2015 Competition Forum Issue 2

COMPETITION FORUM
Volume 13 (2) 2015
TABLE OF CONTENTS
PART I HUMAN RESOURCES AND COMPETITIVE ADVANTAGE
Cost Effectiveness of Retaining Top Internal Talent in Contrast to Recruiting Top Talent 203
Michael Craig, Saint Francis University
Employee Wellness Programs: Savings for Organizations and Employees 210

Kelsey Kohler, Saint Francis University
Jonna Contacos-Sawyer, Saint Francis University
Brennan Thomas, Saint Francis University
How Generation Zs Reliance on Digital Communication Can Affect Future

Workplace Relationships 214
Amanda L. Kick, Saint Francis University
A Tale of Two Crises: America and the American Black: A Perspective 223
Robert L. Lattimer, Rutgers University
Employee Handbooks -- Current Trends for Human Capital Competitiveness 228

Douglas M. McCabe, Georgetown University
Creating a No-Tolerance Policy for Workplace Bullying and Harassment 232

Sarah Pastorek, Saint Francis University
The Impact of Age and Gender on Strategic Innovation in Micro, Small and 241
Medium Enterprises in Egypt
Sayed Elsayed ElKhouly, Ain Shams University
Rania Marwan, Ain Shams University
Can Employer Branding Surge the Retention and Motivation of Egyptian Employees? 253
Tarek A. Al Badawy, German University in Cairo
Vivian M. Fahmy, German University in Cairo
Mariam M. Magdy, German University in Cairo
The Relationship between Ethical Leadership (EL) and Organizational Citizenship Behavior (OCB) 266
Sayed M. El Khouly, Ain Shams University
Nihal A. Mohammad, Ain Shams University
Nabil El Hady, Ain Shams University
PART II INFORMATION TECHNOLOGY AND CYBER ATTACKS
Application of a Decision Tree Model to a Business Case from Egypt 273

Sayed Elkhouly, Ain Shams University
Maher Aldamati, ESLSCA Business School
Michael Soliman, ESLSCA Business School
Mohamed Alfakharany, ESLSCA Business School
Diaa El-Dinne Sobeeh, ESLSCA Business School
Ahmed Ibrahim Ebaied, ESLSCA Business School
Bridging the Gap Between Facebook and Business 287

Linda Jane Coleman, Salem State University
Lauren E. Cote, Salem State University
James Gu, Salem State University
Kathryn Chandler, Bayridge Hospital
Digital Knowledge Management has an Impact on Financial Culture, Competitiveness and 301
Intellectual Capital of Financial Companies
Elia Socorro Daz Nieto, University of Quertaro
Josefina Morgan Beltrn, University of Quertaro
Len Martin Cabello Cervantes, University of Quertaro
Luis Alberto Morales Hernndez, University of Quertaro
Cyber Espionage and the S.P.I.E.S. Taxonomy 307

William M. Fitzpatrick, Villanova University
Samuel A. Dilullo, Villanova University
The Future of Mobile Electronic Payments 337

Bradyn Jeffus, University of Central Arkansas
Steven Zeltmann, University of Central Arkansas
Ken Griffin, University of Central Arkansas
Alex Chen, University of Central Arkansas
Analysis of Global Academic Modeling of University Systems 343

Suzan S. Parhizgar, Hemet Hospital
Kamal Dean Parhizgar, Texas A& M International University
PART III FUTURE MANAGERS IN A CHANGING WORLD
An Investigation of Leadership Theories Best Fitting the Professors Tripartite 350

Scholarly Activities Relating to Teaching, Research and Service-Part 1
Hamid Khan, Our Lady of the Lake University
Using the American Marketing Association Integrated Marketing Plan Competition to 371
Enhance Students Competitiveness
Mark DeFanti, Providence College
Professional and Occupational Balkanization of Academicians Institutional Voting Rights and 377
Duties
Kamal Dean Parhizgar, Texas A&M International University
Robert R. Parhizgar, Texas A&M International University
The Relationship between Undergraduate Student Attitudes about Hypothetical Marketing 383
Moral Dilemmas and Two Personality Traits: Test Anxiety and Need for Social Approval
Carl Malinowski, Pace University
Telemedicine Using Cloud Computing in Jordan 390

Qeethara K. Al-Shayea, Al-Zaytoonah University of Jordan
CF Vol. 13 (2), 2015
Cost Effectiveness of Retaining Top Internal Talent in Contrast

to Recruiting Top Talent
Michael Craig, Saint Francis University
EXECUTIVE SUMMARY
The purpose of this paper is to examine the options employers have relative to using talent management (TM) to maximize
productivity. Decreasing employee loyalty, skill gap shortages, and elevated employee turnover have forced employers to
identify and develop unique employee management strategies to mitigate these disturbing trends in the workforce. As the
competition to acquire skilled and competent employees increases, it is necessary for organizations to adapt and modify their
TM strategies to meet the ever-changing workforce landscape. This paper examines the various aspects of talent acquisition
and talent development and their effects on the overall success of an organization.
Keywords: Talent management, Recruiting, Retention, Succession planning, High-potential employee
TALENT MANAGEMENT DEFINED
Talent management (TM) is a concept that has been adopted by organizations in the United States (US) since the early 1990s
(Fakhr El Din, 2013; Khatri, Gupta, Gulati, & Chauhan, 2010; Nilsson & Ellstrom, 2012; Yarnall, 2011). For TM to be
effective, an organization needs to define and evaluate employee talents and determine which talents are most important to
the organizational structure. Khatri et al. (2010) defined employee talent as attracting and recruiting qualified candidates
with competitive backgrounds, managing and defining competitive salaries, training and development opportunities,
performance management process, retention programs and promotion and transitioning (p. 39).
Kehinde (2012) believed that talent is the primary driver of any successful company. It has become increasingly obvious to
most business owners and executive teams that, rather than being constrained by capital, companies are typically most
constrained by talent (p. 178). Sixty-three percent of surveyed organizations agreed that organizational wealth is derived
from an investment financially in TM (Kehinde, 2012). In order for an organization to be successful, it will need to have the
right people with the right skill sets and talent in the right job (Choudhury, 2012; Fakhr El Din, 2013; Khatri et al., 2010;
Odom, 2012; Pandey et al., 2012). Talent management is not the order entry side of HR (benefits, pensions, payroll, etc.)
but rather focuses on individual employees, their skill sets, their potential and their ability or desire to move vertically within
the organization (Khatri et al., 2010).
Recruiting and Retention
Both recruiting and retention can be used to increase an organizations overall competitive status. Today, Pandey et al.
(2012) stated, in this constantly changing environment, global competition, the natures of work companies have realized the
importance of talent in the success of the organization (p. 367). Therefore, TM should be used to address these strategic
issues in order to improve organizational performance. Pandey et al. (2012) identifies two basic problems and recent trends in
TM. These two problems are shortage of talent and motivation of employees (Pandey et al., 2012).
When an organization spends excessive time, money, and energy recruiting an employee who does not fit the required skill
set or need of that organization, it can result in a high level of turnover and less effective performance in essence, it is a
waste of resources. The economies of India and the US are currently suffering from a gap in skill and qualified talent.
Deloittes 2011 study of US and Indian manufacturing industries identified the skills gap at an estimated 600,000 workers
(Moutray & Swift, 2013). One year later an internal study by the National Association of Manufacturers (NAM) (2012)
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revealed that 62% of small and medium-sized US manufacturers had positions that were not filled due to a shortage of
qualified candidates (Moutray & Swift, 2013). Employees now are taking advantage of a tight labor market by showing
limited employee loyalty to an organization that does not meet the needs and wants of its workforce (Pandey et al., 2012). If
no attention is given to retaining and developing the existing employee, most will leave an organization within five years
(Phillips & Roper, 2009).
Problems Affecting Talent Management
Particular trends in the workforce that will impact an organizations effective use of TM resources include higher salary
requirements, cost of employee turnover, increased global competition and the increased cost of identifying the intangible
assets (skills and knowledge) of an employee. The Society for Human Resource Management (SHRM) stated that nearly four
out of five manufacturing organizations were unable to fill open positions (SHRM, 2013). These shortages for skilled
workers, particularly in the disciplines of Science, Technology, Engineering and Mathematics (STEM) have suggested that a
new normal is at hand for the workforce. This shortage is now known as the war for talent (Laumer, Eckhardt, & Weitzel,
2010; Pandey et al., 2012; Whelan & Carcary, 2011; Yarnall, 2011). The hiring of a high-potential employee has become
insufficient and therefore organizations are desiring to cut labor costs by training and developing internal employees in order
to make up for the lack of productivity through vacant positions (SHRM, 2013). The Corporate Executive Board (CEB)
stated that in the past three years the average length of time needed to fill a STEM position has risen from 43 days to 76 days,
a 77% increase, as opposed to 66 days from 42 days for other positions (CEB, 2014b). The development of skill shortages
forces organizations to pay particularly close attention to its internal talent pool.
Another trend that cannot be ignored is the amount of increased turnover that will occur when the current baby boomer
generation leaves the workforce. Accommodations need to be made to fill those open positions as well as ensure that there is
a mechanism in place for knowledge transfer from the older worker to the new hire (Laumer et al., 2010). SHRM (2013)
reported that 68% of the HR professionals surveyed believed that this generational shift will have a major impact on the US
workforce in the next five years. This, along with a lack of employee loyalty (80% of employees under the age of 35 leave
the organization in five years time), is forcing the organization to direct more money towards the recruitment and retention
of current employees (Phillips & Roper, 2009). When a long-term employee retires, or a high-potential employee leaves,
history, knowledge and skills go with that individual making it very costly and difficult to replace. In the real estate
industry, at all levels on the organizational chart there is a 33% rate of employee turnover (Phillips & Roper, 2009). Phillips
and Roper (2009) estimated that those turnover costs ranged from 30% to 300% of an employees annual cash compensation.
RECRUITING
Recruiting is arguably one of the most critical roles of an HR manager (Pandey et al., 2012). Organizational performance can
be credited with the identification and selection of the most talented individuals. An employee with high potential suggests
that there is a future viability that is not present in the existing workforce (Yarnall, 2011). An appropriately structured
recruitment strategy is essential for the future success of an organization and at times can determine whether that organization
will grow or recede during a particular economic period. A successful recruiting strategy can improve recruiting effectiveness
by 30% and reduce the time to fill that position by 28% (CEB, 2012). Regardless of which particular recruiting strategies are
used, new hire performance has not reached desired outcomes. The CEB (2013a) reported, Business leaders require a 20%
improvement in employee performance to meet business goals, but new hire performance is stagnant (p. 2).
Poor hiring is not the only contributor to poor performance as new hire performance ratings remained unchanged since 2009
(CEB, 2013a). This underachievement is masked by the positive relationship between the manager and the new hire. These
recent trends in recruiting forced HR professionals to review their strategies and more importantly each strategys impact on
the organizations productivity. Choudhury (2012) stressed, The level of effective performance of an organization mostly
depends on the successfulness of its recruitment function (p. 22). Each organizations recruiting process involves three
major steps: identification, attraction and selection (Choudhury, 2012; Nilsson & Ellstrom, 2012; Pandey et al., 2012; Phillips
& Roper, 2009). The nature of these steps will have a direct impact on the quality of employees hired.
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Identifying and Prioritizing Open Positions in the Organization
The identification process involves investigating the requirements of the position and looking internally for a capable
candidate before evaluating an external talent pool. If an organization has multiple positions to fill, then prioritizing which
positions are most important will be a pivotal process. The key to a successful recruitment strategy is the ability to prioritize
the vacancies of the organization and to focus on the key jobs first (Choudhury, 2012; Khatri et al., 2010; Nilsson &
Ellstrom, 2012). A potential employees behavior, skills and knowledge must align with the job analysis and the overall
vision of the organization. An organization must consider not only the employees tactical skills, but it should consider the
cultural fit as well (CEB, 2013a; Whelan & Carcary, 2011). Seventy-three percent of new hires have the knowledge and skills
required, while only 35% are considered to be an organizational fit (CEB, 2013a). This information indicates a misbalance in
the priorities of the organization and the hiring decisions of managers.
Choudhury (2012) believed that the job analysis is one of the most neglected aspects of the hiring process. There is a
particular set of knowledge, physical skills, aptitude and learnability required to perform any job, and in order to hire the
right person, there must be a clear understanding of what those skills and abilities are. A proper job analysis is known as an
Employment Value Proposition (EVP) (CEB, 2013b; Towers Watson, 2012). An organization that can identify and support
the entire EVP process from the time of hire through termination will keep employees engaged and become a high-financially
performing organization (Towers Watson, 2012). A strong EVP can save a moderately sized organization nearly $13 million
a year (CEB, 2012). Correctly aligning candidates with the position will eliminate future turnover costs, increase retention
and ultimately result in higher organizational productivity (Choudhury, 2012).
Attracting and Selecting Talent
Attracting appropriate talent to the organization is the critical second step in the recruiting process. A 2012 study by Global
Talent Management and Rewards recognized that 60% of organizations cite problems in attracting high potential and top-
performing workers, while 72% experience difficulties in attracting critical skill employees (Towers Watson, 2012). An
organization must identify what attracts potential employees and then establish itself as an employer of choice (Laumer et al.,
2010). Each industry has its own workforce demand and salary structure to attract new employees to a particular job or
position. An organization has to determine its strategic position within the industry to understand if it will be able to attract a
top-tier performer. Kehinde (2012) noted, 85% of HR executives state that the single greatest challenge in workforce
management is creating or maintaining their companies ability to compete for talent (p. 179). In terms of EVP, an
organization can decrease its initial compensation premiums by 48% while attracting high-potential candidates (CEB, 2012).
Therefore, there is an ever growing concern around the decision to spend more money for a new hire or allocate funds to the
retention function of TM (Harrop-Allin, 2014).
Hiring top talent potentially means more profit. Choudhury (2012) stated, The right person will make contributions to your
companys productivity and profitability that far exceed salary cost (p. 25). The Harvard Business Review suggested that
hiring the wrong person led to 80% of employee turnover (Choudhury, 2012). Subsequently, managers agreed that 20% of
new hires on their teams should not have been hired (CEB, 2013a). The second criterion that a candidate selection should
meet is the experience level required. A lesser experienced employee can be hired for a marginal salary, whereas an
experienced employee in the same position can require a maximum salary that exceeds what the organization is willing to
spend. The organization needs to determine the level of experience required to perform the tasks associated with the vacant
position (Choudhury, 2012).
Costs Associated with Recruiting
A variety of costs are associated with recruiting. If an organization can establish success in three strategic recruiting
objectives it can decrease its costs per hire by 48% (CEB, 2012). An organization needs to determine the amount of funds
directly associated to the recruitment process as well as examining the value of lost productivity that occurs while a position
is waiting to be filled. Vacant positions impact the organization in a multitude of ways. Not only does the HR department
need to invest time in the recruitment process, but other employees are expected to eradicate lost production. If the position
remains unfilled for a period of time, it can lead to emotional instability within the organization as well as decreasing
employee morale (Choudhury, 2012).
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First the organization must establish how much money it is willing to spend in direct expenses correlated to recruiting. The
average direct global cost to recruit a STEM employee is over $11,000 (CEB, 2014b). Other expenses will include travel
costs for both recruiters and potential candidates. Additionally, an organization needs to consider the indirect costs associated
with the recruitment process. There could potentially be costs associated with overtime pay for employees who are making
up for deficient productivity caused by the vacant position. If the vacated position was held by an organizations highest
producer there could potentially be significant growth opportunities aligned with that position. Choudhury (2012) stated,
The U.S. Department of Labor calculates that it costs one-third of a new hires annual salary to replace him (p. 25). With
turnover being at a high rate recently it is important for the organization to understand that turnover costs will increase as it
climbs the organizational ladder. Turnover replacement costs for an organization are averaging over $15,000 (CEB, 2014b).
If replacement costs are compounded with increased turnover numbers, then the recruiting process becomes increasingly
relevant to an organizations success. The organization must make the correct hire as quickly as possible in order to minimize
loss of production.
RETENTION
The rising rates and costs of employee turnover have stressed the value of internal mobility and identification of internal high
potentials. Employee turnover can have a significant impact on the growth of an organization. An organization can trace 80%
of its overall growth to 20% of its employees, this is known as the 80:20 rule (Pandey et al., 2012). Pandey et al. (2012) noted
that the inability to identify and retain that top 20% of performers can be a large threat to future business success, because
those performers will be in demand from outside organizations. Majeed (2013) stated that when a high-performing employee
leaves there is a loss of investment and a reduced ability to achieve organizational goals equaling 150% of that employees
annual salary.
The second challenge in retention is the war for talent, which has not only limited the supply of external candidates, but
increased the demand for top performers in an organization as well. The CEB (2012) reported that 76% of high-potential
employees are applying for positions in three or more organizations at the same time. Retaining employees is increasingly
arduous as the demand for highly talented performers becomes more egregious. Only 45% of high performers believed their
organization was investing adequately in TM and retention (Arora, 2014). If an organization continues to lose top performers
to competitors then it needs to invest internally in the development of its talent pool. Most challenges arise when an
organization does not have enough talent within to establish a pool deep enough to fill key positions, or internal mobility has
not been considered. SHRM (2013) stated that managing talent, improving leadership development, strategic workforce
planning and enhancing employee engagement will be key priorities for HR professionals moving forward. Organizations
have failed to develop a successful talent pool by not correctly matching the supply to the demand of external talent (Majeed,
2013). This mismatch has led to an organization becoming talent poor and with short supply organizations cannot fill key
positions from within. If the internal supply of employees does not increase then it is faced with turnover, poor performance
and restructuring (Majeed, 2013). Therefore, identification and management of high potentials are vital tools to an
organizations future success.
Identifying the Internal Talent Pool
Talented individuals need to be identified to fill critical positions that positively impact the organizations competitive
advantage. An organization refers to these key positions as Exclusive Positions when referring to the TM strategy. The goal
of exclusive positioning is to fill A positions with A players, B positions with B players and C positions with C players
(Haskins & Shaffer, 2010; Majeed, 2013; Whelan & Carcary, 2011). The most concrete example of exclusive positioning can
be seen in professional sports. Professional sports organizations consistently look to acquire the highest quality athletes to fill
the most pivotal roles. Organizations in the National Football League (NFL) adhere to a salary cap or budget when filling
pivotal positions. All teams in the NFL are competing for the highest quality athlete at the perceived market value for each
position; therefore, each team needs to assess its internal talent to determine if it has the appropriate skill level to compete in
the NFL. Similar to other for-profit organizations, NFL teams are relying on top-level executives (CEO, CFO, President),
general managers (HR management) and coaches (mid-level supervisors) to evaluate internal talent. This process is referred
to as succession management or succession planning.
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Succession management plans are programs that offer tools and guidelines to assist managers in the identification of high-
potential employees (Fulmer et al., 2009). Senior management, HR managers and business line managers all play a pivotal
role in identifying key positions and high-potential or high-performing employees (Fulmer et al., 2009; Haskins & Schaffer,
2010). If talent is misidentified, then an organization risks the potential of placing B players in A positions which will
negatively impact industry competitiveness and financial growth. Sixty-three percent of HR professionals reported that
succession planning or employee management was of greater priority in 2014 as opposed to the prior five years (CEB,
2014c).
Employee Engagement and Recognition
The second function of retention is employee engagement and recognition of high performers within the organization.
Employee engagement and management quality are two disciplines that are highlighted in this function. When an employee
is not engaged by management, then the perception is that the individual will not be offered opportunities for advancement,
and greater career opportunities may reside outside of the organization (Arora, 2014; Phillips & Roper, 2009; Whelan &
Carcary, 2011). The best methods for retaining top performers are motivating or challenging employees in their work,
enhancing job satisfaction, providing consistent management feedback and treating high performers with positive regard
(Laumer et al., 2010; Pandey et al., 2012; Phillips & Roper, 2009; Towers Watson, 2012). Lack of employee engagement and
recognition leads to high turnover which decreases the supply of talent and weakens the internal pool creating a skill gap
shortage that affects overall performance and financial growth (Arora, 2014; Phillips & Roper, 2009; Whelan & Carcary,
2011).
High performers in each industry and each generation have different career wants and needs to satisfy. Specifically,
millennials in the fields of STEM are looking to find a balance in work life and professional development, proving that salary
is not the only motivation and that these employees are willing to perform well and be productive (Laumer et al., 2010).
Organizations that do not retain STEM employees risk losing $15,560 per employee or $1.2 million annually (CEB, 2014a).
One problem for the organization is that only 1 of every 2 college graduates show an affinity for high mobility after
employment (Laumer et al., 2010). If low mobility is evident within the organization, the disengaged employee will likely
leave to accept an outside position, resulting in the initial problematic trend of dysfunctional turnover.
DISCUSSION AND RECOMMENDATIONS
After evaluating the current TM strategies implemented in todays workforce, there is evidence of a disturbing trend. If the
top 10% to 20% of employees are responsible for 80% of the production in an organization then it is vital to not only identify
those top performers, but recognize and engage them as such. If the organization fails to engage the top performers in career
development and advancement then it will be faced with the reality that those employees will want to pursue outside
opportunities. A 16% boost in engaged employees translates to a 5% increase in retention which can provide a cost savings of
$1 million annually for an organization (CEB, 2015). Once top performers become disengaged, whether because of
organizational notoriety or because of a lack of career development opportunities, that disengagement will result in
dysfunctional turnover. Organizations faced with dysfunctional turnover, will again have to evaluate internal candidates or
look to hire from an external pool, completing the dreadful cycle. To avoid turnover, organizations are forced to evaluate not
only their own workforce, but also external talent pools to which they may not have immediate access.
Hiring from an external pool presents advantages and disadvantages. External talent can be risky because of a lack of
knowledge for the existing culture. A new hire who is not a cultural fit will generate a lower performance rating their first
year. Consequently, an external hire who aligns with the organizational culture will allow for increased growth and
productivity. If an organization is not satisfied with the existing culture, then an outside employee who possesses the desired
intangible qualities, coupled with the appropriate knowledge, physical skills, aptitude and learnability, could potentially
motivate current employees to raise the standard of effective work to generate the desired production levels. In each scenario,
organizations must generate an understanding for the existing culture by identifying and creating the correct full job analysis
or EVP on the top-performing positions and employees to determine what is exactly needed to keep high performers in high-
performing positions. A players in A positions and B players in B positions should be the desired goal. Once an organization
defines A positions then it will identify its prototypical A player.
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CONCLUSION
Talent management is a process within an organizational structure that can reduce employee management costs while
increasing productivity. Research has indicated that TM involves two critical functions recruitment and retention- involving
employee management and more specifically, the managing of high performers. Regardless of which route an organization
prefers, both functions begin with the identification of vital positions and proper job analysis. Each function requires the
learned ability to recognize talented hires and employees and properly positioning those hires within the organization to meet
performance goals.
Workforce trends, specifically turnover, employee loyalty and skill gap shortages pressure organizations to answer the most
difficult questions in TM. A well-defined recruitment strategy aligned with an appropriate development and recognition
program will reverse these trends and increase loyalty and productivity. Organizations will always be challenged with
workforce trends, but the organization that can identify its competitive strategy and align the appropriate high potentials and
high performers with that strategy will produce at desired rates and control employee costs at the same time.
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http://www.shrm.org/Research/FutureWorkplaceTrends/Documents/13-0146%20Workplace_Forecast_FULL_FNL.pdf
Towers Watson. (2012). The next high-stakes quest balancing employer and employee priorities. Retrieved from Research on
World at Work website: http://www.worldatwork.org/waw/adimLink?id=71255
Whelan, E., & Carcary, M. (2011). Integrating talent and knowledge management: where are the benefits? Journal of
Knowledge Management, 15(4), 675-687. doi:10.1108/13673271111152018
Yarnall, J. (2011). Maximizing the effectiveness of talent pools: a review of case study literature. Leadership &
Organizational Development Journal, 32(5), 510-526. doi:10.1108/01437731111146596
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Employee Wellness Programs: Savings for Organizations and

Employees
Kelsey Kohler, Saint Francis University
EXECUTIVE SUMMARY
An employee wellness program may be implemented into a companys strategic plan by the human resource department to
support the health and well being of the employees, while also offering incentives and healthcare cost savings. With ever-
changing healthcare laws and increasing costs, companies are looking for a solution to benefit all. Organizations are facing
the effects of chronic diseases among their work force, which in turn may increase their healthcare costs in order to
medicate. By strategically developing, implementing and communicating a well-rounded wellness program, organizations
can achieve a higher morale of their employees and decrease their overall healthcare costs.
Keywords: Wellness, Strategic plan, Healthcare, Morale, Organizations
INTRODUCTION
The healthcare benefit is a type of insurance that protects employees from a large amount of medical expenses due to
procedural, preventive, or emergency medical treatments. Employee wellness programs play an important role in the offering
of healthcare benefits, as they provide guidance, education and incentives for employees to become healthier, tackle any
possible chronic disease and decrease the potential of high medical costs. Companies can benefit from the employee wellness
programs by improving the well being of their overall workforce and to cut costs on the high healthcare bills.
THE HISTORY OF HEALTHCARE IN THE UNITED STATES
Employee healthcare benefits have been in existence for decades as a way to attract and retain employees. During World War
II, job shortages grew because of a wage freeze from the National War Labor Board (Employee Benefits Research Institute,
2002). At this time, employers realized that unions supported employee-based health insurance and that there would not be a
wage control on it. They offered these benefits since they were not subject to income or Social Security tax (Employee
Benefits Research Institute, 2002). Over the years, healthcare benefits evolved from simple laws to the more complicated and
complex laws, for example the Health Insurance Portability and Accountability Act (HIPAA), and other related laws, to the
creation of the Affordable Care Act of 2010. In the United States (U.S.), strict laws govern the healthcare benefits that are
offered to employees in companies of all types and sizes.
Chronic Diseases and Health Intervention
HIPAA and the Affordable Care Act provide guidance for organizations that are interested in offering employee wellness
programs. The organization must abide by the laws when implementing the programs that may help employees who are
fighting with chronic, physical, or mental diseases in their every day life. In order to maintain a healthy work and personal
lifestyle, organizations can implement employee wellness programs that offer the employees the resources that they need to
tackle these diseases. According to the Office of Personnel Management (2015), the common chronic diseases affecting our
U.S. workforce today include; poor diet and nutrition, excess weight gain, lack of physical activity, back pain, high
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cholesterol, mental health issues (high levels of stress), hypertension, smoking addiction and substance abuse. Organizations
can focus on each area to provide education and testing, activities and classes, counseling, brochures, newsletters and many
other ways in order to inform employees of these potential risks.
EMPLOYEE WELLNESS PROGRAM OVERVIEW
In order to assist employees in tackling these chronic diseases or when striving to become a healthier individual,
organizations are starting to implement employee wellness programs. Employee wellness programs are employer sponsored
programs, normally organized by the human resource department, to support employees as they adopt new behaviors to
improve their health, quality of life and enhance personal effectiveness (Baicker, Cutler, & Song, 2010; Zula, 2014). In order
to analyze the cost savings, a survey was conducted by the National Association of Professional Employer Organizations and
found that 41.7% of employers believed that the cost of health care is the most serious aspect affecting their bottom line
(Kumar, McCalla, & Lybeck, 2014). Many companies can lower the costs with the development of plans to control
employees behaviors. According to Kumar et al. (2014), these controlled behaviors could be factors that eliminate death by
heart disease, cancer and strokes based off of poor lifestyle decisions, lack of physical activity and alcohol consumption.
Because of these health conditions, health care costs are continuing to skyrocket. For example, obesity and depression are
two major diseases affecting the U.S. workforce. According to Kumar et al. (2014), obesity costs employers over $45 billion
annually, leading to very high medical costs. While depression may only affect approximately 4% of the workforce, it can
cost up to $83 billion per year for organizations and can affect absenteeism, obesity and other health issues (Kumar et al.,
2014). To address these issues, employee wellness programs can show employees a healthier lifestyle and help control health
insurance costs through the use of employee incentives and benefit discounts.
FINDINGS: A CASE STUDY ON SAINT FRANCIS UNIVERSITYS WELLNESS PROGRAM
In order to relate the above material to a real life example, I studied the employee wellness program at Saint Francis
University in Loretto, PA and also interviewed the coordinator of the program. The wellness program at Saint Francis
University (SFU), WebMD Rewards, is designed to offer incentives and points to make wellness a top priority at the
university. This program helps employees improve and manage their health, no matter what their goals are, and provides
extrinsic and intrinsic rewards for the employees as well as the organization. Employees who take advantage of the Highmark
insurance are offered the following; a complete wellness program online that will use the employees Highmark ID and
password to manage insurance benefits, a complete biometric screening, a complete preventive exam and a complete set of
programs to meet the employees health, wellness and personal goals (Health and Wellness Program, 2015). If employees
participate in the WebMD Rewards program, they have the opportunity of earning up to a maximum of $200, with an
additional earning of points based on the number of programs the individual participates in. Employees may choose from
many different program categories based on their goals/nutritional needs. The different program options are available to meet
all health and wellness goals for each individual.
Cost Savings for the Employee and the Organization
With the implementation of the wellness program at SFU, it has been shown that employees do save money from
participating in the program. SFU is part of a health insurance consortium and, out of eight schools, the university has had the
lowest increase in health insurance rates over the past six years (M. Krimmel, personal communication, March 10, 2015).
This shows that if employees continue to use the program, and the program gets a higher participation rate, health care costs
in turn will be controlled at the university.
An Employee Wellness Program Survey
A survey, approved by the university Institutional Review Board, was distributed to all SFU employees (faculty, staff,
clerical, etc.) to gather impressions and reactions on the wellness program offered at SFU. Employee identities were kept
completely confidential and all ten questions were optional. According to my findings, it shows that employees are most
interested in topics based on diet, nutrition and exercise, with weight management, womens health and a work/life balance to
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follow. The majority of the survey participants do participate in the universitys wellness program at 57.61%, while 42.39%
of the respondents do not. Employees would most likely attend health screenings, with single session educational seminars
and self-directed activities to follow. Participants would rather participate in wellness activities during their lunch breaks or
after work. The incentives that increase the likelihood that the participants would be active in the wellness program are the
financial rewards, with extra days/hours off next. The communication channel that best fit employees is email. Employees
may not participate in the wellness program based on lack of time or an inconvenient time or location of the program. When
surveyed, 56.16% of the employees felt as if they were not saving money due to the universities wellness program because of
less doctors visits, lower insurance premiums, etc. Finally, out of the participants, 58.82% of the employees felt as if they
saved $1-$50 per month when participating in the wellness program, with 20.59% of the employees seeing savings between
$101 and $200. This survey reached a majority of women and in the age group of 40-49.
RECOMMENDATION
Based on my findings, it shows that the majority of the employees cannot find the time to participate in the wellness program
at work. The majority of employees would like to better their health and wellness and see lunchtime as a good fit for the
program. With the use of the program and points system, employees are noticing a savings of around $50 per month. Since
employees are noticing a savings while participating in the program, it is important for SFU to encourage others to participate
when they have time. With an increased participation rate, SFUs employees will notice a decrease in their overall medical
expenses, as are other employees who are currently participating. On the other hand, SFU is seeing cost savings with the
employees who are participating. The challenge the university now faces is to encourage a larger amount of employees to
catch onto the program. With the use of better timing for programs, and an increase of employee participation, the employees
and university will benefit from the overall cost savings.
CONCLUSION
Employee wellness programs are implemented into organizations in order to protect employees from a large amount of
medical expenses due to procedural, preventive, or emergency medical treatments. Employees are provided with many
programs and educational tips to learn about chronic diseases, in order to take charge of them before they become an issue.
Organizations are implementing these systems and spending a lot of money to ensure the health and wellness of their
employees. It is shown that the employees who do participate in these programs are seeing cash savings monthly. With a
higher employee participation rate, organizations can see savings in overall health insurance costs, since employees will be
healthier and proactive with their health, as well as higher employee morale and lower absenteeism. If the program is
implemented in the right way and reaches the maximum amount of employees, the employees and organization will see
overall cost savings.
REFERENCES
Baicker, K., Cutler, D., & Song, Z. (2010). Workplace wellness programs can generate savings. Health Affairs, 29(2), 304-
11. Retrieved from http://search.proquest.com/docview/204622110?accountid=4216.
Employee Benefit Research Institute. (2002). History of health insurance benefits. Retrieved from
http://www.ebri.org/publications/facts/index.cfm?fa=0302fact.
United States Department of Labor. (n.d.). The affordable care act and wellness programs. Retrieved from
http://www.dol.gov/ebsa/newsroom/fswellnessprogram.html.
Horwitz, J. R., Kelly, B. D., & DiNardo, J. E. (2013). Wellness incentives in the workplace: cost savings through cost
shifting to unhealthy workers. Health Affairs, 32(3), 468-76. Retrieved from
http://search.proquest.com/docview/1316562041?account_id=4216.
Kumar, S., McCalla, M., & Lybeck, E. (2009). Operational impact of employee wellness programs: a business case study.
International Journal of Productivity and Performance Management, 58(6), 581-597.
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Office of Personnel Management. (2015). Retrieved from http://www.opm.gov.

Saint Francis University. (2015). Health and wellness programs.
Weiczner, J. (2013). Your company wants to make you healthy. The Wall Street Journal. Retrieved from
http://www.wsj.com/articles/SB10001424127887323393304578360252284151378.
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How Generation Zs Reliance on Digital Communication

Can Affect Future Workplace Relationships
Amanda L. Kick, Saint Francis University
EXECUTIVE SUMMARY
This research paper will explore the interpersonal communication skills of the worlds newest generation of employees, those
who were born in the mid to late 1990s, commonly referred to as Generation Z. Employers are greatly aware of the impact
that digital communication is having on the general populations presence during face to face interactions. Generation Zs
reliance on social media will have an impact on their ability to use interpersonal communication skills to establish
relationships with future supervisors and employers. The relationship between employees and their supervisors is essential to
ensuring that an organization delivers its mission and reaches its strategic goals. This research paper discusses the
numerous problems that are resulting from lack of interpersonal communication skills such as participation in open
workplace discussions, the transference of various types of knowledge from one generation to the next, miscommunication,
and finally, conflict between supervisors and employees. Finally, the paper provides theoretical guidelines that human
resources professionals can use to help buffer communication problems within employment relationships and preserve
necessary skills that are threatened by heavy reliance on social media and smartphone devices.
Keywords: Generation Z, Digital communication, Social networking platforms, Human Resources, Workplace relationships
INTRODUCTION
Interpersonal communication has been an essential part of building relationships that can be traced back to the beginning of
human interaction. Individuals build relationships with one another through sending and receiving messages that have some
effect on the receiver. If the message is received correctly, a bond is likely to evolve. In 1948, Harold Laswell, an American
communication theorist, developed a model to describe how communication works (Hill, 2007). He stated that in order to
understand how the communication process works, we need to ask several questions: Who?, Says what?, In which
channel?, To whom? and With what effect? (Hill, 2007). Later models of communication build on this one and are
slightly more complex, describing communication being a transactional process, in which two individuals assign meaning to
the interaction, sending and receiving messages, through multiple channels (Harris & Nelson, 2008). Furthermore, other
researchers have concluded that what an individual achieves is directly connected to the messages he or she receives from an
organization (Harris & Nelson, 2008). Heath and Bryant (2000) reiterated that a sender transmits messages to a receiver to
stimulate a response from them. Even though the communication process is automatic, and doesnt require much thought,
these concepts are applicable to our past and present culture and relationships, whether they are business-related or personal.
Interpersonal communication is affected by an individuals ability to express themselves whether they choose to speak or
write. The Occupational Information Network, also known as ONET, is often used by individuals to discover suitable career
paths. Employers use the same database to help them identify key knowledge, skills and abilities required for jobs. (National
Center for O*NET Development, 2015) Data collectors affiliated with ONET define social skills as developed capacities
used to work with people to reach goals. (National Center for O*NET Development, 2015) The group titled Social skills
is further broken down into five different parts: coordination, instruction, persuasion, service orientation, and social
perceptiveness (National Center for O*NET Development, 2015). From observing the ranking system based on level of
importance, Employers rank each of these as very important in almost all levels of positions. These include level one
positions, jobs requiring very little preparation, leading up to level five positions, such as top leadership positions which
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require an extensive amount of knowledge, training, and experience (National Center for O*NET Development, 2015). This
means that almost all positions in the United States, even the most entry level, require effective communication as a base
skill.
Much research has been done to identify numerous benefits resulting from businesses and educational institutions using
social media and other forms of mobile communication. While positive benefits should not be discounted and we will most
likely continue to see an increase in using such forms of communication in the future, an over-reliance on mobile
communication and social media can pose potential problems in employment and educational settings. Problems with
interpersonal communication can hinder the ability of both future and current employers to meet each others needs. The
reliance of the next generation, referred to as Generation Z, on smartphone devices and social media outlets can diminish
their ability to communicate in an organizational setting, which can affect the overall operations of businesses. In the
background section I will define the characteristics of Generation Z and recent information reported on their usage of digital
communication channels. In the following sections, I will discuss the possible problems and challenges that can arise from
reliance on digital communication channels, particularly in the workplace. Finally, in the recommendations section I propose
guidelines that HR professionals can put into practice to diminish these problems and build effective relationships with the
next generation of employees. Finally, in the limitations section, I will discuss some of the shortcomings of previous research
and propose questions for future research.
BACKGROUND
The next generation of employees, commonly referred to as Generation Z are defined as those who were born in the mid-
1990s and growing up in the early 2000s (Kaur, 2014). These individuals are beginning to enter the workforce and tend to
rely on newer forms of digital communication. In order to assist organizations in building relationships with this next
generation of talent, it is important to acknowledge the reasons that they frequently rely on the use of social media and
smartphone technology for social interaction. Kaur (2014) confirmed one of the most commonly used forms of
communication for Generation Z is the use of social networking sites such as Facebook and Twitter. Kaur (2014) revealed
that among people in their late teens and early 20s, the most common reasons for social media usage were to get information,
engage in online discussions and, most often, entertain themselves. More recently, other researchers summarized that college
students frequently relied on social media sites as a means to maintain previously existing relationships that were established
offline, although much of their time was found to be spent simply browsing updates from friends, with little to no two-way
interaction (Sponcil & Gitimu, 2013). Other reasons that younger generations use social media included building their self-
esteem through disclosing personal opinions and projecting a preferred image online, gaining the support of others through
social networking sites (Sponcil & Gitimu, 2013).
Other researchers recently found that Generation Z differs in their preferences for social media applications from
Generations X and Y, tending to value more privacy, often using applications such as Snapchat, a picture and video sharing
app that shares content for a limited amount of time, and applications such as Whisper, where users post content
anonymously (Kingston, 2014). Kingston (2014) concluded that this difference could also exist for the simple fact that these
applications are newer and circulate through younger generations first. Although this information is fairly new and still
developing it is clear that newer generations, such as Generation Z are connecting faster and in very different ways than the
generations that lived before them.
WORKPLACE PROBLEMS ASSOCIATED WITH RELIANCE ON DIGITAL

COMMUNICATION
Swarnalatha (2013) noted that the supervisor-employee relationship is one of the most important factors in employee
retention. Swarnalatha (2013) further explained that communication is a key factor that human resources must use to engage
employees, most effective when it is ongoing and well planned. Some of the main contributing factors to employee turnover
are low job satisfaction, lack of clarity on an employees role in an organization, and most importantly, the quality of the
employees relationships with his or her supervisor (SHRM, 2012). Interpersonal communication has a strong effect on all of
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these factors, especially work relationships. If supervisors and employees do not engage in effective communication,
employee performance will suffer and conflict can arise resulting in talented employees leaving. In 2011, the Society for
Human Resources Management (SHRM) released survey findings from 2,286 randomly selected HR professionals across the
U.S. in various industries and found that 52% stated they were having trouble filling positions at their companies (SHRM,
2011). While 54% of respondents stated that critical thinking and problem solving were the most important skills they found
job applicants lacking, 41% stated that written communication in English was the most prominent that applicants lacked, as
shown in Figure 1 (SHRM, 2011). In addition to lacking written communication skills, 36% of HR professionals also
reported a strong need for both oral communication and the ability to work with a team. Although younger generations are
entering the workforce with a great amount of knowledge and unique skills, such as being fluent and adaptable to new
technologies, some of these which older generations might not possess, employers are still having a hard time finding those
who have the ability to collaborate with others. Job applicants need to be able to communicate verbally and in writing to help
solve problems in the workplace.
In the past, employers gave examples of communication problems such as lack of listening or simply not following
instructions (Harris & Nelson, 2008). These problems are timeless and still occur today, regardless of communication
choices. A supervisor could notice that a new employee may spend a large amount of time looking at their smartphone, and
make the assumption that they are inconsiderately not fully listening to what they have to say. Newer generations have grown
up with electronic devices and digital communication has become a major part of their daily life. Their heavy reliance on
using such devices can cause numerous potential problems with how well they communicate in the workplace. Some
generations who are just entering the workplace might not be aware of how they will be perceived by employers, and
employers are not fully aware of how they will handle managing these newer generations and integrate them into working
with older ones. Most importantly, interpersonal communication is an underlying aspect of relationship building and the only
way to transfer knowledge from the generations that are leaving the workforce to the younger individuals who are staying or
just entering.
FIGURE 1
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SMARTPHONE USAGE AND EMOTIONAL ATTACHMENT
The use of social media applications on smartphone devices has become a regular part of daily living and some people
believe that smartphones have become an extension of individual expression. Recently, researchers Roberts and Pirog (2013)
have proven that people tend to experience an increased level of anxiety when they are separated from their phones, which
has become a common problem in social and employment settings. Roberts and Pirog (2013) examined the behavior of
younger generations anxiety and motivations for frequent smartphone usage and came up with the phrase fear of missing out
or FOMO for short. They claimed that younger generations have trouble refraining from checking updates on their
smartphones for fear that they will lose connection with their social circles and miss current events (Roberts & Pirog, 2013).
Other researchers have taken note of the emotional attachment that individuals have with their smartphones as well. Clayton,
Leshner, and Almond (2015) observed the emotional responses of 40 IPhone users who were asked to complete cognitive
tasks such as completing crossword puzzles, while separated from their cell phones. The researchers concluded that the
participants, average age 21, experienced noticeable increases in heart rate and blood pressure in relation to anxiety of not
being able to answer their ringing cell phones during the tasks they were asked to complete, and as a result, had trouble
finishing them (Clayton et al., 2015). While this information may not apply to all situations and individuals, employers can
conclude that a total ban of smartphone usage could slightly disrupt the productivity of their employee population, causing
distress to employees who feel more at ease with their smartphone at their sides. On the other hand, frequent interruptions
from smartphones and social media site usage can also create a problem by distracting employees, affecting the quality and
productivity of their work. With appropriate policies and practices, employers can find a way to benefit from their
employees productivity while still allowing the use of digital media in the workplace.
Employers have recognized the popularity in using digital communication, such as these social networking sites, and many
have begun to establish their own to use in the workplace. In 2014, researchers Peter Cardon and Bryan Marshall surveyed
227 business professionals, representing members of the baby boomer generation, Generation X and Generation Y on their
attitudes and usage patterns of employer- established social networking platforms. These platforms are built similar to public
social networking sites such as Facebook, but include the use of blogs and wikis (Cardon & Marshall, 2014). However, out of
the Generation Y respondents, only 14.3% of professionals believed that the messages they send to co-workers on employer-
established social networking platforms were efficient for team communication (Cardon & Marshall, 2014). Additionally,
Cardon & Marshall found that both members of Generations X and Y believed that social networking platforms will one day
replace e-mail as the traditional means of communication, yet they still find many shortcomings with relying on these
channels of communication. Around only one-third of the survey respondents, members of Generation X, believed that the
use of SNPs helped team members understand their roles more efficiently, increased team-member commitment and the
overall quality of work (Cardon & Marshall, 2014). While social networking platforms and other forms of digital
communication are becoming increasingly popular, it is important for employers to recognize the benefits of traditional forms
of communication such as face-to-face conversations before investing heavily into such technology.
DECLINE OF INTERPERSONAL COMMUNICATION SKILLS
Diercksen, DiPlacido, Harvey and Bosco (2013) predicted that employers will face a decline in interpersonal skills that will
result from heavy reliance on smartphone and social media usage. Currently, many employers are observing that newer
generations of employees are more comfortable in sending emails and text messages instead of calling someone or
communicating face-to-face (Diercksen et al., 2015). Although many believe that newer generations are sometimes
challenged in communicating face-to-face, Randstad U.S., a global human resources service company, produced a survey that
investigated the preferences of 1,000 members of Generation Z aged 16 to 20, and Generation Y, aged 21 to 32 on their
expectations of their future employers from 10 different countries including the United States, Brazil, Canada and the United
Kingdom (Millennial Branding, 2014). The survey revealed that 51% of respondents from Generation Z claimed that they
would prefer in-person communication, with 16% preferring email, and only 11% preferring instant messaging (Millennial
Branding, 2014). While the percentage is slightly over one half of the surveyed population, it is not entirely clear about this
same sample population in the United States and the preferences about the other half of the sample population. Regardless of
what makes employees most comfortable, communicating in person is still very essential to business relationships.
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TRANSFER OF KNOWLEDGE BETWEEN GENERATIONS
Each employee that is hired to work for any organization brings with them a unique set of knowledge, skills and abilities that
have an impact on the companys overall success. Employees from previous generations have a longer history of work
experiences that have provided them with a great amount of on-the-job training through social interactions with co-workers
and supervisors. Most of these employees have worked during times that businesses did not have the options to use text
messaging and social networks as a daily means of communication and established business relationships using primarily
face-to-face communication. Through years of work experience and establishing relationships, certain types of knowledge are
accumulated. Some researchers argue that some of these types of knowledge are harder to articulate, document, and share
with others. One type of knowledge in particular, what researchers have referred to as tacit knowledge, is acquired through
actual work experience and performance, basing future performance on that acquired knowledge (Jennex, 2009). Tacit
knowledge is ambiguous and often hard for individuals to put into words in an effort to explain concepts to another person
(Jennex, 2009). Employees who have worked over a period of years can sometimes turn their experience into explicit
knowledge after reflecting on their actions, knowledge that is easy to explain and leaves little room for confusion (Jennex,
2009). This type of knowledge can be found in formal training programs and even textbooks. Venkitachalam (2014)
summarized the importance of tacit knowledge in understanding a companys business processes, its customers and suppliers
and, generally, knowing how to accomplish work-related tasks. A simple example of this would be knowing the right person
to go to for specific information or resources. Having this type of knowledge or accessing it from another more experienced
co-worker makes an employee more efficient and able to accomplish things faster. More experienced generations are likely to
possess this type of knowledge whether they are aware of it or not, and may have difficulty explaining necessary information
about tasks to a new employee, possibly a member of Generation Z. Employers cannot often put tacit knowledge, acquired
over years of experience into company training courses or manuals, because this information is difficult to explain and
document. Oftentimes, the best way to attempt to explain an issue would be through face-to-face communication and not
through social media sites or text messaging. If newer employees such as members of Generation Z are unable to fully
understand what is being explained, they will not benefit as greatly from relationships in the workplace. If Generation Z
employees continue to rely on their preferred means of communication, they will perpetually miss out on opportunities to
acquire this type of knowledge. Members of Generation Z will have to work at communicating with their mentors and
supervisors more effectively to acquire this type of information so that they can more fully realize the benefits of face-to-face
communication.
RECOMMENDATIONS
Employers are presently aware of the changing impact that the usage of smartphones and social media have on their
employee population, especially newer generations. Companies have been weighing the costs and benefits of allowing such
usage in the workplace. Overall, most businesses today use it to their advantage to reach out to their customers and enhance
their public image. The ability of younger generations to adapt to new technologies is still a very useful skill that should not
be ignored, and most businesses recognize that digital communication is the present norm and a great way to increase the
speed of business processes. Employers are only beginning to witness the social interactions of Generation Z employees in
entry-level positions, because they are still relatively new to the workforce, with little job experience. Even though there is a
lot of uncertainty and lack of research, HR and employers can apply practices that they have learned through working with
Generation Y and the group that they refer to as Millennials, as Generation Z shares some of this generations
characteristics. The following are some guidelines that employers and HR professionals can follow to buffer communication
problems between multiple generations:
Employers should make social media and smartphone policies job-related, stating what is expected of their
employees when using social media and smartphone devices. Employers can legally prohibit harassment or
negativity regarding their organization and its members, including releasing any private company information
(Russell, 2011). Employers should communicate these expectations clearly to employees as changes are made to
policies and upon hire.
Emphasize the importance of oral and written communication skills in job descriptions, recruitment practices,
training, and performance management systems.
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Use content posted on employer-established networking sites as a point of reference in face-to-face conversations
and not as a primary means of communication. Supervisors who adopt forms of digital communication to work with
their employees can help new employees feel more comfortable, and encourage them to build on oral
communication skills, encouraging them to speak up in social settings. Younger generations are used to working
from distant locations or at home and are particularly skilled at completing work in such a way, which also allows
them more room for creativity (Ferri-Reed, 2014). Employers can build their own social networks to make younger
employees feel comfortable because this type of communication channel is practically second-nature to them. These
types of networking sites can be less worrisome because the type of material that is posted is at the discretion of the
employer and can be addressed through policy.
An employer can pair different generations together in hopes that they can exchange skills. For example, a more
experienced employee could be paired with someone from Generation Z to learn how to use new types of digital
communication such as smartphone applications or a work-related social networking site. On the other hand, the
new employee from Generation Z can benefit from the relationship, becoming more comfortable with traditional
face-to-face communication through instructing their coworkers on how to complete a task. Milligan (2014) referred
to this overall process as reverse mentoring.
Employers can establish work teams that include members of all generations. Joy and Haynes (2011) through
administering a questionnaire in the UK found that employees tended to transfer more helpful knowledge to one
another during mundane events they referred to as chance meetings, such as bumping into one another while passing
in a hallway or a break-room. Employees who work in the same building are more likely to connect to one another,
as opposed to those individuals who work as a team virtually. With this information, employers can somewhat
predict that they will observe improved communication and a better understanding of knowledge that is being
transferred between employees who work in close proximity.
Employers can seek to involve new employees in volunteer events. Milligan (2014) found that many companies
have helped employees of different age groups collaborate at volunteer events, outside their normal workdays.
Employees began to feel more at ease in working with one another, which resulted in them beginning to question
each other on how to do different things and pass knowledge back and forth (Milligan, 2014). Employers not only
benefit from volunteer events giving their organization a positive public image, but relationships through these
social interactions can be formed and transferred into an employees work-related activities. Employers can take
advantage of the multiple benefits of these events, as new generations of employees can develop more work-
appropriate social skills to help them succeed in other areas of their work.
Invest in additional training, if feasible. Employers can send employees to workshops to improve oral
communication skills.
Helping members of Generation Z build interpersonal communication skills so that they feel more comfortable conversing
with their immediate supervisors will strengthen supervisor-employee relationships, preventing much avoidable conflict and
future turnover. Strengthening bonds will also increase the likelihood that important, more complex forms of knowledge will
be passed down to this next generation of employees, which will ensure that an organization will survive in the future.
Finally, employers should carefully weigh the costs, benefits, and employment laws related to smartphone and social media
usage within their organizations and create policies that will accommodate their culture and help employees reach their
highest levels of capability.
LIMITATIONS ON PAST RESEARCH
Most research that has been conducted on Generation Z only covers their current usage of social media sites such as
Facebook and Twitter, and the majority of this generation of individuals is only entering the workforce in many entry-level
positions. There is limited research that has been conducted in observance of their social skills in employment settings, only
some minor assumptions and predictions made by individuals working with them in educational and employment settings.
One reason why research on this topic is limited is because of the age of this generation and their lack of work experience,
which could eventually provide them with more opportunities to get familiar with how to network and make conversations
with others, including their co-workers and supervisors.
Another problem that past research has posed is that much of the studies that have been conducted are quantitative, only
showing numerical data for the popularity of social media and smartphone application usage for different age groups. Much
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of the research does not indicate the thought-processes and motivations behind the next generations social media and
smartphone usage. Simple observations of younger generations using social media and smartphones do not reveal the true
reasons behind their behavior and can prove to be misleading.
Additionally, because digital communication usage patterns have only been studied through observation, researchers can
only describe behavior and symptoms of these hypothetical problems, which makes it hard to pinpoint all possible causes.
Finally, the many factors that can create problems with interpersonal communications are very complex and the many
unknown causes of this problem cannot be pinpointed to one issue, such as frequently using digital communication.
FUTURE RESEARCH
Many members of younger generations tend to communicate through digital communication on a daily basis, and it is not
clear about whether this has an effect on their ability to communicate in person and in writing. As smartphone applications
change and offer new ways to connect with friends, family and co-workers, new options are available for communication and
self-expression. More research on these types of communication should be conducted to reveal how the dynamics of
interpersonal relationships are affected. More specifically, it would be most beneficial to research how the supervisor-
employee relationship is affected by using different types of communication channels in daily work practices. Qualitative
research on this subject could reveal the perceptions of varying generations, along with their true motivations behind their
choice of communication channels. Employers can benefit from this knowledge and implement new forms of
communication in their workplace accordingly. More importantly, another question to explore would be how the daily usage
of varying communication channels, including digital communication, affect employee commitment to organizations, which
will in turn help employers to understand how to maintain positive relationships with employees of differing age groups.
Finally, longitudinal studies could reveal how this next generation of employees is performing and how their interpersonal
communication skills have developed over time, after growing up using digital communication throughout various aspects of
their lives.
CONCLUSION
Interpersonal communication is required in almost every position in employment, whether it is entry level or if it involves
leading and managing others. Employees are relied upon to represent an organization to its customers and share information
with co-workers and supervisors in order to reach a common goal. The change in options of communication channels has
caused employers to become concerned with their effects on their work environments.
Multiple researchers have proven that there is a difference in beliefs regarding digital communication. Older generations
often tend to view it as a hindrance to society and an addiction, but younger generations view it as an informational resource
and a way to connect to others (Kingston, 2014; Sponcil & Gitimu, 2013). Other researchers acknowledged that younger
generations are more efficient with using technology than older generations, but they predicted that, overall, the difference in
technological skill levels between generations will decrease over time and technology will become easier to use (Digital
Natives, 2013). Employers might perceive these same differences of perceptions between different generations in their
employee populations, but can work to harness the benefits of digital communication to retain Generation Z employees in the
future. Using training and development, mentoring relationships and prioritizing written and oral communication skills in
recruitment and performance management, employers can increase the likelihood that new generations of employees will stay
for longer periods of time with their organizations. Employers with the help of HR can weigh the benefits of using different
forms of communication to create a plan to help develop future generations of employees and help them to collaborate with
older generations. Researchers have proven that oral communication is still a great time and money saver, as it provides the
opportunity for individuals to instantly clarify information, prevent future anticipated problems and discuss confidential
information (Lankapalli, 2013). On the other hand, digital forms of communication such as email and video-conferencing can
save employers money on travel costs (Digital Natives, 2013). Also, digital communication can benefit employers because it
produces a record of conversations for documentation purposes. Using this information, employers must acquire the ability to
decipher which channels of communication are most appropriate in each business situation and train their employees
accordingly.
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Employers will also have to work to change their corporate cultures to adapt to changes in the use of technology in their
daily work routines, so that younger generations can establish mutually beneficial relationships with older generations, which
will result in the transfer of valuable knowledge. To help employers build these relationships, HR can benefit from learning
about the expectations of the next generation of employees in order to accommodate any roadblocks they might anticipate
when it comes to helping them acquire new skills, including building upon their social capabilities. Through careful
consideration of possible communication problems in the workplace, HR can work to develop a plan to diminish the negative
effects of weakened interpersonal communication skills and ensure that their organizations survive through preserving and
transferring knowledge from one generation to the next.
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Cardon & Marshall. (2014). The hype and reality of social media use for work collaboration and team communication.
International Journal of Business Communication, 1(21).
Calvasina, G. E., Calvasina, R. V., & Calvasina, E. J. (2014). Social media and human resources staffing: legal, policy and
practice issues for employers. Journal of Legal, Ethical and Regulatory Issues, 17(2), 51-60. Retrieved from
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Clayton, R. B., Leshner, G., & Almond, A. (2015). The extended iself: the impact of iphone separation on cognition,
emotion, and physiology. Journal of Computer-Mediated Communication, 20, 119135. doi: 10.1111/jcc4.12109
Diercksen, M., DiPlacido, M., Harvey, D., & Bosco, S. M. (2013). Generational differences in use of social media in today's
workplace. Psychology Research, 3(12), 762-771. Retrieved from
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Ferri-Reed, J. (2014). Building innovative multi-generational teams. The Journal for Quality and Participation, 37(3), 20-22.
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Harris, T. E., & Nelson, M. D. (2008). Applied organizational communication: theory and practice in a global environment.
New York: Lawrence Erlbaum Associates, Inc.
Heath, R. L., & Bryant, J. (2000). Human communication theory and research: concepts, contexts, and challenges. Mahwah,
N.J.: L. Erlbaum.
Hill, A. (2007). Key themes in interpersonal communication: culture, identities, and performance. Maidenhead: McGraw-
Hill Education.
Jennex, M.E. (2009). Knowledge management, organizational memory, and transfer behavior: global approaches and
advancements. Hershey, PA: Information Science Reference.
Joy, A., & Haynes, B. P. (2011). Office design for the multi-generational knowledge workforce. Journal of Corporate Real
Estate, 13(4), 216-232. doi:http://dx.doi.org/10.1108/14630011111214428
Kaur, P. (2014). Relationship between social networking sites usage pattern and motivations behind usage: a study of
generation Z a digital generation. International Journal of Applied Services Marketing Perspectives, 3(2), 996-1004.
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Kingston, A. (2014, Jul 21). Get ready for generation Z. Maclean's. Retrieved from
Lankapalli, R. (2013). Developing oral communicative skills: a necessity for today. International Journal of Applied Services
Marketing Perspectives, 2(4), 656-661. Retrieved from
Millennial branding and randstad US release first worldwide study comparing gen Y and gen Z workplace expectations.
(2014, Sep 02). PR Newswire. Retrieved from http://search.proquest.com/docview/1558861958?accountid=4216
Milligan, S. (2014, November) Capturing the wisdom of four generations: how can employers capture the skills and
knowledge of four generations? HR Magazine, 59(11). Retrieved from
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transfer.aspx
National Center for O*NET Development. Social Skills. O*NET OnLine. Retrieved February 24, 2015, from
https://www.onetonline.org/find/descriptor/browse/Skills/2.B.1/
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Roberts, J. A. & Pirog, S. F. (2013). A preliminary investigation of materialism and impulsiveness as predictors of
technological addictions among young adults. Journal of Behavioral Addictions, 2(1) 56-62. doi:
10.1556/JBA.1.2012.011
Russell, T. E. (2011). Employment law meets social media: advice for employers. HR Focus, 88(10), 4-7. Retrieved from
Society for Human Resources Management (2012, October). Managing for employee retention. Retrieved from
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engagement/pages/managing%20for%20employee%20retention.aspx
Society for Human Resources Management (2011, November). The ongoing impact of the recruiting and skills gaps.
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Sponcil, M., & Gitimu, P. (2013). Use of social media by college students: relationship to communication and self-
concept. Journal of Technology Research, 4, 1-13. Retrieved from
Swarnalatha, C., & Prasanna, T. S. (2013). Leveraging employee engagement for competitive advantage: strategic role of
HR. Review of HRM, 2, 139-148. Retrieved from http://search.proquest.com/docview/1655997743?accountid=4216
Venkitachalam, K., & Busch, P. (2012). Tacit knowledge: review and possible research directions. Journal of Knowledge
Management, 16(2), 357-372. doi:http://dx.doi.org/10.1108/1367327121121891
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A Tale of Two Crises: America and the American Black: A

