Ijfbvol 6

Volume 6, 2009
ISSN 1550-5812
INTERNATIONAL
JOURNAL OF FAMILY
BUSINESS
Volume 6, 2009
ISSN 1550-5812
International Journal of Family Business, Volume 6, Issue 1 2009
International Journal of Family Business
Shawn M. Carraher, Editor

Cameron University
Samuel Lane, Associate Editor
Lane Import
Sherry Sullivan, Associate Editor
Bowling Green State University
Authors retain copyright for their manuscripts. Any omissions or errors are the sole
responsibility of the individual authors. The Reviewers are responsible for the selection of
manuscripts for publication from among those submitted for consideration.
Copyright 2009 International Family Business Center
EDITORIAL REVIEW BOARD

Shawn M. Carraher, Editor
Cameron University
Samuel Lane, Associate Editor
Lane Import
Sherry E. Sullivan
Bowling Green State University
Zafar U. Ahmed
Texas A & M University
Terrence Paridon
Cameron University
M. Ronald Buckley
University of Oklahoma
John Parnell
University of North Carolina - Pembroke
Sarah C. Carraher
Consolidation Enterprises
George Puia
Saginaw Valley State University
Chester Cotton
Steve Schwiff
Madeline Crocitto
SUNY-Old Westbury
Cuthbert Scott
Indiana University, Northwest
Michael Harvey
University of Mississippi
Howard Tu (deceased)
University of Memphis
Johnathon R.B. Halbesleben

University of Wisconsin
Rosalie L. Tung
Simon Fraser University
Lanying Huang
National Changhua University of Education
Howard Van Auken

Iowa State University
Frank Hoy
Worchester Polytechnic Institute
Dianne Welsh
University of North Carolina, Greensboro
Jorge Mendoza
Daniel A. Wren
TABLE OF CONTENTS
Content
Page
EDITORS NOTES Shawn Carraher
SMALL BUSINESS OWNERS MOTIVES, AGE, EDUCATION AND EXPERIENCE AND

FIRMS SIZE AND AGE AS PREDICTORS OF GROWTH INTENTIONS IN TURKEY by M.
Kamil Kozan, Dolun Oksoy, & Onur Ozsoy
THE CASE OF THE MISSING TENURE AND PROMOTION GUIDELINES by Robert P.

Yuyuenyongwatana, John M. Courington, & Shawn M. Carraher
21
URGE TO PURCHASE AS A MEDIATOR OF THE EFFECTS OF BROWSING BEHAVIOR

UPON IMPULS PURCHASING BEHAVIOR by Terrence J. Paridon, Karla Moorhead, Kevin
McClain, & Diane Gately
25
POLYCHRONICITY, LEADERSHIP, AND LANGUAGE INFLUENCE AMONG EUROPEAN

NURSES: SOCIAL DIFFERENCES IN ACCOUNTING AND FINANCES by Shawn M. Carraher,
Robert P. Yuyuenyongwatana, Theresa Sadler, & Thomas Baird
35
LOGISTICAL FLOWCHART AND FEASIBILITY STUDY FOR DOING BUSINESS IN CHINAS

APPAREL AND ACCESSORIES MARKET By Georgina He & Don B. Bradley, III
45
GLOBILIZATION IMPACTS ON HUMAN RESOURCE MANAGEMENT AND THE ROLE OF

EXPATRIATES by Cheuk Yung Henry Lam
65
A VALIDATION STUDY OF MCBRIDES BIG FIVE BIODATA QUESTIONNAIRE AMONG

TECHNOLOGICALLY-ORIENTED ENGINEERS AND ACCOUNTANTS by Feng Johnny Deng,
Autumn Corn, Zach Foley, Anthony Law, Keshon Day, & Jason X. Day
73
LEADERSHIP AND VALUES AMONG ENTEPRENEURS by Andrea V. Amorosi, Mel Aparicio, &
Tibisay Delgado
77
RELATIONSHIP MARKETING AND CUSTOMER VALUE by Myrna Laurenceau, Ray Louis,

Paola Bernat, & Roscoe Randy
91
Editors note
I am pleased to introduce the 6th annual issue of the International Journal of Family Business.
This issue contains nine articles and cases. Of these all but two are from the meetings of the
Association for Entrepreneurship, Family Business, & Franchising which represents the top 10%
of the papers presented at the conference. Sherrie Taylor of Texas Womans University,
Terrence Paridon of Cameron University, R. Michael Buckley of the University of Oklahoma,
Michael Harvey of the University of Mississippi and Samuel Lane of Lane Import were involved
in selecting papers for the conference and I am grateful for their assistance. The next conference
meeting shall be affiliated with the Technology & Innovation Management Division of the
Academy of Management. The overall acceptance rate for this issue of the journal was 11.1%.
The best faculty paper voted for 2009 was Small business owners motives, age, education and
experience and firms size and age as predictors of growth intentions in Turkey while the best
graduate student paper was Logistical flowchart and feasibility study for doing business in
Chinas apparel and accessories market. Congratulations to the authors of these two papers.
Shawn Carraher, Ph.D.

Brewczynski Endowed Chair
Editor: International Journal of Family Business
_____________________________________________________________________________________________iii
Manuscripts
_____________________________________________________________________________________________1
SMALL BUSINESS OWNERS MOTIVES, AGE, EDUCATION

AND EXPERIENCE AND FIRMS SIZE AND AGE AS
PREDICTORS OF GROWTH INTENTIONS IN TURKEY
M. Kamil Kozan, St. John Fisher College
Dolun Oksoy, University of Ankara
Onur Ozsoy, University of Ankara
Abstract
Survey data from 491 small businesses in 14 cities in Turkey were utilized for the study. Growth
intentions were measured as a multi-dimensional construct, comprised of resource aggregation,
technological improvement, and market expansion. Among owners motives, achievement had a strong
influence on all growth areas, as did gaining status, and independence. In contrast, continuing a family
tradition, as a motive, had an adverse effect. Younger owners and relatively larger firms showed higher
growth intentions in all areas. Owners education was related only to technological improvements.
However, higher education, when in interaction with young age, was a predictor of market expansion
plans. Also a size and firm age interaction was found: newer and relatively larger firms had higher
growth intentions in resource aggregation and market expansion. The results suggest improvements in
small business practices, government services, and banks lending policies in order to promote small
business growth in Turkey.
INTRODUCTION
Increased globalization and liberalization of markets have led to the promotion of

entrepreneurial activity throughout the world (Hitt, Ireland, Camp, & Sexton, 2001). Small
business has been central to the economic boom in East Asia, and economic development models
in other developing countries have been affected by Asian successes. However, in countries
embedded in century-old models of development based on large state-owned or private
organizations, the shift in emphasis in favor of small and medium enterprises constitutes a major
political and cultural change that is not easily achieved (Smallbone & Welter, 2001). The need
for more studies of entrepreneurship outside of the US, which various authors have stressed
(Mitchell, Smith, Seawright, & Morse, 2000; Zahra & George, 2002), applies best to developing
countries and will undoubtedly help this transition.
The present study focused on factors affecting small business growth in Turkey. Despite
constant change, and political and economic instability, Turkey is expected to play a pivotal role
in the future as both the link and the buffer between Europe and the Middle East and the former
Soviet Union (Berkz, 2001; Garten, 1996). Turkey has strengthened its trade links with the EU
of which it is a full candidate for membership, and Turkish companies are increasingly
establishing joint ventures with large European MNEs (Burgess et al., 1998; Tatolu & Glaister,
1998). The country is also undergoing a change of philosophy in its development strategy. Its
etatist model of development, which started in the thirties, is leaving its place to a model that
relies on private initiative. The pace of privatization of state-owned conglomerates has increased
during recent years. During this transition much attention and resources have been devoted to the
_____________________________________________________________________________________________2
large private firms that serve as the locomotive of development. Small businesses, in contrast,
have been slow in acquiring a comparable role due to shortcomings in financial and human
capital.
Despite the importance of the topic, research on the conditions of small business, and
factors influencing entrepreneurial growth in small firms, have rather been limited (Keskin, et al,
2004). Recent studies document various problems small business face in Turkey. Small firms
heavily depend on larger companies through which they receive their business, as in textiles
(Ozkanli & Durak, 2007; Taslak, 2004) and automotive industry (Wasti & Kozan, 2007). Size is
a limiting factor on financial performance of small businesses (Ozgulbas, et al, 2006), their use
of modern practices such as benchmarking (Ulusoy & Ikiz, 2001), and securing finances and
know-how (Kozan, et al., 2006). Saka-Hemhoult & Karabulut (2006) found that small company
clusters did not generate the same economic benefits when embedded in weak, state-organized
institutional settings as when operating in strong collaborative institutional contexts found in the
West. Studying small firms electronic commerce adoption, Kaynak, Tatoglu, and Kula (2005)
found low internet use and legal and security issues cited as main limitations in Turkey.
These recent contributions withstanding, a systematic study of the factors that affect
growth intentions would be valuable to various parties interested in small firm growth, including
large domestic and international firms farming out parts of their operations, foreign investors,
and governments that have pledged support to small-to-medium sized enterprises. Previous
studies have highlighted size and resources as the main influences. The present study went
further in order to gain a more comprehensive perspective by including factors relating to
dynamism such as age of firm and owner, skill-related factors such as education and experience,
and psychological factors pertaining to the motives of the owner for starting own business.
The next section gives a brief tour of the history and culture of Turkey, and the business
climate in which small to medium sized firms operate. This is followed by a discussion of the
rationale for selecting growth intentions as the dependent variable and various owner and firm
characteristics as the independent variables. A model is provided to summarize the variables
included in the study, and hypotheses are developed to guide data collection and analysis that
follow.
The Historical and Cultural Context
The Turkish Republic was founded in 1923 from the ashes of a dismembered Ottoman
Empire. The Republic represented a clear break with the past and a major impetus for
Westernization attempts that started in mid-nineteenth century. Speedy reforms during the early
years of the Republic changed the calendar and the script, adopted Western-based civil,
commercial, and penal codes, and promoted a Western life-style. The Ottoman Empire had no
tradition of a powerful, indigenous bourgeoisie; business activity was the stronghold of nonMuslim minorities (Richards & Waterbury (1991). An entrepreneurial class had to be created
from a populace accustomed to public service or farming. While the initial intention of the
young Turkish Republic was to achieve economic development through private initiative, the
experiment was interrupted by the Great Depression in its early stages. New protective measures
such as tariff barriers were developed as a response. However, without a strong private sector to
respond to the measures, the state had to assume a key role in agriculture, commerce, and
industry, as well as education, health, and public works (Richards & Waterbury, 1991).
After World War II, Turkey adopted a multi-party democratic system, which led to
changes in economic policy as well. A new ruling party that came to power in the 1950 elections
shifted the emphasis to private enterprise, relegating the government sector, at least in principle,
to activities that can not be undertaken by the private sector (Aktan, 1997). The trend continued
with another government in the eighties abandoning protectionist policies and opening the
_____________________________________________________________________________________________3
economy to globalization. The reforms, still ongoing, included privatization, deregulation,

liberalization of foreign trade and investment, reduction of tariffs, and the easing of capital
transfer exchange controls (Etkin, et al, 2000; Aktan, 1997).
The Turkish private sector is dominated by large, family-owned conglomerates. The
recent trend in the World towards smaller firms carrying a major load in economic development
has not taken as strong a hold in Turkey. Turkey is comparable to the other countries such as
U.S., England, Italy, India, Japan, and Korea in terms of the percentage of work force employed
by SMEs at close to the halfway mark (http:/www.kosgeb.gov.tr; January 2000). Yet, significant
differences emerge when SMEs meager share in loans, investments, and exports in Turkey are
compared to these countries. For financing and investment, small businesses have to rely
overwhelmingly on family resources rather than loans from the government or private financial
institutions (Kozan, et al, 2006). The scarcity of resources usually associated with developing
countries may be the culprit here. When a limited amount of loans are available, they are
allocated to large businesses with political clout. The banks also feel that little information exists
to predict which SMEs are likely to succeed; being financed through family sources, the
bookkeeping practices of most SMEs come short of providing valuable insights into their
potential for survival and growth (Kumcu, 2003).
The trends towards small business and the opening of the country to global competition
provide ample opportunities for entrepreneurial activity in Turkey. It may be true that Turkish
cultural characteristics do not provide a particularly fertile ground for entrepreneurship. Turkey
has a collectivistic outlook, and high scores on power distance, uncertainty avoidance, and
femininity (Hofstede, 1984). Turkish culture emphasizes values promoting tight links with ingroup and hierarchical roles for maintaining societal order (Svhwartz, 1999). Collectivism and
uncertainty avoidance are negatively related to traits such as internal locus of control, risk taking,
and innovativeness, which are indicators of entrepreneurship (Mueller & Thomas, 2001; Thomas
& Mueller, 2000). However, these traits are not uniform across the entire population. Turkish
society exhibits a mixed and not altogether consistent set of values: neither democratic nor
totally autocratic, open to change but also conservative, and valuing achievement as much as
security and relations at work (Esmer, 1998). Individualistic tendencies are especially high
among the young, educated, and urban people (Yetim, 2003). Using Schwartzs (1994) value
measures, Kozan (1999) described several subcultures in Turkey, which existed alongside the
traditional main culture. Among these is a subculture of power-seekers which grew in
numbers in the last two decades with the opening of the country to global competition. Equipped
with values of achievement, wealth acquisition, influence, and power, these individuals are likely
to take advantage of the growing opportunities for private initiative.
Growth Intentions and Their Determinants
Growth may be what distinguishes entrepreneurship from small business. Drucker (1985:
28), for example, found the common definition of entrepreneur as the one who starts his own,
new and small business inadequate. He proposed, instead: the entrepreneur always searches for
change, responds to it, and exploits it as an opportunity (Drucker, 1985: 1). Other definitions of
entrepreneurship also emphasize introducing a new product or service, or risk taking (Tropman
and Morningstar 1989). The growth intentions of small business owners capture the common
element in these definitions. The focus on plans and intentions puts the emphasis on future
growth, rather than past growth on which most entrepreneurial research has focused.
While past behavior may be a predictor for the future, future behavior is also a function
of intentions (Ajzen and Fishbein (1980). Orser and Hogarth-Scott (2002) found a significant
relationship between the owners growth willingness and actual firm growth over a four-year
_____________________________________________________________________________________________4
period. Wiklund, et al. (1997) report that growth intentions are moderately strong predictors of
goal directed behavior in small firms. According to Kolvereid and Bulllwag (1996) growth
intentions are related to actual growth, and changes in intentions also predict changes in actual
growth. Other authors (Bird 1989, Boeker 1989) have demonstrated how entrepreneurial
intentions play a crucial role in understanding organizational emergence. Mitchell, et al. (2000)
found that willingness scripts, which are actionable thoughts on opportunity seeking,
commitment tolerance, and venture opportunity pursuit, are key predictors of venture creation.
Davidsson (1991) points out that in a small firm operating in an imperfect market, the owner can
chose whether to pursue expansion or not, depending on satisfaction with the status quo versus
motivation to grow. Wiklund and Shepherd (2003) similarly found that small business
managers aspirations to grow predict actual growth, but the relationship is moderated by the
level of education and experience of the manager and the dynamism of their business
environment. As the foregoing discussion demonstrates, the intention to grow may provide
valuable insight as a variable in entrepreneurial research, and it served as the dependent variable
in this study.
Growth has been conceived in the literature both as a narrow or a broad concept. Freel
and Robson (2004) measured growth in employment, turnover, productivity, and profit margin.
Lebrasseur, et al.s (2003: 2) definition, on the other hand, emphasizes breadth of
entrepreneurial activity, and largely ignores the issue of effective use of resources. The
approach used in the present paper is closer to the broader conceptualization. Following Pistrui,
et al. (1997, 2000), growth intentions were conceived as a multi-dimensional construct consisting
of market expansion (entering new markets or new product introduction), technological
improvements (facilities and equipment improvement), and resource acquisition (additional
financing, acquisition of specialists, and offsite training).
A host of independent variables have been studied in the past as predictors of
entrepreneurial growth. One trend has been to focus on psychological variables, such as
sacrifice, motivation, intensity, and risk-taking, in order to explain small business growth
(Cooper, et al. 1992). However, establishing a causal relationship between psychological traits
and entrepreneurial success has been an elusive goal (Brockhaus, 1982). McClure (1990)
reported that Traits such as risk-taking or autonomy did not distinguish successful entrepreneurs
(McClure, 1990) and psychological research into entrepreneurial traits has given equivocal
results (Chell, et al., 1991). Among the big-five personality dimensions Ciavarella, et al. (2004)
found only conscientiousness to be positively associated with long-term venture survival, while
openness showed a negative affect.
Shortcomings of psychological research have led researchers to incorporate an expanded
set of variables. Davidsson (1991) attributed continued entrepreneurship to ability, need, and
opportunity. Roper (1998) found that management and control initiatives depended on the
characteristics of the entrepreneur, but initiatives related to new products, markets or
management systems depended also on the firm's strategic targets, market position, and
operating environment. Mitchell, et al. (2000) explained venture creation in terms of
arrangement scripts (contacts, relationships, and resources), willingness scripts (opportunity
seeking, commitment tolerance, and opportunity pursuit), and ability scripts (skills, knowledge,
norms, and attitudes).
The present study attempted to include variables pertaining to both the entrepreneur and
the firm. Studying personal and firm-related variables jointly, and in interaction with each other,
allowed for a more comprehensive approach. The variables selected as predictors of growth
intentions were the small business owners age, education, previous business ownership, and
motives for going into business, and the firms size and age (see Figure 1). Actual future growth
may be a function of intentions to grow and environmental factors which create opportunities for
_____________________________________________________________________________________________5
growth. The present study was limited to the influence of selected owner and firm characteristics
on growth intentions (shaded areas in Figure 1).
Firms Size
Firms Age
3
Owners Age
Owners Motives:
Achievement
Independence
Status & Earnings
Inertia
Growth Intentions:
Market Expansion
Technological Improvement
Resource Aggregation
Actual
Growth
Owners Education
5
Previous
Ownership
Experience
Growth Opportunities
Figure 1 Selected owner and firm characteristics as predictors of

small business growth intentions (numbers indicate hypotheses)
Among the independent variables, the owners motives for starting his own business were also
conceived as a multi-dimensional construct. A frequently studied motivational variable in
predicting entrepreneurial activity has been achievement motivation (McClelland 1965, Begley
and Boyd 1987, Davidsson 1989). In addition to achievement motivation, the present study
examined other motives that have been studied in relation to small business ownership and
expansion (Pistrui, et al. 1997, 2000). These variables were the desire for working
_____________________________________________________________________________________________6
independently, securing a basic level of income, gaining respect in ones community, and
continuing a family tradition. Working independently tapped the need to escape the autocratic
hierarchies of large organizations, which are typical in Turkey, and be ones own boss. Securing
a basic level of income, gaining respect in ones community, or continuing a family tradition
may play a significant role in starting ones own business in a low income, collectivistic cultural
setting such as Turkey. We expected all motives other than achievement to predict a desire for
stability rather than growth in an ongoing, established business.
Hypothesis 1: Owners with a stronger achievement motive will show a greater tendency
for growth in all areas, as compared to owners with stronger motives for financial security,
continuing the family tradition, gaining community respect, or independence.
Owners age (Warneryd 1988, Davidsson 1991) and firms age (Evans 1987, Dodgson
1993) have both been shown to influence growth negatively. Davidsson (1991) argued that both
are correlated with being content with what the firm successfully does and with the standard of
living achieved. Majumdar (2004) reports that in India younger firms, born under the recent
open-market policies, showed better growth than older firms, which were founded and initially
learned how to operate under earlier export-substitution policies. A similar situation exists in
Turkey, where import substitution practices were replaced with an emphasis on integration with
the global economy (Etkin, et al, 2000; Aktan, 1997). Younger owners and younger firms were
expected to reflect the new policies and project more dynamism.
Hypothesis 2: Younger owners will have stronger growth intentions in all areas.
Hypothesis 3: Newer firms will have stronger growth intentions in all areas.
The effect of firms size has been interpreted in different ways in the literature. Large
size may negatively affect ability to learn (Simonin 1997) and may be an indicator of being
content with earnings (Davidson 1991). On the other hand, size can provide economies of scale
and resource sufficiency (Gulati 1993), which in turn foster growth. The present context favors
the latter interpretation. Small-to-medium sized firms in Turkey depend heavily on internal
resources for growth, particularly in financing (Ozgulbas, et al. 2006) and know-how for
adopting modern management methods (Ulusoy & Ikiz, 2001).
Hypothesis 4: Relatively larger firms will show greater intention to grow in all growth
areas.
Previous business ownership was also included as an independent variable. Westhead, et
al. (2005) reported that novice entrepreneurs, in comparison to those who have owned previous
firms or who own more than one firm, were generally less cautious under changing business
conditions. We therefore predicted higher growth intentions for the first time owners.
Hypothesis 5: Owners who did not have previous business ownership experience will
show greater growth intentions in all areas.
Finally, the education level of the owner was expected to predict growth intentions
requiring knowledge and technical skills (Davidsson 1991; Mitchell, et al., 2000). Two growth
areas may be influenced from education: technological improvements, which involves the
acquisition of new equipment and computerization, and resource aggregation, which includes
hiring of specialists, professional consultants, and training of employees. In Turkey, higher
education would also be associated with a higher level of individualism (Yetkin, 2002), which is
expected to foster initiative.
Hypothesis 6: The more educated owners will show stronger growth intentions in areas
of technological improvement and resource aggregation.
In addition to these hypotheses, the study looked at the interaction effects of the
independent variables on growth intentions. Interaction effects were investigated in pairs of
independent variables. Some of the pairings were of particular interest for the present study. For
_____________________________________________________________________________________________7
example, the interaction of owners age and firm size may create a combination of a dynamic
young owner who has the internal resources for growth that is critical in Turkey. Similarly, firm
age and size would be a potent combination, i.e. new and relatively large startups providing
resources and the dynamism for growth. On the other hand, in a collectivistic culture like
Turkey the combination of low achievement motive and older age could be a particular indicator
of being content with the status quo. Similarly, larger size may not be associated with a strong
initiative when it is coupled with low achievement motive of the owner, a condition sometimes
attributed to second generation family owners in Turkey.
Method
Sample
In fourteen major cities, small businesses in one of the main business districts where most
business activity is concentrated were personally contacted. Only firms with 50 or fewer fulltime employees were selected. Participation was on a voluntary basis. Out of 1031 small
business contacted, 491 complete responses (48%) were obtained. The sample was dominated by
family ownership. Only 20% of those interviewed owned less that half of the firms equity, and
of these 77% had at least another family member as partner. Samples distribution among the
cities was as follows: Istanbul 11.6%, Ankara 8.1%, Izmir 4.8%, Adana 7.5%, Bursa 9.8%,
Antalya 9.7%, Konya 9.9%, Kayseri 8.1%, Mersin 5.4%, Denizli 7.0%, Izmit 4.8%, Corum
8.0%, Trabzon 2.8%, and Tokat 2.5%.
Retail businesses constituted 38.1% of the sample, service firms 22.4%, manufacturing
firms 14.0%, distribution/wholesale firms 6.8%, professional services 4.4%, construction 3.8%,
finance/insurance 3.0%, transportation 2.1%, and other 5.4%. While the sample seems to underrepresent manufacturing, which has a share of about one-fifth of the GNP, this is natural as most
manufacturing firms have more than 50 employees. The average respondent age was 39.1 with a
standard deviation of 10.3. The average years-of-education was 10.9, approximately equaling a
high school degree. Male owners dominate the sample with 85%, which is a fair representation
of small business owners in Turkey. The respondents average age, education, and sex are
comparable to national averages mentioned in an earlier study (Sarikaya, 1995) and to a random
sample of entrepreneurs drawn from a geographic district (Yetkin & Yetkin, 2006).
Measures
Data were collected by means of The Entrepreneurial Profile Questionnaire (EPQ)
(Pistrui, et al. 1997, 2000). EPQ includes sets of questions designed to measure a host of
variables, including growth intentions and motives for going into business. These questions are
shown in abbreviated form in Tables 1 and 2, below. EPQ also contains questions on firm size
and age, and demographic information on the owner. Prior to this study, EPQ has been tested in
several other countries, including Germany, Russia, Romania, Venezuela, China, and the United
states. The EPQ was translated by two bilingual colleagues working independently into Turkish,
and checked afterwards for inter-translator consistency. A trained research assistant handed out
the questionnaire and was present while the owner filled it out at his workplace. A five-point
Likert scale, with response categories ranging from strongly agree (5) to strongly disagree
(1), was included next to the questions designed to measure growth intentions and motives for
going into business. Size of firm reflected the number of full time employees excluding the
owner. Both size and age of firm had high positive skewness, which led us to conduct a
logarithmic (n) transformation for the two variables.
Principal Components Analysis was conducted for growth plans, which yielded three
factors using Varimax rotation. Kaiser-Meyer-Olkin measure of sampling adequacy was .934,
_____________________________________________________________________________________________8
and Bartletts test of sphericity was 6211.3 (p<.001). Table 1 shows the Eigen values,
percentage of variance explained, communalities, and Alpha coefficients of the composite scores
obtained for each growth component. As a rule an item was included in the component of its
highest loading as long as the loading was more than .45. The emergent factors fit the proposed
conceptual model of growth.
Table 1 - Factor loadings for growth plans items* (n=491)
Factors
Market
Expansion
Items
Technological
Improvement
Resource
Aggregation
Communalities
______________________________________________________________________________________
Selling to a new market
74
.630
Adding operating space
75
.709
Expanding distribution channels
73
.690
Expanding advertising &
53
.485
promotion
Acquiring new equipment
71
.653
Computerizing current operations
69
.664
Upgrading computer systems
78
.740
Replace present equipment
80
.706
Expand current facilities
61
.594
Adding specialized employees
55
.575
Redesigning layout
54
.385
Offsite training for employees
68
.680
Redesigning operating methods
66
.638
Seeking additional financing
70
.616
Seeking professional advice
75
.651
Researching new markets
62
.623
Expanding scope of operations
55
.606
Eigen value
4.04
3.82
3.31
% of variance explained
22.46
21.23
18.36
Composite score mean
3.37
3.48
3.40
Standard deviation
1.05
1.07
0.99
Alpha coefficient
.83
.89
.88
*Method: Principal Component extraction with Varimax rotation. Decimal points omitted for loadings and
communalities.
_____________________________________________________________________________________________9
Table 2 Factor loadings for owners motives for going into business items* (n=491)
Factors
Items
Achievement
Independence
Status
Inertia
Communalities
_______________________________________________________________________________________
Contribute to welfare of my community
59
458
Freedom to adopt my own approach to work
59
498
Keep learning
70
576
Make better use of my ability
55
435
Develop an idea for a product or service
72
556
Challenge of starting and growing own business
49
547
Become part of a network of entrepreneurs
55
599
Be at forefront of technological development
70
562
Opportunity to lead rather than be led by others
50
400
Needed more money to survive
46
383
Not to work for unreasonable boss
51
285
Control my own time
65
621
Work with people I chose
72
664
Be my own boss; work for myself
66
507
Make direct contribution to success of a
51
514
Greater flexibility in personal and family life
50
476
Work with people I like
57
551
company
Give myself, wife/husband children security
56
496
Work in a desirable location for me and family

