taking all this into account, it is
possible that this category is a kind of business family maverick, that is, an individual who has
broken away from the traditional business mold to pursue a business opportunity in a growth
industry. While the idea remains the basis for the new business, the founder would probably run
it like a traditional business. The small size of the sample (n=10) prevents us from making any
generalizations about this type, beyond speculating that there may be a wider typology of
entrepreneurs than existing literature suggests. However, there may be some degree of
correspondence to the innovator-entrepreneur that was tentatively identified by Smith (1967),

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who did not fit into either the craftsman or the opportunistic category, but could not be
elaborated by Smith (1967) due to inadequate data.

Type of Entrepreneur and New Venture Performance


It was found that Managerial and New Craftsman type entrepreneurs were significantly
higher employment generators than Push and Opportunistic types. This is an answer to the
fundamental question this research started with: is it possible to identify some characteristics of
successful entrepreneurs? The results of this research point to the answer, at least partly, lying in
certain combinations of skills and motivations which are more successful than others. This
difference in performance can also be in part attributed to higher formal and social education
(Lafuente and Salas, 1989), growth rather than comfort-survival orientation (Amit and
Mueller,1996), or even managerial youth (Child,1974).

Implications for Future Research


Firstly, this paper identifies inconsistencies in the earlier operationalization of the
craftsman-opportunistic-managerial typology of entrepreneurs, which has led to inconsistencies
in empirical findings. This has led to the weakening of the construct. This paper attempts a
theoretically driven-operationalization of the entrepreneur as a combination of her skills and
motivations, which has not been attempted earlier to our knowledge. Although this basis for
categorization has strong theoretical justification, as argued in earlier sections, no empirical
research has been carried out with this operationalization. This could improve the
generalizability of empirical studies using this typology.
Moreover, since a significant association was found between type of entrepreneur and
new venture performance, this operationalization could be a significant contribution in the area
of research focusing on identification of entrepreneurial characteristics which have higher
explanatory power for entrepreneurial behavior and outcomes.
As this was a single industry study in one country (India), the results obtained may not
have high generalizability across industries and nations. Replicating the study with larger cross-
industry and cross-national samples will help in identifying commonalities and differences in
results, and making better generalizations about a larger population of entrepreneurs. Moreover,
the Idea driven Opportunist cluster emerges as a mixed type, exhibiting some characteristics of
all other types. A larger sample would help in defining this type more completely. Studies with
longitudinal design can be used to capture the entrepreneurial skills and motivations at startup
and performance after a lag period to establish the causality of the relationship between type of
entrepreneur and New Venture Performance. Qualitative analysis could also provide a richer
insight into the startup process and the effect of founding teams.

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Conclusion
The findings were robust in spite of the sample size, and the richness of the data can give
rise to many more interesting propositions for future research. The suggested typology can be
used as a measure of entrepreneurial human capital, which is expected to impact the performance
of the venture in its early stages. Moreover, this measure can then be used in more complex
models of venture performance which test for both direct as well as indirect effects of
organizational, strategic and situational variables as well as individual ones (Baum et al., 2001).
Dunkelberg et al. (2013) have already shown that entrepreneurial characteristics are associated
with strategic decisions. This argument could then be extended to test whether particular new
venture strategies are associated with certain entrepreneurial types, and if this strategy-
entrepreneur alignment has implications for the success of the venture (Agarwal and Chatterjee,
2007). Most of us have met individual entrepreneurs who closely resemble the types derived
empirically in this study, and it is extremely satisfying in research to have intuition borne out and
substantiated by empirical findings.

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About the Authors


Madhushree Nanda Agarwal is currently an Assistant Professor at Management
Development Institute, Gurgaon, India. She has a basic engineering degree, a PGDM (equivalent
to MBA) from XLRI, Jamshedpur, and is a Fellow of IIM Calcutta. She also has five years of
work experience in the Information Technology industry in India.

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Leena Chatterjee is currently a Professor in the Behavioral Sciences group at the Indian
Institute of Management Calcutta. She has an MA in Psychology from Delhi University and has
a Ph.D. from the Indian Institute of Technology, Kanpur. She has over 20 years of experience in
teaching, research, and consulting.

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Assessing Strategic Philosophy in Iraq



John A. Parnell, University of North Carolina at Pembroke
Adel. H. H. Al-Baghdadi, University of Babylon
Fadi Hassan Jaber, Kufa University
Donald L. Lester, Middle Tennessee State University

Executive Summary
Individual differences associated with strategic decision-making are encapsulated in the
phenomenon known as strategic philosophy. Studies have addressed strategic philosophy in
various national contexts, but there is a dearth of published research related to the topic in
emerging economies, particularly in Iraq. This exploratory study presents the results of a survey
on strategic philosophy in Iraq. Managers reporting the greatest satisfaction with organizational
performance were likely to view strategy from an artistic perspective and to emphasize the
importance of strategic consistency over time.
The strategic making process is intricate, difficult to manage, and long-term. In most
organizations, executives have access to an abundance of information as a prelude to decision
making. Their strategic choice usually reflects different perspectives on the nature of the
strategy and on the way it should be methodically achieved (Beaver, 2003; Parnell, 2006;
Smircich & Stubbart, 1985). Indeed, strategic managers often utilize a strong philosophical basis
when formulating strategy for their companies, one that influences the strategies they develop for
their organizations. An individual manager may have a different point of view because of
diverse experiences and the obligation to perform effectively (Marginson, 2003). Individual
differences associated with the approach to strategic decision-making have been a topic of keen
interest to scholars over the past few decades and are encapsulated in the phenomenon identified
as strategic philosophy (Parnell, 2005).
Although a number of studies have addressed the construct of strategic philosophy, the
majority of published work considers managers in developed nations (Parnell, 2005). The dearth
of research regarding developing economiesin the entire field of strategic managementis
especially prominent in the nation of Iraq, a complex country whose development during the past
two decades has been plagued by a repressive political regime but more recently influenced by
Western management approaches (Behravan, Jamalzadeh, & Masoudi, 2012; Kayes, Allen, &
Self, 2013).
This exploratory analysis investigates strategic philosophy in Iraqi organizations. Three
specific facets of strategic philosophy are addressed: (1) Whether strategy is viewed as a science
or an art; (2) the significance of viewing strategy as a consistent or flexible process (i.e., rigidity
versus flexibility); and, (3) strategy as a top-down or bottom-up processeither an activity that
begins at low levels and progresses upwards or one initiated by board and top executive
decisions and passed down the management hierarchy.

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Identifying Executive Strategic Perspectives


Choices between alternatives are the cornerstone of strategy formulation (Porter, 1985).
The systematic collection of information concerning the organizations environment is an
inaccurate science replete with contradictions and ambiguity that ultimately affect decisions.
Executives usually respond to this problem by making subjective decisions based on limited
objective evidence. It is not new to recognize the role of individuals in the strategy process. The
personality, values, personal advantage, and attitudes of managers at middle and upper levels
have been connected to strategy formulation in many studies (Guth & MacMillan, 1986; Parnell,
Kseoglu, & Lester, 2010; Walsh & Fahey, 1986).
Strategy formulation is connected to the top executives perspectives of how the
organization should function (Hambrick & Fredrickson, 2001). The concept of executive
perspective entails the existence of competing ideals and numerous perspectives on an issue
(Barney 2001; Priem & Butler, 2001; Salaheldin, 2005).
Recognizing the role of individual psychological differences in the strategy process does
not overrule the value of a rational, objective perspective. Agreement between the two points of
view can be seen at two levels. First, while a logical perspective seeks to identify the best
objective decision, an executive perspective recognizes that some degree of subjectivity, sound
judgment, and experience may also be involved in the process. Both perspectives, however, are
concerned with decision-making that maximizes the performance of the organization over a
given period of time.
Second, while there may be many valid perspectives on a given strategic issue, a
contingency approach may be suitable. Within this context, there may be a rational or
contingency perspective of strategy, by which one executives perspective could be superior in
certain circumstances. For this reason, the acknowledgment of such a domain of strategy should
not be misunderstood as a value-neutral perspective.
A number of dimensions of strategic executives may be identified, but this paper
concentrates on three: (1) Strategic philosophy as an art or science, (2) strategic importance of
consistency or flexibility, and (3) strategy as a top-down or a bottom-up approach.

Strategic philosophy as an Art or a Science


Conventionally, the strategy literature has confirmed a science or planning approach to
strategic decision-making. Executives are strongly recommended to objectively, methodically,
and regularly assess the firms strengths and weaknesses and evaluate the advantages and
disadvantages of a large number of alternatives before formulating a strategy. Executives should
be trained to become highly skilled critical thinkers who can understand and assimilate objective
data and convert it into positive strategic action (Rajagopal, 2011).
Top managers should be trained, highly educated, and capable of formulating strategies
that are largely scientific. This training and education will help managers use appropriate tools,

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assess risk management, process data, and benefit from behavioral modeling to create an
appropriate strategy, with the goal of maximizing success as measured by increases in revenues,
productivity, and profits. Advocates of the scientific approach argue that the business
environment is largely objective, analyzable, and predictable.
Conversely, it is difficult to consider and control all the variables associated with a
business firm, especially those in the external environment. So, strategies should invoke
substantial creativity and intuition as part of an inclusive strategy formation process (Ford &
Gioia, 2000).
Mintzbergs (1987) notion of artistic and scientific perspectives on strategy is helpful in
this regard. Strategic artists understand and interpret the organization state, and they attempt to
craft strategy in the same way that an artist molds clay. The artist forms a mental image of the
outcomes associated with different alternatives and plans a course of action based on intuition,
imagination, and thinking. Mintzbergs concepts of intended and emergent strategies reflect the
differences that arise from the two different schools of thinking. Nevertheless, the majority of
scholars presume that deliberate strategies are the best option, and emerging strategies tend to
emanate from ineffective planning.
Despite the fact that most scholars acknowledge art and science perspectives, the
presumption that executives integrate them remains largely unchallenged (Kseoglu, Parnell, &
Karayormuk, 2009). The difference between the artistic and scientific interpretations of strategy
formulation is important because it is difficult to completely separate the process from the
product (Rajagopal, 2011).
In many respects, an executives approach along the art-science continuum determines
how the process will be addressed. The roles of imagination and creativity are dismissed by the
strategic scientists, however. Strategy artists are inclined to view strategic planning exercise
as inappropriately managed time (Hamel, 1996; Huffman, 2001).

Strategy as a consistent or flexible process


Unlike the art-science dimension, the use of flexibility and consistency simultaneously is
often delicate because executives may not recognize how the two perspectives are related. In an
ideal world, organizations commit to a foreseeable course of action, and any strategic change is
only additional or marginal. This is not easy in practice, however, because outcomes are
unpredictable and environmental change is constant (Grewel & Tansuhaj, 2001). Thus,
executives should determine the direction and strength of the company's strategic commitments.
The appropriate course of action is not always easy to determine, and research on the link
between strategic change and corporate performance is often inconclusive (Kraatz & Zajac,
2001). Many studies suggest that the relationship is very complex and is heavily influenced by
factors such as the nature of the change, environmental upheaval, and the structure of the
industry (Mezias, Grinyer, & Guth, 2001; Parnell, 1994; Trinh & OConnor, 2002).

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The popular business press often takes both sides of the debate on strategic change. When
a firm performs poorly, its managers are typically criticized and urged to promote flexibility,
making strategic changes that improve performance. When courageous changes are not effective,
however, experts assert that the company must return to its core business competence. It is easy
to shift from one side of the argument to the other, mostly with convincing experimental and
intuitive lines of reasoning.
Strategic flexibility is based on several arguments. Firstfollowing contingency
theorya strategy tends to engender high performance when a firm fits with its environment.
Changes in technology and competition can spur transformation within the organizations
knowledge base (Krishnan, 2012; Santos-Vijande, Lopez-Sanchez, & Trespalacios, 2012;
Whipp, Rosenfeld, & Pettigrew, 1989). Many of these changes emanate from the external
environment, making it imperative that executives consider environmental changes when
formulating strategy (Wernerfelt & Karnani, 1987).
Second, flexibility is essential if a firm is to obtain first mover advantages by accessing a
new market or developing a new product or service in advance of its competitors (Gannon, Smith
& Grimm, 1992; Krishnan, 2012). Moving first secures access to scant resources, increases the
knowledge base of the organization, and develops a long-term competitive advantage,
particularly when alternative resources are costly (Lieberman & Montgomery, 1988).
Maintaining strategic consistency can lead to long-term resource obligations, thereby preventing
movement eventually attractive to strategic areas (Mascarenhas, 1992; Wernerfelt and Karnani,
1989).
Third, as a firms strategic capabilities become more refined, strategic changes become
attractive (Barney, 1991, 2001; Lado, Boyd, & Wright, 1992; Pehrsson, 2006). In fact,
competitive advantage results from such organizational characteristics as informational
asymmetry (Barney, 1986), culture (Fiol, 1991), availability of resources (Dierickx & Cool,
1989), and reduction of transaction costs (Camerer & Vepsalainen, 1988). Strategy should
reflect these changes in capabilities.
Fourth, poor performance can prompt the need for strategic changes, many times
facilitated by the recruitment of new executives (Greiner & Bhambri, 1989; Raes et al., 2011). In
most instances, a change in strategy is needed to boost the business ability to earn profits, grow
market share, and improve financial returns. In fact, a downfall in profitability is the most
common incentive for strategic change (Webb & Dawson, 1991).
There are advantages to strategic consistency as well. First, any change in key strategic,
environmental, or organizational factors may tempt an executive to change the strategy. Because
these variables are changing all the time, an approach that emphasizes strategic inertia may
minimize uncertainty. Risk associated with strategic change is heightened when competitors are
better equipped to respond to or even imitate a successful strategy (Wernerfelt & Karnani, 1987).
Moreover, a change in strategy may produce short-term benefits, but it can also incur long-term
costs (Gaertner, 1989). Thus, a change in strategy may challenge the presumptions of all

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organizational members and be hard to implement, even with the support of the employees
(Saffold, 1988).
Second, when an organization initiates a strategic change, competitors may not respond
promptly, choosing a wait-and-see approach (Lieberman & Montgomery, 1988). Often large
companies can afford this affluence because they have the resources necessary to respond
effectively when the results associated with strategic competitor changes become known
(Giesen et al., 2010; Wernerfelt & Karnani, 1987). The result is that one business may finance a
changethrough resources, and trial and errorthat eventually benefits the whole industry.
Third, strategic change may confuse consumers. For example, if a business seeks a
strategic change from cost leadership to differentiation, its price-oriented consumers may
become confused and take their business elsewhere, while those willing to pay more for higher
quality products may not even notice the shift. Many will remember the previous strategy, and
may not consider the organization for future business (Parnell, 1994).
Finally, when the strategic change results in successful new products or services, there is
no guarantee that such success will not be temporal. Competitive companies trying to imitate the
first mover may alter consumer perceptions and receive the benefits of the initial strategic
change. Some buyers do not recognize differences between an original and an imitator.
Nonetheless, if buyers like the product, they may understand that the product is not the original
and may translate the positive association to the imitator. Both situations can be costly to the
innovative firm (Loken, Ross & Hinkle, 1986).

Strategy as a Top-Down or Bottom-Up Process


When considering strategy formulation, it is wise to include non-executive directors in
the process. The key consideration, however, is the appropriate degree of participation for non-
executives. Bottom-up strategy advocates argue that while seasoned executives are best qualified
to make strategic decisions, middle and lower-level managers are ultimately charged with
implementing them, and therefore should have a central role in their development (Bryant &
Stensaker, 2011; Currie, 1999; Fenton-OCreevy, 2001; Sting & Loch, 2009; OShannassy,
2011; Raes et al., 2011; Ramirez, Roodhart & Manders, 2011; Vandeveer & Menefee, 2006;
Wooldridge & Floyd, 1990). Such an approach does not imply that a strategy should originate
from the lowest levels in the organization, however.
Work affirming the role of the top executive prevailed in previous decades (Schendel &
Hofer, 1979). More recently, however, a number of studies support the notion of middle manager
involvement in strategy formulation (Floyd & Wooldridge, 2000; Huy, 2011; Ogbeide &
Harrington, 2011; Parisi, 2013), although many middle managers continue to report low levels of
involvement in the process (Mair & Thurner, 2008). These findings have been echoed in the
Middle East as well (Aldehayyat & Twaissi, 2011; Darwish & Satwinder, 2013). Despite the fact
that middle management involvement in strategy is not new, scholarly work has begun to focus
on the importance of the formulation and implementation of strategies reflecting a variety of

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inputs from top and middle management (Barton & Ambrosini, 2013; Floyd & Wooldridge,
2000; Hart, 1992; Hiam, 1993; Westphal & Fredrickson, 2001). Moreover, there is growing
evidence that the top-down and bottom-up perspectives might not be mutually exclusive (Asan &
Soyer, 2009; Floyd & Wooldridge, 2000; Ramirez et al., 2011; Westphal & Fredrickson, 2001).
In sum, the three aforementioned dimensions of strategic philosophy represent key
judgments made by executives when crafting and executing strategies. The perspectives held by
top managers in these areasstrategy as an art or a science, a preference for consistency or
flexibility, and a predilection for a top-down or bottom-up approach to formulationinfluence
the strategies developed for their organizations. In this sense, strategy process is inseparable
from strategy content.

Emerging Economies
It is imperative that international business strategy research on emerging economies
contributes to the broader strategy literature (Aldehayyat & Twaissi, 2011; Meyer, 2006, 2007;
Meyer & Peng, 2005). Hoskisson et al. (2000) defined emerging market economies as low-
income, rapid-growth countries characterized by economically liberal government policies .
They identified 51 developing nations in Asia, Latin America, Africa and the Middle East, as
well as 13 transition economies in the former Soviet Union and China as emerging economies.
With the advent of economic globalization, international pursuits become one of the most
important strategic venues for firms to achieve sustainable growth.
As a result of both rapid development and government policies that favor economic
liberalization, emerging economies are attaining an increasingly prominent position in the global
economy. Their importance to global business is reflected in an increase in strategy research over
the past decade, focusing on the growing interest among firms in developed nations to expand to
emerging ones (Wright, Filatotchev, Hoskisson, & Peng, 2005). Successful firms have not only
crafted strategies that are qualitatively different from those employed by firms in developed
countries, but they have also discovered novel ways of implementing them (Khanna, Palepu &
Sinha, 2005).
Broadly speaking, strategy research in emerging economies may be framed in four
theoretical perspectives: institutional theory, transactional cost theory, resource-based theory,
and agency theory. It is postulated that in the early stages of market emergence, institutional
theory is especially useful in explaining strategy development by multinational corporations
(MNCs). This is due to the fact that in emerging economies, the influence of government and
society on private business is significantly more pronounced than in developed economies. As
markets mature, the other theoretical perspectives become more prominent in explaining strategy
phenomenon in emerging economies (Hoskisson, Eden, Lau & Wright 2000).

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Hypotheses
Several key hypotheses have been tested in this study. First, there is growing evidence
strategy formulation is associated with the top director 's philosophy and personality (Kotey &
Meredith, 1997). The interests and characteristics of other members of the management team
have also been considered (Guth & MacMillan, 1986; Janis, 1972; Smircich & Stubbart, 1985;
Walsh & Fahey, 1986). Managers in Iraqi organizations tend to rely on many different ways of
developing and executing strategy to improve their global competitiveness. In other nations in
the Middle East, specific decisions in these areas are often attributable to management
characteristics (Parnell & Hatem, 1999).
H1a: There is a positive association between the strategic philosophy dimension of an
artistic approach to strategy and organizational performance in Iraqi organizations.

H1b: There is a positive association between the strategic philosophy dimension of a


scientific approach to strategy and organizational performance in Iraqi organizations.