Perspective
Robert L. Lattimer, Rutgers University
EXECUTIVE SUMMARY
After more than 250 years of slavery, 90 years of Jim Crow practices, 60 years of separate but equal public policies, 35 years
of sanctioned educational and housing redlining segregation, and the current national climate where the American Black is
questioning do their lives matter, in light of the Bible study murders of 9 in church at Charleston and the police killings of
Freddie Gray, Levar Jones, Tamir Rice, Michael Brown, John Crawford, Eric Garner, Renisha McBride, Jordan Davis,
Trayvon Martin and Oscar Grant, all within the last two years. From an economic standpoint, Black families, regardless of
income, are significantly less wealthy than similar white families, as reported by the Pew Research Center, which estimates
that white households are worth roughly 20 times as much as Black households.
This perspective will comment on the current state of race relations in America and will put forth the case that Americas
solution to constructively addressing racism, its original sin, is by implementing a comprehensive diversity public policy.
Sambo Glasses
It is often said within black communities that Blacks have been helping to bring comfort to the majority of Whites ever since
they have been old enough to distinguish themselves from Whites.
In games, classrooms, at lunch counters, restaurants, service stations, business meetings, in all facets of life, in instance after
instance, talk after talk, time after time, Blacks have answered the questions of Whites and have made an effort to put Whites
at ease.
Yet, through all the reaching, bending, stretching, twisting and turning, the majority of Whites still view Blacks through
Sambo Glasses; those partially civilized, semi-human beings.
When the glasses are at the top of the nose, Blacks are a variation of the age old Black stereotype. Underneath the veneer of
being viewed as civilized, Blacks are still perceived as latent African Warriors, potential criminals, mean and illiterate, or
docile and jovial.
After a history of achievements, in countless interactions, discussions and of course the current American President, Blacks
have, at best, been able to convince some enlightened Whites to lower Sambo Glasses.
Some Whites have lowered Sambo Glasses enough to look over the top to see Blacks for brief moments as human, but never
are the glasses removed for full acceptance.
Americas Original Sin
The early American economy was built on slave labor. The American Capitol and the White House were built by slaves, and
many today view racism not as a distinct evil, but as a relative of white privilege and superiority, for it was even President
Lyndon Johnson, in his historic speech at Howard University in 1965, that noted that Negro poverty is not white poverty.
He went on to state that many of its causes and many of its cures are the same; but there are differences; deep, corrosive,
obstinate differences, radiating painful roots into the community, and into the family, and the nature of the individual. These
differences are not racial differences; they are solely and simply, the consequence of the ancient brutality, of the past
injustice, and of the present prejudice.
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The current reality is not because of some laments about the black pathology, nor is the criticism of black family structures
by pundits and the so called intellectual valid, given the history whose existence was predicated on the torture of black
fathers, on the rape of black mothers, on the sale of black children. An honest assessment of Americas relationship to the
black family reveals a country to be not its nurturer but its destroyer; the reason black people are so far behind now is not
because of now, its because of then.
American prosperity was built on two and a half centuries of slavery, a deep wound that has never been healed or fully been
atoned for, and has been deepened by years of discrimination, segregation and racist policies that persist to this day. Until
America reckons with the moral debt it has accrued and the practical damage it has done to generations of African-
Americans, it will fail to live up to its ideals. But then thats not new current America.
The mass murder in Charleston, South Carolina of nine black people, ranging in age from 26 to 87 years, who gathered for
Bible study at a landmark African-American church has shaken the city whose history from slavery to the Civil War to the
present is inseparable from the nations anguished struggle with race.
Charleston, South Carolina, was the capital of the slave trade. It was in Charleston that a state convention in 1860 adopted
the ordinance of secession, putting South Carolina on the path to becoming the first state in the American union and of
which the first shots of the Civil War were fired four months later at the American garrison at Fort Sumter.
At issue, is not just who did the killings at the Emanuel African Methodist Episcopal Church in Charleston, South Carolina
last month, but more about the system, the cultural roots, the culture, the way of life, the philosophy, the unfinished business
of race and race relations within Charleston, the American South, and America that served as the fountain of the murderers.
President Obama stated in his eulogy for the Reverend Clementa Pinckney at the A.M.E. church in Charleston, South
Carolina: Maybe we now realize the way racial bias can infect us even when we dont realize it.
The Dilemma That Confronts The 21st Century American Society: Racism and its Cultural Racial Bias
When one examines the culture of American racism and the associated cultural racial bias against African-Americans within
the recent events in Charleston and the contextual review of the deaths of African-American men at the hands of the police,
such as Freddie Gray this year, Levar Jones, Tamir Rice (age 12), Michael Brown, John Crawford, Eric Garner, all in 2014,
Renisha McBride in 2013, Jordan Davis, Trayvon Martin in 2012 (killed by a security guard) and Oscar Grant in 2009, for
too long America has been blind to the way past injustices that continue to shape the present. As President Obama stated,
Perhaps this tragedy in Charleston causes us to ask some tough questions about how we can permit so many of our children
to languish in poverty, or attend dilapidated schools, or grow up without prospects for a job or for a career.
The deaths of African-Americans in Charleston, South Carolina, in Ferguson, Mo., in Cleveland and on Staten Island, and
others, as stated above, have reignited the debate about race, for now. Some have argued that these events are isolated and
that racism is a thing of the past. Even three years ago, the African-American President announced that we were living in a
Tran-racial society. Well, he has walked that back since. Others contend that they are merely the tip of the iceberg,
highlighting that skin color still has a huge effect on how people are treated.
The central challenge of race research is isolating the effect of race from other factors. For example, we know African-
Americans earn less income, on average, than whites of similar education. Could this be the evidence that employers
discriminate against the African-American? We also know African-Americans tend to be stuck in neighborhoods with poor
schools. If so, perhaps public policy should focus on place rather than race, as the prevailing bias?
Race can and has been isolated in many studies. In 2003, at the University of Chicago, a study was conducted by Marianne
Bertrand, an economist. She and her research colleagues mailed thousands of resumes to employers with job openings and
measured which ones were selected for callbacks for interviews. But before sending them, Bertrand randomly used
stereotypically African-American names, such as Jamal, on some and stereotypically white names, like Brendan, on others.
The same resume was roughly 50 percent more likely to result in a callback for an interview if it had a white name.
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Other studies have also examined race and employment. In a 2009 study, Devah Pager, Bruce Western and Bart Bonikowski,
all now sociologists at Harvard, sent actual people to apply for low wage jobs. They were given identical resumes and similar
interview training. Their sobering finding was that African-American applicants with no criminal record were offered jobs at
a rate as white applicants who had criminal records. My Rutgers colleague, Professor Nancy DiTomaso, in her book The
American Non- Dilemma, conducted research of a similar nature and found similar results.
These kinds of methods have been used in a variety of research, especially in the last 20 years. What follows are a few
general findings:
When doctors were shown patient histories and asked to make judgments about heart disease, they were much less
likely to recommend cardiac catheterization (a helpful procedure) to black patients, even when their medical files
were statistically identical to those of white patients.
When whites and blacks were sent to bargain for a used car, blacks were offered initial prices roughly $700 higher,
and they received far smaller concessions.
Several studies found that sending emails with stereotypically black names in response to apartment rental ads on
Craigslist elicited fewer responses than sending ones with white names. A regularly repeated study by the Federal
Department of Housing and Urban Development sent African-Americans and whites to look at apartments and
found that African-Americans were shown fewer apartments to rent and houses for sale.
White state legislators were found to be less likely to respond to constituents with African-American names. This
was true of legislators in both political parties.
Emails sent to faculty members at universities, asking to talk about research opportunities, were more likely to get a
reply if a stereotypically white name was used.
Even EBay auctions were not immune. When IPods were auctioned on EBay, researchers randomly varied the skin
color on the hand holding the IPod. A white hand holding the IPod received 21 percent more offers than a black
hand.
The criminal justice system, the focus of current debates, is harder to examine this way. One study, though, found a clever
method. The pools of people from which jurors are chosen are effectively random. Analyzing this natural experiment
revealed that an all-white jury was 16 percentage points more likely to convict a black defendant than a white one, but when a
jury had one black member it convicted both at the same rate.
I could go on, but hopefully the sheer breadth of these findings are informative.
There are some counterexamples: Data show that some places, like elite colleges, aremost likely do favor minority
applicants. But this evidence underlies that a helping hand in one area does not preclude harmful shoves in many other areas,
including ignored resumes, unhelpful faculty members and reluctant landlords.
To use the language of the psychologist Daniel Kahneman, we think both fast and slow. When deciding what IPod to buy
or which resume topursue, we weigh a few factors deliberately, slow. But for hundreds of other factors, we must rely on
intuitive judgment and we weigh these unconsciously fast.
Even if, in our slow thinking, we work to avoid discrimination, it can easily creep into our fast thinking. Our snap judgments
rely on all the associations we have, from fictional television shows to news reports. They use stereotypes, both the accurate
and the inaccurate, both those we would want to use and ones we find repulsive.
This kind of discrimination, crisply articulated in a 1995 article by the psychologists Mahzarin Banaji of Harvard and
Anthon Greenwald of the University of Washington, has been studied by dozens of researchers who have documented
implicit bias outside of our awareness.
Ugly pockets of conscious bigotry remain in this country, but most discrimination is more insidious. The urge to find and
call out the bigot is powerful, and doing so is satisfying. But it is also a way to let ourselves off the hook. Rather than point
fingers outward, we should look inward and examine how, despite the best of intentions, we discriminate in ways that are big
and small, in all of us.
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Americas Millennials and Race: They Are Americas Children
One particularly entrenched myth that society holds about racism is that todays millennials are more tolerant than their
parents and that racism will magically die out as previous generations pass on. We think that millennials should be lauded for
aspiring to be colorblind. There is this belief that tolerant young people will intermarry and create a post racial, brown
society, and that it will be beautiful.
The truth is that the American Millennials are not all right when it comes to racial equality. Studies have shown that
millennials are just about as racist as previous generations, or shall I say, as their parents.
When it comes to explicit prejudice against blacks, non-Hispanic white millennials are not much different than whites
belonging to Generation X (born 1965 to 1980) or Baby Boomers (born 1946 to 1964). White millennials (using a definition
of being born after 1980) express the least prejudice on 4 out of 5 measures in a recent survey on the matter, but only by a
matter of 1 to 3 percentage points, not a meaningful difference. On work ethic, 31 percent of millennials rate blacks as lazier
than whites, compared to 32 percent of Generation X whites and 35 percent of Baby Boomers.
The irony of this survey is that a generation that hates racism but chooses colorblindness is a generation that, through its
neglect, comes to perpetuate it.
The danger in invoking the myth of the presupposed racial tolerance of millennials is that it works to absolve todays society
of actively confronting and undoing the damage of the legacy of slavery, segregation and institutionalized racism. We think
racism will just die out with older generations. Why confront Americas racial legacy as long as you believe that the younger
generation will do it for you? To put it bluntly, it ignores how the cold logic of racism, white supremacy and anti-blackness
has worked for generations and how it continues to work.
As long as society refuses to confront this legacy of the ugly sin of racism today, we cannot depend on tomorrows
generations to come to Americas rescue.
Millennials have grown up in a world where we talk about race without racism, or where skin color is the explanation for
racial inequality.
Why Diversity Matters; But Will It Make For A More Perfect Union?
Americans must begin to imagine a new country, one that is based on a new spiritual renewal, on the foundation from which
the country was formed; that is, when the African-American was imported as the major unit of economic production.
The impending American demographic transformation shifts that are in process are creating a significant socio-economic
and political implication for the new American century, for example:
The White population will peak at 199.6 million in 2024 and slowly decline by 20.6 million until 2060.
The Latino population will double to 128.8 million by 2060; this is an increase from 53.3 million in 2012.
The Asian population will double from 15.9 million to 34.4 million.
The Black population will increase from 41.2 million to 61.8 million.
The Native American population will increase from 3.9 million to 6.3 million.
As such, racial and ethnic minorities accounted for 83 percent of the United States population growth in the last decade.
Traditionally American culture has been viewed as a melting pot and this view has been embraced by society and this
countrys business community. Customs developed when the American society and its workforce was relatively
homogeneous assumed that what was successful in the past will be successful in the future. As a result, when newcomers
come to American, or when blacks join organizations, they are expected to adjust to the traditions, norms and values of the
majority and to emulate the behaviors previous generations have found to be successful. Roosevelt Thomas has put it
succinctly: The American approach to diversity has been assimilation. And assimilation reinforces the rightness of
traditional ways of doing things and often creates a society and organizations that either mandates conformity or creates
confusion, isolation and tension.
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Those that have and are conducting diversity research within the American society and its organizations, such as Watson,
Kamalesh and Michaelsen, as presented in the Academy of Management Journal; Taylor Cox, as presented in the Academy of
Management Executives; Rosabeth Moss-Kanters study of motivation heterogeneous teams; Charlene Nemeth and her work
on stimulation consideration alternatives in task groups, and of course Roosevelt Thomas in his work, World Class Diversity
Management are discovering that people who bring diversity are forced to conform in irrelevant ways, are reduced in their
application of such valuable insights, because they lose valuable resources that could help it make better decisions, develop
more creative and innovative solutions to problems, adapt to differences among its communities, regions of the country, its
organizations, and to adjust to increasing competitiveness on a more global scale.
Additionally, my applied research has found the following:
Diversity in the American population, and thus in its communities and organizations, tends to suggest more
approaches to problem solving and decision making; thus, generally the more approaches that are presented, the
better the chance of finding a more effective conclusion.
Diversity in the American population, and thus in its communities and organizations, tends to bring more knowledge
and experience to most problems or can be co-figured to do so than a homogeneous population.
Diversity in the American population, and thus in its communities and organizations, could strengthen group
problem solving and successful implementation by including most concerned parties in the process; thus, when more
are involved in the solution formulation, a greater range of ownership is applied.
Diversity in the American population, and thus in its communities and organizations, could tend to be powerful
vehicles for building and maintaining project sources of information and loyalty.
Diversity in the American population, and thus in its communities and organizations, could tend to meet a variety of
important human needs, such as project affiliation, identity and implementation of project success.
With issues as profoundly complex and sensitive as diversity in society and within organizations, the exploration of greater
levels of creativity, personal adaptability, expanded styles of thinking and conduct and the rendering of public policy that is
required, is a rethink to exist in a new world that requires greater levels of insight, creativity and innovation, as the 21st
century promises to be both complex and invigorating.
The implications for addressing wealth, the widening income gap, race relations and how we as Americans define and
enforce the American value of opportunity will be the first time in our modern history that the U.S. population will be a
majority-minority; yet, success at addressing this transformative series of events could enable the United States to use this
demographic creative diversity as an opportunity to reaffirm Americans values of equality, fairness and dignity as America
engages in a formal process of the diversity of inclusiveness.
REFERENCES
Cox, T. H. & Blake, S. (1991). Managing cultural diversity: implications for organizational competitiveness. Academy of
Management Executives.
Cox, T. H., Lobel, S. A., & McLeod, P. L. (1991). Effects of ethnic group cultural differences on cooperative and competitive
behavior on a group task. Academy of Management Journal.
DiTomaso, N. (2013). The American non-dilemma, racial inequality without racism. New York, NY: Russell Sage
Foundation.
Douglass, F. (1845). Narrative of the life of Frederick Douglass, an American slave. New York, NY: Barnes & Noble
Classics.
Thomas, Jr., R. R. (2010). World class diversity management. San Francisco, CA: Berrett-Koehler Publishers.
Watson, W. E., Kumar, K., & Michaelsen, L. K. (1993). Cultural diversitys impact on interaction process and performance:
comparing homogeneous and diverse task groups. Academy of Management Journal.
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Employee Handbooks -- Current Trends for Human Capital

Competitiveness
Douglas M. McCabe, Georgetown University
EXECUTIVE SUMMARY
This paper will discuss and analyze the most current developments in relation to employee handbooks as delineated in the
recent literature as well as trends discerned from studying the employee handbooks of select small, medium, and large firms
as they relate to the issue of sustaining competitiveness vis--vis human capital. Thus original field research will be gleaned
from actual employee handbooks of domestic firms coupled with evidence-based research from the current literature. The
paper will emphasize policy recommendations for executives, managers, and scholars on what substantive topics should be
included in these critical company documents and what mistakes ought to be avoided from a normative value perspective in
writing these essential human capital policy manuals to achieve sustainable human resource management competitiveness.
Keywords: Employee Handbooks, Human Capital, Organizational Due Process
INTRODUCTION
The development of sound and just employee handbooks within companies and organizations has made significant progress
in recent years. Evolutionary and yeoman changes in the adoption of employee handbooks into the overall strategic and
tactical corporate human capital system of firms have enhanced the opportunities for the growth of this very important human
resource management process. Some problems remain unsettled, but the continued development of sophisticated employee
handbooks that are equitable for both employers and employees will continue to mature. We may disagree as to whether the
pace is fast enough but the direction is clear and encouraging. Simply put, this is an exciting evolving area of human
capital/resources management that warrants close observation (Cook, 2008; White, 2012; Hoft, 2007; Donnelly, 2006;
Lopatka, 2014).
FIELD RESEARCH FINDINGS
This author examined numerous employee handbooks to determine the most salient trends in the arena of organizational due
process for improving human capital competitiveness. He found that employees' complaints -- whether they are the fault of
the employees or of management personnel -- are so inevitable that good business practice dictates that corporations,
companies, and organizations make provision in their employee handbooks for formal procedures for resolving complaints.
In all of the handbooks examined, an organizational due process system was delineated.
Why do firms have a formal organizational due process system? Is the providing of a procedure merely an incidental feature
in the operation of a company, or is it the implementation of an ethical obligation which executives feel toward the
employees, or do managers believe that it will lead to better human capital competitiveness, which in turn, leads to better
profits and productivity. Based upon the prefaces of the employee handbooks, the answer is that they believe that an
organizational due process system will lead to better profits and productivity.
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An examination of these handbooks revealed three major trends in organizational due process systems: the utilization of
arbitration, the use of peer review systems, and very formalized open-door policies, especially with formal appeals to top-
level management at the presidential or vive-presidential level.
To begin with, the use of arbitration in the nonunion employment relationship was not as prevalent as one would expect.
Nevertheless, arbitration remains a sensible option which executives and managers should always consider. The speed with
which it functions is a definite asset for both parties, and its low cost is very attractive in comparison with the expense of
dragging a dispute through a time-consuming civil court suit.
But what inducement is there for a firm to allow its employees to invoke this type of organizational due process? The
inducement is that arbitration is just, speedy, and relatively inexpensive. Beyond that -- and most important from a human
capital competitive standpoint -- is that its availability should assure employees that their company is fair-minded to the
degree of willingness to have their complaint settled on neutral ground. The final consideration is that an employee's
complaint can be the proverbial monkey wrench in a company's otherwise smooth operations, especially if it affects the
morale of other employees. Consequently, a firm should leave no stone unturned in its efforts to dispose of employees'
complaints promptly with this type of organizational due process system.
Next, an examination of these handbooks revealed that peer review systems as a structured format of organizational due
process was more prevalent than anticipated. An increasingly large number of companies are establishing peer review panels
to resolve conflicts as a form of institutionalized organizational due process. This trend represents an effort by companies to
build an open, trusting atmosphere. Executives and employees see tangible benefits in this type of system. For example,
peer review increases supervisor's awareness for the proper application of rules and procedures.
Another benefit of a peer review system as organizational due process is its perceived justice by employees. Employees
truly feel that a decision in which their fellow employees have fully participated guarantees a maximum amount of just and
equitable treatment; provides employees with a tangible and legitimate voice; and meets a fundamental and basic employee
desire for participative management. There is a fundamental principle at work here -- namely -- the ethical obligations of top
management to do everything possible to achieve the imperative objective of a harmonious environment for the growth and
maintenance of justice in the employment relationship. Thus, there is the justification for a company to install peer review
systems based on an improved perception of fairness on the part of all employees about how people are treated at their
company. Finally, every company should familiarize itself with the potential benefits of this type of organizational due
process.
Finally, an examination of these handbooks revealed that very, very formalized open door systems of organizational due
process were most prevalent. It is axiomatic that the internal human capital health of a company requires that its employees
possess high morale, and this in turn requires that complaints -- which are very destructive of morale -- be dealt with as
quickly as possible, and, of course, as satisfactorily as possible from employees' viewpoints. The very first requirement,
therefore, is the maintenance by management of a company environment which encourages employees to reveal their
grievances to management instead of keeping them hidden.
From a human capital motivational standpoint, a just, fair, and legitimate open-door organizational due process framework is
one in which executives are motivated by desire for their employees to feel comfortable -- and without fear of retribution -- in
going over the heads of their immediate supervisors in search of satisfying answers to personal problems, but, inasmuch as
management deems it impractical for all of its doors to be open at all hours and under all circumstances to employees, a more
or less formally structured system is prescribed for an employee's appeals upward through management to the highest level
authorized in the employee handbook. This author found this desideratum to be present in a number of organizational due
process systems delineated in the surveyed employee handbooks.
In closing, it is a business axiom that a project will not be successful unless it is energized and monitored by the company's
top executive. This is applicable to management's installation of various organizational due process mechanisms in employee
handbooks in order to achieve better morale, productivity, and profits.
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POLICY RECOMMENDATIONS
A characteristic of the development of employee handbooks has been the unpredictability of their suitability. Based upon the
study and analysis of selected employee handbooks of some nonunion firms garnered by the author, the following actions
should be taken where appropriate by human resource managers in a multiplicity of firms. Hence, a summary of general
principles should be considered when preparing a company's employee handbook.
First of all, ambiguity in the phraseology of an employee handbook should be no more tolerated than it is in an engineer's
blueprint.
Second -- before you begin writing your employee handbook -- one should examine the handbooks of a number of other
companies to reflect on their thinking of the topics to be covered and to inquire as to their experience living under such a
document.
Third, it is advisable to state in the introduction of an employee handbook that your company's philosophy is that "Our
employees are our most important asset," together with an explanation for this assertion.
Fourth, consider the advisability -- as some companies do -- of providing a specific definition of what constitutes a grievance
as your management desires employees to understand the word.
Fifth, it is essential to delineate the employee handbook a formal four-step grievance process for nonunion employees.
Sixth, if you are a participative management company -- that is, one in which fresh ideas are generated in employee-
management committees -- the employees should be allowed to make recommendations to management as to the provisions
of an employee handbook. If they are involved, they will be more likely to accept such a document.
Seventh, if you are a very, very decentralized company with highly and substantially autonomous divisions, it might be
prudent to perhaps have a different handbook for each different division.
Eight, before any detailed provisions of the employee handbook are written, a decision should be made regarding the
enforcement participation by human resource managers.
Ninth, you will probably desire -- as most companies do -- to announce in your employee handbook that you firm has an
open-door policy. Its primary advantage is undoubtedly social-psychological in nature; that is, giving employees a sense of
intimate relationship with management as contrasted with a sense of isolation from management.
Tenth, a decision should be made regarding the employee handbook's policy of whether grievances should be confidential or
not.
Eleventh, serious consideration should be given to the practice of stipulating in employee handbooks that employees may
feel secure from retribution against them by a supervisor or manager because of an initiation of a grievance.
Twelfth, procedural justice and interactional justice issues regarding discipline and discharge should be well-formulated in
the employee handbook.
Thirteenth, executives must comply with organizational procedures and policies delineated in employee handbooks.
Procedures should never be short-circuited for the sake of expediency.
Fourteenth and finally, companies should adopt a contingency philosophy towards employee handbooks. They should
realize that there is no one single and best handbook for all companies and all organizations and that no two firms should
have identical employee handbooks for the sake of uniformity.
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CONCLUSION
In closing, some general principles were able to be deduced from the cited literature and analyzing select employee
handbooks. In any event, it is hoped that this terse paper will provide some guideposts for employers in future development
of their employee handbooks. Needless to say, the writing of an employee handbook is a very serious matter for successful
and competitive human capital management.
REFERENCES
Cook, G.M. (2008). What's in your client's employee handbook? Georgia Bar Journal, June 2008, 38-40.
Donnelly, L. (2006). Time for a human resources credo? Business Forum, Spring 2006, 20-21, 24.
Hoft, J. (2007). Your employee handbook: is it an enforceable contract? The Entrepreneurial Executive, 13-22.
Lopatka, K.T. (2014) The handbook rules charade. Labor Law Journal, 65 (2), 69-75.
White, R.B. (2012) A reminder to employers about preventative measures. The Advocate, 26-28.
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Creating a No-Tolerance Policy for Workplace Bullying and

Harassment
Sarah Pastorek, Saint Francis University
EXECUTIVE SUMMARY
Many similarities co-exist between workplace bullying and harassment with most originating from a lack of policy.
Insufficient understanding of how the two differ also leads to the negative effects resulting from having no policy. Recent
court rulings on workplace bullying and harassment can assist in new strategy development, providing all-around internal
awareness, collective participation within the company and other benefits. To date, up to 29 states and two territories have
sought to prohibit workplace mistreatment through introducing healthy workplace bills, none of which have yet been passed.
Keywords: Harassment, Healthy Workplace Bill, Litigation, No-tolerance policies, Workplace bullying
INTRODUCTION
Workplace bullying and harassment have continued to show connections relating to one another, yet the laws and ways of
identifying each differ. States have taken steps to create bills prohibiting workplace bullying just as workplace harassment is
prohibited under laws such as the Civil Rights Act (1964), the Age Discrimination in Employment Act (1967) (ADEA) and
the Americans with Disabilities Act (1990) (ADA). To date, no federal, state or local laws prohibit workplace bullying,
leaving human resource departments with the responsibility of creating anti-bullying policies in their organizations. Human
resources and other educated professionals have identified similarities and differences supporting the idea that organizations
can and should pair bullying with harassment under workplace policies. Without having a policy identifying and addressing
bullying with harassment, organizations allow themselves to be more susceptible to suffering litigation from complaints. To
more easily follow the reasoning behind the necessity of implementing such a policy, negative effects of workplace bullying
and harassment should be reviewed thoroughly. Organizations should take into account the legal definitions and prohibitions
with harassment, as well as the lack of support with bullying in order to select and implement a no-tolerance policy covering
both workplace bullying and harassment.
DEFINING BULLYING AND HARASSMENT
Distinguishing workplace bullying from harassment has continued to present challenges, especially in each organizations
specific description. According to multiple sources (Cowan, 2012; Lutgen-Sandvik & Tracy, 2012; Tye-Williams & Krone,
2015), no one definition encompasses an exact and specific description of the scope of workplace bullying. As defined in the
Healthy Workplace Bill (HWB) (2014), workplace bullying is repeated mistreatment, abusive conduct that is threatening,
humiliating, or intimidating, work sabotage or verbal abuse (Workplace Bullying Institute, 2014, p. 1). Other sources
(Cascardo, 2011; Cowan, 2012; Martin & LaVan, 2010; Public Services Health, 2010; Tye-Williams & Krone, 2015)
encompass the same ideas when defining workplace bullying as being a repeated act toward an individual employee or a
group of employees that creates health and safety risks.
As a result of his own research, Cowan (2012) isolated several factors used to classify bullying acts by labels, common acts
and levels of severity per situation. Such labels included harassment paired with the term victimization, emotional abuse and
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mobbing. The common acts of bullying included insulting remarks, gossip, verbal threats, humiliation, work interference,
spreading rumors, groping and isolation. Finally, the levels of severity were based upon the bullys intent to bully, the
verification of this intent and degrees of severity, such as intensity, frequency and duration (Cowan, 2012).
When looking at the definition for workplace harassment, organizations have a clear definition of what constitutes an act of
harassment because of its coverage under federal, state and local statutes. As defined in Section 703 of the Civil Rights Act
(1964), harassment encompasses discrimination on the basis of any such characteristic of race, color, religion, sex (including
pregnancy), national origin, age (40 or older), disability or genetic information (2015, p. 5). The Act also prohibits any
retaliation harassment towards employees for filing a discrimination charge, testifying in support of a charge or participating
in any investigation, proceeding or lawsuit. Acts of discrimination on these bases also violate the ADEA and the ADA and
become unlawful in two instances: when enduring the offensive conduct becomes a condition of continued employment; and
when the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider
intimidating, hostile or abusive (U.S. Department, 2015).
For the employer to be held liable, certain standards and circumstances must be assessed. When the acts of harassment are
committed by a supervisory employee, the employer is automatically liable for any harassment action and charge when the
act deals with employment status, such as loss of wages, failure to promote or hire and termination (U.S. Department, 2015).
Likewise, regarding employer liability for non-supervisory employees committing harassment, if the employer had control,
knew or should have known about the harassment and failed to take immediate and appropriate action, then the employer
remains liable (U.S. Department, 2015).
One notable difference between bullying and harassment is the intent of the bully or harasser. For instance, acts of sexual
harassment can be categorized as having the intent on the basis of subjective perception of the target and of a reasonable
person; whereas, for categorizing acts of bullying, not only must the target feel singled out and the situation hostile to a
reasonable person but also a mal-intent must be recognized (Cowan, 2012). According to the HWB (2014), 29 states and two
territories have already introduced bills to place workplace bullying within the scope of its protection just as harassment is
protected. None of these proposals has yet been passed, but these states have initiated the change to include prohibition of
workplace mistreatment under the policy.
WORKERS AFFECTED BY WORKPLACE BULLYING AND HARASSMENT
Over the past five years, the WBI performed a variety of Instant Polls, or online surveys that rely on self-selected samples of
individuals bullied at work. The sample size and topic of interest for each survey differed, yet the common goal remained the
same in striving to acquire information about workplace bullying with hope that the HWB would be approved and enforced.
According to the more recent WBI national polls in 2014, a major question was how aware the American public was of
workplace bullying. The 2014 WBI U.S. Workplace Bullying Survey revealed that 72% of the American public was aware of
workplace bullying (Workplace Bullying Institute). In contrast, the percentage of employers who acknowledged its presence
was far less than the American public, with employers having eliminated bullying 12% of the time and having acknowledged
it 10% of the time (Workplace Bullying Institute, 2014). In continuation, the HWB (2014) revealed employers having denied
workplace bullying 25% of the time, discounted it 16% of the time, rationalized it 15% of the time and defended it 11% of
the time. Another 2014 poll revealed how rarely targets were believed when bringing forward claims of workplace bullying.
The 666 respondents, a combination of both bullied targets and witnesses, revealed that targets were never believed 71% of
the time. In addition, bullied targets were believed 20% of the time after the bully told his or her story and were only believed
9% of the time over the bully (Workplace Bullying Institute, 2014).
The 2014 WBI U.S. Workplace Bullying Survey further analyzed the results by gender, comparing how often males and
females were the perpetrator and the target. The survey revealed 69% of perpetrators or bullies in the workplace as male and
60% of bullied targets as female (Workplace Bullying Institute, 2014). Male bullies targeted females 57% of the time. When
females were the bullies, they targeted other females 68% of the time. When combined together, these results suggested that
77% of currently bullied targets were bullied by perpetrators of the same gender (Workplace Bullying Institute, 2014). Figure
1 shows the proportion and percentages of male and female bullies and targets while Figure 2 shows male versus female
percentages for bullies targeting genders (Workplace Bullying Institute, 2014).
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FIGURE 1
FIGURE 2
According to a 2013 WBI survey for bullying by industry and sector, the leading industry with workplace bullying was
healthcare at 27% (Workplace Bullying Institute, 2013). The other four most prominent industries identifying workplace
bullying were education (teacher-to-teacher) at 23%; public services at 16%; other financial, skilled trades, legal, banking,
travel and transportation, construction, entertainment and agriculture at 14%; and the service industry at 10% (Workplace
Bullying Institute, 2013). The breakdown of workplace bullying by sector came to 40% for corporate and small businesses,
40% for government agencies and 20% for non-profit organizations (Workplace Bullying Institute, 2013).
Other information supporting the prevalence of workplace bullying and harassment also countered beliefs that both were on
the decline. First, the 2014 WBI U.S. Workplace Bullying Survey revealed that targets appeared to lose their jobs at a rate
almost four times as often as bullies (82% vs. 18%). At the same time, the survey identified 56% of bullies as targets bosses
(Workplace Bullying Institute, 2014). With bosses being the perpetrators this frequently, organizations must take
precautionary steps with having alternative plans for employees to file complaints in such situations. Second, Martin and
LaVan (2010) addressed results regarding the effects of workplace bullying on both the target and the organization in their
article in the Employee Responsibilities and Rights Journal. In descending order, the most common effects from workplace
bullying and harassment were stress (53.3%), retaliation (17.8%), reduced productivity (13.3%), Post-Traumatic Stress
Disorder (PTSD) (4.4%), and violence (4.4%) (Martin & LaVan, 2010). Martin and LaVan (2010) also noted that their
findings suggested bullying to be a legitimate managerial style due to an organizations lack of a no-tolerance policy.
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COURT RULINGS/LITIGATIONS WITH WORKPLACE BULLYING AND HARASSMENT
According to the HWB (2014) under the WBI, 93% of all adult Americans supported the implementation of a law prohibiting
workplace bullying. As noted, without any policies intact, organizations make themselves more susceptible to suffering
litigation. When considering a policy that will work in a specific organization, employers must address a variety of legal
issues. Specifically, employers need to take into account issues deriving from an intentional infliction of emotional distress,
the EEOC, any union involvement and its duty to fair representation, any definitions of bullying relative to harassment under
Title VII, the ADA and the ADEA, and any organizational codes of conduct and ethics policies.
To start, without deriving from a protected status, maltreatment in the workplace remains unprotected at the federal and state
levels. The HWB (2014) intends to help with this lack of coverage by protecting both parties from the repercussions of
workplace bullying and possible harassment claims. The American Bar Association (ABA) highlighted the scope of the
HWB (2014) as enforcing employers to take more reasonable care with the workplace environments to which they subject
their employees along with setting precautionary standards and procedures to deal with workplace bullying and harassment
should complaints arise. As defined by the HWB (2014), an abusive work environment is created when an employer or one
or more of its employees subjects another employee to abusive conduct with intent to cause pain or distress; the abusive
conduct results in physical and/or psychological harm. Although not yet exhaustive, according to the ABA, the plaintiff must
prove the following: the acts and/or omissions must be such that a reasonable person would find abusive based on the
severity, nature and frequency of the conduct; a single act will not normally be sufficient to establish the threshold for
abusive conduct except for the instances of an especially severe and egregious act; or the conduct that exploited a known
psychological or physical illness or disability would be an aggravating factor (2014, p. 2).
In comparison, the process of litigation for harassment claims also consists of three deciding issues. The close mimic of the
ABAs steps to proving workplace bullying with the steps to proving workplace harassment under law might help tie both
together under a no-tolerance policy. The issues needing addressed to deeper extents are whether or not the acts of
harassment in fact occurred, whether or not the conduct constitutes as harassment on the basis of the plaintiffs claimed
protected trait and whether or not the defendant or employer should be held responsible for the harassment (U.S. Department,
2015). The employer is automatically liable when the employee suffered wage loss, termination or another form of economic
harassment, yet in regards to the employer being liable for emotional distress damages, the plaintiff must prove one of the
following theories: that the employer knew or should have known about the harassment and did not take any effective
remedial measures to stop it; that the employer gave the supervisor, or harasser, the authority to control the working
environment and the supervisor, or harasser, abused that authority to create a hostile work environment; or that the employer
was negligent by failing to take reasonable steps to prevent the harassment from occurring (U.S. Department, 2015).
A recent lawsuit (2013) filed by the EEOC incorporated the process of litigation for a claim of harassment in the workplace.
The 2013 lawsuit filed against New Breed Logistics, a North Carolina-based logistics services provider, was settled at a more
than $1.5 million payment for sexual harassment and retaliation claims (U.S. District Court, 2013). In this case, three temp
female employees were targets of sexual harassment from a supervisor, involving unwelcome sexual touching and lewd,
obscene and vulgar sexual remarks (U.S. District Court, 2013). After the three temp employees filed harassment complaints,
the same supervisor fired them. The same supervisor then fired one male employee because the employee spoke up about the
harassment and agreed to serve as a witness to the three females complaints. Because of the status of the harasser, the
specific acts of harassment towards the three female employees and the retaliation to all four employees, New Breed was
proven to have violated Title VII, resulting in the awarding of monetary damages for its violations.
In the court case Vance v. Ball State University (BSU) (2012), a 5-4 decision by the Supreme Court determined that the
employer, BSU, was not held liable for the acts of harassment committed by a co-worker to the plaintiff. The petitioner, an
African-American woman sued her employer, BSU, alleging that a fellow employee, who served as a supervisor to her in
some instances, created a racially hostile work environment in violation of Title VII (U.S. District Court, 2013). In order to
be considered a supervisor, the employee would have to have the power, as given by the employer, to either hire, fire,
demote, transfer or discipline another employee (U.S. District Court, 2013). On the basis of a predetermined definition of
who falls within the supervisory category, the alleged harasser was considered a co-worker by law. If the harasser was a
co-worker to the alleging employee, the employer would be liable only if it did not take reasonable care to correct or
prevent any future behavior (U.S. District Court, 2013). After the initial complaints of harassment, BSU did proceed to take
reasonable care even though the steps taken did not eliminate the acts of harassment altogether.
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Employers should be aware of other liable situations within the boundaries of harassment. Such situations could violate a
states anti-discrimination laws under its Human Relations Act, coverage of the general duty clause and coverage of
reasonable care in the workplace. Each state enforces its own process for employers to follow that were formed from federal
anti-harassment laws. For workplace bullying and harassment, coverage of the general duty clause and the duty of reasonable
care fall under the scope of OSHA, which requires employers to provide their employees with a working environment free
from hazards as noted in the companys handbook and to refrain from negligent hiring and firing practices (U.S. Department,
2012). The duty of reasonable care addresses actions that fall outside the scope of employment (Cascardo, 2011). The key
factor for deciding on such actions comes from foreseeable risk (Cascardo, 2011).
NEGATIVE EFFECTS OF WORKPLACE BULLYING AND HARASSMENT
To minimize these foreseeable risks, employers should take precautionary measures to implement a process of dealing with
bullying and harassment complaints. By doing so, they would minimize law-related risks and would avoid other negative
effects from a lack of attention to dealing with workplace bullying and harassment. Cowan (2012), Lutgen-Sandvik and
Tracy (2012) and Tye-Williams and Krone (2015) identified how the lack of laws impact human resources departments
ability to effectively implement no-tolerance policies covering bullying and harassment and also noted both the organization
and its employees suffered similar negative effects.
For the organization, increases in its turnover rate, overtime payment, medical insurance and absenteeism are prominent
effects from dismissing workplace bullying complaints. Other identifiable effects are reduced productivity and decreased
employee morale and employee retention numbers (American Bar Association, 2014). After researching general cost
estimates resulting from workplace bullying and harassment, the WBI (2014) devised an equation incorporating all of the
areas employers could suffer a loss:
Turnover + Opportunity Lost + Absenteeism + Presenteeism + Legal Defense Cost + Dispute Resolution + Trial
Costs + Settlements + Possible WC/Disability Fraud Investigation = The routine cost of allowing bullies to harm others with
impunity. (Workplace Bullying Institute, 2014)
For turnover costs, factors such as an employers contributions to insurance (COBRA), placement of new hiring
announcements, recruiting firm fees to help find candidates, lost opportunity costs for higher up employees meeting with
candidates during working hours, re-location costs for new employees, possible hiring incentives and loss of production costs
from an empty position all play into its weight within the formula (Workplace Bullying Institute, 2014). The WBI multiplied
the combined salaries of departed workers by 1.5 (a low estimate) to devise an estimated loss for a position turnover (2014).
Specifically, if an employees salary came to $50,000 annually, the company could multiply 1.5 by the salary to get an
average cost of $75,000 to recruit and replace that one departed employee (Workplace Bullying Institute, 2014).
The WBI separated absenteeism and presenteeism in the costs on an organization. An advised estimated cost for absenteeism
per employee comes from multiplying the hourly rate, or an appropriate estimated rate, by the hours the employee spent away
from the employer (Workplace Bullying Institute, 2014). Whereas, to calculate presenteeism costs, the WBI counted the
number of 3-D employees (the disgruntled, disgusted, and desperate employees), discerned and estimated their hourly
wage with the number of hours they worked during the bullying incident and then halved the answer (Workplace Bullying
Institute, 2014). This formula gives employers an estimated cost of unproductiveness from absenteeism and presenteeism.
Litigation and settlement costs can be viewed in two ways. If using an internal legal team, employers could multiply an
attorneys hourly wage by the number of people involved in the defense and then by the amount of hours that will be
dedicated to defending the case (Workplace Bullying Institute, 2014). If represented by an outside legal firm, employers
could assume an estimated cost per threat or lawsuit to amount to around $30,000 (Workplace Bullying Institute, 2014). If the
case goes to court and a lawsuit is pursued, employers must take into account filing costs, depositions, transcripts and
investigation costs. The WBI (2014) calculated an average cost of $60,000 for a defense not including trial costs. Finally, lost
opportunity costs stem from a lack of work for one or more employees. The WBI explained that an employer could
potentially lose an employees annual revenue if that employee leaves the company (Workplace Bullying Institute, 2014).
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For bullied employees, negative effects are identified in their health care costs, alcohol or drug usage, requesting of time off
and family life (Workplace Bullying Institute, 2013). A 2012 WBI poll revealed the most frequent symptoms targets endured
as a result of suffering from workplace bullying.
FIGURE 3
Workplace bullying and harassment also negatively affected employees who witnessed others getting bullied or harassed.
Tye-Williams and Krone (2015) discovered an increase in stress-related health problems and a decrease in job satisfaction for
co-workers who witnessed bullying or harassment. Research revealed results of around 18 million employees in the U.S.
having reported witnessing workplace bullying to some extent (Tye-Williams & Krone, 2015). These co-workers most likely
were not aware of the proper steps to handle such incidents in their organization. Co-workers who witnessed bullying and
harassment also feared retaliation or being bullied as a result of witnessing and/or supporting targets of workplace bullying.
STRATEGIES FOR ADDRESSING AND ELIMINATING

WORKPLACE BULLYING AND HARASSMENT
Due to a lack of policies, no single strategy currently exists for all organizations to adopt. Thus, human resource departments
must assess multiple internal factors before trying to identify an effective policy with prohibiting bullying and harassment.
Some strategies were recommended for different stages in the process of handling workplace bullying.
Lutgen-Sandvik and Tracy (2012) researched a way for targets to relay their bullying experiences and came to a strategy
incorporating the idea of storytelling. When reporting a complaint, targets were to do so in the form of a story, identifying a
clear beginning, middle and end (Lutgen-Sandvik & Tracy, 2012). Targets were also to include clear descriptions of the
bully, specifics on only the bullys behavior, details about the bullying experienceincluding specific dates, times of the day
and places of the eventsexplanations of the targets costs from the abuse, notes on any other bullying incidents, negative
effects this particular experience had on coworkers and the productivity of the workplace and depictions of the target as a
survivor rather than a victim (Lutgen-Sandvik & Tracy, 2012).
Another bullying prevention program, tested by Stagg and Sheridan (2010) in the healthcare field, served as an intervention
program to help employees learn cognitive rehearsed responses and when to use them as defenses against bullying (Stagg &
Sheridan, 2010). The employer provided its employees with 10 of the most common bullying behaviors in its organization.
The employer then created an open environment for employees to rehearse using the responses in practice-bullying
situations. By allowing health care personnel the opportunity to practice the responses prior to the need to utilize them, the
employees felt more confident and prepared when confronted with workplace bullying. The use of these cognitive rehearsed
responses revealed positive results in the 90th-percentile with stopping workplace bullying (Stagg & Sheridan, 2010).
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A third recommended strategy was to offer stress management training. The handbook compiled by the Public Services
Health and Safety Association (PSHSA) (2010) encouraged implementation of stress management training into the pre-
planning phase of a no-tolerance policy. The goal of this training was to offer employees ways to handle stressful situations
deriving from workplace bullying. In the training, employees were provided with some bully-proof responses, excusing them
from situations before they escalated (Public Services Health, 2010). Employees were also required to record bullying
situations in a journal, serving as both a stress reliever and as a more accurate way to present the facts to human resources.
For instance, employees should document incidents as close to the time of occurrence as possible, including the dates, times
and locations of each bullying incident along with who all was present, what happened and how they felt in the situation
(Public Services Health, 2010). This form of documentation provided a safe and confidential place for targets or witnesses to
relieve stress while also providing more accurate details and experiences.
A fourth strategy, also from PSHSAs handbook, discussed a post-situational mechanism for organizations to implement to
help keep complaints internal longer. Employers should provide all employees with access to counselling or rehabilitation
after experiencing bullying instances; it also gives employers more time to investigate situations and more opportunities to
provide reasonable care to those involved, which can ultimately minimize litigation. This mechanism would also help retain
targets longer and give them a way to cope, give bullies opportunities to see the effects of their actions and then change their
behavior and help other employees feel safe and satisfied with their jobs (Public Services Health, 2010).
These strategies and recommendations can assist employers with implementing their own no-tolerance policies combining
workplace bullying with harassment. The effects and factors definitely outweigh ignoring workplace bullying, and policies
should tie together all employees ideas and wants in a no-tolerance policy.
RECOMMENDATIONS TO IMPLEMENTING ANTI-BULLYING/HARASSMENT POLICIES
As mentioned by the EEOC, employers need to take responsibility for creating policies prohibiting bullying with unlawful
harassment in the workplace. Employers should also create an effective complaint or grievance process, continually update
and enforce anti-harassment training to all managers and employees and take immediate action when a complaint arises (U.S.
Equal Employment, 2010). A key part of the success of implementing policies, processes and training is the continual and
consistent communication to all levels of the organization (U.S. Equal Employment, 2010).
Before an organization can decide on a strategy to implement, it must conduct an assessment to identify the current state of
the organizations environment and culture. According to Maurer and Snyder (2014), some answers the organization should
be looking for with this first-stage assessment include:
whether the internal environment supports teamwork or encourages competition;
whether performance is measured at the end result or if it provides rewarding opportunities along the way;
whether the opinions of lower-level, non-management employees are accepted or if they are ignored;
whether immediate assistance is provided for workplace issues and complaints or if it lacks follow through;
whether feedback from all levels is taken into account or if it only considers managerial and supervisory feedback;
whether leadership occurs in a top-down manner or if it functions as more of a dictatorship; and
whether or not coaching and training for performance appraisals are required for supervisors and whether or not
incident reporting is effective and good counseling techniques are present.
Assessments of current managers and supervisors should also be performed in a more generalized manner. Specifically, the
organization should assess the managers and supervisors communication skills to employees of all levels, their guidance of
the employees they supervise and manage, their training and if it is up-to-date, their strengths and weaknesses in comparison
to other managers and supervisors, the strength and accurateness of their completion of performance appraisals and their
reporting of any employee complaints in conjunction with company policies (Maurer & Snyder, 2014).
By completing these and other pre-policy assessments, the organization will be able to take steps of advancement to initiate
its desired change. At this point in time, all areas of the company should play into the goals and functionality of the policy.
Lutgen-Sandvik and Tracy (2012) recommend incorporating specific bullying language. The policy should also identify
general bullying information and bully profiles, what the company considers to be acts of bullying, how to confront and
report prohibited behavior and when it is acceptable to go above supervisors to report complaints. Other important
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information should include training for supervisors and managers on how they should maintain a bully-free environment
along with training for all employees to learn and practice situational bullying instances (Public Services Health, 2010).
Once all areas are taken into consideration, a communication plan should be created with clearly defined goals, expectations
and standards. It should include the time and place the policy will be communicated, which employees will be told when or if
they will be told collectively, the means of communication, the sources available to employees seeking information or help
and possible tools that will serve as consistent means of communicating future changes. Lutgen-Sandvik and Tracy (2012)
advised organizations to spread the efforts and roles throughout all organizational levels and to inform employees that
everyones voices will be heard and taken into consideration. By spreading efforts, organizations will help adjust employee
attitudes, help maintain efficient communication and help employees learn ways in which to counter these acts. For example,
providing employees with reasons or influences for why bullies react the way they do, such as contextual and personality
factors, will help targets feel more in control and focus more on the bullys reasons for acting out that might come from the
bullys own fearfulness or incompetence (Lutgen-Sandvik & Tracy, 2012).
A hiring strategy for assessing new applicants during the hiring process should also be included in the policy. Some
screening techniques for identifying possible bullying tendencies include: contacting prior employers and asking questions
about the prospective employees reliability, honesty and personality; requesting information about business records and
possible criminal records; and asking about any gaps in the candidates employment history (Cascardo, 2011). No hiring
strategy is completely fool-proof; however, Maurer and Snyder (2014) devised steps for employers to take reasonable care
during the hiring process, including: systematically and comprehensively screen all applicants and have them complete a
thorough application; conduct a background and reference check; and always conduct an interview to allow for opportunities
to observe applicants under stressful situations (Maurer & Snyder, 2014). Three key personality traits that Maurer and Snyder
recommend looking for proof of a negative attitude, situations where they blamed others and if they lack interpersonal
relatedness and view social interactions negatively (2014).
These pre-hiring strategies along with assessments of past incidents of workplace bullying and harassment will help
employers identify the areas that need more training opportunities (Cascardo, 2011). Types of training that should be
considered are stress management, conflict management, assertiveness, implementation of a Healthy Work Organization
(HWO) and implementation of an alternative dispute resolution (ADR) through mediation or through establishing an
ombudsperson (Martin & LaVan, 2010). Other types of training as recommended by the WBI (2014) were bystander training
and training on effective communication between supervisors and other employees. In regards to the HWO, it supports the
protection and the promotion of workers health in the workplace through observing any changes in the nature of work, any
effects of new organizational policies and practices on worker health and safety, any changes in worker demographics and
any interplay between environmental forces that come as a result of implementing a new policy (Martin & LaVan, 2010).
Remaining neutral in the decision-making process will allow both parties best interests to be taken into account.
CONCLUSION
Workplace bullying and harassment remain separate under all federal, state and local statutes, yet commonalities with
proving cases of harassment to cases of bullying, as addressed by the ABA, appear to be strikingly similar. Other similarities
have been identified through acknowledging the negative effects bullying can have on employees and organizations. To assist
in combining these similarities, strategies relative to each possible phase in the complaint process of workplace bullying
should be considered and evaluated. The discussed strategies should serve as references for employers and their human
resource departments in devising no-tolerance policies until further acknowledgement and acceptance occurs on the federal,
state and local levels. To date, up to 29 states and two territories have provided their support to include bullying with
harassment through submitting healthy workplace bills. Even though none of the bills have yet been passed, organizations
cannot sit by and ignore bullying and harassment in their workplace. The repercussions of ignoring the need of a policy have
been identified as equally damaging, if not worse. Therefore, organizations and human resource departments must take it
upon themselves to implement an effective no-tolerance policy that fits into their culture and environment.
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American Bar Association, Litigation, Employment & Labor Relations. (2014). Understanding workplace-bullying
legislation. Retrieved March 24, 2015, from http://apps.americanbar.org/litigation/mo/premium-
lt/articles/employment/summer2014-0814-understanding-workplace-bullying-legislation.html-53k.
Cascardo, D. (2011). Bullying and acts of aggression in the workplace: Implementation of effective prevention strategies. The
Journal of Medical Practice Management: MPM, 27(1), 14-7. Retrieved March 12, 2015, from http://search.
proquest.com.francis.idm.oclc.org/docview/910125799/fulltextPDF/726C6D1B7EBE4EC1PQ/1?accountid=4216.
Cowan, R. L. (2012). It's complicated: Defining workplace bullying from the human resource professional's
perspective. Management Communication Quarterly, 26(3), 377-403. Retrieved March 15, 2015, from Sage Journals
doi:10.1177/0893318912439474.
Lutgen-Sandvik, P., & Tracy, S. J. (2012). Answering five key questions about workplace bullying: How communication
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3-47. Retrieved February 26, 2015, from Sage Journals doi: 10.1177/0893318911414400.
Martin, W., & LaVan, H. (2010). Workplace bullying: A review of litigated cases. Employee Responsibilities and Rights
Journal, 22(3), 175-194. Retrieved March 3, 2015, from university database doi: 10.1007/s10672-009-9140-4.
Maurer, T. J., & Snyder, J. (2014). Workplace bullying: Some progress but still a ways to go. Society for Human Resource
Management (SHRM). Retrieved February 14, 2015, from http://www.shrm.org/legalissues/employmentlawareas/
pages/workplace-bullying.aspx.
Public Services Health & Safety Association. (2010). Bullying in the workplace: A handbook for the workplace (1st Edition).
Retrieved March 22, 2015, from http://www.hrpa.ca/HRPAChapterSites/Northwestern/Documents/Bullying in the
Workplace - Handbook.pdf.
Stagg, S. J., & Sheridan, D. (2010). Effectiveness of bullying and violence prevention programs: A systematic review.
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Supreme Court of the United States, U.S. Court of Appeals for the Seventh Circuit. (2012). Vance v. Ball state university et
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Tye-Williams, S., & Krone, K. J. (2015). Chaos, reports, and quests: Narrative agency and co-workers in stories of workplace
bullying. Management Communication Quarterly, 29(1), 3-27. Retrieved March 18, 2015, from university database doi:
10.1177/0893318914552029.
U.S. Department of Justice. (2015). Title vii of the civil rights act of 1964. Retrieved February 14, 2015, from
http://www.justice.gov/crt/about/emp/documents/Title_VII_Statute.pdf.
U.S. Department of Labor, Occupational Safety & Health Administration. (2012). Workplace violence. Retrieved March 16,
2015, from https://www.osha.gov/SLTC/workplaceviolence/.
U.S. District Court, Western District for Tennessee. (2013). Equal employment opportunity commission vs. new breed
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02696/pdf/USCOURTS-tnwd-2_10-cv-02696-2.pdf.
U.S. Equal Employment Opportunity Commission. (2010). Policy guidance on current issues of sexual harassment (N-915-
050). Retrieved March 5, 2015, from http://www.eeoc.gov/policy/docs/currentissues.html.
Workplace Bullying Institute. (2014). 2014 wbi u.s. workplace bullying survey. Retrieved February 28, 2015, from
http://workplacebullying.org/multi/pdf/WBI-2014-US-Survey.pdf.
Workplace Bullying Institute. (2014). Estimating the costs of workplace bullying. Retrieved February 24, 2015, from
http://www.workplacebullying.org/2014/04/24/costs/.
Workplace Bullying Institute. (2014). Healthy workplace bill. Retrieved February 14, 2015, from
http://www.healthyworkplacebill.org/bill.php.
Workplace Bullying Institute. (2014). The wbi 2014 instant poll-f believe it or not: Impugning the integrity of targets of
workplace bullying. Retrieved March 5, 2015, from http://www.workplacebullying.org/multi/pdf/WBI-2014-IP-F.pdf.
Workplace Bullying Institute. (2013). 2013 wbi survey bullying by industry. Retrieved March 3, 2015, from
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Workplace Bullying Institute. (2013). The wbi 2013 instant poll-I offsetting the pain from workplace bullying. Retrieved
March 3, 2015, from http://www.workplacebullying.org/multi/pdf/WBI-2013-IP-I.pdf.
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The Impact of Age and Gender on Strategic Innovation in Micro,

Small and Medium Enterprises in Egypt
Sayed Elsayed ElKhouly, Ain Shams University
Rania Marwan, Ain Shams University
EXECUTIVE SUMMARY
Micro, small and medium sized enterprises are considered to be the engine of growth in any economy, specifically in
developing countries. The Egyptian economy is highly dependent on these enterprises in terms of stimulating the economy
and providing job opportunities to a vastly growing population of young people. The majority of studies about innovation
are concerned mainly with improving product, process and organizational innovation as a whole, and not addressing the
people aspect. Human beings are the ones responsible for those activities within organizations, and one way of identifying
those individuals is through investigating their age and gender and how it impacts their strategic innovation initiatives. In
Egypt there are gender differences in terms of entrepreneurial initiatives, as well as differences in entrepreneurial activity
with regards to age. Given the entrepreneurial disparities in age and gender, researchers were intrigued to see whether
these age and gender disparities among entrepreneurs, top managers, middle managers and non-managerial levels were
mirrored in terms of their impact on strategic innovation in these enterprises. This study aims to examine the impact of age
and gender on strategic innovation initiatives in micro, small and medium enterprises. A single cross sectional descriptive
design was used; a purposive sample of 110 employees in micro, small and medium enterprises in Egypt was drawn from top
managers and middle managers and non-managerial levels. Data was collected through a questionnaire that was adapted
from existing scales and was used as a data collection tool in a bigger research project investigating variables that affected
strategic innovation in M/SMES in Egypt. Unstructured interviews were conducted on entrepreneurs as well and the results
were illustrated as case examples in the literature. Results showed that gender had no effect on strategic innovation, age
affected strategic innovation with younger age groups displaying more strategic innovation than older age groups. The
results of the interviews showed that engaging the customer in idea generation yielded the best results with regards to
innovation.
Keywords: Entrepreneurship, Innovation, Knowledge management, M/SMEs, Egypt
INTRODUCTION
Micro, Small and medium sized enterprises are considered to be the engine of growth in any economy, specifically in
developing countries. In Egypt there are approximately 2.5 million M/SMEs constituting 75% of the total employed
workforce, and 99% of non-agricultural private sector establishments, M/SMEs essentially represent the backbone of the
Egyptian economy (Al Said, El Said, & Zaki, 2014). The majority of M/SMEs (86.4%) in Egypt are those who can hire
fewer than 20 workers, whereas only 6.3% have the capacity of hiring more than 50 workers, which shows that most of
M/SMEs are either micro or small, with a few middle-sized, which further highlights the importance of these enterprises.
Moreover, In terms of economic activity, the majority of them are concentrated in manufacturing (51.1%) or whole trade
sector (40.5%) (Al Said, El Said, & Zaki, 2014).
The researchers were intrigued to dig into the Egyptian cultural fabric, and investigate whether the age and gender of
entrepreneurs of M/SMEs had an impact on how they were able to develop new ideas and new products; in other words to
strategically innovate. According to Hattab (2013) there are gender differences with regards to entrepreneurial activity in
Egypt, with men being more entrepreneurially active than women, moreover, these differences were depicted across the
different classification of entrepreneurs that she has mentioned in her report. The first type of entrepreneur is the established
business owner who regularly pays salaries for more than 42 months, and who has a set up business. The second type is the
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new business owner who is between the age of 18-64, and who has not yet paid salaries, he is an owner/manager of the
business for four months, but less than 42 months. The nascent entrepreneur is between the ages of 18-64 and has been
actively planning for the start-up of his business, organizing fund raising and business planning. According to Hattab, gender
disparities were depicted across these different classifications of entrepreneurs in Egypt. Moreover, with regards to age, the
most entrepreneurially active age group is those between the ages of 25-35 (2013). Given the entrepreneurial disparities in
age and gender, researchers were intrigued to see whether these age and gender disparities among entrepreneurs were
mirrored in terms of their impact on strategic innovation in these enterprises. The study is not limited only to entrepreneurs,
but also aims so study the impact of age and gender on strategic innovation of top managers, middle managers, and non-
managerial levels who are directly involved with the customer in micro, small and medium enterprises.
Significance of the Study
It is crucial to understand how age and gender affects entrepreneurial innovation activity, as it would definitely have policy
implications as to how to better enhance the performance of innovative age groups, and the economy at large, addressing
issues such as the glass ceiling effect in public and private organizations and finding ways to enhance women innovation
initiatives (Alsos, Ljunggren, & Hytti, 2013). This would definitely contribute to the body of literature about M/SMEs in
Egypt, and consequently improve their performance and the health of the economy as a whole.
The majority of studies about innovation addressed the issues of product, process, and organizational innovation, and not
about the people themselves (Alsos, Ljunggren, & Hytti, 2013). Human beings are the ones responsible for those activities
within organizations, and one way of identifying those individuals is through investigating their age and gender, and how this
impacts their strategic innovation initiatives. The aim of this study is to examine how age and gender affects strategic
innovation of M/SMEs in Egypt.
The first part of the paper covers the literature, which is divided into two parts; the first part covers entrepreneurship, its
definition, entrepreneurial initiatives in M/SMEs in Egypt. The literature covers gender and innovation, age and innovation,
strategic innovation, posing the hypotheses accordingly. The second part of the literature relates the concepts discussed in
the literature by displaying three examples of strategic innovation attempts by entrepreneurs drawn from the sample and
based on the unstructured interviews that were conducted, analyzing them according to the introduced concepts in the
literature. The second part of the paper covers the methodology, sampling design, tools of data collection and procedures of
carrying out the research. The final part includes the results, discussion and future recommendations.
LITERATURE REVIEW
Entrepreneurship
Entrepreneurship has several definitions. According to the functional approach, an entrepreneur is someone who innovates. In
the psychological approach, he/she is defined according to his or her personality and behavior. The general consensus is that
an entrepreneur is someone who takes risks (Majumdar & Varadarajan, 2013). Bygrave and Zacharakis (2010) define
entrepreneur as someone who is able to spot an opportunity and build an organization around it.
Successful entrepreneurs are not necessarily excellent students in their schools. They can be school dropouts and then turn
out to be extremely successful in business. Bygrave and Zacharakis relate this to certain personality characteristics called the
10Ds: dream, decisiveness, doers, determination, dedication, devotion, details, destiny, dollars and distribute (2010).
Successful entrepreneurs are concerned with applying innovation and creative thinking to reach their objectives (Wingwon,
2012).
M/SMEs in Egypt are sometimes run by owner/mangers. In other situations the running of the business is delegated to hired
individuals. Whether the running process of the business is done by entrepreneurs or by other delegated personnel,
understanding the impact of the age and gender of these individuals on their ability to strategically innovate would definitely
shed the light on a gap in research with regards to strategic innovation (Alsos, Ljunggren, & Hytti, 2013).
Gender and Innovation
Gender differences in management in general is a frequently discussed topic in business worldwide, with each country having
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its own preset values and norms that definitely further influences gendered behavior in organizations. Gender differentiated
values have been identified by several researchers and its impact on leadership styles ((Hintea, Macarie, & Mora, 2011; Pitts,
2005; Eagley &Johnson, 1990). Research has shown that women are more likely to empower employees than men. In terms
of relationships, women are more cooperative and focus on collaborative relationships (Riger, 1993).
It is clearly evident that the topic of male and female differences in business has been extensively covered, however, Alsos,
Ljunggren and Hytti (2013) point out that more research needs to be done to understand the role of gendered power in
innovation. In other words, whose voice is heard when it comes to a new idea? Given the above difference in male versus
female styles and values (Hintea, Macarie, & Mora, 2011), the researchers pose the following hypothesis with regards to
gender having a differentiated effect on strategic innovation.
H1: Gender affects strategic innovation so that females are better able to develop new ideas than males.
Age and Innovation
Bygrave and Zacharakis argue that as a person gets older, his or her degree of pessimism increases with regards to taking
risks in business. This is because the person has more experience and is more able to predict the negative consequences of
making a specific move. According to Bygrave and Zacharakis (2010, p. 25), the most successful entrepreneurs are those
who have a beginners mind with the experience of an industry veteran. They mention that as a person gets older, his
ability to be creative diminishes and is replaced by being judgmental.
H2: Age affects strategic innovation so that younger people are better able to develop new ideas than older people.
Strategic Innovation
Strategic innovation is the need to address strategic management in an innovative way, to not only think about the current
strategy, but also tomorrows strategy. Strategic innovation is based on fostering creative thinking within the organization.
To not interpret it as just better technology and product based markets, but on constantly developing concepts and business
models (Drejer, 2006). Drejer defines strategic innovation as the ability to develop a business idea by changing markets,
competencies and business systems. In other words it is concerned with changing the organization as a whole. The strategic
innovation approach is to regularly redirect resources towards new creative ideas to keep the business profitable and to
continuously shift from dwindling to emerging innovative lines (Abraham & Knight, 2001). For this to happen, the right
environment and culture should be available, or what Dobni (2008) calls an innovation culture.
In the context of M/SMEs in Egypt, the ability to strategically innovate is operationalized as the ability to regularly generate
new ideas and transform them into marketable products or services. The strategic management approach depends mainly on
leveraging the intangible resources that rely on creativity and innovation, and less on the tangible ones including land, labor
and capital (Abraham & Knight 2001). M/SMEs provide the perfect setting for this to happen, given their relatively smaller
size compared to larger organizations. Their resources are naturally limited and hence their improved performance has to rely
on their intangible abilities. Tse argues that strategic innovation is based on the inequality between the ambitions of business
leaders and their limited resources. This is when creativity is used as leverage for the limited resources (2013). M/SMEs
strategic innovation approach relies on their organized and deliberate knowledge creation to achieve improved business
results and to remain on top (Abraham & Knight, 2001).
Abraham and Knight (2001) have discussed the levels of change that any organization goes through, gradual change,
continuous change and discontinuous change, and how this is related to where the organization is on the S-curve model of
organizational growth. The S-curve in Figure 1 helps understand all the phases of a business cycle and what kind of response
is required from the business to remain on top. The main goal of a business is to try to remain on top and to stimulate the
strategic innovation spiral. The next part of the paper will illustrate the strategic innovation approach with reference to the
strategic innovation cycle through illustrating two examples of entrepreneurs drawn from the sample and their strategic
innovation initiatives.
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FIGURE 1 S-CURVE MODEL
Source Abraham & knight (2001)
Example 1: How Youssef the Jeweler uses Strategic Innovation
Youssef is a 29 year old jeweler who has inherited this profession from his family. He specializes in designing silver jewelry.
He has a small shop in Khan al Khalili, where most Egyptian jewelers are located. He showcases his work in several exhibits
in Greater Cairo.
The strategic innovation spiral as shown in Figure 2 is based on the repetitions of the five phases of generating,
conceptualizing, optimizing, implementing and capturing an idea (Abraham & Knight 2001).
FIGURE 2 THE STRATEGIC INNOVATION SPIRAL
Source Abraham and Knight (2001)
Youssef and the Strategic Innovation Spiral
Phase 1 Generating the most important thing for Youssef is to choose an attractive design that will gain the attention of
customers. He does that by visiting specialized workshops in the Khan el Khalili area, which is considered the hub for
designing jewelry. He researches different markets, including the Turkish one, which is famous for its unique and attractive
silver designs, until he comes up with an initial vision of how he pictures his own design. Youssef proudly says that he
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creates his own designs and he does not copy them. He mentions in his own words that he builds on other designs, adding
his own unique touch which differentiates him from other jewelers. Youssef is known for his ability to create ring designs
made of glass that look exactly like diamonds. He says that people love them because they look original and are much
cheaper than real diamond rings.
Phase 2 Conceptualizing In this phase, Youssef gathers information regarding the costs of producing the design in Egypt.
Youssef conceptualizes this idea and improves it by making sure that his finishing is flawless and his prices are competitive.
He summarizes his success into three words; quality of his work, quantity of designs and prices that are attractive. He
mentions that he tops all that by offering superb treatment to his clientele. He believes that that is what makes him different
than other jewelers who offer the same service.
Phase 3 Optimizing In this phase, Youssef weighs the time, costs and revenues based on the information that he has
gathered and weighs his options accordingly. He maps out his implementation process, which definitely includes his
customers. He bases his designs on what they want, using their feedback constructively to improve his service, creating
rapport and loyalty to his work.
Phase 4 Implementing In this phase, Youssef implements the design and then showcases it in his partition in the exhibit,
testing the waters and seeing the customers reaction to it. Based on that, Youssef makes an order of a certain amount of the
design and puts it on display.
Phase 5 Capturing In this phase, the product is fed to the market and he makes sure that he earns the cost of producing it
before selling all the amounts that he has preordered. At this phase, Youssef receives all the financial benefits that he can get
from the design and a client base. He devotedly tries to exceed their expectations, constantly jumping on to another S curve.
Youssef makes sure that he hooks his customers with another order as he hands in their older one. This is always his target; to
offer them something new and creative.
Example 2: How Hend the Oriental Artifact Maker uses Strategic Innovation
Hend is a 25 year old young woman who is a graduate of the Arts School in Egypt. She specializes in making and selling
oriental artifacts including vases, oriental accessories and paintings, all with the Egyptian flavor, which puts a touch of
mystic charm in everything that she sells. Through observation and interviewing other entrepreneurs in the exhibit, it was
observed that Hend is the one who has trajected the most often on the S-curve with regards to the creative differentiation in
the product ideas that she sells. This could be due to the fact that she is selling artistic elements and hence there is greater
room for creativity and innovation, but there is no doubt that she has consistently jumped from one S-curve to the other in a
continuous spiral of growth.
Hend and the Strategic Innovation Spiral
Phase 1 Generating Just like Youssef, the most important thing for Hend, and the most difficult for her, is to come up with a
product design that will gain the attention of customers and make good sales. Hend came up with the idea of designing a
handmade cushion that she made herself and showcasing it for sale in her partition. Unfortunately, the cushion did not sell
very well. people would come up and say to her: Do you have something that goes with it, to create a corner. An idea
struck and Hend decided to improve and refine her idea, moving forward to the conceptualization phase.
Phase 2 Conceptualizing Hend decided to refine the idea of cushions and develop it into making the handmade designs that
she initially made for the cushions into a banquette seating. She was excited when she received orders for it. However, she
still heard her customers say, Do you have something that goes with it. Hend decided to research exactly what the people
wanted, moving to the next phase, which is the optimization phase.
Phase 3 Optimizing In this phase, Hend took time to listen to the customers, finding out exactly what they really wanted.
Hend listened actively to her clientele and came up with a whole different production line that all came from the idea of the
cushions, creating harmony between the product and its function. From the cushion idea, she came up with the idea of
mirrors embroidered with the handwork of the cushions, chairs upholstered with the cushions designs, wedding albums with
the designs on the covers, place mats and scarves. As Abraham and Knight (2001) stated, this phase is about milking the
business idea and Hend definitely did that.
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Phase 4 Implementing In this phase, Hend stated that she tests the designs first on her closest circle, taking the opinions of
her family, friends and colleagues, then she displays it in her partition. Not only that, she also agreed with a couple of shops
that sell furniture to arrange and display her work in the form of a corner, where the customer could buy the whole
arrangement.
Phase 5 Capturing In this phase, Hend tries to reap profits from her work by playing with colors. Her designs are already
fed into the market. What she actually does to maximize the benefits is to study the color trends in the market and base her
designs according to the latest trends. Hend is definitely the perfect example of a continuous spiral of innovation, jumping
relentlessly from one S-curve to the next.
Research Problem
In an attempt to fill the research gap with regards to understanding the roles of age and gender in stimulating strategic
innovation in M/SMEs in Egypt, the following research was conducted. In this day and age, intangible resources are being
used as leverage in business more than tangible resources (Abraham & Knight 2001). Studies should attempt to focus on the
variables that stimulate these intangible resources, such as age, gender and organizational culture. Statistics show that
M/SMEs in Egypt are yet considered to be underutilized sources of growth for the economy (Al Said, El Said, & Zaki, 2014),
and hence investigating all the economic, social and political variables that enhance the strategic innovation of these entities
is a precursor for their development.
Many of the current research focuses on the issues of bridging the gap between M/SMEs and sources of finance (Al Said, El
Said, & Zaki, 2014). Although financing resources is definitely a cornerstone for SME development, however not much
attention or research efforts have been targeted towards addressing internal demographic factors that influence strategic
innovation as a driving force towards growth and competitiveness of these enterprises. In an attempt to fill this gap, this
study aims to examine the impact of age and gender on strategic innovation initiatives in micro, small and medium
enterprises in Egypt.
Research Questions and Hypotheses
This paper attempts to answer the following questions:

RQ1: To what extent gender affects strategic innovation in Egyptian M/SMEs?
RQ2: To what extent age affects strategic innovation in Egyptian M/SMEs?
The following are the proposed hypotheses:

H1o: Gender has no effect on strategic innovation.
H1 : Gender affects strategic innovation so that females are able to develop new ideas than males.
H2o: Age has no effect on strategic innovation.