Desire to have high earnings
56
51
513
374
Achieve something and get recognition for it
59
396
Achieve a personal sense of accomplishment
57
575
_____________________________________________________________________________________________
10
Increase the status and prestige of my family
64
615
Achieve a higher position in society
58
529
It was the only thing to do
53
364
Have an element of variety and adventure in work
57
445
Escape unsafe working conditions
48
459
Contribute to the welfare of my relatives
52
351
Have fun
65
513
Continue a family tradition
50
299
Follow the example of a person I admire
59
431
Be respected by friends
56
266
Have influence in my community
50
551
Eigenvalue
5.51
4.27
3.74
2.94
% of variance explained
15.73
12.21
10.68
8.39
*Principal Components Analysis. Decimal points omitted for loadings and communalities.
The multi-item motives data was also subjected to a Principle Components Analysis with
Varimax rotation (Table 2), yielding four dimensions.
Kaiser-Meyer-Olkin measure of
sampling adequacy was .905, and Bartletts test of sphericity was 8120.8 (p<.001). Standardized
composite scores for each dimension were obtained from this procedure, with means of zero and
standard deviations of one. This enabled us to use orthogonal motives dimensions for the
regression analysis, thus minimizing the chances of multicollinearity. The dimensions obtained
were labeled as achievement, independence, status, and inertia. The achievement component
emphasized learning, creativity, innovation, contribution, and problem solving. Independence
included being ones own boss, and flexibility of time and whom to work with. Status was
comprised of personal and family prestige, and high earnings. Inertia included a variety of items
including continuing a family tradition, following a role model, working on the only job one can
do, having variety and fun at work, and gaining respect of friends. These items reflected the
continuation of a role the person was cast into, hence leading to the label of inertia. The
correlations between the independent variables are shown in Table 3.
Results
The relation between the dependent and the independent variable sets was analyzed by
three separate regression analyses, with one of the growth areas serving as the dependent
variable in each analysis. A hierarchic procedure was used in each regression. At stage 1, the
nine hypothesized independent variables were entered, followed by ten interaction variables in
stage 2. Interaction variables were products of all possible pairs of owners age, education,
achievement motive, firms size and firms age. Previous ownership was excluded from
interaction analysis because, being a dichotomous variable, the resulting interaction variables
_____________________________________________________________________________________________
11
would have had a restricted range. The interaction variables were centered to avoid
multicollinearity; means were subtracted from each score yielding variables with means of zero
(Tabachnik and Fidell 2001). The hierarchic procedure enabled us to test whether interaction
variables had any explanatory power after the effects of main variables were accounted for.
Table 4 shows the results, where for each dependent variable two models are given, the first with
the original nine independent variables and the second with the interaction variables included
(only the significant interaction variables are included in the Table).
Table 3 - Correlations among the independent variables (n=491)*
Owners
Age
Owners
Education
Firms Age
Firm Size
Variance Inflation
Factor
Owners age
1.00
Owners education
-.10
1.00
Firms age
.37
-.02
1.00
Firm size
.08
.00
.19
1.00
1.22
Owners motives:
Achievement
.06
.16
.08
.28
1.16
Independence
.05
-.18
.12
-.02
1.08
Status
.02
.06
.05
-.08
1.01
Inertia
-.13
-.05
-.02
.01
1.06
39.10
10.93
14.40
8.64
Mean
1.33
1.10
1.38
Standard deviation
10.30
3.55
14.05
13.68
*Owners motives, being factor scores, had zero inter-correlations.
_____________________________________________________________________________________________
12
Table 4 - Results of Regression Analysis: Effects of the Independent Variables on Growth

Intentions (Beta Coefficients)
Resource
Aggregation
Variable
Technological
Improvement
Market Expansion
Owners age
-.151
-.408**
-.098*
-.093
-.141**
.095
Owners education
-.004
-.017
.059
.425**
.021
.345*
Size of firm (Log n)
.216**
.039
.200**
.205*
.296**
-.058
Firms age (Log n)
-.072
-.079
-.046
.289*
-.088
-.215
Owned previous firm or not
.026
-.196
-.008
-.007
.054
.073
Owners motives:
Achievement
.410**
.073
.439**
.439**
.340**
.339**
Independence
.181**
.171**
.187**
.179**
.119**
.107**
Status
.175**
.185**
.251**
.242**
.188**
.195**
Inertia
-.093*
-.087*
-.154**
-.155**
.078*
.076*
Interaction variables:
Owners age X achievement
.460*
a
Owners age X education
-.341
Firms size X firms age
.339*
Education X firms age
.281
Adjusted R-square
.310
F-ratio
.137
-.355
.322
25.11**
.381
.204
-.395*
.190
.410*
.473**
.217
.392
34.10**
.288
.302
22.70**
Change in F-ratio
4.55*
9.55**
4.55*
R-square change
.014
.012
.017
Degrees of freedom
9, 474
19, 464
9, 474
19, 464
9, 474
19, 464
** p<.01, * p<.05, p<.10
_____________________________________________________________________________________________
13
High
Younger Owners
Growth
Intentions
Older Owners
Low
Low
Education
High
High
Small Firms
Growth
Intentions
Micro Firms
Low
New
Firms Age
Old
High
Younger Owners
Older Owners
Growth
Intentions
Low
Low
Achievement Motive
High
High
Older Firms
Growth
Intentions
Newer Firms
Low
Low
Education
High
Figure 2 -- Interaction effects for growth intentions in resource aggregation

_____________________________________________________________________________________________
14
The adjusted R-squares obtained for the base models were .31 for resource aggregation
(F=25.10, p<.001), .38 for technological improvement (F=34.10, p<.001), and .29 for market
expansion (F=22.70, p< .001). The expanded models, which include the significant interaction
variables, show statistically significant improvement over the base models. Change in F-ratios
were 2.59 (p<.05) for resource aggregation, 2.19 (p<.05) for technological improvement, and
2.52 (p<.05) for market expansion.
To summarize, growth intentions in resource aggregation were influenced positively by
size of firm (supporting Hypothesis 5) and by motives for achievement (Hypothesis 1),
independence, and status. Growth intentions were negatively influenced by owners age
(Hypothesis 2) and inertia as a motive (Hypothesis 1). Firms age, previous business ownership,
and owners education did not enter the equation, failing to support, respectively, Hypothesis 3,
Hypothesis 7, and Hypothesis 8. Identical results were obtained for growth intentions in
technological improvement, and also in market expansion but with the exception of inertia
entering the equation with a positive effect contrary to Hypothesis 1.
The interaction effects add valuable information to these findings. To aid the interpretation of
interaction effects that appear in Table 4, further regression analyses were run for two levels of
one of the two interacting independent variables (Peters, et al. 1984). In order to do this, one of
the independent variables was first dichotomized by splitting the sample at the median. Then the
other independent variable was regressed on the dependent variable separately for the two subsamples. An example would be the regression of achievement motive on growth intentions
separately for older and younger owners. The regression lines were then plotted for both subsamples in the same space to illustrate the interaction effect. These plots for one of the
independent variables, resource aggregation, are shown in Figure 2. The interaction effects for
the other two growth areas, where significant, followed a similar pattern. A consistent
interaction effect across all areas of growth was between owners age and education. The top
graph in Figure 2 shows how owners education influences growth for young versus older
owners. Education positively influenced growth intentions in the case of younger owners, while
negatively influencing growth in the case of older owners. The same patterns emerged for
technological improvements and market expansion. Other interaction effects found include
firms size and age of firm. As the second graph in Figures 2 shows, firms age was negatively
related to growth (in resource aggregation) in micro firms (five or fewer employees), while it is
either positively related (resource aggregation) or unrelated (market expansion) to growth in
comparably larger firms. The third graph indicates that owners age and achievement score
interacted in affecting growth in resource aggregation only: higher levels of achievement motive
increased growth intentions more with older owners. Finally, the bottom graph shows that
education was positively associated with growth in newer firms while its effect was negative in
older firms.
Discussion
Several factors contributed to growth intentions of small business owners. Motives
played a major role in these plans, with achievement motive leading the group, and independence
and status factors also playing a role. On the other hand, inertia had an adverse affect on two of
the three growth intention areas. Being cast into an entrepreneurial role, through family
tradition, for example, did not foster entrepreneurial activity, but rather led to being content with
the status quo. The negative affect of inertia on growth intentions supports Davidssons (1991)
_____________________________________________________________________________________________
15
argument that growth intentions are a function of owners growth needs versus satisfaction with
the existing level of earnings.
The findings regarding inertia versus achievement are in line with the achievement
motive theories of entrepreneurial growth. However, the present study also showed,
unexpectedly, that additional motives may be relevant for continued entrepreneurship in this
culture. The role played by status, for example, can be attributed to the collectivistic tendencies
and high power distance found in the Turkish culture. Status motive seems to complement the
achievement motive, by providing a social, collectivistic dimension to achievement. In other
words, the drive for achievement may take a broader meaning than it does in more individualistic
societies.
Need for independence was also an unexpected predictor of growth intentions. The
desire to be ones own boss could be a motive for starting ones own business in order to avoid
the hierarchical, authoritarian structures of large business organizations in Turkey (Pellegrini &
Scandura, 2006). However, once the business is established, and the owner has secured a
certain degree of stability, the independence motive was not expected to provide the additional
drive for growth as the achievement motive would. It is plausible that stagnation raised the
danger of eventual loss of independence. While owners whose main motives were inertia were
likely to have the family resources to overcome difficulties, those whose motives were
independence more likely had to stand on their own feet. Future studies may explore this
diversity in motives by focusing on a comprehensive set of motives, rather than achievement
alone, in different cultures.
As expected, younger owners showed greater growth tendencies in all areas. Older age,
in contrast, seemed to be a critical factor in suppressing growth intentions of owners. An
exception was when old age was coupled with high achievement motives; this combination
actually increased growth intentions in resource aggregation. Education had no significant effect
on its own, but when coupled with young age generally had a positive effect on growth
intentions. Similarly, highly educated owners of older firms showed increased growth intentions
in technological improvement. This latter result may be a partial outcome of well-educated,
second or later generation owners showing interest in technological improvement in established
firms. Future studies may benefit from considering the effect of owners and firms age in
combination with motivational factors and with education and skill level, rather than in isolation.
Firms size was one of the stronger predictors of growth, with relatively larger firms
exhibiting more growth intention in all areas. This finding deviates from arguments that place
smaller size along with youth of owner and firm under a general dynamism factor. In Turkey,
larger size meant greater resources available for growth, as micro firms face substantial
difficulties for financing their expansion plans through internal sources or financial institutions
which seek collateral. Once again interaction effects suggest that size has to be considered
together with firms age. While small size limited growth opportunities in general, growth
intentions in resource aggregation and market expansion increased when the firm was newly
formed. A small start-up business meant a higher, while a small established business meant a
lower tendency to grow.
Some limitations of the study need to be pointed out. While support for Hypothesis 1
gave credence to achievement need hypothesis of entrepreneurship, it needs to be interpreted
with some caution. Both motives for going into business and intentions to grow are based on self
reports by owners, and subject to common factor bias. Future studies may measure actual
growth as a follow-up on growth intentions to achieve a more comprehensive test of the model
presented here. Mitchell, et al. (2000) reported that the relationship between cognitive scripts
and actual venture creation is moderated by cultural variables such as individualism-collectivism
and power distance.
_____________________________________________________________________________________________
16
Policy implications
Since growth intentions are highest among owners with strong achievement, status, and
independence motives, support for their firms may bring the highest return for investors and the
economy. However, such intangible factors hardly qualify for the guarantees that banks require
for extending loans. Banks naturally look for collateral (Mason and Stark 2004), and as pointed
out earlier, the bookkeeping practices of SMEs in Turkey do not provide reliable source of
information for the banks. Most family-financed SMEs operate with registered capitals that are
only a fraction of the actual amounts invested (Kumcu 2003). The banking system, which itself
is undergoing a reform, would continue to have difficulties in extending credit to these small
firms.
Improving the managerial and bookkeeping practices of owners who are interested in
growing their businesses should be feasible, however, and this may open the way for securing
loans from banks. Younger, better educated owners of start-up businesses with high
achievement, status, and independence motives are the most likely candidates to attend seminars
and work-shops to be provided by the government or businessmens associations for this
purpose. Since owners with these characteristics are also more inclined for growth, further
educating them to change their practices would make it possible for the financial system to
allocate loans to the right people.
In order to provide the intended results, these efforts may be complemented by changes
in the lending philosophy used by banks. Berry, et al. (2004) contrasted the going-concern
approach to lending by European banks operating in the UK versus the gone-concern approaches
by UK banks. Turkish banks policy of looking for collateral and security represents a goneconcern approach. In contrast, a going-concern approach would involve collecting information
about the future prospects of the SME, for example, via interviews, business plans, accounting
information, and industry or market data. If such changes are adopted, the aforementioned
seminars and workshops may focus, in addition to bookkeeping practices, on business planning
and research, which are more likely to foster entrepreneurial success. The going-concern
approach, although a major cultural shift for bankers, may provide the impetus for small business
growth which is presently hampered because of financing difficulties.
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21
THE CASE OF THE MISSING TENURE AND PROMOTION

GUIDELINES
Robert P. Yuyuenyongwatana, Cameron University
John M. Courington, Missouri Western State University
Shawn M. Carraher, Cameron University
To:
All Faculty
From: Robert P. Yuyuenyongwatana, Chair

The Tenure and Promotion Task Force Committee (The Committee)
Date: April 28, 2003
Subject: Tenure and Promotion Standard
Attached document is the tenure and promotion standard that The Committee has recommended
for your approval. The task force was composed of eight School of Business faculty members
representing all ranks from Instructor to Full Professor.
Under this guidelines, a faculty member applying for promotion at any level or for tenure must
meet these MINIMUM School of Business criteria in addition to Faculty Handbook criteria.
After each promotion, an individual starts fresh and must meet the criteria again before being
considered for promotion to the next level.
Since this is the most important written guidelines we have so far, please give it a very special
and serious consideration. Following points (that were raised by some faculty member) may
have to be considered:
Should an individuals entire academic career be given weights. For example, under this
proposal, we could have a situation where a newly hired Associate Professor with one
publication be considered for a Full Professor by publishing two or three journal articles
during the eligible period and receive a promotion. On the other hand, a current
Associate Professor with previous (and, therefore, not being counted) sixteen publications
and only one recent publication during the eligible time period will not be considered.
Should in-house publications be considered. If so, how many? This is important from
the point of view of perception of conflict of interest. What if an individual has all
his/her publications in-house?
Teaching excellence-how do we measure that? Some members have strong reservation
of using departmental averages as the sole benchmark due to a lack of comparability
across discipline.
The above points are only a few examples of concerns that need to be addressed. I am
sure there will be more.
_____________________________________________________________________________________________
22
I feel that my duty is done and thereby resign from my position as chair and as a member
of this Committee effective immediately.
Level and activity
TEACHING
Excellence in
teaching
Distinction in
teaching
Above average SE
scores and rigorous
course requirements
Average/good SE
scores and
appropriate course
rigor
Adequacy in service
Distinction in
research
Adequacy in
research
**peer-reviewed
*SE Student
Evaluations
Level and activity
SERVICE
Distinction in service
Level and activity

RESEARCH
Excellence in
research
Four journal
articles** OR one
article in A
journal and two
other journal
articles
Three journal
articles
Two journal articles
Seven service
activities; leadership
position(s); aboveaverage
contributions to
important School
activity or activities
Seven service
activities; at least
one leadership
position
Candidate for TENURE or PROMOTION must demonstrate appropriate collegiality and must
achieve excellence or distinction in at least two of the three areas listed above and adequacy or
better in the third area (note: There is no adequacy category in teaching; candidate must
achieve excellence or distinction in that area).
_____________________________________________________________________________________________
23
Dec. 2004
Hiring, Promotion, Tenure, and Retention Standards based upon desire for AACSB accreditation
for Cameron University
Classifications
1. Ph.D. or DBA from AACSB accredited school, JD/LLM from AALS accredited law school
plus member in good standing of the BAR in their sending state
2. all others (Ph.D. or DBA from AACSB member school; Ph.D. or DBA from non-traditional
non-AACSB school or international university; Ph.D. outside of field; Ed.D. and other
nontraditional doctorate in business
Currency requirements (first five years after receiving doctorate)

Classification
1
2
# of refereed journal articles per 5 years since receiving degree

0
6
Hiring & currency requirements (after first five years of doctorate)

Classification
1
2
# of refereed journal articles per 5 years since receiving degree

3
6
Tenure
1
2
6 (1 per year)
12 (2 per year)
Associate Professor
1
2
6 [8 for going up prior to tenure]

12
Professor
1
2
(at least 25% should be national & international journals)

12
24
How do we measure Teaching and Service?
_____________________________________________________________________________________________
24
Questions
1. What types of standards for teaching, research, and service should a university establish if it is
seeking initial AACSB accreditation? Would these differ if the university has had it for many
years?
2. With the changes in the AACSB guidelines with respect to having research focused to meet
the university mission should standards such as these be changed to match the teaching oriented
nature of the university? Should individuals performing basic research NOT be rewarded?
3. Is it fair to establish different standards of expected performance for those having degrees that
are not from AACSB oriented schools?
4. Is AACSB accreditation important for a school? Why or why not?
5. What is the economic value of AACSB accreditation to a School of Business? What about to
a university as a whole?
6. Are the revised standards too steep for a teaching oriented university?
7. How are the standards different between AACSB and ACBSP?
8. Take a look at the faculty at your university or college. How do they stack up on these
standards?
9. Perform a Strategic Gap Analysis for your department. What gaps need to be filled? What
strategies should be followed?
10. What would be an appropriate set of standards should a teaching university use? What types
of standards should a research oriented university use?
11. Should different sets of guidelines be used for different faculty members depending on their
academic background? Why or why not?
12. What does it take to pass a set of promotion and tenure guidelines at your university? What
would it take to set aside those guidelines? May different standards of performance be used at
different levels of the organization?
_____________________________________________________________________________________________
25
URGE TO PURCHASE AS A MEDIATOR OF THE EFFECTS OF

BROWSING BEHAVIOR UPON IMPULSE PURCHASING
BEHAVIOR
Terrence J. Paridon, Cameron University
Karla Moorhead, Cameron University
Kevin McClain, Cameron University
Dianne Gately, Cameron University
Abstract
Since emotion plays a significant role in shopping focused decisions, the exact nature of the
structure of such behavior has been the subject of a significant amount of study. In particular,
research involving browsing behavior has focused upon the conditions under which such
behavior leads to unplanned purchases. This study continues the tradition of examining the
browsing purchasing relationship by focusing upon findings that indicate, in the context of
emotional shopping experiences, a mediated relationship involving the urge to purchase best
explains the browsing purchasing relationship. Results confirm mediation and imply that
retailers should expect the unexpected.
Introduction
Contemporary marketing thought emphasizes the significance of emotions in consumption
focused behaviors. These behaviors, experiential based and/or utilitarian, transcend the
conventional notion that consumption involves only a gradual yet continuous reduction in
product related utility.
For instance, the emotion evoked by advertising messages,
conceptualized as a low involvement learning process, may create, in the message recipient, a
favorable perceptual process that facilitates recall of a brand name or a product related attribute.
Similarly, in decision making, frequently thought of as rational and objective in nature, research
indicates that on occasion, consumers simply invoke an affect referral rulechoose the item that
generates the greatest emotional or affective response.
In retailing thought, emotion, conceptualized as a reaction involving feelings about or
toward the store environment, links the physical characteristics of the store to numerous
shopping related behaviors. For example, when music, color, and scent in the shopping venue
generate pleasant feelings, those emotions influence shoppers evaluations of products (Matilla
& Wirtz, 2001; Turley & Milliman, 2000) as well as their expenditure of resourcestime and
money (Donovan & Rossiter, 1982). A second instance of emotional focused shopping
characterizes pleasure as an identifiable shopping experience. That is pleasurable shopping
experiences, conceptualized as hedonic value that accrues during shopping, accounts for
thoughts of overall satisfaction with the shopping event (Babin, Darden, & Griffin, 1994). In a
somewhat different context, hedonic shopping experiences contribute to the emergence of
patronage loyalty (Paridon, in press; Wang, Baker, Wagner, & Wakefield, 2007) and indirectly
account for the occurrence of shopping focused word of mouth communication (Paridon, 2006).
Emotionally pleasing shopping focused behavior is the foundation also of
conceptualizations postulating the existence of hedonic shopping motives. These identifiable
and ongoing motivations are consistent with and extend the preceding findings: hedonically
_____________________________________________________________________________________________
26
motivated shoppers spend more time shopping and are more likely to engage in browsing
behavior (Arnold & Reynolds, 2003; for related developments, see also Babin, Darden, &
Griffin, 1994), a theme consistent with other research into the nature of browsing (Beatty &
Ferrell, 1998). However, while the aforementioned research contributes significantly to
understanding numerous shopping and shopping related behaviors, these contributions are best
understood in the context of resource expenditures and interpersonal influence and marginally
understood or researched in the context of browsing behavior. Thus, the focus of this study is
browsing behavior with an emphasis also upon browsing related emotions and purchasing
behavior (Beatty & Ferrell, 1998).
Literature Review
As previously mentioned, in studies involving browsing or browsing related behaviors (e.g.
Arnold & Reynolds, 2003; Babin, Darden, & Griffin, 1994), the emphasis is upon the extent to
which such behaviors correspond to other retailing related constructs. However, Beatty and
Ferrells (1998) research conceptualizes browsing behavior as an antecedent variable in a
complex mediated relationship consistent with ones enjoyment of shopping and involving ones
urge to purchase, and impulse purchasing behavior. Stated somewhat differently, if one enjoys
shopping, then browsing behavior should influence impulse purchasing if a shopper experiences
an urge to purchase.
Although the preceding mediated relationship may be intuitively appealing, additional
insight into the nature of Beatty and Ferrells conceptualization emerges from a consideration of
heuristic thought. Briefly stated, heuristic thought depends upon previous experiences and
involves the idea that specific rules, schemata, or heuristics can mediate peoples attitude (or
other social) judgments and we use the term heuristic cue to refer to any variable
whose judgmental impact is hypothesized to be mediated by a simple decision rule (Chaiken,
Lieberman, & Eagly, 1999, p. 216). Extending this definition to the present study suggests that
if, as a result of browsing behavior, a heuristic cue, individuals temper an impulse to purchase
with a felt urge to purchase, then the urge to purchase may act as a mediator (a decision rule that
intervenes) between browsing behavior and impulse to purchase.
In addition to the explicit evidence indicating such a mediated relationship, the question
arises, does other research suggest the existence of such a relationship. In answering the
question, findings from other studies should confirm or suggest, in the context of the topic of
browsing research, the three main hypotheses required to accept a mediated relationship. First,
browsing behavior should characterize ones purchasing decisions and findings confirm such a
relationship (Darden & Ashton, 1974; Jarboe & McDaniel, 1987). Second, browsing behavior
should contribute to explaining differences in what Beatty and Ferrell (1998) refer to as an urge
to purchase. Although limited direct support for such a relationship exists, the findings reviewed
by Beatty and Ferrell (1998) do imply the feasibility of such an association. To be more specific,
the latter theorists reason that findings from other studies (Hoch & Lowenstein, 1991; Rook &
Hoch, 1985; Rook & Fisher, 1995; Weinberg & Gottwald, 1982) indicate that the effects of
browsing are cumulative, with each instance of browsing contributing to the emergence of an
urge to purchase. Thus, the second requirement for a mediated relationship, ones urge to
purchase depending upon ones browsing behavior, seems reasonable.
The third requirement for a mediated relationship is more complex. Briefly stated, if
evidence confirms that purchasing behavior depends upon browsing behavior and that browsing
behavior contributes to explaining an urge to purchase, then the purchasing behavior relationship
involving browsing behavior must either be nonexistent or significantly weakened in the
presence of an urge to purchase. The findings of Beatty and Ferrell (1998) explicitly and
uniquely indicate such a relationship.
Thus, confirming mediation requires testing the following three research hypotheses:
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27
H1: Orientation towards impulse purchasing depends upon browsing behavior