Second, strategic managers of the institution may choose to adhere to a course of action
for an extended period of time and enjoy the benefits of organizational learning and maintenance
of a consistent customer base. An organization may choose to be flexible, however, so as not to
become committed to obsolete products, technology, or market approaches. In an ideal world,
firms balance the two extremes by maintaining some degree of strategic consistency while
strategies gradually evolve. But the results are not always predictable in a dynamic environment
(Grewel & Tansuhaj, 2001). In general, Middle Eastern managers see the need for a flexible or
consistent strategy as inexorably tied to the nature and diversity of the sectors in which they are
concentrating (Parnell & Hatem, 1999; Zamani, Parnell, Labaff, & ORegan, 2013). A similar
approach that emphasizes a contingency perspective is expected in Iraq.
H2a: There is a positive association between the strategic philosophy dimension of
strategic consistency and organizational performance in Iraqi organizations.

H2b: There is a positive association between the strategic philosophy dimension strategic
flexibility and organizational performance in Iraqi organizations.

Third, this investigation considers the extent to which multiple managers influence
strategy (Hurst, Rush & White, 1990; Markoczy, 2001; Sayles, 1993; Wooldridge & Floyd,
1990). Published work during the past two decades suggests that strategy formulation and
implementation can reflect a diverse array of top- and middle-management inputs (Hart, 1992;
Warn, 1993; Westphal & Fredrickson, 2001). Managers in the Middle East tend to believe that
top managers bear the burden of responsibility in the strategy-making process and decision-

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making related to the performance of the organization; they tend to encourage those at other
management levels and even non-managers to participate in decision-making, but to a lesser
extent (El-Shobery, El-Iskandrani, & Hegazy, 2010; Zamani et al., 2012). It is proffered that
similar findings will be found in Iraq.
H3a: There is a positive association between the strategic philosophy dimension of a top-
down approach to strategy and organizational performance in Iraqi organizations.

H3b: There is a positive association between the strategic philosophy dimension of a


bottom-up approach to strategy and organizational performance in Iraqi organizations.

Methods
This study utilized the strategic philosophy developed and validated by Parnell (2005).
Managers in Iraqi organizations in various industrial sectors were randomly selected for
participation. To execute the study, 120 questionnaires were distributed to managers in person,
105 of which were completed and returned.

Findings
The sample consisted of 105 Iraqis, 91 of whom hold management positions. The
majority of respondents (61%) were males and the mean levels of managerial (19.8 years) and
organizational (17.8 years) were high. Middle (42.9%) and lower level managers (42.0%) were
most prominent in the sample. The majority (51.9%) of respondents earned a college degree,
while most (34.9%) of the others possessed a high school education. Respondents represented
service (46.2%), government (31.1%), and manufacturing (21.7%) sectors. Most (76.2%)
organizations represented were Iraqi-owned. Details about the sample are provided in Tables 1
and 2.
Each of the strategic philosophy subscales was factor analyzed. Results were mixed,
suggesting a number of differences interpreting the dimensions. Factor loadings in the individual
scales ranged from .333 to .832, and coefficient alphas ranged from .376 to .606. Results of the
analysis are presented in table 3.

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TABLE 1
SAMPLE CHARACTERISTICS: FREQUENCIES

Characteristic Category N %

Position Non-manager 14 13.3%


Lower management 42 40.0%
Middle management 45 42.9%
Upper management 4 3.8%

Education Less than high school 8 7.5%


High school 37 34.9%
College/University 55 51.9%
Post-Graduate 5 4.7%

Gender Male 64 61.0%


Female 41 39.0%

Industry Manufacturing 23 21.7%


Service 49 46.2%
Government 33 31.1%

Ownership Foreign-owned 25 23.8%


Not foreign-owned 80 76.2%

TABLE 2
SAMPLE CHARACTERISTICS: DESCRIPTIVES

Characteristic Mean Std. Deviation

Age 45.3 years 10.6

Management experience 19.8 years 9.73

Organizational experience 17.8 years 9.41

Firm size 227.8 employees 285.3

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TABLE 3
RESULTS OF FACTOR ANALYSES: FIRST ROUND

Factor
Item Loading

ART (alpha=.637)
1. Developing an effective strategy is like crafting a fine piece of art. .792
2. Imagination and creativity are very important parts of an effective strategy. .809
3. Great strategies are often born of keen intuition. .647
4. It is difficult to teach one the ability to formulate a great strategy. .556

SCIENCE (alpha=.508)
1. With proper research and analysis, most aspects of an organizations
environment are relatively predictable. .664
2. Effective strategies usually result from a detailed, systematic formulation process. .413
3. Identifying an effective process for strategy formulation is not difficult. .669
4. Strategy formulation is an analytical process. .763

CONSISTENCY (alpha=.376)
1. Organizations that perform best in the long term usually main consistent
strategies through changing times. .491
2. Successful organizations tend to maintain expertise or competence in a specific
area over an extended period of time. .645
3. Organizations should not react too quickly to environmental changes by
instituting major strategic changes. .489
4. It is important that an organization be seen as unswerving and steadfast in its
strategic priorities over time. .723

FLEXIBLE (alpha=.606)
1. An effective strategy allows the organization to be flexible so that it can change
frequently as the environment changes. .657
2. Successful organizations change strategies frequently, even when performance
is not a problem. .333
3. An organizations strategy should be modified whenever there are significant
changes in the strategic resources it controls. .832
4. Organizations whose strategies are not flexible lack the ability to capitalize on
market opportunities. .818

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TABLE 3 (CONTINUED)

Factor
Item Loading

TOPDOWN (alpha=.558)
1. The strategy formulation process should be controlled by top managers. .732
2. Because they are the most experienced, top managers should drive the
strategy-making process. .720
3. To maintain secrecy, it is usually best when top managers avoid discussing much
about the organizations strategy with others in the organization. .672
4. Strategy formulation is the responsibility and prerogative of top management. .484

BOTTOMUP (alpha=.469)
1. Middle and lower level managers should make significant contributions to an
organizations strategy. .721
2. The best strategic ideas often come from organizational members who are not a
part of the top management team. .348
3. Because middle and lower managers are responsible for strategy implementation,
they should be heavily involved in strategy formulation. .791
4. Organizational members who have direct contact with customers and production
processes are best equipped to drive the strategy formulation process. .575

PERFORM (alpha=.703)
1. I am satisfied with the current profitability of my company as compared to the
competition. .636
2. I am satisfied with the current growth of my company as compared to the
competition. .834
3. My organization is doing a good job of meeting its goals and objectives. .785
4. My organizations current level of financial performance exceeds the industry
norm. .638

INDUSTRY (alpha=.771)
1. New competitors do not frequently enter our industry. .638
2. Companies do not frequently leave our industry. .575
3. Our industry is relatively stable. .755
4. The potential for profit in this industry is relatively strong. .755
5. The industry is growing at a fast pace. .734
6. The boundaries of the industry in which my company operates are clear. .629

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Factor scores (regression method) were computed to serve as composite measures for
each factor. Correlations among the factor scores are presented in table 4. A 95% confidence
interval was employed. The positive correlations between the art and science perspectives,
between consistency and flexibility, and between top-down and bottom-up approaches suggest
that Iraqis might not perceive mutual exclusivity. Put another way, Iraqis might view strategy as
both and an art and a science, they can emphasize both consistency and flexibility, and they see
no need to choose between either a top-down or a bottom-up approach to strategy development.
TABLE 4
CORRELATIONS: FACTOR SCORES

Art Science Consist Flexible Topdown Bottomup PerSat

Art 1.000

Science .149 1.000

Consistency .149 -.308* 1.000

Flexible .056 .382* .449* 1.000

Topdown .072 .282* .318* .302* 1.000

Bottomup .054 .253* .147 .362* .305* 1.000

Perform. Sat. .223* .147 .217* .083 .061 .147 1.000

The factor loadings and reliabilities presented in table 3, and the correlations presented in
Table 4 do not provide a sufficient basis for insights about strategic philosophy in Iraq. At least
one item in each subscale loaded below .600, and the positive correlations between the paired
subscales (i.e., art and science, consistency and flexibility, and top-down and bottom-up) could
suggest that Iraqis do not perceive the distinctions between the factors in each pair to the extent
that their western counterparts do. To address this concern, a second round of factor analyses
was conducted. In this round, the lowest loading item in each factor was eliminated, along with
any additional items loading below .500. Items in the paired subscales were factor analyzed
together (employing a varimax rotation) to see if they produced clear two-factor solutions.
Results suggest that respondents distinguished between the factors in each pair (see table 5).

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TABLE 5
RESULTS OF FACTOR ANALYSES: SECOND ROUND

Factor Loadings
Item 1 2

ART-SCIENCE
A1. Developing an effective strategy is like crafting a fine piece of art. .794 .020
A2. Imagination and creativity are very important parts of an effective strategy. .838 .192
A3. Great strategies are often born of keen intuition. .694 -.158
S1. With proper research and analysis, most aspects of an organizations
environment are relatively predictable. .023 .716
S3. Identifying an effective process for strategy formulation is not difficult. -.105 .684
S4. Strategy formulation is an analytical process. .112 .752

CONSISTENCY-FLEXIBILITY
C2. Successful organizations tend to maintain expertise or competence in a
specific area over an extended period of time. -.028 .856
C4. It is important that an organization be seen as unswerving and steadfast in
its strategic priorities over time. .224 .705
F1. An effective strategy allows the organization to be flexible so that it can
change frequently as the environment changes. .677 -.009
F3. An organizations strategy should be modified whenever there are
significant changes in the strategic resources it controls. .819 .217
F4. Organizations whose strategies are not flexible lack the ability to capitalize
on market opportunities. .816 .110

TOPDOWN-BOTTOMUP
T1. The strategy formulation process should be controlled by top managers. .778 .095
T2. Because they are the most experienced, top managers should drive the
strategy-making process. .629 .126
T3. To maintain secrecy, it is usually best when top managers avoid discussing
much about the organizations strategy with others in the organization. .766 .023
B1. Middle and lower level managers should make significant contributions to
an organizations strategy. .139 .724
B3. Because middle and lower managers are responsible for strategy
implementation, they should be heavily involved in strategy formulation. .213 .705
B4. Organizational members who have direct contact with customers and
production processes are best equipped to drive the strategy formulation
process. -.069 .703

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Given the promising results presented in Table 5, each subscale was factor analyzed
again, but only with the retained items. Factor loadings in the subscales ranged from .638 to
.858, suggesting support for the shorter versions of the scales. Coefficient alphas were not
examined because of the low number of items in each scale, only three in five scales and only
two in the other scale. Correlations among the revised factor scores and performance satisfaction
appear in Table 6.
TABLE 6
CORRELATIONS: FACTOR SCORES FROM MODIFIED SCALES

Art Science Consist Flexible Topdown Bottomup PerSat

Art 1.000

Science .057 1.000

Consistency .048 .218* 1.000

Flexible .001 .307* .254* 1.000

Topdown .006 .250* .297* .275* 1.000

Bottomup .023 .256* .059 .348* .239* 1.000

Per Sat. .202* .086 .238 .087 .006 .136 1.000

Hypotheses 1a and 2a were supported, as correlations between the artistic and


consistency perspectives on strategy, and organizational performance, were positive and
significant. Hypotheses 1b, 2b, 3a, and 3b were not supported, as correlations were not
significant.

Discussion
Several correlations are particularly noteworthy. First, considering the art and science
subscales, conceptualizing strategy as an art was more common among respondents in high
performing organizations but was not linked to any of the other five factors. Alternatively,
conceptualizing strategy as a science was significantly linked to all of the other factors (except
art) but not associated with performance.
Second, there was a significant positive association between consistency and flexibility.
Hence, Iraqi respondents did not perceive the necessity of a trade-off.

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Finally, there was a significant positive association between the top-down and bottom-up
perspectives. In this regard, respondents did not view these two as mutually exclusive.
A possible insight as to why Iraqi managers report a positive association between
consistency and flexibility is the tumultuous external environment that has prevailed in the
country for the past three decades. From the war with Iran, to the U.S. gulf war, to the actual
invasion and toppling of Saddam Husseins regime, to the internal unrest, violence, and political
instability brought on by the occupation, Iraq has endured much uncertainty. When these issues
are coupled with energy shortages, regular local terrorist attacks, and a U.S. occupying force that
was trying to control the insurgency, flexibility would have to be an integral part of day to day
strategic implementation.
Conversely, few businesses can survive without some form of consistent operation.
Production, sales, marketing, and logistics are all necessary on a daily basis. The need for
maintaining a consistent presence in markets served dictates the need for consistency, not only in
strategic philosophy but also in operations. The rather open-minded finding of Iraqi managers
that a positive association exists between consistency and flexibility seems perfectly rational
considering the environmental uncertainty that has surrounded the country for a long time.
As for the positive association between art and performance, managing in turbulent times
requires a certain artistic touch. Managers who can read the environment and take advantage of
prevailing moods will be in the best position to take advantage of opportunities to improve
performance.
Strategic philosophy is typically a function of the intellectual, behavioral, and
organizational development level of the firm, and there are many factors that affect the formation
of strategic philosophy such as experience, education, and management position. It also
represents the intellectual and behavioral interaction between the organization and the
environment.
The improved ability level of senior management in Iraqi organizations may be in part
due to factors associated with strategic philosophy, as well as cultural exchanges between local
and international organizations. Iraqi firms also benefit from the experiences of other
organizations outside Iraq by adopting advanced administrative methods and management
development programs.
There are many factors that lead to these improvements in Iraqi firms, one of which is the
development of a cohesive organizational culture without undue government influence.
Moreover, Iraq was cut-off from the world during two important technical revolutions, one
spawning the dissemination of computers and the other promoting cellular telephones. During
most of the 1990s, Iraqis did not have access to new books, journals, and other sources of
scientific information. Since the early 2000s, however, this access has been achieved, and Iraqis
have also been permitted to transmit financial assets instantaneously.

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Conclusions and Implications for Managers


Several limitations of the present study should be acknowledged. It did not account for
variables such as age, gender, organizational experiences, and industrial experiences. Our sample
reflects the views of managers across companies in Iraq, and it could not be generalized. Further
samples and studies that investigate single industries are germane. Nonetheless, the present study
provides keen insight on strategic philosophy as an important, but largely under-researched
region of the world.
There is value in balancing competing perspectives on strategy. This view is broadly
supported by an array of research in emerging nations including Egypt (Salaheldin, 2005),
Jordan (Aldehayyat & Twaissi, 2011), and India (Krishnan, 2012). For example, those who take
up the strategy as art point of view may be unwilling to take into account the value of strategy
as a science. Additional research is needed to clarify how the various perspectives can be
integrated most effectively.
Top managers who regard strategy as a science often do so because of their education and
training; they believe that they are making logical decisions based on the best available evidence
at the time. Lower level managers may view strategy as an art because they are not involved
directly in the process and are unfamiliar with techniques that have been used by the top
management team in formulating the strategy. While the evidence suggests that both
perspectives have merit, bridging the gap in practice remains an important concern. Recent
scholarship (e.g., Huy, 2011; Raes et al., 2011) in this area has been promising, but additional
work is needed.
The preference for consistency and flexibility may be a function of management level.
Top managers tend to prefer flexibility because they are aware of myriad strategic opportunities
available to the firm and believe that they are in the best position to direct the future of the
organization because they understand the entire organization and its intricate competitive
environment (Raes et al., 2011). Middle and lower-level managers tend to prefer consistency
because they are primarily charged with the task of executing the strategy (Bryant & Stansaker,
2011). Moreover, they are in constant contact with employees, customers, products, and services.
This study also supports the idea that the opposite extremes for these three dimensions of
strategy should not necessarily be viewed as such. Strategies that consider the complexity of the
business environment should have both artistic and scientific dimensions. In a similar vein,
organizations should employ both flexibility and consistency depending on the needs of the
market. Top-down and bottom-up approaches can also be complementary and effective.

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About the Authors


John Parnell is the William Henry Belk Chair in Management at the University of North
Carolina at Pembroke. He is the author of over 200 basic and applied research articles, published
presentations, and cases in strategic management and related areas. He earned the BSBA, MBA,
and MA degrees from East Carolina University, the Ed.D. degree from Campbell University, and
the Ph.D. degree in Strategic Management from The University of Memphis. Dr. Parnell is the
author and co-author of two current textbooks with Sage Publications, Strategic Management:
Theory and Practice, and Crisis Management: Leading in the New Strategy Landscape. His
current research focuses on issues related to competitive business strategies and ethics.
Adel.H.H. Al-Baghdadi is Chancellor and Professor of Business Administration at the
University of Babylon, Iraq. He received the M.B.A. degree from Keele University in the United
Kingdom and the Ph.D .in Business Administration from Al-Mustansiriya University, Iraq. Dr.
Al-Baghdadi has published three books and more than 35 papers in magazines, journal and
conference proceedings. His research interests include organizational behavior and strategic
management.
Fadi Hassan Jaber is an Assistant Lecturer of Management at the Al-Imam Al-Kadhum
College, Iraq. He earned the M.B.A. degree from the University of Kufa, Iraq. His research
interests include strategic management, leadership, and organizational behavior.
Dr. Donald L. Lester is a Professor of Management at Middle Tennessee State
University. He earned the Ph.D. degree from the University of Memphis. His previous academic
positions include Chair of the Center for Entrepreneurial and Family Business Studies at
Arkansas State University and Dean of the McAfee School of Business at Union University. His
research interests include business strategy, organizational life cycle, and small business
entrepreneurship. Prior to his academic career, Dr. Lester owned and operated three small
businesses.

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Extrinsic and Intrinsic Job Factors: Motivation and Satisfaction in a


Developing Arab Country The Case of Lebanon

Hussein Ismail, Lebanese American University


Lama El Nakkache, Lebanese American University

Executive Summary
A number of studies have been done in North America and Europe which examined the
role of intrinsic and extrinsic job factors in overall motivation and satisfaction. However, this
field of research has received very small attention, if any, in the Arab region. This research
explores the effects of extrinsic and intrinsic job factors on motivation and satisfaction in the
country of Lebanon. A total of 100 subjects took part in the study. Results showed that while
extrinsic factors have a stronger relationship with motivation and satisfaction than intrinsic
factors, the latter showed a stronger effect on overall motivation when extrinsic job factors were
met. Discussion and implications are presented.

Introduction
From a socio-economical perspective, Maslows needs gratification theory of well-being
has put forward a universally applicable hierarchy of needs based on the idea that man is a
continually wanting animal. That is, one will be continuously striving for more than what he/she
already has (Maslow, 1943: 370). Motivation has always been an important element on
managers agendas as well as the employees. In order for a company to be successful, it needs
employees who are dedicated to the achievement of organizational goals and have a strong sense
of loyalty to the organization (Molander, 1996). The pioneer work of Herzberg, Mausner, and
Snydermans (1959) on the model of motivation and hygiene factors inspired and paved the way
towards numerous research studies on intrinsic and extrinsic job characteristics and job
satisfaction. Regardless of the nature of the work, an employees job satisfaction is influenced by
the attitude he or she has towards the job (Herzberg, Mausner, & Snyderman, 1999). Rewards at
work, whether financial (Vandenberghe & Tremblay, 2008) or nonfinancial (Amabile, Hill,
Hennessey, and Tighe, 1994) are considered as important predictors of attitudes and behavior at
work.
Cross national studies have studied motivation in different parts of the world with some
stressing the differential factors between poor and more developed countries (Huang & Van de
Vliert, 2003). Studies show that in poorer countries (Adigun & Stephenson, 1992; Kanungo,
1990) intrinsic job characteristics such as recognition, autonomy, challenge, and the nature of
work itself are less closely related to job satisfaction. On the other hand, extrinsic job
characteristics like salary, job security, and working conditions, and environment are more
closely related to job satisfaction.

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Reflecting on such crucial studies done on the subject of motivation and in an attempt to
understand the Lebanese work environment better, this study examines the issue of whether
extrinsic job characteristics are more associated with job satisfaction and motivation than
intrinsic job factors. The paper examines both extrinsic and intrinsic job characteristics from a
socio-economic perspective to understand their underlying effects on employees. Academics
have continuously called for greater research in the Middle East region given the lack of
empirical studies in this field (Budhwar & Mellahi, 2006; Abdulla, Djebarni, and Mellahi, 2011).
Moreover, this paper will also extend its scope to examine the possible conditions where intrinsic
job factors can lead to motivation over and above extrinsic job factors. Although research shows
that extrinsic job factors play a greater role on motivation in developing countries, Maslows
theory argues that intrinsic factors will have a motivating impact if the extrinsic job factors are
satisfied at work. Accordingly, we aim to explore this assumption in Lebanon, that is, whether
intrinsic job factors have a stronger impact on motivation than extrinsic job factors when the
latter factors are present.
In the following pages, the literature review and the hypothesis will be presented. Next,
the methodology will be reviewed. Finally, the paper ends with the results, discussion, and
management implications.