H2 : Age affects strategic innovation so that younger people are able to develop new ideas than older people.
Definition of Variables
Type of Variable Variable Name Definition

Independent variable Age factor Refers to the extent to which being an
older or a younger entrepreneur
impacts strategic innovation.
Independent variable Gender factor The extent to which being male or
female impacts strategic innovation
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Dependent Strategic innovation Innovation is generally defined not

only as the conceptualization of a new
product or service, but also as the
successful bringing of the new product
or service to the market. Accordingly,
the organizations innovation
capability is its ability to mobilize the
knowledge, possessed by its
employees, and combine it to create
new knowledge, resulting in product
and/or process innovation.
METHODOLOGY
Research Design
To achieve the purpose of this study, a single cross-sectional descriptive research design is used.
Setting
The study was conducted on top managers, middle managers and non-managerial levels of M/SMEs operating in Trade,
Service, Manufacturing, Construction and other sectors. The sample was drawn from an M/SME exhibit located in Greater
Cairo where more than 100 M/ SMEs from different sectors showcased and sold their products.
Sampling
A purposive sample of 110 owner/managers, top managers, middle managers, and non-managerial levels directly dealing
with customers, working in M/SMEs in the Trade, Manufacturing, Construction and Service industries was drawn. A
nonprobability purposive sampling design was used. The unit of analysis was owner/managers, top managers, middle
managers and non-managerial levels in the above mentioned sectors.
Tools of Data Collection
Data was collected through an already existing questionnaire taken from Cakar and Erturk (2010) consisting of 39 statements,
that were based on an ongoing study by the same authors measuring the impact of organizational culture and empowerment
on strategic innovation in M/SMEs in Egypt. Constructs under investigation were measured on a five-point Likert-type scale
where 1=strongly disagree and 5=strongly agree. Unstructured interviews were conducted with 5 entrepreneurs. Constructs
measured for this study include age and gender as the independent variables, whereas strategic innovation was the dependent
variable.
Procedures
The researchers prepared the tools of data collection after reviewing the relevant literature. The data was collected through
the structured questionnaire distributed to owner/managers, top, middle level and non-managerial levels involved in sales,
among micro, small and medium enterprises from the different sectors. Respondents were clearly informed of the purpose of
the questionnaire through a cover letter and confidentiality was ensured. The questionnaire was administered by the
researchers and personally distributed to 110 randomly selected respondents in M/SME exhibit in Greater Cairo. The
completed questionnaires were collected within three weeks of its delivery. There were 108 responses that were used in the
data analysis for an overall return rate of 98.2%. The data was analyzed statistically using SPSS.
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RESEARCH FINDINGS
To study the impact of age and gender on strategic innovation in micro/small and medium enterprises in Egypt, a survey was
conducted on top and middle managers and non-managerial levels of these enterprises, as well as face to face unstructured
interviews conducted with 5 entrepreneurs investigating their strategic innovation initiatives, two of which were illustrated in
the literature in the form of an example of strategic innovation initiatives.
Descriptive Statistics
Respondents
The collected sample included 61.7% males and 36.4% females. 34.6% of the respondents were between the ages of 25-30,
while 27.1% were less than the age of 25. Of the majority of the respondents, 93.5% were Bachelors degree holders, 32.7%
were middle managers, 24.3% were top managers and the rest had non- managerial positions, but were directly involved in
the sales process.
Enterprises
The sample was drawn from the M/SME exhibit in Greater Cairo, the sample included enterprises from different sectors, and
the following table shows their percentages. The majority of the enterprises were in the Trade sector 35.5%, followed by
Manufacturing sector 17.8%, which reflects the macro distribution of M/SMEs according to sectors in Egypt, as mentioned
by the Egyptian Ministry of Finance.
TABLE 1: DISTRIBUTION OF M/SMES BY SECTOR
Type or Organization Frequency Percentage

Trade
38 35.5%
Service 29 27.1%
Manufacturing 19 17.8%
Construction
9 8.4%
Others
11 10.3%
This research is based on defining M/SMEs according to the number of employees employed and according to the definition
by the Ministry of Finance. Micro enterprises are those who employ between 1 to 4 employees, small enterprises are those
that employ from 5 to 49 employees; whereas, medium enterprises are those who employ from 50 up to 200 employees
according to the sector. The following table shows the size of the enterprises in the sample drawn according to the number of
employees.
TABLE 2: TYPE OF ENTERPRISE ACCORDING TO THE NUMBER OF EMPLOYEES EMPLOYED
Frequency Percentage
Micro 30 28.0%
Small
20 18.7%
Medium
56 52.3%
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Hypotheses Tested
The purpose of this paper is to analyze the impact of age and gender on strategic innovation in M/SMEs in Egypt. To test the
first hypothesis, an independent sample t test was used to compare strategic innovation for males and females.
First Hypothesis
H1o: Gender has no effect on strategic innovation,

H1: Gender affects strategic innovation so that females are better able to develop new ideas than males.
TABLE 3: INDEPENDENT SAMPLE T TEST
Std. Std. Error Mean Std. Error

Gender N Mean T df Pobability
Deviation Mean Difference Difference
Male 66 3.46 1.00 0.12
-0.29 0.20 -1.41 102 0.16258
Female 38 3.75 1.01 0.16
Although the mean strategic innovation is higher for females than males, yet it does not reach statistical significance P>0.05,
which could be due to the small number of females and the small sample size. Therefore, we failed to reject the null
hypothesis.
Second Hypothesis
H2o: Age has no effect on strategic innovation.

H2: Age affects strategic innovation so that younger people are better able to develop new ideas than older people.
TABLE 4: EFFECT OF AGE ON STRATEGIC INNOVATION
95% Confidence
Interval for Mean
Age Groups Std. Std. Lower Upper
N Mean Deviation Error Bound Bound Minimum Maximum
Less than 25 28 3.77 0.82 0.16 3.45 4.09 2 5
years
25 up to 30 37 3.88 1.04 0.17 3.53 4.22 2 5
years
31 up 35 Years 22 3.11 1.00 0.21 2.67 3.56 1 5
Over 35 years 19 3.32 1.04 0.24 2.81 3.82 2 5
The mean levels of strategic innovation for lower age groups (3.77, 3.88) were higher than older groups (3.11, 3.32), as
shown in Table 4. To determine whether there are any significant differences between the means of strategic innovation of
the four groups, analysis of variance one-way ANOVA was used as shown in the following Table 5.
TABLE 5: ANALYSIS OF ONE WAY ANOVA
Mean
Sum of Squares Df Square F Probability
Between Groups 10.38 3 3.46 3.62 0.01566
Within Groups 97.51 102 0.96
Total 107.90 105
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As shown above, there were statistical difference between the groups as depicted by P=0.01566 which is <0.05. The mean
strategic innovation of age groups was statistically significant, with lower age groups below 30 having higher means than
higher age groups. Therefore, we reject the null hypothesis.
To identify which groups differed from each other, the Bonferroni Method was used for multiple comparisons.
TABLE 6: BONFERRONI METHOD FOR MULTIPLE COMPARISONS
Age group Age group Mean Difference Std. Error Probability

Less than 25 years 25 up to 30 years -.111 .245 1.000
Less than 25 years 31 up 35 Years .654 .279 .125
Less than 25 years Over 35 years .452 .291 .738
25 up to 30 years 31 up 35 Years .765* .263 .027
25 up to 30 years Over 35 years .563 .276 .264
31 up 35 Years Over 35 years -.202 .306 1.000
As shown in the above Table 6, the age groups between 25 to 30 years showed the greatest significance with regards to
strategic innovation with p=0.027<0.05,
To illustrate the effect of age more clearly, the sample is divided into two age groups; small age group (30 years or less) and
a large age group (over 30 years) as shown in the following Table 7. Results show that strategic innovation in small age
groups is highly significant P= 0.00172<0.001. This reinforces the posed hypothesis that age affects strategic innovation so
that younger people are better able to develop new ideas than older people.
TABLE 7: SMALL AGE GROUP VERSUS LARGE AGE GROUP
Std.
Std. Mean Std. Error
N Mean Error T df Probability
Deviation Difference Difference
Mean
30 Years 65 3.83 .945 .117
Small Age group or lless
0.62 0.19 3.22 104 0.00172
Over 30 41 3.21 1.012 .158
Large Age group Years
The mean strategic innovation for small age group is higher (3.83) than the mean strategic innovation for large age group
(3.21), which is illustrated in the following bar chart (Figure 3)
FIGURE 3 SMALL AGE VERSUS LARGE AGE GROUPS
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DISCUSSION AND ANALYSIS
Given the sheer size of M/SMEs in Egypt, understanding all the aspects that would enhance their performance is considered
paramount to driving the economic growth of the country. The majority of studies about innovation have addressed the
issues of product, process and organizational innovation and not the people themselves (Alsos, Ljunggren, & Hytti, 2013).
Human beings are the ones responsible for those activities within organization, and one way of identifying those individuals
is through investigating their age and gender and how these impact their strategic innovation initiatives. The aim of this study
is to examine how age and gender affects strategic innovation of M/SMEs in Egypt. Results have shown that there were no
gender differences with regards to strategic innovation initiatives; researchers failed to reject null hypothesis. This was also
supported by the illustrative examples of Youssef the Jeweler and Hend the Artist. Despite their gender differences, both of
them were able to move from generating an idea, conceptualizing it, optimizing the options, implementing and capturing it,
consistently jumping from one s-curve to the next, creating a spiral of innovation (Abraham & Knight 2001).
Results have also shown that the mean levels of strategic innovation for lower age groups (3.77, 3.88) were higher than older
groups (3.11, 3.32). To illustrate the effect of age more clearly, the sample was divided into two age groups; small age group
(30 years or less), and a large age group (over 30 years). Small age groups (30 or less) displayed more strategic innovation
than older age groups (more than 30) with means of 3.83 and 3.21 respectively. The null hypothesis was rejected, which
confirmed that the proposed hypothesis that younger individuals with ages 30 or less were able to develop ideas more than
older people. This was confirmed by the illustrated examples of Youssef and Hend. Both of whom were under the age of 30,
both were able to follow through with their newborn idea from tacit generation to a full-fledged product captured and
replicated for clients. As they went through the different phases of the innovation cycle, both of them kept their eyes on
competitors, constantly thinking of how to raise the bar and create an edge for themselves. They were constantly in a race
with time to come up with their next idea that would carry them to the next S-curve (refer to Figure1). The last and most
important observation was that Youssef and Hend differed from the rest of the three entrepreneurs that were interviewed
during the process of gathering information for this study in that they were very adamant about incorporating the customer in
every phase of developing their idea. Youssef stressed that what made him different than others offering the same service is
how he responded carefully and meticulously to what the customer needed and sometimes he tailored designs according to
the customers wishes; this was his edge. Hend listened actively to her customers feedback and as she moved from
generating the idea to conceptualizing, optimizing, implementing and capturing, she took the customers feedback and built
on it, developed it and generated further ideas along process, which reproduced an endless spiral of further ideas, jumping
from one S-curve to multiple S-curves, creating a spiral of strategic innovation.
Limitation of the research was the sample size, which was not large enough for the results to be generalized. Moreover, there
could be other variables that would impact strategic innovation other than age and gender, such as the organizational culture
and the leadership style. These were not covered in this study. The researchers recommend that further investigations be done
with regards to comparing drivers of strategic innovation in M/SMEs in Egypt and in western countries and how much of the
disparities can be related to differences in cultures. The paper offers recommendations to practitioners in Egyptian M/SMEs
that call for assisting people of a younger age through funding opportunities, training, facilitating governmental policies that
would encourage their innovation, which would further enhance the economy at large.
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Al Said, M., El Said, H., & Zaki, C. (2014). Small and medium enterprises landscape in Egypt:
new facts from a new dataset. Journal of Business and Economics, 5(2), 142-161.
Alsos, G., Ljunggren, E., & Hytti, U. (2013). Gender and innovation: state of the art and a
research agenda. International Journal of Gender and Entrepreneurship, 5(3), 236 256.
Bygrave, W., & Zacharakis, A. (2010). The portable MBA in entrepreneurship. New Jersey: John Wiley &Sons.
Dobni, B. (2008). Measuring innovation culture in organizations. European Journal of Innovation
Management, 11(4), 539-559.
Drejer, A. (2006). Strategic innovation: a new perspective on strategic management. Handbook of Business Strategy, 7(1),
143-147.
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Eagly, A. H., & Johnson, B. T. (1990). Gender and leadership style: A meta-analysis. Psychological
Bulletin, 108(2), 233-256.
Hintea, C., Macarie, C., & Mora, M. (2011). Gender and leadership. The impact on organizational culture of public
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Majumdar, S., & Varadarajan, D. (2013). Students' attitude towards entrepreneurship: does gender matter in the UAE?
Foresight, 15(4), 278 293.
Pitts, D. (2005). Leadership, empowerment, and public organizations. Review of Public Personnel Administration,
25(5), 5-28.
Riger, S. (1993). Whats wrong with empowerment? American Journal of Community Psychology, 21(3), 279-292.
Tse, T. (2013). Paradox resolution: a means to achieve strategic innovation. European Management Journal, 31, 682-696.
Wingwon, B. (2012). Effects of entrepreneurship, organization capability, strategic decision making and innovation toward
the competitive advantage of SMEs enterprises. Journal of Management and Sustainability, 2(1), 127-150.
Hattab, H. (2013). Global entrepreneurship monitor: GEM Egypt report. Retrieved from www.gemconsortium.org.
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Can Employer Branding Surge the Retention and Motivation of

Egyptian Employees?
Tarek A. Al Badawy, German University in Cairo
Vivian M. Fahmy, German University in Cairo
Mariam M. Magdy, German University in Cairo
EXECUTIVE SUMMARY
The resource-based view of the organization has shifted the attention from tangible assets to intangible ones. The focus is on
employees mental contributions as the nucleus of a successful and sustainable organization. Accordingly, organizations
engage in practices to attract and retain a qualified pool of employees. Employer branding is an innovative concept that
connects the worlds of marketing brand management and human resource management. It requires differentiation, relevance
and noticeability and it produces motivation and retention of the right calibers. This study analyzed the interaction between
employer branding, motivation and retention in a sample of 95 Egyptian employees. Results showed insignificant, yet, a
positive relationship between employer branding and retention. A positive significant correlation was found between
employer branding and motivation. Implications and future research directions are provided.
Keywords: Employer Branding, Egypt, Organization
INTRODUCTION
Nowadays, organizations are competing against each other on employees. The attraction and retention of the right calibers
have never been harder. Both academic scholars and practitioners are constantly searching and seeking the best ways to
achieve a person-organization fit. Employer branding, as a concept, has the same significance as other well-known
organizational behavior concepts. The perceived view of the organization is one of the decision criteria candidates consider
(Van Hoye, Bas, Cromheecke, & Lievens, 2013). Hence, employer branding is becoming a lucrative area of study.
In its essence, employer branding is internal marketing of the organization to appear attractive and become the first choice
for both, current and future employees. To be successful, organizations should clearly communicate their values and cultures.
In addition, they should formulate a good reputation that is desirable to employees and future prospects.
Employer branding is composed of several marketing strategies that help in the process of attracting employees to the never
ending recruitment cycle for the numerous job openings. It is basically the use of several innovative ideas aiming to help
develop the organizations image and create an extremely appealing entity that not only attracts a wide pool of members but
also assures that they are matching the needed skills for the openings available. These innovative ideas are unlimited and
come in different forms all aiming to sustain the supply of employees for the company (Katoen & Macioschek, 2007;
Gaddam, 2008).
Employer branding can be described as an innovative concept that connects the worlds of both marketing brand management
and human resource management. This means that employer branding utilizes basic marketing concepts such as branding,
identification, image, reputation, along with some of the human resources unique concepts such as organizational identity
and employee satisfaction (Katoen & Macioschek, 2007).
The resource-based view of the organization has shifted the attention from tangible assets to intangible ones; specifically the
focus is on employees mental contributions as the nucleus of a successful and sustainable organization. Accordingly,
organizations engaged in several practices to attract and retain a qualified pool of candidates/employees without knowing the
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significance of the value returned from their efforts, if any. In addition, academic research in this field is still in the infancy
stage. Most of the studies are purely theoretical, offering frameworks and propositions from the office with no sufficient
practical examples or field testing. Understanding employer branding as a form of internal marketing that helps in attracting
and retaining employees is considered a gap with little research focus (Wilden, Gudergan, & Lings, 2010). In addition,
Maxwell and Knox (2009) claim that the perception of employees on employer branding is often overlooked. They believe
that only three articles discussed this perception and concluded that employees view their organizations different from the
external audiences.
Employer branding is becoming important for four reasons. First, it contributes directly to the competitive advantage of the
company as the human resources acquired become rare, valuable and non-substitutable along with being difficult to imitate
(Suikkanen, 2010). Second, applying the concept provides for a solid corporate identity which attracts the best of talent
allowing individuals to have a great experience in the company (Elving et al., 2013). As Balmer (2012) states Corporate
brands are a means of creating both shareholder and stakeholder value (p. 6). Third, employer branding signals out the
wrong candidates who will not fit within the organization, hence, ensuring that only the right applicants who would achieve
high productivity and tenure remain. Forth, employer branding achieves efficiency and effectiveness as recruitment decisions
are made correctly and the rate of turnover is reduced (Tuzuner & Yuksel, 2009). Organizations can no longer bear the costs,
in terms of recruitment, compensation and retention, associated with losing employees.
Employer branding is also discussed as a process that consists of three steps. First is creating a value proposition that reflects
the values and attitudes that make the organization appeal as an employer. Second is communicating this value proposition
through the sourcing and recruiting of candidates. Third is integrating the same value proposition in the organizations culture
and daily processes (Tuzuner & Yuksel, 2009). Maxwell and Knox (2009) claim that the perception of employees on
employer branding is often overlooked. They believe that only three articles discussed this perception and concluded that
employees view their organizations different from the external audiences.
The main purpose of this study was to find out the effect of employer branding in Egyptian organizations on the retention
and motivation of employees. The article starts with the literature review on employer branding. This is followed by the
methodology of this study. Afterwards, a discussion of the results is provided. Finally, limitations, future research directions
and practical implications are provided.
LITERATURE REVIEW
In the current business arena, organizations are mainly focusing on the acquisition and maintaining of professional employees
who are able to add value to the organization and keep its sustainability. In the literature, the term psychological ownership
has started to appear to provide reasoning as why employees are positively engaging in their organizations and, consequently,
their behaviors and attitudes are progressive. Chiang, Chang, Han and McConville (2013) discuss psychological ownership in
relation to employer branding. They define brand psychological ownership as the state in which organization members feel
ownership and possessive experiences toward the corporate brand (p. 56). The same authors reported from their study that
employer branding is positively correlated with brand psychological ownership. Hence, employer branding is believed to
positively influence attitudes and behaviors of employees (Chiang et al., 2013).
Branding From the Marketing Perspective
It is given different names in the literature; be it brand, trademark, corporate identity or others. All these terms refer to one
intangible asset that organizations strive to achieve; a value for its stakeholders. The brand is the specific values and features
that, associated to the corporate brand, represent an organization and the products offered to the market (Buil et al., 2015, p.
1). While searching different engines typically provides answers related to marketing branding and customers, very few
articles have explored the insider perspective of the organization, its employees.
The employer brand has a strategic importance for the organization and it is the responsibility of the organizations CEO and
the human resources (Balmer & Thomson, 2009). Managing the employer brand has positive impact on motivation and
retention of current employees and on the attraction of the right applicants. Hence, employer branding helps in making the
organization a lucrative place to join (Buil et al., 2015; Melewar, 2003).
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Buil et al. (2015) advocates the study of the empirical impact of corporate branding in the business field. The same
researcher has studied the employees insights on corporate brand identity management. The performed structural equation
modelling uncovered the significance of corporate brand identity management in predicting employees commitment. In turn,
commitment was positively correlated with job satisfaction and brand performance (performing according to the brand
standards).
Internal Marketing of the Organization
Internal branding refers to communicating the brand effectively to employees; trying to convince them of the relevance and
worth of the brand; and being able to link every job performed in the organization to the delivery of the brand essence
(Berthon et al., 2005). On the other hand, external marketing of the employer brand establishes the organization as a major
employer of choice for all candidates. This helps in enabling it to attract the best possible talent in the labor market. It is
assumed that the distinctiveness and uniqueness of the brand allow the organization to acquire distinctive and unique human
capital from the labour market that is being targeted.
Moreover, when the recruits have been attracted by the brand successfully, they start to develop a group of assumptions too
about employment within the organization. They will also carry them into the firm as they start working there, therefore this
will allow them to support the firms values and enhancing those employees commitment to the firm. This form of internal
marketing helps in the creation of an employee base that is difficult for other organizations to imitate, therefore securing a
competitive advantage for the organization. Step by step, exposing employees to the value proposition of the employer brand
offered to them, the workplace culture is shaped around the corporate goals mainly which, in the long run, enables the
organization to achieve a unique culture focused on doing business the organizations way (Ariffin, 2008).
Internal branding requires focusing on the organizations vision, mission and objectives (Raj & Jyothi, 2011). Employer
branding influences the perception of employees; it is the the immediate mental picture that audiences have of an
organization (p. 4). Employer branding is all the efforts done by the organization to appeal to its employees as the best place
to work for. It is using all the marketing techniques but from an HR perspectives to create an emotional bond with current
employees and attract the right candidates for the right places and at the right time with controlled costs. The author proved
that internal branding positively affects employees behaviors and attitudes. In addition, the author argued that for internal
branding to succeed, communication, managerial support, effective HR processes and citizenship behavior. Sullivan (2004)
identifies five factors that influence employee perceptions of an employer brand, including the organizational culture,
management style, quality of current employees, current employment image and impressions of the product. However,
studies showed that employer branding has different characteristics as will be discussed later.
Employer Branding
In the beginning of the 21st century, many factors shaped the rise of employer branding. Starting with the tight labor markets
and low rate of unemployment along with the changes taking place in both the local and global economic and demographic
maps. Many organizations started facing the reality of skill shortage which consequently created a critical need for talented
labor. If it is a matter of some labor it would have been easy, but this labor need to be of the best quality to allow the
organization to survive and grow in the market.
Employer branding is defined as the summation of the organizations efforts to communicate with both current employees
and prospective candidates that the organization is a great place to work at. This is due to the functional, psychological and
economic benefits provided when working under the name of the organization (Ambler & Barrow, 1996; Moroko & Uncles,
2008). Jenner and Taylor (2009) state that employer branding represents organizations efforts to communicate to internal
and external audiences what makes it both desirable and different as an employer. Therefore, employer branding focuses on
the set of attributes and intangible qualities that distinguish the organization from others thus making it attractive for best
performers in the labor market. It was also discussed that employer branding aims at internal retention of high performing
employees and external attraction of unique candidates all of whom will help the organization gain a competitive advantage
(Suikkanen, 2010). Sullivan (2004) defined employer branding as a targeted, long term strategy to manage the awareness and
perceptions of employees, potential employees, and related stakeholders with regard to a particular firm.
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Sullivan (2004) stated that in order to have a successful employer branding, it must contain each of eight essential elements.
They are: a culture of sharing and continuous improvement, a balance between good management and high productivity,
obtaining public recognition (great-place to-work lists), employees proactively telling stories, getting talked about,
becoming a benchmark firm, increasing candidate awareness of your best practices and branding assessment metrics.
Employer branding is becoming important for four reasons. First, it contributes directly to the competitive advantage of the
company as the human resources acquired become rare, valuable and non-substitutable along with being difficult to imitate
(Suikkanen, 2010). Second, applying the concept provides for a solid corporate identity which attracts the best of talent
allowing individuals to have a great experience in the company (Elving et al., 2013). As Balmer (2012) states, Corporate
brands are a means of creating both shareholder and stakeholder value (p. 6). Third, employer branding signals out the
wrong candidates who will not fit within the organization. Hence, ensuring that only the right applicants who would achieve
high productivity and tenure remain. Forth, employer branding achieves efficiency and effectiveness as recruitment decisions
are made correctly and the rate of turnover is reduced (Tuzuner & Yuksel, 2009). Organizations can no longer bear the costs,
in terms of recruitment, compensation and retention, associated with losing employees.
Employee behavior is a reflection of the organizations identity; hence, for the organization to strive, it must ensure that the
employee behavior is consistent with its mission and vision. In other words, employer branding is important to ensure that the
right people are chosen and the organizations identity is correctly positioned (Maxwell & Knox, 2009).
Corporate Brand versus Employer Brand
It is worthy to note that there is a difference between corporate brand and employer branding. The corporate brand addresses
all stakeholders. However, the employer brand primarily addresses (potential and existing) employees; in this sense, it is a
sub-brand of the corporate brand (Foster, Punjaisri, & Cheng, 2010). Maxwell and Knox (2009) believe that employer
branding is a supporting tool for corporate brand through ensuring the attractiveness of the organization to the employees and
aligning their behaviors with the corporate brand. The typical focus on corporate brand with relation to HR was in
recruitment. This means that the focus has ever been on potential candidates; often the view of the current employees is
overlooked.
The researchers study concluded that each organization has a different set of characteristics that it should rely on in its
employer branding activities to remain attractive to the employees. All characteristics were grouped into four categories:
Employment (working conditions), organizational success, construed external image (positive constructed image) and
product of the organization (added value and attractiveness of what the employees produce/work on). The focus of this study
was on employer branding only.
Employer branding was studied in relation to several managerial terms. Employer branding is related to organizational
success (App, Merk & Buettgen, 2012) and successful recruitment. The same authors proposed that sustainable human
resource practices helps the employer brand on the long run to be consistent but at the same time versatile to different types
of employees. Hence, the authors highlighted the strategic importance of combining HRM and employer branding. The
authors proposed that sustainable HRM is positively related to employer attractiveness. Franca and Pahor (2012) also
discussed employer branding in relation to recruitment. Van Hoye et al. (2013) discussed culture as an important factor in the
success of employer branding and determining employer attractiveness to employees.
Sustainability of organizations is dependent on employees level of engagement (Piyachat, Chanongkorn, & Panisa, 2014).
The same authors reported from their study that employer branding was positively correlated with employee engagement.
The dimensions of employer branding which had the highest standardized beta coefficients were employment, development,
reputation and economic returns. The study also revealed positive correlation between employer branding and candidates
expectations.
Organizations, however, cannot promote this image of superior employment experience without identifying the tangible and
intangible benefits that are going to be marketed to the internal and external segments aimed at. An employment value
proposition has to be developed which is a package containing the cumulative and collective benefits which will be received,
gained or experienced by the employee by being a part of the organization (Suikkanen, 2010). Furthermore, employer
branding should target the expectations, perceptions and awareness of employees, potential employees and other stakeholders
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related to the company. Consequently, gaining a sustainable competitive advantage through the human skills attracted is
achieved (Ariffin, 2008).
Corporate branding is not a mere Marketing issue anymore. Todays wrestling organizations must recognize the
importance of integrating employer branding with other managerial concepts. The constellation of employer branding is
currently tested in organizations using the AC4ID test (Balmer, 2012). Out of the seven identity clusters highlighted, two are
the responsibility of the CEO and executive managers and one is the responsibility of managers and employees (culture
corporate brand identity). Therefore, employees at different managerial levels require education and sufficient awareness on
the subject of employer branding.
Characteristics of Employer Branding
When it comes to the characteristics of employer branding it is not easy to pinpoint which one or few characteristics make the
difference or provide significant brand success. The major characteristics that are to be put into consideration when observed
are either categorized as those consistent with consumer/corporate branding or those that are additional to mainstream
components of branding. The following three characteristics will be discussed; differentiation, relevance and noticeability
(Moroko & Uncles, 2008).
Differentiation
Differentiation occurs when a company can deliver and is perceived by employees as a provider of experiences that are not
just distinct but also superior to competitors. The aim is to create a preference for the company's brand by communicating the
unique and special benefits to the candidates or employees with a unique value proposition. Organizations have different
ways to do this; they may differentiate using functional tangible or emotional intangible benefits. Even though the functional
differentiation is considered critical, organizations that have the ability to differentiate with intangible brand characteristics
are much difficult to be copied by any of their competitors. The tangible aspect is made up of the entitys name and all its
external features but only when organizations can upgrade the overall experience and bring extraordinary value, they start to
create barriers to switching for the employees mentally. Only then, it could be said that a brand is truly distinctive.
To formulate this differentiation package, the organization needs to have a unique positioning concept along with a strong
communication media tool and to finally invest time and money (Suikkanen, 2010). The ability to differentiate brands has
been linked to corporate brand health and also its ongoing success. In fact, it is considered a crucial milestone in the process
of brand building. Simply, if a company has a strong brand, it can and will win the war for talent. It is essential to note that
sometimes it is hard to identify what is unique about the company in the employees minds (Moroko & Uncles, 2008).
Relevance
When the value proposition of an organization is looked at as relevant to the employee or candidate, the same individuals
tenure is extended. To pin-point successful employer branding, it is essential to know that it can be distinguished by the fact
that they have a value proposition that is relevant to, and resonant with, their prospective and current employees; thus
becoming attractive for them (Moroko & Uncles, 2008).
Noticeability
Without a clear and strong communication message that is channeled and directed properly, the benefits cannot be known
nor noticeable by employees and prospective employees, as well as by influencers such as recruitment consultants. The
strength of the brand identity and how much it is noticed has been linked with achieving higher rate of recruits of the best
quality. Company based attributes have a more attractive effect on employees and candidates than the regular old school role
specific ones. These, along with the organizations reputation, form some of the major factors why noticeability is a critical
characteristic for the success of employer branding (Moroko & Uncles, 2008).
Objectives of Employer Branding
Organizations use employer branding to serve diverse causes such as improving recruitment procedures and quality,
improving retention rates and commitment or even focusing on priorities and increasing productivity. It is also used in
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creating an attractive image of the organization to internal and external stakeholders in a way that is desirable to its target
market (Elving et al., 2013).
Employer branding could be related to motivation. The term motivation is derived from the Latin term movere, which
means to move (Baron, Henley, McGibbon, & McCarthy, 2002). A great many definitions of the motivation construct have
been postulated over the several decades during which this multifaceted concept has been researched (Roos & Van Eeden,
2008). Campbell and Pritchard (1976) defined motivation as a label for the determinants of the choice to initiate effort on a
certain task, the choice to expend a certain amount of effort, and the choice to persist in expending effort over a period of
time. Schultz and Schultz (1986) regard motivation as simply the personal and workplace characteristics that explain why
people behave the way that they do on the job. Du Toit (1990) distinguished between individual characteristics, such as
peoples interests, values and needs, work characteristics, such as task variety and responsibility, and organizational
characteristics, such as the policies, procedures and customs of an organization as bases for motivation (Baron et al., 2002).
The most common reasons for employee turnover are: job-person mismatch, lack of career growth, new attractive job offers,
better compensation packages offered by other companies, lack of appreciation by the superiors that lead to de-motivation
and employees lose interest, mismatch between the job expectation and reality, stress and work-life imbalance and lack of
trust and support in co-workers, seniors and management. Hence, retention practices have become a highly challenging task
for the human resource specialists in every organization. When managers perfectly understand why employees want to leave,
it is then that a workable retention strategy can be devised to control such intentions. There is also a need for organizations
to properly line up retention practices with the needs and values of employees. It is not the least performers who only leave
the organization; in fact, it is often the highest performing employees who find better alternatives are the first to move out of
the organization.
Interaction between Employer Branding, Employee Motivation and Retention
Organizations used to attract the talent by offering good compensation packages. However, it is observed that it is not only
good salaries that attract the employees, other factors also influence the choice of organization by the employees. Employer
branding is a relatively new approach towards recruiting and retaining the best possible human talent within an employment
environment that is becoming increasingly competitive (Backhaus & Tikoo, 2004). Singh (1996, 2002) also added that it is
not only the intention of the employees to stay in the organization but also the intention of an organization to retain its
employees that matters.
Employer branding has been introduced as a method of enhancing retention by making the promise of employment so
distinctive and superior to that of the competitors that the employee would not consider switching (Taylor, 2002). Retention
focuses on keeping the talent that contributes to the success of the organization (Buenger, 2006). Specifically, positive
impacts of retention are identified as increased sales growth and improved employee morale in conjunction with firms
profitability and market value (Allen, Bryant, & Vardaman, 2010). Organizations that have strong cultures experience
increased retention of employees in addition to the augmented satisfaction and commitment (Wheeler et al., 2006).
Morgans (2008) argument about taking retention seriously was supported by Glen (2006) who mentioned that for many
organizations, the retention of key skills, employee engagement and employee motivation and attendance are key operational
and even strategic concerns. Glen (2006) recommended that a more holistic view on employee engagement planning should
be adopted by organizations to manage the required key elements, so as to enhance the motivation, attendance and employee
retention.
Lather, Puskas, Singh and Gupta (2010) mentioned that organizational culture comprises the attitudes, experiences, beliefs
and values of an organization (total employer brand). Also, greater involvement in nurturing and developing the right type of
culture would lead to higher levels of motivation and engagement in the organization (Sinha, Singh, & Gupta, 2010). Singh
and Jain (2013) developed a model, based on their study, in which employer branding was affecting motivation and
motivation was affecting the intention to stay. In addition, motivation had a mediating effect.
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Hypotheses
The following research hypotheses were developed based on the literature:

H01: There is no relationship between employer branding and the intention of the employees to stay in their organizations in
Egypt.
HA1: There is a positive relationship between employer branding and the intention of the employees to stay in the
organizations in Egypt.
H02: There is no relationship between employer branding and motivation of the employees in their organizations in Egypt.
HA2: There is a positive relationship between employer branding and motivation of the employees in their organizations in
Egypt.
METHODS
Population and Sample
A non-probability convenience sampling design was used. The unit of analysis was the employees working in Egyptian
institutions. The survey was put online on a surveying website and was sent personally to potential respondents. 95
completed surveys were received. The data was later analyzed using the IBM SPSS software.
Instrument Used
For the purpose of the study, one tool was extracted from the publication Employer Branding: A Tool for Motivating and
Retaining Employees by Ajay Kumar Singh and Sonal Jain (2013).
Employer branding and its dimensions are measured on five-point Likert scale. Aspects measured by the tool were
employees brand knowledge (9 items), employer brand and its competitors (3 items), customer brand as perceived by
employees (4 items), employer brand as experienced by employees (14 items) and tThe perception of employer branding in
the employees organizations (23 items).
The intention to stay was also measured on a five-point Likert scale. Motivation was measured on a five-point Likert scale
except the last 10 statements which were based on three levels of the motivation.
The questionnaire comprised of the following sections:
Section 1: It measured the dimensions of employer branding using standardized questionnaires of Borgohain (2010),
Kimpakorn and Tocquer (2008) and Wright (2008).
Section 2: It measured the intention to stay using the study of Masroor and Fakir (2009).
Section 3: It measured the level of motivation using the study of Lin (2007).
Section 4: It collected demographic information of respondents.
RESULTS
As previously mentioned, the number of questionnaires received correctly was 95. The demographic data collected comprised
of the following categories: Gender, number of years of experience, age, marital status and level of education.
The final sample comprised of 59 females (63.44%) and 35 males (36.56%) with 2 respondents leaving this item blank. This
made the participation of females 1.7 times the participation of males.
The distribution of age was as follows: 13 participants (13.68%) were below 26 years old, 25 (26.32%) ranged from 26 to 30
years old, 21 (22.11%) ranged from 31 to 35 years old, 20 (21.05) ranged from 36 to 40 years old, 11 (11.58%) ranged from
41 to 45 years of age and 5 (5.26%) were above 45 years. The sample was considered age diverse.
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The marital status of the sample reflects that (37.89%) were single, (55.79%) were married and (6.32%) are either separated
or divorced. Finally, the tables (1 and 2) display the distribution of the level of education and years of experience of the
members who participated in the survey.
TABLE 1: LEVEL OF EDUCATION DISTRIBUTION OF THE RESEARCH SAMPLE
Level of education Frequency Percent

Diploma 2 2.10%
Bachelors Degree 53 55.79%
Masters Degree 33 34.74%
Other 7 7.37%
Total 95 100%
TABLE 2: DISTRIBUTION OF YEARS OF EXPERIENCE FOR RESEARCH SAMPLE
Number of years of experience Frequency Percent

0 to 5 25 26.32%
6 to 10 22 23.16%
11 to 15 17 17.89%
16 to 20 13 13.68%
21+ 18 18.95%
Total 95 100
Reliability
The following methods of analysis were applied to the data collected: Cronbachs alpha ( ) coefficient provides a measure of
the inter-item correlations within each given scale. In order to determine the reliability of the items linking to each of the
scales used for this study, and in order to validate the creation of the overall scale scores, a reliability analysis was conducted
in SPSS. The Cronbach alpha is used to measure the degree to which items within a set are positively correlated to each
other. It is computed using the average inter correlations between the items (questions in survey) used for measuring the
concept. The closer the Cronbach alpha is to 1 the higher the internal consistency (Sekaran & Bougie, 2010, p. 324).
Table Three provides a summary of the results of the reliability analysis indicating that all 136 items yielded acceptable and
relatively of high levels of reliability. The items measuring employer branding displayed 0.968, intention to stay displayed
0.903 and motivation displayed 0.976.
TABLE 3: RELIABILITY ANALYSIS
Variable Number of items Cronbach Alpha

Employer
71 0.968
Branding
Intention to stay 3 0.903
Motivation 62 0.976
Hypotheses Testing
The first hypothesis assessed the existence of a relationship between employer branding and intention to stay in the
organization. The regression analysis of the relationship indicated a non-significant relationship between the variables with
R-square equaling 0.007 and F (1, 88) = .636, p = .43), in addition to a small non-significant Beta [0.085, p = .43).
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Accordingly, the null hypothesis could not be rejected. There is no relationship between employer branding and the intention
to stay in the organization in the collected sample.
The below scatter plot diagram (Figure 1) reflects a very weak positive relationship between employer branding and intention
to stay.
FIGURE 1: SCATTER DIAGRAM OF EMPLOYER BRANDING AND INTENTION TO STAY
The second hypothesis assessed the existence of a relationship between employer branding and motivation. The R square of
.315 indicated an intermediate positive relationship between employer branding and motivation. The adjusted R square
reflected that 31% of the change in employee motivation is adhered to employer branding. In addition, F (1, 89) = 40.94, p =
.000 and Beta of .56 indicated an acceptable model. Therefore, the results indicated the existence of a highly statistically
significant positive relationship between employer branding and motivation. Accordingly, the null hypothesis is rejected.
There is a positive relationship between employer branding and motivation. The scatter diagram (Figure 2) provided further
verification of the relationship.
FIGURE 2: SCATTER DIAGRAM OF EMPLOYER BRANDING AND MOTIVATION

!
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DISCUSSION
This research aimed to find out the effect of employer branding, in Egyptian organizations, on the retention and motivation of
employees, individually. To be able to find answers, the following hypotheses were tested:
H1: There is a positive relationship between employer branding and the intention of the employees to stay in Egyptian
organizations.
H2: There is a positive relationship between employer branding and motivation of the employees in Egyptian organizations.
Regression analysis was used to test the above mentioned hypotheses. The first regression was made to test the relationship
between employer branding and intention to stay. Results showed that there is a very weak insignificant, yet, a positive
relationship between employer branding and intention to stay in the organization. Such results contradict with the majority of
the studies reported. Chiang et al. (2013) reported positive correlation between employer branding and the psychological
ownership inside organizations that lead to the commitment of the employees and their intention to remain with the
employing organizations. Hence, it was surprising that employer branding did not significantly affect the employees
emotional attachment to the organization.
While the instrument administered did not provide answers, several reasons are suggested. First, employing organizations
may not be positively engaging in employer branding. Organizations may suffer from incongruence between what they
market for and their actual doings; hence, there is a problem of communication. Third, the recruitment practices may not be
successful in acquiring the right calibers that the fit is not reached. Finally, the current economic conditions do not provide
employees with the luxury of choosing an employer or switching between organizations. Hence, the employer brand or the
attractiveness of the employers is not a current priority and it is overlooked. The results of this study also contradicted those
of Buil et al.(2015), Piyachat et al. (2014), Tuzuner and Yuksel (2009) and Wheeler et al. (2006).
The second regression was made to test the relationship between employer branding and the motivation of the employees.
Results showed a moderate positive relationship between employer branding and motivation and the relation is statistically
highly significant. This supports the findings of Raj and Jyothi (2011) who found that employer branding positively affects
employees attitudes. Sinha et al. (2010) and Singh and Jain (2013) also believed in the importance of the right culture is
improving employee motivation.
LIMITATIONS AND FUTURE RESEARCH RECOMMENDATIONS
The results of this study can only be applied with discretion. This study was conducted on employees working in
organizations in Egypt only. In addition, the sample size is small in relation to the whole population. Finally, the relationships
tested were unilateral and both dependent variables were studied individually. Further analyses are required to validate the
results.
It is recommended to study the influences of the gender, gender, years of experience, marital status and the level of
education on the relationship between employer branding and intention to stay and the relationship between employer
branding and motivation. Moreover, integrating the three variables in one model and testing it is recommended to highlight
any possible interrelations. Based on the results of Singh and Jain (2013), the mediating effect of motivation is to be tested.
Finally, it is suggested to conduct comparisons between current and potential employees on their perceptions regarding
employer branding.
PRACTICAL IMPLICATIONS
Sullivan (2004) defined employer branding as a targeted, long term strategy to manage the awareness and perceptions of
employees, potential employees, and related stakeholders with regard to a particular firm. Based on this definition, employer
branding is not a mere one-time event. It is an ongoing process that involves different levels of employees. To build an
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employer brand, the CEO and human resource practitioners are both responsible to set the working conditions, attributes of
organizational success, a positive constructed image and specific characteristics that define what the employees produce/work
on. Furthermore, they should identify the right channels to communicate the employer brand and ensure its continuity to
achieve a sustainable competitive edge.
CONCLUSION
This study aimed to find out the relation between employer branding in organizations in Egypt and the retention and
motivation of employees. Results showed that there is an insignificant, yet positive, relationship between employer branding
and intention to stay in the employed organizations. However, the sample showed intermediate positive relationship between
employer branding and motivation of employees. Additional field examinations are required to further validate the results
and provide more insights on the relationship between employer branding, retention and motivation of employees.
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The Relationship between Ethical Leadership (EL) and

Organizational Citizenship Behavior (OCB)
Sayed M. El Khouly, Ain Shams University
Nihal A. Mohammad, Ain Shams University
Nabil El Hady, Ain Shams University
EXECUTIVE SUMMARY
The reason for this research is to evaluate the relationship between ethical leadership and organizational citizenship
behavior. We have used a sample of 100 employees from 2 different Egyptian organizations working in different sectors. In
this research, we studied the relationship between ethical leadership (EL) and organizational citizenship behavior (OCB)
and the instruments that we have used in this study were two questionnaires: one to assess ethical leadership which is the
Ethical Leadership at Work questionnaire (ELW) and the other is an Organizational Citizenship Behavior Checklist (OCB-
C) that is a 20 item tool designed to evaluate the rate of recurrence of organizational citizenship behaviors. Both of them
were filled by employees. The result of this study revealed that there is a significant relationship between ethical leadership
(EL) and organizational citizenship behavior (OCB).
Keywords: Ethical leadership (EL), Organizational Citizenship Behavior (OCB).
INTRODUCTION
There is no doubt that there is growing attention in studying ethical leadership and its effects on people in Egypt and the
Middle East nowadays, especially after the consequences of the unethical decisions and actions that have been taken by
leaders in these countries which have affected the society and led to a chain of revolutions that has reached and affected the
mindset of the citizens, as well the mindsets of the employees in the organizations.
Similarly, the latest unethical scandals around the world have forced organizations to operate ethically. The scandals are
critical for organizations, as they weaken the reputation of top management and affect the financial success of an organization
(cf., Orlitzky, Schmidt, & Rynes, 2003). Remarkable examples of unethical scandals in both profit and non-profit
organizations has increased the interest of ethics from both the popular press and researchers as a result of the scandals, such
as the Enron case in the USA and the Ahold case in the Netherlands. Since then, various ethical scandals have been
discovered all over the world.
Many studies have focused on this subject, however, no studies have been conducted on the Egyptian culture. As such, it is
very important to start working on this issue here in Egyptian organizations.
LITERATURE REVIEW
Ethics
Hackman and Johnson (2002) mention that ethics are standards of ethical behavior and judgments that identify whether human
behavior is right or wrong. Hornett and Fredricks (2005) claim that leadership is correlated to ethics, so if there is no ethics
there is not really a leader.
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Ethical Leadership
Chen et al. (1997, p. 856) said that there has been a tendency to return to view a business as an ethical performance where
managers are worried about the ethical effects of what they do.
OCB
The concept OCB emerged in the 60s, when Katz (1964) determined three basic types of behavior that are vital for the
prosperity of an organization. First, entering and remaining within the system. Second, carrying the specific role assignments
in a dependable manner. Third, the innovative and impulsive activity that goes beyond the job descriptions. This activity
consists of many terms, including cooperation, helpfulness, suggestions, gestures of goodwill, and altruism, which together
Smith, Organ and Near (1983) summarized in the terms OCB. OCB is the employees actions that goes further than what the
formal job needs and serves the organization without directly receiving any rewards.
Ethical Leadership and OCB
There are two theories that could be related to the influences of ethical leadership on employee behavior; the social learning
theory of Bandura (1963) and social exchange theory (Cropanzano & Mitchell, 2005). First, Banduras social learning theory
emphasizes that behavior is based on the mutual interaction between internal and external influences, learning from reward
and punishment and that people copy the ethical behavior of role models. Ethical leaders can be these role models by
involving with their employees, listening to them and by showing their norms and values in their actions, communication and
behavior (Brown et al., 2005). By observing the behavior of others and the action consequences, employees may learn new
responses or change existing responses. So when a leader shows ethical behavior, employees will show the desired behavior
through imitation.
Second, social exchange theory consists of interactions, which bring certain obligations of which reciprocity is the most
important (Cropanzano & Mitchell, 2005). Employees are willing to work in a positive way if they get something valuable in
return for their effort, but if the rewards are not proportional to their costs, and profits not to their investments, employees tend
to act in their own self-interest (Mayer et al., 2009). Accordingly, if leaders reward employees desired behavior and if they
treat them ethically, employees will be willing to do what is appropriate, because they expect to receive more benefits.
Mautz and Sharaf (1961) state that leaders are responsible for the fulfillment of the standards of ethical behavior and ethical
values. Leaders have a great influence on determining their subordinates behavior and in altering the organizational behavior
ethically as well. Their actions can put in force ethical standards throughout the organization. Many studies have found that
managers, as leaders in the organization, have a big influence on employees behaviors.
The ethical behavior and ethical communication of the leaders do not only positively affect their own work but also the
attitudes of employees and even the business units or organizational performance (Brown, et al., 2005). Because ethical
leadership stimulates employee OCB (Mayer et al., 2009), it is essential to have an ethical lead in the organizations.
OCB is considered to be one of the most important effects of ethical leadership, since employees showing this kind of
behavior have a beneficial effect on the functioning of the organization (Podsakoff, MacKenzie, Paine, & Bachrach, 2000).
The leaders ethical behavior affects positively several employee results on the individual level like performance, satisfaction
with the leader, and organizational citizenship behavior (OCB) (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008;
Brown et al., 2005; Toor & Ofori, 2009). OCB supports the social and psychological work environment (Organ, 1997).
Researchers have mentioned that there is a strong relationship between corporate leadership and individual employee
behavior (Deluga, 1995; Schnake et al., 1993; Wayne & Green, 1993). The employees ethical behavior changes, even if
he/she has a very high ethical standard before joining the organization, in order to imitate the leaders ethical behavior (Zey-
Ferrell et al., 1979). The employees behaviors can be affected by the direct behaviors of the leaders and also their
understanding of organizational norms and appropriate behavior. Lee (1986) has found that leaders actions directly and
indirectly establish and form the ethical manner in the organization. When leaders actions and behaviors are described,
supported and rewarded, this gives the employees and subordinates information about the accepted behaviors in the
organization. Accordingly, employees and subordinates behaviors change.
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Research has shown that there is a positive relationship between ethical leadership and OCBs (De Hoogh & Den Hartog,
2008; Mayer et al., 2009). William et al. (2002) mentioned that leaders fairness motivates employees to engage in OCB. This
is as a result of the psychological contract that exists between leaders and employees. Philipp and Lopez (2013) found that
ethical leadership cannot directly predict OCB. Also, some studies found ethical leadership does not directly impact OCB
(Yates, 2014). Other studies have stated that the relationship between ethical leadership and OCB is direct (Cyril & Girindra,
2009; Michael & Linda, 2006; Silke, 2012). Mayer, Kuenzi, Greenbaum, Bardes, and Salvador (2009) and Walumbwa and
Schaubroeck (2009) have mentioned that supervisory ethical leadership is related positively to OCB.
METHODOLOGY
Aim of the Study
This research aimed to assess the relationship between ethical leadership (EL) and organizational citizenship behavior (OCB)
in Egyptian organizations.
Research Objective
The research objective is to check if there is a relationship between ethical leadership (EL) dimensions and organizational
citizenship behavior (OCB) dimensions.
Research Question
Is there a relationship between ethical leadership (EL) dimensions and organizational citizenship behavior (OCB)
dimensions?
Research Hypothesis
Null Hypothesis: There is no relationship between ethical leadership (EL) dimensions and organizational citizenship behavior
(OCB) dimensions.
H1: There is a relationship between ethical leadership (EL) dimensions and organizational citizenship behavior (OCB) in
general.
H2: There is a relationship between ethical leadership (EL) dimensions and organizational citizenship behavior (OCBO), a
dimension of (OCB).
H3: There is a relationship between ethical leadership (EL) dimensions and organizational citizenship behavior (OCBP), a
dimension of (OCB).
Research Design
A descriptive design was used to check the relationship between ethical leadership (EL) dimensions and organizational
citizenship behavior (OCB)
Setting
The study was conducted in two different Egyptian organizations from different sectors, the first one from the petroleum
sector and the second one from the FMCG sector.
Sampling
A convenience sample of 100 employees was used, 27 questionnaires were excluded and the rest, 83, were used. It was not
an easy task to ask employees to assess their leaders because they feel a little bit afraid that their leaders may find out.
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Tools of Data Collection
We collected the data through two different questionnaires:

1) Ethical Leadership at Work Questionnaire (ELW)
2) Organizational Citizenship Behavior Checklist (OCB-C)
Ethical leadership (ELW) tested seven ethical leader behaviors (fairness, integrity, ethical guidance, people orientation,
power sharing, role clarification and concern for sustainability).
Descriptions of ELW dimensions:

Fairness: Are not biased, treat others in a right and equal way, make ethical and fair choices.
Power sharing: Listen to followers ideas and concerns and engage them in decision making.
Role clarification: Explain tasks, expectations and work goals.
People orientation: Look after the followers; respect and support them.
Integrity: Your words and acts must be consistent and you have to keep promises.
Ethical guidance: Talk to employees about ethics, clarify ethical rules, promote and reward ethical behavior.
Concern for sustainability: Take care of the environment and encourage recycling.
The Organizational Citizenship Behavior Checklist (OCB-C) consists of 20 items that evaluate the regularity of
organizational citizenship behaviors performed by employees. Different subscale scores can be computed. One that reflects
actions toward the organization that benefits the organization is OCB-organization (OCBO) and the other one reflects the
actions toward coworkers that help with work-related issues OCB-personal (OCBP).
Procedures
After reviewing the relevant literature, we prepared the instruments for data collection. We explained the aim of the research
to all participants and took their approval to participate orally. We wrote the collected data in a data sheet and then analyzed
it statistically using SPSS.
RESULTS
The research analysis and testing the above mentioned hypotheses show that there is a significant relationship between
ethical leadership (EL) and the organizational citizenship behavior (OCB) with both dimensions (OCBO and OCBP).
The Relationship between EL Dimensions and OCB in General
TABLE 1: REGRESSION MODEL TO OCB (Y)
Independent Model Abstract Model

Variable R R2 F-value P
Ethical .874a .763 34.089 .000
Leadership Y = -.694 + .147x1 + .157x2 + .300x3 + .020x4
+ .097x5 + .005x6 + .407x7
Equation:
OCB = -0.694 + 0.147(People Orientation) + 0.157(Fairness) +0.300(Power Sharing)* +0.020(Concern of Sustainability) +
0.097(Ethical Guidance) + 0.005(Role Clarification) + 0.407(Integrity)*
*means significant
The results in Table 1 refer to a significant relationship between ethical leadership and OCB P-Value =.000. This means that
we rejected the Null hypothesis and accepted the alternative hypothesis which says that there is a significant relationship
between ethical leadership and OCB.
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R2 = (.763) which means the model has the ability to explain 76.3% of the response.
The most important dimensions of ethical leadership represented in Power Sharing (P-Value =.021) and Integrity (P-Value =
.000).
The Relationship between EL Dimensions and OCBO
TABLE 2: REGRESSION MODEL TO OCBO (Y)

Ethical 854a .730 28.582 .000
Leadership Y = -.864+ .096x1 + .309x2 + .304x3 + .025x4
+ .104x5 + -.050x6 + .387x7
Equation:
OCBO= -0.854 + 0.096(People Orientation) + 0.309(Fairness)* +0.304(Power Sharing)* +0.025(Concern of Sustainability)
+ 0.104(Ethical Guidance) - 0.050(Role Clarification) + 0.387(Integrity)*
*means significant
The results in Table 2 refer to a significant relationship between ethical leadership and OCBO P-Value =.000. This means
that we rejected the Null hypothesis and accepted the alternative hypothesis which says that there is a significant relationship
between ethical leadership and OCBO.
R2 = (.730) which means the model has the ability to explain 73% of the response.
The most important dimensions of ethical leadership represented in Fairness (P-Value = .012), Power Sharing (P-Value =
.048), and Integrity (P-Value = .000).
The Relationship between EL Dimensions and OCBP
TABLE 3: REGRESSION MODEL TO OCBP (Y)

Ethical .840a .705 25.311 .000
Leadership Y = -.524+ .198x1 + .005x2 + .295x3 + .015x4
+ .090x5 + -.060x6 + .426x7
Equation:
OCBP = -0.524 + 0.198(People Orientation) + 0.005(Fairness) +0.295(Power Sharing)* +0.015(Concern of Sustainability) +
0.090(Ethical Guidance) + 0.060(Role Clarification) + 0.426(Integrity)*
*means significant
The results in Table 3 refer to a significant relationship between ethical leadership and OCBP P-Value =.000. This means
that we rejected the Null hypothesis and accepted the alternative hypothesis which says that there is a significant relationship
between ethical leadership and OCBP.
R2 = (.705) which means the model has the ability to explain 70.5% of the response.
The most important dimensions of ethical leadership represented in Power Sharing (P-Value =. 033), and Integrity (P-Value
= .000).
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DISCUSSION
The aim of the research was to assess the relationship between ethical leadership (EL) and organizational citizenship behavior
(OCB) in Egyptian organizations by using multidimensional an Ethical Leadership at Work (ELW) questionnaire measuring
ethical leadership, including various related behaviors, fairness, role clarification, ethical guidance, people orientation, power
sharing, integrity and concern for sustainability, and another questionnaire to assess organizational citizenship behavior. The
study results revealed that employees will act more ethically if they have an ethical leader that they like, take him/her as a
model and dont want to make him/her upset by any means. Also, the ethical leader can change their attitudes by acting as a
role model and by implementing the ethical behaviors of fairness, role clarification, ethical guidance, people orientation,
power sharing, integrity and concern for sustainability.
CONCLUSION
The recent unethical scandals around the world and corruption in conjunction with recent revolutions in the Middle East, and
especially in Egypt, after decades of corruption has affected the whole market and the employees themselves and made it
very important to have an ethical leader in every organization in order to eliminate corruption and unethical behavior and
engrave ethical behavior in the employees.
RECOMMENDATIONS
Based on the study and the findings we suggested that:

Organizations try to choose ethical leaders who can change the behaviors of the employees.
All the managers within top and middle level to be trained to behave in an ethical way.
Organizations to assess the ethical behavior of their managers periodically.
LIMITATIONS
The study was conducted in only two different Egyptian organizations from different sectors: the first one from petroleum
sector and the second one from the FMCG sector. Some employees were afraid to assess their leaders as they think their
leaders may find out if they gave a bad comment about them. That resulted in some biases in some surveys and others refused
to give their opinions at all.
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Application of a Decision Tree Model to a Business Case from