H2: An urge to purchase is explained by browsing behavior
H3: The urge to purchase mediates the relationship between browsing behavior and
orientation towards impulse purchasing.
Methodology
Since the focus of this research was to test for mediation involving in store browsing, urge to
purchase, and purchasing orientation, it seemed reasonable to approach the study of the topic by
surveying a nonprobability sample of shoppers using a self-administered structured
questionnaire. Thus, a convenience sample of shoppers residing in a metropolitan statistical
participated in a brief survey about their shopping behaviors. After informing each potential
respondent that the university students who administered the survey were studying market place
behaviors, each individual was asked if they would be willing to answer a few questions about
their own shopping behaviors. Those shoppers who agreed were informed that in addition to
assisting students with developing their understanding of retailing related behaviors, their
participation would enable students to further their understanding of the marketing research
process. No personal identifier information was collected and respondents were informed that
their answers were and would remain anonymous. One hundred and six completed and useable
surveys were obtained. The demographic profile of the approximately equal number of male and
female respondents indicates that they were predominately Caucasian (74 %), married and had
attained an average age of 37. At least 65 % had attended some college and their average
household income was $47,000. (Averages represent the sum of the products of the category
midpoint values multiplied by their respective ratios.)
The development of the survey instrument was guided by existing research in the area.
To be more specific, the indicators for each latent variableenjoyment of shopping, store
browsing behavior, urge to purchase, and purchasing orientationin this study were selected
from previous research into the nature of the aforementioned constructs (Beatty & Ferrell,
1998). However, more than precedence was involved in the selection. That is, in order to be
included in this study, the observed measures for each of the latent variables were evaluated in
terms of their potential to contribute to an acceptable level of construct reliability and validity.
To be more specific, shopping enjoyment has been measured frequently with reliable
indicator variables that focus upon ones emotional orientation towards shopping (Beatty &
Ferrell, 1998) and other research confirms such a relationship. For example, research has
indicated that emotions associated with shopping are significantly related to measures of
resource expenditure (Babin, Darden, & Griffin, 1994) and browsing behavior (Arnold &
Reynolds, 2003; Donovan & Rossiter, 1982). Similarly, Beatty and Ferrell (1998) report that
specific measures for assessing ones urge to purchase and an emotional orientation towards
shopping are significantly related. Other studies confirm that an urge to purchase is part of ones
overall evaluation of a pleasurable shopping experience (Babin, Darden, & Griffin, 1994). In
addition, since ones orientation towards impulse purchasing depends in part upon ones urge to
purchase (Beatty & Ferrell, 1998), then this finding, in conjunction with the previous research
indicating a relationship between enjoyment and purchasing orientation, suggests that an
individuals level of affective emotion towards shopping should be consistent with the extent to
which one engages in impulse purchasing behaviors.
Thus, the observed measures that Beatty and Ferrell (1998) used to study the
aforementioned shopping relationships were used either without modification or as a foundation
for the latent variable indicators of this study. Nevertheless, some changes were made and these
changes were considered minor. For example, when appropriate, minor rephrasing of the
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28
aforementioned indicators conveyed to the respondents a generalized shopping context instead of

a specific shopping event. In addition, one measure of browsing behavior, I would rather browse
than buy (Darden & Ashton, 1974), was included in an attempt to insure an acceptable level of
reliability for the browsing construct. The complete set of indicators is contained in Appendix
A. They were presented to respondents in a five point Likert type format. Response options
ranging from one to five were semantically anchored by strongly disagree, disagree, neither
agree nor disagree, agree, and strongly agree, respectively.
Regression analysis, one of many statistical analyses suggested for testing the hypotheses
involved in a mediated relationship (e.g. Baron & Kenny, 1986), has been used frequently in
the initial or exploratory stage of researching these complex relationships in studies with small
samples. Thus, each research hypothesis in this study was evaluated in accordance with Baron
and Kennys recommendation that testing for a mediated relationship must include three
separate regression analyses. However, in keeping with the accepted practice that statistical
testing of a hypothesis should be undertaken only if the composite reliability of latent variables
attains an acceptable value, the internal consistency of each construct was evaluated. Coefficient
alpha (Nunnally, 1967) for the latent variables are: emotional orientation towards shopping .93;
store browsing behavior .76; urge to purchase .86; and orientation towards impulse purchasing
.88. Each exceeds the generally accepted criteria that the estimate should meet or exceed .70.
Although not part of the formal hypotheses in this study, additional insight into the nature
of each latent variable was gained from an analysis of the correlation coefficients involving
enjoyment of shopping. That is, since each of the latent constructs involved in this study were
conceptualized in previous studies to be related to ones emotional orientation towards shopping,
then if significant correlations with shopping enjoyment characterizes the latent variable
relationships of this research, a higher level of confidence may be attached to the results of the
regression analyses. The values, and the significance level for a test of the null hypothesis that
the correlation equals zero, are: browsing behavior, -.19, p < .10; urge to purchase -.39, p < .05;
orientation towards purchasing, -.55, p < .05. (The negative signs are attributable to the wording
of the affective orientation indicators. Reverse coding for those indicators leads to positive
correlation coefficients.) Thus, browsing behavior, urge to purchase, and impulse purchasing
orientation embody an emotional orientation towards shopping.
Accordingly, the regression analyses recommended by Baron and Kenny (1986) for
testing for a mediated relationship were preformed. Since the study focused exclusively upon
examining the nature of the proposed mediated relationship, each regression did not include an
intercept term. The first analysis involves regressing the mediator, urge to purchase, on the
independent variable, browsing behavior. The results of the analysis indicate that a significant
causal relationship exists: ones urge to purchase is influenced by ones browsing behavior.
The t-value for the beta coefficient of .93 involved in this regression and the variance explained
in this analysis are 26.77 (p < .05) and .87, respectively. In the second regression, the dependent
variable was ones overall orientation towards purchasing and the predictor variable was
browsing behavior. In this the second regression, the t-value for the beta coefficient of .93 was
25.43 (p < .05) and the variance explained was .86. Thus, research hypothesis number two was
accepted and the second requirement for a mediated relationship was fulfilled.
The final requirement for mediation is more complex. Multiple regression is required.
The dependent variable is ones orientation towards purchasing. The two independent variables
are urge to purchase and browsing behavior. A mediated relationship is indicated if the
regression involving urge to purchase is significant and the coefficient for the regression of
browsing behavior is not significant. The results confirm mediation. The t-values are 15.79 (p <
.05) and 1.93 (n.s.) for urge to purchase (beta equals .88) and browsing behavior (beta equals
.11), respectively. The coefficient of determination for the analysis was .96.
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29
Discussion
Previous research has documented the emotional nature of shopping and the results of this study
are in agreement with these findings. Emotions in the form of shopping enjoyment coincide
with browsing behavior, ones feelings of the necessity to purchase an item, and ones impulsive
purchasing behavior. Thus, retailers are advised that in addition to generating a favorable
atmosphere for task focused decision making, offering shoppers pleasurable shopping
environments should increase the occurrence of impulse purchasing and its antecedents
browsing behavior and felt urge to purchase.
Thus, specific suggestions for generating an emotionally favorable shopping atmosphere
should include recommendations on ways to increase browsing behavior, with the expectation
that an increase in such behavior will contribute to shoppers experiencing an urge to purchase.
For example, since browsing behavior, a leisurely activity, involves sorting through a product
assortment that is relevant to the needs and wants of shoppers, then retailers are advised that
more than atmosphericsmusic, lighting, and scentsare necessary for browsing to occur. A
well planned and executed merchandising plan is important. However, retailers should recognize
also that the mediator of browsing behavior, urge to purchase, is, in a very real yet not yet
completely understood sense, under the control of the shopper. As a result, retailers who plan for
the occurrence of impulse shopping should recognize that predicting its occurrence is, and will
be, surrounded by a large amount of uncertainty.
Finally, by replicating in part the research of Beatty and Ferrell (1998), this study has set
the foundation for additional research into the phenomenon of impulse buying. Future studies
should extend the conceptual development of this study by incorporating other latent variables.
For example, consumption specific self-confidence has been shown to contribute to the
emergence of shopping focused word of mouth communication (Paridon 2006). In a somewhat
different context, pleasurable shopping experiences and task focused shopping behaviors have
been shown as antecedents to patronage loyalty (Paridon, in press; Wang et al., 2007). Thus,
research into the plausibility of causal relationships involving impulse purchasing behavior and
its antecedents and pleasurable and task focused shopping experiences along with consumption
specific self confidence, patronage loyalty and word of mouth communication may contribute
significantly to developing a nuanced model of shopping and purchasing behaviors.
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30
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Appendix
Shopping Behavior Scales
I. Browsing Behavior Scale
A.
B.
C.
D.
The percentage of time I spend just looking around on a shopping trip is fairly
high.
I would say that I primarily just look around during shopping trips.
I devote most of my attention to the items I planned to buy on shopping trips.
(Reverse scored)
I would rather browse than buy.
II. Orientation Towards Impulse Purchasing Scale

A.
B.
C.
D.
E.
When I go shopping, I buy things that I had not intended to purchase.

I am a person who makes unplanned purchases.
When I see something that really interests me, I buy it without considering the
consequences.
It is fun to buy spontaneously.
I avoid buying things that are not on my shopping list. (Reverse scored)
III. Urge to Purchase Scale

A.
B.
C.
D.
I experienced a number of sudden urges to buy things I had not planned to

purchase.
When I go shopping I see a number of things that I want to buy that are not on my
shopping list.
I experience no strong urges to make unplanned purchases. (Reverse scored)
When I go shopping I feel a sudden urge to buy something.
IV. Shopping Enjoyment Scale

A.
B.
C.
D.
Shopping is a waste of time. (Reverse scored)

Shopping is not a way I like to spend my leisure time. (Reverse scored)
Shopping is not entertaining to me. (Reverse scored)
Shopping is not one of my favorite activities. (Reverse scored)
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33
FIGURE 1
Mediated Model of Browsing Behavior, Urge to Purchase, and Orientation Towards
Impulse Purchasing
Urge to Purchase
Browsing Behavior
Orientation
Towards Impulse
Purchasing
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34
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35
POLYCHRONICITY, LEADERSHIP, AND LANGUAGE

INFLUENCES AMONG EUROPEAN NURSES: SOCIAL
DIFFERENCES IN ACCOUNTING AND FINANCES
Shawn M. Carraher, Cameron University
Robert P. Yuyuenyongwatana, Cameron University
Theresa Sadler, Texas A and M University Commerce
Thomas Baird, Cameron University
ABSTRACT
Using a sample of 174 European nurses we examine the relationship between
polychronicity, task oriented leadership, language abilities, earnings, task-oriented
performance, and social-oriented performance. It was found that polychronicity was related to
task-oriented and socially oriented performance, that task-oriented leadership was related to
wages and task-oriented leadership, and that language ability was related to task-oriented
performance. Gender was also found to be related to socially oriented performance with
females performing better in this area. Suggestions for future research are made.
INTRODUCTION
This paper examines the relationship between polychronicity, task-oriented leadership,
and language abilities on the compensation, task-oriented performance, and socially oriented
performance of nurses in Europe. The term polychronicity includes simultaneous work, such as
eating, reading, and watching TV at the same time, as well as activities that may be interspersed
with each other in the same time period (Bluedorn 1998). For example, a professor who is
simultaneously writing five different research articles, yet only works on one of them at a time in
a five hour time period could be said to exhibit polychronic behavior. Additionally a nurse who
works with multiple patients during a shift could be said to be working in a polychronic fashion.
Bluedorn states that polychronicity is not a single behavior, but an enduring cultural or
individual preference.
Polychronicity has been studied as both an individual and cultural preference/trait
(Slocombe, 1999). Hall was the originator of the term polychronicity, and he used it to describe
a cultural construct involving different ways of organizing activities (Bluedorn, 1998, Hall
1983). Individuals who exhibit a strong preference for polychronic behavior have a tendency to
blend their home and work activities in a much more significant way than those who are
primarily oriented toward monochromic time attitudes and behaviors. (Francis, Smythe and
Robertson, 1999). In a cultural context, Americans typically are more monochromic at the office
and polychronic at the home whereas in other cultures the business atmosphere tends to be
permeated with polychronic behavior (Lee, 1999). In discussions about temporal orientations of
cultures, it has been argued that monochromic oriented cultures may be superior to polychronicInternational Journal of Family Business, Volume 6, Issue 1 2009
_____________________________________________________________________________________________
36
oriented cultures in terms of the level of productivity in their organizational work in many
situations (Lee, 1999). Although others believe that polychronicity shows an organizational
advantage (Bluedorn, 2002; Bluedorn and Martin, 2008; Carraher, Scott, and Carraher, 2004),
and it often influences behavior and the outcomes from work (Slocombe, 1999). Therefore, an
organizational culture that requires rapid decisions and multiple tasking may have a positive
performance impact from polychronicity (Onken, 1999). This is the type of environment faced
by nurses on a daily basis (Berkowitz and Bennis, 1961; Best, Hysong, Pugh, Ghosh, and Moore,
2006; Thomas and Davies, 2005).
Task-Oriented Leadership
At the University of Illinois, Fiedler (1964; 1967) began his work on a contingency
theory of leadership in 1953. He believes that the organizational situation moderates the
relationship between the preferred leadership style and organizational effectiveness. According
to Fiedler (1978) a task oriented leader is primarily motivated by the achievement of job-related
objectives and emphasizes task-oriented performance when there are tasks to be completed.
Peters, Hartke, and Pohlmann (1985) reviewed thirty years of research on the LPC scale and
concluded that the evidence supported the contingency model. There were major criticisms of
both the scale and the theory. Therefore, we chose to use a newer scale in order to measure taskoriented leadership.
Language Ability
Strong research evidence has supported the contention that foreign language skills are
necessary when conducting business globally (Swift, 1991). However, there is limited research
on the importance of speaking multiple languages while working domestically (Ginsburgh,
Ortuno-Ortin, and Weber, 2007). It is known that financial costs of maintaining records in
several languages increase with greater number of languages used (Ginsburgh and Weber, 2005).
The ability to speak more than one language has been found to increase the earnings of college
graduates in the United States (Saiz and Zoido, 2005) and has been seen as a boon to accounting
and business majors (Cornick and Roberts-Gassler, 1991) and in hospitality management fields
(Yuan, Houston, and Cai, 2006). In a survey of 205 foreign and domestic businesses Cornick
and Roberts-Gassler (1991) found that 29% of domestic firms and 37% of foreign firms reported
a need for business and accounting students to have foreign language skills. Only 20% of USbased organizations and 36% of foreign based organizations would offer higher starting salaries
to American students with foreign language abilities. As far as we know no studies have
examined the impact of foreign language abilities on earnings of individuals in the healthcare
professions.
Cohorts
A cohort can be defined as a set of individuals entering a system at the same time
(Mason and Wolfinger, 2001, pg. 1). In a traditional cohort analysis researchers study the
differences between cohorts (Mason and Wolfinger, 2001). In the present study we examine one
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37
cohort in order to control for potentially mediating and moderating variables which might be
introduced when not tightly controlling the sampling frame.
METHODS
The sample consisted of a cohort of 174 nurses approximately five years after finishing
nursing school. The average age for members of the sample was 26.8 years of age (SD=.68)
with working language ability of 4.24 (SD = .72) languages, and earning an average of 9.3 per
hour (SD = 1.38). Sixty-two point six percent of the respondents were female. The sample
included all nurses who had graduated from nursing schools in one region of a European country.
They had finished their formal education five years prior to the study and were employed full
time as nurses. All nurses in the sample were limited to a single organizational level and in nonsupervisory positions in order to minimize the influence of hierarchical differences in the results
(Nealey and Blood, 1968).
Instrumentation
In order to measure polychronicity, the Index of Polychronic Values (individual level)
developed by Bluedorn, Kalliath, Strube, and Martin (1999) was administered to the subjects.
The Index contains 10 items taken from Bluedorn et al. (1999). The coefficient alpha reliability
estimate for the polychronicity scale was .712. The leadership scale is derived from Values in
Action and was developed by Peterson and Seligman (2004). The leadership scale contained 9
items and is available from the international personality item pool (Goldberg, Johnson, Eber,
Hogan, Ashton, Cloninger, and Gough, 2006). Responses are made on a five-point, Likert-like
scale with response categories going from 1 = strongly disagree to 5 = strongly agree. The
coefficient alpha reliability estimate for this scale was .917.
Foreign language ability was self reported as the number of languages in which the
respondent believed that they could speak. In Central Europe, it is fairly typical for respondents
to report that they can speak a language if they have the ability to take a university level course
in that language involving both vocabulary and grammar. Task-oriented performance was
measured using a 7-item performance measurement scale. The coefficient alpha reliability
estimate for the scale was .93. Social-oriented performance was measured using a modified
version of a 17-item scale previously used to measure customer service oriented performance
among nurses (Carraher, Parnell, Carraher, Carraher, and Sullivan, 2006). The coefficient alpha
reliability estimate for this scale was .96.
Compensation rate was measured as both the hourly wage rate and the natural log of the hourly
wage rate (Saiz and Zoido, 2005). It is fairly typical to examine the natural log of wage rates in
accounting and finance when there may be large variations in the wage rates. Due to the cohort nature of
this data [limiting the wage ranges], we believe that the results should not vary in a very meaningful way
between the two ways of measuring the wage rates.
Analysis and Results

In order to examine the desired relationships 4 multiple regression analyses were
performed. Tables 1 and 2 show similar results for both natural log of hourly wage and actual
wages. The Rs for the 2 varied only slightly with a .012 difference between the two (Rs = .295
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38
and .307). In both cases the only variable which influenced wages was Task-oriented leadership.
Table 3 shows polychronicity, language ability, and leadership influence task-oriented
performance at .001 level. Age explains task-oriented performance at .05 level. Over 80% of
the variance in self-reported task-oriented performance can be explained by the three variables.
Table 4 shows polychronicity and gender both influencing socially oriented performance with
females scoring higher than males in this type of performance. Twenty-three point four percent
of the variance in Socially oriented performance can be explained by the two variables.
Table 1
Results of Regression of Polychronicity, Age, Languages, Gender, and Leadership on
Ln Wages
Standardized
Unstandardized Coefficients
Model
1
Std. Error
(Constant)
1.758
.471
Polychron.
-.035
.036
.009
Coefficients
Beta
Sig.
3.735
.001
-.102
-.957
.340
.017
.043
.568
.571
-.012
.018
-.060
-.690
.491
Gender
.046
.024
.149
1.880
.062
Leadership
.065
.019
.314
3.401
.001
Age
Languages
a. Dependent Variable: Natural Log of Wage

R = .295 R squared = .087 F = 3.213 Sig. = .009
Table 2
Hourly Wages
Standardized
Model
1
Std. Error
(Constant)
3.222
4.326
Polychron.
-.191
.335
.154
Coefficients
Beta
Sig.
.745
.457
-.061
-.570
.569
.152
.076
1.012
.313
-.147
.166
-.077
-.882
.379
Gender
.426
.224
.150
1.904
.059
Leadership
.565
.176
.295
3.209
.002
Age
Languages
a. Dependent Variable: Hourly wage

R = .307 R squared = .094 F = 3.500 Sig. = .005
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39
Table 3
Task-Oriented Performance
Standardized
Model
1
Std. Error
(Constant)
-.109
1.292
Polychron.
1.173
.100
Age
-.105
Languages
Coefficients
Beta
Sig.
-.084
.933
.583
11.740
.001
.045
-.082
-2.325
.021
.238
.050
.194
4.803
.001
Gender
.124
.067
.068
1.860
.065
Leadership
.617
.053
.503
11.735
.001
a. Dependent Variable: task oriented performance

R = .896 R squared = .803 F = 137.38 Sig. = .0001
Table 4
Socially Oriented Peformance
Standardized
Model
1
Std. Error
(Constant)
-4.534
3.364
Polychron.
1.077
.260
.226
Age
Languages
Gender
Leadership
Coefficients
Beta
Sig.
-1.348
.180
.406
4.138
.001
.118
.133
1.913
.057
-.147
.129
-.091
-1.136
.258
.635
.174
.265
3.647
.001
-.020
.137
-.012
-.143
.887
a. Dependent Variable: Social Oriented Performance