Literature Review
The word motivation originally comes from the Latin word movere, meaning to move
(Kreitner, 2001). Human motivation is a critical aspect in the field of organizational behavior and
psychology (Benabou and Tirole, 2003). The importance of motivation in organizations is
explained by the equation put forward by Maier (1955): Job Performance = Ability x Motivation.
Motivation represents those psychological processes that cause arousal, direction, and
persistence of voluntary actions that are goal oriented (Mitchell, 1982: 81). Another definition
put forward for motivation is that it is a psychological development that causes the stimulation,
direction and persistence of behavior (Luthans, 2010). Motivation energizes and directs certain
behavior towards reaching a specific goal (Sansone & Harachiewicz, 2000). Motivation can be
divided into two types: intrinsic and extrinsic motivation.
Intrinsic motivation has obtained the attention of many organizational research studies
tracing back to the 1970s with the works of Lawler (1973) and Deci (1972). It has been viewed
by some as the activation or energization of goal-oriented behavior stemming from an individual
due to internal motivational factors rather than external ones acting on the individual (Herzberg,
1973; Deci & Ryan, 1985). Intrinsic motivation is simply enjoying the act itself (Hennessey &
Amabile, 2005) in which an employee is motivated for reasons other than financial rewards. As
such, one may experience increased feelings of self-esteem, personal growth, and
accomplishment (Pritchard & Peter, 1974; Cherniss & Kane, 1987). It is the desire to work on
something that is interesting, challenging, satisfying, exciting or involving (Robbins and Judge,
2013). From an organizational perspective, intrinsic motivation reflects an employee who is
caring about his or her work, searching for better methods to get his or her work done, and

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committed and excited to excel at his or her job (Thomas, 2000). Intrinsic job characteristics may
include career opportunity, task identity, skill variety, task significance, job autonomy, and
perceived power. These feelings of fulfilment represent Maslows higher order needs (Maslow,
1997) that we will be discussing in more detail later in this paper
On the other hand, extrinsic motivation is the emotional state that an employee attains
from the rewards that are controlled by the organization, colleagues, or supervisors (Bhucan &
Islam, 1996; Pepe, 2010; Pritchard & Peters, 1974). Extrinsic motivation is to pay special
attention to external rewards such as bonuses and promotions (Van Herpen, Van Praag, & Cools,
2005), or to wage cuts or dismissal (Frey, 1997). These factors, also known as hygiene factors
according to Herzberg (1959), are external to the job itself and affect the employees level of
dissatisfaction rather than determining his/her satisfaction (Lucas, 1985). Extrinsic
characteristics may include job security, compensation and benefits, tenure, promotion
opportunity, feedback, and quality of co-worker-relationship (Ryan & Deci, 2000). For example,
the initial and most important goal of incentives aims at enhancing an employees extrinsic
motivation by satisfying her needs indirectly through various methods such as salary and
bonuses (Anthony & Govindarajan, 2007; Kunz & Pfaff, 2002). According to the expectancy
theory, linking incentives to performance motivates employees to increase their performance
(Jenkins, Mitra, Gupta, Shaw, 1998; Lawler, 1973; Vroom, 1994). Expectancy theory states that
motivation is a combined function of an individuals belief that the effort will lead to
performance and of the perceived desirability of outcomes resulting from this performance
(Steers, Porter, and Bigley, 2003).
In sum, intrinsic job satisfaction is how people feel about the nature of the job tasks
themselves, whereas extrinsic job satisfaction is how people feel about aspects of the work
situation that are external to the job task or the work itself (Hirschfeld, 2000).

Intrinsic and Extrinsic Job Characteristics in Developing Countries


In less developed countries, intrinsic job characteristics such as challenge, recognition,
autonomy, and the work itself are less closely related to job satisfaction (Adigun & Stephenson,
1992; Kanungo, 1990). Extrinsic job characteristics, on the other hand, such as pay, job security,
and working conditions are more closely linked to job satisfaction.
In the second half of the century many studies have shed light on the relationship
between intrinsic job characteristics and extrinsic job characteristics. The results from many of
these research studies conclude that both intrinsic job characteristics and extrinsic job
characteristics are positively related to job satisfaction (cf. Dunnette, Campbell, & Haket, 1967).
However, this relationship is also dependent on a third factor, namely the extent to which
workers value intrinsic job characteristics and extrinsic job characteristics (Mottaz, 1985).
Employees assessment of the importance of these two job characteristics differ on a cross-
national level (Hofstede, 2010, 2001; Schwartz, 1992). Studies show that the weight employees
attach to intrinsic job characteristics and extrinsic job characteristics differ drastically depending

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on nationality (Clark, 1998). Previous research also shows that the link or relationship between
job characteristics and job satisfaction varies across nations (Adigun & Stephenson, 1992; Earley
& Stubblebine, 1989; Eylon & Au, 1999; Kanungo, 1990). Huang and Van de Vliert (2003)
conducted a study on 107,292 employees across 49 different countries. Their aim was to
determine the relationship between intrinsic and extrinsic job characteristics and job satisfaction.
The results of their study showed that the association between job characteristics and job
satisfaction differed from one country to another.

Socio-Economic Theory
Steers and Sanchez-Runde (2002) were among others who joined a different line of
research that analyzed motivation from a cultural perspective. They suggested that an
individuals self efficacy is a function of socially instilled values and norms. They also added
that characteristics of socio-economic environment which included education, degree of
affluence and government regulation help to frame behavior and motivation (Steers & Sanchez-
Runde, 2002). Peterson and Ruiz-Quintanilla (2003) argued that an individuals intrinsic
motivation is related to the nature of the government under which they function, whether being
flexible or bureaucratic. Erez (2008) also mentions in his study the effect of culture on an
individuals values and character of work-related goals. Authors such as Kanfer, Chen, and
Pritchard (2008: 9-11) studied non-work influences on work behavior. Three factors discussed
by the author are:
(1) [The] content of a persons work, that is the biological, cognitive, personality and
affective systems [that] shape relatively stable individual different in preferred actions, setting,
and strategies.
(2) The context in which motivation is framed, that is the non-work factors that influence
work motivation.
(3) The change associated with a persons environment (as cited in Klonoski &
Baldwin, 2011: 92).
Kosset and Misra (2008) studied the effects of the role of new communication technology
and that of the mobile nature of knowledge based economies and workforce and their
repercussions on work-life balance and work-life integration. Inglehart (1997) on the other hand,
distinguished between countries with scarce economic environments and others that are
economically secure. His study indicated the important role the socio-economic theory plays in
regards to motivation. He concluded that economic factors tend to play a decisive role under
conditions of economic scarcity, but as scarcity diminished, other factors shape society to an
increasing degree (Inglehart, 1997: 1289). The findings of Inglehart fall in line with Huang and
Van de Vlierts (2003) study who came to the conclusion that in countries with a well
developed social security system, employees place more importance on higher needs and
therefore are more motivated by intrinsic rewards.

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National wealth is a major factor of the socio-economic perspective that has been studied
vastly over the years. This major theoretical principle underling the socio-economic theory is
firmly tied to Maslows need-gratification theory of well-being (Maslow, 1997). The latter states
that higher needs become more significant as lower needs are satisfied. Additional studies
suggest that lower needs are less compelling in rich countries than in poor countries
(Veenhoven, 1991; Veenhoven & Ehrhardt, 1995). Adigun and Stephensons (1992)
investigation on this subject revealed that British workers were motivated more by intrinsic job
factors such as achievement, recognition, and the work itself whereas Nigerian employees were
more motivated by extrinsic job factors such as pay, working conditions, and fringe benefits.
Kanungo (1990) suggested that Indian workers didnt place much weight on challenging jobs.
Some societies have had a gradual but phenomenal economic development. Thus, over time,
values related to economic development become less salient than those related to enhancing self-
expression. In other words, employees in richer and more developed countries tend to attach
more weight to intrinsic characteristics of the work, and are more motivated by intrinsic factors
because they have taken survival needs for granted. In contrast, workers in poorer and less
developed countries may be motivated by extrinsic factors since the lower needs (such as food,
money, safety) are still more important than higher ones (e.g. self-esteem, self-actualization).
The social security welfare programs are another factor that some researchers studied in
terms of socio-economic theory. A fully developed social security system fulfils much of the
basic human needs (Taylor-Gooby, 1992). In countries having such a developed social security
system, people have more likely satisfied their lower basic needs such as good physical well-
being in addition to economic autonomy. They have the luxury to focus on higher needs thus a
shift in social value norms towards an emphasis on self expression may exist (Doyal & Gough,
1984; Plant, 1985; Weale, 1983).

Maslows Hierarchy of Needs


Maslow proposed his theory of motivation in 1943. He pointed out that within an
individual there exists a hierarchy of needs. These needs, Maslow explains, are basic to ones
existence and therefore represent goals to be achieved. These goals are interrelated in the sense
that the most preponderant goal should be satisfied in order for the individual to seek satisfaction
of a further goal. Maslow characterized these needs in order of prepotency as physiological,
safety, love, esteem, and self actualization.
Physiological needs refer to those basic needs of air, water, food, rest, warmth and
shelter.
The safety needs include security, stability, law and order.
The need for love consists of affection, belonging, friends, and intimate relationships.
The esteem needs comprise prestige and feeling of accomplishment. They include the
need of achievement and recognition.

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The self-actualization needs include achieving ones full potential.


Physiological and safety needs are also referred to as basic needs while love and self
esteem are categorized as psychological and self actualization needs as self-fulfilment (Simons,
Irwin, & Drinnien, 1987).
Maslow explains that when an individual falls short in satisfying any of these needs, such
as food or sleep for example, he/she will feel an upsetting tension of hunger or fatigue. The lack
of these needs stimulate an individual to seek the missing commodity and restore balance in the
system. Therefore, as long as the body feels derived of those needs, it will employ all its energies
to satisfy these needs. Once these needs are met, the body is freed from this tension and these
satisfied needs are no longer motivating. The individual will start to seek higher needs (Griffin,
2001).
According to Champagne and McCafee (1989), examples of some potential ways to
satisfy these needs in employees are to have cafeterias or vending machines in respect to
physiological needs. Examples of security need included wages and salaries from an economical
point of view and avoiding abrupt changes from a psychological perspective. When it comes to
the affiliation need, they mention the example of encouraging social interaction among
employees. Delegating responsibilities is one example Champagne and McCafee (1989) suggest
in terms of esteem needs. And finally, for self-actualization need they give examples such as
providing challenges and encouraging creativity. Maslow referred to the four lower needs as
deficiency needs since their absenteeism creates a tension within the individual. He also
explained that these needs are universal urges and not created by culture (Maslow, 1943).
Some considered Maslows theory as an alternative to what he saw as a pessimistic
determinism of Sigmund Freud and B. F. Skinner. To differentiate his optimistic views from the
latter, he labelled his theory the Third Force. Maslow (1943) pointed out that humans in
general and employees in organizations in specific are motivated by their desires to acquire or
maintain different conditions of these basic satisfactions. Maslow advises managers to find ways
to motivate employees through designing programs aiming at satisfying those needs. According
to Stephens (2000), Maslow believed that humans aspire to become self-actualizing and viewed
the human potential as a vastly underestimated and unexplained territory.

Job Satisfaction
Job satisfaction is an emotional or affective reaction to various aspects of an individuals
work situation. It has been characterized as a positive sentimental reaction resulting from
appraisal of an employees job (Kreitner & Kinicki, 2012). Job satisfaction bares several aspects
of ones job and is therefore a sum of different components (Robbins and Judge, 2013). Some
authors mentioned that job satisfaction is a function of the degree to which an individuals needs
are being met within an organization (Sharma & Jyoti, 2006). There are five major models of job
satisfaction that identify its causes (Brief, 1998). The first category is what is known as
discrepancy models. The second is related to need fulfilment. The third are models situated in the

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value attainment category. Next are models that fall under the heading of equity and finally the
last category are the dispositional components.
Based on the review above, the following hypotheses were developed pertaining to the
country of Lebanon:
Hypothesis I: Extrinsic job factors have a stronger relationship with overall job
satisfaction than intrinsic job factors.
The second subject of interest in this research is the impact of extrinsic and intrinsic job
factors on motivation.
Hypothesis II: Extrinsic job factors have a stronger association with overall motivation
than intrinsic job factors.
Hypothesis III: Intrinsic job factors have a stronger relationship with motivation than
extrinsic factors, when the latter are met.
Another objective of this research is to explore the extent to which intrinsic and extrinsic
job factors are currently met in the country of Lebanon.

Methods

Participants and Setting


The sample for this study consisted of 100 MBA students based at a reputable university
in Beirut. All of the participants are considered working professionals. The MBA students filled
the questionnaires in their classes and returned them to the researcher. Although participation
was voluntary, none of the students who were approached declined participating in the study.
Over 90% of the respondents were between the age of 21 and 30 years old, and 58% of them
were female. Furthermore, 90% of those surveyed were single, 7% were married, and 2% were
divorced. Finally, there was some diversity regarding the size of the firms. It follows that 40%
came from large firms employing more than 500 employees, followed by 24% whose
organizations had between 101 to 500 employees. 19% came from small firms with 50 workers
or less, while the rest of the respondents, or 17%, came from firms which had anywhere from 51
to 100 workers.

Measures
Extrinsic and Intrinsic job factors. In the literature, extrinsic job characteristics tend to
meet employees lower-order needs, such as security and social needs, while intrinsic job
characteristics are those job features which enhance self-esteem and self-actualization (Maslow,
1997). Extrinsic factors were measured using a series of five questions assessing the degree to
which extrinsic job characteristics were met. Mainly, those questions were based on the extrinsic

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job factors indentified in Mottaz (1985). In particular, the questions included such factors as pay,
job security, supervisory support, working conditions, and promotion. This construct was
measured with five items using a seven-point Likert scale that assessed the extent to which
extrinsic job factors were met (1 = strongly unmet to 7 = strongly met). Examples include to
what extent is job security met at work and to what extent are your salary expectations met.
The coefficient alpha for this scale was .734. On the other hand, the measure of intrinsic job
characteristics consisted of a set of questions relating to the extent to which certain intrinsic
factors were met at the workplace (Hackman & Oldham, 1980). In particular, a total of two items
drawn from Huang and Van de Vliert (2003) made up the intrinsic measure, including
challenging work and recognition. The items were measured with a seven-item Likert scale that
ranged from 1 = strongly unmet to 7 = strongly met. The coefficient alpha for this scale was
.602.
Job Satisfaction and Motivation. Overall job satisfaction was assessed with a single-item
measure: Overall, how satisfied are you in your job. Single-item measures of job
satisfaction have been used in many studies on job satisfaction, and have been shown to
be valid and reliable (Wanous, Reichers, and Hudy, 1997). Respondents in this study were asked
to rate their job satisfaction on a 7-point Likert scale ranging from 1 (highly unsatisfied) to 7
(highly satisfied).
Overall motivation was also measured with a single-item asking respondents to rate their
motivation on a 7-point Likert scale from 1 (very low) to 7 (very high). Recent studies have
employed single-item motivation measures successfully (Stamov-Ronagel & Biemann, 2012).

Results
For our research question which is concerned with exploring the extent to which
individual extrinsic and intrinsic factors are actually met at Lebanese organizations, table 1
presents the mean scores. On a 7-point Likert scale, basic salary had the lowest mean score (M =
3.63, SD = 1.269), followed by promotion (M = 3.99, SD = 1.517) showing that they are the least
fulfilled. Both items are considered extrinsic job factors. Moreover, as far as intrinsic job factors
are concerned, results show that employee recognition (M = 4.53, SD = 1.469) and challenging
work (M = 4.73, SD = 1.521) were hardly present at the organizations in this study. Job security
(M = 4.98, SD = 1.636) had the highest mean score when compared to the rest of the items,
although it is still not considered high itself. Finally, our sample shows that both overall job
satisfaction (M = 4.27, SD = 1.30) and motivation (M = 4.47, SD = 1.394) are generally weak in
firms based in Lebanon.
For our first hypothesis, table 2 shows the results from the regression analysis.
Demographic variables including age, gender, marital status, and company size are all non-
significant (p > 0.05). However, extrinsic and intrinsic factors are both significant predictors of
job satisfaction (p < .001). As hypothesized, the results show that extrinsic job factors have a
stronger relationship with job satisfaction (b = .499, p < 0.001) than intrinsic job factors (b =

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.359, p < 0.001), thus H1 is supported. Overall, the research model explained more than 61% of
the variance in job satisfaction (R2= .613, F (6, 91) = 24.018, p < .001). This means that there is
about 39% of the variation which remains unexplained by the model.
Table 1 Means and Standard Deviations
Mean Std. Deviation
Salary 3.63 1.269
Promotion Opportunities 3.99 1.517
Recognition of your efforts 4.53 1.469
Challenging work 4.73 1.521
Work environment 4.84 1.383
Supportive managers 4.94 1.67
Job Security 4.98 1.636
Overall job satisfaction 4.27 1.30
Overall motivation 4.47 1.39

Table 2 - Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
1 (Constant) -.322 .565 -.570 .570
Age -.113 .294 -.027 -.384 .702
Gender .037 .180 .014 .207 .837
Marital Status .142 .259 .041 .547 .586
Company Size -.020 .077 -.018 -.258 .797
Extrinsic .626 .114 .499 5.504 .000
Intrinsic .378 .093 .359 4.080 .000
a. Dependent Variable: Overall job satisfaction

Concerning hypothesis 2, the coefficient results of the hierarchical regression are


presented in table 3. None of the background variables had a statistically significant relationship
with overall motivation. As with overall satisfaction, our findings showed that extrinsic job
factors are more associated with overall motivation (b = .462, p < 0.001) than intrinsic job
factors (b = 351, p < 0.001). Therefore, H2 was supported. Overall, the model explained around
56% of the variance in overall motivation (R2= .556, F (6, 91) = 18.989, p < .001).

Table 3 - Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .012 .649 .018 .986
Age -.385 .338 -.086 -1.139 .258
Gender .048 .207 .017 .231 .818
1 Marital Status .123 .298 .033 .412 .681
Company Size .018 .088 .015 .210 .834
Extrinsic .621 .131 .462 4.756 .000
Intrinsic .396 .106 .351 3.718 .000
a. Dependent Variable: Overall motivation

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To test hypothesis 3, we used hierarchical regression. Since none of the demographic


variables showed any association with the dependent variable from our results above, they were
not included in the analysis. In step 1, we entered the high extrinsic factors into our model, which
represent the high presence of extrinsic factors, and in step 2, we entered the intrinsic factors.
The high presence of extrinsic job factors, or block 1, explained 28% of the variance in
motivation (R2 = .28, F (1, 59) = 22.903, p <.001). However, after the inclusion of intrinsic job
factors, the model as a whole significantly explained 46% of the variance. In particular, the
intrinsic job factors explained an additional 18% of the variance in motivation (R = .68, R2 =
.462, R2 = .183, p <. 001). Examining the model further, when high extrinsic variables where
entered into the equation, it showed a significant relationship with motivation (b = .529, p <
0.001). However, when intrinsic variables where entered next, extrinsic factors lost some of their
predictive power (b = .268, p < .05) whereas intrinsic factors had a significantly more important
relationship with overall motivation (b = .501, p < 0.001) compared to extrinsic factors. Table 4
shows the results from the hierarchal regression. This indicates that for the firms with a high
presence of extrinsic factors in place, intrinsic job factors become more influential on overall
motivation. In such firms, motivation became more dependent on intrinsic job factors than
extrinsic job factors. Specifically, a one-unit increase in intrinsic job factors was associated with
an increase of approximately .50 in overall motivation. Therefore, hypothesis 3 was supported.