Egypt
Sayed Elkhouly, Ain Shams University
Maher Aldamati, ESLSCA Business School
Michael Soliman, ESLSCA Business School
Mohamed Alfakharany, ESLSCA Business School
Diaa El-Dinne Sobeeh, ESLSCA Business School
Ahmed Ibrahim Ebaied, ESLSCA Business School
EXECUTIVE SUMMARY
Over the past few decades, Egypts economy has evolved tremendously due to the advancements in all aspects of business
supporting infrastructures including power, transport and telecom. As a result, a lot of business opportunities have started to
appear in various sectors and most are very attractive in terms of potential profits. As a result, the need for scientific tools to
help investors decide upon the most profitable opportunities has arisen. In this paper, we prove the importance of using
scientific models in decision making by applying the Decision Tree Model on a business case from Egypt, in which an
investor is facing two different opportunities and deciding upon the most profitable one.
Keywords: Feed-in-Tariff (FiT), Solar energy, Project development, Private Equity Fund, NPV, IRR, Payback Period.
INTRODUCTION
Egypt is one of the major markets in the Middle East and African region in terms of investment opportunities with positive
NPV, high PI, high IRR and moderate Payback Period. In addition, there are several sectors in Egypt that are very promising
to invest in and most, if not all, of those sectors are heavily supported by the government and have supporting infrastructures
that make such sectors very interesting. Such sectors include oil and gas, petrochemicals, power, tourism, real estate,
transport, engineering industries, heavy industries, chemicals and construction materials. Those sectors are supported by very
reliable infrastructures that include: three cellular operators, 5,063 km of railways, several numbers of airports with
thousands of flight destinations, several sea ports handling import and export, 64,000 km of highways, 5 investment zones
and 47 industrial zones. Furthermore, a very strong banking sector already exists that includes local banks, foreign banks,
joint-venture banks and private equity funds in addition to a very flexible monetary policy.
Therefore, making a decision on how to enter the Egyptian market and which sector to invest in is quite complex and
requires several considerations that include Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI)
and a Payback Period. In this paper, we demonstrate the importance of using decision making techniques and applying the
Decision Tree Model on a practical case in Egypt from which we select the most profitable investment.
THE CASE
In this case, the decision maker is a Private Equity Fund that owns 1.025 Km2 of land in Al Ain Al-Sokhna, Egypt and is
willing to develop a long term investment on it, while retaining land ownership, since the land is an asset that increases in
value as time passes.
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The Opportunities
The customer is offered two investment opportunities that will allow the customer to retain land ownership as required and
yield a number of dollars by the end of the investment duration. Opportunities in brief are as mentioned in Table 1.
TABLE 1
Opportunity 1 Opportunity 2
Nature of opportunity Land Lease Investing in 50 MW Solar Energy
Plant (BOO)
Investment duration 25 Years 25 Years
Offered by Real Estate Investor Local Project Development
Company
Opportunity 1: Land Lease
In this opportunity, the customer is being offered by a real estate investor an opportunity to have the land leased to the real
estate investor, for the duration of 25 years. In return, the land owner (the customer) receives a fixed amount of payment
annually for the contract duration. This summarized in Table 2.
TABLE 2
Option 1: Lease
Lease Contract Duration (years) 25
Annual Payment 2,000,000 USD
Payment Collection Period Semi-annual
Payment Start After 6 months of contract signage
Project Preparation Time 0
Opportunity Feasibility
In this case, we are evaluating the outcome of the total payments at the end of the contract duration, 25 years in comparison
with the current value of the land, $293,333,330, and at a discount rate of 2% (the current rate offered by local banks on USD
deposits). The evaluation is performed based on the Net Present Value (NPV) and Profitability Index (PI). Results of the
calculations are as mentioned in Table 3.
TABLE 3
Year Cash Flow Present Value

0 -293,333,330 -293333330
1 2,000,000 1960207.782
2 2,000,000 1921207.274
3 2,000,000 1882982.725
4 2,000,000 1845518.696
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5 2,000,000 1808800.054
6 2,000,000 1772811.971
7 2,000,000 1737539.911
8 2,000,000 1702969.628
9 2,000,000 1669087.158
10 2,000,000 1635878.818
11 2,000,000 1603331.195
12 2,000,000 1571431.143
13 2,000,000 1540165.778
14 2,000,000 1509522.472
15 2,000,000 1479488.848
16 2,000,000 1450052.777
17 2,000,000 1421202.368
18 2,000,000 1392925.971
19 2,000,000 1365212.164
20 2,000,000 1338049.754
21 2,000,000 1311427.771
22 2,000,000 1285335.461
23 2,000,000 1259762.286
24 2,000,000 1234697.919
25 2,000,000 1210132.234
NPV -254423587.8
Profitability Index $0.13
The calculations yields are NPV = Negative Value, PI = $0.13 (That means that every $1 yields only $0.13).
Opportunity 1: Final Outcome
The final outcome of Opportunity 1 is as displayed in Table 4
TABLE 4
Option 1: Lease
Lease Contract Duration (years) 25
Annual Payment 2,000,000 USD
Payment Collection Period Semi-Annual
Payment Start After 6 months of contract signage
Project Preparation Time 0
Project Cost 0
NPV Negative
Profitability Index (PI) %0.13
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Opportunity 2: Investing in a 50 Mega-Watt Solar Energy Plant
In this opportunity, the customer is offered a proposal by a local project developer to invest in Photo-Voltaic Solar Energy
Power Plant with installed capacity of 50 megawatt and to sell the produced electricity to the Egyptian Electricity Holding
Company (EEHC) via the national grid according to Egypts recently announced Feed-in-Tariff (FiT) Program, which allows
investors to invest in solar energy plants and sell the electricity to the government based on a 25-year contract and for a fixed
tariff per kilowatt hour (kWh) for the contract duration.
Opportunitys Non-Financial Details
In Egypt, the solar irradiation rate is considered among the highest in the world, ranging from 1900 kWh/m2 annually to
2574 kWh/m2 annually, according to the following solar map (Figure 1) announced over the solar Mediterranean atlas,
developed by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety in Germany.
FIGURE 1
The customers land is located in Al Ain Al-sokhna, according to the following map (Figure 2) and with solar irradiation rate
of 2,020 kWh/m2 annually.
FIGURE 2
The exact solar irradiation rate per square meter of the customers land location monthly and annually is as displayed in
Figure 3 and Table 5.
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FIGURE 3
TABLE 5
Month GHI DNI TEMPER
Jan 107 143 10.4
Feb 120 139 11.5
Mar 175 187 14.9
Apr 193 181 19.6
May 215 191 23.2
Jun 228 212 25.8
Jul 228 209 27.3
Aug 211 194 26.9
Sep 181 180 24.5
Oct 149 164 21.1
Nov 113 146 16.0
Dec 100 140 11.9
Year 2020 2087 19.4
Opportunitys Financial Details
The following table (Table 6) shows the official Feed-in-Tariff (FiT) rates officially announced by the Egyptian Ministry of
Electricity and Egypts New & Renewable Energies Authority (NREA) as part of the Feed-in-Tariff (FiT) Program offered
by the government for investors.
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TABLE 6
Feed-in-Tariff for Renewable Energy Projects

A) Solar (PV) Projects Feed-in-Tariffs
PV Power Plant Installed Capacity Corresponding Feed-in-Tariff
Residential 84.4 P.T./kWh
Installed Capacity 200 Kw 90.1 P.T./kWh
200 Kw Installed Capacity < 500 Kw 97.3 P.T./kWh
500 Kw Installed Capacity < 20 MW 13.3 $ Cent/kWh
20 MW Installed Capacity < 50 MW 14.34 $ Cent/kWh
PV Projects FiT has a flat rate during the entire 25-year contractual period
Payment of Feed-in-Tariff is quarterly, according to the governments Financial Year, which starts on July 1st , while
contract duration is 25 years and the FiT has a flat rate during the entire 25-year contractual period. New FiT is negotiated
upon the completion of the 25-year contract.
Solar plant production capacity installed is 50 megawatt, which is expressed in terms of kWh when calculating production.
Taking into consideration that 1 megawatt = 1000 kilowatt, the installed capacity in terms of kW peak is 50,000 kWp.
Concerning the Photo-Voltaic (Solar) Panels, the latest R&D researches and currently available PV panels in worldwide
markets, warranty duration is a 25-year linear warranty, making guaranteed solar panel output over 25 years as mentioned in
Table 7.
TABLE 7
Year Output Capacity

1 to 15 100%
16 to 20 90%
21 to 25 85%
Therefore, expected annual production and gross cash from contractual FiT will be as mentioned in Table 8.
TABLE 8
Year Annual Production (kWh) Annual Gross Cash-in from FiT

($0.1434/kWh)
1 127,750,000 $18,319,350
2 127,750,000 $18,319,350
3 127,750,000 $18,319,350
4 127,750,000 $18,319,350
5 127,750,000 $18,319,350
6 127,750,000 $18,319,350
7 127,750,000 $18,319,350
8 127,750,000 $18,319,350
9 127,750,000 $18,319,350
10 127,750,000 $18,319,350
11 127,750,000 $18,319,350
12 127,750,000 $18,319,350
13 127,750,000 $18,319,350
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14 127,750,000 $18,319,350
15 127,750,000 $18,319,350
16 114,975,000 $16,487,415
17 114,975,000 $16,487,415
18 114,975,000 $16,487,415
19 114,975,000 $16,487,415
20 114,975,000 $16,487,415
21 108,587,500 $15,571,447
22 108,587,500 $15,571,447
23 108,587,500 $15,571,447
24 108,587,500 $15,571,447
25 108,587,500 $15,571,447
The amount of capital needed for the proposed 50 megawatt solar plant is $100,000,000 on an Engineering, Procurement,
and Construction (EPC) basis. Project is depreciated over 15 years.
Like any proposed investment, there are three ways to raise the required capital: 100% equity, equity+debt and partnership
with more investors. The proposed financing options in our case are as mentioned in Table 9.
TABLE 9
# Details
Option 1 100% Privet Equity
80% Private Equity
Option 2 20% Debt

(Interest Rate 6%, Duration 5-years)
60% Private Equity

Option 3 40% Private Equity from second
partner
Option 1: Detail
If option one is chosen (100% private equity) to raise the initial capital of $100,000,000, then two parts are to be considered.
Part A, which includes the expected annual production and gross cash in from contractual FiT as mentioned in Table 8.
Part B, which considers fixed annual costs for years, a) years 1 through 15, b) year s16 through 20 and c) years 21 through
25.
a) Fixed annual costs for years 1 through 15 includes depreciation = $4,666,666 and Operations & Maintenance (O&M) =
$340,000.
Therefore, annual net income (years 1 through 15) at 100% production capacity is as mentioned in Table 10.
TABLE 10
Sales 18,319,350
Depreciation -4,666,666
Gross Income 13,652,684
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O&M -340,000
Operating Income 13,312,684
25% Income Tax -3,328,171
After 25% Income Tax 9,984,513
5% Income Tax (Above 1 M) -615,634
Net Income After Tax 9,368,879
b) Fixed annual costs for years 16 through 20 includes Operations & Maintenance (O&M) = $340,000.
TABLE 11
Sales 16,487,415
O&M -340,000
25% Income Tax -4,036,853
c) Fixed annual costs for years 21 through 25 includes Operations & Maintenance (O&M) = $340,000.
TABLE 12
Sales 15,517,447
O&M -340,000
25% Income Tax -3,892,861
As a result, at discount rate of 2.03%, option 1s NPV, IRR, PI and Payback Period are as mentioned in Table 13.
TABLE 13

0 -100,000,000 -100000000
1 9,368,879 9182474.762
2 9,368,879 8999779.244
3 9,368,879 8820718.655
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4 9,368,879 8645220.675
5 9,368,879 8473214.422
6 9,368,879 8304630.425
7 9,368,879 8139400.593
8 9,368,879 7977458.192
9 9,368,879 7818737.814
10 9,368,879 7663175.354
11 9,368,879 7510707.982
12 9,368,879 7361274.118
13 9,368,879 7214813.405
14 9,368,879 7071266.692
15 9,368,879 6930575.999
16 11,353,192 8231363.791
17 11,353,192 8067591.68
18 11,353,192 7907077.997
19 11,353,192 7749757.911
20 11,353,192 7595567.883
21 10,558,714 6923495.38
22 10,558,714 6785744.762
23 10,558,714 6650734.844
24 10,558,714 6518411.099
25 10,558,714 6388720.081
NPV 92931913.76
IRR 8%
Payback Period (years) 10.7
Option 2: Detail
If option one is chosen (80% private equity + 20% debt 5-year payment plan) to raise the initial capital of $100,000,000,
then two parts are to be considered. Part A, which includes the expected annual production and gross cash in from contractual
FiT as mentioned in Table 8.
Part B, which considers fixed annual costs for years, a) years 1 through 15, b) years16 through 20, and c) years 21 through
25.
C) Fixed annual costs for years 1 through 15 includes depreciation = $4,666,666, Operations & Maintenance (O&M) =
$340,000, and debt installment = $5,200,000.
Therefore, annual net income (years 1 through 15) at (80% private equity + 20% debt 5-year payment plan) will be as
mentioned in Table 14.
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TABLE 14
Sales 18,319,350
Income After Depreciation 13,652,684
Debt Installament -5,200,000

O&M -340,000
25% Income Tax -2,028,171
b) Fixed annual costs for years 6 through 15 includes depreciation = $4,666,666 and Operations & Maintenance (O&M) =
$340,000.
TABLE 15
Sales 18,319,350

O&M -340,000
25% Income Tax -3,328,171
b) Fixed annual costs for years 16 through 20 includes Operations & Maintenance (O&M) = $340,000.
c) Fixed annual costs for years 21 through 25 includes Operations & Maintenance (O&M) = $340,000.
As a result, at discount rate of 2.03%, Option 1s NPV, IRR, PI and Payback Period are as mentioned in Table 16.
TABLE 16

0 -100,000,000 -100000000
1 5,728,879 5614896.599
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2 5,728,879 5503182.004
3 5,728,879 5393690.095
4 5,728,879 5286376.649
5 5,728,879 5181198.323
6 9,368,879 8304630.425
7 9,368,879 8139400.593
8 9,368,879 7977458.192
9 9,368,879 7818737.814
10 9,368,879 7663175.354
11 9,368,879 7510707.982
12 9,368,879 7361274.118
13 9,368,879 7214813.405
14 9,368,879 7071266.692
15 9,368,879 6930575.999
16 11,353,192 8231363.791
17 11,353,192 8067591.68
18 11,353,192 7907077.997
19 11,353,192 7749757.911
20 11,353,192 7595567.883
21 10,558,714 6923495.38
22 10,558,714 6785744.762
23 10,558,714 6650734.844
24 10,558,714 6518411.099
25 10,558,714 6388720.081
NPV 75789849.67
IRR 7%
Payback Period 12.6
Option 3: Detail
If Option 1 is chosen (60% Private Equity + 40% Private Equity from a second partner) to raise the initial capital of
$100,000,000, then two parts are to be considered. Part A, which includes the expected annual production and gross cash in
from contractual FiT as mentioned in Table 8.
Part B, which considers fixed annual costs for years, a) years 1 through 15, b) year s16 through 20, and c) years 21 through
25 will be the same as Option 1.
Also, at discount rate of 2.03%, Option 13s NPV, IRR, PI and Payback Period are the same as Option 1 and are as
mentioned in Table 13.
The difference here is its 60%-40% partnership with 60% owned by the customer being the subject of discussion. Therefore,
the final NPV, IRR, PI, and Payback Period for the project will be as mentioned in Table 17 and PI at 60% for subject of
discussion will be $1.158.
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TABLE 17
NPV 92931913.76
IRR 8%
Payback Period (years) 10.7
Therefore, net income for Option 1, 2 and 3 by the end of the 25-year contract will be as mentioned in Table 18.
TABLE 18
Option Net Income at end of 25-year

1 $250,670,195
2 $231,892,715
3 $150,402,117
And results of finance Options 1, 2, and 3 can be summarized as in Table 19.
TABLE 19
Opportunity 2: Invest in 50 Mega-Watt Solar Energy Plant

Power Purchase agreement 25 Years
(PPA) /Duration
Initial Cost $100,000,000
Project Installation 1 Year
Duration
Payment Collection Period Quarterly
Payment Start After Project Installation and Commissioning; after 1 Year
Finanace Options Option 1: 100% Equity NPV = Positive Number
IRR = 8%
Profitability Index = $1.93
Payback Period = 10.7 Years
Option 2: 20% Debt + 80% Equity Interest Rate = 6%
Grace Period = 6 Months
Duration = 5 Years
NPV = Positive Number
IRR = 7%
Option 3: 60%-40% Partnership NPV = Positive Number
IRR = 8%
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Application of Decision Tree Model
The results of Opportunity 1 and Opportunity 2 can be summarized as mentioned in Table 20.
TABLE 20
Opportunity 1: Lease Opportunity 2: Invest in 50 MW PV Plant

Contract Duration 25 25
Payment Collection Semi-Annual Quarterly
Period
Net Income by end of 31,525,812 USD 100% Equity = 250,670,195 USD
Contract 20%Debt+80%Equity = 231,892,715 USD
60-40 Partnership = 250,670,195 USD
@60% = 150,402,117 USD
NPV Negative Value 100% Equity Finance = Positive Value
20%Debt+80%Equity = Positive Value
60-40 Partnership = Positive Value
Now, we apply the Decision Tree Model on the final summary in Table 20. The result will be as shown in Figure 4.
FIGURE 4
The application of the Decision Tree Model leads us to choose Opportunity 2 with Financing Option 1 (100% equity) that
allows the customer to have a net income of 250,670,195 USD by the end of the 25-year contract (power purchase
agreement).
CONCLUSION
From the calculations in the previous sections and the application of the Decision Tree Model, we can conclude that in
evaluating investment opportunities of different and similar outcomes, even after applying the techniques that return solid
and clear numbers, such as Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI) and Pay-Back
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Period, there is still a probability of missing the most optimum and most profitable investment opportunity if a decision is
only made based on the mentioned calculations. In such cases comes the importance of applying scientific decision making
methods such as Decision Tree Model, which has been applied and demonstrated in this paper, to select the most profitable
investment opportunity.
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Bridging the Gap between Facebook and Business

Linda Jane Coleman, Salem State University
Lauren E. Cote, Salem State University
James Gu, Salem State University
Kathryn Chandler, Bayridge Hospital
EXECUTIVE SUMMARY
Although social media continues to grow, there is a lack of research regarding demographics of Facebook users, especially
regarding their activity on business pages and related purchasing behavior. The authors surveyed 349 participants at a U.S.
university to determine Facebook awareness, overall use, and patterns of use regarding visits and interactions with
businesses. This study found that many users are aware of and active on organizations pages, age correlates with the
likelihood of having a page and gender and type of device used influence the users behaviors. Businesses can use our
findings to improve their communications with their Facebook fans.
Keywords: Social media, Online communities, Facebook, Marketing
INTRODUCTION
Social medias influence is constantly expanding as more people join online communities every day. Social media platforms
are maturing into serious communication channels that facilitate problem-solving in creative and unexpected ways for
commercial purposes, educational institutions, government and not-for-profit organizations, and for crisis responders and
crisis response efforts (Perkins, 2010). Facebook is one of the more prominent social networking sites and has experienced an
incredible amount of growth: Facebooks active monthly user population has grown from 200 million users in 2009 to 1.35
billion users in the third quarter of 2014 (Statista, 2014). Of these users, more than 60% of them use Facebook every day
(Swani et al., 2013). In a 2009 study of social media sites, it was estimated that 50% of the U.S. population had some version
of social media profile. (Mathur et al, 2012; Stelzner, 2009). To better understand the reach of social media, one must look at
its components as well as the types of people who utilize these sites.
Consumers are increasingly adopting social networking, engaging in micro-blogging and downloading applications for
smartphones and tablets. Along with sharing and communicating with friends about their social lives, updating pictures and
posting status updates, customers and members of society have found that social media applications can empower them as
they navigate through the abundance of information available online (Andzulis et al., 2012; Richardson, 2010). In 2013, 29%
of Facebook users reported clicking the like button on other users statuses or generated content several times per day
(Statista, 2014). On an organizational level, firms have not readily adopted these technologies, but are quickly seeing the
potential value in their use. For example, Ford Motor Company employed social media to promote the release of their new
model Ford Focus. Ford distributed videos of social media practitioners on a test track via Facebook, Twitter and other social
media platforms and received positive feedback from consumers (Levin, 2011; Andzulis et al., 2012). Additionally, Business
Insider reported that Procter & Gamble proposed to lay off about 1,600 staffers, including marketers, as part of a way to cut
cost from their advertising budget, since advertising on Facebook costs less than the traditional media used for advertising
(Andzulis et al., 2012; Edwards, 2012). Using Facebook also allows brands to create brand communities without the effort of
building or owning external online platforms or promoting independent websites. Using social networks allows a brand
access to large numbers of customers at low costs and high speeds. Social networks, such as Facebook, are also ideal for
creating loyal brand communities and effective customer-to-customer based information exchange (Zaglia, 2013).
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SOCIAL COMMERCE
Social commerce refers to the use of social media to assist in the online buying and selling of products and services. This
practice leverages social shopping behaviors when online shoppers interact and collaborate during the shopping experience.
Social commerce channels include review and ratings sites (i.e., Epinions and Yelp), deal sites and deal aggregators (i.e.,
Groupon and Yipit), social shopping markets (i.e., Etsy) and social storefronts (i.e., Levis Friends Store) (Tuten & Solomon,
2013). Organizations can socially enable aspects of their traditional e-commerce websites by using tools such as Facebook
Connect (a Facebook tool that allows users to log in to other partnering sites using their Facebook identities) and Share
applications (tools that let users share what they are reading or doing on their status feeds).
SOCIAL MEDIA MARKETING
Due to the rapid growth of social media, marketing professionals have found a new outlet that can potentially increase the
interest in a product or services (Mathur et al., 2012). This has important implications for customer lifetime value (CLV)
considerations and related interest for advertisers who are deciding whether investments in social media are cost effective.
Social media marketing is a hot current topic of interest for many organizations worldwide. It is a relatively new technique
for many organizations and there is much uncertainty about the overall impact on the growth and expansion of the company.
Social media sites such as Facebook challenge managers with the decisions of how and when they will incorporate this
opportunity (Hartzer, 2010; Mathur et al., 2012).
FACEBOOK
Facebook is the dominant social networking site, with an audience of approximately 160 million U.S. visitors each month. If
Facebook were a country, it would be the third most populous in the world. It accounts for 90% of all time spent on social
networking sites. Facebook offers synchronous interactions (which occur in real time, such as when texting back and forth
with a friend) and asynchronous interactions (which do not require all participants to respond immediately, as in emailing a
friend and getting an answer the next day), photo sharing, games, applications, groups, e-retailing and more. Branded content
on social media can take many forms, among them content shared directly from brands, re-shared content from connections
and social marketing tools, such as Facebooks Sponsored Stories advertising unit. There has been a focus on counting the
incidence of these brand mentions on social networks and categorizing it. The reach and frequency of social-media brand
impressions are far more important than simple counting statistics (Lipsman et al., 2012; Tuten & Solomon, 2013).
Facebook users spend more than a fourth of their time on the site consuming and interacting with the Facebook Newsfeed,
which represents 4% of all time spent online in the United States (Lipsman et al., 2012). The Newsfeed is also the primary
location where branded content is consumed. Users are 40 to 150 times more likely to consume branded content in the
Newsfeed than to visit the Fan Page. There are potentially two audiences for branded content on Facebook: Fans of brands
and friends of fans.
Fans of brands on Facebook (those who have explicitly liked a brand) are the easiest to reach with social-media brand
impressions (Lipsman et al., 2012). The act of liking a brand on Facebook is equivalent to sharing information with all of
the connections within a users social network (Swani et al., 2013). Friends of fans typically represent a larger set of
consumers (34 times larger, on average, for the top 100 brand pages) and can receive social media brand impressions by way
of their friends. The reach of branded content among friends of fans exceeds the reach among fans. When a brand focuses on
acquiring and engaging fans, it can benefit from the significant secondary effect of exposure among friends of fans that often
goes beyond reach among fans. Facebook fans may have different aggregate demographic and behavioral profiles for some
brands than typical brand purchasers, which implies that social media may require varying approaches to marketing strategy.
The value of a fan can be assessed in three primary ways: increasing the depth of engagement and loyalty among fans,
generating incremental purchase behavior and leveraging the ability to influence friends of fans (Lipsman et al., 2012).
Companies also benefit from integration with Facebook when users like their content, because it encourages customer-
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customer and firm-customer interaction, gauges the popularity of their posts and allows users to provide their personal
endorsements (Swani et al., 2013).
DISTRACTION OR RELAXER
Facebook and its role in the workplace and among employees is an area receiving more attention. The topic of employees
using Facebook in the workplace has been addressed, but has had conflicting studies and results. There is not a plethora of
information that confirms either side of the argument in view of the massiveness of this phenomenon. According to PopCap
Games research, taking a 10-minute break to browse the Internet will reduce stress and sharpen your mind (Skinner, 2009).
Per a study by the Australian University, 70% of office employees use the Internet at work for personal reasons. Of them, 9%
were more productive than employees who did not use the Internet for fun (Skinner, 2009). Firms spend millions on software
to block their employees from watching videos, using social networking sites or shopping online under the pretense that it
costs millions in lost productivity. Thats not always the case. Coker reports that the study reflected people who browsed the
web 20% or less of their working day. Those who behave with Internet addiction tendencies will have a lower productivity
than those without, he adds (Skinner, 2009).
ORGANIZATION STRATEGIES
How do businesses make social media work for them? How can businesses use Facebook to effectively entice, persuade,
involve and reach consumers? For example, it would be helpful for a business to know the best time to post to Facebook in
order to reach its target market. There is much discussion around the best times for an organization to post on Facebook. It
seems there is no consensus because optimal times are audience-specific. Research does show that a Facebook post reaches
half of its audience within 30 minutes. This would indicate that the key would be to concentrate on posting when your
existing and potential consumers are on Facebook (Cormier, 2013).
This warrants getting to know and understand your customer. Who are they? What are their demographics? How do they
spend their time throughout the day and evening? Facebook is being accessed in a variety of ways: from smartphones, iPads
and desktops. Facebook had 751 million monthly active users on mobile devices in 2013. 80% of 18-44 year olds check their
smartphones right after they get up in the morning. Those with smartphones check their phones around mealtimes and 86% of
mobile Internet users use their devices while watching television. Another consideration is not to necessarily post weekday
and weekend evenings from 5-8 PM, because that could be the most active time for many newsfeeds, messages from friends
and other brands that they follow (Cormier, 2013). Early morning, between work and dinner, and bedtime can be effective
times, but gearing it to the lifestyle of your particular fans and target market is most important.
In order for an organizations page to be successful, marketers should also encourage consumers to participate in their
content, through relevant and valuable posts and to validate consumers participation by responding to them (Smith et al.,
2012). This adds a genuine connection to the interactions and will humanize an organizations page. This will likely be
appreciated, as such interactions will make a brand more personable and likeable and will foster trust. This humanizing of
your brand can help accessibility, new connections, genuine relationships and result in an improved image in the minds of the
consumers (Romeri, 2014).
When considering an organizations online image, it is also important to consider the ethics of customizing a virtual
presence. For instance, some brands allow any fan to post personal, non-offensive photos of his/herself using the brand
without considering the impressions this might give a new fan. On the other hand, there are ethical implications to filtering
content, actively deleting content that does not contribute to the brands desired impression (such as a complaint or bad
review) or simply editing the page to create a particular image might lead to backlash from consumers. A brand might be
perceived as manipulative or misleading if it presents an edited display as being exhaustive of a brands supporters (Naylor et
al., 2012).
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CHARACTERISTICS OF FACEBOOK USERS
Many businesses use Facebook to implement marketing activities to promote products, services, sales and to enhance a
brands image but do not know the factors that affect consumer decision making behavior. Yang (2012) found that
advertising messages provided by close friends on Facebook enhance the recipients attitudes towards a brand, but
advertising messages provided by commercial sources on Facebook enhance the recipients brand attitude and purchasing
intention. Overall, Yang (2012) found that Facebook involvement affected advertising attitudes, brand attitudes and
purchasing intentions of customers.
Wallace et al. (2014) looked further into the characteristics of Facebook users to better understand their actions and
influences as attracting Facebook fans is a potentially valuable marketing communications strategy and this is an area where
there is a significant gap in existing research. Facebook reports that people who use the Like button are more engaged,
active and connected than the average Facebook user, offering a Facebook population for companies to attempt to attract as
fans. Wallace et al. (2014) identified four key types of Facebook fans: Fan-atics, self-expressives, incentives and
authentics. This study found there is actually a disconnect between Likes and brand consumption. Further exploration of
these types of users as well as their decision making behavior is warranted and needed information.
Segmentation of Generations
Matures Boomers X-ers Echoes

1909-1945 1946-1964 1965-1978 1979-1990
52 million 78 million 57 million 51 million
AMA 2008 Market Research Conference
CONCLUSION
There is a vastness to Facebook and how it is evolving. Clearly, Facebooks expansion and popularity are significant, but it
remains to be seen how businesses can best utilize it and maximize its role and effect.
In future studies, we will be exploring the optimization of Facebook for business use and bridging the gap between likes
and brand consumption. Eventually, we would also like to expand our research into the international arena.
DATA REPORT ON FACEBOOK SURVEY
Section 1: Descriptive Analysis
The authors conducted this survey at a university in the northeastern United States. The same survey was sent to the general
community to make the sample more diverse. There are 349 usable responses for the survey, including 141 male and 215
female respondents. More than half of the respondents (264 out of 349) were born after 1979. The exact responses to each
question are summarized in the Appendix 2.
Section 2: Test Results
The objective for this survey is to determine participants behaviors when using Facebook. The variables can be split into five
categories: (1) demographic independent variables, such as age, gender, country and whether or not the participant uses a
smartphone or tablet; (2) the behaviors on his/her own Facebook page: whether or not the respondent has a Facebook
account; frequency of visits to his/her own page and activities (such as posting status updates, viewing photos,
communicating with friends and family, etc.); (3) activities on friends Facebook pages (such as directing messages to that
friend); (4) organization pages: whether participants are aware that organizations have Facebook pages and the frequencies of
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their visits to those pages; and (5) Facebooks influence on purchase behaviors, including whether to consult business sites
(either a brands Facebook page or official website) before purchase, frequency of consultation and the purpose of consulting
a page (to receive direct information about the brand, to give or receive feedback about the brand, to complain about negative
experiences,etc.).
The relations between the five categories of variables is depicted in the following graph:
Figure 1: Relations between variables
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2.1: Will the demographic characteristics affect the usage of Facebook, frequency of visits to a users own Facebook page,
how users interact with their own pages?
In exploring the effect of demographic characters on the activities on Facebook pages, the independent variables are age,
gender and whether or not the participant owns smart devices. It can be postulated that if a person uses smart devices (i.e.,
smartphones and tablets), (s)he may surf online at any time, because these gadgets are portable. Therefore, the frequency of a
participants visits to a Facebook page may differ from the frequency of visits of someone who does not own a smartphone or
tablet. There are three dependent variables for this set of data. The first is whether or not the participant has a Facebook
account, and the thirteen Facebook actions the authors listed in their survey are all 0/1 categorical variables. Therefore,
ANOVA is not appropriate for these 0/1 dependent variables. Instead, multivariate discriminant analysis technology is used.
The second dependent variable is the frequency of visits to ones own Facebook page. That variable can take five values (0-
4). It can be treated as a continuous variable and therefore ANOVA test may be used. Discriminant analysis results are
reported in Table 1. ANOVA results are reported in Table 2. Due to manuscript limitations, only significant results are
reported. Significance is defined as a two-tail test significance level being less than 5% (marked for *) and 1% (marked for
**) for ANOVA. For the discriminant analysis, overall model Lambda and significance levels are reported. Only the
independent variables with structural coefficients higher than 0.4 are marked as significant.
2.1.1 Age, gender and smart device impact on whether or not a participant has his/her own Facebook account
Table 1 shows that only a participants age group has a positive significant influence on whether or not (s)he has a Facebook
account. Gender and ownership of a smart device have no significant effect on a persons Facebook activity, or whether they
have a Facebook account or not.
2.1.2 Age, gender and smart device impact on the visitation frequency to a participants own Facebook page
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Table 2 shows that only a participants age has any positive influence on the frequency visitations to his/her own Facebook
page. Gender and owning a smart device have no influence on visitation frequency.
2.1.3 Impact of age, gender, smart device usage and visitation frequency of ones own Facebook page on the activities
performed on own page
Besides the demographic variables, people who visit their own Facebook pages more frequently favor different activities than
people who visit their Facebook pages less frequently. Therefore, the frequency of visiting ones own page is added to age,
gender and smart device ownership as independent variables. As there are 13 Facebook-related activities in the survey, with
each one taking 0/1 values, 13 discriminant analyses were performed.
Table 1 shows that both age and gender positively increase the likelihood of 5 out of 13 activities. It seems that older people
and males are more likely to read political messages and jokes on Facebook than their younger or female counterparts, and
they are more likely to complain on a brands dedicated Facebook page. Males are more likely to browse Facebook for
pictures. Having a smart device has no influence on any activities, but the more frequently a person visits his/her own page,
the more likely (s)he is to do all those activities, except asking other peoples opinions.
2.2: How will the demographic variables, the frequency of visits to ones own Facebook page and the activities performed on
ones own Facebook page affect the activities performed when visiting other users pages?
In this section, we try to understand what affects the activities people engage with on other users pages. Besides the
variables of age and gender, it is possible that owning a smart device can affect these activities because people can access
Facebook on smartphones and tablets anywhere and at any time. The frequency of visiting Facebook can affect which
activities people engage in on others pages. It is further proposed that people tend to do the same activities on other peoples
pages as they do on their own pages.
Thirteen (13) discriminant analyses are performed on the activities participants engaged in on others Facebook pages. Each
dependent variable takes 0/1 value. The independent variables are age, gender, usage of smart devices, frequency of visits to
ones own Facebook page and the same activity level on his/her own Facebook page. The results are reported in Table 3.
The activities a participant engages in on his/her own Facebook page are always significantly related to the activities on
other peoples pages. It supports the proposition that people tend to perform the same activities on others pages as on their
own pages. The frequency of visiting ones own page significantly affects 8 out of 13 activities. Generally speaking, the more
frequently a person visits Facebook, the more likely (s)he is to see pictures, communicate with friends and family and read
messages and opinions, but (s)he will not necessarily complain to brands on Facebook.
Interestingly, having a smart device and surfing online anywhere at any time significantly makes a user more likely to seek
other peoples opinions on Facebook. Seeking the opinions of others on Facebook seems to be time-consuming and is
something that only users who visit Facebook very frequently, such as those with smartphones can do. This implies that most
people do not care about others opinions when they occasionally surf on Facebook: they are more likely to do things that
interest themselves.
Lastly, age and gender do not affect any of the activities performed on others pages.
2.3 What affects the likelihood of knowing that organizations have Facebook pages and the frequency of visits to those
Facebook pages?
2.3.1 Awareness of organizational Facebook pages
The independent variables are age, gender, usage smart devices and frequency of visiting ones own Facebook page. More
frequent active users of Facebook tend to know that organizations have their own Facebook pages, as confirmed in the Table
1 discriminant analysis.. The dependent variable 0/1 is a categorical variable. This is the only significant determinant as to
whether or not people know that organizations have their own Facebook pages.
2.3.2 The determinants of visitation frequency to organizations pages
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As the frequency is a continuous variable, ANOVA results are reported in Table 2. The frequency of visiting ones own page
and age are two significant variables that positively affect the frequency of visiting organizations pages, but gender or smart
device usage are not influential.
2.4 What affects the likelihood of consulting business sites (either on Facebook or on an organizations websites) before
making a purchase? For which purposes do customers consult these pages?
2.4.1 The likelihood of consulting business sites before purchase
This is a continuous variable. The independent variables are age, gender, smart device usage, visitation frequency to ones
own Facebook page and knowledge of an organizations page, frequency of visiting the organizations page and visitation
frequency to business sites. As Table 2 shows, all the above variables have positive impact on the likelihood, with age,
gender, smart device usage and frequency of visiting ones own page having only marginal influence. More direct influence
comes from knowing that organizations have Facebook pages and from visiting those sites more frequently.
2.4.2 The relative importance of consulting objectives
If consumers do consult the business sites before making a purchase, the survey asks participants what they consult sites for.
The relative importance of each of the five activities (getting product or service information, reading reviews, asking
questions, making purchases and comparing offered products or services to those from another business website) is a variable
that takes the values from 1 to 5. The determinants are the same as in the likelihood of consulting business sites before
making a purchase. The ANOVA results are also included in Table 2.
According to Table 2, only one factor the frequency of visiting business sites marginally affects the relative importance
for the contents of consultation. The more frequently a person visits business sites, the more (s)he will consider searching for
product reviews on business sites before making a purchase.
However, if we enlarge the criteria for marginal significance from 5% to 10%, then the same factor (more frequent visits
to business sites) also makes a person more likely to seek product information before making a purchase. In addition, if a
person knows that an organization has a Facebook page, (s)he is more likely to seek information for all purposes except to
look for reviews.
Section 3: Summary of Findings
Our survey finds that most respondents are aware that organizations have Facebook pages. About half of all the respondents
have visited organizations Facebook pages at least a few times in the past three months and about half of respondents visit
business websites at least monthly.
Exactly which factors make people consult business sites before purchase is another important finding from this study. A
profile of customers who consult with business sites before purchase are rational and Internet-literate. These are typically
adult males who own at least one smart device, who visit organizations Facebook pages and who are aware of the
companies official websites. When a potential customer consults with business sites before making a purchase, the
importance of asking direct questions of the brand is second only to comparative shopping. In addition to potential as an
advertising hub, organizations Facebook pages provide space for the exchange of product reviews and opinions and two-way
interactions between businesses and their potential customers.
Age does affect whether or not a person has Facebook page. The older people are, the more likely they are to have Facebook
pages and to visit their own profiles often. This fact goes against the notion that Facebooks main demographic is teenagers,
but it confirms the observation that Facebook is becoming a mainstream social site for adults. When people visit their own or
other peoples Facebook pages, older people and males are more likely to read political messages and jokes. Male
respondents view more pictures than female respondents. The tech savvy (those owning smart devices and who therefore can
get online any time) are more likely to complain and do research on an organizations page. More frequent users of Facebook
tend to know that organizations have their own Facebook pages, which leads to more likelihood of consulting business
websites or Facebook pages before making purchases.
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Only people using smart devices and visiting Facebook very frequently care about other peoples opinions on products or
services. Reading others opinions is a time-consuming activity and most casual surfers only focus on their own activities
while surfing. This finding has important potential implications on Internet marketing: reviews on a product or service are
relevant only when the purchase decision is made.
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Appendix 1: Results for Discriminant Analysis and ANOVA Tests

Table 1: Discriminant analysis results for sections 2.1 and 2.3
have dow com com com poli post post ask ask ask com com com kno
FB n pic m m m mess joke opi org pro ser plain plain plain w
0/1 frien fam clos age s nio duc vic org prod servi org
ds ily e ns t e uct ce page
frie
nd
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age stan .987 .831 0.35 0.32 0.35 0.35

dard * * 6 4 7 8
struc 0.97 .653 .547 0.52 .539 .530
ture 9 * * 4* * *
sex stan 0.56 .517 - - - -
dard 6* * 0.52 0.40 .531 .531
1* 7 * *
struc .572 .411 - - - -
ture * * 0.43 0.30 .433 .422
3* 3 * *
smart stan - 0.32
dard 0.16 4
5
struc - 0.24
ture 0.09 6
3
freqo stan 0.70 .936 1.0 .94 - .723 .95 .831 0.73 .659 1*
wn dard 2* * 18* 3* 0.50 * 8* * 2* *
1
struc .749 .898 0.9 .92 - .707 .92 .836 .711 .623 1*
ture * * 7* 2* 0.21 * 6* * * *
1
Lamb 0.96 0.83 0.93 0.9 0.8 0.96 0.96 1.9 0.95 0.93 0.92 0.98
da 6 8 3 25 55 1 3 63 8 5 6 4
Model 0.00 0000 0000 000 000 .016 .022 .02 .011 0000 0000 .017
sig 7** ** ** 0** 0** * * 2* * ** ** *
Table 2: ANOVA test results for sections 2.1, 2.3, and 2.4
freq own freq org likely get look ask buy compare
page page consult product review question shopping
for info
purchase
Age F 9.26 3.904 2.735
Sig 000** .004** .029*
cor coeff .271** .126* -0.011
sex F 2.881
Sig .091*
cor coeff -0.092
use smart F 4.623
Sig .032*
cor coeff 0.066
freq own F 29.425 2.239
page
Sig 0000** .065*
cor coeff .502** 0.093
know org F 9.093 2.987 2.968 3.461 3.348
page
Sig .003** .085* .086* .064* 0.069
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CF Vol. 13 (2), 2015
cor coeff 0162** 0.065 0.078 -0.071 -0.104

freq org F 5.041
page
Sig .001**
cor coeff .206**
freq buz F 56.992 3.412 6.216
page
Sig 0000** .066* .013*
cor coeff 0.522 -.105 .131*
Table 3: Discriminant analysis results for section 2.3: Determinants for activities on others pages
dow com com com poli post post ask ask ask com compla compla
n pic m m m mess joke opini org prod servi plain in in
frien fami close age s ons uct ce org produc service
ds ly frien t
d
age standar
d
structur
e
sex standar
d
structur
e
smart standar .499 .559
d * *
structur .512 .493
e * *
freqow standar 0.66 0.35 0.35 .451 0.38 0.51 0.37 .414
n d 9* 2 3 * 3 1* 2 *
structur .826 .444 .549 .411 .503 .492 .442 .444
e * * * * * * * *
own standar .585 .901 .934 .858 .848 .873 .873 .679 .900 .726 1* .928* 1*
page d * * * * * * * * * *
same structur .764 .937 .946 .939 .842 .901 .925 .726 .929 .745 1* .935* 1*
activity e * * * * * * * * * *
Lambd 0.90 0.69 0.53 0.71 0.81 0.82 0.90 0.92 0.85 0.86 0.93 0.884 0.901
a 7 1 6 1 2 4 1 8 9
Model 000* 000* 000* 000* 000* 000* 000* 000* 000* 000* 000* 000** 000**
Sig * * * * * * * * * * *
Appendix 2: Survey questions and responses
Please specify your gender and age.
Response
Answer Options Male Female
Count
1909-1945 2 11 13
1946-1964 20 26 46
1965-1978 10 18 28
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1979-1990 65 78 143
1991 and after 44 82 121
Other age group (please list gender)
answered question 349
skipped question 5
! ! ! ! " !
# # ! $
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% 0 +
Do you have a Facebook account?
Response Response
Answer Options
Percent Count
Yes 88.1% 312
No 11.9% 42
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CF Vol. 13 (2), 2015
1 # # ! " ! "
2 3 4 2 3 4
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& ! < ! " 2 3 4

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2 3 4 ! 5# ! $
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: 4
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What is the main purpose of your visit to a business website? Rate according to importance to you, where 1 is most
important and 6 is least important.
Rating Response
Answer Options 1 2 3 4 5
Average Count
Get product or service
165 73 47 22 10 1.86 317
information
Look at reviews 88 118 52 43 16 2.31 317
Ask questions 17 22 71 83 124 3.87 317
Make a purchase 34 54 60 103 66 3.36 317
Compare to other products or
services from another business 13 50 87 66 101 3.61 317
website
1 # !? # @$
% " !
1 63 A
4 ! ! #
&# # ! !
64
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Digital Knowledge Management has an Impact on Financial

Culture, Competitiveness and Intellectual Capital of Financial
Companies
Elia Socorro Daz Nieto, University of Quertaro
Josefina Morgan Beltrn, University of Quertaro
Len Martin Cabello Cervantes, University of Quertaro
Luis Alberto Morales Hernndez, University of Quertaro
EXECUTIVE SUMMARY
This study aimed to describe the digital knowledge currently being managed in financial companies, which has transformed
intellectual capital, competitiveness and financial culture. This is understood as those engaged in the acquisition of financial
assets or liabilities in the market. The variables addressed are: digital knowledge management, intellectual capital, financial
culture and competitiveness. This research is a qualitative technique using a documentary observation approach with a
powerful descriptive. Digital knowledge has transformed digital financial literacy through new material symbols, such as
mobile phones, tablets, ipads, computers and screens, which have meanings of status and social belonging.
Keywords: Digital Knowledge, Management, Financial Companies
INTRODUCTION
Organizations have changed radically as a consequence of technological advances, the opening of commercial boundaries
among countries, the new economy and globalization, among other things. Organizations in search of competitiveness have
adopted different strategies, such as knowledge management, that have changed old paradigms of tangible capital to
intangible assets that increase the financial value of organizations, that is, intellectual capital. All this has transformed the
social culture in which we currently live. Digital knowledge, which can be perceived in the live social systems that are
autogenetic communication networks, on the Internet has been transformed into a powerful global communications network
and a live organization. The objective of this research has been to describe digital knowledge that is being managed in
financial companies and how it has transformed intellectual capital, competitiveness and financial culture. Under these
variables: Digital knowledge management, intellectual capital, financial culture and competitiveness, we initiated this study
with the main question: what is the relationship between the digital knowledge being managed by financial companies and
intellectual capital, competitiveness and financial culture?
The methodology in this scientific investigation has a qualitative focus and that due to its scope being descriptive. It has the
objective of providing a vision of an event, a condition or a situation. The observation technique is documentary. The object
of the study of this research is descriptive, with the new symbols, languages and rites of the social culture, as part of the new
knowledge and competitiveness of financial companies. http://www.ehowenespanol.com
DIGITAL KNOWLEDGE MANAGEMENT
The term digital is a territory that is physically inexistent, that is why the term virtual is also employed. It is a metaphor to
indicate what lies below: the process of digital calculation. It carries out a transformation of a magnitude and number and
then operates upon the numbers as if they were the considered magnitude. On the other hand, analog calculation tries to find
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a magnitude that operates in a similar way to the one to be analyzed and the operations are based on it, without resorting to
numerical transformation, except at the moment of presenting a Bosch M (2002) result. In a digital environment, we are
within a different reality: the reality of imperceptible discontinuous matter. The complex aspect is that through digital
representation we are advancing upon analog forms; the greatest reservoirs of knowledge that were deposited in books are
starting to be registered more and more quickly in bytes. But at the same time, this process, which is usually called
digitalization, is also becoming parallel to another, analogization, that is, the step from digital to analog. Such is the case, for
example, of the physical fabrication of objects designed digitally or the step from digital to print (it was believed that
digitalization would reduce the use of paper, but we all know from our own experience that this hasnt been the case).
Gonzalez Carlos (2010) explains that virtual organizations integrated by the new Internet communication and interaction
tools, data analysis and management, auto management and response mechanisms, automated processes and technology
devices allow for almost eliminating the variable of time that defines the urgency attribute to prioritize attention to the
demands of E-Stakeholders (employees, shareholders, suppliers and partners). Goodstein (1999) quoted in Gonzalez (2010)
comments that E-stakeholder defines the structure of virtual organizations, due to the fact that virtual organizations by
definition are based on their electronic structure of interfaces and data bases through electronic information.
Besides the customers, the suppliers, the shareholders, the governments and the community, that is, stakeholders, there are
others related to technology such as the community of free software developers, the community of Internet users, the bodies
that control or regulate the use of the Internet, the community of free software users, multinational companies, such as
Microsoft, Dell, HP, Telmex, Telefonica, Sprink, IBM, Oracle, the users that are against these multinational companies, web
pirates or hackers, Internet users, the laws and regulations of all governments in the world where possible E-Stakeholders
may be found for a virtual organizations, training centers providing Internet courses, mobile technology users, Web page
designers, electronic security companies, users that are against the use of the Internet, E- banking, companies whose
substitutes for traditional products are E-banking.
The New Economy
The new economy works in real time and moves quickly through global financial networks. Capra (2003) pointed out that all
types of financial activities are invested and most of the returns of those investments reenter financial flows. Information and
communication technologies allow moving from one option to the next in a constant global search for investment
opportunities. The dual role of computers as fast instruments to process information and elaborate complex mathematical
models has led to substituting gold and paper currency with abstract financial products, among which are future options such
as purchase options by means of computer projections and hedge funds, that is, equity funds frequently used to buy and sell
large amounts of currency in a matter of minutes and benefiting from small variations in the exchanges. Capra (2003) also
explained that the same capital circulates from one place to another among economies in a matter of hours, minutes and
seconds. Powerful computer programs and expert financial analysts, who are at the same time computer wizards installed in
the strategic nodes of a selective telecommunications web, literally play with billions of dollars. These global players are
large investment banks, pension funds, multinational corporations and investment funds organized to practice financial
speculation. The growing virtuality of financial products and the no less growing importance of computer models based on
the subjective perceptions of their creators, have made the attention of investors deviate from real benefits to the subjective
and volatile criteria of the value perceived of stock shares. Castells, quoted in Capra (2003), explained that in this new
economy, the objective is no longer to maximize benefits but to maximize the value of stock shares. On a long-term basis, the
value of a company will decrease if it does not have benefits, but on a short-term basis its value in the stock market can
increase or decrease in a manner unrelated with its actual behavior.
Competitive Activities of Financial Institutions
Banking institutions and non-banking institutions, the latter defined as those who are dedicated to acquiring financial
liabilities and assets in the market, are generally oriented to capturing small savings and capitals and financing SMEs in both
rural and urban sectors. Banks are commercial enterprises that carry out financial operations using the money from DE
shareholders and customers.
The body in charge of regulating credit information and financial services societies is The Bank of Mexico, based on
articles 28 of the Political Constitution of the United Mexican States, paragraph six and seven; 24 of the Law of the Bank of
Mexico; 12, 17, 20, 23, 28, 36, 41 and 42 of the Law to Regulate Credit Information Societies; 22 of the Law for
Transparency and Ordainment of Financial Services; 8, paragraphs three and six, 10, 14 regarding 25 fraction II and 17
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fraction I, that grants the General Direction of Analysis of the Financial System and the Direction of Dispositions of the
Central Bank, respectively, the attribution of participating in the issuance of dispositions, all within the Internal Regulation of
the Bank of Mexico, published in the Official Journal of the Federation on September 30, 1994, whose last modification was
published in such the journal on May 9, 2008 (www.banxico.com).
The activities of financial institutions have changed as a consequence of digital knowledge to strengthen their
competitiveness. As Nonaka and Takeuchi pointed out, knowledge is a resource to increase competitiveness, that is, the new
approach (1994).
List of New Activities
a) Payments using electronic transfers

In Mexico, money is transferred without having to go to bank branches. From the banks Internet websites, customers can
order a transference of resources from their current accounts to those of customers of other banks. These transfers can be
cleared immediately, in real time, or the next day. In the country, there are two payment systems which process transfers: one
that clears payments in real time and another that does so the morning of the following day.
b) Interbank Electronic Payment System (SPEI )

SPEI is a payment system that offers its participants electronic payment services in real time. In this context, real time
implies that the beneficiary receives the money a few minutes after the party making the transfer orders the payment. The
Bank of Mexico operates SPEI. This system clears an average of about 400 thousand payments per day in an amount of
more than 600 billion pesos. To give us an idea of how much this is, a simple calculation tells us that 600 billion pesos are
600 million $1,000 peso bills, which weigh more than 600 tons. Seen from another point of view, SPEI transfers an amount
similar to the value of everything that Mexico produces in a year every 22 days.
SPEI is a modern payment system with a state-of-the-art design that allows it to quickly process a large amount of
payments. SPEI processes from urgent high-value payments among financial institutions and companies to low-value
payments used by the general public for common operations. Because the number of payments that SPEI processes is very
high, the Bank of Mexico may charge the participants very low commissions and Banks offer their customers payment
services that in other countries are generally available only for treasurers of large enterprises, and they also do so at low
prices.
c) Electronic Fund Transfers (EFT)

EFT is a payment system operated by Cecoban. EFT offers its participants, banks in Mexico, an electronic transfer service
that is cleared the next day. Beneficiary customers from banks receive the money in their accounts one day after the
transferring customers instruct their respective banks. EFT is used for payments that can be programmed in anticipation. EFT
clears an average of around 90 thousand payments per day that sum up to an amount of almost 3 billion pesos. The amounts
of EFT payments average lower amounts that those made through SPEI, 33 thousand pesos, and their main use are payroll
payments and payments from companies to their suppliers.
d) In mobile banking
The Communications Regulating Commission (CRS) issued a resolution through which now fees for text messages used in
the country for mobile banking are regulated. This measure forces mobile operators to reduce the prices which financial
entities must pay for each text message (SMS) used in mobile banking transactions. This price cannot exceed $9.20 per each
SMS, as the Commission expressed in detail.
The objective is that banking entities can provide this service to users free of charge. According to the regulating entity in this
sector, the resolution contemplates that users can have new channels (USSD technology) to interact with their bank or
financial entity so as to make transactions easier through the use of any cellular phone (http://www.mediatelecom.com.mx/).
According to the regulating body, in the year 2013, the text messaging service in this sector exceeded 2 million users,
counting those who sent and received this type of communication focused in about 200 million text messages.
f) Low and high value transactions

Banks and treasurers of large enterprises preferably process high-value payments worth millions of pesos, and other systems
process many low-amount payments of hundreds or thousands of pesos made through common-use instruments such as cards
or checks. Financial stability is necessary for the good performance of the economy. Financial authorities must protect it from
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problems that generate difficulties in any financial entity, disorders in the markets and the loss of peoples trust. One of the
risks for financial stability is a payment system with an inappropriate design, this means an inefficient system that does not
possess the effective risk control mechanisms. This can cause participating groups not to comply with their obligations and
thus collapse the system.
Failure of a payments system, that although it processes low-amount payments has a high number of transactions, can
unleash a generalized crisis in the economy. For example, if at the end of the month and the retail payments system stopped
working, many employees would not receive their salaries. It is necessary to offer a high level of technical service so that
payment orders can be cleared on the expected date.
Low-value payment systems in Mexico process transactions for bank cards, checks, differed electronic transfers and
collections. On the other hand, high-value payment systems are the system for electronic transfers in real time, SPEI and
the system of operation liquidation using stock market instruments, DALI.
g) Credit and debit card payments

Credit cards are payment instruments associated with a line of credit that a bank grants its customer, who exercises it when
paying for goods or services or withdrawing cash with his or her card. Debit cards are similar instruments, but instead of
being associated with a line of credit, they are associated with a current account. Electronic terminals which establishments
have installed to receive payments accept practically any credit or debit card. These terminals are called Point Of Sale
terminals, POS. Card users may also obtain money with their cards at any bank ATM, regardless of which bank issued the
card, although if the bank which owns the ATM is different from the bank which issued the card the commission that the
customer will have to pay for using the ATM will be higher.
INTELLECTUAL CAPITAL
Knowledge is the capital of human beings, and human beings are a fundamental part in any organization. Edvisson and
Malone (2000) have stated that if the company lacks a happy human dimension, none of the other activities to create value
will work, no matter how sophisticated technology is. An unhappy company is worth nothing; a company without ideals has
no value (p.151).
Today the creation of wealth is a mental fact. Microsoft shares are listed at ten times their carrying value, which means that
90 percent of its value is intangible. It consists of things that are in somebodys brain, electronic programming,
manufacturing brand and marketing strength. Gates, quoted by Edvisson and Malone (2000), revealed to Time magazine the
secret of Microsofts Midas touch: We win because we hire the most intelligent people.
Digital knowledge has transformed the world, society and organizations of all types and activities. The financial value of
intellectual capital has been clearly evidenced by software companies. The only indispensable assets for a company of this
type are reduced to a few computers and some office tables, chairs and phones, and as long as they can communicate among
each other and send codes through the Internet, they have no need to be assembled in the same place. They can talk on the
phone and meet with potential clients in a hotel lobby, as well as distribute products, computer programs and manuals
electronically. They can also provide technical support to their customers through the telephone or the Internet, and, finally,
they can exhibit their items in the huge showcase of a World Wide Web. Material assets of a software company with six
employees do not exceed 35.000 dollarsits almost not worth hiring an accountant- but their sales can reach amounts of
several millions. Many computer program companies start out that way. Their product, software, is as intangible as their
copyright and, once theyre in the market, can be valued by means of sales projections, although specialists still havent
agreed on what is the most appropriate method to assign them a value during the design period. Currently, it is still a very
conflicting subject, due to the volume and the extraordinary value that computer software has reached.
Castro et al. and Suarez have pointed out that in our times great economic changes are happening, originated by technology
developments and the increase in commerce, which affect accounting. Information is no longer used only by the owners of
companies; other users are incorporating themselves with their banking needs
(http://uahpren112.blogspot.mx/2008/12/historia-de-la-contabilidad.html). Accounting has been transformed. The assets that
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used to give value to an organization are not the same. In olden days, tangible assets were the ones that were commonly
registered in accounting documents.
LA CULTURA FINANCIERA DIGITAL
Computer technology has drastically modified social behaviors, forming digital habits. A practical way of generating digital
habits is the continuous and unrestricted exposure to a computerized environment. The habit is linked to the massive barrage
of new technology in human society. The best way to learn a language is by living in a community where that language is
spoken; to acquire the digital language, its necessary to live in a digital habitat. Digital is changing everything. It is not only
about technology, but also about all the changes in the consumers attitude and behavior that the use of these new
technologies is causing: The digital universe extends throughout society and generates new lifestyles (Muoz, quoted in
Colve, 2013, p.12).
Organizational culture can be evidenced through symbols, languages and anecdotes, but financial and social culture can also
be appreciated through these characteristics, Robbins and Coulter (2006) pointed out that we are living in a new culture that
is appreciated in new symbols such as: computers, I-pads, cellular phones; new ways of communications, that is, new digital
languages through electronics; and new ways of doing things, such as buying, selling, informing, through the Internet. Cases
of successful companies in the modality of electronic businesses become anecdotes in which digital knowledge and
intellectual capital are the main actors.
Figure 1 Digital Model Competitiveness
CONCLUSIONS
Digital knowledge has transformed the digital financial culture through new material symbols, such as cellular phones,
tablets, I-pads, computers and Smart TVS, which carry a significance of social status and belonging; other forms of
communication, meaning different digital languages through electronics; diversification of doing things, such as buying,
selling, informing, negotiating through the Internet.
Financial companies have increased their intangible assets and their intellectual capital through new knowledge:
Payments through electronic transfers
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Interbank Electronic Payment System (SPEI)

Electronic Fund Transfers (EFT)
Mobile banking
High and low value transactions
Credit and debit card payments.
Digital knowledge has transformed banking regulations through the Bank of Mexico; the Communications Regulating
Commission (CRC). It is increasing intellectual capital by means of the new technology, information technologies, software,
data bases, financial and business models.
Digital knowledge has had an impact on competitiveness by reducing response times, financial costs for organizations, ease
for customers to carry out their transactions through the internet and cellular phones, network management for brand
positioning, which generate leadership in the financial sector.
REFERENCE
Brooking (1977). The main asset of third millennium companies. Blog 1- Intellectual Capital, 1-155.
Colve. (2013). Marketing strategies for SMEs. ANETCOM.
Edvinsson, L., & Malone, M. (2000). Intellectual capital. GESTIN Publishing.
Capra, F. (2003). Hidden connections. Anagrama Publishing.
Gonzlez C. (2010). E- stakeholders an application of the stakeholder theory to e-businesses. Icesi, 26 (114), 5-19
Mela B. (2002). Knowledge management in the digital media old information treatment problems and new aspects.
Nonaka, I., & Takeuchi, H. (1994). Knowledge-creating organization. Oxford: Oxford University Press.
Robbins, S., & Coulter, M. (2005). Management. New York: Prentice Hall.
http://www.banxico.com
http://www.ehowenespanol.com/metodo-investigacion-descriptivo-cualitativo-info_386243
http://uahpren112.blogspot.mx/2008/12/historia-de-la-contabilidad.html
http://www.mediatelecom.com.mx/index.php/telecomunicaciones/telefonia-movil/item/60939-regulan-tarifas-para-servicios-
de-banca-movil
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Cyber Espionage and the S.P.I.E.S. Taxonomy