R = .483 R squared = .234 F = 10.237 Sig. = .0001
Discussion
Our analyses indicate that being task-oriented can influence ones earnings and taskoriented performance. However, the number of languages spoken was unrelated to wages and to
socially oriented performance and that polychronicity was unrelated to wages. It would be
useful to examine whether or not these relationships hold true when examining non-cohort data
and/or cohort data that allowed additional variables to vary. For instance how might the results
_____________________________________________________________________________________________
40
differ if more than one organizational level was included, or if both full and part-time employees
were examined in a study such as this one? Including both full and part time employees would
also change the gender composition as many more of the male nurses who choose to work full
time as compared with the female nurses.
Future research should include studies on the relationship between polychronic behaviors
and intelligence, cognitive complexity, and tolerance for ambiguity. We believe that there may
be a slightly positive relationship between general intelligence and polychronicity, a stronger
positive relationship between polychronicity and cognitive complexity and a moderate
relationship between tolerance for ambiguity and polychronicity. Additionally, it is useful to
examine some of the potential outcomes of polychronic behaviors and task-oriented leadership
such as Return On Investment, Sales growth, or organizational profitability (Bluedorn, 2002),
and to examine their relationships to other constructs such as the time span of discretion concept
of Jaques (1964) and temporal flexibility (Bluedorn and Martin, 2008). Other individual
attributes may influence individual, team, or organizational performance.
These
recommendations are important, not just in the management field, but also in accounting,
finance, psychology, and social psychology (Halbesleban, Novicevic, Harvey, & Buckley, 2003;
Harvey, Novicevic, Buckley, & Fung, 2005; Novicevic, Harvey, Buckley, & Fung, 2008).
In the area of performance, future research should examine other attributes that might
influence task and socially oriented performance. Organizational citizenship behaviors should be
closely related to socially oriented performance. There may also be other types of performance
which could be examined as well as alternative means of collecting data. In the current study
self-reported performance data was used which is subjected to personal bias. Ideally, multiple
sources of performance data should be collected and the roles performed should be carefully
considered (Best, Hysong, Puch, Ghosh, and Moore, 2006; Thomas and Davies, 2005). Raskin,
Boruchow, and Golob (1965) examined the concepts of task and person (socially) oriented
performance over 40 years ago. A lot has changed in healthcare industry since then. Finally,
cross-sectional data between the United States and European counterparts may be compared to
discern any cultural/national differences.
In conclusion, utilizing a sample of 174 nurses in Europe, we have examined the
relationship between language ability, polychronicity, task-oriented leadership and actual wages,
task-oriented performance and socially oriented performance.
It was found that
polychronicity was related to both task-oriented and socially oriented performance but not to
wages; that task-oriented leadership was related to both wages and task-oriented leadership, but
not to socially oriented leadership, and language ability was related to task-oriented performance.
Females were found to score higher in socially oriented performance. Several suggestions for
future research were made.
_____________________________________________________________________________________________
41
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_____________________________________________________________________________________________
45
LOGISITICAL FLOWCHART AND FEASIBILITY STUDY FOR

DOING BUSINESS IN CHINAS APPAREL AND ACCESSORIES
MARKET
Georgina He, University of Central Arkansas
Don B. Bradley III, University of Central Arkansas
Abstract
This research was designed to develop a logistical flowchart and feasibility study for an
American apparel and accessories company. China is now regarded as the fourth-largest
economy in the world, with an average annual growth rate of 9.8 percent--triple the world
average. In contrast to other developed countries that are greatly affected by the financial
crisis, China appears to have a favorable turn in its foreign trade starting from March. These
achievements are primarily due to Chinas decision to join the World Trade Organization
(WTO). This has led to rapid and sustained increases of U.S. exports to China, making China
the second biggest foreign market for U.S. goods. Under the US-China WTO Agreement in
2004, China has not only phased out trading and distribution rights to US firms, but also
eliminated all import quotas. This is significant since the agreement has made it possible for
small and medium-sized US companies to import and distribute products without going through
a state-trading enterprise or middleman; also business licenses for foreign investment are now
easily obtainable.
Introduction
The boom of the economy has drawn various investors, including luxury brand
companies. All the facts and data the researcher has illustrated clearly demonstrate that the
performance of luxury items are still solid and strong, which means the current Chinese luxury
market is thriving despite the recession. It also indicates that this market is far from mature, thus
providing a huge opportunity to entrepreneurs.
Another opportunity is the driving force behind the luxury market. Although people in
foreign countries are currently tightening their belts, Chinese consumers are still spending.
With the exponential growth of the Chinese middle class who are able and willing to buy luxury
goods, China is predicted to consume 29% of the world's luxury goods by 2015. Compared with
old people, young Chinese have a low savings rate and tend to dispose most of their income.
Young ladies, in particular, are more likely to spend as long as the products are attractive to buy.
They believe that possessing luxury goods are in accord with fashion and a high quality lifestyle.
Before investors start businesses, they must know how to distribute their goods. In this
article, the author has gathered all the related information and put it into a flow chart; involving
the application for a business license, representative office and import quota license, shipping,
customs declaration, and distribution channels.
To make this plan more effective and concrete, the researcher also suggests the
representative products and basic price level by analyzing customer behavior and disposable
income.
The most impressive issue is her pioneering market strategy, which absorbs the virtues of
online stores and shopping outlets. This unique strategy, also known as competitive advantage,
endows the store a considerable power to carve out a market share.
On the whole, the business seems to be quite striking and feasible. However, the biggest
threat one needs to address is that the competition in the luxury market has become quite fierce,
_____________________________________________________________________________________________
46
as a multitude of foreign investors saturate the Chinese market each year. It is difficult to
acquire market share from existing competitors, who have already built up a loyal customer base.
Therefore, how to broaden brand awareness rapidly and gain customer loyalty is the most
noteworthy issue for the business owner.
Background
Economy
Following a multitude of economic reforms, China has achieved remarkable success in
economic development. It is reported that China has maintained an average annual growth rate
of 9.8 percent triple the world average, over the past 30 years1. According to Chinas Xinhua
news agency, the Chinese GDP soared from 53 billion USD in 1978 to 3.7 trillion USD in 2007,
making China the fourth-largest economy in the world. U.S. companies are benefiting from this,
as evidenced by rapid and sustained increases in U.S. exports to China. Over the past several
years, increases of U.S. exports to China averaged well over 20 percent. In 2007, the U.S.
exports to China increased by 5.7 percent, according to the Census Bureau, causing China to be
the fastest growing foreign market for U.S. goods. As statistics show, the China-U.S. total trade
is 354.1 USD billion, placing China as its second biggest trading partner behind Canada.
Accurately, U.S. exports of goods to China are 58.3 billion USD for 20072.
On account of the global economic recession, it was the fifth consecutive month of declines
in both imports and exports in China, but the rate of decrease shrank by 6.3 and 9.2 percent in
2008 respectively, compared with the first two months of 2009. During March, Chinas import
and export volume totaled $162 billion and the trade surplus reached $18.56 billion, up 41.2
percent year on year, as shown by Customs statistics. All of these figures signify a favorable
turn in Chinas foreign trade starting from March3.
Distribution
Distribution is a broad concept that encompasses wholesaling, retailing, maintenance,
repair, and transportation.
Before the US-China WTO Agreement, U.S. companies had no right to distribute products
other than those they made in China, or to own or manage distribution networks, wholesaling
outlets, or warehouses. Also, the Chinese government severely restricted trading rights and
distribution to foreign invested enterprises. Moreover, business licenses limited the ability of US
firms to conduct marketing, after-sales service, maintenance and repair, and customer support.
Thanks to the agreements during Chinas WTO accession, US trade and investment have
benefited from a more open and stable China. Basically, China has eliminated most foreignequity restrictions, especially in sectors where the United States has a strong commercial interest.
In terms of trading rights and distribution rights, Americans are permitted to trade, distribute, and
sell goods themselves, allowing for better control and greater market access4. As Chinese
commitments are phased in, foreign firms are able to provide services auxiliary to distribution
1
Chinas Xinhua news agency reported,

http://www.cnn.com/2008/BUSINESS/12/18/china.economic.reform/index.html#cnnSTCVideo
2
Lynch, David J. "Makopolo Markets US Companies Directly into China". American Companies export to China.
http://makopolo.wordpress.com/2008/08/10/makopolo-markets-us-companies-directly-into-china/
3
4
By Huang Yingchuan, Canton Fair News http://www.cantonfair.org.cn/en/info/news/detail.aspx?id=14885

Source: The White House Office of Public Liaison
_____________________________________________________________________________________________
47
including, rental and leasing, air courier, freight forwarding, storage and warehousing,
advertising, technical testing and analysis, and packaging5.
With regard to import quotas and tariffs, China has agreed to phase out quotas, and reduce
average tariffs to 14.5% for US priority products, and 17% for all other products. Prior to this the
average tariffs on US priority products was 31.5%. On the other hand, FIEs (Foreign Invested
Enterprises) importing items subject to quota and licensing control for domestic sale in China
directly should apply for the required import quota, import license or automatic import licensing,
according to the New Foreign Trade Law amended in April 20046.
In a sense, it is significant that the agreement opened new placements for small and mediumsized US companies to import and distribute products without going through state-trading
enterprises or middlemen. In accordance with the existing laws in China, the procedures for the
establishment of enterprises with foreign investments are quite simple. After the initial project
application is approved in writing by the examination and ratification authorities, the investors
may submit a formal application with articles of corporation and other required documents.
Upon receipt of the Approval Certificate, they can proceed with the registration formalities by
presenting the Approval Certificate7. Fortunately many provinces, autonomous regions, and
municipalities directly under the control of the central government have established foreign
investment service centers, which offer foreign investors one-stop service, providing investors
with efficient and qualified services.
Apparel Industry
With the rising purchasing power and increasing influence of Western culture, the
domestic apparel market of China is still thriving, despite the global economic depression.
Typically, the emergence of the middle class, growing young population, and rapid globalization
of culture is fuelling the demand for branded apparel in the country.
According to export statistics released by China National Textile & Apparel Council
(CNTAC), the total annual sales were above 660,000 USD in this last fiscal year. Currently,
more than 2000 brands of clothing are available in China. Kurt Salmon Associates, an industryfocused management consulting firm, has forecasted that by 2020 the total clothing consumption
of China will be about 120% of that of Japan, drastic jump from the current 10%. It is this
speculation that has attracted many overseas investors to tap the rising demand of branded
products in China. As a consequence, many international clothing manufacturers and retailers
are now viewing China as a huge potential market.
Although people in the developed world have been tightening their belts and focusing
spending on daily necessities, the Chinese market shows remarkable resilience in the financial
crisis, and this is because of the increasing number of people willing to buy goods. Furthermore,
consumers appear to prefer more fashionable and branded products as their purchasing power is
stronger.
So far, China is considered to be the largest consumer market, and is expected to enter
into a new era in the apparel and textile industry, which will be stimulated in the coming years.
http://www.sinomania.com/CHINANEWS/china-wto.html#top
http://www.marisglobal.com.cn/quota-and-licensing-control.html
7
http://www.hongkong-company.org/news.aspx?id=11&tid=2
6
_____________________________________________________________________________________________
48
Luxury Market
China is the third largest consumer of luxury goods worldwide, and its appetite for the good
life continues to increase in step with the rapidly growing economy. It is anticipated that China
will consume 29% of the world's luxury goods by 2015, making it second worldwide to only
Japan8.
Most economists and marketers agree that China will evolve into a nation of spenders9.
Such expectation can be supported by savings rates, which are finally falling from the historic
40% rate, as Chinese consumers are increasingly optimistic about their futures and look to enjoy
life by buying items from companies like Ralph Lauren (RL), Tiffany's (TIF), and Omega
(SWGNF.PK). It is surprising to know that the spending power in China is spectacular. An
estimated 415,000 Chinese had more than $1 million in disposable assets in 2007, more than any
other country, according to the Merrill-Lynch Asia-Pacific Wealth Report. The expanding
middle class constitutes an important group of consumers who desire and can afford luxury
goods. Recent data shows that up to 170 million people can afford luxury brands and the number
will reach 250 million by next year10. Notice that women are more likely to buy luxury products
for themselves than men, especially those aged between 25 and 40 and living in developed
regions. These women are fashionable, mature, and passionate about lifestyle and quality.
Therefore, the aspiring Chinese women are becoming increasingly valuable targets to luxury
retailers.
Unlike the mature traditional market, the luxury products market in China is far from
saturated either materially or psychologically. In other words, there is still plenty of room for the
luxury market to expand. This month Gucci announced that China represented one of the most
dynamic areas of retail growth for the firm, with a 2008 sales growth rate of 42 percent in the
mainland. Likewise, LVMH claimed that business profit was up 2.1 percent from a year earlier
to 3.63 billion Euros in 2008 while sales in USA and Japan declined. Furthermore, Bain &
Company anticipated the Chinese luxury market would see growth of 20 to 35 percent in the next
five years. According to the Ministry of Commerce, China is expected to be the worlds largest
luxury market by 2014, accounting for 23 percent of global business.
In spite of the financial crisis, Chinas impressive economic growth and rising number of
new rich have drawn many luxury companies11. Coach currently has 17 shops in mainland
China, in addition to eight stores in Hong Kong, and two in Macao. Gucci is looking to open its
Shanghai flagship store in May, with 25 stores in 17 Chinese cities. Similarly, Cartier, the
French jeweler and watchmaker, is planning more stores in Chinese cities.
All these phenomena strongly demonstrate that the Chinese market is so desirable that
international luxury companies are speeding up their quest for a share12.
Objective
Based on the investors hobbies such as reading womens magazines, keeping informed of
fashion news and helping others to figure out the best dress styles, she has decided to create a
small business that sells womens apparel, including clothing and accessories such as hats, belts,
jewelry, and handbags. These are all in increasing demand and are being updated all the time. It
8
http://www.marketavenue.cn/upload/articles/ARTICLES_1787.htm
Eswar, Prasad. "China's Growth and Integration into World Economy". International Monetary Fund.
http://www.imf.org/external/pubs/ft/op/232/op232.pdf
10
China Association of Branding Strategy
11
Huang Siwei, director of the www.neeu.com website, a Beijing-based luxury and lifestyle portal
12
Said Yan Jun
9
_____________________________________________________________________________________________
49
is a good opportunity because almost every woman has beauty and fashion needs. Besides, there
is no denying that fashion is an ever-changing phenomenon that captivates the entire world. In
particular, women aged between 25 and 40 in Shanghai are pursuing fashion, maturity, a
passionate lifestyle, and quality. As a result, the investor determines to open a store that offers
an extensive range of items inviting customers to mix and match while experimenting with their
styles. By collecting the newest trends in the market today, and displaying them with an array of
options, the business owner will assist customers in choosing the ensembles that suit them best.
Whether she is a sophisticated, career-minded woman or the next Gwen Stefani the store will
provide an arrangement of new styles to her, thus maximizing customer satisfaction. In a way,
the entrepreneur aims to enable modern women to have an insiders peek into the future of
fashion by researching the latest global fashion trends.
SWOT Analysis
Strengths
With China joining the WTO in 2001, China has agreed to lower tariffs and abolish market
impediments. Foreign investors gained the right to import and export on their own, and to sell
their products without going through a government middleman. By 2005, average tariff rates on
U.S. exports dropped dramatically from 30% to 10%13. The agreement opens up new
opportunities for U.S. firms since China has made significant progress implementing its WTO
commitments. This will ensure that foreign investors business costs are not wildly affected by
trade regulations. It will also help expedite the transportation of goods as there will not be many
government officials to deal with.
Another strength is the fact that the clothing will be made in America. American clothing
manufacturers have state of the art machines which can produce clothing at a much higher
quality than Chinese companies can. Products Made-in-USA are preferred globally, and enjoy
a reputation of high quality. The opposite is true for goods manufactured in China, which are
perceived to be of low quality and based on out-dated designs. Demands in the market are very
sensitive to changes, and as the apparel market changes, manufacturers are forced to adapt
swiftly to each situation that arises. However, China still isn't adept at this due to its lack of
innovation and conservation14. This provides US companies with an advantage when competing
with Chinese apparel companies.
Lastly, the Chinese government aims to build "a well-off society" by 2020 with a per capita
GDP of $3,000. Developed regions such as Shanghai, Beijing, Guangzhou, Shenzhen, Suzhou,
and Wenzhou with a total population of more than 300 million will see per capita GDP exceed
$15,000. The 250 million members of China's quickly growing middle and upper-middle classes
with their increased disposable income provide foreign investors another advantage. Since no
luxury brands dominate the market now, the next five years will be incredibly important for
developing brand loyalty and a taste for luxury products. As for the target demographic, the
upwardly mobile and aspiring women tend to be increasingly important to luxury companies.
According to a recent CRM research project many women buy luxuries because they view these
purchases as an investment, something that will help them get ahead at work or in their social
circles.
13
exporting-to-china, "China Compulsory Certification". Export.gov.

http://www.export.gov/china/exporting_to_china/CCC_System.pdf
14
"Clothing and footware in Hongkong, China". EUROMONITOR INTERNATIONAL.
http://www.euromonitor.com/Clothing_And_Footwear_in_Hong_Kong_China
_____________________________________________________________________________________________
50
Weaknesses
The biggest disadvantage of conducting business in China is that the current legal and
regulatory systems are still opaque, inconsistent, and often arbitrary15. Implementation of the
law is often criticized as being inconsistent. Although China has made significant progress
toward a market-oriented economy, its government still protects local firms. This is especially
true for state-owned firms. In addition, thousands of foreign businesses have already failed in
China due to a lack of market research conducted on their behalf. While China represents a lot
of opportunity the waters are still untested for many new products. Therefore, it is absolutely
essential for foreign investors to fully understand legal issues and evaluate risks clearly before
they enter into the market.
The second weakness is that foreign investors must also assume the risk of currency
exchange rates fluctuating wildly. Since the business owner manufactures products in America
and makes a profit in China, the revenue will be exchanged back to dollars. Although the
Chinese RMB continues to be appreciated, this does not necessarily mean that the profit will be
guaranteed. There is still a possibility that the profit margin will be squeezed out when the value
of Chinese currency declines.
Yet another disadvantage is that the preferences of Chinese customers can change faster than
foreign investors can cope with. As the business owner is basing production in the USA, the
transportation time required to move goods from the USA to local Chinese markets will take
roughly two weeks alone16. By the time the retailer is able to analyze the shift in preferences and
produce a new product it will have probably taken at least two weeks. This amount of time,
however short, can be enough for some companies to crumble due to consumer abandonment.
On the other hand, the designers already in China know the Chinese people better than foreign
investors, which is an indisputable truth. Hence, the owner should pay careful attention to the
needs and wants of the target customers in order to survive in the Chinese market. By and large,
foreign investors are highly recommended to conduct a long research campaign before
establishing their businesses in China.
Opportunities
Although, the economic crisis is still in full swing, there are signs that the Chinese economic
stimulus package is starting to increase manufacturing output and add jobs. Simultaneously,
consumers in the country are finally starting to shop more. As a result, it is important that
western luxury brands strike while they can, taking advantage of the fact that native luxury
brands still lack the history and pedigree of their foreign counterparts, even though their quality
is often comparable. Under such a circumstance, investors should have a keen eye for business,
and be keen to gain a foothold in China now, in order to build up their own brand loyalties ahead
of the native counterparts.
It is particularly noticeable that Chinas future high-end consumer market will be with
the affluent, who are 20 years younger than their peers in the U.S. and Japan17. Those wealthy
consumers are urban households earning over 37,000 USD annually. In contrast to the
traditional Chinese characteristics, the young Chinese have a very low savings rate and are
inclined to dispose of most of their income pursuing fashion, high taste, and high quality. That
15
Foreign Commercial Service and U.S. Department of State, "usembassy-china". US Commercial Service.
http://www.usembassy-china.org.cn/fcs/ccg_2008_secured.pdf
16
See Shipping section, page 26
17
McKinsey report http://www.forbes.com/2009/04/14/china-consumers-wealthy-markets-economy-luxury.html
_____________________________________________________________________________________________
51
means foreign retailers, who want to gain a market share, have to convince young people to
purchase their products and win brand loyalties from the youth. Typically, young shoppers are
far more willing to drop their paycheck on the semi-luxury products that sell for $100 or less.
Therefore, it is a great opportunity for foreign investors. Needless to say, if they take advantage
of it and do it in a correct way, their profit will be enhanced substantially.
Threats
In China there are currently many different large retailers of globally popular brand names.
Such include Coach, Gucci, Prada, Channel, etc. As a multitude of foreign investors saturate the
Chinese market each year the competition as a whole has become is quite fierce. It is also
difficult to acquire market share from the existing competitors, unless the products are
differentiated or the market strategies are original.
Another competitor is from the domestic market. Some Chinese have a very strong national
pride and are more comfortable with familiarity. One of the marketing strategies a business
should consider would be to target peoples national pride. As China expands its economy, the
domestic market is also progressing, and the Chinese are producing products at a relatively lower
price. Thus, the domestic industry is actually gaining more market share in China and thus
creating higher brand awareness18. Since newly-branded clothing will not be recognized in the
Chinese market, it is possible that the owner will have low sales volume initially. All in all, the
investor needs to take note not only of the competitors at same level, but also smaller local
enterprises that will be gradually expanding in the years to come.
Although luxury products are considered to have high profit margins, the total costs are
actually high. Such costs consist of high labor, costly raw materials, transportation freight, and
tariffs which exacerbate the business risk substantially. Hence, once the business has failed, the
investor will suffer a tremendous loss.
Summary
With China joining the WTO in 2001, China has agreed to lower tariffs and abolish market
impediments. Foreign investors, therefore, have gained the right to import and export on their
own and to sell their products without going through a government middleman. This agreement
has resulted in great increases in US-China trade, as proved by the fact that China is currently the
third largest export market for US goods. In a sense, it is a significant advantage to US investors
because the agreement opened a new entry for small and medium-sized US companies to import
and distribute products without going through a state-trading enterprise or middleman. Besides,
the procedures for the establishment of enterprises with foreign investment are quite simple,
which means that the business licenses are now easily accessible. The background, as a whole,
is a bright and promising stage that attracts various foreign businesses.
However, the reform is not completed in every respect and some serious problems
remain. At the root of problem is excessive Chinese government intervention in the market
through an array of trade distorting measures. This government intervention is a reflection of
Chinas historic, yet unfinished transition from a centrally planned economy to a free-market
economy governed by rule of law. Moreover, some Chinese government agencies and officials
have not yet fully embraced key WTO principles of market access, nondiscrimination, and
18
Xi, Xiao Zhai. "Brand Growth in Shanghai Leads Sales". HKTDC. http://info.hktdc.com/imn/06030701/clothing200.htm
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52
transparency. Lack of necessary transparency is still a core problem, frustrating efforts of

foreign businesses to achieve the full potential benefits of Chinas WTO accession.
LOGISTICS
Flow Chart
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53
The increasing number of middle class able and willing to buy luxury goods appears to be a
remarkable opportunity to foreign entrepreneurs, who intend to seize the great time and grab a
piece of the huge potential market. Unlike the mature traditional markets the luxury market still
has plenty of room to grow. On the one hand, the performance of luxury items in China is
solid and strong, and little affected by the financial crisis. On the other hand, Chinas
impressive economic growth and rising number of new rich have drawn lots of luxury firms. As
to the target segment, the Chinese high-end consumer market will be affluent with the youth who
have a low savings rate and tend to dispose most of their incomes. This trend implies that how to
locate and launch new products to catch young people is the crucial lesson for US firms.
Lastly, the primary threat the investor will face comes from both the existing luxury brands and
the expanding domestic brands. Since current brands have already established an amount of
loyal customer basis and those designers undoubtedly know more about their target customers,
new investors are confronted with a challenging, stressful beginning to spread their brand
awareness in the market. Considering the huge cost of production and distribution potential
entrepreneurs would be subject to substantial loss if they could not survive in the fierce brand
battle. In a nutshell, the market represents a combination of uncertainties.
Business License
Obtaining a business license (pictured below) is one of the most important requirements
to starting a business in China. First an application form must be submitted to the provincial
commerce authorities in the province where the foreign-invested commercial enterprise (shop) is
registered. Then the provincial commerce authorities would forward the application to the
Ministry of Commerce, who would decide whether or not to approve the application within three
months from the receipt of all the related documents. The process includes doing all of the
paperwork, obtaining photocopies of passport, visas and other business licenses19. Specifically,
the cost of obtaining a business license will be around $1000 USD in Shanghai.
The required documents for setting up shops by foreign-invested commercial

enterprises include an application letter, a new contract and articles of association(if revised), a
19
Runckel & Associates, "Company Registration in Asian". Business in Asian. http://www.business-inasia.com/china_invest_documents.html
_____________________________________________________________________________________________
54
feasibility study report on setting up shops, the resolution of the board of directors to set up
shops, an audit report for the latest year by an accounting firm, a credit report on the enterprise
(photocopy), proofs of registration (photocopy) and proofs of statutory representatives
(photocopy) from each of the investors20.
If the application is approved, the Ministry of Commerce is to issue an Approval Certificate
for Foreign-invested Commercial Enterprises to the successful applicant (picture below). In
addition, it is regulated that the business area should not exceed 300 square meters for single
shop. After receiving the approval certificate, the investor must go through relevant
registrations, such as opening up a bank account for both Chinese and foreign currencies. Also,
the company must do tax registration, customs registration, foreign currency registration,
business inspection and recruitment procedures21.
Representative Office
A representative office is necessary for the entrepreneur to begin business activities in
China. It enables the investor to do a market survey, analyze the local customer base and adjust
market strategies swiftly.
The first step for application is to appoint an agent, which can be a foreign investment
services company in China or a representative from the investors own company. Next, the
agent will submit all the required documents to the provincial foreign trade and economic
cooperation department. Once approval is granted, applicant should proceed to the provincial
administration for registration. Other formalities that should be included are the opening of a
bank account, applying to Customs for permission to import office equipment, and completing
tax payment registration and so on22.
20
http://www.marisglobal.com.cn/required-documents-2.html
"Doing business in Shanghai". Ministry of Commerce of the People's Republic of China.
22
http://www.marisglobal.com.cn/procedure-3.html
21
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55
Import Policies and Tariff Rates