Table 4 - Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
1 (Constant) .226 1.032 .219 .827
HighExtrinsic .955 .200 .529 4.786 .000
2 (Constant) .057 .900 .064 .950
HighExtrinsic .485 .204 .268 2.379 .021
Intrinsic .504 .113 .501 4.441 .000
a. Dependent Variable: Overall motivation

Discussion
As the results show, employees identified that their expectations for the basic salary as
well as promotion were not adequately met in Lebanese firms. These two extrinsic factors had
the lowest means of 3.63 and 3.99, respectively. Although job security had the highest mean
score (M = 4.98) in comparison with the rest of the job factors, it still cannot be considered high
enough indicating the lack of security for employees in the Lebanese firms when it comes to
their jobs and careers. Moreover, in terms of intrinsic job factors, the results also show that
employee recognition and a challenging work environment were hardly present in the
organizations. In fact, on a scale from 1 to 7, none of the job factors got a score of 5 or more. The
fact that many of the job factors were below expectations might have translated to the low job
satisfaction and motivation scores in this study.

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Age, gender, marital status, and company size had no significant effect on our findings
with regards to job satisfaction. In other words, an employee is satisfied or dissatisfied with
his/her job regardless of his/her age or the size of the company he or she works at. Extrinsic and
intrinsic job factors on the other hand are significantly related to job satisfaction in line with the
results. These findings are somehow similar to the results of a recent research study in the region
(Abdulla et al., 2011). Keeping all things constant, our initial regression analysis showed that
extrinsic job factors had a stronger relationship with job satisfaction (b = .499) than intrinsic
factors (b = .359).
The findings of the study are in harmony with the conclusions drawn from the socio-
economic perspective. It explains the stronger link between extrinsic job factors and job
satisfaction in poorer countries and in countries with weak social security systems where survival
issues become more essential. Extrinsic aspects of jobs become more important for such workers
(Inglehart, 1997). Individuals in such countries are more stimulated by extrinsic factors which
tend to be unsatisfied needs at the bottom of the hierarchy (Maslow, 1943). In less developed
countries, extrinsic job characteristics such as pay, job security, and working conditions are more
closely linked to job satisfaction (Adigun & Stephenson, 1992; Kanungo, 1990).
However, this is not to say that intrinsic job factors are not vital. In fact, results from the
hierarchical regression showed that for firms with a high presence of extrinsic factors in place,
intrinsic job factors became more influential on motivation than extrinsic job factors. This falls
in line with Maslows hierarchy of needs theory (1943) which states that the individual will start
seeking higher needs once his/her lower needs are satisfied. In others words, in such firms,
motivation becomes more dependent on intrinsic job factors than extrinsic job factors.
Specifically, a one-unit increase in intrinsic job factors was associated with an increase of
approximately .50 in overall motivation. In effect, our results suggest that in less developed
countries extrinsic job factors are not always more powerful in motivating employees than
intrinsic job factors as some studies suggest. This study shows that if employers provide enough
extrinsic rewards to their workers, intrinsic rewards can actually have the leading role in
enhancing motivation at the workplace. Although several decades have passed since Maslows
hierarchy of needs theory, it still proves to be a powerful model for creating a motivating work
environment.
Our study has several important implications. All else held constant, the results of the
study showed that extrinsic job factors have a major role to play in motivation and satisfaction.
This implies that managers need to ensure that extrinsic job factors such as promotion and pay
need to be sufficiently present especially that those are typically weak in Lebanese organizations
as was shown an observation that may be common to other countries in the region. Managers
can enhance motivation through various reward systems such as merit reward systems.
Following a merit pay system, employees can receive an awarded pay based on their contribution
to the organization. At the same time, organizations in those countries should not ignore intrinsic
job factors. As a matter of fact, our findings suggest that implementing management intervention
techniques that reinforce intrinsic rewards such as employee recognition and a challenging work
environment, after which extrinsic factors have been adequately met, proves highly effective.

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Managers can use empowerment and participation in motivating employees in Lebanese firms.
Empowerment is the process of giving employees access to setting their own goals and making
their own decisions. It also enables the employees to solve work-related problems that fall under
their responsibility (Griffin, 2013). An employee participating in decision making will be more
committed to the decision. Implementing such methods in organizations will ultimately help
satisfy the employees need for achievement and recognize employees for their contributions to
the firm.
In many cases successful motivation practices used in the home country may prove
unsuccessful in other parts of the world (Hofstede, 1980; Mensik, Grainger, and Chatterjee,
1999; Modern, 1995). This may be the case with U.S. multinational companies operating in the
Middle East and in Lebanon specifically. Such companies can benefit from the results of the
study at hand. Managers of U.S. multinational companies operating in Lebanon can use the
results of this study to develop a systematic approach to motivate their employees. The study
shows that employees identified that their expectations of salary and promotion are not
sufficiently met. Managers can develop a motivational work plan addressing these extrinsic job
characteristics primarily, via reward plans, salary redesign, or more promotion opportunities.
Managers can also elevate the employees feeling of recognition via employee empowerment
and engagement in decision making (Cullen & Parboteeah, 2013). The motivational plan,
however, should ensure that extrinsic job factors, such as promotion and rewards, are sufficient
before managers can introduce empowerment systems. According to the results of this study, the
latter can be highly effective in motivating employees, but only after ensuring that extrinsic job
rewards have been sufficiently provided.
Finally, as this study was based on MBA students (who may either be current managers,
or are likely to become managers in the next few years in their firms), professors may help their
students to think about creative ways in motivating employees in Lebanon using extrinsic and
intrinsic rewards. Given the low job satisfaction and motivation levels as was demonstrated in
this study, it highlights a serious need on the part of educators to make such topics an important
part of their class discussions.

Limitations
The study has three main limitations. The first limitation was the relatively small sample
size (n =100). The study can be repeated with bigger samples in order for the findings to be
generalized more confidently.
The sample was also limited by the larger number of participants between the age of 21
to 30 years old and those who were single in comparison to the other groups in the study. This
calls for another study which ensures a more diversified sample which can further increase the
reliability of the findings attained here. However, as far as this study is concerned, it might be
worth mentioning again that none of demographic variables had a significant impact on the
results when they were entered in the model.

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Another issue lies in the fact that all respondents were pursuing an MBA degree. This
may influence the results in that they may have different or ambitious expectations from
respondents or employees who may not be pursuing an MBA degree. Therefore the study could
be repeated with different groups.

Acknowledgements
This study was supported by a research grant from Lebanese American University.

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About the Authors


Hussein Ismail currently teaches courses in HRM, strategy, and family business
management at both undergraduate and graduate levels at the Lebanese American University in
Beirut. He holds a Ph.D. in HRM from the University of Manchester in UK, and a Masters
Degree in Strategic Management from Nottingham University in UK. Ismail has several years of
industrial experience locally and internationally, and has also served as a business
consultant/trainer to a number of companies. He has published in several journals in the area of
management. His research interests include HRM, entrepreneurship strategy, & organizational
psychology.
Lama Nakkache earned her bachelors degree in Business Administration with emphasis
in both accounting and management from the American University of Beirut (AUB) in 2003. She
also has an MBA degree from the Lebanese American University in Beirut. Lama has mainly
worked in the area of HR at several multinational recruitment companies based in Dubai/UAE.
She currently conducts research in the area of management.

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Strategic Planning for Community-Based Small Nonprofit


Organizations: Implementation, Benefits, and Challenges

Qian Hu, University of Central Florida


Naim Kapucu, University of Central Florida
Lauren O'Byrne, University of Central Florida

Executive Summary
Although strategic planning can help organizations develop strategic thinking and adapt
to environmental changes, small nonprofit organizations may run into challenges when using
strategic planning in their management practice. Strategic planning can be time-consuming and
cost extra human capital and monetary resources that many small nonprofit organizations have
limited access to. Hence, it is worthwhile to examine the application of strategic planning and
management to small nonprofit organizations and evaluate the benefits and challenges that
strategic planning can bring to small nonprofits. Using a mixed methods approach, this research
investigated how managers in community-based small nonprofit organizations perceived the
importance and use of strategic planning and management. This research also evaluated the key
elements of the strategic plans and the unique challenges in strategic planning. This research
suggests that strategic planning, if executed properly, can provide small nonprofit organizations
opportunities to not only improve their existing services, but also more importantly, build
capacity to sustain and expand their programs in an uncertain environment.

Introduction
Facing the sluggish economic recovery, most nonprofit organizations are experiencing
the unprecedented challenges of seeking sustainable funding and donations, retaining high-
quality staff, effectively providing services, and attracting qualified volunteers (Mosley,
Maronik, & Katz, 2012). Community-based small nonprofit organizations are more vulnerable to
the constantly changing political, economic, financial, and demographic environment (Mara,
2010). Strategic planning can serve as a management tool for capacity building of small
nonprofits and help organizations develop strategic thinking and adapt to environmental changes
(Bryson, 2011). Yet, strategic planning takes time and costs extra human capital and monetary
resources that small nonprofits do not have (Mara, 2010). To address this dilemma, this study
examines the application of strategic planning to small nonprofit organizations, which has been
less studied.
A large number of studies have examined the organizational and environmental factors
influencing the use of strategic planning, strategy formulation and implementation, and the
impact of strategic planning on organizational performance outcomes (Crittenden & Crittenden,
2000; Poister & Streib, 2005; Poister, Pitts, & Edwards, 2010; Siciliano, 2006; Stone, Bigelow,

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& Crittenden, 1999). Strategic planning has demonstrated potential for improving social
performance and financial performance for small nonprofit organizations (Siciliano, 2006). Yet,
most of the existing studies on strategic planning in the nonprofit sector have focused on the
well-established nonprofit organizations, while few case studies have explored the benefits and
challenges of utilizing strategic planning and management in smaller, less established
organizations (Mara, 2000). Knowledge remains limited about the use of strategic planning in
small nonprofit organizations. Hence, it is worthwhile to identify the role of strategic planning
and management for small nonprofit organizations in their management and capacity building.
This research examines the following questions: Can strategic planning help small
nonprofits improve management and performance? What are the major challenges facing small
nonprofit organizations when using strategic planning in their management practice? To answer
these questions, we conducted an online survey and focus group studies of executive directors
and senior staff of small nonprofit organizations in a southeastern state in the United States. This
research suggests that with leadership and other organizational support, small nonprofit
organizations can use strategic planning to develop and sustain in an uncertain economic
environment.

Literature Review & Background


Considerable literature has focused on the adoption and implementation of strategic
planning in public, private, and nonprofit organizations (Allison & Kaye, 2005; Bryson, 2011;
Moore, 2000; Morrisette & Oberman, 2013; Poister et al., 2010). This section begins with
reviewing the impacts of strategic planning on public and nonprofit organizations, and then
addresses the potential benefits of strategic planning for small nonprofit organizations. Next, it
identifies factors influencing the use of strategic planning in nonprofit organizations and
discusses the challenges facing strategic planning for community-based nonprofit organizations.

Strategic Planning for Public and Nonprofit Organizations


Since the 1980s, strategic planning has been widely adopted by public, private, and
nonprofit organizations (Bryson, 2011; Heriot, & Loughman, 2009; Mintzberg, 1993; Moore,
2000; Poister & Streib, 1999; 2005; Poister, et al., 2010). According to Bryson (2011), strategic
planning is a deliberative, disciplined approach to producing fundamental decisions and actions
that shape and guide what an organization (or other entity) is, what it does, and why (p. 7-8).
There are core steps of strategic planning across a large number of studies (Allison & Kaye,
2005; Bryson, 2011; Moore, 2000). Most strategic planning includes the following steps:
initiation, clarification of the mission, vision, and values, environmental assessment, strategic
issue identification, strategy formulation, implementation, and assessment (Allison and Kaye,
2005; Bryson, 2011).
Public and nonprofit organizations adopt a variety of strategies to adapt to the constantly
changing environment (Alexander, 2000; Boyne & Walker, 2004; Mosley, Maronick, & Katz;

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2012). Public agencies may decide to move into new markets or exit the service markets, provide
new services to existing users, seek additional revenues, improve internal management practices,
and enhance relationships with external organizations (Boyne & Walker, 2004). Facing financial
uncertainty, nonprofit organizations can add new programs, cut off existing program or staff,
build or expand a joint program through collaboration, increase earned income, and start or
increase involvement in advocacy (Mosley et al., 2012, p. 286-289). In sum, public and nonprofit
organizations can either examine the organization internally and focus on existing programs and
services, or look externally at the external stakeholders and organizations to establish
collaboration and provide joint services.
Strategic planning has been found to be beneficial not only for private businesses and
public agencies (Moore, 2000), but also for nonprofit organizations (Allison & Kaye, 2005;
Bryson & Roering, 1988). Strategic planning can help organizations develop organizational
adaptability to environmental changes, improve organizational decision making, set up
organizational development priorities, and develop and enhance relationships with key
stakeholders (Allison & Kaye, 2005; Brown, 2010; Bryson, 2011). Nonprofit organizations often
utilize formal strategic planning because they are required to do so from funders (Stone et al.,
1999); however, strategic planning can have a significant impact on nonprofit organizations
beyond the potential funding benefits (Crittenden & Crittenden, 2000). Strategic planning may
initiate a change in mission, structure, board, and management roles (Stone, Bigelow, &
Crittenden, 1999). Benefits include thinking strategically, clarifying the direction of the
organization, improving performance, building teamwork and expertise, solving problems, and
decision-making (Bryson & Roering, 1988; McHatton, Bradshaw, Gallagher, & Reeves, 2011).
Small nonprofit organizations can use strategic planning to better utilize their limited
resources and examine external opportunities and challenges to build their capacity rather than
focus on daily operations (Kapucu, 2012). Based on the survey results of 240 YMCA
organizations, it has been found that formal strategic planning may help nonprofit organizations
improve financial and social performance (Siciliano, 1997). Through surveying human service
nonprofits located in Los Angeles County in California, Mosley, Maronick, and Katz (2012)
found that engaging in strategic planning may allow organizations to deal with funding
uncertainty by carrying out complex adaptive tactics such as joint programs or expanding
earned income (p. 296). In sum, as Allison & Kaye (2005) noted, successful strategic planning
in nonprofit organizations improves focus on mission and values, offers a blueprint for action,
provides ways to monitor and assess actions, and delivers information to the organization that
can be used to market the organization to the public and possible funders.

A Need for Strategic Planning for Community-based Small Nonprofit Organizations


Existing strategic planning research focused on large, well-established public and
nonprofit organizations, despite several exceptions (for example, Mara, 2000). Few studies have
examined the application of strategic planning to small nonprofit organizations. There are no
widely agreed-upon ways to define small nonprofit organizations (Mosley et al., 2012). The size

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of nonprofit organizations can be measured by the amount of total expenditures, number of staff
members, or annual revenues (Mosley et al., 2012; Siciliano, 2006). This study used the amount
of annual expenditures to define small nonprofit organizations as those nonprofits have total
expenditures under $ 1 million. According to the National Center for Charitable Statistics,
nonprofit organizations with less than $1 million in total expenses account for over 80% of
public charity services (Blackwood, Roeger, & Pettijohn, 2012) . However, only a small number
of case studies have investigated the specific elements of strategic planning, and the unique
benefits and challenges of strategic planning for small nonprofit organizations (Inglis &
Minahan, 2001; Mara, 2010).
Strategic planning has become a useful tool for capacity building of nonprofit
organizations. There has been concern over community-based small nonprofit organizations
lacking capacity and technical expertise to keep up with the changing environment (De Vita,
Fleming, & Twombly, 2001). Strategic planning is a tool that nonprofit organizations frequently
utilize in capacity building activities, along with other tools such as strengthened internal
management using information technology, team building activities, reorganization, and
leadership development (Allison & Kaye, 2005). Many capacity building programs include a
strategic planning component as a part of a capacity and intervention strategy. Capacity building
activities include workshops and training and custom-based technical assistance for small
nonprofit organizations in the US (Kapucu, Augustin, & Krause, 2007; Kapucu, Healy, &
Arslan, 2011; Weiss, 2000).
There are other unique benefits of strategic planning for community-based small
nonprofit organizations. Strategic planning can help small nonprofit organizations efficiently
utilize limited resources to support program objectives and missions (Mara, 2000; McHatton et
al., 2011; Medley & Akan, 2008). As small nonprofit organizations have smaller budgets, they
can benefit from enhanced management techniques that strategic planning may require. These
techniques may include team building and collaborating, strategic thinking, planning, and
program evaluations.

Factors Influencing the Use of Strategic Planning among Nonprofit Organizations


A number of factors may influence an organizations participation in strategic planning,
such as the size of the organization, characteristics of the board, type of management, agreement
on organizational goals, and funding requirements to adopt planning (Stone et al., 1999). Larger
nonprofit organizations are more likely to plan (Crittenden & Crittenden, 2000; Siciliano, 2006;
Stone et al., 1999). In addition, planning in nonprofit organizations is related to the age of the
organization (Crittenden & Crittenden, 2000). Previous planning experience can also affect the
organizations future engagement in strategic planning. Organizations that have been planning
longer tend to have more formalized strategic plans (Crittenden & Crittenden, 2000). Through
surveying 240 YMCA organizations, Siciliano (2006) found that organizations are less likely to
go through a formal strategic planning process when they are facing less favorable financial
conditions. However, there is some conflicting research that has shown that it is larger

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organizations, not necessarily older organizations that are more likely to engage in strategic
planning (Stone et al., 1999). Crittenden & Crittendens (2000) study sampled 11,300 nonprofit
organizations from a State Office of Voluntary Citizen Participation. They did not find a positive
correlation between the strategic planning process and organizational characteristics such as
member age, funding source, administrator education, and bureaucracy (p. 166).
Leadership, transformational leadership in particular, enables small nonprofits to
overcome resource constraints, use strategic planning in management practice, and become more
sustainable. Leadership plays a crucial role in initiating, supporting, and championing the
strategic planning process (Bryson, 2011). Leaders can help other members understand the
opportunities and challenges facing the organization and develop strategic thinking. Furthermore,
leaders can mobilize resources to support and facilitate strategic planning (Bryson, 2011).
Leaders not only work with employees to accomplish personal goals and organizational goals,
but also need to think strategically about the long-term development of an organization. This is
why transformative leadership is important for successful strategic planning. Transformational
leadership inspires other members to pursue high organizational performance by setting up role
models, challenging existing assumptions, and proposing creative approaches to address issues
(Avolio, Waldman, & Yammarino, 1991; Bass & Avolio, 1993; Bass & Riggio, 2006; Burns,
1979). Transformational leadership allows small nonprofits to initiate and facilitate the process
to challenge the status quo, think outside of the box, and seek creative ways to implement
strategic planning in their organizations.

Challenges of Strategic Planning for Nonprofit Organizations


Strategic planning is not without flaws (Mintzberg, 1993). Planning is inherently
turbulent in nature (Mintzberg, 1993). Lengthy strategic plan are often ignored in nonprofit
management practice (Mara, 2010). Small nonprofit organizations may encounter more
challenges. It is difficult to measure performance of nonprofit organizations, whose sole purpose
is to fulfill a social mission (Crittenden & Crittenden, 2001; McHatton et al., 2011; Moore,
2000). Empirical support is still lacking that strategic planning improves performance (Poister et
al., 2010). Additionally, studies have shown that larger nonprofit organizations that offer certain
services, receive funding from the federal government or the United Nations have greater success
in program management and evaluation (Carman & Fredericks, 2010; DiMaggio, 1988). Small
nonprofits, by contrast, face even greater challenges because they often lack financial and human
resources to budget for strategic planning practices. Dart, Pat, Vic, and Jacob (1996) found that
strategic planning is a time consuming activity and therefore, it is optional for a board. Mara
(2010) noted that the strategic planning process could be very time consuming and cost resources
that small nonprofit organizations lack (2010). She noted that adequate, competent staff
members, a capable facilitator, and prior education on the strategic planning process is needed
for effective strategic planning (2010). Yet, small nonprofit organizations may not have access to
these resources.