William M. Fitzpatrick, Villanova University
Samuel A. Dilullo, Villanova University
EXECUTIVE SUMMARY
Cyber Espionage has been identified as an activity which has the potential of costing the world economy billions of dollars
and significant employment losses. On a global basis, companies find their intellectual properties and trade secrets subject
to cyber attack by government actors, competitors, employees and agent provocateurs. This paper seeks to document and
analyze the anatomy and emerging threats of cyber espionage through development of the S.P.I.E.S. taxonomy (Situational
Threats, Penetration Methodologies, Information Targets, Enforcement of Espionage Laws and Security Vulnerabilities).
Keywords: Cyber Espionage; Cyber Security, Trade Secret Misappropriation, Economic Espionage
INTRODUCTION
Between 2004 and 2014, the U.S. State Department issued 4,150,359 F1 student visas to individuals desirous of pursuing
educational opportunities in the United States (United States Department of State, 2007; 2012; 2014). While some students
utilize these visas in order to advance or enhance their skill sets, other persons have exploited these entry permits as a ruse to
commit acts of economic espionage and trade secret theft (Fink, 2002; Fitzpatrick, Dilullo, & Burke, 2004). This stratagem
is documented in a recent economic espionage and trade secret misappropriation indictment of six Chinese nationals by the
U.S. Department of Justice (U.S. v. Wei Pang, Hao Zhang, Huisui Zhang, Jinping Chen, Zhao Gang and Chong Zhou, 2015;
U.S. Department of Justice; 2015). Prior to earning their doctorates in engineering from the University of Southern
California (U.S.C.) in 2005, Wei Pang and Hao Zhang worked on a project at U.S.C. dealing with thin-film bulk acoustic
resonator (FBAR) technologies. This university sponsored research was funded by the U.S. Defense Advanced Research
Projects Agency (U.S. Department of Justice, 2015). FBAR technologies are used in a variety of wireless devices in order to
insure that the user only receives and transmits the specific communications intended by the user (U.S. Department of
Justice, 2015, p.2). The filtering technology has significant applications for consumer, military and defense communications
(U.S. Department of Justice, 2015). Global revenues associated with the sales of these technologies are approximately $1
billion annually (Sanger & Perlroth, 2015).
While working on university/DARPA sponsored research on technologies, Pang and Zhang realized that enhancing their
expertise related to FBAR technologies might (a) enhance their own academic job prospects in the Peoples Republic of
China; (b) assist the PRC government in gaining access to advanced communications technologies; and (3) enable them to
develop their own commercial manufacturing capabilities for these communications technologies upon their return to the
PRC (U.S. Department of Justice, 2015; U.S. v. Wei Pang et al, 2015). Therefore, Pang and Zhang respectively leveraged
their college research experiences in order to obtain employment at Avago Technologies and Skyworks Solutions, Inc. After
beginning their employment at these companies, Pang and Zhang began their real career in economic and industrial
espionage. These espionage activities were accomplished by initiating a series of internal cyber attacks which permitted
Pang and Zhang to misappropriate their employers trade secrets related to FBAR technologies. These internal cyber attacks
were exemplified by the downloading of screen captures, employer power point presentations, source code, design masks and
corporate documents containing proprietary information/trade secrets. Once in possession of these trade secrets, Pang and
Zhang used corporate email servers to transfer this proprietary information to external confederates in the Peoples Republic
of China. In order to bolster their academic job ambitions, Pang and Zhang sought to independently and illicitly patent these
misappropriated trade secrets in both the United States and China (U.S. v. Wei Pang et al., 2015). Additionally Pang, Zhang,
their co-conspirators and Tianjin University created a joint venture (ROFS Microsystems) in order to mass produce FBAR
technologies based upon the trade secrets stolen/misappropriated from Avago Technologies and Sykworks Solutions, Inc. In
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2009, Zhang and Pang resigned their U.S. employment, (a) returned to the Peoples Republic of China; (b) assumed academic
positions at Tianjin University; and (c) assisted ROFS Microsystems in gaining manufacturing contracts from both
commercial firms and the military within the PRC (U.S. Department of Justice, 2015).
Wei Pang next traveled to the United States on May 16, 2015. He was promptly arrested by the Federal Bureau of
Investigation. Pang and his co-conspirators have been indicted under the provisions of Economic Espionage Act (1996) and
are currently charged with committing acts of both trade secret misappropriation and economic espionage. If convicted, Wei
Pang and his confederates could be potentially sentenced to a maximum of 50 years imprisonment (U.S. Department of
Justice, 2015). The United States does not have a criminal extradition treaty with the Peoples Republic of China (18 USC
1381, 2015). By remaining in the PRC, Pangs co-conspirators are currently beyond the reach of U.S. law.
Like many victims of economic espionage and trade secret misappropriation, Avago Technologies and Skyworks Solutions,
Inc. have lost the financial and commercial benefits of years of research and development. For Avago Technologies, 20 years
and $50 million of R & D expenditures have been compromised. Additionally, Avago Technologies and Skyworks Solutions
now face new international competitors which seek to utilize these misappropriated trade secrets against them in international
markets (U.S. Department of Justice, 2015).
The Avago Technologies and Skyworks Solutions experience is not unique to the world business community. The use of
cyber attacks to capture trade secrets and proprietary information has been significantly increasing in recent years
(PriceWatershouseCoopers, 2014). For companies, cyber espionage results in lost revenues, decreased consumer confidence
and reduced competitive advantage in the global market place (Almeling, 2012; McAfee, 2009; Marsh, 2013; Lewis &
Baker, 2015). For nations which host these victimized companies, lost economic growth, taxes and job growth have also
resulted from this new form of espionage (Almeling, 2012; McAfee, 2009; Marsh, 2013; Fitzpatrick & Dilullo, 2013; Lewis
& Baker, 2015).
Many recent government reports and major news organizations have documented cyber espionage threats which originate
from foreign nations and their intelligence operatives (Clapper, 2014; Office of National Counterintelligence Executive,
2011; Federal Bureau of Investigation, 2014; Corrin, 2013; Center for Strategic and International Studies, 2014). While these
hostile actions by nation states have captured much public attention (Mamiit, 2015; Lemos, 2015), the fact remains that most
cyber and conventional economic espionage is committed by a firms current and former employees, consultants and value
chain partners (PriceWatersHouseCoopers, 2015; Fitzpatrick & Dilullo, 2013; Shey, 2013).
The purpose of this paper is to provide a systematic analysis of the espionage strategies/methodologies utilized by these
latter agent provocateurs and the vulnerabilities of corporate security systems to these cyber and conventional assaults on
their trade secrets. This analysis is accomplished within the context of a newly developed paradigm entitled the S.P.I.E.S.
taxonomy. The S.P.I.E.S. taxonomy seeks to explore these espionage strategies and corporate vulnerabilities by
documenting (1) Situational Threats [S] and actors which are responsible for initiating espionage activities; (2) Penetration
Methodologies [P] which are used to facilitate the theft of organizational trade secrets; (3) Information Targets [I] which
constitute the objective of economic espionage/trade secret misappropriation activities; (4) Espionage Enforcement [E]
activities initiated by the law enforcement and judicial communities; and (5) Security Vulnerabilities [S] of corporate security
infrastructures to acts of cyber and/or conventional industrial espionage activities. Examination of these aforementioned
relationships is accomplished through both (a) a review of exiting literature/industry studies (PriceWatershouseCoopers,
2015; Shey, 2013; Anderson, 2014; Mandiant, 2015) and (b) reporting the results of a new small sample study conducted by
the authors which examines interrelationships among each of the S.P.I.E.S. variables/constructs (Cyber and Industrial
Espionage Data Base). Data for this latter study has been created through a systematic content analysis of legal decisions,
complaints and indictments of economic espionage and trade secret misappropriation cases occurring between 2008 and
2015.
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THE COMPETITIVE AND FINANCIAL CONSEQUENCES OF CYBER ESPIONAGE
Conceptual Dimensions of Cyber Espionage
Cyber espionage represents a category of cyber attacks/warfare which targets the information infrastructure of organizations
(Symantec, 2104). However, specific definitions of the construct tend to vary more widely (Kostadinov, 2015). Some
researchers seek to define the cyber espionage construct in terms of the specific methodology used to illicitly obtain access
to an organizations proprietary information or trade secrets (Hersh, 2010; Janczewski & Colarik, 2008; Lin, 2010). Other
researchers define cyber espionage more broadly so as to include a description of both the clandestine activities and cyber
technologies used to illicitly gather/collect and subsequently transmit proprietary information to an organizations adversaries
(NATO Cooperative Cyber Defense Center of Excellence, 2012). This present paper adopts a viewpoint consistent with this
latter conceptualization of the cyber espionage construct.
The Emerging Threat of Cyber Espionage
PriceWatershouseCoopers [PWC] recently published the results of a survey on the global state of information security
(PriceWatershouseCoopers, 2014). The sample comprising this study included 9700 top level managers (i.e., CEOs, CFOs,
CIOs, CSOs and IT directors) in 154 countries. The survey asked respondents to provide relevant information on security
practices, incidents of cyber attack/espionage and the financial damages associated with the cyber theft of their firms
proprietary information. The study reports that cyber-based global security incidents have increased by 48% between 2013
and 2014. Data from survey respondents indicate approximately 117,339 cyber attacks occur on a daily basis and target a
diversified array of proprietary information. This growth trend in cyber attacks/cyber espionage has been quite dramatic.
Since 2009, cyber attacks have grown from an annual rate of 3.4 million incidents to a yearly level of 42.8 million security
incidents in 2014 (PriceWatershouseCoopers, 2014). In a parallel fashion, the Pew Research Center (Raine, 2014) also
reports a disturbing cyber espionage/cyber attack trend for U.S. businesses. Data from their study indicates that 43% of U.S.
businesses were subjected to data breaches during 2014. However, it should be noted that the findings from these two
aforementioned studies may have significantly under-reported the volume of cyber attacks/cyber espionage activities that
target organizations. Industry researchers have estimated that as many as 70% of actual cyber security breaches go
undetected and unreported in organizations (Trustwave Holdings, 2014).
The PWC study also indicates that cyber security incidents tend to increase in proportion to organizational size. The study
grouped organizational responses into three different revenue size categories. These categories were respectively (a) large
organizations characterized by annual revenues exceeding $1 billion; (b) medium sized organizations where annual
revenues ranged between $100 million and $1 billion; and (c) small organizations which generated annual revenues of less
than $100 million. Data from the study demonstrated that large organizations accounted for 71.18% of cyber-related
security incidents. This volume of cyber-related security incidents represent a 44% increase over levels reported for 2013.
Conversely, in 2014, medium and small organizations accounted for 22.9% and 5.91% of reported cyber-security
incidents (PriceWatershouseCoopers, 2014).
PWC (2014) attributes this disparity in cyber-security attacks to variations in both the information richness and security
infrastructures among different sized firms in their sample of respondents. According to PWC (2014), smaller firms appear to
invest lesser amounts of resources for purposes of protecting IT and proprietary information. They speculate that this lack of
investment in security systems may result in these smaller firms detecting fewer cyber-security incidents/breaches.
Additionally,
Threat actors often target large organizations because they typically offer a rich trove of information
including trade-strategy documents, intellectual property related to product design, and large volumes of
consumer datathat can be exploited, sold, or used for economic or military gain. Larger companies also
typically have more mature security processes and technologies in place, which allows them to uncover
more incidents. (PriceWatershouseCoopers, 2014, p. 8)
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The Cost of Cyber Espionage
Keith Alexander, former director of the National Security Agency, has indicated that cyber attacks on organizational trade
secrets may represent the greatest transfer of wealth in history (Sanger & Perlroth, 2015:2). Financial losses from cyber
espionage activities typically emanate from (1) theft of intellectual property; confidential business and customer information;
(2) opportunity costs associated with disrupted business plans or competitive activities; (3) short-term revenue losses and
inefficiencies associated with service interruptions and employee confusion; (4) reputational damage due to erosion of
customer/business partner confidence in the viability of the firms business/IT security programs; and (4) increased security
costs associated with remediating and safeguarding the firm from malicious cyber activities in the future (Sentonas, 2014;
Center for Strategic and International Studies, 2013).
On a global basis, the maximum dollar cost of intellectual property and proprietary information loss has been estimated to
range between $575 billion (Center for Strategic and International Studies, 2014) and $1 trillion per year (Almeling, 2012;
ASIS, 2007; Marsh, 2013). IP and proprietary information losses to U.S. firms are also subject to variations in cost estimates
(Almeling, 2012; ASIS, 2007; Marsh, 2013; McAfee, 2013). Estimates of aggregate losses experienced by American firms
vary between $120 billion (McAfee, 2013) and $300 billion on an annual basis (Almeling, 2012; ASIS, 2007; Marsh, 2013).
Cybercrime/cyber espionage sponsored by the Peoples Republic of China or its agents have been estimated to cost the U.S.
economy $140 billion per annum (Corrin, 2013; Center for Strategic and International Studies, 2014).
Create.org and PWC(2014) report that these variations in country-level and global cyber-based IP losses can often be
attributed to (a) different methodologies for calculating losses; and (b) a reluctance of many firms to report the actual
magnitude of their IP losses when victimized by economic espionage or trade secret misappropriation. This under reporting
of financial losses may have emerged from two corporate damage control objectives. These objectives include preservation
of the companys market reputation and maintaining the confidence of organizational stakeholders (Create.org and PWC,
2014). Cost estimates of firm-level losses may also fail to reflect the overall competitive costs of data breaches (Mamitt,
2014; Lemos, 2015). This was exemplified in the recent cyber attack mounted against Sony Pictures in 2014. Sony initially
estimated that the cyber attack impacting the company created a $35 million financial loss for the firm (Mamitt, 2014;
Lemos, 2015). This initial assessment was largely based upon cost estimates necessary to restore acceptable levels of cyber
security for the firms IT infrastructure (Mammitt, 2014). However, in assessing this situation, corporate security experts
have concluded that the security breach (1) compromised IT infrastructure; (2) disseminated unflattering/contentious emails;
and (c) resulted in losses of proprietary information related to new film projects, scripts, contracts, marketing plans and
copies of unreleased films (Mamiit, 2014). When remediation of these latter issues are factored into damage estimates, some
industry experts estimate that the cyber attack on Sony may have cost the firm somewhere between $70 million and $100
million (Mamitt, 2014).
Many researchers have also speculated that cybercrime and cyber espionage activities may impose a variety of indirect costs
on national economies. These indirect costs are characterized by (1) increased unemployment or the transitioning of laid-off
workers to lower paying jobs, (2) increased competition in international markets when misappropriated trade secrets are
illicitly utilized to stimulate product development/manufacturing by foreign firms; and (3) erosions of national
competitiveness when foreign sponsors of economic espionage exploit the trade secrets of inventor nations (Center for
Strategic and International Studies, 2014). With respect to the unemployment issue, the U.S. Department of Commerce has
developed a methodology to assess the impact of malicious cyber activities on job loss in relation to a countrys export level
(International Trade Administration, 2012). Under this methodology, the Department of Commerce estimates that $1 billion
in exports tends to generate 5080 jobs. Thus, should proprietary information losses attributable to cyber espionage average
$300 billion per year, the U.S. economy would be forecasted to lose approximately 1, 524,000 jobs per annum (International
Trade Administration, 2012; Center for Strategic and International Studies, 2014).
ANALYZING CYBER ESPIONAGE ACTIVITIES AND THE S.P.I.E.S. TAXONOMY
Mandiant (2015) recommends that after cyber attacks have been detected, organizations should implement a comprehensive
incident investigation in order to prevent future occurrences of similar attacks. These investigations should focus on an
analysis of (1) how attackers gained access to the firms IT infrastructure or proprietary information; (2) how attackers were
able to maintain their presence in the firms IT environment so as to better opportunities for securing access to proprietary
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information; (3) the process by which attackers were able to access and steal proprietary information; (4) actual proprietary
data losses and the liability that organizations incur for this information loss; and (5) whether the security breach has actually
been contained and that no further proprietary information losses will occur as a result of the security breach. Additionally
these types of analyses need to highlight actors/agents capable of implementing future intrusions and the proprietary
information/trade secrets that may become the target of future cyber attacks (Sheldon & McDonald, 2012; Sciliano, 2014;
Leow, 2014; PriceWatershouseCoopers, 2014).
Pursuant to these corporate security objectives, the present paper proposes that organizational vulnerabilities to cyber
espionage may be both analyzed and assessed through use of the newly proposed S.P.I.E.S. taxonomy. As described Figure
1, the S.P.I.E.S. taxonomy is an acronym which seeks to assist organizations in conceptualizing and evaluating major threat
vectors to their proprietary information and trade secrets.
FIGURE 1: THE S.P.I.E.S. TAXOMONY
S.P.I.E.S. Taxonomy
Situational
Threats
Penetration
Methodologies
Information
Targets
Espionage
Enforcement
S.P.I.E.S.: Situational Threats [S]
Within the corporate security literature, Situational Threats have been conceptualized in terms of both (1) agents responsible
for initiating cyber and conventional espionage activities against organizations; and (2) the geographic origin of cyber attacks
(PriceWatershouseCoopers, 2014; Clapper, 2014; Mandiant, 2015; Anderson, 2014; Trustwave Holdings, 2014;Shey, 2014).
Situational Threats and Agent Provocateurs
Three recent studies have attempted to examine the types of agent provocateurs typically responsible for cyber breaches and
cyber espionage activities (PriceWatershouseCopoers, 2015a; Fitzpatrick & Dilullo, 2015; Shey, 2014). The 2014 Forrester
research study on information security/privacy (Shey, 2014) sought to identify agents responsible for cyber attacks/cyber
espionage in terms of external/internal actors and third party contractors or vendors. Of the 895 cyber breaches analyzed by
Forrester during the first six months of 2013, (a) 49.9% were initiated by external actors/agents; (b) 40.22% originated from
organization insiders/employees; (c) 9.27% were instigated by 3rd party vendors/contractors having access to a firms
proprietary information, trade secrets or IT servers; and (d) .5% of the cyber breaches were the product of collusion between
both organizational insiders and external actors (Shey, 2014). The PWC 2015 Global State of Information Security study
(PriceWatershouseCoopers, 2014) sought to further refine the cyber breach/agent provocateur linkage by reporting the
percentage of cyber attacks initiated by specific internal and external actors. Among those actors/agents categorized as
insiders, current and former employees were identified as the major catalyst for cyber attacks. Thirty five percent of
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respondents indicated that current employees were linked to cyber breaches/proprietary information loss and 30% of survey
participants attributed these attacks to former employees (PriceWatershouseCoopers, 2014). Current and former service
providers, consultants and contractors also constituted a significant source of malicious cyber activities. For this category of
insiders, 18 % of survey participants specified current service providers/consultants/contractors as being responsible for
cyber breaches/attacks and 15% of respondents found evidence suggesting that their former associates exhibited culpability
in these activities. Other value chain associates (i.e., suppliers and business partners) were mentioned by 13% of respondents
as having complicity in cyber breaches/proprietary information loss. Among external parties, PWC discovered that four
types of agents were perceived as being responsible for illicit cyber based activities. These external agents and their
percentage of perceived involvement in cyber breaches are respectively (1) competitors [24%]; (2) information brokers and
hacktivists/activist organizations [16% each]; and (3) organized crime [15%]. The involvement of foreign nation states in
these illegal activities was mentioned by only 7% of survey respondents (PriceWatershouseCoopers, 2014).
The authors of the present paper recently compiled a data base for purposes of identifying the situational threats, penetration
methodologies and information targets characterizing both cyber-based and conventional economic espionage/trade secret
misappropriation activities targeting American corporations (Fitzpatrick & Dilullo, 2015). This Cyber and Industrial
Espionage Data Base (CIEDB, 2015) was compiled from economic espionage and trade secret misappropriation litigation,
civil and criminal complaints occurring between 2007 and June 2015. Alleged incidents involving economic espionage and
trade secret misappropriation were identified through information obtained from the U.S. Department of Justice, the Federal
Bureau of Investigation and the Trade Secret Institute at the Brooklyn School of Law. Published legal decisions or
civil/criminal complaints associated with these incidents were then obtained by the authors. Information from these
documents were then content analyzed by the authors in order to create a data base reflective of economic espionage and
trade secret misappropriation litigation occurring in both federal or state court systems. As a technique, content analysis
permits researchers to covert text or verbally communicated information into categorical data for subsequent quantitative
analysis (Hsieh & Shannon, 2005). This categorical data can then be subjected to frequency and cross-tabulation assessments
in order to discern the prevalence and interrelationships among descriptors developed through the content analysis procedure
(Blalock, 1979).
A total of 41 economic espionage and/or trade secret misappropriation cases comprise the Cyber and Industrial Espionage
Data Base (CIEDB). Of these cases, (a) 70.7% involve the use of cyber-based methods or technologies to access, retrieve,
and/or transfer proprietary information purloined from targeted corporations; and (b) 29.3% of the incidents were referred to
criminal courts for subsequent legal action. Additionally, unlike the PWC study, the CIEDB conceptualizes only illicit
activities initiated by employees to be internal threats. Espionage or trade secret misappropriation activities committed by
former employees, value chain partners, service providers and customers are regarded as external threats. This mode of
classification is more consistent with the methodology used by Forrester Research in their 2013-2014 information security
and privacy study (Shey, 2014).
Table 1 presents a frequency analysis of situational threats or actors who allegedly were responsible for acts of economic
espionage or trade secret misappropriation. Data for this table was compiled from cases contained in the Cyber and
Industrial Espionage Data Base (CIEDB). As can be seen from the frequency distribution, current employees were allegedly
involved in 46.3% of economic espionage or trade secret misappropriation incidents. This percentage was more than double
the number of incidents attributable to former employees (22%). Economic espionage or trade secret misappropriation
incidents attributable to value chain partners and current service providers/contractors/consultants were 17.1% and 7.3%
respectively. When contrasted with the PWC investigation, (1) a greater percentage of illicit activities were allegedly
committed by current employees; and (2) lower percentages of former employees, value chain partners and service
providers/consultants/contractors appeared to be involved in economic espionage or trade secret misappropriation activities.
Additionally, current employees in the CIEDB exhibited a higher proclivity for implementing cyber espionage activities
(59.3%) compared with the other categories of perpetrators. Often, these current employees would exploit vulnerabilities in
IT systems and corporate security programs in order to access and abscond with proprietary information/trade secrets
immediately prior to terminating their employment with targeted organizations. Former employees, value chain partners,
service providers/contractors/consultants were observed to more frequently utilize non-cyber methodologies for purposes of
acquiring access to proprietary information. These non-cyber methodologies often included manipulating current employees
or other value chain partners into negligently disclosing proprietary information belonging to the targeted organization.
Finally, despite the widespread concern of foreign nations as sponsors of cyber-based economic espionage, the CIEDB
uncovered only one recently filed federal indictment of nation state actors (U.S. v. Wang Dong, Sun Kailiang, Wen Xinyu,
Huang Zhenyu and Gu Chunhui, 2014).
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The PWC study indicates that organizational expenditures on cyber security programs have been dramatically increasing in
recent years (PriceWatershouseCoopers, 2014). However, these cyber based security programs do not really target the issue
of negligent disclosures of proprietary information by a firms former employees and value chain partners. These types of
security issues are perhaps better dealt with through (1) active deployment/reinforcement of nondisclosure/confidentiality
agreements; and (2) civil litigation against violators of these agreements (Fitzpatrick & Dilullo, 2005; Boni, 1999).
Secondly, many cyber security programs seek to construct barrier defenses which are designed to protect information assets
from external attacks (Symantec, 2015; Symantec, 2013; Forensicom, 2015; Trustwave Holdings, 2014). However, findings
from both the PWC study (PriceWatershouseCoopers, 2014) and the CIEDB provide evidence of pervasive threats emerging
from the firms own employees. Therefore, corporate security professionals might be advised to strengthen their efforts
toward preventing internal cyber attacks by their current workforce.
TABLE 1: SITUATIONAL THREATS TO PROPRIETARY INFORMATION OR TRADE SECRETS
Number of Incidents % of Total Incidents
Source/Perpetuator
of Threat
Current Employees 19 46.3
Former Employees 9 22
Current Service Providers, Contractors 3 7.3

or Consultants
Value Chain Partners (suppliers, business partners 7 17.1

licensees, distributors)
Customers 2 4.9
Foreign Nation States 1 2.4
Total 41 100.0
Situational Threats and the Geographical Origin of Cyber Attacks
In the 2014 Worldwide Threat Assessment of the Intelligence Community, the U.S. Director of National Intelligence (James
Clapper) documented the range of cyber threats facing the United States (Clapper, 2014). In this report, Clapper identified
four nation-states which were perceived as constituting critical cyber threats to the United States government, American
businesses and/or global strategic partners of the U.S. These nation-states were Russia, the Peoples Republic of China,
North Korea and Iran (Clapper, 2014). As noted by Clapper (2014),
Russia presents a range of challenges to US cyber policy and network security, Russia seeks changes to the
international system for Internet governance that would compromise US interests and values. Its Ministry
of Defense (MOD) is establishing its own cyber command, according to senior MOD officials, which will
seek to perform many of the functions similar to those of the US Cyber Command. Russian intelligence
services continue to target US and allied personnel with access to sensitive computer network information.
Chinas cyber operations reflect its leaderships priorities of economic growth, domestic political stability,
and military preparedness. Chinese leaders continue to pursue dual tracks of facilitating Internet access for
economic development and commerce and policing online behaviors deemed threatening to social order
and regime survival. Internationally, China also seeks to revise the multi-stakeholder model of Internet
governance while continuing its expansive worldwide program of network exploitation and intellectual
property theft. Iran and North Korea are unpredictable actors in the international arena. Their development
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of cyber espionage or attack capabilities might be used in an attempt to either provoke or destabilize the
United States or its partners. (Clapper, 2014, p. 2)
Evidence supporting Mr. Clappers concern is evident in both a recent study conducted by Trustwave Holdings, Inc. (2014)
and data contained in the Cyber and Industrial Espionage Data Base (CIEDB). The Trustwave Holdings investigation
focused on an assessment of 691 cyber attacks launched against firms in 24 different nations during 2014. The majority of
these cyber attacks attempted to steal customer financial data/records and other confidential information maintained by these
targeted companies. Data from the study was used to classify both the geographic origin of the attack and the location of the
victimized company. The preponderance of cyber attacks originated from 10 countries. These countries and the percentage
of attacks implemented from within their boundaries are (1) the United States (19%); (2) China (18%); (3) Nigeria (16%); (4)
Russia (5%); (5) Korea [5%]; (6) Germany, the United Kingdom and Japan [4% each]; and (7) France and Taiwan [3% each].
Eighty four percent of businesses targeted by these cyber attacks were located in the United States, the United Kingdom or
Australia (Trustwave Holdings, 2014). While data from this study would appear to reinforce the concerns raised by Mr.
Clapper, the Trustwave study also reveals a significant threat vector originating from within the United States.
The international threat matrix associated with cyber espionage is also evident in data contained in the CIEDB. Since 2008,
the U.S. Department of Justice has initiated 11 prosecutions or criminal actions for alleged violations of the Economic
Espionage Act (1996). Ten of these eleven cases (90.9%) involved economic espionage/trade secret misappropriation
activities benefiting the government of the Peoples Republic of China (PRC) and/or businesses in the PRC. While external
organizations or the PRC government were the ultimate beneficiary of these criminal activities, the espionage activities were
in most instances committed by Chinese nationals working as employees in U.S. firms (United States v Dongfan Chung;
2011; United States v. Kexue Huang, 2010; United States v. Sixing Lieu, 2011; United States v. Wei Pang, Hao Zhang, Huisui
Zhang, Jinping Chen, Zhao Gang and Chong Zhou, 2015; U.S. Department of Justice, 2008; United States v. Meng, 2007;
United States v. Hanjuan Jin, 2008; United States v. Chunlai Yang, 2011; U.S. Department of Justice, 2013; Federal Bureau
of Investigation; 2014). Therefore, heightened attention to internal corporate security protocols may again be necessary to
circumvent similar employee-based threats in the future.
S.P.I.E.S.: Penetration Methodologies [P] and Information Targets [I]
Corporate security specialists have proposed that the prevention of cyber attacks must be based upon an analysis of the
information targets and penetration methodologies used by cyber criminals. Evidence from both industry studies and
the Cyber and Industrial Espionage Data Base (CIEDB) provide useful insights in order to both (1) anticipate cyber-based
attacks on proprietary information/trade secrets; and (2) create effective barriers/defenses to cyber espionage activities.
Industry Studies
Numerous researchers and corporate security specialists have sought to document the manner in which cyber attacks are
utilized to penetrate corporate IT systems and facilitate the misappropriation of proprietary information and trade secrets
(Anderson, 2014; Mandiant, 2014; PriceWatershouseCooppers, 2014; Sood & Enbody, 2014; Symantec, 2015). Sood and
Endbody (2014) propose that cyber attacks can utilize five primary mechanisms in order to breach corporate IT systems and
data resources. These attack or penetration methodologies include (a) social engineering; (b) phishing emails; (c) exploiting
software based vulnerabilities in both corporate IT systems and web-based browsers; (d) advanced malware intrusions; and
(e) persistent campaigns. Social engineering permits cyber criminals to breach systems/data bases by manipulating the trust
and technological insufficiencies of the end users of data bases/ IT systems (nood & Enbody, 2014). Social engineering
attacks assume that most end users of IT systems/data bases are both unaware of cyber threats and take inadequate
precautions to thwart common penetration methodologies used by cyber criminals. This is particularly evident in
organizations which become the target and subsequent victim of phishing and/or malware intrusions (Sood & Enbody, 2014;
Sangani & Vijayakumar, 2012; Cisco Security Intelligence Operations, 2015).
Phishing has been defined as the
creation and use by criminals of e-mails and websites designed to look like they come from well-
known, legitimate and trusted businesses, financial institutions and government agencies in an attempt to
gather personal, financial and sensitive information. These criminals deceive Internet users into disclosing
their bank and financial information or other personal data such as usernames and passwords, or into
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unwittingly downloading malicious computer code onto their computers that can allow the criminals
subsequent access to those computers or the users financial accounts (Binational Working Group on
Cross-Border Mass. Marketing Fraud, 2006, p. 4)
Since, these internet sites and emails appear to be legitimate, unsuspecting end users voluntarily disclose information that
can (1) lead to personal identity theft; and (2) permit cyber criminals to catalogue email accounts/passwords used on
corporate IT servers. Access to this latter information (i.e., spear-phishing) can subsequently enable cyber attackers to
support corporate espionage activities by gaining access to confidential communications and proprietary information which
may be internally transmitted in the organization through use of its email system (Symantec, 2013; Binational Working
Group on Cross-Border Mass Marketing Fraud, 2006). These stolen email credentials may also permit cyber criminals to
replicate these same attacks against other end users from inside the targeted company and thereby magnify the impact of their
malicious activities to other servers/sources of proprietary information (Symantec, 2015). From a corporate perspective,
Mandiant (2014) reports that 78% of phishing attacks tend to masquerade as emails from the firms IT department or anti-
virus vendors.
Trustwave Holdings (2014) found that (a) 59% of fraudulent and spam emails contain malicious file attachments; and (b)
41% of these communiqus contain links which if accessed can be used to subsequently upload a variety of malicious
software including viruses, worms and trojans. This type of malicious software is generically referred to as malware (Cisco
Security Intelligence Operations, 2015). When file attachments containing viruses are opened, malicious software initially
infects the end users computer, data base or server that is currently being utilized. The virus can be transferred or propagated
to other IT resources when the infected machine/data base links to them. Typically, virus infections are used to damage
data/software or precipitate denial of service attacks (Cisco Security Intelligence Operations, 2015). Worms are also utilized
to create similar damage to a firms IT/information infrastructure. Worms either exploit a vulnerability on the target system
or use some kind of social engineering [i.e., negligence] to trick users into executing them. A worm enters a computer
system through vulnerabilities in the system and takes advantage of file-transport or information-transport features on the
system, allowing it to travel unaided (Cisco Security Intelligence Operations, 2015, p. 1). Trojans also attempts to exploit
end user ignorance/ negligence by tricking these individuals into executing a file that contains malicious code. Once
executed, trojans can attack host systems and delete files or steal proprietary data. Theft of proprietary information is often
facilitated when trojans contain packet sniffers (Symantec, 2013; Forensicom, 2015). When uploaded to an IT
server/network, packet sniffers permit cyber criminals to (1) monitor and collect all data which is transmitted over a network;
and (2) potentially gain access to proprietary information/trade secrets (Symantec, 2013; Forensicom, 2015). Additionally, a
Trojan attack can also create backdoors in host systems that may permit cyber criminals to re-enter and exploit IT
vulnerabilities to their advantage in future time periods (Cisco Security Intelligence Operations, 2015).
The vulnerability of organizations to phishing and malware attacks would seem to be substantiated based upon both survey
and experimental research (Anderson, 2014; Mandiant, 2015; Trustwave Holdings, 2014). In their survey of cyber pros
working in federal agencies of the U.S. government, Meri-Talk (Anderson, 2014) reports that 66% of cyber managers
perceived that downloading files from other servers constituted a significant conduit for breaching the security of their
agencys IT systems. Additionally, 62% of these same survey respondents reported significant cyber breaches attributable to
web surfing. Mandiant (2015) found that these types of employee activities directly increased the vulnerability of
organizations to phishing and malware attacks. An experimental study conducted by Trustwave Holdings (2014) also reveals
how employees ignore security protocols, download information from fraudulent emails and link to servers that may be the
conduit for malware attacks. In this study, Trustwave (2014) initiated a series of mock attacks using phishing
methodologies. Results from this study suggest that 33% of employees opened these spear-phishing emails and clicked on
links in the email that would result in the downloading of malware. Additionally, when the mock emails contained links
that permitted employees to access other servers or internet sites, 80% of these employees logged into these servers/sites with
their corporate credentials (i.e., email accounts, passwords, etc.). By having access to these credentials, cyber criminals can
subsequently masquerade as legitimate end users of these organizational IT resources and potentially have access to a variety
of proprietary information/trade secrets (Trustwave, 2014; Mandiant, 2015). Finally, Trustwave (2014) attempted to discern
the geographic origin of actual malware attacks on organizations. Data used for this assessment was derived from an
investigation of 691 cyber breaches that occurred globally among multinational firms. Based upon an analysis of this data,
the majority of malware attacks (46% of reported incidents) originated from within the United States. Malware threats
implemented in Russia comprised 13% of reported incidents and German-based activities accounted for 9% of these cyber
attacks (Trustwave, 2014).
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Findings from the Cyber & Industrial Espionage Data Base
The Cyber and Industrial Espionage Data Base (CIEDB) also sought to determine the types of specific types of penetration
methodologies used by individuals/organizations when attempting to misappropriate trade secrets. Table 2 provides a
crosstabulation analysis which examines the penetration methodologies used in supporting both cyber and conventional
espionage activities. As will be recalled, data reported in the table was compiled utilizing criminal/civil cases and complaints
filed before either federal or state courts in the United States during the 2008 and 2015 time period. Consistent with prior
research, cyber espionage classifications were construed as representing the use of cyber technologies in order to illicitly
gather or transmit proprietary information to an organizations adversaries (NATO Cooperative Cyber Defense Center of
Excellence, 2012). A Chi-Square statistic was calculated for categorical data contained in the table and emergent results
were found to be statistically significant (i.e., Chi Square =41.0, df= 10 ; Sig. = .000).
Table 2 denotes several differences in the methodologies used by cyber and conventional espionage perpetrators when
attempting to penetrate or secure access to organizational trade secrets. Among alleged cyber criminals, the three most
popular methods for misappropriating organizational trade secrets were (a) downloading proprietary information from
organizational IT servers and then storing this information on their PCs, thumb drives, external storage devices or in drop
boxes [51.7%]; (b) illicitly acquiring and then utilizing data obtained from their companys value chain partners [10.3%];
and (c) the combined use of downloading proprietary information from IT servers, printing this material and also theft of
paper-based files containing proprietary information (10.3%). In this later instance, the printing of material located on IT
servers was implemented in order to avoid security measures that prevented the downloading of data to external storage
devices. Additionally, in other circumstances, the downloading of proprietary information to external storage devices may go
unnoticed by corporate security personnel. This lack of detection may emerge due to the commonplace use by employees of
both external storage devices and email in order to access or archive data during their normal work activities (Shey, 2014).
For conventionally implemented espionage/trade secret misappropriation activities, 100% of the catalogued incidents derived
from the illicit use of trade secrets obtained through the personal and negligent disclosure of proprietary information from
current/former employees, customers and business partners.
TABLE 2: ESPIONAGE TYPE AND PENETRATION METHODOLOGIES
Situational Threat
(Columnar % of Total Incidents; N= 41; Chi Square =41.0, df= 10; Sig. = .000)
Cyber Espionage Conventional Espionage

Penetration
Methodologies
Stolen Emails 3.4 0.0

Use of Mobile
Devices to
Photograph 3.4 0.0
Monitor Screens,
Machinery or
Product Designs
Download Stolen
Info. from IT Server 6.9 0.0
to Paper Format
Download Stolen
Info. from IT Server
to PC, External 51.7 0.0
Device, Drop Box or
External Acct.
Personal Disclosure of
Proprietary Information
Obtained from Current/ 0.0 100.0
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Former Employee,
Previous Business
Partner or Customer
Illicit Use of Data/
Proprietary Information 10.3 0.0
obtained from Value
Chain Partner/Supplier
Combination Methodology #1 3.4 0.0

Where: Combination Methodology #1: Combination of Malware, Stolen Network Credentials & Stolen Email
Combination Methodology #2: Combination of Downloading Stolen Information from IT Server, Paper Files &
Printing/Copying Proprietary Information or Material
Combination Methodology #3: Combination of Personal Disclosure and Downloading Proprietary Information to
External Storage Device
Combination Methodology #4: Combination of Downloading Source Code from IT Server & Transmission to
Code/Proprietary Information to Competitor Server
Combination Methodology # 5: Combination of Screen Capture/Monitor Screen Photograph & Downloading
Source Code or Documents
TABLE 3: SITUATIONAL THREATS/PERPETRATORS AND

ASSOCIATED TRADE SECRET PENETRATION METHODOLOGIES
Situational Threat
(Columnar % of Total Incidents; N= 41; Chi Square =98.74; d.f. = 50; Sig. = .000)
Current Former Current or Value Customers Foreign

Employees Employees Former Chain Nation
Service Providers, Partners States
Consultants, Contractors
Penetration
Methodologies
Stolen Emails 0.0 11.1 0.0 0.0 0.0 0.0

Use of Mobile
Devices to
Photograph 0.0 0.0 33.3 0.0 0.0 0.0
Monitor Screens,
Machinery or
Product Designs
Download Stolen
Info. from IT Server 5.3 0.0 33.3 0.0 0.0 0.0
to Paper Format
Download Stolen
Info. from IT Server 57.9 33.3 0.0 14.3 0.0 0.0
to PC, External
Device, Drop Box or
External Acct.
Negligent Disclosure of
Proprietary Information
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Obtained from Current/ 10.5 44.4 33.3 42.9 0.0 0.0

Former Employee,
Previous Business
Partner or Customer
Proprietary Information 0.0 0.0 0.0 42.9 0.0 0.0
obtained from Value
Combination Methodology #1 0.0 0.0 0.0 0.0 100.0 100.0

TABLE 4: TRADE SECRET PENETRATION METHODOLOGIES AND

THEIR ASSOCIATED INFORMATION TARGETS
Information Targets
(Columnar % of Total Incidents; N= 41; Chi Square =123.8; df = 90; Sig. = .01)
Tech. Proprietary Proprietary Manf. Proprietary F Comb. Of Comb. Of Comb. Comb. of
& Docs. & Source Processes Info on O Tech. Data Tech. & of Tech./ Proprietary
Design Info. Code Bus. Plans, R Manf./ Manf. Data R&D Info.
Data (Generic) R & D, M Design Employee Data, New
New, U Data & Emails Bus. Product
Product L Bus. Network Plans & Data,
Intros. A Plans Credentials Software Bus.
Plans &
Penetration Formulas
Methodologies
Stolen Emails 0.0 0.0 0.0 0.0 8.3 0.0 0.0 0.0 0.0 0.0
Use of Mobile
Devices to
Photograph 11.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Monitor Screens,
Machinery or
Product Designs
Download Stolen
Info. from IT Server 0.0 0.0 12.5 0.0 0.0 0.0 100.0 0.0 0.0 0.0
to Paper Format
Download Stolen
Info. from IT Server 44.4 100.0 37.5 0.0 41.7 0.0 0.0 0.0 66.7 0.0
to PC, External
Device, Drop Box or
External Acct.
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Negligent Disclosure
of Proprietary Info.
from Current/ 44.4 0.0 12.5 100.0 25.0 50.0 0.0 0.0 0.0 0.0
Former Employee,
Previous Business
Partner or Customer
Proprietary Info 0.0 0.0 25.0 0.0 8.3 0.0 0.0 0.0 0.0 0.0
Obtained from Value
Comb. Method #1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.
Comb. Method #2 0.0 0.0 0.0 0.0 8.3 50.0 0.0 0.0 0.0 100.0
Comb.Method #3 0.0 0.0 0.0 0.0 8.3 0.0 0.0 0.0 0.0 0.0
Comb. Method #4 0.0 0.0 12.5 0.0 0.0 0.0 0.0 0.0 33.3 0.0
Comb.Method #5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0
Tables 3 and 4 seek to document the (1) type/frequency of penetration methodologies used by specific agents/perpetrators in
trade secret misappropriation activities; and (2) the type of proprietary information that is generally targeted by specific
penetration methodologies. This analysis is also accomplished by means of a crosstabulation between relevant variables.
Data reflected in Tables 3 and 4 was subsequently subjected to significance testing using the Chi Square statistic. Results of
this latter analysis demonstrated that emergent findings were statistically significant at the .000 and 01 levels respectively.
As previously noted, in Cyber and Industrial Espionage Data Base (CIEDB) the majority of trade secret misappropriation
activities were initiated by either current or former employees. Table 3 summaries the principal penetration methodologies
that these individuals utilize in misappropriating trade secrets or proprietary information. Data from the table suggests that
among current employees, the most popular penetration methodologies for acquiring trade secrets are downloading
proprietary information from corporate IT servers and then either transferring this data to an external storage device or drop
box (57.9%). This methodology was also frequently used by value chain partners who were given access to the victimized
firms IT infrastructure. In the CIEDB, a significant number of legal cases involving current employees also evidenced their
acquisition of trade secretes through a combination of methods. This combination methodology (#2) was utilized by 15.7%
of perpetrators and involved both downloading proprietary information from servers, obtaining paper-based file materials and
subsequently copying/printing of the proprietary information obtained from these intrusions. Printing of electronically stored
information was often necessitated by corporate security protocols which inhibited the downloading of these materials to
external storage devices or drop boxes.
These findings of the CIDB are also reflected in studies of cyber breaches in the U.S. government. Security breaches
involving downloading and file transfers of proprietary data have been reported to be (1) of significant concern to cyber
professionals in the U.S. government (Anderson, 2014); and (2) a technique used by cyber criminals to support trade secret
misappropriation in a number of recent economic espionage cases prosecuted by the U.S. Department of Justice (U.S.
Department of Justice, 2013a). In the Meri-Talk study of U.S. government agencies (Anderson, 2014), 66% of federal cyber
professionals attributed the majority of their agencys cyber breaches to employee downloading activities. Twenty nine
percent of these same security professionals reported that the majority of cyber breaches in their agencies occurred as a result
of file transfers (Anderson, 2014).
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Table 3 also documents significant relationships regarding trade secret misappropriation activities initiated by the former
employees, service providers, consultants, contractors and value chain partners of victimized companies. Significant numbers
of former employees (33.3%) also appear to utilize their continuing access to their prior employers IT network in order to
misappropriate and download proprietary information. These trade secret misappropriation activities were often made
possible by the employers negligence in not discontinuing the former employees access to the firms IT infrastructure
(Dantec Dynamics, Inc. v. LaVision Inc., 2010). However, the most common method of trade secret theft (44.4%) by former
employees involved their illicit use of proprietary information obtained through the negligent disclosures of relevant data by
the current/former employees, business partners or the customers of their prior employer. This same technique also proved to
be a popular method of misappropriating trade secrets (33.3%) by service providers, consultants, contractors and value chain
partners that perform outsourced tasks for the victimized firm.
Several recent legal cases are illustrative of these aforementioned perpetrator/penetration methodology interrelationships.
The trade secret misappropriation activities documented in Pal Inc. et al. v. Google, Inc. et al., (2011) center on the activities
of Osman Bedier. Mr. Bedier was employed as a senior manager in charge of mobile platforms and new ventures at Pay
Pal.. His responsibilities involved developing and delivering point-of-sale (POS) technologies/services to Pay Pal retail
clients. As a result of his position at Pay Pal, Bedier had an extensive knowledge of his employers business plans and the
trade secrets underling its mobile payment/transaction programs. In 2010, Bedier was recruited by Google to lead its efforts
in developing technologies/services supporting their POS systems. Within in days of leaving for his new assignment at
Google, Bedier downloaded to both his own computer and an external drop box account a variety of Pay Pal trade secrets.
These trade secrets contained proprietary information related to Pay Pals market/customer analysis, business strategy, and a
competitive assessment of the weaknesses of Googles Wallet System. During his exit interview at Pay Pal, Beider was
asked to return any proprietary information in his possession. Beider subsequently (1) refused to return any of the trade
secrets downloaded to his personal computer and drop box; (2) has been accused of using this proprietary information to
benefit his new employer; and (3) utilizing knowledge of these Pay Pal trade secrets in order to more effectively market
Google services to potential clients (Pal Inc. et al. v. Google, Inc. et al., 2011).
The 2FA Technologies, L.L.C. v Oracle Corporation (2010) demonstrates the vulnerability that organizations have when
value chain partners are given access to their trade secrets. 2 FA Technologies was both the creator and manufacturer of a
credential authentication system. This system was used to verify and manage the ability of consumers to access a variety of
products including smart cards, contractless cards, one-time password tokens, digital certificates, biometrics and other
physical or logical devices (2FA Technologies, L.L.C. v Oracle Corporation, 2010, p. 6). In order to gain greater market
access for their product, 2FA Technologies entered into a licensing agreement with Passlogix, Inc. During the term of this
licensing agreement, Passlogix engineers were given access to 2FAs IT infrastructure and the proprietary source code
associated with the authentication system/software. This business relationship began to unravel when Passlogix entered into
an additional partnership and subsequently became a subsidiary of Oracle Corporation. In support of this new business
relationship, Passlogix manufactured and marketed products containing 2FA trade secrets under an Oracle brand name.
These activities occurred despite the existence of a noncompete agreement that Passlogix had signed in conjunction with the
original 2FA licensing agreement. When violation of this noncompete agreement was detected, 2FA Technologies terminated
their licensing agreement with Passlogix. However, before the termination of the license had been completed, Passlogix
engineers used their access to 2FA IT servers in order to download both 100,000 pages of proprietary documents and the
source code for 2FAs authentication system. This source code and associated documentation was then emailed to other
employees working at Passlogix.
The Baden Sports case (Baden Sports, Inc. v. Wilson Sporting Goods Company, 2011) illustrates the competitive
vulnerabilities that firms can experience as a result of proprietary information loss through former employees. Baden Sports,
Inc. is an American company that utilizes a variety of offshore outsourcers to produce inflatable ball products. In order to
facilitate delivery of this merchandize to the United States, outsourcers ship the ball-related products in an un-inflated
condition. Prior to being packaged for shipment to U.S. distributors, these products required re-inflation through insertion of
a needle into an inflation valve on the surface of the ball. This re-inflation process was a labor intensive and costly activity
for the firm. Additionally, during the mechanized re-inflation of these balls, improper alignment of the needle can result in
damage to the valve and thereby create a defective product. In order to overcome this potential quality control issue, Baden
Sports invented a ball inflation table which could be used to properly align equipment during an automated ball inflation
process. This ball inflation table was both a unique invention of Baden Sports and maintained as an organizational trade
secret. The ball inflation table was produced by the firms in-house workshop. This workshop was managed by Ray
Sharp. Mr. Sharp built all the ball inflation tables used by Baden Sports and was intimately familiar with the
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design/manufacturing processes used in fabricating this technology. Sharp retired from Baden Sports in 2009. While
continuing to perform consulting activities with Baden Sports, he was also offered consulting opportunities with the Wilson
Sporting Goods Company. Wilson hired Sharp in order to assist the company in overcoming quality control problems
associated with their own ball re-inflation activities. Mr. Sharp assisted Wilson Sporting Goods with this problem by
disclosing proprietary information concerning the design, technology and manufacture of Badens ball inflation table.
Finally, despite the concern that cyber and security professionals have expressed regarding proprietary information loss from
malware, phishing and email theft, data reported in Tables 2 and 3 indicate that only small number of trade secret
misappropriation incidents are attributable to (1) stolen emails [3.4%]; and (2) the combined use of malware, stolen network
credentials and email theft [3.4%]. These findings may have emerged due to the fact that the majority of economic
espionage/trade secret misappropriation activities in the CIEDB sample were committed by the current or former employees
of victimized organizations. In most instances, these individuals possessed or retained access rights to corporate servers/data
bases housing proprietary information. Thus, since they possessed appropriate network credentials, these current/former
employees could readily access, retrieve and store proprietary information for future misuse.
Table 4 explores the interrelationship between penetration methodologies used to support industrial espionage and the
information targets of these trade secret misappropriation activities. This pattern of interrelationships was found to be
statistically significant (i.e., Chi Square = 123.8; df = 90; sig. = .01). As evident from the table, penetration methods
involving the downloading and subsequent placement of proprietary information on external storage devices emerged as a
significant technique for acquiring a variety of organizational trade secrets. This penetration methodology emerged as a
dominant technique used to misappropriate trade secrets related to (a) technical and design data; (b) generic proprietary
information and/documents containing this type of information; (c) proprietary source code; and (d) business plans, R & D
and new product information. Negligent disclosures of proprietary information from current/former employees, business
partners and customers also served as a an important technique for gaining access to information on (1) technical and design
data; (2) manufacturing processes; (3) ) business plans, R & D and new product information; and (4) formulas. Finally,
there existed only one incident of the external penetration of corporate IT infrastructures for purposes of misappropriating
manufacturing data, employee emails and network credentials of end users. This system penetration was effected through the
use of malware, previously stolen network credentials and email login data.
The recent Forrester study on data security and privacy (Shey, 2014) provides some additional insights which both confirm
and extend the results of the Cyber and Industrial Espionage Data Base (CIEDB). Similar to findings from the CIEDB,
Forrester reports significant breaches of corporate IT/information systems due to employee negligence or the implementation
of malicious activities which are designed to access/misappropriate trade secrets. Loss or theft of backup data files and/or
devices containing proprietary information also represented major cyber threats to companies in the Forrester sample. These
latter devices included the corporate IT servers, laptops and smart phones of organizational personnel and business partners
that had access to an organizations proprietary information. Additionally, the vulnerability of these portable devices to theft
and economic espionage activities has been previously documented by a variety of other corporate security researchers
(Laffin, 1996; Fitzpatrick and Burke, 2003). Finally, similar to findings of the CIEDB, data from the Forrester study also
indicated that the frequency of cyber breaches due to phishing attacks was lower than for each of the aforementioned
penetration methodologies/threats (Shey, 2014).
S.P.I.E.S.: Espionage Enforcement [E]
Both the United States and the international community have sought to curtail trade secret misappropriation through
articulation and enforcement of a variety of legal statutes (Fitzpatrick & Dilullo, 2013; Zimmerman, 2011; Padilla Torres,
2001; Hogan Lovells International LLP, 2012). Analysis of cases contained in the Cyber and Industrial Data Base (CIEDB,
2015) reveals that criminal and civil enforcement of trade secret misappropriation issues in the United States derives from
four major statutes. These statutes include (1) the Economic Espionage Act (1996); (2) Computer Fraud and Abuse Act
(2006); (3) National Stolen Property Act (2006); and (4) the Uniform Trade Secrets Act (1985). Internationally, the
resolution of trade secret misappropriation finds a legal basis in the TRIPS Agreement (World Trade Organizations, 1994)
and the Council of Europes Convention on Cyber Crime (2001).
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United States Laws Protecting Trade Secrets
At the federal level, the United States has developed four major laws that have been utilized by law enforcement
organizations in order to respond to the growing threat of trade secret misappropriation and cyber-based espionage. Evident
from analysis the CIEDB, most federal prosecutions of these activities (26.8%) emanated from application of the Economic
Espionage Act (1996) or combinations of legal actions involving this statute and other federal laws (i.e., 7.3% of cases). The
Economic Espionage Act (1996) contains criminal penalties for both acts of economic espionage and trade secret
misappropriation. The Act defines economic espionage as actions involving trade secret theft which are initiated by or for
the benefit of foreign governments/entities. This would include actions typified by (a) actual theft or unauthorized
duplication of trade secrets; (b) brokering or transferring stolen trade secrets; and (c) support activities to facilitate these
illegal actions (Zimmerman, 2011; Newman, Cai, & Heugstenberg, 2007 ). Theft of trade secrets, not linked to foreign
governments/entities, is prosecuted under the trade secret misappropriation section of the Act (Economic Espionage Act,
1996 Section 1832). Individuals convicted of economic espionage activities can be subject to maximum penalties of 15
years imprisonment and $5 million in fines. Organizations convicted of economic espionage can potentially face fines of $10
million or three times the estimated value of the stolen trade secret (Economic Espionage Act, 1996 Section 1831).
Individual violators of the trade secret misappropriation section of the Act (Section 1832) can potentially be sentenced to 10
years imprisonment and assessed $5 million in fines.
A smaller number of prosecutions comprising the CIEDB (4.9% of cases) involved actions brought under both the Economic
Espionage Act (1996) and National Stolen Property Act (2006). The National Stolen Property Act [NSPA] (2006) is a statute
which addresses interstate trafficking in stolen goods and property. The NSPA defines stolen property as money,
merchandize, goods, or other wares commonly sold in commerce (Office of the United States Attorneys, 2015). The Act has
also been extended to cover trade secrets involving manufacturing processes (US v. Bottone, 1966). However, the NSPA has
limitations when applied to dealing with the theft of cyber-based trade secrets. In U.S. v Agrawal (2013), the courts ruled
that proprietary source code was considered to be an intangible asset and therefore not covered by the NSPA statute. Persons
convicted of violations of the Act may be subject to 10 years imprisonment and fines as assessed by the court (Cornell
University Law School Legal Information Institute, 2015a).
In a similar fashion, 2.4% of cases in the CIEDB consisted of legal action involving both the Economic Espionage Act
(1996) and Computer Fraud and Abuse Act (2006). This latter statute seeks to criminalize activities whereby individuals (1)
exceed their authorized access to computers/data bases; and/or (2) unlawfully access computers in order to obtain information
which may subsequently defraud, cause loss or damage to its rightful owner (Computer Fraud and Abuse Act, 2006). These
illegal activities would include (a) committing fraudulent activities through unauthorized access to protected computers/data
bases; (b) threatening or actually committing physical damage to protected computer/IT systems; (c) interstate trafficking in
stolen computer passwords; and (d) accessing computer resources to commit acts of espionage (Farhat, McCarthy, &
Raysman, 2011). Persons convicted of offenses under the CFAA can also be subject to fines and 10 years of imprisonment
(Cornell University Law School Legal Information Institute, 2015b).
Data from the CIEDB also reveals that large numbers of trade secret misappropriation cases (24.4%) are litigated under the
auspices of the Uniform Trade Secrets Act [UTSA] (1995). Variations of this model statue are enacted by states in order to
provide civil remediation of trade secret misappropriation disputes (Zimmerman, 2011). Under the UTSA, civil liability is
provided for two types of trade secret-related offenses. These activities include (1) acquisition of trade secrets by improper
means; and (2) misappropriation of trade secrets (Uniform Trade Secrets Act, 1985). Improper means describes a variety of
illicit actions in which trade secrets are acquired through theft, bribery, misrepresentation, breach or inducement of a breach
of a duty to maintain secrecy, or espionage through electronic or other means (Uniform Trade Secrets Act, 1985:4).
Misappropriation is deemed to occur anytime a perpetrator (a) discloses or utilizes a trade secret without consent of its
rightful owner; and/or (b) acquires access to a trade secret that knowingly has been acquired through improper means
(Uniform Trade Secrets Act, 1985). The UTSA has also been utilized in federal civil cases involving parties from different
states in which the potential damages exceed $75,000 (28 U.S.C. 1332).
International Agreements Protecting Trade Secrets
The Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS (World Trade Organization (1994) sought
to encourage the world community to adopt minimum legal protections and law enforcement mechanisms in order to protect
intellectual properties. While not specifically referencing the term trade secrets, this type of intellectual property is legally
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protected under article 39 of the Agreement as undisclosed information (World Trade Organization, 1994). Since TRIPS
requires nations to develop their own intellectual property statutes in conformance with minimum legal protections,
country specific IP laws tend to be characterized by a lack of uniformity (Hogan Lovells International LLP, 2012). These
variations in statutory law have created significant international enforcement difficulties in situations regarding trade secret
misappropriation (Hogan Lovells International LLP, 2012).
The Council of Europes Convention on Cyber Crime (2001) was a major initiative to create a global framework for the
criminalization of cyber crimes. Among its provisions, the Convention seeks to establish criminality for offenses related to
misuse of computer and data systems. This misuse would include (a) compromising the confidentiality of information; (b)
illegal access and interception of data; and (c) interference with IT systems and data related activities (Weber, 2003).
Currently, 47 countries have ratified or acceded to the provisions of this agreement (Council of Europe, 2014). Signatory
nations to this agreement are then required to develop their own legislation compatible with the objectives of the Convention
(Council of Europes Convention on Cyber Crime, 2001). Enforcement of these country specific statutes is applicable within
their own borders and for their own citizens which commit offenses under the Convention in other signatory nations. The
Convention also sought to promote greater cooperation between signatory nations regarding the extradition of individuals for
alleged cyber crimes (Council of Europes Convention on Cyber Crime, 2001).
S.P.I.E.S.: Security Vulnerabilities [S]
Cyber threats to organizational trade secrets and proprietary information have been effectively documented in a variety of
recent industry studies (Anderson, 2014; Mandiant, 2015; PriceWatershouseCooppers, 2014; Sood & Enbody, 2014;
Symantec, 2015; Trustwave Holdings, 2014). These cyber attacks have significant financial and competitive consequences
for victimized organizations (Almeling, 2012; ASIS, 2007; Marsh, 2013; McAfee, 2013; PriceWatershouseCoopers, 2014;
Sentonas, 2014; Center for Strategic and International Studies, 2013). Despite the widespread existence of these threats,
organizational security researchers have provided evidence of the continuing vulnerability of organizations to cyber attacks.
These organizational vulnerabilities to cyber attacks emerge from a variety of security inadequacies including (1) detection
issues; (2) lack of preparedness; and (3) deficiencies in both the content and enforcement of corporate security programs
(Mandiant, 2015; PriceWatershouseCoopers, 2014; Shey, 2014; Sagani & Vijayakumar, 2012; Anderson, 2014).
Detection Issues
Mandiant (2015) provides data which suggests that organizational losses of proprietary information may be due to their
failure to promptly detect and remediate cyber breaches/attacks targeting organizations. Data from their 2015 survey finds
that only 31% of targeted organizations actually detect cyber attacks on their IT systems and proprietary information. For
most organizations in their sample (i.e., 69%), awareness of these cyber breaches is initially brought to their attention by
external entities including law enforcement agencies. This study also sought to document the time lapse between initiation of
cyber attacks and their subsequent detection by organizations/external entities. Pursuant to this detection issue, Mandiant
(2015) reports that (a) the average time between intrusion and discovery is 205 days; and (b) the longest reported time frame
for discovery of a cyber breach was 2982 days.
Organizational Preparedness for Dealing with Cyber Attacks and Cyber Espionage
This inability to promptly detect cyber breaches may signal a lack of organizational preparedness in preventing cyber attacks
from both internal and external actors (Shey, 2014; Anderson, 2014). Evidence of these deficiencies in preparedness was
reported in a recent study undertaken by Meri-Talk (Anderson, 2014). The 2013 Meri-Talk survey focused on preparedness
perceptions of employees (i.e., end users of IT and data bases) and cyber professionals working in agencies of the U.S.
government. Among end users of information technologies and data bases, only 41% to 61% of these employees believed
that there exists adequate safeguards to prevent data breaches associated with international cyber attacks, hacking and
malware. In these same federal agencies, cyber professionals were far more pessimistic when rating their agencys level of
security preparedness. Approximately 2/3 of these cyber professionals perceived that their agencys infrastructures and data
bases are (a) vulnerable to data theft; and (b) are ill prepared to deal with threats associated with hacking and the negligent
disclosure of proprietary information by employees. Additionally, the vast majority of these IT specialists (74%) believed
that their agencies were inadequately prepared to prevent data breaches attributable to both international hackers and non-
secure mobile devices used by agency employees (Anderson, 2014).
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Deficiencies in Corporate Security Programs
Dodge (2014) observes that organizational security systems are not equally effective in protecting proprietary
information/trade secrets from both internal and external threats. He notes that corporations appear (1) to be more adept at
protecting themselves from external threats and physical security issues; and (2) less capable in insulating themselves from
internal sources of proprietary information loss (Dodge, 2014). Evidence of this deficiency in internal security programs has
been reported in a variety of industry studies (PricewatershouseCoopers, 2014; Shey, 2014; Cyber and Industrial Espionage
Data Base, 2015). Both the PriceWatershouseCoopers (2014) and Forrester Research studies conclude that intentional or
inadvertent misuse of data by insiders was a primary cause of information loss for organizations. The CIEDB (2015) found
that the majority of proprietary information losses reported in trade secret misappropriation cases in the United States were
attributable to current/former employees and the value chain partners of firms. These individuals/organizational actors were
observed to facilitate trade secret misappropriation by utilizing insider access to download proprietary information from
corporate IT servers and/or encourage negligent disclosures of information by persons having access to the organizations
trade secrets.
Negligent disclosure of trade secrets may be induced by the failure of corporate security programs to (a) properly identify
data/information as being a proprietary information asset; (b) effectively train organizational personnel in protocols
governing the security of IT systems and information assets; and (c) ensure employee compliance with security protocols
(PriceWatershouseCoopers, 2014; Shey, 2014; Sagani & Vijayakumar, 2012; Anderson, 2014). Among organizations
comprising the PWC survey, only 54% have a program to identify sensitive assets, and just 56% have taken the effort to
inventory the collection, transmission, and storage of sensitive data for employees and customers
(PriceWatershouseCoopers, 2014, p. 33). Identifying and classifying information assets as being confidential is critical for
both the subsequent development of corporate security programs (Boni, 1999; Weld, 1998) and in establishing a basis for
potential litigation in matters of trade secret misappropriation (Uniform Trade Secrets Act, 1985; Fitzpatrick, Dilullo, &
Burke, 2002).
The Forrester State of Data Security and Privacy survey (Shey, 2014) also reveals that organizations may not be training or
informing their workforces in IT and data security issues. This report finds that among North American and European
organizations only 42% of employees have received training in security methods/protocols regarding data use and handling
activities. Data from the survey also reveal widespread ignorance of and noncompliance with organizational security
policies. Pursuant to this conclusion, Forrester research reports that only (a) 56% of employees are aware of or actually
understand security policies related to internal data use and handling activities; and (b) 61% of survey respondents indicate
that they actually comply with organizational security policies (Shey, 2014). This lack of compliance to security guidelines
has also been identified as a major problem for IT and data security within agencies of the U.S. government. Cyber
professionals employed within the federal government estimate that approximately 49% of their data breaches are directly
attributable to employee noncompliance with security procedures (Anderson, 2013). The lack of employee compliance to
basic security protocols stems from their perception that these cyber defense mechanisms are burdensome and time
consuming. These complaints arose from a variety of factors including (1) the number of passwords needed to access
servers/data bases; (2) the frequency of password changes initiated by government agencies; (3) security mechanisms
reducing the operational speed or efficiency of software; (4) limiting remote access to data and IT servers; and (4) the time
consuming nature of security compliance (Anderson, 2014). In response to these criticisms, 31 % of federal employees in the
Meri-Talk study reported that they circumvent cyber security protocols at least once per week (Anderson, 2014).
Negligent enforcement of protective measures by corporate security professionals has also contributed to trade secret losses
in organizations. The repercussions of this negligence by corporate security personnel has been documented in several
recent legal cases (United States v Sean Edward Howley and Clark Alan Roberts, 2013; Ikon Office Systems v. John Brad
Kolasinski et al, 2011; Dantec Dynamics, Inc. v. LaVision Inc., 2010). For example, Ikon Office Systems had deployed a
variety of cyber defenses in order to protect their trade secrets and proprietary information. These corporate security
measures included (1) firewalls designed to prevent unauthorized access to servers; (2) random audits of employee email
traffic and internet use; (3) password restricted access to confidential information housed on corporate IT servers; and (4)
limiting employee access to proprietary information on a need to know basis. However, two employees were able to evade
these defensive mechanisms prior to their accepting employment with an Ikon competitor. Several days prior to their
resignations, John Kolasinski and Robert Hornbeck utilized their network credentials in order to access and download
customer lists, pricing schedules and business plans that would have utility to their new employer. The lack of video
surveillance/monitoring of the work environment permitted these employees to download and subsequently remove the
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aforementioned trade secrets through use of a 500 GB flash drive. Additionally, an audit which detected this pre- separation
download activity only took place sometime after Kolasinskis and Hornbecks departure from Ikon Office Systems. The
delayed detection of this cyber activity permitted these two former employees to utilize illicitly obtained proprietary
information in order to solicit former Ikon customers on behalf of their new employer (Ikon Office Systems v. John Brad
Kolasinski et al, 2011).
The failure of corporate security personnel to properly enforce security protocols also led to trade secret losses in recent
cases involving both Dantec Dynamics and the Goodyear Tire and Rubber Company. The Dantec Dynamics case centers on
the ability of a former employee (Michael Kotas) to circumvent and exploit the negligent enforcement of corporate security
protocols. Upon termination of his employment at Dantec Dynamics, Kotas began working at LaVision, Inc. LaVision was a
direct competitor to Dantec. Security protocols at Dantec required network credentials (i.e., login IDs and passwords) to be
discontinued at the time of an employees termination/departure from the organization. Unfortunately, this security
precaution was overlooked when Kotas left Dantec. Therefore, on behalf of his new employer, Kotas was able to utilize
these network credentials to (a) connect to Dantecs IT servers; (b) access trade secrets/proprietary information; and (c) email
this data to LaVision. These network credentials also permitted Kotas to re-enter Dantecs server and eliminate electronic
information or a data trail indicative of his cyber attack. Trade secrets obtained through this cyber attack permitted Kotas to
both launch market raiding activities on Dantecs clientele and subsequently benefit LaVisions marketing objectives (Dantec
Dynamics, Inc. v. LaVision Inc., 2010).
In a case involving the Goodyear Tire and Rubber Company, a failure to both enforce security protocols and monitor
supplier representatives during a plant visit led to the loss of trade secrets related to the firms proprietary technologies
(United States v Sean Edward Howley and Clark Alan Roberts, 2013). This supplier, Wyco Tire Technology, supplied parts
for a variety of machines associated with the manufacture of automotive and truck tires. Wycos customers included
Michelin, Bridgestone, Goodyear and the HaoHua South China Rubber Company. HaoHua had contracted with Wyco to
provide it with machine parts related to swabbing down processes associated with tire manufacture. Wyco had not
previously manufactured these types of parts. However, Goodyear possessed proprietary technology that did perform this
manufacturing activity. A former Goodyear engineer working for Wyco attempted to duplicate engineering drawings of these
technologies. Unfortunately, these drafting efforts proved to be inaccurate. Therefore, Wyco had to resort to other means for
duplicating the technology for their Chinese client. A solution to this dilemma occurred when Goodyear requested Wyco to
provide them with two technicians to repair equipment installed in Goodyears Topeka plant. Upon arrival at this facility, the
two technicians (Howley and Roberts) were (1) required to sign nondisclosure agreements; and (2) informed by security
personnel that they were not permitted to bring their cell phones into the factory. However, the personal belongings of these
individuals were not searched in order to insure compliance with this security directive. Secondly, while completing their
work assignments, Howley and Roberts were left unescorted/unmonitored for several minutes. This negligence on the part of
corporate security permitted Howley to (a) use his cell phone camera in order to photograph proprietary technologies required
for the Chinese contract; and (b) transmit photos of these trade secrets to his email account at Wyco Tire Technology.
Civil litigation and a variety of industry studies have additionally documented the vulnerability of organizations to cyber
attacks through activities which combine accessing proprietary data on IT servers and subsequently downloading this data to
thumb drives, external storage devices, external email accounts and/or drop boxes (Shey, 2014; Anderson, 2014; Pal Inc. et
al. v. Google, Inc. et al.,2011; 2FA Technologies, L.L.C. v Oracle Corporation, 2010). However, the use of external storage
devices and email to support these types of illicit activities may go unnoticed by corporate security personnel. Failure to
detect the illicit use of these technologies may stem from their routine use in the workplace. Forrester Research reports that
over 60% of workers utilize USB flash drives, CDs, DVDs and email attachments to facilitate these types of data
access/storage activities (Shey, 2014). Finally, many workers also legitimately utilize mobile devices to exchange
proprietary information, share work product and communicate with other employees. Unfortunately, these mobile devices
have become a conduit for trade secret theft and proprietary information loss. These devices have become increasingly
vulnerable to theft and malware attacks by cyber criminals (Shey, 2014; PriceWatershouseCoopers, 2014). Additionally, a
recent study by Hewlett Packard (Meissler, 2014) reports that typical mobile devices are subject to an average of 25
vulnerabilities which increase their risk to cyber attacks. Some of the more significant vulnerabilities noted in the H-P report
include (a) lack of data encryption; (b) insufficient authorization barriers in order to permit use or transfer of data stored on
the device; (c) insecure web interfaces; and (d) inadequate software protection (Meissler, 2014). Similar vulnerabilities in
mobile devices were also reported by Trustwave Holdings in their Global Security Report. In this investigation, every mobile
device tested was reported to contain at least one critical vulnerability to cyber attacks (Trustwave Holdings, 2014).
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Security Initiatives
Mandiant (2015) recommends that organizations should utilize vulnerability assessments of both a firms IT infrastructure
and proprietary information in order to develop new security initiatives capable of defeating cyber attacks/espionage. These
security initiatives may often include new methodologies which better protect proprietary information through enhancing (1)
barrier defenses; (2) trade secret protection among value chain partners; (3) security awareness and training programs for
employees; and (4) compliance monitoring activities (Trustwave Holdings, 2014; IMG Global Security, 2012; Symantec,
2015; Boni, 1999; Fitzpatrick & Burke, 2003; Fitzpatrick & Dillullo, 2005; Tonsanger, 2014; Martinez de Andina, Tate, &
Maddry,2004).
Barrier Defenses
Corporate security programs have generally conceptualized barrier defenses in terms of both internal and external
dimensions. External barrier defenses attempt to harden an organizations IT and information assets from malicious attacks
by cyber criminals operating from outside the firm (Symantec, 2015; Trustwave Holdings, 2014; Shey, 2014). In contrast,
internal barrier defenses attempt to prevent trade secret loss when the firms cyber/information environment is misused by
employees or other persons/organizations that have insider access to these information assets (Trustwave Holdings, 2014;
IMG Global Security, 2012). The development of these internal barrier defenses often begin with (a) an inventory of
organizational information assets; and (b) the subsequent classification of these assets in terms of both their importance to the
organization and requirements for confidentiality. Proprietary or confidential information should be designated an
organizational trade secret and definitive activities should be undertaken to protect these trade secrets (IMG Global Security,
2015).These activities permit organizations to prioritize their security measures and expenditures in order to protect the
firms most critical trade secrets. Labeling proprietary information as confidential and developing security measures to
insure the reasonable protection of these information assets is also requirement of the Uniform Trade Secret Act (Uniform
Trade secrets Act, 1985; Fitzpatrick, Dilullo, & Burke, 2002). Failure to meet these requirements may inhibit trade secret
owners from successfully defending their intellectual properties in both civil and criminal litigation (Fitzpatrick, Dilullo, &
Burke, 2002; Van Arnam, 2001; Religion Technology Center v. Netcom On-line Communication Services, 1995; Fink, 2002).
IMG Global Security (2015) also recommends that corporate security specialists should analyze likely attack vectors that can
be used in facilitating trade secret theft. This information is important in both the development of effective barrier defenses
to prevent trade secret loss and in creating employee awareness to threats which may target proprietary information under
their control (Trustwave Holdings, 2014; IMG Global Security, 2012).
In response to analyses of the most common cyber attack methodologies, security researchers have recommended
enhancement of three major internal barriers to proprietary information loss. These internal barrier defenses involve (1)
limiting employee/business partner access to proprietary information; (2) upgrading authentication hurdles or network
security credentials needed to access IT/information assets; (3) restricting data portals or storage media that can be used by
insiders to illicitly transfer proprietary information external confederates; (4) encrypting all proprietary information
transferred over the firms IT networks; and (5) prioritizing security expenditures/upgrades to reflect major vulnerabilities as
perceived by security personnel (Symantec, 2013; Forensicom, 2015; Trustwave Holdings, 2014; Fitzpatrick, Dilullo, &
Burke, 2002). Research has identified human beings as being one of the greatest threats to corporate, IT and information
security within organizations (Fitzpatrick, Dilullo, & Burke, 2002; Boni, 1999; PriceWatershouseCoopers, 2014; Shey,
2014). In order to stem proprietary information loss through the human factor, corporate security researchers/practitioners
have recommended restricting proprietary information access to those individuals with a legitimate need to know or utilize
this information (Symantec, 2015; Fitzpatrick, Dilullo, & Burke, 2002). Symantec (2015) proposes the deployment of multi-
level information access restrictions in organizations. Under this protocol, restrictions in accessibility should increase in
proportion to the criticality of the proprietary data to the organization. Additionally, limiting access to proprietary
information on a need to know basis is considered to be evidence of an organizations actions to reasonably protect its
trade secrets (Van Arnam, 2001; Religion Technology Center v. Netcom On-line Communication Services, 1995; Fink, 2002).
As noted previously, failure to implement measures to reasonably protect trade secrets/proprietary information may inhibit
firms from seeking legal protection or compensation for misappropriated trade secrets (Van Arnam, 2001; Religion
Technology Center v. Netcom On-line Communication Services, 1995).
The strengthening of authentication/network credentials has also been suggested as an internal security initiative that may
reduce proprietary information loss (Trustwave Holdings, 2014; Symantec, 2015; Farhat, McCarthy, & Rayman, 2011).
Pursuant to this issue, Trustwave Holdings (2014) found that 31% of successful cyber intrusions resulted from the use of
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weak passwords. These weaknesses often emerge when employees utilize (1) simplistic passwords; and (2) the same
password for all servers/data bases requiring login authentication. Trustwave researchers discovered that the most prevalent
passwords used by end users in their study were (a) 123456; (b) 123456789; (c) 1234; and (4) password. This
simplicity and repetitiveness in password use permits cyber attackers to more easily spoof or masquerade as legitimate
system users (Trustwave, 2014). In order to counter these weaknesses, Trustwave Holdings (2014) recommends that system
administrators require multi-stage logins and more robust passwords in order to access IT servers/data bases containing
proprietary information. Symantec (2015) proposes that passwords should consist of 8 to 10 characters comprised of both
alphabetic and numeric descriptors. Additionally, passwords to data bases/servers should be changed frequently in order to
frustrate cyber attacks based on spear-phishing and pony botnet attacks. Symantec (2015) recommends that changes to
password and authentication credentials be implemented every 90 days.
Analysis from the CIEDB, other industry studies (Shey, 2014; Anderson, 2014) and the Department of Justice (U.S.
Department of Justice, 2013a) have documented extensive levels of cyber attacks which are attributable to current employees
downloading proprietary information from IT servers and subsequently transferring this data to external storage devices or
drop box accounts. In response to this insider cyber vulnerability, corporate security researchers have recommended (a)
limiting the availability of data portals or workstations which permit the external transfer of data files/proprietary information
to external destinations (Trustwave Holdings, 2014); (b) limiting the amounts of data which can be transferred over networks
to employee workstations or storage devices (Cundiff, 2009); (c) installing system safeguards which prevent employees from
transferring files/documents to unauthorized email accounts/servers (Cundiff, 2009); (d) disabling USB drives on the
majority of employee workstations (Cundiff, 2009); and (d) prohibition of the possession/use of personal storage and wireless
devices in the workplace (Cundiff, 2009; Symantec, 2015; Trustwave, 2014; Encription, 2015; Symantec, 2013). Each of
these limitations are designed to curtail the ability of insiders to access and transfer proprietary information to portable
media or external accounts for later exploitation by cyber criminals (Symantec, 2015; Encription, 2015). Additionally,
these limitations also permit security professionals too better monitor network activities and data transfers that may be a
prelude to trade secret misappropriation or industrial espionage (Cundiff, 2011; Farhat, McCarthy, & Raysman, 2011).
However, it is recognized that limiting data access/file transfers to storage devices and workstations may have a negative
impact on productivity (Encription, 2015; Farhat, McCarthy, & Raysman, 2011). Therefore, many cyber professionals have
recommended that these data access/transfer activities be restricted to company provided storage devices and that the data
content/use of these devices be actively monitored by corporate security personnel (Symantec, 2015; Farhat, McCarthy, &
Raysman, 2011). Pursuant to this latter activity, the cyber security community suggests that all portable storage and wireless
devices should be scanned for proprietary data prior to being transported to external venues. Secondly, data stored on these
devices should be encrypted prior to being removed from a secure organizational setting. Additionally, any data viewed as
not being critical to the support of external task assignments should be purged from these devices and a subsequent
investigation should be launched in order to determine if a security breach has occurred (Farhat, McCarthy, & Raysman,
2011; Symantec, 2015; Tonsanger, 2013).
External barrier defenses attempt to curtail proprietary data loss attributable to the actions of cyber criminals operating
outside the organization (Symantec, 2015; Trustwave Holdings, 2014; Shey, 2014). These externally based cyber attacks
often use either malware to exploit vulnerabilities in IT systems (Symantec, 2015; Forensicom, 2015) or physical theft of IT
hardware/mobile devices as a mechanism for access to proprietary information (Shey, 2014; Pullen, 2013). External barrier
defenses generally attempt to defeat these types of cyber crimes through (1) updating security patches to software (Symantec,
2015; Cundiff, 2009); (2) data encryption (Symantec, 2013, 2015; Forensicom, 2015); (3) counterstrike measures (Kesan &
Hayes, 2012); and (3) enhancing physical security of IT/information assets (Pullen, 2013). In order to cope with malware
attacks, corporations have generally been advised to monitor and install security patches or updates to their software and
virus protection (Symantec, 2015; Farhat, McCarthy, & Raysman, 2011). In a parallel action, Symantec (2015) also
recommends that organizations insure that employees routinely update these types of protections for personally owned IT
devices which are used to support their workplace activities. Failure to update security/firewall protection for these devices
can create additional pathways for cyber criminals to illicitly access and misappropriate corporate proprietary
information/trade secrets (Trustwave Holdings, 2014). Cyber criminals often attempt to gain access to proprietary
information by attempting to upload packet sniffers to a firms IT servers (Symantec, 2015; Forensicom, 2015). This form of
malware collects all data that is transferred across an organizations IT network and mobile devices (Symantec, 2013;
Forensicom, 2015). In order to inhibit the ability of cyber criminals to exploit this captured data, a variety of security
researchers/practitioners have recommended that organizations encrypt all their proprietary data prior to its electronic transfer
(Trustwave Holdings, 2014; Symantec, 2013; Encription, 2015).
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Once evidence of an external cyber breach has been detected through anti-intrusion software, some security practitioners
have suggested that organizations mount a counterstrike against the perpetrators which launched the cyberattack (Kesan &
Hayes, 2012). These counterstrike measures constitute an active defense mechanism for organizations. As a technique,
counterstrike seeks to utilize tracking software to identify the source of the external cyber assault. Once the source of the
attack has been verified, the victimized company retaliates by mounting its own damaging attack on the cyber criminals IT
infrastructure. Counterstrikes are frequently implemented by either re-directing the malware back to its original sender or by
launching worms to attack the cyber criminals IT infrastructure (Kesan & Hayes, 2012). While these counterstrike activities
may be an effective means for disrupting the illicit activities of cyber criminals, this form of corporate vigilantism by U.S.
firms has yet to be legally sanctioned by either statute or law enforcement organizations (Kesan & Hayes, 2012; U.S.
Department of Homeland Security, 2011).
A final barrier to external threats involves proactively anticipating and responding to the theft of physical assets containing
proprietary information (Pullen, 2013). Forrester Research (Shey, 2014) has documented the significant organizational trade
secret losses that occur when cyber equipment containing proprietary information is stolen from either an organization or its
value chain partners. Information contained on this stolen equipment has also been used by cyber criminals in order to
subsequently hack into the IT infrastructure of these previously victimized companies (Pullen, 2013). In response to this
physical assault on a firms computer equipment, corporate security professionals recommend (a) the deployment of
encryption technologies on all equipment containing proprietary information; and (b) the use of lockdown devices, alarms,
and active surveillance by corporate security personnel in order to protect equipment from theft (Pullen, 2013; Van Arnam,
2001; Fink, 2002; Fitzpatrick, Dilullo, & Burke, 2002).
Employee Training
The Forrester State of Data Security and Privacy survey (Shey, 2014) reveals most organizations may be negligent with
respect to properly training their workforce in IT and data security issues. In response to this widespread deficiency, cyber
professionals have recommended the implementation of security awareness training programs for all workers having access
to proprietary information (Condiff, 2009; Shey, 2014; Anderson, 2014; Pullen, 2013; Symantec, 2015). These training
programs would also be mandatory for the employees of value chain partners which utilize trade secrets obtained from
contractor organizations (Tonsanger, 2014; IMG Global Security, 2012; Trustwave Holdings, 2014; Boni, 1999; Fitzpatrick,
Dilullo, & Burke, 2002; Condiff, 2009). Security protocols should provide employees with specific guidance on a variety of
activities including (a) procedures governing the security, storage and retrieval of proprietary information; (b) internet
privacy and data security principles; (c) internet access and use policies; (d) social media policies; (e)
nondisclosure/noncompete agreements and their requirements for employees and value chain partners; (f) possession and
usage of personal mobile and data storage devices in the workplace; and (g) incident response procedures which should be
utilized in the event of trade secret theft (Tonsanger, 2014; Trustwave Holdings, 2014; Farhat, McCarthy, & Raysman,
2011). Finally, in delineating data privacy and security protocols, security specialists suggest that organizations articulate the
specific methods that employees need to utilize in collecting, utilizing, disclosing, sharing and disposing of data when it is no
longer required by the company or its value chain partners (Tonsanger, 2014; Boni, 1999; Fitzpatrick, Dilullo, & Burke,
2002).
Value Chain Management Initiatives
Security researchers have suggested that due diligence investigations should be implemented in order to ascertain the
capabilities of potential value chain partners (VCP) for protecting proprietary information/trade secrets transferred to them
within the context of partnering relationships (Boni, 1999; Fitzpatrick & Burke, 2003; Fitzpatrick & Dillullo, 2005; Martinez
de Andina, Tate, & Maddry, 2004). These due diligence investigations should attempt to evaluate the potential security risks
of value chain partners through assessing (1) the adequacy of their physical and cyber security infrastructures for protecting
proprietary information/trade secrets; (2) litigation histories which may evidence prior trade secret misappropriation or
negligence in the handling of proprietary information; and (3) potential criminal proclivities of their workforce (Fitzpatrick &
Dilullo, 2005; Boni, 1999; Trustwave Holdings, 2014). This latter assessment can be facilitated by mandating that all VCP
personnel having access to proprietary information undergo criminal background investigations (Boni, 1999; Winkler, 1997;
Fitzpatrick & Burke, 2001). The periodic physical inspection and auditing of VCP security infrastructures also constitutes an
additional safeguard in maintaining the continuity of protection for proprietary information/trade secrets (Boni, 1999;
Fitzpatrick & Burke, 2001).
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Prior to exchanging any proprietary information, both value chain partners and their employees should be required to sign
nondisclosure/noncompete agreements (Fitzpatrick & Dilullo, 2005). These types of agreements are critical in (a) protecting
proprietary information during partnering negotiations (Yeti by Molly, Ltd. & Molly Strong-Butts V. Deckers Outdoor
Corporation, 2001; Auto Channel, Inc. et al v. Speedvision Network, LLC, 2001; (b) preventing VCPs and their employees
from illicitly utilizing knowledge of trade secrets after expiration of the partnering agreement (Taylor, 2004); and (c)
providing a legal basis for subsequent litigation in the event that VCPs and/or their employees misappropriate the trade
secrets under their control (Saunders, 2003; Clarkson, Miller, Jentz, & Cross, 2004). These agreements can also be used as a
legal framework in defining the security protocols that should be used in managing and protecting the trade secrets provided
to VCPs and their employees (Boni, 1999; Fitzpatrick & Dilullo, 2005).
Finally, Bucci, Rosenweig and Inserra (2013) propose the development of rating system which could be used to perform
comparative assessments of the efficacy of cyber security infrastructures across potential VCPs. This rating system would be
independently developed, updated and managed by an institution similar to Underwriters Laboratories. Access to VCP
security ratings from this type of institution might serve to assist organizations in better evaluating partners prior to disclosure
of proprietary information (Bucci, Rosenweig, & Inserra, 2013).
Compliance Monitoring
Compliance monitoring is designed to verify that corporate security protocols are being properly deployed and reinforced in
the workplace (Symantec, 2015; Forensicom, 2015; American Management Association, 2014). Monitoring activities have
been suggested in order to determine whether (a) emergent threats to proprietary information/trade secrets are properly
cataloged; (b) IT infrastructures have been updated with appropriate barrier defenses; (c) employees exhibit compliance with
corporate security protocols governing the protection of proprietary information; and (d) security response initiatives
effectively respond to incidents associated with trade secret misappropriation (Forensicom, 2015; Symantec, 2015; Farhat,
McCarthy, & Raysman, 2011; Dodge, 2014; IMG Global Security, 2012; Trustwave Holdings, 2014). Based on common
cyber attack modalities, Trustwave Holdings (2014) recommends that organizations should stage simulated security
intrusions in order to evaluate contingency plans for responding to cyber breaches and trade secret misappropriation.
Outcomes from these simulated attacks and organizational responses should then be the basis for future modifications in
corporate security protocols (Trustwave Holdings, 2014; Farhat, McCarthy, & Rayman, 2011).
Security and cyber professionals have generally attempted to assess employee compliance to security protocols through
workplace monitoring/surveillance activities (Sass, 2014; Forensicom, 2015). Workplace monitoring/surveillance activities
are implemented by a diversity of technologies and support a variety of corporate security objectives (American Management
Association, 2014; Forensicom, 2015). These monitoring technologies include (a) proxy servers/firewall reports; (b)
corporate email monitoring; (c) computer forensics; (d) surveillance monitoring (screen captures); and (e) packet sniffers
(Forensicom, 2015). Proxy server and firewall reports are generally utilized to track internet use and web surfing activities
by employees. Excessive use of corporate IT infrastructure for these purposes has been cited as a reason for employee
termination by a variety of organizations (American Management Association, 2014). Corporate email monitoring, computer
forensics, computer monitoring and packet sniffers have often been utilized by organizations to investigate potential abuse of
IT resources by employees for purposes of supporting trade secret misappropriation/industrial espionage (Forensicom, 2015;
American Management Association, 2014). In 2007, the American Management Association (AMA) sought to discern the
use of these monitoring activities by corporations (American Management Association, 2014). Data from this study suggests
that 43% of surveyed organizations engage in the active monitoring of employee emails. The majority of these email
monitoring activities (73%) are accomplished through technological means. These technologies scan emails for sensitive
content or keywords which may be indicative of illicit activities (Forensicom, 2014). Additionally, 40% of these
organizations also utilized individuals to manually read and review emails of employees (American Management
Association, 2014). The AMA survey also reported significant use of technologies in order to monitor data transfer/storage
activities and workplace computer usage through keystroke logging activities. Forty five percent of organizations were found
to utilize these keystroke monitoring technologies. Tracking and analyzing data transfer/storage activities was initiated by
43% of organizations in the AMA sample (American Management Association, 2014). These latter types of monitoring
activities can be supported through organizational use of packet sniffers (Forensicom, 2014).
The AMA study of workplace monitoring also documented the extensive use of video and telecommunications surveillance
by organizations (American Management Association, 2014). In this study, 48% of organizations utilized video monitoring
as a means for deterring workplace theft, violence and sabotage. Telecommunications monitoring included both active and
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passive surveillance of the workforce. Forty five percent of survey respondents reported the cataloging of telephone numbers
and time spent by employees in phone conversations. A minority of organizations (16%) actually monitor/evaluate the
content of these conversations (American Management Association, 2014).
The Electronic Communications Privacy Act [ECPA] (1986) is the principal Federal statute governing the use of monitoring
activities by employers. In general, the ECPA prohibits interception and subsequent transmission of communications
through use of these monitoring technologies. However, businesses have been granted certain exceptions to these
prohibitions. These business exceptions to employee monitoring are waived if (1) there exists evidence of employee misuse
of communication technologies in the workplace; (2) employees have both consented to and been informed of active
workplace monitoring by their employer; and (3) monitoring activities occur within the context of an employees normal
task activities (ECPA, 1986; Ali v. Douglas Cable Communications, 1996). The courts have defined misuse of
communications technologies to include actions associated with the misappropriation or disclosure of organizational trade
secrets (Briggs v. American Filter Co., Inc., 1980). When these types of activities have occurred, the courts have ruled that
employees are not entitled to a reasonable expectation of privacy (U.S. v. Christman, 1974. Therefore, under these
circumstances, the monitoring of employee communications/data transfers may be permissible (U.S. v. Christman, 1974).
CONCLUSION
Cyber and conventional espionage techniques targeting trade secrets have significant financial and competitive consequences
for organizations (Sanger & Perlroth, 2015; Almeling, 2012; ASIS, 2007; Marsh, 2013; McAfee, 2014). Organizations
victimized by these assaults on their intellectual properties have been found to experience significant disruptions in business
plans/operations, loss of competitive advantage, erosion of customer/investor confidence and the costly remediation of
damages attributable to these illicit activities (Sentonas, 2014; Center for Strategic and International Studies, 2014).
Successful cyber attacks on corporate proprietary information have been found to cost firms an average of $2.7 million per
incident (PriceWatershouseCooppers, 2014). Aggregate yearly losses to American and multinational firms from cyber
attacks/espionage have been estimated at $300 billion and $1trillion respectively (Almeling, 2012; ASIS, 2007; Marsh,
2013).
While cyber attacks emanating from nation-state actors have received great publicity (Mamitt, 2014; Lemos, 2015),
numerous studies have concluded that the majority of cyber espionage breaches can be attributed to an organizations current
and former employees (PriceWatershouseCoopers, 2015; Cyber and Industrial Espionage Data Base, 2015; Shey, 2014).
The most prevalent cyber breach methodology utilized by these individuals involves their use of network credentials to
access corporate IT infrastructures and subsequently initiating downloads/transfers of proprietary information to benefit
external associates (CIEDB, 2015; Shey, 2014; Anderson, 2014; Symantec, 2015). These findings reinforce the conclusion
that human beings constitute the most significant threat to corporate security and the safeguarding of trade secrets (Boni,
1999; Winkler, 1997; Fitzpatrick & Burke, 2003). Thus, effective cyber security must begin with initiatives that target the
individuals which utilize these information technologies (Shey, 2014).
In response to these human challenges, organizations have sought to enhance their security infrastructures (Forensicom,
2014; Symatec, 2014; Farhat, McCarthy, & Raysman, 2011). These upgrades in security protocols are designed to
behaviorally reinforce both (a) the proper safeguarding of IT resources and information assets (Symantec, 2015; Shey, 2014;
Anderson, 2014); and (b) the fiduciary responsibility of employees to protect their employers trade secrets (Shey, 2014;
Restatement [Third] of Unfair Competition, 1995 ). These security efforts rely on (1) creating technological barriers to trade
secret misappropriation (Symantec, 2013; Forensicom, 2015; Trustwave Holdings, 2014); (2) developing enhanced security
protocols governing the access/management of information assets by employees and value chain partners (Boni, 1999;
Martinez de Andina, Tate, & Maddry, 2004) ; and (3) instituting security awareness training programs for all employees
having access to proprietary information (Condiff, 2009; Shey, 2014; Anderson, 2014; Pullen, 2013).
Finally, organizations must recognize that the effectiveness of these IT/information security initiatives depend on the
willingness of employees to simultaneously enact security protocols and proactively protect the information assets of their
employer (Shey, 2014; Restatement [Third] of Unfair Competition, 1995). Security professionals have sought to accomplish
these latter two objectives through employee surveillance and compliance monitoring activities (American Management
Association, 2014; Forensicom, 2015). These monitoring activities may constitute one of the most critical components of all
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cyber/information security programs (Forensicom, 2015). Since human beings are responsible for managing both proprietary
information and organizational responses to cyber breaches, they must be both familiar with and committed to the
enforcement of cyber security procedures (Shey, 2014). Therefore, in dealing with the human security variable,
organizations should be guided by the words of President Ronald Reagan --- Trust but Verify!!! (De Groote, 2011).
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The Future of Mobile Electronic Payments