It is essential for importers to be kept informed of Chinese import policies prior to the
shipment. Over the past thirty years, China has enacted many quotas, tariffs, taxes, and
antidumping laws, in an attempt to control its own development. Such policies actually
undermined its growth and development. After China joined the World Trade Organization
(WTO) in 2001, it agreed to lower tariff rates and show more transparency with its customs
operations. Within five years of joining the WTO, China lowered its tariff rate by 15% to 20%.
It has also agreed to bind its tariff rates which prevents it from raising those rates without
compensating its trade partners. The elimination of import quotas has also been a major
concession on the part of the Chinese government since it joined the trade organization.
Under the US-China WTO agreement in 2004, China has made its commitments to phase in
trading rights and distribution rights progressively within 3 years. Consequently, US companies
are allowed to distribute the imported goods and establish foreign-owned enterprises. This
agreement significantly stimulates the global economy and bilateral trade. As evidence, China is
currently the third largest export market for goods from the U.S.
However, FIEs (Foreign Invested Enterprises) importing items that are subject to quota and
licensing control for domestic sale in China directly, have to apply for the required import quota,
import license or automatic import licensing, according to the New Foreign Trade Law amended
in April 2004.
Import-Export Flow Chart
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56
Tariff rates
Sales and state taxes, and in some instances customs fees will often be levied as well.
Before the foreign investor export goods to China, she needs to determine what the tariff rate is
on them as well as any import fees for the country23. The current import tariff rate is 12% and
China's WTO concession will render the tariff even lower according to the agreed time line.
Additionally, China started to implement unified Value Added Tax, consumption tax and
business tax in FIEs while simultaneously abolishing industrial and commercial consolidated tax
since 1st January 1994.
Here are the tariff rates for womens or girls blouses, shirts and shirt-blouses, knitted or
crocheted24:
The tariff rates for womens or girls suits, ensembles, jackets, blazers, dresses, skirts,
divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swim wear),
knitted or crocheted:
23
US Commercial Service, "Export Licenses, Standards and Legal Considerations". Export.Gov.

http://www.export.gov/mrktresearch/index.asp
24
Chinese Office of Customs. "Customs Tariff of Import of the People's Republic of China". China Customs
Information Network. http://english.china-customs.com/customs-tax/
_____________________________________________________________________________________________
57
_____________________________________________________________________________________________
58
The tariff rates for other clothing accessories, knitted or crocheted; knitted or crocheted parts
of garments or of clothing accessories:
Shipping
Shipment is the main part of logistics, since the cargo is regarded as the core investment.
Only with the goods landing on the mainland safely could the investor start her business in
China. The shipping company plays a critical role in the whole shipping process. Therefore,
finding a qualified shipping company is the first thing the investor needs to do.
Shipping Company
China Shipping Container Lines Co. Ltd. (CSCL) is owned by the China Shipping Group.
CSCL is principally engaged in container transportation and related diversified business
ventures. These involve the container transportation business, ship leasing, cargo booking,
transportation customs clearance, warehousing, container yards, container manufacture, repair,
sales, trading and other fields. Founded in Shanghai in 1997, the company has been ranked the
world's sixth largest company in terms of carrying capacity in dollars. It was also the first
shipping company in China and now dominates the Chinese container shipping industry.
CSCL has a modern, large-scale, rapid, and young fleet of 136 ships. Its overall carrying
capacity is about 350,307 containers. Each of its 52 large vessels has a carrying capacity of
more than 4,000 containers and averages an age of only 1.9 years. The advantages of fast
delivery, high efficiency, and low-cost make CSCL more competitive in the international
shipping container industry. The firm has opened up 10 international and domestic container
ship routes. Chinese internal trade has increased along with the increase in foreign trade from
Chinese ports to Japan, Korea, Southeast Asia, Australia, Europe (Mediterranean), the Americas,
West Africa, and the Persian Gulf. Among these routes, the route to the United States has 30
container ships dedicated to it alone. CSCL conducts business in over 40 Chinese inland points,
and also has a market share of more than 50 percent in Chinese domestic trade routes25.
Shipping Lane
Once the exporter finishes all the required work, such as packing, labeling,
documentation, and insurance, the goods can be shipped from Los Angeles Port.
25
"About CSCL Shanghai". China Shipping Container Lines CO., LTD.

http://www.cscline.com/zhweb/pages/en/aboutus/aboutus.asp
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59
The Los Angeles to Shanghai Shipping Lane

Ship
ping
Time
T
he
follo
wing
graph
show
s that
the
avera
ge
transi
t time
from
Los
Ange
les to
Shan
ghai
is 13 days, with a range of 12 to 15 days.
The shipping time is also an important factor to the business. The investor should take
shipping time into consideration to ensure that items in the store wont be out of stock. Should
that happen, customers would switch to substitutes, thus greatly affecting the sales revenue.
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60
Shipping Cost
The cost of tariffs are based on the following conditions:
Cargo
Commodity: Garments, apparel, new
Equipment: Shipping Container
Qty:
2
Size:
20'
Type:
Standard
Weight (kg):
20,000
Volume (cbm):
Route
From location:
To location:
Receipt date:
Los Angeles, CA, US

Shanghai, 31, CN
06-Mar-2009
Validity
One or more freight elements are due to expire 25-Mar-2009.
Charge type
Type
Details Valid to
Basic Ocean Freight (BAS)
Tariff
25-Mar-2009 552.00 USD
$552.00
Bunker Adjustment Factor (BAF)
Tariff
31-Mar-2009 90.00 USD
$90.00
Handling Charge - Destination (DHC)
Tariff
300.00 USD
$300.00
Handling Charge - Origin (OHC)
Tariff
780.00 USD
$780.00
Carrier Security Charge (SER)
Tariff
12.00 USD
$12.00
Documentation Fee - Destination (DDF)
Tariff
125.00 CNY
$18.27
Total
Local currency USD
$1,752.27
According to the above data, every 2 20*20 containers cost $1752.27.
Shanghai Port
The destination of shipment is the famous Yangshan Deepwater Port. Shanghai started the
construction of the deepwater port in 2002. On December 10, 2005, the first phase of Yangshan
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61
Deepwater Port was completed. Five 70-100 thousand tonnage berths of the first phase have
been built and gone into operation so far. With a capacity to deal with over three million
shipping containers each year, it offers all-weather service to the largest of containerships.
Yangshan Deep Water Port, also houses the Yangshan Bonded Zone, which is the first of its kind
in China26. It integrates all the functions as a port, a bonded zone, an export processing zone and
a bonded logistics zone.
In the East Sea, about 30 KM away from Shanghai, there are two islands, Little Yangshan
Island, and the other is called Big Yangshan Island. These two islands combined offer the
largest shipping port in China.
Customs Declaration
Next, the importer needs to go through the necessary clearance procedures for the imported
goods. Prior to the landing of the goods, all documents and invoices for declaration purposes
should be prepared and checked. Once the goods have landed at the port, the date of landing of
the goods should be noted and the details of the shipment should be promptly checked by the
Customs. In the event of failure to make customs declaration within 14 days from the date of
landing, the imported goods will be subject to a fine from the 15th day onward at a rate of 0.3%
of the price of the goods calculated on a daily accumulative basis27. The required documents for
customs declaration include product manual, copy of letter of credit, quarantine certification and
trade agreements. As soon as the customs duty demand note is issued, the importer should pay
the customs duty and other relevant charges before the deadline. Upon inspection and release by
the Customs, the goods should be promptly delivered to minimize warehousing or transfer
charges.
Distribution Channel
Once the goods are released by the Customs, CSLC will discharge and unpack the
containers, and load the goods onto a truck. They will then be transported to the Grand Gateway
Plaza, which is one of the biggest shopping malls in Shanghai. This plaza is located in the
Xujiahui area, one of the most prestigious living areas, and a busy commercial and residential
centre. Known as an upper class living area with many luxurious villas and upper class
apartments, Xujiahui is very densely populated and has lots of traffic.
The shopping mall, Grand Gateway, has 7,000 square meters of shopping area stretched out
across seven floors. There are also 94 elevators and almost 1,400 parking spaces in the mall
giving it optimal accessibility28. Among the many stores in the mall are Gucci, Coach, Slice, and
more that offer popular brand name merchandise.
26
Wang, Jian shuo. "Visited Yangshan Deep Water Port". Discover Shanghai.
http://home.wangjianshuo.com/archives/20060420_visited_yangshan_deep_water_port.htm
27
Customs Clearance for Imported Goods in China,
http://en.ec.com.cn/article/tradingabc/encustoms/200901/713730_1.html
28
Shanghai Times Square Property Management (Shanghai), "Shanghai Times Square". Shanghai LongXing
Property Development Company Limited. http://www.shtimessquare.com/en/shopping/main/aboutus/index.htm
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62
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2.Chinese Office of Customs. "Customs Tariff of Import of the People's Republic of China".
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<http://makopolo.wordpress.com/2008/08/10/makopolo-markets-us-companies-directly-intochina/>.
6.Rein, Shaun . "China's consumers are still spending". Business week. 04/04/2009
<http://www.businessweek.com/globalbiz/content/mar2009/gb20090325_370224.htm>.
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Republic of China. 02/04/2009.
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<http://home.wangjianshuo.com/archives/20060420_visited_yangshan_deep_water_port.htm>.
10.China Business Consulting, "Quota and Licensing Control". Maris Global. 04/19/09
<CNN.com, World business. "China Celebrates 30 years of economic reform". CNN. 04/18/09 .
>.
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<http://www.marketavenue.cn/upload/articles/ARTICLES_1787.htm>.
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03/29/2009 <http://www.euromonitor.com/Clothing_And_Footwear_in_Hong_Kong_China>.
14.Eswar, Prasad. "China's Growth and Integration into World Economy". International
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15.Xi, Xiao Zhai. "Brand Growth in Shanghai Leads Sales". HKTDC. 02/24/2009
<http://info.hktdc.com/imn/06030701/clothing200.htm>.
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63
16.Zheng, David. "Analysis of Chinese Clothing Consumption Market in 2007 and 2008".
Articles Base. 03/29/2009 <http://www.articlesbase.com/marketing-articles/analysis-of-chineseclothing-consumptionin-market-in-2007-and-2008-336606.html>.
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Commercial Service. 04/07/2009 <http://www.usembassychina.org.cn/fcs/ccg_2008_secured.pdf>.
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Export.Gov. 04/02/2009 <http://www.export.gov/mrktresearch/index.asp>.
19.Tariffs and Import fees, "export.gov/logistics". US Commercial Service. 04/01/2009
<http://www.export.gov/logistics/exp_001015.asp>.
20.Cscline, "About CSCL Shanghai". China Shipping Container Lines CO., LTD. 02/07/2009
<http://www.cscline.com/zhweb/pages/en/aboutus/aboutus.asp>.
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<http://www.ustr.gov/assets/Document_Library/Reports_Publications/1999/asset_upload_file41
5_2812.pdf>.
22.Shanghai Times Square Property Management (Shanghai), "Shanghai Times Square".
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<http://www.export.gov/china/exporting_to_china/CCC_System.pdf>.
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<http://www.forbes.com/2009/04/14/china-consumers-wealthy-markets-economy-luxury.html>.
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<http://www.marisglobal.com.cn/required-documents-2.html>.
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<http://www.marisglobal.com.cn/procedure-3.html>.
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65
GLOBILIZATION IMPACTS ON HUMAN RESOURCE

MANAGEMENT AND THE ROLE OF EXPATRIATES
Cheuk Yung Henry Lam, Center for Emerging Technology & Entrepreneurial Studies
Abstract
This research study discussed the role of entrepreneur and the use of expatriate
managers in the global business environment. As the business world continues to globalize,
globalization becomes a major challenge for multi-national companies (MNCs). At the
meanwhile, the process of globalization improves the economy and market growth pace in
developing countries and creates many opportunities for the entrepreneur. However, recruiting
the suitable person for different, specific assignments is one of the main challenges for many
entrepreneurs. The cost of international managers is significantly high, therefore, companies
must adapt an effective human resources strategy in order gain competitive advantage in the
global markets.
Introduction
While business and entrepreneurs are all over the world, the style and the way of doing
business are greatly different from nation to nation. Cultural-differences is one of the main
factors that make the business style unique in different nations. MNCs must adopt different
forms of business style and satisfy the consumer in different needs around the globe. However,
the form of business is becoming more similar due to the process of globalization. Globalization
also has required employees and managers to be better equipped with a variety of skills and
knowledge. Therefore, globalization is a popular discussion topic and focus in academic research
studies.
Numerous new issues arise given the diversity of employees in an international context:
expatriates, host-country nationals, third-country nationals, and inpatriates. The complexity of
operating in different countries and employing different national categories of workers is a key
variable that differentiates domestic and international human resource management (Napier et
al., 1995). This research study is more focused on how the entrepreneurs effectively choose a
person who is residing in a country and culture other than that of their upbringing residence
Expatriates.
Opportunities Created By Globalization

There are still many undeveloped and developing countries in the world. A majority of
these countries are in Asia, such as China and India. According to Deardorff (2001), developed
countries encouraged the developing world to grow for many years. In the early years, the
economic growth rate in many of the developing countries was relatively slow due to political
issues such as in China. In more recent years, as the result of an improvement in technology and
globalization, many of the developing countries are now growing in a faster pace than ever.
_____________________________________________________________________________________________
66
To note Duesterberg (2007), in the early 1990s, major American industrial firms have
invested overseas, in order to access a larger and more sophisticated market. By the 21st century,
approximately 42% of the global sales of U.S. manufacturing multinationals came from sales by
their foreign affiliates. Total sales by foreign affiliates are over $2.5 trillion dollars and are five
to six times larger than exports from the domestic parent firm (Duesterberg 2007). According to
a survey conducted by U.S. department of Commerce in the late 1990s, the results indicate that
about 20,000 small American manufacturers and agricultural concerns offer goods and services
that could be very competitive in foreign markets. The U.S. department of Commerce also
indicated that 60% of U.S. companies that do export have fewer than 100 employees. This
survey revealed that many entrepreneurs see foreign market as a very profitable place to be
invested in. To quote Bernstein, CEO of Laventhol & Horwath, exporting can allow companies
to expand their market bases and overcome domestic or seasonal sales fluctuations, provide new
markets for extra production capacity and, in some cases, extend the length of time the product is
viable (Liebtag 1986). According to a more recent journal (Duesterberg 2007), there are also
many other reasons for locating production and sales in foreign locations:
Foreign affiliates growth draws in component parts from the U.S. parent firm.
The larger scale of global operations leverages the management, finance, purchasing,
logistic, sales, and administrative functions of the parent firm.
Global operations lead to around-the-clock manufacturing and services operations which
helped to improve availability and customization.
Markets abroad provide extended life for products introduced in the United States, and
therefore, amortize research and development costs over a larger base and improve
profitability.
Global scale and competition lowers prices for consumers, increases the variety of goods
and service available.
Give the firm a larger global market share.
Global operations give parent firms access to a larger pool of technical workers who help
customize and improve product quality and value.
The Impact of Globalization on Human Resource Management
The nature of International Human Resource Management (IHRM) is changing in a rapid
pace compared to the past. Technology plays an important role in IHRM. For example, the
development in technology, media, and Internet shortens the distance between friends, family
members, consumers to businesses, businesses to businesses, and nations to nations. As a result
of rapid change in technology, the numbers of international organizations are also increased
substantially. Increasing technology leads to more cross country economic activities and global
competition. Therefore, it is much more important for multinational companies to adopt and
develop a cross-cultural strategy in human resource management in order to gain a competitive
advantage among other competitions. There is growing recognition that the success of global
business depends, to a considerable degree, on the quality of multinationals human resources and
on how effectively these critical resources are managed and developed (Stroh & Caligiuri, 1998).
As the world continues to globalize, companies are required to manage a more diverse
workforce with expatriation being just a subset of this challenge (Deresky 2000). According to
the research done by Caligirui & Cascio (1998) and Scullion & Brewster (1998), there are
indications that the availability of people willing to accept global assignments is not increasing
fast enough to meet the growing demand for international managers. Especially in Europe,
_____________________________________________________________________________________________
67
research suggested that the general shortage of expatriate managers constrain corporate efforts to
expand abroad, and that the successful implementation of global strategies may be also
constrained by an inadequate supply of international managers (Scullion 2001).
Use of Expatriate
According to the definition of expatriates, the person is residing in a country and culture
other than that of their home country. Therefore, cultural difference will be one of the main
obstacles associated with expatriates. Foreign markets along with the globalization process,
create more of a high return and a more profitable market place for companies in many
industries. Therefore, it is important for MNCs to select the most qualified person to manage the
foreign affiliate and communicate with the parent firm. Often this person will be the expatriate.
Every person has limited knowledge and therefore, sharing knowledge and information is
important for executing strategy effectively. Most of the business owners, approximately 74%,
agreed that they found it difficult to recruit people (Liebtag 1986). Entrepreneurs should consider
hiring human resource consultants if they are not expertise and sophisticated in human resource
management area (Henricks 2007).
After hiring the qualified candidate, maintaining the relationship with the employee is
also a challenge faced by entrepreneurs. According to Liebtag (1986), most of the entrepreneurs
have little or no difficulties understanding the needs of consumer and delivering products or
services to them. However, as shown in Exhibit 1, 41% of business owners said they have
problems associated with employees or partners and 60% of entrepreneurs indicated that they
have difficulties to motivate people to work harder.
Problem and Difficulties Associated with Expatriate
Due to globalization, economical and technological development, an increased presence
of staff and updated knowledge will be needed for success. It has been suggested that between 16
and 40 percent of all expatriate managers end their inability to adjust to the foreign environment
(Black 1988). To quote Buckley and Brooke (1992), "Empirical studies over a considerable
period suggest that expatriate failure is a significant and persistent problem with rates ranging
between 25% and 40% in the developed countries and as high as 70% in the case of developing
countries. The failure rate of expatriation is significantly high and it will become a main
challenge for the management of MNCs. Cultural difference can have a direct impact on
individual managerial effectiveness; it can also affect the motivation and satisfaction of the
manager as well as the local staff. Cultural difference can also have an impact on the
effectiveness of key organizational systems such as recruitment, training, performance evaluation
and rewards (Warner, 1995 and 2005). Research found that expatriates coming to live and work
in China commonly experience a period of transition entailing some degree of anxiety, confusion
and disruption (Jones 1997).
Language barrier is another major challenge faced by expatriates. Communication is very
essential in business environments. If a Chinese company sends a worker to the United States
and he or she does not speak any English, the worker will more likely return to China. Therefore,
identifying a qualified person for expatriate assignments is very important for its success. As we
know, failure to adjust to the foreign environment is a key reason for expatriate failure. It is
important to provide appropriate training to expatriates. Also, for the expatriates, they need to be
well prepared for the challenges they face.
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68
Cost of Expatriates
According to a Wall Street Journal article, the typical first year of an expatriate
assignment for a family of four costs three times that of the U.S. executives base salary. For
instance, given a salary of $100,000 and cost of housing, relocation allowance, company car,
schooling for kids and local tax an assignment in London can easily total up to $300,000
(Wederspabn 2002). The increasing cost of supporting expatriates is forcing companies to reduce
the amount of people sent abroad. Hence, finding a suitable person for the assignment is very
essential. Failure to select the most inter-culturally suitable expatriates increases the risk of
failure abroad in terms of attrition, turnover, separation and replacement costs, lowered
productivity, higher maintenance requirements, and damaged relationships with local employees,
partners and customers overseas (Wederspabn 2002).
Expatriate managers are playing a critical role in MNCs. They are contributed to
knowledge transfered between parent firms and subsidiaries through the mechanisms of formal
training, informal mentoring, and social networking (Hocking, Brown and Harzing 2004). Based
on the critical role of expatriate managers, it is important to have an effective human resource
management strategy in order to minimize the possibility of expatriate failure. Finding the right
person for the job is important in order to avoid future replacement costs. By choosing people
with experience in the foreign country, people who speak the foreign language and are familiar
with the foreign culture can also effectively reduce the possibility of expatriate failure.
Reasons for Expatriate Failure

According to Mendenhall, Dunbar and Oddou (1987), the direct cost of expatriate failure
range anywhere between $55,000 and $150,000. Based on the high replacement cost, MNCs
should be more serious about the reasons for failure. According to a survey done by the U.S.
National Foreign Trade Council, it has been reported that failure to adjust to the foreign cultural
environment is a major reason for expatriate failure. Another main reason for expatriate failure is
family issues (Black & Mendenhall 1990). Companies may provide appropriate training to the
potential candidate, but his or her family may not be ready to the dramatic change in life style.
For example, after the family moved to the foreign country, the son or the spouse of the manager
may have found difficult to adopt the new environment. As a result, the family issue is the main
cause of premature return as well. Many researches on expatriate failure have traditionally
focused on three general areas:
The selection of the most appropriate expatriate (Zeira and Banai 1985).
Poorly developed or the complete absence of cross-cultural training (Black &
Mendenhall 1990).
Spouse and family issues (Black & Mendenhall 1990).
Poor expatriate selection is linked to expatriate failure, which is usually defined as the
premature return of an expatriate manager (Tung 1981). When companies select potential
candidates for expatriate assignments, there is an overemphasis on technical competence to the
disregard of other important attributes such as relational abilities (Tung 1987). The main reasons
for expatriate failure in Tungs (1987) study are:
_____________________________________________________________________________________________
69
Inability of managers to adjust to new environment.

The managers inability to adapt to the new environment.
Other family related issues.
The managers personality or emotional immaturity.
The managers inability to cope with responsibilities associated with the overseas
work.
The cost of expatriate failure is relatively expensive, and therefore, it is important for
companies and human resource managers to understand the reasons of expatriate failure.
Understanding employee is very essential for management to execute strategy effectively.
Expatriates must know how to effectively adapt to new situations and environments. Expatriate
managers are low in self-confidence, trust, and independence and these factors are often viewed
as negative traits (Jack & Stage 2005). Management must know the weaknesses of their
employees and provide appropriate training programs to overcome those weaknesses.
Training and Strategies to Expatriate Success

Selection of expatriates is important and most companies are forced to select from a
shallow pool of potential candidates (Jack & Stage 2005). As a result, the poor selection of
expatriates is directly related to expatriate failures. MNCs have the responsibility to ensure the
appropriate selection of international managers. In order to lower the rate of expatriate failure,
companies also have responsibilities to provide suitable trainings to the selected candidate.
According to Scullion (1994), over 60% of British and Irish MNCs provided some predeparture
training for expatriate assignments. U.S. research suggests that only 30% of U.S. managers
destined for international assignments receive cross-cultural training and it is estimated that more
than half of U.S. companies operating abroad provided no form of predeparture preparation
(Black 1998). Training and development programs for expatriates appear to be more common in
European than in U.S. MNCs (Hendry 1994). As a result, expatriate failure rate is lower in
European MNCs and it is a less significant issue for European MNCs (Scullion 1994).
According to a survey study done by Tung (1987), the common determinants for a low
expatriate failure rate in European and Japanese multinationals are the following:
Their long-term orientation regarding overall planning and performance assessment.
Use of more rigorous training programs to prepare candidates for overseas assignments,
particularly by Japanese multinationals.
Provision of a comprehensive expatriate support system.
Overall qualification of candidates for overseas assignments.
Restricted job mobility.
Tungs (1987) study also indicated that for the European MNCs, there are three other
factors that may account into their success: 1) international orientation, 2) longer history of
overseas operations, and 3) language capability. For the Japanese MNCs, they are more focused
on selection of oversea assignments and the family of the international manager. For a company
to maximize its profit and efficiency, it is important to ensure the success of international
managers. As we discussed earlier, replacing and reselecting an expatriate manager is costly.
_____________________________________________________________________________________________
70
Therefore, providing an effective predeparture training is essential to avoid future replacement.

