Proceedings of the

14th European Conference on Management,

Leadership and Governance
ECMLG 2018

Hosted By
HU University of Applied Sciences
Utrecht, Netherlands

18-19 October 2018

Edited by
Dr. Ing. Benny M.E. de Waal
Prof. dr. Pascal Ravesteijn
Copyright The Authors, 2018. All Rights Reserved.

No reproduction, copy or transmission may be made without written permission from the individual authors.

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were reviewed for relevance and accessibility and successful authors were invited to submit full papers. Many thanks to the reviewers who
helped ensure the quality of all the submissions.

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 Contents

Paper Title Author(s) Page

No
Preface v
Committee vi

Biographies ix
Research papers
Towards Designing a Framework for Creating Ann S Lourens 1
Opportunities for Women Engineering Students to
Develop Leadership, Teamwork and Management
Skills

Maintaining Ethical Behaviour in Universities Iman Karam I.M. Ashmawy 10

Adopting the Integrity Approach
Enhancing the Strategic Alignment Model: The Ronald Beffers and Benny de Waal 18
Contribution of BiSL
Influence of Accounting IS on Accounting Processes Marie Černá, Lucie Vallišová and Pavla 28
Setting in Production Company Karabinová
Principles for Good Enough IT Service Management Stefan Cronholm and Sören Romare 37
Challenges and Opportunities for a Successful Ian Jester M. de Vera and Ergun Gide 45
Small-Scale ICT Management
Challenges for Effective Information Management Louise Evans, Nina Evans and James Price 54
in Hospitals: Perspectives of Junior Doctors
Digital Disruption and Innovation in the Legal Nina Evans, James Price and David Pender 66
Industry: Management Considerations
Conversational Commerce, the Conversation of Marja Exalto, Maarten de Jong, Tim de 76
Tomorrow Koning, Axel Groothuis and Pascal
Ravesteijn
Advertising Management and Companies’ Financial Daria Gunina, Tomáš Kincl and Lenka 84
Performance: the Czech Insurance Market Komárková
Distributed Leadership and its Role in Improving Richard Hubbard, Stephen Ison, Steven 89
Performance in UK Construction Projects Yeomans and Lee Bryer
Analysing the Rogue Device Phenomena: An Tim IJntema, Christian Walet, Koen Smit 98
Explorative View on Threats and Potential and Dave van der Velde
Solutions
GDPR: Governance Implications for Regimes Coral Ingley and Philippa Wells 105
outside the EU
How Agile is the BiSL framework? The Case of the Perry Lauf and Benny M.E. de Waal 114
Dutch Ministry of Defence
Organizational Decision Priorities to Ensure Project Claire Laybourne , Amitrajit Sarkar and 122
Management Success: A Q-Methodology Approach Stephen Wingreen
From Average Joe to Part Time Professional Singer: Michaël Le Duc 131
A Service Marketing and Leadership Perspective

ii
Paper Title Author(s) Page
No
Temporal Aspects of Big Data and Their Maria Mach-Król 138
Implications for Big Data Analytics
Impact of Managers‘ Psychological Contract Breach Alexander Mackrell and Bing Wu 147
on Firm Operation: A Case Study of a German Berberich
Auto-Parts Subsidiary in Suzhou China
Leadership, Artificial Intelligence and the Need to Lize Moldenhauer and Cindy Londt 155
Redefine Future Skills Development
Corporate Governance: The Evaluation Based László Monostori, Botond Kádár, Gábor 161
Approach to the Governance and Business Models Nick, András Pfeiffer, Tamás Várgedő and
of the EPIC Centre of Excellence in Production Fabian Hecklau
Informatics and Control (EPIC Coe)
Leadership, Management and Governance Christopher Moon, Andreas Walmsley and 171
Implications of the UN Higher Education Nikolaos Apostolopoulos
Sustainability Initiative
Implementing Big Data Analytics in a Jürgen Moors and Sofie Rogiest 180
Manufacturing Environment: A Theoretical
Framework
Decision Factors for Outsourcing on-Premise Rik Nijman, Pim Schouten and Pascal 188
Applications of Institutions for Higher Education Ravesteijn
Leadership and Entrepreneurship: Preliminary Jonathan A. Odukoya, Aize Obayan, Maria- 198
Validation of Covenant Entrepreneurial Stella C. Odafe, Charles Iruonagbe, David
Effectiveness Scale Igbokwe, Olushola Oyero, E.N. Abiodun-
Eniayekan, Elizabeth Olowookere,
Nchekwube Excellence-Oluye, David
Abasilim, Emmanuel Uba and Lily
Chimuanya
Network Decentralized Regulation with the Fog- Nadezhda Pokrovskaia, Tatiana 205
edge Computing and Blockchain for Business Khansuvarova and Ruslan Khansuvarov
Development
Initiating Structure and Consideration 044 John D. Politis, Denis J. Politis and Nicholas 213
Leadership – Creativity and Innovation J. Politis
Relationships: The Cypriot and the United Arab
Emirates Experience
Factor Model of the Network Capacity of a Firm Evgeny Popov Viktoriya Simonova and 221
Maxim Maksymchik
Empirical Study of Screening and Signalling Theory Pavel Pudil, Lenka Komarkova, Irena 231
in HRM: Reasons for Studying Management Mikova and Vladimir Pribyl
Librarians’ Innovative Behaviour Patterns in Public Haziah Sa’ari, Norwati Roslim and Mohd 238
Research Universities: A Solution in Turbulent Roslan Mohd Tahir
Times
Health Care Information Technologies Innovation Elena Serova and Irina Guryeva 245
HR Analytics Models for Effective Decision-Making Maria José Sousa 256
University Social Responsibility and Direct Katarzyna I. Szelągowska-Rudzka 264
Participation of Academic Teachers

iii
Paper Title Author(s) Page
No
IT Support to Improve Organisational Problem- Emőke Takács, Orsolya Keményffy and 273
Solving Abilities Toon Abcouwer
When Public Leadership is Destructive: Crimes Roberta Troisi and Vittorio Guida 284
Committed by Italian Mayors
Strategic Alignment and Financial Performance René van Dinten and Benny M.E. De Waal 292
Indicators
Digital Leadership: As the Only Way to Survive a Frank van Outvorst Cinty Visker and Benny 300
Changing Digital World? M.E. de Waal
Parental Labour: Labour Market Acceptance Driven József Veress and Anna Bagirova 307
by Civil Activism
PhD Research Papers 315
Canonical Analysis of Perceived Leadership Styles Ugochukwu D Abasilim, Daniel E 317
and Employees’ Commitment in Nigeria Gberevbie and Adewale Osibanjo
Do Leadership Styles Relate to Personnel Ugochukwu D Abasilim, Daniel E 323
Commitment In Private Organisations In Nigeria? Gberevbie and Adewale Osibanjo
Is Organizational Identification Affected by Dagmar Balgová, Miloslava Hiršová, Lenka 328
Employee and Student Value Systems? Komárková and Martina Bednářová
Characteristics of Head Nurses’ Leadership Style Martina Bednářová, Lenka Komárková and 337
and Its Impact on Patient Satisfaction Miloslava Hiršová
The Buffering Role of Ethical Leadership in Moral Salim Khan, Dapeng Liang, Adnan 345
Disengagement: Anticompetitive Behavioral Muhammad Shah and Rizwan Ullah
Tendency Link
Leadership in Social Care: A Case Study from the Agáta Marková 352
Czech Republic
Masters Research Papers 361
Labour Flexibility as Management Practice António Luís Dionísio, Rui Henriques 363
Gonçalves and Marta Correia Sampaio
Privacy Governance and the GDPR: How Are Xander Seerden, Hannu Salmela and 371
Organizations Taking Action to Comply with the Anne-Françoise Rutkowski
New Privacy Regulations in Europe?
Non-Academic Papers 379
The Four-Step Approach for the Creation of the HR Fabian Hecklau, Ronald Orth, Florian 381
Concept for the EPIC Centre of Excellence in Kidschun and Gábor Nick
Production Informatics and Control (EPIC CoE)
Late Submission 391
Key Factors of Effective Communication in Ľubica Pechanová, Dagmar Cagáňová and 393
Multicultural Collaborative Teams Natália Horňáková

iv
Preface
These proceedings represent the work of contributors to the 14th European Conference on Management
Leadership and Governance (ECMLG 2018), hosted this year by HU University of Applied Sciences, Utrecht, the
Netherlands on 18-19 October 2018. The Conference Chair is Prof. Dr. Pascal Ravesteijn and the Programme
Chair is Dr. Ing. Benny M.E. de Waal.

ECMLG is now a well-established event on the academic research calendar and in its 14th year the key aim
remains the opportunity for participants to share ideas and meet the people who hold them. The scope of
papers will ensure an interesting two days. The subjects covered illustrate the wide range of topics that fall
into this important and ever-growing area of research.

The opening keynote presentation is given by Brian Johnson who is Chief Architect at ASL BISL Foundation and
Brian will discuss “BiSL next as a Generic Conceptual model for Digital Transformation”. The second day of the
conference will start with an address by Lineke Sneller from Nyenrode Business University, talking about “Agile
in Control: A Square Circle or White Snow?”

With an initial submission of 120 abstracts, after the double blind, peer review process there are 98 Academic
research papers, 6 PhD research papers, 2 Masters Research papers and 1 Non-academic papers published in
these Conference Proceedings. These papers represent research from Australia, Bahrain, Belgium, China, the
Czech Republic, Estonia, Germany, Ghana, Greece, Hungary, Iran, Italy, Japan, Kazakhstan, Malaysia, the
Netherlands, New Zealand, Nigeria, Pakistan, Poland, Portugal, Russia, South Africa, Sweden, the UAE the UK,
Uzbekistan, and Venezuela.

We hope you enjoy the conference.

Dr. Ing. Benny M.E. de Waal and Prof. dr. Pascal Ravesteijn
ECMLG Conference and Programme Chairs
HU University of Applied Sciences
The Netherlands
October 2018

v
ECMLG Conference Committee

Paul Abbiati, The European Law Institute-ELI, UK; Prof. Rute Abreu, Guarda Polytechnc Institute, Portugal; Prof
Grigorescu Adriana, NUPSPA; IEF Romanian Academy, Romania; Dr. Mohd Shahril Ahmad Razimi, Northern
University of Malaysia, Malaysia; Dr. Mo'taz Amin Al Sa'eed, Al - Balqa' Applied University, Amman, Jordan; Dr.
Morariu Alunica, “Stefan cel Mare" University of Suceava, Faculty of Economics and Public Administration,
Romania; Prof. Maria Ceu Alves, University of Beira Interior, Portugal; Prof Bencsik Andrea, Szechenyi Istvan
University, Hungary; Prof Bencsik Andrea, Szechenyi Istvan University, Hungary; Sanaullah Ansari, Shaheed
Zulfikar Ali Bhutto Institute of Science and Technology , Pakistan; Maria Argyropoulou, Boudewijngebouw 4B ,
Greece; Dr. Leigh Armistead, Edith Cowan University, Australia; Prof Lina Artemenko, National technical
university of Ukraine "Igor Sikorsky Kyiv Politechnical University"", Ukraine; Ahmet Aykac, Theseus Business
School, Lyons, France; Dr. Daniel Badulescu, University of Oradea, Romania; Dr. Afsaneh Bagheri, Faculty of
Entrepreneurship, University of Tehran, Iran; Dr. Samira Bakr, NCEEE, Egypt; Prof Joan Ballantine, Ulster
University, Northern Ireland; Dr. Neeta Baporikar, Harold Pupkewitz Graduate School of Business (HP-GSB),
Namibia; Dr. Egon Berghout, University of Groningen, The Netherlands; Svein Bergum, Lillehammer University
College, Norway; Dr. Madeleine Block, St.-Petersburg State University, Russia; Dr. Milena Bobeva,
Bournemouth University, Poole, UK; Prof Lonel Bostan-DHC, Stefan el Mare University Suceava, Romania;
Constantin Bratianu, Bucharest University of Economic Studies, Romania; Prof Felicjan Bylok, Technical
University of Czestochowa, Poland; Prof. Kiymet Tunca Caliyurt, Trakya University - Faculty of Business
Administration and Economics, Turkey; Dr. Marian Carcary, NUIM, Ireland; Prof. Sven Carlsson, Lund University,
Sweden; Dr Ondrej Castek, Faculty of Economics and Administration, Masaryk University, Czech Republic; Dr.
Walter Castelnovo, Università dell’Insubria, Como, Italy; Dr. Akemi Chatfield, University of Wollongong, New
South Wales, Australia; Prof. Prasenjit Chatterjee, MCKV, India; Prof George Chiladze, The University of
Georgia, Georgia; Dr. Mei-Tai Chu, La Trobe University, Australia; Dr Leszek Cichobłaziński, Częstochowa
University of Technology, Poland; Jacek Cypryjanski, University of Szczecin, Poland; Dr. Serene Dalati, Arab
International University, Syria; Dr. Phillip Davidson, University of Phoenix,School of Advanced Studies, Arizona,
USA; Dr. Miguel de Castro Neto, ISEGI, Universidade Nova de Lisboa, Portugal; Dr. Benny M.E. De Waal,
University of Applied Sciences Utrecht, The Netherlands; Andrew Deegan, University College Dublin, Ireland; Dr.
Mihela Diaconu, The Gheorghe Asachi Technical University of Iasi, Romania; Prof. Philip Dover, Babson College,
USA; Katarzyna Durniat, Wrocław University, Poland; Dr. Th Economides, Neapolis University Pafos, Cyprus; Dr.
David Edgar, Caledonian Business School, Glasgow, UK; Dr. Iancu Eugenia, Stefan cel Mare University,
Romania; Ass. Prof. Nina Evans, UniSA, Australia; Ass. Prof. Hossien Fakhari, Mazandaran University, Iran; Dr
Ummu Kolsome Farouk, University Tunku Abdul Rahman, Malaysia; Prof. Liliana Feleaga, Academy of Economic
Studies (ASE), Romania; Assc Cristina Feniser, Technical University of Cluj Napoca, Romania; Prof Paula
Fernandes, Polytechnic Institute of Bragança & UNIAG, Portugal; Jorge Ferreira, Nova University of Lisbon,
Portugal; Shay Fitzmaurice, Public Sector Times, Ireland; Dr. Marzena Frankowka, University of Szczecin,
Poland; Dr. Marzena Fryczynska, Warsaw School of Economics, Poland; Dr. Andreas Gadatsch, Bonn-Rhein-Sieg
University of Applied Sciences, Germany; Dr. Prof. Sayalee Gankar, MAEERs MIT School of Management, India;
Ass. Prof. Balan George, Romanian-German University, Romania; Ass. Prof. Dr. Adriana Giurgiu, University of
Oradea, Faculty of Economic Sciences, Romania; Dr. Tatiana Gladkikh, The University of Winchester, UK; Prof
Paulo Gonçalves, Polytechnic Institute of Porto, ISCAP, Portugal; Prof. Ken Grant, Ryerson University, Toronto,
Canada; Dr. Stewart Green, University of the West of England, UK; Dr. Paul Griffiths, Director, IBM, Santiago,
Chile; Dr ALEKSANDRA GROBELNA, Gdynia Maritime Academy, Poland; Prof ANTONIO GUERREIRO, University
of Evora, Portugal; Prof Niraj Gupta, Indian Institute of Corporate Affairs, India; Adam Gurba, WSZ Edukacja
Management Department, Poland; Memiyanty Haji Abdul Rahim, Universiti Teknologi MARA, Malaysia; Dr
hossein hakimpour, Islamic AzaUniversity Birjand branch, Iran; Dr Mahmoud Hassanin, Pharos University at
Alexandria, Egypt; Dr. Liliana Hawrysz, Opole University of Technology, Poland; Dr Terseer Hemben, University
of Riverside, USA; Ass. Prof. Dr. Carola Hillenbrand, Henley Business School, UK; Jack Huddlestone, Cappella
University, USA; Dr. Prof. Eun Hwang, Indiana University of Pennslyvania, USA; Dr. Katarzyna Hys, Opole

vi
University of Technology, Poland; Dr. Andreea-Oana Iacobuta, Alexandru Ioan Cuza University of Iasi, Romania;
Ass. Prof. Dr. Coral Ingley, Faculty of Business and Law, AUT University, New Zealand; Dr. Dembińska Izabela,
University of Szczecin, Poland; Martina Jakábová, Visions, S.R.O., Slovakia; Björn Johansson, Lund University,
Sweden; Dr. Maj Jolanta, Opole Univeristy of Technology, Poland; Dr. Octavian Jula, Babes Bolyai University,
Romania; Georgios Kapogiannis, Coventry University, UK; Dr. Husnu Kapu, Kafkas University, Turkey; Dr. N.V.
Kavitha, St.Ann's College for Women, India; Alicja Keplinger, Institute of Psychology at the University of
Wroclaw, Poland; Prof. Wafa Khlif, Toulouse University, Toulouse Business School Barcelona, Spain; Prof
Tatiana Khvatova, Peter the Great St. Petersburg Polytechnic University, Russia; Mr. Chang-Hee Kim, School of
Management and Communication, Republic Polytechnic, Singapore; Dr Joanna Kizielewicz, Gdynia Maritime
University, Poland; Maria Knecht-Tarczewska, Wroclaw College of Management “Edukacja”, Poland; Prof.
Jesuk Ko, Gwangju University, Korea; Dr. Juha Kontio, Turku University of Applied Sciences, Finland; Dr.
Dimitrios Koufopoulos, Brunel University, UK; Jolanta Kowal, College of Management and Wroclaw University,
Poland; Prof. Dr. Ibrahim Krasniqi, University for Business and Technology, Kosovo; Aleksandra Kwiatkowska,
College of Management and Wroclaw University, Poland; Iwona Lapunka, Opole University of Technology,
Poland; Dr Anna Lemańska-Majdzik, Czestochowa University of Technology, Faculty of Management, Poland;
Dr Regina Lenart-Gansiniec, Jagiellonian University, Poland; Dean Mieczysław Leniartek, Technical University in
Cracow, Poland; Dr Vanessa Liu, The Hong Kong Polytechnic University, China; Dr. James Lockhart, Massey
University, Palmerston North, New Zealand; Dr. Harald Lothaller, University of Music and Performing Arts Graz,
Austria; Prof. Sam Lubbe, NWU, South Africa; Dr. Camelia Luliana Lungu, Academy Of Economic Studies,
Bucharest, Romania; Dr Teodoro Macaraeg, University of Caloocan City, Philippines; Dr Łukasz Mach, Opole
University of Technology, Poland; Ahmad Magad, Marketing Council, Asia, Singapore; Paolo Magrassi,
Polytechnique of Milan, Italy; Dr Arkadiusz Malkowski, Faculty of Economic, Poland; Mrs Anna Maltseva, Tver
state university, Russian Federation; Prof Evangelos Mantizaris, Stellenbosch University, South Africa; Bill
Martin, Royal Melbourne Institute of Technology, Australia, Australia; Ana Martins, Zirve University, Turkey;
Prof. Nico Martins, University of South Africa, South Africa; Milos Maryska, University of Economics, Prague,
Czech Republic; Dr. Aneta Masalkovska-Trpkoski, Faculty of Administration and Information Systems
Management, Macedonia; Dr. Andreas Masouras, Neapolis University, Cyprus; Michael Massey, International
Centre for Applied EQ Leadership, UK; Mr Mohd Shamsuri Md Saad, Universiti Teknikal Malaysia Melaka,
Malaysia; Prof. Luis Mendes, Beira Interior University, Portugal; Philip Merry, Global Leadership Academy,
Singapore; Dr. Kevin Money, Henley Business School of the University of Reading, UK; Dr Shima Moradi,
National research institute for science policy, Iran; Dr. Denis Mowbray, Gryphon Management Consultants/
AUT University, New Zealand; Aroop Mukherjee, King Saud University, Saudi Arabia; Dr. Gunilla Myreteg,
Örebro University School of Business, Sweden; Timothy Nichol, Liverpool Business School, LJMU, Liverpool, , UK;
Dr. chetsada Noknoi, Thaksin University, Thailand; Maciej Nowak, University of Wrocław, Poland; Dr Melao
Nuno, Polytechnic Institute of Viseu, Portugal; Abiola Ogunyemi, Lagos Business School, Nigeria; Ass. Prof. Dr.
Abdelnaser Omran, School of Economics, Finance and Banking, Universiti Utara Malaysia, Malaysia; Mr Msc
Marc Oteman, University of Applied Sciences, The Netherlands; Dr. Roslina Othman, International Islamic
University Malaysia, Kuala Lumpur, Malaysia; Dr. Nayantara Padhi, Indira Gandhi National Open University,
New Delhi, India; Dr. Jatin Pancholi, Middlesex University, UK; Christos Papademetriou, Neapolis University,
Cyprus; Dr Xavier PARISOT, IKI-SEA, THAILAND; Dr. Stavros Parlalis, Frederick University, Cyprus; Dr. H.B. Patel,
Grow More group of Institutions, India; Dr. Shaun Pather, University of the Western Cape, South Africa; Prof.
Noel Pearse, Rhodes Business School, South Africa; Dr Jindra Peterkov, V B-TU Ostrava, Faculty of Economics,
Czech Republic; Dr. Danilo Piaggesi, Framericas, USA; Prof Maryna Pichugina, National Technical University of
Ukraine, Ukraine; Florina Pinzaru, The College of Management - NSPSPA,, Romania; Dr. John Politis, Charles
Darwin University, Australia; Dr. Dario Pontiggia, Neapolis University Pafos, Cyprus; Adina Simona Popa,
"Eftimie Murgu" University of Resita, Romania; Dr. Cosmin Popa, The University of Agricultural Sciences and
Veterinary Medicine, Romania; David Price, Henley Business School of the University of Reading, UK; Dr. Irina
Purcarea, The Bucharest University of Economic Studies, Romania; Dr. Gazmend Qorraj, University of Prishtina,
Kosovo; Prof Agota Giedrė Raišienė, Mykolas Romeris University, Lithuania; Senthamil Raja, Pondicherry

vii
University, India; Dr Pascal Ravesteijn, HU University of Applied Sciences, The Netherlands; Dr. Marcin Relich,
University of Zielona Gora, Poland; Dr. George Rideout, Ashford University, USA; Mr Martyn Roberts, University
of Portsmouth, UK; Lieutenant-Colonel José Carlos Dias Rouco, Military Academy, Lisbon, Portugal; Mohd
Shamsuri Saad, Universiti Teknikal Malaysia, Malaysia; Prof. Abdel-Badeeh Salem, Ain Shams University, Cairo,
Egypt; Amitrajit Sarkar, Christchurch Polytechnic Institute of Technology, New Zealand; Prof. Chaudhary Imran
Sarwar, Mixed Reality University, Pakistan; Dr. Ousanee Sawagvudcharee, Centre for the Creation of Coherent
Change and Knowedge, Liverpool John Moores University, Thailand; Dr. Simone Domenico Scagnelli, University
of Torino, Italy; Ass. Prof. Elsje Scott, University of Cape Town, Rondebosch, South Africa; Dr. Elena Seghedin,
Alexandru Ioan Cuza University, Romania; Dr. Maria Th. Semmelrock-Picej, Alpen-Adria Universität Klagenfurt,
Austria; Kakoli Sen, Institute for International Management and Technology (IIMT) Gurgaon, India; Dr. Elena
Serova, National Research University Higher School of Economics St. Petersburg, Russia; Prof. Sandro Serpa,
University of the Azores, Portugal; Dr Armin Shams, Sharif University of Technology, Iran; Irma Shyle,
Polytechnicc University of Tirana, Albania; Samuel Simpson, University of Ghana Business School, Accra, Ghana;
Dr. Raj Singh, University of Riverside, USA; Dr Chandranshu Sinha, Amity Business School, Noida,, India; Dr
Katarzyna Skrzeszewska, Gdynia Maritime University, Poland; Dr. Roy Soh, Albukhary International University,
Malaysia; Dr Lew Sook Ling , Multimedia University , Malaysia; Dr Maria Jos Sousa, Universidade Europeia,
Portugal; Dr. Riccardo Spinelli, Universita Di Genova, Italy; Dr Padma Srinivasan, Acharya Bangalore B School,
India; John Sullivan, School of Information, University of South Florida, USA; Prof. Reima Suomi, University of
Turku, Finland; Dr. Dalia Susniene, Kaunas University of Technology, Lithuania; Dr Katarzyna Szelągowska-
Rudzka, Gdynia Maritime University, Poland; Dr Safdar Husain Tahir, Govt. College University Faisalabad ,
Pakistan; Ramayah Thurasamy, Universiti Sains Malaysia, Malaysia; Dr. Xuemei Tian, Swinburne University,
Australia; Prof. Milan Todorovic, Union Nikola Tesla University, Serbia; Dr. Piotr Tomski, Czestochowa
University of Technology, Poland; Dr. Savvas Trichas, Open University Cyprus, Cyprus; Dr. Blanka Tundys,
University of Szczecin, Poland; Alan Twite, COO Vtesse Networks, UK; Dr. Gerry Urwin, Coventry University, UK;
Prof Tuna Uslu, Istanbul Gedik University, Turkey; Prof. Dr. Asta Valackiene, Kaunas University of Technology,
Lithuania; Dr Hab Mirosława Wawrzak- Chodaczek, Institute of Pedagogy, Wrocław University, Poland; Dr.
Lugkana Worasinchai , Bangkok University, Thailand; Dr. Zulnaidi Yaacob, Universiti Sains Malaysia, Malaysia;
Ms Sook Fern Yeo, Multimedia University, Malaysia; Tuan Yu, Kent Business School, University of Kent,
Canterbury, UK; Dr. Monica Zaharie, Babes-Bolyai University, Romania; Asst. Prof. Nurul Mohammad Zayed,
Daffodil International University, Bangladesh

viii
Biographies
Conference and Programme Chairs
Dr. Ing. Benny M.E. de Waal is assistant professor at the HU University of Applied Science.
He received his PhD in 2013 at Utrecht University with research into user participation in
BPM implementation. Current research is focused on digital leadership, business process
management, and performance management.

Prof. dr. Pascal Ravesteijn is professor of Process Innovation and Information Systems at
the HU. He gained his PhD in 2011 at Utrecht University with research into the
implementation of BPM systems. His current research is focused on IT driven business and
process innovation and the subsequent issues around digital leadership and skills needed in
organisations to succeed in the digital transformation.

Keynote Speakers
Brian Johnson is author of more than 30 books on best practice in IT and how business is
failed by IT. His latest publication is BiSL® Next; A framework for Business Information
Management. One of his current roles is Chief Architect at ASL BISL Foundation. The
Utrecht based Foundation provides guidance on Business Information Management to a
wide range of public and private sector businesses in the Benelux. They publish best
practice guidance and together with certification bodies provide education and
examinations. The ASL BISL's ambition is to grow as an International organisation, and
Brian is chief architect for the redesign of all guidance.”

Lineke Sneller is Professor of IT Value at Nyenrode Business University, and Director of the
Centre for Information and Management Accounting Control Systems. She holds a
master’s degree in business econometrics, and is a post-master’s chartered controller
(RC). Lineke has written around fifty books and articles on Enterprise Resource Planning,
Corporate Governance, IT Value and the role of the CIO. In 2010, she successfully
defended her PhD dissertation with title Does ERP add company value? In the past fifteen
years, Lineke has held CIO and board member positions at Vodafone NL, Tele2 NL and
InterfaceFLOR Europe. She has been the president of the Dutch Computer Society (Ngi), and a member of the
advisory board of the Association of Chartered Controllers (VRC). In 2010 Lineke became Dutch CIO of the
Year.

ix
Biographies of Contributing Authors
Toon Abcouwer works at the University of Amsterdam. His research interest is on how organizations deal with
crisis situations. Especially the different roles that information and learning play in the various phases of crisis
handling has his special interest. It is his believe that traditional governance approaches only offer a partial
solution for that.

Isaac Nana Akuffo is a second year Ph.D. student in management at the School of Economics and Business
Administration at the University of Tartu, Estonia. He comes from Ghana but currently living in Estonia for
Ph.D. studies. He has over five years of university teaching experience both in Ghana and Estonia. His research
interests are leadership, ethics, innovation and internationalization, strategic management and work attitudes.
He loves football, boxing, and music.

Nikolaos Apostolopoulos is Lecturer in Entrepreneurship and researcher at the Responsible Entrepreneurship

and Social Innovation research group of the Plymouth Business School, University of Plymouth. He holds his
PhD in Entrepreneurship and Sustainable Development. He acts as an expert at the SAYWA project ‘Legal
boundaries of work between Peru and Bolivia’ which is funded by EuropeAid. He was successfully co-applicant
of the Enterprise Educators UK research 2017/2018. He acts as scientific adviser at the Labour Institute (INE-
GSEE) and at the rehabilitation centre ‘Amaltheia’. Finally, his publications focus on entrepreneurship and
sustainability.

Dr. Iman K.I.M. Ashmawy is an Assistant Professor of Public Administration at Cairo University. She published
and reviewed various researches on local government, organizational behaviour, ethics in the public sector,
and HRM, as well as attended numerous conferences and workshops on the same topics.

Anna Bagirova is a professor of economics and sociology at Ural Federal University (Russia). She explores
issues of human capital, labour economics and sociology of labour. She is interested in data analysis. Her
research interests include also demographical processes and their determinants. She is a doctoral supervisor
and a member of International Sociological Association.

Ing. Martina Bednarova Education-2015 – Doctoral studies University of Economics, Prague, Faculty of
Management Jindrichuv Hradec, subject field management As a PhD student I specialize in management of
healthcare. Particularly I focus on the managerial styles applied in healthcare and their influence on the
selected indicators.

Ronald Beffers works as an information manager at the Radiocommunications Agency of the Ministry of
Economic Affairs and Climate Policy in Amersfoort. He specializes in information management and how BiSL
can be used for implementing information management in organizations.

Slim Ben-Hassine obtained a DBA from Liverpool John Moores University in 2014, prior to that he studied
economics before starting his career in Finance department. He was then enrolled as Finance Director and
Operations Manager. With over 22 years of experience, he is today Managing Director (Finance &
Administration and Key Account Management) in his own IT-Company.

Stefan Cronholm is professor in the subject of informatics. He specializes in requirement specification,

methods concerning design and evaluation of information systems, IT service management, and qualitative
research approaches. Stefan has published more than 100 scientific papers and a vast range of pedagogical
material. Stefan is the head of the Research Group InnovationLab.

Ian Jester M. de Vera is a university extension specialist in UP ISSI, where he currently heads its Information
and Public Affairs Office. He finished a master's degree in Technology Management at the University of the
Philippines and is now working towards his Doctor of Professional Studies degree at Central Queensland
University in Sydney, Australia.

António Luís Dionísio is completing his PhD in Management at the University of Évora, he is currently the
Manager of Team of Fidelidade Insurance Company, S.A.. Guest teacher in the areas of Human Resources

x
Management and Team Management, having as main research areas the flexibility of work, competence
development, minimum team management and knowledge.

Dr Nina Evans is Associate Head of IT and Mathematical Science at UniSA in Australia. She teaches ICT
Leadership, Business Information Systems and Knowledge Management. She holds tertiary qualifications in
Chemical Engineering, Education, Computer Science, a Masters in IT, an MBA and a PhD. She does research in
Knowledge Management, Innovation in SMEs and has published widely.

Marja Exalto-Sijbrands, PhD logistics, is lecturer at the institute for Business Administration of HU University of
Applied sciences, and assistant professor at the research group Process Innovation and Information Systems.
Her interests are Strategic Decision making and Supply Chain Management. Marja started her career in process
innovation and logistics consultancy.

Valerie Priscilla Goby (PhD, JCU, Australia) is a professor in the College of Business, Zayed University, Dubai.
Her research interests include leadership, communication, and workforce localization and she has published in
a wide range of journals including Journal of Business Ethics, International Journal of Organizational Analysis,
and Corporate Communications: An International Journal.

Vittorio Guida received his master degree in Government and Administration (summa con laude) from the
University of Salerno in 2017. In the last year as he collaborated as a research assistant to studies on
organizational topics directed by Professor Roberta Troisi in order to improve his research skills and to
compete in PhD selections that he passed.

Richard Hubbard (UK-Based), currently a doctoral student with Loughborough University and working in
collaboration with the Construction Industry Training Board (CITB) on projects aimed at advancing the
understanding of leadership and management skills at strategic, sectoral and occupational levels.

Rabiu Iliya born in 1980. I am a holder of MBA, MSc in Entrepreneurship. I joined Jigawa State Polytechnic of
Nigeria in 2011 as a lecturer teaching management courses to date. I am also teaching with the Nigerian
institute of management charted (NIM) since 2013 to date.

Salim Khan is pursuing his PhD degree from school of management, Harbin Institute of Technology, China.
Their study major is business administration and they are working under the supervision of professor Dapeng
Liang. Salim got his master’s degree in business administration from Quaid-i-Azam University Islamabad
Pakistan. His research work is the impact of market competition on employees’ morality which falls in the
domain of organizational psychology.

Tomáš Kincl is Associate Professor at the Department of Manangement, Faculty of Management, University of
Economics, Prague. He is interested in marketing strategy, online marketing and social media, marketing
communications, customer satisfaction, sentiment analysis and cross-cultural differences.

Perry Lauf has thirty years of experience in Information Services within different organisations and in different
roles as engineer, project manager, product manager, portfolio manager and Information manager. Especially
active within the business IT alignment and business information management dealing with IT demand in big
organisations. He has a BSc Electrical engineering, Ing. Economical Business Technics, and a MSc Informatics

Michael Le Duc, Ph.D., is assistant professor in business, marketing, at Mälardalen University in Sweden. He
holds a Ph.D. degree from the School of Business, Stockholm University. His research areas include marketing
of services, ethnography in the music industry and leadership. He is chairman of union Saco- and SULF at the
university since November 2014.

Cindy Londt works in the field of Adult and Vocational Learning in South Africa. She is the Operations Executive
for OMNI HR Consulting, and has studied in the fields of Occupationally Directed Education, Training and
Development Practices. Her research interests include Operations in Education, Training and Development,
Contact Centre Operations, Project Management and e-learning practices.

xi
Dr Ann Lourens obtained undergraduate qualifications in Operations Management followed by MBA (Cum
laude) and DBA. Prior to a career in academia, Ann worked in various manufacturing industries in operations
related positions. As an academic, Ann has a keen research interest in students’ (particularly women
engineering students) development and retention and to this end has developed and managed several co-
curricular interventions.

Maria Mach-Król is associate professor at the Katowice University of Economics, Poland. She received her PhD
degree in information systems for management from the University of Lodz, Poland in 1998. She is author and
co-author of more than 60 journal papers, six books, and several book chapters. Current research interests
include artificial intelligence, big data and knowledge based systems.

Agata Markova is a PhD student at the University of Economics, Prague, Faculty of Management. She holds a
Master in management. Her current fields of interest are Social Care Management, Leadership and Human
Resource Management in Social Care. She teaches Data Analysis and Presentation. She also participates on a
national research project.

Lize Moldenhauer works in the field of Adult and Vocational Learning in South Africa. She is the Managing
Director of OMNI HR Consulting and the COO for the Shoprite Checkers Development Trust. She has studied in
the fields of Occupationally Directed Education, Training and Development Practices and her research interests
include Contact Centre Management, Human Resources, e-learning practices and occupational learning.

Christopher Moon is an award winning ecopreneur and founder of several eco businesses. He is Senior
Lecturer at Middlesex University and the author of over 60 papers including co-author of the book Business
Ethics for the Economist. Chris is Lead Judge of the international Innovation & Entrepreneurship Teaching
Excellence Awards 2016-2018 and finalist in 2015. He is a fellow of the RSA, HEA, with a PhD from Imperial
College.

Jürgen Moors is an operations manager at BASF Antwerp, Belgium. He has been active since 2003 for BASF. At
the moment he is also embarked in an executive Phd program at Antwerp Management School. In this
program he focuses on leadership, climate and big data analytics.

Dr. Jonathan A. Odukoya, is a Senior Lecturer in the Department of Psychology, Covenant University, and the
National Coordinator of the Educational Research Network for West and Central Africa in Nigeria. He worked
with the West African Examinations for eleven years. The exposure opportuned him to serve as Consultant to
organizations to UNICEF, UNESCO and USAID.

Augustina Nkechi Oko was born on 12th April, 1978 to the family of Late Mr. & Mrs.Michael Oko of Amaelu
village, Amaizu, Afikpo in Ebonyi State, Nigeria. She studied Educational Management (English option) from
Enugu State University of Science and Technology. Married to Late Mr. Godwin Oko Agha in 1999 with 3
children.

Dr Ronald Orth is Head of Department Business Excellence Methods at Fraunhofer Institute for Production
Systems and Design Technology, Berlin, Germany. Ronald holds a MBA degree from Free University Berlin and
a Doctor of Engineering from Technical University Berlin. He has worked in several research and consultancy
projects with partners from industry and the public sector.

Dr. John Politis is Senior Academic of Business at Charles Darwin University, Australia, and Adjunct Virtual
Professor of Laureate International Universities- University of Roehampton, UK. Ph.D. in Management from
the University of Technology, Sydney; Australia. He is currently a member of a number of editorial boards,
including The Leadership and Organisational Development Journal, The Electronic Journal of Management,
Leadership and Governance (EJMLG), and the Knowledge Management Research and Practice Journal.

Prof. Dr. Evgeny Popov is the Honored scientist of the Russian Federation (2006), member of the Russian
Academy of Sciences (2011), head of the Economic Theory Department of the Institute of Economics of the
Ural Branch of the Russian Academy of Sciences. Economic theory, institutional economics, firm behaviors are
the spheres of his scientific interest.

xii
Prof. Pavel Pudil, Sc.D. is Director of Joint Laboratory of Management at the Faculty of Management,
University of Economics Prague, Czech Republic In 2000 he was elected Fellow of IAPR (International
Association of Pattern Recognition) for his contribution to the field of statistical pattern recognition. His
research interests include learning approaches to decision-making and managerial data analysis. He has 2400
WoS citations with H-index = 16.

Redouane Sarrakh is a PhD researcher at the Faculty of Science and Engineering, the University of
Wolverhampton, researching the impact of sustainability strategies on the Qatar energy sector. He received a
BEng (Hons) in Process Engineering from the EMI Engineering School in Morocco and MSc in Oil and Gas
Management from the University of Wolverhampton.

Haziah Sa’ari is a Researcher and Lecturer at the Universiti Teknologi MARA (UiTM) Malaysia. Her current
research looks at the transformation of entrepreneurship and related competencies by academic libraries in
Asian countries such as Thailand, Indonesia and China. She wrote his PhD on entrepreneurial competencies
and innovative behaviour in Malaysian Research Universities.

Amitrajit Sarkar is a senior member of faculty at Ara Institute of Canterbury and an affiliated research
associate at University of Canterbury, Christchurch, New Zealand. He has published widely in Software
engineering and Management Information Systems. His main research interests include IT Governance and IS
resilience, which is an aspect of organisational resilience.

Xander Seerden is a Masters Student in the Dual Degree Programme Global IT Management which is jointly
taught by Tilburg University and the University of Turku. His academic fields of interest include IT
Management, IT Security and (Privacy) Governance. He has working experience in IT transformation projects.

Dr. Elena Serova is an academic Elena Serova is working now in National Research University Higher School of
Economics St. Petersburg Branch. Her role combines teaching and research in equal measure. Her research
interests are related to Business Analysis, Strategic Management, Marketing, and Information Management.
She has co-authored the books and collections of essays, regular key presenter at national and international
conferences.

Maria José Sousa (PhD in Management) is a University Professor and a research fellow of CIEO (Algarve
University) and BRU-ISCTE/IUL. She has co-authored over 50 articles and book chapters and published in
several scientific journals (e.g. Journal of Business Research, I. J. of Knowledge, Culture and Change
Management, Information Systems Frontiers, European Planning Studies and others).

Katarzyna Szelągowska-Rudzka Ph.D. is an academic teacher and scientist at Gdynia Maritime University at
Faculty of Entrepreneurship and Quality Science in Poland. Her scientific interests are as follows: Human
Resource Management, employee direct participation, management style, Corporate Social Responsibility
especially in relation to employees.

Emőke Takács has started her carrier as a researcher at the Hungarian Public Administration, where she was
involved in training civil servants. She then has worked on the EU accession of Hungary and Romania, getting
close to EU policies. Her interest is in efficient knowledge acquisition and management.

David Abasilim Ugochukwu is a lecturer and a Doctoral Candidate of Public Administration in the Department
of Political Science and International Relations, Covenant University, Ota, Ogun State, Nigeria.

Dr. René van Dinten (1957) works for the University of Applied Sciences Utrecht since 1997. He is lecturer of
performance management and author of the study-book ‘Strategic and Operational Performance
Management’. He obtained the degree of doctor (PhD) at Nyenrode Business University. His thesis was
entitled ‘Blockades in the process of achieving strategic alignment’.

Frank van Outvorst is associated to the research group Information Manangement and Process Innovation of
the HU Utrecht University of Applied Sciences, The Lifecycle Company and the ASLBiSL Foundation. Frank
works as a consultant in the field of (corporate) governance of IT and business information management. From
curiosity deived from his professional practice Frank is also committed to doing research in the field of digital

xiii
leadership, business information management, (corporate) governance of IT and maturity of business
information management. Frank is also involved in WorkingGroup 40 of ISO.

Andreas Walmsley is Associate Professor Entrepreneurship at University of Plymouth. Alongside teaching

undergraduate and postgraduate students Andreas’ research interests extend to entrepreneurship education,
responsible entrepreneurship and entrepreneurship in the tourism and hospitality industries. He is currently
writing a book ‘Entrepreneurship in Tourism’ to be published by Routledge (2018) and has published a number
of papers relating to employment in tourism.

Philippa Wells works at Federation University Australia after having been on the staff at two different
universities in New Zealand. A lawyer by qualification and background, she researches in the area of
governance for sustainability and has a particular interest in the intersection of public policy and governance.
Her experience in union governance has led to an interest in the role and future of employee unions in Higher
Education, as is reflected in the paper.

Bing Wu Berberich is the Acting Associate Dean of Learning and Teaching at International Business School
Suzhou (IBSS) at XJTLU, specialising in International HRM, Psychological Contract, and SME related research
topics. Alexander Mackrell is a recent MSc Management graduate of IBSS, XJTLU Suzhou, specialising in
Psychological Contract and Leadership research.

xiv
xv
Towards Designing a Framework for Creating Opportunities for
Women Engineering Students to Develop Leadership, Teamwork
and Management Skills
Dr Ann S Lourens
Nelson Mandela University, Port Elizabeth, South Africa
ann.lourens@nmmu.ac.za

Abstract: A successful engineer is not only technically competent but also possesses an array of management and
leadership skills. This becomes evident in one of the ten engineering qualification outcomes developed by the Engineering
Council of South Africa (ECSA). Engineering graduates, according to Exit Level Outcome 8, must demonstrate knowledge
and understanding of engineering management principles and must be able to apply them to their own work, as members
or leaders in a team. The engineering council defines management principles as planning, organising, leading, and
controlling. To develop the skills suggested by ECSA and to retain, develop, support and prepare women engineering
students (WES) for the world of work, an association for women in engineering was established at a South African
University. This research will investigate and evaluate the effectiveness of creating three leadership positions, named
Portfolio Leaders for the different focus areas or portfolios each would represent for WES belonging to the association. In
addition, steps towards the development of a framework for creating leadership development opportunities for WES are
proposed. The research instruments used in this study to obtain deeper and richer data were feedback questionnaires and
interviews. This study will conclude with recommendations and suggestions for higher education institutions concerned
with developing and retaining in particular women engineering students. In addition, this research will provide suggestions
of creating co-curricular opportunities for all students to develop the skills associated with demonstrating knowledge and
understanding of engineering management principles to their own work, as members or leaders in a team.

Keywords: Leadership, teamwork, management skills, retention, development, women engineering students

1. Background
The Women in Engineering Leadership Association (WELA) is a South African university’s initiative to improve
retention rates of both women engineering students (WES) and practising women engineering professionals.
The university’s School of Engineering and the Manufacturing, Engineering and Related Services Sector
Education and Training Authority (merSETA) Chair in Engineering Development launched WELA in 2011.

WELA’s goals are the academic, professional, and personal development of women in engineering, thereby
striving to contribute to the attraction and retention of women in the field of engineering (Lourens, 2014,
2015). Further to achieving these aims, several co-curricular interventions, workshops and activities were
developed and registered as a Leadership Development Programme (WELA LDP) for WES belonging to WELA
(Lourens, 2014, 2015). The overall WELA programme therefore comprises of the WELA LDP and several
optional co-curricular interventions, workshops, and activities. The underlying premise of the WELA
programme has been to improve feelings of self-efficacy and to assist WES to become more self-assured and
able to cope with the perceived challenges of employment in a male dominated work environment such as
engineering.

WELA, in its aim to support and advance WES, continuously develop and improve the WELA programme and
the opportunities it presents to its members. Regular feedback is obtained from WELA members in which a
need was identified to create more leadership opportunities for the WES belonging to WELA (Lourens and
Pannell, 2014). Student feedback also alluded to the need for more project management, teamwork, and
leadership skills. To support these, the WELA programme itself presented an opportunity for WES to improve
the management and success of three components of the WELA programme, namely, the mentorship
programme, the technical project, and community outreach. Accordingly, for each of these components, three
Portfolio Leaders’ positions were created that would be filled by WES belonging to WELA.

Finally, a very important reason for developing student leadership, teamwork, and management skills was that
it is one of the programme outcome requirements prescribed by ECSA. ECSA stated that a successful engineer
is not only technically competent, but also possesses an array of management and leadership skills. This
becomes evident in one of the ten engineering qualification outcomes developed by ECSA. Engineering
graduates, according to ECSA’s Exit level Outcome 8 (Individual and Teamwork), must demonstrate knowledge

1
 Dr Ann S Lourens

and understanding of engineering management principles and must be able to apply them to their own work
as a member or leader in a team. They must also be able to manage projects (Engineering Council South Africa,
2012).

As the preceding discussion has made evident, there was a need to create leadership and management
developmental opportunities for WES. Accordingly, three Portfolio Leadership (PL) positions were created for
WES belonging to WELA. The PLs would manage and lead the Technical project, Mentorship programme and
Community Outreach portfolios. Not only was creating PL positions seen as a developmental opportunity for
WES belonging to WELA, but it was also viewed as a potential contributor to the successful execution of
components of the WELA programme.

This article presents and discusses the three PL positions that were created for senior WELA members to
develop and practice their leadership and management skills. Furthermore, it presents the findings of a
questionnaire completed by the three portfolio leaders and discusses the data obtained from interviews with
them. The article concludes with recommendations and suggestions that will assist both faculties and
individuals concerned with developing students’ leadership and management skills.

2. Leadership Development
Industry is calling on universities to broaden curricula beyond engineering content to include professional
leadership (Farr & Brazil, 2009) and in 2005 the National Academy of Engineering (NAE, 2005) stated that
engineering graduates required not only technical excellence, but also team communication, ethical
reasoning, global and societal contextual analysis skills in addition to understanding work strategies. Farr and
Brazil (2005) proposed that leader development is an individual process and an individual endeavour,
irrespective of leadership training and development programmes. Therefore, the earlier the development
process is started, the more time the individual will have to grow into a leadership role. Furthermore,
engineers must understand, commit to and embrace a life-long learning attitude, constantly assessing and
evaluating themselves. The Centre for Creative Leadership (CCL) (McCauley and Van Velsor, 2004) proposed to
focus on the growth of innate and already learned behaviours and developed a framework based on three
components, namely assessment, challenge and support.

The first component, assessment, refers to becoming self-aware and developing a picture of oneself by means
of self-assessment, peer assessment, superior feedback, informal and formal 360-degree feedback. The second
component, challenge, relates to challenging experiences from which students will grow and develop.
Students can develop leadership abilities by taking on stretch-assignments and other challenges perceived to
be beyond their usual comfort zone. The final component, support, recognises that universities must identify
the need for leadership development and allow students the time and resources to be exposed to leadership
development activities (McCauley and Van Velsor, 2004).

Ely, Ibarra and Kolb (2011) found that women leadership development programmes, such as WELA, could
amongst other, assist women to internalise a leader identity and to build strong networks of support that can
last throughout their careers. WELA therefore provided an ideal co-curricular university intervention to
facilitate the development of leadership skills for WES belonging to WELA.

3. Leadership development framework

Three PL positions, named for the different focus areas or portfolios each would represent, were identified for
the mentorship programme, the technical project, and community outreach. When the adverts for the PL
positions were written, the ECSA range statement for Exit Level Outcome 8 (Individual and teamwork) was
considered (Engineering Council South Africa, 2012). The range statement for this outcome is described by
ECSA as follows:

x The ability to manage a project should be demonstrated.

x Tasks are discipline specific and within the technical competence of the graduate.

Management principles include:

x Planning: set objectives, select strategies, implement strategies, and review achievement.

2
 Dr Ann S Lourens

x Organising: set operational model, identify and assign tasks, identify inputs, delegate responsibility,
and authority.
x Leading: give directions, set an example, communicate, motivate.
x Controlling: monitor performance, check against standards, identify variations, and take remedial
action.

Even if the above-mentioned exit level outcomes could be covered in the formal curriculum, it was still seen as
important to purposely develop the relevant skills and create opportunities for the students. This was
especially important for WES who are often in the minority in engineering classes and therefore are not always
elected as team leaders in team projects.

In addition to ECSA requirements, the development of PL positions and recruiting PLs were considered an
important initiative for the success of certain aspects of the WELA programme. For instance, ever since the
mentorship programme commenced in 2013, it never reached its full potential. Every year, feedback from
students indicated that a lack of management and control had a negative impact on its success. It therefore
became apparent that a PL, who would manage and lead other mentors in the process of mentoring junior
WELA members, would be a valuable asset for the success of the programme. The technical project portfolio
required a senior engineering student who was able to identify a technical project suitable for engineering
students across the various engineering disciplines. This portfolio required the PL to identify projects (such as
designing and making a power saving device or designing a study table for disabled students), and to plan the
project. This included costing, managing teams, and reporting. The community service and outreach portfolio
required a person who was committed and passionate about doing various forms of community work, such as
fundraising for the underprivileged.

Research indicated that the success of creating the PL positions would be influenced by leadership identity and
a leader’s sense of purpose. Ely et al., (2011) found that leadership identity evolved from two core interrelated
tasks: internalising a leader identity and developing an elevated sense of purpose. Internalising a leader
identity is a rational and social process whereby a person takes actions aimed at asserting leadership, and
comes to see herself and is seen by others as a leader. Through positive reinforcement and the feedback of
others, in conjunction with leadership role actions, experiences are accumulated that motivate an internal
sense of self as a leader. Recognition and affirmation strengthen one’s self-identity as a leader and this
encourages the search for new developmental opportunities and growth (Ely et al., 2011). On the other hand,
if one does not receive validation for one’s leadership attempts it can result in diminished self-confidence and
low levels of motivation to seek new challenges and opportunities. Based on the findings of Ely et al., (2011) it
was very important to the success of the PL position initiative to emphasise the leadership role of PLs amongst
their peers, to ensure positive reinforcement and feedback to create an internal sense of leader identity
leading to the desire to seek new developmental and growth opportunities.

Moreover, leaders’ identities are tied to their individual sense of purpose. Therefore, leaders were most
effective when they pursued purposes that were aligned with their personal values. Fu, Tsui, Lui and Li (2010)
proposed that leaders who advanced such purposes were viewed as authentic leaders. When leaders were
committed to an elevated purpose, they were challenged to move outside their comfort zones, face their fears
and insecurities, and take action (Quin, 2004). Given that the interested WELA members submitted
applications by means of a written motivation, WELA Management was able to assess their values, passion,
and interest. These indicated the applicants’ sense of purpose in taking up leadership positions and, in addition
to self-belief in their leadership and management capabilities, showed their perceptions of their own leader
identities.

Each of the three of the portfolio positions required the PL to take ownership of and responsibility for the
management and success of their individual portfolios. PLs were required to submit monthly reports and
received a financial stipend of which they were unaware when they applied for the position.
The above mentioned process can be summarised as follows:
Table 1: Steps in developing opportunities for WES to develop leadership, teamwork and management skills
ACTIVITY RELEVANCE AND APPLICATION TO WELA PLs
Identify the aim Develop WES leadership skills
Why (identify the need) ECSA Graduate attributes

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 Dr Ann S Lourens

ACTIVITY RELEVANCE AND APPLICATION TO WELA PLs

University Graduate attributes
Feedback from WES
Research, national and international
How Develop portfolio leadership positions within WELA
Process Job description
Advertise and recruit
Request written motivation form applicants
Interview and select
Announcement of successful PLs to Reinforce individual purpose and leadership identity
WELA community Reinforce importance of PL position
Development Discussion with WELA management team on expectations (from both PL and WELA)
Monitor Monthly written reports and feedback to WELA team
360 degree feedback of PLs

The steps illustrated in Table 1 can be viewed as the start of a process of developing a framework for creating
opportunities for WES to develop non- technical skills such as leadership, teamwork and management skills.
The development of such a framework will be explored further in the future.
The sections following will address the research design.

4. Research Design
PLs were appointed in April, and at the end of the year, a feedback questionnaire was emailed to the three PLs
prior to inviting them for a meeting with the aim of discussing the feedback questionnaires. A further aim was
to explore what has helped and hindered them in conducting their PL tasks and duties and what
recommendations they could make to improve not only the concept of PLs but also the WELA programme.
Finally, they were asked to explain what they have learnt about themselves in their time as PL.

The three PLs were informed that the aim of the feedback questionnaire was to establish if the concept of PL
was contributing to the development of their management skills. The intent was to establish if the system of
PLs was effective and how it could be improved.

The following concepts (Engineering Council South Africa, 2012) were explained to the PLs:

x Planning: set objectives, select strategies, implement strategies, and review achievement.
x Organising: identify and assign tasks, identify inputs, delegate responsibility, and authority.
x Leading: give directions, communicate, motivate.
x Controlling: monitor performance, check against standards, identify variations, and take remedial
action.

The three PLs were asked to respond to a set of questions by using the scale below:
1 2 3 4 5
Never Sometimes Not sure Most of the time Always

Table 1 illustrates the questions asked and the average PL rating of the management and leadership tasks they
performed. They were also asked if they were at all aware that they should have performed the relevant tasks.
The last question was to establish whether they realised that they had not performed particular tasks because
they were not explicitly told that they had to do them. The aim of the last question was to obtain a sense of
their attitude, responsibility, and initiative.
Table 1: Feedback questionnaire and results
I practiced/did the My rating of myself I was aware that I could/should do Nobody told me to do this
following: (use the above this (yes/no)
scale) (yes/no)
1. Gave direction 5 3 0 2 1
2. Set an example 5 3 0 3 0
3. Identified and assigned 4.7 3 0 1 2
tasks
4. Communicated 4.7 3 0 3 0
5. Reviewed achievement 4.3 2 1 2 1
6. Motivated 4.3 2 1 2 1
7. Implemented strategies 4 2 1 1 2

4
 Dr Ann S Lourens

I practiced/did the My rating of myself I was aware that I could/should do Nobody told me to do this
following: (use the above this (yes/no)
scale) (yes/no)
8. Identified inputs 4 2 1 1 2
9. Delegated responsibility 4 3 0 1 2
10 Select/develop strategies 3.7 2 1 3 0
11 Set an operational model 3.7 1 2 1 2
12 Monitored performance 3.7 2 1 3 0
13 Checked against standards 3.7 1 2 1 2
14 Identified variations 3.7 0 3 1 2
15 Took remedial action 3 0 3 3 0
16 Set objectives 2.7 3 0 2 1

Overall rating Scale of 1 (I am not satisfied) to 5 (I am extremely

satisfied)
How would you rate your satisfaction with the job you were able to do as Average score: 3
Portfolio Leader

Because it was important to obtain information to improve the PL system, the following questions were asked:

x What made you able to do a good job as portfolio leader? (What helped you?)
x What made you not do as good a job as you would have liked to (What hindered you?)
x What recommendations can you make to improve the job of a portfolio leader?
x Did you learn anything about yourself from being a portfolio leader?

The section below provides a discussion of the results and recommendations.

5. Discussion and recommendations

The following discussion and recommendations are based on the results of the feedback questionnaires and
the data obtained from the interview questions:

5.1 Top ranking items

In Table 2 below, it is evident that the three PLs felt that they gave clear directions while setting an example
for their peers. This could indicate an internalised task identity and sense of purpose. They also felt that they
identified and assigned tasks and communicated well with their peers.
Table 2: Extract from Table 1 (highest ranking items)
Highest Ranking Items Score
Gave direction 5
Set an example 5
Identified and assigned tasks 4.7
Communicated 4.7

It also appears as if the PLs were comfortable with and took pride in being viewed as role models. The
recommendation is that the PLs, along with the WELA members, be continuously motivated so that the
members acknowledge the PLs as peers in leadership positions.

5.2 Lowest ranking items

Table 3 below indicates the lowest ranking items. These show that the PLs did not set objectives and therefore
could not select or develop the best strategies or operational models to follow to achieve these. By not setting
objectives and therefore not monitoring the performance of their peers or themselves, it appears as if they did
not take full responsibility for their portfolios. Because they did not define exactly what they wanted to
achieve, it would be impossible to determine progress. They were therefore unable to identify variations from
targets or strategies and take remedial action.
Table 3: Extract from table 1 (lowest ranking items)
Lowest ranking items Score
Select/develop strategies 3.7
Set an operational model 3.7
Monitored performance 3.7

5
 Dr Ann S Lourens

Lowest ranking items Score

Checked against standards 3.7
Identified variations 3.7
Took remedial action 3
Set objectives 2.7

A recommendation was that WELA management team, consisting of university staff members, invited the
following year’s PLs to a planning workshop. The aim of the workshop would be to assist PLs in setting
objectives and developing plans and strategies on how to achieve them. This would be important because the
results in Table 3 indicatde that WELA management should provide more structure and direction to assist the
PLs in developing leadership and management skills.

6. Challenges and factors contributing to success

On the question of how they would rate their satisfaction of the job they were able to do as a PL, the average
PL rating was a three. The individual scores were one, three, and five respectively. One PL mentioned that she
is passionate about what she does and that the support from fellow WELA members greatly motivated her.
Two of the PLs mentioned that the committed students motivated them and the motivational aspect of being
seen as a role model was also mentioned. One PL stated that the support from the other PLs and the WELA
management staff was invaluable and motivational. All the PLs also appreciated the encouragement offered by
the WELA management team. This confirms the findings of Ely et al., (2011) who stated that well developed
leader identity and an elevated sense of purpose could lead to individuals seeking further growth
opportunities

A valuable management skill learnt during the year as a PL was that communication is key to every activity.
Feedback indicated that PLs should get to know their fellow PLs and other WELA members and be able to
identify which people would best assist with specific activities. This implies that PLs learnt that different team
members have different skills sets and interests, and that a good manager would capitalise on individual team
members’ strength to the successful execution of the project.

A finding based on the WELA management observations and PL feedback, was that frustration arose when the
PLs felt that certain WELA members were not committed. One PL mentioned that her own poor planning and
time management presented a challenge. All the PLs mentioned that time and study pressure was a challenge
that both they and all the WELA members experienced, and resulted in poor attendance at some meetings and
activities. Apart from these practical issues, the possibly exists that other WELA members did not feel the
same sense of commitment and purpose to the three portfolios as the PLs themselves. Furthermore, it could
be an indication that the WELA Management should have promoted and reinforced the PL positions more
amongst WELA members to create a greater sense importance and recognition for the PLs as peer leaders.

Lack of commitment on the part of some WELA members was especially evident when tasks required
investment in time over a long period. Engineering courses constitute a heavy workload and mostly full days of
contact classes and practical work. It was therefore challenging for PLs to schedule meetings with WELA
members and retain commitment when it came to the community projects, the mentorship programme and
the technical project. The recommendation is that PLs are introduced at the beginning of the year so that a
greater feeling of commitment from both PLs and WELA members’ in acknowledging the PL as a peer leader
can be facilitated. This will also allow WELA members to work closely together and in a way that will develop
greater bonds and improve team cohesion. If PLs are introduced at the beginning of the academic year it will
allow them more time to successfully execute projects and spread the workload for both PLs and participating
WELA members. In addition, by introducing PLs at the beginning of the year to WELA members, a greater
sense of belonging, commitment, and integration could be achieved. It is important for the WELA management
team to bear in mind that they themselves still need to play an active and encouraging role in assisting PLs to
successfully manage their portfolios.

6.1 PL recommendations
When the PLs were asked to make recommendations on improving their PL role, they suggested the following:

x Each PL should have a sub-committee to assist them. This would imply that more WELA members
could be more involved and committed to the individual projects.

6
 Dr Ann S Lourens

x PlL should start earlier in the academic year so that they are known to WELA members and recognised
as peer leaders
x PLs should be made more visible and given more authority which implied a more active prompting of
PL roles by the WELA management team,
x There should be more physical outdoor team activities for all WELA members to ensure closer bonds
that could lead to more commitment to take part in projects requiring time and effort.
x The three PLs should organise an event together to create a greater feeling of commitment and sense
of belonging.

Feedback from the interviews thus confirmed the findings of the questionnaires. The recommendations will
be implemented, and the impact thereof evaluated at the end of the following year.

6.2 Self-knowledge
When the three PLs were asked if they learnt anything about themselves, the response was affirmative. One PL
felt that she gained great experience in working with different types of people and that leadership is about
leading others, taking what the group wants, and putting it into action. This PL also stated that she learnt that
she should believe in herself first before others believe in her. Another PL stated that her greatest lessons
related to being more organised, not postponing work, suggesting that every second in the day counts. The
remaining PL stated that she felt that she had gained confidence in being a leader for peers. She said that she
had learnt that not everyone has the same work ethic, that a leader must manage the process and remain
focused and motivated. She concluded by stating that “planning” was a good start to being a good leader. In
the future, a 360-degree feedback and evaluation will implemented to assist PLs with their leadership and
personal development.

7. Conclusion and further research

This research proposed steps to follow in creating leadership development opportunities for WES. A more in-
depth research study should be conducted to develop a more comprehensive framework for developing
leadership and teamwork skills for WES and working female engineers.

This research investigated and evaluated the effectiveness of creating portfolio leadership positions for WES.
The research instruments used in this study to facilitate deeper and richer data were feedback questionnaires
and interviews. Feedback data showed that the PLs took ownership of their roles and felt that they set an
example to other WES. It appears too that they attached value to the PL role and viewed it as a serious
responsibility. In future, PLs should be encouraged to obtain 360-degree feedback for their own assessment
and development.

The PLs learnt some key leadership and management skills and that communication is vitally important as is
commitment, passion, dedication and the ability to inspire these in their followers. Valuable lessons with
regard to planning and time management were also learnt. Based on the feedback from the PLs, it became
apparent that a workshop must be offered to PLs to prepare them for their PL role. It is also important for the
WELA management team to impart to other WELA members that the role of PL must be regarded as that of
student, leader, and manager.

Finally, creating the PLs provided practice in meeting the ECSA requirements of managing projects, planning,
organising, leading and controlling - skills for being a successful practising engineer. Co-curricular
interventions such as community projects, mentorship and technical projects can be implemented in most
engineering and other faculties. Such opportunities can lead to greater student exposure to and practice of
management, leadership, and teamwork skills that can provide invaluable developmental opportunities to
students.

References
Ely, R.J., Ibarra, H.I., & Kolb D.M. 2011. Taking gender into account: theory and design for women’s leadership
development programs. Academy of Management Learning and Education. 10(3):474-493.
Engineering Council of South Africa: Standards and procedures system. (2012). Qualification Standard for Bachelor of
Engineering Technology: NQF Level 7. Available: www.ecsa.co.za /E-02-PT_Rev1. Sighted 11 November 2015.
Farr, J.V., Brazil, D.M. 2009. Leadership Skills Development for Engineers. Engineering management Journal. 21(1): 3-8.

7
 Dr Ann S Lourens

Fu, P., Tsui, A.S., Liu, L. & Li, L. 2010. Pursuit of whose happiness? Executive leaders’ transformational behaviours and
personal values. Administrative Science Quality. 55:222-254.
Lourens, A. 2014. The development of co-curricular interventions to strengthen female engineering students’ sense of self-
efficacy and to improve the retention of women in traditionally male-dominated disciplines and careers. South African
journal of Industrial Engineering. 25(3):112-125.
Lourens, A.S. 2015. Exploring the differences in male and female engineering students’ motivation to successfully complete
engineering studies: findings from a longitudinal study measuring the self-efficacy of engineering students. Proceedings
of the Ireland International Conference on education (IICE-2015).20-22 April 2015. Dublin: Ireland.
Lourens, A.S. & Pannell L.S. Self-efficacy of engineering students at NMMU. [Unpublished report]. Port Elizabeth, South
Africa, 2014.
McCauley, C., & Van Velsor, E. (Eds.) (2004). The centre for creative leadership handbook of leadership development.
Second edition. San Francisco, California: Jossey-Bass
National academy of engineering. 2005. Educating the Engineer of 2020 – Adapting Engineering Education to the New
Century. National Academies Press.
Quinn, R.E. 2004. Building the bridge as you walk on it: A guide to leadership change. San Fransisco, CA: Jossey-Bass.

8







9
Maintaining Ethical Behaviour in Universities Adopting the Integrity
Approach
Iman Karam I.M. Ashmawy
Cairo University, Giza, Egypt
iman.ashmawy@feps.edu.eg

Abstract: Universities enjoy a high degree of freedom. They are free to design methods of teaching and determine the
content of their various programs. Since good ethics lead to a good image, many universities adopted a compliance
approach and installed codes of ethics for the students and sometimes for their faculty members to ensure ethical
behaviour. Nonetheless, the recently revealed ethical scandals at universities and the mixed results produced in the
literature raise the question of how the American public universities maintain ethical behaviour, especially those not
adopting codes of ethics and compliance measures, i.e. adopting the integrity approach. In order to get in-depth insights, a
qualitative analysis using the case study approach and semi-structured interviews were used. An American public university
that, based on its website and its professors, has only a code of ethics for its students and not for its faculty members was
selected, as this indicates that the university trusts the integrity of its personnel. Eleven professors of nineteen professors
from the School of Public affairs were interviewed. All these professors had a working experience extending to more than
eight years and are well acquainted with the topic of ethics and teach it in their courses. The answers were then
transcribed and coded using the thematic criterion. Thereafter, the answers in all the categories and sub-categories were
analysed using QDA Miner 4 lite. As a result, the paper concludes that the universities adopting the integrity deploy a
reactive approach when recruiting or evaluating professors. Whereas deploy a proactive approach when training them.
Furthermore, even though leadership, the role of peers, and most importantly the expectations of the students influence
ethical behaviour, yet relying on personal values comes as the first priority when faced with ethical dilemmas. Surprisingly,
organizational culture, the ombudsman, and socialization have a small effect.

Keywords: Behaviour, Ethics, Integrity, Management, Public Universities

1. Introduction
Good ethics lead to a good image and business (Gottlieb& Sanzgiri 1996). Therefore, many organizations
adopted a compliance-based approach and institutionalized codes of ethics (Connor 2006; Lee et al 2014).
Nonetheless, various studies have produced mixed results about whether codes influence ethical behaviour.

They have either demonstrated a weak or negative relationship between the existence of codes and ethical
behaviour (Schwartz 2001). De Cremer et al (2010) even state that despite the existence of codes of ethics,
unethical behaviour can still occur. Connor (2006) concludes that more than compliance measures is required,
whereas Iltis (2009) and Trapp (2011) recommend moving away from the compliance approach towards the
integrity approach. The integrity approach, according to Tremblay et al (2017), emphasizes self-governance in
accordance with certain values and informal norms.

Universities are knowledge producing institutions and influence their societies (Bacevic 2017). They enjoy a
high degree of discretion to design methods of teaching and determine the content of their various programs
(Hyytinen& Löfström 2017). To ensure ethical behaviour, many universities adopted a compliance approach
and installed codes of ethics for the students and sometimes for their faculty members. Other universities rely
on the integrity approach that trusts the integrity of their members. Nonetheless, the recently revealed ethical
scandals at universities raise the question of how the universities, especially those not adopting codes of
ethics, can maintain ethical behaviour. Given the paucity of the research on the effectiveness of the various
initiatives taken to ensure ethical behaviour (Weber 2006), this paper aims to investigate how the American
public universities, adopting the integrity approach, maintain ethical behaviour.

While doing so, the paper demonstrates how the most autonomous organizations, like the universities, that
adopt the integrity approach can enforce ethical behaviour. It also highlights the managerial factors that are
influential in maintaining ethical behaviour, especially when no clear rules and codes are present.

Hence, this paper demonstrates firstly the nature and influence of the universities. Secondly, it presents
organizational integrity and the importance of having an ethical environment to foster organizational integrity.
Thirdly, it illustrates the factors that shape an ethical environment. And finally, it reveals the different
managerial factors that maintain ethical behaviour in the American public university.

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 Iman Karam I.M. Ashmawy

2. Universities: Their nature and influence

Universities are responsible for producing knowledge upwards to benefit the decision-makers, and downwards
to transfer knowledge and skills related to special areas of expertise to the students and future scholars
(Bacevic 2017; Hyytinen& Löfström 2017). Even though universities enjoy a high degree of autonomy, this
discretion sometimes offers no guidance to the academicians and makes them prone to ethical dilemmas, like
student cheating, getting unauthorized access to exams, writing papers for athletes, trading grades for money
and other favours, extensive plagiarism, stolen and falsified incomplete research data, exclusion of key
candidates from award-winning scholarships, and the inappropriate influence of funding partners. As a result,
various American public and private universities, including top-ranked universities, started to follow the
compliance approach, introduce courses on ethics (Smith 2012; Hughes& Gallant 2016), adopt codes of ethics,
offer training on ethics, and establish a central office for investigating and communicating ethical issues
(Weber 2006).

Yet, Weber (2006) and Smith (2012) pinpoint that the mere existence of compliance measures for enforcing
ethical behaviour is not sufficient. Commitment to ethics and values, the integration of ethics and values in the
mission statements, and consistency between the espoused ethics and the actual performance are important.
These are the essence of organizational integrity.

3. Organizational Integrity
There is no unified definition of organizational integrity. Molina (2018) defines it as "a condition in which an
organization functions in a manner that is consistent with the purposes and values for which it was created".
Clarkson (2009) also defines it as "adherence to moral values or the state of being whole or undivided".

Trevinyo-Rodriguez (2007) explains that organizations adopting the integrity approach are based on self-
governance and would act in accordance with self imposed standards.

Despite the tendency in the literature on shifting away from the compliance approach to the integrity
approach(Lawton, Rayner& Lasthuiszen 2013), Tremblay et al (2017) recommend a balance between
compliance and integrity-based approaches, as integrity alone would result in an organization that lacks the
guiding rules to structure ethical decision-making and activities. Lawton, Rayner& Lasthuiszen (2013) further
emphasize the necessity of maintaining an ethical environment that would foster organizational integrity. This
environment should encourage exemplary ethical behaviour through training, value statements, and education
(Jacobs 2004; Letendre 2018).

4. Factors shaping the ethical environment

When studying the main elements that may contribute to an ethical environment two strains of literature can
be found (Brown& Mitchell 2010; Gino 2015). One focuses on the demographic factors, such as age, gender,
level of education... etc. The second strain, which is the main focus of this paper, focuses on the managerial
factors such as leadership, culture, peers… etc. Román& Munuera (2001) and Weber (2006) indicate that an
ethical environment would foster job satisfaction, financial performance, and ethical behaviour.

4.1 Managerial factors maintaining an ethical environment

The studies in this strain focus on the managerial factors, like leadership, peers, national and organizational
culture, training, communication, and rewarding (Gottlieb& Sanzgiri 1996; Treviño, den Nieuwenboer& Kish-
Gephart 2014). The literature agrees that leadership sets the ethical tone in the organization, influences the
behaviour of the employees, acts as a role model (Brown& Mitchell 2010), enforces codes of ethics (Stevens
2008), encourages open discussions to guide behaviour and helps build trust (Zhu, May& Avolio 2004; Trapp
2011), enhances the right conditions and culture to ensure ethical behaviour (Neubert, Wu& Roberts 2013),
enhances group cohesiveness (Schminke et al 2002), and rewards ethical behaviour or reprimands unethical
behaviour (Chadegani& Jari 2016; OECD 2000). In short, leadership is responsible for maintaining
organizational integrity by making sure that the organization functions consistently with its purpose and values
(Molina 2018).

The peers influence also ethical behaviour (Ashkanasy et al 2000; Smith 2012). This influence is exerted
through the relationship with the colleagues, the role model that they play, and their adherence to the
integrity policies. Senior peers play an important role in mentoring younger peers on organizational integrity

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 Iman Karam I.M. Ashmawy

(Löfström 2016). The stronger the group cohesiveness among peers, the stronger the compliance with the
rules and regulations (Schminke et al 2002; Molina 2018).

As for the organizational culture, Chadegani& Jari (2016) and Molina (2018) emphasize that a culture marked
by fair treatment and transparency would make the members willing to take any measures towards improving
the ethical climate. Apriliani, Anggraini& Anwar (2014) highlight the negative relationship between
organizational culture and unethical behaviour. The stronger the organizational culture, the more guidance it
provides to behaviour and hence, helps reduce or avoid unethical behaviour. Moreover, communicating the
organizational values enhances ethical behaviour, especially in universities (Weber 2006). This communication
can be enhanced through using online-discussions, or through the leadership that would encourage open
discussions and interaction among the co-workers (Trapp 2011). Nevertheless, due to the workload, rule-based
approaches are often prioritised when solving ethical issues (Bretag& Green 2014).