Bradyn Jeffus, University of Central Arkansas
Steven Zeltmann, University of Central Arkansas
Ken Griffin, University of Central Arkansas
Alex Chen, University of Central Arkansas
EXECUTIVE SUMMARY
In this paper, we survey mobile payments technologies and what is motivating them. While magnetic strip technology is
being replaced, other technologies are vying for acceptance in the retail arena. There are pros and cons to each service, but
one format appears to be taking hold of the marketplace. We discuss different perspectives and conclude with our
perspective on the future of mobile electronic payments.
Keywords: Apple Pay, CurrentC, PayPass, NFC, Google Wallet, Merchant Perspective
INTRODUCTION
Magnetic stripe cards have been the dominant mobile payment method in the United States for quite some time. We
differentiate mobile electronic payments (historically credit cards) from electronic funds transfers (EFT) which are used to
move money and pay bills. Unlike ETFs, mobile electronic payment systems are primarily used at retail establishments, and
the magnetic stripe still rules these transactions, for now.
Newer technologies and new applications of one specific technology are challenging the magnetic stripe card. These include
Near-Field Communication (NFC), Code-Based, and Cloud-Based (Hayashi & Bradford, 2014). Apple Pay and Google
Wallet are examples of an NFC based system which require a compatible device and reader. CurrentC is an example of a
Code-Based system where the application scans a code to process the transaction. Merchants need a QR code scanner and
the correct software to enable Code-Based systems. Lastly, there are Cloud-Based systems like PayPal. Consumers only
need an account and merchants only need to install the correct software and interface to use Cloud-Based systems (Hayashi &
Bradford, 2014).
MOBILE ELECTRONIC PAYMENT OPTIONS
Magnetic Stripe Cards
Magnetic stripe cards have been in use for many years. Magnetic stripe cards combine ease of use with decently fast
transaction times. When a consumer walks up to a register to pay, they already know exactly what to do. Take their card out,
swipe it in the terminal and enter their pin. Consumers have been doing it for so long that any other method seems foreign.
While magnetic stripe cards do provide reasonable ease of use and have been the payment norm for over fifty years, there are
huge weaknesses to the payment method.
Security is the largest concern. The physical card itself is vulnerable to theft and duplication. Some thieves are able to
duplicate the card at the point of sale terminal. Since the card is physical and can be duplicated easily, misplacing the card
can be a serious problem. Another issue is that transaction information is seen by the parties involved. Account numbers,
description of items, and other personal information is transmitted. Magnetic stripe cards might be easy and convenient, but
the glaring security issues raise huge concerns (Chase, 2014).
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Smart Cards
Smart cards are magnetic stripe cards with additional capabilities embedded in the card. They function much like magnetic
stripe cards except there is a small electronic chip embedded inside the card . Since the transaction is processed through the
chip there is no need for consumers to swipe a smart card. Consumers simply insert their card into a reader, much like an
ATM reader. The reader reads the information stored on the chip and completes the transaction. Because smart cards do not
depend on the magnetic strip found on older cards, it is much more difficult to duplicate the card. Smart cards are slowly
replacing traditional magnetic stripe cards today with many banks already sending out smart cards as replacements to
magnetic stripe cards. One disadvantage is that smart cards require additional capability at the merchant in the form of an
upgraded point of sale terminal. Since smart cards are not swiped, current terminals for magnetic cards will not work with
smart cards unless the smart card also has a magnetic stripe (Chase, 2014).
No Card and Pay at Launch
Both Google Wallet and Apple Pay utilize near field communication (NFC) technology. These systems utilize the wireless
data interchange that NFC provides to transmit payment data and complete transactions. Google Wallet was released in 2011
and had Citi, MasterCard, Sprint, First Data, Visa, American Express, and Discover all on board (Baig, 2011). It is tied to the
PayPass network built by MasterCard which enables consumers to tap and pay at any of the 140,000 PayPass locations
around the United States. Google Wallet uses much of the same technology as Apple Pay, however, Apple Pay is considered
to be more secure since credit card specific information never leaves the Apple device (Santus, 2014). Another problem with
Wallet is that cards loaded into the wallet are not actually used. When a transaction occurs within Wallet, a pre-paid card is
loaded with funds from the consumers actual card and then used to pay. This practice is a workaround to certain restrictions
and ends up causing difficulty in certain situations. Who handles chargebacks, rewards, and charges?
The outlook for Wallet was huge when it was launched. Predictions that it would be the next big advancement in payments
were abundant, but something just did not click and Wallet is still seen as a secondary payment method rather than a primary
one (Baig, 2011).
Recently, a new competitor, CurrentC, has surfaced. It is being developed by many popular retailers such as BestBuy and
Wal-Mart. After the announcement of Apple Pay, Wal-Mart and Best Buy both announced that customers would not be able
to use Pay at their stores (D'Orazio, 2014). Their announcement aimed to support CurrentC in place of Apple Pay. CurrentC
is a smart phone application that completely cuts out banks as middlemen; transaction information goes directly to retailers.
Retailers want more information on their customers and buying habits as well as wanting to cut out the transaction fees when
banks are involved (Yarow, 2014). It works by opening an app and scanning a QR code using the camera.
There are quite a few issues with CurrentC. Transaction information is seen by retailers and there is no significant security
measure. After Pay was launched, several stores including Rite Aid disabled Pay in support for CurrentC. However, in a
series of rather unfortunate events, CurrentC was breached and several email addresses were stolen. This occurred not long
after Wal-Mart announced that it was not supporting Pay because Ultimately, what matters is that consumers have a
payment option that is widely accepted, secure, and developed with their best interests in mind (Yarow, 2014).
With Apple Pay, Google Wallet, and CurrentC there is no physical card to lose, but depending on the application and
method, some applications might be able to see the card number and transaction information. All potentially provide
convenience by combining two everyday objects that are used by consumers. Consumers simply take their phone out to pay
instead of having to use another form of payment. Convenience is a significant motivating factor in support of using smart
phones as a method of payment, and is a main driving force for change.
On September 9, 2014, Apple introduced Apple Pay alongside its iPhone and iWatch announcement. Apple Pay, or Pay for
short, is a system much like Google Wallet in which payments are processed wirelessly by holding a device embedded with
an NFC chip over an NFC enabled terminal. While the concept is not new to the industry, it is new to Apple.
At its core, Pay is similar to Google Wallet, which was released in 2011. Consumers simply enter their credit card
information into the device where it is stored for future use. When a transaction occurs, all the consumer has to do is hold
their phone over a compatible terminal and the payment is processed quickly. The concept is simple and easy to use, but
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there is much more going on behind the scenes to ensure the transaction information is kept safe from intruders and the
payment is processed correctly.
Pay is unique to Apple and therefore will only work with the recently released iPhone 6 and iWatch. The process starts with
entering a compatible credit card into the Passbook application. Users can add a card already on file with the iTunes store or
enter a new one through the application by text fields, or simply take a photograph of the card. After the card is stored in
Passbook, it is able to be used with Pay.
Physically, the card information is stored on a tiny chip inside the device called the Secure Element
(NearFieldCommunication, 2014). The Secure Element stores a unique Device Account Number which is tied to the specific
credit card entered into the device. The Device Account Number acts like a token or surrogate that represents the card
number. The token that has no use outside the specific transaction, so listening attacks are useless (Santus, 2014). The
Account Number inside the Secure Element is encrypted and never accessed by any external entity. Not even Apple is able
to look at individual Account Numbers (NearFieldCommunication, 2014). In addition to not being able to see individual
Account Numbers, Apple is not able to look at individual transactions. The most recent transactions are recorded in
Passbook, but they never are seen outside of the application.
The Apple Pay payment process from start to finish is quite simple and fluid. When a consumer is at a sale terminal
equipped with NFC technology they have the option of paying with a magnetic-strip credit card, a smart card, or using Pay.
Once the device is held over the terminal and receives the information, a biometric fingerprint is required to complete the
transaction, which gives Pay an added level of security. If the transaction is successful, the device delivers a quiet beep and
subtle vibration to let the user know the payment was processed (NearFieldCommunication, 2014).
As far as integration into current merchant and business infrastructure, Pay is backed by Visa, MasterCard, and American
Express as well as many popular banks such as Bank of America and Chase. At the time of launch, Pay will be able to be
used at over 220,000 stores with more being added (NearFieldCommunication, 2014).
It appears that card issuers (not the cardholder) will pay Apple a 0.15% fee on every transaction handled using Pay. There
are no hidden fees for any other party. The fee can be looked at as Apple being token-assurance provide. Basically the fee
is Apples way of showing that their service is secure, and that they will back it up with utmost support (Daly, 2014).
MOBILE ELECTRONIC PAYMENTS FROM THE MERCHANT PERSPECTIVE
Fumiko Hayashi and Terri Bradford researched the merchant side of mobile electronic payments. Their merchant survey
consisted of five main attributes that merchants feel are mission-critical including customer shopping experience, cost,
customer data control, security, and fragmented markets (Hayashi & Bradford, 2014).
Overall, they found that the customer shopping experience was perceived as the most important attribute of a mobile
payment system. They discuss that mobile payments have the capability to enhance and compliment a consumers shopping
experience in many ways. These include applications can help consumers find stores and products, and give users deals and
coupons. Advertisements are also a huge plus to mobile commerce and payment applications. Every single merchant viewed
enhancement of customer shopping experience as a primary benefit of mobile payments (Hayashi and Bradford, 2014).
Cost was the second most cited attribute. The processing cost of NFC payments is higher than code- or cloud- based
methods. NFC payments are linked to payment cards directly tied to banks, while code- and cloud- based payment methods
use a pre-funded method. Because mobile payments do not require a physical card, transactions have the potential to be
labeled card-not-present transactions, which incur a higher fee than transactions labeled card-present. However, mobile
payments have the potential to reduce fraud because of the higher security as well as potentially reducing processing fees that
merchants pay to other parties. Because mobile payments can be quicker than card-based transactions, merchants are able to
process more payments and get customers in and out more quickly. The most important factor in cost is the investment
needed to support a payment method. For some businesses, investing in NFC readers might be too costly, and for other
companies, investing in the technology might backfire because of the fragmented market (Hayashi and Bradford, 2014).
Customer data control was the third most cited factor. Who owns the customer data collected, such as transaction histories
and shopping habits as well as personal information? Having access to all the data enables merchants to market to the best of
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their ability, but there is the concern of who exactly owns the data captured by third-party payment providers. The concern
leads to potential misuse of data and privacy (Hayashi & Bradford, 2014).
Security was the next most cited factor. Security is a major concern for every party involved in a transaction. Consumers do
not want to lose their money, and merchants do not want to lose customer information and loyalty. Mobile payments have
the potential to reduce fraud at the sale terminal compared to magnetic-stripe cards. Mobile payments are protected with
passwords and encryption. In the case of Apple Pay, a biometric fingerprint is required to complete the transaction. Another
major concern is transaction liability. Currently, fraudulent card-present transaction losses are borne by card issuers. If
mobile payment transactions are treated as card-not-present transactions, then the liability has the potential to shift (Hayashi
& Bradford, 2014).
Hayashi and Bradford concluded that merchants generally view code- and cloud- based payment methods as providing more
benefits than NFC in 2014. Mobile payment methods that gain wide adoption will be the methods that easily integrate with
merchants. Standards for security and data ownership need to be established. Consumers must trust the payment method
before they will adopt it.
THE FUTURE OF MOBILE ELECTRONIC PAYMENTS
With new technologies such as tokens and hidden transaction information, the mobile electronic payments market continues
to shift. It appears that the token system that Google Wallet and Pay use is the future of mobile electronic payments. There
will be little motivation to use cards if vital information is seen by third parties. We are seeing a shift from payment method
providers to the idea of a security guarantor like Apple Pay. Apple charges their 0.15% fee as a way to guarantee the
transaction is safe and completed correctly.
Pay has the potential to solve many of the concerns and issues associated with magnetic stripe cards and similar payment
methods. One of the main arguments against NFC technology is the investment required by consumers and merchants.
Consumers have no problem adopting the new technology when it is built into the phone they purchase. Apple has over 800
million ITunes accounts and each one of them has a credit card attached to them. (Krause, 2014). If consumers already have
the technology in hand, and the right account to go along with it, then the incentive to use Pay is much greater. It is left up to
the merchants to offer the correct equipment to process NFC payments.
Pay was released at an opportune time. In the coming year the United States is making a huge change from magnetic-stripe
cards to EMV chip based cards (Gara, 2014). By October 2015, merchants and retailers that have not upgraded to the new
EMV payment standard will be held liable for fraudulent transactions. This liability will motivate many merchants and
retailers to upgrade their point of sale terminals to the new standard. What does this have to do with NFC payments? EMV
POS terminals have NFC technology built into them (Gara, 2014). Because merchants and retailers will have a huge
incentive to upgrade their equipment or face liabilities, most POS terminals across the United States will have NFC
capability. This eliminates a primary impediment to the adoption of Apple Pay and Google Wallet.
The security features of Pay are unrivaled. Pay uses the secure element like Google Wallet, but the chip is inside the
physical device instead of on the Internet. To complete a transaction, an authorized fingerprint is needed as well. Data
control is a big factor in the realm of payments. Who owns what? With Pay, Apple never sees the transaction information or
the card information and neither does the retailer (NearFieldCommunication, 2014). The combination of the Unique Device
Account Number and the security token inside the secure element allow the information to be encrypted and hidden from
prying eyes.
WHERE IS PAY NOW?
Since Pay was launched, quite a bit has changed. Pay has expanded its card support and added 24 more participating issuers
(Rossignol, 2015). Pay now has nearly has 250 issuers nationwide with more planning to support Pay. In the fall, Discover
plans to support pay which means that all major US card companies will be supported (Kastrenakes, 2015).
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Best Buy is the first merchant to break exclusive ties with Wal-Mart and CurrentC. It announced that Pay will be accepted
in U.S. stores later this year (Del Rey, 2015). Best Buy says it still supports CurrentC, but also that it supports Pay.
CONCLUSION
Considering Apples huge customer base, we expect that Apple Pay has a real chance of disrupting the mobile electronic
payments market. Apple Pay is easy to use, and it is more secure than any other competing mobile electronic payments
method. This alone would tend to motivate the use of Apple Pay. In addition, new POS terminals should be widely in use to
support smart credit cards, and those terminals will likely also support NFC-based payment systems like Google Wallet and
Apple Pay.
Apple appears to be adding an additional service to the market by serving as a security guarantor. This is a real innovation
to the mobile electronic payments market. Data stolen anywhere in the transaction stream appears to be worthless to a thief.
And a stolen iPhone will not allow a payment without an authorized finger print.
We have highlighted merchants main concerns and what they believe is important in the payment realm as well as some
hurdles Pay needs to cross in order to be successful according to the Hayashi and Bradford. Pay has eliminated or made most
concerns a nonissue especially since all businesses will be required to have NFC enabled terminals at the end of the year.
We believe that Apple is on the right track with Apple Pay, and we see Pay as a significant improvement over other mobile
electronic payment methods available today.
REFERENCES
Aspan, M. (September 11, 2014). The case against Apple Pay. Inc. Magazine. Retrieved Oct. 3, 2015, from
www.inc.com/maria-aspan/the-case-against-apple-pay.html.
Chase. (Nov. 24, 2014. Your wallet. without the wallet. EMV Chip Card Technology FAQs. Retrieved May 13, 2015, from
https://www.chasepaymentech.com/faq_emv_chip_card_technology.html.
Daly, J. (Sept. 11, 2014). Apple Pay: no charge for merchants, but transaction-security fees for issuers. Retrieved Nov. 3,
2014, from http://digitaltransactions.net/news/story/Apple-Pay_-No-Charge-for-Merchants_-But-Transaction-Security-
Fees-for-Issuers.
Del Rey, J. (April 28, 2015). Apple Pay coming to Best Buy stores as retailer breaks ranks from Walmart-led rival. Retrieved
May 13, 2015, from http://www.currenscene.com/currency-news/us-news/119-apple-pay-coming-to-best-buy-stores-as-
retailer-breaks-ranks-from-walmart-led-rival.
D'Orazio, D. (Oct. 25, 2014). Retailers are disabling NFC readers to shut out Apple Pay. Retrieved Nov. 15, 2015, from
http://www.theverge.com/2014/10/25/7069863/retailers-are-disabling-nfc-readers-to-shut-out-apple-pay
Baig, E. C. (Sept. 19, 2011). Google Wallet puts mobile payments on the radar. USA Today 2011. Academic Search Premier.
Retrieved Sept. 25, 2014, from http://usatoday30.usatoday.com/MONEY/usaedition/2011-09-20-Google-wallet-
_ST_U.htm.
Hayashi, F., & Bradford, T. (Sept. 2014). Mobile payments: merchants' perspectives. Retrieved Sept. 21, 2015, from
https://www.questia.com/library/journal/1P3-3415637871/mobile-payments-merchants-perspectives.
Gara, T. (Feb. 6, 2014). October 2015: the end of the swipe-and-sign credit card. Retrieved Oct. 2, 2014, from
http://blogs.wsj.com/corporate-intelligence/2014/02/06/october-2015-the-end-of-the-swipe-and-sign-credit-card/
Kastrenakes, J. (April 27, 2015). Apple Pay will support all major us credit cards when Discover joins this fall. Retrieved
May13, 2015, from http://www.theverge.com/2015/4/27/8502635/discover-apple-pay-joining-fall-2015.
Krause, R. (Sept. 10, 2014). IPhone tap-to-pay rings up cool factor Apple enters mobile payments Apple Pay feature teams
with credit card leaders, takes on PayPal, Google. Investor's Business Daily.
NearFieldCommunication. (September 25, 2014). Security concerns with NFC technology. Retrieved October 3, 2015, from
http://www.nearfieldcommunication.org/
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Rossignol, J. (May 5, 2015). Apple Pay gains 24 more participating issuers in United States. Retrieved May 13, 2015, from
http://www.macrumors.com/2015/05/05/apple-pay-24-participating-issuers-usa/
Santus, R. (Oct. 24, 2014). Why Apple Pay is the most secure payment platform on the planet. Retrieved. Oct. 2015, from
http://mashable.com/2014/10/23/apple-pay-is-more-secure-than-your-credit-and-debit-cards/#7uN4PQoU_Skf
Yarow, J. (Oct. 29, 2014). Wal-Mart's answer to Apple Pay has already been hacked. Retrieved Oct. 2014, from
http://www.businessinsider.com/currentc-hacked-2014-10.
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Analysis of Global Academic Modeling of University Systems

Suzan S. Parhizgar, Hemet Hospital
Kamal Dean Parhizgar, Texas A& M International University
EXECUTIVE SUMMARY
Globally, higher educational systems have been viewed as a challenge of mankind to advance peoples curiosities in
discovering natural mysteries of existence, survival and the extension of life expectancy. This article has focused on
analytical deliberations on general philosophical models of strategic management for higher educational systems and
emphasizes that strategies are not given but results from the decision-making processes and operational outcomes of
sociocultural and politico-economic functions of a nation. The purpose of this article is to examine syllogistic means and
ends of three models of higher educational systems: (1) Strategic System Design, (2) Strategic Policy Design and (3)
Strategic Qualitative Performance Design.
Keywords: Higher Education, Academic Modeling, Decision-Making Process
INTRODUCTION
Historically, early humans were ignorant not stupid, but their potential curiosity to experience new discoveries, not their
ignorance, were their most important characteristics. There are two extreme views concerning humans historical
intelligence: (1) Aristotelianism and (2) Darwinism. Aristotle believed that humans by nature have been intelligent creatures
because they simply exercise reasoning. To be rational is to be human. The life of each creature manifests what it is by
nature. Darwin, however, viewed intelligence as a rather late product of evolution, developing gradually to reach its most
potent form in humans. Intelligence, like all other biological functions, came into existence as a tool in the struggle for
existence. This is known as adaptation. The term adaptation means to discover innovative ideas through thinking critically.
How did our ancestors first discover what they should know and then what they should teach and learn about what they
reasonably and logically should know? The reason for being reasonable or logical is quite unlike Aristotles view that reason
should be exercised because it is human to exercise it (Weber, 1960, p. 252). Therefore, sophisticated searching for the
discovery of the truth and teaching the truth laid foundation for higher learning endeavor. Dewey (1939) was the first
philosopher of education who made systemic use of Darwins ideas. Dewey looked upon intelligence as one of the humans
chief tools for securing adaptation. Adaptation means to search to know general characteristics of the environment; then
make changes in self and the environment and finally to implement intelligent decisions and actions in order to survive.
Also, Dewey did not forget the endless sociocultural problems faced by humans that go far beyond the mere problem of
biological survival.
Historically, when humans established their own groups identity, they initiated philosophical principles in self-instruction as
the earliest system of adult education. The youths were inquisitive and adults began to preserve historical cultural philosophy
of life in order to be transferred to the oncoming generations. They created philosophical theories as crossroads through the
realm of intellectual reflections. They created philosophies of education as the bedrock in which branches of knowledge have
emerged.
To analyze foundational philosophies of higher educational systems requires strategic attention to be paid to the general
characteristics of colleges and universities. A college or university needs to teach students how to learn discovered
knowledge. It should be indicated that knowledge is not static. Knowledge is dynamic; it is subject to production of
knowledge and completing knowledge. Professors along their teaching responsibilities should conduct research and
institutional incumbents should provide services to the community in order to progress and advance their citizens cognitive
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perceptions and their prospective valuable lifestyles. It is obvious that there is no business for colleges and universities if
there are no valuable thoughts. The concept of creating valuable thoughts and behavior is concerned with the ways in which a
system has established principles of beliefs and expectations to guide decision makers and to know how to interact with
constituencies over an extended period of time. For clarity in our strategic analysis, we pose three key questions as follows:
What are the basic philosophical fundamental beliefs and operational practices concerning relationships among academic
stakeholders namely students, faculty members, administrators, board members of trustees or regents, professional and
accreditation associations, governmental regulatory agencies, and families at large? As we will find out, intrinsic-institutional
and extrinsic-societal relations commonly take mixed forms of cooperative and conflictive end results in colleges and
universities. Cooperation among academicians and politico-economical authorities in a nation can synergize their academic
programs and mitigates conflicting result in hostile confrontations among interest groups and degrades academic
performance. Just as we are concerned with understanding why cooperation and conflicts are common among colleges and
universities constituencies and external societal authorities, we will find out how philosophies of a system design, policy
design and performance design models can create harmony or conflicts in a nation.
How can governmental authorities with their political aspirations dominate regulate and provide funding for colleges and
universities and convert them into effective political arms to rule over people? Dominated governmental supported colleges
and universities appoint executives as system chancellors and/or campus presidents based on three models: (1) to be
academically qualified in the specialized field of university administration AQ based upon trial and wisdom, (2) to be
qualified in any discipline and practical administrative experience PEQ based on experience, (3) to be politically qualified
and supported by interest groups PQ, based on trial and catastrophes, and (4) to be holistically qualified HQ, based
upon trial and popularity by the integration of AQ, PEQ, and HQ to influence academic environments for the benefit of
community of scholars and socio-political aspirations. What governmental appointees attempt to do is to create effective
environments for political figures to support them in order to keep them in their offices. In return, college or university
presidents with their discretionary authorities employ those subordinates who promote their ideas and socio-political
ideologies. In fact, such a social pressure forces faculty members to integrate political ideologies within the vision and
mission of a college or university and to some extent to avoid professionalism. Sometimes, faculty members on the basis of
their professional academic responsibilities resent administrators strategies and may organize themselves into pressure
groups to force presidents and/or chancellors to resign (by the vote of no-confidence) and/or to be removed or vice versa.
Nevertheless, strategic management planning can diffuse interest groups hostility and create harmony among academicians
and governmental authorities.
What are the long-range effective academic outcomes in a multicultural society? We need to define and describe general
characteristics of different types of philosophical modeling of strategic management systems of higher education. When a
higher educational system builds up its philosophical institutional infrastructure, they need to examine certain philosophical
foundations.
The strategic management models that have been analyzed in this paper have multiple phases and resolutions. They involve
several interrelated and interdependent consequential phases. First, the institutions of higher learning should carry out a
careful analysis of their historical and current environmental information. Second, they should precisely define traditional
aspirations of academic freedom, free speech and civil liberty within both concepts of critical thinking and thinking critically.
Third, they should rationalize strategic formulations concerning defining boundaries of academic freedom, free speech and
civil liberty. Each of the above strategic elements and their characteristics in both academic and operational decision-making
processes possesses its own norms that will be explained in more depth in the strategic modeling of this article.
ACADEMIC MODELING OF UNIVERSITIES
In recent years, it has become commonplace for one discipline to borrow terminology and models from another. Mechanical,
biological, and ecological frameworks have cross-fertilized scientific endeavors in most of the social sciences. The concept of
general strategic management model that now well established in the business world, has similarly spanned and germinated
across disciplines such as political science, organizational theory; military sciences; and higher educational policy and
planning systems. Researchers were using strategic management models long before the term model became a key word in
the management scientists vocabulary.
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The strategic management modeling can best be studied and applied using models. Every model represents some kind of
priorities of achievable objectives. Some are political-economic oriented, while others are professional. Nevertheless, each
selected model without knowing environmental forces does not guarantee success, but it does represent a clear and practical
approach for conceptualizing, formulating, implementing and evaluating strategies. The models, we are referring to in this
article are the highlights of higher educational strategic management philosophies along with their existing aspirations,
visions, missions, objectives and strategies. The matter of developing models for academic administration is not a simple one.
There are too many complexities within these models. Higher educational systems today are faced with tremendous changes
and revisions of policies and procedures that make strategic managerial operations more difficult and more complex than ever
before.
As stated before, there is no doubt that higher educational systems around the world are facing a crisis of governance and the
state of future financial uncertainty. Some of the systems are student discontent with college and university priorities,
unresponsive professors, non-relevant curricula, rigid instructional and research policies and other facets of institutional life.
Taken together, these symptoms signal that higher educational systems must find some new scientific directions for
determining the future of academic and administrative operational activities. Universities vary in the processing of the use of
strategic management models. Many of the concepts and strategic management models that deal with long-range planning
have been developed and used successfully in the United States and abroad.
For these analytical purposes, the selection of three academic models in this article that have been developed at least will
serve as the beginning point in analyzing higher educational strategic management systems. Although all three models do not
account for successful decisions and actions, which are important factors in administrative styles, it is useful to study
scientifically a gross assessment of strategic decision-making process for their future actions. Models of strategic
management in higher educational institutions typically have been developed by research experiences and intended either
from managerial operation or educational use. Many higher educational administrators spend valuable times trying to solve
the wrong problems or non-existing problems. They often make their strategic choices based on misinformation or faulty
assumptions about how their systems work. One of the most critical activities of top administrators is strategic decision-
making function. A number of prominent researchers have emphasized the importance of models. The strategy literature
typically does not differentiate between the models and their assumptions. The models have not been subjective to which
their assumptions are warranted and whether one yielded more satisfactory systems outcomes than the other. In an effort to
begin with addressing this deficiency, we should identify that the system and the class relationships are not the same as the
ones that are connected with outcomes that should be called effective productive roles of higher educational systems.
PRINCIPLES OF A UNIVERSITYS ACADEMIC ASPIRATIONS
Traditionally, higher educational systems have three main functions, or more accurately three levels of societys functional
orientations: (1) teaching oriented universities, (2) research oriented universities and (3) community academic service
oriented universities. All are serving global citizens according to the following objectives:
They are sub-societal systems that are occupying some portions of political ideological endeavor.
They process societal systems of thoughts.
They utilize certain socioeconomic resources with definite intellectual objectives.
For studying higher educational systems and managerial styles, we must start with four major dimensional views as follows:
Reviewing a societys sociocultural beliefs, political-legal ideologies, peoples dynamic functional interactions,
professional-occupational interrelations, historical performance and innovative scientific capabilities.
Analyzing social orientations and class relationship between triangles of politico-economic power role players:
governmental regulatory agencies, colleges and universities and community.
Examining the decisions and the class relationships that are converted into higher educational strategies and societal
changes.
Reaching down to the levels of the systems and their sub-systems to assess their institutional outcomes
effectiveness.
It should be noted that, in colleges and universities, there are five major platforms that are viewed as foundations of
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academic influential aspirations: (1) political ideologies, (2) cultural beliefs, (3) religious faiths, (4) demographic trends and
(5) professional and occupational academic values. All these five major forces influence both short and long range of
strategic decision making processes and operations for higher educational systems.
THREE STRATEGIC MODELS OF UNIVERSITY SYSTEMS
In the three models that have been analyzed through this article, the debate is not on higher educational processes, but rather
changing the reality of the relationships between administrative world of higher education and societys sociopolitical
aspirations at large. Also, the debate is revealing in its class relationships, its orientation and its sociopolitical outcome
spectrum. First, in the following pages we will analyze the Strategic System Design model, second we will describe the
Strategic Policy Design model and third we will analyze the Strategic Qualitative Performance Design model.
I. THE STRATEGIC SYSTEM DESIGN MODEL
A system is defined as an aggregation or assemblage of objects or institutions united by some forms of regular interactions or
interdependences. In a higher educational environment, a system is found a group of diverse colleges and universities so
combined by general rules and regulations to form an integrated whole unity to function, operate or move in unified
operations and in obedience to some form of comprehension, command, control, communication, coordination, cooperation,
and collaboration seven Cs. In the time, when societal institutions are being challenged more widely than in any period of
history, including colleges and universities, it is wise to step aside from the perspective of historical events and view it from
the futuristic lenses of change and change agents. We need to analyze higher educational systems from two different cultural
views: (1) functional and (2) utopian. From the standpoint of clever functional views, university systems have been designed
carefully in which some truth is sometimes interwoven to justify rationally academic freedom on paper. Such a factual claim
exists by authorities to bring organizational constituencies within the operation of the rule of law. This is an idealistic cultural
value system that has been claimed by all politico-economic doctrines among nations. From the standpoint of imagery
utopian views, the utopia as a culture to be more desirable than the one in which a system claims for its future. Strategically,
the college or university aspiration, vision and mission statements declare such a utopian objective. Some philosophers like
Anatolia France believed that: Without the Utopias of other times men would still live in caves, miserable and naked Out
of generous dreams come beneficial realities. Utopia is the principle of all progress. From the standpoint of imagery utopian
views, the utopia as a culture to be more desirable than the one in which a system claims for its future. Strategically, the
college or university vision-mission statements declare such a utopian objective.
The mission of academic institutions is to deal with both fictional and utopian unknown phenomena. Know that humans
have discovered so much unknown, they must learn about the complex nature of humans and their relationships, that greatest
reservoir of unknowns, so that they can predict and control their future. A system design model of higher education is viewed
as integrative united institutions of higher learning and research centers with a unified form of governance to be influenced
mainly by professional, political, demographical, cultural, economic and historical forces.
The focal objectives of a higher educational system are enhancing students knowledge. The main influential factors within
this model are the notions of comprehension, command, control, communication, cooperation, coordination and collaboration
among incumbents to mobilize colleges and universities constituencies into a large centralized unit system in order to fulfill
national ideological aspirations. This kind of centralized administrative authorities handles all general administrative policies
concerning financial sponsorship of institutions of higher education, the number and location of affiliated systems
institutions, the academic aspiration, vision, mission and objectives of the systems colleges and universities, the systems
enrollment size and retention rates of students, the standards of access and quality of academic performance and the
establishment and implementation of tenure, tenure track and part-time faculty members as matters to be resolved by the
system board of regents or trustees. For example, as Millett and his associates (1984, p. 6) reported: The proportion of
young people who were motivated, economically able, and intellectually competent to enroll in higher education also
increased after World War II. In 1940 about 47 percent of (American) eighteen-year-olds graduated from high school and
about 13 percent enrolled in college. In 1980, however, about 75 percent of eighteen-year-olds graduated from high school
and some 40 percent enrolled in colleges.
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According to the SSD model, affiliated colleges and universities are structured according to political-professional ideologies.
Colleges and universities operate under direct influential political authorities; judiciary, legislative and executive bodies that
are shielded by constitutional status from direct intervention by elected authorities in democratic nations or by appointed
politicians under autocratic nations. In addition, the boards of regents and/or in developing countries the ministries of higher
education play the fourth source of political power in a society. Faculty members feel a semi-sense of professionalism
concerning academic freedom and organize themselves through mobilization of members in associations and unionization to
defend academic freedom and free speech.
In the SSD model, the system chancellors and the Secretary of the Department of Education or ministers of higher education
along with campus presidents play mediatory roles on behalf of bureaucratic authorities (government and boards of
regents/trustees), faculty members (academic unions or associations) and students governance associations. Both
administrators and faculty union representatives negotiate the terms of employment and mutually agree on signing a
collective bargaining contract. All four key work financial derivatives of the colleges and universities including program
quality in teaching, research, academic community services and international academic contributions are directed and
managed by centralized administrative authorities. Despite that each institution may or may not possess a board of
governance, the management system is highly bureaucratic.
Usually, the system operates without significant micro-environmental modifications. The federal or the state coordinating
boards of higher education and departments or ministries of higher education are responsible for strategic planning and
coordinating academic affairs of all dominated institutions. For example, Kerr (1992, p.54) indicated: The California System,
according to one of its surviving founders, was developed through 1960 master plan as a treaty among the constituent parts of
higher education . . . that would, at the same time, be accepted to the governor and legislature.
Generally, public funded colleges and universities in California are organized into three major systems: The University of
California System as a research oriented system, The California State University System as teaching oriented institutions and
the California Community Colleges as local peoples academic entrepreneurial enhancement oriented organizations. Also,
academic affairs of all dominated institutions as higher educational systems are subject to the collective bargaining contracts,
and shared governance inhibits better coordination by allowing professionals to determine, without much involvement from
outsiders, the appropriate responses to public perceptions of state needs (Richardson et al., 1999, p. 174). Differences in the
way the three major systems operate are the result of variances in academic policy and strategic planning environments rather
than in structural dimensions.
II. THE STRATEGIC POLICY DESIGN MODEL
The distribution of power between a countrys authorities at federal, state and local and higher educational systems and
institutions reflects the interests articulation among decision-makers and executives concerning public policies and policy
priorities. In order to first understand the infrastructure of political power diffusion in the public sector, we need to analyze
the structural mechanism of power in a nation. Parhizgar (2002, p. 74) indicated that the socio-cultural and political-
economical doctrine in a nation include an elaborated system of concepts, spelling out the entire structure of societys means
and ends without specified institutional arrangements. Sometimes, in analyzing the social reality of a nations socio-political
doctrine, it becomes clearer by stepping back from the historical concrete images of day-to-day activities and events and by
analyzing the large mechanical context of a political doctrine. Within the contextual boundaries of sociopolitical
infrastructure in a nation we need to take into account the term of stakeholders.
Higher educational systems and their affiliated institutions are embedded in and interacted with multiple changing local,
national, and global environmental forces. At all three levels of environmental contexts, colleges and universities are
increasingly moving toward global dynamically interrelated interactions among local, national and global policies,
procedures and performances. Within the contextual boundary of knowledge, we must think globally before acting locally in
any academic deliberation. The macro-level of environmental forces illustrate how stakeholders affect the performance and
operation of higher educational systems. The framework can be used as a strategic starting point to identify trends, issues,
opportunities and threats.
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How do higher educational systems and their affiliated campuses respond to various resources when societal issues and
dilemmas from one affect others? The stakeholders as policyholders are ways of understanding the effects of environmental
forces and groups on specific issues that affect students, faculty members, and administration. The stakeholder approach
begins with specific questions by enabling students, faculty members and administrative groups to articulate collaboration,
coordination and cooperation with a win-win strategy based on the following factors: (1) identifying sources of power and
influential forces. (2) Identifying and prioritizing issues and dilemmas. (3) Identifying the influential positions of societal
policyholders. (4) Mapping who are their stakeholders. (5) Identifying their stakes, interest, and powerhouse resources. (6)
Showing who are the members of policymakers with what level of political and professional capabilities? (7) Showing what
stakeholders positions are concerning issues and dilemmas. (8) Developing a reciprocal collaborative strategy from a higher
ground perspective to initiate interactive debates, discussions and dialogues in order to reach to the desired closure for all
parties.
III. THE STRATEGIC QUALITATIVE ENHANCEMENT MODEL
Today, many colleges and universities design their strategic decision making processes at the level of qualitative
enhancement performance and availability of adequate resources. Quality is a universal objective. At the same time, it is one
of the least understood concepts. Everyone desires it, but most of the time they dont know what is it. In the field of academic
administration, qualitative enhancement performance (QEP) is a philosophy and a set of scientific methodological tools that
enable colleges and universities to pursue continuous systematic improvement in rendering academic services to students.
One aspect of the qualitative enhancement performance is related to the efficacy of teaching and learning processes. Another
is related to the innovative research and publications. Also, quality is the rhetoric philosophy of being excellent. The battle
may be about the primacy of effective curricula and the desire of learners to enhance their performances. Seymour (1995, p.
50) expressed its views concerning qualitative enhancement performance of higher educational systems as follows: (1) who
are our students and why do they come here? (2) What should a graduate be like? (3) How do students change and why? (4)
How do students talk about their own learning? (5) Is there a better way to organize the curricula? (6) How could we do it
better? Qualitative enhancement performance in teaching and learning endeavor has been viewed as an integrated assessment
between instructors and learners concerning means (the process of teaching) and ends (the process of learning). The deriving
forces behind QEP concerning students perceptions are as follows: (1) what do I want to learn? (2) What do I want to
achieve by learning? (3) How should my learning efforts be evaluated? (4) How should I manage my time? (5) How much
efforts need to achieve the highest level of learning? (6) How can I organize my study habit to achieve in depth learning?
According to the QEP model, all processes of teaching and learning compose of four major dimensions: (1) institutional
enhancement, (2) resources enhancement, (3) performance enhancement and (4) quality enhancement. The outcome
assessment of QEP is creating public trust.
CONCLUSION
In application of strategic management phases, strategists should design their strategies in such a way to perceive how to
utilize the flow of historical, current and future forecasting data for comprehensive long range planning. The strategic models
of higher educational management systems tell us what is and is not important in a college and/or university management
planning and performance. For studying higher educational systems and managerial styles, we must start with six major
dimensional views: (1) reviewing a societys sociocultural beliefs, (2) political-legal ideologies, (3) dynamic functional
interactions, (4) professional-occupational interrelations, (5) historical performance and (6) innovative scientific capabilities.
REFERENCES
Dewey, J. (1939). Freedom and culture. New York: Putman.