However, the trainings are often complicated and it is always easier said than done.
In psychology content, motivation is directly related and influence on the performance.
So, what if the management can motivate the international managers to do a better job? While
success in a company can be a motivating factor, the reasons for people wanting to be an
international manager could vary. For instance, the desire to travel the world, visit another
country, or experience new things to impress management could be reasons. Therefore,
understanding the potential candidate is also an important factor for success. According to Jack
& Stage (2005), compared to non-expatriate, personality data shows that managerial expats
express more need to move up the corporate ladder quickly and achieve a high level position.
Expats also score higher than non-expats in the personality trait scales of taking initiative,
influencing others, taking charge and ability to spot trends and issues quickly.
Conclusion
As the business world continues to globalize, companies are gradually changing their
strategies in human resource management in order to gain competitive advantages among
competitors. As more MNCs expand globally, demand of international managers will increase.
However, it is difficult for a person to adapt to another culture, working environment, and life
style. Transportation, schooling for children, and housing will also increase the cost for
companies. Therefore, it is important to select the international manager carefully and precisely.
In order for the international managers to be successful, it is a must to have an effective
predeparture training program for the selected manager. Having an effective training program
can help to lower the chance of expatriate failure and, as a result, reduce costs for MNCs.
_____________________________________________________________________________________________
71
References
Black, J.S. (1998). Work role transitions: A study of American expatriate
managers in Japan. Journal of International Business Studies, 30(2): 119-134.
Black, J.S., & Mendenhall, M. (1990). Cross-cultural training effectiveness: A
review and a theoretical framework for future research. Academy of Management
Review. 15(1), 113-136.
Buckley, P.J. and Brook, M.Z. (1992) International Human Resource
Management, Buckley, P.J.and Brook, M.Z.: International Business Studies, Oxford:
Blackwill, 523-539
Caligiuri, P.M., & Cascio, W. (1998). Can we send her there?: Maximising the
success of women on global assignments. Journal of World Business, 33(4): 394-416.
Deardorff, Alan V. (2001). Developing Country Growth and Developed Country
Response, Journal of International Trade & Economic Development. 10:4 373-392
Deresky, Helen (2000). International Management: Managing Across Borders
and Cultures.
Duesterberg, Thomas J., Exporting Offers A Global Advantage, Industry
Week/IW, May2007, Vol. 256 Issue 5, p13-13
Hendry, C. (1994). Human resource strategies for international growth. London:
Routledge.
Henricks, Mark. Work Force, Hire Power, Entrepreneur, Nov (2007), Vol. 35 I ssue 11, p105105.
Hocking, J.B., Brown, M. and Harzing, A.W. (2004). A knowledge transfer
perspective of strategic assignment purposes and their path-dependent outcomes,
International Journal of Human Resource Management 15, 3:565-586.
Jack, Douglas W., Stage Victoria C., (2005), Success Stragtegies for Expats,
TD September 2005, Vol. 59 Issue 9, p48-51,
Jones, Selmer. (1998) International Management in China: Cross-cultural issues,
London: Routledge.
Liebtag, Bill. Entrepreneurs, Journal of Accountancy, Oct (1986), Vol. 162 Issue
4, p70-79.
Mendenhall, M.E., Dunbar, E. and Oddou, G., (1987), Expatriate Selection,
Training and Career Pathing: A Review and Critique, Human Resource Managemnt, 26
(3): 331-345.
Napier, N.K., Tibau, J., Janssens, M. and Pilenzo, R.C. (1995), Juggling on a
_____________________________________________________________________________________________
72
High Wire: The Role of International Human Resources Manager. In Ferris, G.R.,
Rosen, S.D. and Barnum, D.T. (eds) Handbook of Human Resource Management.
Cambridge, MA: Blackwell, pp. 217-42.
Schuler, H. (1994). Staffing polices and strategic control in multinationals.
International Studies of Management and Organization. 3(4): 86-104.
Scullion, H. (1994). Staffing policies and strategic control in multinationals.
International Studies of Management and Organisation, Vol. 3, no. 4, 86-104.
Scullion, h. (2001). International HRM in medium-sized MNCs: Evidence from
Ireland. In: C. Brewster & H. Harris (eds.), International HRM: Contemporary issues in
Europe. London: Routledge. 48-37.
Scullion, H., & Brewster, C. (1998). Current trends in European expatriation.
Management Development Journal of Singapore, 8(1): 44-55.
Stroh, L. K., & Caligiuri, P.M. (1998). Increasing global effectiveness through
effective people management. Journal of World Business, 33(1): 1-17
Tung, R.L. (1981). Selection and training of personnel for overseas
assignments. Columbia Journal of World Business, 16(1), 68-78.
Tung, R.L., (1987).Expatriate Assignments: Enhancing Success and Minimizing
Failure, Academy of Management Executive, 1(2): 117-126.
Warner, M. (1995), The Management of Human Resource in Chinese Industry,
London: Macmillian.
Warner M. (2005) (ed.), Human Resource Management in China Revisited,
London: Routledge.
Wederspabn Gary M., Moran, Stabl & Boyer International (2002), Costing
Failures in Expatriate Human Resources Management
Zeira, Y. and Banai, M. (1985). Selection of Expatiate Managers in MNE: The
Host Environment Point of View, International Studies of Management and
Organization, 15 (1): 31-51.
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73
A VALIDATION STUDY OF McBRIDES BIG FIVE BIODATA

QUESTIONNAIRE AMONG TECHNOLOGICALLY-ORIENTED
ENGINEERS AND ACCOUNTANTS
Feng Johnny Deng, California State University, Sacramento
Autumn Corn, Cameron University
Zach Foley, Cameron University
Anthony Law, Cameron University
Keshon Day, Cameron University
Jason X Duan, Jietu Information Technology, Inc.
Abstract
Using a sample of 433 accountants and engineers we examined the dimensional nature of
McBrides biodata measure of the Big Five. The five dimensional nature of the questionnaire
was supported and it was suggested that other researchers should also examine the dimensional
nature of the questionnaire across countries and occupational groups.
Introduction
Customer service is important to any business, new or old, because it satisfies customers
and makes them want to come back and receive the companys services again and again. Good
customer service can also attract new business, which means more profit. If the customer is
treated right and likes how his or her business is handled, they will become a repeat customer
instead of look for services elsewhere.
Changes are occurring in the marketing environment that will soon intensify competition
and change the ways in which small businesses function (Carraher, Parnell, and Spillan, 2009).
Customer oriented firms outperform competitors by anticipating the needs of customers.
Development of market orientation and associated improvements in efficiency and effectiveness
of exchange are ways to succeed in the new transition process. Biographical data is one way of
attaining important information used by businesses. Studying economic development is one way
businesses prepare to satisfy customers.
Special attention has been given to human resource management issues in high
technology organizations (Carraher, Franklin, Parnell, and Sullivan, 2006). Observations were
made using the customer service selection instruments developed by Dr. McBride and modified
by Dr. Carraher. Data was used to check on previous findings as well as consistency.
Technologically oriented organizations should develop more information sources over an
individuals performance. Western ways are typically not good measures of constraints for
workers in China. Supervisors need to be trained properly, and organizations must take action to
help employees adapt.
This study reviews how customer service affects Austria, Switzerland, the United
Kingdom, and Asia during the in-season and off-season times. Studies show that during inseason times customer service is embraced on a greater level in order to increase revenue for
these entrepreneurial businesses (Carraher and Parnell, 2008). Also, the studies show that during
off season times the level off customer service decreases because not as many tourists are
present. The seasonality of each country greatly affects the level of customer service utilized.
This article observes the three types of on-the-job performance factors which are, service
orientation, goal orientation, and general performance (Carraher, Parnell, Carraher, and Sullivan,
_____________________________________________________________________________________________
74
2006). In this study, three questionnaires were given in Hong Kong, New Zealand, the United
Kingdom, Italy, and the United States to test the three factors of performance. The studies show
that all five countries resulted in similar findings. The questionnaires given in this study can
assess which individual exemplifies the highest performance of the three types of factors as well
as help management place individuals in the correct job positions.
The purpose of this paper is to examine the dimensional nature of the McBride biodata
inventory in a sample of Technological employees.
Method
Our chosen data group surveyed 433 technically trained individuals. Their average age
was 27.82 years of age and 56.1% were males. They were evenly split between accountants
(218) and engineers (215).
The questionnaire used was the Big Five biodate inventory of McBride, Mendoza, &
Carraher (1997) as modified by Carraher et al. (2009). It has been found in previous research to
measure the Big Five personality factors using 39 items.
Results
We performed two principal components analyses. A comparison of the hyper plane
counts supported the utilization of the Promax with Kaiser Normalization method of rotation.
The results are presented in Table 1. The five dimensions were found to be Extroversion,
Conscientiousness, Tolerance for Stress, Agreeableness, and Openness to Experience. This
supports the findings of previous researchers with other samples.
Discussion and Conclusion
These results should be replicated with other samples. These samples could vary in
educational levels, cultures, gender composition, and average ages. As shown by Carraher et al.
(2006a) it is possible that these results could vary with the types of jobs examined and the
countries from which the samples are taken. In the current study we found support for the same
type of dimensional structure for a sample of accountants and engineers as previously found with
entrepreneurs, small business people, customer service representatives, and general employees.
It appears that the McBride et al measure might be a useful measure of the Big Five personality
factors.
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75
Table 1 - PCA
Component
1
bio1
bio2
bio3
bio4
bio6
bio7
bio8
bio9
bio10
bio11
bio12
bio13
bio14
bio15
bio16
bio17
bio18
bio19
bio20
bio21
bio22
bio23
bio24
bio27
bio28
bio29
bio30
bio31
bio32
bio33
bio34
bio35
bio36
bio37
bio41
bio42
bio43
bio44
bio45
2
.066
-.032
.048
-.316
.198
.117
.218
-.075
.159
.098
.223
-.193
.102
.202
-.065
.180
-.027
-.066
-.182
-.129
-.010
.101
-.042
.706
.317
-.065
.488
.511
.631
.649
.601
.731
.545
.527
.062
.159
.155
.211
.166
3
.607
.662
.631
.498
.162
.099
.109
-.246
.318
.441
-.489
.569
.404
.195
.196
.174
.103
-.042
.206
.146
-.005
-.073
-.153
.130
-.130
-.056
.216
.150
.033
-.109
-.165
-.018
.091
-.121
.408
.631
.227
-.337
.445
4
.089
-.035
.124
.075
-.372
.308
.096
.090
-.301
-.076
.287
-.192
-.088
.156
.823
-.260
.004
.629
-.338
.123
.595
-.633
.604
-.041
.029
-.076
-.216
.180
-.183
.151
-.067
.028
-.100
.012
.159
.086
.174
-.085
.079
5
.010
-.044
-.091
.052
.190
-.010
.036
.456
.143
.070
-.066
.109
-.065
-.481
-.131
.127
.753
.104
.076
-.188
.009
.022
.075
-.098
.482
.783
-.110
.185
-.132
.259
.034
-.188
-.029
.347
.300
-.106
.333
-.392
-.136
.186
-.010
.033
.309
.451
.730
.639
.545
.270
-.018
.060
-.045
.044
-.029
.195
.219
.145
.002
.084
.481
.319
-.046
.251
.118
.020
.063
-.239
-.280
-.045
-.089
.274
.154
.192
-.081
-.244
-.005
-.181
.264
.241
_____________________________________________________________________________________________
76
References
Carraher, S., Franklin, G., Parnell, J., and Sullivan, S. (2006a). Entrepreneurial Service
Performance and Technology Management: a study of China and Japan, Journal of Technology
Management in China, 1(1), pp. 45-55.
Carraher, S., and Parnell, J. (2008). Customer service during peak(in-season) and non peak (offseason) times: a multi-country (Austria, Switzerland, United Kingdom and United States)
examination of entrepreneurial tourist focused core personnel, International Journal of
Entrepreneurship, 12 pp. 39-56.
Carraher, S., Parnell, J., Carraher, C. and Sullivan S. (2006b), Customer service, entrepreneurial
orientation, and performance: a study in healthcare organizations in Hong Kong, Italy, New
Zealand, the United Kingdom, and the USA, Journal of Applied Management and
Entrepreneurship, 11(4), pp. 33-48.
Carraher, S., Parnell, J., Spillan, J. ( 2009 ) Customer service-orientation of small retail business
owners in Austria, The Czech Republic, Hungary, Latvia, Slovakia, and Slovenia, Baltic Journal
of Management, 4(3), pp. 251-268.
McBride, A., Mendoza, J., & Carraher, S. (1997). Development of a biodata index to measure
service-orientation. Psychological Reports, 81 (3 Pt 2), 1395-1407.
_____________________________________________________________________________________________
77
LEADERSHIP AND VALUES AMONG ENTREPRENEURS

Andrea V. Amorosi, Nova Southeastern University
Mel Aparicio, Stream Line Aviation
Tibisay Delgado, Great Florida Bank
Abstract
Entrepreneurship has an important role in a countrys economy, contributing decisively
for the creation of new businesses or business opportunities in companies that already exist,
according to Global Entrepreneurship Monitor (GEM, 2007). It seems that during the worst
economic times some of the biggest, well known companies were born. This also gives room for
many small companies to grow and become stronger due to the larger companies fall in the
market. It is known that many different leadership styles and values can make up just one
entrepreneur but there are still a lot of unknown theories that might influence each other in
regards to this topic specifically. This paper gives a great deal of information on the different
styles of both leadership and values found among entrepreneurs, which after reading into their
key aspects, gives room to further discuss the difference between men and women entrepreneurs,
as well as, the ethical behaviors needed to have a successful business.
Introduction
The earliest historical references to entrepreneurship come from the field of economics and
inquiries into the nature and sources of profit. All economic value was thought by the classical
economists to arise from some combination of Land, Labor, and Capital (e.g., Smith, 1776).
Entrepreneurship became associated with all activities that create residual profits in excess of the
rate of return for Land, Labor, and Capital (e.g., Glancey & McQuaid, 2000; Kirzner, 1973;
Matley, 2005; Mises, 1949; Moschandreas, 1994; Ripsas, 1998; Schumpeter, 1934/1961). Here
in the US, there are many well known entrepreneurs that have become quite a success and have
proved it by becoming a household name. People like Steve Jobs with Apple and of course Bill
Gates with Microsoft are just a few that we can be named today. The theories of how they
became successful are highly debated over. Questions that have been asked are: Is it something
in their personalities? Is it their propensity to take risks? How did they become so successful?
Their personal traits, functional area specializations, sources of financing, educational levels and
leadership styles?(Joyner, Payne, 2006). Some argue that it is something specific, like
McClelland (1961), who believes that entrepreneurial behavior was embedded in an individual's
personality, the result of one's upbringing. Entrepreneurs have a few choices when making a
decision on how to provide leadership in their company. Like anything, some leadership styles
can be more successful than others. Entrepreneurs have sometimes used common sense as their
leadership style of choice but common sense does not always provide the best course of
direction. Entrepreneurship has also been widely regarded as a driver of economic development
and growth in the western world (Harper, 2003). Williams (2008) argued that there appeared to
be a clear distinction between "necessity-driven" entrepreneurs pushed into entrepreneurship
because other options for work are absent or unsatisfactory, and "opportunity-driven"
entrepreneurs who engage in entrepreneurship out of choice. Carraher (2006) also found this in
his work in Eastern Europe.
Even studies of college students have become in question in regard to entrepreneurship.
Does the fact that you have a college degree make a difference? Some can clearly agree that it
does but in other cases, like Steve Jobs, who was mentioned earlier never had an MBA and still
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78
achieved a very high level of success in his entrepreneur career. As a matter of fact in a recent
study Couto & Thiago, (2009) find results from their research showing that nationality, gender,
enrollment in academic associations, family background and the level of income are the more
significant factors that differentiate students that consider starting a new business.
Studying values of entrepreneurs shows some very interesting and important information
about the entrepreneurship phenomenon. An example would be that entrepreneurs tend to exhibit
unique value systems when compared to non-entrepreneurs or when compared to managers
(Fagenson, 1993; McGrath, MacMillan, & Scheinberg, 1992). It is obvious that the relationship
between individual values and entrepreneurial success is very important. There is even plenty of
research now that investigates the differences in values between successful and unsuccessful
entrepreneurs. Within this paper we will suggest that values, especially through the influence on
behavior and of course decision-making, are one of the most important ingredients of a
successful entrepreneur.
Entrepreneurs are ambitious personalities that dare to take a chance in their beliefs as to
what would make a successful business. As owner and operators, they will be subjected to many
situations that will require important decisions to be made, many reactionary in nature. Within
those decisions, there will always be an inherent cross check of their personal values to ensure
there are no violations to them in the decisions they have made. Ethics in business has to do with
making the right choices. One might well ask, Right for whom? (Robinson 2007). This paper
intends to depict what some of these values are as well as the different types of factors that lead
them to venture out on their own. Studies have shown that less than half of entrepreneurs go on
strictly seek monetary satisfaction. Many cited independence as well as exploring their ability to
manage and innovate as primary reasons for embarking on their solo venture. Leadership styles
will also be reviewed and we will explore how these different styles can affect the growth and
success of the business as well as how it can influence the types of relationships the
entrepreneurs create with their employees. Leadership and values are key factors in creating a
business and in order for a business to grow there needs to be a consensus between the
entrepreneur and their subordinates regarding the types of leadership needed to grow the
business and the values that will be the foundation of the organization.
A factor that might prevent the creation of a culture of excellence within many
organizations is that they are often run by managers rather than leaders. Entrepreneurs, as
managers within organizations, might excel in their ability to handle a daily routine, yet never
question whether or not that routine should have been implemented in the first place. There can
be a profound difference between being a manager and being a leader, but one should readily
recognize that both are important, and both typically should exist in successful entrepreneurs. To
manage means to bring about, to accomplish, to have responsibility for, and to conduct. To lead
means to influence, to guide in direction, course, action, or opinion (Darling, Gabrielsson,
Serist, 2007). An interesting culture is the one created by Kiichiro Toyoda at the Toyota auto
manufacturing company, which we will discuss later in detail. Toyotas management structure
took the proverbial managerial pyramid and turned it upside down. This counterintuitive style
has made them the number one manufacturer in the world and along the way created an
ingenious managerial system, The Toyota Way, which companies around the globe have
attempted to replicate. Mr. Toyota is an entrepreneur which set out to improve the lives of people
as his goal, exhibiting his social values and setting this as the core value of the company.
Creating the best auto manufacturer in the world with billions in sales is viewed as a byproduct
of his main accomplishment, which is providing high quality, affordable transportation. Like Mr.
Toyoda, there are many exciting entrepreneurs that have made a difference in society. We will
look into the value structure of these entrepreneurs and the leadership styles exhibited by them
_____________________________________________________________________________________________
79
and try to establish if there are similarities that cross the myriad of variables that make up an
entrepreneur.
Do successful entrepreneurs have values and leadership skills that differ from those who
are unsuccessful? One of the foremost entrepreneurs was Lee Iacocca. Mr. Iacocca emphasized
that good managers create a sense of urgency: Youre up against the wall and youre getting
hammered. Instead of hiding in the corporate offices, get out there and communicate (Anastakis
2007). This leader ship style of acceptance of responsibility and resolution of issues that arise
constantly in the entrepreneurial venture creates a culture amongst the managers and employees
of accountability. Everyone on the team must do their part in order in order to fulfill the mission
envisioned by the founder. As a result of this leadership style, Mr. Iacocca was able to resurrect
Chrysler from certain demise. His leadership abilities allowed him to gain not only the
acceptance of over 100,000 employees, but also the Treasury Department, President Jimmy
Carter and the American public. In less than two years the company went from losing over a
billion dollar to turning over 11 million in profits. In one of his best selling books he stated that
management is a code of values and judgments . . . thats why, in the end, you have to be
yourself (Anastakis 2007).
After the corruption scandals that have plagued our society in recent times, leaders are
under a microscope, where their ethical decisions are continuously being monitored for deviation
from societys norms. Many entrepreneurs are being pressured to make decisions that may not be
in line with what they see as ethical. Ethical and economical pressure lie in the balance and its
up to the entrepreneur to tip the scale in one direction or the other. The latest and greatest
entrepreneur to throw their hat into this un-prestigious ring is Bernard Bernie Madoff. The son
of a plumber began his corporation with $5000 saved by working as sprinkler installer. Mr.
Madoffs company grew very quickly with the use of advanced computer models. These systems
eventually helped create what is now known as the NASDAQ. His failure to uphold his moral
obligation though cost his investors an estimated $50 billion. Integrity lapses can now have
catastrophic financial consequences, liabilities in the hundreds of millions or several billiondollar range for Citigroup, JPMorgan Chase, Adelphia, and Computer Associates, bankruptcy
proceedings for WorldCom and Parmalat; and the ultimate penaltycollapsefor Enron and
Arthur Andersen (Heineman,2007). Failure to recognize the ethical responsibility as an
entrepreneur in the early stages of establishment will continue to grow into a more sophisticated
level of self acceptance and blind them to wrong in unethical practices.
By contrast, there is Kiichiro Toyoda. Founder of the leading auto manufacturing
company in the world, Mr. Toyoda has built his success by creating a culture that focuses on
social ethics and internal customer collaboration. One of the pillars which the Toyota Production
System is built upon is Respect for People. Many companies have tried to emulate this system
without success. Simply inserting 5S and other lean systems in attempt to duplicate the success at
Toyota has never succeeded. This is now the focus of many studies as this has been the least
studied aspect of the Toyota Production System and the most ignored by entrepreneurs
attempting to implement lean systems. According to Selinger (2003), research stemming from
McKinsey and Company reported that investors are paying 12-14% higher in premiums for
businesses that are able to demonstrate proactive ethical practices. Additionally, businesses that
were highly driven to first and foremost meet the needs of external shareholders versus internal
stakeholders were receiving as high as 8.5% greater returns on an annual basis (Bergeson 2008).
One of the cornerstones of a great leader is ambition. Ambition is the drive to achieve ones
goals, to be successful, to improve oneself, to be better off, to be the best that one can be ( Hicks 2009).
With out ambition, skills and financial resources that may be available to the entrepreneur will never be
maximized. It is the internal engine that drives the entrepreneur to reach his or her full potential regardless
of the obstructions that may present themselves. Jack Welch, CEO of GE for over twenty years and
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entrepreneur, led the company to unimaginable success during his tenure. His ambition to be number one
or number two in every division the company had pushed management to find new ways to improve their
current methodology. This would only be possible by breaking up the beauracracy that had plagued the
company for many years and believing that employees would do right by the company when given the
opportunity. This component of leadership is visible in successful entrepreneurs and is infectious
throughout the organization.
So far we have attempted to lay the platform for the correlation of leadership styles and ethical
values with the resulting success or failure outcome of the entrepreneurs decision. We have chosen to
exemplify these outcomes using well known cases in order to magnify the cause and effect of the decision
enacted by the entrepreneurs. Although the outcome may not be attributed to one specific flaw or
attribute, we will attempt to find commonalities in the moral or leadership traits of the entrepreneur.
Several factors can motivate someone to venture out on their own and start their own
business; to become an entrepreneur. Is there a difference between what motivates males and
females to take this risk? Dr. Stanley Crome of the University of Ulster created a study titled
Motivations of aspiring male and female entrepreneurs. The study aimed to discover what
motivates entrepreneurs to create their own businesses, if the motives were economic or noneconomic and if men and women shared the same motivational factors. Results ,based on
personal interviews with 35 men and women, indicate that both genders do have a variety of
reasons for founding and that women, as well as men, are primarily motivated by autonomy,
achievement, a desire for job satisfaction and other non-economic rewards (Cromie, pg 251). In
respects to any differences found among men and women Dr.Cromie concluded in his study that
women tend to be less concerned with making money and more with career satisfaction. They
also see entrepreneurship as a means of meeting simultaneously their own career needs and the
needs of their children(Cromie, pg 251). Around the world women entrepreneurs tend to face
more challenges than their male counterparts in founding their own business. In his study titled
Breaking the Bamboo Curtain and the Glass Ceiling: The experience of Women
entrepreneurs in High-tech industries in an emerging market Justin Tan attempts to compare
entrepreneurial orientations and venture performance between men and women in the electronics
industry in Chinese transition economy. Results from his study show that even though women
are influenced by the same factors that affect decision making among men they differ in their
eagerness to take more risks and make bolder moves when chasing greater returns and future
competitive advantage (Tan, pg 547). In his study Tan mentions some of the different obstacles
and challenges that women meet in their entrepreneurial ventures such as stereotyping and social
impact on career choices. Social cultural influences have led more women to receive liberal arts
education rather than in technical and financial areas. Such choices have led more women to
choose traditional and life-style business ventures, a choice often translated into more difficulties
in getting financial assistance for growth. (Tan, pg 549). Chinese women have lived in a male
dominated society for centuries. They are finally in a position where they are able to break the
bamboo curtain by starting their own businesses and making financial contributions to their
families and the society that controlled them. The problem with Chinese women entrepreneurs is
that once they do break this curtain they run into something women in the United States are all
too familiar with, the glass ceiling. In Dublin, Ireland research argues that economic policies
and enterprise support policies contribute to the continuance of disadvantages faced by many
female entrepreneurs. The European Union aims to become the most competitive and dynamic
knowledge-based economy in the world and this involves moving up the value chain through the
development of more technologically oriented industries where women are minority
stakeholders (Browne, Moylan, Scaife pg109).
Once the business is started whether male or female and regardless of what factors led
them to start the business it is now the job of the entrepreneur to take what they started and make
it grow. Growth in a business comes with ethical integrity, similarities in values between the
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entrepreneur and the employee and the ability to retain valuable employees. Becky H. TakedaTinker and James W. Mirabella conducted an exploratory study of the impact of differences and
similarities in personal values and personalities between entrepreneurs and their employees on
tenure. The findings of the study suggest that there is indeed a positive correlation between these
and those employees with similar values where the longest tenured employees. This finding
could prove to be not only helpful but very important for entrepreneurs during the hiring process.
It is important to have employees that share the same values and vision to grow the company,
studies have found that the cost of turnover can be anywhere from 150% to 250% of employee
annual compensation, in a startup company with high turnover this can mean large financial
losses and it could cost the company its survival (Takeda-Tinker, Mirabella, pg145). Kemelgor
and Meek found that entrepreneurial firms that reported very low annual voluntary turnover
actively promote a positive work environment, and they also value employee contributions
while achieving a true work-life balance (pg76). They also noted that key retention factors are
not necessarily based on salaries or benefits. These are two things that employees have come to
expect and they are no longer motivated primarily by them. Retention factors that new
companies should keep in mind consist of treating employees fairly, creating opportunities for
meaningful contributions, growth and skill development, creating and maintaining a positive
work environment and providing feedback.
Leadership and Entrepreneurs
The concept of leadership and entrepreneurs has undergone dramatic changes in the last
thirty to forty years. The traditional view of entrepreneurs having three distinct types of
leadership styles of autocratic, democratic and free reign is no longer valid in todays business
environment (Littlefield, 2004). The new definition of leadership among the most successful
business ventures include terms such as trust, integrity, collaboration, empathy, etc. This is often
depicted in the popular media by showing leaders who promote work settings where employees
are allowed to play games during work hours to promote creativity, bring pets to work and are
allowed to exercise in company paid gyms to enhance overall well being. These extreme cases
depicted in TV commercials are not necessarily so extreme if one reviews some existent
literature on the topic of new concept of leadership and entrepreneurs.
Understanding the definition of leadership as it relates to entrepreneurship is important,
not only for large organization but for small business entities, as small businesses represent
approximately 99.7% of all employer firms in the U.S. (Shinnar, Pruett, & Toney, 2009). There
is overall consensus in the public that the notion that traditional organization organizational
business structures where there are many layers of management is no longer applicable in
todays global economy. Similarly, the notion that leadership styles are the result of pre-disposed
traits that an individual is born with is also no longer applicable. There is the view that new
technology and accessibility of information has brought about a new type of leader who
empowers employees and is flexible as well as proactive in order to survive in the current
business environment. Many books have been written about the characteristics of this type of
leader, some of which appear to contradict each other. However, there are some common themes
in the literature written about leadership (Littlefield, 2004).
Some of the commonalities that appear in the new definition of leadership is the quest or
desire for knowledge and specific mental habits that enable the leader to rise above others in an
organization. The ability to be able to communicate with subordinates and earn their trust is also
listed as a key component. Having a competitive capacity and having perseverance to be able to
handle complex and changing business models are also characteristics of the new definition of
business leadership. In addition, being a life-long learner allows the individual to be more
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comfortable in handling change. Being forward-thinking is also considered to be of paramount