Finally, reinforcing ethical behaviour is vital for maintaining an ethical environment. People respond to the
extrinsic motivations. Therefore, they should be rewarded for ethical behaviour and punished for unethical
behaviour (Molina 2018). The OECD in 2000 demonstrates that many countries adopt gradual disciplinary
measures starting with a warning, reprimand, penalty, temporal to permanent dismissal. Molina (2018)
suggests that punishment should be in proportion to the misdeeds or a feeling of unfairness would ensue and
the members would be less committed to ethical behaviour.

Given the paucity of research on how the integrity approach contributes to ethical behaviour, this paper is
aiming to explore how American public universities, adopting the integrity approach, maintain ethical
behaviour.

5. Methodology
While exploring how the American public universities, adopting the integrity approach, maintain ethical
behaviour, an American public university was selected. This university, based on its website and its professors,
has only a code of ethics for its students and not for its faculty members. This indicates that the university
trusts the integrity of its personnel.

This paper had to rely on the qualitative analysis using the case study approach, since little is known about
how the integrity approach contributes to ethical behaviour.

Therefore, eleven professors from the department of public administration were interviewed. All these
professors had a working experience extending to more than eight years and are well acquainted with the
topic of ethics and teach it in their courses.

Of the eleven interviews, only four were females, and six had executive or functional position next to their
academic profession. Interviewing professors with and without functional positions was intended to achieve
data triangulation as recommended by Bhattacherjee (2012) and hence, increase research reliability.

The questions of the semi-structured interviews revolved around: whether professors face ethical dilemmas at
work, the extent to which compliance tools are used to ensure ethical behaviour, the extent to which ethics is
considered in the recruitment, evaluation and training of professors, and the extent to which ethical
expectations are communicated. The questions were pre-tested on two colleagues to test the validity of the
question.

The semi-structured interviews were recorded and lasted from 30 till 60 minutes on average. To protect the
identity of the interviewees, they were assured that their names would remain anonymous and their replies
were given a certain number for identification. The answers were then transcribed and coded thematically to
represent the different categories (indicators). Whenever the answers converged in a specific category, but
were distinguished from the rest of the answers in the same category, these were put together in a sub-
category. Thereafter the answers in all the categories and sub-categories were analysed using QDA Miner 4
lite.

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 Iman Karam I.M. Ashmawy

6. Results
While exploring how the American public universities, adopting the integrity approach, maintain ethical
behaviour, the paper reached at the following results:

6.1 Integrity in universities

When studying how the integrity approach is adopted at the university, all the interviewees confirm that there
is no code of ethics for the faculty members and that the administration has a great trust in the integrity of the
members even when they may be facing ethical dilemmas whether in teaching, research, and service. This
trust is also manifested in the indirect emphasis on ethics in their recruitment, evaluation, and training. For
example, in recruitment, the main focus is on credentials and qualifications. Interviewee 8 clarifies:

"There are things that are very clear in the state's laws. For example, we can't ask a candidate about his
marital status or why he left the previous institution.. But we may ask about how his relationship with
his colleagues, and we can talk with his references."

Interviewee 10 adds:

"We rely on the campus visits. The candidates come here for two days. One day they give an involved
job talk, and the next day they teach a class. So, they are with us and the director for these two days.
And we learn then a lot about them."

As for evaluation, all the interviewees mention that their performance is evaluated in three domains: teaching,
research, and service with no direct emphasis on ethics. For example, in teaching, a faculty member is
evaluated based on his syllabi and tests, in addition to the quantitative and qualitative evaluations of the
students each semester that evaluate professor's knowledge, the nature of the course, and whether the
instruction was beneficial. Research is evaluated based on publication in peer reviewed journals. Finally, the
peers evaluate a professor's service based on his participation in the various committees inside and outside the
university. If something unethical emerges, it is then addressed by the administration.

With regard to training, all the interviewees confirm that all of them receive emails notifying them about the
online courses that they have to pass. Yet, no specific training courses are offered on ethics. Interviewee 8
justifies:

"I do not think that we need training on ethics as we have personal, organizational, and societal values.
And also, no training can cover all aspects."

Moreover, all the interviewees proclaim that the department of human resources (HR) does not play any role
in encouraging ethical behaviour. Interviewee 9 illuminates:

"The HR departments are more concerned with the paperwork and orientation about health care
benefits and the retirement plans."

As a result of the indirect emphasis on ethics in recruitment, evaluation, and training, the interviewees are
then asked about the factors that maintain an ethical environment

6.2 Managerial factors shaping the ethical environment

When the interviewees are asked about the factors that make them behave ethically, all of them indicate that
even though there are no codes of ethics, yet there are a lot of rules and regulations coming from the federal,
state, and university level that govern ethical behaviour. Interviewee 3 demonstrates:

"There are federal laws that prohibit unethical behaviour like discrimination and sexual harassment. But
I don't think that those are things that most of the professors in US context would deal with on a day-to-
day basis. Also, each university has its own policies. Here at our university, we have regulations that
prevent us from engaging in unethical behaviour."

13
 Iman Karam I.M. Ashmawy

In addition, all the interviewees mention the important role of the leadership in acting as a role model for
ethical conduct. Yet, all indicate that this role is informal. Interviewee 1 explains:

"When we have our faculty meetings, there might be informal discussions about being a good colleague
and participating in committees. I consider this to be ethical."

All the interviewees contend that their leadership (whether the dean or the department's director) is
transparent, integral, expresses the expectations, but does not set the ethical tone. Interviewee 11
demonstrates:

"Nowadays, university leadership's job is to get money to add to the university endowment. The nature
of this job is ethically compromising. This doesn't mean that you can't have a good person or people
doing good things, but it means that the context of their decision making is naturally circumscribed by
the nature of their positions."

Nevertheless, all the interviewees confirm that they resort to the leadership when they are facing a situation,
where they are not able to take a clear decision.

All the interviewees also mention that they resort to their colleagues for advice. Interviewee 2 maintains:

"We trust each other and talk about our research and students. And if I have a question, I can always
ask for advice. And they would collaborate."

When asking whether the students - as the clients - have any expectations regarding the ethical behaviour and
hence, impose a kind of pressure on the professors, all the interviewees agree that they care about what their
students expect. Interviewee 4 pinpoints:

"I ask them at the end of every semester whether they want me to do something differently. I like to talk
to them and involve them in a family-type situation."

Interestingly, few interviewees also mention other factors that they see as reasons for their ethical behaviour.
For example, interviewees 5, 8 and 11 mention having an ombudsman to solve complaints. Interviewee 11:

"If we have any complaints, especially with the students, we can raise our concern to the ombudsman."

Nevertheless, interviewee 5 complains:

"Many of us have found it challenging to get resolutions out of these scenarios. We don't hear back after
we forward that information. And it is a very slow process."

Interviewee 7 also emphasizes the important role of socialization and mentoring, whether before or after
being recruited. He states:

"You start being socialized before being hired as an academic. As a PhD-student, you receive a lot of
mentoring from your professors and supervisors and colleagues and classmates."

Finally, interviewee 2 adds a generation-change to be the reason for their ethical behaviour. She claims:

"A whole generation changed. They all retired, and the old people left are literally three. So, we have a
whole different group that wants to get along and they socialize outside the school and make an effort
together."

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 Iman Karam I.M. Ashmawy

When asking to rank the previously mentioned factors based on the extent they influences ethical behaviour
most, the opinions differ. Six interviewees contend that the personal values play the important role. Two
interviewees favour the peers. One interviewee considers the rules and regulations as important, another
emphasizes the organizational values, and a third stresses the students as the factors setting the ethical tone.

Finally, all the interviewees suggest further recommendations to ensure ethical behaviour. Interviewees 2 and
10 emphasize the importance of transparency and distributive justice in distributing capital. Interviewees 3
and 5 wish to have clearer guidelines to guide behaviour. Interviewees 3 and 4 also demand the existence of
formal channels of communication to get advice or report ethical dilemmas. Interviewee 6 stresses the
important role of leadership. Interviewee 7 pinpoints the importance of training. Interviewee 1 recommends
making more effort during the recruitment process to ensure that they would get the right colleagues. Finally,
interviewee 11 suggests having inward reflection on their mission and celebrating those who behave ethically
and take ethical decisions.

7. Discussion
While exploring how the American public universities that adopt the integrity approach maintain ethical
behaviour, this paper concludes the following:

7.1 Integrity in the universities

The present paper confirms that the universities adopting the integrity approach do not see a necessity for
having a code of ethics for its members and trust their personal integrity and moral judgement when handling
ethical dilemmas.

This trust is further manifested in recruitment. The university considers the focus on the credentials and
qualifications in addition to calling the candidates' references and having a two-day visit to the campus to
observe the candidates while being in action as "satisficing". As a result, this paper contributes to the literature
by indicating that the universities that adopt the integrity approach most probably adopt a reactive approach
in recruitment, i.e. intervening only when ethical dilemmas occur to maintain ethical behaviour.

Another manifestation of this trust is in the indirect emphasis on ethics when evaluating the professors. Most
of the evaluation is based on teaching, publication and its impact, and service on the different committees
inside and outside the university. Yet, only if red flags regarding ethical issues arise, the administration would
step in to address the matter. As a result, this paper contributes to the literature by indicating that the
universities adopting the integrity approach more likely follow also a reactive approach when evaluating the
performance of the professors.

Surprisingly, the integrity approach indirectly focuses on ethics in training, also. Moreover, many of the
interviewees do not see even a necessity to receive training on ethics and indicate that the even the HR
department does not communicate any messages regarding the ethical expectations. Yet, as this training
entails ethical elements, is offered to the all members, and is not initiated following misconduct, this paper
inducts that the universities adopting the integrity approach most likely follow a proactive approach in training
to raise ethical awareness.

7.2 Managerial factors shaping the ethical environment

The universities that adopt the integrity approach rely on various managerial factors to maintain ethical
behaviour. Of these factors are the federal, state, and university laws and regulations, which indicate that
adopting the integrity approach implies also abiding by the rules and regulations.

In addition, as suggested by Brown& Mitchell (2010), Trapp (2011), and Molina (2018), the results highlight
that the universities adopting the integrity approach put great emphasis on the "indirect" role of the
leadership in acting as a role model for ethical behaviour.

A further important finding is that peers play an important role in the universities that adopt the integrity
approach. The peers tend to have a strong relationship with each other, trust each other, and resort to each
other for advice, learning, and exchange of experiences. This is in agreement with findings of Ashkanasy et al
(2000), Schminke et al (2002), Smith (2012), and Molina (2018).

15
 Iman Karam I.M. Ashmawy

Furthermore, this paper adds one element not highlighted in the literature before, which is the ethical
expectations of the clients, i.e. the students. All the interviewees confirm that students' expectations of ethical
conduct influence their behaviour and force them to behave ethically. This finding is likely to be related to the
role model that university professors play in the lives of the students and the positive construed image the
students have of their professors.

Yet, another unexpected finding is the little emphasis that the interviewees place on the organizational culture
and the role of the ombudsman. A possible explanation that agrees with Apriliani, Anggraini& Anwar (2014)
and Chadegani& Jara (2016) is that when the organizational culture is perceived as strong, the individual tends
to adhere to it. While when the organizational culture is perceived as weak, the individual - when adopting the
integrity approach - would rely on his personal values to maintain ethical behaviour. Also, when the
procedures of the ombudsman are too slow, this may discourage the members from resorting to him as
mentioned by Bretag& Green (2014).

Surprisingly, only one interviewee mentions socialization as a further factor for influencing ethical behaviour
and another interviewee mentions the generational change that has produced a coherent colleagueship as
another factor influencing ethical behaviour, even though it may not be existent elsewhere. This can be
attributed to the fact that the majority of the interviewees claims to rely in the first place on their personal
values. Leadership, however, is not prioritized, which might indicate that professors do not resort to the
leadership unless they are worried about the possible consequences of their acts.

Finally, this paper highlights that in universities that adopt the integrity approach, the faculty members focus
on the processes in fostering ethical behaviour. This is obvious in their recommendations. All the interviewees
offer recommendations related to the operational processes, like transparency, distributive justice, better
communication, leadership, training, better selection of candidates, recognition of ethical conduct, and better
auditing. Furthermore, no-one mentions financial rewarding in contradiction to Román& Munuera (2001).

To sum up, this paper explores how the American public universities that adopt the integrity approach
maintain ethical behaviour. While doing so, it relied on semi-structured interviews to provide in-depth insights
on the managerial factors that affect ethical behaviour while adopting the integrity approach. Many questions
remain, however, unanswered like why the professors do not emphasize the role of leadership and rely more
on their personal values or resort to their peers. Thus, for future research more quantitative studies are
needed to verify these preliminary results. Furthermore, as this paper focused on one of the American public
universities, which makes it less generalisable, more cross-cultural studies would be of great importance to
verify the results and point out how national culture influences the effect that the various managerial factors
have on ethical behaviour. Also, cross-sector studies are recommended to investigate the unexpected results
of this paper, especially with regard to the reactive approach adopted when recruiting and evaluating the
faculty members (the employees); the influence of the students' expectations (the customers) on ethical
behaviour; and the role of socialization.

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Enhancing the Strategic Alignment Model: The Contribution of BiSL
Ronald Beffers and Benny de Waal
HU University of Applied Sciences Utrecht, The Netherlands
ronald.beffers@agentschaptelecom.nl
benny.dewaal@hu.nl

Abstract: Scientific literature and practices emphasize that organizations have to align their business strategies with their IT
strategy. Strategic alignment of business with IT in organizations is not only a prerequisite for organizations to be
successful or competitive but also positively influences IT effectiveness and leads to greater profitability. At the same time
organizations have been struggling for a long time with the concept of strategic alignment. In this paper an enhanced
concept of strategic alignment is given in such a way that organizations can practically use to align their business and IT.
Based on scientific research in this study the existing concept of strategic alignment model, i.e. the relationship between
business and IT, was enhanced by placing the discipline of information management between business and IT and thus
making information management responsible for the alignment or linking of business with IT. This conceptually enhanced
concept of strategic alignment was practically enhanced even further with the use of the Business information Service
Library (BiSL) framework. This framework links business with IT on the strategically, managing and operational level of an
organization. The BiSL process framework thus provides an description of the information management processes on the
different levels of an organization that have to be implemented and carried out to achieve strategic alignment within an
organization. With the support of three experts in the field of information management and BiSL, an enhanced Strategic
Alignment Model was constructed. To validate this model 25 semi-structured interviews were conducted in eleven
organizations. The results of these interviews show not only a strong and solid support for adding information
management to the existing concept of strategic alignment but also indicate a strong and solid support for the use of the
BiSL framework for implementing information management. These findings support the notion that the BiSL enhanced
Strategic Alignment Model not only provides a conceptually enhanced strategic alignment model but also provides
organizations with a concept of strategic alignment that organization can practically use to align their business with IT.

Keywords: Strategic alignment, Business Information Management, BiSL framework, Qualitative research

‘However there is little research published that attempts to validate the SAM or describe its use in
practice.’ (Avison, Jones, Powell and Wilson, 2004).

1. Introduction
Organizations need to align their business with IT to be successful or competitive (Bennis, 2013; McKenna,
2000). At the same time there is a debate in scientific literature about what alignment actually is, why it is
needed, how organizations may go about the task of becoming aligned and how it should best be researched
(Silvius, De Waal and Smit, 2009). As a result many different ideas or concepts of strategic alignment exist
(Chan and Reich, 2007). Organizations also seem to be struggling how to make practical use of the concept of
strategic alignment to align their business with IT (Avison et al, 2004). And although attempts have been made
to enhance the concept of strategic alignment these studies provided little information what one could do
with these enhanced strategic alignment concepts and models except understand them conceptually (Avison
et al, 2004). For any model to continue to exist it should not only be conceptually relevant but also practically
relevant (McKay and Marshall, 1999). According to Sabherwal and Chan (2001) this means that the processes
by which alignment is accomplished, i.e. practically and effectively worked out in organizations need to be
better understood.

One of the strategic alignment models that provides such a process oriented approach is the Business
information Services Library (BiSL) (Van der Pols, Donatz and Van Outvorst, 2005). BiSL describes a process
framework that links business with IT (Van der Pols and Backer, 2007). Since the business information
management processes in BiSL link business with IT, BiSL therefore can be used to enhance the concept of
strategic alignment. In this study we use the Strategic Alignment Model by Henderson and Venkatraman
(1989) as a starting point for our research since much of the research on strategic alignment is based on this
model (Avison et al, 2004; Coltman et al, 2015). We explore BiSL because BiSL enhances the concept of
strategic alignment by providing a process oriented concept of strategic alignment that organizations can use
to align their business with IT. Both theoretically and empirically, the main research question of this paper is:
How can the concept of strategic alignment be enhanced with BiSL?

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 Ronald Beffers and Benny de Waal

In the following section, the theoretical foundation of the research is presented. Thereafter, the research
methodology is presented, followed by the description and analysis of the results. In the final section, the
conclusions and a discussion of the implications and limitations of this paper will be presented.

2. Theoretical perspective
All organizations have to align their business with IT. Scientific literature suggests that organizations cannot be
competitive or successful if their business and information technology strategies are not aligned (Avison et al,
2004; Coltman et al, 2015). This alignment of business and information technology strategies has been
conceptualized in scientific literature as strategic alignment or business IT alignment (Henderson and
Venkatraman, 1989). But organizations seem to be struggling with the concept of strategic alignment and they
have been struggling for a long time (Chan and Reich, 2007; Luftman, 1996; Luftman et al, 2015). In regard to
question why organizations are still struggling with strategic alignment, Avison et al (2004) point out that
despite the widespread acceptance that business and IT strategies should be aligned the nature of alignment is
inadequately clarified in literature because the concept of this linkage has been historically invoked as a
metaphor to argue for the integration of business and information technology strategies without adequate
articulation or clarification of its characteristics. As a result of this inadequate articulation or clarification of the
characteristics of the concept of strategic alignment many pseudonyms of strategic alignment and different
strategic alignment models have been proposed to conceptualize alignment in scientific literature (cf. Silvius,
De Waal and Smit, 2009). It has been named as linkage (Henderson and Venkatraman, 1989), fit (Chan, 1992;
Henderson and Venkatraman, 1993), integration (Weill and Broadbent, 1998), harmony (Luftman et al, 1996),
bridge (Ciborra, 1997), and fusion (Smaczny, 2001). Of the models that have been proposed in Information
Systems (IS) literature the one that has attracted the most attention from researchers is the Strategic
Alignment Model (SAM) by Henderson and Venkatraman (1989). In Figure 1 an adapted version showing the
relevant organizational aspects of this strategic alignment model for this research is shown.

Figure 1: An adapted version of the Strategic Alignment Model by Henderson and Venkatraman (1989)
According to Avison et al (2004), SAM emerged from the part of the MIT90s Framework by Scott Morton
(1991) that looked at the link between business strategy, IT, structure, and management processes
(Venkatraman, 1991) and a series of three MIT Sloan School/CISR working papers that appeared at the same
time that essentially looked at the cross-domain linkages between different quadrants in SAM (Henderson and
Venkatraman, 1989; 1990) and highlighting results from a survey linking IT business partnerships, IT planning,
to four measures of fit (Henderson and Venkatraman, 1992). Since much of the research has been based on
SAM this strategic alignment model will be used in this research (Avison et al, 2004; Coltman et al, 2015).

The Strategic Alignment Model was enhanced by the generic framework for information management
developed by Maes (1999; Maes et al, 2000). An adapted version of the generic framework for information
management showing the relevant organizational aspects of this strategic alignment model is shown in Figure
2. In the generic framework for information management the functional layer of information and the
organization layers of managing and operations were added to the concept of strategic alignment to reflect
the current need for information and communication between business and IT on the different levels of an
organization (Coltman et al, 2015).

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 Ronald Beffers and Benny de Waal

Figure 2: An adapted version of the generic framework for information management by Maes (1999).

Figure 3: The BiSL Framework (ASL BiSL Foundation, 2017)

To manage the information on the different levels of an organization a process framework for business
information management, better known as the Business information Service Library (BiSL) was developed by
Van der Pols, Donatz and Van Outvorst (2005) based on their experience and lessons from practice. The BiSL
process framework describes the business information management processes that link business with IT. The
BiSL process framework is depicted in Figure 3. Since these business information management processes link
business with IT, the BiSL process framework can be used to enhance the existing concept of strategic
alignment. Although attempts have been made to enhance SAM these studies provided little information
what one could do with these enhanced Strategic Alignment Models except understand them conceptually
(Avison et al, 2004). For any model to continue to exist it should not only be conceptually relevant but also
practically relevant (McKay and Marshall, 1999). According to Sabherwal and Chan (2001) this means that the
processes by which alignment is accomplished, i.e. practically and effectively worked out in organizations need
to be better understood. The BiSL process framework provides such a process oriented approach.

The conceptual model for this research was constructed by combining the generic framework for information
management by Maes (1999) with the BiSL process framework by Van der Pols, Donatz and Van Outvorst

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 Ronald Beffers and Benny de Waal

(2005) and by positioning the BiSL process framework in the middle column of information of the generic
framework for information management. This positioning is possible because the BiSL process framework
provides an implementation of the information management processes needed to manage the information on
the different levels of an organization in the middle column of the generic framework for information
management by Maes (1999). The BiSL enhancement of SAM was discussed in three interviews with experts in
the field of strategic alignment, information management and BiSL. By positioning the BiSL process framework
in the middle column of information of the generic framework for information management, a BiSL enhanced
Strategic Alignment Model as depicted in Figure 4 was constructed.

Figure 4: The BiSL enhanced Strategic Alignment Model

Our conceptual model consists of two assumptions or hypotheses which are examined in this study:

1. The Strategic Alignment Model by Henderson and Venkatraman (1989) can be enhanced by adding the
functional layer of information and organizational layers of managing and operations to the concept of
strategic alignment as proposed by Maes (1999) in the generic framework for information
management;
2. The generic framework for information management by Maes (1999) can be enhanced even further by
positioning the BiSL process framework by Van der Pols, Donatz and Van Outvorst (2005) in the middle
column of information of the generic framework for information management by Maes, resulting in
the construction of a BiSL enhanced Strategic Alignment Model.

In the next section the research methodology used for the research will be described.

3. Research methodology
The BiSL enhanced Strategic Alignment Model was constructed according the Design Science Research
Methodology (DSRM) by Peffers et al (2007). As part of DSRM a literature study was conducted to introduce
the key concepts on strategic alignment and BISL for this study. The BiSL enhanced Strategic Alignment Model
was evaluated by a case study method (Yin, 2014). An embedded, in-depth, multiple qualitative case study
(Yin, 2014) was conducted at 11 case organizations in the period between June and September 2016 where 25
semi-structured interviews were taken to test our hypotheses. The case organizations in question were
carefully selected and varied on their organizational characteristics (industry, company size, profit and not-for-
profit, governmental and public owned organizations) as proposed by Benbasat, Goldstein and Mead (1987).

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 Ronald Beffers and Benny de Waal

3.1 The interviews

The participants from the 11 case organizations that participated in this research were selected based on their
professional knowledge of strategic alignment and information management or the function or position they
fulfil in the case organization. Based on these selection criteria the group of participants consisted mainly of
CIO’s, (senior) business managers, heads of IT departments, heads of information management departments,
information managers, strategic alignment experts and BiSL-experts. The choice for primarily targeting this
group of participants for this case study research was based on the assumption that these professionals should
have a clear and professional understanding of what is meant by strategic alignment and information
management and what kind of (information) management processes are needed in an organization to realize
both.

To gain a better understanding of the 11 participating case organizations and to prepare for the case study
interviews a desk research was performed. Also the case organizations were asked to provide additional
information and documentation on how strategic alignment and information management in their
organization are realized. Between June and September 2016 a total of 25 interviews at the 11 case
organizations were taken by the researcher usually at the case organizations’ offices. The interviews were
focused on how SAM could be enhanced by focusing on BiSL’s contribution to strategic alignment. These 25
interviews also include two pilot interviews. The reason to include these pilot interviews was that these
interviews were conducted in exactly the same way as the case study interviews. Table 1 shows the
interviewees by job title and organization characteristics.
Table 1: List of interviewees by job title and organization characteristics
Organization Interviewee job title Sector Number of
employees (FTE)
1 Team Manager Functional Management Insurance (health care) 2259
1 Manager Business Team Insurance (health care) 2259
2 Test Manager Financial sector(banking) 37170
3 Information Manager Education (higher education) 3536
3 Information Manager Education(higher education) 3536
3 End user support specialist Education(higher education) 3536
4 Program & Project management Officer Insurance (retirement) 1372
5 Corporate Information Manager Education (higher education) 2812
5 Business Information Manager Education (higher education) 2812
5 Business Information Manager Education (higher education) 2812
6 Head Information Manager Semi-Governmental (energy) 3061
6 Information Manager Semi-Governmental (energy) 3061
7 Information Manager Health Care 764
7 Head Information Management Health Care 764
8 Information Manager Health Care 7353
8 Team Manager Information Management Health Care 7353
8 Chief Science Information Officer Health Care 7353
8 Chief Medical Information Officer Health Care 7353
8 Service Manager Health Care 7353
9 Information Manager Education 530
10 Coordinator Information Management Semi-Governmental (law enforcement) 50747
10 Coordinator Information Management Semi-Governmental (law enforcement) 50747
10 Team Manager Information Management Semi-Governmental (law enforcement) 50747
11 Head Information Management Education (university) 2610
11 Information Manager Education (university) 2610

Since BiSL’s contribution consists of the BiSL process framework that can be used for implementing
information management the research questions were focused on the role of information management has in
the alignment of business and IT and if the BiSL process framework can be used to implement information
management in an organization. The length or duration of the interview was set to one hour. An interview
guide was designed and applied, but deviations could occur depending on the answers. The interviews were
digitally recorded using a digital voice recorder. The recorded interviews were professionally and fully
transcribed (Patton, 2002). The transcriptions of the interviews were sent to the respondents for approval and
possible comments and corrections. The transcripts from the interviews were then placed in, coded and
analyzed using the CAQDA software package of Atlas.ti version 7. Further and additional analysis of the
research data was done using the spreadsheet program of Microsoft Excel 2016.

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 Ronald Beffers and Benny de Waal

3.2 Analysis procedure

The different types of interviews were analyzed using a cumulative editing approach (Runeson and Höst,
2009). For this approach each of the interview transcriptions were placed in Atlas.ti and then read by the
researcher to determine the meaningful fragments of texts. This resulted in the identification of statements
related to the key findings of the research on the BiSL enhancement of the Strategic Alignment Model. Since a
combination of question and theme based coding was used for this research the fragments of text were first
coded in Atlas.ti using structural coding (MacQueen and Quest, 2008). These structural coded text fragments
were then read again to determine meaningful fragments within these structural coded text fragments using
open coding. If necessary, the decision was made to merge codes or to change a fragment to another code
following an axial coding procedure. This procedure was repeated for each interview. Because the structural
codes were derived from the variables for this research this whole procedure could also be viewed upon as the
selective coding process (Boeije, 2002; Neuman, 2002).

3.3 Validity procedure of interview data

For the interview data in this case study research the following four aspects of validity are used: construct
validity, internal validity, external validity, and reliability (Yin, 2014). Construct validity in this case study is
handled by using multiple sources of evidence (desk research, documentation and case study interviews) and
establishing a chain of evidence. The internal validity was safeguarded by conducting interviews with multiple
participants to check the statements made in the different interviews. To govern external validity multiple case
studies were arranged for comparison, in particular with regard to the participation of different types of
organizations but also the participation of senior information management executives in this case study
research. Finally, to ensure reliability, the interview were professionally transcribed and the transcripts of the
case study interviews in combination with a questionnaire were sent to the interviewees for approval and
possible corrections and comments. To generally govern validity, a case study protocol and a case study
database were created.

4. Results
The results of this study relate to the two topics that have been examined in the case study research. The first
topic that has been examined is the topic of strategic alignment. This topic was examined based on the
literature review to provide a contemporary insight of both the definition, importance and relevance of
strategic alignment. The other topic that has been examined is the BiSL enhancement of the Strategic
Alignment Model. This topic is the central theme of this study. The results on both strategic alignment and
how the concept of strategic alignment can be enhanced with BiSL will be discussed next.

4.1 Results on strategic alignment

On the meaning of strategic alignment several descriptions were provided by the respondents but all these
different description can be placed under one single description found in the scientific literature that describes
strategic alignment as connecting the business strategy with the IT strategy (Avison et al, 2004). About the
importance of strategic alignment all the respondents stated that the topic of strategic alignment is a very
important topic. The reason why strategic alignment is so important several reasons were provided. One of the
reasons is that it is seen as vital or important for the realization of the strategic or business objectives of the
organization. Another reason is that IT has become part of the primary process and that IT is seen as an
accelerator or enabler of new way of doing business.

4.2 Results on the BiSL enhancement of the Strategic Alignment Model

Since BiSL’s contribution to strategic alignment consists of a process framework for implementing information
management the research questions were focused on the two key elements of the BiSL process framework.
The first key element involves the role of information management has in the aligning of business and IT. The
second key element is that the BiSL process framework can be used to implement information management
on the different levels of an organization.

All the 25 respondents agreed upon the fact that information management fulfills a role in the aligning of
business with IT. This unanimous agreement among the respondents about the role information management
fulfills in the aligning of business with IT indicates a strong and solid support for the enhancement of the
concept of strategic alignment, i.e. the relationship between business and IT with information management as
proposed in the generic framework of information management by Maes (1999). The interviewees gave
several explanations. One of the frequent explanations given is that information management acts as a bridge

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 Ronald Beffers and Benny de Waal

function between business and IT. Another explanation frequently found is that it acts as a translation
function. Related to that another explanation that was found is that information management acts as a
gatekeepers function between business and IT. In regard to the use of the BiSL process framework for
implementing information management in 17 out of the 25 cases the respondents agree with such a use. In 7
out of the 25 cases this is probably the case because of the ambiguous or not straight forward nature of the
answers the respondents provided. And in just one case the respondent did not agree with such an
enhancement. The reasons why respondents agree with the use of the BiSL process framework for
implementing information management can be best summarized as follows: BiSL provides an accurate and
overall description of all the aspects of information management and the information management processes
needed to implement information management in an organization.

4.3 Summarizing the results on the BiSL enhancement of the Strategic Alignment Model
Since all of the respondents agree with the role information management has in the aligning of business with
IT and also a strong and solid majority of the respondents agree on the use of BiSL for implementing
information management in an organization these results indicate a strong and solid support for the BiSL
enhancement of the Strategic Alignment Model and therefore the construction of a BiSL enhanced Strategic
Alignment Model. These results show that a BiSL enhanced Strategic Alignment Model not only enhances the
concept of strategic alignment by introducing information management to the concept of strategic alignment.
But by using BiSL for implementing information management the BiSL enhanced Strategic Alignment Model
provides organizations also with a concept of strategic alignment that they can practically use to align their
business with IT.

5. Discussion, conclusions and implications

In this paper we have elaborated on BiSL to explore how BiSL could be used to enhance the concept of
strategic alignment. Since BiSL links business with IT the assumption was made that BiSL could be used to
enhance the concept of strategic alignment. This assumption or hypothesis led to the construction of an BiSL
enhanced Strategic Alignment Model. The results of the analysis not only indicate a strong and solid support
that the concept of strategic alignment, i.e. the relationship between business and IT can be enhanced by
adding information management between business and IT, but also a strong and solid support that the BiSL
process framework can be used to implement information management on the different levels of an
organization. Since the BiSL enhanced Strategic Alignment Model incorporates these enhancements, these
results also indicate a strong and solid support for the BiSL enhanced Strategic Alignment Model. Based on
these results the conclusion can be drawn that he BiSL enhanced Strategic Alignment Model not only enhances
the concept of strategic alignment but also provides organization with a practical concept of strategic
alignment that organizations can use to align their business with IT.

These findings have a number of practical implications. First, the results provide an answer to the research
questions found in the scientific literature on the processes associated with strategic alignment and strategic
alignment models (Avison et al, 2004; Coltman et al, 2015; Hussain, King and Cragg, 2002; Sabherwal and
Chan, 2001). Second for practitioners, like for example information managers, head of information
management departments and CIO’s the results make clear that the BiSL process framework should be
considered a serious alternative for implementing information management in the organization. To be able to
use the BiSL process framework as a serious alternative for implementing information management we
suggest to invest in acquiring adequate knowledge about BiSL and how BiSL can be used in the organization for
implementing information management so that strategic alignment in the organization can be achieved.

6. Limitations and further research

Although the research was carefully designed, there are some limitations. One of the limitations was that the
research was limited in both time and the resources available. This will impact the scope and the
generalizability of the results. Another limitation is the number of case studies that were performed. Even
though the number of case studies that were performed is considerable and appropriate measures were
applied to ensure validity, it is still important to realize that the information obtained from the cases studies is
bound to the context of the case studies and therefore is not automatically applicable in a broader context.

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 Ronald Beffers and Benny de Waal

Also a limitation is the interview design, specifically the situation that the interviewing for this research was
limited to one single one-hour-interview, that in a number of the cases proved to be a limitation. Therefore
more case studies, preferably under modified conditions, are needed to validate the findings.

The results also have implications for further research. Based on the experiences and the results of the case
study research we would suggest two different lines of research. The first line of research we would suggest is
a continuation of the research conducted in this case study research. But for such a case study research we
would recommend that enough adequate and detailed information should be available on how information
management is implemented in the case organization. The absences of such information seriously hampered
this case study research on one of the most crucial parts of the case study research since it was unclear what
to expect and what to prepare for. The other recommendation we would like to make for such a case study is
that some sort of follow-up to the interview is available. The availability of such a follow-up to the interview
will provide an opportunity not only to present but also discuss and clarify some of the findings of the
research. We believe that these two suggestions will have a strong and positive effect on the results of such a
case study research.

The second and different line of research we would like to suggests is a line of research that takes a closer look
at some of the results of this case study research. As described the results of this case study offer a strong
support for the BiSL enhancement of the Strategic Alignment Model. But when taking a closer look at these
results it becomes clear or obvious that these results in fact originate or come from two different types of
sources. One of the type of sources are those respondents that agreed on the BiSL enhancement of the
Strategic Alignment Model based on the comparison of the description of the information management
processes implemented in the organization with the information management processes in the BiSL process
framework. These respondents had no prior knowledge of BiSL. The other type of sources are those
respondents that agreed on the BiSL enhancement of the Strategic Alignment Model based on an already
present professional conviction or believe that the BiSL process framework provides them as described in the
findings of this research with “an accurate and overall description of all the aspects of information
management and all the information management processes needed to implement information management
in an organization”. So these respondents had prior knowledge of BiSL. This raises the question why these
respondents started looking at information management for aligning their business with IT. But also what the
reasons were that these respondents came to believe or became convinced that the BiSL process framework
provided them with a process framework that was suited for implementing information management in an
organization. For this a deepened or intensified investigation of these research result on the BiSL enhancement
of the Strategic Alignment Model is needed.

We believe that these recommendations for further research will show if these results can be generalized to
more organizations and show how the BiSL enhanced Strategic Alignment Model provides organizations not
only with an enhanced strategic alignment concept but also with a concept that can be practically used for
aligning business with IT.

Acknowledgement
The authors wish to acknowledge the different organizations for making it possible to investigate the use of
BiSL for implementing information management in practice. Without their corporation it would not have been
possible to collect the data for this research. In that respect, many thanks to the respondents who were willing
to be interviewed.

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Influence of Accounting IS on Accounting Processes Setting in
Production Company
Marie Černá, Lucie Vallišová and Pavla Karabinová
University of West Bohemia, Pilsen, Czech Republic
macerna@kfu.zcu.cz
lbuzkova@kfu.zcu.cz
karabinova@students.zcu.cz

Abstract: Use of suitable IS, ERP, is one of the key elements supporting the optimal setting of processes in any selected
area. Influence of accounting information system on accounting processes setting in the specified production company has
become an object of interest analyzed by the article authors. Objective of this contribution is to compare the expected and
actual changes of current processes and accounting procedures setting and propose the changes leading to their future
higher efficiency and security. Selected type of conducted survey is qualitative research using the document analysis,
participating observations and non-standardized conversation. Conducted research pointed out the most significant
problems usually solved by the selected business unit in relation to their daily use of information system. Currently used
information system was described at the level of selected modules relevant for the work of company accountants. The
actual utilization rate of the used modules was analyzed and weak areas related to the use of substitution tools were
identified. Weak areas were discussed with the accounting department representatives. Then the proposed changes and
improvements were described and the related legislative framework was incorporated. Proposed changes are represented
by the acquisition of additional modules dealing with document management, customer relationship management or
production planning. It is also suggested to purchase improved barcode readers and improve the quality assurance system.
The research results and proposed improvements were considered to be implementable and they are expected to be
realized in future. There exist the reasonable requirement for cooperation of the accounting department with other,
especially manufacturing, departments with respect to legislative framework in the area of information risk management.
Suitability of proposed solutions will need to be further verified by practice.

Keywords: accounting, ERP, information system, qualitative research, risk

1. Introduction
By Martin (1995) or Drucker (1993), current society is referred to as knowledge or information society. The
term information society was used for the first time in 1975 in the French government report as was written
by Švarcová and Rain (2011). Information society is most often described as “the society where quality of life
and perspective of social changes and economic development increasingly depend on information and the way
of its use. In such society standard of living and typical standard of work and rest, education system and
market conditions are significantly influenced by progress in the use of information and knowledge” (Martin,
1995).

Information and knowledge are perceived as the key sources of the social life development (Vodáček and
Rosický, 1997). They become, besides the three classical economic sources - labor, land and capital, the fourth
economic resource (Best, 1996).

Gathering, processing and storage of information are in current time of rapid development of information and
communication technologies (ICT) associated with the use of information system (IS). Suitable and functional
information system facilitates the implementation of all business activities and greatly reduces the number of
risky situations. It is recommended, with respect to ISO/IEC 27005:2011 (Information technology - Security
techniques - Information security risk management), to focus on the process of risk management within the
company. It is necessary to implement it to all operating activities and further to apply it to information
security management system (ISMS). “New information systems should be included to ISMS already in the
planning and design phase to be possible to ensure the proper management of information security risk” (ISO,
2011).

By Sodomka and Klčová (2011) is possible to divide the processes in the area of business to:
x internal processes with strictly given owner having their management under control,
x and external processes with no strictly defined owner, not manageable by the company management.

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

Business processes can be further divided to:

x management processes - strategic planning, company management and quality and innovation
management,
x key processes - production, logistics, customer relationship management,
x supporting processes - economy, human resource management, information and communication
technologies (ICT) management.

The supporting processes can be further divided with respect to conducted research described below using the
division by Monk and Wagner (2013) that divides this kind of processes to:
x financial accounting,
x cost management and control,
x planning and budgeting,
x cash-flow management.

Monk and Wagner (2013) also state that information system used by the companies in the current market
conditions has to be based on information coming from all above mentioned areas. Business information
systems can be generally divided to:
x ERP - enterprise resource planning,
x CRM - customer relationship management,
x SCM - supply chain management,
x MIS - management information system.

ERP, CRM and SCM represent parts of Business Intelligence (BI). BI is defined by Dresner (2015) as the
summary of tools enabling the users comprehensive and effective access to data in business information
systems ant their analysis carried out in order to understand the business and customers. These applications of
BI are used mostly in areas like:
x planning and forecasting,
x financial reporting and consolidation,
x cost and profitability analysis,
x risk management,
x financial optimization.

The general objective of system integration is business information technologies setting to create integrated
information system of the quality that enables the support of company business strategy. This process was
observed by authors of the article and described in the following sections.

2. Objectives and methodology

Objective of this contribution is to compare the expected and actual changes of current processes and
accounting procedures setting and propose the changes leading to their future higher efficiency and security.
It is expected that the proposed changes will finally lead also to positive changes in all business activities and
accounting processes of the analyzed company.

The objectives will be met taking into account the foreseeable need to improve the existing information
system used by the company. Current company information system was selected by the parent company.
Therefore all proposed changes need to be approved by this parent company, because they may affect also
other enterprises, not only the one analyzed by the article authors.

Selected type of conducted survey is qualitative research using the document analysis, participating
observations and non-standardized conversation. Conducted research pointed out the most significant
problems usually solved by the selected business unit in relation to its daily use of information system.

3. ERP systems use and options

From the business information systems point of view represent the critical applications those for internal
business processes management like: production, internal logistics, human resource management and
economics. Information systems focused on management of these four areas are ERP systems. ERP systems
are used as the efficient tool that covers key internal company processes. They are used by many companies as

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

summarized in the following tables. There is also the comparison with two other systems, CRM and SCM, used
by the Czech companies in the Table number 1. Table number 2 summarizes the information about ERP
systems use by companies in the EU countries.
Table 1: Companies using ERP systems - evidence from the Czech Republic, 2017 (January)
Total number
Share Share
of companies Share
Size of enterprises using of enterprises using
extrapolated of enterprises using ERP
of the company CRM SCM
to the entire population to the total number
by the number to the total number to the total number
of companies of enterprises
of employees of enterprises of enterprises
in the reference sector in given size class (in %)
in given size class (in %) in given size class (in %)
and size group
10 - 49 30.859 19,7 16,6 1,7
50 - 249 6.740 53,0 34,3 4,3
250 and more 1.592 77,4 45,7 9,2

Source: own processing in accordance with ČSÚ (2018), 2018

Table 2: Companies using ERP systems - evidence from the EU, 2017 (January)
Use of ERP Use of ERP
Use of ERP by large companies
by small companies (10-49 by medium-sized companies
Country (250 and more employees)
employees) (50-249 employees)
(in %)
(in %) (in %)
EU28 28,41 57,18 76,38
Belgium 48,78 77,51 89,34
Bulgaria 20,04 35,52 59,15
Czech Republic 19,67 53,07 77,44
Denmark 33,94 67,59 82,31
Estonia 23,78 41,43 64,55
Finland 31,81 68,44 88,44
France 32,71 67,11 80,44
Croatia 19,73 46,75 75,47
Ireland 23,50 45,00 67,66
Italy 32,46 64,77 79,55
Cyprus 30,33 60,76 79,17
Lithuania 41,30 64,78 85,96
Latvia 19,89 48,29 70,28
Luxembourg 35,27 60,27 75,17
Hungary 10,17 31,05 63,44
Malta 25,22 42,86 70,69
Germany 31,06 62,37 82,34
Netherlands 41,15 72,55 86,07
Poland 18,76 53,56 86,48
Portugal 33,46 70,18 90,35
Austria 34,46 68,33 89,49
Rumania 13,96 23,90 49,21
Use of ERP Use of ERP
Use of ERP by large companies
by small companies (10-49 by medium-sized companies
Country (250 and more employees)
employees) (50-249 employees)
(in %)
(in %) (in %)
Greece 32,64 65,94 77,74
Slovakia 24,98 46,54 67,64
Slovenia 21,60 58,50 93,12
Spain 41,76 66,12 79,34
Sweden 26,17 54,93 75,90
Great Britain 14,50 38,16 57,44

Source: own processing in accordance with ČSÚ (2018), 2018

Above mentioned tables describe the situation in the use of all ERP systems. Further information will be
focused specifically on the economic ERP systems. Economic ERP systems are used by the companies who are
no more satisfied with simple accounting evidence, mainly medium-sized and huge companies. The intention
of companies decided to implement ERP system is usually interconnection of economic, business, personal,
production and other company processes. As the useful tool may be used any set of ERP modules selected
with respect to company’s activities. Economic (accounting) ERP system and accounting are two related terms.
Development of accounting and increase of the accounting agenda led to the creation of accounting systems
which simplify accounting data processing.

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

4. ERP system selection criteria - accounting view

To be able to decide which system is the most suitable one for activities of accounting department, it is
necessary to consider several criteria from the three main categories:
x content criteria,
x system (technical) criteria,
x business criteria.

To prepare as objective assessment as possible, it is suitable to use the multi-criteria selection.

ITeuro (2018) sets the five main points the company should consider before the final software solution
selection:
x Analyze “pains” - differentiate needs according to the types of production that the enterprise carries
out.
x Identify the benefits and problems that the information system solves.
x Select the appropriate software tool, identify the business activities to which the change relates. If
necessary, introduce the planned change to the employees.
x Determine the expected benefit measurement.
x Consider the company strategy, the future company development and future possibility of the system
to meet the company needs.

Usable ERP should have by Pelphrey (2015) or Kim et al (2017) these qualities:
x automation and unification of the key business practices,
x data and processes sharing across the enterprise,
x information creation and real-time access to information,
x historical data processing ability,
x comprehensive approach to ERP support.

Moreover, the acquired information system should be by Sodomka and Klčová (2011), from the technological
point of view:
x efficient,
x reliable,
x safe.

More detailed information about the above mentioned criteria and the areas they relate to is listed in the
following table.
Table 3: Criteria for ERP selection - accounting department point of view
General criterion Criterion Description
Assessment of the company organizational structure
Program advantages for its intended use
and size.
Possibility to make changes, purchase
Modularity and openness of additional modules, compatibility
with other systems.
Possibility of data sharing within modules, quality of
Extent and method of subsystem integration
control functions.
Content criteria Ensuring user functions, documentation functions -
Documentation and help installation, maintenance
and data protection.
User friendly and uniform throughout
User interface the program, understandable
and clear.
Degree of adaptability Adaptability versus costs.
Legislative requirements fulfilling Compliance with current legislative requirements.
Minimum and recommended configuration set by
Technical equipment requirements
the supplier.
Support for work in a computer network Data sharing, printing.
System (technical) Data protection and security Risk management, data access protection.
criteria Data backup Backup copies creation.
Technology of application and database technology
Additional information.
used
System maintenance and management System maintenance and management.

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

General criterion Criterion Description

Terms of use, installation, number
Licence conditions
of users and computers with installed program.
Installation Mostly done by the supplier.
Training Possibility of staff training.
Phone communication, web pages
User support
of the supplier, other materials.
Guarantee of updating in case
Business criteria Upgrade
of changes in legislation.
Price Price versus quality.
Reputation of the supplier Tradition, number of installations, ...
Audit made on the basis of the supplier's request -
confirmation
Audit
that the program is able to meet
the requirements of current accounting legislation.

Source: own processing in accordance with Mejzlík (2006) and Solitea (2018), 2018

4.1 ERP system - risks

Each implementation and use of information system is accompanied by the need to consider security
measures for the risky situations. Risk represents the form of company threat. It can cause damages and
significant financial losses. Risks that can be met in relation to information system use are by Gála et al (2015):

x insufficient information system - does not meet the company requirements,

x loss of data,
x errors (intentional or unintentional),
x system failure,
x unskilled users,
x wrong data backup,
x external attack on hardware or software.

The following sections of the article deal with the issue of ERP system implementation and improvements in
the analyzed companies.

5. Qualitative research
This research is based on the results of previously conducted researches (qualitative and quantitative) dealing
with the issue of implementation and use of accounting information systems or accounting modules of ERP
systems by the production companies. These researches were conducted in 2016 and pointed out the main
problems related to above described issues like:

x inappropriate information system setting,

x insufficient staff (user of IS) training,
x prevailing ICT approach to information system,
x intuitive information risk management.

5.1 Current state of information processing in analyzed companies

This qualitative research was conducted in 2017. The original research sample consisted of 5 production
companies. These companies provided information on their use of accounting information system and also
other parts of company information system, because if the company used ERP system selected modules, their
representatives were not always able to divide the used operations or describe them without all production
processes inclusion.

Information was provided by 5 representatives from the area of accounting and information technologies (IT)
coming from the companies based in West Bohemia. Used method of survey was non-standardized
conversation (semi-structured expert interview). Respondents were asked questions related to the use of
information system (type of information system, technical background, access to the information system,
information management, risk management). The respondents were also asked to prepare a brief analysis of
the situation in the field of information management and use of information system in the company where
they work (brief analysis of risks and benefits).

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

Gathered information was analyzed and after this analysis, one selected company was asked to provide more
detailed information. This company provided very clear analysis covering all problem areas mentioned also by
other respondents. The representative of this company helped the article authors to compile the final report.

5.2 Current state of information processing in analyzed production company

The subject of analysis has become the limited liability company based in West Bohemia. This company is the
producer of ventilators, compact air conditioning units, assembled air conditioners and door curtains. The
company employs about 300 employees, the production capacity is represented by 10 production halls with an
2
area of 14 545 m .

Since the foundation of the company in the 1990s information system which enabled not only accounting data
gathering and processing was used. It was Material Resource Planning (MRP) system used mainly for
warehousing purposes. Financial accounting was processed by an external tax office. Invoices were only
recorded to MRP, but they were no longer processed.

Growth of production raised the need for data processing. Therefore, the new information system acquisition
was assessed. All necessary considerations related to the suitability of purchased system were done, but the
solution was in principle clearly determined from the beginning. Parent company based in south central
Germany uses the ERP system PROαLPHA supplied by the SPC solutions Inc.

System PROαLPHA is said to be “a comprehensive solution designed to optimize all relevant core processes. It
offers a wide range of functionalities for purchasing, materials management, production, cost accounting,
financial accounting, sales, customer relationship management, business intelligence, CAD (computer aided
design) integration, document management, and e-business” (PROαLPHA, 2018). This system supports also
activities of companies operating worldwide.

5.3 Analyzed production company - current situation in data processing

Following table identifies the modules currently used by analyzed company. There are also highlighted the
differences between the IS use in the parent company and analyzed company. During the ERP system
implementation was simultaneously used the original system of company data processing. Concurrent data
processing took four months.
Table 4: Analyzed production company - currently used modules of PROαLPHA
Name of the module Level of use by analyzed company
Master Data Considerable degree of utilization
Sales Considerable degree of utilization
Purchasing Considerable degree of utilization
Materials management Considerable degree of utilization
Production Considerable degree of utilization
Project management Standard use
Financial accounting Standard use
Investment accounting Standard use
Cost centre accounting Standard use
Bookkeeping of cost carriers Standard use
Bookkeeping of results carriers Standard use
MIS Standard use
Evaluation Standard use
System administration Standard use
System configuration Standard use
Development Standard use
Intercompany (IC) Considerable degree of utilization
Typenschild Considerable degree of utilization

Source: own processing in accordance with PROαLPHA (2018) and conducted research, 2018
Modules IC and Typenschild were prepared especially for the analyzed company. Module IC enables electronic
data interchange with the parent company and the module Typenschild enables centralized printing of labels
that are sticked to the final products.

Both companies use the system PROαLPHA, both have the access to the system of each of those two
companies. The access is limited by the program level, for example access only to the item Master data. Both

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

sides have three accesses for simultaneously working IS users. Parent company is in the position of sales office,
analyzed company represents one of the greatest production plant in the concern. Parent company therefore
uses the modules sales, purchasing, master data, materials management and production less than analyzed
company.

In the modules related to accounting are, in parent company, used also special sub-modules like quality
assurance system called Babtec. This module enables complaint processing and generating of protocols about
non-compliance and keeping track of gauges in the area of metrology. System PROαLPHA has many
advantages, but it is possible to meet also the disadvantages as no possibility to provide selected accounting
and business processes using the PROαLPHA system. The company therefore uses additional programs like MS
Excel and others.
Table 5: Business activities processing using the information system and other programs
Used system or program Volume of processed business activities
PROαLPHA 71 %
MS Excel 14 %
CAD 13 %
Other and supporting documents 2%

Source: own processing in accordance with conducted research results

To business activities processed by other programs belong calculations, calculation of depreciation, production
planning, accounting, dealing with complaints and evidence of gauges.

System PROαLPHA is used by analyzed company and its parent company in a similar way. The differences are
minimal. Parent company focuses mainly on business activities and uses the quality assurance system called
Babtec. Analyzed company uses most often the modules Typenschild and Materials management due to its
focus on production and use of warehouses to a grater extent than the parent company.

5.4 Identification of strengths and weak areas and proposals for changes
During the interviews with the specialist from the field of accounting were identified positive and also negative
impacts of information system use to the company processes. The summary is in the following table.
Table 6: Advantages and disadvantages of ERP system use - evaluation of the current ERP system status and
settings
Advantages Disadvantages
No possibility to manage trades in money
Comprehensive ERP. and capital markets and work
with financial derivatives.
Available as on-premise software
No possibility of market risk management.
or as cloud version.
No possibility to manage data on carrier
Generally identifiable Productivity and transparency of data processing.
planning and recruitment.
by all IS users
Possibility to use the system in ordering, series production Unavailability of accounting
and trade. for continuous production.
System is suitable only for selected
branches. It is not possible to use it
Support for international business. in the areas like: food, beverage,
construction, textile, shoe
and metallurgical industry.
Intuitive use.
User-friendly user interface.
Applicable help.
Limited simultaneous use of the system
The possibility of limiting access rights.
by multiple users.
Identified Document management (original accounting documents No possible use of calculations and wage
by the analysed processing) accounting module.
company IS users Archiving documents.
Use of CRM module – improvement
of communication with customers.
Computer Telepohone Integration (CTI).
Claim management.
Module Sales – sub-module: public information service.

Source: own processing in accordance with conducted research, 2018

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 Marie Černá, Lucie Vallišová and Pavla Karabinová

Table 7: Proposals for changes of current state of ERP system use

Type of change
Document Management System (DMS)
- purchase and implementation
of this module.
Customer Relationship Management (CRM) -
purchase and implementation
of this module representing part
of the module Sales.
Advanced Production Planning (APS)
- purchase and implementation
of this module.
Upgrade of currently used version
of PROαLPHA.
PROαLPHA setting improvement.
Further changes in logistics.
Effects of change
Possibility to process data in MS Word and MS Excel using IS.
Document search using advanced filters.
No necessity to spend time by searching in the archive.
Saving of wage costs - employees in archive and seasonal help in IT.
Reduction of the negative impact on the environment.
Improvement of communication with customers.
Service and claim management.
Early warning system.
Computer Telepohone Integration (CTI).
Facilitating the acquisition of new customers.
Reduction of the need for manual data entry.
Reduction of possible error rate.
Compilation of the production plan using the module,
not manually in MS Excel.
Improving Supply-Customer Relationship Management (SCM).
Immediate control of material availability, no need of manual recalculation.
Planning in term of hours
(not a week in advance as in current system).
Increase of production capacity at existing capacities
and shortening of production times.
More user-friendly user interface.
Faster query processing (printing of reports, data export).
More sophisticated Workflow.
Better material calculation setting.
Correction of depreciation settings.
No need to prepare calculations and calculate depreciation using MS Excel.
Layout processing – move an hour earlier - acceleration
of system operations during employees' working hours.
Purchase of barcode readers.
Purchase of RFID gateways

Source: own processing in accordance with conducted research, 2018

These proposals would, if implemented, serve to streamline business operations and accounting processes in
the analyzed company. It can be said that the implementation of the proposals into practice would bring an
increase in labor productivity and ultimately also an increase in company profits. The biggest obstacle is the
extremely high costs demands associated with the acquisition of additional modules. In the enterprise, similar
amounts are invested rather to modernization and expansion of production and to purchases of means of
production.

6. Conclusion
This article deals with the issue of ERP system influence on business data processing, mainly in the area of
accounting. Authors examined the possibilities of using the PROαLPHA system in a selected production
company, where the ERP system selection was influenced by the decision of the parent company.

Objective of this contribution was to make the comparison of expected and actual changes of current
processes and accounting procedures setting and prepare the proposal of changes leading to their future
higher efficiency and security.

To be able to meet the set objective, analysis of current state of use of purchased modules of ERP system
PROαLPHA was conducted. Information used as the base for final report was gathered during the semi-
structured expert interview with the employee of analysed company with the experience in the field of
accounting (economy). The extent of utilization of available system functions has been examined in relation to
all processes in the company associated with the area of company supporting processes. Other corporate
activities were also mentioned, because it was not always possible to extract just the information from the
accounting area. Supporting activities provided by the accounting (economic) department are always
significantly influenced by other business processes setting and current legislation. During the comparison of
use of ERP system functions was confirmed that there are only small differences in the rate of ERP system
function use in parent company and analysed production company. These differences come from the different

35
 Marie Černá, Lucie Vallišová and Pavla Karabinová

positions of the two mentioned companies. Parent company is in the position of sales office, analysed
company represents one of the greatest production plant in the concern.

Proposals for changes were prepared for the production company with the intention to make the daily
processes ensured by the company more efficient. Possibilities that can facilitate the work of company
employees (not only in accounting department) in the future were taken into account. To the most important
changes belong implementation of DMS and APS module of PROαLPHA system. All proposed changes should
lead to facilitation of document processing and archiving, facilitation of the master of production work, making
production more efficient and implementation of the quality management or its parts to management of
business processes. During the research were also set the expected expenses related to the proposed changes.
Further should be done the comparison of expected expenses and benefits of proposed changes. However, the
final decision on making changes depends on the management of analyzed company.

References
Best, D. (1996) The Fourth Resource. Information and its Management, Aslib Gover, Aldershot.
Czech Statistical Office (ČSÚ). (2018) “Use of selected management information systems in the business sector”, [online],
Czech Statistical Office, www.czso.cz
Dresner, H. (2015) “Business intelligence”, [online], Dresner Advisory Services, www.dresneradvisory.com
Drucker, P. F. (1993) “The Rise of the Knowledge Society”, The Wilson Quarterly, Vol 17, No. 2, pp 52-71.
GÁLA, L. et al (2015) Business Informatics: Computer applications in corporate and inter-company practice. 3., Grada
Publishing, a.s., Praha.
International Organization for Standardization (ISO). (2011) ISO/IEC 27005:2011. Information technology - Security
techniques - Information security risk management, International Organization for Standardization, Geneva.
ITeuro, a.s. (2018) “Advanced planning and scheduling”, [online], ITeuro, a.s., www.iteuro.cz
Kim, J. et al (2017) “The Impact of Enterprise Resource Planning (ERP) System on the Audit Report Lag.”, American
Accounting Association, Vol 10, pp 63-88.
Martin, W. J. (1995) The Global Information Society, Aslib Gover, Aldershot.
Mejzlík, L. (2006) Accounting information systems: use of information and communication technologies in accounting,
Oeconomica, Praha.
Monk, E. and Wagner, B. (2013) Concepts in Enterprise Resource Planning, Course Technology, Boston.
Pelphrey, M. W. (2015) Directing the ERP Implementation, CRC Press, UK.
PROαLPHA. (2018) “A Reliable Partner for SMEs”, [online], PROαLPHA, www.proalpha.com
Sodomka, P. and Klčová, H. (2011) Information Systems in Business Practice, Computer Press, Brno.
Solitea, a.s. (2018) “Products - Byznys ERP”, [online], Solitea, a.s., www.solitea.com
Švarcová, I. and Rain, T. (2011) Information management, Kernberg Publishing, s.r.o., Praha.
Vodáček, L. and Rosický, A. (1997) Information Management: Concept, Mission, and Applications, Management Press,
Praha.

36
Principles for Good Enough IT Service Management
Stefan Cronholm1 and Sören Romare2
1
University of Borås, Sweden
2
Tregamma, Gothenburg, Sweden
stefan.croholm@hb.se
soren.romare@3gamma.com

Abstract: To manage IT services continues to be a challenging process for many organizations. IT service providers are un-
der constant pressure to deliver IT services both at a low cost and high quality, in order to maximize benefits and value for
their customers. Obviously, IT service providers find that solving this equation is almost impossible. Thus, there is a need to
find new principles or guidance which support satisficing and acceptable IT service delivery. Improvement of IT services
delivery are often related to the concept of IT Service Management (ITSM). ITSM focuses on service delivery and can be
regarded as an umbrella term including frameworks, models and methodologies. Our review of the ITSM literature has
revealed that best practices and standards have been considered as expensive to implement and maintain, have caused
high expectations that are seldom fulfilled, are viewed as too complex, and have high learning thresholds which means
that learning is time-consuming. The purpose of this paper is to suggest principles concerning good enough IT service man-
agement which should be seen as a complement to established best practices and standards such as ITIL or ISO/IEC 20000
IT Service Management Standard. Our study has generated four principles: 1) focus on core processes, 2) design for co-
creation of value, 3) recognize situation-specific attributes, and 4) avoid over-engineering. The purpose of the principles is
to support the assessment of IT service delivery and to promote service management, with respect to costs, effort and
customer value. The principles have been implemented in a digital tool for the assessment and management of IT service
delivery. The tool has been used to test and verify the principles in real empirical settings. The principles have also been
collaboratively formulated by service practitioners and researchers. We claim that the principles advance theory concern-
ing service management, by providing normative knowledge with respect to the concept of good enough.

Keywords: Good enough, management principles, IT service management, service management, best practices

1. Introduction
This paper focuses on management of IT services. Management of IT services are often related to the concept
of IT Service Management (ITSM), which is a key issue in business and IT alignment, since organizations are
highly dependent on their IT services. According to Pollard and Cater-Steel (2009), the purpose of ITSM is to
provide real benefits by helping IT organizations become more adaptive, flexible, cost effective, and service
oriented. The implementation and management of IT services is often supported by best practices or stand-
ards such as ITIL, (e.g. Karu et al. 2016; ISO/IEC 20000 IT Service Management Standard (ISO/IEC 2011). Often
these best practices emphasize the importance of being service oriented and their purpose is to provide nor-
mative process support for service providers in their efforts to improve management and improvement of IT
services, in order to offer value to customers.

The problem we address is that implementing and maintaining best practices and standards are often consid-
ered expensive (Cronholm and Persson 2016), cause high expectations that are seldom fulfilled (Bardach
2011), are viewed as too complex (Van Bon 2002), and have high learning thresholds which entail that learning
is time-consuming (Cronholm and Persson 2016). According to Cepeda (2008), this is especially problematic for
small and medium sized enterprises (SMEs) which need to realize payoff quickly and cannot explicitly dedicate
staff to work solely with process improvement. The purpose of this paper is to advance theory concerning IT
service management, by providing normative knowledge with respect to the concept of good enough. This
knowledge will be expressed as principles based on ‘good enough’ which should not be regarded as a contra-
diction to best practices. Rather, they should be seen as a complement to or as a way to adapt best practices.

A principle is defined as a basic truth, law, assumption, or general rule (The Free Dictionary 2016). The princi-
ples have been implemented in a digital tool for the assessment and improvement of IT services. In addition,
the principles have been empirically tested by acquiring experiences from the practical use of the tool in a set-
ting consisting of IT service providers (suppliers) and service receivers (customers, consumers). The following
section presents a description of the state-of-the-art concerning best practices while a presentation of the
state-of-the-art of the good enough concept is included in section 3. The methodology used is described in
section 4. Section 5, presents the findings and finally, in section 6, conclusions are drawn.

37
 Stefan Cronholm and Sören Romare

2. Shortcomings and Critical Factors in Best Practices: State-of-the-Art:

The purpose of best practices is to improve the quality of IT services, by delivering superior results compared
to other frameworks. A quote from Szulanski (1996, p. 28) reads, “It [best practice] connotes the firm's replica-
tion of an internal practice that is performed in a superior way in some part of the organization and is deemed
superior to internal alternate practices and known alternatives outside the company”. In addition to the prob-
lems described in section 1, our literature review has also revealed a number of other shortcomings. Neward
(2010) criticizes best practices for taking a solution to a problem out of a specific context and applying it across
the entire spectrum, which essentially can invalidate the whole purpose. Cronholm and Persson (2016) and
Röstlinger and Cronholm (2009) criticize best practices for being too general and thus difficult to transfer to
new unique contexts. Winniford et al. 2009) presents a list of barriers to adopting best practices. The highest
ranked barriers are: need of more information about service management; my IT is good enough already;
there is no push for service management; and it costs too much. Capps (2009) claims that there is a need of
services that are ‘good enough’ and ‘fit for purpose’. This claim is based on that best practices are too costly to
implement and that there is a risk for over-engineering. Johnston et al. (2002) criticize current best practices
for being over structured and state: “A more structured approach driven by models and frameworks is leading
managers to become swamped with measures and information such that they spend their time feeding meas-
uring systems rather than focusing on management and action” (p. 261).

Pollard and Cater-Steel (2009) report from case studies and present six critical factors which are important in
achieving an effective service-oriented philosophy: support from senior management; the threat or opportuni-
ty to outsource IT services; integration of processes to provide end-to-end service; involvement of business
stakeholders; change of IT staff culture to include service excellence; and the redesign of processes prior to
investing in tools. One important conclusion of their study is “If IT service providers fail to provide a reliable
customer-centric focus, it will impact on their organizations by limiting the potential for IT to add value” (p.8).

All the shortcomings and critical factors discussed above seem to be oriented towards costs, efficiency, stand-
ardization, control and ease-of-use. This criticism has been valuable input for the development of principles
concerning good enough.

3. A Review of Good Enough: State-of-the Art:

3.1 Aspects and definitions of good enough

Initially, our literature search concerning good enough resulted in only a few articles. Moreover, we did not
find any established definition of good enough. However, we found a number of discussions which emphasize
different aspects and suggest alternatives for understanding the concept of good enough. One lexical defini-
tion of good enough reads: satisfactory and adequate (Oxford Dictionaries 2016). According to Bach (1997),
good enough is characterized by the following propositions: it has sufficient benefits; it has no critical prob-
lems; the benefits sufficiently outweigh the problems; and further improvement would be more harmful than
helpful. This characterization illustrates that good enough has nothing to do with mediocrity. Instead, it con-
sists of rational choices rather than compulsive behavior, such as thoughtlessly following recommended pro-
cesses in best practices. Moreover, Bach (1997) states that “If something really is good enough … then further
improvement means making an investment that has an inadequate return” (p.98). Our interpretation of Bach’s
view of good enough is similar to the expression Simon (1992) calls ‘satisficing’ which is a combination of ‘sat-
isfy’ and ´suffice´. Johnston et al. (2002) discuss good enough from the perspective of performance measure-
ment. They claim that there is a risk of over-complexity in performance measurement. Instead, they advocate
the good enough performance measurement which means a willingness to trade off performance measure-
ment as an activity against decision-making and action, with a focus on improvement rather than control.

Capps (2009) discusses good enough from a consumer perspective and describes ‘the good enough revolu-
tion’. He states: consumers sacrifice quality for a cheap and convenient device, and consumers will use prod-
ucts that are good enough for their requirements, despite the availability of more advanced technology. Fur-
thermore, Capps (2009) claims that what consumers want from the products and services they buy is funda-
mentally changing. Consumers prefer flexibility over high fidelity, convenience over features, quick and simple
over slow and polished, and having it here and now rather than having it perfect.

38
 Stefan Cronholm and Sören Romare

3.2 Other similar concepts

Our literature research has also exposed a number of similar concepts. One such concept is ‘optimal’. Accord-
ing to Online Etymology Dictionary (2016), optimal means ‘most favorable’ and its meaning is closely related to
the engineering fields. It refers exclusively to the fact that one state is better than all other states (Loeb 2012).

The second similar concept identified is the Pareto principle which is coined by the late Italian economist and
sociologist Vilfredo Pareto. This principle is also known as ‘the 80-20 rule’ (e.g. Sanders 1987; Craft and Leake
2002). Examples of the Pareto principle include that 80% of the effects come from 20% of the causes and 80%
of your sales come from 20% of your clients. A third similar concept is ‘less is more’ which emanates from the
fields of design and architecture (e.g. Carter and Mies van den Rohe 1999). The purpose of ‘less is more’ is to
strive for minimalism and simplicity and to reduce complexity.

The fourth similar concept is ‘over-engineering’ (e.g. Lethbridge and Laganiere 2005; Kerievsky 2002). Over-
engineering refers to the idea that products are designed to be more robust and have more complexity than
they would necessarily need for their application area. The fifth similar concept is ‘good practice’ which is dis-
cussed in ITIL (Cannon et al. 2011). Good practice means simply doing things that have been shown to work
and to be effective. A good practice can derive from many different sources, such as frameworks, people and
organizations (ibid.). We can conclude that the concept of good enough partly overlaps all these similar con-
cepts, but that it also encompasses other aspects not included in these similar concepts.

4. Research method
This study has been part of a three-year research project, whose overall purpose is to suggest efficient models
and methods for ITSM. The project included six firms and two municipalities representing both IT service pro-
viders and customers. The project also included four researchers. The service providers consisted of IT manag-
ers, IT consultants, and those responsible for customer relations. The customers represented the business and
included roles such as CEOs, CIOs, process owners and those responsible for e-services. One of the researchers
and one of the service providers are the authors of this paper. In order to suggest principles concerning good
enough, we have conducted an action research approach (e.g. Susman and Everett, 1978; Cronholm and
Goldkuhl, 2003). We have structured our research process into five actions: analyze the-state-of-the-art, for-
mulate initial principles, implement principles, collect feedback and enhance the principles. The purpose of the
first two actions was to suggest initial principles concerning good enough and the purpose of the latter three
actions was to iteratively enhance the initial suggestions. While the researchers conducted actions 1, 2, 3, and
5, researchers, service providers and customers collaboratively conducted action 4. Each action is described in
detail below.

Action 1 - Analyze the state-of-the-art. The first step was an analysis of the state-of-the-art concerning the
concepts of best practices and good enough, to learn what is known (see section 3). This was done by litera-
ture studies and using Google Scholar to find knowledge concerning the concepts ‘best practice’, ‘good
enough’, ‘good enough quality’ and ‘principles concerning good enough’. During the review of the state-of-
the-art with respect to these concepts, other similar concepts that were important to consider were found
(see section 3.2).

Action 2 - Formulate initial principles concerning good enough. Initial principles were formulated on the basis
of the results from the analysis of the state-of-the-art. That is, the initial formulations were based on existing
definitions and aspects of good enough. Other similar and overlapping concepts were also reflected upon (see
section 3.2). These initially formulated principles were regarded as hypotheses, since they were based on the-
oretical insights but lacked empirical verification.

Action 3 - Implement principles concerning good enough. To support the verification and enhancement of the
principles, we implemented them in a digital tool for service assessment and service improvement. Imple-
menting the principles meant they could be verified through their practical use in the participating organiza-
tions’ environments. Since the implementation included to visualize the principles in a concrete way, we as-
sumed that this would increase our possibilities to obtain richer and qualitative feedback. This assumption is
supported by Vonk and Ligtenberg (2010) who have reported about the advantages with more concrete illus-
trations.

39
 Stefan Cronholm and Sören Romare

Action 4 - Collect feedback. The purpose of this action was to strengthen the hypotheses through empirical
testing. Feedback was collected from a service provider and a customer using the digital tool to assess IT ser-
vice delivery and to improve IT services in a real empirical setting. More specifically, we collected feedback
with respect to how the suggested principles helped the assessment and the improvement. This included an
explicit discussion of the implemented principles. The analysis of the notes taken during the discussions was
the basis for improving the principles. Feedback was also gained from interviews with both service providers
and customers. In total, we have collected feedback from 20 tests. This means we have collected feedback
from two or three sessions with each participating organization. Each test lasted approximately two hours and
comprised two researchers, 1-2 service providers and 1-2 customers. Consequently, the suggested principles
were discussed and analyzed from both a service provider perspective and a customer perspective.

Action 5 - Enhance the principles of good enough. Based on the feedback from the empirical tests, the good
enough principles were enhanced. That means we formulated new principles, re-formulated existing ones and
implemented enhanced versions of the principles into the digital tool.

5. Principles concerning Good Enough

Our study has resulted in four principles concerning good enough: 1) Focus on core processes, 2) Design for co-
creation of value, 3) Recognize situation-specific attributes, and 4) Avoid over-engineering. Some of the princi-
ples are exemplified below by the use of the ITSM process Incident Management, which is one of the most
common processes used for service delivery.

5.1 Focus on core processes

The backdrop for suggesting the principle ‘focus on core processes’ is that there are a vast number of process-
es in popular ITSM best practices. Both ITIL (Cannon et al. 2011) and Capability Maturity Model Integrated for
Services (CMMI) (CMMI Product Team 2010) are recognized as extensive frameworks (Mesquida et al. 2012).
ITIL comprises twenty-four processes and four functions while CMMI contains twenty-four process areas. To
implement such a vast number of processes is considered to be too costly, especially for SMEs (e.g. Winniford
et al. 2009; Cronholm and Persson, 2016).

Based on a good enough perspective, our analysis of the feedback from the participating organizations clearly
indicates a need to focus on the most important processes which can simplify adopting the ITSM concept for
organizations. This was especially valid for SMEs, but also for other organizations in the project which were in
a position to adopt a structured process support, in order to improve the quality of IT service delivery, as well
as to find out new ways to deliver IT services. It was neither possible nor feasible for the organizations to
adopt a full ITSM best practice. The selection of the suggested core processes was based on the needs of the
participating organizations, with respect to their business goals. They were therefore asked to rank the most
important processes, which resulted in the following: Incident Management, Problem Management, Change
Management, Request Fulfillment, Service Level Management, and Business Relationship Management. This
selection corresponds well to the Pareto principle, since approximately 80 % of the participating organizations’
business was supported by these processes (see section 3.2). All six processes were implemented in the digital
tool that supports assessment and improvement of IT service delivery. According to the organizations, this
principle has reduced complexity and learning thresholds, which in turn means the organizations can adopt a
structured approach more quickly.

5.2 Design for co-creation of value

The motivation for the principle ‘design for co-creation of value’ is based on positive feedback concerning a
collaborative situation in which the shared competences of service providers and customers added value to
both parties. That is, service providers and customers jointly assessed current service deliveries and together
decided how the service delivery could be improved. The principle is related to service innovation theory (e.g.
Organisation for Economic Co-Operation, 2006), which claims that “innovation is collective process that re-
quires access to multiple skill sets” (p. 11) and “users and customers are important drivers of information” (p.
11) “integrating internal and external capacities are extremely important” (p. 14).