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Strategic planning has the potential for benefitting small nonprofit organizations. Yet
small nonprofit organizations may encounter unique challenges when using strategic planning as
a management tool. As shown in Figure 1, a variety of organizational and environmental factors
such as organization size, leadership, resources, financial uncertainty, and mandates can
influence the adoption of strategic planning in nonprofit organizations. This study first explores
the useful elements of strategic planning for small community-based organizations, and the
strategies small nonprofit organizations adopted to tackle financial uncertainty. Then it explores
the impacts of strategic planning on organization management and performance. Lastly, it
investigates how executive directors, board members, and staff working in community-based
small organizations perceive the benefits and challenges of strategic planning.

Factors Strategic Planning Outcomes

Figure 1: The adoption of strategic planning and its impact on organizations

Methods
A mixed method, including an online self-administered survey and a focus group study,
were conducted. In fall 2012, we surveyed executive directors and senior staff of twenty
community-based small nonprofit organizations in a southeastern state that participated in a
federally funded capacity-building program in 2009-2011. We also conducted a focus group to
have more in-depth conversations about the use of strategic planning in small nonprofit
organizations. These small nonprofit organizations serve in the area of human services, mainly
providing employment assistance to local residents who need help with employment.
Although these small nonprofits have clearly-defined organizational missions, these
organizations have very limited access to resources such as funding and staff.

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All of the organizations selected for this study have participated in strategic planning
training sessions that were provided through a federally funded nonprofit capacity-building
program. Then, these organizations individually conducted their strategic planning process.
Formal strategic plans were developed at the end of the strategic planning process and were
approved by their respective Board of Directors. This unique group of nonprofit organizations
allows us to have in-depth conversations with them regarding their experience with strategic
planning and implementation. Furthermore, these small nonprofit organizations that participated
in this study do share similar challenges and opportunities with other small nonprofits, such as
limited staffing, tight budgets, and struggles with daily operations, even though these small
nonprofit organizations may not represent a large population of small nonprofit organizations.
This study explores whether strategic planning can be a useful management tool for small
nonprofit organizations; and if so, how strategic planning can be better utilized for small
nonprofit organizations. Survey questions ask participants their perception about the strategic
planning process, the unique need for the organizational strategic planning and management, the
impacts of developing and implementing the strategic plans, the perceived challenges and
opportunities, and the strategies developed to deal with financial uncertainty. The survey
questions about the impacts of strategic planning were built upon Poister and Streibs (2005)
survey instruments with adaptations to nonprofit organizations (p. 52). A series of questions
examine the impacts of strategic planning on organizational mission, goals, and priorities,
relationships with key stakeholders, organizational management and decision making,
organizational development and change, and organizational performance. Another set of
questions was developed according to Mosley et al.s (2012) categorizing of nonprofit
management strategies and other research on public sector strategies (Boyne & Walker, 2004;
Brown, 2010). These questions examine what strategies these small nonprofit organizations
adopt in response to financial uncertainty.
Analysis of the survey results were used to develop focus group questions which aimed to
collect more detailed information about their management experience with strategic planning.
Seven representatives from six organizations participated in the focus group study. Among them
six participants are executive directors, and the other one is a program officer. All of the seven
participants have been working in the nonprofit field for many years and have accumulated
hands-on knowledge about using strategic planning in their organizations. The focus group study
provides the platform for the nonprofit leaders to reflect on their strategic planning experience.
The conversation was later transcribed and analyzed to supplement the survey data to provide
more contextual information and additional insights.

Findings and Discussions


Out of the twenty community-based small nonprofit organizations, seventeen
organizations completed the survey. Among these seventeen respondents, twelve are executive
directors, four are staff members, and one is the program director. The majority of these
organizations have small budgets and limited staff, as shown in Table 1. Only two organizations

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have more than ten paid full-time staff members, and thirteen have less than five paid full-time
members.

Table 1
Characteristics of the community-based small nonprofit organizations
Year of Formation Before 1980 4 23.5%
1981-2000 2 11.8%
2001-current 10 58.8%
Paid full- 0-5 13 76.4 %
time staff 6-10 2 11.8 %
Over 10 2 11.8 %
Paid part- 0-5 15 88.2%
time staff 6-10 2 11.8%
Unpaid 0-5 10 58.8%
Staff Size staff 6-10 1 5.9%
Over 10 6 35.3%
Number of members on 2-5 5 29.4%
the Board of Directors 6-10 8 47.1%
Over 10 4 23.5%
Budget Status Increase 9 52.9%
Decrease 4 23.5%
No Change 4 23.5%
Total Budget $ 0-100,000 8 47.1%
$100,001-300,000 4 23.5%
$ 300,001-$500,000 1 5.9%
Over $500,000 4 23.5%

Elements of Strategic Planning for Community-based Small Nonprofit Organizations


Most of the survey respondents perceived the elements of strategic planning as a useful
management tool for their organizations, as shown in Table 2. These respondents agreed that it is
beneficial for their organizations to identify stakeholders needs and concerns, review
organizational missions, clarify organizational mandates, analyze internal weaknesses and
strengths, external challenges and opportunities, develop a vision, identify strategic issues, and
develop goals and objectives, and implementation plans. The elements of strategic planning for
community-based small nonprofit organizations are similar with the counterparts that were
widely used in public agencies and large nonprofit organizations (Allison & Kaye, 2005; Bryson,
2011). Only two respondents noted that they are neutral about the usefulness of clarifying
organizational mandates in the process of strategic planning. One respondent did not think
reviewing the organizational mission is useful.

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Table 2
Useful elements of strategic planning for community-based small nonprofit organizations

Very Not Not Useful


Elements of Strategic Planning Useful Useful Neutral Useful At All

Identification of stakeholders needs


and concerns 10(58.8%) 6(35.3) 1(5.9) 0(0) 0(0)

Review of organizational mission 12(70.6) 4(23.5) 0(0) 1(5.9) 0(0)

Clarification of organizational
mandates 5(29.4) 10(58.8) 2(11.8) 0(0) 0(0)

Analysis of internal strengths and


weaknesses 9(52.9) 8(47.1) 0(0) 0(0) 0(0)

Assessment of external threats and


opportunities 6(35.3) 10(58.8) 1(5.9) 0(0) 0(0)

Development of a vision for the


future 11(64.7) 5(29.4) 0(0) 0(0) 0(0)

Development of strategic issues 8(47.1) 8(47.1) 0(0) 0(0) 0(0)

Development of goals and objectives 10(58.8) 6(35.3) 0(0) 0(0) 0(0)

Implementation plans with actions,


resources, and timelines 9(52.9) 6(35.3) 1(5.9) 0(0) 0(0)

Perceptions about Strategic Plannings Impact on Nonprofit Organizations


Overall, respondents understood well what strategic planning means to an organization.
All but one respondent were familiar with strategic planning and implementation, as shown in
Table 3. Respondents rated strategic planning highly and perceived strategic planning as a useful
tool for their organizations to focus on organizational missions, goals, and priorities, strengthen
relationships with stakeholders, improve management and decision making, increase
organizational effectiveness, and foster organizational development. This finding is consistent
with most existing studies that focus on the benefits of strategic planning for public agencies and
well-established nonprofit organizations (Allison & Kaye, 2005; Poister & Streib, 2005). In other
words, strategic planning brought about positive benefits to these seventeen community-based
small nonprofit organizations.

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Table 3
Impacts of Strategic Planning on Nonprofit Organizations
Neither
Strongly Strongly
Areas Items Agree Agree Nor Disagree
Agree Disagree
Disagree
Understand what a
mission statement 10 (58.8%) 5 (29.4) 2 (11.8) 0 (0) 0 (0)
means
Focus on the
Mission, 12 (70.6) 5 (29.4) 0 (0) 0 (0) 0 (0)
important issues
Priorities,
Enhance employees
Goals
focus on 8 (47.1) 6 (35.3) 3 (17.6) 0 (0) 0 (0)
organizational goals
Define clear program
7 (41.2) 8 (47.1) 2 (11.8) 0 (0) 0 (0)
priorities
Understand the
importance of 8 (47.1) 7 (41.2) 2 (11.8) 0 (0) 0 (0)
stakeholders
Maintain supportive
relations with
External 8 (47.1) 7 (41.2) 2 (11.8) 0 (0) 0 (0)
donors/funding
Relations
agencies
with Key
Maintain public
Stakeholders 6 (35.3) 10 (58.8) 1 (5.9) 0 (0) 0 (0)
support
Seek new
8 (47.1) 9 (52.9) 0 (0) 0 (0) 0 (0)
collaborations
Enhance relationships
7 (41.2) 10 (58.8) 0 (0) 0 (0) 0 (0)
with existing partners
Maintain a functional
organizational 4 (23.5) 9 (52.9) 4 (23.5) 0 (0) 0 (0)
structure
Implement effective
Management 3 (17.6) 11 (64.7) 3 (17.6) 0 (0) 0 (0)
management systems
and
Target and utilize
Decision
program evaluation 4 (23.5) 8 (47.1) 5 (29.4) 0 (0) 0 (0)
making
tools
Make sound decisions
regarding programs, 5 (29.4) 8 (47.1) 3 (17.6) 0 (0) 0 (0)
systems, and resources
Maintain our
organizations overall 4 (23.5) 10 (58.8) 2 (11.8) 0 (0) 1 (5.9)
financial condition
Effectiveness Manage operations in
Performance 6 (35.3) 9 (52.9) 2 (11.8) 0 (0) 0 (0)
an efficient manner
and Serve the needs of the
Organizational 8 (47.1) 8 (47.1) 1 (5.9) 0 (0) 0 (0)
community
Development
Initiate changes 7 (41.2) 9 (52.9) 1 (5.9) 0 (0) 0 (0)
Strengthen abilities to
7 (41.2) 9 (52.9) 1 (5.9) 0 (0) 0 (0)
change

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Small nonprofit organizations are at the early development stage and may have difficulty
focusing on what is expected of them by their stakeholders. All of the respondents thought that
strategic planning helped their organization focus on important issues. Strategic planning can
help small nonprofit organizations focus on their mission, as indicated in the comment by one
focus group participant:

We use our mission statement, for every monthly meeting, as part of


either the opening or somewhere and that came because of the strategic
planning. And if we are going to do a new program, it has to be
something that will follow what our mission statement is.

Most of the respondents noted that strategic planning could help their organizations
understand the importance of stakeholders and maintain supportive relationships with funding
agencies or donors. Even more respondents agreed that strategic planning could help
organizations maintain public support, seek new collaborations, and enhance relationships with
existing partners. Managing stakeholder relationships is crucial to nonprofit organizations
because nonprofit organizations need different avenues of support from stakeholders, such as
funding, human capital, and other resources (Abzug & Webb, 1999; Balser & McClusky, 2005).
This is especially the case for small nonprofit organizations. Yet, many small nonprofit
organizations are struggling with daily operations and may not invest their time and resources to
identify key stakeholders, seek new collaborations, and build and sustain supportive relationships
with key stakeholders. As indicated in one of the comments made by a focus group participant,
strategic planning can help small nonprofit organizations realize the importance of stakeholders,
and direct some of their attention from daily functions to identifying potential donors,
collaborators, and competitors.

I think one thing that it [strategic planning] did for us is it brought many
sectors of the community in to help do the thinking. It was not just the staff
and the leadership team and the people we serve directly, but it was those
people who have an interest in who we are, the donors, the board, a larger
segment of the community that help us came in to help us decide what
were those strengths and what were the weaknesses and how are we going
to go about making a difference rather than just fumbling along on our
own steam.

Regarding the impact of strategic planning on organizational performance, almost all


respondents agree that strategic planning can help an organization better serve community needs,
and strategic planning can help an organization manage operations in a more efficient manner.
As the comment below shows, strategic planning can help small nonprofit organizations reflect
on its strengths, weaknesses, challenges and opportunities to strengthen its performance.

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Strategic planning is also perceived as an effective tool to initiate organizational change and
strengthen abilities to change. One of the participants highlighted in the following statement:

Strategic planning gave my organization an opportunity to do a


self-evaluation of where we were and where we needed to be. It also
gave us a road map so that we can see the needs that our organizations
needed through our weaknesses... the strategic plan allows you to really
look at it and evaluate it and develop an action plan to put those things
in place that strengthen your organization.

When it comes to the impact of strategic planning on organizational management and


decision making, relatively fewer respondents agree that strategic planning can help target and
utilize program evaluation tools. This finding speaks to the existing research that suggests
although many public organizations have developed formal strategic plans, the use of evaluation
and implementation tools remain limited (Poister & Streib, 2005; Vinzant and Vinzant; 1996). In
these small nonprofit organizations, the use of evaluation tools and other effective management
systems remain limited despite the fact that all of these organizations have developed formal
strategic plans. This point can be better illustrated using the comments made by one of the
respondents in the focus group studies.

Its a tool that we set, reviewed, revised but its often a tool that is put in
a drawer. We need to make sure we do what we say we are going to do.

This finding reflects a common challenge in using strategic planning as a management


tool, that is, how to ensure the implementation of strategies and the achievement of strategic
goals set in the strategic plan. Drafting a formal strategic plan does not suffice. As suggested in
Poister and Streibs (2005) research on the use of strategic planning by municipalities, in order to
maximize the benefits of strategic planning, organizations need to integrate the strategic plan into
their budgeting process, develop clear implementation plans, and evaluate the performance by
linking strategic plans with performance management.

Strategy Use under Financial Stress


As shown in Table 4 below, the most frequently used strategy to tackle economic
uncertainty among these small community-based nonprofit organizations is to collaborate with
other organizations, followed by increasing fund-raising efforts and strengthening
relationships with key stakeholders. Only one respondent noted that his or her organization has
done nothing. The use of passive strategies such as reducing marketing efforts, services, and staff
has been very limited. This is an interesting phenomenon given that all of the seventeen

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organizations are relatively small and have limited budgets. Different from the research that
suggests that large organizations tend to have more diverse strategies to respond to financial
challenges (Mosley et al., 2012), in this study, community-based small nonprofit organizations
take proactive measures to tackle the challenges brought by financial stress. Although the
adoption of diverse strategies by these small nonprofit organizations does not necessarily result
from the strategic planning, this finding at least shows that despite the limited staffing and
budgets, small nonprofit organizations can go beyond using passive strategies such as cutting off
services or staff to be more proactive.

Table 4
Strategies under Financial Stress
My organization dealt with financial uncertainty in the following manner:
Response
Strategies Response Count
Percent
Collaborate with other programs 47.1% 8
Collaborate with other organizations 82.4% 14
Strengthen your relationships with key stakeholders 70.6% 12
Increase fund-raising efforts 70.6% 12
Reduce marketing efforts 5.9% 1
Reduce services 5.9% 1
Reduce staff 17.6% 3
Done nothing 5.9% 1
Other (please specify) 5.9% 1

Challenges to Strategic Planning and Implementation


Existing research suggests that time commitment from leadership and staff members and
financial resources are the factors that may affect the organizations participation in strategic
planning (Mara, 2010; Siciliano, 2006). As shown in Figure 2, more than half of the respondents
agreed time commitment from leadership and staff has been a concern in the strategic planning
process, and lacking financial resources is another barrier to their organizational participation in
strategic planning.

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It is interesting to find that a few respondents disagreed that the time commitment and
limited financial resources constrain their organizations use of strategic planning, as indicated in
Figure 2. Previous research suggests that strategic planning is more likely to be adopted as a
management practice in large well-established organizations (Crittenden & Crittenden, 2000;
Siciliano, 2006; Stone et al., 1999). Although time and costs are legitimate and prominent
concerns for small nonprofit organizations to take into consideration before going through a
strategic planning process, small nonprofit organization can still adopt strategic planning in their
management practices. Leadership, especially transformational leadership, is vital for small
nonprofit organizations to overcome their weaknesses and think beyond the daily operations of
their organizations. The small nonprofit organizations we studied successfully completed their
strategic planning processes through the support from a federally funded capacity-building
program. To save costs, leaders from these small nonprofit organizations need to be innovative
and seek new ways of developing strategic plans, such as collaborating with education
institutions and obtaining free professional services from education institutions.

Figure 2.
Constraints to Your Organizations Participation in Strategic Planning and Management

Besides the concerns about time and costs, two focus group participants highlighted the
importance of getting buy-in from board members to the strategic planning process.
It is a challenge to get the board more active, actively engaged in the process.
I think it also challenged us to, I think I remember we had a whole white board
full of sticky notes and try to determine where is the best place that this
particular service is to be given.
Two focus group participants noted that initiating changes could be very challenging for
her organization.

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One of the challenges that we faced was getting staff that has been working
with you for a period of time to start taking on and embracing like a new
process or a new way of doing things.
Other focus group participants noted that it is quite challenging to implement what has
been proposed in the plan in reality.
Also like time management, following up can be a barrier. Following up on
where you are at No one assigned to one project. People are jumping
around, so who is following up on certain projects.
To summarize, survey respondents agreed that time and financial costs may constrain
their organizations participation in strategic planning and implementation. The small nonprofit
organizations also face the challenges of initiating changes and getting the support from board
members. These challenges are similar with what large public or nonprofit organizations
encounter in their strategic planning process. On the other hand, it is still likely for small
nonprofit organizations to overcome these challenges and utilize strategic planning. That is to
say, small nonprofit organizations may seek other ways to save costs and time to make it feasible
to embrace strategic planning in their management practices.

Conclusion
Community-based small nonprofit organizations have grown rapidly and become an
important provider of public services. Although a large number of studies have examined
strategic planning for government agencies and well-established large nonprofit organizations,
very few studies have explored whether and how strategic planning can be employed in the
community-based small nonprofit organizations. Hence, it is worthwhile to study whether
strategic planning can be used as a management tool for small nonprofit organizations to sustain
in the tough economic environment and grow high-quality services.
This research attempts to fill in an existing research gap by focusing on the application of
strategic planning to community-based small nonprofit organizations. This research suggests that
through the support of a federal capacity building grant, all of the twenty community-based small
nonprofit organizations have successfully gone through the strategic planning process and
completed formal strategic plans. Overall, the executive directors and staff members in the
surveyed community-based small nonprofit organizations perceived strategic planning as a
useful tool. One of the authors has been teaching strategic planning courses for the MPA
program and the nonprofit management program. Through conducting service-learning projects
and providing free consultation services to local small nonprofit organizations, we found that
many community-based small nonprofit organizations were too focused on their day-to-day
operations to think out of the box and prepare for the uncertain economic environment.
Leadership in these small nonprofit organizations plays a key role in embracing strategic
planning to envision the future and seek additional resources, and make small nonprofits more
sustainable. Strategic planning, if executed properly, can not only provide small nonprofit
organizations opportunities to improve their existing services, but also more importantly, help

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small nonprofits build capacity to sustain and expand their programs in such an uncertain
environment.
This research provides an understanding of the challenges and opportunities of
introducing strategic planning to small nonprofit organizations. Although existing research
points out that strategic planning can be time-consuming and costly, this research shows that it is
possible for small nonprofit organizations to overcome the barriers to develop successful
strategic planning. It is possible for community-based nonprofit organizations to seek external
resources such as funding and free facilitation through education institutions to support their
strategic planning. Other than time and financial costs, the respondents noted that it is important
to fully engage the board members and staff in the strategic planning process.
This research not only provides suggestions about advancing strategic planning for small
nonprofit organizations, but also presents broad implications for capacity building in a large
number of emerging small nonprofit organizations. Small nonprofit organizations need to think
big. Small nonprofit organizations can be creative in seeking funding and collaborations to
support their strategic planning and other capacity-building efforts. In addition, strategic
planning can take on various formats. Depending on the need, small nonprofit organizations may
decide whether to go through a formal strategic planning or an informal strategic planning
process. Small nonprofit organizations can partner with researchers to get free professional
services or other types of consultation services. Furthermore, there are federal, state, and local
funding opportunities that small nonprofit organizations may pursue to support their capacity
building activities.
This study is not without limitations. This study examines whether strategic planning can
help small nonprofit organizations better adapt to an uncertain economic environment. The small
nonprofit organizations in this study have already established long-term partnerships with the
research center and the university. They are unique in the sense that the leaders of these
nonprofit organizations reach out to communities and seek resources from external partners to
help them use strategic planning as a management tool. This partially explains why these small
nonprofit organizations can overcome the challenge of limited budgets and staffing to explore
the potential of strategic planning for developing organizational capacity. This study does not
claim that the perceptions presented in this paper can represent all community-based small
nonprofit organizations. Rather, the findings of this exploratory study call for more systematic
and large-scale research to explore the appropriate formats and effective approaches to strategic
planning for small nonprofit organizations.
Acknowledgement: We are grateful for the representatives of the nonprofit organizations
who participated in this research.