Gorry, G. A. (1971). The development of managerial models. Sloan Management Review, 12(2), 1-15.
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Kerr, C. (1992). The California master plan for higher education: an ex ante view. The OECD, the master plan and the
California dream: a Berkeley conversation. In S. Rothblatt (Ed.), Berkeley California: regents of the University of California.
Millett, J. D., Harcleroad, F. F., Mautz, R. B., McKinney, T. H., Wood, R. C., & Muringhan, M. (1984). Conflict in higher
education: state government coordination versus institutional independence. San Francisco, CA: Jossey-Bass Publishers.
Parhizgar, K. D. (2002). Multicultural behavior and global business environments. New York: Haworth Press.
Richardson, Jr., R. C. Bracco, K. R., Callan, P. M., & Finney, J. E. (1999). Designing state higher education systems for a
new century. Phoenix, Arizona: The American Council on Education and the Oryx Press.
Seymour, D. (1995). TQM: focus on performance, not resources. In Ruben, B. D. (Ed.). Quality in higher education. New
Brunswick, USA: Translation Publishers.
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An Investigation of Leadership Theories Best Fitting the

Professors Tripartite Scholarly Activities Relating to Teaching,
Research and ServicePart 1
Hamid Khan, Our Lady of the Lake University
EXECUTIVE SUMMARY
Faculty leadership of tripartite activity of teaching, research and service depends on professors motivational efficacy. For
the purpose of scholarly effectiveness and continuous development faculty members, one must study individual dispositions of
professors (leadership styles)some are great in teaching, some are great in research, and some are great in service, and
yet some great in administrative zeal. Chronological development of leadership theories will be presented with regard to
such professorial inclinations and motivations. Finally, findings from a study (of doctoral students in leadership) will be
presented to understand the impact of motivational profiles on their choice or preference of their dispositions. Results of
Multiple Linear Regression of professors motivational inventory or parameters will be shown to correlate with their
preferred leadership styles.
Keywords: Scholarly activities, Tripartite activities, Leadership in education
INTRODUCTION: EVOLUTIONS OF ALL LEADERSHIP THEORIES
The Great Person Theory, 1888 Through 1920
This early leadership lacked an empirical base. This theory advanced that successful leaders were born to greatness and it was
in their genes to show their mettle of worldly successes and heroism much to the liking of their contemporaries.
The Trait Theory of Leadership, 1948
In 1948, Stogdill first attempted to synthesize trait literature. He did a frequency count of 128 trait studies. He came out with
a long list of possible traits. In 1974 he conducted another study. This time he came to the conclusion that there are 26 most
frequently observed traits which he grouped into three categories:
1. leadership skills of leaders
2. relationship of leaders with groups; and
3. personal characteristics of leaders
In 1986, Lord, De Vader and Alleger did a meta-analytic study, instead of frequency counts, and used follower perception of
a leader and came up with a better summary which consisted of:
1. Intelligence
2. Dominance
3. Extraversion
4. Adjustment (or being well adjusted)
In 2011, Derue, Nahrang, Wellman and Humphrey performed multiple regression analyses on 59 studies that represented
143 bivariate relationships with predictors from the full range model of leadership, initiation of structure and consideration
from Ohio State, leader personality, leader gender and leader intelligence.
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Their conclusion was the leader behaviors became significant and leader demographic gender and traits became less
important. Vocational traits instruments were used to measure traits of leaders who showed promise in their respective fields
of prominence.
The Ohio State and Michigan Studies, 1955
Generally by 1955 we saw the emergence of these researches dealing with leader behavior on two areas primarily to take care
of business or take care of people of production focusing on concern for people and concern for production, because of
that era of industrialization. Fleishman, Harris and Burtt of Ohio State and Kartz and Kahn of University of Michigan (1955-
1960) are generally associated with these theories as pioneers, but there were many more subsequently.
Year Theory Taking Care of Business Taking Care of Followers
1955 Ohio State Studies Initiation of Structure Consideration

1960 University of Michigan Production Orientation Employee Orientation
The Ohio State studies had two constructs: they viewed initiation of structure and consideration as two separate
constructs.
Initiation of Structure Low High
Clearly define own role and lets followers know what is expected.
Consideration.....Low High
Leader / Manager regards the comfort, well-being, status and contributions of followers.
The University of Michigan studies called them Production Orientation and Employee Orientation. The
researchers at the University of Michigan originally conceived of these constructs as opposite ends of a continuum.
Production Orientation Employee Orientation

Emphasizes the task or Emphasizes on concern
production aspects of the for interpersonal relations
job getting things done. and personal needs of followers.
Ohio State and Michigan studies were foundational to the most subsequent leadership theories. Several meta-
analyses have found both leader task and relationship behaviors to be important in organizational and follower
outcomes.
Both Ohio State and Michigan streams of research conceived of dimensions of leadership related to taking care of
business, which is initiating structure, production orientation, and taking care of followers, which is consideration
and employee orientation.
The Managerial Grid, 1964
Blake and Mouton (1964) assigned the dimensions to the grid with the X axis described as concern for production in the y-
axis called concern for people.
Consideration 1,9 9,9 If we think about the original two constructs

(Concern for
from Ohio state studies and envision
People)
consideration as a vertical, rather than
horizontal scale the two concepts can form a
5,5 grid
1,1 9,1
Initiation of Structure (Concern for

Production)
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The managerial grid performed this rotation. Rather than call this X-axis Initiation of Structure, Blake and Mouton called it
Concern for Production. They called the Y-axis Concern for People.
Leadership Grid
The Managerial Grid is based on two behavioral dimensions:
Concern for People This is the degree to which a leader considers the needs of team members, their interests,
and areas of personal development when deciding how best to accomplish a task.
Concern for Results This is the degree to which a leader emphasizes concrete objectives, organizational
efficiency and high productivity when deciding how best to accomplish a task.
Using the axis to plot leadership concerns for results versus concerns for people, Blake and Mouton defined the
following five leadership styles are shown in the graph.
There was a regularly used instrument that measured the constructs of this theory--Stogdill (1957- 1963) was the original
inventor of Leaders Behavioral Description Questionnaire (LBDQ), which has been modified into many versions and the
most popular one is LBDQ XII Leader (Stogdill, 1963).
The major difference from the Ohio State/Michigan theory is that of the development of the grid, which places numbers and
four quadrants of leadership Type using the X and Y axes when we get four distinct quadrants of leadership namely
improvised, country club, authoritarian and team manager. This suggests that this is a descriptive theory with a prescriptive
style as the leader falls into a category described/prescribed by X and Y axis number.
Situational Leadership, 1969
Evolution of the theory happened in about 1970. Paul Hersey and Kenneth Blanchard are attributed to the inception of this
theory. The theory is based on a descriptive model that includes two dimensions of leadership that describe how someone
prefers to lead - Concern for production, Concern for people plus an additional component added to it-- competence and
commitment for the development of follower.
The following table explains the way it works-- how much concern for production the leader has and how much concern for
people the leader has keeping in view how competent and committed his followers are, as shown. Situational Leadership
Task Behavior Relationship Behavior grade for the readiness of the follower are shown below:
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Hershey and Blanchards Situational Leadership Model
Courtesy of situational leadership from web: https://www.google.com/search?q=hersey+blanchard+graph

The original instrument was LBDDQ from the Ohio State studies. Situational Leadership has developed its own and calls it
situational leadership questionnaire (SLQ I & II), which has twelve descriptive questions and asks a respondent to make a
decision on a specific situation or scenario.
Situational leadership retained the original concept of concern for production and concern for people or production
orientation and employee orientation from the previous theories, but they added another dimension to it: competence and
commitment of the follower. They modified the original LBDQ to their own SLQ. LBDQ has been validated, but Blake and
Moutons grid and Hersey Blanchards SLQ have not been validated -- so they have not produced much research to the
satisfaction of academic inquiry.
From traits to Ohio State/Michigan, we come from traits to behavior. From Ohio State/Michigan studies of two dimensions,
we come to see scores in a grid with five typologies. Then we go from grid to add two more dimensionsfollower
competence and follower commitment.
Servant Leadership, 1970
Generally, we saw the theory emerge in 1970. Robert Greenleaf is credited with the theory (or philosophy). Servant
leadership begins with the ideal that a leader has a natural feeling to serve others. Leaders grow into servants that generally
want to leave the world a better place than what they found it. They focus on increasing their service to others as both leaders
and mentors.
There have been some instruments created, but none have really been accepted for research purposes.
The focus of relationship changed from previous theories. Greenleaf practiced it as a philosophy. There are ten things that
emerged as paramount from this ideology promoted in servant leadership concept: Foresight, authenticity, love, sympathy,
empathy, healing, patience, consideration, communication, and finally the community development. But it has not yet
developed a reliable instrument.
From Ohio State/Michigan studies to the present servant leadership, we have seen that Consideration develops in different
form, but Servant leadership raised the bar of servitude for leader quality of selflessness by subverting leaders need and put
follower needs in front. This ideology influenced Leader Member Exchange (LMX), but it also eventually influenced Full
Range Model of Leadership (FRLM).
Leader Member Exchange (LMX) Theory, 1975
Generally, this theory emerged in 1975 and the theorists attributed are Densereau, Graen, and Haga, and Graen and Uhl-Bien
(1975).
This theory was developed from the aspect of consideration of people from Ohio State/ U of Michigan (OSM) studies. LMX
is a much deeper and richer description of what leaders are to do for what is good for the followers they lead.
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Authors of LMX differed from OSM, Grid type Situational Leadership but they proposed a strong trichotomy of leader
follower relationship as seen below in Stranger, Acquaintance, and Mature (SAM) relationship .
Leader follower relationship developed SAM relationship:
Stage 1: In the S phase consideration/relation is perfunctory
Stage 2: In the A phase consideration/relation is close to informality
Stage 3: In the M phase consideration/relation is genuine or heartfelt
This is the main dimension (richness of relationship development in three stages) that affected or effectively impacted the
theoryhow considerate the leader is to his followerin-group and out-group.
The theory works to explain that there are three main stages of a relationship between the follower and the manager. In
between each stage the manager as well as the follower must past Trust Tests in order to advance to the next phase of the
relationship. For example can a leader count on a follower in the Stranger Stage to come in on a Saturday because the leader
got a last minute project assigned. Or will the leader throw a follower under the bus at the first sign of an honest mistake?
The idea is that each phase turns into great trust, and stronger relationship. The instrument used is called LMX-7 and LMS-
MDM.
This theory was developed from the aspect of consideration of people from Ohio State. LMX is a much deeper and richer
description of what leaders are to do for what is good for the followers that they lead.
Full Range Model of Leadership (FRML), 1980
The Full Range Model of Leadership concept emerged in the 1980s, specifically in 1985. Bernard M. Bass and later Bruce
Avolio are primarily associated with the formation of the Full Range Model of Leadership theory. It has nine dimensions
Individualized Consideration (IC), Idealized Inspiration (IIA), Idealized Inspiration (IIB), Inspirational Motivation (IM),
Intellectual Stimulation (IS), Contingent Reward (CR), Management by Exception (MBE-A), Management by Exception-
Passive (MBE-P) and Laissez Faire (LF).
Bernard M. Bass and colleagues describe the Full Range Leadership Model as assessing leadership styles along a spectrum
of effectiveness. On the bottom end of the scale, meta-analysis research indicates leaders are ineffective when they practice
passive/avoidant leader-follower interactions that are totally non-participative/disengaged (laissez faire leadership) or that
only engage subordinates when problems become serious (Management by Exception Passive or MBE passive.
Burns conceptualized Transformational Leadership and Transactional Leadership as distinct and mutually exclusive
behaviors. Bass, however, viewed Transformational Leadership and Transactional Leadership on a continuum as opposed to
distinctly separate items. This continuum concept helps one conceptualize how the models behaviors have a scaled-like
attribute where transformational leadership behaviors are most effective and passive-avoidant behaviors are least effective.
The instrument used is the Multifactor Leadership Questionnaire or MLQ-5X. The MLQ-5X is a 36-question instrument that
measures the nine dimensions of the Full Range Model of Leadership. There are four questions per dimensional category
(i.e., one question for each of the nine individual dimensions). Additionally, there are nine Outcome questions three on
leader effectiveness, three on follower satisfaction with the leaders and three on followers extra effort.
Epistemologically, the Full Range Model of Leadership is an empirical theory. It is empirical because (1) the MLQ-5X
instrument has reliability and validity accuracy (e.g., face validity, content validity, predictive validity, etc.) and (2) because
numerous peer-reviewed quantitative research studies suggests that the Full Range Model of Leadership explains and predicts
leadership performance and effectiveness within a wide range organizational and situational settings.
Influence of transformation came from Greenleafs servant leadership and LMXs relationship (SAM). Burns Charismatic
Leadership theory thought of the transcendence of leaderhigher call of charismatic leadershipgreater than the self.
Evolution from LMX to FMLR indicated that Greenleafs servant leadership did not have charisma so FMLR charisma crept
in and specific pieces of 9 (ranges of behavior) dimensions of theories with Subscales emerged for measurement indicated
by not so good passive avoidant (P-A), good Transformational leadership (TL) and in the middle of the road the
Transactional Leadership. The theory is alive and well1985 to present.
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Emotional Intelligence, 1990
This theory emerged in 1990. Goleman was the original inventor of the theory, but Salovey, Mayer and Caruso (1990) are
associated with the development of the theory. Golemans original construct was Self-awareness, Self-management, Social
awareness and Social management, but his inventory never took off due to lack of a reliable instrument and empirical
research. Salovey, Mayer and Caruso (1990) developed the MSCEIT model and Bar On (1990) developed the EQi instrument
and both became popular.
EQ requires the effective awareness, control and management of one's own emotions and those of other people using two
models:
Ability Model: focuses on the individual's ability to process emotional information and use it to navigate the social
environment. The ability model is more highly correlated with intelligence scores.
Mixed Model: a combination of both ability and traits (self-perceived abilities and is measured through self-report). It
defines EQ as an array of skills and characteristics that drive leadership performance.
EQ was developed as a form of social intelligence that involves the ability for one to perceive his/her own feelings and
emotions as well as the feelings/emotions of others. The mixed model is more highly correlated with personality scores.
MSCEIT has right or wrong answers hence a test (recognize faces): happiness sadness sorrow joy. Bar on EQi2 an
inventory, asks what degree you manage to express yourself, manage stress. Self-awareness was added on by EI--
Introspection of who you are as a leader evolved. Transformational Leadership asks to transform followers but nowhere it
says know yourself first. Previously, it was believed that intelligence influenced behavior. With EI, it is now accepted that
emotions can influence behavior as well.
Global Leadership and Organizational Behavior Effectiveness (GLOBE) (2004)
Project GLOBE studies and theory were introduced in the 1990s stemming from Charismatic Leadership; specifically
introduced in 1991. Results and studies were release in 2004.
Robert J. House started with the Path-Goal Theory and Charismatic Leadership Theory to evolve into the GLOBE studies
and leadership theories of culture and behavior.
The constructs of this theory can be broken down into two different dimensions: culture and leadership.
Culture consists of Power Distance, Uncertainty Avoidance, Humane Orientation, Institutional Collectivism, In-Group
Collectivism, Assertiveness, Gender Egalitarianism, Future Orientation, and Performance Orientation.
Leadership -- Charismatic/Value Based, Team-Oriented, Participative, Humane-Oriented, Autonomous and Self-Protective.
Globe was going on in 1990 till 2004. It does not ask how you leadit asks who is a generic group leader it deals with a
new word called implicit theory of leadership. The survey was conducted throughout the whole world. GLOBE is designed to
study not only the cultures of the leader but also their behavior types to examine how the two inter-correlate. GLOBE Phase
2 was designed to compare the differences around 62 different societies consisting of 17,300 middle managers and 951
different organizations.
Authentic Leadership (2007)
This theory emerged in 2007 and we often associate it with George, Avolio and Gardner (they did not develop the
instrument) and Walumbwa. Walumbwa developed the instrument Authentic Leadership Questionnaire (ALQ), which has the
following constructs and dimensions. ALQ measures one big concept of authenticity from all the 16 questionsfour in each
subscale.
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Self-awareness: An ongoing process of reflection and re-examination by the leader of his or her own strength, weaknesses,
and values
Relational Transparency: Open sharing by the leader of his or her own thoughts and beliefs, balanced by a minimization of
inappropriate emotions
Balanced Processing: Solicitation by the leader of opposing viewpoints and fair-minded consideration of those viewpoints
Internalized Moral Perspective: A positive ethical foundation adhered to by the leader in his or her relationships and
decisions that is resistant to outside pressures
Authentic leadership is an approach to leadership that emphasizes building the leaders legitimacy through honest
relationships with followers who value their input and are built on an ethical foundation. Generally, authentic leaders are
positive people with truthful self-concepts who promote openness. By building trust and generating enthusiastic support from
their subordinates, authentic leaders are able to improve individual and team performance.
Self-awareness was there already and continued from EI, Relational transparency was added, Balanced processing was
added, Internal moral perspective was added to the immediately preceding theories of Emotional Intelligence.
IDEATION OF AN INSPIRATION CONCEPT MAP FOR SCHOLARLY ACTIVITIES OF TEACHING

RESEARCH AND SERVICE
Statement of the Problem
An inspiring university education is of paramount importance for everybodys development today, professionally and
psychologically. Education is a transformational intervention that changes the individual and the society. The world has seen
many transformational leaders and university professors as educators are the incarnation of profound tradition of education
and change.
Transformational leaders as university educators are needed in to impart instruction to the young malleable minds through
Teaching, Research and Service (TRS- a tripartite activity of scholarship). Transformational leaders/professors must possess
the appropriate leadership styles in these tripartite activities of scholarship that are essential and necessary for imparting
education to university students and thereby transform societies. However, there's paucity of empirical research that exists in
the area of transformational leadership of University professors who could exhibit such extraordinary leadership for
themselves and inspire extraordinary achievement from their students. But there are limitations imposed on them.
Lately, college and university professors have witnessed a marked change in institutional climate. Competition has replaced
collegiality. Faculty performance has become very stringent and is monitored very closely from inside and outside by all
stakeholders of education. Promoting faculty productivity by enhancing faculty motivation for increased productivity is a key
ingredient of social transformation through research, teaching and service, and to appreciate faculty members contribution at
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work. So research, teaching, and service and scholarship of faculty being the key factors of faculty responsibility, they should
be measurable for social change. There must be a connection between individual productivity of faculty and institutional
characteristics that would allow such productivity to fulfill their full academic missions with eventual societal
gain. (Blackburn & Lawrence, 1995).
College and university professors can be servant leaders or transformational leaders to meet the existing challenges being
faced in the academia. Servant leadership of Greenleaf which has been tested in the highest echelon of Ivy League schools
has not taken root yet in the citadels of American and Western higher education although the effects of transformational
leadership in organizational settings is well known Conger, 1999; Goodwin, Wofford, & Whittington, 2001; Hackman &
Johnson, 2004; Ravlin & Meglino, 1989). Research on the relationship between higher education professors
transformational leadership behaviors and effective research, teaching and service outcomes have been sporadically reported
but such research is not replete with transformational outcomes (Blokan & Goodboy, 2009). The search found no persistent
aim at research uncovering transformational leadership of college/university professors in the pattern it was undertaken by
Greenleaf (2004) in experimenting or precipitating servant leadership within academia, is certainly warranted. This research
is a meager effort to uncover the problem stated, and to examine the relationship between professors motivational profile and
possible correlates of transformational leadership behaviors displayed in executing a effective job performance to impact
education.
Theoretical Foundations
There are two models of leadership and conceptual foundations with valid instruments exist to measure the various constructs
of leadership models. This study proposes to use the most widely and validated leadership measure known as multi-factor
leadership questionnaire ML Q5 X. A variety of models of motivation and conceptual foundations exist and one of the latest
and validated measures called motivational sources inventory will also be administered to professors to uncover their
motivational antecedents which precipitated scholarship success in these professors to be transformational in leadership of
scholarship.
This study is based on transformational leadership theory, transactional leadership theory and social learning theory to
understand how instructor leadership behaviors affect student cognitive learning, affective learning, perceptions of instructor
credibility, and communication satisfaction. The theoretical rationale supporting the proposed research design is based on
transformational leadership theory research that has tested the relationship between transformational leadership behaviors
(intellectual stimulation, individualized consideration, idealized influence and inspirational motivation) and follower
outcomes of increased performance and satisfaction (Eom, 2009; Ruggieri, 2009). These variables have been empirically
tested in educational settings and linked to positive learning outcomes (Bolkan & Goodboy, 2009; Avolio, Gardner,
Walumbwa, Luthans, & May, 2004). Given that instructors who display individualized consideration, intellectual stimulation,
idealized influence, and inspirational motivation are perceived as more effective (Walumbwa et al.) and that students are
more satisfied with instructors displaying these behaviors (Pounder, 2008), students should report increased learning
outcomes compared to students viewing instructors as displaying transactional behaviors.
Methodology
The research question of this study is: Is there a relationship between professors self-ratings of their motivational
antecedents and their self-reported leadership styles (transformational/ transactional/ passive or avoidant) controlling for
professors gender, age, experience, education, rank, salary and tenure.
The study of relationship between professors motivational efficacy and transformational / transactional leadership
effectiveness controlling for age, educational level, ethnicity, gender, rank, salary, tenure, years in profession.
Participants in this study would be collected from the University Professors websites:
American Society for Competitiveness
American Society for Education (ASE) list serve has 3000 members,
International Leadership Academy (ILA),
The United States Association for Small Business and Entrepreneurship (USASBE),
Small Business Advancement National Center (SBANC),
International Academy of Business Disciplines (IABD),
International Academy of Business and Personnel Administration Disciplines (IABPAD),
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International Conference on Advancement of Management (ICAM),

International Management Development Association (IMDA),
American Association of University Professors (AAUP),
The Teaching Professor (TP) list serve.
Operationalization
Motivational antecedents will be measured by motivational sources inventory which measures these in five areas of
motivation which have been comprehensively researched and advanced. Professors will be administered motivational sources
inventory (MSI).
Professors will also be surveyed for their Full range Leadership Behaviors using Multifactor Leadership
Questionnaire 5x (rater version) by self-rating version of the MLQ-5x form, containing 45 questions (each
dimension of full range leadership model will have five questions). Recent publications have ratified the
motivational sources inventory (MSI) and its precise measurement of five dimensions of motivation e.g.
Intrinsic/Internal Process
Instrumental Motivation
Self-Concept-External motivation
Self-Concept-Internal Motivation
Goal Internalization Motivation
The MLQ-5X has been refined over the years and leadership styles of executives and managers have been measured using
this survey instrument and hence it is supposed to be the best instrument for measuring transformational leadership,
transactional leadership, and MBEA and passive avoidant leadership (MBE-P and Laissez Faire) which have been
extensively researched and the significance of it published widely through the use of these instruments.
Dependent Variables
The dependent variable is the transformational leadership behavior and its constituent components in the five areas as
defined/ operationalized earlier (IC, II-A, II-B, IM and IS) that are caused to happen by the independent variables of
motivation.
The independent cluster of variables are the motivational antecedents consisting of seven operationally defined and
measurable components of motivation-- Intrinsic Process Motivation, Instrumental Motivation, Self-Concept-External
Motivation, Self-Concept- Internal Motivation, Goal Internalization Motivation, Intrinsic/ Internal Motivation and
Extrinsic/External Motivation.
Measurement
Professors will be administered motivational sources inventory (MSI) and surveyed for their Full range Leadership Behaviors
using Multifactor Leadership Questionnaire 5x (rater version) to identify and measure their motivational profile.
Classifications of perspectives on motivation have been provided in the recent literature studies dealing with motivational
antecedents. Motivation is classified into four broad categories emanating from content theories, processed theories, decision-
making periods, sustained effort theories-drawing from different measures. Recommendations on measurements are
developed succinctly for each classification scheme of motivation and this questionnaire uses such kind of measurements.
However, on further refinements lately, the independent cluster of variables have been operationalized in the domain of
motivational antecedents that consist of seven operationally defined and measurable components of motivation-- Intrinsic
Process Motivation, Instrumental Motivation, Self-Concept-External Motivation, Self-Concept- Internal Motivation,
Goal Internalization Motivation, Intrinsic/ Internal motivation and Extrinsic/External Motivation.
Professors will also be administered self-rating version of the MLQ-5x short form. This MLQ-5X has 45 questions and it has
been refined over the years and extensively used for research purposes to describe and measure the transformational,
transactional, MBE-A, MBE-P and Laissez Faire behaviors of such leaders at work.
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Multifactor Leadership Questionnaire (MLQ-5X) will be used to measure professors transformational, transactional MBE-
A, and Passive-Avoidant behaviors. The authors/researchers of the test hypothesized that the five transformational leadership
dimensions (IC, IIA, IIB, IM, and IS,) and transactional leadership dimension of Contingent Reward (which are part of the
full range leadership model developed by Bass and Avolio (1994) are positively associated with job performance.
Additionally the researchers hypothesized that the remaining elements of Bass and Avolios full range leadership model,
which include the transactional dimensions of Management by Exception-Active will be minimally but positively correlated;
whereas MBE- Passive and Laissez Faire leadership style will not be positively associated with job performance.
The Full Range Model of Leadership has been widely studied with over 200 peer-reviewed articles that have been used in
meta-analysis. The results from the meta-analysis tend to agree that the Full Range Model of Leadership that transformational
behaviors and contingent reward behaviors of transactional leadership are active and effective. And MBE-Active, MBE-
Passive and Laissez Faire behaviors are less active and less effective.
Transformational and Transactional behaviors are positively correlated with a host of follower, leader and organizational
outcomes. MBE-Active has mixed results and MBE-Passive and Laissez-Faire are negatively correlated with desired
outcomes.
Participants
The participants of the survey will be faculty members in American Universities. Faculty members in the grades of assistant
professor, associate professor, and full professors with and without tenure will be able to participate. These participants will
be drawn from various university websites and various professional websites and from conference websites.
Participants in this study would be collected from the University Professors websites. It is anticipated that from five
professors website and lists, 200 or more individual scores can be collected from American Society for Engineering
Education (ASEE) listserve, International Leadership Academy (ILA), The United States Association for Small Business and
Entrepreneurship (USASBE), Small Business Advancement National Center (SBANC), International Academy of Business
Disciplines (IABD), International Academy of Business and Personnel Administration Disciplines (IABPAD), International
Conference on Advancement of Management (ICAM), International Management Development Association (IMDA),
American Association of University Professors (AAUP), and The Teaching Professor listserve.
These subjects with qualified to be in the study because of their affiliation with the universities in which they teach, their
association with the conferences and programs, there association with the listserv in which they have qualified themselves to
be associated with. For instance all leadership professors would belong to ILA, all engineering professors would belong to
ASEE and frontiers in education FIE. Similarly professors engaged in entrepreneurship education will be in the list of
USASBE and professors who are in IMDA list they are bona fide contributors to the International Management Development
Association will be surveyed. Partial list of list serves to professors are: ASEE, ILA, USASBE, SBANC, IABD, IABPAD,
ICAM, IMDA, AAUP, and the Teaching Professor.
Transformational Leadership
Burns first introduced the concept of transformational leadership in 1978. Burns offered a new vision of leadership called
Transforming Leadership that focused on the ways that leaders emerged from being ordinary "transactional" leaders to
become major social change players who truly empowered their followers. This period was followed by Bass who refined
and further operationalized the concepts of leadership styles, followed by Avolio (Avolio, Bass, & Jung, 1999; Bass &
Avolio, 1994; Bass, 1985). Later studies of transformational leadership focused on the outcomes perspectives of followers
(Bolkan & Goodboy, 2009).
Literature on university professors transformational and transactional leadership behaviors are rare; but studies are replete
with organizational leadership studies dealing with transformational and transactional leadership both, but this research study
hopes to take a new direction to provide an operational definition of transformational leadership of college and university
professors. This vista of research on professors has not been prodigiously investigated as much as their counterpart company
midlevel and senior level executives.
According to Burns (1978), transformational leadership occurs when one or more persons engage with others in such a way
that leaders and followers raise one another to a higher level of motivation, performance, and morality (p. 20).
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Transformational leaders have been described in prior literature as highly interactive, passionate, empowering, visionary, and
creative (Hackman & Johnson, 2004). Bass (1985) and with Avolio later, further expanded Burns theory by conceptualizing
transformational leadership behaviors into four categories: individualized consideration (IC), Idealized Influence-Attributed
(II-A), Idealized Influence-Behavioral (II-B), Inspirational Motivation (IM) and Intellectual Stimulation (IS).
Between the period 1985 and 1990, hasty revisions occurred as new refinements were envisioned and added to the
continuum of leadership behaviors by Hater and Bass, 1998; Avolio and Bass, 1991; Avolio, Waldman and Yammarino,
1991. By 1991, a final and comprehensive nine-component theoretical model matured. A comprehensive survey instrument
was also simultaneously developed using the above constructs of leadership theory. It was called The Multifactor Leadership
Questionnaire-5X. Many researchers have used this refined model which became very popular after the publication of Bass
and Avolio's 1994 book titled Improving Organizational Effectiveness through Transformational Leadership.
Idealized Influence (Attributed and Behavioral)
Bass (1999) described idealized influence as the transformational leaders ability to clearly articulate a vision to followers
and the ability to motivate followers to join the vision (p. 19). As a result, followers place a high degree of trust in the leader
(Bass, 1985). Yukl (2006) stated that idealized influence behaviors arouse strong follower emotions and identification with
the leader. This idealized influence may be used to inspire charisma in the leader which may bring about unintended
outcomes as has been seen in history. So charisma has been substituted by Idealized influence to protect the follower from
unintended outcomes of charisma as history has shown.
Intellectual Stimulation
Avolio et al. (1999) described intellectual stimulation as getting followers to question the tried and true methods of solving
problems by encouraging them to improve upon those methods. Intellectual stimulation encourages followers to challenge
leader decisions and group processes, thus encouraging innovative thinking (Bass & Steidlmeier, 1999). Brown and Posner
(2001) advocated intellectual stimulation as a component of organizational learning and change by appealing to follower
needs for achievement and growth in ways that the follower finds attractive. Brown and Posner (2001) found that the
intellectual stimulation component of transformational leadership plays a healthy and beneficial role in organizational
learning because leaders place value in learning for both themselves and their followers.
Individualized Consideration
Avolio et al. (1999) found that through the process of transformational leadership, the leader takes on the role of mentor by
assigning responsibilities to followers as opportunities for growth and development through a process of self-actualization.
Corrigan and Garman (1999) found that individualized consideration positively affects and facilitates team-building efforts.
Yukl (2006) described individualized consideration behaviors as support, encouragement, and coaching to followers. The
relationship used for mentoring and coaching is based on followers individual development needs with the outcome being
the evolvement of followers into leaders (Bass & Steidlmeir, 1999; Bass, 2000). Barnett, McCormick & Conners (2001)
described individualized consideration as occurring when leaders develop interpersonal relationships with followers. It is
these interactions that allow the leader to personalize leadership and establish goals for each individual follower (Barnett et
al.).
Inspirational Motivation
Bass (1999) described inspirational motivation as providing followers with challenges and meaning for engaging in shared
goals. Bass and Steidlmeier (1999) took it further by identifying inspirational motivation as the leaders ability to
communicate his or her vision in a way that inspires followers to take action in an effort to fulfill the vision. Inspirational
motivation enables leaders to remain focused on the vision of the group despite any obstacles that may arise (Kent, Crotts, &
Azziz, 2001). Yukl (2006) described inspirational motivation behaviors as communicating an appealing vision, using
symbols to focus subordinate effort, and modeling appropriate behaviors. Some researchers have related inspirational
motivation to concepts of ethics, claiming that when leaders show concern for organizational vision and follower motivation,
they are more inclined to make ethical decisions (Banjeri & Krishnan, 2000; Kent et al.).
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Transactional Leadership
The other conceptualization of leadership often cited in management literature is transactional leadership (Bolkan &
Goodboy, 2009). Transactional leadership is traditionally described as an instrumental approach to organizational leadership
that is associated with task orientation (Conger, 1999) and it has two dimensions eg. Contingent Reward and Management by
Exception Active (MBE-A).
Contingent Reward
Jung and Avolio (2000) described contingent reward system to be occurring when the leader and his or her followers agree
on what the followers need to do to get rewards, with little effort to change follower personal values or to develop a sense of
follower trust and commitment to the leader. According to Hackman and Johnson (2004), transactional leaders use contingent
rewards to motivate followers and prevent poor performance using negative feedback and criticism. Managers may even
attempt to motivate subordinates by withholding extrinsic rewards (Conger).
Management by Exception Active
When a manager or a leader, works within the organizational culture where employees achieve objectives through rewards
and punishments set by the leader. The followers are not motivated by their own self to achieve results, and the leader
quickly and actively intervenes to correct the situation.
Management by Exception- Passive Avoidant (MBE-P & Laissez faire)
In this situation, the leader does not take necessary steps to actively intervene at all to correct the situation, but waits till the
situation gets bad enough to be an emergency requiring immediate attention by all concerned in a state of commotion.
The Transformational Leader --Professor, Teacher and Educator
Studies by Ingram (1997) and Yuen and Cheng (2000) have found certain leadership behaviors to be important to successful
transformational leadership for educators. Yuen and Cheng classified these behaviors as inspiring, social supporting, and
enabling. Inspiring refers to building a vision and providing motivational tasks; social supporting refers to fostering a
learning culture, facilitating support networks, and handling conflicts; and enabling refers to enhancing knowledge and skills
and offering intellectual stimulation (Yuen & Cheng).
LITERATURE REVIEW
Motivation and Leadership Meta Analysis
A Meta-Analysis by Hammond et al. found numerous reviews related to innovation in work organizations. Their meta-
analysis, using the following model, investigated the relationships between four predictor types (individual differences,
motivation, job characteristics, and contextual influences) and individual-level workplace innovation. Results indicated that
individual factors, characteristics of the job, and factors of the environment were moderately associated with phases of the
innovation process.
Gegenfurtner et al. (2012) conducted a meta-analysis titled, Age-related differences in the relation between motivation to
learn and transfer of training in adult continuing education. This meta-analysis (k = 38, N = 6977) examined age-related
differences in the relation between motivation to learn and transfer of training, using data derived from the literature on adult
continuing education of the past 25 years. Based on socio-emotional selectivity theory, two views on motivational change
over the trajectory of a working life were evaluated: the view of age-related motivational decline and the view of age-related
motivational maintenance. Results showed a main effect of age on motivation to learn ( = .44) and a moderating effect of
age ( = .59) on the relation between motivation to learn and transfer of training ( = 0.33). Both effects were in the positive
direction, indicating support for the view of age-related motivational maintenance. The findings were discussed in terms of
their implications for theories of age-related changes in training motivation and their significance for the design of training
programs for older learners.
Motivation and Learning
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Colquitt et al. (2000) did a meta-analysis of 25 years of research on motivation to learn and transfer and tested whether or
not motivation and transfer decrease as age progresses. Age was positively associated with motivation to learn and with the
relationship between motivation to learn and transfer of training. Age differences were moderated by study, participant, and
training conditions. The study reported corrected correlation = 0.58, based on k = 2 studies of N = 1011 participants;
whereas meta- analytic study of Blume et al. (2010) reported a = 0.29 from k = 29 studies and N = 3844 participants.
Motives and Age
Kooij et al. (2011) performed a meta-analysis of age and work-related motives: results of a meta-analysis and investigated the
relationship between age and work-related motives. The meta-analytic results showed a significant positive relationship
between age and intrinsic motives, and the significant negative relationship between age and strength of growth and extrinsic
motives.
Motivation and Transformational and Transactional Leadership
Barbuto (2005) examined relationships between leaders' motivation and their use of charismatic, transactional, and
transformational leadership. One hundred eighty-six leaders and 759 direct reports from a variety of organizations were
sampled. Leaders were administered the Motivation Sources Inventory (MSI) while followers reported leaders' full range
leadership behaviors using the Multifactor Leadership Questionnaire (MLQ-rater version). Leaders were also
administered the self-rating version of the Multi-factor Leadership Questionnaire (MLQ-rater version). The Motivation
Sources Inventory subscales subsequently significantly correlated with leader self-reports of inspirational motivation, idealized
influence (behavior) and individualized consideration (range, r = .10 to.29), as well as with raters' perceptions of inspirational
motivation, idealized influence (behavior) and individualized consideration (range, r = .18 to .19). The Motivation Sources
Inventory subscales significantly correlated with leaders' self-reports of charisma, transactional and laissez-faire leadership
(range, r = .12 to .28), with rater-reports of the same variables (range, r = .16 to .29).
Motivation and Transformational Leadership
Barbuto et al. (2000) did a field study of two measures of work motivation for predicting leaders transformational behaviors.
This study examined the relationships between motivation and transformational leadership. Use of the Motivation Sources
Inventory and the Job Choice Decision-making Exercise found correlations between goal internalization and both
inspirational appeals and rational persuasion.
Relationships between motivation and transformational leadership were examined in the study. Fifty-six leaders and 234
followers from a variety of organizations were sampled. Leaders were administered the motivation sources inventory (MSI)
and the job choice decision-making exercise, while the followers reported leaders behaviors using the multi factor leadership
questionnaire- MLQ-rater version. Scores on the motivation source inventory subscales subsequently correlated with the
multifactor leadership questionnaire subscales of inspirational motivation (IM), idealized influence- behavior (II-B), idealized
consideration ( range: r =.13 to .23). There were no significant correlations among any of the job choice decision-making
exercise subscales with any of the variables measured.
Motivation and Emotional Intelligence
Barbuto et al. (2006) used the Multi-factor Leadership Questionnaire (MLQ, 5x-Revised; Bass & Avolio, 1996) to determine
the leadership style of individuals. The Bar-On Emotional Quotient Inventory (EQ-i Bar-On, 1996) was used to obtain the
emotional intelligence scores of leaders. A demographic questionnaire was also administered to collect participant personal
data. The latest version of the MLQ (5x-Revised; Bass & Avolio, 1996) is available in two forms: the self-rating form, where
supervisors rate themselves as leaders; and the rater form, where associates rate their leaders. For the current study, the
leaders responded to the MLQ (5x-Revised; Bass & Avolio, 1996) self-rating form. The MLQ (5x-Revised; Bass & Avolio,
1996) contains 45 items and assesses five components of transformational leadership, three components of transactional
leadership, one non-transactional leadership component, and three outcome components. The five components of
transformational leadership are 'Idealized Influence (Behavior),' 'Idealized Influence (Attributed),' 'Inspirational Motivation,'
'Intellectual Stimulation,' 'Individualized Consideration' (Bass & Avolio, 1996).
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The three components of transactional leadership are categorized under constructive transactions or corrective transactions.
The first category is based on 'Contingent Reward,' and the second on 'Managementby-Exception (Active),' and
'Management-by-Exception (Passive)' (Bass & Avolio, 1996). The non-transactional component is 'Laissez-Faire,' and the
three outcome components are 'Satisfaction with the Leader,' 'Individual, Group, and Organizational Effectiveness,' and
'Extra Effort by Associates' (Bass & Avolio, 1996).
Motivation and Locus of Control
In this study, Barbuto et al. (2010) examined leaders' and members' scores on locus of control, sources of motivation, and
mental boundaries to predict the quality of leader-member exchanges. 80 elected officials and their 388 direct reports were
sampled in a field study. Analysis indicated followers' scores on locus of control, leaders' scores of self-concept internal
motivation, leaders' scores on locus of control, and followers' rated goal-internalization motivation were positively related to
leader-member exchanges. Implications and directions for research were discussed with the significant findings being useful
to the professors research productivity.
Motivation and Job Performance
Harland et al. (2005) conducted a study that dealt with team leadership focusing on the idea that leadership is a shared
activity among team members with cohesiveness instead of being a lone wolf of vertical communication, which meant that
leadership position related than team related.
The findings indicated that significantly positive relationship existed between attributed charisma (r = .21, p < .01)
idealized influence (r =.22, p < .01), inspirational motivation (r = .14, p < .05), intellectual stimulation (r = .27, p <.01 ) and
individualized consideration (r = .27, p < .01) . Moreover, significant positive relationship at p <.05 level were also
observed for transformational leadership dimensions after controlling for optimism. Contingent reward was positively
associated with job performance/sub resilience.
Motivation Sources Inventory and Measure of Transformational Leadership
Barbuto and Scholl (1998) on intense re-examination of current and past literature, have developed and tested motivation, a
construct based on an integrative taxonomy of motivation sources. The sources, as measured on the motivation sources
inventory MSI include intrinsic process, instrumental, external self-concept, internal self-concept, and goal internalization.
The development of procedures produced five subscales with six unique loading items per subscale that seem to capture all
domains of interest for each source of motivation for the faculty members to demonstrate their scholarly productivity.
Motivation and Emotional Intelligence
In a study Barbuto and Joanna (2010) examined the relationships between emotional intelligence, locus of control, and
mental boundaries. Three hundred and eighty-two county employees were sampled using a cross-sectional survey design.
The results indicated internal locus of control and thin mental boundaries are positively related to emotional intelligence. A
hierarchical regression revealed that internal locus of control and thin mental boundaries together explained 18% of the
variance in emotional intelligence for this population. Implications and future research directions were discussed.
Simple statistics and zero-order correlations were calculated for all variables examined in this study. From this analysis,
several relationships were found. A significant positive relationship was found between internal locus of control and EI (r =
.41, p <.01). A significant positive relationship was also found between thin mental boundaries and EI (r = .32, p <.01).
Internal locus of control and thin mental boundaries also shared a positive significant relationship (r = .42, p <.01).
Emotional Intelligence and Transformational Leadership
Barbuto et al. (2006) did a field study of elected officials. Participants were 80 elected public officials in the United States
and 3-6 direct-report staffers for each leader. Together they composed 388 leader-member dyads. The authors surveyed them
to explore the relationship between emotional intelligence and transformational leadership. The authors considered the 80
officials as leaders and the staffers as members. The present results showed that the emotional intelligence of the leaders
shared significant variance with self-perceptions and rater-perceptions of transformational leadership. The present results also
somewhat support the predictive value of emotional intelligence in antecedent leadership field research.
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Motivation and Achievement Goals (Academic performance)
In a study, Bipp et al. (2014) investigated the role of three basic motivational needs (need for power, affiliation, achievement)
as antecedents of goals within the 2x2 achievement goal framework, and examined their combined predictive validity with
regard to academic performance in a sample of 120 university students. Structural equation modeling analysis largely
supported the postulated model, linking motivational needs indirectly to course grades through goals. Achievement goals
were formed by a combination of different motives: need for achievement was a positive predictor of all four achievement
goals, and need for affiliation was negatively related to performance-approach and performance-avoidance goals.
Additionally, need for power was a positive predictor of performance-avoidance goals. Performance-approach goals had a
direct (positive) effect on performance outcomes. In sum, their results integrated basic motivational needs with the
achievement goals and claimed hierarchical achievement motivation models, by showing how basic human motives of
achievement, affiliation, and power are related to goal striving motivation and performance outcomes in an academic setting.
Findings are shown in the correlation table.
Motivation and Academic Achievement/Performance
Using 81first-year college students, researchers examined the indirect effects of seven types of academic motivation on
academic performance when mediated by academic integration. When accounting for all other types of academic motivation
in the statistical model, academic integration only mediated the relationship between intrinsic motivation to accomplish
things and first-year grade point average (GPA). Therefore, students who attend college to gain a sense of accomplishment
believe that college helps them develop intellectually and they perform well academically. However, when each motivation
type was considered independently of the others, intrinsic motivation to know was also indirectly related to GPA, suggesting
that students who enjoy learning are likely to perceive the intellectual benefits of college as well.
Regardless of the indirect relationships between academic motivation and academic performance, academic integration was
positively correlated with first-year grade point average (r=.32, p= .009). The knowledge, that students are more likely to be
successful in college if they adapt to their institutions academic integration, has prompted many universities to develop
programs that teach students to acclimate both socially and academically. The same findings are expected for professors with
regard to their motivation and performance/ scholarship.
Motivation and Transformational Leadership
Godoya and Bresb (2013) studied the theoretical formulation of transformational leadership (TL), and its influence on
motivation. Empirical studies have considered motivation as a general construct, but have not distinguished different
motivational constructs. This empirical study analyzed the influence of TL on Expected Intrinsic Motivation (EIM) based on
the ASH-Mot model (The ASH-Mot model questionnaire was the Spanish equivalent of the EIM model). A sample of 575
employees from two Spanish organizations was chosen. Two questionnaires were applied, ASH-Mot and ASH-Lid, the latter
based on the Multifactor Leadership Questionnaire (MLQ). The Structural Equation Modeling shows empirical support for
the relationship between TL and EIM. Results also show empirical support for the mediation of instrumentality between TL
and EIM. Moreover, the multiple-group analysis showed the invariance of the model across samples, thereby highlighting the
robustness of the hypothesized model.
Motivation and Increased Effort
Dysvik and Kuvaas (2013) explored the roles of intrinsic motivation (IM) and extrinsic motivation (EM) and the 2 2 model
of achievement goals as predictors of increased work effort (WE). A cross-lagged field study was conducted among 1,441
employees from three large Norwegian service organizations across a 10-month time span. The results showed that the
relationship between IM and increased WE was more positive for employees with high levels of mastery-approach goals.
This observation suggests that having congruent goals may accentuate the positive relationship between IM and WE.
Achievement Motivation and Academic Performance
Huang (2012) examined the discriminant and criterion-related validity of achievement motivational goals in predicting
academic achievement. Analysis of 151 studies yielded 172 independent samples (N = 52,986) with correlations among
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achievement goals, and between achievement goals and academic achievement. The discriminant validity of achievement
goals in the 2-, 3-, and 4-factor achievement models was sound, as the correlations among achievement goals ranged from .00
to .38. Approach motivations were associated with higher academic achievement, and avoidance motivations were associated
with lower academic achievement. The criterion-related validity of each achievement goal (r = - .13 to .13) and the validities
for the 2-, 3-, and 4-factor models were low. Integrating the findings regarding the discriminant and criterion-related validity
revealed the 4-factor model as the best choice to facilitate the understanding of learning outcomes.
For the three-factor achievement goal model, the achievement goal measure significantly affected the relationship between
mastery and performance approach goals (QB 9.07, p < .01), and the AGQ (r = .29) indicated a statistically stronger
correlation than did the PALS (r = .15). Conversely, the effect of achievement goal measure on the relationship between
mastery and performance avoidance goals was not supported indicating no relationship between this measure and the
correlation between mastery and performance avoidance goals. The PALS obtained a stronger correlation (r = .52) than did
the AGQ (r = .32), supporting the effect of the achievement goal measure on the relationship between performance approach
and performance avoidance goals.
Motivation and Self-determination
[Translated from Japanese] Oka Ryo (2010) meta-analytic study has shown that a comprehensive theoretical frame captures
the motivation in various areas. In this study, the correlation coefficient between the motivational concept of self-
determination identified the dimension behind the motivation concept. As a result of estimating the correlation coefficient
from the collected correlation matrix, the correlation coefficient between motivation to adjustment is larger and progresses to
self-decisiveness. The results show dimension of motivation, and self-determination of Two-dimensional control motivation.
Extrinsic / Intrinsic Motivation and Creativity
In a study, Cooper and Jayatilaka (2006) postulated that there was evidence of creativity-reducing extrinsic motivation that is
associated with rewards tied to task performance. There is also evidence that creativity-affecting motivation may also result
from extrinsic rewards that are not tied to task performance. This type of motivation may be due to feelings of obligation. A
research model was developed that examined how such obligation motivation differs from extrinsic and intrinsic motivations
in terms of influencing creativity. Given the importance of groups in organizations, the focus is on motivation and creativity
within interacting groups. The study performed laboratory experiment that involved groups focusing on requirements for an
academic information system. The results support a conceptual differentiation between the three types of motivation e.g.
extrinsic motivation, intrinsic motivation and obligation motivation.
Motivation Sources Inventory and Leadership Effectiveness
Barbuto et al. (2002) tested 2 motivation measures, the Motivation Sources Inventory (MSI) (Barbuto Scholl, 1998) and the
Job Choice Decision-Making Exercise (Harrell & Stahl, 1981), as predictors of leaders influence tactics. The authors
sampled 219 leadermember dyads from a variety of organizations and communities throughout the central United States.
Results strongly favored the MSI as a predictor of influence tactics. Limitations of the study include low power of
relationships, sample size as limited by the research design, and education levels of participants. Future researchers should
use larger and more diverse samples and test other relevant antecedents of leaders behaviors.
Intrinsic process yielded reliability alpha of .83 and its correlation with legitimating was .16*; instrumental motivation
yielded reliability alpha of .69 and its correlation with rational persuasion was .22 **; self-concept external motivation
yielded reliability alpha of .72 and its correlation with personal appeals was .23**; self-concept internal motivation yielded
reliability alpha of .77 and its correlation with pressure was .18**; goal internalization motivation yielded reliability alpha of
.66 and its correlation with exchange was .33** (* p < .05; ** P < .01).
Achievement Goal Motivation and Performance
Van Yperen et al. (2014) did a meta-analytic study to examine the relationships between self-reported achievement goals and
nonself-report performance and the moderating potential of achievement domain. Identifying achievement domain as
moderator improved understanding of the contexts. Because the achievement goal (AG) measure used in the study was
partially confounded with achievement domain, they examined the moderating role of this variable as well. Their findings
suggested that, approach goals (either mastery or performance) were associated positively with performance attainment,
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whereas avoidance goals (either mastery or performance) were associated negatively with performance attainment. These
relationships were moderated by achievement domain. Giving an example of education or work domain, and the sports
domain, the authors did not observe negative correlations between avoidance goals and performance. The absence of
statistical moderation due to AG measure suggested that the observed moderation of achievement domain cannot be
explained by the AG measure. The authors suggested further steps to integrate the achievement goal literature to broaden and
deepen understanding of performance attainment in competence-relevant settings, including the workplace, the sports field,
and the classroom.
Transformational Leadership and Performance
Charbonne et al. (2001) developed and tested a model in which transformational leadership affected sports performance
indirectly, through the mediating effects of intrinsic motivation. During the season, 168 university athletes provided data on
their perceptions of their coachs transformational leadership and their own intrinsic motivation. At the end of the season,
their coaches assessed the performance of the athletes. The results isolate intrinsic motivation as a mediator of the
relationship between transformational leadership and sports performance, suggesting that transformational leadership may
enhance performance.
Correlations observed between Individualized Consideration and Intellectual Stimulation was .55**; between Individualized
Consideration and Charisma was .44**; between Individualized Consideration and Accomplishment was .37**; between
Individualized Consideration and Stimulation was .27**; between Intellectual Stimulation and Charisma was .52; between
Intellectual Stimulation and Accomplishment was .51; and between Charisma and Accomplishment was .19** (** means
significant at (p < .01)
Transformational Leadership, Innovative Behavior and Task Performance
Aryee et al. (2012) used the self-concept based theory of leadership and social exchange theory to hypothesize processes
linking transformational leadership to follower performance outcomes. Specifically, they hypothesized that (a)
transformational leadership relates to followers work engagement both directly and indirectly through their psychological
states, (b) work engagement relates to innovative behavior, (c) innovative behavior relates to task performance, and (d) the
work engagementinnovative behavior relationship is moderated by leadermember exchange. Results from a test of these
relationships in a sample of employees of a large telecommunication company in China largely supported their hypothesized
model.
Of the 300 surveys distributed, 200 completed were returned. Seven were discarded because of unmatched subordinate
supervisor responses, thereby representing an effective response rate of 66%. Fifty-two percent of respondents (subordinates)
were male and reported an average age of 28.37 years (SD = 6.24). With regard to education, respondents reported an
average of 13.52 (SD = 4.07) years of education and an average organizational tenure of 3.89 years (SD = 4.41). Respondents
worked an average of 43.51 hr per week. Among the supervisors, 58% were male, with an average age of 35.84 years (SD =
7.67), an average of 14.30 (SD = 3.98) years of education, and an average organizational tenure of 9.55 (SD = 7.94) years.
Authors used the 20-item Multifactor Leadership Questionnaire to measure transformational leadership ( = .93; Rater Form
5X; Bass & Avolio, 2004). The Multifactor Leadership Questionnaire measures the dimensions of idealized influence
comprising attributed and behavior, individualized consideration, intellectual stimulation, and inspirational motivation.
Following prior research of (Bono & Judge, 2003; Piccolo & Colquitt, 2006; Walumbwa et al., 2008), they averaged the 20
items to form a single measure of transformational leadership as the following table.
Motivational Innovation and Task Performance
Rank et al. (2009) examined self-related subordinate variables as moderators of relationships between supervisors' leadership
behaviors (transformational as well as active-corrective transactional leadership) and subordinates' innovative behavior and
task performance. Based on behavioral plasticity and self-monitoring theory, they hypothesized that these associations would
be moderated by subordinates' organization-based self-esteem and by their propensity to modify self-presentation, a major
facet of the self-monitoring construct. Field survey data (N = 161) collected in research and development, marketing and
human resources departments of several German companies revealed that transformational leadership positively predicted
both criteria, whereas active-corrective transactional leadership negatively predicted innovation. As hypothesized,
transformational leadership related more strongly and positively to innovation for subordinates low in organization-based
self-esteem. When subordinates were low in self-presentation propensity, active-corrective transactional leadership was
negatively, and transformational leadership was positively associated with task performance.
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Results showed the means, standard deviations and zero-order inter-correlations of all study variables were: transformational
leadership yielded significant positive correlations with both innovation and task performance ( r = .50**) Active-corrective
transactional leadership was significantly and negatively correlated with innovation (r = - .17*) , but unrelated to task
performance. Study found that organization-based self-esteem was positively and significantly correlated with innovation and
task performance respectively (r= .22**, r = .27**), whereas self-presentation propensity was not significantly correlated.
Direct relationships between the two leadership predictors and the criteria, were tested by assessing the standardized
regression coefficients obtained from multiple hierarchical regression analyses. The control variables were entered into the
first block, the leadership variables into the second b lock, and the subordinate self-related variables into the third block of
the regression equations (Pedhazur, 1997). The predicted transformational leadership was positively related to subordinates'
innovation and task performance, respectively. Transformational leadership was positively and significantly associated with
innovation ( = .33, p < .01) and task performance ( = .29, p < .01). Active-corrective transactional leadership was
negatively and significantly associated with innovation ( = - .23, p < .01). With respect to the self-related subordinate
variables, Organization based Self Esteem (OBSE) related positively and significantly to innovation, whereas self-monitoring
related negatively and significantly to innovation in the regression equation.
Power Motivation and Performance
Zang et al. (2015) studied power motivation that would influence employees creative performance. Drawing on a relational
perspective, they developed a moderated mediation model in which power motivation enhanced individual creativity through
improving the quality of leadermember exchange (LMX). They further tested and found that supervisor support for
creativity would moderate the indirect effect of power motivation on creativity through LMX. In a sample of 410 Chinese
employees in 6 state-owned companies, the study found that power motivation was positively related to creativity, and that
this relationship was mediated by LMX. Moreover, the results suggested that the indirect relationship between power
motivation and creativity via LMX was stronger when supervisor support for creativity was high, than when it was low. They
used the following model to test their hypothesis.
Motivation and Passive Avoidant Behavior
Zachera and Bal (2012) have shown that, in general, older professors are rated by their research assistants to have more
passive-avoidant leadership styles than younger professors. They investigated professors age-related work concerns and
research assistants favorable age stereotypes as possible explanations for this finding. They collected data from 128
university professors paired to one research assistant each. Results show that professors age-related work concerns
(decreased enthusiasm for research, growing humanism, development of exiting consciousness and increased follower
empowerment) did not explain the relationships between professor age and research assistant ratings of passive avoidant and
proactive leadership. However, research assistants favorable age stereotypes influenced the relationships between professor
age and research assistant ratings of leadership, such that older professors were rated as more passive-avoidant and less
proactive than younger professors by research assistants with less favorable age stereotypes, but not by research assistants
with more favorable age stereotypes.
Results of the descriptive statistics and inter-correlations of the study variables have shown that Professor age was positively
related to research assistant ratings of passive-avoidant leadership (r = .18, p < .05), and negatively related to proactive
leadership (r = -.24, p < .01). The study also found that that professor age was positively related to leaders decreased
enthusiasm for research (r = .19, p < .05), growing humanism (r = .27, p < .01), development of exiting consciousness (r <
.65, p < .01) and increased follower empowerment (r < .25, p < .01). In contrast, the study found that professor age was not
significantly related to greater work selectivity or greater non-work selectivity.
Emotional Intelligence and Transformational Leadership
A study by Rahim et al. (2015) investigated the relationship between emotional intelligenceempathy and social skillsand
transformational leadership. Questionnaire data on emotional intelligence and transformational leadership for this study were
collected in five countries (U.S., Greece, Portugal, South Korea, and Bangladesh) from observers (an MBA student and two
of his/her colleagues who had the same supervisor, N = 685 triads). In other words, three observers rated their common
supervisor on the independent and criterion variables and the scale for each variable was created by averaging responses to its
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items for each group (triad). Empathy was positively associated with transformational leadership in all the five countries.
Social skills were positively associated with transformational leadership in the U.S., Greece, South Korea, and Bangladesh,
but not in Portugal. Overall, there were similarities in the results between the individualistic (U.S., Portugal, and Greece) and
collectivistic (South Korea and Bangladesh) cultures.
Findings were: Empathy was positively associated with transformational leadership and Social skills was positively
associated with transformational leadership.
Palmer et al. (2001) found that emotional intelligence has become increasingly popular as a measure for identifying
potentially effective leaders, and as a tool for developing effective leadership skills. Despite this popularity, however, there is
little empirical research that substantiates the efficacy of emotional intelligence in these areas. Emotional intelligence was
assessed by a modified version of the Trait Meta Mood Scale in 43 participants employed in management roles. Effective
leaders were identified as those who displayed a transformational rather than transactional leadership style as measured by
the multifactor leadership questionnaire. Emotional intelligence correlated with several components of transformational
leadership suggesting that it may be an important component of effective leadership. In particular emotional intelligence may
account for how effective leaders monitor and respond to subordinates and make them feel at work.
Scores on both the idealized influence sub-scales (charisma) significantly correlated with scores on the emotional monitoring
scale of the mTMMS (r = 0.44, p < 0.01); however, they did not correlate with the emotional management scale (r = 0.27 NS)
(idealized influence active and behavior respectively). Inspirational motivation was moderately correlated with both the
emotional monitoring (r = 0.42, p < 0.01) and emotional management (r = 0.37, p < 0.05) scales. Similarly, individualized
consideration also correlated with the emotional monitoring and management (r = 0.55, p < 0.01, r = 0.35, p < 0.05,
respectively) scales. Intellectual stimulation did not correlate significantly with either of the EI scales. Finally there was a
significant correlation between the contingent reward sub-scale of transactional leadership and the emotional monitoring
scale (r = 0.41, p < 0.01).
Research on Scholarship of Teaching Research and Service
Exhaustive literature search has revealed that Professors tripartite activities of Teaching, Research and Service are of
considerable interest for the community of scholars as professors motivation affects their productivity. Part 2 of the research
will shed some light on the relationship of Motivation and Productivity.
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Using the American Marketing Association Integrated Marketing