According to the feedback, both service providers and customers prefer to solve problems ‘here-and-now’,
instead of long-winded problem-solving processes. This means the phases of problem formulation and prob-
lem solving were tightly coupled, instead of being two distinct phases. To solve problems ‘here-and-now’ was
considered time saving and both parties preferred efficient and result-oriented meetings. The support for ‘de-

40
 Stefan Cronholm and Sören Romare

sign for co-creation of value’ is illustrated in figure 1. First, the customer and the service provider have individ-
ually graded the statements concerning Incident Management and commented their grading. Altogether,
there are 20 statements, but due to limited space the figure only includes five statements. Then, the customer
and service provider met face-to-face to discuss discrepancies in the grading and possible differences in the
understanding of the problem. The purpose of this discussion was to arrive at a shared understanding of the
problem by sharing perspectives, competences and experiences, in order to jointly co-create a solution which
will increase the customer value. During the discussions, ideas for solving the problem were immediately not-
ed in ‘Idea column’. There can be one or many ideas regarding how to solve one problem. These ideas were
valued at a later stage. The digital tool also provided the possibility to add a comment in the ‘Comment col-
umn’ next to the ‘Idea column’. The expected customer value can be noted in this column. The participating
organizations preferred this way of shared problem solving compared to a situation where only the service
provider is the problem solvers. This improved way of problem solving added quality both to the formulation
of the problem and to the agreement of the solution. A related quote from one of the participating organiza-
tions claims, “Solutions suggested from a one-sided service provider or a customer perspective will probably
be short-lived”. Our analysis has also shown that the principle ‘design for co-creation of value’ prevented ser-
vice providers from implementing functions that the customer did not request. The principle of ‘Design for co-
creation of value’ is in line with the concept ‘Value cocreation’ (Vargo and Lusch, 2016). They claim that value
is always co-created by multiple actors that always include the beneficiary.

Figure 1: Illustration of ‘Design for co-creation of value’ and ‘Avoid over-engineering’

5.3 Recognize situation-specific attributes

According to Conboy (2009), value is a subjective concept. This means that every value co-creation situation is
unique. In other words, service delivery which is considered to be satisfactory in one situation is not necessari-
ly considered to be satisfactory in another. Based on the feedback, we have also experienced that value is dy-
namic over time. This means, something considered as value today does not necessarily mean it will be con-
sidered as value tomorrow. Consequently, service management can be conducted with less effort, lower cost
and lower customer value in one specific situation, while another situation would require more effort, higher
cost and higher customer value. Both these cases are considered as good enough. A quote from the feedback
reads: “To improve services in collaboration ensures that situation-specific factors from both the service pro-
vider perspective and the customer perspective are included”. In figure 2, the digital tool includes support for
situation-specific service improvement. In other words, the tool supports possibilities to jointly discuss, value
and suggest ideas for improved service delivery. Step 1 contains the prioritized statements (see section 5.3 and
figure 1). Step 2 contains the ideas previously suggested (see section 5.3 and figure 1) and offers a possibility
to add new ideas. The purpose of Step 3 is to value each idea, which is done by the main criteria ‘Feasibility’,

41
 Stefan Cronholm and Sören Romare

‘Effect’ and ‘Risk’. These main criteria were derived from the feedback the participating organizations provid-
ed. Each main criterion has a number of sub-criteria which can be defined and modified according to the situa-
tion. There is also a possibility to weigh each sub-criterion. The valuation and the weight are used to calculate
a total which is used to compare the ideas and to find the most preferable one. Due to limited space, we are
not able to illustrate how different ideas are compared.

Figure 2: Illustration of ‘Recognize situation specific attributes’ and ‘Avoid over-engineering’

5.4 Avoid over-engineering

The motivation for suggesting the principle, ‘avoid over-engineering’, is that the service providers often deliv-
ers too much. That is, they delivered more than what had been agreed upon. This over-delivery was based on
the service providers’ ambition to deliver perfection and a standard of professionalism, with regard to the so-
lutions, that the service providers were proud of. This over-delivery was considered costly and time-
consuming. One quote from the feedback reads, “if we strive for perfectionism, we will never progress”. Bach
(1997) adds that everything has a cost, and what we want always exceeds what we can afford. It is important
to note that the principle ‘avoid over-engineering’ is not the same as over-simplification. To avoid over-
engineering means making the right effort in relation to customers’ requirement and budget. In addition,
avoiding over-engineering means reducing complexity, satisfying customer needs and not delivering unwanted
quality. The principle ‘avoid over-engineering’ touches on the Pareto principle, which means that if possible,
you should settle for solutions that solves 80% of the problems (see section 3.2); the remaining 20 % would
probably provide a lower value at higher costs.

The principle of avoiding over-engineering is supported in figure 1 and figure 2. Figure 1 shows that assess-
ments made by service providers and customers are based on specific statements concerning the Incident
Management process. The idea is that service improvement has to take place where there is a notable differ-
ence in the grading between the service provider and the customer (or if both parties considered something to
be unsatisfactory). Of course, there can be many differences in how the service provider and the customer
have graded the statements. The purpose of the column on the right (Prio.) is to support a prioritization of the
most critical challenges and is made jointly by the service provider and the customer. This is line with Bach
(1997) who claims that good enough has been fulfilled when no critical problems remain. ‘Avoid over-
engineering’ is also supported in figure 2 since the ideas are jointly suggested and valuated by service provid-
ers and customers. The fact that this is a joint effort prevents over-engineering to occur.

42
 Stefan Cronholm and Sören Romare

6. Conclusions
In this paper, we have elaborated on the concept of ‘good enough’ and proposed normative knowledge ex-
pressed as principles concerning good enough, to promote service improvment as a complement to best prac-
tices in the IT sector. We have also illustrated how the principles can be used in a collaborative situation con-
sisting of a service provider and a customer. The four suggested principles are: 1) Focus on core processes, 2)
Design for co-creation of value, 3) Recognize situation-specific attributes, and 4) Avoid over-engineering. The
principles have been iteratively tested and verified in real empirical settings. We can conclude that the princi-
ples have supported the collaborative assessment and improvement of IT service delivery. Both the service
providers and the customers experienced that the principles support a good enough perspective which in-
cludes delivery of satisfactory value with a satisfactory effort at a satisfactory cost. That is, the principles have
supported assessment and improvement as ‘fit to purpose’.

We can also conclude that the concept of good enough has nothing to do with mediocrity. It is not something
that just happens when a project is short of money. Good enough is a reaction to unnecessary perfectionism
and over-engineering. Good enough is a strategy that supports service providers: in their delivery of services
requested by the customer, in the delivery of services for which they are paid and in their delivery of the right
services at the right price. Moreover, we can conclude that the suggested principles are especially useful for
SMEs or other organizations that do not have the time or resources to spend according to comprehensive best
practices. As further research, we suggest testing the principles in other sectors that need ‘good enough think-
ing’. Such sectors can be IT-related or could be any sector that includes service management.

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Challenges and Opportunities for a Successful Small-Scale ICT
Management
Ian Jester M. de Vera and Ergun Gide
Central Queensland University, Sydney, Australia
ianjester.devera@cqumail.com
e.gide1@cqu.edu.au

Abstract: Much has been said about small and medium enterprises or SMEs being the backbone of the economy for
developing countries around the world, as governments increase their financial assistance for their development and
growth in the hope of spurring national economic progress. But despite this increased attention being provided to SMEs,
they remain lacking in many resources, financial and otherwise. It is thus important for SME policy makers, advocates and
researchers to study how SMEs around the world manage to thrive using available resources they have to hurdle
operational issues that come with their size. One technology that SMEs can take advantage of is ICT or information and
communications technology. Oftentimes regarded as a great equalizer that can close in the gap between large and small
enterprises, the technology enables increased productivity and efficiency in the workplace with remarkable speed and
scalability using only few resources. To identify the challenges and opportunities for a successful ICT management by SMEs,
this study employed the content analysis technique by collecting papers from secondary data. Specifically, this research
used a comprehensive review approach in examining all available peer-reviewed articles in the last five years (from 2013 to
2017) to analyze the challenges and opportunities for a successful implementation of ICT management by SMEs in the Asia-
Pacific region, where two of the most populous countries in the world are located and where all the East Asian
technological powerhouses can be found. Across all literature, ICT poses both challenges and opportunities for SMEs.
While ICT can become an advantage for these SMEs as they become more globally competitive, the same can also become
a threat as they become more exposed to a globally competitive environment. The results of this comprehensive review
suggest that ICT adoption and management of SMEs are not uniform. ICT use needs to be considered according to
individual ICT applications and explained in the context of a particular SME.

Keywords: information and communications technology (ICT) management, small and medium enterprises (SMEs),
technology management, innovation management, Asia-Pacific

1. Introduction
Small and medium enterprises or SMEs have caught the attention of researchers and policy makers around the
world because of their significant contribution and impact to the socioeconomic development of individual
countries and regions. In particular, SMEs boost competition; have flexibility to respond to rapidly changing
demand; provide mostly employment, including in times of crisis; enable self-realization of citizens; create
conditions for the formation of the middle class that provides stability in society; contribute to the
establishment of private property, the development and implementation of innovations; and participate in
exports and attracting investment (Laurențiu, 2016).

As a response, governments around the world undertake a range of initiatives to foster SME access to finance
as well as complimentary policies to support bank financing (OECD, 2018). Other emerging policy trends
include the introduction of comprehensive policy reforms to address the needs of innovative startups,
combining both financial and non-financial support (OECD, 2018). But despite these various forms of
assistance being provided to SMEs, they remain lacking in many resources, financial and otherwise (Duarte
Alonso et al, 2014; Kahiya and Dean, 2016; Kahiya, Dean and Heyl, 2014; Paul, Parthasarathy and Gupta, 2017;
Ramukumba, 2014).

It is thus important for SME policy makers, advocates and researchers to study how SMEs around the world
manage to thrive using available resources they have to hurdle operational issues that come with their size.
One technology that SMEs can take advantage of is ICT or information and communications technology.
Oftentimes regarded as a great equalizer that can close in the gap between large and small enterprises, the
technology enables increased productivity and efficiency in the workplace with remarkable speed and
scalability using only few resources (Cardona, Kretschmer and Strobel, 2013; Hagsten and Kotnik, 2017).

Of particular interest is how SMEs in the Asia-Pacific region manage to overcome challenges using ICT as a
success factor, given that two of the most populous countries in the world, China and India, are in the region

45
 Ian Jester M. de Vera and Ergun Gide

and other Asian economies like Chinese Taipei, Japan and South Korea are headlining technological innovation
in terms of technological agility and savviness (Ahmed, 2017; Ahmed and Ridzuan, 2013).
2. Search method and data sample
To identify the challenges and opportunities for a successful ICT management by SMEs, this study employed
the content analysis technique by collecting papers from secondary data. Specifically, this research used a
comprehensive review approach in analyzing all available peer-reviewed articles in the last five years (from
2013 to 2017). On 24 March 2018, well-known academic databases of Academic OneFile, Directory of Open
Access Journals, Elsevier ScienceDirect Freedom Collection, Emerald, Gale Databases, SAGE Journals Online,
SciVal, Scopus, Springer Journals Online, Taylor and Francis Online and Wiley Online Library were analyzed
using the following Boolean search operator: (“ICT Management” OR “Manag* ICT”) AND (“*SME*” OR “small
business*”) AND (“Asia-Pacific”). The search retrieved a total of 237 results, which were further screened to
obtain English-only articles that made studies about ICT management of SMEs in the Asia-Pacific region.
Conceptual papers and those that did not focus on the topic were excluded. The final screening delivered a
total of 15 articles.

To make a comprehensive search, another Boolean operator was applied, this time with focus on the title (TI)
of the research articles being sought: TI = (information technology or IT or ICT or digital) and TI = (small and
medium enterprises or small business or small businesses or SMEs). The second query generated a total of 39
results, but upon further screening, no study relevant to the topic could be selected. Thus, this study focused
on the literature obtained from the previous search.
3. Results
The final selection of 15 articles had studies made about SMEs in the following geolocations: Australia, China
including Taiwan or Chinese Taipei, India, Indonesia, Japan, Malaysia and Vietnam. Malaysia had the most
number of studies with four articles written about their SMEs’ ICT management. It was followed by Australia
with three, and India and Indonesia with two. China, Chinese Taipei, Japan and Vietnam all had one article
each.

Although all the papers were written in English, it is significant that most of them were made in the Far East,
representing a growing interest in ICT management in the region.

Majority of the studies used the quantitative research method (n = 11, 73%). One study (Janita and Chong,
2013) involved the use of secondary data to analyze extant literature on ICT adoption among SMEs in one
Southeast Asian country.

While some of the studies indicated the industries where the SMEs surveyed belonged, the others did not
indicate their sectors. There is almost a balance in terms of focus of the research, as the studies that centered
on ICT adoption by SMEs slightly outnumbered (n = 8, 53%) the others that focused on certain approaches in
strengthening or developing the capabilities of those SMEs that have already adopted the technology.

The extant literature showed that the use of ICT by SMEs varied from the simple use of websites (Wang et al,
2015) to the more sophisticated technologies such as cloud computing (Ross and Blumenstein, 2015; Hassan,
2017) and enterprise resource planning software (Deshmukh, Thampi, and Kalamkar, 2015). Meanwhile, the
various approaches to strengthen or develop the capabilities of SMEs through ICT ranged from the
employment of Internet marketing (Aziz and Omar, 2013) to taking advantage of regional linkages (Aslesen
and Harirchi, 2015), early adoption (Ross and Blumenstein, 2015) and implementing a successful knowledge
transfer (Nguyen and Burgess, 2014). Training, hardware and software, project management, and top
management support also benefited SMEs that have already adopted ICT (Deshmukh, Thampi, and Kalamkar,
2015).

Table 1 presents a summary of the literature review.

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Table 1: Summary of the literature review

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4. Discussions and limitations

Since only eight geolocations in Asia and the Pacific are represented in this study, the findings could not be
taken to be illustrative of the entire region. Also, since each qualitative study involved a small sample size, the
results could not be interpreted to generalize the entire SME population. On the other hand, while the
quantitative studies involved a higher number of respondents, they were made in specific industries or sectors
and were therefore limited in scope, as each industry or sector is peculiar from another.

Except for one study (Wang et al, 2015), the literature find no significance in the fact that the SMEs surveyed
are situated in Asia and the Pacific. The studies tend to emphasize the importance of the human element even
in a field where technology should have an expected preeminence over other factors regardless of culture or
nationality of the participants. From the “adoption studies” to the “capability studies” the human element
figures prominently in the findings regardless of the country or cultural background of the SMEs surveyed.
Even when the technology boasts of value, benefits, usefulness, ease of use, and relative advantage, the
perception of either the owner or the employees is still important (Lai et al, 2013; Selamat, Jaffar and Kadir,
2013; Ahmad et al, 2014; Rahayu and Day, 2015; Wilkin et al, 2016). These pose both a challenge and
opportunity for ICT developers to create appropriate software and hardware that will be worth the investment
for SME owners and employees, the “human ware”.

Meanwhile, two adoption studies from the literature find more influence from technology than from human
factors such as top management support and employee knowledge. Hassan (2017), for instance, finds that the
relative advantages of technology can only be achieved within the allocated resources and without these
resources the adoption will be meaningless. It must be noted, however, that this study involved SMEs in the
services sector that only made use of free cloud-based services in their organizations (Hassan, 2017). The
nature of these free cloud services may justify the minimal requirements needed for top management
approval, especially in terms of financial provision, and top management only plays their role once technology
involves costs (Hassan, 2017).

On the other hand, Lai et al (2013) find that technology factors such as security and ease of use are most
influential in the adoption of ICT by SMEs. This finding was the result of a survey based on SMEs that engage
in business-to-business electronic banking. Therefore, technological sophistication in terms of security and
ease of use would be expected by these SMEs. The study also finds a connection between its results and a
“strong culturally specific design preferences for interfaces (Lai et al, 2013, p. 63)”. This finding is consistent
with Wang et al (2015), who found out that Chinese SMEs are more likely to use animation on the website.

While ICT procurement and services may be costly, an opportunity lies for external change agents such as the
government and the banking industry to step up their SME development initiatives and assistance, as the
literature find significant influence from them in an SME’s adoption of ICT (Janita and Chong, 2013; Ahmad et
al, 2014). Therefore, laws and policies in the Asia-Pacific region which will require SMEs to shift electronically
their government and banking transactions such as filing of their taxes or remitting contributions of their

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workers to the social security funds as well as programs that will help SMEs acquire ICT assets through loans or
grants will greatly influence SMEs to adopt ICT and eventually innovate and develop their capabilities.
5. Conclusions and suggestions for further study
In general, more than the hardware and the software, regardless of their features, advantages and benefits to
the enterprise, the human ware are also important for a successful ICT management. Top management
support and employee knowledge significantly influence adoption, development and innovation of SMEs
through the use of the technology. This is where investment in training and orientation of the organization
about the new technology would be meaningful alongside the investment in acquiring new ICT assets.

Should costs and sophistication (in terms of ease of use and security) be an important issue for the SME either
because of the nature of the business of the enterprise or because of purely cultural preferences, acquisition
of ICT resources such as hardware and infrastructure as well as employment of appropriate software would be
important factors beyond the human element.

Across all literature, ICT poses both challenges and opportunities for SMEs. While ICT can become an
advantage for these SMEs as they become more globally competitive, the same can also become a threat as
they become more exposed to a globally competitive environment. The results of this comprehensive review
suggest that ICT adoption and management of SMEs are not uniform. ICT use needs to be considered
according to individual ICT applications and explained in the context of a particular SME.

Finally, for further study, it is suggested that some of the qualitative analyses presented here be expanded to
involve a larger sample size so that the findings from the previous studies would be verified with higher
confidence level. And as for the quantitative studies, it is suggested that SMEs in other industry sectors be
studied too. Comparative studies that will deal with the SMEs’ adoption of free versus paid ICT services as well
as cultural differences in ICT management of SMEs in Eastern and Western countries may also be explored by
future researchers.
Acknowledgments
This work was made possible through the Doctoral Studies Fund of the University of the Philippines under its
Faculty, Research, Extension, Professional and Administrative Staff Development Program, and the Research
Higher Degree Conference Support Fund of the Central Queensland University.

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Hassan, H. (2017) “Organisational Factors Affecting Cloud Computing Adoption in Small and Medium Enterprises (SMEs) in
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Challenges for Effective Information Management in Hospitals:
Perspectives of Junior Doctors
Louise Evans1, Nina Evans2 and James Price3
1
Central Adelaide Local Health Network, Adelaide, Australia
2
University of South Australia, Adelaide, Australia
3
Experience Matters, Adelaide, Australia
louise.evans3@sa.gov.au
nina.evans@unisa.edu.au
james.price@experiencematters.com.au

Abstract: Data, information and knowledge are often referred to as ‘the lifeblood’ of an organisation. Managing such
information is especially important in hospitals as lives and wellbeing of patients depend on it. This paper describes the
results of qualitative empirical research to elicit views of junior doctors regarding the information they encounter in
hospitals, challenges to effective information management and strategies for improvement. Personal interviews were
conducted with ten junior doctors in hospitals in Adelaide, South Australia. It was found that junior doctors encounter
patient information such as patient history, test results and clinical guidelines, as well as management information such as
rosters and professional development. Junior doctors face a number of challenges regarding information management,
including poor handover and documentation, challenges obtaining histories from patients, poorly centralised information
storage, lack of access to external information, limits of confidentiality, information security and poor information
destruction. Recommendations to improve information management in South Australian hospitals include improvements
in the information management behaviour of practitioners, the implementation of a centralised electronic medical records
system, improved hardware and clear guidelines regarding information management.

Keywords: Information Management, Hospitals, Junior doctors, Challenges

1. Introduction
Data, information and knowledge are often referred to as ‘the lifeblood’ of an organisation. Information
management relates to the creation, storage and use of information to allow an organisation to achieve its
goals. The organisational structure must support information management throughout the information
lifecycle to deliver the right information to the right people at the right time (McConnell 2000). The stages of
the information lifecycle include creating, storage, use, sharing, archiving and destroying. Information
management relates to all types of information, all media formats and all types of health organisations.

Information management is an important part of a healthcare organisation’s activities. The World Health
Organization (WHO) asserts that good collection, management and use of information within healthcare
systems allows it to detect health problems, define priorities, identify solutions and allocate resources to
improve health outcomes (World Health Organisation 2005). Much of the responsibility for information
management in hospitals rests with junior doctors, that is doctors in their first few years after medical school.
This research elicited the views of junior doctors in public hospitals in Australia regarding the information they
encounter and the information practices of their environment. The specific focus of the research is on the
personal information management practices of junior doctors: the challenges they encounter and suggestions
for improvement to knowledge and information management practices in Australian hospitals.

2. Literature Review

2.1 Information management in Australian Hospitals

Information has long been recognised as one of the most important resources for hospitals (Wyatta 1995).
Timely and accurate information is required to guide clinical care, reduce medical error and guide quality
improvement, as well as direct population health management (Wyatta 1995, Hanna, Gill et al. 2017). Doctors
require information for a range of purposes, including patient care, teaching, continuing professional
development and research (Chitha 2017). This information is sourced from clinical knowledge, medical
records, test results and conversations with patients and families (Florance, Bettinsoli et al. 2002, Flynn and
McGuinness 2010). Clinicians must navigate a large corpus of knowledge and information to provide the best
evidence-based care available, which can often be overwhelming (Ely, Osherhoff et al. 2002, Williams, Cheung
et al. 2004, Flynn and McGuinness 2010, Gibson, Dixon et al. 2015).

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 Louise Evans, Nina Evans and James Price

Data and information management is forecast to become the biggest growth area in health due to digital
health transformation (Fenton, Low et al. 2017). Healthcare in Australia comprises multiple agencies, including
public and private hospitals, outpatient services, general practice and allied health, and computerisation is
variable across each sector (Pearce and Brainbridge 2014). Due to this variability there is minimal exchange of
information between healthcare providers from different sectors. Information sharing in healthcare settings is
complex due to the importance of data security (Fenton, Low et al. 2017). Information management systems
employed in healthcare must ensure that data is managed legally and securely. It is also important to
recognise that information in medicine is ever-changing and information management systems must keep up
with change (Ganzinger and Knaup 2017). It is well recognised that technological innovations and electronic
systems play a key role in improving the quality, flexibility and efficiency of healthcare services (Williams and
Dickinson 2010, Bullock 2014, Meyerhoffer, Deily et al. 2016).

2.2 Challenges and barriers to effective information management

The barriers to effective information management have been identified in other industries (Evans and Price
2017) and the findings may well be applicable to the hospital environment. Two studies by Chitha (2017) and
Kostagiolas and others (2012) investigated barriers to information seeking behaviours in healthcare settings.
Barriers include a lack of time, no available computers, lack of internet connectivity, poor access to libraries
and lack of technological skills (Kostagiolas, Ziavrou et al. 2012, Chitha 2017). These studies investigated the
research-level information searching behaviours professionals rather than the day-to-day and clinical
information management addressed in this paper. There was no specific focus on junior doctors, who play a
unique and important role in information management.

2.3 The role of the junior doctor in information management

Junior doctors are defined as doctors in their first few years after medical school. A large portion of the junior
doctor’s work relates to information management, including documenting clinical patient information and
managing hospital discharges and referrals (Miller 2003, Stojanovic, Cornejo Alonso et al. 2015, McDougall
2007). The junior doctor can be described as the “synthesiser” of information, collecting information from
multiple sources to present to their seniors. Accurate documentation has become increasingly important as
doctors face increased pressure to judiciously document clinical information for medico-legal purposes (Tabak
1995, Arnold 2012). Junior doctors are the end-users of any information management system and are very
time-poor (Brennan, Corrigan et al. 2010). Junior doctors therefore need to be confident that the processes
and procedures regarding information management are efficient and uncomplicated.

An important example of the junior doctor’s role in information management is in handover of clinical
information. Poor information transfer is often a contributing factor to major medical error, so identifying
reasons for this and addressing them will directly improve patient outcomes (Bernau, Aldington et al. 2006,
Pfeiffer, Nazareth et al. 2011, Mehra and Henein 2014)

3. Research Questions
The research questions that guided this study were:

1. What are the junior doctors’ views about their roles and responsibilities related to information
management?
2. What challenges do junior doctors encounter regarding information management in hospitals in South
Australia?
3. What strategies do junior doctors think hospital managers should implement to improve information
management practices in hospitals in South Australia?

4. Research Methodology
This study utilised a qualitative descriptive approach to enable the researchers to share individual stories from
junior doctors. The qualitative approach allows the researcher to establish rapport and extract honest
answers, which would not be possible with quantitative methods such as a more impersonal survey.

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4.1 Sampling and Recruiting Participants

Purposive sampling was used to select participants: junior doctors working in Public Hospitals in South
Australia. For this study, the term “junior doctor” includes doctors in the two years after graduation from
medical school.

Participants from each of the four Local Health Networks (LHNs) in Adelaide were selected (Table 1). The local
health networks in South Australia include the Northern Adelaide Local Health Network (NALHN), Southern
Adelaide Local Health Network (SALHN), Central Adelaide Local Health Network (CALHN) and the Women’s and
Children’s Local Health Network (WCHN). The Country Health SA Local Health Network (CHSALHN) was
excluded as the model of care is based on primary practice, which is not the focus of this research. Quota
sampling based on LHN was not required, as many junior doctors work across different health networks and
may draw on experiences from all networks in their responses to interview questions. The sample size was not
pre-specified but determined on the basis of theoretical saturation; the point in data collection when new data
do not add new insights to the research question (Glaser and Strauss 1967). A randomised sample was not
required as junior doctor perspectives are sought, not statistical significance.
Table 1: Study Participants
Post-graduate Location of Current
year Employment
P1 PGY 2 NALHN
P2 PGY 2 CALHN
P3 PGY 1 CALHN
P4 PGY 2 WCHN
P5 PGY 1 SALHN
P6 PGY 2 SALHN
P7 PGY 2 WCHN
P8 PGY 2 CALHN
P9 PGY 2 WCHN
P10 PGY 1 CALHN

4.2 Data Collection

Data were collected via personal interview to allow in-depth exploration (Charmaz 2006). The interview
protocol started with general questions, allowing the researcher to develop trust with the participant and
providing context for the more detailed discussion to follow. The researchers made use of both planned
(predetermined) and floating prompts (impromptu) to obtain more detail as required.

The interview questions were as follows:

1. What data, information, documents and knowledge do you deploy in your work as a junior doctor?
2. How much of your role as a junior doctor is collecting information?
3. What challenges do you face when managing information? Give examples where you can.
4. What do you think will help you to improve information management?

4.3 Data Analysis

The interviews were transcribed and de-identified. The interview transcripts were separately analysed by the
researchers and discussed to identify common themes. Open coding was used to produce a set of codes. Axial
coding was then used to refine and differentiate the categories to identify the categories most relevant to the
research questions.

4.4 Ethical Considerations

Ethics approval was obtained from the University of South Australia Ethics Committee. The researchers gained
informed written consent from participants, including confidentiality and secure storage of information
including recordings and field notes. The interviews were transcribed by the interviewer and de-identified
immediately. Participants understood that their involvement in the study was entirely voluntary and that they
may withdraw from the research project at any stage without consequence to their career or personal status.

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 Louise Evans, Nina Evans and James Price

5. Findings

5.1 Information encountered by junior doctors

Information has long been recognised as one of the most important resources for hospitals. This was
corroborated by participants, who described information management as an important part of their role as a
junior doctor:

“It [my job] is 99% information gathering and 1% what decisions you make from that information.” (P2)
“Everything you do is based around information that you have.” (P8)
“It [information management] is almost our entire role when you think about it.” (P9)

The types of information used by junior doctors are varied and include clinical information and information
related to the management and governance of the organisation. Most of the information junior doctors work
with is patient information, which includes information obtained from the patient during clinical history and
physical examination (P1-P10). This information is not limited to what the patient explicitly tells the doctor:

“We’re always collecting information from a patient, from the minute you walk in and look at them
you’re already formulating some idea about what’s going on and why they might be here.” (P4)

Patients’ family and friends are a valuable source of clinical information (P6, P9). Services such as the
ambulance and police services provide additional collateral history (P4, P5, P6). Information obtained during
handover from other healthcare workers form a large portion of clinical information encountered by junior
doctors (P1, P4, P6, P7. P10). Clinical handover occurs face-to-face, telephonically or using handover
documentation and may make use of tools such as the “introduction, situation, background, assessment,
recommendations” (ISBAR) handover tool (P3, P8). Results of tests and investigations also provide important
information to guide patient care (P1, P3, P4, P9, P10). These results are stored on a number of platforms.
Within SA Health these include Open Architecture Clinical Information System (OACIS), Enterprise Patient
Administration System (EPAS) and InteleViewer, among others. Information about a patient’s previous hospital
encounters, outpatient letters and discharge summaries are commonly used to gather additional clinical
information (P1, P3, P4, P5). Junior doctors often gather information from sources external to the hospital,
including General Practitioners (GPs) and nursing homes (P3, P5, P6, P10). Specialist services may require more
sensitive information such as child protection information and psychiatric histories, which in SA Health is
stored on a separate platform, Community Based Information System (CBIS) (P9, P10).

Junior doctors also use a substantial clinical knowledge base in their work, both their own knowledge and that
of senior colleagues in the team (P6, P7, P9). Participant 4 commented: “Everyone can provide knowledge and
information: nurses, colleagues, seniors, students”.

Clinical guidelines and protocols are useful, especially for junior doctors. These are found electronically on the
hospital intranet or printed guidelines in various locations around the hospital (P1, P3, P4, P5, P6, P7, P9). A
range of other clinical resources are useful for junior doctors. The most commonly identified resources include
the Australian Medicines Handbook (AMH), electronic Therapeutic Guidelines (eTG), Pharmaceutical Benefits
Scheme (PBS) website and UpToDate (P1, P5, P7, P8, P9).

In addition to clinical information used directly for patient care, information related to organisational
management or governance is also encountered by junior doctors. This information includes rosters,
timesheets, payslips and updates on clinical policies. This is most commonly communicated via email, or less
commonly via word of mouth, education sessions or posters in the hospitals (P3, P4, P10).

5.2 Challenges to information management

5.2.1 Limited access to information

A lack of access to information was identified as one of the greatest challenges for junior doctors:

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 Louise Evans, Nina Evans and James Price

“Some patients have a lot of past clinical history that would be useful but [we] don’t always have access
to that.” (P1)

“It’s a lot of detective work sometimes to hunt down information.” (P5)

This is particularly true regarding information from other hospitals, where written patient consent is obtained
before information is requested and faxed over:

“I’ve had patients who are under general anaesthesia so can’t sign a consent form to get this
information released and I urgently need this information related to the procedure.” (P2)

“Fax isn’t the most reliable system. It often goes to an open area fax where any staff member could
access that information but you’re not able to sit there and wait for a fax.” (P4)

Information from private hospitals and private specialists is particularly difficult to find, especially after hours
(P2, P4, P5, P6, P10).

“[You have to] wait for that person who only works from 9am to 2.30pm Monday to Friday to get that
information faxed.” (P10)

Access to outpatient information is limited in many hospitals using paper-based systems (P1, P5, P6):

“You know they had a urology appointment last week, but you don’t know the outcome of the
appointment was. And they don’t know either.” (P5)

Information storage varies between departments, which often makes finding information difficult:

“The haem[atology] patient letters are stored in word documents in a random file that you need to get
special access to and have it installed on your desktop. They’re coded by year, so you have to know what
year the person came to clinic. So, it’s really hard to find things.” (P7)

5.2.2 Poorly centralised information storage

A major challenge for junior doctors regarding information management is the incompatibility of information
technology systems (P5, P6, P7, P10):

“CBIS is the mental health record system for the State, and we don’t have access to that in the
Emergency Department. Knowing that someone has been physically violent with staff before isn’t
something that’s recorded in our system. It is on a separate system that doesn’t talk to our records
systems.” (P10)
“The problem with SA Health at the moment is that everything is everywhere. There are some bits in
EPAS, OACIS, outpatient letters. There is no centralised way to gather everything and save time. And
time is such a critical thing.” (P6)

5.2.3 Inaccurate clinical handover

Clinical handover is an important part of the role of junior doctors. They are responsible for producing
accurate handovers and utilising information obtained from handover to perform a clinical task. Handover is
often not well documented; patient information is jotted down on lists and scrap paper that is easily misplaced
(P3). Junior doctors rely on senior doctors’ knowledge, which is often exchanged during a “paper round” where
patients’ progress is discussed with seniors to develop an appropriate management plan (P1, P3). Occasionally
information is not appropriately conveyed in these settings due to the reliance on junior doctors’ memory of
minor details. For example, the junior doctor must remember a patient’s urine output over 24 hours to
determine the rate of intravenous therapy required, which can be difficult if the doctor has a high patient load:

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“You don’t want to look like you don’t know the patients so it’s easier to say: ‘it’s this much urine output’
but then if you get back to the ward and notice that it’s wrong you don’t have a plan for the patient.”
(P1)

Some hospitals employ a “clinical activity task board” for junior staff to handover information to the after-
hours team (P5, P6, P9). These task boards are useful when used appropriately, however occasionally
handover instructions are not clear, which can be dangerous:

“(Other doctors) write “please chase CT brain” but they don’t tell you what to do with it.” (P5)

5.2.4 Technical problems

Technical problems are a barrier to effective information management in hospitals. For example, there are
only a small number of computer stations accessible to junior doctors, and an even smaller number with
specialised programs to access specific investigations:

“There are six people who use our office and only three computers.” (P10)

Software malfunction creates havoc for junior doctors as without programs such as EPAS or OACIS, junior
doctors do not have the required information to make clinical decisions (P6, P9).

5.2.5 Inaccurate information obtained from patients

Junior doctors may have difficulty obtaining accurate histories from patients. This may be because they are
unwell, due to language barriers or if there is no adult to provide a history in the paediatric setting (P2, P9).
Patients occasionally provide a misleading history intentionally:

“Sometimes people think that either they’ll get different care or things will happen faster or differently if
they say the things they think we want to hear.” (P10)
“Patients don’t always fully disclose information, possibly because they are embarrassed or because the
truth paints them in a bad light.” (P1)

Examples of intentionally misleading information from patients includes concealing illicit drug use, being
untruthful about alcohol/cigarette use or not being truthful about which medications they take (P1, P4).

5.2.6 Inaccuracy of Documentation

There are a number of challenges to accurate documentation, including time pressures and reliance on junior
doctor’s memory when writing retrospective notes.

“You’re generally doing your note after you’ve done the information gathering, so you have to
remember it all and have the time to write it all down correctly.” (P9)

There may be opposing information in clinical documentation, which may reflect differences in clinical opinion,
changing clinical status or differences in the history obtained from patients (P1). Junior doctors often
document advice from other teams or seniors as discussed telephonically, however this information may not
be understood by the junior doctor, introducing miscommunication and clinical error (P3).

Furthermore, junior doctors are busy and work under immense time pressures, which may affect their ability
to write complete and detailed clinical notes:

“Sometimes I have knowledge that I don’t put in the notes because I don’t have time to write everything
down. I know about them in my head.” (P5)

5.2.7 Difficulties with paper-based notes

Health in South Australia is undergoing significant changes with the introduction of an electronic records
system, EPAS. Junior doctors who have previously worked with EPAS are frustrated with paper records:

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“It takes longer for paper notes to arrive and can be difficult to find information in the notes, things are
filed in different places.” (P1)
“I think my main challenge is paper notes - it takes forever for me to document things and find the
relevant information I’m looking for.” (P8)

5.2.8 Confidentiality challenges

Junior Doctors are aware of their responsibilities relating to privacy and confidentiality (P1-P10). Despite
understanding the requirements for confidentiality, participants were uncertain regarding who should have
access to different types of information (P3, P4, P5, P6, P10). When discussing whether information should be
shared with other departments, such as the Police, one participant commented “information is power and so
drawing a line between who needs to know what is difficult” (P5). At other times, accidental breaches of
confidentiality occur:

“In a public setting doing a paper round and attempts will be made to de-identify information but
people slip up and names are said, or information is given away that may be used to identify patients.”
(P3)

5.2.9 Information security concerns

Information security is important to maintain confidentiality, however junior doctors do not always comply
with information security requirements. Patient lists are printed every morning and are easily misplaced,
which means that patient information is no longer secure (P4, P9).

Junior doctors are concerned regarding capturing, sharing and storing information on their personal mobile
phones (P1, P2, P4, P5, P6, P10):

“We take a lot of photos on plastics because it’s a lot of wounds, people need to know what it looks like
for the management. People use their personal phone and we use our WhatsApp group quite often.”
(P5)
“On my personal phone I have like 50 ECGs [electrocardiograms] then a couple of nice things I’ve done
on my week off, then 100 ECGs straight, then a couple more nice meals I’ve had.” (P2)

Junior doctors also have concerns regarding the security of medical notes. Participant 6 recalls a case where
family members were reading confidential patient information:

“We would do our rounds and document it, and they would somehow steal the notes to read what we’d
written. It got to the point where we had to hide the notes around the ward because her parents would
get them. At one point someone said they saw her dad on a computer because someone had logged
themselves on.” (P6)

When writing in the medical record, it is difficult to know who will have access to the documentation:

“If you’re having a conversation with someone face to face you know where that information is going, if
it’s in a patient record system I don’t know every person who has access to that information.” (P10)

5.2.10 Interpersonal conflict

One participant mentioned that interpersonal conflict may be a barrier to good information management:

“If there is any previous conflict or challenges then people will interpret information differently. For
example, if someone is well known for referring patients for reasons that are not particularly good,
when they make a referral, even if it’s a patient who has an excellent reason to be referred, there is an
intrinsic element of doubt and assumption that it’s probably not as bad because it’s this person who is
making the referral.” (P10)

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5.2.11 Access to archived patient information

Junior doctors have a poor understanding of archiving and they have difficulties accessing archived patient
information (P5, P9):

“The public patients who go to Flinders private - their notes end up in an abyss and you can’t find them.”
(P5)

5.2.12 Poor destruction of information

Some junior doctors mentioned that they have a responsibility to destroy confidential information (P7, 8):

“Information that you print then needs to be destroyed confidentially. So, you have to be mindful of all
the lists that you print and put them in the confidential bin, you can’t take them home.” (P7)

Junior doctors do not appropriately destroy information. Participant 9 commented: “I feel like in general
patient lists are quite poorly destroyed. Our office if littered with them”.

One reason for poor information destruction may be a lack of appropriate facilities:

“We have a confidential bin, but it is not secure. It is just an out tray in the ward and everyone can see
what’s in it and can take things out of it.” (P1)

Junior doctors also have some difficulty knowing what information to destroy, as the “emphasis is on making
sure everything is recorded, whether it’s useful or not” (P3).

6. Improving Information Management

6.1.1 Increase understanding of importance of information management

The junior doctors interviewed recognise that information management is important, but also that it is often
poorly done in hospitals for a number of reasons. Junior doctors are not directly responsible for
implementation of information management systems, so the management team must also recognise the
importance of information management. The entire health industry must recognise that implementing
software does not address the whole picture.

6.1.2 Improved information management behaviour

In order to improve information management in hospitals, all staff must have a sound understanding of what
health does and what information is important.

For example, junior doctors may be more inclined to use validated handover tools if they understand the
importance of adequate handover and the implications for patient safety if handover is done poorly:

“Even though there is an ISBAR sheet pretty much everywhere you look in the hospital, people still don’t
do it effectively and I found that really detrimental to the system.” (P7)

6.1.3 Centralised electronic medical records system

Participants stated that the introduction of an effective and user-friendly electronic records system will
improve information management (P1-P10). Most junior doctors interviewed had personal experience with
both EPAS and paper records, so they were able to directly compare these systems:

“EPAS is the best tool for information management. You have access to all information, and it’s
available everywhere. It’s nice that EPAS has eTG, PBS and AMH all built into one program.” (P3)

“I know it [EPAS] will improve things because we can directly compare and it’s so much better. EPAS is
so much better than paper notes.” (P7)

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“Having a more universal place for information to live. Going from EPAS where all the information lives
in one place back to OACIS and paper notes where it’s just so difficult to go back and forth between
different things and spend half your life trying to find notes on the wards.” (P9)

An electronic, centralised system may improve information management because it simplifies the input, access
and sharing of information. This is only one aspect of improving information management and will only be
successful if there is a workplace culture of ensuring information is uploaded to the system accurately and in a
timely manner. Without a good understanding of the importance of information management and a culture of
sharing relevant information, an electronic medical records system delivers little benefit. If clinicians have
difficulty integrating the use of electronic records into their practice, they may partially use the system,
develop “workarounds” or avoid using the system, which impairs organisational function and may compromise
patient safety (Cresswell, Worth et al. 2012). Previous attempts at a centralised electronic medical records
system, such as the Australia-wide MyHealth record, have failed to recognise the complexity of health
information management and have therefore been unsuccessful (Garrety, McLoughlin et al. 2016).

6.1.4 Improved hardware

Junior doctors described frustration at the lack of computers and the fact that many computers were slow. A
hardware upgrade may address this problem:

“Can SA health just look into upgrading the actual computers? Half the battle is loading the computer.”
(P6)

Hardware is a vital component of the information management mix. Hospital management must recognise the
cost, value and benefits of good information management and fund improvements in hardware accordingly.

6.1.5 Clear guidelines regarding the use of information assets

Many participants were unclear on the policies related to the use of personal mobiles for clinical information
sharing. Almost all participants believe that it may not be allowed but were unclear on the exact guidelines and
consequences of not adhering to the rules. This is only one example, and guidelines on the whole information
management spectrum would be important.

6.1.6 Secure confidential bins

Participants stated that access to secure confidential bins may improve junior doctor’s compliance with
information destruction. It is important to note, however, that even in hospitals with a multitude of
confidential bins that are easy to access, information destruction is poorly done. This indicates that education
and changes in information management behaviours are required.

7. Discussion
Analysis of the data shows that challenges in information management arise in various stages of the
information lifecycle. The researchers recognised that challenges identified by junior doctors relate to all
stages of the information lifecycle from creation through to destruction of information, as summarised in
figure 1 below:

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 Louise Evans, Nina Evans and James Price

Figure 1: Challenges in information management in hospitals at each stage of the information lifecycle
Junior doctors identified challenges in information management in all stages of the information lifecycle, which
indicates that improving information management in hospitals requires a multi-faceted approach. Junior
doctors recognised a wide range of information in their day-to-day clinical activities and identified a number of
challenges to effective information management. Recommendations to improve the information management
practices of junior doctors in hospitals were also explored. The information junior doctors encounter,
challenges to effective information management and junior doctors’ suggestions for improvement are
summarised in figure 2 below.

Figure 2: Summary of junior doctor perceptions of information management in hospitals

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 Louise Evans, Nina Evans and James Price

8. Conclusion
Data, information and knowledge management are an important part of a healthcare organisation’s activities.
Much of the responsibility for information management rests with junior doctors. This information includes
clinical patient information such as patient history, test results and clinical guidelines, as well as management
information such as rosters and professional development. Junior doctors face various challenges regarding
information management, including poor handover and documentation, challenges obtaining histories from
patients, poorly centralised information storage, lack of access to external information, limits of
confidentiality, information security and poor information destruction. Recommendations to improve
information management in South Australian hospitals include a centralised electronic medical records
system, improved hardware and clear guidelines regarding information management. Improving information
management in hospitals relies on the whole system understanding and valuing the importance of good
information management.

9. Future research
Future research to explore why information is poorly managed in hospitals requires an analysis of the
hospital’s function, identify the most important information, business governance, accountability for
information management and examining policies and procedures related to information management.
Implementation of interventions to improve information management in hospitals will require effective
leadership and management. In order to drive continuous improvement, employees should be incentivised to
improve information management, which would include a thorough understanding of the benefits of effective
information management.

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Digital Disruption and Innovation in the Legal Industry:
Management Considerations
Nina Evans1, James Price2 and David Pender3
1
University of South Australia, Adelaide, South Australia
2
Experience Matters, Adelaide, South Australia
3
Knowledge Perspectives, Adelaide, South Australia
nina.evans@unisa.edu.au
james.price@experiencematters.com.au
david@kp3.com.au

Abstract: A literature review and qualitative interview-based empirical research with 21 senior practitioners and practice
managers of law firms in Australia, South Africa and the US, indicated that the global legal sector is undergoing
unprecedented change, resulting in numerous challenges and increased pressure for law firms to be more effective and
efficient. Furthermore, technological advancement and innovation in hardware and the software capacity of computer
programs, have especially been crucial in driving change in the legal industry. This paper provides a conceptual framework
of management considerations - i.e. the areas managers need to focus on - to prepare law firms for the transformative
impact of digital disruption and to effectively manage the ‘digital disruption’. Fifteen management considerations were
identified from the literature, including the areas of law that are most prone to disruption, the technologies and software
packages disrupting the legal industry; the impact on employees, clients and suppliers; as well as executive leaders’
responsibilities to manage the inevitable digital transformation of their firms. The paper also includes comments made by
senior managers in law firms about the challenges presented by digital innovation and disruption and ways to maximise
the opportunities presented and respond to the threat it presents.

Keywords: Digital Disruption, Innovation, Transformation, Legal Industry, Information management

1. Background
ICT Innovation refers to the use of technologies in new ways to create a more efficient organisation align
technology with the business and its drivers (TechTarget, 2011). Such innovation should result in a net benefit
to an organisation realised through an increase in profit or productivity, research and development, new
products launched, or the number of patents or related intellectual property rights developed. These benefits
are driven by the ability for the right people to have access to the right information at the right time, with the
technology delivering that information.

ICT innovations, for instance big data and analytics, the cloud and cybersecurity (Dupont, 2013; Lim, 2017; Aris,
2016; Lee 2007) can generate digital disruption that introduces various kinds of large scale and dramatic
changes for an industry and destroys existing business models. Digital disruption is a double-edged sword for
businesses and organisations. On one hand it enables them to be agile and innovative and on the other they
face increased competition and customer expectations, as well as and the probability of employee resistance.

As the pace of technological innovation accelerates, the traditional law firm model is being increasingly
challenged. Law firms are provoked to embrace new technologies, information management systems and
social media. Digital technologies help firms to improve their decision making for the purposes of scoping,
pricing and conducting their matters, reducing costs, increasing billable hours, improving client service and
extending competitive advantage. New workplace practices emerge and law firms are starting to use intranets,
expert systems, online dispute resolution systems and knowledge management tools such as decision support
systems, document management systems and artificial intelligence tools. Content management systems allow
law firms to search, manage and retrieve information stored both internally and externally.

This paper aims to give business managers an insight to innovative and disruptive digital technologies and
what they need to do about it.

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2. Literature review

2.1 Digital Innovation and Disruption

In 1997 Christensen described the pattern of disruptive innovation as a situation where an unobtrusive
competitor focuses on winning the low end of another firm’s market by offering a lower quality product
(Denning, 2016). In response, the firm concentrates on adding more features to its offering for its high-value
customers. The disruptor steadily improves the quality of their product or service to move up-market, and
then devours the whole market and the firm does not recognise the threat until it is too late. Some innovation
creates radical disturbance in the marketplace, even if it is not ‘disruption from the bottom’ in the classic sense
of disruptive innovation.

Disruption is therefore about innovating to create, or defend against, competitive advantage; digital disruption
does it through the application of technology. Easy access to digital tools at low costs means that businesses
can bring new ideas and solutions to the market at a cheaper and faster rate (McQuivey, 2013). Weill &
Woerner (2015: 27) refer to this as ‘digital disruption’. Examples of digital innovation in the business world
include cloud, mobile, social media and big data. Just like “two sides of the coin”, ICT innovations have ability
to “make or break an organisation”. Not all organisations welcome digital disruptions. Established
organisations usually aim to maintain and enhance the status quo, so the drive for disrupting the existing
market dynamics by their new innovative technology mostly arises from new organisations. Many complex
forces and factors determine how disruptive digital technologies become for certain industries (Ho & Lee
2015).

2.2 Digital Innovation and Disruption in the legal industry

No industry is safe from the ‘tsunami of digital disruption’ but some will be hit sooner than others. The legal
industry has for years been considered too complex to be disrupted by technology. However, in many cases
legal tasks can be broken down into smaller pieces of work that can be automated, particularly if the work is
low risk and high volume (Croft, 2017). This industry is therefore certainly prone to being disrupted. The legal
industry has also been found to be amongst the most inefficient, but law firms are now under pressure to
deliver more with fewer resources. Despite predominantly charging for time spent, a significant amount of
time is wasted through poor information management practices (Evans & Price, 2017).

Digital disruption caused by information systems and technology has been unprecedented in the legal
industry. Technology is shaping the future of the legal industry and “technology is one of the levers you can
pull” (Croft, 2017). The technologies that might be used by the legal industry include Artificial intelligence,
Machine learning, Mobile device, Social networking, Internet of Things, Cloud computing, Big data analytics,
Blockchain, Robotics and cybersecurity technologies. The legal fraternity is facing changes and challenges due
to the creation of document analysis software, access to information and judicial decisions online, online
collaboration spaces, virtual courtrooms and online dispute resolution (Case, 2016; Krause, 2017).

3. Research Methodology
Personal interviews were conducted with 21 senior lawyers and legal business managers in Australia (A1–A8),
the United States (U1-U5) and South Africa (S1-S8) (Refer to table 1 below) to identify the changes in-, and
challenges to the legal industry, and to elicit their perceptions about the management considerations
regarding digital disruption, as identified in literature.
Table 1: Interview participants

Australian firms (A1-A9) United States firms (U1-U5) South African firms (S1-S8)

Number Position Number Position Number Position

A1 Managing partner U1 Attorney S1 Owner

A2 Chief operating officer U2 Data management S2 Managing director

A3 Director U3 CFO S3 Director

A4 Managing partner U4 Equity partner S4 Board Chairman

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Australian firms (A1-A9) United States firms (U1-U5) South African firms (S1-S8)

Number Position Number Position Number Position

A5 Chief information officer U5 Business Intelligence S5 Director

A6 Chief operating officer U6 Principal, IM in law firm S6 Lawyer

A7 Lawyer S7 Partner

A8 Chief Information Officer S8 Partner

A9 Chief Financial Officer

The confidential interviews were conducted face-to-face and lasted between 40 minutes and one hour. Each
interview was audio recorded and transcribed verbatim. An interview protocol was used to focus the
discussion and to promote a consistent approach across interviews (Flick, 2006; Miles & Huberman, 1994;
Swap et al, 2001). Business questions were asked to provide context, followed by questions about information
management and digital disruption. The interview questions discussed in this paper are:

1. How is the legal industry changing and what challenges are they facing?
2. What should managers of law firms consider regarding the challenge of new technology and software
developments, the disruption of the industry and the increased need for digital innovation in law
firms?
The management considerations that emerged from the literature review and interviews are discussed next.

4. Management considerations
Analysis of the literature indicate that managers of law firms need to consider fifteen important aspects
regarding the management of the ‘digital transformation’ that may occur in their firms. These considerations
are described next and summarised in the Digital Disruption in the Legal Industry (DDLI) conceptual framework
in figure 1. Comments from managers of law firms are added to the end of each consideration.

4.1 Consideration 1: Areas of law that are most susceptible to digital disruption
McGinnis and Pearce (2014) suggest five areas that will be dramatically changed by information technology,
especially machine intelligence, namely discovery (the review of legal documents), legal search (accurately
finding the case law and evaluating it for persuasiveness), document generation (where machine processing
will be able to automate a form, tailor it according to the specific facts and legal arguments, and track its effect
in future litigation), brief and memoranda generation and prediction of case outcomes through predictive
analytics.

The principal of a firm that advises law firms on information management matters (U6) is of the opinion that
areas such as patents and intellectual property will be greatly impacted by technology, while areas such as
litigation, tax and real estate will be impacted less.

4.2 Consideration 2: External development of disruptive technologies versus internal innovation

Some technological developments happen external to the firm and have a potentially disruptive impact on the
industry, i.e. they are adopted industry wide. Such digital disruption is creating or destroying competitive
advantage through the application of technology across the industry. Additionally, there is increased pressure
on firms to be innovative in the way they develop their own technology and software for the benefit of the
firm. According to Hakim (2017) innovative law firms foster a firm-wide culture of innovation, they embrace
the game-changers, they step into their clients’ shoes and they adopt technological advancements.

Although U6 refers to the development of software from within a law firm as a ‘fad’ from the past (especially
for large firms), another American firm (U5) is investing heavily in both buying and developing data warehouse
and analytics technology and declares that the resultant benefits are significant, tangible and measurable and
that they derive competitive advantage from such bespoke development.

4.3 Consideration 3: Digital strategy considerations

To effectively leverage digital technology, the digital strategy must align with the firm strategy. Managers must
both update their IT services and support their business processes to achieve the firm’s strategic goals

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(Wittenburg et al, 2007). On one hand business strategy acts as the main force for making changes in IT
processes and infrastructure. On the other hand, IT acts as the driving force in which the latest IT capabilities
guide and influence the business strategy.

U6 agrees that, in law firms, development of new technology often leads the strategy. He added that although
this is not necessarily the correct way to do it “we know that law firms don’t follow the rules”. Choosing a
specific technology platform is often done only to “keep up with the Jones’, rather than for strategic reasons”.

4.4 Consideration 4: Risk

Identification, assessment and management of risk requires managers of law firms to know internal and
external threats and vulnerabilities that may be exploited. These threats and vulnerabilities are associated
with, amongst others, cybersecurity, corporate memory, business continuity, compliance, discovery/litigation
and reputation and are often related to fear of the unknown (Dupont, 2013; IBM, 2014; Smallwood, 2012).

U6 agrees that lawyers are very risk averse (U6). The risk associated with failure to match technology to the
firm’s needs, is lost clients and losing work (S2).

4.5 Consideration 5: Maturity and readiness for change

A law firm’s culture is a focal point of their digital transformation efforts. Digitally mature firms measure,
adjust and continuously refine and improve their offerings to remain sustainable and relevant to their clients.
Newman (2017)’s comments that ICT innovations and business transformation have a huge impact on a firm’s
sustainability in the current digital era. According to Croft (2017) lawyers naturally resist change, while Uhl &
Alexander (2012) suggest five key focus areas that support change management, namely governance,
stakeholder management, communication, performance management and organisational change monitoring.

S4 commented that “with transformation and change comes resistance”, whereas U6 agrees that “the biggest
obstacle to get past is the culture and history of law firms”.

4.6 Consideration 6: Technologies that disrupt the legal industry

There are various important considerations for choosing one technology over another, e.g. which technology
offers the best business benefit, and which will be embraced by the people in the firm who need to use it
(Hakim, 2017).

Cloud computing simplifies client communication, time tracking, legal billing, legal document management and
legal calendaring. Using this technology, law firms can store client data, financial records, legal documents
and other information on the Internet, rather than house data in servers located on their premises, often at a
much lower cost than storing data internally (CloudSecureTech, 2016; Davis & Li, 2015; Mell & Grance, 2011;
Richard, 2017).

Artificial intelligence (AI), i.e. machines that perform functions like human beings (Alarie et al, 2016), can be
used for language recognition, image recognition, natural language processing and expert systems (Susskind,
2010). A software bot (also referred to as an intelligent agent) is an application that uses AI to perform
repetitive tasks, such as the preparation of standardised documents much faster and simpler than before. Law
firms use bots to automatically respond to client questions on their website (Australian Robot Lawyers Pty Ltd,
2017). Machine-driven legal services will use sophisticated algorithms both to structure data in legal
documents, and to make predictions about case outcomes (McGinnis & Pearce, 2014). Lawyers can make use
of AI tools to visualise, analyse and understand what kind of arguments influences a judge’s decision and to
create algorithmically perfect jury pools that match the demographic realities of a community (Ferguson,
2016).

Online dispute resolution systems help guide disputants through the various stages of disputes, namely
diagnosis of the problem, negotiation, mediation and arbitration. With more accurate predictions of case
outcomes, fewer trials should occur because more parties will settle out of court (Carneiro, 2014).

Law firms collect billions of bits of personal client data. These data sets are so voluminous and complex that
traditional data-processing application software is inadequate to deal with them (Mayer-Schönberger, 2012).
Big data applications enable the capturing of such large volumes of data, the storage, analysis, searching,

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sharing, transfer, visualisation, querying, updating, as well as improving information privacy in order to make
predictions.

Blockchain technology provides verification and validation of transactions through direct transactions between
the creator and consumer and transparency between parties (Fenwick, Kaal, & Vermeulen 2017, U5). Lawyers
use this technology to track transactions and given that it is very difficult to modify the block chain, it might
replace the present public registries and notaries for legalising documents. Blockchain can be applied to ‘smart
contracts’ (Lim, 2017), because they can execute part of their functions themselves through software
programs, e.g. to calculate payments due in a derivatives contract and arranging for the payment to be made
(Croft, 2017). The chief financial officer of an Australian firm (A9) commented: “It is huge how blockchain can
holistically impact the whole industry”.

Another important technological development is virtual and augmented reality. Lawyers in Virtual Law Firms
(VLFs) deliver legal services online to clients and collaborate with their colleagues from any location. Virtual
Courtrooms are replacing traditional courtrooms as courtroom proceedings can be simulated using virtual
characters and interactions between them. (Kimbro, 2010, Press, 2017)

U6 commented that cloud computing enabled mobility where lawyers can access documents from anywhere.
According to interviewees (S2, A5, A8) AI is a useful technology to provide quick answers to legal questions as
it can read and find the exact information from a legal document, gather information or evidence by reading
specific laws or previous judicial opinion and draw conclusions. A large US based law firm (U5) is currently
using AI to exploit lessons learnt in planning, budgeting and pricing of matters. U5 referred to the use of big
data technology to learn more about someone whom the lawyer will defend and predict if there is a chance to
win the case, while A9 believes that blockchain can be used to track different versions of a person’s will.

4.7 Consideration 7: Software available to the legal industry

Various examples of software packages are available to law firms. The software can roughly be categorised as
legal billing software for online lawyer payment and refund options (e.g. Bill4Time and Freshbooks), legal case
management software (e.g. Actionstep and SmartAdvocate) to gather all the evidence of a case in one system,
legal document management software (e.g. Logikcull and Clio) and electronic discovery software (e.g.
Logikcull, Onna and Relativity) that analyses documents in a fraction of the time of a human lawyer.

4.8 Consideration 8: Managing digital employees

Boring repetitive work, such as typing, dictation, data capture and document review can now be automated,
which frees lawyers to do more interesting, complex work. Technology advancements enable flexible work
practices and many law firms are using technology to create and maintain a web-based law practice
structure. A lack of digital talent is one of the primary dangers to law firms, as this limits the digitisation
initiatives and progress towards transformation (Newman, 2017). Law firms must cultivate a culture in which
employees are encouraged to develop new ideas and become agile (RapidBI, 2012).

A9 is refers to lawyers as “humanities people” and added that “older lawyers prefer words above technology”.
The managing partner of an Australian firm commented that he “could not understand the level of fear”
among lawyers, when he initiated a software implementation in his firm (A2).

4.9 Consideration 9: Client expectations and relationships

Clients are often ahead of lawyers in implementing new technologies, and they also have improved access to
legal information on the Internet (Kabene, King & Skaini, 2006). Digital transformation can transform the
client’s experience through understanding their unique preferences, habits and requirements (Muir et al,
2002; Newman, 2017; RapidBI, 2012).

Clients of law firms are becoming increasingly sophisticated and demanding (A3, U4, S4) based on their ability
to leverage third party billing providers (A9) and compare the prices of legal services. U6 commented that
client requirements can be regarded as the biggest motivator for adopting technology. He added that “big
firms attract bigger clients and bigger clients have bigger expectations”.

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4.10 Consideration 10: Billing

There is pressure on law firms to move from the traditional pricing mechanism (Tjaden, 2009) where time is
billed in six-minute increments to alternative fee arrangements such as blended rates, capped fees, fixed
prices, value pricing, staged costing, event costing, and success fees (Blanco & Latta, 2012; Dunford and Le-
Nguyen, 2014). These pricing mechanisms demand far greater reliance on information (e.g. matter histories)
and technology.

In-house counsel teams also challenge the kinds of fees lawyers were used to, which in turn puts pressure on
law firms to manage overheads and be more effective and efficient (A2, A5) through the innovative use of
technology. According to the Chief Financial Officer of a larger firm, their firm is therefore increasingly willing
to take write-offs to win work, which is a short-term response that damages the broader industry (A9). U6
made an interesting comment that law firms often only implement billing software systems if clients expect it,
but they do not realise that using e.g. cash codes will provide them with valuable internal management
information for managing their firm like a business.

4.11 Consideration 11: Improved efficiency

Technology can significantly enhance business performance of law firms by delivering data, information and
knowledge to different role-players in the firm when they need it (Bedford & Morelli, 2006; Choo, 2013; Evans
& Price, 2017; Ladley, 2010; Schiuma, 2012; Willis & Fox, 2005), which can help organisations achieve
competitive advantage by enabling cheaper or more differentiated products and services (Citroen, 2011;
Porter, 1980). More efficient and effective deployment of information assets can increase revenue, reduce
cost, improve profitability, mitigate risk, improve compliance and increase competitiveness (Bedford & Morelli,
2006; Oppenheim, Stenson & Wilson, 2001; Young & Thyil, 2008).

The managing partner of a successful Australian law firm commented that lawyers got away with an attitude of
“the longer it [the legal task] takes, the more money we can charge the client” and he added that this is
“madness from a commercial perspective” (A2). U6 commented that, although the law itself might not change
much, the way law firms are managed changes tremendously. However, “lawyers do not think enough about
how they do what they do, but just about what they need to do to keep their clients happy” (U6).

4.12 Consideration 12: Organisational structure and layout

Technology is the most important driver of structural change. More work will be done by paralegals and
technology will replace lawyers on tasks such as due diligence and document reviews. There will also be a shift
away from practice area reporting lines to sector and client-focused financial reporting and internal
organisation. The ability to work remotely will also have a direct impact on law firm physical spaces where
open offices and transit offices with more than 100% occupancy will be common practice (Kimbro, 2010;
White & Grueger, 2017).

U6 mentioned that the facilities and space management of law firms make up the second largest cost in law
firms, so it is very significant. Law firms are stuck on the past and even law firms that have virtual practices
cannot get away from setting up a central office. Furthermore, lawyers need to be connected but they don’t
need to be physically present in the office. He added; “The big corner offices are clearly things of the past”.

4.13 Consideration 13: Diversification versus specialisation

As indicated before, the areas of legal practice most susceptible to technology change include discovery, legal
search, document generation, brief generation, and prediction of case outcomes (McGinnis & Pearce, 2014). If
these activities comprise the bulk of tasks in a legal practice, the firm will face increasing competition from
machines. “Journeymen lawyers”, who write routine wills, vet house closings, write standard contracts, and
review documents, face an uncertain future, because machines will do many such routine legal tasks
(McGinnis & Pearce, 2014; Susskind, 2010).

According to U6 the large law firms (more than 1000 lawyers) “are doing well and making money”, while small
boutique firms will also have a place due to their bespoke service. He believes the mid-sized law firms are most
at risk if they do not adopt technology effectively and become more efficient. Literature (Simpson, 2016;
Susskind, 2010) suggests that counsellors who must create the necessary emotional bonds with clients will also
continue to have a role, since machines will be unable to do so, yet A9 believes that “smart machine learning
may make this argument null and void” in the near future.

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4.14 Consideration 14: Role-players in the management of digital disruption and innovation
Top management plays a critical role in identifying opportunities to innovate and articulating required
efficiency goals to their employees (Teece, 2007). One of the most important roles for a Chief Information
Officer is to build and communicate the vision of where smart use of information and the technology that
enables it, can take the organisation (Evans & Price, 2015a; Nirell, 2014; Red Hat, 2015). These C-level
executives, e.g. Chief Technology Officer (CTO) (Chun & Mooney, 2009), Chief Data Officer (CDO), Chief
Information Security Officer (CISO) and Chief Digital Officer (Horlacher & Hess, 2016) can have significant input
on strategic technology decisions and investments that directly or indirectly impact the firm (Nirell, 2014;
Peppard, 2010).

If the firm has a Board of executives, its role is to impose business governance, i.e. to ensure that the firm’s
business strategy exploits opportunities, while at the same time ensuring that risk is addressed. Board
members should attempt to cover the broad range of information management and IT issues, i.e. there should
be education for Board members in information and IT management strategy (Evans & Price, 2015b; Turel &
Bart, 2013).

U6 believes that executives in law firms do not know enough about technology, they do not experiment
enough “and they are not out there talking to industry innovators enough”. He added that the role of the
managing partner in law firm is to think about what is right for the firm and to appoint a senior executive who
is accountable for identifying opportunities and driving innovation. The problem is that the person responsible
for technology will report to a group of senior legal partners who have very little understanding of technology.
This is a “strange dynamic and an unhealthy situation”.

4.15 Consideration 15: The central role of data, information and knowledge
When examining different technologies, their impact on the legal sector and the purpose of using information
technology, it becomes clear that the single common denominator is data, information and knowledge. Evans
& Price (2017) refers to the data, information and knowledge in an organisation as the “lifeblood of the
organisation”.

According to U6 the one thing that all law firms should be thinking about all day every day, is the way they can
collect and measure their data, information and knowledge. “That’s the heart of it. You have to create a
culture of data and information; what do we do, how much of do we do, what does it cost, et cetera. The
purpose of information technology is only to deliver the right data, information and knowledge to the right
people at the right time.

The fifteen management considerations are diagrammatically illustrated below, with data, information and
knowledge taking a central position in the DDLI conceptual framework (Figure 1):

Figure 1: The DDLI Conceptual Framework

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5. Discussion
Digital disruption is creating or destroying competitive advantage through the application of technology
towards digital transformation (Simpson, 2016). Digital disruption is an accelerating force that will invade areas
of legal practice such as discovery, legal search, document generation, brief generation, and prediction of case
outcomes, i.e. the bulk of tasks in many legal practices. Firms that mostly engage in providing these routine
tasks and services will face increasing competition from machines (McGinnis & Pearce, 2014). Law firms must
appropriately consider the unique threats and disruptions they face and develop a plan to address the actual
threats to their business.

The point about disruption is that it is a product of innovation that happens at both macro and micro levels. At
macro level industries fundamentally change. At micro level, firms innovate if they are the attacker and
respond if they are the defender. Successful digital firms embrace the concept of self-disruption, knowing that
disruption is a certainty in the digital marketplace. Digital disruption has been enabled by technology, namely
computing power and throughput. It is important to recognise a fundamental truth, namely that all technology
development and implementations have one, fundamental common denominator – information. If the new
technology did not deliver the information required for the disruption to work, the technology would not be
bought in the first place.

There are concerns that AI will threaten lawyers’ jobs, as it can give better legal advice based on copious legal
data. The latest analysis from Deloitte (White & Grueger, 2017) states that in the next two decades AI will
make an estimated 114,000 jobs redundant in the legal sector. Law firm managers need to manage the
response of employees to disruption, such as fear and resistance to change (Susskind, 2010). Machines will
have a smaller effect on areas such as judicial opinions. For instance, machines will not argue in court and thus
will not replace those who specialise in oral advocacy. Lawyers are therefore more likely to excel if they are
specialists in novel laws and regulations.

Given the world’s ongoing technological acceleration in e.g. intellectual property, lawyers in this field will also
continue to prosper. Lawyers should also bond with their clients and foster relationships of trust and machines
are unlikely to develop such lawyer-client relationships. There will still be a role for lawyers, as their judgement
will still add value to the predictions derived from machine intelligence, even if the machine prediction alone is
better than the lawyer’s prediction alone (McGinnis & Pearce, 2014). Lawyers can use the technology to
deliver innovative solutions to problems faster and to a broader range of clients. A combination of machine
intelligence and human intelligence will usually assure the best possible result.

6. Conclusions
The future environment for legal professionals looks very different and only progressive practices that can
balance technical abilities with intra-firm stability, client affinity and agility (being adaptive to new commercial
and technological challenges) are likely to outshine the competition (Lim, 2017). However, digital disruption
does not spell all gloom and doom for law firms and offers many opportunities business benefits to law firms.
Consumers will be able to compare the performance and quality of lawyers and exceptional lawyers will
therefore be identified easier and they may earn even greater returns. Machine intelligence may also help
lawyers to increase delivery of very low-priced services (e.g. generating relevant forms) thereby reducing the
costs of providing services and making the services more broadly affordable.

Managers need to be properly prepared to deal with the challenges of digital disruption and be able to
demonstrate the benefits of embracing the change, prepare the organisation for the implementation of that
approach, encourage staff to adhere to the new practices and measure the benefits. They can do so by
considering the fifteen aspects of digital disruption identified and described in this paper. Instead of ignoring
the increasing pace of technological changes, law firms should adopt it to increase their legal know-how and
the efficiency and quality of their services, to meet client needs and increase wellness of their employees. Law
firm managers need to articulate achieved and future benefits of disruptive technologies and drive innovation
in their firms.

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7. Future research
The management considerations identified and described in this paper will be used as a basis for the
development of an instrument to measure the readiness (maturity) of law firms to deal with digital disruption
of their industry and to be more innovative from within.

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Conversational Commerce, the Conversation of Tomorrow
Marja Exalto1, Maarten de Jong1, Tim de Koning1, Axel Groothuis2and Pascal Ravesteijn1
1
HU University of Applied Sciences Utrecht, the Netherlands
2
Magnus Red, Naarden, the Netherlands
marja.exalto-sijbrands@hu.nl
maarten16@icloud.com
tim@dekoning.io
a.groothuis@magnus.nl
pascal.ravesteijn@hu.nl

Abstract: Online shopping in The Netherlands is rapidly becoming more popular and many web-shops are aiming to
develop improved customer journeys. As a consequence pure play web-shops switch to an Omni-channel approach while
conventional businesses add ‘online’ to their offline sales. In The Netherlands fast growth of online sales is made possible
by industry organisations such as ‘Thuiswinkel.org’, an organisation that supports their over 12.000 retail-members with
knowledge, development and information on all possible aspects of online shopping. In 2017 these members raised the
question whether it is possible to mimic the ‘traditional sales conversation’ to online environments by deploying AI based
conversation technology. To research this question the specific actual benefits for consumers need to be determined of the
conventional ‘offline-shopping sales conversation’. Next, the current online shopping opportunities presented by the B2C
market of The Netherlands were studied including the level of interaction (conversation) that is technically provided. With
so many industries active in the online arena it was decided to focus on the following industries: Electronics, Clothing,
Food, and Financial services. This selection was made based on levels of online sales (highest for these sectors) and
interests of Thuiswinkel.org members. Subsequently, the offline sales conversation benefits that were found as ‘most
important’ in these industries, were used to construct online customer journeys. These are then used to formulate
requirements for the comparison and selection of conversation systems. With this insight in how to achieve true
conversational commerce in the defined customer journeys of the four industry’s the retailers’ question is answered. The
outcome shows differences per industry in importance of a limited number of ‘e-sales conversation’ benefits. An important
conclusion is that the current available technology cannot deploy all complex aspects of the offline sales conversation
benefits in an online shopping environment. The technology still needs to progress significantly to adopt offline sales
conversation aspects. On the other hand pure substitution of offline benefits may not be required. Further, the maturity of
the functionality within each conversation system appears to be of importance as requirements differ per company.
Additional research is required to extend on the differences and first insight found in the options to develop ‘e-sales
conversation’.

Keywords: e-commerce, online shopping, conversational commerce, customer journey, e-sales conversation.

1. Introduction
Chris Messina, the inventor of the successfully used hashtag (#) in tweets, and both ex-Uber and ex-Google
employee, started using the term “Conversational Commerce” in 2015 (Edwards, 2013). Conversational
Commerce is used to describe how customers get in ‘direct-contact’ with businesses through messaging or
voice technology. This can be a ‘conversation’ between a customer and an employee, a smart Chabot or a
combination of both. Messina (2016) predicted a big future for conversational commerce and smart systems
such as e.g. Amazon’s Echo, Alexa, Google Home and Apple’s Siri, all of which already adopted this technology.
Also, the continuous growth of chat messages within online sales support use conversation technology. Does
this mean that conversational commerce will bring back a personal and human dialog to e-commerce? Will
artificial intelligence play a big part in the online future, delivering conversations between customers and
organisations without any human interaction? And what will the development of conversational commerce
entail for customer journey in the near future? In The Netherlands these are the questions that are posed by
web-shop managers and owners. From a strategic development approach they are in need to understand
technical developments, in order to match international competition from large online retailers. Their strategic
business decisions depend on the innovation and progress of conversational commerce developments and
options.

To create insight in conversational commerce options presented by the available technology also requires
input from customers’ experiences with ‘talking’ to bots. In 2017 the organisation ‘Thuiswinkel.org’, the
industry organization for online e-commerce organisations, together with business started a research program
on the development of conversational commerce. Due to the growing interest, a part of the program was to

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understand (near) future e-commerce evolvement. The knowledge centre ‘Process Innovation and information
systems’ at HU University of Applied Sciences Utrecht supported the research by participating with two
students and three senior research fellows. MagnusRed provided project management and an additional 18
organisations (members of Thuiswinkel.org) participated in expert sessions and data gathering. These 18
webshop organisations formed the expert group supporting the research with information (hence expert
group).

The research’s main question was: “What are the benefits of the traditional sales’ conversation and how can
these be implemented in online customers journeys using current conversation technology systems for online
sales?”. To answer this research question, firstly the current traditional sales conversation was studied to find
the benefits expressed by customers preferring offline above online shopping. The study explicitly excluded
the decision ‘why’ customers prefer on- or offline shopping, as well as the sociologic behind this choice. The
search was solely for information on in store experiences that can be transferred to online environments in
order to improve the online customer journey.

In the next section the theoretical background is described of offline sales conversation, online customer
journeys, and conversational commerce. Subsequently, the research approach is explained in section three.

The results (section four) entail the different impacts of conversational commerce per industry in online
shopping. Insight in conversation benefits and value of offline shopping are combined with the online
customer journey and available conversation technology. The paper ends with conclusions, limitations and
discussions.