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About the Authors


Qian Hu, Ph.D., is an assistant professor in the School of Public Administration at the
University of Central Florida. Her research interests include strategic and performance
management, collaborative public management, network studies, and policy informatics. Her
work has been published in academic journals such as American Behavioral Scientist, Journal of
Community Informatics, Research Policy, and Journal of Public Affairs Education.
Naim Kapucu, Ph.D., is a professor of public administration and founding director of the
Center for Public and Nonprofit Management in the School of Public Administration at the
University of Central Florida. His research focuses on decision-making in complex
environments, collaborative governance, capacity building for nonprofit organizations, and
organizational learning and design. His work has been published in Public Administration
Review, Journal of Public Administration Research and Theory, and American Review of Public
Administration among others.
Lauren O'Byrne, is a Ph.D. student in the School of Public Administration at the
University of Central Florida. She is interested in nonprofit management in general and capacity
building for nonprofit organizations in particular.

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Executive Interview

A Millennial in IT Management:
A Conversation with
Michael Sabado

Belal A. Kaifi,
Trident University International

Executive Summary
Michael Sabado is a millennial and has eight years of experience in Healthcare
Administration. He earned a Bachelor of Science in Management of Information Systems from
Bellevue University, Nebraska. Currently a Lead Business Consultant in the Business
Information Office for Kaiser Permanente in Walnut Creek, California, Michael is also the Area
Information Officer representative for a major medical center and two clinics. He has eight years
of experience in a healthcare organization working in several IT domains including technical
support, server administration, consulting, and software application development.
Michael is ambitious and driven in both his academic and career goals. He is currently
working on a Masters in Business Administration with a concentration in Healthcare
Administration from Western Governors University, Utah. Michael explains his observations and
challenges as a young manager. His passion for software development has a unique influence on
his perspective towards management. Michael shares his assessment of Healthcare Reform and
solutions on how to prepare for the future in healthcare technology. He continues by revealing
his future goals as well as his current innovation projects.

Author: As a manager, how do you enhance motivation levels? Please provide some
examples/stories.
Sabado: The best way Ive found to enhance motivation is by breaking relationship barriers and
setting baseline competencies so that more effective teams are formed. When a team is more
effective, the individual employees tend to be more motivated. The most recent example I have
is when I was promoted to a department with an older peer group. Enhancing motivation was as

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simple as teaching my peers new skills and offering my assistance as much as possible. My
energy spread across the department resulting in increased collaboration among all members of
the team.
Author: What skills/traits do leaders need? How can a person develop his or her leadership
skills?
Sabado: Leaders should be technically competent over the organization that they are leading as
well as being educated in management theory. Effective leaders empower their employees as
stewards of the work over straight delegation. A person needs both experience and the
willingness to research/learn new management theory at all times to keep them from stagnating.
Author: Who is a leader that you admire and why? How has this person influenced your
leadership style?
Sabado: A leader that I admire is the vice president of technology for my organization. She has a
strong technical competency, but her relationship building capabilities make her an admirable
leader. When working in task groups with her, she respects the knowledge that everyone brings
to the table and empowers people to work at their maximum potential. She has taught me to
respect the people that I work with as functionally adequate so that I can focus on their potential
and not on their shortcomings.
Author: What kind of performance management system do you use or recommend and
why?
Sabado: Salesforce has a product called Work.com that a colleague of mine shared with me. The
software is based on principles that my organization is trying to set. For instance, it offers real-
time coaching of employees and a more motivational approach to performance recognition. The
application is very socially interactive so younger employees will feel more at home with the
social networking influenced experience.
Author: What strategies do you recommend for maximizing productivity levels in the
workforce?
Sabado: The best strategy that I have found for maximizing productivity is by watching what the
most productive employees are doing. Then, I focus on the most unproductive employees. By
recognizing the gaps and barriers of unproductive employees, I can better influence what was
learned from the more productive employees. My observation has been that lower producing
employees also have the lowest competency in the work that they are involved in. Increasing
their competency with cross training or third party training usually helps. Like many
organizations, my organization encourages us to do more with less. The focus is to not expand
the workforce horizontally by bringing on more employees. Therefore, the only way to increase
productivity is to scale our workforce vertically by adding value to existing resources.
Developing a learning culture is the most efficient method to align to that strategy, in my
observations.
Author: Provide some examples of how you empower your employees.

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Sabado: One way that I empower employees is by stepping back and asking for their input often
and by giving them an opportunity to teach me their processes. I serve only as a supportive
influence and help guide them as necessary. An example is a strategy that I use quite often. I
have projects that involve many technicians. I ask the technicians to tell me how they would
solve the problem given all of the artifacts of the situation. I also tell them that I will support
their process as long as its logical and non-disruptive. They usually come back with more
effective solutions than I would be able to come up with by myself.
Author: How do you reward your employees? Should rewards be based on merit?
Sabado: I recognize employee accomplishments first on a team level. If a team member goes
above and beyond, I will reward that individual in front of the team after the team recognition.
Rewards should absolutely be based on merit because the strongest performers will set the pace
for the rest of the team.
Author: How can a leader influence and mold the culture of an organization?
Sabado: A leader can influence the culture of an organization by working with other leaders to
develop the culture. Getting buy-in from every level of the organization is the key and including
frontline staff will increase the likelihood of the cultures long-term effectiveness.
An example that I often refer back to is a culture change that I personally witnessed in
our emergency department. Patients filled the hallways, and we were constantly reaching critical
levels of occupancy for the department. The leader of the department had tried numerous
methods to encourage staff to move patients through the department more efficiently. Over time,
the leader was forced to resort to harsh discipline and staff morale was at an all time low. The
leader worked with the front line managers and assistant managers to develop a totally new
method of controlling the patient throughput issues. They created a Patient Safety Committee
that was chaired by senior staff and the managers acted as executive sponsors. The committee
was chartered to design, modify, and execute new systems and processes that increased patient
safety in the emergency department. The committee quickly realized that having patients waiting
in the hallways was a safety risk and started developing solutions to the various problems in the
current system. There was buy-in across the staff because they came up with the solutions.
Throughout the department, staff was challenging each other asking, Is that safe? All of the
output from the committee aligned to one basic principle, patient safety. The culture of the
department changed almost overnight and management had no more discipline issues.
Author: Can organizational politics help an organization?
Sabado: In my experience, organizational politics can be a benefit only if the message is aligned
to the mission.
Author: How important is teamwork in your profession?
Sabado: Teamwork is the most essential component of my profession. I work in a very technical
department and no one person knows the solution to every problem. Most of the solutions that
we generate are a collaborative effort.

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Author: Do you think your education has complemented your work experience or has your
work experience complemented your education?
Sabado: My early education was very technical and that allowed me to get an entry-level job to
start building my work experience. Later on in my career, my work experience provided context
for my education. For example, part of my major requirements for my bachelors degree
included courses on project management. I had managed projects before the courses so I knew
some of the basics like planning and implementation. As I was working through the project
management courses, I was able to directly apply new concepts to projects that I was working
on. As I work on my masters level courses, I am able to draw on my experiences to develop
practical responses and analysis.
Author: What motivates you to be successful?
Sabado: I am a life-long learner. So, an opportunity to learn new things in my current position
keeps me motivated. I really enjoy building new relationships and learning from other people. I
do have a genuine interest in what I do, and I am almost always supported by my management to
be creative.
Author: If you could go back to college, what would you have majored in?
Sabado: I would have majored in Computer Science. I know that I had the discipline right out of
college to complete that degree. I think I would have had more to offer to my organization and
my personal interests by having an engineering degree.
Author: Describe a typical day at work for you.
Sabado: I usually start off the day reviewing the tasks that I have to accomplish for the day and
what is scheduled on my calendar. Then I write those items in a book listed by priority and
urgency. A lot of the morning consists of going through emails and getting status updates on
projects. I meet with my team to see if there is anything that I can help them with. I travel to
face-to-face meetings or I meet via web conferencing.
One unique thing about me that is different from the rest of my team is that I keep a zero
inbox. A zero inbox means that I dont keep any email in my main inbox. I file emails away
immediately that I dont have to take action on. If I do have to take action on an email, I
immediately create an entry in my calendar with the contents of the email. That way, I know
exactly how much time I am spending on certain activities and I can set realistic expectations for
myself on what I am going to get accomplished each day. If I have something scheduled that I
cannot get to at that time, I simply move it to the next available time slot. This system has been
working out very well for me.
Author: Where do you see yourself in 10 years?
Sabado: In 10 years I see myself at a senior management/executive level. I really want to stay in
Information Technology, but I would not be opposed to contributing to hospital administration.
Author: What is your span of control?

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Sabado: I have virtual oversight of 30+ employees including managers and field technicians. I
lead a group of three consultants and one project manager under the IT Director. I am a point of
escalation and approval for several technology domains. I have direct influence for technology
related matters for two medical centers and eight clinics. My peer group consists of senior
leaders, service directors, and managers.
Author: How has the retiring of baby boomers affected your career goals?
Sabado: One of my biggest frustrations with my organization is the lack of succession planning.
Board approved executive positions are the only positions that I have seen where proper
succession planning is taking place. Most succession is taking place in a very reactive way. As
senior leaders are retiring, many of their immediate managers are left with additional work that
they are not properly resourced or trained for. My major point of frustration is that even when I
have identified areas that we need to have succession planning for critical roles, my concerns are
mostly ignored. For employees that show long term commitment to the organization and who
have constantly performed above average, there is little to no formal career planning available. I
feel as though this is a major risk for the organization because we are losing a tremendous
amount of valuable experience as baby boomers are retiring and we are not doing a good job of
knowledge transferring. I want to capture those experiences and skills so that I could use them as
assets to further the organization. I am a firm believer in standing on the shoulders of giants but
at times my organization perpetuates a culture of reinventing the wheel. I am afraid that we will
be hiring outside resources for key positions instead of developing the resources that we already
have. We can save a lot of money if we could expand the competencies of pre-existing
employees and capture experience as an organizational asset for future growth. Healthcare is
changing rapidly with the new Healthcare Reform laws. Succession planning is critical because
we are losing highly experienced employees right before many of the new laws come into effect.
I am afraid that we have lost a lot of the skills that would be advantageous as we enter a
healthcare environment that we have never seen before.
Author: Expand on how you view the changes with the new Healthcare Reform laws
coming into effect.
Sabado: I believe that the new Healthcare Reform laws provide universal access to healthcare
but at a high cost. Many companies are moving toward a self insured model where they are
ultimately making healthcare decisions for their employees by deciding what is covered and
what is not. Healthcare Management Organizations (HMOs) have operated for many years under
a virtually all-inclusive coverage for existing members. Self-insured companies are demanding a
fee for service model that works against the all-inclusive model. If healthcare is going to be
effective with universal accessibility, we cannot ask clinicians to start counting bandages to
appease the fee for service model. Additionally, I do not think that there are enough provisions in
the new Healthcare Reform for non-medicine based healthcare. I think that medicine is the only
assumed type of healthcare because our culture has accepted medicines sick care as
healthcare. I believe that Generation Y will not accept medicine as the only form of healthcare
and will challenge the current models of healthcare. There was a point of time when medical

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physicians convinced Americans that smoking cigarettes was not harmful to your health. I dont
think that the Gen Y population will make the mistake of accepting everything from the medical
community without independent research. I strongly believe that there will be another healthcare
reform in my lifetime. Healthcare companies and professionals should be ready for a lot of
change even after this first round of laws come into effect.
Author: What do you think the future of technology is and what can your generation do to
prepare for it?
Sabado: Without any doubt, I think that the future of technology will all be in the software. We
have done so much in the world of technology to make hardware smaller, more mobile, and
much faster. I think that will start to die down as we concentrate our efforts on making our
existing hardware more capable. Companies like Google and Facebook are buying up software
engineers to expand their software based product pipelines. Apple has grown significantly as a
company when they empowered the rest of the software community with their best in class user
experience models. Software development will be the most exciting output out of the technology
industry until we develop flying cars or space travel. My generation and the generations
following should be focusing on how to develop software development competencies. We need
to be teaching this in schools for all ages. Just as NASA inspired the nation to become
mechanical and electrical engineers in the late 1960s, we need to start inspiring the software
engineers of tomorrow. The proof is in the worldwide strategy to make everything electronic. We
have massive amounts of data from the financial, retail, and now the healthcare industries. The
only way we can leverage that data is by developing new software that manipulates all of our
historical data so that we can make better future decisions. Even better, we need to develop
software that helps us make better real time decisions. We should have up to the second data on
the effectiveness of medication before we prescribe it. We should be able to leverage all of the
data that we are collecting that makes us all unique so that we can deliver personalized health
care. I believe that software is how we can make all of that happen.
Author: What are your educational goals?
Sabado: As I stated earlier, I am a life-long learner. I started my educational journey receiving a
highly specialized Associates degree so that I could get my foot in the door. I knew from the
beginning that I wanted to be in technology, so my associates degree was very technical. I
learned that I wanted to get into management, but I didnt want to lose my technical skills so I
worked toward an undergraduate degree in the management of information systems. My most
recent decision to work on a graduate degree in business administration and a concentration in
healthcare is my attempt to capitalize on experiences that I already have. I really want to be
versatile with my management education so that I could apply my skills in a highly technical
company or other opportunities in healthcare.
I have seen a lot of people my age and older with a Masters degree, so I decided that I
want to be able to set myself apart both in experience as well as education. I have made the
decision to start applying for a doctoral level degree to solidify my knowledge in management
for my current career as well as to contribute toward the science of management through

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academia. I want to complete this early in my career so that my level of education will not
disqualify me for employment opportunities.
I also want to be able to provide as much value as possible to the organization that I will
eventually lead, and I think a doctorate in management will help me keep my skills sharp. Even
though I have focused a majority of my educational goals toward management, I still plan on
keeping my technical skills sharp. I have not stopped trying to learn new software languages and
I stay up to date with the latest advances in technology. Just the other week I completed an
online training course on Ruby on Rails. Ruby is a popular software development language and
Rails is a popular framework for Ruby. I plan to continue my education in Java, Groovy, Grails,
C#, and the various JavaScript frameworks available. I also want to learn more about the
business productivity platform Microsoft SharePoint. Education is important to me and I dont
want to be left behind as technology continues to evolve.
Author: What exciting things are you currently working on?
Sabado: I am a part of a special innovation group called Experiment 15. We are given 15% of
our time to work on innovative projects. This year, I will be working on a project that will
hopefully complement my future dissertation that I call Citizen Development. I plan on creating
a program that will identify and nurture citizen developers within the organization. I define a
citizen developer as a person that develops electronic tools to enhance their job and does not
necessarily have a degree in software development. I have received interests from our physician
group as well as other technology domains. I am working on a curriculum that teaches the
fundamentals of software development, and I plan on teaching people how to solve tedious
problems with simple, self-created, tools. My main goal is to promote citizen development in the
organization and get people excited about software development. At the very least, I hope to
make the subject more approachable. I plan on creating weekly webinars that cover basic skills
as well as have other internal software developers share their experiences and skills.
I believe that understanding the basics of software development will help anyone
understand technology at a more sophisticated level. I would like to eventually have non-
technical employees such as senior leaders and nurses attend my course so that they develop an
appreciation for the profession. I do not have any education or experience in instructional design,
so I am working with one of our technical trainers to help me with the delivery method. Software
development is not an easy subject to learn, so I hope to have lots of group exercises that
demonstrate complex concepts using simple and easily read code. So far this has been a lot of
fun to work on and I have lots of support. I am really looking forward to the first class and
analyzing the initial feedback.

About the Author


Belal A. Kaifi completed a post-doctoral program at the University of Floridas
Warrington College of Business Administration where he researched Management and
Marketing. He earned a doctoral degree from the University of San Francisco where he studied

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organization and leadership. Belal is a Professor of Business Administration at Trident


University International. Belal can be reached via email at: belal.kaifi@trident.edu

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Executive Interview

Education Status and Development Strategies


in Afghanistan: A Perspective from Dr. Saif R.
Samady, Former Deputy Minister and
Chairman of the Independent High
Commission of Education

Bahaudin G. Mujtaba,
Nova Southeastern University

Executive Summary

Progress and Peace in Afghanistan


The people of Afghanistan have experienced nearly four decades of war and turmoil, and
there does not seem to be an end to the mismanagement of political resources and strategies by
local, domestic, and international players. From the authors personal observations, while there
have been many positive changes over the past ten years, mismanagement is perhaps the
appropriate word to describe the status of politics in Afghanistan. Uncertainty, distress, and
chaos are other words that perfectly describe the status of peoples emotions and feelings in the
country. So there is little to no peace in the country at this time and very little stability is
expected as the international community prepares to leave and transition full governance to the
local people. For those who are lucky to have a professional job, most of them seem to be living
day-to-day not knowing whether they will come home alive in the evening.
The lack of a strong police force to enforce local norms and existing laws has limited
foreign direct investment opportunities from multinational firms. Furthermore, the existence of
widespread corruption in getting paperwork done through various public agencies has put local
and domestic small business entrepreneurs at a disadvantage as they cannot always compete by
paying large amounts of cash in grease or facilitating payments. All these challenges for the
country are further exacerbated by a lack of sufficient educational institutions and the fact that
the international community is no longer going to be providing funds for non-governmental
agencies (NGOs) and other development initiatives beyond 2014. While there are many political
challenges that are facing Afghan politicians and their international colleagues, this interview
focuses on the one key variable that will enable the country of Afghanistan to stand on its own in
the decades to come. That key variable is education, which is considered to be the enabler of

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peace, growth, development, and prosperity in a moral and ethical business environment (Cavico
& Mujtaba, 2013).
Afghanistan is now going through its most critical transition period in its history and
having an educated population and workforce is the key to its long-term development, peace and
prosperity when the international community leaves the country in 2014 (Kaifi, 2014; Mujtaba,
2014a; Mujtaba, 2006, 2007a). Education is not just important for the success of developing and
developed countries, but it is crucial for survival in the modern 21st centurys globally
competitive environment (Mujtaba, 2007b; Mujtaba & Preziosi, 2006). As part of the education
and performance management processes, modern leaders in Afghanistan and neighboring region
must also focus on the reduction of corruption by integrating ethics and morality modules in their
regular academic curriculums through spiritual and faith-based teachings (Kaifi, 2014; Mujtaba,
2014; Cavico & Mujtaba, 2013; Mujtaba & Kaifi, 2010).
Kaifi (2014) explains that the progress toward capitalism in Afghanistan over the past
decade has created high levels of corruption, and this can be reduced by integrating local values,
and spirituality-based morality into the education process for college students and working
adults. Consequently, most experts are advocating the proper education of young Afghans,
continuous training and development of working adults through effective coaching, and
leadership in the business environment, and timely management of peace by military and
political leaders throughout the country (Mujtaba, 2014b).
Since education is the foundation of any measurable and noticeable progress, this
interviewer consulted a respected and long-time leader from Afghanistan to see what his
suggestions are from a lifetime of productive experience in Afghanistan and other countries
around the globe. In this interview, Dr. Saif Samady offers a realistic view of the current
education process in Afghanistan along with excellent reflections and prescriptive remedies that
can be used by educators, administrators, managers, business leaders, and politicians inside
Afghanistan and those outside of the country who are helping during this transition period.

Biographical Review1
Dr. Saif Samady completed his secondary education from Habibia High School in Kabul,
in Afghanistan, and earned his undergraduate degree in chemical engineering from the
University of Illinois, and a doctoral degree in chemistry from the University of Colorado. He
has done research at the American Potash and Chemical Company (Trona, CA) and at the
University of Durham in the United Kingdom. In terms of employment in Afghanistan, he was
an associate professor in Faculty of Science, Kabul University, and served as the President of

1
Special thanks go to the Executive Committee at the Society of Afghan Engineers (SAE) who involved

the author and initiated this interview with Dr. Saif Samady for their E-Newsletter. I am thankful to everyone at

SAE and to Dr. Samady for their time in granting me this interview.