importance- The overwhelming consensus among leadership experts is that without vision, little
can happen (Littlefield, 2004, p. 38). Also the ability to intermix different leadership styles as is
needed in particular circumstances is another characteristic that is attributed to the new business
leader. Overall the new business leader must be adaptable and think outside the box in order to
make the highest contribution to his/her organization (Littlefield, 2004).
Another key concept, although not a new concept per se, that has been incorporated in the
new definition of business leadership is the ability to identify opportunities that otherwise other
individuals might not recognize. Traditionally, this concept had only been applied to profitmaking opportunities, such as a new product or service or a new sales strategy that will enhance
the organizations bottom line. However, the new definition of leadership goes further to say
such opportunities must also include efforts, like new business processes or methodologies,
which add value to an organization (Smith, Matthews, & Schenkel, 2009).
The definitions presented thus far all point to the fact that leadership in entrepreneurs is
mostly focused in psychology and understanding organizational behaviors (Papalexandris &
Galanaki, 2008). Therefore, the most valuable skills needed by leaders in the business world
today are not necessarily technical knowledge but rather traits derived from emotional
intelligence. The so called leadership school of entrepreneurship presented by Papalexandris &
Galanaki, indicates that the successful entrepreneur must also be an effective leader/mentor
who will define a vision of what is possible and attract people to transform this vision into
reality (2008, p. 3). This can only be done by understanding human nature as well as
understanding organizational culture. These concepts are even more critical when one takes into
consideration the fact that general population of entrepreneurs is aging, along with the general
population of the U.S. It is expected that by 2030 1 of 5 Americans (20% of the U.S. population)
will be 65 or older when the percentage was roughly 4% 100 years ago (Singh, 2009). Therefore,
it appears that as older entrepreneurs will represent a larger segment of American businesses,
understanding the new definitions behind the concept of business leadership will become more
significant. As older business leaders continue to remain in the business world, the ability to
educate a new group of leaders will be a challenge to business schools across the country.
Values and Entrepreneurs
The concept of values in the business world has received a lot of attention in last couple of
years as a result of such business scandals like Enron and WorldCom as well as the multi-million
ponzi investment schemes attributed to Bernie Madox and others. Therefore, it is not surprising
that the public has not been accustomed to associating the definition of values with the business
world and more specifically with entrepreneurs who make up a large part of the business world.
There is also the historical myth depicted in movies and popular books that portray entrepreneurs
or business owners as having no moral compass or values when dealing with societal needs or
business needs, unless it has a positive effect on their business bottom line. However, the
concept of values in business has also received some positive reinforcement with the likes of
Cynthia Cooper, who blew the whistle on the accounting practices of WorldCom, and Sherron
Watkins, who also blew the whistle on Enron (Harmeling, Sarasvathy & Freeman, 2008).
More recently the discussion of values a distinction has been made between ethics and
values. Although these concepts are usually presented as different topics and they are inherently
integrated with each other and analyzed at the lowest level, they have the same definition. Ethics
is being viewed as being the result of having values and entrepreneurs are the ones that create
those values in an organization. In other words, one concept is not exclusive of the other - In
ethics, the conversation has to do with the nature of values; in entrepreneurship, the nature of
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opportunities (Harmeling et al., 2009, p. 341). However, there been long debate about whether
values should be considered universal or relative. Universal values meaning all successful
entrepreneurs or business owners have a shared or common set of values that are viewed by
society as being the golden rules of business behavior. While relative values are considered
those values that arise or come up depending on what situations or opportunities an entrepreneur
or business owner is faced with.
Some arguments indicate that the association of values with entrepreneurs need not be
necessarily considered or explained in terms of being absolute (i.e. there is only one set of
values) vs. relative (i.e. changing from different situations), as pointed out by Harmeling. They
argue that as new situations or opportunities arise (what they call contingencies); new values or
individual responses will be created to deal with those emerging situations. Emerging situations
could be for example emerging technologies or emerging societal issues. Who would have
predicted 20 years ago that emerging technologies such as email communications would have
required new values on how to deal with employee privacy in the workplace? As another
example, who would predicted in the early 20th century that new values will be required of
business to deal with issues affecting the environment? Therefore, values and entrepreneurs need
to be viewed as changing with the societal expectations as well as with the nature of business.
Along the lines of the relationship between values and entrepreneurs, a new concept has
also been developed when addressing the societal aspects of entrepreneurs. The term social
entrepreneurship is being defined as the process of using ethical values to obtain the common
good of society and the planet (Muscat & Whitty, 2009). This term is not only applied to the
benefit of society and the environment but is also being applied to the transformation of business
education provided to future business leaders. The traditional concept of business education had
been to teach future entrepreneurs how to maximize a companys profits. However, the new
approach to business education is to also emphasize the responsibilities of entrepreneurs to
society and to the environment. The concept goes on to advocate that certain business models
many not necessarily bring in high returns but help provide a greener environment, create new
jobs and promote the overall economy. Many of the business leaders that come out from these
new educational programs end up working for non-profit organizations, government agencies,
and private partnerships between government and for-profit companies. These individuals are
viewed as the non-traditional entrepreneurs of the 21st century, who work in the healthcare,
education and public-sector industries (Muscat & Whitty, 2009).
Another key concept associated with values and entrepreneurs is the notion that business
leaders are undoubtedly the face and manifestation of the cultural values of a company. This
accompanies preaching to the public, to stockholders and to employees by example not just with
words. IKEA store founder, Ingvar Kamprad, once indicated in an interview that: If there is
such a thing as good leadership, is to give a good example. I have to do so for all the IKEA
employees (Darling, Gabrielsson & Seristo, 2007, p. 6). Similarly, Jack Welch (former CEO of
General Electric), has advocated the view that a leader must also mentor and sell the companys
values to its employees and practice the corporate values that are employees are expected to
adhere to (Darling, et al., 2007). This preach and act attitude is considered an important
element of what is commonly recognized leadership values. According to scholars, these
leadership values are evident in all successful and respected business leaders and entrepreneurs.
Success and Entrepreneurs
One common trait amongst the successful entrepreneurial leaders is they focused on
pragmatic ethics and values, on creating value through system productivity and on creating a
stable organizational community to make this feasible. In most cases, entrepreneurial leaders
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developed an overarching vision that appealed to organizational members, building linkages with
various stakeholders such as customers, employees, the government and other institutions to gain
access to resources and to ensure that the vision could be enacted (Surie & Ashley 2008). The
ability to translate this vision is pivotal to promoting an entrepreneurial environment. The
leadership skills of the entrepreneur will come into play and the strong belief in the cause of the
organization must be projected with conviction in order to stimulate the employees resolve to
complete the mission statement. The successful entrepreneurs have clear vision of what is to be
done and builds a support system that they can delegate their duties and be confident the orders
will be executed correctly. One study attempted to determine the leadership styles of successful
entrepreneurs. From the study data, it was concluded that successful entrepreneurs display a
measurably higher tendency toward transformative leadership than start-up entrepreneurs
(Hulsing 2008). Transformative leadership encourages the harmony and cooperation amongst
employees and attempts to transform the culture into one of mutual respect among ones peers.
Successful entrepreneurial leaders are innovative and are continuously investigating new
methods to improve flaws in the system. Their openness to change separates them from those
that are transfixed by the old ideology of the organization. As a result, team members feel that
they have not only the right but the obligation to seek out new opportunities and to make them
happen (Surie & Ashley 2008). Innovative companies are usually a reflection of the founder and
the entrepreneurial spirit they have evoked in their employees. Successful entrepreneurs have the
ability to find internal customers that have the expertise to develop new and creative solutions
and sustain the momentum to find these resources.
While we may, for the purpose of analytical distinction, differentiate between value
creation, efficiency and ethics, in practice, efficiency outcomes cannot be separated from the
moral sphere (Surie & Ashley 2008). The quality of the product is essential to the organizations
long standing position in the marketplace and the cornerstone of successful entrepreneurs such as
Mr. Henry Heinz of the Heinz Food Corporation. His emphatic quest for quality product changed
the food industry. Mr. Heinz felt a moral obligation to produce food that was high in quality and
safe for the consuming public. He sent company executives to meet with President Theodore
Roosevelt to introduce new laws concerning food safety and labeling practices and improve the
overall safety standards of the food industry. This corporation is still in existence today and the
dedication to excellence for the good of society has enabled Mr. Heinz vision to be realized.
Social entrepreneurs may be the most pure display of ethics and entrepreneurship
working hand in hand for a cause driven by the ethical belief of the entrepreneur to aid society by
way of his talents. Successful social entrepreneurs aim to help those in society that by unforeseen
circumstances are not able to help them selves. William Drayton, voted by the Center for Public
Leadership at Harvard University's John F. Kennedy School of Government in collaboration with
US News and World Report among America's 25 Best Leaders, founded Ashoka, a non-profit
organization that has focused on assisting children in low performing schools. With a twelve
million dollar budget, he set off to reform the social structure within these communities by
infecting the children with the desire of a higher education. The organization was able to double
the number of students enrolling in colleges and effectively push the students into the middle
class of society. This will have a contagious effect on the student body as well as the faculty at
the participating schools, encouraging both to succeed and giving them a reason to put forth the
effort to reach a higher education.
Bill Gates, Co-founder of Microsoft, reflects peace as a positive attitude and leadership
value. With this innovative dream, and organization he developed based upon a strong
commitment to these leadership values, Bill Gates is credited with turning the disorganized PC
industry of the 1970s into today's huge industry, affecting the net worth of numerous
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organizations. (Darling, Gabrielsson, Serist, 2007). This value focuses on the personal worth of
oneself and others and creates a desire to move forward and progress to a better future.
In summation, successful entrepreneurs share similar ethical values and leadership skills
amongst themselves though not mutually exclusive from those shared by unsuccessful
entrepreneurs. What does seem to vary is the degree to which the successful entrepreneurs are
committed to their beliefs and willingness to stand behind their core values in the face of
challenging times. Pragmatic and ethical leadership skills help establish a value based
organization with a strong foundation that is supported by internal customers for the good of the
organization and society. By addressing the question of values on a day-to-day basis in the
process of achieving their goals, entrepreneurial leaders are likely to alter current norms and
evolve new ones. Ethical behavior can be reinforced and built through practice and standards
evolving as in other domains (Surie & Ashley 2008). Successful, long enduring entrepreneurs
will systematically check their virtues with the decisions that need to be made and will
consistently side with their moral beliefs and will deliver the resulting outcome to their
supporters through their charismatic and transformational leadership skills. More research needs
to pay attention to the work of the Carlands and recognize the ethical and value differences
between entrepreneurs and small business people. Their work was the most significant work
published in the field of entrepreneurship from 1975 to 1999.
Gender and Entrepreneurs
As previously noted, there are several factors that can motivate both male and female
entrepreneurs to start their own business. The literature review does make one thing clear;
although the monetary reasons are an important part of the decision making it is definitely not
the most important. In his study of what motivates aspiring male and female entrepreneurs,
Cromie found that previous research was mostly focused on motivational factors for males so he
set out to find motivational factors for females and in his research he attempts to discover if
individuals have multiple motives for founding; if non-economic motives predominate over
economic ones; and whether men and women have similar reasons for creating business
enterprises or if the different social roles taken by men and women result in differing motives for
founding (pg 253).
His research was carried out by generating a sample of 200 names chosen at random from
lists supplied by banks and six small business agencies of intending new business start-ups. The
individuals in the sample were then contacted by telephone to determine if: (a) they were either
in the process of launching their business or had been trading for six months or less; and (b) they
were either male and in full-time paid employment immediately prior to start up or if they were
female and in any employment status prior to founding, the first 35 men and 34 women that met
this criteria were asked to participate in his interview. One peculiar finding in this study was that
one third of the men and women had no previous experience of the same or similar kind of
business they planned to form. This could be due to the fact that the entrepreneurs were so
dissatisfied or frustrated with their current fields that they set out to start something completely
new. The results of the study showed 14 categories the participants mentioned during their
interview as factors for motivation; the highest for both men and women was Autonomy,
mentioned 32 times by the males and 26 times by the females. Achievement was a tie at 23
mentions each, next in line for females was career dissatisfaction at 20 mentions and for males it
was Job dissatisfaction (pg 255). Dr. Cromie explains that the reason for the high number of
career dissatisfaction with women could be seen as a reflection of the unsatisfactory, truncated
careers that they experience (pg 256). It is also noted that more females expressed
dissatisfaction with their careers; particularly the young well qualified women who find it
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difficult to find jobs or careers that are challenging and rewarding and the middle-aged women
looking to return to the working field. Several of the young women with families mentioned that
they saw entrepreneurship as a means to unite their role of mother with successful career woman
(pg 257).
Research shows that while men and women have similar motivational factors for
entrepreneurship, it is more difficult for women. Even with all the advancements women have
made in the working world it seems as if society has not let go of the old views and women still
find they have to prove themselves to everyone in order to get recognition. Sadly this gender bias
continues to follow women around the world, as Justin Tan explains for centuries, Chinese
women have been separated from social and economic life by a bamboo curtain, and when they
finally have a chance to make contributions not only to their family but also directly to the
society previously dominated by men, they soon find themselves under a glass ceiling (Tan,
pg 547). In his study Professor Tan compares and contrasts male and female entrepreneurs in the
Peoples Republic of China. He, like Dr. Cromie, also found that men and women share more
similarities than differences when looking at motivational factors to start their own business. At
the same time he mentions the fact that women tend to possess a greater sense of autonomy, they
drive their sense of motivation and productivity behind a personal touch as well as have a
better handle on balancing their work life and their family life. Another characteristic among
female entrepreneurs is the joy, success, and satisfaction brought to them by attentively building
relationships with customers and employees, mastering control of their own destiny, and from
accomplishing something that they consider worthwhile (Tan, pg 549).
According to Tan the gender disparity start showing up during the financing phase, but
explains that according to several studies this is because the business ventures that women tend
to embark on are those that banks tend to consider as high-risk businesses and not necessarily
only because they are female. He goes on to mention that the literature on women entrepreneurs
suggests that women encounter stereotyping since early on in their lives and they are often
directed toward self-selection which leads them towards female specific career paths in the
future. For instance, socio-cultural influences have led more women to receive liberal arts
education rather than in technical and financial areas (Tan, pg 549). With all of these obstacles
present, one may believe that women dont choose to become entrepreneurs but are pushed into
the venture in order to avoid the glass ceiling or the bamboo curtain or anything else that
may stunt their career development and self fulfillment. Despite the lack of research on women
entrepreneurs in developing and transition economies, Tan comments that women are playing an
important role in the transition aspect by decreasing the discrimination against women and
employing more of them which in turn affects the younger generations by creating more
opportunities and encouraging new and more innovative entrepreneurial ventures. In his study he
wanted to determine if there were any differences between men and women and their strategic
orientation and the performance of their start-up in high-tech industries. He tested two
hypotheses Under Chinese transitional environment, men and women entrepreneurs will exhibit
significant difference in decision characteristics and Under Chinese transitional environment,
entrepreneurial firms owned and managed by men and women will exhibit significant difference
in performance (Tan, pg 552). His findings show that there are no significant differences
between males and females in entrepreneurial orientations; he does mention that women tend to
take more risks for higher returns than their male counterparts. In respect to the performance of
the new business, Tan shows that women entrepreneurs reported higher return on asset, on sales
and had a higher sales growth. All of these findings clearly contradict the idea that women
underperform when put up against men.
The disparities and obstacles dont stop in China or the United States. As the European
Union seeks to become the most cutthroat and vibrant knowledge-based economy by developing
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more technologically oriented industries it neglects the fact that women are a minority in this
economy. It does not help that in order for this technological economy to evolve those involved
should possess high levels of technical skills and literacy which the women in this area do not
posses, placing them in a serious disadvantage.
In their research of female entrepreneurs in Dublin, Ireland, Browne, Moylan and Scaife
argue that the issues which drive women from the labour market and into self-employment
negatively impacts their performance as self-employed entrepreneurs out of the frying pan and
into the fire (pg109). Even though EU has passed equality legislation, not unlike the United
States, these have opened up more job opportunities for women but they are still not typically
found in executive positions and there are still differences in wages and benefits. The difference
in pay and earnings is accounted for by the highly segregated nature of the labour market with
women concentrated in what is generally referred to as the secondary labour market (pg 110).
The secondary labour market tends to be less organized and consists of low pay, and part time or
temporary employment. Some of the obstacles that entrepreneurial women face in Ireland are
that they continue to fall behind their male counterparts in their ability to acquire and build the
cash reserves that are necessary to finance a start-up business, regardless of the fact that women
are slowly closing the wage gap, raising the funds seems to be a harder task to complete for the
female entrepreneurs. Because of the financial challenges, women find it easier and more cost
effective for themselves to create start ups in the service sector. This way the new business can
be based out of a home and can consist of a smaller initial financial investment and fewer
monthly expenses.
The literature review is consistent in their findings on gender comparisons in
entrepreneurship. The factors that motivate each gender to start a new business venture are very
similar regardless of the gender. For the most part both genders are dissatisfied with their current
jobs, they want more autonomy, and they seek to be innovative, or have more control of their
business lives and career paths. Regardless of the shortage on literature in women entrepreneurs,
what is out there also reports the same findings across the board and around the world. It is much
tougher for female entrepreneurs to venture out than it is for their male counterparts.
Entrepreneurs and Employee Relationships
Once the business has been set up there are several factors the entrepreneur must now
consider to grow and expand their new venture. As a new business owner, they have to think
about hiring the right staff by bringing in the people that can share their same values and views.
Once the staff is hired, they need to consider training and once they have invested the time to
train; the next key item is retention. Studies have found that the cost of turnover can easily
reach 150% to 250% of employee annual compensation due to the costs of the person leaving,
recruitment, training, lost productivity, new hire, and lost sales cots (Takeda-Tinker, Mirabella
pg 145). For a new and small start up company these costs could cause them to close their doors
a lot sooner than they would expect. The purpose of the study conducted by Dr. Takeda-Tinker
and Dr. Mirabelle was to examine the differences and similarities in personal values and
personality between entrepreneurs and employees, and to examine the affect they have on
employee tenure status (Takeda-Tinker, Mirabella pg 145). Study findings show that there is a
significant correlation between values of the entrepreneurs and those of their employees. In order
for small businesses to remain open and reduce employee expenses it is important for the
entrepreneur to understand different personalities that can be found in different associates and to
find common personal values to build upon. A team is only as strong as its weakest member, if
there are different values it can bring negativity to the workplace and reduce production which
will cause financial losses.
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RELATIONSHIP MARKETING AND CUSTOMER VALUE