2. Theoretical background
To understand the research question, the expressions (1) Traditional sales conversation benefits and (2) Online
sales conversation need clarification prior to performing data collection and analysis. Additionally, offline sales
as a profession was studied to understand the power of the face to face retail sales conversation with a
customer, compared to online shopping where the sales conversation depends on the technical solution
available.

The theoretical background is based on scientific literature and industry information. Sources used, were:
Google scholar, YouTube, and Blogs. Online and offline sales, and customer journey were keywords and
outcome was studied. Other keywords focussed on how to ‘transpose’ the benefits found to move from a
physical situation to a digital situation, which is addressed in the results.

2.1 The traditional retail sales conversation and its benefits

There are many books that discuss improvement of the sales process approach, and more specifically
conversation techniques. Dixon, and Adamson (2011) express that challenging the customer is more important
than building a customer relationship. Schultz and Doerr (2014), developed a system, Rainmaking
Conversations, turning every conversation into ‘wining new customers’ by maximizing robust relationships,
and deepening trust. Blogs also form a source to understand the sales conversation. Richardson (2013) being
the ‘Sales Thought Leader’ for 2013 presented Changing the Sales Conversation as an action that is influenced
by today’s hyper-digital world. She presents conversation benefits, however only focussed to the B2B
environment, stating that ‘Clients today are focused on business outcomes and reduced risk’. They prepare
themselves by searching peers, social networks, and by self-education before turning to salespeople.

Understanding that these clients at the end of the day are consumers themselves, the B2C environment may
differ. Richardson emphasizes the ‘engage’ aspect of sales and advices that the sales person must demonstrate
‘knowing the customer needs and environment’. Customers seek insights and ideas to add to their own
knowledge in order to achieve customer consensus. Richardson comes with five clear strategies to support her
approach to improve the sales process and accelerate closing a deal. In the brick and mortar shop useful
benefits are: ‘to prepare for’ and ‘anticipate on’ your average customer needs. Data analyses on current
available customers’ loyalty program information is required. Engagement must come from the sales
conversation, understanding what the conversation can add to get retention sales. Finally the sales
conversations themselves need to be trustworthy and sincere. Edinger (2013) mentions seven factors which
mainly focus on preparation and rewarding successful sales conversations. Access to success metrics, visionary
leadership, talent development, understanding of selling roles and sales cycle involvement, and recognition of

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and rewards for sales with success are all indirect related to the sales conversation. Value creation during the
sale process, and understanding of the customers’ buying process can be seen as two benefits of the sales
conversation. According to Edinger these are valid regardless of industry. Additionally, De Zaak (2012)
describes different phases of the ‘traditional sales conversation’, that even differ in occurrence per industry.

Comparable to prior sources, the traditional sales conversation starts with ‘sales preparation’ (being aware of
the product sold and service available). After the opening conversation, information on the needs of the
(future) customer must be sought: what does the customer want to buy? With a clear insight, the offering
phase starts and the customer will be brought into the phase of consideration. Next different, adjusted offers
may follow. Once accepted, the completion of the offering starts, ending in a transaction, or in an unsuccessful
ending of the conversation. The last phase is the aftersales, in which the customer is asked about product (and
service) satisfaction, including the sales process (De Zaak, 2012). The comparison between off- and online sales
conversations shows that involvement and recognition of the customers’ needs are focus points for both.
These can therefore be seen as benefits of the conversation, resulting in a closed sale.

2.2 Online sales and conversational commerce

Online sales conversations have developed from manually answering questions from customers via a chat-
function to automating these answers via an Internet BOT. The Internet BOT refers to software application
running automated tasks (scripts) over the Internet. These tasks are both simple and have a repetitive
structure. Therefore, performance at a much higher rate is possible than via human resources. In 1966 the
development of adopting behaviour patterns as a sets of instruction started with ELIZA, the first natural
language processing computer program, that was created at the MIT Artificial Intelligence Laboratory by
Joseph Weizenbaum (Suchman, 1985).

The online sales conversation depends on technology systems in general. Within online sales the mode to
answer customers’ questions can vary from mails, chat to voice. Therefore this literature search is not limited
to voice supported technology. ‘Sight-limited’ persons already have the option to convert text to sound as
voice supported conversation. However, a conversation does not immediately needs to be ‘voice supported’.

For this study the definition of Online Sales Conversation is: the exchange of questions and answers in a mode
that is determined by the customer and with the goal of clarifying uncertainties of the potential customer to
support him/her during the customer journey (Thuiswinkel.org, 2018). This also requires technology being part
of the web shop software application, to support the direct interaction between the customer and the web
shop (representative). This may range from software with limited functions and the option for additional
assistance of a real person up to real self-learning expert-system software (Groothuis and Damsteegt, 2018).

‘Conversational commerce’ is today already being used by multiple organizations. E-bay has a simple
Messenger named ‘Shop-bot’ with which products can be searched based on price, popularity, text or pictures.
Shop-bot also learns from inputs given to personalise future offers (Mool, 2017). ‘WeChat’ did a great job in
China. Their app offers multiple-ordering: a cab, food, a ticket for the cinema, an appointment for GP and
payments, e.g. of the water bill. This is all organised through ‘conversation’ (Quoc, 2016). Although companies
can be found using conversational commerce, it is still in its infancy and expected to extend in the near future.

3. Research method
To transpose benefits from the offline into the online sales conversation this research needs to select
industries to study, find benefits in the offline sales conversation arena, transpose these to the online
customer journey and address functionality of systems that present capabilities for the near future (see Figure
1 Research approach).

To limit the scope into a manageable research topic, four industries were selected. The selection was based on
online sales data from the Central Bureau of Statistic of The Netherlands (hence CBS). This is followed by
determining benefits of the offline (physical visit) sales conversation. These are then compared with benefits
to online shopping, to be able find values that can be transposed to the online environment. Next technical
systems were scanned on their ability to support the selected benefits as conversational commerce functions
at the online customer journey. Finally the current available solutions are tested on their ability to adopt the
required transposed functions as true values and actual solutions in practice. With this, a first indication is
provided in regards to the current technology status for the innovation of online conversational commerce.

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Each of the activities above, due to its nature and type, requires a specific research approach, as is described
below.

Figure 1: Research approach

3.1 Industry selection

The differences between industries must be taken into account whilst determining the benefits of the
traditional sales conversation (De Zaak, 2012). The industry selection started with analysing the current spread
of online and offline shopping percentages per industry. For this, different data sources were used, being: the
CBS, the industry organisation ‘Thuiswinkel.org’ and Twinkle (specialised bureau for online shopping statistics).

Next, the data found was compared to the outcomes of a questionnaire developed especially for this study
(also see 3.2). Finally, the expert group was presented the outcome and asked to make the final industry
selection.

3.2 Benefits of the traditional sales conversation

To determine the benefits of the traditional in-store sales conversation (per industry) a questionnaire was
developed and sent to random selected consumers via Twitter accounts of the researchers involved (Twitter,
2017). Twitter offers a wide spread and ease of use, however, the population of the target group cannot be
estimated. The questionnaire consisted mainly of multiple-choice questions that were formulated together
with the expert group. The survey started with questions about industries that were most attractive for
shopping Offline (the outcomes were used as described above in 3.1). Followed by questions addressing the
benefits of the traditional sales conversation. Additional questions were defined to filter out age groups and
gender, to find differences between shopping groups. The survey was created in Google Forms (Google, 2017)
due to its graphics and ease of use and cloud-openness. The data was analysed and the outcome was
presented in percentages and in graphs within Google Spreadsheets. Results were presented, discussed and
compared within the expert group and with available statistics of the multiple resources as mentioned above.

3.3 Applicability of benefits found for conversational commerce

Next was to determine per industry selected, the functional applicability’s of the offline sales benefits that fit
the online sales as a ‘conversational commerce benefit’. For this the ‘card sorting method’ (usability.gov, n.d.).
was used. Per industry, respondents were asked to put the benefits found in order according their importance.
Within SurveyMonkey (SurveyMonkey, n.d.) the ordering was performed. The questionnaire was again created
with the support of the expert group. With the same approach again a wide number of customers was reached
through Twitter for the same reason as discussed above. The data was analysed with graphs and filtering
methods available within SurveyMonkey. However, the free version limited data-export options.

To deduct the most important contribution of the conversation benefits found, four customer journeys were
selected and studied (one for each industry). Although conversational commerce can be applied at every
aspect of the customer journey, the focus was mainly on ‘where in the customer journey to start’, and ‘what
content the customer needed first’. ‘To transpose benefits’ was studied as an adjustment to move from a
physical situation to a digital situation. For this the journey paradigm of Bonsing (Bonsing, 2017) was used due

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to its completeness in the different phases of the customer journey. For each industry, the customer journey
was analysed to its phases with the highest impact of conversational commerce. The end-result was visualised
as one total overview. The validity and reliability of the results were supported by previous results and
literature. The results of this step address how the customer journey will look like (per industry) with the
offline benefits implemented in online conversational commerce.

3.4 Ability of conversation systems to deploy the Benefits’ functionality found?

Finally, the current available conversation systems were studied to understand how benefits of the traditional
sales conversation can be applied online. With clear implementation needs for the benefits found, criteria
were searched to define a shortlist of suitable solutions of conversation systems out of the longlist of solutions
available in The Netherlands. The longlist contained the most well-known conversation systems (by the expert
group and an Internet search). Next, the expert group members scored the solutions on a set of eleven
specific, technical criteria to create a shortlist consisting of four conversation system solutions. Financial
criteria were left out, due to the fact that its importance differs for each organisation. Again, as the importance
of the criteria may differ per company no weighing was used in the construction of the shortlist.

4. Results

4.1 Industry selection

The first survey (as described in 3.1 and 3.2) had 460 respondents with a comparable demographic build-up to
that of The Netherlands in gender, and age groups, making the data found reliable from this perspective. The
question: “In which industries do you rather shop in a physical store (offline) compared to an online store?”
was asked to the respondents for whom offline shopping was favourite. The industry selection for this study is
based on this outcome. The results were Food (38%); Apparel (21%); Personal care (15%); Household products
(11%); Financial services (8%); and Electronics (7%). The industries selected, were (in alphabetic order):
Apparel (being clothing and shoes); Electronics (all kinds); Financial services (loans, insurances and mortgages);
and Food (supermarket and other). Food and Apparel were selected because of their highest offline shopping
scores. Electronics and Financial services because of their lowest scores for offline shopping, which should
mean that these industries score highest online. A comparison with other statistical sources showed outcome
consistency, increasing the reliability of the respondents group of this survey.

4.2 Benefits of the traditional sales conversation

The question “Why do you rather shop in a traditional store?" was asked to respondents who rather shopped
in a physical store than online. It was allowed to give multiple answers. Eight reasons were found why people
rather shop offline. The first four and the last reason can be part of the sales ‘conversation’.

1. Instant satisfaction 30%

2. Personal experience 19%
3. Asking Questions 16%
4. Showroom 14%
5. Convenience 10%
6. Try on (apparel) 6%
7. See & feel the product 3%
8. Humor 2%

4.3 The applicability of conversational commerce per industry

The second questionnaire (as described in 3.3) had 96 respondents and again presented an equal age and
gender spread compared to the population of The Netherlands. The results of this questionnaire was a priority
ranking of the offline shopping benefits (Table 1). The option ‘to ask questions’ is found most important in two
industries.
Table 1: Top 3 voted most important benefits per industry of sales conversation
Priority Electronics Apparel Food Finance
importance
1 Option to ask questions Fit on Instant satisfaction Option to ask questions
2 Instant satisfaction See/feel the product See/feel the product Humour
3 Humour Humour Humour Feeling of safety/privacy

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Next to the most important, also the least important benefits per industry were determined (see Table 2). Due
to the limited number of respondents an almost equal number was found on a benefit labelled as ‘very
important’ as on the label: ‘not important’, as can be noticed on e.g. Humour.
Table 2: Top 3 voted less important benefits per industry of sales conversation
Priority Electronics Clothing Food Finance
importance
1 Humour Humour Humour Humour
2 See/feel the product See/feel the product Instant satisfaction Option to ask questions
3 Instant satisfaction Fit on Feeling of safety/privacy

4.4 Deduction of conversational commerce at the customer journey per industry

For all four industries the deployment options of conversational commerce within a customer journey differ.
Therefore differences in the options for adoption can be expected. Therefore, how a customer journey looks
like (for the four industries) with conversational commerce implemented was studied. The model of Bonsing
and Mann (2017) was used to answer this question (see Table 3).
Table 1: Conversational commerce implemented in customer journeys
Process phase Apparel Electronics Food Finance
Orientation
Selection
Transaction
Delivery
Customer Care
In-between Purchases
©Bonsing / Mann

In the Apparel industry conversational commerce can be applied in the phases ‘orientation’, ‘selection’ and
‘transaction’ in multiple ways. At ‘orientation’ the conversation ‘bot’ can find out the personal preferences of
the customer for which the bot subsequently offers a best fit selection for the customer to choose from. With
the right choice missing, the customer refuses the selection. This updates the personal preferences, and a new
selection is offered. After making a choice the bot continues with the transaction.

In the Electronics industry conversational commerce application use is similar to the Apparel industry. At
‘orientation’ the customer can ask questions that refer to his/her needs. After the bots understands those
needs, a selection is offered and alike the Apparel approach the bot corrects itself till the right choice is given
and the bot can continue with the transaction phase.

In the Food industry however, conversational commerce needs to focus on ‘transaction’ and ‘delivery’ and ‘In-
between Purchases’. During transaction the process can completely be performed in a ‘chat interface’. After
the transaction the client needs to be briefed about the delivery status. If applicable for in-between purchases
additional action from push messages can be of interest, particular when new products with higher
sustainability results or better performance are available. A customer also wants to feel appreciated and
maybe wants to share his or her experiences, for this conversational commerce has tools available.

The Financial products and services industry can apply conversation commerce in the phases ‘orientation’,
‘selection’, ‘customer care’ and ‘in-between purchases’. Which is basically every phase that doesn’t include
sharing sensitive information. Conversational commerce can be used perfectly for customer orientation and
products or service selection. After the selection the customer may have several questions, which might also
happen during the annual renewal of the product (e.g. insurances).

4.5 Benefits of the traditional sales conversation applied by available conversation systems within online
shopping
Understanding (per industry) the use of conversational commerce into the customer journey the next question
to answer is: What benefits of the traditional sales conversation can be applied online with the current
available conversation systems?

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The criteria set by the expert group members to select available conversational commerce software systems
were: integration with other systems, language support, API support, knowledge sharing, voice recognition,
natural language processing, option for dialogs, sentiment analysis, machine learning, predictive ability and
personalization.

From the longlist (Jong, Koning, 2018) a short list derived of four different conversation systems (Agentbot,
Dialogflow, Microsoft Bot Framework and Amazon Lex). The capabilities are very similar (on paper), however
in reality differences were found. The shortlist is restricted to functionality and misses the level of
advancement and development of the functions. Also, some products require a lot of manual activities, while
others offer better automated activities and integration. This however comes with a higher price. These
aspects are not visible in the results. The level of integration is important. This runs from Whatsapp, Google,
other social media, Skype to enterprise and customer planning’s software. Two out of the four solutions
deliver ‘Dutch’ language support. On sentiment analysis, predictive ability and personalisation just slight
differences were found.

5. Conclusion
At an ‘as early possible state’ within the sales process the traditional sales conversation selects suspects from
true customers. In this traditional set up ‘the sales conversation‘ refers to different aspects preserved for
particular moments during the sales process. At retail shops the traditional sales conversation is a particular
type of conversation, that also presents elements of informing, engaging and creating trust. Based on this the
research question underlying this study is:

“What are the benefits of the traditional sales’ conversation and how can these be implemented in
online customers journeys using current conversation technology systems for online sales?”

The benefits found, were used to develop criteria with which available conversation technology is compared.
The technology selection emphasizes the informing and explanation elements of the conversation (to be able
to ask questions) and influencing emotion (instant satisfaction). The presented short list offers four almost
equal solutions to deploy the traditional benefits found as conversational commerce.

There is a difference when interpreting the results for different industries. The card sorting method showed
that these occur at the different phases of the online customer journey, where conversational commerce
impacts most. Also, it showed that positive factors easily can be seen as negative ones, depending on its
presentation (for example ‘Humour’). Mapping the customer journey per industry showed that the transaction
and delivery of Food require attention. In this example weekly groceries can be seen as a different type of
shopping, then what is found in the other three industries. This may result in different tools to implement as
conversational commerce solution in the transaction and delivery phases of food when compared to other
industries and their customer journeys. This is of great importance for management when deciding on
adoption of conversation commerce systems.

The short list shows that language support and application interaction (e.g. with payment tools) are the main
differentiators. Where trust building is essential, sentiment analysis is important too. Price remains a
management decision and needs to be seen in combination of technical options.

6. Limitations and discussions

The two most important limitations of this study were: (1) only one customer journey was studied per
industry; (2) the ‘traditional sales conversation’ was formulated in the questionnaire as the ‘traditional physical
shop visit’. This has led to other ‘benefits’ than those only to be retrieved from the actual conversation to
which it should have been restricted. A third but less influencing limitation is, that the study could have picked
up a more in-depth analyses of the differences in adoption of conversational commerce solutions per
customer journey phase, which is a recommendation for extension of this study. The information gathered and
visualized in this paper can be used for companies to start exploring the use of conversational systems. It
supports management with an approach and an idea of what is important once deploying a solution.

This study doesn’t give a complete overview of all applications available. As products and features are released
monthly for the different systems presented and technology evolves quickly. Therefore the value of the system

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part of this paper is limited. The present study doesn’t show an in-depth maturity of the functionality within
each conversation system. This reduces the value of the presented comparison. Future research could
continue upon this to test products more thoroughly and give in-depth insights on the capabilities of available
system.

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83
Advertising Management and Companies’ Financial Performance:
the Czech Insurance Market
Daria Gunina, Tomáš Kincl and Lenka Komárková
University of Economics in Prague, Jindřichův Hradec, Czech Republic
daria.gunina@vse.cz
tomas.kincl@vse.cz
komarkol@fm.vse.cz

Abstract: The insurance market in the Czech Republic is a highly commoditized and undifferentiated market. Companies
operating in this market compete through intensive marketing communication. As part of their marketing communication,
their advertising strategy can significantly influence a company’s success and financial performance. As a result, the
influence of advertising management strategies and the relationship with economic indicators is an important issue to
explore. This paper addresses the advertising management of insurance companies in the Czech market. The aim is to
answer the question of whether there is a relationship between insurance companies’ financial performance and their
advertising activity. The study is based on complete monitoring data of TV advertising in the Czech Republic from 2010 to
2017 inclusive and also employs data regarding the financial strength and performance of insurance companies. As the
study is based on longitudinal (panel) data, the effects were evaluated using the linear mixed model. Although the
correlation between advertising activity and financial performance was not confirmed, this conclusion contributes to the
academic debate on advertising management strategies on the insurance market.

Keywords: marketing communication, advertising, TV commercials

1. Introduction
Advertising management is a process of advertising planning, organising and decision-making for achieving
settled aims (Aaker et al. 1992; Arens and Bovée 1994). Advertising decisions must be made by “5 M”: mission,
message, media, money and measurement (Kotler and Keller 2016). All these parts are closely connected and
influence each other to different extents. Advertising planning and decision-making cannot be based only on
internal analysis and “5M” setting. The process of advertising management requires analysis of competition
and complete market research (Batra et al. 2009).

Measurement of advertising effectiveness depends on settled advertising aims. According to the hierarchy of
advertising effects (Barry and Howard 1990; Tellis 2003; Kelley et al. 2015), the ultimate aim of advertising is
the action or purchase. Many scholars insist that advertising should increase sales or profit (McGuire 1977;
Kruegel 1988; Mela et al. 1997; Kieschnick et al. 2001; Wilbur 2008; Gijsenberg et al. 2009; Rubinson 2009;
Percy and Elliott 2016; Bellman et al. 2017). Moreover, in practice, firms (in particular the managers) evaluate
their advertising campaigns by measuring sales changes. Sales volume data is often kept confidential as
internal information although it is included in the “Profit” item in financial statements.

The relationship between advertising activity and sales can vary on different markets. For example, in the
cigarette market, advertising has a positive relation with product demand although no correlation between
these variables was found on the coffee market (Cowling et al. 1975). The correlation was confirmed on the
car market (Kwoka 1993), but not on the beer (Nelson 2005) or whisky market (Cavaliere and Tassinari 2001).

It remains unclear if advertising influences demand or vice versa. Advertising can influence the demand, but
the only thing proven is that the variables are in a mutual relationship and the direction of influence cannot be
defined (Taylor and Weirserbs 1971). Such assumptions in different industries provide the motivation to
analyse the relationship between profit and advertising in the Czech insurance market. Insurance is part of the
service market and has its own specifics. The core of the insurance “product” requires relationship-building
activities, deeper interaction, and communication with consumers (Crosby and Stephens 1987). Consumers on
such a market can base their evaluation of the quality of a service on their attitude toward a company’s
marketing communication (Crosby and Stephens 1987).

The importance of insurance in the Czech Republic is increasing (Ducháčková 2004). Although an insurance
company in the Czech Republic cannot operate without a license from the Czech National Bank (Ministry of
Finance 2018), the insurance market in the Czech Republic is a highly commoditised and undifferentiated

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 Daria Gunina, Tomáš Kincl and Lenka Komárková

market. Besides licensed insurance companies there are many different agents, brokers, intermediaries, and
financial consultancies (Ministry of Finance 2018). Hence, companies operating on this market compete
through intensive marketing communication. As part of their marketing communication, their advertising
strategy can significantly influence a company’s success and financial performance.

The insurance market in the Czech Republic is divided into the subcategories: general insurance, insurance of
persons (health, accident, travel, life or other insurance), property insurance (car general, car accident, car
obligatory liability, household and other insurance) and animal insurance. Consumers have different relations
to the insurance of persons and property insurance in the Czech Republic. They would rather obtain car
insurance or household insurance than insurance of persons because the Czech Republic has had bad
experiences with low-quality consultants and scammers offering this type of insurance (Petříček 2017). Both
consumer behaviour and advertising activity in these subcategories may differ. Before studying and putting
forward the conclusion about the insurance market as a whole, we need to examine if the market with the
insurance of persons and property evince statistical differences. Thus, the following research questions were
formulated:

x RQ1: “Are there statistical differences in TV advertising activity between the insurance of persons and
property insurance on the Czech insurance market?”
x RQ2: “Is there a relationship between the insurance companies’ financial strength and their TV
advertising activities on the Czech insurance market?”
x RQ3: “Is there a relationship between the insurance companies’ profit and their TV advertising
activities on the Czech insurance market?”

2. Data and Methods

This study deploys an empirical quantitative research method based on real data. The complete monitoring
dataset provided by the Nielsen Admosphere research agency was used as the input dataset in this study. The
dataset includes all advertisements broadcast in the Czech Republic on TV from 2010 to 2017. Commercials
data are categorized by the industry in a hierarchical tree. On the main level, there are 23 categories according
to the main industries. The hierarchical tree consists of five levels (Novák and Kincl 2013). This study analyses
457,306 advertisements from NACE (Statistical Classification of Economic Activities in the European
Community) category M – Finance and Insurance – Insurance, reinsurance and pension funding, except
compulsory social security (see Table 1).
Table 1: Numbers of TV advertisements in category M in the period 2010 - 2017
Year 2010 2011 2012 2013 2014 2015 2016 2017 Total
Number 15,502 24,919 29,629 39,202 47,579 97,456 99,764 103,258 457,306

2.1 Research sample I

From the initial dataset, those advertisements that were uniquely classified into one of two categories
(personal insurance, property insurance) were selected. In this way, the data for answering research question
RQ1 was obtained (Table 2, Table 3). A TV advertising activity comparison was provided using the paired
Wilcoxon test with respect to the distribution of group differences and the sample size (n = 8).
Table 2: Numbers of TV advertisements according the type of insurance in the period 2010 - 2017
Insurance 2010 2011 2012 2013 2014 2015 2016 2017 Total
Personal 3,394 2,796 6,412 22,545 22,748 68,276 64,937 50,112 241,220
Property 9,305 15,690 19,822 11,341 9,305 3,794 24,294 43,062 136,613

Table 3: Expenditure in thousands CZK of TV advertisements according to the type of insurance in the period
2010 - 2017
Insurance 2010 2011 2012 2013 2014 2015 2016 2017 Total
Personal 137,963 79,730 158,189 164,806 171,958 364,476 350,838 287,127 1,715,085
Property 318,301 245,059 282,454 153,353 129,367 58,752 292,304 370,940 1,850,530

2.2 Research sample II

Each company with TV advertisements in the initial dataset obtained was included in the research sample and
the following variables for the company were monitored:

85
 Daria Gunina, Tomáš Kincl and Lenka Komárková

x number of TV commercials broadcast per year,

x the expenditure for TV advertising in thousands of CZK per year,
x total assets in thousands of CZK per year,
x profit in thousands of CZK per year.
Table 4: Numbers of companies for which financial performance variables were available in the given year
Year 2010 2011 2012 2013 2014 2015 2016 Complete
Number 33 34 35 35 34 36 32 27

On the Czech insurance market, 45 advertisers were identified and analysed for answering research questions
RQ2 and RQ3. We found that advertisers on this market are not only insurance companies, but also such
organisations as the Czech Insurance Association, different agents, brokers, intermediaries, and financial
consultancies. However, for simplicity, these are still referred to as insurance companies without distinction in
the following text. Data about the financial strength and profits was available for a one-year shorter period
(2010 – 2016) and was not traceable for all 45 companies for each year (see Table 4). The statistical analysis
was processed using R software version 3.5.0 (R Core Team 2018) and was based on all available data in
individual years. Given the nature of our data, which is longitudinal, the relationships were evaluated by using
the linear mixed models (Laird and Ware 1982).

3. Findings and Discussion

Table 5 summarises the results using paired Wilcoxon rank tests for comparison of TV activities expressed by
the ads number and the costs of ads between two basic categories on the insurance market, namely personal
and property insurance. The insignificant results indicate a negative answer for the first research question
RQ1. Therefore, we can conclude that from the perspective of Ads Number and Ads Costs Ads Costs (in
thousands CZK) both analysed categories show no statistical difference and could be approached as a merged
market to answer subsequent research questions (RQ2 & RQ3).
Table 5: Paired Wilcoxon test results: Difference estimates, related confidence intervals and p-values
Variable Difference (Personal - Property) 95% Confidence Interval P-value

Ads Number 10,725.3 (-9,660.5; 38,962.5) 0.313

Ads Costs (in thousands CZK) -38,508.8 (-15,2301.6; 158,588.5) 0.641

Table 6: Linear mixed models results for various combinations of response and predictor variables: Effect
estimates, related Wald confidence intervals, and Wald test p-values
Response Predictor Estimate 95% Conf. Int. P-value

Log10(Total Assets) Log10(Ads Costs + 10) 0.008 (-0.006; 0.023) 0.268

Log10(Total Assets) Log10(Ads Number + 1) 0.010 (-0.005; 0.025) 0.185
Sgn(Profit) · Log10(|Profit|+1) Log10(Ads Costs + 10) 0.001 (-0.091; 0.094) 0.978
Sgn(Profit) · Log10(|Profit|+1) Log10(Ads Number + 1) -0.021 (-0.115; 0.074) 0.666

Note: The symbol Sgn denotes a sign function, Log10 denotes a decadic logarithm, and || denotes an absolute
value.
To evaluate the relationship between financial performance and the ads activity of insurance companies, a
linear mixed model was used as an appropriate method. In general, the financial performance variable was as
a response. The advertisement activity variable and the year were entered into the model as fixed effects with
a random intercept for an insurance company. In particular, using four linear mixed models, we obtained the
estimated effects of ads activities on financial performance (both measured in two ways), the given insurance
company and the year. Regarding the shape of the original variables distributions and the better models’
properties, all the main variables entering the models were transformed using the logarithmic function. The
model results are presented in Table 6. For all four situations, the p-values are greater than 0.05. Therefore,
we can conclude that there is no statistically significant relationship between the financial performance and
the advertising activities of Czech insurance companies. Based on our study, the answers for research
questions RQ2 and RQ3 are also negative. The results indicate that there is no direct relationship between the
advertising activities of the companies on the insurance market in the Czech Republic and their financial
performance (financial strength, profit).

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 Daria Gunina, Tomáš Kincl and Lenka Komárková

Our assumption, that there is a positive strong correlation between the insurance companies’ financial
strength and their TV advertising activities (RQ2), was not confirmed. According to Kotler’s competitive
strategies, market leaders (companies with high financial strength) were expected to invest more in
advertising activities in major mass media to protect their market shares. Similarly, market challengers (second
tier companies in terms of financial strength) were also expected to invest heavily to advertising to challenge
the market leaders, whereas the market followers were anticipated to accept their market positions and to
account for lower advertising expenditures. However, the Czech insurance market does not seem to be such
case as there weren’t such advertising patterns found at all.

Despite the sales are on the top of hierarchy of desired advertising effects (Barry and Howard 1990; Tellis
2003; Kelley et al. 2015), our study suggests there is no direct relationship between profits (inducted by the
sales) and the volume of advertising activities (RQ3). Such results might indicate that advertising campaigns
are operated in a lousy manner (poor managerial decisions and processes regarding the advertising activities)
and are not delivering on their promises (increasing sales). However, such conclusion cannot be made without
deeper qualitative research of advertising goals setting on the analysed market. On the other hand, the
insurance companies are likely to pursue other goals than increasing market share or sales: i.e. brand
awareness, strengthening the relationship between the insurance company and clients or rather focus on the
retention of current customers than on the acquisition of new ones. Advertising effectiveness should not be
measured solely as a profit-related but the managers should use more adequate metrics (i.e. reach).

Results indicate advertising has no impact on sales or profit on the insurance market, and such a conclusion is
similar to the results of studies by Cowling et al. (1975; coffee market) Cavaliere and Tassinari (2001; whisky
market) and Nelson (2005; beer market). Even though the analysis does not consider the delay in reactions
between variables (the increase in advertising activities cannot affect sales immediately) and is limited only to
TV media, the results confirm the unclear relationship between advertising and demand stimulation.

Moreover, the results were similar for both main categories on the insurance market – personal and property
insurance. The advertising and media planning patterns were similar for both categories in the analysed years.

4. Conclusion
The aim of this study was to answer the question of whether there is a relationship between insurance
companies’ financial performance and their advertising activity. The main motivation was the lack of literature
on advertising strategies in the insurance market. Furthermore, the evidence of the relationship between the
advertising activities of the companies and their financial performance varies among industries and markets.
The analysis results indicated no direct relationship between the two variables on the Czech insurance market
from 2010 to 2016, which complements previous studies focused on similar phenomena (i.e. Nelson, 2005;
Cavaliere and Tassinari, 2001; and Cowling et al.,1975) that suggest that companies on specific markets might
follow different goals than direct demand stimulation. This study complements the classical advertising
effectiveness models that emphasize that there is no action without attention or awareness (Barry and
Howard 1990; Tellis 2003; Kelley et al. 2015). Therefore, the marketers should be very specific when
formulating the advertising goals as the sales/profits may not truly reflect the effects of advertising campaigns.

Even though the analysis utilised the entire advertising data about the selected market, the results should be
considered within the limitations of our study. The empirical quantitative approach did not consider the delay
in reactions between variables. The dataset also only included data about advertising in the TV media. The
companies usually use an integrated marketing approach and the goals of the campaign may vary across
various media channels used. Moreover, the analysis could be complemented and extended by deploying
mixed methods and qualitative data collection. Qualitative research of an explanatory nature could reveal
strategic choices behind the campaigns and provide a deeper understanding of the relation between
advertising management and companies’ financial performance on the insurance market.

Acknowledgements
This study was supported by the Internal Grant Agency project of the University of Economics, Prague: IGS
F6/01/2018.

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Distributed Leadership and its Role in Improving Performance in UK
Construction Projects
Richard Hubbard1, Stephen Ison1, Steven Yeomans1 and Lee Bryer2
1
Loughborough University, UK
2
Construction Industry Training Board, Bircham Newton, UK
r.hubbard@lboro.ac.uk
s.g.ison@lboro.ac.uk
s.g.yeomans@lboro.ac.uk
Lee.Bryer@citb.co.uk

Abstract: Performance is a key priority for businesses operating within the UK Construction Sector (UKCS) and indeed
worldwide (HM Government, 2017). Recognising this, UK Government has pursued policy aimed at improving performance
through better innovation of technologies and processes whilst reducing adverse environmental impacts (HM Government,
2017). Central to these aspirations is the recognition such change is likely to engender the need for the training and
acquisition of new skills, with ‘improving leadership’ being one. ‘Improving leadership’ is not new, exploration into this
within the UKCS remains dominated by research focussed on individual leaders. This paper makes a case for Distributed
Leadership (DL) for improving leadership as it reflects the project nature of construction assignments; and if implemented
effectively by project managers can play an important role in current debate on the scale of skills gaps and ability to deliver
performance improvements within the industry. This review focusses on three key areas, current application of DL
practices and the people who participate. Second the possibility for DL impacting on performance, finally how barriers
might present a challenge for DL uptake in construction projects. The review suggests DL has the potential to bring about
enhanced performance; the conclusions of which are drawn from predominantly education and healthcare environments.
To progress, further exploration is required especially within the context of UK construction.

Keywords: Distributed Leadership, UK construction, Project Management, Performance, Enabling Practices, Barriers.

1. Introduction
Improving performance is a key priority for businesses operating within the UKCS (HM Government, 2017). The
UK government recognises this, pursuing policy to transform the productive capacity of a sector worth
£500bn-plus in public and private projected investment (Infrastructure and Projects authority, 2017), through
better use of technologies and processes which raise performance whilst reducing the adverse environmental
impacts (HM Government, 2017). Central to this is recognition that such change will engender the need for
acquisition of new skills, improving ‘leadership’ within the sector being one of them.

Given this, greater challenges and changing business environments necessitates the need for a fresh look at
leadership research and a call for change to traditional perceptions of leadership in the construction industry.

Globalisation and the fast changing nature of construction require the need to consider different leadership
models based on their compatibility with the ever-changing project environment (Toor and Ofori, 2008). The
fragmented nature of the industry through the common practice of subcontracting requires complex
leadership and management (Dainty and Loosemore, 2012). For construction projects to be effective,
intragroup and intergroup relationships are required (through collaboration, information sharing and
compliance) (Yang et al 2011). From this perspective individual orientated leadership (in isolation) might be
less effective at influencing performance across projects and tasks which vary (Cope, Kempster and Parry,
2011).

State and Capital entities recognise leadership will shape the future strategic direction of the UKCS (HM
Government 2013 and 2017). However currently individual leadership is viewed dominantly as the panacea to
delivering wholesale improvements in standards (Harris, 2009). Research supports this by continuing to focus
on developing the competency profiles of managers (Muller and Turner, 2010), measuring outcomes of
leadership development programs (Toor and Ofori, 2008 and Black and Earnest, 2009) and methods to manage
project environments (Mok, Shen and Yang, 2015), these studies reflect the technical nature of projects and
how effective delivery are a result of collective effort.

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 Richard Hubbard et al

DL provides an alternative perspective by studying how leadership can be enacted through collective
involvement and processes (Gronn, 2002, Bennett et al, 2003 and Bolden, 2011). This paper begins this process
by reviewing literature key in the development of DL as a theoretical framework. Then it assesses whether DL
practice is congruent with practice in construction projects, although this relationship is positive, the role of
the Project Manager (PM) is discussed highlighting their importance in implementation of practice. In
response, practices and structures a PM may implement to propagate DL, how these might impact on
performance and the potential challenges PM’s may experience to pursue these are discussed. Finally areas for
further study are recommended.

2. Distributed Leadership, What is it?

Previous research has focussed on hierarchical organisations, here knowledge flows downwards through an
organisation from the perceived ‘top’, here leaders are positioned; they set the tone and make all key strategic
decisions. These leaders are seen as figureheads by those ‘looking up’ (followers) and acting upon instructions
(Thorpe, Gold and Lawler, 2011).

The speed of change due to macro-economic factors shows no sign of slowing (Hairon and Goh, 2015). For
organisations to avoid the rigidities associated with hierarchical bureaucracies the impetus has been created
for them to be more adaptive and responsive to change, which have been observed mainly through flexibilities
like organic structures, extensive decentralisation and delegation of control and job design seeking to achieve
‘functional flexibility’ (i.e. multi-skilling) among the workforce and the relaxing of inappropriate professional
and craft demarcations (Whittington and Mayer, 2002).

Widespread restructuring and change occurring in organisations at sectoral level highlights the limitations of
leadership models which utilise the individual as the unit of analysis (Thorpe, Gold and Lawler, 2011) and has
encouraged a shift in focus away from the traits and behaviours to one where leadership is viewed as a
collective social process, emerging through the involvement and interactions of multiple actors. As a result DL
has grown in stature, making inroads in leadership theory and practice (Bolden, 2011).

DL is not something ‘undertaken’ by an individual ‘to’ others, or a set of individual actions through which
people contribute to a group or organisation…it is a group activity that works through and with relationship,
rather than individual action (Bennett et al, 2003:3). The concept provides an analytical approach to how
leadership activity occurs amongst various people, working in complex organisations over time (Bolden, 2011).

Considered as procedural rather than an isolated activity, DL was established in an educational environment to
seek to understand how people work together in order to establish the necessary conditions to improve
performance (Bennett et al, 2003).

Gronn (2002), studied how DL within organisations was arranged; and observed it in two forms:

x Numerical action - leaders are given a role or formal leadership status and placed at various levels in
organisations, providing insight as to how leadership operates within organisations, across functions
and within groups.
x Concertive actions - are less formal leadership acts, nurtured through spontaneous collaborative
working; intuitive working relationships and institutionalised practices, proposing leadership can occur
without formal impetus, people do not necessarily need to be assigned leaders.

Gronn (2002) also identifies three forms of concertive action, compatible with interactions and practices in
construction, these are spontaneous collaboration, where leadership practice emerges through the
necessitation to find a resolution to problem or requirement; interactions between participants from different
backgrounds and skills ensue, their aim is to find a solution or means of moving forward, collaboration is
temporal and disperses when projects are completed.

Furthermore, intuitive working relationships, these occur when close understanding between two or more
people emerges through practice, reliance and independence exists, borne through mutual trust resulting in
the creation of a ‘shared role space’ (Gronn, 2002:627). As a result of participation in these practices above,
DL behaviour might be replicated (and increasingly exhibited in others) in organisations through learning.

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 Richard Hubbard et al

Knowledge transference is achieved by observation or direct instruction, the propagation of DL activity was
driven by conditional factors and behaviours exhibited by others, practice became normalised and formalised
over time (Harris, 2009 and Leithwood et al, 2009).

Building on Gronn’s position of DL arrangement which can stretch numerical actions of designated leaders,
concertive efforts of followers and can be an emergent phenomenon, Spillane’s (2006) ‘leader plus aspect’
stretches beyond assigned leaders to others in non-recognised leadership roles. The ‘practice aspect’ acts as
the foreground for the practice of leading and managing, the context (Spillane, Camburn, and Stitziel, 2007).

From a distributed perspective practice is initiated through (or a result of) interactions between leaders and
followers, these are likely to be driven/ inhibited by actions and human behaviour influenced by individual,
material, cultural and social factors (see Bolden, 2011) within the context of construction and these are likely
to shape types of practice.

DL literature infers leadership can be distributed in two forms, it can be assigned or be emergent (informal)
without ‘recognised’ leader impetus, people interacting (DL practice) finding more efficient ways to perform.

Success can be driven or inhibited by individual, material, cultural and social factors, these impact on DL
behaviour and practice. Finally both DL practices are likely to become normalised and replicated within the
organisational context through observation and instruction. As a result consideration for task types utilised to
involve others; additionally how these may benefit practice and the challenges these may raise in projects is
required. These will be discussed once the contextual factors for UKCS are understood.

3. Can Distributed Leadership be more effective at fostering better leadership practices in

construction projects?
The UKCS is complex and fragmented, relying on skilled craft workers, interconnected management teams and
design professionals who remain divorced in their work up to the point of delivery (Clarke, McGuire and Wall,
2012). Contracts involve design, supplier and construction organisations, involvement and support can be
sporadic and intermittent throughout project timescales. Those involved from a variety of other organisations
come together to ensure the projects effective delivery (Clarke, McGuire and Wall, 2012). During a project
lifecycle numerous types of skill and expertise can be utilised through cross-functional teams, virtual teams,
fragmented work groups and subcontracted workers from different organisations collaborating on a project
and multi-organisational project delivery structures (Clarke, McGuire and Wall, 2012).

The implications of a fragmented UKCS are viewed as detrimental to improving performance (Clarke, McGuire
and Wall, 2012). Concerns have led to government enacting policies to bring about improvements by
introducing initiatives encouraging wider integration of project tasks, better outcomes in terms of design and
construction processes (Opoku and Ahmed, 2014). Appreciating how industry stakeholders co-depend on
collective and collaborative effort emphasises why opportunities to study the prospects of DL in improving
performance require attention.

The structure of the sector would seem to lend itself to DL, being highly project and knowledge-based, this
involves both professional and skilled work (Dainty and Loosemore, 2012). Innovation occurs through the
exchange of processes within sophisticated networks. Leadership is moving to a form which can cope with
collective effort and support the unitary perspective where individuals can work together and contribute to
achieving a common goal or output (Thorpe, Gold and Lawler, 2011). The conditions appear favourable,
however the unique arrangement of construction cannot be ignored and as a result to implement DL and
concertive actions it may require orchestration in the form of numerical actions by the appointed leader.

4. The Project Manager

Individual leaders remain the source of research focus, believing their role aligns with effective outcomes
(Larsen and Rieckhoff, 2014). UKCS context highlights why performing ‘leadership’ duty alone makes prospects
for delivering change complex. A requirement exists to create suitable conditions where DL can propagate;
developing structures whereby leadership could be shared would enable greater involvement and
participation in others (Cope, Kempster and Parry, 2011).

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Previous research recognises leaders as the impetus for developing structures to encourage wider
participation and involvement (Martin et al, 2015 and Tahir et al, 2016). Facilitation of similar practices within
construction would require Project Manager (PM) impetus, who lead, oversee and manage essential aspects of
a construction project. The PM needs to balance planning and management skills to control costs, time,
resources and quality of outputs (Pinto, 2000); and effectively do this against the backdrop of collapsing
project budgets, shortening deadlines and increased risk (Stevenson and Starkweather, 2010).

PM involvement in increasing levels of leadership can impact on relationships between team members in areas
like collaboration, communication and cohesiveness. Furthermore if effectiveness of the team is improved this
can positively impact on improved performance in projects in areas like schedule performance, cost
performance, quality improvement and greater stakeholder satisfaction (Yang et al, 2011). What practices can
be introduced by PMs to harness DL behaviours and higher involvement within project teams? these are
visited next.

5. Enabling practices supportive of DL practice.

There are three stages to a basic project lifecycle, planning, undertaking and the conclusion. During the
planning stage, the PM (with budget) will estimate costs, timescales and various resource requirements for
successful completion. During the project, PM’s will manage costs, time and resources against the agreed plan.
Upon completion, the PM will reflect upon and assess aspects of the project delivered well and also areas for
improvement. If increased leadership impacts on team effectiveness and positively improves performance,
here are some of the areas to initiate wider involvement for PM consideration.

5.1 Involving Multiple Leaders in Business Planning

Involvement of others at the planning stage is a key theme, a possibility for PMs to partner with those with
relevant knowledge to set project parameters (Cope, Kempster and Parry, 2011). Effective leadership practice
should vary, switching between formal and informal arenas; this can inform medium and short term decisions,
examples include formal team/ management meetings and informal communication (Lumby, 2013).

Involvement in planning encourages greater buy-in and enables PMs to assess opportunities and risks before
the project commences (Coldren, 2007 and Yang et al 2011). Similar has occurred in education where planning
amongst key people resulted in the creation of performance monitoring protocol which later raised quality and
performance standards (Cope, Kempster and Parry, 2011 and Gronn, 2002).

5.2 Good Collaboration between Various Leaders

Collaborative working should support DL practices throughout the project lifecycle. To maximise performance,
structures must exist for project members to communicate regularly, share expertise and better working
practices. Opportunity for others to inform/influence decision-making and practices should also exist (Bolden,
2011 and Lumby, 2013).

Collaborative working leads to growth in individuals working together more cohesively, making joint decisions
of strategic importance. These include; weekly meetings (Spillane, Camburn and Stitziel, 2007), leadership
meetings (Klar et al, 2016), regular and informal communication amongst staff (Nicolades et al, 2014) and
broad management teams involved in regular meetings (Larson and Rieckhoff, 2014).

5.3 Sharing of Knowledge between Leaders and Followers

To encourage wider leadership practice, effective interactions between PM and ‘others’ must exist (Thorpe,
Gold and Lawler, 2011), absence may result in information gaps, therefore effective mechanisms to ensure
strategic decisions and knowledge-sharing can be disseminated reliably amongst those involved is required
(Coldren, 2007 aand Cope, Kempster and Parry, 2011 and Thorpe, Gold and Lawler, 2011). Furthermore
‘additional’ systems of upward communication and knowledge sharing require provision, here advice can be
sought (from recognised leaders) before decisions are made (Harris, 2009, Nicolades et al, 2014 and Martin et
al, 2015).

Knowledge sharing mechanisms have been implemented previously through, ongoing forums, enabling PMs
and assignment workers to remain engaged with projects, (Coldren, 2007 and Tahir et al, 2016). Furthermore,
they allow key messages to be communicated, opening up channels for two-way communication. Additionally
cross-sectional teams integrate various sub-contracted parties and encourage greater involvement and

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cohesiveness in teams, improving information sharing mechanisms (Yang et al, 2011) leading to better
performance (Spillane, Camburn and Stitziel, 2007, Harris, 2009 and Tahir et al, 2016). Finally meetings provide
opportunity for feedback, influential in reviewing ongoing project performance (Lumby, 2013). These have
included, meetings between heads of organisations, departments, functions and respective subordinates
(Tahir et al, 2016).

5.4 Project conclusion and evaluation

Project conclusion requires thorough evaluation, performance is reviewed against key deliverables like, project
cost, financial return, quality, timescales and use of resources (Hoseini et al, 2013), PM’s performance is
assessed against these. If project success is dependent on factors like team engagement and involvement
(Yang et al, 2011), then interventions used to enhance DL require review. This requires reflecting on their
effectiveness and impact on performance factors during evaluation, various exit meetings are evident. Here
leaders engage with stakeholders to assess project success (Tahir et al, 2016). Where the intention exists to
grow DL presence, methods used should require ongoing review to highlight and continually implement
recognised improvements.

Leadership enhancing structures observed are limited by research contextually-based in education, (Klar et al,
2016). Above highlights initiatives a PM could implement to support the propagation of DL practice, these are
knowledge-sharing initiatives; encouraging informal and formal information sharing amongst staff and
reviewing the interventions employed to achieve these. Reviews how employing these can impact on practice
and performance follows.

6. How projects might benefit from implementation of DL practice.

The fundamental challenge for construction companies in the UKCS is how to encourage, nurture and reinforce
the requirements of good leadership behaviours and achieving these within project environments where
difficulties applying good HR practice exist (Clarke, McGuire and Wall, 2012 and Dainty and Loosemore, 2012).

Common direct employment practices are rarely utilised so managing people through stringent procedures is
difficult. Practice is shaped through large organisations primarily the holders of large contracts, who divide
these up into smaller work packages allocating to smaller designated subcontractors, these again extenuate
the supply chain by further subcontracting work. As a result duties are often undertaken on a temporary,
contractual basis by craft and professionals freelance or working for smaller organisation(s), on completion
they disperse and take up work on other projects (Clarke, McGuire and Wall, 2012). Such an environment
offers insight on why conveying a consistent corporate leadership message is challenging, from a policy making
perspective there is clear disconnect.

Considering potential outcomes generated through employing DL which impacts positively on performance for
adopting organisations (Nicolaides et al, 2014) is important; evidence suggests employing these strategies,
aligns people management with project outcomes. Literature supports the performance argument, revealing
some interesting outcomes beneficial to strategic and operational practice, these are.

6.1 Mutual trust and support between project workers

DL improves if trust and mutual support exists (Cope, Kempster and Parry, 2011), this may depend on culture.
Positive culture embraces good DL practice, bringing increased benefits like mutual support between actors
and a sense of affiliation in teams (through involvement strategies) and can aid to develop positive
relationships between different members of staff who exist in roles which differ vertically and functionally
(Bennet et al, 2003 and Hulpia and Devos, 2010).

6.2 Shared Values and Goals

Improved HR influence might be supported through implementation of DL strategies, where difference in job
complexity and expertise exist, these can be aligned by utilising collaborative, information-sharing and
decision-making (Nicolaides et al., 2014). This would require orchestrating through coherent shared goals and
values (Nicolaides et al., 2014), knowledge sharing, increased involvement and two way communication to aid
this. This may reduce opportunity for employees to pursue individual agendas, where increased fragmentation
and disparity (Cope, Kempster and Parry, 2011) can manifest.

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6.3 Raising leadership and management levels and best practice standards
DL is conducive with development of good HR practice; those participating in various leadership
responsibilities are supported with ongoing coaching and mentoring. DL adopters experience higher growth
potential (Cope, Kempster and Parry, 2011). Long-term commitment to soft/inclusive HR practices instigated
through DL initiatives can result in replicating conditions ideal for greater survival rate for those (Cope,
Kempster and Parry, 2011) facing harsh economic conditions of a cyclical environment (Clarke, McGuire and
Wall, 2012).

6.4 Teamwork and cooperation

Team working enables DL practice and is coordinated through interactions with others; each member’s
individual activity is critical to collective contribution. Cooperation and teamwork may result in a greater clarity
of roles, leading to less confusion and competition, resulting in more responsive decision-making; and a
greater recognition of differences in ability and competence (Nicolaides et al, 2014). Working effectively within
teams is facilitated by trusting and supportive relationships. DL provides long-term opportunities for people to
commit to goals of greater equity.

6.5 Improved performance from employees making better use of skills and knowledge
Adopters may experience raised ability, making better use of skills and knowledge, leaders were more
effective at delegating tasks, problem recognition and solving; and generation/implementation of new
innovations (Hoch, 2013).

6.6 Increasing motivation and morale

Links between DL and increased motivation/morale are highlighted by; improved/effective communication of
shared mission and goals, cultures where employees feel empowered to take greater initiative, employees
sensing greater control/ownership of work and resulting in career satisfaction (Hulpia and Devos, 2010 and
Tahir et al, 2016).

The relationship between DL and improved performance shows promise, further study is required. Current
research mainly identifies improvements in intangible areas, although these factors influence performance
(Sezer and Brochner, 2014). Research emphasis requires focus on tangible areas (labour and capital) such as
examining whether employing DL assists PM effectiveness thus influencing better performance in projects and
whether employing DL structures assist with the delivery of cost (and other resource) savings. Extended
attention to these will strengthen DL legitimacy amongst UKCS stakeholders.

7. Barriers to implementation
Existing literature indicates some difficulties, challenges and obstacles to practicing DL, these are.

7.1 Power dynamics and the perpetuation of existing structures

Power dynamics are hard to overlook in construction projects, they present challenges and thus require
attention so DL is not undermined. PMs can be reluctant to distribute leadership, assuming sole responsibility,
controlling activity and making strategic decisions. PMs are bound and belong to larger organisations which
have evolved into bureaucratic entities and control governance resulting in tighter, centralised management
through top-down decision making. Those in subordinate positions on projects may readily accept these
arrangements, leading to reluctance to engage with DL structures and develop skills required to participate
(Bolden, 2011 Lumby, 2013 and Cope, Kempster and Parry, 2011).

7.2 Lack of capacity and senior manager buy-in

Senior figures (like PMs) can impede DL (Larson and Reickhoff, 2014) in construction; this would reflect key
decision-making made by those in seniority (Lumby, 2013). Lack of manager buy-in is borne through
inadequate trust and communication (Tahir et al, 2016), resulting in failure to relinquish control (Martin et al,
2014) and the inability to distribute leadership (Martin et al, 2014 and Tahir et al, 2016). Inadequate skills and
fear of appointing incompetent people (Tahir et al, 2016) are cited as potential barriers.

7.3 Deficiencies in suitable skills

Skills gaps impact adversely on construction projects, good DL practice hinges on appropriate soft skills
(communications, verbal, listening skills). It is challenging to develop DL enhancing structures if these skills
cannot be sourced from those working on projects, leading to a reluctance to distribute leadership but also for

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individuals to assume leadership responsibility (Tahir et al, 2016). If a requirement exists to develop DL
structures, mechanisms through which people develop skills conducive with these structures need
consideration (Spillane, Camburn and Stitziel, 2007).

Soft skills underpin DL and are congruent with practice driven by social processes. Robles (2012) conducted a
study aiming to establish soft skills most sought by organisations; highest rated were communication,
responsibility, positive attitude, flexibility and teamwork. To facilitate proactive behaviour, less disconnect
between skill requirements and availability should exist, attention should enhance DL practice. Establishing
skills requirements; and noting the challenges for organisations to train and acquire these skills and how these
can be supported through developmental procedures within the sector is required.

In the UKCS, to facilitate DL practice in projects; more people must be involved. This is influenced by the
unique material, cultural and social factors and is likely to generate problems. Here DL is ignored by senior
figures, perpetuation of top-down initiatives is favoured and skills inefficiencies are cited for the inability to
implement structures. A lack of clarity on what DL is (Leithwood et al, 2009), how it works, the skills required
and how it delivers improved performance means the practical implications are understudied (Thorpe, Gold
and Lawler, 2011 and Bolden, 2011) and lack endorsement to challenge existing barriers impeding
propagation.

8. Conclusions and recommendations

The papers aim was to investigate current understanding of DL and its role in improving performance in the
UKCS (notably projects). To achieve this, the context of construction itself was visited, suggesting its unique
configuration might be congruent with the implementation of DL strategies and practice. The role of the PM in
the implementation of these strategies seems pivotal as they control project resources and have final
responsibility for delivering key deliverables. It was recommended project effectiveness could benefit by PM
making effort to connect with project stakeholders via wider participation and involvement at various project
stages, however issues were highlighted over material, cultural and social factors that could impact on this.

Evidence suggests DL improves performance, but it also highlights intangible factors are likely to influence
performance whilst not affecting outcomes directly. DL is unlikely to succeed unless strategies to support its
implementation exist and these must be linked to improving tangible outcomes, as result this paper proposes
further research which attempts to establish such.

9. Further research
Research is required which analyses DL in construction projects. Most DL research demonstrates how initial
implementation of DL strategies are conducted through numerical actions of appointed leaders (Gronn, 2002
and Tahir et al, 2016), these are likely to be PM’s on construction projects, as they control resources and
possess the greatest span of control, this would make them ideal for research and analysis. Acknowledging
this, further research could focus on establishing the current PM application of DL practices within UK
construction projects, examining the ‘others’ who contribute to its deployment and how effective they are at
achieving outcomes. Secondly, there are benefits to determining existing barriers, how these shape/impede
collective practices and how they might be overcome. It would also be recommended that potential ‘enabling’
DL practices are examined, highlighting how they enhance practice. Importantly need exists to examine the
relationship between DL and performance encompassing both tangible and intangible factors. Finally, as DL
will have some impact on training and development; attention on how DL can be embedded into existing
practices and supported through other training initiatives is required. Special attention to research in these
areas may assist practitioners to implement DL practices and improve understanding of its role in mitigating
performance concerns within construction projects.

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Analysing the Rogue Device Phenomena: An Explorative View on
Threats and Potential Solutions
Tim IJntema, Christian Walet, Koen Smit and Dave van der Velde
University of Utrecht, The Netherlands
tim.ijntema@student.hu.nl

Abstract: With organizations making more use of flexible workplaces, the threat of a rogue device infiltrating these places
is becoming more likely. In our paper we discuss 1) the threat of rogue devices, 2) the harm they can cause to organizations
and their information systems, 3) how these devices work, and 4) what we believe to be a potential solution to this threat.
Personal devices for instance, laptops, are often protected against software attacks, but currently lack protection against
physical hardware attacks. Virus scanners are used to scan for viruses in downloaded files. However, when a rogue device
is plugged in and executes the same task as the virus, the anti-virus protection does not detect it. This is because a rogue
device often pretends to be a harmless device, such as a normal keyboard, which is automatically trusted by what it gets
connected to. Even though a rogue device is just as dangerous if not more dangerous as a virus that is stopped by anti-virus
software, our research discovered that a rogue device remains mostly undetected. This comes from the inability to live
monitor what a USB device does. After all, the USB device just performs actions like typing or mouse movement. As we
investigated how rogue devices work, we identified a possible solution for protecting devices, such as laptops. The aim of
this paper is to inform organizations and individual users about rogue devices and share our solution. Increased awareness
about this problem could prevent these kind of attacks in the future.

Keywords: Hack prevention, Rogue USB devices, Endpoint protection, Virus, Awareness

1. Introduction
Imagine a normal day in our life were we come across objects that people have forgotten. When they are
worth something we are often deemed to try and find the owner, or we want to use it by ourselves and take it
with us. For example, if we see a USB stick, the first thought is often to put it in our computer to see what’s on
it, maybe we find some information to track the user or data we can use for ourselves. But what if the device
steals your data or even destroys your computer? These days that’s all possible with rogue devices that look
like a normal everyday USB stick. The use of rogue devices has a high success rate (Bursztein, 2016). This is
supported by the fact that there is often no protection against these devices (Bursztein, 2016).

Rogue devices are reprogrammed USB devices (Cylance Threat Guidance Team, 2017). Therefore, they can
pretend to be any other type of USB device. This includes keyboards, mice, networking hardware, storage, etc.
Some of these devices, such as the keyboard and mouse, are always trusted. Others, like the networking
hardware, are chosen as connection for network traffic automatically. One example is the USB Rubber Ducky.
It appears to the computer as USB keyboard once it is plugged in. Therefore, it is not detected as a harmful
devices and can undetected hack the system it is plugin to. This includes starting a command line and making a
connection to a hacker, which can be used to execute commands remotely. Another example would be using a
Lan Turtle to reroute network traffic. This USB device can be put between a computer and networking cable
and can capture all traffic going over the line. Remote access is used to view the traffic over the device.

There are many other rogue devices like the two examples given and they bring an abundance of possibilities.
Likely, awareness regarding rogue devices is still lacking in organization at employee level (Bursztein, 2016).
The aim of this paper is not only to centralise information about rogue devices, but to encourage researchers
to answer to the following research question: ‘how can companies protect their systems against rogue
devices?’ by providing a starting point.

The remainder of this paper is structured as follows. In the next section, the background and related work with
regards to rogue devices is presented and discussed upon. This is followed by a description of the research
method. Then, the data collection and analysis is elaborated upon, which is followed by the results of our
analysis. Lastly, the research is discussed upon and conclusions are drawn from this study and its results.
Finally, the paper is completed with directions for future research.

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 Tim IJntema et al.

2. Background and related work

When talking about rogue devices, it is important to understand the way that Universal Serial Bus (USB)
devices work. The USB protocol allows for up to 127 devices to be connected to the computer (Leavitt, 2007).
Some examples of USB devices are printers, mice, keyboards, webcams and network devices. When one of
these devices is plugged in, the operating system (OS) of the computer recognizes it and starts to figure out
which drivers belong to it. If the driver is already installed, it will start to exchange information with the device
immediately. When the device driver is not installed yet, the OS often starts searching online for the driver
(Hudek & Kepler, 2017) or askes user to install the drivers. The drivers might already in the OS, which means
that no installation is necessary, and the device is ready to be used almost instantly. These devices use the idea
of plug-and-play functionality. This means they can be plugged in and used within a short period of time.

Figure 1: Rogue hardware ID

Drivers are chosen depending on the hardware identifier (hardware ID). The compute retrieves the hardware
ID when an USB device is plugged in (Moore, 2004). This hardware ID must contain at least two parts, the
vendor ID and the product ID. Other optional information that can be provided by the USB device is the
product, serial number and manufacturer. One of the ways to get a device ID on Windows is to look in the
device manager. Figure 1 shows the hardware ID from a device plugged into a Windows computer. The
information in the red frame represents the vendor ID. This vendor ID tells us that the device is made by
Chipsbank Microelectronics (SZ development, n.d.). The information in the blue frame tells us that the device
is a USB flash drive. The green frame contains information about the revision of the device (Hudek, 2017). The
hardware ID is combined with the compatible ID. This is a more generic identifier that the operating system
Windows, hereafter Windows, uses to find the most suited drivers for the device. Another way of retrieving
the hardware ID of a USB device is to use devcon (Bazan & Saita, 2017). Devcon, short for Windows Device
Console, is a tool included with the Windows driver kit (WDK) that is included in visual studio (Microsoft, n.d.).

Rogue devices use the plug-and-play functionality of the USB protocol to get the computer to install the
required drivers. Rogue devices use the same hardware ID’s as standard devices, like keyboards, to get the
computer to install the drivers they need for their attacks (Nohl & Lell, 2014). There are two main types of
Rogue devices; human interface devices (HID) (Crenshaw, 2011) and network devices (ND) (Kierznowski, 2016).

The HID devices use the hardware ID of a mouse or keyboard to get the computer to install the standard
drivers for those types of devices. After that, it can perform the same actions as a mouse or keyboard operated
by a human. It takes full advantage of the fact that HID’s are always trusted by the computer. No authorization
is required to use USB devices. After the driver installation of, for instance a rogue device that pretends to be a
keyboard, it is possible to open up a command prompt. Inside this command prompt, it is possible to execute
all kinds of commands that, for example, create a backdoor or send content such as files to the system of the
hacker (Nurrl, 2018).

HID rogue devices are often put into the shell of a normal USB storage device to hide their real purpose. This
way they can be dropped in a very specific location, for instance the parking space of a company. Those “USB
storage” devices could then be picked up by one of the company employees and put into a company laptop.
The device then executes the attack and damage could be done. A good example of one of these HID rogue
devices is the USB Rubber Ducky (Hak5, 2018). The Rubber Ducky looks like a normal USB stick, but can type a
user specified piece of text at extreme speed which can be used to execute attacks in a short amount of time.
This reduces the time that physical access to the computer is required to execute an attack. The device
appears to the computer as just another keyboard.

The second type of rogue USB devices are network devices. These get the computer to install network drivers.
By default, computers choose the fastest network device. Network based rogue USB devices make sure that
they are the fastest, therefore they are chosen by the OS (Muniz, 2016). One example of what they can do is to
change the cookies that a web browser exchanges with advertisement servers. These modified cookies then
could contain a backdoor. This backdoor is activated when the web browser loads in a new advertisement. This
backdoor can be used to execute commands remotely (Kamkar, 2016). Another example is that this type of

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rogue USB device could capture all the network traffic and reroute it to the computer of the hacker. The
hacker can then sort through the data and possibly find unencrypted passwords and thus gain access to an
employee’s account.

An example of a rogue USB network device is a Lan Turtle (Hak5, 2018). This device perform the above-
mentioned actions and more, such as network scanning for open ports, vulnerabilities, and schedule tasks. Due
to this device being an actual computer by itself, the functionality of it can be extended using custom modules
(Kinne, 2017). It can be plugged into the back of a computer and left there for long period of time. Since
nothing seems to change from the user’s perspective, it is likely to stays unnoticed.

3. Research method
The goal of this paper is to provide the reader with information about rogue USB devices as well as providing
an answer for the question: how can companies protect their systems against rogue devices? We will start by
describing the scope of the research domain, and secondly defensive strategies are outlined. The majority of
our research will be concentrating on experimenting and prototyping the defensive strategies of rogue USB
devices.

To examine our open-ended problem the research team decided to apply qualitative methods (Creswell,
2007). These methods were chosen because the research team wanted to explore, explain and understand the
phenomena about what rogue USB devices are and what can be done to protect against them. To get an image
and the information needed for our research, an appropriate research design is selected. An qualitative
research approach case study type has been used because the research is a combination of experimental
testing and prototyping to analyse the concept of rogue USB devices.

There are many factors that can influence the method(s) of selecting the appropriate data collection
approaches (Creswell, 2007). This includes the research objectives, time, funding, experience and so on. This
study has been split up into three data collection methods, namely observations, experiments and
prototyping.

4. Data collection and analysis

The data is collected for this research is acquired between September 2017 and February, 2018. The case
study consists of observations, experimental and rapid prototyping. The steps taken to collect data and
analyses the data are depicted in Figure 3.

First a brief literature review was conducted to identify the key information about rogue USB devices, such as
their abilities, function, use and harm. Based on this, the goals were identified and described.

Figure 3: workflow of collecting data

4.1 Observations
To observe rogue USB devices, we utilized a rubber ducky, LAN turtle, Digi spark and keylogger. These rogue
USB devices where chosen to use in the direct observations to analyse the behaviour of how rogue USB
devices work without any interference. While the rogue USB devices were plugged in the pc, each researcher
takes notes of what was happening on the screen. This observation was especially valuable because the
scientific literature on Rogue devices, based on the review, is limited.

4.2 Experimental
The information gathered from the direct observations have provided an image of how a rogue USB device
behaves under normal circumstances. The following step was to make technical adjustments to see how a
rogue USB device can be blocked. The research team performed experiments to examine the possibilities to
block a rogue USB Device. The first experiment was to see if a plugged in USB stick can be found on the laptop
and what the output of the device looks like. With that information our research team used a tool, called

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Devcon, to search for possibilities to protect against rogue USB devices. The second experiment had to do with
capturing for USB traffic on the laptop. The tools, USBpcap, Wireshark, Python library Pyusb and C++ library
Libusb, are examined.

4.3 Rapid prototyping

After the information was analysed, the research team built a prototype of a Rogue Device Protection System.
The intention of this system is to block and log rogue USB devices plugged into a laptop. After this, a USB port
can be enabled using an authentication token. The prototype is built in a test environment to prevent any
harm to live systems. The prototype is divided into three parts. The first part consists of USB hardware
interfacing, which sends information when a USB device is detected. The second part is made up of a C# form
application which authorizes the users from the MySQL database to unlock the USB port in which the USB
device is inserted. The last part consists of a log management solution to get notifications when a rogue USB
device is detected to take further actions.

5. Results
Our first experiment with a rogue USB device was to see how a desktop computer reacted when a device was
plugged into the USB port. The question that needed answering, was how a rogue device shows itself to a
computer and if this could be used to determine what kind of device it is. One of the most interesting aspects
of a rogue USB device is the hardware ID that the USB device shows to the computer. The main thing about
the ID that a rogue USB devices shows is that it presents itself as a basic keyboard that require the default
drivers to work. This makes it impossible to use the ID’s to determine the difference between a rogue USB
device that’s pretending to be a HID device and an actual HID device. Even though the operating system
cannot determine the difference, the ID’s are unique. So even though the ID’s could not be used to identify if a
device is a rogue device, it could be used to manage the devices that are connected.

5.1 USB device ID’s

When a USB device gets connected, the plug and play feature from the operating system takes over and uses
the hardware ID given by the connected device and installs the drivers. This is done in the first few seconds
after the device was detected by the computer. The only information the user gets on every version of
Windows is that the device is ready to be used. During testing, it occurred that this notification appears well
after the device had everything it required to function. Meaning, that the rogue device has conceivably already
executed its attack.

As mentioned, the hardware IDs of a USB device are unique and can be used to get a lot of information about
the device itself (Hudek, 2017). The problem with this is that all the information the computer has about this
device is based on the information given by the device. There is no way of check whether or not the
information is actually valid. The Operating System (OS) just uses this information to generate the hardware
ID. This points out that the hardware ID cannot be relied upon to show what the device is. Yet, for the
computer this ID is the only connection point to a physical device connected to the computer. From a security
standpoint this is a problem because, whatever the devices tell the computer will be accepted and the devices
can then execute whatever they want.

Figure 4: Rogue hardware ID. 1

Figure 4 depicts two hardware ID’s. Both USB devices have identified themselves as a USB input device and
Windows has given both devices access to the drivers they require to operate. The purple ID is a rogue device
that’s pretending to be a keyboard where the yellow ID is the actual keyboard connected to the computer.

Without the ability to know what the device is, the most logical next step would be to determine what the
device does. This, however, is a different problem. Because of the way USB devices interact with the
computer, it is not easy to live monitor without interrupting it. There are tools that have the ability to do so,
for example, Pyusb (Costa, 2017) or Wireshark (Wireshark, 2017) with the USBPcap (USBPcap group, n.d.)

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plug-in. These tools are both capable of monitoring a device, but not in the way that would be required to
prevent rogue devices from doing harm.

Pyusb is a tool that allows to monitor a USB device. However, to do so, it needs its own USB drivers and these
drivers would then capture all activity. This allows for monitoring of wat the device is doing but it also means
that the USB device cannot be used, because everything is captured by the Pyusb drivers and not send to the
operating system. The USBPcap plug-in for Wireshark on the other hand does not need its own drivers. But
getting it to live capture USB activity was difficult and needs to be setup before the USB device gets connected.
The problem was that the live feed was feed was send to the console and as soon as a different output option,
rather than the console option, rather than the console was used, the live capture would not provide any data.
Therefore, the tools that were identified did not serve the needs related to our problem statement and
research question.

5.2 Potential solution

Currently, the tools that try to mitigate the danger of rogue devices are limited and with the way USB devices
and plug-and-play works on modern operating systems, there is no easy way of dealing with this threat. Based
on a literature review a mind map of potential solutions to mitigate the threat of a rogue device was created
(Figure 5). These solutions do not fully protect or limit the usability of USB devices. While these potential
solutions where not fully tested, critical issues are summarized based on the observed behaviour of a rogue
device.

Figure 5: Mind map of potential solutions

Take for instance locking a pc. This would protect against most rogue devices. Now this is an easy and build in
solution that everyone can and should use, but the obvious flaw here is that it only protects you when
someone is not using the computer. This means that when someone plugged a rogue device in without the
user knowing or the user does this without knowing it’s a rogue device, the harm will still be done. It would
also harm user friendliness to the point where one could argue whether the solution really solves the problem,
and not just moves the problem around.

Disabling USB ports is another option. However, this would not be practical since it would not allow for the
user to utilize USB devices. This would, for instance, keep the user from using an external keyboard. On a
laptop this could still work due to it having an internal keyboard. On a desktop this solution would make using
the device impossible. A similar approach would be covering the USB ports. This would have the option for the
USB ports to still be used depending on how permanent the USB port cover is. The problem here would be that
a cover that cannot be removed would have the same problem as with disabling the USB ports. Removable
USB port covers would still allow for someone to use the USB ports. However, this also allows for a hacker to
use the ports.

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A combination of some of these potential solutions could bring us closer to something that could work as an
actual solution or at the very least make it more difficult for rogue devices to do any harm to a system.
Controlling access to a computer for all USB devices is something that can be done using the hardware IDs.
After a USB device is plugged in, it gets disabled. This occurs after the device has identified itself to the
computer, but before it is able to do anything. With the information provided by the device, the user can be
shown what the new device that has been connected is claiming to be. By using a password, it can be enabled.
The research team made a prototype of a tool that could do this using the Devcon toolkit from Microsoft. By
combining disabling USB ports, controlling USB devices with a password with a register of USB devices that are
allowed so that a user doesn't need to approve the same devices repeatedly, one would end up with a basic
system that could protect against unknown USB devices getting connected without the user's knowledge.
Tracking USB behaviour could be added to notify the user if a USB device is doing something that it shouldn’t.

6. Discussion and conclusions

In this paper, the aim was to find a solution against rogue USB devices. To accomplish this, a study was
conducted on how they work and on defensive strategies. Based on the results, the research team recognized
that combining different measures makes a solution, but also saw that it hasn’t really reached its full potential
and there is still a lot of research to be done.

For example, the application the research team build against rogue USB devices can block the rogue USB
devices even if the user isn’t paying attention and reconnect the device based on the user’s decision. This can
be seen as an advantage because it provides full control of our USB ports. The downside of this is that it also
still allows the rogue USB devices to attack if the user misses the danger and still trusts the device. This shows
that the research into this problem is still not fully completed. The proof of concept the team made consists of
a combination of existing applications. This makes it more vulnerable for failures and the dependencies are
higher too. The research team also tested a limited number of rogue devices. But there are a lot more devices
out there that the team were not able to test, yet.

From a technical perspective the research team answered the question and found a solution to the problem.
An application prototype was created that protects the user against attacks from rogue devices by blocking all
the newly connected USB devices instantly and gives the user the possibility to unlock them again.

7. Future research
In the future, there is still a lot that can be researched with regards to rogue USB devices, like how can the
application prototype be made less vulnerable to human failure and does it work against every USB device?
Future research could integrate trends, such as the use of artificial intelligence for detecting rogue USB devices
or solutions for recognizing certain patterns that may indicate a rogue USB device. Our research has been
limited to only researching a selection of rogue USB devices, but there are other rogue devices which must be
taken into account in future research. Each rogue device has its own possibilities, such as using wireless
communication to gain unauthorized access. Nowadays, more and more devices are connected to the internet
with, which generates more security risks. We believe that future research and awareness are important focal
points to be able to advance detection and security against rogue devices in a rapidly changing IT environment.

References
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GDPR: Governance Implications for Regimes outside the EU
Coral Ingley1 and Philippa Wells2
1
AUT University, Auckland
2
Federation University Australia, Victoria, Australia
coral.ingley@aut.ac.nz
p.wells@federation.edu.au

Abstract: It is estimated that as of 2017 around 120 nations around the globe had legislation to protect personal data with
at least another 30 in train. Many of the early regimes (dating back to the 1980s and 90s) reflect the OECD Guidelines on
the Protection of Privacy and Transborder Flows of Personal Data (1980, updated 2013). However, there are also increasing
concerns that these guidelines may no longer be fit for purpose with recent issues regarding breaches of data security and
privacy. The EU’s General Data Protection Regulation (GDPR) (2016) implements a reformed data privacy regime. Tellingly,
some of the new and pending privacy regulations elsewhere reflect the GDPR, a characteristic that suggests much about
the impact of international trade. Two questions arise: first, how is the GDPR likely to affect and influence governance of
organisations, not only those domiciled in the EU, but also those trading with the Union or having a presence there?
Second, compared to the GDPR, what gaps are there in other existing privacy regimes and what are the implications for the
governance of those organisations and their risk management strategies? This paper compares the GDPR with privacy
regimes in place in New Zealand and Australia (the first of which has GDPR “approved country status” for receipt of data)
and attempts to answer the questions above, thus providing a focus for empirical research. As such, the paper provides
insight into the impact of the data privacy and security legislative reform, on corporate governance, strategy and risk
management beyond the EU in its reach to far distant regions.