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department of vocational education and teacher training, and deputy minister of education.
During the last decade (2002/2003), he was an elected Chairman of the Independent High
Commission of Education for Afghanistan.
Dr. Samady is a well-known educator in Afghanistan. In his capacity as President of the
department, he has been involved in the administration of technical schools. Many of the current
engineers and technicians, especially those who have graduated from the Afghan Institute of
Technology may have learned about his leadership. I found the opportunity to get to know him
for the first time during 2013 through his publications. It is a privilege to meet him and
exchange thoughts and philosophies related to our mutual interest in education, especially in
Afghanistan. Besides being a knowledgeable and respected person, Dr. Samady is one of the
most experienced and well-informed educators around the globe.
In addition to the posts noted above, Internationally, he has served as UNESCO Regional
Education Advisor (Bangkok, Thailand), Director of UNRWA/UNESCO Department of
Education (Beirut, Lebanon), and Director of Division of Science, Technical and Environmental
Education in UNESCO (Paris, France).
Dr. Samady has contributed in the preparation of many international publications on
education policy, science education, environmental education and technical education. He has
also produced studies and documents on the development of education in Afghanistan. One of
his publications is Education and Afghan Society in the twentieth century; and another of his
publications is entitled Working Knowledge - Symbiosis of programs in science teaching,
environmental education, and technical and vocational education, Sixty Years of Science at
UNESCO, (2006). Another work of his is entitled Education and Scientific Training for
Sustainable Development in Afghanistan, (2007). Some of Dr. Samadys publications are
available on UNESCO website. It has been a pleasure for me to undertake this interview. The
following are the authors questions and Dr. Samadys responses.

Author: When did you begin teaching in Afghanistan, and what was the situation at that
time? Could you mention one or two significant experiences?
Samady: I began teaching inorganic and analytical chemistry to science and pre-medical
students (PCB) at the Faculty of Science in 1959. It was an interesting period, as the Faculty of
Science including the chemistry department was being developed. I was appointed assistant dean
of the Faculty, and I was able to participate in this process. The University of Kabul had
initiated significant reform and development projects. The Faculties of Engineering and
Agriculture were being established in new facilities. A team of professors from the University of
Illinois was invited in 1960 to advise the education authorities on the training programs and
structure of Kabul University. An important development during 1960 was the introduction of
coeducation for the first time in Kabul University. In 1963 the university administration was
moved to new facilities in Ali Abad, and a modern central library was established. In the early

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1960s several Faculties were cooperating through an affiliation arrangement with universities in
Europe and the USA.
A significant personal experience for me was the preparation of a short paper on applied
research, at the request of the President of the University, Professor M. Asghar. He endorsed my
proposal and with the assistance of the Asia Foundation (USA), the first research laboratory was
set up at the Faculty of Science in 1960. Based on this initiative, the university set up a research
center and a board for promotion of scientific research. In the 1970s different Faculties carried
out some 20 research projects.
Author: You have been an educator for many years and have also been involved in the
rebuilding the process of education in Afghanistan over the past decade. How are things
different now in the country?
Samady: It should be recognized that the development of modern education in Afghanistan was
slow due to government policy, cultural constraints and limited resources. In the 1960s and
1970s some progress was made in the development of education according to government policy
and strategies in the context of a democratic movement, peace and stability. The role of
dedicated education leaders, Afghan experts and teachers was significant. The war and conflicts
of the 1980s and 1990s devastated the social and economic infrastructure including the education
system in the country. In 1980, there were 1.2 million students including 18% girls in all levels
and types of education in Afghanistan. After 20 years at the end of the century the total
enrollment in the education system was less than one million with only 7% girls. During this
period the quality of education suffered and the system did not function effectively due to
conflicts and instability. Since 2002, with the assistance of the international community, efforts
have been made to develop the education system. There has been significant expansion of
education. In 2012 the enrollment in general education was 8.6 million including 2.9 million
girls (38%). The enrollment in higher education was 110,000 including 19,200 female students
(19%). However, the quality and efficiency of education continue to be a major challenge. There
has been no significant progress in adult literacy, which remains under 30%.
Author: The Afghan government established an Independent High Commission of
Education in 2002. What was the role of the Commission?
Samady: The Commission was established, with the support of UNESCO, to propose policy,
objectives and strategies for the revival and development of education in Afghanistan. It was
composed of 23 Afghan educators and experts from within the country, Europe and the USA.
The Commission completed its report in August 2003, which contained recommendations
concerning modernization and development of the education system. The education of girls and
women and promotion of education for peace and human rights were emphasized. The
Commission also made specific proposals concerning future education policy and objectives,
which were reflected in the new Constitution of Afghanistan. The report of the Commission
under the title The Revival and Development of Education in Afghanistan is available on
UNESCO website.

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Author: What is the status of general education in Afghanistan now? In one of your recent
publications, you wrote that since 2002 schools in Afghanistan increased from 6,040 to over
14,456 today. During the same time period, the number of teachers in Afghanistan have
tripled to about 181,640 and 32% of these educators are women. Despite this growth, many
young children and young teenagers are not able to get the education that they deserve as
they cannot get into schools. Given the available resources, what can the Afghan
government and the people of Afghanistan do to make the best of use of their available
resources to educate more people?
Samady: The development of education requires resources. In Afghanistan the education system
is financed through the government budget, contribution of the international community and
public participation. Currently the development of education depends largely on external
assistance and support. To make the best use of available resources, it is necessary to develop
relevant strategies and ensure the efficiency of the system. This requires proper management,
transparency and accountability. The support of communities and civil society, professional
organizations such as teachers associations and school councils will contribute in the
improvement of quality and efficiency of education. The use of new technologies and innovative
methods such as distance education can increase educational opportunities. There has already
been significant development of private vocational and higher education in Afghanistan. This
trend can be further encouraged and facilitated by the authorities. The enterprises can participate
in the training of young people. According to the Education Law in Afghanistan, education in
government schools and institutions is free. Ways and means should be explored to encourage
voluntary participation and contribution of the people in education.
Author: Literacy of working adults is important for the economy of any country in todays
globally competitive workplace. The literacy rate for Afghans who are in the age of 15 and
above appears to be less than 30% in 2013. Assuming the country has security, what should
Afghan educators, government officials, and business leaders specifically do to help more
adults become literate in the shortest period of time? Please share your thoughts regarding
the status of adult education in Afghanistan now.
Samady: Adult literacy has been a major problem in Afghan society. The main reasons are
limitation of resources for an effective literacy program and lack of schooling for a significant
portion of the school age population. In order to improve the situation, it is necessary to
undertake a national campaign for adult literacy with appropriate strategies and adequate
resources, and continue efforts for achievement of basic education of all children. Substantial
private and public resources will have to be mobilized, large number of teachers from the formal
and non-formal education systems and volunteers including university students should be trained
and innovative methods and relevant materials developed for functional literacy. The use of
technology and distance learning could be explored. The national program for eradication of
illiteracy should be decentralized and conducted in cooperation with all governmental and non-
governmental organizations, agencies, institutions, enterprises, development projects, and
communities. Realistically, at present it seems unlikely that adequate resources could be
mobilized for an accelerated national program of adult literacy. There are also social and cultural

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constraints for literacy programs especially for women. Furthermore, in 2012 only 58% of school
age children were in basic education. The out-of-school children and young people will impact
literacy efforts. Nevertheless, in addition to governmental measures, the communities and
voluntary groups could play an important role in literacy efforts. The non-governmental
organizations and private sector should be engaged.
Author: In one of your publications, you mentioned that in 2012 there were 3009 male and
510 female faculty members in Afghanistan. About 5% have doctoral degree qualifications
and 36% have earned masters degrees. Despite the increase in numbers, the qualification
of these educators has not improved much over the past few decades. Also, when faculty
members are sent abroad, the majority are likely to stay there after graduation. Despite
these limitations and lack of sufficient resources, what can be done to quickly increase the
number of qualified masters degree and doctoral educators in Afghanistan?
Samady: I believe the training of faculty for higher education in Afghanistan is of utmost
importance, which could be organized by developing graduate studies and sending qualified
candidates abroad for higher degrees. The ministry of higher education has undertaken such
programs, largely through scholarships to the USA, Europe and other countries. Currently 175
faculty members study abroad for the masters and doctoral degrees. There are also 16 masters
programs in several faculties of the universities in Kabul and another 7 programs have been
approved in 2013. I understand the ministry of higher education intends to expand these
programs as soon as the conditions permit. It is important to ensure the quality and standards of
graduate studies. It is also necessary to make the employment conditions (salary, opportunity for
research and professional growth) of the higher education faculty more attractive and interesting
to encourage trained Afghans to return home. Peace and security is also a factor. In general
Afghans love their country, and in the 1960s and 1970s the majority of Afghans who were
trained abroad came back to Afghanistan.
Author: What are your thoughts regarding technical education in Afghanistan? What are
some of the relevant trends in the application of management education using modern
technologies for Afghanistan? What new technologies are needed in Afghanistan and how
can they be integrated to enhance the quality of education?
Samady: Technical education is very important for economic development in Afghanistan.
Engineers and technicians need to be trained for all sectors of development. In 2012 a total of
18,112 students including 893 female students were enrolled in the Faculties of Engineering,
computer science, geology and mining, and agriculture. There were also 350,000 trainees in
about 600 public and private technical and vocational centers. A survey of 420 centers found that
58% of trainees are in computers, mechanics, electronics, and construction, and 17% received
training in business. The quality of teachers and facilities are not always at desired standards.
The government departments, agencies and the private sector have developed separate strategies,
and there is a need for coordination and a comprehensive national strategy for the training of
engineers and technicians. The application of technologies in the management of education has
been very limited and used primarily for data collection and statistics, communication, libraries,

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etc. The application of new technologies initially in higher education and teacher training in
Afghanistan will improve the quality of education. The gradual provision of appropriate facilities
including hardware and software and necessary training programs will be required.
Author: What do you think about online or distance education modalities for university
students in Afghanistan? Can this be a medium to enhance the quality of learning and to
make education more conveniently available for young students and working adults across
the country? What role does virtual education play in the cost of education in
Afghanistan? Please discuss your thoughts as the availability of electricity, internet
limitations, and computers are major hindrances for rural areas in the country.
Samady: Virtual education or e-learning has developed extensively in the United States, Europe
and many developing countries. The first successful distance teaching university was the Open
University, which was established in 1970 in London. There are many advantages in virtual
education, as it provides flexible distance education for working people, who may not have
access to standard universities. It is assumed that the cost of on-line education will be less than
the cost of standard education. Virtual education depends largely on computers and
telecommunication. There is a need to plan and manage effectively this new mode of teaching
and learning. While hundreds of thousands of students receive education through distance and
virtual mode around the world, questions remain about accreditation and the quality of
assessment. In Afghanistan distance education was used for teacher training as early as the
1960s. In recent years some higher education institutions have made limited use of e-learning.
At present the technical capacity (computers and internet facility) and managerial experience for
virtual education in Afghanistan is very limited. But it is important that higher education
institutions and teacher training colleges consider the development of distance education
modalities in their system.
Author: There has been a great increase in the establishment of private education
institutions in Afghanistan. These private educational institutions are operating as profit-
making entities. What are your thoughts regarding the privatization of education as for-
profit institutions in Afghanistan? Will this be a positive transition or should education be
made available to people at a cheaper cost by the government?
Samady: According to the Constitution of Afghanistan the government has a responsibility to
provide education. The Constitution and Education Law allow private education, and that is why
a number of private institutions have been developed in the last few years especially in
economics, business and management, computer science, engineering, medical technology,
journalism, etc. Not all private education institutions are for-profit. For example the American
University of Afghanistan is a non-profit private institution. I believe the number and capacity of
private higher education institutions will rapidly increase. Hopefully the majority will be non-
profit or minimum-profit to allow young Afghans to have higher education and contribute in the
development of the country. Many private universities in Europe and the USA find additional
funds from philanthropic foundations, charities and private contributions from individuals and
enterprises in order to keep the cost to students as minimum. The concept of making significant

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profit in universities is not generally appreciated by the public. In Afghanistan, the ideal situation
will be for government to increase the capacity of university education as much as feasible and
for the private sector to offer higher education at a reasonable cost. The wealthy people and
enterprises have a moral responsibility to contribute in the education of young people. The
government should provide incentive for enterprises and private individuals through the tax
system for their contribution to education. Ways and means should be explored to help qualified
needy students with scholarships or low interest loans.
Author: Over the past decade, higher education enrollment has increased threefold to over
101,000 students in Afghanistan and 19% of them are females. If the coming decade sees
similar increase of threefold, can the existing public and private institutions absorb and
educate all the eligible students in the coming decade? What are your thoughts regarding
the education of all those who are eligible to attend college?
Samady: In Afghanistan education at all levels is free in public schools and educational
institutions. Private higher education institutions charge tuition fees. The public universities at
present can admit about 40,000 new students. Last year 130,000 students graduated from
secondary schools. It is estimated that about 5,000 joined private institutions, and several
thousand students were admitted to post-secondary teacher training and technical and vocational
training programs. The remaining presumably joined the labor force or they are waiting for
opportunities next year. The number of secondary school graduates will substantially increase in
the years to come. It is necessary that greater efforts should be made to expand post-secondary
and higher education. The ministry of higher education intends to develop community colleges.
Measures should be taken to develop part-time and distance education as well. The possibility of
virtual education also needs to be explored. Unless substantial resources become available, it
seems unlikely that all eligible students will be absorbed in higher education. Flexible higher and
post-secondary education and increasing participation of the private sector will be essential to
meet this need.
Author: Due to the limitation of resources and to make Afghan students more globally
competitive in the future, some experts have been advocating to convert all educational
textbooks and instructional material at the college level into English. Should all colleges
begin teaching their curriculums in English as is currently the case in Indian and Pakistani
universities? Would this transition even be doable with the existing teachers in higher
education of Afghanistan? What are your suggestions and thoughts?
Samady: The English language is important in higher education especially for studies such as
science, technology, business, and management. Afghan students should learn English to be able
to study English texts and communicate with fluency in this international language. It would be
very useful and efficient in terms of quality if science and technology subjects and business
courses could be taught in English. However, the teaching of all subjects in English is neither
doable nor advisable. In India and Pakistan the English language as the medium of instruction in
colleges is part of their colonial heritage. The great majority of Afghan students and faculty will
not be able to use English as a means of instruction and learning effectively. It would be highly

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desirable to be able to make use of available English textbooks, references and resource
materials. They should also be able to study abroad when the opportunity comes up. In this
perspective efforts should made to provide intensive English language training to university
students. It is also important that textbooks and educational resource materials are prepared in
our national languages (Pashto and Dari). These are important languages with rich literature,
which should be further developed and used to produce texts in all areas of modern knowledge
including science and technology.
Author: We are pleased to know that the numbers of private and governmental universities
have increased in Afghanistan. The concern is finding jobs for these graduates. It is my
understanding that many graduates are still looking to find jobs. Most of the companies
hire experienced professionals from outside Afghanistan. What should be the governments
role and responsibilities in this area?
Samady: In reality the number of current university graduates is much smaller than the
development needs of the country. If many graduates are unable to find jobs, and companies hire
professionals from outside the country, it is a question of matching qualifications with jobs and
perhaps a problem of management as well. At present there is no national strategy for human
resource development. The number and qualification of manpower needed for the country has
not been established. There is currently no mechanism for communication and effective
cooperation between universities and enterprises. The employment system for recruitment of
new graduates is also inadequate. Companies with foreign participation find it convenient to hire
experienced professionals from neighboring countries. The English language ability and
experience could also be in favor of foreign professionals. It should be recognized that the
country has experienced very significant social and economic changes during the last few years.
There are many deficiencies in the administration and management of human resources including
training and employment of graduates. The government should encourage and if necessary
regulate that companies in their employment policies give preference to Afghan nationals, based
on qualification.
Author: What is the role of science and technology in social and economic development of
Afghanistan? How can science and technology be applied more effectively in the
development process of the country?
Samady: Science and technology play an important role in economic development and
improvement of the standard of living. The application of science and technology, development
of scientific infrastructure, education and training are essential for sustainable development and
progress in modern societies. The teaching of science and technology to children and young
people, training of engineers and scientists, and promotion of public understanding of science
and technology facilitate the application of science and technology to development. During the
last decade some efforts have been made in developing science and technology education and
training in the country. However, greater resources and efforts are needed to promote the
application of science and technology not only in education and training but also in all sectors of
the economy. I have advocated the development of a national policy and long term strategic plan

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for science and technology. Special attention needs to be given to applied research and
development of appropriate infrastructure and mechanism such as a National Council for Science
and Technology. The promotion of scientific literacy and public understanding of science and
technology will contribute to modernization and development of Afghanistan.
Author: Given the current situation of education in Afghanistan, what are the future
challenges for educational development in the country?
Samady: One of the most important constraints in the development of education in Afghanistan
is a lack of resources. The education system is largely funded through international
contributions. It is hoped that with exploitation of natural resources including minerals and other
economic activities, the country will be able to finance its development. The important
challenges are not only lack of capacity in the education system, but also the quality and
efficiency of education. These challenges include shortage and qualification of teachers and
university faculty, lack of adequate physical and learning facilities such as laboratories and
libraries, outdated curricula and lack of appropriate textbooks especially in vocational and higher
education. The achievement of a basic education for all children, which according to the
Constitution should be compulsory up to middle school level, and also adult literacy will be a
continuing challenge in education. Social and cultural constraints for the education of girls and
women especially in the South and East of the country will affect the development of education.
Peace and stability will be the most important factor for progress in education.
Author: Finally, have you visited Afghanistan recently and been involved in the promotion
of any educational activities?
Samady: The last time I visited Kabul was in August 2010. I was invited to participate at the
inaugural conference of the Association of Natural Science and Mathematics Educators. I spoke
on the subject of science and society in Afghanistan. Another recent activity was a short paper
that I prepared in early 2013 for setting up a national science museum in Kabul, which could be
developed in cooperation with universities. The ministry of higher education and a senior
American advisor seem favorable to the proposal. I believe non-formal programs of science
education and information such as a science museum can be an effective means for inspiring
children and young people in science and technology. I hope the Afghan scientists and engineers
in the United States, especially the Society of Afghan Engineers (SAE), could support a science
museum in Kabul.

References
Cavico, F. J. & Mujtaba, B. G. (2013). Business Ethics: The Moral Foundation of Leadership,
Management, and Entrepreneurship (3rd edition). Boston: Pearson.
Kaifi, B.A. (2014). Afghanistans Conundrum: Capitalism in a Dependent Nation, pp. 29 37,
Chapter 4 in Capitalism and its Challenges Across Borders. Edited by Bahaudin G. Mujtaba.
Florida: ILEAD Academy.

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Mujtaba, B. G. (2014a). Capitalism and its Challenges across Borders (edited). Florida: ILEAD
Academy.
_______ (2014b). Managerial Skills and Practices for Global Leadership. ILEAD Academy:
Florida.
_______ (2008). Coaching and Performance Management: Developing and Inspiring Leaders.
ILEAD Academy Publications; Davie, Florida, USA.
_______ (2007a). Afghanistan: Realities of war and rebuilding (2nd edition). LEAD Academy,
LLC, Davie, Florida; United States.
_______ (2007b). The ethics of management and leadership in Afghanistan (2nd edition).
ILEAD Academy: Davie, Florida - USA.
_______ (2006). Privatization and Market-Based Leadership in Developing Economies:
Capacity Building in Afghanistan. Llumina Press and Publications, Tamarac, Florida.
Mujtaba, B. G. and Preziosi, R. C. (2006). Adult Education in Academia: Recruiting and
Retaining Extraordinary Facilitators of learning. 2nd Edition. Information Age Publishing.
Connecticut.
Mujtaba, B.G., & Kaifi, B.A. (2010). Business ethics and morality in Afghanistan. Business and
Professional Ethics Journal, 29(1-4), 32-63.