Plan Competition to Enhance Students Competitiveness
Mark DeFanti, Providence College
EXECUTIVE SUMMARY
The purpose of this paper is to recognize the benefits derived from group assignments while identifying the serious problems
that occur frequently in student groups such as diminished effort by some free-riding team members or disassociation from
the group by lone wolf team members. The American Marketing Association developed a national competition that was based
on creating and integrated marketing plan for Hersheys Take 5 candy bar. The project was adopted in an attempt to
leverage the many benefits of team projects, to minimize the drawbacks of client-sponsored team projects, and to enhance
students competitiveness in the job market.
Keywords: Marketing pedagogy, Group projects, Integrated marketing plan competition
INTRODUCTION
Given that much of the work that business students will eventually accomplish in the workforce will be the result of team
efforts (Finch, Nadeau, & OReilly, 2014; Sundstrom, De Meuse, & Futrell, 1990), use of student-led group projects in
business schools has been growing over the past couple of decades (Batra, Walvoord, & Krishnan, 1997; Huff, Cooper, &
Jones, 2002). Student-led group projects are widely used by marketing instructors because of their value as supplements to
lectures and other forms of instruction (Chronicle of Higher Education 1989).
The American Marketing Association provides a comprehensive competition guide, which outlines the deliverables expected
from the students, along with several financial summaries of Hersheys performance in sales and market share, which
avoided the problem of incomplete financial information often faced in client-sponsored projects (Parsons & Lepkowska-
White, 2009). From this project, students learned how to use secondary market research to perform a situation analysis; to
conduct primary marketing research; to segment a market, identify a proper target market and position its brand toward that
target market; devise a marketing strategy and tactics; and to propose how they would measure and evaluate their integrated
marketing plan. The students were given a $10 million budget to market Hersheys Take 5 candy bar in the U.S. over a 12-
month period beginning May 2014 and they were required to provide a one-year sales forecast for their marketing strategy
along with an additional four years of sales projections based on a continuation of their strategy while documenting their
assumptions.
LITERATURE REVIEW
Team Projects: The Positives
Without question, marketing educators recognize the benefits derived from group assignments (Williams, Beard, & Rymer,
1991). First and foremost, they help to achieve the learning objectives in a marketing course (Henke, Locander, Mentzer, &
Nastas, 1988). Moreover, past research in the education field suggests important advantages to group assignments that are
perhaps less widely appreciated (Williams et al., 1991). Past research suggests that there exist a broad range of benefits for
students participating in either theoretical student-led group projects for real companies or client-sponsored group projects
(Allen et al., 1987; Ashraf, 2004; Beard & Rymer, 1990; Chapman & Van Auken, 2001; Cooke & Williams, 2004;
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Dommeyer, 1986; Goodell & Kraft, 1991; Gremler, Hoffman, Keaveney, & Wright, 2000; Hansen, 2006; Henke, 1985;
Henke et al., 1988; Humphreys, 1981; Lepkowska-White & Parsons, 2006; McCorkle, Reardon, Alexander, Kling, Harris &
Iyer, 1999; McEachern, 2001; Parsons & Lepkowska-White, 2009; Payne & Monk-Turner, 2006; Poole & Hirokawa, 1986;
Scribner, Baker & Howe, 2003; Slavin, 1980, 1990; Wickliff, 1997; Williams et al., 1991; Williams & Sternberg, 1988). For
instance, they provide students with comprehensive, realistic experiences in marketing, and can develop other essentials of
the workplace such as communication skills (Williams et al., 1991). Because they are oriented to marketing careers, group
projects motivate students more effectively than individual assignments (Williams et al., 1991). They also give students the
opportunity to experience the full complexity of marketing problems (Henke, 1985; Henke et al., 1988).
Students in both theoretical and client sponsored group projects found them to be challenging, effective, practical, and
intense; to build more interest in the course; and to help them apply the concepts studied in class to real life situations while
giving them hands on experience and granting them an ability to see what they have learned (Parsons & Lepkowska-White,
2009). Moreover, with the client sponsored group projects, students enjoyed receiving comments from and having
interactions with their business clients (Parsons & Lepkowska-White, 2009).
Team Projects: The Negatives
Notwithstanding the value of group assignments in marketing education, they can present significant drawbacks (Strong,
1988). A serious problem that occurs frequently in student groups is diminished effort by some free-riding members
(Abernethy & Lett, 2005; Aggarwal & OBrien, 2008; Beard, Rymer, & Williams, 1989; Bosley, 1990; Dommeyer, 2007,
2012; Latane, Williams, & Harkins, 1979; Neu, 2012; Strong & Anderson, 1990; Tyagi, 2010) or disassociation from the
group by lone wolf team members (Barr, Dixon, & Gassenheimer, 2005; Dixon, Gasenheimer, & Barr, 2003). In addition,
for students working on client-sponsored team projects, the level of involvement and amount of student contact with the
client company can vary (Clark & Whitelegg, 1998; Swan & Hansen, 1996). Undergraduate students may be overwhelmed
by the ambiguity of client-based projects (Kennedy, Lawton, & Walker, 2001). This could be attributed to the fact that
undergraduate students are just learning the fundamentals; they are overwhelmed with the task of having to immediately
apply them and then present their ideas to real businesses (Parsons & Lepkowska-White, 2009). They may also become
frustrated if the clients are not responsive enough and cannot or do not want to provide them with sufficient information
about their businesses (Kennedy et al., 2001).
Some students believed that client-based projects are too time consuming (de los Santos & Jensen, 1985). Students also
experienced frustration with their inability to reach clients when they needed to and lack of sufficient dialog with the
businesses. Some students were overwhelmed by the scope of the project and the fact that they had to learn the concepts,
create a project and present it for a real client. Others wished they worked for a different client. Others found the projects
time-consuming or frustrating when it came to working with their groups (Parsons & Lepkowska-White, 2009). Finally, team
projects frequently fail to provide the intended learning experience for a variety of reasons, among them students lack of
effective interpersonal and small group skills, which leads to counterproductive group conflict (Forman & Katsky, 1986;
Johnson & Johnson, 1987; Kohn, 1986).
Client-sponsored group projects are also time consuming for the faculty. Faculty members must screen potential clients for
appropriateness and reliability, decide the nature and scope of the project, invest time before implementing the project,
manage and set client and student expectations throughout the course of the project, and decide how to provide useful and
timely feedback (Lopez & Lee, 2005). Finding appropriate real-life projects that meet the needs of both the instructor and the
students can be a challenge (Goodell & Kraft, 1991; Razzouk, Seitz, & Rizkallah, 2003). Faculty do not see the rewards of
implementing them, especially if other activities like research are more valued at their universities (McIntyre, Webb, & Hite,
2005). In addition, time and effort are required of the instructor who must devote to critiquing and grading the assignments
submitted by the students (Clark, King, & Jurn, 2012). For some faculty, the projects are viewed as not being worth the
trouble (e.g., Albanase & Mitchell, 2013; Gackowski, 2003; Gaidis & Andrews, 1990; Goodell & Kraft, 1991; Haas &
Wotruba, 1990; Lizzio & Wilson, 2004; Lopez & Lee, 2005).
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THE AMERICAN MARKETING ASSOCIATION: THE TEAM PROJECT IT

CONCEPTUALIZED
Goals and Characteristics
In order to take advantage of the numerous benefits offered by group projects while attempting to avoid the aforementioned
difficulties faced by students and faculty of working with actual clients, an advanced advertising course at a northeastern
liberal arts college adopted the American Marketing Associations integrated marketing plan competition for Hersheys Take
5 candy bar as its course project. The semester long group project in the advanced advertising course helped students learn to
apply the course material; develop specific skills, competencies, and points of view needed by professionals in the field most
closely related to this course; and acquire skills in working with others as a member of team. The course introduced the
students to four major parts of advertising: the process of advertising, the planning of advertising, preparing the advertising
message, and placing the advertising message. The course also focuses on the attainment of skills necessary for students to
advance in their professional lives. These skills include creativity, critical thinking and the evaluation and creation of
effective advertising communications, among others. Finally, the course aims to help the students gain progress toward
achieving the four undergraduate learning goals. First, students will build on the liberal arts core to demonstrate an ability to
think critically and make business decisions that appreciate the need to balance the often conflicting demands of the
marketplace, the global environment and society. Second, students will communicate effectively, using technology when
appropriate. Third, students will demonstrate ongoing development of and strengthened skills in interpersonal relationships
and teamwork. Fourth, students will understand the importance of behaving ethically in their professional lives.
Challenges
To a large extent, the problem of inequitable contributions was solved with a grading system that gave appropriate weight to
individual contributions, as well as to the groups achievement (Williams et al., 1991). In doing so, it satisfied the necessity
for individual accountability (Williams et al., 1991). To ensure students achievement (based on course objectives), the
reward structure motivated students to engage in effective group processes as well as to produce a quality product (Williams
et al., 1991). The team assignment combined individual accountability with a group goal (Johnson & Johnson, 1987; Slavin,
1990; Webb, 1982). The team assignment was an interdependent task, a cooperative goal that a student was able to achieve
only insofar as the group achieved its goal (Williams et al., 1991). Such a structure provided an incentive for students to help
their fellow students learn, even to bring the slower ones along, and was the key to making the group project a fully
cooperative learning experience (Williams et al., 1991). Students individual achievement was monitored through numerous
student meetings the professor both in class and out of class (Williams et al., 1991; Larson & LaFasto, 1989). These meetings
took place both on an individual basis and a functional team basis with students acting as account executives, publicists,
media planners, researchers, artists and copy writers. Meeting minutes (Bogert & Butt, 1990; Larson & LaFasto, 1989),
individual logs (Goldstein & Malone, 1984; Nezlek, Wheeler, & Reis, 1983) as well as mid-term and end of term peer
evaluations (Williams et al., 1991; Darian, 1988; Dommeyer, 1986; Barr, Dixon, & Gassenheimer, 2005) accompanied by
confidential memos (Williams et al., 1991) were collected from the students. In addition, the professor reserved the right to
fire a student from the group at the mid-term if a students peer evaluations indicated excessive free riding (Abernethy &
Lett, 2005).
PROJECT IMPACT
Consistent with previous research regarding the academic benefit of using American Marketing Association competitions
(Aurand, St. Clair, & Sullivan, 2012), the project did indeed encourage team members to help each other learn (Williams et
al., 1991). The students individual learning is evidenced by their excellent performance on project-related short answer
exam questions. For instance, students were able to identify several reasons accounting for the difficulty in measuring
marketing communications effectiveness such as choosing a metric (e.g., brand awareness, attitudes toward the brand,
purchase intentions, sales volume); gaining agreement among individuals from different backgrounds and with varied
organizational interests who often see the world differently or operate with varying ideas of what best indicates suitable
performance; collecting accurate data that are reliable and valid; and calibrating specific effects of individual program
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elements so that even better decisions can be made in the future as to how best to allocate resources (Shimp, 2013). Students
were also able to successfully compare and contrast the concepts of share of market and share of voice as well as discuss the
implications for advertising budgeting (Shimp, 2013).
The students collective learning is also evidenced by the excellent scores they received on the judges scorecard, which
resulted in their top 20 finish in the national competition, earning them an honorable mention. The project was also selected
for presentation at the northeastern liberal arts colleges annual celebration of scholarship. The students also discussed their
unique experience in their job interviews and frequently mentioned the improvement of their groups communication and
overall effectiveness, which are critical categories of workplace skills (Davis & Miller, 1996). Finally, the students were
hired for advertising and marketing positions at C-4 Analytics, Digitas LBi, Fidelity Investments, NBC Universal, Ogilvy
Health, and Universal Pictures, among other firms.
FUTURE RESEARCH
Encouraged by this outcome in the colleges first entry into the competition, the faculty member adopted the American
Marketing Association competition as the final project in the Principles of Marketing taken by freshman marketing majors at
a northeastern liberal arts college. Future research should investigate the impact of implementing such a time-consuming
project on individual learning as measured by quizzes and exams. If sample size permits, students individual learning can be
compared across groups specified by gender, major, and year of graduation, among other characteristics. In addition, more
robust forms of assessment of the learning outcomes, such as post-project reflection, can be incorporated.
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Professional and Occupational Balkanization of Academicians

Institutional Voting Rights and Duties
Kamal Dean Parhizgar, Texas A&M International University
Robert R. Parhizgar, Texas A&M International University
EXECUTIVE SUMMARY
Within the contextual boundaries of a college or a university entity, there are three major internal and external groups that
work together to bring reality in inspirations, aspirations, visions, and missions of a college or university: (1) faculty
members, (2) academic administrators, and (3) boards of trustees/regents. Each group makes their decisions based on a set
of parliamentarian system rules, regulations, policies, and procedures. Nevertheless, in all above three groups, there are
three types of voting systems that we have called them as professional, occupational, and societal balkanization of voting
systems: (1) individual personal rights and duties, (2) institutional group rights and responsibilities, and (3) societal civilian
elitism rights and power. Furthermore, the shifts from professionalism to occupationalism, and from occupationalism to
citizenship mark long steps. There is a clear view that the shifting power is the matter of morality into ethicality, and
ethicality into compliance with legality. In so doing, it is shifting from individualized professional conscience to the ethical
social consciousness, and from professional fairness into institutional justness. It is a philosophy concerning ancient and
modern professional group rights and duties of faculty governance and modern occupational rights and responsibilities of
academic administrators; executive governance. In this paper we have defined the voting systems concerning appointments,
retention, promotion, tenure, and performance appraisal. Also we have defined and analyzed three terms of professionalism,
occupationalism, and citizenship elitism.
Keywords: Higher Education, Professionalism, Balkanization
WHAT IS PROFESSIONALISM?
Parhizgar and Parhizgar (2006, p. 610) indicated that the notion of professionalism does seem to be a more impersonally
regulated concept and often has been structured in terms of serving others beyond self-interest. Every day we hear the terms
profession, professional, and professionalism. At one level, we describe a member of a profession is related to a group
of experts who are committed to certain self-made rules and regulations through observing a pluralistic professional codes
of ethics. These professional codes of ethics mandate a member of a profession to observe them in addition to the
occupationally mandated rules. Accordingly, Edgar Schein (1966, p. 3) has sketched out the basic elements in conceiving the
concept of professionalism as follows: In an economical term, professionalism is more oriented towards elitism. This means
more should be given to those who have developed their intelligence rather than more is given to those who have not. It is
common for the incumbents of a profession to regard themselves as people whose services are given to others in a way that
leaves room for their personal selfishness. The idea of professionalism does seem to be more impersonally regulated and has
often been viewed as client-centered precise separation of selfishness from altruistic perceptions. In philosophical terms,
professionals have been supposed to enter their professions for love rather than money. This means that faculty members in
colleges and universities are serving students beyond their personal financial interests. Professionals are conceived as
meritocratic experts in specific scientific branches of knowledge. They possess all possible pluralistic competencies to
practice their jobs and morally, ethically, and legally are accountable for their success or failure. This perception enshrines a
range of virtues more than a set of scientific skills. This means that professionals practice their skills with very high levels of
virtuous standards. Furthermore, professionalism is known as an altruistic concept to be highly devoted to others interests
(e.g., students learning). Professionals are loyal to their specializations rather than to be dominated by their organizational
superior authorities. This notion is based on the level of performances to be loyal to professional obligations rather than to
their personal interest groups. Professionals during their practices avoid self-serving interests and strive for meeting the needs
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of their clients (e.g., medical doctors, professors, teachers, judges, nurses, and firefighters). Professionalism avoids
dehumanization of a group of people whose intentions and practices serve clients rather than making self-profit. Within the
practice of professionalism philosophy, clients easily perceive the integrity of practitioners who are judged to be on their
side. Nevertheless, professionalism avoids hypocrisy (Carr, 2000; De George, 1995)
WHAT IS OCCUPATIONALISM?
We may begin our analytical discussions by recognizing a broad distinction among professionalism and occupationalism.
These ideas carry different definitions, power, authority, responsibility, and accountability in colleges and universities. Both
terms refer to specific ranges of activities. Occupationalism is viewed as a societal bureaucratic ordering (legal) system
concerning the values, contributions, effectiveness, and efficiency of all types of jobs and jobholders in a college/university.
Occupations and occupational incumbents attempt to convince the public, legislators, and community authorities that they
deserve high respect, prestige, privilege, and special treatments in society because of two major reasons: (1) they claim that
they begin to generate their own esoteric and useful knowledge including branches of scientific expertise, skilful pragmatic
know-how methodological thinking for doing things, and both possession of experiential and experimental valuable data, and
(2) on the basis of acquisition of scholarly knowledge and rendering services to their clients for receiving very high pays (e.
g., university presidents, provosts, deans, and chairpersons). They believe that like professionals (e.g., physicians, professors,
and lawyers) they should be entitled to regulate their own conduct from within their occupations, rather than solely being
imposed by authoritative funding agencies. These people believe that ethical values and moral convictions are created for
outside public consumption, so that an occupation can gain full administrative authorities and have little impact within their
groups because they are bounded with legal agencies to implement all their policies and procedures. Some ethicists like
Douglas (1978, p. 13) take strong issue with this view and view occupational ethics as a deceit and a snare; a means by
which the establishment within an occupation can control and hide its activity from the public and thereby create a monopoly
in academic administration. Furthermore, he argues that even if the occupation takes its self-policing seriously, it could be
used as a club to control deviance of the more creative non-establishment members whose new ideas are vital, particularly for
young people. Furthermore, an academic occupation is a kind of vocation in which people perform specific jobs for receiving
economic incentives as incomes, wages, salaries, commissions, and special fees for rendering their services to their clients;
namely students. It is common for the higher educational incumbents of so-called vocations to regard themselves as
occupationals. Usually, academic administrators will be heavily involved with administrative bureaucratic red-tapes and time
consumption that they will not have enough time to do research.
Whereas professionalism seems to be viewed as loyalty to the notion of expertise codes of ethics, occupationalism is
viewed more as having loyalty to the civil codes of conduct. The expertise code of ethics means that professorial
professional commitment is to provide students high levels of teaching effectiveness, qualitative research productivities, and
scholarly production of knowledge by publications, and providing academic services to societies for all types of people
within the boundary of humanity without any discriminating policy such as race, religion, color, ethnicity, political ideology,
nationality, and wealth. The civil codes of conduct mean that jobholders must act within the legal boundaries of their
power and authority. Occupationalism is enshrined with legal standards and requires a specific set of skillful training
programs. Occupationals may not be professionals, because they do not require the same equivalent qualifications of
professional expertise. For example, in some university systems, nonacademic figureheads such as politicians, military
leaders, and business CEOs become presidents of colleges and universities. Therefore, the main objective for an occupation is
the pursuit of self-interest. From this perspective, if university professors, lawyers, or physicians convert their jobs from
professionalism to occupationalism through self-interest, their clients will suffer from such a self-interest. Then, they will not
be trusted to serve people.
Another dimension of occupationalism is related to the priority of the notion of economic self-means and ends. From this
perspective, occupationalisms priority is to first fulfill self-interest and second to serve others. As we indicated before, the
notion of professionalism is a personal attachment to a kind of scientific job expertise that requires avoidance of preferential
personal welfare and/or self-interest. It is a fact that all occupations in our society are no more than that they get paid for what
they do, fee for services. Within this sense of understanding in a college or university, academic administrators are those
administrators to satisfy their employers interests (e.g., Boards of Trustees/Regents).
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Occupationals are known as having a cultural custodian view of performing their jobs in return for receiving a specific
financial reward. One reason for including such a financial view among different types of occupations is that a certain anti-
professionalism stance has been found within the organizational bureaucratic mandates. Thompson (1961, p. 170) has stated:
The bureaucratic culture makes certain demands upon clients as well as upon organizational employees. There are people in
our society who have not been able to adjust to these demands. To some people bureaucracy is a curse. They see no good in it
whatsoever, but view the demands of the modern organization, and is not simply a reaction to bureau pathology. Its source
will be found within the critic himself, not within the organization. It is, in fact, a kind of social disease, which we propose to
call bureausis. Furthermore, Schwartz (2001, p. 247) has indicated that there are eight themes through which jobholders
perceive them as codes of conduct, as follows: (1) rulebook, (2) signpost, (3) mirror, (4) magnifying glass, (5) shield, (6)
smoke detector, (7) fire alarm, and (8) club.
Whereas professionalism seems to be viewed as loyalty to the notion of independent commitments to expertise rules and
principles, occupationalism is viewed more towards the notion of being loyal to the civil policies; even in dictatorial and
authoritarian nations. Expertise policy is a set of shared values flowing from the part of an individuals intellectual self-
disciplinary perceptions of professional membership; professionalism. The civil policy is viewed as top-down desired
conceptions of elite groups of power-holders concerning societal ordination of citizens in a society; occupationalism.
WHAT IS CITIZENSHIP ELITISM?
Global citizens believe that academic institutions of higher learning should educate all adult youths in order to promote
public awareness concerning individual freedom, collective civil liberty, and peaceful behavioral coexistence among nations.
This is the exact meaning of academic societal massification. Academic massification prevents national isolation, which is a
weakening of the social fabric expressed in declining the spirit of democracy, and strengthening global leadership against
ignorance, negligence, prejudice, and belligerence. Also, academic massification can jolt global citizens from their
preoccupation with themselves. Nevertheless, the mushroom development of virtual colleges and online universities, through
online course offerings and distance learning degree offerings, have caused some colleges and universities to lose their
academic integrity. Some non-accredited virtual colleges and universities have converted higher education into printing
certificate institutions. The main reason for such a shortfall is saving costs in educating citizens. But on the other side,
commercialists, industrialists, fundamentalists, and militarists pursue their societal objectives through supporting elite groups
of students in order to exploit resources for their individual, national, and political interests. Within the magnitude of
academic elitism and academic massification, there are several remote controlling authorities that influence social costs of
colleges and universities, both, in terms of quality and quantity, teaching and researching, drop-out rates and lengthy periods
of study. Also, in between these two extreme zones, other interest groups influence the direction of vision and mission of
colleges and universities as boards of trustees/regents whose members are appointed by political authorities and/or investors.
Nevertheless, the qualitative outcome assessments of academic efficacy in industrial nations today are more important than
ever before. They, increasingly, determine societies evolutionary knowledge exploration and potential in econo-political
terms, and they affect global competitiveness and industrial choices.
Some colleges and universities evaluate faculty members qualifications based on six types of voting systems: (1)
supermajority voting system (2) simple majority voting system, (3) cumulative voting system, (4) weighted voting system,
(5) majority and minority voting system and (6) gerrymandering voting system. For defining and analyzing all six types of
faculty voting systems, in the following section we will elaborate on the basis of six academic theories: (1) meritocracy, (2)
bureaucracy, (3) multiculturallacy, (4) timocracy, (5) plutocracy, and (6) kakistocracy in more depth.
Table 1: Comparative Academic Administrative Institutional Philosophies and Faculty

Professional Voting Systems
ACADEMIC FACULTY VOTING ACADEMIC OCCUPATIONAL STRUCTURAL VOTING SYSTEM

SYSTEMS ADMINISTRATIVE AUTHORIES AND COMMITTEES
INSTITUTIONAL GOVERNANCE* FACULTY GOVERNANCE
Supermajority Voting System Meritocracy: The term meritocracy Supreme Faculty Council:
was invented in 1958 by the British University Supreme Faculty Council is
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sociologist Michael Young in his composed of full tenured professors.

compelling little book of so-sci-fi which Since the rank of professorship is the
is called The Rise of Meritocracy higher academic expertism, therefore
(Lemann, 1997, p. 32). It is an they are qualified to evaluate all faculty
academic management system in which members based on their professional
employees in an organization have been codes of ethics. This council looks like
rewarded and promoted based on their the Supreme Court of the United States
knowledge, talents, skills, and of America within the micro level of
performance achievements rather than societal representative democracy.
through their affluent socioeconomic
class privileges, wealth, or by
supporting political interest groups.
Simple Majority Voting System Bureaucracy: The term bureaucracy Academic Faculty Senate:
has been defined by the famous Since a college/university is a function
sociologist Max Weber (1921) for of democracy, therefore all faculty
improving the structure of large-scale members regardless their academic
organizations and in designing the ranks should represent their clients and
blueprint of a highly sophisticated on behalf of the institutional vision and
operational system to cope with socio- mission should make academic
political issues concerning decisions in regard of curriculum
organizational objective achievements. designs and degree plans.
Cumulative Voting System Multiculturallacy: Parhizgar (1999, p. Holistic People Governance:

43) has defined: Multiculturalism is President, University Executive
submaximization of integrated Academic Administrators, Supreme
cultures Multiculturalism means a Faculty Council, University RPT
healthy environment where everyone Committee, College RPT Committee,
has appropriate and respectfully a safe Division/ Department RPT Committee
place according to his/her personal
qualifications. People respect each
other regardless of their race, age,
gender, religion, language, and place of
birth differences and/or group
affiliation. Therefore, multiculturalism
is the means of pluralistic participation
among different people in one global
peaceful environment to share their
mutual understanding for pacing the
whole social system towards a
meaningful pluralistic achievement It
is not related to grouping people into
majority and minority, or professional
and occupational power holders and or
faculty and academic administrators.
Weighted Voting System Timocracy: Timocracy is a form of Academic Professional Governance:
academic administrative process in Honorable Professional External
which love of honor is the dominant Expertises and University Academic
motivational doctrine for academicians. Councils Votes that faculty members
Timocratic academic voting system is are grouped based on professorship,
free from jealousy, revenge, favoritism, associate professorship, and assistant
nepotism, bias, discrimination, egoism, professorship. These are the bedrock of
selfishness, conspiracy, and a university system and each group has
enviousness. It is based on altruism; its proportionate quantitative and
judging beyond self-interest and qualitative voting systems (both in
egoism. Also, timocratic academic relationship of seniority and
administration is a form of holistic meritocratic academic professionalism).
professional management in which
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certain levels of academic qualifications

are requisites as qualifications for both
professional faculty members as voters
and as well as for applicants.
Majority and Minority Voting Plutocracy: Accordingly, in the Egalitarian Political Academic
System conventional political system, the Governance:
majority party that gains all the power Invisible Hands of Political,
and the minority party as losers gets Legislative, and Industries, Board of
none. Such a voting system seems Trustees/Regents, and the University
attractively democratic. In reality, it is President Votes.
based on plutocracy. This means that
those faculty members that gain the
minority votes by the democratic
faculty voting system will be denied
appointment, retention, promotion,
tenure, and merit pays. This is a
politically oriented voting system that
they need to get along with majority
votes and should not be as claimants
because the rule is based on the
principle that those faculty members
that have received the majority votes
should make the major rules and thus
this is the rule of the plutocracy that
money-power manipulates the
university system.
Gerrymandering Voting System Kakistocracy: The conceptual Impoverish Patronal Faculty System
philosophical belief of kakistocracy is Governance:
defined to be manipulated by special University Community Advisory
wealthy, powerful, and influential Board, Faculty Senate, Representatives
people by appointing the least able of Student Governance Association,
president to lead a university and or the Staff, Librarians, Athletic Coaches,
least knowledgable faculty member as Counselors, Computer Center, Institute
the main decisi0on-maker. This means Directors, Department Chairs, Deans,
that appointments, promotions, tenure Provost, President, and Board of
status, and merit pays of faculty Trustees/Regents Votes
members would be based on the patron
system. Accordingly, in order
presidents to justify their decisions,
they apply gerrymandering faculty
voting system to promote and granting
tenure to faculty members. Usually,
kakistocratic university presidents look
for being popular in the community by
the supports of local influential interest
groups. In order to do this, they apply
gerrymandering voting system to
pretend that they are democratic
leaders. In reality, these academic
administrators try to manipulate other
faculty members and gain to the
academic administrative positions.
When they get to the power
position,they reward yes-men and yes-
women faculty members based on the
reversed merit pay system: giving the
most to the least knowledgeable faculty
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members and giving the least to the

most highest level of performance of
respected faculty members.
Source: Parhizgar, K. D., & Parhizgar, F. F. (2012). Organizational behavior: global multicultural perspectives. San Diego;
Cognella Publishing Company.
CONCLUSION
There is a real statement that one cannot measure what faculty members functions in a college or university to be measured.
Such an impression can hurt faculty members because it suggests that any real value added to the students learning statutes
may be mystical or magical. Defining and benchmarking expected performance standards in a college or university are not
easy tasks in teaching and learning processes, because they are not subject to a crystallized quantification of outcome
assessments. Assessing the contribution of faculty members to the processes of students learning may vary course-to-course,
discipline-to-discipline, faculty-to-faculty, and student-to-student. This is the complexity of academic strategic performance
appraisal. Nevertheless, professional and occupational appointments, promotions, tenure, and performance appraisals are
facts that all colleges and universities need to conduct them. Academic institutional effectiveness is often defined as the
extent to which strategic academic objectives have been achieved. Academic institutional efficiency is the degree to which a
college or universitys operations are done in an economical manner. Efficiency can also be thought of as cost per unit of
output productivity in terms of the academic contribution. For such reasons, faculty members, academic administrators, and
boards of trustees/regents may follow different management systems. Each system provides inclusive end results in a
college/university academic efficacy.
REFERENCES
Carr, D. (2000). Professionalism and ethics in teaching. London/New York: Routledge, Taylor and Francis Group.
De George, R. (1995). Business ethics. Englewood Cliffs, New Jersey: Prentice Hall.
Lemann, N. (1997). The SAT Meritocracy. The Washington Monthly. September, 29, p. 32.
Moore, J. (1996). What is really unethical about insider trading? In Robert A. Lamar (Ed.), Ethics in the workplace: selected
readings in business ethics. Minneapolis/St. Paul: West Publishing Company.
Parhizgar, K. D. (1999). Comparative analysis of multicultural paradigm management system and cultural diversity models
in multicultural corporations. Journal of Global Business, 10(18), 52.
Parhizgar, K. D., & Parhizgar, R. R. (2006). Multicultural business ethics and global managerial moral reasoning. MD:
University Press of America.
Parhizgar, K. D., & Parhizgar, F. F. (2012). Organizational behavior: global multicultural perspectives. San Diego: Cognella
Publishing.
Schwartz, F. N. (1989). Management women and the new facts of life. Harvard Business Review, 67, 65-67.
Thompson, G. F. (2000). Toward a relegitimation of higher education: reinvigorating the humanities and social sciences. In
Brown, R. H. & Schubert, J. D. (2000). Knowledge and power in higher education. New York: Teachers College,
Columbia University.
Schein, E. (1985). Organizational culture and leadership. San Francisco: Jossey-Bass.
Weber, M. (1921). Theory of social and economic organization. London: Oxford University Press.
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The Relationship between Undergraduate Student Attitudes

about Hypothetical Marketing Moral Dilemmas and Two
Personality Traits: Test Anxiety and Need for Social Approval
Carl Malinowski, Pace University
EXECUTIVE SUMMARY
The study investigated the relationship between ethical attitudes and two traits, test anxiety and need for social approval.
Five hundred seventy undergraduates were studied. It was found, as hypothesized, that the higher the test anxiety, the more
moral the attitudes to hypothetical marketing moral dilemmas. Also found, as predicted, was that the greater the need for
social approval, the more ethical the attitudes to the ethical scenarios. Implications of these findings for management and
marketing were some of the conclusions. It was also concluded that appropriate use of the data could provide a global
competitive advantage. The paper ended with suggestions for future research.
Keywords: Students, Ethical scenarios, Attitudes, Fear of failure, Social desirability
INTRODUCTION
Personality is the essence of any individual; the persons unique combination of traits. It is, therefore, the best way for an
organizations manager to understand employees and customers. An employer who understands the personalities of workers
and consumers may have a competitive advantage that extends globally.
Before management and marketing became social sciences, psychology was an established one. According to Schultz and
Schultz (2012), Freuds superego gave personality a moral dimension. If personality is extended to business ethics, this
knowledge can give a firm a more enhanced global advantage.
PRIOR RESEARCH RELATING BUSINESS ETHICS AND PERSONALITY
In recent decades the following personality characteristics were related to business ethics: (1) religiosity (Barnet, Bass, &
Brown, 1996), (2) social responsibility ( Burton, Farh, & Hegarty, 2000), (3) relativism-idealism (Erffmeyer, Keillor, &
LeClair, 1999), (4) values ( Fraedrich, Herndon, Iyer, & Yu, 2000 ), (5) moral intensity (Jones, 1991), (6) locus of control (
McCuddy & Peery, 1996), (7) materialism (Muncy & Eastman, 1998), (8) Type A personality (Rayburn & Rayburn, 1996),
(9) individualism-collectivism ( Teoh, Setany, & Lim, 1999), (10) defense mechanism (Waldman, 2000) and (11) ethical
sensitivity (Wittmer, 2000).
WHY TEST ANXIETY AND NEED FOR SOCIAL APPROVAL ARE BEING STUDIED
TOGETHER
On the surface, it may appear unusual to the reader that the same paper focuses on both the need for social approval and test
anxiety. After all, the former variable focuses on the individuals interest in saying and doing socially desirable things. But
the latter one has an intrapersonal ring to it. Yet test anxiety is regarded in psychology as the equivalent of fear of failure. But
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failure is a concern not only of how the individual regards the self but how others see the person. Therefore, people high in
the need for social approval as well as those high in test anxiety may react comparably when their ethical attitudes are
measured.
PURPOSE OF THE STUDY
The present study relates test anxiety and need for social approval to undergraduates responses to hypothetical marketing
moral dilemmas. The following combination of features differentiates this investigation from prior research in the area of
business ethics and personality: (1) Neither test anxiety nor need for social approval appear often in the business ethics
literature, (2) The combination of the two scales may have never appeared before in this area of scholarship, (3) A variety of
moral dilemmas is presented, (4) The ethical scenarios focus more on marketing issues than on other business management
issues, (5) Moral attitudes are studied in terms of participants thoughts, feelings and action tendencies rather than on just one
or two of these dimensions, (6) Both the urban and suburban campuses of the cooperating university were surveyed, (7)
Undergraduates in all business majors volunteered for the study and (8) Participants included freshmen, sophomores, juniors
and seniors.
HYPOTHESES
Prior research relating test anxiety and ethics. Bergin and Bergin (2012) call test anxiety a dispositional proneness toward
anxiety in test situations that interferes with performance (p. 325). It starts hurting test scores as early as the third grade. It
is not a lack of ability, but difficulty in trying to show ability (p. 326). Steinberg (2014) agrees that it is manifested in
evaluation situations (p. 387). Eggen and Kauchak (2013) believe it is classically conditioned. But why would test anxiety
be correlated with measures of morality? Malinowski and Smith (1985) wrote: We regard test anxiety as indicative of
strength of motivation to avoid failure. Because cheating on a test serves as added protection against failure , subjects with
high test anxiety should be more inclined to cheat (p. 1019). Hill and Eaton (1977) found this to be true. Smith, Ryan and
Diggins (1972) found that undergraduates high in test anxiety (fear of failure) reported more cheating on exams than
participants lower on this trait. Malinowski and Smith (1985) studied the honesty with which college males reported scores
on a rotary pursuit task. Number of trials cheated on was positively related to test anxiety.
But how should test anxiety be correlated with marketing ethics attitudes? It was noted above that test anxiety is equivalent
to fear of failure. Failure is a negative perception, as well as negative affect. But failure is not only self perception but a social
one as well. Therefore, the way we answer questions about hypothetical moral dilemmas could reflect our anxiety about how
others feel about us and what they think of us. Thus, people with high test anxiety should give more ethical attitudinal
responses than those lower in test anxiety.
Hypothesis 1: Compared to undergraduates lower in test anxiety, those higher in test anxiety will be more likely to (a)
believe the ethically questionable action is wrong, (b) anticipate guilt if they consider doing the same thing and (c) say they
would not do it.
Prior research relating need for social approval and ethics. Wood, Wood and Boyd (2011) say: Respondents may try to
position themselves in a good light or they may deliberately mislead (p. 18). This distortion can be done knowingly or
unknowingly, say Dozier, Husted and McMahon (1998). Weiten (2013) sees social desirability as a tendency to give
socially approved answers to questions about oneself (p. 62). To Feist and Rosenberg (2012), the need for social approval is
a tendency toward favorable self-perception that could lead to inaccurate self-reports (p. 60). Eggen and Kauchak (2013)
believe that need approval is the desire to be accepted and judged positively by others (p. 261). Nevid (2013) adds that
social desirability may be especially strong in situations where people have a considerable stake in what others think of
them (p. 29). This trait, says King (2011), can cause people to say what they think will make them look better (p. 408).
But why would need for social approval be correlated with measures of ethics?
Malinowski and Smith (1985), agreeing with Jacobson, Berger and Millham (1970), write that the Social Desirability Scale
(Crowne and Marlowe, 1964) , measures a motive to avoid social disapproval, and that such an avoidance motive will be
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aroused in situations in which a subject confronts failure that might mean humiliation or rejection (p. 1019). Malinowski and
Smith (1985) studied the honesty with which college males reported scores on a rotary pursuit task. Cheating was positively
correlated with need for social approval. But how should need for social approval predict marketing ethics attitudes? People
who crave the approval of others should give more ethical attitudinal responses than those lower in social approval.
Hypothesis 2: Compared to undergraduates lower in need for social approval, those higher in need approval will be more
likely to (a) believe the ethically questionable action is wrong, (b) anticipate guilt if they considered doing the same thing and
(c) say they would not do it.
METHOD
Subjects. A total of 570 undergraduates from a large Eastern multi-campus university were studied. Participants from both
the urban and suburban campuses contributed to the research. The students majored mostly in accounting, finance,
management or marketing. Freshmen, sophomores, juniors and seniors were included. Table I shows the demographic
breakdown of the sample.
Materials. Test anxiety was measured by Part I of the Test Anxiety Questionnaire (Mandler & Sarason, 1952). Scores from
Part I have been shown to correlate between .84 and .90. with scores from the entire Test Anxiety Questionnaire (Smith,
1965). Need for Social Approval was measured by the Social Desirability Scale (Crowne & Marlowe, 1964).
Attitudes about hypothetical marketing moral dilemmas were measured last. The ethical scenarios dealt with these issues
(variable names in parentheses): (1) contents of bottled water (WATER), (2) corporate response to oil spill (OIL), (3) bribe a
foreign official (FORMLK), (4) charging more for a green container (ENVBOX), (5) selling unaffordable books (BKSLS),
(6) selling alcohol to minors (LIQUOR), (7) blinding animals while testing cosmetics(ANTEST), (8) selling cigarettes to
inner city Black people (CIGRET) and (9) not adding warning labels to explicit rock lyrics (RAP). Participants were asked to
respond cognitively, affectively and behaviorally to the nine dilemmas. For each attitude component, a ten point scale (-5 to
+5) appeared. The letters A, B and C represent cognition, affect and behavior tendency, respectively in Table II.
Since they are clearly marketing dilemmas, face validity is apparent. The variety of dilemmas attests to content validity.
Previous research shows construct validity. In those studies, differences in marketing ethics attitudes were found as follows:
(1) Men versus women undergraduates (Malinowski & Berger, 1996; Berger & Malinowski, 2006), (2)U.S. versus foreign
born (Berger & Malinowski, 1998), (3) U.S. versus Asian ancestry (Berger & Malinowski, 2002), (4) Judgers versus
Perceivers on the Myers-Briggs Type Indicator (Malinowski, 2003), (5) Catholic versus non-Catholic (Malinowski & Berger,
2004), (6) Asian born in Asia versus Asian born in the U.S. (Malinowski, 2005), (7) U.S. versus Latin American
(Malinowski, 2007), (8) High versus low Machiavellian, (9) Younger versus older (Malinowski & Berger, 2009), (10) Black
versus white (Malinowski, 2010), (11) U.S. versus Western European (Malinowski, 2011), (12) High versus low moral
judgment (Malinowski, 2012), (13) U.S. versus Indian (Malinowski, 2013) and (14) Men versus women graduate students
(Malinowski, 2014). In addition, the hypothetical marketing moral dilemmas were adapted for use in research on legal issues
(Comizio, Malinowski, & Kraus, 2008).
Procedures .Participants first did the Test Anxiety Questionnaire. They were then given the Social Desirability Scale.
Finally, they were presented with the nine hypothetical moral dilemmas.
RESULTS
Given the nine hypothetical marketing moral dilemmas reacted to cognitively, affectively and behaviorally, twenty seven
Pearson correlations were calculated to test Hypothesis 1, test anxiety and ethical attitudes. Another twenty-seven correlation
coefficients were calculated to test Hypothesis 2, need for social approval and ethical attitudes.
Test of hypotheses. Table II shows six significant correlations between test anxiety and ethical attitudes. In all six cases the
higher the test anxiety the more ethical the attitudes. Hypothesis 1 is confirmed. Again, looking at Table II, seventeen
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correlations between need for social approval and ethical attitudes are significant. In all seventeen, the higher the need for
social approval the more ethical the attitudes. Hypothesis 2 is confirmed.
The three components of ethical attitudes. Table II also shows that questions A, B and C all contributed significant
correlations as follows: A (cognition) 6, B (affect) 8 and C (behavior tendency) 9 correlations.
The different hypothetical marketing moral dilemmas. Looking at Table II once again eight of the 9 dilemmas yielded
significant findings. The CIGRET and LIQUOR dilemmas yielded five of a possible six significant correlations,
while the RAP dilemma yielded four.
DISCUSSION
Non-moral personality traits and moral attitudes. The confirmation of both Hypotheses 1 and 2 shows that personality traits
seemingly unrelated to morality can still be correlated with ethical responses. Impression management (putting ones best
foot forward) can lead to ethical responses as readily as moral character does. Blasi (1980) noted that different kinds of
internal attributes can be facilitators or inhibitors of moral behavior (p. 10). Malinowski and Smith (1985) wrote that test
anxiety and need for approval would create a desire to avoid the humiliation and embarrassment of failure and thereby
increase the temptation to report falsely high scores (p. 1025). Perhaps revealing unethical attitudes can also produce a poor
social image.
The three components of ethical attitudes. The fairly even distribution of significant findings across the three components of
the tri-component model of attitudes indicates that cognition, affect and action tendency may each have the power to
influence actual moral behavior.
The different marketing moral dilemmas. What is one to make of the fact that ANTEST yielded no significant Pearson
correlations while CIGRET and LIQUOR yielded five each? Jones (1991) says that the evaluation of a moral issue stems
from the moral intensity of that issue. If people see it as extremely serious they will render more impassioned judgments of
wrongdoing.
CONCLUSION
The confirmed hypotheses demonstrate that non-moral personality factors are related to moral attitudes. Managers might find
that their employees honesty is related to traits other than personal integrity. Hiring people who seem relatively free of
achievement anxiety and who dont crave others approval could be a wise investment. Such a corporate policy could
translate into a global competitive advantage. Future research should continue to examine how both ethical and non-ethical
personality traits are related to ethical attitudes.
Table 1: Sample Demographics
N %
Gender Male 272 47.4
Female 298 51.9
USA 449 78.2

Other North American 18 3.1
Country Born In
Latin American 9 1.6
Western Europe 9 1.6
Eastern Europe 22 3.8
South/West Asia 12 2.1
East Asia 32 5.6
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USA 127 22.1

Other North American 62 10.8
Nationality Latin American 24 4.2
Western Europe 117 20.4
Eastern Europe 44 7.7
South/West Asia 24 4.2
East Asia 42 7.3
Catholic 223 38.9

Jewish 23 4.0
Religion Muslim 18 3.1
Protestant 15 2.6
Buddhism 12 2.1
Hindu 13 2.3
Christian 93 16.2
White 293 51
Black 39 6.8
Race Hispanic/Latino 55 9.6
East Asian 46 8
South/West Asian 31 5.4
Mixed Race 26 4.5
Table 2: Significant Pearson Correlations- Personality and Moral Dilemmas
Dilema Question Coefficient Two-Tail N

Significance Test
Liquor A -.085 .05 570
TA=Test Anxiety C -.092 .05 570
Cigret A -.130 .01 568
B .088 .05 568
C -.110 .01 568
Rap A -.118 .01 571
Water B .174 .01 567
C -.159 .01 567
NA= Need for Oil C -.106 .05 569
Social Approval Formlk B .112 .01 567
C -.089 .05 567
Envbox A -.110 .01 564
B .183 .01 564
C -.148 .01 564
Bksls B .095 .05 567
Liquor A -.096 .05 567
B .220 .01 567
C -.155 .01 567
Cigret B .166 .01 565
C -.158 .01 565
Rap A -.137 .01 568
B .172 .01 568
C -.161 .01 568
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Notes: A -5 Not at all believe doing the right thing

+5 Strongly believe doing the right thing
B -5 Would not at all feel guilty doing this
+5 Would feel very guilty doing this
C -5 Not at all likely would actually do it
+5 Very likely would actually do it
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Bergin, C. C., & Bergin, D. A. (2012). Child and adolescent development in your classroom. Belmont, CA: Wadsworth
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Blasi, A. (1980). Bridging moral cognition and moral action: a critical review of the literature. Psychological Bulletin, 88, 1-
45.
Burton, B. K., Farhane, J. L., & Hegarty, W. H. (2000). A cross-cultural comparison of corporate social responsibility
orientation: Hong Kong versus United States students. Teaching Business Ethics, 4, 151-167.
Comizio, J. M., Malinowski, C., & Kraus, R. (2008). A model for teaching law and ethics in a marketing business
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Crowne, D. P., & Marlowe, D. (1964). The approval motive: Studies in evaluative dependence. New York, NY: Wiley.
Dozier, J. B., Husted, B. W., & McMahan, J. T. (1998). Need for approval in low context and high context cultures: a
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Erffmeyer, R. C., Keillor, B D., & LeClair, D. T. (1999). An empirical investigation of Japanese consumer ethics. Journal of
Feist, G. J., & Rosenberg, E. L. (2012). Psychology: perspectives and connections. New York, NY: McGraw-Hill.
Fraedrich, J., Herndon, N. C., Iyer, R., & Yu, W. Y. (2000). A value approach to understanding ethical business relationships
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Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issue contingent model. Academy of
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King, L. A. (2011). The science of psychology .New York, NY: McGraw-Hill.
Malinowski, C. (2003). The relationship between the judging-perceiving dimension and undergraduate student attitudes
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---. (2005). Differences in ethical attitudes between Asians born in the U.S. and Asians born in Asia. Competition Forum, 3,
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--- .(2008). The relationship between Machiavellianism and undergraduate student attitudes about hypothetical marketing
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---. (2010). Differences in marketing ethics between black and white undergraduates. Competition Forum, 8(2), 227-233.
---. (2011). Differences in marketing ethics attitudes between U.S. and Western European undergraduates. Competition
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--- .(2012). Relationship between graduates students moral judgments and their attitudes toward hypothetical marketing
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--- .(2013). Differences in marketing ethics attitudes between U.S. and Indian graduate students. Competition Forum, 11(1),
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Malinowski, C., & Berger, K. (1996). Undergraduate student attitudes toward hypothetical marketing moral dilemmas.
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---. (2004). Religion as a correlate of student attitudes toward hypothetical marketing moral dilemmas. Competition Forum,
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Telemedicine Using Cloud Computing in Jordan

Qeethara K. Al-Shayea, Al-Zaytoonah University of Jordan
EXCUTIVE SUMMARY
In cloud computing, data is available at anytime and anywhere with the spread of a broadband network. The paper proposes
a telemedicine model to be implemented in Jordan. This model uses MATLAB server services to make decisions about a
patient case. At the same time, this paper focuses on the relationship between the national broadband network projects and
telemedicine in Jordan. In this context, Jordan is pointed in the direction of becoming a knowledge-based economy and
society. The success in the knowledge economy demands increasingly higher skill levels, especially greater facility with
information and communications technologies. The information and communication technology is an integral part of the
health information management part, though the use of information and communications technology is working to promote
social and economic development of all members of society, especially in rural and remote areas. The use of a broadband
network in Jordan helps the spread of medical information and communication technology on a large scale in the field of
health care through electronic health projects working to improve telemedicine, the medical information system and patient
satisfaction and gives personalized health care and coordination between public health care systems and other medical care
centers in the world to find innovative solutions and options for the provision of services health in areas that suffer from lack
of professionals in the healthcare sector. As a result, the need for a broadband fiber network was determined as a major
requirement for the success of telemedicine in Jordan.
Keywords: Telemedicine, Cloud computing, Broadband network, Healthcare, eHealth and Information technology
INTRODUCTION
Telemedicine can be defined as the use of information and communication technology (ICT) to deliver medical services and
information from one location to another. In other words, telemedicine can be seen as a way of distributing medical expertise
and services to medically underserviced areas, such as remote and rural areas, using ICT as a communication platform.
Though any communication system can be used in telemedicine, rapid development in computer technology and easiness to
purchase has led to more amenability to computer-based telemedicine technologies that are IP-based. Services offered by
telemedicine are designed to help improve healthcare access and information service, while reducing the isolation of
healthcare providers and residents in rural areas. Telemedicine can also reduce the time and allay the costs of rural patient
transportation significantly. Telemedicine includes applications in areas such as pathology and radiology, as well as
consultations in specialties such as neurology, dermatology, cardiology and general medicine. Telemedicine is also used for
Continued Medical Education (CME), administration, research and development (Malindi, 2011).
Al-Zoube and Alqudah (2014) presented a cloud-based mobile health monitoring solution that takes advantage of cloud
infrastructure and mobile processing capability to address the rising cost of health care monitoring. The solution enables
health care providers to remotely analyze, monitor and diagnose a patient's data. The solution integrates a powerful data
analysis tool, cloud computing and mobile services. They presented a proof of concept that has been developed to monitor,
record and analyze heart rates. The design enables a physician to develop custom analysis and monitoring to collect key
indicators or set alerts without a need for infrastructure implementations to store or transfer the data.
Almashaqbeh et al. (2014) proposed a cloud-based real-time remote health monitoring system for tracking the health status
of non-hospitalized patients while practicing their daily activities. The performance of the proposed framework is optimized
by reducing congestion, inference and data delivery delay while supporting users mobility.
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Sivaraman et al. (2012) discussed the challenges faced when building a national optical access network that is ubiquitous
(i.e., reaches all households nationwide) and open access (i.e., allows any provider to offer their services over it). Their work
is inspired by a public fiber access network being built in Australia called the National Broadband Network (NBN) that will
deploy fiber to 93 percent of premises, providing broadband access at potential data rates of 100 Mb/s and above.
Hsieh and Hsu (2012) created a new cloud and pervasive computing based 12-lead Electrocardiography (ECG) service to
realize ubiquitous 12-lead ECG tele-diagnosis.
Seymour (2011) discussed the emergence of fiber optics industry in Qatar. With the nation's lack of capacity and reliability
in terms of high-speed broadband, Gulf Bridge International (GBI) aims to provide Qatar with a more robust network which
is capable of carrying more information.
METHOD
Broadband high speed, one of the basic supports of the march of nations towards building a knowledge-based economy and
societal informational pillars, has impacted social and economic lifestyles. Many government transactions and business,
health and education services are based on broadband applications, which indicates that broadband plays a pivotal role in the
sustainable development strategies including the role played by enabling digital images and job creation in all parts of the
world, as well as the positive impact on individuals to acquire knowledge, skills and experience. The aim of this strategy is
the provision of a wide range of high quality services and high-speed companies to institutions and every citizen, regardless
of their level of social and economic life. This strategy focuses mainly on improving the quality of public services and the
method of delivery of health care, as well the use of modern technologies like cloud computing.
Cloud Computing
According to the National Institute of Standards and Technology (NIST), cloud computing is a model for enabling
ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks,
servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or
service provider interaction. Cloud computing offers new ways to store, access, process and analyze information and connect
people and resources from any location in the world where an Internet connection is available. As shown in Figure 1, users
connect to the cloud from their personal computers or portable devices using a client, such as a web browser. To these
individual users, the cloud appears as their personal application, device or document. It is like storing all your software and
documents in the cloud, and all you need is a device to access the cloud. No more hard drives, software or processing
powerthat is all located in the cloud, transparent to the users. Users are not physically bound to a single computer or
network; they can access their programs and documents from wherever they are, whenever they need to. Just think of having
your hard drive located in the sky and you can access your information and programs using any device from wherever you
are. The best part is that even if your machine crashes, is lost or is stolen, the information hosted in the cloud is safe and
always available (Baltzan, 2015; Baltzan, 2015).
FIGURE 1. Cloud Computing Example (Baltzan, 2015)
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CF Vol. 13 (2), 2015
National Broadband Networks
Broadband refers to high-speed data transmission in which a single cable can carry a large amount of data at once. The most
common types of Internet broadband connections are cable modems (which use the same connection as cable TV) and DSL
modems (which use your existing phone line). Because of its multiple channel capacity, broadband has started to replace
baseband, the single-channel technology originally used in most computer networks. So now when you see companies like
AT&T and SBC pushing those fancy "broadband" ads in your face, you'll at least know what they are talking about.
There is little debate that increasing broadband access spurs economic development, but can this be quantified? There have
been numerous studies by economic and telecommunications analysts which study the correlation between broadband access
and number of jobs created, as well as measure the economic impact of broadband. There are multiple economic factors that
could affect the results, as well as many facets of providing broadband Internet access, which have the potential to
significantly affect the results. For example, what is the economic impact of increased broadband adoption? At what levels of
broadband availability do local communities realize the highest rate of new jobs? Does the type or speed of the broadband
connection affect the economic impact? These questions all have even more as significant as national broadband policies are
driven from the nations Capital, State and local leaders try to close gaps in broadband availability and adoption. When
deciding where to invest broadband dollars, broadband providers try to prove where funding would provide the most benefits.
With the state of the economy the lowest it has been in years and unemployment rates in double digits, putting money into
broadband projects can definitely spur economic development and increase jobs. The only question is quantifying how much
and how many jobs does each broadband add. There have been numerous studies completed on the economic effects of
broadband.
The NBN Program Accomplishments in Jordan
A lot of countries in the world lack facilities, support and special services in the field of health care. There is a need to enable
citizens to organize their own health better and participate more effectively in the healthcare process. In the year 2008, in
Jordan, it was decided to utilize the efforts and use the infrastructure of the broadband network to connect medical entities
and support the building of a network linking the health entities in Jordan to the broadband network to increase the efficiency
of the medical system and prevent wasting medical materials which will enhance the efficiency of the public sector. Hakeem
projects as an eHealth projects manifested through the formation of specialized working groups aims to promote the work of
companies operating on the existing health care information and communications technology, while providing the necessary
support for these companies at the local, regional and international level. The government in Jordan has prepared a
comprehensive and integrated plan for the development of medical information systems, including eHealth through using the
broadband networks.
Current projects completed in Jordan are:

- The connection of 74 medical entities in the north area.
- The connection of 5 medical entities in Amman.
- The installation of equipment to prepare the site of the main building of the Ministry of Health and connect it to the
fiber Broadband Network.
- The connection of 11 health entities in Aqaba.
- The connection of Queen Rania Hospital in Petra and Ma'an Public Hospital.
The health entities are connected to the NBN network in the south area where 33 health entities will be connected to the
network. In the middle area project: the health entities are connected to the NBN network where 33 health entities and 38
aggregate points will be connected to the network.
The future project tendering documents have been prepared for connecting health entities to the NBN network in the south
area. The project aims to supply, install and operate equipment to connect health entities.
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CF Vol. 13 (2), 2015
THE PROPOSED TELEMEDICINE ALGORITHM
Telemedicine provides clinical healthcare availability between geographically separate locations using medical expertise
supported by telecommunication and information technologies. Doctors and specialists from any distance can provide
diagnosis, treatment and advice to patients by remote control. This improves access to medical services particularly in rural
and remote areas. Medical services in distant rural communities would often not be constantly available without
telemedicine.
One of the obstacles facing the application of telemedicine in Jordan previously has been the telecommunication
infrastructure. But with the national broadband network, it becomes easier to implement it, as nowadays there is a big
progress in technology that helps telemedicine. The Hakeem program is the first national initiative in Jordan to computerize
the public healthcare sector. The Hakeem program is being implemented based on the Veterans Association platform
VistA, which is a system used throughout the United States Department of Veterans Affairs (VA) medical system.
The physician who is licensed to practice medicine in the system receives the patient's complaints, patient's history, patient's
inspection data, patient's examination data and a compressed digital interactive video, audio, images and signals. The
telemedicine system proposed is provided for the purpose of patient assessment, diagnosis, consultation or treatment by a
physician. The broadband network is used to transfer of medical data including the following:
- Patient information system by way of smart card.

- Medical information system including symptoms, images and signals.
- MATLAB server services or medical specialty expertise.
The MATLAB Web Server enables one to create MATLAB applications that use the capabilities of the World Wide Web to
send data to MATLAB for computation and to display the results in a Web browser. The MATLAB Web Server depends
upon TCP/IP networking for transmission of data between the client system and MATLAB. The required networking
software and hardware must be installed on ones system prior to using the MATLAB Web Server (MATLAB Users Guide).
The physician can also use MATLAB services in predicting some of the diseases using the symptoms and signals that come
from medical devices. The proposed telemedicine model is shown in Figure 2.
Databases for the proposed model are:

- Central database server which include the international physician database.
- MATLAB database server.
- Local database server, which includes patients personal information, patients medical information, patient
management such as referral and physicians information databases.
- Biomedical devices that produce images and signals.
Figure 3 shows the basic operations for the proposed model.
FIGURE 2.The proposed telemedicine model
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CF Vol. 13 (2), 2015
FIGURE 3.The proposed telemedicine basic operation
CONCLUSION
Jordan is turning in the direction of a knowledge-based economy and society. The Jordanian government, at the September
2002 ICT forum, launched the Connecting Jordanians Initiative, which aims to deliver the governments drive to make
computers and networks more widely available to the public. In this paper, telemedicine network architecture is proposed
using a national broadband network in Jordan. The proposed telemedicine enables healthcare providers to remotely analyze
and diagnose patients data. The solution integrates a powerful MATLAB services, cloud computing and broadband network.
The telemedicine enables an international physician to study the patient case and diagnose the disease.
REFERENCES
Almashaqbeh, G., Hayajneh, T., Vasilakas, A. V., & Mohd, B. J. (2014). QoS-aware health monitoring system using cloud-
based WBANs. Journal of Medical Systems, 38(10), 121.
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CF Vol. 13 (2), 2015
Al-Zoube, M. A., & Alqudah, Y. A. (2014). Mobile cloud computing framework for patients health data analysis.
Biomedical Engineering: Applications, Basis and Communications, 26(2).
Baltzan, P. (2015). Business driven technology. New York: McGraw Hill Education.
Baltzan, P. (2015). Information systems. New York: McGraw Hill Education.
Hsieh, J., & Hsu, M. (2012). A cloud computing based 12-lead ECG telemedicine service. BMC Medical Informatics and
Decision Making, 12, 77.
Malindi, P. (2011). QoS in telemedicine, telemedicine techniques and applications. Retrieved from
http://www.intechopen.com/books/telemedicine-techniques-and-applications/qos-in-telemedicine.
MATLAB Users guide. Retrieved from http://matlab.izmiran.ru/help/toolbox/webserver/ch01intro.html
Seymour, R. (2011). The rise and rise of fiber optics. Middle East, 425, 42-43.
Sivaraman, V., Russell, C., Collings, I., & Radford, A. (2012). Architecting a national optical fiber open-access network: the
Australian challenge. IEEE Network, 26(4), 4-10.
395
COMPETITION FORUM
1
1
Aims and Scope
Competition Forum (CF) is a leading scholarly outlet focusing on business competition in the global
marketplace. It provides a forum for understanding the nature of competition, global interdependence
and connectivity, and the essence of competing on a global scale. In addition, CF presents original
articles on a wide range of subjects related to business conduct and operations within and across nations.
Both empirical and conceptual papers are welcome. Papers written by emerging scholars are
encouraged. All papers submitted should be original and not under consideration for publication
elsewhere. Manuscripts are subject to double-blind peer review.
Primarily, CF focuses on broadening the understanding of the nature of the marketplace in a globalized
economy where complex actors respond simultaneously and instantaneously to market signals, thereby
widening the arena of competition without limiting organizational goals to mere simple profit. That is,
business organizations should purposefully engage in activities which ultimately optimize their long-
term achievements and strengthen their capacity for renewal and growth. Accordingly, CF seeks to
enhance firms abilities to sustain their market long-term vitality, while effectively serving their
stakeholders.
REFERENCES AND BIBLIOGRAPHIES
The style guidelines for references and bibliographies must follow the publications manual of the American Psychological
Association. Below are examples:
Journal Articles
Paivio, A. (1988). Perceptual comparisons through the minds eye. Memory and Cognition, 3(5), 653-668.
Chapter in Book
Hartley, J. T., Harker, J. O., & Walsh, D. A. (1980). Contemporary issues and new directions in adult
development. In L. W. Poon (Ed.), Aging in the 1980s (pp. 234-278). Washington, DC: American
Psychological Association.
Entire Book
Ali, Abbas J. (2000). Globalization of business: practice and theory. New York: Haworth Press.
Internet Articles or Abstracts Based on a Print Source

Smith, R. (1998). TQM in Australian manufacturing businesses [Electronic version] Quality Journal, 5,
117-123.
Articles or Abstracts in an Internet-only Journal

Frederickson, B. L. (2000, March 7). Cultivating positive emotions to optimize health and well-
being. Prevention & Treatment, 3, Article (or Abstract) 0001a. Retrieved November 20, 2000 from
http://www.preventiontreatment.com/ frederickson.html.
Report From an Organization on its Web Site

Canarie, Inc. (1997, September 27 or n.d. if no date is available). Towards a Canadian health IWAY:
Vision, opportunities and future steps. Retrieved November 8, 2000, from
http://www.canada.org/iway.html.

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COMPETITION FORUM

Volume 13 (2) 2015

PART I HUMAN RESOURCES AND COMPETITIVE ADVANTAGE

Employee Wellness Programs: Savings for Organizations and Employees 210

How Generation Zs Reliance on Digital Communication Can Affect Future

Employee Handbooks -- Current Trends for Human Capital Competitiveness 228

Creating a No-Tolerance Policy for Workplace Bullying and Harassment 232

Application of a Decision Tree Model to a Business Case from Egypt 273

Bridging the Gap Between Facebook and Business 287

Cyber Espionage and the S.P.I.E.S. Taxonomy 307

The Future of Mobile Electronic Payments 337

Analysis of Global Academic Modeling of University Systems 343

PART III FUTURE MANAGERS IN A CHANGING WORLD

An Investigation of Leadership Theories Best Fitting the Professors Tripartite 350

Telemedicine Using Cloud Computing in Jordan 390

Cost Effectiveness of Retaining Top Internal Talent in Contrast

Keywords: Talent management, Recruiting, Retention, Succession planning, High-potential employee

TALENT MANAGEMENT DEFINED

Recruiting and Retention

Problems Affecting Talent Management

Identifying and Prioritizing Open Positions in the Organization

Attracting and Selecting Talent

Costs Associated with Recruiting

Identifying the Internal Talent Pool

Employee Engagement and Recognition

DISCUSSION AND RECOMMENDATIONS

Employee Wellness Programs: Savings for Organizations and

Keywords: Wellness, Strategic plan, Healthcare, Morale, Organizations

THE HISTORY OF HEALTHCARE IN THE UNITED STATES

Chronic Diseases and Health Intervention

EMPLOYEE WELLNESS PROGRAM OVERVIEW

FINDINGS: A CASE STUDY ON SAINT FRANCIS UNIVERSITYS WELLNESS PROGRAM

Cost Savings for the Employee and the Organization

An Employee Wellness Program Survey

Office of Personnel Management. (2015). Retrieved from http://www.opm.gov.

How Generation Zs Reliance on Digital Communication

WORKPLACE PROBLEMS ASSOCIATED WITH RELIANCE ON DIGITAL

SMARTPHONE USAGE AND EMOTIONAL ATTACHMENT

DECLINE OF INTERPERSONAL COMMUNICATION SKILLS

TRANSFER OF KNOWLEDGE BETWEEN GENERATIONS

LIMITATIONS ON PAST RESEARCH

A Tale of Two Crises: America and the American Black: A

Americas Original Sin

Americas Millennials and Race: They Are Americas Children

Additionally, my applied research has found the following:

Employee Handbooks -- Current Trends for Human Capital

Keywords: Employee Handbooks, Human Capital, Organizational Due Process

FIELD RESEARCH FINDINGS

Creating a No-Tolerance Policy for Workplace Bullying and

DEFINING BULLYING AND HARASSMENT

WORKERS AFFECTED BY WORKPLACE BULLYING AND HARASSMENT

COURT RULINGS/LITIGATIONS WITH WORKPLACE BULLYING AND HARASSMENT

NEGATIVE EFFECTS OF WORKPLACE BULLYING AND HARASSMENT

STRATEGIES FOR ADDRESSING AND ELIMINATING

RECOMMENDATIONS TO IMPLEMENTING ANTI-BULLYING/HARASSMENT POLICIES

The Impact of Age and Gender on Strategic Innovation in Micro,

Keywords: Entrepreneurship, Innovation, Knowledge management, M/SMEs, Egypt

Significance of the Study

Gender and Innovation

Age and Innovation

FIGURE 1 S-CURVE MODEL

Source Abraham & knight (2001)

Example 1: How Youssef the Jeweler uses Strategic Innovation

FIGURE 2 THE STRATEGIC INNOVATION SPIRAL