Keywords: Personal data transfer, risk, security, data privacy, governance

1. Introduction
One of the major “scandals” of 2017 was the association of Facebook with Cambridge Analytica; an association
that enabled Cambridge Analytica to harvest and use personal data of Facebook members. Critics claimed that
this data was then used to manipulate the democratic process, including the 2016 U.S. Presidential election
(e.g. Meyer, 2018). The widespread negative press around this association recently claimed its major scalp
with Cambridge Analytica filing for Chapter 7 Bankruptcy in New York and its British parent SCL elections Ltd
shutting down operations (Reuters, 2018).

From this one example, it is apparent that the protection, control and use of personal data is a major and
expanding concern for many jurisdictions. Further, as the capacity of technology increases and the controllers
of that technology explode in size, sophistication and wealth, so too does the potential for (mis)use of data.

Lawmakers have not exactly instilled confidence in their ability to control this phenomenon but instead, “the
political class has reacted to the rise of the tech behemoths with the gawping stupefaction of a five-year-old
strapped into the nose cone of a space rocket” (Rawnsley, 2018).

One region whose lawmakers have reacted is the European Union (EU), most recently via the General Data
Protection Regulation or GDPR. This measure in turn poses risk management issues (and therefore governance
challenges) for companies, large or small, operating either directly in the EU, or indirectly via organisations
operating there. These risks and challenges arise not only because of the potentially significant monetary costs
of compliance but also the costs of any legal proceedings and/or the damage to organisational reputation.

With the central imperative of the GDPR (formulated prior to the Facebook-Cambridge Analytica debacle)
being the protection of individual data, it is beyond credible to suggest that it merely represents business as
usual. There are also questions as to how the GDPR affects, or could affect, strategic decision making by
organisations. Already some organisations have announced their intention to abandon operations in the EU
due to the GDPR and others are changing their policy and processes to minimise the risks. However,
indications are that not all appreciate the potential risk they face. The Information Systems Audit and Control
Association (ISACA) found that fewer than one third of senior executives and boards of directors globally are
satisfied with their organisation’s progress preparing for GDPR and 35% of respondents were unaware as to
whether their organisation had made any progress at all (ISACA 2018). Closer to this paper’s context, it has
been reported that almost 10% of New Zealand respondents to the Global Cyber Risk Perception Survey (2018)

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were unsure whether their activities were subject to GDPR or any other overseas regulations, and 25% of
those who did know they were exposed to the GDPR had not developed a data breach response plan (Boles,
2018).

Given the above, it appears that organisations are likely to face significant issues and challenges in relation to
their governance as per the GDPR. It is also significant that the GDPR is merely one manifestation of the
growth of risks, uncertainties and challenges that affect the present and future. Thus, it is suggested, research
into organisational strategy in this context requires an exploration not just of management of the impact of
the GDPR as (yet another) specific and discrete risk (which tends to be reactive and short-term), but also of
responses to its requirements from the perspective of organisational resilience, addressing the question of
“what can…[be done] to ensure the future success of…[organisations] against the growing array of risks?” (a
long term, proactive approach) (Hopkin, 2014:252). Although beyond the primary focus of this paper, using
organisational resilience as a conceptual framework is appropriate to future research on the matter, as is
outlined in the last section.

By way of historical context, the Organisation of Economic Cooperation and Development (OECD) Guidelines
Governing the Protection of Privacy and Transborder Flows of Personal Data (TBFD) (Privacy Guidelines)
(originally promulgated in 1980 and most recently updated in 2013), incorporates 13 principles addressing the
collection, storage and use of personal data. Many jurisdictions both national and subnational have adopted
these principles either as is, or with some modification, with some 120 nations having privacy regimes in place
as of 2017. These principles acknowledged the impact on privacy from ineffectively controlled expansion in
extent and capability of technology in collection, use, manipulation and storage of personal data and on the
transborder data flow issues arising from inconsistencies in national regimes (Kirby, 2010).

In the instance of the EU, The Grand Chamber of the Court of Justice of the European Union has for some years
been developing a reputation “for its more purposive and expansive interpretation and application of EU data
protection law” (Kuner, et al., 2018, 1), most specifically in relation to the EU Charter of Fundamental Rights
(2009). The latest development has been the GDPR which, as from 25 May 2018, is fully in force. It is not
limited to the private sector, although the focus of much of the publicity and warnings available on the impact
of the GDPR has been on its consequences for companies (a tiny cross-section of official, general and sector-
specific examples being Brandom, 2018; EGDPR Org (nd); Irwin 2017; Kharpal, 2018; New Zealand Trade and
Enterprise 2017; OAIC, 2018; Strand, 2017).

The following section provides an overview of the central provisions of the GDPR. This is followed by a similar
overview of the privacy regimes in place in New Zealand and Australia (Commonwealth (Federal) only, as
under the Constitution, the power to manage external relations is within the Commonwealth ambit). The
section focuses on similarities and variations between these regimes of relevance to activities of “foreign” or
external entities that may affect the privacy of protected individuals. This discussion provides a framework in
which to explore governance implications for Australian and New Zealand domiciled companies engaged in
some way with EU residents or those seeking to do so at some point. It also is worth emphasising that while
the GDPR applies only to EU individual data, other jurisdictions are moving to implement similar regimes. Thus,
in the longer term the GDPR provisions are likely to have broad governance implications for all businesses
involved in international trade.

2. The GDPR
Very briefly (given that it stretches to some 260 pages), the Regulation provides for the protection of personal
data of residents (“data subjects”) of the EU whether a threat to the protection of such data emanates from
organisations (“controllers or users”) in or outside the EU and whether it is direct (arising from a relationship
between the individual and an entity possessing or using that data) or indirect (as a result of a third party
entity gaining access to that data via the controller or user). More specific and relevant details are as follows
(drawing from the useful summary created in 2018 by the Australian Commonwealth Office of the Information
Commissioner (OAIC):

x Coverage extends to activities (including supply and transaction-related activities such as payment
arrangements) that relate to the offering of goods or services to EU “data subjects” or that monitor
their behaviour.

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x “Personal data” is (any information relating to an identified or identifiable individual, including any
once combined with other data that allows identification of individuals). Thus, details of race cross-
tabulated with genetic data may facilitate identification of individuals falling into that specific category.
“Processing”, the critical activity triggering obligations under the Regulation, means any operation(s)
that interrogate(s) personal data whether it be automated or not and whether it occurs in the EU or
elsewhere.
x Compliance responsibility lies with the “controller” (the entity that determines the use or means of
processing data) and the processor (the one doing the processing as defined).
x Criteria against which any activity is judged for (non)compliance are identified in Article 6(1)(a) and
include any, some or all of: clear consent (by the subject), contextual necessity (e.g. for a contract),
necessity affecting the controller (e.g. with a legal requirement), protection (of a vital interest of the
subject’s), public interest or official authority (e.g. law enforcement or national security) and/or
legitimate interests of the controller that outweigh those of the subject.
x Management and regulation of international (transborder) data transfers. Countries outside the EU
may be “white-listed”, which means the European Data Protection Board (via an adequacy decision
pursuant to Article 45), deems them to have adequate data-protection safeguards such that data can
be transferred there without the need for recipients to demonstrate specific safeguards. Only a few
countries are presently white-listed. Absent such a status, the controller must demonstrate that it has
adequate safeguards in place, such as approved codes of conduct or an agreement to comply with
“standard data protection clauses” promulgated by the EU Commission.
x Significant penalties for breach, most particularly those relating to consent, rights of subjects and
transborder data flow, where it can be up to €20 million or 4% of worldwide turnover, whichever is the
greater.
3. New Zealand and Australian Privacy Regimes compared to the GDPR

3.1 General Introduction

Australia and New Zealand (both members of the OECD) moved (relatively) early to incorporate the original
OECD privacy principles in statute (the Australian Privacy Act (Commonwealth) 1988 Schedule 1 (since 2014
includes the 13 Australian Privacy Principles (APPs) with their scope and exceptions incorporated within each
one, and the New Zealand Privacy Act 1993 (s6) (with 12 Information Privacy Principles or IPPs)). However,
while the New Zealand Act applied from the outset to the private sector (the first such legislation outside the
EU to do so), the Australian legislation originally applied to the public sector only (Blair, 1999). As of May 2018,
the New Zealand Act covers “agencies”: any person or persons, whether private or public, incorporated or not,
while the Australian federal legislation is limited in scope to “APP entities” (s6) – a term that impacts the
extent to which the privacy principles apply. Specifically, the term embraces government “agencies”, private
and non-profit “organisations” (defined as those, regardless of legal personality, with turnover exceeding AU
$3 million) (s6C – last amended in 2012), private health providers, and some small businesses operators
(subject to limitations) (s6D – last amended in 2012).

The New Zealand legislation has most recently been amended in 2013 and is currently undergoing reform
through the 2018 privacy bill. This bill is a response to a series of recommendations in favour of updated
legislation (e.g., the Law Commission in 2011 and more recently, the New Zealand Privacy Commissioner who
argued that the New Zealand provisions have “fallen …behind international standards” (Edwards, 2017),
needing further reform to ensure currency and consistency with trading partners). At the time of writing, this
bill is trudging through the parliamentary process (MacManus, 2018). Inter alia, if passed in its present form,
the new legislation will provide for stronger investigation and enforcement powers for the Privacy
Commissioner, mandatory reporting of breaches by affected agencies and the issuing of enforceable
compliance notices.

In Australia, the Act was reformed reasonably extensively in 2014 and further in 2017 (to require mandatory
reporting by APPs of data breaches). However, the latest narrow interpretation of “personal information”
framed by the Federal Court in Privacy Commissioner v Telstra [2017] FCAFC 4 (as information about an
individual rather than that which could reasonably be used to identify, based on the previous definition, not
the latest under the reforms of 2014), has left the position uncertain (Johnston, 2017). This particularly
impacts on the control and use of metadata and data matching programs.

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Below is an overview of how the New Zealand and Australian regimes differ from the GDPR regarding aspects
particularly important to corporate governance. As part of this discussion, governance implications of the
GDPR are identified.

3.2 Entities Affected

As identified above, the range varies as to which entities the different privacy regimes apply. In all three
instances large corporates are covered. From the perspective of the GDPR, it is arguable that such
organisations are the most likely to be involved in international trade or data-relevant activities in the EU, but
other businesses cannot be complacent. Entities/agencies not subject to existing regimes may have less
appreciation of privacy obligations under the GDPR than those who are already required to comply. Further, in
a global economy, it is likely that goods and/or services will or could be offered to those in the EU, even from
as far distant as Australia or New Zealand (e.g. Lundstedt, 2018). It is also the case that in a networked world,
data processing can happen at remote locations, including, again, in Australia and New Zealand. Potential
governance issues associated with the definition of affected entities are thus largely related to ongoing
management of data, particularly for smaller businesses or those without previous or extensive experience
with personal data management. Significantly for all such organisations, repeated reports in the media of
cyber-attacks and data security reveal that even large organisations are vulnerable to hacking and other
invasions with consequences for customers (including financial fraud, identity theft, violence and other
physical harm (OAIC, 2018)), and for the organisation (including loss of trust, reputation and financial loss). The
GDPR provisions around data protection requirements and penalties merely serve to indicate how serious are
these repercussions and protection implications, to the point that those who may potentially come under
scrutiny must implement compliance and management programs to protect themselves against breach, or to
minimise the impact should a breach occur.

Additional to this is the requirement in the GDPR (Art. 38(3)) that there should be a Data Protection Officer
(DPO) in any controller or processor. Further, this officer must exercise their functions independently and
“directly report to the highest management level” (sic). Although it would appear organisations have
discretion in how this is to be achieved (Stenz and Taieb, 2018), it could challenge existing expectations and
governance/power/management structures and relationships. Given that a fundamental tenet of an agency-
driven governance ethos is clear separation of the governance (board) function from management, the
question might then be – what is or should be the DPO’s relationship to management and the board, given
that privacy management has strategic, compliance and operational aspects? The lineal relationships are
further obscured by the recommendation that the DPO role sit within a risk, compliance, or governance
function independent of management or operations and with direct access to the board (Calder, 2017).

3.3 Transborder Data Flows

First, the GDPR, as indicated above, extends to any controller or processor (any natural or legal person, public
authority, agency or other body (Art 4)) whose activities involve the “processing of personal data” (defined (art
4) as any…relating to an identified or identifiable natural person”). This coverage is not limited to those located
in the EU or even those connected to those in the EU. It suffices if their activities in some way relate to
personal data collection, management or use. As also indicated above, the European Data Protection Board
has the authority to “white-list” specific countries outside the EU for the purposes of receiving EU individual
data. As at the beginning of 2018, New Zealand is on the “approved” list, but Australia is not.

The New Zealand Act presently addresses the privacy concerns associated with transborder data flows through
the Privacy (Cross-border Information) Amendment Act 2010. Under this Act the Commissioner “may” prohibit
the transfer of personal information from New Zealand to another state if satisfied on reasonable grounds that
“the information [comes]…from another State and is likely to be transferred to another…where it will not be
subject to a law providing comparable safeguards (s114B(1)(a)) and the transfer would be likely to lead to a
contravention of the basic principles of national application set out in…the OECD Guidelines” (s114A(1)(b)).

What is important about this provision is its proactive focus: the Commissioner is expected to act prior to the
transfer of the information: equally, to forestall any complaints, the agency would need to formulate a
rationale and justification for such a transfer prior to asking the Commissioner for a ruling (otherwise, surely
the Commissioner would need to be prescient?). However, it would appear this process is not mandatory,
meaning that those transferring data may elect not to involve the Commissioner at all. Also noteworthy is that
the provision not only specifically charges the Commissioner to consider OECD guidelines but also the

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“European Union Directive 95/46/EC on the Protection of Individuals with Regard to the Processing of Personal
Data and on the Free Movement of Such Data” (which the GDPR replaces) (s114A(2)(c)(ii)), thereby
acknowledging the importance, relevance and application of legal regimes external to New Zealand. The 2018
bill provides further powers for the Privacy Commissioner in this context in the form of stronger protection.

By way of contrast, the Australian APP 8.1/8.2 and s16C (incorporated into the Act in 2012) embody a reactive
approach to this matter, leaving it to the entity to make the pre-transfer determination and only involving the
Commissioner if, and when, a breach does occur. Principle 8.1 requires the entity to take “reasonable steps” to
ensure the overseas recipient does not breach the Australian APP or, inter alia, that the recipient is subject to
rules “substantially similar” to those of the Australian regime (8.2). S16C shifts responsibility for such breaches
to the APP entity transferor.

As all three regimes allocate responsibility for ensuring the recipient of cross-border data is subject to
substantially similar rules as those affecting the transferor, prima facie (except in terms of the size of penalties
and perhaps the determination of the enforcement bodies), the differences between the GDPR and the other
regimes do not seem significant. However, again there is the issue of risk management: where data is
transferred by a controller to a processor, that controller can lose control of that data or its use. Hence
“reasonable steps” as required under the New Zealand and Australian regimes prior to transfer would likely
impact on the control and oversight involved in that relationship – through appropriate due diligence
(affecting the selection of both the proposed transferee and the regime in which they operate), the
management of the data (including the security and protection structures they have in place) and destruction
of local records once the data processing has been completed and results returned. Although this seems
operational, the fundamental financial and reputational impacts for the controller that may arise from misuse
or mismanagement means that the board should have at least a watching brief on these operations.

This leads onto another area in which there is variation of potential relevance for the governance of affected
organisations. It is highly risky for those entities faced with the reality of the GDPR to ignore and hope.

Proactive strategies and a culture of compliance is fundamental. Hence it is important to consider how codes
are incorporated in the regimes and whether they accord with the expectations of the GDPR.

3.4 Codes of Conduct/Compliance

The GDPR (Art 40) provides for codes of conduct as a “semi-self-regulating” mechanism (Bird and Bird, 2017).

Such codes can cover any, or all, of a variety of data privacy aspects and must be approved and certified by a
“supervisory authority” (Art 55) (defined in Art 51 as an “independent public authority”). Such certification can
be revoked by that same authority should it at any stage be deemed not to satisfy the conditions for
accreditation. Importantly, the GDPR has moved beyond a compliance-with-regulation focus to demonstrable
responsibility and accountability on the part of affected entities, with its central objective of protecting
“fundamental rights and freedoms of natural persons and…their right to the protection of personal data” (Art
1(2)). Accordingly, such codes go to the heart of policy and process for all entities affected.

Both the New Zealand and Australian regimes provide for legally enforceable codes of practice covering
specific industries, processes, or classes of information (s46 (New Zealand) and s46U (1) (Australia). Australia
has three codes (covering Government Agencies, market research (limited to members of the relevant industry
association) and credit reporting). Data-management in the context of health information and medical
research data are treated separately under ss95 and 95A. (OAIC (nd)). These become enforceable once
registered (ss26A-S). The focus of these codes is compliance with the APPs and in some cases, variation from
them. In New Zealand, there are presently seven codes in force covering such areas as health, credit reporting,
superannuation and telecommunications (New Zealand Privacy Commissioner, n.d.) and often modifying the
principles for particular purposes, or contexts. These codes, too, are deemed enforceable (as regulations) once
registered.

The fundamental difference between the GDPR and the New Zealand and Australian approaches in this
context is the focus of, and expectations implicit in, these codes. With the GDPR, their approval and
certification are dependent on the drafting organisation being able to demonstrate compliance with the
underlying principles, while controllers and/or processors must accept the responsibility of something going

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amiss – a proactive approach involving their having sufficient confidence that the code will achieve the
objective of the Regulation. Compare this to the wording of s46 (NZ) that authorises codes which may
prescribe “standards that are more or less stringent than the standards that are prescribed by any [privacy]
principle” (although being required to align with the overarching purpose of the legislation to “promote and
protect individual privacy in general accord with the Recommendation of the [OECD]….”). Essentially, these
codes act to provide a “safe harbour” defence to claims that an agency has breached a given principle (s53).

The Australian equivalent does not specifically address whether the codes act in this manner although it
probably is implied by Ss 26A and L – which provide that entities must comply with any binding registered
code. Such compliance would therefore serve as an absolute (safe harbour) defence.

The governance issues specific to this context revolve around the strength of relevant codes. If New Zealand or
Australian codes are weak compared to the GDPR and/or codes under it, presumably the safe harbour or other
defence would not apply should they be scrutinised by those responsible for enforcement of the Regulation.

Thus, either the codes would require updating to reflect super-national legal requirements, or that individual
organisations dealing in or with the EU and affected by an inconsistent code, would require a second
compliance process or face the risk of breach. With the board responsible for management and organisational
compliance and given the significant implications of breach, this would be a priority, or as Durbin (Managing
Director of the Information Security Forum (IFS)), puts it, "you never know when a breach is going to take
place” (Olavsrud, 2018). The final aspect to explore is the personal responsibility of those accountable for
governance: that is, the directors. This is the focus of the next section.

3.5 Directors’ liability and responsibility for privacy

Many commentators stress the requirement of a top-down approach to the GDPR. The Regulation has a much
greater focus on compliance than do previous or other privacy regimes and makes data protection a
boardroom issue (MinterEllison, 2018).

While the focus in the New Zealand and Australian regimes is on the responsibility of agencies/ entities and
the provisions are couched in such terms, the GDPR is very specific, with strict requirements and substantial
penalties. The status quo for most board members under present New Zealand and Australian regimes
involves acceptance of assessment by management or consultants, of the level of protection needed.

Reported research findings reveal some of the implications of this provision on current management and
governance processes. According to the Spencer Stuart2 (2016) “What Directors Think” survey, 38% of
directors think that cybersecurity risk is “out of their hands.” This is troubling. Cybersecurity expertise has not
been a core strength sought in candidates for most director positions. The vast majority of directors have
finance, legal and business backgrounds. A recent article in SC Media3 reported that only 5% of companies on
the Financial Times Stock Exchange (FTSE) have cybersecurity expertise on the board. In addition, Accenture4
has found that only 6% of the directors at the world’s largest financial institutions have technology expertise
(Diligent, 2017). On the other hand, the SpencerStuart2 (2016) survey cited above also revealed that a high
percentage (83%) of director respondents considered IT/cyber expertise a key skill for new directors.

For the first time, under the GDPR, the board is accountable for protecting data (Diligent, 2017). This means
that board accountability and data protection should be included in the corporate risk register (Calder, 2017).

Thus, board members must now become active participants in certifying data protection, ensuring cyber-
security and being the drivers of internal processes and actions to protect private information. Additionally,
directors themselves will have to be conscious of how, when and where they store any board-related
documents or communications that contain EU citizen data. Outside directors are included and there is almost
no way to absolve individual board members from responsibility. Consequently, the matter of Directors and
Officers (D&O) liability insurance is of crucial importance for organisations to address (Loopuit, 2016).

GDPR requires that boards become active drivers of better data protection processes. This echoes the theme
of a recent article in the Harvard Law School Forum on Corporate Governance and Financial Regulation that
the board itself creates a board committee focused on cyber risk and cybersecurity that covers the gamut of

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potential threats from both internal and external parties. The article makes it clear that directors need to deal
in specifics, rather than take an “overview” approach (Diligent, 2017).

4. Conclusion and Directions for Research

Overall, then, the GDPR has potentially significant implications for governance structures, board composition
and many other aspects relating to board responsibility, accountability and transparency, some of which are
yet to emerge from this far-reaching regulation. The paper set out to address two particular questions: first,
how is the GDPR likely to affect and influence governance of organisations, not only those domiciled in the EU,
but also those trading with it or having a presence there? Second, compared to the GDPR, what gaps are there
in other existing privacy regimes and what are the implications for the governance of organisations and their
risk management strategies? The regimes in place for New Zealand and Australia were chosen to examine the
similarities and variations between these two regimes and the GDPR. While noting that other jurisdictions
outside the EU are moving to implement similar regimes, and regarding the first question, the discussion has
provided a framework for identifying governance implications for companies engaged in some way with EU
residents, or who are seeking to do so. The key understanding is that the GDPR provisions are likely to have
broad and far-reaching governance implications for all businesses involved in international trade whether, or
not, their own country’s data privacy regulations align with the GDPR.

In respect of the first part of the second question, if there are gaps in such regulations between the GDPR and
other jurisdictions, companies trading with the EU may need to ensure compliance with both sets of
regulations. This may be the approach taken for transborder personal data flows by affected organisations in
both New Zealand and Australia. In both countries the existing data privacy protection regulatory regimes are
somewhat adequate, with the New Zealand regulation defined broadly, applied widely and enforced for all
types of organisations, thus being more closely aligned with the GDPR than is that of Australia, which is
narrower in its definition and application and less stringently enforced.

Insofar as the second part of the second question is concerned, we note that, so far, little attention has been
paid in the literature to the implications of the GDPR for corporate governance and risk management
strategies of affected organisations. Given the move by jurisdictions beyond the EU borders to adopt similar
regimes and, given also that the GDPR adds another layer of complexity to the regulatory and other risks facing
organisations in an integrated world, a broad-based framework focusing on organisational resilience is
appropriate for analysing organisational response to GDPR. Relevant to this, Hopkin (2014) identifies five
principles of resilience, these being risk radar (the ability to anticipate and identify problems), resources and
assets (enabling timely response), relationships and networks (to enable transparent information flows), rapid
response (to allow prompt and appropriate response) and review and adapt (to allow learning and adaption to
change).

With reference to the above, and given the responsibility imposed by the GDPR on the board, research should
explore views of directors as to resources available, and responses and responsiveness of their organisations
to the hazards and impacts of the GDPR. It appears from the surveys cited above that directors are less than
confident about their understanding of the implications of the GDPR, the current adequacy of their
organisational systems for ensuring cybersecurity, and control of personal data collection, storage and use, as
well as risk mitigation/prevention of data breaches. Resources are also important, so investigation of board
capability regarding the skillsets and IT/cyber expertise would be revealing. With the massive and ongoing
emergence of new and increasingly sophisticated web-based technologies, existing commentary has
highlighted the need for a much higher standard of board competence and urgent upskilling in this area.

Readiness to respond quickly and effectively and to learn from the experience is also important for ensuring
resilience. A failure to realise that the GDPR does not mean business as usual also brings risk, and thus it is
important to explore, further, boards’ understanding of this risk and its governance implications.
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How Agile is the BiSL framework? The Case of the Dutch Ministry of
Defence
Perry Lauf¹ and Benny M.E. de Waal²
¹Ministry of Defence, Utrecht, the Netherlands
²HU University of Applied Sciences Utrecht, the Netherlands
erl.lauf@mindef.nl
benny.dewaal@hu.nl

Abstract: In the upcoming digital transformation era more and more IT changes get implemented quickly on an agile way
like for example the Scrum method. Besides that, there are stable legacy IT Platforms where IT Demand is managed plan
driven. To deal with these different technological developments organizations choose for BiModal IT, where organizations
support both “old” legacy IT platforms as well as “new” agile front end IT platforms and therefor forced to use different IT
Governance frameworks. For various reasons (cost-increasing effect, time consuming), this is not desirable. Therefore, in
this study we investigate the possibility to handle the two technological developments within the same framework. To
manage IT Demand in the Netherlands the Business Information Service Library (BiSL) framework is frequently used. BiSL is
a process framework that describes activities to link business with IT. A case study was performed within the Dutch
Ministry of Defence and investigated the following research question: Does the BiSL framework support agile realization of
IT Changes? Based on the theory of BiSL and Scrum, a conceptual model was developed in which seven themes were
defined. On these themes semi-structured interviews were conducted. In total five IT change projects were analysed in
three different domains.. The results show that the BiSL framework can support parts of the agile demand and
implementation of IT changes, but there are also some considerations to bear in mind. These considerations are mainly
non IT related. When introducing an agile method like Scrum into the organization it is important to look at aspects of
Management & Organization, People, Process and Technology.

Keywords: BiModal IT, IT Demand, BiSL framework, Business Information Management, Agile

1. Introduction
In Business more and more gets digitalized (Bharadwaj et all, 2013). A side effect of this digital transformation
is that most organisations have to deal with the implementation of new IT solutions besides the upgrades and
maintenance of existing IT. This all is causing another development which Gartner put on their CIO agenda and
is called BiModal IT (www.gartner.com/imagesrv/cio/pdf/cio_agenda_insights2014.pdf). This is a development
where organisations have to support two IT strategies simultaneously. One strategy for their IT platforms
where primarily their legacy and other stable IT platforms are supported and managed by a plan driven
approach. The other strategy is for new front end IT platforms which is driven by an agile approach (Horlach
and Schrimer, 2016). The plan driven and especially agile realisation of IT Changes and its effect on the
business and IT alignment within an organisation is also a management topic (Tallon and Pinsonneault, 2011).
One of the primary goals of IT Governance besides accountability, performance- and risk management is to
ensure alignment between the business and IT (Symons, 2005). A lot of research is done on Business IT
alignment (Chan and Reich, 2007; Silvius, De Waal and Smit, 2009).There are several frameworks available
which are covering Business IT alignment like Information Technology infrastructure Library (ITIL) and Cobit
framework, each having their own specific elements and qualities and attentions filling in specific parts of
alignment (Mora et al, 2014). In the Netherlands, the Business information Service Library (BiSL) is used
frequently to establish the alignment between business and IT (Van Outvorst and De Waal, 2015) The BiSL-
framework is designed to help the business to take responsibility for management and governance of their IT
demand. Within BiSL, Business information management is responsible for translating the business needs into
IT demand and translating IT services and solutions into IT enabled business opportunities (Van der Pols,
Donatz and Van Outvorst, 2012). Besides the developments around BiModal IT there are also some new
developments coming from the IT. Instead of the plan driven projects (waterfall based projects), a more agile
way of developing is becoming popular (Qumer, Henderson and McBride, 2007). In 2001 from a development
community, an agile manifesto with 12 agile principles is signed and are now being applied worldwide (Fowler
and Highsmith, 2001). Also for this agile development a lot of research is done and there are several agile
methods developed like Extreme Programming (XP), Scrum, Feature Driven Development (FDD), and Dynamic
System Development Method (DSDM) (Qumer and Henderson-Sellers, 2008). From these methods, Scrum is
the most common used method. All these developments together raise the question if it is possible to use just
one IT governance framework instead of two different IT strategies to support and manage all these different

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requirements and IT changes. This generates the research question, if it is possible within the BiSL framework
to support agile realization of IT changes along the current plan driven IT realization of IT changes?

In the next part we describe both the BiSL framework and the Scrum method to look at the difference and the
similarities of these two frameworks. Based on these theoretical overview we will introduce a conceptual
model with the themes which are important for this research. Thereafter the research method is presented.
Then, the results will be presented. In the last section we will discuss the outcomes and give the conclusions of
the research.

2. Theoretical overview of BiSL and Scrum

In this part we will look at the relevant theoretical parts of the BiSL framework and Scrum method which
supports the realization of IT Changes. First, we will describe the BiSL framework. Thereafter, the Scrum
method. At the end, the differences and similarities between the two approaches are presented.

2.1 BiSL framework

The BiSL framework consist of three levels: the strategic level, the managing level and the operational level.
For this research the focus is on the operational level, because the realization of IT changes mainly takes place
at this level. On the operational level there are two operational process clusters, Use management and
Functionality management and two connecting processes, Change management and Transition management.
In this research the process cluster Use Management is also excluded as it covers end user support and not IT
Changes. The process cluster Functionality management is relevant as it deals with IT Changes, the process
cluster Functionality management consist of the four activities, Specify information requirements, Design not
automated information systems, Prepare Transition and Review & Testing. Also, at the managing level the
Demand Management process has to do with IT Changes.

Figure 1: Process actions of IT changes according the BiSL framework

In Figure 1 an overview is given of all the relevant processes and activities for the realization of IT Changes
according to the BiSL framework. Through Change management an IT Change requests will be received. In the
Demand management process with the customer it has been determined business wise to realise an IT
Change. Then through Specify information requirements activity IT together with the business determine the
required specifications. Here is where the initial demand will be aligned between the business and the IT, the
business justification. Via Change management the next step will be authorised which starts the activities,

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implement, develop and build and starts with the Preparation Transition activity and the Design not
automated information systems activity. If everything is in place than the next step will kick in the Review and
Testing. If the customers accept the testing then through change management the transition process will be
initiated. If during this process the customer changes its requirements then a long process starts through
exception reports etc. to get the requirements changed in the Demand management process before the new
requirements get realized.

2.2 Scrum
In the literature the Scrum method is often positioned as an alternative for the traditional project approach
(Chow, 2007), where the focus is on the implementation of IT changes. The assumption is, that the initial
demand is already done and the project scope is already known. In this research however, we also look at the
process of the initial IT Demand. How it gets, and stays aligned between the business and the IT before and
during the agile realization of the IT change. In the literature, the Scrum method is mentioned as one of the
most popular and used agile method (cf. Oomen et al, 2017). We used the Scrum Body Of Knowledge to guide
our research (SBOK™ Guide, 2016). The Scrum Body Of Knowledge Guide is a reference and knowledge guide
for applying Scrum within portfolio’s, programs and projects. A second reason to use the SBOK Guide is
because it also focus on the processes involved with the IT Demand processes where business information
management is involved in managing the IT Demand. Within the SBOK Guide this is the aspect of Business
justification. Besides principles and aspects, the SBOK Guide also specifies 19 Scrum processes divided over 5
process phases. Within the SBOK™ Guide (2016) the aspect of Business Justification is imported, especially for
the IT Demand part. In here the substantiation for the IT Change is done, resulting in a business case. In an
agile iterative way of working during each sprint, the justification is verified each time and can be changed or
prioritized as the business required. In Figure 2 an overview is given of the Scrum processes to realise IT
changes. Further according the Scrum principles, the scrum team is self-organising and they determine what
they can deliver in a sprint, based on the prioritise set by the product owner.

Figure 2: Overview of realizing IT Changes according SBOK™ Guide 2016

2.3 Differences and similarities

By comparing the BiSL and Scrum frameworks there are some significant differences. For instance, the BiSL
framework covers much more then only managing changes while Scrum only deals with managing change.

Within BiSL the IT Changes are mainly managed on product, time, costs and capacity. While in Scrum the IT
Change is managed on time boxing, what product can be delivered in a sprint. Another big difference is the
organisation of the teams. In Scrum, the teams are self-organizing compared within BiSL where the team is
told what to deliver. On the operational level of managing IT Changes we also see similarities. In fact, all the
required process activities in BiSL also play a role in Scrum. In Figure 3, the process activities of both
frameworks are placed side by side. All BiSL process activities like Specify, Design, Prepare transition, Review
and Testing and Transition activities can be sprint backlog items in the Scrum method which, through phase 3
Implementing and phase 5 Release, will be released during sprints. This is illustrated with the thin arrows from
the BiSL activities to the Scrum phases. In the BiSL framework Change management are the decision moments,
which you also find in in the Scrum method respectively Scrum phase 1 where the product backlog planning is
determined and in phase 4 Review and Retrospect where the evaluation of each sprint is done. In the picture
this is illustrated through the bold arrows between the Bisl framework and the Scrum phases 2 and 4. In this
picture we have not added the initial BiSL demand management process because we assume that according

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the Scrum method the initial demand is continuously looked at in the Scrum Process phase 2 where the
product backlog is planned and estimated. And so, the business justification is continuously reviewed and
adjusted with the business and IT if required. Even though we mapped the BiSL and Scrum process activities
for realizing IT Changes, there are some significant differences on several aspects. In Table 1 the main
differences are given which needs consideration when mapping the two frameworks.

Figure 3: Plot how the process activities in BiSL and Scrum interconnect
Table 1: Scrum vs traditional project management
Aspect Scrum Traditional project mgt (BiSL)
Emphasis on People Processes
Documentation Minimal – only as required Comprehensive
Process style Iterative Linear
Upfront planning Low High
Prioritization of requirements Based on business value and regularly update Fixed in the project plan
Quality assurance Customer centric Process centric
Organization Self-organization Managed
Management style Decentralized Centralized
Change Updates to Productized Product Backlog Formal Change Management System
Leadership Collaborative, Servant Leadership Command and Control
Performance measurements Business value Plan conformity
Return on Investment (ROI) Early/throughout project life End of project life
Customer involvement High throughout the project Varies depending on the project life cycle

Based on the theoretical perspectives we defined several themes, we used to answer our research question.
Theme 1 is about the sub-question, How IT Changes are realised in practice with in the Dutch MoD, are they
based on a BiSL framework? Theme 2 is also related to a sub-question, Can a project be executed on an agile
way? When introducing an agile working method in an organisation there are some important factors to
consider, such as Organisation & Management factors, People factors, Process factors and Technology factors
(Nerur, 2005; Chow, 2007; Boehm and Turner, 2005). These factors served as starting point for defining the
themes as shown in Table 2.
Table 2: Overview Themes
Nr. Theme Clarification
1 Realization conform BiSL reference Realization process fits BiSL reference framework
2 Can project be executed on an agile Interviewee indicates if project can be (partly) executed on an agile way
way
3 Organisation & Management factor Interviewee indicates which factors are playing a role in working agile.
4 People factor Interviewee indicates which people factors are important to be able to
work agile
5 Process factor Interviewee indicates which process factors are important to work agile
6 Technology factor interviewee indicates which process factors are important to work agile
7 Requirements to work on an agile Interviewee indicates which requirements should be considered before
way in the Dutch MoD working agile within Dutch MoD

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3. Research method
The research was at the Dutch MoD, who were facing the problem of BiModal IT. This was also the reason for
getting access to the required resources for this research. To answer the research question a multiple case
study design was applied, to gather the data from the relevant stakeholders of IT change projects (Klein and
Myers, 1999; Yin, 2003). The Dutch MoD is a big and complex organisation so to have a better understanding
we looked at three different organisation domains where IT Demand is managed. We looked at the
Organisation domain responsible for generic IT demand, called GIV Domain. We also looked at the
organisation domain responsible for IT Demand for different Material and Financial applications, which we
called the M&F Domain. Within each Domain we selected two IT Change projects. Further, we looked at one IT
Change project for the Military Police within the COC2 domain. In Table 3, an overview is given of the projects
and the domains and role of the interviewees, being information managers, project managers and one
program manager. For the semi structured interviews, a topic list was constructed, with questions based on
the themes. Beforehand, a proof interview was held and based on the outcomes the topic list was amended
and became more specific. The 8 interviews took place in November 2017. All interviews were tape-recorded
and transcribed. The textual data were analysed using the software program Atlas.ti.
Table 3: IT Change projects and role of interviewee
IT Change project Domain Interviewee 1 Interviewee 2
1 Proj COC2 COC2 Projectmanager (1)
2 Proj GIV2 GIV-Domain Informatiemanager (2) Projectmanager (3)
3 Proj M&F1 M&F-Domain Programmamanager (5) Projectmanager (4)
4 Proj GIV1 GIV-Domain Informatiemanager (6) Projectmanager (7)
5 Proj M&F2 M&F-Domain Informatiemanager (8)

3.1 Analysis steps

The analysis was carried out in five steps, applying the constant comparative method (Boeije, 2002). Most of
the steps are done to build in some validity within the research. Table 4 gives an overview of the analysis
steps. Step one is the preparation, in which we setup a topiclist and a theme book based on the themes. In
step 2 we coded all the eighth interviews based on open coding. In step 3 we applied axial coding by
comparing the interviews of the interviewees who were stakeholders of the same IT Change Project. This to
investigate if there are different viewpoints or discrepancies on the different codes. In step 4 we did data
triangulation and selective coding by comparing different groups. In this step we compared the interviews of
the project managers and the business information managers. In step 5 we also did selective coding by
comparing the interviews between the different Domains.
Table 4: Overview of analysis steps
Step Analysis step Activity Comments
1 Prepare Analysis Code book Define codes based on themes and topic list
2 Quote and Code all 8 Open coding All 8 interviews are coded and quoted
interviews
3 Per project compare both Axial coding Compare both interviews per project and see if
interviewees interviewees have significant differences or not
4 Compare the interviews of Data triangulation / Compare the interviews of the
the informatiemanagers selective coding informatiemanagers and projectmanagers
and projectmanagers
5 Compare the different Data triangulation / Compare the interviews within the different
domains, GIV and M&F selective coding domains, GIV and M&F

In this way we have taken care to meet the validity and reliability of this study (Golafshani, 2003). Construct
validity is applied by consulting different sources. We also analysed project documents. Internal validity is
applied by verifying and comparing different persons within one project. And the external validity is applied by
also comparing different stakeholders within different organisation domains. The reliability is assured by
having done a proof interview to make sure the interviews got more reliable and to use a case study database.

4. Results
The findings from the analysis of the interviews will be presented according the different themes.

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4.1 Theme 1: Realization conform the BiSL processes

The results from analysing the interviews about the structure of the realization process showed in all
interviews that the realization process for IT change projects refers to the BiSL framework.

4.2 Theme 2: Can the project be executed on an agile way

In this theme the interviewees were asked if the project could be executed on an agile way. The following
results were retrieved. In project GIV1 they were already executing deliverables on an agile way and were
using agile tooling for managing product backlogs and sprint backlogs. A quote from the project manager: “We
try to work agile as much as possible, in fact within the development team we work fully with Scrum.” Project
COC2 interviewees confirmed and mentioned that an agile realization would have improved the involvement
of the customer, for instance with the use of user stories, where customer needs to confirm before the next
sprint could start. Now the customer was not constantly involved due to resource issues. A quote form the
project manager: “… thus we go on to process 2, or we go to process 1, but then we have to drop something,
dear business owner you choose……” In project GIV2 they carefully indicated that working-out some
functionalities could have been done on an agile way. They mentioned that the initial specifications would
probably difficult to realize on an agile way due to involvement of a lot of stakeholders with different interests
and scoping. A quote of the information manager: “… I think that we could have done parts agile, but to take
the first hurdle to get something tangible, yes that will be difficult.. “. Project M&F1 indicated that part of the
project could be done agile, especially the realisation part, working out the defined specification. The initial
specification part which needs to adjust with the business and the release calendar is not feasible. Project
M&F2 indicated as well that the realization of the project could be done agile, also working out the
specifications with the customer. They also indicated that the initial specification is not feasible due to the tide
release calendar and interaction with all other projects.

4.3 Theme 3: Management & Organisation factor

In this theme the questions were asked about management commitment, cooperative organisation structure,
rewarding systems, support for agile etc. All interviewees mentioned that the business also should cooperate
to work agile, the business is still seeing realizing IT changes as an IT problem instead of business management
issue where they also should participate. Often they do not have enough capacity to participate. According to
the interviewees, the trust in the organisation and management to facilitate agile is quite low.

4.4 Theme 4: People factor

In this theme we asked if employees are motivated, have expertise, like to work independent and is
management open for self-organising teams. One interviewee mentioned if it will even be possible to have
self-organising teams in an organisation with a lot of politics and where the team has to deal with a lot of
interference and influencing of powerful stakeholders. Another interviewee mentioned that experienced
developers become project managers but then don’t have the right skills to manage projects. This shows that
looking at the right competences is important. In general it showed that this theme needs some attention.
Summarising, management seems to be open for self-organising teams. Environmental factors within the
organisation can have effect on the motivation of employees. It also showed that employees obviously do not
independently collaborate in teams, especially if they have to take decisions. So it is important to look at the
competence when selecting agile teams.

4.5 Theme 5: Process factor

In this theme the questions were about, if the project management process and the demand process could be
done agile, what is the involvement of the business owner and the one who is accepting, and does
communication improve with daily meetings? The important results from this theme were: Six interviewees
indicated that the realisation part of the project management process could be done agile. Especially the
information managers indicated that the initial demand process cannot be done agile easily. The reason is that
scoping and right vision is not yet set. The project managers on the other hand mentioned that specifications
can be done agile, but in fact than the initial scope of the project is already determined.

4.6 Theme 6: Technology factor

This theme is about agile tooling and which technology fits to be implemented agile more easily. Results
showed that within the organisation there is not much experience and knowledge on this subject. Only one
project was using agile tooling.

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4.7 Theme 7: Requirements to realize IT Changes agile within Dutch MoD

In this theme the interviewees were asked what is required to realize IT changes on an agile way. The most
important requirements are grouped in three aspects. First, the team - The team needs the right mandate and
needs the capacity for dedicated scrum teams and the teams need to get the right support from the
organisation. Second, the business or customer – The business needs to have capacity available to participate
in the agile projects. And here also the issue to determine who is the business owner for generic services.
Third, the process – Especially within the M&F domain should be investigated how IT changes can realized on
an agile way within the 4 major release lifecycle.

5. Discussion and conclusion

The aim of this paper was to answer the question if the BiSL framework support agile realization of IT changes.
Within the MoD, data were collected by 8 interviews divided over five projects. The analysis of the interviews
showed that all projects had their own specific issues and that there were no discrepancies between the
interviewees of the same project. Also, both the project managers as the information managers agreed that
the realization of IT changes can be done agile. Further, the results indicated that the IT demand process – the
business justification - cannot be done agile. It seems that an organisation which is used to a high upfront
planning (determine business justification) may have problems with low upfront planning in the Scrum method
where planning is also done iterative. This may jeopardize the benefits of quick agile realization because the
organisation may go back to the initiation phase whenever a problem during a sprint occurs.

According to theme 1 – Realization conform BiSL reference - the process structure of the IT Change realization
process in the Dutch MoD match the BiSL process activities. Then in both Theme 2 – Can the project be
executed on agile way – and in Theme 5 – Process factor- it is indicated that the realization part of a project
can be executed on an agile way. Further there are some requirements specified in Theme 7 – Requirements
to work agile in the Dutch MoD - which have to be considered when introducing agile realization. Also the
Themes 3, 4 and 6 give some points to consider when introducing agile realization within the organisation.

These result lead to the conclusion that the research question can be answered positively. The BiSL process
activities for realization of IT Changes are, Review and testing, Prepare transition, Design not automated
information systems, Transition, Specify information requirements and Change management can be done on
an agile way according the Scrum process phases. Into consideration should be taken the requirements to
work agile and the points to introduce agile working in an organisation.

This research showed that however the realization of IT Changes can be done agile, this is mainly the case for
the project execution, where specification and scoping is already determined in the initiation phase. The
question should be if the organisation can also execute the initiating phases quicker and rely on an agile way to
work out the outcome on an iterative way within the scrum method. This should be analysed in future
research.

There are, of course, also some limitations in this study. The results of this research are based on a limited
number of interviews and projects. We propose to conduct more research based on the different themes in
other settings. Further research should also involve representatives of management and representatives of the
different business departments besides IT staff.

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Organizational Decision Priorities to Ensure Project Management
Success: A Q-Methodology Approach
Claire Laybourne1 , Amitrajit Sarkar2 and Stephen Wingreen1
1
University of Canterbury, Christchurch, New Zealand
2
Ara Institute of Canterbury, Christchurch, New Zealand
sarkara@cpit.ac.nz

Abstract: Organizations increasingly rely on complex Information Systems (IS) and digital platforms to manage their value
chain activities, which require the IS to operate reliably under a variety of adverse circumstances. Project Management
Company (name changed) is a New Zealand project management-consulting firm, which provides independent project
management services for a diverse range of projects. In last five years they have observed that information systems (IS)
have grown organically and there is now an opportunity to investigate and improve some of those systems. The purpose of
this research is to investigate organization’s information systems and technology and solve how it can best utilize IS to
provide a competitive advantage, increasing productivity, retaining high quality staff and support the achievement of its
business strategic objectives. In this study, the framework was built around the sponsor’s requested scope, and statements
were refined using personal experience of the systems and discussions with others in the team. As a result, 23 statements
were developed under the agreed IS scope items. The surveys were carried out individually in-group meetings to make the
explanation and time involved as efficient as possible. 21 complying Q-sort surveys were received. Detailed analysis
revealed three types of decision priorities in context to efficient use of IT in project management, each representing a
unique perspective of IT project management. These types are discussed, along with implications of findings, an IS
assessment matrix, and suggestions for future research.

Keywords: IT Project Management, Q-Methodology, Decision Priorities, Knowledge Sharing, Value Chain.

1. Introduction
The people who pay for the IT projects consider that 40-70% of IT projects does not meet their expectations.
Organizations increasingly rely on complex Information Systems (IS) and digital platforms to manage their
value chain activities, which require the IS to operate reliably under a variety of situations. Information
systems technology alone does not provide a competitive advantage to a business as it is widely available and
more alike to a commodity (Bradshaw et al, 2015; Xang et al, 2013). It is noted that information systems is
considered much broader than simply information technology, it includes the procedures and systems to
transfer information and directly linked to how well a business utilizes knowledge. Knowledge is observed as
the most important resource for a company and can provide a competitive advantage if utilized effectively
(Bradshaw et al, 2015; Schiuma, 2012). This is of particular significance to project management consultancies,
which facilitates delivery of capital projects and conceptualization of projects to its clients. How project
management consultancies acquire, share and use knowledge, experience and skill, along with building
relationships with clients and other consultants in the market, is an important competitive advantage to the
business, and a strategy capability for organizations to focus on.

Johnson et al (2014) observes that strategic capability, the capabilities of an organization to provide
competitive advantage, consist of resources and competences. Resource being the assets of the organization,
it can be physical in terms of tools, infrastructure, systems, materials etc. or human based, being the
experienced managers and team, and the clients of the business. Competence is the way the assets are used
effectively. For organizations, competence would be the utilization of the tools, systems and infrastructure in
an effective way, it is also how the team gains and uses knowledge, skills, experience, how they build
relationships and motivate others (Johnson et al, 2014). Therefore an effective IS strategy to build strategic
capability needs to include the procedures and systems to enable the tools, and people’s knowledge and skills
to be used effectively.

Project Management Company (name changed) is a New Zealand project management-consulting firm, which
provides independent project management services for a diverse range of projects. In last five years they have
observed that information systems (IS) have grown organically and there is now an opportunity to investigate
and improve some of those systems. The purpose of this research is to investigate organization’s information
systems and technology and solve how it can best utilize IS to provide a competitive advantage, increasing
productivity, retaining high quality staff and support the achievement of its business strategic objectives.

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IS covers a broad range of activities relating to how information is obtained, shared, stored and used, and it is
important to note that IS is not necessarily technically focused or computer based. Because the IS includes
such a wide scope, this research investigates the specific areas defined by the client and only focuses on the IS
aspects of the project management. This research investigates and researches solution options to provide an
IT project management strategy. The following IS items are contained within in this project:

x Organization project file structure

x Document share system
x Network access
x Project Reviews
x Internal knowledge sharing
x Email archive

This paper presents the initial findings of an investigation of the IT project management decision priorities of
the executive management team and employees at a Project Management Company. First, the literature on
Information Systems, IT Corporate Strategy, IS Project planning and IS success factors is reviewed. The paper
then describes the research methodology, in which the Q-methodology is employed to determine how project
managers and senior management at a project management company manifest their decision priorities and
preferences in order to ensure project success. Further, we conduct interviews with the executive
management team and other key employees to enrich our interpretation of the case study. The paper
concludes with the discussion of a theoretically founded typology of IT project planning priorities. We also
discuss the relevance of this research for both practitioners and academics and we propose some
recommendations for further research in the area of IT project management.
2. Background
The key aspect of this research project is Information Systems (IS) and Information Systems planning,
particularly for a Small to Medium Enterprise (SME) corporate environment. A comprehensive understanding
and definition of this is critical to best appreciate the issues facing case organization and assist in identifying a
practical solution.

2.1 Information Systems (IS) and IS technology

IS covers a broad range of activities in a company relating to how information is obtained, shared, stored and
used. Bacon and Fitzgerald (2001) define IS as a combination of information and communications technology,
operations and network management, information for knowledge works, customer satisfaction and business
performance, and how people use technology. Turban et al (2000) describes that IS collects, processes, stores,
analyses and disseminates information for a specific purpose. Not all corporate information purposes need
computing input, and the key idea to highlight is that IS is not necessarily all computers based and it is far
broader than computing technology.

Firstly understanding what information is in the context of a business is important as this is the basis of IS, as a
system that deals with information.

Turban et al (2000) describes the three types of information that a business uses. Data - the raw unorganized
facts, Information – the collection of facts organised in a meaningful way, Knowledge – information that is
organised and processed for understanding, this includes experiences, accumulated learning and expertise
within a company.

IS technology is the combined use of information technologies to perform the tasks required in the
management of information. The basic components are:

hardware – simply a set of devises, this could be printers, mobile phones, computers, software – a set of
computer programmes to enable the hardware, databases - an organised collection of related files that store
data, networks – a connecting system that allows the sharing of resources, where multiple users share the
same files, procedures – the strategies, policies and methods for using IS technology and people – always
highlighted in literature as being the most important factor. These are the users that work with the IS and use
its outputs.

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Turban et al (2000) goes on to describe that successful application of an IS technology requires not only an
understanding the business problem it is solving, but an understanding of the business environment also.

2.2 SME and IT Project Management

The SME environment is different to large corporations and this must be recognized in the IS context. SME’s
tend to have unique characteristics in relation to adoption and use of IS, this is because of limited resources
for implementing IS, there are no large IT departments or CIO leading technology advancements, and the
dominance of the owner-manager(s), as opposed to levels of management and executive leaders (Cragg et al,
2011). SMEs tend to respond quickly to changing business environments and tend to take small steps that
require minimum resources as opposed to large businesses that take a more systematic approach where
resources are deployed on a large scale in support of a long-term business plan.

Majority of the IT project mistakes can be grouped as either process mistakes or people mistakes. It is worth
mentioning that technology is seldom the major cause of IT project failure. Avoiding poor estimation could be
key to project success. The estimation process that involves adequate scoping of the project, estimating the
effort and time required, developing a realistic schedule keeping in mind factors such as resource availability,
technology and business strategy. Four valuable approaches to improving project estimation and scheduling
include (1) time box development because shorter, smaller projects are easier to estimate, (2) creating a work
breakdown structure to help size and scope projects, (3) retrospectives to capture actual size, effort and time
data for use in making future project estimates, and (4) a project management office to maintain a repository
of project data over time. Advocates of agile development contend that their methods facilitate better
estimation and scheduling by focusing on scope,

The key aspects of IS for a SME include, database management, that is the ability to store and retrieve data in
a system; reporting, that is the ability to produce information in a way to help decision making; accessibility to
maintain and manage the system; integration, that is how well as system integrates with the company’s
existing systems; and scalability, the ability to scale up or down as the company requires (Hamlett, 2015).

2.3 Relationship between IS and corporate business strategy

IS technology is so widely available that it is not considered a strategic tool on its own. Business objectives
achieved by using IT as a supporting tool (Xang et al, 2013).

The motivation of developing strategic information systems planning aligned to the business strategic
objectives is described by Duhan (2007) as providing opportunity for improving the efficiency and effectiveness
of business activities through the use of IS and information technology. IT alignment has become an important
area of study for SMEs. Many studies of IT alignment draw on the Henderson and Venkatraman model as cited
in (Cragg, et al., 2007), particularly their concepts of strategic alignment and operational alignment. Numerous
studies have found evidence to link both strategic alignment and operational alignment with organisational
performance (Cragg, et al., 2007).

Earlier Peppard et al (2000) observed that the perception of failed IS investments is directly associated with
the lack of alignment with business strategy. They described some the leading factors causing failed IS
investments as being: lack of strategic direction in IS investment decisions, lack of understanding of benefits to
the business, inability to leverage existing IT infrastructure and relationship gap between the IS function and
the rest of the business

Peppard et al (2000) also detected that for the researched businesses IS solutions incline to only address the
supply of technology into the business and the application’s contribution to achieving strategic goals was not
well considered.

2.4 Importance of IS in knowledge sharing

Although IS is not considered in literature to be a competitive advantage, knowledge is. Bradshaw et al (2015)
describes knowledge as being an organization’s most valuable resource for a lasting competitive advantage, it
plays a critical role in improving productivity and maintaining competiveness. Schiuma (2012) describes that in
the fast changing business landscape that knowledge based resources and process are likely to be the key to
business performance.

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Therefore, effective knowledge management and knowledge sharing within a company is critical, and this is
certainly the case for TPO where successful project delivery and client advice based on staff and company
knowledge. How knowledge is managed and shared within a company is grounded in IS (Martin, 2013).

A study by Martin (2013) investigated the role of IS in knowledge management for SMEs. The study revealed
that the key avenues of disseminating knowledge that proved effective for SMEs was using social relationships
with face-to-face interaction and teamwork as a key way of acquiring knowledge. Where geographic
separation was present, an intranet provided the necessary connection. Where IS was used in knowledge
sharing, it was observed that it must be made as easy as possible for people to share knowledge. The common
obstacles for effective use of knowledge were noted as, insufficient or poor quality information, outdated
information; poor organization or categorization of information and too much information and irrelevant
material (Bradshaw et al, 2015).

In project-based organizations, knowledge and capabilities tend to be built up through the execution of
projects, where each project is customized and different therefore special effort is needs to be invested to
share transferable lessons across projects. Boh (2007) found that for project-based organizations the following
mechanisms for knowledge share were effective:

Codification knowledge sharing (organized data records) is more suited for organizations where tasks and
encountered problems tend to be standardized or routine personalization (knowledge shared from personal
interaction) is more suited for organizations with more uniquely encountered problems and tasks
Institutionalized knowledge sharing (organized company knowledge sharing) is more suited for largely
geographically disposed organizations Individualized knowledge sharing (person to person) is suited to small
collocated organizations.

Using Boh’s framework, organizations’ situation would be most suited to personalization, as projects are
unique, and a mixture of institutionalized and individual, as although the company is small, office locations are
dispersed across Christchurch and there is limited interactions outside of company monthly meetings and
social events.

2.5 Factors affecting success in IS implementation

The related study by (Cragg, et al., 2007) focused on strategic alignment in SMEs, that is, strategy and IT
strategy. They found that strategic alignment in SMEs was influenced by many factors, but particularly by IS
maturity and the CEO’s software knowledge. They (Cragg, et al., 2007) reported that many SMEs have
achieved high levels of alignment between IS and business strategy, and that firms with high alignment
performed better. In simple terms a new IS application should check off the following requirements: It solves
the problem, it fits the requirements, it is robust, it is secure, it is maintainable, it is documented, the users
understand it, it is flexible, and it is proven.

How well a newly implemented IS application is utilized in a SME is also directly related to how the employees
perceive the ease of use and usefulness, described by Davis, 1989 is still relevant today. The model below
describes this relationship, where external variables factor into the user’s perception of usefulness and east of
use, this affects the attitude towards the technology, which in turn affects user behaviours and the actual use
and acceptance of the new system.

Figure 1: Technology acceptance model (adapted from Davis, 1989)

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3. Q-Methodology
To determine various types of IT project management related decision priorities in a Project Management
Company, we used Q method which offers a “systematic and rigorous quantitative means for measuring
human subjectivity. (Dawson & Watson, 2011) Q Method was invented in 1935 by British physicist-
psychologist William Stephenson. It is most often associated with quantitative analysis due to the factor
analysis component, but its function is to reveal subjectivity from the viewpoint of the participant in a
systematic way (Wingreen & Blanton, 2018). Q Method’s roots are in the health and psychology fields;
however it has now branched into many different fields and areas and has been used successfully in IT and
business research. It bridges the gap between qualitative research, which has no initial testing hypothesis and
is inductive in approach and qualitative research, which tests a hypothesis, and is deductive (Wingreen &
Blanton, 2018). The quantitative aspect comes from the formation of the statements, which require some
research or interview basis and can hence incorporate quantitative aspects, and the qualitative aspect is the
response of the individual to the statements. They observed that Q Method measures attitudes and enables
the researcher to gain a greater understanding of an individual and identifies the characteristics of individuals
that share a common perspective at a point in time (Wingreen & Blanton, 2018).

Q Method is reflective of single point in time as is the case with other survey and interview based research. If
the survey was repeated, the participants are likely to answer in a slightly different way resulting in a
potentially different outcome. This is one criticism of Q Method and in the original social psychology setting;
this is not considered an issue, as there is no expectation that an individual will express the same views on
separate occasions (Dawson & Watson, 2011). However, in a more technical setting, like evaluation of IS
requirements, a certain amount of reliability and repeatability in individual’s responses is expected. The
objective of this study is to reveal the team’s priorities in regards to a specified IS scope and overall is not likely
to be significantly affected by minor differences in ranking if repeated.

Another aspect of Q Method is that participants have a limited number of responses and it can be argued that
this limits the accounts that can be expressed, but others’ consider that the factors that emerge are due to the
participant’s own sorting rather than the built in distribution, and therefore not a concern (Cross, 2004). The
defined distribution also forces participants to select the statements that they ‘most’ agree and disagree with,
and therefore highlights the extremes of priorities of an individual (Sarkar et. al, 2013).

Consideration and awareness of introducing bias into the Q Survey is also important. Kampen & Tamas (2014)
observed that bias could be introduced by the researcher through the selection of the participants,
constructing the Q-Statements, guiding the survey, interpretation and reporting of findings. In the case of this
study, it is unlikely these biases have a significant impact as the participants consist of the volunteers from the
team, and the study is a reasonably straightforward and low-risk subject.

Q Method is considered an appropriate tool and used successfully in the information technology field (Sarkar
et al, 2013). The method was considered appropriate for this study because of the systematic approach to
subjective perspectives and the function of prioritizing. The output summarizes the perspectives of the team
in a systematic way that can be easily used in making IS decisions. The tool is simple to implement and easy for
participants to complete, and the study requirements and concourse are reasonably straightforward and
unlikely to introduce bias from the researcher and analysis.

In the case of this study, the framework was built around the Sponsor’s requested scope, and statements were
refined using personal experience of the systems and discussions with others in the team.

23 statements were developed under the following agreed IS scope items. The corresponding matrix diagram
for ranking the statements was determined and ranged from -5 (extremely disagree) to +5 (extremely agree)
with a neutral ranking at 0.

The surveys carried out individually in-group meetings to make the explanation and time involved as efficient
as possible. 21 complying Q-sort surveys received.

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4. Findings and Discussion

This section presents the findings of this research that reached through analysis of Q-sort data. The Q-sort data
was analysed using a centroid factor analysis, as suggested by prior research (Watts & Stenner, 2012) and
Varimax used for the rotation method.

Firstly, two, three and four-factor solutions were investigated, the four-factor solution converged to a three-
factor solution but with a slightly different loadings. This showed that there was no need to continue to higher
factor solutions. The three and four Factor analyses were compared and showed very similar results, therefore
the three Factor analysis adopted for the interpretation.

The three type group perspectives were compared, and compared with the results of the three directors. The
interpretation for each IS scope item was determined and an overall priority chart developed, the priorities
based on a focus on the two type groups with the highest number of ‘exemplar’ participants.
Table 1: Three Factor Analysis of Z-scores
No. Statement Type 1 Type 2 Type 3
z-score z-score z-score
1 My Project File structure - understandable to others -1.53 -0.13 0.64
2 Project File structure - consistent across users -2.02 -0.86 0.60
3 Project File structure - compares well with other systems -0.69 -0.85 -0.00
4 Project File structure - better organised wanted 0.90 0.03 0.89
5 DropBox is ok as is 0.07 -0.48 0.28
6 DropBox system needs better security 0.13 0.06 -0.39
7 DropBox system needs to be easier to use -0.82 0.16 -0.96
8 DropBox system needs more capacity -0.31 -0.50 0.85
9 DropBox system needs more to be more professional 0.54 0.66 -0.99
10 TPO network VPN is ok 0.24 0.28 -0.28
11 TPO network remote web ok 0.21 -0.85 0.04
12 TPO network – access away from office + on different devices wanted 1.76 1.28 -1.21
13 TPO network - better mobility and flexibility wanted -0.20 0.99 -0.35
14 Project reviews - would be a good benefit the company 1.22 0.39 1.49
15 Project reviews - would be good for knowledge sharing 0.10 -0.31 0.60
16 Knowledge share - TPO does it well -1.56 -1.90 0.64
17 Knowledge share - TPO captures project lessons learned -1.58 -1.96 -0.28
18 Knowledge share - should be a structured process 0.54 -0.08 -0.92
19 Knowledge share - is best done by personal communication -0.40 -1.02 1.60
20 Knowledge share - is best done by intranet/social network -1.13 -0.41 -1.85
21 Knowledge share - Lessons learned should be recorded 0.09 0.60 -0.04
22 Archiving emails - to TPO project file is easy and quick -1.28 -1.44 -0.60
23 Archiving emails - should be a automatic system 0.54 0.13 0.89

Table 1 reports the results of the factor analysis, which reveals three "types" of decision priorities. The factor
scores are the factor q-sort values for how each statement prioritized on the Q-sort distribution by those who
comprise that factor.

Three ‘Type Groups’ were identified in the Q Method analysis; these represent the correlated viewpoints that
explain the maximum variation in the data. Each participant has some degree of alignment to all of the type
groups. The software tool identifies the participants that are considered significantly aligned to a factor group,
and therefore the way that person has ranked the statements is most representative of the type group. It is
noted that all three directors were flagged as significantly aligned to a type group, two directors with type 2
and one with type 1.

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4.1 Project Reviews

Type 1 group view that project reviews would be a useful activity for the company and projects, and they place
a moderate priority on this improvement. Type 3 group also see that project reviews would be of benefit as a
similar level of priority.

In contrast type 2 group do not put any priority on adopting project reviews as having a benefit to the
company and project.

In comparison, one of the directors is agreement that project reviews would be a benefit; whereas, two put
this lower on their priority ranking.

4.2 Sharing knowledge and lessons learned

Type 1-group views that organization does not share knowledge very well across the team and is an area for
improvement. A one on one type personal communication or web-based forum not considered sufficient, and
a more structured and systematic approach needed; however, there is not importance placed on recording
such data. Type 2 group also shares this view, and see moderate benefit in recording the information.

Type 3-group viewpoint is that organization shares knowledge within the team reasonably well, but is not so
good at capturing and using lessons learned from projects.

They do not see a need for this to be a structured process, and that personal communication is the best way to
transfer knowledge, and a web-based forum would certainly not be supported.

In comparison, two directors disagree that organization shares knowledge well, and all three directors view
deficiencies with the current level of capturing lessons learned. One of the directors is more aligned with
Factor Array 1 in the respect that sharing knowledge should be structured, all three directors view that
personal communication and web based sharing is not appropriate for the company.

4.3 Project File Structure

Type 1 group viewpoint is that the project file structure system not being used in a consistent way, and there
could be some improvement to the project file structure to make it more logical to users, they place a
moderate priority on this improvement.

Type 2 group also view the project file system as currently not being utilized in a consistent way and have
experienced better structure/systems, however do not see improvement to the structure as a priority.

In contrast, Type 3 group view project file structure is reasonably consistently in their experience. Although
they recognize that, it could be better structured.

In comparison, two directors share a similar view to Type 1 group and other director is satisfied with the
current file structure system but recognizes that there is some inconsistency across users.

4.4 Network Access

Type 1 group viewpoint is that flexibility of access outside of the office and on other devices is a very
important consideration; however, there is no current concern with mobile access organization currently has,
where some in this group would rarely access the network via VPN or web.

Type 2-group share a similar viewpoint and view improvement as a moderate priority particularly with the web
mail access.

Type 3-group view the organization network access as sufficient as is, and ability for mobile access not seen as
a priority at all.

In comparison, one director shares a similar viewpoint to type 1 group, other two see deficiencies with the
webmail access, and they place a lesser ranking on importance and need for better mobility with network
access.

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4.5 Document Share

Type 1 group views the current document share system (Drop Box) not sufficient for purpose, no capacity
increase needed, it is easy to use, and there is no particular security concern. However, this could be
improved for a more professional representation. However, this is not considered a particular priority.

Type 2 group also view the current document share (Drop Box) system has not being sufficient for projects,
and improvement for professionalism is a moderate priority. The current capacity is sufficient and there are no
particular security concerns.

Whereas, type 3 group view the current document share (Drop Box) system as being sufficient, but want more
capacity.

4.6 Archiving Emails

Type 1 and type 2 groups do not consider email archiving quick and easy, and automation could be good
approach, although not considered a priority. Type 3 group would like email archive to have some automation.

In comparison, the directors all viewed deficiencies in the email archive system, with two directors viewing
that an automatic archive being beneficial and one being neutral.
5. Conclusion
Three ‘Type Groups’ were identified in the Q Method analysis; these represent the correlated viewpoints that
explain the maximum variation in the data. Each participant has some degree of alignment to all of the type
groups. The factor arrays and z-scores, with emphasis on type groups 1 and 2, which include the highest
number of significantly aligned participant, used to identify the following summary of priority upgrades for the
case organization. The key objective identified for each item considered in alignment with the project
objectives and organization’s business objectives.
Table 2: Summary of Q-method results
Priority IS Item Key objective
Sharing knowledge and
To be more effective at sharing knowledge
High - medium lessons learned
Medium Project Reviews To support project quality
Project guiding
Medium Internal focus to support project quality
framework document

File Structure To improve consistency

Medium - low

Auto email archive To be quicker and easier

Medium - low
Low Drop Box upgrade For increased professionalism
Network mobility improvements – noted as an important factor, but current
Low
system is considered to be working sufficiently well

References
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From Average Joe to Part Time Professional Singer: A Service
Marketing and Leadership Perspective
Michaël Le Duc
Mälardalen University, Eskilstuna and Västerås, Sweden
michael.le.duc@mdh.se

Abstract: In the context of organizations in the servicescape (Bitner, 1992), ambient conditions include, temperature,
music and scent. Branding can include sound and music in the area of sonic branding, e.g., associated with sodas, computer
games, cell phones, amusement parks and movies. Sonic branding needs further research (Gustafsson, 2015). Live music
can contribute in this area. To become a professional singer and musician you have to train skills extensively and also
overcome stage fright, which illustrates the negativity bias of the brain. In the servicescape perspective learning from
approach and avoid can determine success or failure. The goal of the research is to investigate how an average person can
successively become a part time musician and professional singer from a service marketing and leadership perspective. A
case study method is used with elements of action research. The case study is documented and analysed primarily
between 2008 and 2018. Multiple sources of evidence are used with a time perspective. I work full time as assistant
professor so artist life is outside my regular work. Three main phases in my development are analysed as well as the
development of some colleagues. Between 2008 and 2011 I was a consumer of music, started meditation that led to
singing and later choir life as well as starting to become a singer on my own. Between 2012 and May 2016 I lived a rich
choir life and developed my own artist life. Between June 2016 and 2018 I experimented with technology acquired during
an outdoor music festival, increased intensity in my life as a singer and musician. There is a structured analysis of selections
from the account of episodes in the perspective of approach and avoid in the servicescape. Experimentation and learning
of artists in different contexts, with support of social media, can lead to success over time.

Keywords: Service marketing, servicescape, avoid, approach, sonic branding, leadership, case study, action research

1. General introduction and background

In the context of service organizations, ambient conditions include, temperature, music and scent (Bitner,
1992). In service business sectors employees are paramount as services are generally produced and consumed
simultaneously. The consumer is “in the factory” experiencing the total service (Bitner, 1992). Branding can
include sound and music in the area of sonic branding (Forbes, 2016; Wired, 2016), e.g., associated with sodas,
computer operating systems, computer games, cell phones, amusement parks and movies. Sonic branding
needs further research (Gustafsson, 2015). Another concept related to branding is sensory marketing (Krishna,
2012), which according to Spence et al. (2014) also needs further research.

Music and singing has been an interest since my childhood, but with a long pause of activity for approximately
two decades, like for so many people you have to stay at the stage of dreams and limited practice. Information
technology has greatly facilitated the development of me and many other people in music and other areas.

Furthermore, some people enjoy practicing and effortlessly performing music in public. However, it is quite
widespread to experience stage fright (Bonshor, 2016), which can be associated with a leadership perspective.

Neuroscience can provide explanations to phenomena like stage fright, e.g. the negativity bias of the brain
(Rozin and Royzman, 2001).

The goal of the research is to investigate how an average person can successively become a part time musician
and professional singer from a service marketing and leadership perspective.

The paper is structured as follows. First the theoretical framework is described. Its aim is to provide sensitizing
concepts for the data collection and analysis. In the second section the method is discussed. The method
combines the case study approach together with action research. An important element is a timeline
perspective. Then follows the case study with analysis in a timeline perspective, with analysis of approach and
avoid in the servicescape. And finally the conclusions are presented.

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2. Theoretical framework and previous research

For categorizing service organizations, Bitner (1992) offers a typology in two dimensions that capture
important difference in the management of the servicescape. The first dimension is who performs actions
within the servicescape, i.e., customer only (self-service), both customer and employee (interpersonal
services) and employee only (remote service). The second dimension is about the physical complexity that can
be elaborate or lean. Restaurants with live music offer elaborate interpersonal services. In comparison, a
simple/lean interpersonal service is illustrated by a hot dog stand. The focus of the paper in on elaborate
interpersonal services. In service business sectors employees are paramount as services are generally produced
and consumed simultaneously. The consumer is “in the factory” experiencing the total service (Bitner, 1992).

The elements to understand services in this perspective are numerous, including environmental conditions,
internal responses of employees and behavior of both customers and employees. Environmental conditions
include ambient conditions (temperature, air quality, noise, music, odor etc), space/function (layout,
equipment, furnishings) as well as signs, symbols and artefacts (signage, personal artefacts, style of decor,
etc.). For services businesses such as restaurants the physical environment can influence behaviours of
customers and employees and create an image (Bitner, 1992). Internal responses are cognitive (beliefs,
categorisation, symbolic meaning) emotional (mood, attitude) or physiological (pain, comfort, movement,
physical fit).

Behavior can be either approach or avoid both for employees and customers. Approach includes affiliation,
exploration, stay longer, commitment and carry out plan. Avoid is the opposite of approach. In the approach
perspective before purchase, consumers are looking for cues (Bitner, 1992), music can be powerful in that
respect. (Bitner, 1992)

The role of stage fright (Bonshor, 2016) is included in the conceptual framework of the paper. Stage fright can
impair the quality of performance, impact health negatively and lead to avoidance of performance (Studer et
al., 2011) notably regarding mood, attitude and comfort. Stage fright is not only found in musical domains, but
in many professions (Bonshor, 2016). Neuroscience can provide explanations to phenomena like stage fright.
The brain in animals and humans has a negativity bias (Rozin and Royzman, 2001) which was developed during
evolution. However, Brannon and Gawronski (2018) did not find clear support for the negativity bias. To know
this phenomenon helps to feel relief, e.g., in a leadership perspective.

Branding can include sound and music in the area of sonic branding (Forbes, 2016; Wired, 2016), e.g.,
associated with sodas, computer operating systems, computer games, cell phones, amusement parks and
movies. Sonic branding needs further research (Gustafsson, 2015). Another concept related to branding is
sensory marketing (Krishna, 2012), which according to Spence et al. (2014) also needs further research. If food
is described with sensory words, sales increases. Mattila and Wirtz (2001) report that scent and music need to
be congruent for marketing success. In the servicescape several companies can cooperate in the perspective of
co-branding. A restaurant and a music business can cooperate in this perspective.