About the Author


Dr. Bahaudin G. Mujtaba, born and raised in Logar, Afghanistan, is currently Professor
of Management, Human Resources and International Management at Nova Southeastern
Universitys H. Wayne Huizenga School of Business and Entrepreneurship in Fort Lauderdale,
Florida - USA. Mujtaba worked as an internal consultant, trainer, and teacher at the Training and
Development Department of Human Resources as well as retail management in Corporate
America for over sixteen years. Bahaudin has taught graduate business courses face-to-face as
well as virtually and professional development workshops both nationally and internationally
since 1996.
Mujtaba is the author and co-author of twenty books and two-hundred journal articles in
the areas of management, adult education, business ethics, human resources, leadership, and
performance management. He can be reached through email at: mujtaba@nova.edu

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Engaging Government Employees:


Motivate and Inspire Your People to
Achieve Superior Performance

Robert J. Lavigna
AMACOM (2013)
288 pages, hardback, $18.05

Reviewed by: Victoria Geyfman,


Bloomsburg University of Pennsylvania

In the last few decades, being employed in the public sector has transformed from a noble
calling to a workplace with tough budget environment and persistent attacks on government for
inefficiencies and the lack of effort. Faced by a unique set of challenges that include declining
resources, frequent political changes, aging employee base, complicated rules and regulations,
and multiple external stakeholders, public sector managers and employees are increasingly being
asked to do more with less. It is in these tough times that the public sector leaders are called on
to motivate their employees to put forth their best effort. Based on extensive and compelling
empirical research and his three decades of human resource experience, author Robert Lavigna
offers government leaders his thoughtful guidance and effective action steps in achieving
employee engagement in the public sector.
This book makes a strong case for employee engagement in government organizations
because such organizations perform dramatically better than organizations whose employees are
not engaged. However, there is no one-size-fits-all business approach. Instead, Robert Lavigna
acknowledges challenges and opportunities of the public sector and calls on managers of the
Americas largest employer to improve the workplace by 1) analyzing specific areas for
improvement, 2) setting priorities for action, 3) improving communication at every level, 4)
motivating employees to deliver above-minimum effort, 5) recognizing outstanding employee
contribution in meaningful ways; 6) promoting employee growth; and 7) achieving more positive
and rewarding work environment, which will lead to better morale and relationship with the
public that these organizations serve. The book asserts that public sector management poses its
own unique challenges and requires leaders to utilize a different set of skills and tactics to engage
their employees.
Lavigna educates his readers on the concept of employee engagement, which if
successful, results in a heightened employee connection to work, the organization, the mission,
and coworkers. Engaged employees, argues Lavigna, find personal meaning and pride in their
work, and they believe that their organizations value them. In such environment, employees

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strive to perform at the above-minimum levels. The author bases his arguments on a wealth of
research on positive effects of this engagement. He provides specific examples of organizations
and what they have done to improve employee engagement. Finally, he offers practical strategies
on how to achieve this outcome.
Particularly strong aspects of the book are the practical step-by-step strategies on how to
improve public employee engagement. Although the author concedes that some of the
problems or peculiarities of government decision making cannot be changed (for instance,
complicated rule-bound and often politically-based decision making), many of these issues can
be thoughtfully addressed. For example, to deal with a problem of negative public attitude on
government employment, the author suggests creating positive, responsive experiences in public
interactions with government employees. Such experiences then translate into more positive
feelings about government in general. In addition, frequent political changes that result in short-
term perspectives may be combatted by developing public-sector succession planning that are
designed as leadership development programs and serve as a motivation mechanism for younger
employees. This engagement of the rank and file is critically important to maintaining smooth
and effective operations during the periods of transition to new policies or new leadership.
Especially interesting and troubling are the statistics on the current levels of engagement
in various public services, which appear to be quite low by historical standards. The author cites
studies that compare employee engagement in the federal, state, and local government with that
of the private sector employees. For example, only 29 percent of the public sector employees felt
that they were consulted on the issues that affect them, compared to 40 percent in the private
sector; only 34 percent said that they operate in an open and trusting environment and are
encouraged to provide honest feedback, compared to about 49 percent of the private-sector
respondents. It is not surprising that these findings manifest themselves in declining job
satisfaction for public-sector employees, damaging morale, and ultimately less connection to the
public that these organizations serve. Of particular concern is the level of engagement in public
education, which is a very important area of public service. According to 2011 survey in the
U.S., education was found to be one of the five industries with the most disengaged
employees.
Another interesting aspect of the book is the discussion of public-service motivation.
Although it is well known that for reasons of various forms of financial constraints (budget cuts,
pay freezes, union contracts, and strict rules on how pay is distributed), public sector leaders do
not have the same performance-based compensation mechanisms that are available to their
private-sector counterparts. Government agencies do not pay bonuses or offer stock option plans;
instead, there is strong empirical evidence that shows that government employees are attracted to
public service primarily by the opportunity to make a difference in the lives of the people they
serve. This is termed a public-service motivation (PSM), and the research in this area shows that
this is a much stronger motivator in the public sector than in the private sector. Considering
limited financial incentives to encourage performance-based efforts, PSM is an essential
element. It is imperative for government management leaders to recognize and leverage this

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motivation to ensure that they hire and do their best to retain employees with a high degree of
PSM.
This book may only seem appropriate for managers and human resource departments in
the public sector who are charged to lead and motivate the public sector workforce. However, as
the author argues, employee engagement is a shared responsibility across the entire organization,
including leaders, managers, supervisors, and the employees themselves. The book is also an
interesting read for students and academics studying applications of the science of engagement
and its impact on organizational performance.
Overall, the book offers a careful analysis of unique challenges and opportunities of
engaging public service employees. The main thesis of the book is that engaging public
employees is as important if not more important than engaging private sector workers. The
solution is not a one-size-fits-all approach, but an integrated series of actions that require an
important recognition that public agencies cannot be run like private organizations due to the
very different public-service motivation. Among the solutions proposed are to hire the right
people with a high degree of public-service motivation. Once hired, government managers and
leaders need to help employees see how their work contributes to the overall agency mission;
involve the workers in decision making; help them grow and develop in ways that will contribute
to the organizations strategic goals and decisions; help them achieve a higher-ranked
recognition arising from personal satisfaction from doing interesting work and being of service
to the public. More engaged government employees will create positive interactions with the
public they serve and help government organizations achieve their full potential.

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Personality Power: Discover Your Unique


Profile And Unlock Your Potential For
Breakthrough Success
Shoya Zichy with Ann Bidou

AMACOM (2013)

278 pages, paperback, $16.95

Reviewed by: M.J. Park, Bloomsburg University of Pennsylvania

Whether in our professional or personal lives, we strive to understand those around us


and enhance these relationships. Successful interpersonal communication is critical to managing
a full range of professional issues including conflict, job satisfaction, employee engagement,
teamwork, and organizational efficiency and effectiveness. In this book, Shoya Zichy provides
us with an interesting and useful tool to understand ourselves, and those around us, thereby
increasing our emotional intelligence skills and setting us on a path to success through improved
interpersonal communication.
Personality Power attempts to accomplish several things and a readers interest can be
satisfied quickly depending on what they hope to gain from the book. The author (a) explains
the Color Q model approach and its foundation in Jungian and Myers-Briggs personality typing;
(b) offers a self-assessment for the reader to determine his/her personality profile; (c) provides
how to recognize charts to assist the reader in spotting other peoples personality types; (d)
shares the profiles of well-known persons within each profile type; and (e) suggests practical
applications of the Color Q approach to the readers work environment and professional
development. Further, the author proposes that what the reader is interested in learning from the
book may be directly related to their personality profile.
Using the personality profile assessment sections, Zichy asks the reader to determine
their primary personality profile as Green, Blue, Red or Gold. The readers next assessment step
to additional individual insight is to determine their backup personality profile. And a final
assessment allows the reader to determine if they are an introvert or extrovert. By this point, the
reader has learned that their full personality profile, for example, Green/backup Gold, is
Introvert. A key strength of the book is that it is configured to expedite a readers understanding
and opportunity for practical use of the information within it. Further, at the end of each primary
profile chapter there is a chart entitled How to Recognize a ______ Colleague. These end-of-
chapter charts are a powerful tool for anyone that is interested in quickly recognizing themselves
and the personality profiles of those with whom they relate, especially those with dissimilar
personalities.

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A third key strength of the book is the detailed analysis of each primary/backup
personality profile combination. The topics within each chapter include (a) top motivators; (b)
corporate culture finding the optimal fit; (c) leveraging executive presence and building
personal brand; (d) participating and managing productive teams; (e) stressors that produce
fatigue and strife; (f) self-coach your way to more productive work relationships; and (g)
political savvy making your words count which includes negotiating strategies for engaging
persons with other personality profiles.
An interesting part of Personality Power is the inclusion of the personality profiles of
well-known persons from various industries. These will be beneficial to readers who are
particularly interested in knowing and learning from other peoples stories, their challenges, and
their strategies for resolving them. This is valuable in any professional setting.
Most professionals are interested in the practical use of information. In addition to the
insights provided throughout the book, Zichy specifically addresses the application of Color Q
model in the final five chapters. The topics of workplace styles, innovation, compensation,
generational conflict, and self-coaching are relevant to any professional, whether manager or
employee, and provide the opportunity for workplace success through a more positive
connection to coworkers.
The first practical application of the model that Zichy recommends is that professionals
learn how to adjust their workplace styles to others. In order to make adapting relatively easy, a
chart is included that demonstrates how an employees work space can provide clues to their
Color Q personality profile. The specific impact of style shifting will be in ones ability to
communicate to each coworker in a manner that more closely mirrors their personality. A skill
held by high self-monitors, Zichy states that a style shift will result in an improved workplace
environment including a reduction in workplace clashes, an increase in the capacity to motivate,
and the ability to recognize coworkers strengths. The development of this skill will assist any
professional but especially those that work in a politically-charged organization in which success
is often more about relationships - the who you know.
The application of the Color Q model to the topic of innovation is very interesting. In
Personality Power, Zichy introduces the idea of the diversity of personality types to the topic of
innovation and presents the contribution of differing Color Q profiles to conceptual, product, and
material innovations. While each personality type may react differently to the need for
innovation, each brings something to the table that can benefit the organization in the process.
The next application of the Personality Power concepts relates to compensation, a topic
critical to management and their employees. The right mix in a compensation strategy between
extrinsic and intrinsic rewards is crucial to maximizing an employees motivation, work
engagement, job satisfaction, and organizational commitment. Therefore, Zichy believes that
professionals must consider the Color Q model implications related to compensation.

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Personality Power addresses the use of the Color Q model to the topic of generational
conflict, a timely topic in todays multi-generational workplace. However, Zichy questions
whether a number of these conflicts may instead be personality related. Recall that Zichys
premise is that personality differences impact communication styles. The author states that a
link has been found between a populations generations and the preponderance of Color Q
personality profiles within each generation and that this link is consistent globally. A case in this
chapter illustrates a common conflict between older (Gold) employees and younger (Red)
employees and provides suggestions on managing these and several other common between-style
conflicts. Again, the benefit of style-shifting is clear in reducing workplace conflicts and
improving interpersonal communication, but this may be a cross-cultural benefit as well.
The final application of the books personality style concepts addresses the topic of self-
coaching to success. Zichy states that the information provided has different uses for each
personality profile. Specifically, for each Color Q profile, the author provides a scenario and
gives advice on self-coaching. Further, Zichy provides a list of possible conflicts that each
personality style might encounter from other profile styles.
In conclusion, Personality Power is an excellent read, valuable to any person interested
in understanding personality diversity, improving communication, and maximizing personal and
professional relationships. It provides useful tools to all professionals especially those that are
(a) high self-monitors, and (b) interested in increasing their level of emotional intelligence.
Consider what makes a professional successful it is not expertise alone. Communication skills
enhance ones success and Zichy provides the tools to improve these skills through self-
knowledge and style shifting. This is a thought-provoking way to manage relationships.

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The Star Factor-Discover What Your Top


Performers Do Differently-and Inspire a
New Level of Greatness in All

William Seidman and Richard Grbavac

AMACOM (2014)

232 pages, $25.00, hardback

Reviewed by: Christina Force, Bloomsburg University of


Pennsylvania

There are star performers in every business and to gain a competitive advantage
organizations hope to acquire as many star performers as possible. Seidman and Grbavac based
on years of experience have developed a proven method to help identify what behaviors, actions
and attitudes star performers possess. The model known as Affirmative Leadership is grounded
in Dr. Seidmans research conducted at Stanford and the most up-to-date findings in
neuroscience.
Seidman and Grbavac describe how as consultants they encountered many businesses
that were having major problems within their organizations due to lack of leadership. They
acknowledge that the few star performers within an organization can become overloaded. After
many years of development Seidman and Grbavac produced a cost-effective system to identify
what makes certain individuals stars and how others within the organization can achieve star
level performance. Their methodology known as Affirmative Leadership helps a company to
create leadership programs that match their needs and strengths.
The authors have successfully implemented their Affirmative Leadership program in
many Fortune 500 companies and they detail their experiences with companies from varying
industries. Affirmative Leadership consists of four phases, including (1) Discover, (2) Prepare,
(3) Launch and (4) Guided Practice. In Phase 1, Discover, a company identifies its stars, who
will participate in a three-day workshop. A facilitator guides the stars as they identify what
makes them successful. In Phase 2, Prepare, a learning program is created that will teach
learners the skills that star performers possess. During this phase coaches are chosen and trained
by the facilitator. The Launch occurs in Phase 3 and consists of an initial workshop in which the
coaches meet their learning group and they instruct them on how to become self-directed
learners. The final phase last approximately four to six months and the coaches guide learners
through a variety of activities that include weekly group discussions and personalized exercises.

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The authors claim that 90 percent of those who completed the Affirmative Leadership program
exhibit the behaviors and attitudes of star performers.
Seidman and Grbavac describe the importance of star performers within an organization
and how they can utilize their sense of purpose and esteem to create leaders. A unique section of
this book describes how star performers identify what makes them great. The authors explain the
wisdom discovery program, which will help uncover these qualities. There are four things that
all stars identify from this process, (1) a clear statement of their true purpose in their role, (2) a
big-picture view of the steps needed to achieve their purpose, (3) an in depth definition of what
greatness looks like for each step, and (4) the activities that help build the necessary habits to
achieve this greatness.
The authors explain that when creating the Affirmative Leadership program it is
important to apply the most effective ways in which people learn. They suggest varying the
learning tasks in order to create positive habits. In order to create engaging content they stress
the importance of selecting and training coaches that will assist with the alignment of the
purpose, applying the Principles, adapting Learning Tasks and leading discussion and reflection
for the learning process. The authors provide an example that details how the Affirmative
Leadership program was implemented for a womens apparel chain consisting of 500 stores and
how it assisted in transforming the knowledge of their star performers into a successful learning
program.
A particularly strong point of the book is that the authors include examples of successful
companies in which Affirmative Leadership has been incorporated. This program can be used
globally for small groups or large numbers of participants. They provide a step-by-step process
to create an infrastructure for large, culturally and linguistically diverse organizations. The
authors provide actual case studies of varying levels of employees as they adopt the Affirmative
Leadership method.
Another strong point of the book is that Seidman and Grbavac recognize that many
employees may be resistant to leadership training because they have already been through a
variety of different programs, but the authors provide several well researched methods by which
to motivate learners. They describe how to use the new sciences of motivationFair Process,
Motivation 3.0, and the neuroscience of positive visualization. Fair Process incorporates respect
for the listener instead of telling them what to do. It seeks input from stakeholders; thus, they are
more likely to adopt the change more expediently. The authors refer to Dan Pinks book
DRiVEPurpose, Mastery, and Autonomy in which he discusses motivation and he refers to
this process as Motivation 3.0. The first part of Motivation 3.0 is Purpose, which relates work to
social good. Mastery is the next component and people will work toward this if they have a
strong purpose and believe it is possible to achieve. The final component is Autonomy and
individuals enjoy being in control. When people have a purpose and have mastered the
necessary skills they can be granted autonomy in decision making.

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The authors not only explain the importance of creating self-directed learners, but they
discuss why and how this should be accomplished. Seidman and Grbavac describe how to
unfreeze learners from their typical passive learning approach. The authors believe the
creation of personalized learning programs motivate learners and produce better results. Most
importantly, participants share their reflections with fellow learners and coaches in order to
become a great leader.
An additional strongpoint of this book is that it recognizes the importance of individual
contributors (ICs) to an organization. An IC may not be high on the organizational chart, but
they are experienced and respected. Both of these attributes need to be recognized as a force of
change. Regardless of the industry the ICs recognized three levels of realizationthey had the
ability to lead, they had the know-how to lead and that being a leader provided themselves, their
organizations and society with value.
Businesses today are concerned with the bottom line and Seidman and Grbavac provide
quantitative data that proves Affirmative Leadership works. They formally evaluated
participants and objectively found that more than 90 percent show behaviors and attitudes
possessed by star performers. They acknowledge they have encountered skeptics, but in response
Seidman and Grbavac detail their quantitative findings and describe their success stories.
This book is appropriate for business leaders, academics and students in all areas of
business. The Affirmative Leadership model has been proven to be successful in a variety of
industries. The Star Factors authors utilize their experience and research in neuroscience to
create a methodology that turns star performers experiences into a successful leadership
program. All stakeholders in a business will find the Affirmative Leadership model beneficial in
creating a culture of greatness. This book is a must read for any organization that wants to turn
all of their employees into star performers.

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Asias Entrepreneurs: Dilemmas,


Risks and Opportunities

Virginia Cha and Jennifer Lien


Routledge, 2013
115 pages, $ 160.00 (Hard cover)

Reviewed by: Daniela Feenstra, Penn State University

This book is excellent for practitioners and educators interested in gaining a better
understanding of how to raise capital, especially those who are interested in starting a technology
venture in Asia. The authors do a great job explaining the different groups of investors as well
as describing the expectations of investors and terminology used by them. The authors provide
readers a glimpse into Singapores history and culture, which is key to achieving success as a
technical entrepreneur.
Asias Entrepreneurs: Dilemmas, Risks and Opportunities focuses on technological
entrepreneurship. The book contains a number of cases of technology startups in Asia, which are
written in a narrative manner. The authors created a manuscript that is easy to read and will
encourage young business students as well as those interested in exploring entrepreneurial
opportunities in Asia to gain a better understanding of the dilemmas, risks and opportunities that
may be experienced when deciding to start a technology business in Asia.
The book is divided into four sections. Each part contributes to a better understanding of
challenges and opportunities available to technopreneurs in Asia. At the end of each part, the
reader can find a section of lessons learned and key takeaways, which is very informative and
provides opportunity to reflect on the key points found in the cases utilized.
Part One- Raising money for your technology dream: The importance of getting the first
partner right. In this part readers will find case studies of technopreneurs who were able to raise
capital, but found a disconnect between their understanding of expectations and those of their
investors.
Part Two- Plunging into the market: Managing dilemmas and keeping afloat. The case
studies in this section focus on technopreneurs who started their ventures without the need for
raising capital. The focus of this part is the adaptability that was shown by each of the four
technopreneurs showcased in this section. The reader will see the key difference in the
approaches taken between those technopreneurs in part one and those in part two as the decision

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to maintain more control of their venture by not raising capital created other dilemmas,
challenges, and opportunities.
Part Three- Coaching the young: Modern Singapores new crop of funding schemes and
incubation programs. This section focuses on the importance and development of a venture
ecosystem where the technopreneurs who were introduced to the reader in earlier case studies are
now taking active roles as investors and mentors to new technopreneurs in Singapore.
Part Four- Paying it forward: Preparing the new generation of start-ups for success. In
this section, readers will find two teaching case studies that focus on the challenges and
dilemmas that two new technopreneurs face as they raise funds for their ventures.
I have read many books on entrepreneurship and unlike most of them Asias
Entrepreneurs offers readers an insight into the dilemmas, risks, and opportunities faced by
technopreneurs from a real-life perspective. The case studies in this book made the subject easy
to understand and placed emphasis on the development of an ecosystem, where the new
technopreneurs learned from experience and became role models the next generation of
technopreneurs. As an educator, I really appreciate the two teaching case studies found in section
four, as they provided me with material to share what I learned in this book with my students.

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