Myrna Laurenceau, Southern Wine & Spirits of America
Ray Louis, City of Miami, FL
Paola Bernat, Self-employed
Roscoe Dandy, Nova Southeastern University
Abstract
Marketing was the means of transporting items from producers to consumers. With the
establishment of the American Marketing Association, marketing became a business process in
the 1950s, and developed the 4p approach: product, placement, pricing, and promotion. Since
the 1990s, relationship marketing has gained in value not only due to the increase in services,
technology and information oriented organizations but due to the trend toward strategic
network competition. Relationship marketing based strategies allow firms to share, develop and
leverage resources with other firms and consumers. Customer Relation Management is a critical
technological tool to help firms maximize profitability of customer interactions. CRM can
structure consumers online shopping, detect their buying habits, generate promotional offers,
assess economic consumer advantages and sustain long term mutual beneficial relationships.
Future research must define a relationship marketing theory, design proper metrics to predict
consumer loyalty and advocate for a free standing non-federally regulated Internet system.
Introduction
Marketing has been re-invented for the past decade. The roots of marketing as an area
of academic study can be traced back to around 1910 in the mid-western America land-grant
universities (Terblanche, 2005). Back then marketing was used in the agricultural sector; its
function was to be a middlemen between the products and the consumers. This practice was
mainly geared toward commodities and agriculture. Marketing was the process of transporting
item from producers such as farms, forest, sea, mine, and factories to consumers. As time
progressed functions were divided into three approaches. One approach only focused on
commodities, the second approach was focused on the marketing institution, and the last
approach studied the occupation of intermediaries. In these early approaches managerial
orientation was non - existence. Marketing was seen as a set of social and economic process
rather than as a set of managerial activities and responsibilities (Webster, 1992) . This all
changed in 1948 because of the American Marketing Association. The American Marketing
Association defined marketing as, The performance of business activities directed toward, and
incident to, the flow of goods and services from producer to consumer or users (Webster, 1992).
Marketing became a business process. Implementing management provided relevance
to the study of marketing thus emphasis on planning, implementing, and developing. From the
study of marketing and its developments the 4p approach was discovered. This approach focuses
on the product, product placement, pricing of products, and promotion of the product. Each
decade represented a development for marketing. According to Terblanche (2005) here is a time
table that emphasizes on focal marketing developments; 1950 consumer marketing, 1960
Industrial marketing, 1970 Nonprofit & Societal marketing, 1980 Service marketing, and 1990
Relationship marketing. Each phase of development took place as a result of environmental
factors that require firms to adapt the marketing focus (Terblanche, 2005).
In 1950 new phases of marketing was developed. This development was called consumer
marketing. The focus of customers needs and wants were the main emphasis for marketers
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during this time. Profit was not the objective; it was the reward for creating a satisfied
customer (Webster, 1992). The objective became pleased customers. Marketing was
considered as for Webster (1992), the main function of the firms because business was part of
creating customers. Then in the 1960 Industrial Marketing developed, It grew out of the
functional view and defined marketing functions as business activities rather than as social or
economical process (Webster, 1992). With this change new approaches were formatted using
economics, behavioral science, and quantities methods. Incorporating economics and quantities
methods allowed marketing to use statistical data to better perform its function. These studies
advocated education based on a rigorous, analytical approach to decision making as opposed to a
descriptive, institutional which, it was argued, should be held to an irreducible minimum
(Webster, 1992) . During the 1950 and 1960 companys structure were hierarchical. Often
marketing was considered an addition to sales. Marketing was considered a way to support the
sales team. It only focused of growing business through sales. Then in the 1970s the nonprofit
and societal marketing era begun that changed company structure. Companies during this time
became decentralized and the global markets were influencing business. New forms of marketing
became prominent. Even before the forces of global competition became clearly visible, there
was a trend towards more flexible organization forms, forms that are difficult to capture with a
traditional organization chart (Webster, 1992) . New relationship between companies in which
creating a different approach toward marketing. Service marketing and relationship marketing
was developed. In the 1980 and 1990 customer loyalty and value toward consumers were
implemented in the marketing function. In marketing the focus has changed from attracting
customers to customer retention and customer loyalty. This has given marketing a specific task
in creating value for each person. Customers are becoming increasingly sophisticated and more
demanding (Clemmet, 1998) . They have been expecting more for themselves. Individuals
want their needs to be met and identified. Customer Satisfaction is required to build customer
loyalty. Companies during this time partnered with other companies through joint ventures or
value-adding partnerships as referred to in Webster (1992). Companies were doing this to find
better ways to increase in performance for customers. The alliances, a focus on quality, and the
growing importance of networks as the basis for competition, all contribute to realization that
marketing management would have to go beyond conceptual framework of microeconomics to
fulfill its obligations towards customer (Webster , 1992). In the past years relationship with
customers was not the main focus. As globalization continued and deregulations were expanded
into other markets business increased, Internet resources were being use in dealing with other
business, international business increased.
th
At the end of the 20 century, it was apparent that the dynamic and knowledge-rich
environment would exert pressure on the hierarchical organizations of the 20th century to be
replaced by a variety of networks as a means for conducting business (Webster, 1992).
Networking became part of marketing during the beginning of the 20th century. According to
Webster (1992) four categories of network were founded that had an impact of marketing. The
four categories are the following: internal network, vertical network, inter-market network, and
opportunity network. These categories once again changed the responsibility of marketing. It
was envisaged that marketing would increasingly assume the role of creating and managing new
marketing knowledge, education, real-time market information systems, intra-firm integration,
conflict resolution, technology forecasting, risk and investment analysis, transfer pricing of
tangibles and intangibles, and the co-ordination of the networks economic and social activities
(Webster,1992). Marketing shifted from providing support to the market and products to
consulting buyer in the correct direction for their needs.
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93
Value
Customers are allowing value to shift their purchasing trends; The usual approach of
value-adding strategies is that the supplier adds technical product features or supporting services
to the core solution so that the total value of the offering is increased (Ravald & Gronroos,
1996. This attracts customers because they acquire more for what they want. Furthermore,
customers think that they are spending less or gaining. Implementing value allows an increase
on the product quality, service support, and improves customer satisfaction that strengthened the
relationship with the customer for customer loyalty. We must keep in mind that buyers in most
buying situations use reference prices and even reference values when they evaluate the
attractiveness of an offering (Ravald & Gronroos, 1996). Customers are looking for the best
deal and best value for their money.
Relationship marketing as a process
Relationship marketing holds many facets that include: building networks, creating
strategic alliances, making partnership agreements, developing customer databases and
managing relationship-oriented integrated marketing communications. According to Grnroos
(2004), relationship marketing is a process that gravitates from identifying potential customers to
establishing a relationship with them; as well as maintaining the relationship that has been
established, enhanced, and sustained. Terminated relationships or that fade away must be
managed carefully. In addition to the price of the goods and services, the relationship that is
formed between parties creates additional value for the customer, supplier, or service provider.
Customers no longer want the ability to just purchase goods and services; they want the complete
package. They want information about how to best and safest use of product, including
delivering, installing, repairing, maintaining, and updating solutions they have brought
Grnroos. These services extend the value of the products, they enhance the relationship;
whereby, delays in deliveries, or unsuccessful maintenance and unclear documentation damage
or destroy the value of the products. In customer relationship, the whole approach represents the
process. Relationship marketing is not limited to the exchange of goods or services; it
encompasses the firms ability to manage the additional components of the offering and to create
value for the customers. A successful relationship creates value and provides customer
satisfaction.
Integrated marketing communication is a requirement in relationship marketing.
Grnroos
explains that for relationship marketing to be thriving, integrated marketing
communication is needed to help establish, maintain and enhance relationships with customers
and other stakeholders. To create value for its customers, a supplier or service provider must
align its resources, competencies and processes with those of its customers. This value base
translates into customer perceived value that is established through marketing communication
before and during the interaction process of the relationship. Before the interaction process can
take place, there must be an understanding of the customers internal values. In addition,
marketers should learn how the customers strive to achieve the results required. To provide a
good solution to the customer, marketers must know the value systems of the customer to guide
its internal need-fulfilling and value-generating process. Grnroos report that when relationship
marketing is a process that interaction process is the core of relationship marketing. In addition,
integrated planned communication process is the distinct communications aspect of relationship
marketing, and the value process is the outcome of relationship marketing.
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Co-creating values with customers

Prahalad, C.K & Ramaswamy,V (2004) explain that product and service providers are
co-creators of value with their customers and that the customer experience is the key indicator. In
the new model, customers play an active role as they are engaged and involved in creating the
experience. Companies should leverage advances made in technology; whereby, invest in
information systems that help them understand, evaluate, and improve the customers
experience. They recommend that every employee who can directly influence the experience
and facilitate value co-creation should experience the business as the consumer does. As such,
employees will be more effective and will contribute to creating experience quality. Further,
(Prahalad, C.K & Ramaswamy,V) state that IT infrastructure is the way for line managers to
understand the reality of consumer experiences. Managers must demand experience-centric
information systems so that they are provided with real time information and have access to
consumer company interactions as they happen. In addition, information systems should
support experimentation and innovation. To gain new knowledge, share appropriate practices
and co-create better consumer experiences, managers should communicate with others that share
the same system. Gummesson, E (2004) highlights that information technology resources are
essential tools but that also that executives should not neglect the human aspect of supplier
personnel, customers, and others.
Customer Loyalty
Frow, P. & Payne, A (2007) report that co-creation plays an important role in seeking to
develop an outstanding customer experience. Using the co-creation approach, customers are
engaged in dialogue and interactions with suppliers during product design, production, delivery
,and consumption. Further, they note that value resides not in the object of consumption but in
the experience of consumption. Frow and Payne anchors their definition of perfect customer
experience on the customer as an advocate for the company. They point out that the customer
experience needs to be considered in terms of the whole interaction over the lifecycle of the
customer relationship. Furthermore, the context and expectation of a customer experience needs
to be considered. Moreover, outstanding customer experience must be achieved at an affordable
cost. To guide organizations seeking to improve customer loyalty and enhance profitability, the
authors recommend that the focus be placed on 11 areas. They encouraged organizations to
recognize the problem and the importunity for improvement. According to research, there is
often misunderstanding between the experience delivered to customers and the experience
received by the customers. Supplier and customer co-creating value and working together to
improve customer experience are areas of opportunities that companies should explore.
Organization should use techniques such as process mapping, service-blueprinting and customer
activity cycles to improve customer experience, identify weaknesses, re-engineer processes and
support differentiation. Carefully manage customer touch points and how this contributes in
providing and improving customer experience. Organizations should select appropriate metrics
for measurement of customer complete experience. They need to manage carefully the multiple
channels that a customer is engaged with to provide a consistent customer experience across the
board. Determine the different needs of the customers at different stages of the relationship
lifecycle. Engage all staff members and departments so that they collaborate in a cross-functional
manner, Understanding the different profit contributions of customer segments. Organizations
should be consistent in their communications to their customers. Motivate and improve
employee satisfaction to achieving superior customer service.
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Customer Value Creation

Hunt and Arnett (2006) analyzed the reasons for customer- company relationships. On
one level, they conclude that it is because the benefits outweigh the cost. Benefits are key
components for consumers to consider relationship exchanges with firms. Another key factor
that characterizes and enhances relationship exchange for consumers is the issue of trust (ibid).
Consumers will do business with firms that reflect their core values (e.g., being socially
responsible, caring, full of integrity, etc ). Once consumers engage in relationships with firms,
they trust it reduces their stress levels, they acquire less time to make their decisions, and it
lessens their perceived risk for any future transactions (Hunt & Arnett, 2006). In essence,
consumers look for compatible values through their interactions with particular firms.
These firms, in turn, are beginning to modify and tailor their product offering to satisfy
the particular wants and nuances of the customers (Vargo & Lusch, 2004). Thus, customers are
becoming part of the value-creation process by exercising their purchasing power. As
Gummesson (1998, p. 247) value creation is only possible when a good or service is consumed.
An unsold good has no value, and a service provider without customers cannot produce
anything. So the tangible product in itself no longer carries any value; it only becomes infuse
with value through purchase by customers. As Vargo and Lusch (2004) explain, if a tangible
good is part of the offering, it is embedded with knowledge that has value potential for the
intended consumer, but it is not embedded with value (utility) (p. 11).
So the focus switches from the product to the actual interaction between the consumer
and supplier. So the relational process becomes service-centered rather than goods-centered
(ibid). The objective than is to customize offerings, to recognize that the consumer is always a
co producer, and to strive to maximize consumer involvement in the customization to better fit
his or her need (Vargo & Lusch, 2004, p. 12). The consumer than is in control and will chose
from a few selective vendors that meet his needs and tends to develop long- term relationships
with those companies (ibid). From the perspective of companies, they enter in individualized
relationships with consumers when they can produce tangible goods targeted to particular
population segments. Firms nurture relationships with customers when they can customized
products tailored to the tastes and wants of individual consumers (Hunt & Arnett, 2006).
Firms that successfully implement relationship marketing have developed and maintained
long- term associations with both other firms and consumers alike (ibid). Most relationship
marketing strategies require extensive time and effort to achieve success; and that kind of
investment requires a positive cost/benefit analysis (ibid). The success of relationship marketing
is predicated on the implementation of an effective strategic plan. Gurau, Ranchhod, and
Hackney (2003) noted that more than half of companies use a strategic plan had substantial profit
margins whereas those that didnt showed no improvement at all. Today, contemporary
marketers rely on information technology, such as database marketing or the Internet, to develop
and manage long-term relationships between firms and customers. Technology plays a major
role in a firms ability to handle large volumes of data and deliver customer information analysis
to management.
The advent of the Internet
The advent of technology in the 21st century, has allowed many Relationship Marketing
Agencies (RMA) to develop and sustain individualized relationships with their clients.
Personalized IT- based services can be provided at a high quality and for a very low cost. In
addition it can increase revenue as it lowers the cost of doing service. Relationship Marketing,
through the advent of technology is focused on the creation of services rather than providing
goods. Moreover, technology allows RMAs to gain information about their clients, their
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competitors and use this information to create value, differentiation, and more desirable services
for their clients. All clients need to be treated uniquely and no mass produced goods will satisfy
the needs of all clients. Thus, IT cant just be used as a way of cutting cost, but rather must be
use to improve service in the long run.
As their capacity to collect data increases through greater reliance on IT, companies can
use that data to customize their service to particular clients. In addition, IT fosters real-time
communication with their clients which helps RMAs pinpoint the needs of their clients, lead
them to products that satisfy their needs along with providing the necessary level of satisfactory
service. As a direct consequence, IT can also detect and fix any problems the customer may
have and thus, elevating customer satisfaction and building on long-term relationships. RMAs
can rely on data collected through surveys and IT databases to guarantee long-term profitability.
With the advent of web-based commerce, consumers are increasingly empowered as
decision makers. The Internet allows both consumers and vendors to reduce time, distance, and
location limitations to reach a global marketplace (Pires, Stanton & Rita, 2006). Consumers
have a wide array of products to choose from internationally, also the ability to communicate
with other shoppers online, and more important, the ability to create and design their own brand
(ibid). This is what Deshpande (2002) refer to as customer empowerment. That
empowerment is dependent on consumers understanding of the market, her ability to browse
and collect new market information, weigh alternative value options (e.g., pricing, convenience,
and logistic constraints), and the variety of value options available in the marketplace (Pires,
Stanton & Rita, 2006). In essence, consumer empowerment entails providing education, access,
information, and business choices to consumers wherever they are situated (ibid). Consumers
exercise their power through their selection of suppliers, through rejection of certain
propositions, and by continuing to browse for better deals. Thus, these options generate a higher
level of quality expectation (ibid). Consumer empowerment can be measured in the growth of
Internet uses that totaled 972.8 million in 2005, more than a 170% increase from the year 2000
(ibid). In 2004 e-retails totaled $64 billion by 2005 they had reached $63 billion in the first
three-quarters. The number of websites has increased from 600 in 1993 to 15 million in 2000
(Pires, Stanton & Rita, 2006). With this array of choices, competition is fierce, and sellers offer
more incentives and discounts to potential consumers, and this increases consumer expectation
and empowerment (ibid).
Companies have unwittingly ceded control to clients because they cannot restrict
consumers browsing or limit their choices through the use of ICT (Pires, Stanton & Rita, 2006).
Although the authors cite the existence of consumer empowerment, they also point out that
suppliers can limit and influence the consumer decisions by categorizing the consumer choice
options (ibid). Companies have very little control over that power because they cant restrict the
browsing process or consumer choices (Pires, Stanton & Rita, 2006). In essence, companies that
engage in relationship marketing and do business through IT are relinquishing power and
authority to the consumer in making decisions. Consumers can evaluate the information and
products offered and are able to satisfy their needs through gathering of information over the
Internet (ibid). Yet, many suppliers are strategically using consumer empowerment as a way of
putting the customers wants at the core of their company. The more power the consumer has in
satisfying their needs and wants, the suppliers benefit by reducing their operational cost. Not
only are clients not being hemmed in by limiting their choices, but also they value suppliers that
provide them with purchasing power (ibid).
Customer Relation Management
Suppliers are relying more on the theory of customer relationship management (CRM) as
a way of gauging what appeals to consumers, what level of information they need and want, and
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with what frequency do they want to participate in business contacts (Pires, Stanton & Rita,
2006). As Chen and Popovich (2003) state, CRM business strategy leverages marketing,
operations, sales, customer service, human resources, R&D and finance, as well as information
technology and the Internet to maximize profitability of customer interactions (p. 673). CRM
can both increase customer satisfaction and the level of customer retention. CRM allows firms
to measure customer loyalty by documenting how often they buy, how much money they spend,
and how long they have been with the firm (ibid). As such, CRM is firmly rooted in relational
marketing because it aims to solidify customer retention by managing and nurturing consumer
relationships. Through the implementation of CRM, firms can develop these relationships to
customize the shopping experience, better predict online buying patterns, entice customers with
special offers or services, evaluate the economic advantage of each customer, and build longterm mutually beneficial relationships (Chen & Popovic, 2003, p. 676). These relationships
also elevate customer expectations and the customer comes to accept that companies will be able
to detect their preferences and provide superior customer service beyond their expectations
(ibid). This is a worthwhile proposition for companies because many studies have demonstrated
that an increase of 5% in customer retention translates to a long- term profitability margin
between 35% and 95% over the lifetime value of customer transactions.
Data collection is a key component of successfully implemented CRM strategies. The
information that companies can store from customer transactions allows them to generate
consumer segmentations, innovate the quality of service rendered, sum up the lifetime value of
consumers, and redesign their product to meet customer expectations (Peppard, 2000). The more
information companies are able to mine from their customer minimizes the amount of resources
they need to commit to market research, focus groups, and surveys (Chen & Popovich, 2003).
CRM is more than a technological tool; it allows companies to draw up detailed demographics of
their customers by determining their background, cultural and work experiences, spending
habits, and their likes, and dislikes.
A successful implementation of a CRM technology requires a modification of a
companys business and organizational strategies (ibid). Unless a company has complete buyin
from every department of the company to rally them around the CRM system, the strategy is
doom to fail. Moreover, successful implementation of CRM requires full commitment from the
CEO and top management in their time and company resources. Unless the new strategy has a
champion from upper management to take the helm and guide the program, it wont be
successful. As explained by Gurau, Ranchhod, and Hackney (2003), the main success factors
for the strategic planning process are project management capabilities, a high level of
involvement of key operational staff, and the ability to measure the impact of the action plans on
value creation at customer segment level, or even for every individual customer (p. 207). One
of the reasons for the failure of some CRM system is because many executive fail to take into
account the cost and the implementation of this strategy. Some CRM systems can cost between
$60 million and $130 million to implement and take up to two years on average to go fully
operational (Rigby, Reichheld, & Schefter, 2002). The authors go on to add that a CRM rollout
will succeed only after the organization and its processes job descriptions, performance
measures, compensation systems, training programs, and so on have been restructured in order
to better meet customers needs (p. 104). Unless companies refocused their internal system on
the customer, CRM technology will not render its intended goal.
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98
Conclusion
Marketing was mainly used in the agricultural sector. It was regarded as a means of
moving items from producers to consumers. It was not regarded as a part of managerial
qualities, but rather as a set of social and economic processes (Webster, 1992). Marketing
eventually evolved into a business process and the development of the 4p approach: product,
placement, pricing and promotion. Each decade harkened a new theory du jour of marketing, in
the 50s it was consumer marketing, the 60s saw the advent of industrial marketing, and the 70s
hailed nonprofit and social marketing. During the 80s customers became more savvy and
demanding and want to engage in satisfactory transactions (Clemmet, 1998). Thus, the focus
changed to customer satisfaction and customer loyalty.
Relationship marketing is as tool used by many firms to build networks and strategic
alliances, initiate partnership agreements, and develop customer databases (Gronroos,
2004).
Relationship marketing identifies potential customers and establishes and sustains a long term
relationship with those consumers. Integrated marketing is a key component of relationship
marketing for companies because it aligns resources, processes, and competencies with that of its
customers. As such, product and service providers are co-creators of value with their customers
(Prahalad & Ramaswamy, 2004). Using the co-creation approach, customers engage in the
design, production, delivery and consumption of the product (Frow & Payne, 2007).
Organizations should utilize IT for process mapping, service-blueprinting and customer activity
cycles to identify weaknesses, re-engineer processes and support differentiation.
Once consumers engage in relationships with firms they trust, it reduces their stress level,
transactions acquire less time, and perceived risk of any future transaction is diminished (Hunt &
Arnett, 2006). Thus, firms are catering to the particular wants and needs of consumers by
modifying and tailoring their products to appeal to segmented consumers (Vargo & Lusch,
2004). The use of the internet for transactions has empowered consumers by offering a wide
array of product and service choices. Companies are limited in their capacity to restrict
consumer searches on the internet. Yet, the internet allows both consumers and suppliers the
ability to reduce time, distance, and location restrictions, while at the same time reducing
operational cost for suppliers (Pires, Stanton & Rita, 2006). Customer Relation Management
(CRM) technology is being employed as a data mining system by many firms engaged in
relationship marketing. CRM transcends all departments within an organization (marketing,
operation, sales, HR, IT, and finance) to increase profitability of consumer interactions (Chen &
Popovich, 2003).
Future research on relationship marketing must focus on developing a workable theory to
define the exact nature of relationship marketing. Right RM comprises so many marketing
theories under one umbrella that its hard to define it or use it as a teaching tool in academia. In
addition, firms need more qualitative metrics to measure customer loyalty. One study has shown
that although 60% to 70% of consumers were satisfied with their level of service, they were not
return consumers (Gordon, Mckeage & Fox, 1998). This may be due to the vast search option
available to many consumers on the internet and the willingness of consumers to continue to
seek better deals. Also, there are now policies being discussed at the federal level considering
mechanism to force consumers and suppliers to pay to use the internet. Such legislation, if
successfully adopted may cut into the profit margins of many suppliers since consumers would
no longer have the deals that they currently enjoy.
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Volume 6, 2009

International Journal of Family Business, Volume 6, Issue 1 2009

International Journal of Family Business

Shawn M. Carraher, Editor

International Journal of Family Business, Volume 6, Issue 1 2009

Copyright 2009 International Family Business Center

International Journal of Family Business, Volume 6, Issue 1 2009

EDITORIAL REVIEW BOARD

Johnathon R.B. Halbesleben

Howard Van Auken

International Journal of Family Business, Volume 6, Issue 1 2009

EDITORS NOTES Shawn Carraher

SMALL BUSINESS OWNERS MOTIVES, AGE, EDUCATION AND EXPERIENCE AND

THE CASE OF THE MISSING TENURE AND PROMOTION GUIDELINES by Robert P.

URGE TO PURCHASE AS A MEDIATOR OF THE EFFECTS OF BROWSING BEHAVIOR

POLYCHRONICITY, LEADERSHIP, AND LANGUAGE INFLUENCE AMONG EUROPEAN

LOGISTICAL FLOWCHART AND FEASIBILITY STUDY FOR DOING BUSINESS IN CHINAS

GLOBILIZATION IMPACTS ON HUMAN RESOURCE MANAGEMENT AND THE ROLE OF

A VALIDATION STUDY OF MCBRIDES BIG FIVE BIODATA QUESTIONNAIRE AMONG

RELATIONSHIP MARKETING AND CUSTOMER VALUE by Myrna Laurenceau, Ray Louis,

International Journal of Family Business, Volume 6, Issue 1 2009

Shawn Carraher, Ph.D.

International Journal of Family Business, Volume 6, Issue 1 2009

International Journal of Family Business, Volume 6, Issue 1 2009

SMALL BUSINESS OWNERS MOTIVES, AGE, EDUCATION

Increased globalization and liberalization of markets have led to the promotion of

economy to globalization. The reforms, still ongoing, included privatization, deregulation,

Figure 1 Selected owner and firm characteristics as predictors of

Selling to a new market

Adding operating space

Expanding distribution channels

Expanding advertising &

Computerizing current operations

Upgrading computer systems

Replace present equipment

Expand current facilities

Adding specialized employees

Offsite training for employees

Redesigning operating methods

Seeking additional financing

Seeking professional advice

Researching new markets

Expanding scope of operations

Composite score mean

International Journal of Family Business, Volume 6, Issue 1 2009

Make better use of my ability

Develop an idea for a product or service

Challenge of starting and growing own business

Become part of a network of entrepreneurs

Be at forefront of technological development

Opportunity to lead rather than be led by others

Needed more money to survive

Not to work for unreasonable boss

Control my own time

Work with people I chose

Be my own boss; work for myself

Make direct contribution to success of a

Greater flexibility in personal and family life

Work with people I like

Give myself, wife/husband children security

Work in a desirable location for me and family

Achieve something and get recognition for it