The focus of the research in the perspective of servicescapes is approach and avoid as well as some of the
associated aspects such as music and noise, mood, attitude, comfort, movement and physical fit.
3. Method
The case study approach is paramount in the paper, e.g., a time perspective as well as using multiple sources of
evidence (Yin, 1989). The case study approach is relevant to create new knowledge (Eisenhardt, 1989). Thus
the literature review/theory is a guide to structure data collection and analysis but with revised and new
concepts likely to emerge. Action research is used, which is a case study where the researcher by actively
participating in projects gets access and in-depth knowledge but also faces some limitations, e.g., what can be
reported and how to report (Gummesson, 1991). Furthermore, action research tends to make the case study
method less systematic. As an action researcher you need to adapt to circumstances over time, e.g., in
business settings.

However, action research does not mean that anything goes. Seven quality criteria from Bradbury Huang
(2010) are addressed here. (1) Objectives of the research are articulated, in this case the goal of the paper. (2)
Partnership is addressed. There was no partnership in the research process, however ample partnership in the

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case data generated by the action research approach. There are challenges regarding the amount and
structure of data as well as some confidentiality issues. Furthermore, there can be conflicts of interest. (3) The
project makes a clear contribution to action research, e.g., the link between data over time in the case
analysed especially with the action research approach chosen. (4) Methods and process are clearly articulated,
which is performed in this article. (5) Actionability means that the project should lead to ideas that guide
action, e.g., in this project how to overcome fear and become a leader in the music business. (6) Reflexivity is
clear, e.g., the time perspective is essential to analyse material and reflect. (7) Significance (content and
process) is addressed by clear presentation of relevant results and analysis as well as the action research
approach.

Subjective personal introspection (SPI) is another inspiration to the method of the paper (Holbrook, 2005; Hart,
2016). With SPI the researcher is the main research instrument. SPI focuses on impressionistic narrative
accounts of the writer’s own private, consumption experiences. SPI is critiqued by Wallendorf and Brucks
(1993), e.g., regarding the extent to which introspections are documented in a form accessible to others,
sampling issues and lack of method literature, although the mentioned article is not recent.

Sampling has not been systematic. Sampling is largely based on purposive principles (Silverman, 2005),
opportunity/access (Silverman, 2005), convenience and snowball principles. Music has been learned and
performed in churches, in companies, in government organizations, in homes, in the context of non-
government organization (NGOs), in private events, in hotels and restaurants (both indoors and outdoors), in
markets (both indoors and outdoors). The restaurants where I have been working are mostly small.

Since I am an important element of this research, it is important to include a brief description. I have a
multicultural background from Europe and Africa regarding childhood, now in my fifties. I performed a Ph.D.
Candidate project in the 1990s with success in the area of information technology for environmental
management. Since many years I am assistant professor, since 8 years in marketing. During the writing process
of this paper I practiced guitar playing for short periods, it boosts creativity and productivity, such much fun!

The most important types of data source include: Diary database saved in a database software I started to use
in the early 1990s and later Excel, social media data (e.g. Facebook) including pictures, photographs with date
and time stamps saved by the small digital cameras used, e-mails, NVivo diaries and notes, audio recordings,
video recordings, notes in mindmaps. Regarding photographs and other visual data analysis can be very
complicated (Silverman, 2005). In this paper an analysis of a small sample of the photographs is performed,
especially related to a time perspective.

To minimise distortions daily field notes were used although not in an extensive research diary. The many
photographs are a kind of diary. I make notes on post-its and sheets of paper and take pictures of them,
photograph, increasing the quality of the diary. You need to rely on detailed recording of experiences as close
as possible to the time of their occurrence (here the digital photographs help greatly). You can also use
different informants by saving data from social media and other sources making the information anonymous.

Data analysis has been performed using the qualitative data analysis software NVivo, in Microsoft Word as
well as a Mind Map software that enables tagging data with theoretical concepts as well as dates in GANTT
charts. Data analysis has been performed continuously as recommended by method literature such as
Silverman (2005)

To further discuss the strengths and weaknesses of the research reported here principles on how to document
research transparently from Silverman (2005) are addressed. An honest account of the conduct of the research
has been performed to some extent. The description of what was actually done in choosing cases, choosing
methods collecting and analyzing data is limited by the nature of action research. One challenge is the
structure of the data collected related to how to report in scientific publications. Each decision in the research
process has not been explained or justified in depth. The major strengths include my deep learning and
personal development as well as the network of people and organizations associated and how this contributes
to action research. The main weaknesses of the research includes that is not performed in a systematic way
regarding especially research question formulation and research design, including sampling of cases.
Generalization is possible for some of the concepts.

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4. Results and analysis

Here are key events from the rich data collected mainly between 2008 and 2018 as well as analysis of
approach and avoid.

4.1 2008-2011 Consumer of music, meditation, choir life and starting to become a singer on my own
One of the first decisive activities in my development towards becoming a professional singer was in June
2008, when I started to practice yoga nidra guided meditation technique. Meditation led to the urge of singing
at home including mantras, French music, Jazz and Rock’n Roll. February 2009 I started my development in
choir life. Learning harmonies in the choir makes you focused and also overcome stage fright as being part of a
supportive social context. Also it was recommended to record during rehearsals for learning the songs. The
choir leader supports the choir members. Singing to an audience was a wonderful but often intimidating
experience. May 2009, I participated as choir member in celebration of an important person in a major
organisation, I got great feedback. April 2009-August 2009 cooperation with university colleagues from India
with visits in each other’s countries. Music and sound was an important part of this exchange. October 2009
Entry into new choir. You tend to get an on and off relation with choirs and other music projects. April 2010
lady in a choir says I sing well a jazz song, L.O.V.E. (Nat King Cole). June 2010 workshop on solo singing and
improvisation.

Thus, a social context and intense training supports the individual service provider in the servicescape to
develop service quality including overcoming stage fright.

In 2011 a choir member invited me to his guitar course, which has contributed significantly.

June 2011 my family moved to new apartment close to school for the children, close to large indoor and
outdoor markets, shopping streets as well as many restaurants. I can just in 5-10 minutes walk reach a lively
city center.

4.2 2012- May 2016 choir life and further development of my own artist life
May 2012 a famous artist Jasmine, performance with big crowd documented by me, at Market Square. This
might have influenced me to later perform in similar spots and I trained later to perform many events.
According to my digital camera, the weather was nice, 19:03 I was at the meeting place with thousands of
other people as well as my daughter. At 19:06 a politician spoke about the importance of the artist (co-
branding). 19:07 I photographed a large screen with a company logo and also welcoming the famous artist (co-
branding). At 19:12 the artist appears in one of my photographs, many photographers are active in the
audience. Jasmine is smiling. At 19:13 a famous TV host is talking, welcoming the artist (co-branding, again).

Jasmine makes a heart symbol with her hands towards the audience. I have a video at 19:38 when she
performs the song to the audience. On YouTube there are videos of the event, one with over 100.000 plays.

Another video with the artist performing a song in better conditions has 33 million plays. I could not imagine in
2012 that I would be a singer and artist on my own a few years later, planning and hosting many events. I had
not put the effort and had not yet received all the positive feedback. Jasmine started in a TV competition in
th
2004 with great success (4 place). When I listen to Jasmine in 2004 and 2012 there are significant differences.

So she had developed as an artist during a number of years. Role models inspire service providers to develop
their skills and overcome obstacles such as stage fright.

September 2012 I started in a new advanced choir. December 2012 Famous singer was the lead in a small
Christmas concert with this choir. December 2012 another famous singer and TV host lead concert where I
participated in the choir. Great experience in large concert hall with approx. 700 paying customers. I saw
admiration for the famous singer in the eyes of the audience in the front rows, since with the spotlights you
cannot see the audience well when you are on stage. I have obtained similar looks but also totally uninterested
eyes many times. May 2013 musical course with professional musicians, motivated and trained me as solo
artist. Contents included warmup, technical aspects of singing, music theory, how to use a microphone,
exercises, participating in music jam in town, how to perform on stage.

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September 2013, music workshop with choir people. November 2013, end of participation in one musical
organisation that is open to anybody, not at my level. I still get e-mails and attend occasional events.

March 2015 I joined a music jam on Sundays with professional as well as advanced amateur musicians,
motivated by two choir members. It is a very well established restaurant with good food in a place with
amazing settings, TripAdvisor, 4,5/5 (150 reviews), “really tasty”, “cosy and very tasty food.” I had seen one
choir member singing and playing in the jam on Facebook before. I just said to myself “do it” when taking the
lead singer and guitar player position in the band overcoming the fear.

Although, I tried my best bringing music sheets, I could not jam freely like the other musicians. After a number
of attempts, I was more or less excluded from the events, several persons in charge said “practice more and
come back at another time”. Also I knew too few songs by heart. One musician in charge said “singer
songwriters often are not trained to perform in a band.”

2015-2016 many events performed by me and small network of partners in small restaurants in week days
with usually few customers, i.e., not Friday and Saturday. There was average food, scenery and staff, good
learning, but few customers. I tried marketing together with colleagues with my social media network, posters
on the town, word of mouth, free ads in local free newspapers. In many cases almost only the (mostly poor)
musicians showed up.

To be honest in 2015 I needed a lot of improvement. May 2015 church staff had small a meeting with visitors
and invited me to sing and play guitar. After some apprehension on my part, people were amazed. June 2015
First performance in sunny street.

January 2016 musician, says I am good host in restaurant event, Berliner Hof. The restaurant was not
interested in finding my lost hat, one singer got phone stolen, restaurant by railroad station, TripAdvisor rating
<2/5 (7 reviews, e.g. “not friendly staff”, “terrible shrimp sandwich”, “not good service”). Sometimes I was
insulted in the restaurant by a few customers “you are a terrible guitar player”, a co-host of the event said
“throw him out”. On many occasions customers talked loud, drinking, not listening to the music.

Nevertheless, I had a few loyal fans, especially one retired lady, Beatrice, who could wait for me to sing when
other artists performed, she wanted to hear French music. February 2016, I was invited to sing in a small
religious congregation not associated with the Swedish state church. The response was very good when I
played the guitar and sang. I made some errors that people did not notice it seems. However, they tried to
convince me to participate in their bible studies. I have not time for that.

4.3 June 2016-2018 outdoor music festival increased intensity in my life as a singer and musician in many
places.
June 2016 an outdoor festival required me to use amplifier on batteries which has been very useful many times
after that. During the festival, I was at a bus stop outside a flower shop, not the ideal place, bus passengers
smiled and waved hands, host pleased. Unsuccessful marketing with Facebook messages to restaurants.

September 2016 a good musician says it is socially accepted to play in the streets although I am not busking
systematically. I prefer to perform in outdoor restaurants, festivals, markets, etc. in a co-branding perspective.

October 2016 I saw computer software in an open mic event with huge database of good music recorded by
professional musicians for sing back. Fellow singer with French music included showed me. Thus I can bring
only phone or computer as well as also guitar to different contexts. Many more options were opened with the
support of information technology. December 2016 I got OK to film musicians with my good video camera and
put on YouTube. I went to a restaurant with owners interested in French culture during lunch time which many
customers. That led to opportunities, .e.g., an event in January 2018 with French movie, French food and I
contributed with French singing and music. Almost 80 customers came, a great success that illustrates the
concepts of co-branding and sonic branding in the servicescape.

During 2017 I was motivated to perform many times in different contexts. March 2017 researchers in
psychiatry and psychology inspired me, music and dance make you feel good. July 2017 positive feedback from
staff in music shop about my singing, I was trying a device with effects for singing.

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August 2017 fellow musician, gave me the phone number of his brother regarding an outdoor festival in a
famous place downtown. I sang several times upon request with great success. Thousands of people heard me.

I participated again with great success in July and August 2018, which led to one booking for a private party. In
an outdoor market very fancy neighbourhood I tried a little after being accepted by management and they
asked me to come back on a regular basis commitment. Analysis of a sample of episodes in the Approach and
Avoid perspectives

Here is a structured analysis of selections from the account of episodes above in the perspective of approach
and avoid (Bitner, 1992). Approach includes affiliation, exploration, stay longer, commitment and carry out
plan. Avoid is the opposite.
Table 1: Analysis of approach (Bitner, 1992)
Affiliation June 2011 my family moves to new apartment close to many possible venues for entertainment,
including music.
Role models include: May 2012, Jasmine event; December 2012, famous singer small Christmas
concert with choir; December 2012 famous singer and TV host concert where I participated in the
choir.
June 2015 First performance in sunny street outdoor event.
Exploration February 2009 – November 2013 – Life in choir open to everybody, not really committed as later
on, many demands from work and family life.

2013-2015 various music jams and open mic events.

Stay longer May 2012 Jasmine event illustrates principles that I later applied.
September 2012 – March 2015 Choir life, I started in a new advanced choir in 2012, concerts with
professional solo singers, musical courses and workshops, but I was not committed fully due to
circumstances outside choir life.
Commitment April 2009- September 2012 (estimated) cooperation with university in India.
April 2010 lady in a choir says I sing well a jazz song.
September 2013-… part of association of people with relations to India, e g Diwali festivities in
November.
May 2015 church staff had small meeting and invited me to sing and play guitar. After some
apprehension on my part, people were amazed.
January 2016 musician says I am good host in restaurant event.
Carry out plan. June 2008 - … - yoga nidra, singing at home. “…” means ongoing activity).
February 2009 - … record audio when singing, learning harmonies, support from choir leader and
other musicians, sing more and more without stage fright to an audience
In 2011 - … a choir member invited me to his guitar course.
June 2016 - … performing outdoors. An outdoor festival required me to use amplifier on batteries.
October 2016 - … I saw computer software huge database of songs,
2016 –… record video with good quality when singing. December 2016 I got OK to film musicians
with my good video camera. This is good for marketing, improving rehearsals and performance as
well as to contribute to other artists and the audience.
2016 –… post videos on YouTube.
March 2017 - …researchers in psychiatry inspire me, music and dance make you feel good
July 2017 - … positive feedback from staff in music shop about my singing
August 2017 -… fellow musician, gave me the phone number of his brother regarding an outdoor
festival in a famous place downtown. This led to an invitation to participate in 2018. That
participation led to booking a private party.

Avoid is the opposite of approach, non-affiliation, non-exploration, not staying longer, no commitment and not
carrying out plan.
Table 1: Analysis of avoid (Bitner, 1992)
Non-affiliation November 2013, end of participation in one musical organisation that is open to anybody, not at my
level (see also table 1).
Non-exploration
Not-staying longer February 2016, I was invited to sing in a small religious congregation but I have not time for bible
studies.
No - commitment Spring 2015 – after some test in music jam for advanced musicians I understood the need to practice
much more and only very seldom take part (as an artist) in music jams with advanced musicians. I
could only be singing, but lack of time.
Not - carrying out plan October 2009 Entry into new choir that I left (December 2011) later because of bad management,
e.g., constant change of harmonies, conflicts and other opportunities in other choirs as well as
different musical contexts.

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 Michaël Le Duc

Although, less is reported in the avoid perspective, the consequences are significant. This is especially
important in the perspective of the negativity bias (Rozin and Royzman, 2001).

5. Conclusions
How an average person can successively become a part time musician and professional singer from a service
marketing and leadership perspective, is illustrated in this article. I was more of a consumer of services before
2008 including with music and became increasingly an employee offering music services. I had to overcome
the fear of performing in front of people. This was possible by practicing by myself, practicing with others and
performing in public extensively. The support of information technology has been important for this process.

Meditation is rather passive but activates you gradually, as that is my case. Learning from approach and avoid
processes in the servicescape can be seen as essential to achieve success over time
Acknowledgements
Mälardalen University encourages and supports teaching and research staff to publish research in quality
conferences and journals, which is acknowledged here. Many thanks for the valuable feedback obtained in the
double blind review process of this paper. I would like to thank many people involved in the experience
industry, including music. That is the customers, the artists, the restaurants, the markets, the churches, etc.
who struggle and have fun, in many cases without any substantial financial gains in mind. I would also like to
thank Dr. Peter Ekman, Mälardalen university, associate professor in marketing, regarding the perspective on
servicescapes and other topics.
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137
Temporal Aspects of Big Data and Their Implications for Big Data
Analytics
Maria Mach-Król
University of Economics, Katowice, Poland
maria.mach-krol@ue.katowice.pl

Abstract: The main aim of this paper is to present selected results of research performed in 15 Polish business enterprises
showing the most important findings within the context of temporal big data features. The main research questions that
are posed are: what are the most important challenges for effective big data analytics in organizations in the modern busi-
ness environment and whether the Polish managers are aware of the temporal aspects of big data? If yes, do they recog-
nize the need for and have access to tools and solutions aimed at temporal big data processing and analytics? The recent
development of the big data phenomenon differs – as a source of data – from commonly used sources, such as databases
or data warehouses. It’s most important features may be summarized as follows: organizations have to perceive data as
flows instead of stocks; big data requires a new approach to technology and processes, therefore analytics has to focus on
data changes and their directions, not on the data itself. Hence, in opinion of this paper, it is justified to use the notion of
temporal big data, which emphasizes the importance of the time dimension in the nature of data, in big data analytics, and
in decision-making. This is a research-based paper aimed at highlighting the most important business needs linked with
temporal big data implementation and analytics. The results of this research can be used by IT professionals, business
leaders and policy makers as they plan and develop big data applications within their organizations. The results presented
in the paper are collated from research performed in 2016 using the case-study approach involving multiple cases. The
data collection method consisted of semi-structured, expanded interviews. The epistemological foundation of this paper is
grounded upon the interpretivist paradigm. The multiple case research is particularly suited to interpretivist research in ICT
where the context of the information system, and the information system influence on the context is the factor that is
needed to be known. The main conclusions of the paper are as follows: the majority of researched organizations are aware
of big data’s importance for their functioning, and there is a strong need for infrastructure which will take the temporal
aspects of big data into account.

Keywords: temporal big data, analytics, visualization, temporal reasoning.

1. Introduction
In the last few years, a new, potentially highly valuable source of data has come into play. Namely, big data.
This has given new insight opportunities, but due to its nature it is not possible to analyze it with existing hu-
man and IT infrastructure (Phillips-Wren et al, 2015). Big data is generally characterized by the 7V’s, which
stands for Volume, Velocity, Variety, Veracity, Variability, Visualization and Value (Mikalef et al, 2017). In the
contemporary fast-paced economy, especially the velocity dimension of big data is of extreme importance, as
the speed of action is critical to gaining a competitive advantage. Enterprises have to respond in almost real
time to rise to emergent challenges and opportunities (Yang and Meyer, 2015). For this reason, big data ana-
lytics gains importance. Syncsort (2016) predicted that in 2017 big data insights would become a mainstay in
the boardroom, which has turned out to be true.

The big data phenomenon differs – as a source of data – from previous, commonly used sources, such as data-
bases or data warehouses. The most important features of this new kind of data may be summarized as fol-
lows (Davenport Barth and Bean, 2012):

x Organizations have to perceive data as flows instead of stocks, hence they have to implement the so-
called streaming analytics;
x Data analysts are being replaced by data scientists – people, who not only understand analytical pro-
cesses, and have deep knowledge of IT solutions, but are also often skilled in computational physics or
biology, as well as social media-oriented sociology;
x Big data requires a new approach to technology and processes, so analytics has to be moved from IT
department level to business and its operational functions level.

What can be immediately seen from the above-mentioned list is big data’s fluidity, changeability, and dynam-
ics – from which the temporal aspect may be implied. It is present in such notions as: data flows, social media
(dynamic in nature) or operational functions.

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 Maria Mach-Król

Hence, in the opinion of this paper, it is justified to use the notion of temporal big data, which emphasizes the
importance of the time dimension in the nature of data, in big data analytics, and in decision-making.

The previously stated aim of this paper is to present selected results of research performed in 15 Polish busi-
ness enterprises, showing the most important findings within the context of temporal big data features. The
main research questions were: what are the most important challenges for effective big data analytics in or-
ganizations nowadays and whether the Polish managers are aware of temporal aspects of big data? If yes, do
they recognize and need tools and solutions aimed at temporal big data processing and analytics?

The results presented in this paper are based on research performed in 2016 using the case-study approach
involving multiple cases. The data collection method consisted of semi-structured, expanded interviews with
relevant business managers and professionals.

This research-based paper is aimed at pointing out and highlighting the most important business needs linked
with temporal big data implementation and analytics. The results of this research will be available for use by IT
professionals, business leaders and policy makers as they plan and develop big data applications in their organ-
izations within the ever changing business environment.

The paper is organized as follows: Section 2 is devoted to related works; in Section 3 various challenges linked
with big data usage in enterprises are highlighted and briefly discussed. Section 4 presents excerpts from in-
terviews on big data with Polish managers in the context of the temporal nature of this source, Section 5 is
devoted to discussions on the research findings, and finally Section 6 contains the main conclusions from the
research, and also outlines possible future research directions.
2. Related works
Many authors have already recognized the importance of big data (BD) usage/analytics in various areas, not
only business.

For example Wang Kung and Byrd (2018) drew attention to the healthcare sector, and analyzed 26 big data
implementation cases, identifying five BD analytics capabilities: analytical capability for patterns of care, un-
structured data analytical capability, decision support capability, predictive capability, and traceability. The
same sector has been addressed in e.g. (Raghupathi and Raghupathi, 2014) and (Batko, 2016), but from a more
theoretical point of view, presenting, inter alia, benefits and challenges of BD analytics in healthcare.

Some other pieces of research and of research roadmaps concerning big data analytics implementation en-
compass various sectors, e.g. logistics and supply chain management (Wang et al, 2016), the government sec-
tor (Kim Trimi and Chung, 2014), but the overwhelming majority of research is focused on business and man-
agement-related issues. Examples include: the impact of big data on processes, technologies, organizations,
and industries (Abbasi Sarker and Chiang, 2016), organization design (Galbraith, 2014), big data in society ad-
ministration (Chen and Zhang, 2014), organization management (George Haas and Pentland, 2014), or possible
BD applications in business in general (Fosso Wamba et al, 2015). Mikalef et al (2017) presented a systematic
review on big data analytics within the context of achieving a competitive advantage. Olszak (2017) proposes
to implement business strategies driven by big data analytics, and presents the state-of-art in big data usage in
25 organizations.

The possible usefulness of big data for business success has also been addressed in the context of Polish organ-
izations. Wieczorkowski (2014) focuses on the area of public administration. Weinert (2016) reports the results
of research conducted in 269 Polish companies with the aid of a questionnaire and uses a comparative ap-
proach to indicate differences in the exploitation of big data solutions against the various characteristics of
these companies.

The main difference of the research presented in this paper, in relation to the approach in (Weinert, 2016), lies
in the methodology – a case-study approach involving multiple cases – and in the main focus and direction of
the research questions. In the research presented within this paper, questions were strongly focused on the
managers’ understanding of the term “big data” and their knowledge about possible IT solutions and function-
alities which (in their opinion) may be useful for BD analytics.

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 Maria Mach-Król

It has to be noted that none of the existing big data solutions or BD analytics proposals presented above ex-
plicitly accommodate such an important factor as time. This deserves to be highlighted as the temporal dimen-
sion is essential due to the velocity of big data. The pace of unstructured data flow makes it impossible to fully
incorporate it in traditional analytical systems.
3. Some of big data’s challenges
While recognizing the specific nature of big data, the challenges for organizations willing to use this data
source have also been recognized. They may be expressed as follows (SAS, 2013; Hoskins, 2014):

1. velocity – organizations not only have to find the needed data, but they have to do it quickly, due to
the pace of data appearance;
2. data understanding – analytical background and domain knowledge are needed to put data in con-
text;
3. data quality – data has to be up-to-date, delivered on time, and exhaustive;
4. data visualization – indispensable for understanding and analyzing great amounts of data;
5. outliers handling – typically outliers constitute 1-5% of data, so in the case of big data this is a huge
amount;
6. data integration and management – due to (mainly) big data heterogeneity;
7. specific IT skills needed to work with a big data processing system;
8. data security and accessibility – huge amounts of big data collected by enterprises need to be proper-
ly secured, protected from unauthorized access, and processed by specific systems able to handle
such amounts of data without crashes;
9. new analytical and business skills, which will enable data scientists to analyze big data and to link the
resulting insights with business strategies;
10. relevant processing performance of IT solutions – which will fit to the pace of data flow, and assure
the almost real time query processing.

Other researchers have also been concerned with big data and it’s challenges. Assunção et al (2015) enumer-
ate a set of these factors involved in big data computing, such as, data management, model building and scor-
ing, real-time visualization, business models, qualified staff recruitment. They draw attention to big data visu-
alization, also the real-time factor, and to the impact that BD analytics has on contemporary business models;
Harper and Menon (2015) present some principles (or fundamentals) to be returned to in order to establish a
sustainable BD strategy. These principles, and challenges, are linked with organizational change, culture, and
learning; and finally Erl Khattak and Buhler (2016) discuss several aspects of BD adoption and planning in com-
panies. They consider, amongst other factors, inter alia organization prerequisites, data procurement, privacy,
and security, performance challenges focusing on both organizational and technical issues that are identified
by this new approach.

Syncsort (2017) points out 5 main big data trends, and challenges for 2018, which are: data blending in data
lakes, looking for big data quality, data lake governance, new big data projects, and – last but not least – keep-
ing data in data lakes “fresh”, which can be extrapolated to concern keeping track of data changes and their
temporal characteristics.

As in the case of big data’s features (Section 1) – also in the case of big data challenges, the temporal aspect is
easily visible. It is present in questions of velocity, data quality (on-time delivery), big data impact on company
strategies, or finally the question of a constant data flow. It is even postulated that to analyze not just big data
itself, but rather changes in incoming data, because the flow is too quick, and the amount of data is too huge
to enable effective big data analytics.

These temporal aspects of big data, and the role of time in big data processing have inspired the research into
Polish business enterprises, focusing on their big data understanding and their big data analytics usage.

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4. Temporal aspects of big data adoption and analytics – excerpts from interviews with
Polish business managers

4.1 Research methodology

The research presented in this section has been carried out by personal CAPI semi-structured, and expanded
interviews. All the interviews have been recorded in the form of .mp3 files. In the research, employees from 15
various companies (from the services, manufacturing, and R&D sectors, ranging from SMEs to big) have been
interviewed. Thus, the research used the case-study approach involving multiple cases. The interviews took
place between April and September, 2016. The epistemological foundation of this paper is grounded upon the
interpretivist paradigm. As Wang et al (2018) pointed out, the multiple case research approach is particularly
well suited for interpretivist research in ICT where the context of the information system, and the information
system influence on the context are the factors that are needed to be known.

The preliminary research results concerning inter alia managers’ understanding of the big data notion and its
implications for advanced business analytics have been reported in (Mach-Król, 2017). Here the attention will
be focused on time, and the temporal aspects of big data, occurring from the respondents’ answers.

The interview questionnaire was developed in March 2016, and consisted of 15 questions, both closed- and
open-ended, followed by 7 questions concerning the respondent’s particulars.

The sample was selected by purposive sampling. Independent variables which have been taken into account
during sample verification, these include: the company’s business activity, number of employees, average an-
nual turnover for the last three years, capital structure, respondent’s position within the organization, the
company’s business sector, and for how long the company has existed on the market.

The author is aware of the fact that the sample is small, due to the relative novelty of the big data notion in
Polish companies, especially when linked with the notion of temporal analytics; however, due to the same rea-
son, it is worthy to publish the results obtained.

The summarized information on the research sample characteristics is given in Table 1.

Table 1: Research sample characteristics

Company’s business activity No. of answers

Manufacturing 2
Services 7
Other 6
Total 15

As can be seen in Table 1, among the companies being researched, the largest group (7) are from the service
sector. 2 companies are from the manufacturing sector, and 6 respondents selected the answer „other”, for
example banking, R&D, or software development.

These are mostly medium to large companies: 8 of them belong to one of these two categories. The category
of ‘small company’ may be assigned to 7 organizations being researched. No micro-companies were selected
for the study.

As to the sector in which the researched companies operate, the ICT sector is the most numerous (4 indica-
tions, with production of ICT, and ICT service/support are treated collectively), the second position is occupied
by professional, scientific and technical sector (3), and the third by the financial sector (2).

Obviously, these are not all the respondents’ particulars, however, they sufficiently illustrate the heterogeneity
of the research sample.

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4.2 Research findings

The most important question, in the context of big data temporality, concerned the significance of the time
factor in analysis and managerial decisions taken as a result of that analysis. As indicated by the respondents,
this factor is very significant for 4 of the interviewed managers, and significant for 11 others. These findings
correspond with the results of the subsequent interviews’ sections, concerning the most important business
analytics types, and IT solutions, as seen by the interviewed managers.

Respondents were asked to give their opinion on the various types of business analytics, which are especially
important for their organizations, and which should be performed. The managers’ opinions on this topic are as
follows:

x Dynamic analytics and reporting – 12 and 11 answers, respectively;

x Multi-criteria analytics, predictive analytics, forecasting, real-time analytics – 9 answers.

Other answers were also given, however, they were not so numerous.

It can be easily seen that time-linked, and dynamic types of business analytics are strongly needed by manag-
ers for constant dynamic environment analysis.

Managers were also asked about the types of data and/or knowledge useful for advanced business analytics
(BA). They were additionally presented with a closed set of examples, accompanied with the five-level Likert
scale, having the following format:

1. Definitely not;
2. Probably not;
3. Neither yes nor no;
4. Rather yes;
5. Definitely yes.

Keeping in mind that while not every respondent is an IT-specialist, and some of the notions may be new to
the respondents, the response-table contained an additional column entitled “I am not familiarized with such a
concept”. Respondents could also add their own comments during the interview.
Summarized results are as follows (Figure 1):

Figure 1: The most essential data/knowledge in business analytics

Among other indications, almost all respondents – 14 people – found knowledge labelled with time as indis-
pensable for performing advanced business analytics; also the majority of respondents (12 managers) assessed
dynamic (changing) knowledge as very important for advanced business analytics. These two kinds of
knowledge: the one labelled with time, and the dynamic one – together may be perceived as extremely signifi-
cant types of knowledge, indicating the role of time factor in business analytics.

Subsequently, the respondents were asked about what IT solutions organization they considered should be
used while preparing advanced business analytics. Again, they were presented with a closed set of examples,

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accompanied with the five-level Likert scale, with the same format as used previously, with the additional “I
am not familiarized with such a concept” column, and with the possibility to add their own comments during
the interview.

The summarized information on managers’ responses concerning IT solutions is presented in Figure 2.

Figure 2: The most suitable IT solutions for business analytics

The majority of respondents – 11 persons – considered a system with dynamic (changing) knowledge base (KB)
very useful for advanced business analytics. Such a system may be called more formally a temporal knowledge
base system, where the knowledge base is automatically updated in response to changing circumstances, due
to update mechanisms based on temporal logics. The number of managers convinced about the usefulness of
a temporal KB system again indicates the vital role of time in advanced business analytics.

Almost all interviewed managers – 14 persons – considered web mining solutions of great importance in busi-
ness analytics. Similarly, 10 managers perceived text mining tools as indispensable in modern analytics.

Again, answers and responses concerning data/knowledge and IT solutions needed for advanced business ana-
lytics revealed the importance of temporal questions. This is in line with the conclusions of the importance of
the temporal nature of big data, pointed out in Section 3.

The next interview topic concerned functionalities which should be offered by IT systems if they are to be of
use in advanced business analyses. The most needed functionalities that were listed are as follows:

x multidimensional analytics/Business Intelligence (BI) reporting;

x data mining and advanced data mining;
x analysis of big data;
x inferences taking time factor into account.

All the above functionalities were chosen by 14 managers, so almost the entire respondents’ group. It should
be explained here that by “advanced data mining” the respondents meant all data mining activities which go
beyond the traditional DM tasks (clustering, classification, associations etc.), e.g. temporal data mining.
The summarized view of IT functionalities for advanced BA is presented in Figure 3.

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Figure 3: The most desired IT functionalities for BA

The most outstanding fact in the above results again is linked with the time aspects of advanced business ana-
lytics, which can be found (in various forms) in such functionalities, as among others, advanced data mining,
event ordering in time, description of changes.

To sum up the respondents positions, regardless of the business analytics perspective discussed during the
interviews, the needs and challenges concerning the vital nature of the time factor are always brought to the
foreground. Hence, these temporal aspects of big data processing and analytics have to govern the future re-
search directions, as will be described in Section 6.

5. Discussion
In this paper, the main research questions were: what are the most important challenges for effective big data
analytics in business organizations in the new age of BD and whether the Polish managers are aware of the
temporal aspects of big data? If yes, do they recognize and have a need for tools and solutions aimed at solv-
ing the issues of temporal big data processing and analytics?

During the interviews attention was paid, especially to the time dimension of analytics, and to temporal IT
possibilities. While analyzing respondents’ responses, it is easily seen that temporality is present across all are-
as that were analyzed. Within the context of advanced business analytics – which obviously encompasses big
data analytics – the bigger group of answers concerned solutions encompassing temporality and unstructured
types of data. Hence, in order to effectively analyze big data, organizations do need to make use of temporal,
unstructured sources, and of temporal IT tools and their functionalities. The proper choice and implementa-
tion of these may be perceived as the greatest challenge for effective BD analytics.

The interviews also revealed the fact that managers are not always aware of existing temporal solutions (as
e.g. systems with a temporal knowledge base). However, they are very interested in new IT tools, and when
informed of their characteristics, managers perceive them as useful, and needed for advanced (temporal)
business analytics.

The interviews were done in 2016, when the notion of big data, and other notions linked with it, e.g. massive
parallel processing, were not so widely known among Polish managers (Mach-Król, 2017). It may explain, why
almost all the interviewed managers seemed a little surprised when informed on BD analytics’ implications for
achieving a competitive advantage.

Furthermore, such notions, as “temporal knowledge base”, “temporal data mining”, and others linked with the
factor of time, and temporality are not presently widely known nor understood. The interviewed managers are
not an exception. Often they asked for an explanation of the terms and ideas being explored within the re-
search, and following this explanation then found temporal solutions and functionalities very useful for ad-
vanced business analytics in the modern competitive environment.

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Hence, in our opinion, it would be worthy to popularize knowledge on temporal analytics, and temporal IT
solutions among managers. When being aware of the existence of such solutions, managers would be more
willing to implement them within their organizations. In this way, organizations would be given new insights
potentially leading them to gain a competitive advantage or to a better understanding of the dynamic compet-
itive environment.

Obviously, implementation of these new solutions will raise the need for employee training in organizations.
The form of this training may be one of new research directions proposed from this research.

6. Conclusions and future research directions

The paper dealt with the question of the temporal aspects of big data. The results of empirical research in 15
Polish organizations were presented from the perspective of the business needs for effective and efficient
temporal big data analytics.

The research is obviously pilotage in nature, and it requires further verification, especially with a bigger re-
search sample. However, it already allows the formulation of two observations:

Firstly, the majority of researched organizations are aware of big data importance for their functioning. They
are taking various steps to follow the internet resources, and to use them in their decision-making.

Secondly, there is a strong need for new and improvement of existing infrastructure which will take the tem-
poral aspects of big data into account.

The future research directions are therefore twofold. Firstly, verification of the research results is planned with
the use of a bigger sample of Polish business managers. Secondly, both conceptual and software solutions for
temporal big data processing and analytics should be elaborated upon and implemented. In our opinion, busi-
ness enterprises – in order to make a mature and effective use of big data analytics, especially in the temporal
context, need the following elements:

1. Managers must be aware of the analytical needs that are relevant to their operations, and answer
the question of how to meet these needs, and what should be done towards implementing temporal
big data analytics: they need to identify a maturity model, and a self-assessment tool concerning
temporal big data analytics;
2. Managers need algorithmic tools for temporal big data analytics, involving the temporal dimension, in
order to quickly analyze the competitive environment, to swiftly address the new challenges, and – in
consequence – to achieve a sustainable competitive advantage over the competition;
3. Managers need visualization tools, and methods to understand the results of temporal big data ana-
lytics;
4. Managers need a methodology for real-time big data analytics implementation and its use in enter-
prises for sustainable competitive advantage.

Consequentially , the planned future research is aimed at building the so-called Temporal Big Data Analytics
Toolkit (TBDAT) consisting of: a Temporal Big Data Maturity Model (TBDMM), with an accompanying interac-
tive self-assessment tool, the metaheuristic algorithms for analyzing temporal big data in almost near real
time, the visualization method focused on temporal aspect of big data analytics results, and the methodology
of implementing, and performing temporal big data analytics for a sustainable competitive advantage. A nice
positive research direction will also be the developing, and then testing of a managerial game that would allow
managers to easily adopt the methodology.
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Impact of Managers’ Psychological Contract Breach on Firm
Operation: A Case Study of a German Auto-Parts Subsidiary in
Suzhou China
Alexander Mackrell and Bing Wu Berberich
Xi’an Jiaotong Liverpool University, Suzhou, People’s Republic of China
Alexander.mackrell@xjtlu.edu.cn
Bing.wuberberich@xjtlu.edu.cn

Abstract: The purpose of this case study was to evaluate the impact of line manager psychological contracts on
organization within a German automotive subsidiary in Yangtze River Delta Economic Zone in China (one of two key
economic development areas in China hosting thousands of foreign manufacturing subsidiaries). We carried out a six-
month in-depth case study and collected data through documentary study, participant observation, and in-depth
interviews with all managers including a newly recruited manager. Findings add empirical evidence to support the claim
that managers’ psychological contract breach create more negative impact on firm internal communication and operation.
It further highlights that such breach is an accumulative outcome of lack of clear management framework within small to
medium enterprises (SMEs) in particular. From the perspectives of cultural differences, Chinese managers are accustomed
to ‘following’ orders hence their psychological contracts are breached when firm is required to take more strategic
initiatives in response to a fast changing market in China. As new employees go through recruitment processes they
develop a set of expectations based upon factors, such as previous work experience and information communicated by
recruiting managers acting as ‘agents’. The study finds that improper management of employee expectations throughout
this initial period and beyond results in psychological contract breach, whereby obligations owed to employees by the firm
are perceived to have been unmet or specific promises broken. Breach can lead to negative impacts on both individual and
firm, ranging from mistrust and cynicism towards the organisation, to leaving the organisation outright. Findings are
representative and can be generalized to understand and explain similar issues felt by foreign manufacturing SME
subsidiaries in the area. The study implies that psychological contract breach is necessary when changes happen, and level
of the breach impact on firms reflects level of clarity in organizational structure and internal communication. SMEs
experience negative impact more than larger and more established corporations and thus the study bears practical value
to SME managers on effectively managing internal communication and their employees through organizational change.

Keywords: Psychological Contract, SME, Line Manager, Subsidiary, Breach, China

1. Foreign subsidiaries in China

The last two decades have seen waves of foreign multinational companies (MNCs) establish subsidiaries in key
areas of China to exploit location specific advantages such as low-cost labour and government incentives
(Dees, 1998). Managing the growth of these subsidiaries over time, both in an alien business environment and
from a geographically distant position, presents a great challenge to smaller companies with little experience
in this rapidly changing foreign market. Expectations and promises an employee perceives as having been
made by an employer begin as early as the recruitment process (Tomprou and Nikolaou, 2011), and if
managed poorly can cause outcomes such as lower trust, decreased performance, and high turnover (Conway
and Briner, 2002a). Managers are less likely than employees to believe that the organisation breaks promises
in the areas of payment, promotion opportunities, and employment relationships (Lester et al., 2002),
breaches within management therefore likely an indication of more exaggerated breach and its effects lower
in the chain of command.

Multi-facet external phenomena (such as population ageing, emergence of new technologies e.g. AI and new
energy) forced firms to (re)consider how to attract and sustain right talent and employees. This can be said to
be even more important in China, where individuals believe that having personal relationships with one
another within organisations, or “guanxi”, ensures that obligations will be fulfilled (Hui et al, 2004). This case
study thus seeks to evaluate the impact of line manager psychological contracts in SMEs and their overseas
subsidiaries.

Through the exploration and evaluation of manager psychological contract creation and breach, we seek to
gain insights into how manager psychological contracts have developed within the subsidiary over time. The
case study aims to answer the question of how line manager psychological contracts are developed and
influenced by their organisation over time. Whilst there have been numerous studies on psychological contract

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(see Conway and Briner, 2005 for extensive research list), relatively little is on studying manager psychological
contract development and its impact on organisation. Even less is on the context where Chinese managers
work for foreign subsidiaries in China. A shift to localising talent identification and development has started
over the past years in key economic development zones in China, such insights are valuable to foreign
subsidiaries to sustain their development in the growing market in China and Asia.

2. Background, of the Study

This research was triggered by requests from SME subsidiaries in Jiangsu Province that were facing challenges
in response to external and internal changes. Manufacturing SMES, such as those from Germany, enjoy a high
level of technology and production quality and contribute a significant amount to parts production for large
automobile and machinery manufacturers. Typically, manufacturing SME subsidiaries hire the majority of their
operational workers from the local labour market, while relying on a minority of more expensive expatriate
management and technical professionals to manage their subsidiaries and facilitate technology transfer. Over
the past few decades, as China has gradually moved away from a ‘low cost labour’ haven towards a far higher
average wage and steadily shrinking workforce (Wei, Xie and Zhang, 2017). This, along with rising shipping
costs and land prices, as well as a strengthening RMB, has resulted in the rapid erosion of SME cost advantages
(Yan, 2015), driving many to source more and more management level talent locally. Through in-depth
conversation with senior managers of SME subsidiaries in the area, the researchers found that SME
subsidiaries receive limited support from their HQ and mostly operate in response to their key business clients’
requests instead of proactively seeking opportunities to establish themselves locally. Therefore, management
teams in such subsidiaries tend to find it challenging to implement changes and respond to parent firm’s
strategic plans.

Facing similar challenges, the case company approached the researchers seeking support to investigate major
problems at the subsidiary. Through initial visits and observation, the researchers found a major problem was
cross-department communication and how the management team carried out their work. This explorative
case study aims to provide further insight into how psychological contracts develop in line managers across
geographical distances in Small to Medium sized Enterprises (SMEs). Through the exploration and evaluation
of historic and current Agent-Principle and Agent-Agent relationships at the subsidiary and organisation over a
six month period, the authors seek to gain insights into the development of psychological contracts within the
subsidiary over time. This analysis will serve to answer an overarching research question: How have
psychological contracts in line managers developed and been influenced over time within the subsidiary, and
what implications have there been for the organisation?
3. The Process of Psychological Contract
The concept of a “psychological contract”, consisting of “non-articulated understandings between individuals
and organisations”, has existed since 1960 (e,g. Argyris, 1960). Rousseau’s seminal reconceptualisation of the
concept focuses on highly subjective and individual level interactions, proved a catalyst for this research field’s
further development (Rousseau, 1989). The fulfilment of an individual’s psychological contract was found to
reflect employee responses such as increased performance, organisational citizenship, trust, satisfaction and
intention to stay within the organisation (Robinson, 1996; Robinson and Morrison, 1995; Robinson and
Rousseau, 1994). Herriot, Manning and Kidd (1997) identified twelve categories of organisation obligation in
their research, in addition to seven employee obligations, examples from both obligations types featuring in
this paper. In their illuminating work “A model of psychological contract creation upon organisational entry”,
Tomprou and Nikolaou (2011) gather and structure the processes involved in psychological contract creation,
creating a timeline and model the author has found invaluable for this paper (figure 1).

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Figure 1: Model of Psychological Contract Creation in New Employees (Tomprou and Nikolaou, 2011)

Figure 2: Framework used in this research adapted from (Tomprou and Nikolaou, 2011)
Based on Tomprou and Nikolaou’s (2011) original framework, we developed the framework to allow a close
following of the process of manager psychological contract creation (figure 2). In our framework, ‘contract
makers’ is changed to ‘principals and agents’, “principal” referring to the organization while “agent” (normally
a manager) being an individual that works towards achieving the principal’s goals. Such work is often carried
out through the communication of expectations and promises on behalf the Principal (Rousseau, 1989). Both
have power within the subsidiary and to an extent over the new manager, with organisational agents also
affecting pre-entry expectations. The disruptions to the organisation experienced post-psychological contract
creation will also be considered as part of this framework.

Creation and fulfilment of employee psychological contract is deeply embedded in human resource
management (HRM) practices and its effectiveness is heavily influenced by the ‘agents’. At times employees
“systematically analyse their employer’s HR practices for meaning vis-à-vis their psychological contract” (Guzzo
and Noonan, 1994). Organisational support communicated by managers predisposes employees to overlook
small violations, and is a moderator of how employees react to breach (Conway and Briner, 2005). Manager’s
attempts to inspire employees are further considered to have a positive impact on how promises are
perceived and fulfilled (Podsakoff et al., 1990). Employees also use organisational HRM practices to assess
organisational promises and performance expectations to them (Rousseau, 1995). For example, Managers in
culturally similar Hong Kong reported their organisation as having such practices were much more likely to
report promises as having been made to them by the organisation (Westwood, Sparrow and Leung, 2001).

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Guest and Conway (2004) discovered that employees in organisations where human resource management
(HR) practices were adopted were more likely to report psychological contract fulfilment, senior HR managers
in such organisations additionally more likely to report that their organisation does not break its promises
(Guest and Conway, 2002).

During the employment, employee psychological contract breach and violation can happen when they feel less
support from their (line) managers (Teklaub, Takeuchi and Taylor, 2005; Rousseau, 1989; Roubinson, Kraatz
and Rousseau, 1994). The extent to which employees attribute breach to deliberate reneging by the
organisation has been found to adversely affect the relationship between breach and feelings of betrayal
(Conway and Briner, 2002a), intention to quit (Turnley and Feldman, 1999), and Organisational Citizenship
Behaviour (OCB) (turnley et al., 2003). While breach result in a negative impact on employees but does not
always lead to a broken contract or withdrawal. Breach can cause higher turnover, decreased trust from
employees, lower satisfaction, and the intention to leave (Robinson and Rousseau, 1994). Employee
emotional responses due to the realisation of discrepancies between expected and actual situations (Weick,
1995) are referred as psychological contract violation (Morrison and Robinson, 1997; Rousseau, 1989, 1995).

Emotions are at stake when the newcomer experiences contrast and change between the pre-entry
expectations and the emerging psychological contract, however emotions and perceptions can be exaggerated
or even made up by individuals (Schkade and Kilbourne, 1991). Considering the nature of psychological
contract as stated by Rousseau (1995), individual emotions can influence the change of expectation and
perception of contract fulfilment. Violation produces intense responses similar to anger and moral outrage or
victimise oneself in a breach event (Averill, 1983; Bies, 1987). Once the psychological contract is broken, its
repair is often difficult due to exaggerated negative emotion towards the issue (Conway and Briner, 2002a;
Conway, D Guest, L Trenberth, 2011).

Additional to events negatively perceived by employees, changes at the organisational level also jeopardise
contract fulfilment by destabilising and decreasing employee trust towards the organisation (Guest and
Conway, 2002). Aselage and Eisenberger (2003) integrated psychological contract theory and organisational
support theory to find a strong mutual relationship and an indication that decreased organisational support
increased the likelihood of breach. Kiewitz et al (2009), who argued not only that psychological contract
breach reduces perceived organisational support, also found that perceptions of high level organisational
politics moderate the relationship between the two, with higher levels of organisational politics resulting in
more serious breach outcomes and lower perceived organisational support. This suggests a compounding
effect whereby breach and perceived organisational support are locked within a mutual cause-effect spiral,
moderated by factors such as infighting within top management at the company.

Psychological contract is much researched in western cultures, and thus less is known in Eastern cultural
context. Limited studies to date highlight a focus that psychological contract types in Chinese cultural context
tend to be transactional, relational or balanced (Hui et al. (2004). The relational and balanced contract forms
are found to be more associated with OCB in Chinese employees (Hui et al., 2004) than their Western
counterparts. Such findings also reflect Hofstede’s Cultural Dimensions (1984, 2010) as collectivism in Chinese
culture as Chinese people traditionally seek to benefit the group over individual at workplace, and as respect
to power and rank (power distance). This study applies the Psychological Contract Theory as a process theory
to help to unravel the unseen process of psychological contract creation and fulfilment/breach and violation. It
seeks to understand how managers’ contract (perceived) breach can impact their organization, particularly
when organization undergoes changes.
4. Methodology
We conducted an in-depth case study as it provides a holistic and in-depth explanations of social and
behavioural issues where purely quantitative studies can be limiting (Zainal, 2007). The case study has found
extensive use in the research of issues pertaining education, sociology, and communities (Gulsecen and Kubat,
2006), all of which relate closely to the field of business and business management. With the majority of data
appropriated from 11 managers and 2 interns, a case study was deemed most appropriate to provide a specific
and in-depth analysis of a limited number of events and their relationships. Taking into account that “the view
that social phenomena are created from the perceptions and consequent actions of social actors” (Saunders et
al., 2009, p.109), and taking into account the subjective nature of psychological contracts (Rousseau, 1989), a

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qualitative research approach was deemed highly appropriate for this paper. A flexible design research
approach, largely consisting of qualitative data, was used to achieve the desired holistic analysis and
evaluation of the company, while allowing in-depth analysis.

Multiple data collection methods were applied including semi-structured interviews with managers and
participant observation over 6 months within the subsidiary including documentary study. Observation and
documentary study helped to gain more insights into the subsidiary and cross-examine managers’ perceptions
of organization function and operation (Robson, 2002). Interviews and observations were coded to find
consistencies or inconsistencies in the information gathered, in addition to as much support (or disproving
evidence) as possible for the positions of the author and individuals.

Data was analysed using the framework from figure 2 and narratives of managers’ work experience were
generated following psychological contract creation, level of fulfilment, and causes of breach. The newly
recruited finance manager’s entry into the company during the case study period and subsequent
psychological contract breach particularly highlighted key issues within the subsidiary. Their interactions with
other managers within the firm also served to further illuminate these problems.

5. Analysis of Findings

5.1 Impact of a lack in clear organizational structure and support from Headquarters
Data shows that the subsidiary lacks clear organisational structure and indicates limited support the subsidiary
received from its German Headquarter (HQ). As a leading German private plastic-metal parts manufacturer
and supplier to leading commercial manufacturers such as Bosch, Heller and Continental, the subsidiary in
China was established in 2004 after being ‘forced’ by its major clients to do so. There were just over 2,000
employees worldwide at the time of the study with under 200 employees in China.

“The founding family’s main goal was to follow the main customer, only follow.”
(Acting GM)

Over two decades, the subsidiary’s main profit came from a few giant multinational customers, the majority of
attention paid to satisfying their needs. Consequently, less attention was paid to review and improve its
organisational structure, develop policies and practices at operational level and provide a fuller range of
business and management functions. Result from this initial unstructured set up, lack of clear structure
coupled with HQ support implies likeliness of management psychological contract breach (Aselage and
Eisenberger, 2003). Tension between shareholders at HQ brought uncertainty to the future of the subsidiary in
China, likely impacting management most (Kiewitz et al., 2009). Centralised decision making process also
creates emotional disruption as described as the contract breach (Guest and Conway, 2002).

“I felt that my (sales) job at the time was not suitable …. In addition to this, the German HQ required a
large number of decisions to go through them, creating a large amount of stress due to the time
difference between the two countries.”(Order Centre Manager)

Frequent organisational restructuring was found to happen at HQ and subsequently affected the restructuring
of the subsidiary. This was claimed to result in lower levels of loyalty towards the principal within management
at the subsidiary (Turnley and Feldman, 1998).

“Working at this company is like taking two steps forward and one step back.”(Tooling Vice GM)

Furthermore, cultural differences between the two countries were also shown to have an impact on
management contract breach. High index on power distance indicates that line managers expected to follow
orders from their superior, in this case the HQ (Hofstede, 2010). However, data from observing also show that
subsidiary level managers tend to ‘protect’ their peer by tempering with company data and record.

Documentary study of the subsidiary’s HR policy found that there was no structured HR framework set up and
‘promises’ made by managers at recruitment stage were thus seen to have no back up. This indicated another
sign of causing psychological contract breach and supports the claim that employers were more likely to report

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‘promises’ fulfilled by organisations that have established HR system in place (Rousseau, 1995; Guest and
Conway, 1998).

One HRM area highlighted is staff training and development. Inconsistent training at departmental level led to
unbalanced and unequal opportunities to employees across the subsidiary. Consequently, this could result in
further psychological contract breach related to factors such as the provision of adequate training, justice in
the application of rules and discipline, the fairness and consistency of benefits, and humanity (Herriot,
Manning and Kidd, 1997).

5.2 Causes of internal communication disruption

Internal communication was found to bear strong individual perceptions by different line managers. This
echoes a key statement on psychological contract creation as contracts are in the eyes of the beholder
(Rousseau, 1995). Evidence also suggests that individuality of psychological contract, without being
synchronized by organizational objectives, lead to diverse behaviour and attitudes at workplace and hence
cause conflict in communication.

“I asked the production manager several times to confirm the product scrap rate information, because I
did not believe that this was accurate. … the manager became angry. He said that finance should not
just sit in their office and actually come down to see what really happens in production, so when I did
this and found further problems he became angry again.”(Finance Manager)

Protectionism in favour of one’s own department was found to negatively influence other management team
members’ emotions, increasing the likeliness of contract breach perception of a lack of organisational support
(Teklaub, Takeuchi, and Taylor, 2005). This further supports the view that emotional interruption painted an
exaggerated picture that went beyond the matter itself (Weick, 1995).

“I think they focused on their own interests. They always ask how they personally can benefit from a
certain change, not their department or the long term view.”(Finance Manager)

Protectionism was further found in the Acting GM’s behaviour within the subsidiary, as when managing the
operation she safeguarded the interests of the group, reflecting a collectivist culture dimension (Hofsetde,
2010). With the distance between HQ and the subsidiary, and the knowledge that HQ was causing supply
issues for the subsidiary, it is also possible that the Acting GM did not see herself as having a “shared destiny”
with the principal (Ashforth, Harrison and Corley, 2008). The agent and principal did not share a similar view
and vision towards business development, causing tension between the subsidiary and HQ (Ashforth, Harrison
and Corley, 2008; Lee and Taylor, 2014).

Manager psychological contract breach was also seen to cause unclear and inconsistent communication of
responsibilities to employees. Protectionism and lack of organisational structure resulted in different
approaches to information management and assessment at the departmental level. Through observation, we
found data requested from different departments were in contrast, there also being a low level of trust of
information produced by other departments.
6. Conclusion
Line manager psychological contracts can have a serious, negative, and compounding effect on organisational
performance particularly when they do not have a clear structure to follow. The psychological contract breach
was found in old and new line managers. New manager’s experience indicates that initial psychological
contract formation in management is defined by a contrast between positive communicated promises pre-
entry, and the real situation within the firm, with further breaches after entry. Antecedents of breach come in
at least four forms; the behaviour of the Principal HQ in Germany, cultural differences within the organization,
the behaviour of other line managers within the subsidiary, and an almost non-existent HR structure. These
antecedents and the outcomes of psychological breach increased protectionism were found to have a cause-
effect relationship with further breach and impacts on the firm. Role ambiguity as a result of and contributor
to poor communication was deemed to influence negatively organisational performance. The opportunity to
work with managers was fortuitous, as Lester et al. (2002) found that supervisors were less likely than
employees to believe that the organisation breaks promises in the areas of payment, promotion opportunities,

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and employment relationships. This indicates that negative results regarding psychological contract breach
gained from management were likely to be even more exaggerated in their employees. The case organization
bear similarities to other organisations of the same nature around the economic region in China and findings
capture common issues found when managing psychological contracts in foreign SME subsidiaries in China.
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1
This view was gained at EAMSA Conference 2016 and was raised by GM of a leading German SME subsidiary
in Suzhou, China.

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Leadership, Artificial Intelligence and the Need to Redefine Future
Skills Development
Lize Moldenhauer and Cindy Londt
OMNI Academy for Education, Training and Development, South Africa
jason@omnihrc.com
cindy@omnihrc.com

Abstract: Leadership development has been critical in the consideration of the longevity of an organisation and its ability
to remain relevant. Organisations’ focus on leadership development has resulted in the need to further develop learning
linked to it. The focus on qualifications, linked specifically to the term leadership, have been developed like a Master’s in
Business Leadership, at the University of South Africa, to help differentiate the focus on business administration to the
focus on skills required of leaders. The evolution of artificial intelligence has resulted in the need to establish alignment of
artificial intelligence to various avenues of life and that of Leadership in an Artificial Intelligence based economy.
Challenges associated to the independence of artificial intelligence, in addition to possible autonomy, are the focus of
thought. Coupled with the links to the utopian/dystopian nature of the arrival of technology, which are prime, rather than
looking at the practical requirements that organisations need to implement in order to partner with artificial intelligence.
The relationship between leadership and artificial intelligence has been noted through research done by Liebowitz (2001),
and the need to find practical solutions on its implementation need to be considered. As part of this paper, the focus is on
the links between artificial intelligence and leadership, and its relationship, if any, as well as the examples of practical
implementation and education and training with which it is aligned. A case study has been done on an organisation that
has developed a model for the training of staff towards the AI model of leadership; one which considers practical
requirements needed of new leaders, as well as the requirements to align to AI considerations. As this is a work in
progress, the focus on the design of the programme is critically evaluated and the considerations of the methodology
deliberated for implementation consideration.

Keywords: leadership, artificial intelligence, skills development

1. Introduction
Leadership and Artificial Intelligence (AI) are directly related, as it is through the actions of leaders that AI is
funded, designed and created. There is a tendency to consider the negative aspects of AI, as noted in
McDermott (2007), where the challenges of the unknown are marginalised. Rather than to challenge the
efficacy and potential of AI, this paper considers that learning and development are key to ensuring that future
leaders are developed to understand AI, develop strategic objectives which include the interrelated functions
of technology, knowledge management and the AI that it initiates. In addition to this, leaders are required to
develop opportunities that do not create challenges between humans and AI in the form of work, or the loss of
potential work by the human form. The focus on qualifications, linked specifically to the term leadership, have
been developed like a Master’s in Business Leadership, at the University of South Africa, to help differentiate
the focus on business administration to the focus on skills required of leaders. The evolution of artificial
intelligence has resulted in the need to establish alignment of artificial intelligence to various avenues of life
and that of Leadership in an Artificial Intelligence based economy. Training Leaders therefore is primary, and a
curriculum should be developed that provides the tools to ensure the ongoing efficacy of AI engagement. The
potential curriculum and programme is explored for Leaders in such a way as to engage in the positive based
future of AI.

2. Literature Review
This literature review considers AI and its relationship to Leadership. This does not imply that one is isolated
from the other, but through the initial discussion on AI and its evolution, the focus of AI and its current and
future intention is understood as both independent and co-dependent. This is contrasted by Knowledge
Management, which indicates that there is a potential power-based relationship between Leaders and AI
based on the intention of the Leader. Finally, a partnership between AI and Leaders is explored to understand
that there is a potential for mutually beneficial situations if the value of AI is understood and the purpose of
Leaders explored.

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2.1 Historical research AI

Research from the 80s and 90s considers the role of AI, and notes that technology is rapid, evolves and
provides ongoing critical reflection. Newell (1982) evaluated research on AI from 1955 to 1980, and noted
that AI had evolved not in a stereotypical manner, but had been linked to accumulation and assimilation. In
addition, Newell notes that AI has not provided the opportunity for providing the scientific answers that are
expected of it. Mataric (1993, pg. 40) notes, “[s]ynthesizing and observing group behaviour will offer insights
into understanding social interactions in biology, as well as help derive methods for principles behavior control
on robotics and AI.” Through considering insights and exploring behaviour, results have shown that AI does
indeed have opportunities for providing services in the future that are revolutionary in what has previously
been considered servitude based roles, such as housekeeping, basic administration and bookkeeping services.

The development of research like, The International Dictionary of Artificial Intelligence (Raynor, 1999), has
helped to define the behaviour, service and principles of AI. The evolution of AI has changed the perception of
AI as servitude based, to one in which it is perceived as interactive. Winograd (1997, pg.8) notes that AI, and
“[s]uccessful interaction design requires a shift from seeing the machinery to seeing the lives of the people
using it. In this human dimension, the relevant factors become hard to quantify, hard to even identify.”

From interaction design, the focus has been on human interaction and AI interaction, to ensure efficacy of the
system. As Moursund (2006, pg. 27) notes:

AI programs make use of both algorithmic and heuristic procedures. Many of the problems being
addressed using AI have the two characteristics:

1. The problems are very difficult from a human point of view, and a human world-class expert does not
solve them perfectly. Indeed, many of the problems are beyond human (unaided by computers)
capabilities.
2. The computer programs being written to address these problems make use of algorithms, heuristics,
computer speed, computer storage capacity, and computer connectivity. This approach can produce
ICT systems of increasing expertise within many different problem-solving areas of interest to people,
but cannot guarantee success in solving all of the problems within each of these areas.

Historically, AI has evolved and improved and thus become more functional. The evolution has resulted in
moving from the conceptual ideas of the 80s to practical models provided in the 2000s. In part, Savarimuthu et
al. (2007), notes that the evolution of AI has resulted in the consideration of developing the practical models
and in doing so, this provides cognitive functions that are working to contribute to primary service functions.
As Yudkowsky, (2008, pg. 17), states “AI can rewrite its existing cognitive functions to work even better”

However, not all of the historic studies speak positively of AI. Education has had access to computers from the
80’s as explored by Schofield et al. (1989), despite this, it has not resulted in teachers and students using the
computers due to a of lack of understanding of how to use the technology to address the challenges of
educators. Similarly, there are instances were researchers like McDermott (2007) and Brunette et. al (2009),
consider consciousness studies of AI and the lack of researchers desires to address the contentious and
controversial issues thereof, this results in proposed models, but without actual implementation.

2.2 Knowledge Management

Knowledge is critical to the understanding of AI, as knowledge management has various functions
which have been understood and documented in relation to how AI is developed. Leadership is the
key to the distribution of knowledge. As Liebowitz (2001, pg. 4) notes, “[k]nowledge distribution, one
of the basic functions of knowledge management, involves sending knowledge internally and externally to
those who could benefit from the use and application of the knowledge.” Leaders understand this function
and whether positive or negative, influence how knowledge distribution happens. Leadership and AI are
considered to be power focused due to the nature of sharing information and knowledge distribution. This can
be understood from an agent vs leader perspective, as AI focuses on a specific stream of engagement, namely
for the “leader” that provides it with its identity and information. This is well defined by Bastin et. al (2007, pg.
11),

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There is no explicit notion of leadership as each agent maintains an internal model of who its leader is.
In our work, each agent chooses its leader explicitly and the leader sends the norms only to its followers.
Also, the agents in our model have the notion of autonomy which is more representative of a realistic
society.
The fact that leaders send information to followers ensures that a power relationship and control exists which
in turn ensures the pursuit of power. Van Harmelen et. al (2008) notes that even though there is a sense that
the AI functionality will be human-like, there is a belief that power can be the driving force behind it.
Leadership with positive goals will ensure a positive experience while those with negative or self-interest
related goals will have alternative means. Dewhurst and Wilmott (2014, pg. 5) ask the question: “If senior
leaders successfully fuel the insights of increasingly brilliant machines and devolve decision-making authority
up and down the line, what will be left for top management to do?” They address the question and note that
the role for the individuals with the strongest judgements are the senior leaders.

This field of leadership is fraught with difficulties in that it is a “new world of analytical complexities.” As such,
experiments need to be conducted with the intention of discovering changes which consider the ramifications
of the new insights, rules and managerial styles. AI has the ability to address the issues by informing leaders of
such issues.

Articulation, the form of attaching sensors and understanding the functions through digitization, also
determines how knowledge management is progressed (Herschel & Jones, 2005). This is still linked to how
information is shared and how the information has the opportunity to control.

One of the critical requirements of leaders in AI related functions is to ensure that there is a knowledge
management system which is inclusive, but has clear systems and initiatives. Liebowitz (2001, pg 3.) notes
that:

The major lesson learned is that most organizations do not have a rigorous, comprehensive knowledge
management methodology for creating these knowledge management systems and initiatives. Part of
the reason for this phenomenon is that the knowledge management providers themselves do not have
comprehensive knowledge management methodologies.

Thus, even though AI is developed, linked to knowledge management systems and implemented through
simulation and other activities, integrated systems and comprehensive knowledge management
methodologies still require enhancement to enable articulation to Leader paradigms. If understood so well
against a singular leadership goal then as Harmelen, Lifschitz & Porter (2008) note, “computers can be made to
exhibit human-like abilities” (pg. vii), even if this is negative. Coupled with this is anonymity, and the fact that
identity can be created and managed accordingly, without representing an authentic original identity
(Asenbaum, 2017).

2.3 Partnering with Automation

Automation and the development of AI provides opportunities for a change in job related function from
mundane to innovative work in technical skills and engineering. The advent of AI has implications for the
labour force. At its current level, AI threatens to replace certain fields of expertise within an organisation
which may result in labour disputes. As such, management needs to address these issues by implementing
training strategies for new fields of advancement, taking into account the need for human job satisfaction as
well as the need to implement roles for AI. With AI comes the ability to link learning to it and more specifically
personalized learning experiences. Polson et. al (2010, pg. 186) note, “[i]f effectively exploited for teaching and
learning, intelligent systems can offer unique opportunities to deliver personalized learning experiences and to
form reciprocal relationships between formal and informal learning groups and environments.” This is further
supported by research conducted by the McKinsey Global Institute (2017), which recognises the reduction in
labour costs. The efficacy of throughput which can be met ensures that reliability is in place as well as the
maintenance of quality. These are all win-win situations, which ensure that the products produced are of
better quality, and that opportunities for other roles come into place as potential employment opportunities.

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The use of predictive modelling has the potential to change years of research and inferencing (Bennett. et al,
2012) and provide actual products which are specific to ongoing recommendations in the health care industry.
Although this does not challenge decades of research, it does however provide opportunities for quicker
resolution in empowering the health care industry in providing better services.

Regardless, there are some challenges which partnering with automation brings. These challenges do not have
to be the barrier to the success of Leaders initiating efficiency, but rather provide regulation and
recommendations of best practice models. Scherer notes, (2016, pg. 400):

we are entering an era where we will rely upon autonomous and learning machines to perform an ever-
increasing variety of tasks. At some point, the legal system will have to decide what to do when those
machines cause harm and whether direct regulation would be a desirable way to reduce such harm. This
suggests that we should examine the benefits and drawbacks of AI regulation sooner rather than later.

The key to successful Leadership is the engagement with the drawbacks in ensuring the success of automation
in conjunction with its goals and desires. The benefits of using AI seem to provide more opportunities than
challenges.
3. Research Methodology
The purpose of the research is exploratory: to understand potential models for engaging with learning and
development initiated projects for Leadership and AI efficacy. The research methodology used was qualitative
in nature. Data was not based on statistics but rather engagement with linking curriculum to leadership
development initiatives.

The initial phase of the research included a literature review to understand the AI, its function, the relationship
between AI and Knowledge Management and more importantly partnership available with AI and Leadership.
Findings from this research were then considered for understanding the potential learning programmes that
could be developed to help develop Leaders within the AI innovation framework.

“Descriptive Case Studies” are noted as being controversial (McDonough, 1997; Zainal, 2007), as they are
considered subjective. This research intends to engage with stakeholders on a potential training initiative and
therefore the recommendations of the training programme are exploratory and the curriculum is at the initial
design phase.

Focus groups were conducted with the operational managers as well as the executive managers who are
based in the private educational sector of South Africa: one to gather the initial understanding of the models
and the intention of Leadership and AI and the second with a view towards the practical implementation of
such a learning programme.

This is not a comprehensive evaluation of multiple stakeholders but rather a singular case and the application
thereof.
4. Developing a learning programme for Leaders aligning to Artificial Intelligence

Taking into account the information identified, in order to best partner with AI, Leaders need to ensure that
human capital management learning programmes are developed to consider that functional roles
implemented by AI are accompanied by redefined:

1. Competency Management
2. Workforce Planning
3. Organisation Design
4. Talent Analytics

Competency Frameworks have to consider AI and the role it has in replacing staff, functions and overall
business output. The learning programme has to encourage that organisational efficacy is not only limited to

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staff but also linked to the technology (AI) that accompanies it, and the potential development of AI which can
replace certain roles.

In addition to this, to ensure business goals are met, the following are considered:

1. Reward Management
2. Performance Management
3. Capability Management
4. Career Management.

Full skills audits should be conducted to establish knowledge, skills and aptitudes, and the organisation should
include psychometric assessment that leads to the highlighting of the current challenges within the leadership
mix/composition of the organisation.

Resilience and Analytical/Logical reasoning are highlighted as low measured aptitudes. It would be suggested
that a detailed skills audit is conducted to ensure all critical areas of development are evaluated so that the
Learning and Development Strategy of the organisation can be formulated to support the business growth
targets. The risk if an integrated plan is not formalised is that Learning and Development will approach
business needs with a reactive agenda. In addition, this will allow for an integrated brand alignment to the
conceptual thought process of creating a learning function which will also support effective succession
planning and development strategies of the organisation.

In addition to these, the following should be developed to help align the minds of Leaders to AI:

x Complex Problem Solving (complicated or intricate, hard to understand or deal with)

x Critical & Computational Thinking (managing massive amounts of data)
x Creativity (original ideas for creating out of the box solutions / blue sky thinking)
x People Management (management, leadership and influence)
x Collaborative Management (cross functional and complex initiatives)
x Emotional Intelligence (self-awareness & regulation, motivation, empathy and social skills)
x Judgement and Decision Making (thinking, cognitive process or act of reaching a decision, drawing
sound conclusions, forming an opinion through assessment, comparison, and/or deliberation)
x Service Orientation (ability and desire to anticipate, recognize and meet others' needs before it is
articulated)
x Negotiation Skills (priority classification and compromise discussions for results)
x Cognitive Flexibility (adapt strategies to face new and unexpected conditions in the environment)

Overall, the focus of the programme is the engagement with future Leaders to understand the changing world,
how the focus is linked to technology and data and the key requirements thereof.
5. Recommendations
As noted in section 4, it is recommended that AI based learning programmes are developed; ones which
specifically look at Leadership to ensure that there is sufficient engagement at a senior level.

In addition to this, Knowledge Management Systems need to be evaluated for efficacy, and the role of AI and
Knowledge Management explored as directly linked to the organisation. This then becomes a key driver in the
development of learning programmes which share the Knowledge Management Systems and the impact that
AI has on them.

Finally, partnering with automation and more specifically AI efficacy within an organisation, to ensure
compliance with regulation, legislation, staff and potential challenges is critical in ensuring Leadership in 2030
is current.

6. Conclusion
AI has its challenges and Leaders need to provide the correct engagement with it and with those that work
with them to ensure that there is coherence between all. As is the potential with many new applications of

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 Lize Moldenhauer and Cindy Londt

technology within businesses, there are risks as well as opportunities. The failure to adopt new technologies,
as is often the case, leads to failures of the business itself. As such, it is taken as a given that new technologies
must be adopted and experimented with in order to gain success in a competitive environment.

There are two options: One, in which AI is repelled, ignored, not developed nor implemented due to design
not finding the opportunities for development. This indicates a negative link to AI, but also provides the
opportunities for control over AI.

Two, to engage with Leaders to ensure that technology is embraced, that systems which can change the
quality of lives are explored, to encourage the development of technology and research and ensure that staff
look at technology as the source of improvement with fundamental new opportunities.

It is through learning that Leaders as well as potential Leaders have the opportunity to provide the
engagement with how technology has the power to change efficiency, provide services, improve the quality of
life and develop operational practices that always provide optimal service. Therefore, it is suggested that
hybridizing the workforce with AI is necessary as it will improve workplace culture for both employees and
leaders.

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Research Center for Educational Technology, 6(1). pp. 185-193.
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Computer-Based Tutor on Teachers and Students. Research was sponsored by the Cognitive Science Program,
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Van Harmelen, F., Lifschitz, V. and Porter, B. (eds.). (2008). Handbook of Knowledge Representation. Elsevier, Oxford,
United Kingdom.
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Yudkowsky, E. (2008). Artificial Intelligence as a Positive and Negative Factor in Global Risk. Global Catastrophic Risks.
Bostrom, N. and Ćirković, M. M. (eds.). Oxford University Press, New York. pp 308-345.

160
Corporate Governance: The Evaluation Based Approach to the
Governance and Business Models of the EPIC Centre of Excellence
in Production Informatics and Control (EPIC Coe)
László Monostori1, Botond Kádár1, Gábor Nick1, András Pfeiffer1, Tamás Várgedő1 and
Fabian Hecklau2
1
Hungarian Academy of Sciences, Budapest, Hungary
2
Fraunhofer IPK, Division Corporate Management, Berlin, Germany
laszlo.monostori@sztaki.mta.hu
botond.kadar@sztaki.mta.hu
gabor.nick@sztaki.mta.hu
andras.pfeiffer@sztaki.mta.hu
tamas.vargedo@sztaki.mta.hu
fabian.hecklau@ipk.fraunhofer.de

Abstract: The Centre of Excellence in Production Informatics and Control (EPIC CoE) was established by an international
consortium with the objective to be a leading, internationally acknowledged and sustainable focus point in its field,
representing excellence in R&D&I related to Cyber-Physical Production. This 7-year project is funded by the European
Horizon 2020 Teaming Programme. By the end of this period, the newly created EPIC CoE is expected to become fully self-
sustainable in its regional operation that is planned to cover both advanced and emerging countries in Europe. Main
objective of this paper is to describe the organisational development and transformation process of an Industry 4.0
oriented state-of-the-art organisation. These circumstances determine the approach how to address the issue of
governance closely related to the business model and processes that will be implemented. However, this task has to be
facilitated as part of the evolution process envisaged for the upcoming years. First the vision, mission and concrete targets
of the EPIC CoE are analysed to build the strategic basis for the derivation of the management and organisational
structures enabling the participating partners to harmonise their experiences, skills and competences. By these efforts, the
EPIC CoE is conceived as a synergic combination of two entities, i.e. one existing, acting in basic and applied research while
the other one is a new company focussing on knowledge transfer and dissemination. In this paper, the special aspects that
led to the concrete representations of the governance structure for each of the planned three operational phases will be
outlined. These phases are (1) the establishment and start-up of the EPIC CoE, (2) followed by the phase of the evolving
and maturing operation (3) to be concluded by the self-sustained one. For the definition of these phases, it is indispensable
to define the different levels of the management functions and responsibilities to ensure efficiency, reliability,
transparency, clear accountability as well as high-quality services to EPIC CoE’s clients and partners. Being service oriented
is specifically a key issue, therefore the processes that will be highlighted are grouped into: the core processes embodying
the daily businesses, the management processes that ensure the effective flow of all processes that are aided by the
supporting processes.

Keywords: Corporate governance, Business processes, Organizational structure, Industry 4.0, EPIC, Concept Development

1. Introduction
The Centre of Excellence in Production Informatics and Control (EPIC CoE) was established with the objective
to be a leading, internationally acknowledged and sustainable focus point in its field, representing excellence
in research, development and innovation related to Cyber-Physical Production (CPP). The big challenges of the
new technological era when information and communication technologies are fundamentally transforming
and revolutionizing production will be responded by concentrating the multidisciplinary, partly overlapping,
partly complementary competences of CoE partners from Hungary, Germany and Austria. The project has
received funding from the European Union's Horizon 2020 research and innovation programme under grant
agreement No 739592.

Main objective of this paper is to describe the organisational development and transformation process of an
Industry 4.0 oriented state-of-the-art organisation in the sense that its key features are innovativeness and
adaptability simultaneously able to satisfy the robustness requirement of the smart business models (Grey,
Walters 1998).

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These circumstances determine the approach how to address the issue of governance that is closely related to
the business model and processes that will be implemented. However, this task has to be facilitated as part of
the evolution process envisaged for the upcoming years.

First the vision, mission and concrete targets of the EPIC CoE are analysed to build the strategic basis for the
derivation of the management and organisational structures enabling the participating partners to harmonise
their experiences, skills and competences.

In this paper, the special aspects that led to the concrete representations of the governance structure for each
of the planned three operational phases will be outlined.
2. Mission and vision of the EPIC CoE and the conclusions we’ve derived from them
The mission of EPIC CoE - as a leading-edge knowledge centre of cyber-physical production systems - is to
accelerate innovation, realize industrial solutions, train new generations of highly qualified professionals and
support the development of a sustainable and competitive European manufacturing ecosystem.

In our vision, the future of manufacturing in the efficient and sustainable cooperation of all partners along the
product life-cycle, in the value creation chain, and within the enterprise is foreseen. The convergence of
manufacturing, information and communication sciences has established not only the key cyber-physical
enabling technologies for tomorrow’s production, but has also initiated a fundamental, revolutionary change
affecting science, industry, education and society alike. EPIC will be in the European forefront of this move by
identifying, addressing and, responding to main challenges in the service of smart, competitive, sustainable
and cooperative manufacturing. This vision will be pursued in the following directions:

x Research, development and innovation: EPIC will conduct cutting-edge theoretical and experimental
scientific explorations in all main research fields related to cyber-physical production systems in a
multi- and interdisciplinary setting.
x Technology transfer: EPIC will establish institutional channels for transferring state-of-the-art research
result from academic and university research laboratories to innovative industrial applications. Special
attention will be paid to advanced but affordable services for small and medium size enterprises. It is
also foreseen that sectors like smart cities and energy will take up relevant scientific results.
x Attracting talents and training professionals: Beyond directly contributing to graduate and
postgraduate education, EPIC will create new job opportunities by training knowledgeable
professionals to find and fit their right place in cyber-physical production. Through EPIC’s network of
exchange relationships, the training programs will provide a broad and up-to-date European
perspective.
x Ecosystem formation: In collaboration with regional innovation clusters EPIC will shape the local
ecosystem of manufacturing so as to improve innovation performance, foster interoperability and
compliance with emerging standards; to build and maintain trust between business partners and, to
elaborate incentives for competitive, but at the same time cooperative and sustainable manufacturing.

The EPIC consortium as a whole has all the assets that are essential to make the above vision a reality: the
critical mass and momentum, multi- and interdisciplinary research background, international scientific
network, industrial experience, well-proven innovation and technology transfer culture, educational practice
and potential to impact on policy-making. EPIC will respond not only to the needs of its home country,
Hungary, but especially through the cooperation with the German and Austrian Fraunhofer partners it will
have a cross-border regional character and will support Central East Europe (CEE) as well.

What makes EPIC CoE specific and thus creates unique circumstances to take into account when designing its
management and organisational structure, is that the EPIC CoE in its final status, i.e. not considering the
transient steps leading to this point, is conceived as a synergic combination of two pillars. One of those pillars
was existing from the very beginning, acting in basic and applied research while the other one is a new
company focussing on knowledge transfer and dissemination:

x MTA SZTAKI, Institute for Computer Science and Control, Hungarian Academy of Sciences as an existing
Centre of Excellence of the EU in Information Technology, Computer Science and Control whose

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current principal basic research profile focuses on cyber-physical systems (CPS). This pillar is to be
upgraded on the one side by deepening its basic competency in fundamental research and
strengthening its reputation in the applied research and, on the other side, by extending its scope of
activity to become a CEE hub in the field; and
x the new EPIC InnoLabs Nonprofit Ltd. established in Hungary as a new legal entity on the basis of the
formal Fraunhofer-SZTAKI Project Centre for Production Management and Informatics (PMI) that has
been formed in 2010 in collaboration with the Fraunhofer Institute (FhG) for Manufacturing
Engineering and Automation (IPA), Stuttgart and Fraunhofer Austria (FhA), Vienna. Through the
current consortium, two additional institutes of FhG, the Institute for Production Technology (IPT),
Aachen and the Institute for Production Systems and Design Technology (IPK), Berlin have been
included into the cooperation. As the name stipulates, the main focus in this respect is to manage and
facilitate the transfer of the research and innovation results to the industry through complementary
developments and other value-added services.

Furthermore, the former academic relationships between SZTAKI and the Budapest University of Technology
and Economics (BME) have been formalized by inviting two of its faculties, i.e. the Faculty of Mechanical
Engineering (GPK) and the Faculty of Transportation Engineering and Vehicle Engineering (KJK) into the
consortium resulting in the widening of the scientific and educational scope and approach pursued.
3. The harmonisation concept
Thus, EPIC has two fundamental, cooperating entities or pillars (SZTAKI CoE and EPIC InnoLabs Nonprofit Ltd.)
yielding a solid basis for its operation. However, for the outside world EPIC has to appear as a single integrated
entity acting coherently and uniformly on all forums and in all its spheres of interest. How is this ambitious
goal to be accomplished? First of all, by adopting an approach of addressing the issue of governance in a
closely related manner to the business model and the processes that will be implemented. Moreover, this task
has to be facilitated as part of the evolution process envisaged for the upcoming years.

3.1 The Operational Phases of EPIC CoE

Following the plan described in the EPIC teaming project, three main phases in the operation of EPIC CoE will
be distincted over the time span of 7 years (Grey, Walters 1998; Nyström, Starbuck 1981; French, Bell 1978).

3.1.1 Operational Phase 1: Establishment and Start-up of the EPIC CoE

Currently the project is in the middle of this stage, as the EPIC InnoLabs Nonprofit Ltd. has recently been
established and a ramp-up phase is foreseen in the second year. At the end of this period the most important
milestone is that the company is founded and the legal process has terminated, the company is part of the
EPIC Teaming consortium, the internal structure and staffing having been set up with the most basic internal
processes already in place.

3.1.2 Operational Phase 2: Evolving and Maturing EPIC Operation

As EPIC CoE is moving on, with its operation fully geared towards the realization of its principal objectives, first
the evolving then the maturing periods in approximately the 2nd to 5th and the 6th to 7th years are foreseen.
A consolidated research programme and a well-functioning portfolio of common client relationships are set in
place and operational. Following the business plan, EPIC CoE is getting a widening acceptance in both the
industrial and the R&D&I community and is to be more and more recognized as a leading organization in the
field of the Cyber Physical Production Systems (CPPS) (Monostori et al 2016). Tailored education programmes
and dedicated technology transfer actions will produce tangible results internally as well as externally.

3.1.3 Operational Phase 3: Self-sustained Operation

This is the consolidated status of the EPIC CoE as conceived by the Consortium: with a well-established and
solid position in research and industry it has an unrivalled reputation and financial stability ensuring long term
survival and continuous and organic growth.

3.2 The Business Model as Product of an Evolutionary Process – Dependence on the Operational Phases
Although a clear vision of the business model to be adopted for the EPIC CoE is well described it is evident that
its actual shape is to a great extent dependent on the operational phase the EPIC CoE actually happens to be in.
The individual phases with different scale of activity, different R&D&I intensity and different staff size

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obviously require different management methods, different approaches to the relationship with the
stakeholders and also different HR policies (Dobák, 2001).

In the first phase, i.e. that of establishing and starting up the EPIC CoE everything is focused on creating the
entity itself and launching its operation successfully which is invariably on a low scale yet. By the time the legal
process has terminated and the new entity is inaugurated – with the internal structure and staffing having
been set up with the most basic internal processes already in place – and elementary research work, i.e. basic
research in the most important strategic areas and complementary applied research, underpinned by a stock
of client contracts will have already been started or, taken over from the preceding operations (i.e. SZTAKI). It
can be stated that at this point traditional models and patterns may be used to operate the organisation and
gain more and more impetus for the boost in the next phases.

As the CoE is moving on through the next evolving, then maturing phases and finally the self-sustained one and
gets acceptance in both the industrial and the R&D&I community the business model has to be enhanced and
become ever more sophisticated to be able to cope with the needs of flexibility and adaptability and deal
adequately with the expanding activity and as a consequence thereof, with the increasing responsibility.
Indeed, the growing responsibility towards the professional reputation and financial sustainability of the CoE
on the one hand, and towards the societal community on the other hand, is the most compelling factor to
apply the policy of continuous self-check, search for new paradigms and introducing new elements in the
business model.

Thus, a regular review of the factors that influence both the business model and those of related stakeholders
is a must, including keeping close tabs on shifts in technology, sociodemographic trends, macroeconomic
influences, ecological factors and the legal/political framework as well as listening to the internal and external
stakeholders and accommodating the views of the trend and technology researchers, suppliers and even our
customers' customers. These aim to pick up the eventual warning signals long before they become relevant to
the competitive marketplace. Alongside them, early strategic reconnaissance must also be able to detect any
“blind spots”. These are key factors of influence that companies' strong inward focus often causes them to
overlook.

In general, business model innovation may basically take one of three approaches (Roland Berger 2011) (Figure
1):

x Skill based business model innovation: is a new way to satisfy existing customer needs by using new
skills, technologies and core competencies in addition to the capabilities a company already masters.
x Demand based business model innovation: happens when hitherto unsatisfied or newly emerging
customer requirements can be met using existing skills and capabilities.
x Lateral business model innovation: seeks to accommodate new customer requirements by applying
new skills and/or technologies.

Figure 1: Comparing Business Model Innovation approaches depicted in the Ansoff matrix
In this approach these three principles have been combined and have been used to define the HR strategy and
infrastructure strategy accordingly (Hecklau et al 2018).

The same approach defines three steps in the renewing or evolution of the business model which is to
applicable to the EPIC CoE:

x Step one involves an audit to determine whether a business model needs to be modified. The audit
describes in detail both a company's existing business model and the models operated by competitors.

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The most important – and most difficult – part of this step is not finding the right answers, but asking
the right questions.
x Step two is then to develop the new business model. The acid test, ultimately, is the ability to generate
customer benefits superior to those offered by the competitors.
x Lastly, step three involves preparing to implement the business model. The main question is whether
the old and new models are to coexist for a transitional period, or whether a clean break between the
two should be scheduled for an appointed date.

In addition to this, the simultaneous application of the elements of the Roland Berger (2014) approach by
developing a vision of the industry in the years leading up into 2020s will put us immediately into the Horizon
2020 context and beyond and allows to take appropriate action:

x Accelerating the continuous evolution of the existing business model

x Injecting from time to time revolution into the new organisation by launching new business models as
demands have arisen and are recognised.

Also, the model has been adapted to the challenges incorporated in the VUCA (Volatile – Uncertain – Complex
– Ambiguous) principle (Stiehm, Nicholas 2002) describing the new reality of a fast-changing world (Figure 2).
In this context in the recent history of SZTAKI the evidence for the applicability of this principle could be clearly
identified ,i.e. which, by adopting a revolutionary strategy in pursuing business while maintaining obviously the
evolutionary endeavours as well has created significant benefits (Figure 3).

Figure 2: Meeting the challenges of the VUCA world

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 László Monostori et al

Figure 3: The EPIC paradigm in the VUCA world

3.3 Organizational structure, main roles

Interestingly, the EPIC CoE organisation has two distinct, although inseparable aspects. From the EU financing
and monitoring perspective, it is a project that should be structured and managed as any high-value projects.
From the final goal’s point of view it is an entity deemed to be a future key actor on its own field of designated
operation. This fact is reflected in the design of the organisational structure.

Here, by contrast, only the project aspect for the very first project phase is shown (Figure 4) while the project
independent phase is demonstrated by the matured organisational and management structure (Figure 5).

EU Phase 1: Establishment and Start-up of CoE

Board of Directors
Advisory Board Supervisory Board
CoE Director

CoE Project Manager CoE Industrial Coordinator

CoE Management Unit
Coordinates EPIC related
industrial contracts of the
Laboratories

WP1 leader WP2 leader WPn leader

WP2 WP3 Technology

Prepares & Designs EPIC Transfer WP
implements InnoLabs Ltd
Performs
establishment of operation
coordinated
EPIC InnoLabs Ltd … actions

Figure 4: The EPIC Project management structure in Phase 1

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 László Monostori et al

It is important to emphasise that in this project phase the everyday activity of SZTAKI is carried out on a
“business-as-usual” basis, i.e. the laboratories are pursuing their R&D work, liaise with their industrial partners.

However, in order to integrate this latter activity into the future dedicated technology transfer function of
EPIC, the separate and independent position of a CoE Industrial Coordinator will be created who will
coordinate all EPIC related partner relations and contracts of the SZTAKI units. However, the professional
activity with the participation of the cooperating consortium partners have already been initiated.

Figure illustrates the organizational structure of EPIC CoE entity. As the organization and the management
structure of EPIC CoE involves several levels and managing roles a glossary of relevant definitions is provided in
Table 1. Both Figure and the table below includes only the organizational structure of the Centre of Excellence
and does not show the connection of the partners within the Teaming Consortium.
Table 1: Glossary of EPIC bodies
EPIC CoE The object of the Teaming Proposal; which is the establishment of a leading state-of-the-art Centre of
Excellence in the field of Production Informatics and Control, more concretely in the field of CPPS in the
region.
SZTAKI CoE The main research oriented pillar of EPIC CoE, at the same time part of the legal entity MTA SZTAKI and
being an existing Centre of Excellence of the EU (since 2001), to be substantially upgraded during the EPIC
EU Project.
EPIC InnoLabs The newly established Nonprofit legal entity owned by the MTA SZTAKI and FhG. Its main function is to
Nonprofit Ltd. acquire, organize and accomplish the CoE’s industrial projects constituting the mainly the development,
innovation and technology transfer pillar of the Centre.
Advisory Board A consultative board comprising invited representatives of EPIC’s stakeholders holding yearly meetings
and providing advice to the EPIC Board in strategic and professional issues.
Supervisory Board The supervisory Board of EPIC InnoLabs Nonprofit Ltd. including three members delegated by the owners
of the company with the main duty to supervise the operation of EPIC InnoLabs Nonprofit Ltd.
EPIC Board The highest decision making entity of the EPIC Centre of Excellence – as appropriate and applicable –, it
consists of delegates of the EPIC Teaming consortium members and is headed by SZTAKI’s Director.
Research Unit (RU) A group of qualified staff in SZTAKI CoE to perform specialized research tasks; consists of senior and junior
researchers, developers, IT experts, doctorate students, etc. Each unit in this pillar is lead by a leading
researcher of the given field.

BME Delegate SZTAKI Director FhG Delegate FhA Delegate

Advisory
Board
CoE Director EPIC Board

CoE R&D Coordinator Managing Director

Supervisory Board

(CoE Industrial Coordinator)

Business Back
Operations
Res. Unit 1 development office
Leader

OR, Applied Digital Sales Admin

Res. Unit 2 Factory CRM Finance
Mathematics
Leader

Marketing
Robotics HR
AI, ML PR

Res. Unit 3
Leader Data Commu- Legal
analytics nication IPR
Collaborative
Robotics Edu. Quality
Training

SZTAKI CoE EEPIC InnoLabs Nonprofit

ofit Ltd.
Ltd

Figure 5: The EPIC CoE’s organizational structure

The Management structure of the EPIC CoE

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 László Monostori et al

Table 2: Glossary of EPIC managerial positions

CoE Director
CoE R&D Coordinator
Managing Director of EPIC
InnoLabs Nonprofit Ltd.
(Industrial Coordinator)
The person in designated from the project’s beginning to head the EPIC CoE organization. With its
role it is inherently part of the EPIC Board and manages both pillars of the Centre. The role of CoE
Directorship can be taken both by SZTAKI Director or a separate person.
The CoE R&D Coordinator is the leader on the R&D part of the EPIC CoE, engaged as a SZTAKI CoE
employee responsible for keeping the research themes and knowledge base of the CoE up-to-date,
monitoring the R&D activities and providing the support for a successful transfer.
The CoE Industrial Coordinator who at the same time is the Managing Director of EPIC InnoLabs
Nonprofit Ltd. is the counterpart of the CoE R&D Coordinator on the industrial transfer side
employed by the newly created company. He or she is responsible for the operation of EPIC
InnoLabs Nonprofit Ltd. including the acquisition and completion of technical industrial projects,
planning and completing the marketing activities and controlling the operation of supportive units.

Figure highlights the two basic functional and legally independent pillars of EPIC CoE. Their smooth and
coherent cooperation is coordinated and headed by the CoE Director. On strategic level EPIC CoE is controlled
by the EPIC Board, which is the highest decision making body of the Centre. The EPIC Board coordinates and
monitors but does not manage the research and industrial projects. The structure of the two pillars are as
follows:

x SZTAKI CoE is and remains part of the entire SZTAKI organization. At the SZTAKI CoE the research units
are the equivalents of the laboratories and/or groups which can be with traditional basic research
dominance and/or labs and groups where the applied research and innovation activities are also
carried out. The research units are led by Leading Researchers while the CoE R&D Coordinator is the
professional who coordinates these research activities as whole. According to the new trends or new
research needs, new research units can be established, existing ones re-thought or even eliminated if
its main topic is not any more relevant.
x EPIC InnoLabs Nonprofit Ltd. follows a more conventional organization with the main standard
functional units that support the innovation management, acquisition, management and monitoring of
new industrial projects as well as taking care of outer, mainly industrial stakeholders of EPIC CoE and
finally yet importantly channeling the industrial needs back into SZTAKI CoE, the research pillar of the
centre. It is headed by a Managing Director who is also taking the role of CoE’s Industrial Coordinator
being responsible for the overall operation of the company.

In summary, EPIC InnoLabs Ltd. enables the acquisition, organization and accomplishment of CoE’s industrial
projects, by which the overall technology transfer is much more professionally and successfully undertaken. As
such, the right pillar of EPIC CoE depicted in Figure includes the main operational fields that were identified by
the EPIC partners for the starting phase of the Centre and additionally, the supporting functions grouped as
Business Development and Back Office type activities which are needed in a very professional way.

The main starting themes of the Research Units in SZTAKI CoE as well as the initial main operation fields of
EPIC InnoLabs Nonprofit Ltd. were defined as focussing on the technology definition methodology and
strategy.

3.4 Key business processes

The operation of EPIC CoE including the research, development and innovation core activities, as well as the
management and support functions will carried out according a formalized set of processes which were
designed in the EPIC Teaming project. A brief summary of the results is described as following. It should be
noted that the elements of the process map clearly matched to the EPIC organiational structure.

The activities are planned with the main focus on efficiency, reliability, clear accountability and high-quality
services to EPIC CoE’s clients and partners. Being service oriented is specifically a key issue, therefore the
processes are grouped in three different levels. The Core processes group embodies the main daily businesses
focusing on the core competencies of the Centre identified in the previous section. Management processes
govern the functioning of the organization’s system of operation and ensure the effective flow of all processes.
Supporting processes are put in place to support the core processes.

To get the organization more efficient, processes of these three levels have to be regularly analyzed, the
employees sensitized for changes and the processes optimized step by step. The determination and

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application of such processes are particularly necessary for a newly created organization like EPIC InnoLabs
Nonprofit Ltd. The fact that new employees have to be hired and efficiency in working is required from the
very first day, standardized processes are needed.

Figure 1: The overall process map of EPIC CoE

Following multiple workshops with consortium partners and taking into consideration the solid experience of
several FhG institutes in Germany and Austria, for EPIC CoE a process landscape map (Figure 1) was adopted
with the following processes and areas of activities:

x Management processes: Strategic Planning, Stakeholder Management, Risk Management, Change

Management, Finance Management, HR Management and Quality Management;
x Core processes: Management of Industry Projects, Management of Research Projects, Scientific Work
and Education & Training;
x Supporting processes: Infrastructure (Facility Management), Procurement Management,
Communication Management, Marketing & PR, CRM & Business relations, Conferences & events, HR
Administration, Business Trips &Visits abroad and Executive general service.

Obviously, there is a high degree of interdependence between the organisational and the processes’
structures. Indeed, the processes may also be matched to the individual elements of the organisational chart.

It is worth to note that a comprehensive Balanced Scorecard based (Kaplan, Norton 1996) framework of the
Key Success Factors and Key Performance Indicators for the entire EPIC lifecycle has also been developed. The
former ones are derived from the EPIC mission and major goals while the latter ones are integrated in this
structure. Ensuring the full compliance of this framework with the process and organisation structure is subject
of further research work.
4. Conclusion
In this paper, the path leading to and the organisational development and transformation process of an
Industry 4.0 oriented state-of-the-art organisation is presented. The special aspects of the EPIC CoE comprising
the two independent, however integrated entities have been highlighted. This fact was a key factor when
designing the governance and management structure of the organisation. In addition to this, the focus of this
approach was to enable the continuous evaluation and adaptation of the organisation, thus ensuring the
flexible operation in a world that is most adequately characterised by the VUCA model. The schemes outlined
will guarantee to become and remain successful both from the scientific and the economic perspectives.
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Leadership, Management and Governance Implications of the UN
Higher Education Sustainability Initiative
Christopher Moon¹, Andreas Walmsley² and Nikolaos Apostolopoulos²
¹Middlesex University, UK
²Plymouth University, UK
c.moon@mdx.ac.uk
andreas.walmsley@plymouth.ac.uk
nikolaos.apostolopoulos@plymouth.ac.uk

Abstract: The Higher Education Sustainability Initiative (HESI, 2017a) states that higher education institutions (HEIs) are
integrating the SDGs into sustainability strategies in the form of research, teaching, pedagogy, and campus practices, and
to position HEIs as key drivers for achieving the UN Sustainable Development Goals (SDGs). Concern has been raised (HESI,
2017b) as to the potential impact of HEIs in helping to achieve the SDGs; the challenges faced by HEIs with integrating the
SDGs into curriculum and institutional strategies; the role of partnerships for HEIs among students, faculty, government,
and various stakeholders; and how the adoption of the 2030 Agenda for Sustainable Development, including the SDGs, will
transform the work of HEIs. Prior research has highlighted the importance of interdisciplinary and trans-disciplinary
research and studies (e.g. Mader & Rammel, 2015); and more recently Rasche et al., (2017) conceive that governance
systems in general can serve to make, take, or break support for the SDGs. In fact, Velazquez et al., (2005) found many
obstacles preventing the success of sustainability initiatives on campuses around the world. This paper reviews progress of
a sample of n=307 signatories to the HESI. Findings reveal a difference between HEI governance that is ‘instrumental’ and
governance that is ‘holistic’ in relation to sustainability with implications for achieving the SDGs in general and for
leadership, management and governance in particular. The research is supported by a grant from Enterprise Educators UK
(EEUK, 2017) a network of 1,600 enterprise and entrepreneurship educators and practitioners from over 100 UK Higher
and Further Education Institutions and related organisations.

Keywords: UN HESI, UN SDGs, leadership, governance, management, education.

“…we need authentic, vibrant leadership based on values and integrity.”

Matthias Müller, Group CEO, VW Annual Report. 2017.

1. Introduction
The VW emissions scandal or ‘dieselgate’ is ongoing but has already provided salutary lessons for leadership,
management and governance. Moon (2018) presented a workshop on corporate governance and business
ethics at the Institute of Chartered Accountants in England and Wales (ICAEW), London, on the eve of Martin
Winterkorn, former Volkswagen chief executive, being charged by US prosecutors in Detroit over the scandal.
Winterkorn was accused of conspiring to mislead regulators about the German car maker's efforts to cheat the
emissions tests of its diesel-fuelled vehicles. Two executives have already been jailed in the US; and, although
the VW share price recovered to pre-dieselgate levels in 2018, the scandal has already cost VW $25bn in the
US alone. And 15 countries have class actions pending. The case has some similarities to the collapse of ENRON
(Moon, 2017b). In the late 1990s, Moon was Manager of ethics and responsible business practices for Arthur
Andersen, which also collapsed in light of the ENRON scandal; and published his co-authored book Business
Ethics for the Economist (Moon & Bonny, 2001) the day he left Andersen – not knowing even that Enron had
been a client of the firm. Today, questions are still being asked about the role of the auditors in such financial
scandals. And, in the case of VW, the role of their auditors PwC, one of the remaining ‘big four’ audit firms. VW
had an ethics code; and produced a comprehensive sustainability report lauding its credentials in excellent
environmental management. Why did the auditors not challenge the company statements more vigorously?
Why did directors at VW not speak out about the risks? These issues concern leadership, management, and
governance.

Just as ethical crises bring general concerns about management education (what are we teaching?), concerns
are now being raised about both ethics and sustainability education in particular (what core ethical and
sustainability education do leaders and managers need?). Both subjects are clearly important. In fact, ethical
and sustainable thinking is considered a key competence by ENTRECOMP (2016) and numerous agencies
promote best practices responsible management education (e.g. UN PRME, 2017) which also place emphasis
on sustainability:

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 Christopher Moon, Andreas Walmsley and Nikolaos Apostolopoulos

x to impart students with the theoretical and practical debates within the discipline.
x to challenge students to think strategically, multi-dimensionally and innovatively regarding business
management and processes.
x to provide students with the knowledge, skills, and awareness required to be responsible managers.
x to develop the capabilities of students to be future generators of sustainable value for business and
society at large, and to work for an inclusive and sustainable global economy.

So, what is continuing to go wrong?

The key is corporate culture, the actual values evident within companies. And this culture is a product of
leadership and management practices. Tone at the top needs to be more than rhetoric; and today’s leaders
and managers need to be educated more stringently to ensure that ethical and sustainable practices are
imbued within company cultures and governance systems; and properly accounted and audited for.

The Sarbanes-Oxley Act (2002) in the US has sought to imbue such values:

The moral compass begins at the top. Corporations should emphasize the importance of integrity and ethics in
all decision-making. Directors and officers set a culture of respect and compliance with state and federal laws
that sets the standard for everyone else, including vendors and employees. Boards can reduce fear of
incrimination by implementing policies for conflicts of interest, codes of conduct and whistleblowing. They
should also establish procedures for managing and overseeing ethical matters. The board and its committees
should practice financial accountability and transparency.

However, SOX did not prevent the VW emissions scandal! Faced with the pressure to increase sales of diesel
vehicles in the US, and tougher environmental regulations in California, senior executives at VW sanctioned
the use of emissions cheating software supplied by Bosch.

In this paper the authors address this issue by reviewing current leadership and management education.

Surely, we need to ensure current and future executives are educated to such high standards in ethics and
integrity, and sustainability, to ensure that short-term financial performance does not come at the expense of
long-term financial, social and environmental sustainability? And this education needs to transfer across to
actual decision-making by making this an explicit duty of directors.
2. Leadership and management education
Cortese (2003) highlighted the critical role of higher education in creating a sustainable future. In fact, he
acknowledged that it is the people coming out of the world’s best colleges and universities that are leading us
down the current unhealthy, inequitable, and unsustainable path. Why? Is it that executives merely study
ethics and sustainability in an ‘instrumental’ way to gain their MBA? That is, they feign an authentic interest in
ethics and sustainability simply to gain their degree? Or are they genuinely interested in ethics and
sustainability but the organisation that they work for regards these subjects as rhetoric rather then reality? Are
executives receiving mixed messages from both business schools and companies? That is, there is talk about
ethics and sustainability from some faculty members and senior executives but others in the HEI or company
might pour scorn on these subjects and their relevance?

Moon (2015) in a survey of business students revealed that the majority were ‘cynical’ about the environment
and studying a green business module. The second largest group were positive; and the third and fourth
largest groups were ‘instrumental’ and ‘complacent’. The implications are that a large group of students are
not willing or able to change their mindset towards the importance of ethics and sustainability. These students
are the profit maximisers who are likely to become the short-termist decision makers in organisations that do
not place ethics and sustainability above profit maximisation. These could be the future VW and ENRON type
executives, with the Liang, Schmidt, Winterkorn (VW) and Skilling, Fastow, and Lay (Enron) mindsets to name
but a few.

Educational strategies to try and prevent such mindsets developing include compulsory courses in ethics and
sustainability, and/or integrating ethical and sustainability values across all subjects. There is also a need for
professional qualifications to more actively test for ethical and sustainable mindsets. And pracademics such as

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Moon (2015) are drawing attention to tools and techniques that can be used to evaluate such mindsets (e.g.
the ecopreneurial or social mindset) which are more compassionate, empathetic and connected to nature.

3. This research
To further elucidate cultural effects on leadership and management education the authors of this paper
surveyed 300+ HEI signatories to the UN Higher Education Sustainability Initiative (HESI). HESI was established
in 2012 by a group of UN partners including the UN Global Compact and UN PRME. Initially 272 HEIs from 47
countries made voluntary commitments to drive the sustainability agenda by committing to achieve one or
more of the UN Sustainable Development Goals (SDGs). Progress was evaluated in 2014 (HESI, 2014) finding
that 73% of 272 commitments made by HEIs indicated partial progress, either directly or indirectly; 18% hadn’t
demonstrated any progress, 9% could not be determined.

Research for this paper provides a more in-depth review of progress and discusses implications for leadership,
management and governance. The focus is on HEIs as they are considered to be a key catalyst for a sustainable
society (IARU, 2016); and HEIs serve as institutional moral reinforcers (Hanson et al., 2017). Thus, HEIs are
significant stakeholders towards achieving the SDGs but are also case studies for understanding how other
organisations can face the formidable challenges with integrating sustainability into their governance and
operations (Ferrer-Balas, 2008). And as Mindt and Rieckmann (2017) contend, the transformation of current
economic systems towards sustainable development requires innovative sustainability-driven enterprises with
competent managers and staff.
4. Conceptual framework
The conceptual framework in Fig.1. is based on academic literature relating higher education to sustainability
outcomes (e.g. Wals, 2013, review for UNESCO of the Decade of Education for Sustainable Development). The
literatures on the ‘need’ for both entrepreneurship education (ED) and education for sustainable development
(ESD) are both strong. The impact of pedagogical interventions on both EE and ESD outcomes is less clear
(conditions A&B) due to numerous intervening variables (c.f. Wals, 2013). In fact, there are tensions between
the goals of traditional entrepreneurship and sustainable development i.e. economic growth and the
exploitation of resources (self-interest) vs. limiting growth and conserving resources (sustainability). As James
& Schmitz (2011) acknowledge, business schools sometimes fail to engage the exploration of sustainability
holistically because of the lure to view sustainability as a tool for profitability instead of responsibility.

Figure 1: Conceptual framework, Author figure.

Aragon-Correa et al., (2017) also draw attention to these tensions. These tensions partly explain the lack of
ethics and sustainability courses in HEIs (Moon, 2017); and also creates a potential problem for policy makers
in regard to higher education. For example, Snelson-Powell et al., (2016) suggest that: rather than institute
actual change and include ethics and sustainability in organizational activities, business schools may ‘merely’
indicate that such change is taking place.

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This paper, therefore, investigates key factors of the above literature e.g. transdisciplinary learning,
partnerships, and eco & social mindsets (condition C), to see if there are significant pedagogical and
governance implications necessary for HEI reform, in order that HEIs can transform from ‘mere’ catalysts of
ethical and sustainable development to fully committed enablers. The impact of the research could represent
a paradigm shift from conditions A&B to condition C.

5. Governance implications
HESI (2017b) have noted that institutional structures and hierarchies within universities often impede
interdisciplinary and trans-disciplinary research and studies. The same could be said for businesses in general.

A renewed focus on governance could, therefore, have a considerable impact on spurring ethical and
sustainability education and practice. For example, the emphasis could, therefore, shift from ‘teaching’
students to supporting students, ‘enabling’ the leaders and managers of tomorrow to learn applied skills of
relevance to business and society in general. And, research in FTSE350 companies reported in Moon (2001)
provides a model of best practices for building and maintaining a responsible decision-making culture (see Fig.
2).

Figure 2: Model of best practices for building and maintaining a responsible decision-making culture, Author
figure.
Unfortunately, the European Commission funded project “University Educators for Sustainable Development”
(UE4SD) revealed that among 33 European countries there is a big lack of professional training programs in
education for sustainable development. An investigation among 33 countries showed that even though 16
countries report about national strategies or action plans on sustainable development or ESD, only 9 strategies
call for professional development and only seven countries report about national or regional initiatives for
professional ESD training (UE4SD, 2014). Consequently, there is a sizeable gap between what is explained in
national or regional strategies and what is done to empower people to act accordingly. Similarly, in business, if
there is a lack of adequate education and training in ethics and sustainability (see Figure 2.) then a key
component for building and maintaining a responsible decision-making culture is missing.

6. Leadership and management implications

The most recent review of progress with the HESI was in July 2017 (HESI, 2017b) in New York, on the occasion
of the 2017 session of the High-Level Political Forum on Sustainable Development - United Nations’ central
platform for follow-up and review of the 2030 Agenda for Sustainable Development and the Sustainable
Development Goals (SDGs) - and in conjunction with the 2017 Global Forum for Responsible Management
Education.

The overall trend is for companies to work with HEIs to better inform their leadership and management
strategies in support of the SDGs. Companies such as BASF in Germany now report against all 17 SDGs. And
Unilever have realised that their strategic focus on the SDGs means identifying staff with the appropriate
sustainability mindset – they recently surveyed 55K staff in this regard.

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Nevertheless, Mindt and Rieckmann (2017) conclude that: ‘To date, there is no comprehensive literature
review dealing with teaching-learning approaches and methods of higher education for sustainability-driven
entrepreneur-ship’. These authors distinguish sustainability-driven entrepreneurs as having: (1) systems
thinking competence; (2) normative competence (values thinking); (3) action competence; (4) interpersonal
competence; and (5) strategic management competence. This builds on the work of Wiek et al., who more
recently identified a meta competence (6) integrated problem-solving (Wiek et al., 2016, 243). In fact, Mindt
and Rieckmann (Ibid) cite various authors that testify to the benefits of good academic-business partnerships
(e.g. Barth et al., 2014; Lehmann et al., 2008; Thomas, 2009). One example is the European project CASE –
Competencies for A Sustainable Socio-Economic Development – which is a joint European Master’s
Programme on Sustainability-driven Entrepreneurship involving 10 universities and business partners from five
European countries (CASE, 2017). Evaluations of 9 pilot courses are currently under way. Examples of
innovative pedagogical practices involving external partnerships (from a total of 19 partnerships) include:

x Austria ‘sustainability challenge’ – intra and transdisciplinary course in cooperation between four HEIs
- encourages students to develop their own business solution together with business partners. TryOut
– six-week internships in start-ups.
x Germany ‘Outside the University Box’ provides city challenges for students with three external
partners: the city administration, a local food entrepreneur (start-up company) and a municipal
institution for elderly people and intense nursing. Working with a company partner on corporate
sustainability communications. Internship in an institution with disabled persons.

According to CASE (2017): The CASE Knowledge Alliance jointly accepts the need of new ways of teaching and
learning as well as a strong cooperation between higher education and business to enhance a sustainable
socio-economic development in general and new forms of sustainable driven enterprises in particular. Will this
be enough to counter the ‘Corrupt, Aggressive, Ruthless’ corporate culture that apparently existed at VW (FT,
2017)? Only time will tell. Currently, a survey of 51K staff at VW found no discernible change in the culture
(Reuters, 2018) since ‘dieselgate.’
7. Measurement of ethics and sustainability

7.1 Governance.
IARU (2016) have produced a report on ‘greening’ the university. Whilst the report is written by the
International Association of Research Universities, the findings can be applied to all organisations. Thus, IARU
recognise that all aspects of HEI life need to be geared towards achieving sustainability including: sustainable
campus organisation, campus-wide operations, buildings, laboratories, green purchasing, transport,
communication, employee and student engagement. There are clear implications here for the governance of
organisations. Indeed, without top level support and more holistic approaches there is little to suggest that
organisations can overcome the ‘cynical’ or ‘instrumental’ attitudes towards the environment that many
individuals can have (Moon, 2015).

7.2 Sustainability literacy for leadership and management.

Another measure of commitment to sustainability is ‘sustainability literacy’. In fact, there is one test named
SULITEST (2017) that has been taken by over 61K individuals from over 600 organisations in 57 countries.
Results show that that individuals are on average more aware of specific SDGs than of the 2030 Sustainable
Agenda and related UN processes. However, this test reveals general awareness of sustainable development
knowledge rather than impacts of an organisation in tackling SDGs in particular. And Dawe et al., (2005)
conclude from ‘sustainability literacy’ that there is an overall patchy picture with sustainable development
being marginal or non-existent in some influential disciplines and higher profile in others; major gaps in
curricula; and major barriers to implementation.

7.3 Behavioural change

Clearly the best measure of the effectiveness of ethics and sustainability education is actual behavioural
change. This can be evidenced by identifying sustainable development projects initiated as a result of ethics
and sustainability programmes. However, the actual impact of educational programmes might not be evident
for years after students graduate, if at all. Thus, apart from impact case studies written of projects undertaken
by participating students, most educators are again left to try and measure the effectiveness of ethics and

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 Christopher Moon, Andreas Walmsley and Nikolaos Apostolopoulos

sustainability programmes through various default measures e.g. attitude change, propensity to engage in
ethics and sustainability initiatives, etc.
From the above concerns the following research questions were formed.

8. Research questions
Our survey instrument, educator interviews, and student feedback mechanisms, were designed to get answers
to the above challenges:

1. Are ethics and sustainability curricula held in high regard in business schools?
2. What are the challenges and obstacles faced by HEIs in adopting ethics and sustainability education
e.g. governance issues, silo issues, mindset issues, etc?
3. What are the implications for leadership and management education e.g. mindset of educators, CPD of
educators, tools for educators, etc?
4. What added value does a focus on ethics and sustainability bring to leaders and managers when
implementing the SDGs?
5. To what extent is the ‘competence’ model the primary theoretical underpinning to pedagogical
development in this area i.e. sustainable entrepreneurship.
6. How can we effectively measure changes in student attitudes and behaviours as a result of such ethics
and sustainability interventions?
9. Methodology
Sample. Sample. The target sample was the 307 HEI signatories to the UN HESI. Our preliminary survey was
based on an existing database of HESI signatories. Analysis of this database revealed which HESIs had
committed to which SDGs. We then conducted a follow-up survey via email to identify best practices across
HESI signatories; and finally, the results were presented to a sample of entrepreneur students and academics
for their validation. Our main survey instrument included questions on which SDGs each HESI had signed up to,
progress with their implementation, challenges faced and how obstacles were overcome. Further, a series of
statements from the literature were designed to test the validity of the literature on ESD pedagogy, and
implications for governance. As this paper focuses on leadership, management and governance only related
responses from the initial survey are reported below.
10. Findings
Fig. 3 shows that 276 of 307 HEIs committed to SDG#4 Education i.e. 89%. 30 HEIs committed to SDG#13
Climate Action i.e. 9.7%. Only 24 HEIs committing to > 1 SDG i.e. 7.8%. Of particular concern is that five SDGs
are not being committed to by any of the HESI signatories. And SDG#17 Partnerships for the Goals is only
committed to by N=5 HEIs.

Figure 3: Frequency of SDG SMART commitments by HESI signatory

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 Christopher Moon, Andreas Walmsley and Nikolaos Apostolopoulos

Table 1 indicates that although over 300 HEIs signed the UN Higher Education Sustainability Initiative, only a
small proportion are taking a holistic approach across the HEI to implementing the SDGs. Our measure based
on IARU (2016) provides an indication of the extent to which whole institution approaches are being
implemented i.e. board level support with sustainability integrated into operations. For each HEI that means
ESD curriculum, transdisciplinary and extra-curricular activities including academic-business partnerships. For
the majority of HEIs these are still absent.

How the SDGs can Obstacles for How businesses can Implications for Implications for leadership
help businesses businesses that can overcome the governance (EEUKRP and management education
(PRME) hinder the adoption of obstacles (adapted 2017/18 survey findings) (EEUKRP survey findings
SDGs (adapted from from Rasche et al, 2017/18)
Rasche et al, 2016) 2016)
Strengthen and enable Groups of actors can Base on mission and HEIs are catalysts for a Leadership and management
future business obstruct the strategic vision; sustainable society. education can benefit from
practitioners, thereby development and integrated through all Therefore, HEIs need to being more competency
adding value to implementation of the levels of the business develop sustainably: based e.g. CASE competences
modern business and SDGs and through strategic including campus for a sustainable socio-
society engagement with all organisation; campus- economic development with
staff wide operations; real-world orientation,
buildings; laboratories; university-business
green purchasing; cooperation, and
transport; sustainability-driven
communication; entrepreneurship.
employee and student
engagement.
Give future business Aspirational talk, Ensure specific- HEIs need to set goals All leadership and
leaders the tools to greenwashing, and timebound and based on achieving all 17 management students should
recognise and ‘bullshit’ can be used measurable, linked to SDGs, with measurement be tooled in e.g. Circular
maximise sustainable to oversell value creation, and reporting based on Economy Design techniques
opportunities commitment to SDGs financial drivers and all 17 SDGs. and Life Cycle Analysis (LCA)
future investment tools.
Create a paradigm for Individuals can exploit Ensure covers all There are 17 SDGS. Approaches to solving global
teaching, learning and loopholes in the SDGs dimensions of EEUKRP found that most risks increasingly need to be
understanding sustainable HEIs have only signed up based on developing
sustainability as core development and to one SDG #4 Education. sustainability innovations via
to the business model implemented on an Sustainability needs to be transdisciplinary approaches,
interdisciplinary scale integrated across schools partnerships and eco & social
and programmes building mindsets. Policy makers
on the agenda set by should ensure that there is a
Mader& Rammel. paradigm shift in this regard.
Connect with a [Isolation; Ensure covers entire Only N=5 HESI Learning gain by leadership
network of institutionalisation, value chain and all signatories commit to and management students’
stakeholders reaching bureaucracy, etc.] stakeholders SDG#17 Partnerships for needs to be curricula and
beyond the business the Goals. HEIs need to extra curricula. The Erasmus
sphere, into more actively consider CASE program provides
signatories and ecosystems development examples of academic-
supporting in this regard e.g. glocal business partnerships.
organisations identities; and promote
academic-business
partnerships across
disciplines.

Table 1: Implications of the SDGs for governance, leadership and management education, Author table

11. Conclusions
This paper has highlighted some of the benefits and challenges in adopting the UN SDGs; and implications for
governance, leadership and management. Benefits include providing a focal point to learn about the breadth
and depth of ethics and sustainability issues and problems facing leadership and management. Best practices
are more evident when educators and businesses recognise the interdisciplinary nature of problems and
potential solutions. Yet, the rate of progress with the SDGs is far slower than needed to meet the targets by
2013 (UN, 2017).

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 Christopher Moon, Andreas Walmsley and Nikolaos Apostolopoulos

The UN HESI has been shown to be a valuable tool for adopting the UN SDGs in HEIs. The framework provides
a reminder that there are 17 SDGs and innovative projects can be based on single or combined goals. By
combing goals in different ways students across disciplines can ‘disrupt’ silo thinking and develop more
creative solutions to complex problems. Organisations though face numerous challenges and obstacles in
implementing the SDGs.

For HEIs, becoming one of the UN HESI signatories does provide an impetus to each HEI tackling the SDGs.

However, for all organisations there can still be important governance issues to face. This is more crucial to
micro level as the SMEs, which are the backbone of the economy, are struggling in implementing green
strategies (Liargovas et al, 2017). Thus, businesses that are adopting a more holistic approach to implementing
sustainability have a more effective platform for SDG implementation, overcoming the vagaries of silo
thinking. However, the commitment to social goals can act effectively (Apostolopoulos, et al. 2018; Littlewood
and Holt, 2015; Rahdari et al, 2016).

Thus, businesses that are adopting a more holistic approach to implementing sustainability have a more
effective platform for SDG implementation, overcoming the vagaries of silo thinking. Indicators of this holistic
thinking are evident when organisations adopt more comprehensive measures to become ethical and
sustainable. That is, more than a PR exercise – i.e. ‘merely’ for marketing (aka greenwashing).

One of the key implications for leadership and management education is that CPD of educators is an important
perquisite for developing the next generation of ethical and sustainable leaders and managers. Thus, there
needs to be more CPD tools and training to enable staff development in this regard. This is especially true for
business education which is designed to enable the leaders and managers of the future. There is increasing
recognition that all graduates need to be prepared to make a strong contribution to a sustainable society (TEF,
2017). And there is evidence of a changing emphasis on broader competences. However, the efficacy of the
competency model in this regard is still relatively untested and should be subject to further research.
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Implementing Big Data Analytics in a Manufacturing Environment:
A Theoretical Framework
Jürgen Moors and Sofie Rogiest
Antwerp Management School, Antwerp, Belgium
Jurgenmoors@hotmail.com
sofie.rogiest@gmail.com

Abstract: Big data analytics is one of the key technologies of what is called “industry 4.0”. In marketing this technology is
readily adopted to predict among other things, customer behaviour. But in an industrial manufacturing environment this
technology is only taking its first steps. McAfee and Brynjolfsson (2012) stated that a successful adoption would require the
right balance between leadership, organizational culture, decision making, technology and talent. The goal of the research
at hand is to define the optimal combinations to allow a company to successfully deploy big data analytics in a
manufacturing environment to increase efficiency (energy, costs, waste…) and reliability. Our framework focuses on the
aspects of leadership, culture and decision making. For leadership we will rely on the literature of complexity leadership as
it is very well suited for innovation in a manufacturing environment and as it reflects the tensions between entrepreneurial
and operational challenges through an enabling role. For organizational culture we will build on the literature of
organizational climate because it is a very useful tool to focus on the manifestation of a culture, as it is more behaviorally
oriented. Also the aspect of decision making has its own literature but in our case we decided to integrate it into the
construct of climate, the dimension of autonomy to be more concrete. Our theoretical framework, operationalizes the
constructs of complexity leadership and climate, each with different dimensions, based on the existing literature on the
one side and big data analytics and innovation in a manufacturing environment on the other side. The result is a framework
that allows researchers to investigate the effectiveness of the implementation of big data analytics in a manufacturing
environment using a survey approach. Since it is expected that there will be not one combination for success but several,
the theoretical framework is adapted to allow the researcher to use a qualitative comparative analysis.

Keywords: big data analytics, complexity leadership, manufacturing, organizational climate

1. General introduction
The terms Industry 4.0 and the 4th industrial revolution are at the moment at every CEO’s agenda in the
manufacturing industry. One key technology of industry 4.0 is big data analytics. TechAmerica defines big data
as follows: “big data is a term that describes large volume of high velocity, complex and variable data that
require advanced techniques and technologies to enable the capture, storage, distribution, management and
analysis of the information” (Federal Big Data Commission, 2012, p. 10). The use of analytics is not new, but
what is so revolutionary about big data analytics? It is expected that big data analytics will allow companies to
measure and therefore manage more precisely, make better predictions and more informed decisions, target
more effective interventions, and also in areas that have so far been dominated by gut and intuition (McAfee
and Brynjolfsson, 2012). Big data analytics is indicated to be an enabler for the advancement in manufacturing
systems (Esmaeilian et al., 2016). Some examples of this advancement are additional types of value creation
from big data analytics like the creation of transparency, enablement of experimentation and others (Fosso
Wamba et al., 2015).

McAfee and Brynjolfsson (2012) propose five major challenges for adoption: leadership, talent management,
technology, decision making and company or organizational culture. They indicate that for companies to reap
the full benefits of a transition to using big data, they will have to be able to manage the change process
effectively. But the major question is how. Is there one winning combination? Is a certain challenge more
important than another? In this article we will first describe the present knowledge about leadership,
organizational culture and decision making in relation to big data analytics and a manufacturing environment.

We will not focus on the role and impact of technology and talent management on the adoption of big data
analytics, as these two aspects are already discussed extensively by Davenport (2010) and (2014). In a second
stage we will link it to the existing literature of complexity leadership and organizational climate, first from
theoretical point of view and secondly from an operationalization point of view. Third it will all be combined in
a theoretical model, including a survey to allow further empirical research. And finally we will describe shortly
how the empirical set-up is drafted as a next step in our research

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1.1 Big data Analytics: defining adoption and successful implementation

To define success and adoption one can look at two major sources of literature. First of all the big data
analytics literature. A big data project or roll-out is always done with a certain or several business benefit(s) in
mind as described by Fosso Wamba et al. (2015). Therefore, if one discusses a successful implementation, one
needs to go beyond the potential of one-time success or value of the project, and look at the sustained value
of the change in using big data analytics throughout the organization or in certain departments or units.

Ransbotham et al. (2016) state that competitive advantage can only be achieved by a sustained commitment
to the role of data in decision making, having a strategic plan for analytics in alignment with the overall
corporate strategy, expanding the skill set of management who use data and finally placing a high value on
data. Davenport (2014) looks at a successful implementation when multiple data sources and knowledge is
used for analysis and optimization, when the quality of the data is good and reliable, when one conducts data-
driven experiments, when data is continuously used for decision making, when one develops analytical skills
and finally one acts upon the findings.

Second major source that can help us, is the project management literature. This literature is very extensive
and we will name a few contributions. For instance Joslin and Müller (2016) focus on the relationship between
project governance and success, Harrington and Guimares (2005) focuses on the success of IT projects and
Heckman et al. (2016) looks for instance at the relationship between change, change experience and change
project performance. Therefore we will build on this part of the literature during the operationalization and
link it to the big data literature mentioned before.

1.2 Big Data Analytics: role of leadership

Gerald Kane et al. (2016) mention change in leadership as one of the transitions of digitally maturing
organizations. In their research the following skills emerge as most important to succeed as a leader in a digital
workplace: having a transformative vision, including business model change; being forward looking,
understanding technology, being change-oriented and openness to transparency. Kane et al. (2015), mention
leading by example, implying showing support for teams and helping them to understand how their works fits
into the overall business plan. They also mention listening to the internal and external environment. Vidgen et
al. (2017) support this by posing that leadership is responsible for the creation of a big data and business value
strategy. Kiron et al. (2011) talk about fact-driven leadership in which leaders are open to new ideas that
challenge the current practices and the need for data to make decisions. Galbraight (2014) states that in order
to take advantage of the opportunity of big data a shift in power will impact leadership. He describes how
every organization has an establishment, a power structure with a vested interest in the status quo. The shift
of power from experienced and judgmental decision makers to digital decision makers is a challenge that
either current leadership can adopt or reject. But this issue plays at all organizational levels therefore another
challenge of leadership will be to focus on the alignment of middle managers across the organization in
support of the mission (Barton and Court, 2012). B. Brown is even most extreme by stating that in some cases
and industries big data analytics could make middle management obsolete (2011). Although one needs to be
careful as many others have predicted this already before, but so far it has not yet happened. McAfee and
Brynjolfsson (2012) talk about muting the HiPPO or the highest-paid person’s opinion. In the case of Ramco
Cements by Dutta and Bose (2015) leadership’s change openness and guidance are mentioned.

1.3 Big data Analytics: role of organizational culture

Lavalle, Lesser, Schockley, Hopkins and Kruschwitz (2011) name company culture as one of the most faced
adoption barriers besides leadership. Schein’s (2010, p. 18) generally accepted definition of culture of a group
as a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation
and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to
new members as the correct way to perceive, think, and feel in relation to those problems. He also states that
culture can be analyzed at three different levels: artifacts, espoused beliefs and values and finally basic
underlying assumptions. He defined the levels depending on the degree to which a cultural phenomenon is
visible to the observer. He looks at climate as a manifestation of culture. Climate is therefore more
behaviorally oriented (Patterson et al., 2005). There are for instance climates for creativity, innovation, safety…
One can investigate the behavior on the level of individual, referred to as psychological climate or at an
aggregate level like work group, department or organization, referred to as group, department or
organizational climate (Patterson et al., 2005). As many of the terms used in literature before, when talking
about culture, are more behavioral aspects, we will focus in this research on climate instead of culture.

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1.3.1 Data driven climate

Kiron et al. (2011) refer to a fact- or data-driven environment. Davenport assesses a company’s analytical
culture as an indication for big data readiness or not (Davenport, 2014) and (Davenport et al., 2010). He
defines an analytical culture as a culture that searches for the truth, that finds or identifies patterns and gets
to root causes, that is as granular as possible in analysis, that seeks data and not just stories to analyze a
question or issue, that values negative results as well as positive ones, that uses the results of analyses to
make decisions or take actions and finally that is pragmatic about trade-offs in decision making. Janssen et al.
(2017) indicate the importance of designing processes to guarantee data quality, as it is a multidimensional
concept in big data describing properties of the information such as accuracy, timeliness, completeness,
consistency, relevance and fitness for use. If the data quality is not monitored the quality of the decision
making, later on, will also be questionable. Colegrove (2016) mentions the importance to forgive your data and
to remember that perfection is a myth. Indicating that mistakes still can happen and that it is important to
keep flexibility during implementation.

1.3.2 Cross-functional climate or a climate without organizational silos

If one looks at cooperation models in an organization in big data literature Galbraight (2014) mentions the
importance of cross-functional teams, Gabel and Tokarski (2014) talk about breaking down the silos, Kane et
al. (2015) see this as integration and collaboration, Fosso Wamba (2015) refer to networking, Donovan (2015)
uses the term multi-disciplinary and finally Calvard (2016) speaks about interdisciplinarity.

1.3.3 Innovative and entrepreneurial climate

Another big climate aspect if one looks at big data literature is entrepreneurship. A lot of authors mention this
in different ways. Donovan (2015) talks about high risk and disruption, White (2016) mentions quick
experimentation, Colegrove et al. (2016) use the term piloting and Kane et al. (2016) talk about rapid
experimentation and taking risks. Of course innovation and creativity are also often mentioned as for instance
by Brynjolfsson and McAfee (2012) and Kane (2015). As data are able to make things like processes, value,
information… more transparent (Galbraith, 2014) and visible (Berner et al., 2014) the organizational climate
should be able to cope with this.

1.3.4 Autonomous climate

Galbraight, (2014) mentions the following two features of big data: on the one hand the vast amount and
different kinds of data, and on the other hand the real time accessibility of this data. . Predictive tools are
designed to operate in real time and allow companies to influence the outcome and prevent bad outcomes
before they happen. Big data increase the speed in an organization. It even allows companies to experiment
with decisions based on big data and models (B. Brown, 2011). Therefore an autonomous climate will support
an implementation of big data analytics as it allows companies to make decisions faster and in real-time.

1.4 Conceptual model

Figure 1 depicts the conceptual model, drafted based on the current state of the literature.

Complexity Leadership
x Entrepreneurial leadership behaviour
x Enabling leadership behaviour
x Operational leadership behaviour
(Un)successful big data project implementation
Department / organizational climate
x Data-driven
x Cross-functional or absence of
organizational silos
x Innovative and entrepreneurial
x Autonomous

Figure 1: Conceptual model

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2. Operationalization
The goal of this work is the development of a survey that allows us to compare successful and unsuccessful big
data analytics projects in a manufacturing environment. Based on the results from the survey it will allow us
the to look at the importance and relevance of the different aspects of complexity leadership and
organizational culture. To realize this, we will first have to operationalize the three main concepts:
organizational culture, leadership and successful big data projects.

2.1 Successful big data projects

Implementing a big data project can be compared to the implementation of projects, that are also always
accompanied by change. The big data aspects add some IT flavor. Therefore, we will rely on project success
literature and IT project success literature to operationalize this aspect of the framework. Joslin and Müller
(2016) developed a questionnaire to measure project success along 5 dimensions: project efficiency,
organizational benefits, project impact, future potential and stakeholder satisfaction.

2.2 Leadership: complexity leadership

Bringing big data analytics to the manufacturing floor is bringing innovation to units focused on operational
tasks. Uhl-Bien et al. (2007) introduced the complexity leadership model using the concepts of complex
adaptive systems (CAS), as they were convinced that leadership should not only be seen as a position and
authority but an emergent, interactive dynamic. Arena and Uhl-Bien (2016) see the need for an adaptive space
to link operational systems to entrepreneurial systems in order for new solutions and innovations to survive
and thrive in complex environments like for instance organizations. Uhl-Bien and Arena (2017) incorporate
complexity leadership behaviors in each of the systems, spaces and overlapping spaces. These behaviors
create a link between the entrepreneurial and the operational system through the adaptive space. This allows
them to define entrepreneurial, enabling and operational leadership, including their behaviors in order to let
organizations function as complex adaptive systems in a dynamic system that are able to adapt in and evolve
with a changing environment. As Uhl-Bien and Arena (2017) indicate, it could be possible that a single
individual engages in all three of them. In most cases however, organizations can tap into a broad array of
leaders, that excel in either one of the leadership types. It will in those case be critical to guarantee that the
adaptive space is there as well as the linkages between both the entrepreneurial and operational system with
the adaptive space.

So far, the complexity leadership model has not been operationalized to be used in a survey. To be able to use
the complexity leadership theory, a survey is constructed based on existing literature in the field of
operational, enabling and entrepreneurial leadership.

2.2.1 Operational leadership

Uhl-Bien and Arena (2017) describe in their work that operational leadership has on the one side a
bureaucratic focus but on the other side also a focus to realize innovation and adaptability in order to survive.

The following key roles are given to illustrate this: conversion of emergent ideas to organizational systems and
structures, sponsoring, aligning, executing, creating energy, creating enthusiasm, breaking down the walls that
stop innovation... These roles fit very well to the concept of transformational and change leadership. In his
review of complexity leadership Brown (2011) states that transformational leadership holds the strongest link
to complexity leadership. Bento (2013) states that certain elements are not in contradiction with complexity
theory. The big difference, as he writes, is the way both concepts look at the change to take place.

Transformational leadership implies that transformations are created, complex thinking implies that
transformations emerge and that leadership plays a certain role. Herold et al. (2008) look at the combination
of transformational leadership and change leadership in relation to employee's commitment to change. They
mention that change leadership refers to the here-and-now, focusing on the specific change at hand and how
the leader is handling it from a tactical point of view. Transformational leadership refers to a longer-term
relationship established between the leader and followers, built up over many interactions and having a more
organizational or strategic orientation. Introducing Big data analytics is exactly the same, introducing a new
technology and way of a work, a change based on an at hand project with a focus on the future. The
combination of both also fits to the expected addition role described by Uhl-Bien and Arena. For that reason

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the scales of Herold et al. [refer] for transformational leadership and change leadership will be used to
operationalize the item of operational leadership of Uhl-Bien and Arena in the survey.

2.2.2 Entrepreneurial leadership

In their paper, Uhl-Bien and Arena (2017), describe the following skills for the role of entrepreneurial leader:
creation and development of novelty, action oriented, quick, working with limited resources, persistent and
patient, flexible and finally linking-up and conflicting. Since the concept of entrepreneurial leadership is rather
clear, for the operationalization we draw from the entrepreneurial leadership literature, namely the scale
developed by Renko (2015). In his measurement tool (the ENTRELEAD scale) he integrated the following key
elements: innovativeness, creativity, passion and motivation, tenacity and persistence, bootstrapping, vision of
the future and finally taking risks.

2.2.3 Enabling leadership

Uhl-Bien and Arena (2017) refer to enabling leadership or enabling leadership capabilities needed to bridge
the gap between operational leadership and entrepreneurial leadership. They not that enabling leadership
helps initiate and amplify support for novelty, innovation and change. They see the following principles as part
of enabling leadership: apply complexity thinking, enable adaptive space, leverage network structures, engage
complexity dynamics and play in the pressures. Brokerage, leveraging adaptive tension, linking up, tags and
attractors, simple rules and network closure are for them the related practices. To operationalize the concept
of enabling leadership, we look at the concept of adaptive leadership. In his book Heifetz (2009) states that
adaptive leadership is the practice of mobilizing people to tackle tough challenges and thrive. Heifetz
summarizes the following aspects about adaptive leadership: it is about change that enables and thrives what
means the orchestration of multiple stakeholders, adaptive changes are built on the past rather than jettison
them what means they make the best possible use of previous wisdom and know-how therefore it is both
conservative and progressive, it occurs through experimentation, it relies on diversity and it takes time. We
will therefore employ certain scales from the adaptive leadership competency profile developed by Sherron
(2000). In total the whole framework exists of 10 competency scales. We will employ the following ones to
cover the concept of enabling leadership: influencing and motivating, Learning, envisioning, changing and
effectiveness.

2.3 Climate
In climate literature one of the most extensive validated measuring tools was created by Patterson (2005). In
his work he created the Organizational Climate Measure (OCM) that consists of 17 scales. Each scale consists
of 5 questions that are all scored on a 5-point Likert scale. Not all 17 scales are relevant for the research at
hand. Based on the literature, described earlier, 5 scales can be identified to investigate the relevance of
climate in the success of big data analytics in a manufacturing environment: the quality and involvement scales
to measure the data-driven climate, the integration scale to measure cross-functional climate or a climate with
the absence of organizational silos, the innovation & flexibility scale to measure an innovative and
entrepreneurial climate and finally the autonomy scale to measure a climate with room for autonomy and the
kind of decision making climate.

Based on the aspects of literature around climate before, on top of all scales identified before one additional
scale from the Patterson Organizational Climate Measure is chosen. This is typically a scale that according to
literature would not be beneficial for implementing successful big data projects in a manufacturing
environment. The scale of choice is tradition. It is typically a climate that does not support innovation and is
therefore chosen.

3. Methodology

3.1 Qualitative Comparative Analysis

All different aspects of climate and complexity leadership have an impact on the final result but also interact
with each other. They are interdependent. A set-theoretic approach fits well to a more systemic and holistic
view of organizations like Fiss (2007) points out. Fiss (2007, p. 1191) states in his article: in studies employing
complexity theory, researchers tend to see organizations as dynamic, non-linear systems, explicitly focusing on
connections and the interaction of variables in creating outcomes. The method used for the research will be
qualitative comparative analysis as described by Ragin (1987). It has some distinct advantages (Marx et al.,
2014) as for instance: it emphasizes a case-based approach, it is able to link configurations of causally relevant

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conditions to outcomes, it is comparative and therefore is able to explore similarities and differences across
comparable cases and offers a way for examining equifinality. This explains also the suitability for our research
since we want to investigate the causally relevant conditions of different scales of complexity leadership and
climate for a successful implementation of big data projects.

Our concepts of leadership and climate are not simple on/off concepts, either present or not. These are typical
concepts that can vary along certain axes. Therefore, the original approach of qualitative comparative analysis
with crisp sets is not a perfect match. But Ragin (2000) widened the methodology introducing the usage of
fuzzy-set variables. This allows us to make the variables ordinal or continuous, what makes it better suited for
our research.

3.2 Sample
In a first step we would like to validate our approach and set-up. In order to do this, we look at one
organization, a large multinational chemical manufacturer, based in Germany, with a large production site in
Belgium. On the site in Belgium about 3000 people are employed in different service functions and about 25
different manufacturing plants. In several of the plants there have been big data projects implemented over
the last years, in total around 5 projects.

In a second phase, we would like to perform the actual investigation. To do this, together with a large
consulting firm, we will contact their customer base that, in the last years, implemented big data projects in
their organization. In total we will look for 10 to 20 different projects, each to be seen as a different case, to be
in focus of the research. Ideally spread over several organizations.

3.3 Data collection

Data will be gathered based on an online survey or questionnaire. Based on the conceptual model a survey will
be composed based upon validated questions for each of the topics and from the existing body of literature.

Each topic or scale composes of several questions that are rated based on a Likert-scale. The different
concepts discussed in the operationalization chapter are not all rated at the same Likert scale. Some are rated
at 5-point Likert scale others at 7-point Likert scale. The scaling will be adjusted in such a way that within one
overarching concept i.e. project success, leadership or climate, the scales are similar. The overall score for the
topic or scale will be the weighted average of the scores on all questions. As we will use fuzzy-set variables the
average final scores will be changed into a continuous score between absent (=0) and fully present (=1). This is
also the moment that all scores will have a similar scale whether the concept was rated against a 5-point or 7-
point Likert scale.

3.4 Measures
Online questionnaires will be administered in the respondents’ native language (Dutch). Questionnaires will
first be translated by the researcher into Dutch and afterwards back-translated by an independent researcher,
as recommended by Brislin (1980).

3.5 Use of control variables

We will include several demographic control variables: age, gender, education, role in organization,
department (service, operations…), nationality as well as several industry control variables like sector and
number of employees.
4. Analysis
The overall analysis of the data will consist of three separate studies. In a first stage we will focus on leadership
and more precise at the relative importance of each leadership dimension or the combinations of several
leadership dimensions of the complexity leadership model, i.e. operational, enabling and entrepreneurial
leadership. In a second study we will turn our attention to the relative importance of or combinations of each
organizational climate dimension, namely data-driven, cross-functional, innovative & entrepreneurial and
autonomous. The third and final study will combine both concepts leadership and climate and search for the
relative importance or combinations of dimensions of both that make a big data implementation project more
successful or not.

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5. Academic, managerial and societal contribution.

5.1 Academic
This work will contribute to theory in three different ways. First of all, it will contribute to the literature of big
data analytics by generating a better view of the importance of climate and leadership on the successful
implementation of big data projects in a manufacturing environment and how both aspects interact and
influence each other. It will also give a better view on how to influence both factors in order to achieve a
better end result. Secondly it will further strengthen the field of complexity leadership in two ways. On the one
side it combines complexity leadership with a recent digital challenge, namely big data. On the other side it
enlarges body of empirical research on complexity leadership, that is still limited. And third it will contribute to
enlarge the body of literature of qualitative comparative analysis, especially in a field that is suited for it like
complexity leadership (Fiss, 2007).

5.2 Managerial
As a company is a complex adaptive system it is really important to know if there is only one road to a goal or
whether there are several equal ways of reaching it. The results from this research will, to a certain extent,
give managers a better guidance of the possible roads to implement successfully big data projects in a
manufacturing environment. This research makes it a little bit more concrete, unlike the general statements
found in literature so far like the 5 challenges from (McAfee and Brynjolfsson, 2012). Local subtleties and
differences make often one approach work at one place and fail at another. As part of the research a survey is
developed, it can later be used by managers as a tool to scan their organizations in the forefront and
determine whether the conditions inside the company are ready to implement big data projects.

5.3 Societal
This work will also contribute to the value creation capabilities of organizations. Big data analytics projects are
designed to generate a competitive advantage for organizations. The findings of this research will support
them to access this faster or sustain it for a longer period of time.
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Decision Factors for Outsourcing on-Premise Applications of
Institutions for Higher Education
Rik Nijman1, Pim Schouten2 and Pascal Ravesteijn1
1
HU University of Applied Sciences, Utrecht, Netherlands
2
Verdonck, Klooster & Associates
rik.nijman@hu.nl
pim.schouten@vka.nl
pascal.ravesteijn@hu.nl

Abstract: The outsourcing of IT applications is becoming more common in higher educational institutions. Today new
applications are purchased from the ‘cloud’, however what to do with existing on-premise applications? Can they also be
outsourced? If so, what factors does an institution for higher education have to consider when making the IT outsourcing
decision of their on-premise applications? In this paper, a study described to answer the following research question:
‘What decision factors should Dutch higher education institutions take into considerations in order to select a sourcing
model for their on-premise applications?’ First a literature study is performed in order to determine outsourcing factors
that are already known. Subsequently, these factors are validated in four explorative interviews. Second a survey is
constructed to further test the factors in a higher education context. Based on the interviews and survey results we found
that fourteen factors are important for Dutch higher education institutions when outsourcing IT. Furthermore, we found
that there is a hierarchy between these fourteen factors. Finally, our research suggests that there is a relationship between
outsourcing decision factors and the sourcing models, a relationship which seems to be influenced by outsourcing
objectives.

Keywords: IT outsourcing, on-premise application, decision factors, sourcing objectives, sourcing models, higher education.

1. Introduction
Much is published about the IT outsourcing (ITO) decision process. Still, Dibbern, Goles, Hirschheim, &
Jayatilaka (2004) state that when it comes to making the decision ‘Which’ decision process to choose and
‘How’ to decide between sourcing models or vendor selection decision, more research is needed. Several
scientific articles suggest to combine multi criteria methods with clusters of decision factors (Tajdini & Nazari,
2012; Y. C. Tjader, Shang, & Vargas, 2010; Y. Tjader, May, Shang, Vargas, & Gao, 2014; C. Yang & Huang, 2000),
but these decision factor clusters are formulated on a high and abstract level. Also, most of this research was
done in several sectors of industry, but not in an education context. The education sector differs from other
sectors, if only, due to the availability of educational licenses and personnel policy. Therefore, in this study we
investigate the decision factors higher education institutions should consider when making the decision for the
best sourcing model for a specific application. By sourcing their applications, organizations want to achieve
certain objectives (Bergstra et al., 2011). The objective of this research is to find the factors to consider after
the strategic decision to outsource the application is made.

The research described in this paper is in the context of Higher Education (HE) institutions in the Netherlands
that are in the decision making process to (out-)source their on-premise applications.

The remainder of this paper is organized as follows, the next section describes the research approach which is
followed by the literature review in section 3. In section 4 the results are discussed followed by conclusions,
limitations and suggestions for further research in section 5.
2. Research Method
The objective of this research is to determine what factors are considered when making the ITO decision. For
this a explorative study is conducted in which factors are harvested through several research strategies and
placed in a hierarchy in order to support the ITO decision. In this research no existing theory is tested, but new
theory is created. Therefor the approach is inductive. A qualitative approach is chosen to analyse the results in
the several research phases. Also, several research strategies are applied in this research (Verschuren &
Doorewaard, 2015). A literature review is performed to find existing decision factors and ITO objectives. This is
followed by several explorative interviews to determine the completeness of the factors found in literature.

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For this respondents are selected that have knowledge and experience in ITO. Finally, the decision factors are
tested in a HE context, using an online survey among IT decision makers in HE institutions.

2.1 Phase 1: Literature study

To conduct a structured literature review the following scientific databases and journals are consulted:
Academic Search Premier (Ebsco), Emerald Insight, Research Gate, ScienceDirect, Google Scholar, Journal of
Enterprise Information Management and Journal of Information Technology. The main keywords used are: IT-
outsourcing, ITO, IT sourcing, cloud computing, cloud adoption decision, decision models, decision factors, ITO
decision factors, IT-outsourcing success factors, outsourcing objectives, reasons for IT-outsourcing, higher
education, and combinations of these keywords. Search results were first assessed by their title followed by a
scan of the abstract and conclusions. This provided 117 papers which were then categorized into the following
topics: Advantages and challenges of ITO, decision factors, cloud adoption, decision making, generic
outsourcing papers, outsourcing objectives, sourcing models, success factors of sourcing and decision
methods. Based on the literature study an initial list of 16 decision factors for sourcing in multiple sectors is
constructed and an overview of objectives and sourcing models is provided.

The most prominent article (based on number of citations) is by Dibbern et al. (2004). In their paper they
propose a framework to make the ITO decision. Several stages help decision makers with the ITO decision, in
these stages decision factors, sourcing models and sourcing objectives are discussed separately.

In this research besides the search for decision factors, the relationship between decision factors and sourcing
models is also investigated. Furthermore, the sourcing objective is expected to influence this relationship and
this assumption is also tested.

2.2 Phase 2: Explorative interviews

After conducting the literature study, the 16 decision factors were challenged in four explorative interviews.
All respondents work in or for educational institutes. Table 1 shows the characteristics of the respondents
interviewed. The interviews were semi-structured. The interviews were recorded during the conversations,
and transcribed and coded afterwards.
Table 1: Respondent characteristics explorative interviews
Respondent Experience / knowledge Profit / non-profit
Respondent 1 Has more than 20 years active in consultancy agency; helps companies to formulate Profit
their sourcing strategy.
Respondent 2 Has more than 20 years of experience as a consultant for several consulting Both
agencies. Is also teacher for a Dutch university and conducted a PhD study on the
sourcing decision subject, for this the respondent published multiple articles on the
outsourcing decision topic.
Respondent 3 Has more than 20 years of experience in IT. Worked for several consultancy Both
agencies, is currently employed in both a management function at a Dutch
university as well as being a professor. Did a PhD on ITO decision factors.
Respondent 4 Around 20 years employed at an organization which stimulates collaboration Non-profit
between Dutch HE institutions. Was closely involved with the tender for a joint
computing centre.

2.3 Phase 3: Survey

By means of an online survey IT decision makers in HE institutions are asked to answer three clusters of
questions. The goal of this research phase is to find the decision factors important in HE context, determine if
there is a hierarchy between the decision factors, and test if sourcing objectives influence the relationship
between the decision factors and the sourcing models. The first set of questions asks the respondent which
their objectives were for outsourcing IT. The second cluster determines the respondents view on the decision
factors important for the ITO decision. Finally in the third set, the respondents are asked to spread 10 points
over three sourcing models (make, ally and buy), this is done to determine which approach is found to be the
most relevant.

For the survey an online tool (Lime survey) is used. After the results were harvested, the results were exported
to Excel for further (qualitative) analysis.

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3. Literature
In order to determine which factors higher education institutions need to consider when making IT
outsourcing decisions, we first look at the knowledge that is already available in literature. In this section we
first discuss the IT outsourcing literature, which is followed by a description of ITO objectives and subsequently
we present possible sourcing models. Finally, current literature on decision factors is described.

3.1 IT outsourcing
IT outsourcing in general has been studied a lot during the past decades. One of the earliest and probably most
famous articles on outsourcing is the research on the outsourcing process of Kodak’s data centre to IBM (Loh
& Venkatraman, 1992). Since then many more papers have been published. Liang et al. (2016) studied 798
papers using a main path analysis on IT outsourcing in the period of 1992 until 2013 (Liang, Wang, Xue, & Cui,
2016). They divided the existing literature in two domains: ITO-decisions and ITO management. Furthermore,
ITO-decision papers can be categorized according to the following dimensions: a) to outsource or not, b) how
to outsource, and c) re-outsourcing decisions. This division between ‘a) to outsource or not?’ and ‘b) how to
outsource’ is also shown in Dibbern’s outsourcing decision framework (Dibbern et al., 2004). Dibbern et al.
(2004) designed a framework in support of ITO decisions, based upon literature from 1990 until 2004 (Dibbern
et al., 2004). They discovered that, despite the huge amount of literature on the ITO subject, a framework did
not exist. Therefore they propose a framework to map the decision process. Dibbern et al. (2004) divide the
decision process in two stages: the decision phase and the implementation phase. The decision phase consists
of three steps to answer the ‘Why?’, ‘What?’ and ‘Which?’ question. Following this, the implementation phase
works out the ‘How?’ and ‘Outcomes’ steps. During the ‘why?’ phase, the motivation or sourcing objectives
are investigated. The ‘What?’ phase answers which application, IT component or groups (parcels) should be
considered to outsource. Finally, the ‘Which?’ question completes the decision phase by adopting procedures
to make the ITO decision. In this phase guidelines are chosen to assess the criteria important to take the
decision.

Dibbern et al. (2004) comment that literature about guidelines and procedures for ITO is scarce. This study
aims to offer more insight in the ‘which step’ by finding the decision factors HE institutions should consider
when making the ITO decision. Furthermore, Liang et al. (2016) recognize the differentiation between making
the ITO decision and choosing a sourcing model to suit the need of the organization, they state: “Once
companies are determined to become involved in ITO, the follow-up question is: ‘how to outsource?” Liang et
al. (2016). In the ‘How?’ phase, organizations give direction to the implementation of their ITO decision by
focusing on vendor selection, structuring the relationship between vendor and client and managing the
outsourcing agreement. The final ‘outcomes’ step is the evaluation phase of the actual results of the ITO
decision.

3.2 ITO objectives

As stated in the why step of Dibbern’s framework (Dibbern et al., 2004), organizations need to assess risks and
rewards, advantages and disadvantages in relation to the objectives organizations try to reach by outsourcing
their IT functions. Prior research (Tajdini & Nazari, 2012; C. Yang & Huang, 2000) shows that organizations
strive for one or more of the following sourcing objectives: management goals, technological-, economic-
and/or geopolitical objectives.

In 2011, a consortium of Dutch research institutions and businesses, investigated outsourcing in the
Netherlands (Bergstra et al., 2011). This research is also known as the symbiosis research. In this
comprehensive case study research, the sourcing objectives organizations expect to achieve by IT outsourcing
are presented (table 2). Apart from the geopolitical objectives, the sourcing objectives from this study
correspond with the research of Tajdini & Nazari (2012) and Yang & Huang (2000).
Table 2: Outsourcing objectives (source: the symbiosis research (Bergstra et al., 2011))
Cluster Sourcing objectives for ‘outsourcers’
Strategic Focus on core activities
Flexibility
‘Top down pressure’
Cover IT-risks
Continuity
Financial Long term cost reduction

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Short term cost reduction

Predictable costs
Knowledge & Personnel Access to IT knowledge and experience
Access to IT personnel
Continuity of IT personnel

3.3 Sourcing models

Sourcing models show different ways to arrange the sourcing of the IT function. Examples of sourcing models
are insourcing, offshore and business process outsourcing. Kotlarski and Oshri (2012) distinguish thirteen
different sourcing models. In the ‘NIST definition of cloud computing’ (Mell & Grance, 2011) separate service
models (IaaS, PaaS, SaaS) from deployment models (private, community public and hybrid cloud).

This research is focusing on the management of on-premise applications. When looking at the OSI model
(figure 1) such applications do not necessarily cover the infrastructure, platform or software layers but can be
more specific. Therefore another classification of sourcing models is needed.

Figure 1: Service models and OSI-model (“Service models and OSI-model,” 2011)
Siep Eilander, Chief procurement officer for the Dutch government, defines three different forms of sourcing
(Eilander, 2009): ‘make, ally and buy’.

3.4 Decision factors in literature

Success factors for outsourcing are widely investigated and reasons why outsourcing projects fail or succeed
are well known (Bergstra et al., 2011; G. Delen, 2005; G. P. A. J. Delen, Peters, Verhoef, & van Vlijmen, 2016;
Kettler & Walstrom, 1993; Reilly, 2014; L. P. Willcocks & Lacity, 1999). However, the factors HE institutions
should consider before making the ITO decision are not readily available.

Kettler & Walstrom (1993), in their publication ‘The outsourcing decision, describe lessons learned from the
ITO decision making in three American companies and discuss some outsourcing factors on a high level (e.g.
‘personnel’, ‘economic’, ‘risk vs control’, ‘data or segment characteristics’, ‘organization characteristics’ and
‘supplier and contract issues’). Also other researchers mention similar high level clusters of decision factors
(Kremic, Tukel, & Rom, 2006; Lian, Yen, & Wang, 2014). Wilcocks et al. (1995) discovered six decision factors in
case study research in 30 middle and large companies from the UK and Europe (L. Willcocks, Fitzgerald, &
Feeny, 1995) while Wood found six decision factors in an education context for ERIC digest (Wood, 2000).

Using the Analytical Hierarchy Process theory (Saaty, 1987), Yang & Huang propose a decision model
containing five tangible and non-tangible decision factors (C. Yang & Huang, 2000). Baldwin et al. (2001)
conducted a case study, investigating an organization in the banking sector in the United Kingdom (Baldwin,
Irani, & Love, 2001) and Beulen, in 2004, developed a decision support model for outsourcing IT (Beulen,
2004). This model is not specific for one branch of industry, but SURF adopted this research into their
outsourcing toolkit (Surf Foundation, 2011) in a higher educational context. Delen (2005) put together a list of
generic sourcing factors based on case study research in which eighteen Dutch companies are investigated.

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Kremic et al. (2006) describe a collaboration between NASA and an American university that resulted in a
decision model in which expected benefits are assessed against potential risks resulting in a business case.

Four decision factors are stated in this research. In order to develop a decision making model for outsourcing
business processes (BPO), Yang et al. (2007) point out several decision factors. These BPO factors are also
applicable for ITO (D.-H. Yang, Kim, Nam, & Min, 2007)
In the context of IT sourcing strategy for service providing companies, Wilcocks and Graig proposed a dynamic
sourcing strategy model. Their research was conducted for Logica in association with the London school of
Economics (Logica, Wilcocks, & Craig, 2010). Assaf et al. (2011) searched for decision factors in a maintenance
company in Saoudi Arabia. While these factors are not specifically for ITO, many factors correspond with
earlier ITO research. The only factor we cannot use in this research is ‘Lack of spare parts’, which is a typical
maintenance factor. Tajdini used AHP decision method and factor analysis in a HE context (Tajdini & Nazari,
2012) while in 2014, Tjader et al. (2014) developed a decision making model, based upon balanced score card
and NHP decision making theory, conducing a case study in a commercial US company (Y. Tjader et al., 2014).

In a study on cloud computing adoption in a Taiwanese hospital five factors were found by Lian et al. (2014).
Nine factors are described by transition experts in a book on the lessons of the practice of outsourcing in the
Netherlands which is used by a Dutch consultancy agency for supporting the ITO decision (Heurn & Sicheme,
2016, pp 30-33). All the publications mentioned above state decision factors which can be used in ITO decision
making. Although geographic areas differ and also the branches of industry differ from each other, we
extracted a list of 16 decision factors that seem to be applicable in Dutch HE context. This is done by
summarizing all these factors in a matrix containing a total or 219 lines of factors from the different sources
(columns). Next, the factors were merged by manually judging the factors in comparison to the others. This
process resulted in the following sixteen (clustered) decision factors:

1. control & management

2. communications
3. contract
4. data characteristics
5. environment
6. finance
7. knowledge
8. quality & innovation power
9. suppliers & market
10. disentanglement of the application (integrations with other applications)
11. organization
12. personnel
13. risk
14. security & privacy
15. strategy
16. technology

These factors are presented to four experts in outsourcing in explorative interviews (section 4.1). Following the
explorative interviews, the decision factors will be investigated in a Dutch Higher Educational context.

4. Results & Discussion

In this section the sixteen remaining decision factors are validated through four explorative interviews,
conducted with respondents carefully chosen because of their knowledge and experience on ITO.
Subsequently the remaining factors are validated in a higher education context, by asking IT decision makers
about their opinion using an online survey.

4.1 Explorative interviews results

The sixteen decision factors derived from existing literature are validated in four explorative. The interviews
were semi-structured. In the first section of the interview, respondents were asked what factors are important
according to their knowledge and experience when outsourcing IT. In the second part, the decision factors we
found in literature are presented and the respondents are asked for their opinion about these factors. The
interviews were recorded and transcribed. The transcriptions were coded using NVIVO software. Based on

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this, two of the sixteen factors were dismissed in these interviews, resulting in the following fourteen factors
(see appendix 1): ‘Control & Management, Data characteristics, Environment, Finance, Knowledge, Quality &
innovation power, suppliers & market, dis entanglement of the application (integrations with other
applications), organization, Personnel, Risk, Security & privacy, Strategy and Technology‘. The decision factors,
together with the sourcing objectives and sourcing models are subsequently surveyed with IT decision makers
in Dutch higher education institutions.

4.2 Survey results

To further validate our findings, a questionnaire is constructed and subsequently tested with several people
(not included in the survey sample). Based on this no changes were deemed necessary. In order to determine
the population, we used the HU university of Applied sciences Utrecht and decided that on average three
decision makers per education institution is normal. Since there are 55 higher education institutions in the
Netherlands (StudieLink, 2016), the population of IT decision makers in Dutch higher education is estimated at
165 respondents. Invitations were send to several mailing lists that covered 78% of all 55 institutions. In the
invitation people were asked to forward the invitation to the decision makers in their institution (if applicable)
in order to try to increase the targeted audience. After one month, a reminder was send to all respondents.

After two months 49 respondents completely or partially filled out the survey. The response therefor was
29.7% of the total estimated population. Therefore, with a reliability of 95%, an error margin of 11,77% has to
be taken into account.

4.2.1 Sourcing objectives

In the first section of questions, respondents are asked which sourcing objectives they have when outsourcing
on-premise applications. Forty respondents answered this question of which 70% stated strategic objectives as
primary goal, 18% wanted to achieve knowledge & personnel objectives while the remaining 12% had financial
objectives. When comparing the two types of HE institutions, the financial objective stands out. None of the
university respondents indicated to have financial objectives, while the other two objectives are relatively
similar (See Table 3). As three respondents are working for a consulting company and not for an HE institution,
the number of respondents is 37.
Table 3: Sourcing objectives Dutch higher education institutions; Universties of Applied Sciences versus
universities
Sourcing objectives
n Strategic Knowledge & personnel Financial
Universities of applied 28 71% 18% 11%
sciences
Research Universities 9 78% 22% 0%

4.2.2 Decision factors

In the second part of the questionnaire, the respondents ae asked to indicate what factors are important when
making the ITO decision. First they are challenged to list factors without being presented our findings.

Interestingly, no new factors were mentioned in comparison with the fourteen factors. Next the respondents
were asked to rank the decision factors, putting the most important factor at the top and finishing with the
least important factor. The respondents were obliged to fill out at least six factors. This question has been
filled out by 36 of the respondents. The survey tool processed these rankings in fourteen columns per
respondent. In order to transform these lines into one hierarchy ranking, a linear weight was added to the
factors. Column one (with the number one factor from all respondents) was given a weight of fourteen,
column two was given a weight of thirteen, etc. The fourteenth column was given a weight of one. Combining
all these weighted factors, the linear hierarchy as shown in Figure 2 was derived.

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Figure 2: Graphic representation of hierarchy of decision factors, ranked linear

Dividing decision makers by type of institutions shows a different ranking. The same applies to the size of the
institution, measured by their number of students.

Table 4 presents the top five decision factors based on type and size of the institution (more or less than 5000
enrolled students). Three factors appear to be important, despite type of the institution. These factors are:
‘Strategy’, ‘Security & Privacy’ and ‘Knowledge’.
Table 4: Top five decision factors, sorted after institution type and size
Top five decision factors, sorted after institution type and size
All institutions, all University of Applied Research < 5000 students > 5000 students
sizes Science University
1 Strategy Strategy Security & Strategy Security & privacy
privacy
2 Security & privacy Economics Strategy Security & Quality &
privacy Innovation power
3 Knowledge Organization Knowledge Knowledge Strategy
4 Economics Knowledge Technology Economics Economics
5 Organization Security & privacy Personnel Organization Technology

4.2.3 Sourcing models

The final survey question tried to detect a relation between decision factors and sourcing models.
Respondents are asked to fill out this question with the sourcing objective in mind as stated earlier.

Respondents were asked to divide 10 points (as they see fit) per decision factor across the three different
sourcing models. For example when considering decision factor ‘security & privacy’, if a respondent decides
that administration of the application in-house is more favourable than in the outsourced scenario, than
sourcing model ‘make’ should get the most points and ‘buy’ the least. This could result in 8 point for make, 2
for ally and 0 for buy. Or 5 for make, 3 for ally and 2 for buy.

27 of the respondents answered this question. Although there is a low response rate (27 out of an estimated
population of 165), a pattern seems to occur when highlighting the largest score per decision factor (see Table
5).
Table 5: Relation between decision factors and sourcing models

Sourcing model
Decision Factor MAKE ALLY BUY
Control & Management 113 82 78
Data characteristics 115 79 87
Environment 90 77 98

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 Rik Nijman and Pascal Ravesteijn

Sourcing model
Decision Factor MAKE ALLY BUY
Economics 97 61 104
Knowledge 81 73 109
Quality & Innovation power 74 84 104
Suppliers & Market 66 74 121
Disentanglement of the application
(integrations) 105 73 85
Organization 103 69 91
Personnel 101 64 98
Risk 90 67 106
Security & Privacy 112 67 84
Strategy 118 61 84
Technology 61 71 129

As table 5 shows, there seems to be an indication that sourcing objectives influence the decision making
pattern.

5. Conclusion, limitations and future research

Based on this research fourteen decision factors are found to be important when making the ITO decision in
Dutch higher education context. The hierarchy of these factors are (in order of importance): ‘Strategy’,
‘Security & Privacy’, ‘Knowledge’, ‘Economics’, ‘Organization’, ‘Technology’, ‘Control & Management’, ‘Quality
& Innovation power’, ‘Risk’, ‘Personnel’, ‘Disentanglement of the application (integrations)’, ‘Suppliers &
Market’, ‘Environment’ and ‘Data characteristics’. However the ranking is found to be different according to
the type of institution. We also found that 70% of the IT decision makers in Dutch HE institutions aim to
achieve strategic objectives by outsourcing IT applications, such as: ‘focus on core activities’, ‘achieving
flexibility’, ‘top-down pressure’, ‘covering IT risk’ and ‘continuity’. Finally, a relationship seems to be present
between decision factors and sourcing models, certain factors seem to imply a specific sourcing model is
preferred.

5.1 Limitations
Despite efforts to raise the response rate for this study, it was limited to 29,7% of the estimated population. As
a consequence, conclusions must be interpreted with certain reservation. Furthermore, the survey results
were analysed qualitatively, it was not possible to statistically prove a relationship between decision factors
and sourcing models due to a limited amount of data.

5.2 Future research

Based on the current findings we find that further research is needed. First, the factors need to be tested, an
experiment is recommended in order to compare situations both using and not using the factors. Second,
factors should be further validated in different settings such as size and type of organization. This
differentiation could be interesting for the education institutions or consulting companies when making the
ITO decision. Third, the survey was analysed qualitatively but if more data is collected a quantitative analysis is
possible. As the sourcing objectives seem to influence the results, additional research in this area can be
undertaken. Finally, in order to make the ITO decision, the decision factors should be incorporated into a
decision model. Dibbern et al (2004) suggested a framework to make decisions (in the ‘which’ and ‘how’ step
the factors could help to choose a sourcing model suitable per application) which can be explored further.
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Appendix 1: Decision factors of IT Outsourcing (including source)
Factor Description
Control & Management Does managing of the application become
more complex when changing the
sourcing model?
Data characteristics Is it necessary to convert the data
structures when outsourcing the
application?
Environment Does the (geographic) location of the
application matter to organizations after
outsourcing the application? Also take in
mind government support in case of
offshoring.
Finance What financial consequence does
outsourcing bring on the short and long
term? Are currency differences important
when outsourcing?
Knowledge Does your organization need specifc
knowledge to maintain the application?
Also is there sufficient knowledge
available in your company of in the
market?
Quality & Innovation power What consequences does changing the
sourcing model have on the quality and
innovation power of the application
administration?
Suppliers & market Does the market offer sufficient vendors
to enable education institutions to choose
between vendors?
Integrations How complex is it to ‘free’ the application
from the integrations already existing in
the current infrastructure?
Organization What consequences does outsourcing
bring to the organization. Hereby think
about resources, capabilities and culture.
Personnel How will outsourcing of the application
effect the current personnel. Not only for
IT personnel, but also for functional
management employees in the current
company.
Risk Does outsourcing increase or decrease the
level of uncertainty
About the future business environment?
Security & privacy Is the data that the application store to
such a degree that certain sourcing
models are not to be considered?
Strategy What is the strategic importance of the
application to the organization? Does this
application enable the organization to
differentiate itself from its competitors?
Technology Does technology contribute to increasing
the quality of the competitive position?
Also does the organization possesses
sufficient technical knowledge to maintain
the application (now and in the future)?
197
Source
(Assaf, Hassanain, Al-Hammad, & Al-Nehmi, 2011; Kettler &
Walstrom, 1993; Shepherd, 1999; Y. Tjader et al., 2014;
Wood, 2000; C. Yang & Huang, 2000)
(Assaf et al., 2011; Kettler & Walstrom, 1993)
(Logica et al., 2010)
(Baldwin et al., 2001; Beulen, 2004; G. Delen, 2005; Heurn &
Sicheme, 2016; Kettler & Walstrom, 1993; Lian et al., 2014;
Logica et al., 2010; Shepherd, 1999; Y. Tjader et al., 2014;
Wood, 2000; C. Yang & Huang, 2000)
(Assaf et al., 2011; Beulen, 2004; G. Delen, 2005; Heurn &
Sicheme, 2016; Lian et al., 2014; Logica et al., 2010; Y. Tjader
et al., 2014; L. Willcocks et al., 1995)
(Assaf et al., 2011; Beulen, 2004; Heurn & Sicheme, 2016;
Logica et al., 2010; Shepherd, 1999; L. Willcocks et al., 1995;
Wood, 2000; C. Yang & Huang, 2000)
(Assaf et al., 2011; Baldwin et al., 2001; Beulen, 2004; Heurn
& Sicheme, 2016; Kettler & Walstrom, 1993; Logica et al.,
2010; Y. Tjader et al., 2014; L. Willcocks et al., 1995)
(Assaf et al., 2011; G. Delen, 2005; Heurn & Sicheme, 2016;
Lian et al., 2014; L. Willcocks et al., 1995)
(Assaf et al., 2011; Baldwin et al., 2001; G. Delen, 2005;
Kettler & Walstrom, 1993; Lian et al., 2014; L. Willcocks et al.,
1995)
(Baldwin et al., 2001; G. Delen, 2005; Heurn & Sicheme,
2016; Kettler & Walstrom, 1993; Kremic et al., 2006; Lian et
al., 2014; Logica et al., 2010; Wood, 2000)
(Logica et al., 2010; L. Willcocks et al., 1995; Wood, 2000; C.
Yang & Huang, 2000)
(Heurn & Sicheme, 2016; Lian et al., 2014)
(Assaf et al., 2011; Beulen, 2004; Heurn & Sicheme, 2016;
Kremic et al., 2006; Y. Tjader et al., 2014; L. Willcocks et al.,
1995; Wood, 2000; C. Yang & Huang, 2000)
(Assaf et al., 2011; Y. Tjader et al., 2014; C. Yang & Huang,
2000)
Leadership and Entrepreneurship: Preliminary Validation of
Covenant Entrepreneurial Effectiveness Scale
Jonathan A. Odukoya, Aize Obayan, Maria-Stella C. Odafe, Charles Iruonagbe, David
Igbokwe, Olushola Oyero, E.N. Abiodun-Eniayekan, Elizabeth Olowookere, Nchekwube
Excellence-Oluye, David Abasilim, Emmanuel Uba and Lily Chimuanya
Covenant University, Ota, Nigeria
adedayo.odukoya@covenantuniversity.edu.ng
odafemariastella@gmail.com
aize.obayan@covenantuniversity.edu.ng

Abstract: Attaining and maintaining leadership in any field of human endeavour requires regular valid measurement and
evaluation. The latter is the quest of Psychometrics. The core objective of this study, therefore, was to develop and
attempt preliminary validation of the Covenant Entrepreneurial Effectiveness Scale [CEES], a monitoring device for
entrepreneurs. The CEES was based on Schumpeter’s theory of Innovation in entrepreneurship and Leibenstein’s theory of
entrepreneurship, combined with current observations of SMEs in a developing economy. The core research questions
were: What are the internal consistency reliabilities of the CEES? What are the discriminant validity indices of the CEES?
One hundred and ninety-four (194) small scale entrepreneurs were randomly sampled from Ado-Odo Ota local
government area in Ogun State, Nigeria. There were 128 males and 66 females with age ranging from 20-65 years. The
mean and standard deviation of their age were 38.05 and 8.56 respectively. The responses to the CEES were analysed with
Cronbach alpha, Guttman Split-half and Spearman-Brown coefficients and independent student t-test. The results showed
that the CEES has significant internal consistency reliability (0.755), split-half reliability (0.742) and discriminant validities
for entrepreneurs who were differentiated on Gender (t=2.75, p=0.007), Age (t=2.003, p=0.048), House (t=5.68, p=0.0) Car
(5.89, p=0.0) and Annual Profit (t=3.432, p=0.001). It was recommended that the CEES be administered on SMEs in other
parts of the globe to further ascertain its reliability and validity for regular monitoring and evaluation, to catalyse
entrepreneurial leadership.

Keywords: Entrepreneur, Leadership, Effectiveness, Testing, Validity, Monitoring, Evaluation

1. Introduction
Nigeria, like many developing economies around the world, is awash with entrepreneurship opportunities.
However, the realization of the full potential of these opportunities has been dampened by many factors.
Several policy interventions by successive governments aimed at stimulating entrepreneurship development
failed to achieve the desired goals. One of the reasons for this failure is ineffective monitoring.
Entrepreneurship is the engine room of development worldwide (Qian, 2018). Regular, reliable and valid
measurements of entrepreneurial effectiveness is therefore imperative, not only for maintaining leadership
position in the field, but for driving unending national development. This is the essence of the paper.

The Federal Government of Nigeria has made reasonable investment in the development of small scale
businesses. Additionally, some faith-based and welfare spirited organizations like Living Faith Church, Daystar
Christian Church, Redeemed Christian Church of God, Covenant University and Tony Elumelu Foundation have
also played significant roles in creating entrepreneurial awareness and building capacity among African youths.
Covenant University particularly has been prominent in driving entrepreneurial development and practice.

It is now common knowledge that the development of national economies is contingent on concerted
development of small scale enterprises (Chinonye, Akinbode and Obigbemi, 2014). In many developing
economies, very little is done in preparing youths for entrepreneurship, hence the rising rate of
unemployment and the attendant social vices around the world. Since Governments cannot provide jobs for
everyone, it is apparent entrepreneurship is the most plausible and logical panacea. Youths should be
equipped with entrepreneurship skills, thus preparing them to become employers of labour and not
employees, as it has erstwhile been the practice.

Unemployment has become an issue of international concern. Part of the reasons is the attendant social vices
that often accompany victims of unemployment. Out of desperation and frustration, unemployed youths (who
are full of energy) engage in vices such as armed robbery, human trafficking, kidnapping, militancy and
prostitution. Others are used by Politicians as political thugs.

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 Jonathan A. Odukoya et al.

Organizations putting up vacancy adverts are often inundated with applications from teeming population of
job seekers. Recently, a mammoth crowd of youths converged at the gate of a newly established multinational
company in Nigeria. The first impression was that the company was conducting an interview. Alas, closer
scrutiny revealed that the over 500 applicants were submitting applications for the position of 12 petrol
attendants in the company’s newly opened petrol station. It is the same pattern in many developing nations
around the world.

Nigeria currently has 144 universities. Assuming that Polytechnics and Mono-technics summed up to the same
figure, it implies Nigeria has about 300 tertiary institutions. Conservatively, let us further assume that each of
tertiary institutions has an average of 1000 graduates annually. That yields extra 300,000 job seekers annually.
It is apparent the Government alone could hardly provide the required employment. Entrepreneurship is
clearly the way out. In 2006, the Nigeria Federal Government, through the National University Commission,
made a concerted effort to solve the escalating unemployment challenge by making entrepreneurship study a
compulsory course for all higher education students. Ironically, more than one decade after this
promulgation, many Nigerian graduates still remain unemployed long after graduation (Ikebuaku and Dinbabo,
2018).

However, entrepreneurs have their challenges. They need requisite entrepreneurial skills to stabilise their
businesses to the point of being capable of employing more hands. Research has shown that almost 80% of
new businesses and start-ups tend to fail within the first three years of starting. The reason for the high failure
rate is often lack of entrepreneurial skill. To salvage this situation, it is imperative that an empirically validated
entrepreneurship effectiveness monitoring scale be developed for public use. This is the core objective of this
study. The idea is to place the validated instrument on the internet, such that entrepreneurs, worldwide, can
gain easy access to respond to the scale. The automated scale is expected to autoscore, auto-interprete and
auto recommend appropriate remedial interventions for identified areas of entrepreneurial skill weakness.
The
placement of the CEES on the internet is not part of the current study, rather it is an aftermath project.

Entrepreneurial Theories backing CEES

According to Śledzik (2013), the concepts of entrepreneurship and innovation are probably Schumpeter’s most
distinctive contributions to economics. One of the most common themes in Schumpeter’s writings was the
role of innovation and entrepreneurship in economic growth. Schumpeter highlighted the function of
entrepreneurs as principally that of carrying out new combinations. He viewed the occurrence of
“revolutionary” change as the core of “economic development”.

This theory explains how innovation gives rise to entrepreneurial growth which is key in entrepreneurial
performance. Schumpeter’s position is that anybody seeking to make profits must innovate. He further
opined, we are living in a complex and dynamic world in which innovation and entrepreneurship are occupying
decisive roles in economic development (Schumpeter, 1934). According to him, innovation in business is the
major reason for prosperous business. His proposed process of structural change comprises of 5 steps:

x Launch of a new product or a new process of already known product.

x Application of new method of production or sales of a product (not yet proven in the industry).
x Opening of a new market (the market for which a branch of the industry was not yet represented)
x Acquiring new sources of supplying raw materials or semi-finished goods
x Creation of new industry structure – such as the creation or destruction of a monopoly position.

Another notable theory of entrepreneurship, the X-efficiency theory, was proposed by Harvey Leibenstein of
Harvard University. Leibenstein (1968) posited that X-inefficiency is the difference between efficient behavior
of businesses assumed or implied by economic theory and their observed behavior in practice caused by a lack
of competitive pressure. Leibenstein enumerated the characteristics of successful entrepreneurs as: risk
bearing, taking ultimate responsibility, gap-filler, the ability to evaluate economic opportunities, the ability to
perceive buying opportunities in different markets, the ability to perceive selling opportunities in different
markets, determine and engage in profitable activities, ability to minimize cost so as to achieve maximum
efficiency and profitability, Ability to develop new goods or processes in demand but not in supply and

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 Jonathan A. Odukoya et al.

recognizing market trends. These points turned out to be the key indicators of entrepreneurship effectiveness
used in the CEES.

The core research question and hypotheses for this study are:

1. What are the internal consistency reliabilities for the CEES?

2. There is no significant difference in the entrepreneurial effectiveness of male and female
entrepreneurs.
3. There is no significant difference in the entrepreneurial effectiveness of young and elderly
entrepreneurs.
4. There is no significant difference in the entrepreneurial effectiveness of entrepreneurs having personal
houses and those without personal houses.
5. There is no significant difference in the entrepreneurial effectiveness of entrepreneurs having personal
car(s) and those without personal car.
6. There is no significant difference in the entrepreneurial effectiveness mean of entrepreneurs making
high profit and those making little or no profit.

2. Method
The survey research design was adopted in this study. A sample of one hundred and ninety-four (194)
participants was randomly drawn from the population of small scale entrepreneurs in Ado-odo ota local
government of Ogun State. The distribution of the sample by gender and business type are displayed in Tables
1 and 2 below.
Table 1: Sample Distribution by Gender

Gender Frequency Percent

Male 129 66.5
Female 65 33.5
Total 194 100

Table 2: Sample Distribution by Business Type

Business Type Frequency Percent

Fashion 26 13.4

Shoe Making, Barbing, Photography etc 21 10.8

Selling Building Materials 15 7.7

Electronics & Electrical 20 10.3

Home and Kitchen Utensils 12 6.2

Motor Spare Parts 9 4.6

Petty Trading 15 7.7

Drinks and Foods 31 16

Livestock and Poultry 11 5.7

Books 9 4.6

Medicals 14 7.2

Sports 11 5.7

Total 194 100

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 Jonathan A. Odukoya et al.

Frequency of Entrepreneurship Types

Sports 11
Medicals 14
Books 9
Livestock and Poultry 11
Drinks and Foods 31
Petty Trading 15
Motor Spare Parts 9
Home and Kitchen Utensils 12
Electronics & Electrical 20
Selling Building Materials 15
Shoe Making, Barbing, Photography etc 21
Fashion 26
0 5 10 15 20 25 30 35

Figure 1: Bar Chart showing Frequency Distribution of Respondents by Business Type

From Table 2 and Figure 1, Drinks and food entrepreneurs topped the list of respondents [n = 31, 16%],
followed by Fashion entrepreneurs [n = 26, 13.4%] and Shoemaking, barbing and photography entrepreneurs
[n = 21, 10.8%].

Instrument
The instrument used for data collection, the Covenant Entrepreneurship Effective Scale [CEES], was developed
and validated by the researchers. As mentioned above, the items were derived from the key indicators of
entrepreneurship effectiveness as depicted by established theories of entrepreneurship (Leibenstein, 1968
and Schumpeter, 1934). Consequently, the CEES has three sections – Section A: Biodata, Section B:
Entrepreneurial effectiveness section and Section C: open ended questions. Section B contains 11 sections:
Profitability, Administrative & Financial Management, Research and Innovation, Staff training & Motivation,
Sales & Marketing, Customer Service, Accessing Cheaper Supply Sources, Expansion Drive/New Business
Opportunities, Investment Drive, Improving Infrastructural facilities, and Handling Harassment from
Government Officials. Prompts include items like: My company has adequate fund to operate with, my
company makes profit every year, and research helps our marketing team to discover new sales strategies.
There are 41 items in Section B. The four-point response scale of Strongly Agree, Agree, Disagree and Strongly
Disagree was used. The reliability and validity indices of the CEES are provided under results.

Procedure for Data Collection and Analyses

After the establishment of the content validity of CEES via concerted reviews by psychometric and
entrepreneur experts; cum establishment of face validity by potential end-users, research assistants were
trained on administration procedure and sent to the field to collect data. Consent of the respondents was also
obtained to use their responses for research purposes. Out of over 200 questionnaires administered, 194
were retrieved. Thereafter the responses were coded and entered into the SPSS for analyses. In line with the
research question and hypotheses raised for this study, frequency count, percentage, bar chart and
independent student -test were used to analyses the data. The results are presented below.
3. Results
Reliability
Table 3: Internal Consistency Reliability of CEES

Reliability Types r
Cronbach's Alpha [N of items=40] 0.755
Spearman-Brown Coefficient 0.742
Guttman Split-Half Coefficient 0.735

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 Jonathan A. Odukoya et al.

Table 3 shows that the CEES has sufficient internal consistency reliability, which ranged from 0.735 (Guttman
Split half) to 0.755 [Cronbach alpha).

Validity
Table 4: Test of mean difference in Entrepreneurial effectiveness of Male and Female

Gender N Mean Std. Dev. t df Sig.

Male 129 118.031 10.4597
2.75 192 0.007
Female 65 113.354 12.4968

The CEES offered indices of discriminant validity between male and female entrepreneurs (t=2.75, p=0.007),
with male outperforming female respondents in entrepreneurial effectiveness.
Table 5: Test of mean difference in Entrepreneurial effectiveness of Young and Elderly Groups

Age_Group N Mean Std. Dev. t df Sig.

20 to 35 yrs 71 115.5634 11.6346
-2.003 82 0.048
51 to 65 yrs 13 122.2308 6.50838

The CEES offered indices of discriminant validity between younger and older entrepreneurs (t=2.003, p=0.048),
with older respondents [31-65 yrs] outperforming younger respondents [20-35 yrs] in entrepreneurial
effectiveness.
Table 6: Test of mean difference in Entrepreneurial effectiveness of those with and without personal houses

House_Ownership N Mean Std. Dev. t df Sig.

Has no personal house 90 112.3778 12.2819
-5.68 187 0
Has personal house(s) 99 120.8788 8.0309

In Table 6, the CEES offered indices of discriminant validity between respondents who had personal houses
and those who don’t (t=5.68, p=0.0). Respondents who own personal houses tend to exhibit significantly more
entrepreneurial effectiveness.
Table 7: Test of mean difference in Entrepreneurial effectiveness of those with and without personal cars

Car_Ownership N Mean Std. Dev. t df Sig.

Does not have a car 93 112.2581 12.41
-5.89 188 0
Have car(s) 97 121.0309 7.66

In Table 7, The CEES further offered indices of discriminant validity between respondents who had personal
cars and those who don’t (t=5.89, p=0.0). Respondents who own personal cars tend to exhibit significantly
more entrepreneurial effectiveness.]
Table 8: Test of mean difference in Entrepreneurial effectiveness of those making profit below and above One
Million annually

Annual_Profit N Mean Std. Dev. t df Sig.

4 to 1 million naira 36 123.1667 4.46894
3.432 66 0.001
Below 1 million naira 32 119.3125 4.78868

From Table 8, the CEES further offered indices of discriminant validity between respondents who made profit
above and below one million naira (t=3.432, p=0.001). Respondents who made profit from one to four million
naira tend to exhibit significantly higher entrepreneurial effectiveness than those who made profit below one
million. Current exchange rate is $1 = N360.

4. Discussion
The following are the summary of findings in this study:

1. CEES has sufficient internal consistency reliability, which ranged from 0.735 (Guttman Split half) to
0.755 [Crombach alpha).

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2. CEES offered indices of discriminant validity between male and female entrepreneurs (t=2.75,
p=0.007), with male outperforming female respondents in entrepreneurial effectiveness.
3. CEES has acceptable indices of discriminant validity as depicted by indices of significant difference
between the entrepreneurship effectiveness of respondents who had personal houses and those who
were not having personal houses (t=5.68, p=0.0). Those who had personal houses displayed higher
entrepreneurial effectiveness.
4. CEES offered indices of discriminant validity between younger and older entrepreneurs (t=2.003,
p=0.048), with older respondents [31-65 yrs] outperforming younger respondents [20-35 yrs] in
entrepreneurial effectiveness.
5. CEES further offered indices of discriminant validity between respondents who had personal cars and
those who were not having personal cars (t=5.89, p=0.0). Respondents who own personal cars tend to
exhibit significantly more entrepreneurial effectiveness.
6. CEES further offered indices of discriminant validity between respondents who made profit above one
million naira and those who made profit below one million naira (t=3.432, p=0.001). Respondents who
made profit from one million to four million naira tend to exhibit significantly higher entrepreneurial
effectiveness than those who made profit below one million.

The finding that CEES has sufficient internal consistency reliability suggests that the CEES has acceptable
indices of internal consistency. This is an indication of the homogeneity of the items comprising the
instrument. Theoretically, this is expected, since the unitary construct the CEES measures is entrepreneurship
effectiveness. This point is supported by Goforth (2015), who opined that the higher the Cronbach alpha (α),
the more the items have shared covariance and probably measure the same underlying concept.

On the finding that CEES offered indices of discriminant validity between male and female entrepreneurs, with
male outperforming female respondents in entrepreneurial effectiveness, it has been found male tend to be
more aggressive and persistent than their female counterparts (Ellis, 2014). These traits appear to make the
difference between thriving and ailing entrepreneurs. For instance, Lechner et al. (2017) observed that gender
differences in work values explained a substantial share of the gender gap in entrepreneurial and leadership
aspirations. Men tend to have higher support for extrinsic rewards. These finding suggests that work values
are implicated in shaping young people's aspirations to business leadership and consequently contribute
strongly to the gender gap in the world of entrepreneurship.

The finding that the CEES offered indices of discriminant validity between younger and older entrepreneurs
(t=2.003, p=0.048), with older respondents [31-65 yrs] outperforming younger respondents [20-35 yrs] in
entrepreneurial effectiveness hardly find support in the literature. For instance, as opposed to the finding in
this current study, Petersen (2017) observed that as people got older, they tended to believe they had fewer
opportunities for entrepreneurship and fewer skills required to be successful entrepreneurs. These beliefs
tend to explain the link between age and entrepreneurship – older people were less confident in their ability
to be entrepreneurs. Of-course, there were exceptions. For some people, their entrepreneurial tendencies lie
dormant until retirement. Generally, It has been found that elderly people who succeeded as entrepreneurs
were wealthier, more educated and confident in their abilities. Lange (2014), in a more comprehensive study,
found that there is a relationship between age and different types of entrepreneurship. For example,
analysis of MIT alumni who were tech entrepreneurs showed that the median age of first-time entrepreneurs
declined from age 40 in the 1950s to 28 in the 1990s.

The finding that CEES furnished indices of discriminant validity by differentiating between entrepreneurs who
made profit above one million naira, own personal cars and own personal houses are clearly in the same
direction. The primary goal of all business enterprises is to make profit. It is the spill over from such profits
that are often used to buy cars and build personal houses. The discriminant validity of CEES, therefore, is
based on the expectation that entrepreneurs who score high in the CEES are applying the effective principles
of entrepreneurship and consequently should be making good profit that spills over to allow them acquire
personal cars and houses. The results obtained along this line of hypotheses confirmed this expectation, and
this was corroborated by Seth (2018). In her article tagged, ‘Entrepreneurs make money’, she reiterated the
neoclassical economic theory which states that lack of suitable rewards discourages entrepreneurs to take on
risk and put in extra effort. Revision World (2018) concisely puts it this way: “Why is profit important to an
entrepreneur? It provides a measure of success for the business, as well as acting as an indicator to others.

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Prospective lenders use the profit figure to decide whether to lend, and potential entrepreneurs look at
present profit levels when deciding on entering the industry”.
5. Conclusion & Recommendation
This study investigated the reliability and validity of the Covenant Entrepreneurship Effectiveness Scale [CEES]
with the aim of offering entrepreneurs a valid monitoring tool what could reliably show them the areas to firm
up. It is expected this monitoring tool will not only facilitate prompt correction of poor practices, but is
expected to catalyze productivity and ultimately national development. Findings from this study tend to affirm
the reliability and validity of the CEES. Though further study is recommended to affirm the findings of this
study, it is apparent from the content and construct validity results that the CEES can safely be used by
entrepreneurs for the monitoring purpose. Entrepreneurs are advised to search for training outlets under
proven entrepreneurial mentors to overcome areas of weaknesses revealed by CEES.
References
Chinonye Love, Akinbode M. and Obigbemi I.A (2014) “Esusu as an effective strategy for achieving the entrepreneurial
objectives of SSEs: An exploratory study of entrepreneurs in Ado-Odo Otta, Ogun State, Nigeria” Proceedings of the
23rd International Business Information Management Association Conference, IBIMA 2014 Volume 1, 2014, Pages
2885-2904 Valencia; Spain; 13-14 May 2014; Code 107075.
Goforth, Chelsea (2015) “Using and Interpreting Cronbach Alpha”, Research Data Services, Online
http://data.library.virginia.edu/using-and-interpreting-cronbachs-alpha/ University of Virginia Library.
Ikebuaku K. and Dinbabo M. (2018) “Beyond entrepreneurship education: business incubation and entrepreneurial
capabilities”, Journal of Entrepreneurship in Emerging Economies, Vol. 10, Issue 1, pp 154-174
Lange, Julian and Marram, Ed and Murphy, Ian and Marquis, Joel and Bygrave, William D., (2014) “Born Lucky? A Study of
the Birthdates and Ages of Paradigm”, Shifting Entrepreneurs, Available online: https://ssrn.com/abstract=2412096 or
http://dx.doi.org/10.2139/ssrn.2412096.
Lechner et al., (2017) “What drives future business leaders? How work values and gender shape young adults'
entrepreneurial and leadership aspirations”, Journal of Vocational Behavior, Vol. 107, pp.57-70.
Leibenstein, Harvey (1968) “Entrepreneurship and Development”, The American Economic Review, Vol. 58, No. 2, pp. 72-83
Marie Ellis (2014) “Male aggression: testosterone increases brain's threat response”, Medical News Today, Online:
https://www.medicalnewstoday.com/articles/280915.php.
Petersen, Neil (2017) “Entrepreneurship and Age”, AllPsych, Online https://blog.allpsych.com/entrepreneurship-and-age/
Schumpeter, J.A. (1934) “The theory of economic development: an inquiry into profits, capital, credit, interest and the
business cycle”, Harvard Economic Studies, Vol. 46, Harvard College, Cambridge, MA.
Schumpeter’s View on Innovation and Entrepreneurship. Available from:
https://www.researchgate.net/publication/256060978_Schumpeter's_View_on_Innovation_and_Entrepreneurship
[accessed May 09 2018].
Seth Shobhit (2018) “Entrepreneurs Make Money: Why, How, Where & When”, Investopedia, Online
https://www.investopedia.com/articles/personal-finance/101414/why-how-where-and-when-entrepreneurs-make-
money.asp#ixzz5Fhr18E56
Śledzik K., (2013) “Schumpeter's view on innovation and entrepreneurship” (in:) Management Trends in Theory and
Practice, (ed.) Stefan Hittmar, Faculty of Management Science and Informatics, University of Zilina & Institute of
Management by University of Zilina.
Qian H. (2018) “Knowledge-Based Regional Economic Development: A Synthetic Review of Knowledge Spillovers,
Entrepreneurship, and Entrepreneurial Ecosystems”, Economic Development Quarterly, Vol 32, issue 2, pp 163-176.

Abridged Abstract
Attaining and maintaining leadership in any field of human endeavour requires regular valid measurement and
evaluation. The core objective of this study, therefore, was to develop and attempt preliminary validation of
the Covenant Entrepreneurial Effectiveness Scale [CEES], a monitoring device for entrepreneurs. The CEES was
based on Schumpeter’s and Leibenstein’s theory of entrepreneurship. One hundred and ninety-four (194) small
scale entrepreneurs were randomly sampled from Ado-Odo Ota local government area in Ogun State, Nigeria.
The responses to the CEES were analysed with Cronbach alpha, Guttman Split-half and Spearman-Brown
coefficients and independent student t-test. The results showed that the CEES has significant internal
consistency reliability (0.755), split-half reliability (0.742) and discriminant validities for entrepreneurs who
were differentiated on Annual Profit (t=3.432, p=0.001). It was recommended that the CEES be administered on
SMEs in other parts of the globe to further ascertain its reliability and validity for regular monitoring and
evaluation, to catalyse entrepreneurial leadership.

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Network Decentralized Regulation with the Fog-edge Computing
and Blockchain for Business Development
Nadezhda Pokrovskaia1, Tatiana Khansuvarova2 and Ruslan Khansuvarov2
1
Peter the Great Saint-Petersburg Polytechnic University, Saint-Petersburg, Russia
2
Saint-Petersburg State University of Economics, Saint-Petersburg, Russia
nnp@bk.ru
khansuvarova.tatiana@gmail.com
ruslan.hansuvarov@gmail.com

Abstract: The changings in the world economic system are characterized by the growing decentralization of regulative
mechanisms. The technical decentralization of streaming big data treatment is fulfilled with the fog and edge computing,
the social regulation is transformed with the transactions through blockchain and sharing economy. The cryptocurrencies
and smart contracts are the examples of the distributed regulation among participants, built on the basis of blockchain
technologies and within the space of individuals’ deals. The public regulation is transforming from the State apparatus
toward technical equipment and software including decentralized systems in the contrast to the previously developed
heavy sluggish systems, which are constantly showing institutional traps and errors, causing the data loss and having a low
level of usability. In this paper, we interpret the networking as the process of the inclusion of every concerned actor into
local or global group with close communicative ties taking part in a socioeconomic activity. The networks are perceived as,
both, social communities and technical communications. In Russia, Masterchain project is an example of the attempt to
introduce the technical instrument of the confident relationship in the banking sector and private property deals,
especially, in real-estate sector, which met the social and institutional resistance. The research purpose is to find the
essential features of the networking as a process of fostering the new social organization, on the basis of individual choices
instead of a centralized officially approved system, through the digital democracy and smart economic environment
including the new level of the security attained, cybersecurity and personal safety, as the outcome. The conceptual
research reflects the analysis of the evolution of regulative mechanisms of society organization due to the implementation
of technical regulative approaches, devices and software. The study of the spread of fog computing and blockchain use is
carried out with the survey of students and of enterprises’ managers. The analysis of the obstacles that interfere into the
process of the fog computing and blockchain implementation is based on the examining the Masterchain project and its
late and difficult introduction since 2016, and the revealed ignorance of the fog computing use. The research outcome is
the understanding of new ethical and economic regulative mechanisms to be built.

Keywords: fog computing, edge computing, blockchain, regulation, networking

1. Introduction
The digital economy as a symbolic concept reflects the new understanding of the economic activity as a social
function based on new computing capacities and intelligent systems. The information and communication
technologies (ICT) changed the several core elements of economy and business, re-oriented them to the
interests of people, e.g., with the crowd-funding platforms (such as platforms Indiegogo, kickstarter etc.) and
peer-to-peer investments, or with open sources approach (where the production process is improved with the
customers’ participation), even if this approach is used by profit-driven companies (such as AirBnB, that invited
customers to improve the translation to national and local languages).

The sharing economy, e-democracy and smart environment raise ethical and political questions on the choice
(or combination) of the centralized or decentralized path to foster the regulative mechanisms. Technological
solutions allow individuals to self-regulate and to auto-organize the relations. The research is aimed to reveal
institutional obstacles and socio-ethical concerns of the new technical regulative solutions.
2. Background: Literature review on the Decentralisation as technical and social
regulative mechanisms evolution
The global evolution of social models reflects the growing decentralization of regulative mechanisms. Since the
appearance of the Declaration of the Independence of Cyberspace (Barlow, 1996), the decentralized
governance of communities has been transferred from the physical localities toward the internet as a space of
the freedom from the centralized authorities and established incumbents, with the typical features such as
corruption, regulatory capture, lax oversight and too close relationship between capital and State, between

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business and regulators. The technologies of distributed consensus (including blockchain) were conceived to
solve the problem of the lack of trust in a central administrator (Pokrovskaia, 2016).

Today, the internet is not completely free from the pressure of authorities, and first of all, from the impact of
financial and tax authorities (Wei et al, 2016), which have sophisticated methods to imply taxation’ rules on
the online-commerce and services (Pokrovskaia, 2017), online banking and applications. The political control is
also spreading on the social media or messengers such as Telegram (blocked in Russia) or Facebook (blocked in
China). The e-democracy penetrates the different levels and geographic places and is now used not only for
private initiatives and petitions, or intra-corporate voting, but for the public sphere regulation (McCorry et al.,
2017) and, e.g., the electronic voting is proposed by the Moscow government for the election in Sep 2018.

National policies to digitizing of economic, political and even social processes began with the most rationalized
sphere of human life activity - industrial processes. The concepts of “Industry 4.0”, “Connected factories” and
“Industrie du futur” are adopted respectively in Germany, Japan and France as national programs for the total
digitizing of producing units and processes (D’Ascenzo, 2017). This dynamic reflects the next (forth) industrial
revolution in the economy and a dramatic change embedded in the new social organization. The essential
basis of interaction of groups and communities within the new society is enrooted in the principles of open use
and sharing which replace the ideology of individual property and limited access.

2.1 Überization of consumption and production (Sabatini, 2015)

The arising digital economy requires the specific research to revise a number of economic science assumptions
relating both to the valuation of the service, for example, in the case of digital services on the
telecommunications platform, and the role of the employee or entrepreneur in the service delivery system.

Thus, the development of information platforms and their improvement, taking into account the needs of
users, is a significant fixed cost, while in the future, variable costs will be close to zero (Rifkin, 2014). The high
level of the fixed costs needs a centralisation of production, including the production of knowledge and
intellectual assets (e.g., joint R&D ventures of huge transnational corporations). But at the same time, the
possibilities of the investment are growing and the open source such as HyperLedger can be used for the
healthcare system or land cadastre with a high level of security at low costs.

The social regulation is transformed with the transactions through blockchain as technological platform, the
behavioural models are changing with sharing economy as a new basic approach to the physical objects – the
value of products is transferred from ownership to use (Asanov et al., 2017). The consumption does not
require to possess an object, the cars can be shared with systems of Blablacar or Beepcar, the flats can be
allowed for living through Airbnb or Couchsurfing, the überisation concerns more and more types of the
physical objects; the industrial enterprises prefer to pay for the use of an engine, e.g., the aircraft jet engine of
the General Electric approach (Ababkova et al., 2017), and for the leasing.

The engines themselves become intelligentEngine as launched in Feb 2018 by Rolls-Royce as an extension of
the TotalCare service of Rolls-Royce for maintenance and upgrading of the aircraft engines sold by the
company to its clients. This shift from the centralised service by headquarter to the self-analyzing and self-
repairing systems within the objects reflects the technical decentralization of streaming big data treatment,
which is fulfilled with the fog, or edge, computing. The edge computing as an industrial solution to accumulate,
structure and analyze the data of continuous monitoring of an object’ functioning, that helps to optimize the
data stream and treatment for digital twins as the virtual models of the each concrete object, e.g., each track
motor, ship or aircraft engine. The digital twins are created for the producing and consumption process, such
as the transport units’ monitoring for detection of the correct moments of the technical maintenance or
power generation optimisation due to the up-to-date making decisions about the power use (smart grid) or
necessary maintenance of turbines.

2.2 Technical regulative solutions for social-economic behaviour

Autonomous intelligent system already regulates the human behavioral choice, through the smart houses or
mobile applications that are able not only remind to their owner, but to switch on / off domestic devices, to
operate and to pay for several categories of products and services.

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The cryptocurrencies and smart contracts are the examples of the distributed regulation among participants,
built on the basis of blockchain technologies according the Nakamoto consensus (Garay et al., 2015). The
smart contracting creates the wide space to conclude and to implement individuals’ deals. The public
regulation is transforming from the State apparatus toward technical equipment and software including
decentralized systems, contrary to the previously developed heavy sluggish systems, which are constantly
showing institutional traps and errors, causing data loss and having a low level of user friendliness.

The smart contracts within the Ethereum platform are fulfilled automatically, the mutual obligations are to be
respected due to the new financial reality, when money are presented in the digital space more than in a
physical reality – in banking sector, in wallets and payment systems, or in cryptocurrencies platforms
(Pokrovskaia, 2017).

Machines' intelligence determines the acts of humans within digital space (e.g., automated moderation of
communications) and, now, within the physical reality, with the means of smart environment: smart houses,
smart streets and cities. Human beings have different values, these values and ethical basis are to be
implemented with and through the new networking regulative mechanisms and regulatory algorithms and
protocols.

The involvement of persons to correct machine judgments is to be automated on the basis of specific technical
regulation’ tools, because the real human and social life includes infinite diversity of cases, that are difficult to
identify and classify. The discussions among people help to define the essential approaches to several
categories of cases, but in the reality the humans' behavior differs from the declared or articulated verbalized
"attitudes", described as LaPiere' paradox (LaPiere, 1934) and from general frames. That is why, the ethical
approach is based on the better understanding of the real making decisions of people.
3. Methodology of research
The study of the technical and social regulation in the information society and knowledge economy is
concentrated on the social integration of technical regulative tools.

The business development purpose determined the two groups of the survey sample – the business
representatives (N=39) and students of economic universities and faculties (N=305). Both groups are
concerned with the management problematic. The respondents’ profiles of students and of business
professionals are chosen for their specific role in the implementation of the regulative mechanisms of social
and technical nature:

x students represent the younger generation that is “born with smart-phone in the hand” and they will
work within the world of digital twins and blockchain based networks;
x business practicians have the professional experience of the use of up-to-date computing tools and of
the networks that are built on the base of the high technologies.

The survey is carried out among the students of 5 Russian and European Universities who were present during
the academic year 2017-2018 in Saint-Petersburg or who were met in Italy, when N.N. Pokrovskaia was in
Roma as invited professor at La Sapienza University. The numbers of students are presented in the table 1.
Table 1: The distribution of the respondents from the students’ group
Students categories
Bachelor Master Total
Saint-Petersburg State University of Economics 87 57 144
University of management technologies and economics 44 34 78
Peter the Great Saint-Petersburg Polytechnic University 58 11 69
Angers university - 6 6
Sapienza university - 8 8
Total by students’ levels 189 116 305

The 3 Saint-Petersburg universities include the State University of Economics (144 students), a private high
school University of management technologies and economics (78 students), and department of Advertising
and Public Relations of the Peter the Great Saint-Petersburg Polytechnic University (69 people). 6 master
students of the Angers University (France) were surveyed during their international mobility in Saint-

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Petersburg, Russia. La Sapienza University of Rome (Italy) was the hosting institution for the author that
permitted to include also 8 students of international master program of Economic Faculty of Sapienza
University. All the students are active users of the modern information and telecommunication tools,
especially, the ones involved in the international programs, they are open-minded students with active social
position and the large experience of the integration in different socio-cultural milieux.

The business professionals represent both industrial (13 plants) and service sector (3 banking institutions, 3
hotels and 2 tourist agencies, 2 museums, 2 hospitals, an IT-company, an insurance company, etc.). The
corporate top-managers who took part in the research were involved with the help of the Saint-Petersburg city
Administration for the survey of municipal programs for the regional knowledge economy and human capital
development. The survey purpose was to examine the social-technical regulation as a new factor of business
development, that explains the choice of both technical and management staff of companies.
4. Social regulation impact on the new high technologies
The use of the high technological solutions should be based on the consumers’ agreement, their readiness to
accept these new technological solutions. The example of the fog computing used for the injections of the
insulin according the data collecting and monitoring demonstrates the concerns about the technical control
above the human beings life. The mistrust of the “retrogrades” toward the new technologies reflects, in fact, a
collective wisdom of the long-term trust’ process which was fostered during the history of the communities
and societies evolution.

The example of the blockchain spreading and the case of the Masterchain platform witness of the complex
problem of the innovation introduction. These two examples have not only the marketing implications (the
typology of the customers from the innovators to the conservative traditionalists) but reflect the deeper social
mechanisms of reproduction of mankind and of concrete society with its values and norms as a socio-cultural
basis. The socio-cultural dynamics represents a surviving mechanism to protect the human beings that
requires long-term experience before the control will be transferred to the machines.

4.1 Spread of blockchain technologies as problematic of trust

The survey among students of economic universities and faculties demonstrates that the young people have
heard about blockchain and fog computing, but they have a vague idea about the implementation and existing
platforms. Thus the 100% of students respond that they know the term “blockchain”, only 50,5% where able to
describe it, answering an open question, and 12.8% of respondents recognized that they “don’t know exactly”
what it is:

Bitcoin 30,5%

Cryptocurrency 9,2%

ICO or investment platform 5,6%

IT-system of confident data stocking and transfer 5,2%

I don’t know exatcly 12,8%

0% 5% 10% 15% 20% 25% 30% 35%

Figure 1:Description of what is blockchain, according the economic faculties’ students

Only 5.2% of the respondents answered, that blockchain is an IT-system and other descriptions done by the
students (45.3%) concern its economic implementation, this distribution is related to the choice of the
students of economic universities and faculties for the survey.

Even the students of former University of Economics and Finance (now Saint-Petersburg State University of
Economics) know bitcoin much better that the general notion of “cryptocurrencies” as a monetary

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implementation of the blockchain technologies – 30.5% of the whole number of students relate the blockchain
with the most well-known token “bitcoin” and only 9.2% have mentioned the concept of cryptocurrencies.

The answers of the representatives of the business milieu (N=39 of enterprises surveyed) gave similar vision of
the ideas about blockchain – 71.8% answered the question, but among them 38.5% have written that they
have no a clear understanding what it is, a third part (33.3%) have given a substantial answer: 5 persons
(12.8%) relate blockchain with bitcoin, 3 persons (7,7%) have used other descriptions with the central stressed
point on cryptocurrencies and 5,1% have related blockchain with investments or with property rights.

The last version of the blockchain implementation is quite known in Russia, because a quite well promoted
project was created and tested by several Russian banks (including the Central Bank and some giants of the
sector such as Sberbank and VTB) – the Masterchain.

4.2 Masterchain fast creation and long implementation as a socio-cultural or institutional case?
The Masterchain project is oriented to the creation of a confident data stocking system for the real-estate
property rights, the shareholders transactions with securities and crediting operations.

The history of the Masterchain project is a good illustration for the technical solution that has passed from a
well conceived and promoted project to the very long process of its applying within the practice, due to the
existing rigid regulation and due to the weak understanding and low trust to the blockchain technologies form
the side of people involved.

Based on a request from the Central Bank of Russia and several financial institutions, the Financial
Technologies Association has developed by October 2016 an integrated system for storing, processing and
transferring data on the basis of the Masterchain technology (Vlasov, 2017). According the White paper and
the analysis of the bankers, who were founders of the committee approving the Masterchain project, "the use
of blockchain technologies in the public sphere will reduce unnecessary bureaucratization, will optimize State
document circulation and eliminate abundant intermediaries, which often complicate and increase the cost"
(Pritula, 2017). For example, Director of the Banking and Information Technologies Department of the Russian
huge bank VTB24, S. Rusanov describes the digital transformation and creation of a "master-system" for
processing and storing information, he notes that "before the repository, the classical tasks of centralizing the
formation of regulatory and analytical reporting”, creating a unified version of the truth "and optimization of
existing analytical services" (Pritula, 2017, p. 2). Masterchain as a combined regulatory model is designed to
combine centralization and decentralization approaches to regulation.

The Masterchain can be implemented for the labor market, as a confident system of employees’ competencies
and CV and of open vacancies from employers (Wei at el., 2017). Since the last decades of the previous
century, the corporate management has recognized the need to search, reward and retain talented
collaborators who are considered to be the most valuable resource of the company and, at the same time, as
free market participants with the entrepreneurial competencies, including communication, negotiation and
personal competencies (for example, the ability to make choices and assume the risk of the consequences of
the choice made, to bear responsibility, to make decisions independently and to seek new resources for their
implementation). The technical regulation is not appropriate for this kind of corporate governance, because of
the unique competence and because of the specific feature of entrepreneurial spirit that is oriented not to
follow but to break the rules and habitual modes.

The survey demonstrated, that among students and enterprises’ representatives only several persons (7
students and 3 managers) have heard of Masterchain, and during the interview the enterprises’ respondents
have mentioned the test operation between the Megafon (Russian telecommunication giant) and Sberbank
(banking sector leader) in November 2017. But, until today, the platform is still not introduced as a system for
shareholders, land operations and cadastre neither for labor market or banking transactions.

There are two essential reasons of the delayed applying of Masterchain on the level of the State authorities in
Russia. The first one is based on the idea of the population inertia and the public rejection of the innovations in
the very important, fundamental questions of the regulation, such as land property rights. At the same time,
the Russian system of “gosuslugi.ru” (the portal of the State services for population) has already 8 years of

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experience (since 15 Dec 2009), many of citizens solve the essential questions of public authorities through
this system during almost a decade.

5. Fog computing ignorance and regulative control

The consumers usually don’t know about the use of the fog computing. The smart-phones became today the
part of everyday life for the large part of population, and for the absolute majority of young people. The survey
of students demonstrated that only less than 3% have the idea of their use of for computing:

Yes; 2,6%
No answer; 5,2%
No; 19,3%

I don't know; 72,8%

Figure 2: Distribution of answers of economic faculties’ students to the question “Do you use fog or edge
computing?”
Even if every surveyed student has a smart phone, with the geolocation, games applications, video-
conferences and other functions of fog computing approach, only 2,6% of respondents know about it.

19,3% of them think that they don’t use the fog computing, and 72,8% gave the honest answer “I don’t know”,
we should add to them 5,2% who did not give any answer, in total that makes 78,0%. That means, that 97,4%
of young people with smart-phones don’t know what are the basic technical solutions that are used to the
treatment of their personal big data, and almost 20% (19,3%) of them have the wrong idea about this
question. At the same time, the majority of the smart-phones’ mobile applications collect their data, that
provoke the targeting advertising and promotions, the change of the prices according their previous choice,
the model of the smart-phone or the places visited.

The same question asked to the enterprises gave a different result – 5 people (12.8%) of the business
representatives know about the use of the fog or edge computing, among them 3 persons are the employees
or managers of industrial and IT-companies, so, they even know what digital twins are (7,7%) of respondents
from the enterprises surveyed. At the same time, less than a half of respondents (46,2%) have given the wrong
answer (No), and all this group of respondents are working in the service sector, among them no one is able to
answer what are digital twins (0%):
Yes; 12,8%

I don't know; 41,0%

No; 46,2%

Figure 3: Distribution of answers of enterprises’ employees to the question “Do you use fog or edge
computing?”
In the group of respondents from enterprises everyone gave an answer, there were no respondents without
an answer to the questions about the fog / edge computing use, 41,0% of them honestly told that they don’t
know about the use.

The next questions concerned the types of the fog computing use, and most respondents recognise the use of
geo-location (99,7% of economic faculty’ students and 94,9% of enterprises representatives), but only a few of
them use Internet of Things (IoT) in their real or professional life:

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Table 2: The distribution of the respondents’ answers on their use of fog computing
Groups of respondents
Students Enterprises
Geo-location 99,7% 94,9%
Games as mobile applications 64,3% 28,2%
Video-connection 8,9% 10,3%
IoT, smart-device or smart-house 2,0% 5,1%
Source: Authors’ research.

Almost everyone recognise that their smart-phones use the geo-locating function, only 2 persons think that
they do not use geo-location. The younger generation is intensive user of gaming applications (64.3%) and only
28.2% of employees are playing at their mobile devices. Nevertheless, the other two use cases – video-
connection and IoT are more wide-spread among professionals, that among students.

Only 2% of students respond that they use IoT or smart environment or devices, such as smart houses, smart
streets, smart fridges or smart kettles (except smart-phones), but 5,1% of the business representatives use
them for the personal or professional purposes.

There results witness of a high level of ignorance of the mass population (even among the professionals and
economic faculty students, future higher school graduates) of the technical tools and platforms that are used.

We can conclude, that the innovations and new high-technological regulative mechanisms are better
accepted, when the population has no idea about the technical solutions implemented. If Masterchain has to
cope with the resistance and inertia, the fog and edge computing approach is wide-spread in fact, but the
customers are ignorant about it, and they actively use the fog computing’ based applications.

This outcome helps to compare the technical and social regulation: if the social regulation is based on the
interiorized values and norms that are not necessarily conscious, the technical regulation can also be an
efficient instrument to improve the everyday personal and professional life, without realizing what kind of
regulative tools or mechanisms are implemented.

The decentralization of the networking in this situation seems to be more declarative than real, because the
customers don’t make choices, don’t take part in making decisions process and don’t optimize the regulative
mechanisms. The network’ participants just follow the already existing rules, imposed with the technological
solutions or with any regulatory body, including the centralized legislative requirements and restrictions.

6. Conclusion
Decentralization of regulative mechanisms due to the technological, social and economic changes causes the
ethical and political concerns, related to the responsibilities and freedom of choice in making decisions
process. The institutional traps and other social-political aberrations demonstrate the interest toward
networking, the new technologies show the possibilities to overcome several problems of traditional
regulative mechanisms, with the higher level of cybersecurity, the individuals’ free networking.

The growth and evolution of neural networks, machine learning and artificial intelligence systems, in
combination with neural communication can ensure the accuracy in assessing the true value and significance
(Ababkova et al., 2018). At the same time, neuron technologies are not capable to take into account the
persons’ own internal censorship, the rational prioritization fulfilled inside the human personality, the
sustainable long-term social regulative mechanisms of trust and confidence. The ethics issues, the control of
sufficient tolerance, the political and religious multicultural environment and inclusive space for people with
special needs are to be included into fog computing and technical regulative mechanisms.
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Initiating Structure and Consideration Leadership – Creativity and
Innovation Relationships: The Cypriot and the United Arab Emirates
Experience
John D. Politis1, Denis J. Politis2 and Nicholas J. Politis2
1
Charles Darwin University, Australia
2
Imperial College London, UK
jdpolitis@gmail.com; john.politis@cdu.edu.au
denis.politis06@imperial.ac.uk
politis.nick@gmail.com

Abstract: This study examines the relationship between initiating structure and consideration leadership styles, creativity
and innovation in organisations operating in Arabic and European cultures. The study involves a questionnaire-based
survey of employees from the financial sector. The sample consists of a total of 75 full time employees from Cyprus and 69
full time employees from the United Arab Emirates who participated in the study. The responses will be subjected to a
series of factor, correlational and regression analyses. The study revealed three major findings. Firstly, the relationships
between consideration leadership and creativity and innovation for both samples are strong, positive and significant.
Secondly, the correlations of creativity and innovation with initiating leadership for both samples are weaker, less positive
and significant compared with those of consideration leadership. Finally, the findings demonstrated that the initiating
structure and consideration style managers exercise comparable influence on the dimensions of creativity and innovation
in the Arabic culture. Limitations and directions for future research are discussed.

Keywords: Consideration, cross-cultural leadership, creativity, Cyprus, initiating structure, innovation, United Arab
Emirates

1. Introduction
Over the past few years we are trying to understand more clearly the challenges facing organisations operating
and competing across different cultures. It is also acknowledged that most of the high profile organisations
intend to expand globally. However, recent findings suggest that organisations are struggling to encourage,
adapt and execute innovation (Dewhurst et al. 2012), hence, there is an increased interest to investigate the
complex implications of leadership styles from the cross-cultural perspective (Politis and Breman 2011).

Although numerous studies have explored the relationship between a number of leadership styles and
creativity and innovation (Puhakka and Aaltio 2017; Kazanjian and Drazin 2012; Politis and Breman 2011; Rosin
et al. 2011; Paulsen et al. 2009; Politis and Politis 2009; Randall and Coakley 2007; Keller 2006; Lovelace and
Hunter in press), researchers and practitioners acknowledge that the literature linking the specific leadership
behaviours of initiating structure and consideration to firms’ creativity and innovation from the cross-cultural
perspective is notably absent. This study aims to investigate the impact of initiating structure and
consideration leadership on the dimensions of creativity and innovation in financial organisations operating in
the United Arab Emirates (UAE) and in Cyprus.
2. Literature review and hypotheses

2.1 Initiating structure and consideration leadership

Studies in the field of leadership since the 1940s and 1950s generally found that leaders differ in their levels of
people and task-oriented behaviours (Velsor et al. 2010; Neubert et al. 2008; Politis 2001; Mukhi 1981;
Hemphill 1949; 1950). The people-oriented behaviours, known as relations-oriented leadership, is expressed
through consideration leadership and includes behaviours such as “listening to employees for their opinions
and ideas, creating a pleasant physical work environment, showing interest in staff, complementing and
recognising employees for their efforts and showing consideration of employee needs” (McShane et al. 2016,
p. 396). These behaviours generate enthusiasm and encourage creativity and innovation. In particular, Politis
(2015, p. 209) found that ‘choosing pleasant surroundings’ is positively and significantly related with
innovativeness (r = 0.26, U  0.01). Although the Politis’ (2015) study did not support the relationship between
‘choosing pleasant surroundings’ and ‘creativity’, it lent support to another physical work environment factor
namely ‘focus on pleasant aspects of work’, and found a positive and significant relationship (r = 0.16, U 

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0.05). Moreover, Politis (2005a) found strong and significant relationships between Amabile et al. (1996)
determinants of the creative work environments and Manz and Sims’s (1987) self-management leadership,
which contain themes common to those measured by Stogdill’s (1963) consideration leadership. If we accept
consideration leadership promotes a positive climate akin to creative leadership (Rickards and Moger 2000), it
is then plausible to assume that consideration leadership will influence the respective variables of creativity
and innovation. The assumed connectivity is expressed in the following hypotheses.

Hypothesis 1 (H1): The correlation of creativity with consideration leadership will be strong, positive and
significant.

Hypothesis 2 (H2): The correlation of innovation with consideration leadership will be strong, positive and
significant.

On the other hand the task-oriented behaviours, commonly known as initiating structure leadership, includes
behaviours such as “assign employees to specific tasks, set goals and deadlines, clarify work duties and
procedures, define work procedures and plan work activities” (McShane et al. 2016, p. 395). In this sense,
initiating structure is transactional leadership focusing in expectations and consequences (Neubert et al. 2008),
rewards and punishment (Kanfer 1990), that are likely to elicit organisational bureaucratic factors (Politis
2005b) and autocratic behaviour (Brown 2003), which hinder creativity and innovation through rigid and
irrational use of policies and procedures (Landy and Conte 2004). Specifically, a quantitative study conducted
by Politis (2005b) found that “transactional leadership tends to foster and support the dimensions of
bureaucracy” (p. 122). In addition, in another empirical study it was found that organisational bureaucracy has
a moderate negative impact on both creativity and innovation (Politis and Politis 2010). If we accept that
initiating structure leadership contains themes common to transactional leadership (Yukl 2010), which does
not build on the employees’ need for meaningful work or stimulate their creativity (Brooke 2004; Flauto 1999),
it is then plausible to assume that the task-oriented (initiating structure) leadership could impede creativity
and innovation (Amabile and Gryskiewicz 1987) as opposed to consideration style. This assumption is
expressed in Hypotheses 3 and 4.

Hypothesis 3 (H3): Correlations of creativity with initiating structure will be weaker, less positive and
significant, than those with the consideration leadership.

Hypothesis 4 (H4): Correlations of innovation with initiating structure will be weaker, less positive and
significant, than those with the consideration leadership.

2.2 National culture and leadership styles

In relation to the cultural perspective Hofstede (1994) emphasises the significance of national culture when
research is undertaken in management and organizations and concludes; “Therefore management practices in
a country are culturally depended, and what works in one country does not necessarily work in another.

However, not only the managers and the human and children of their culture; the management teachers, the
people who wrote and still write theories and create management concepts, are also human and constrained
by the cultural environment in which they grew up and which they know. Such theories cannot be applied in
another country without further proof if applicable at all, it is often only after considerable adaption” (p. 7).

Hofstede’s theories are supported by Lok and Crawford (2004) organisational cultural study, which investigates
samples in Australia and Hong Kong. In particular, the Australian sample scored significantly higher for the
measures of “innovation, supportive organisational cultures, job satisfaction and organisational commitment”
(Lok and Crawford 2004, p. 321) compared to those with the Hong Kong sample. In relation to leadership
styles, transformational leadership attributes share common values found in consideration leadership, such as
individualised consideration (Velsor et al. 2010; Yukl 2010; Bass and Steidlmeier 1999), that are often seen as
important elements of creativity and innovation (Politis 2004). This type of leadership is associated with less
bureaucratic and flatter organisational structure, decentralised decision making and low power distance in the
Western firms (Chen 2001; Whitley 1997; Hofstede 1991; 1980). Since the organisations in the UAE have
relatively higher power distance index (PDI) (PDI = 90) compared to the PDI = 60 in organisations in
Greece/Cyprus (Hofstede Insights, 2018), it is assumed that the financial firm investigated in the UAE will be
more bureaucratic, more paternalistic and the decisions are made by executives and senior management.

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These typical outcomes are generally derived from initiating structure leadership (Taucean et al. 2016). It is
thus anticipated that the consideration leadership style would provide greater creativity and innovation in the
European firm. This prediction is expressed in Hypothesis 5. Also, Ali (1986/7) supported that the Arab
employees prefer an unambiguous and structured work environment in order to advance creativity and
innovation; hence it is assumed the initiating structure leadership would provide greater influence for
creativity and innovation in the Middle Eastern firm. This assumption is expressed in Hypothesis 6.

Hypothesis 5 (H5a): The effect of consideration leadership on creativity for the Cypriot managers will be more
positive and significant, compared to their UAE counterparts.

Hypothesis 5 (H5b): The effect of consideration leadership on innovation for the Cypriot managers will be more
positive and significant, compared to their UAE counterparts.

Hypothesis 6 (H6a): The effect of initiating structure leadership on creativity for the UAE managers will be
more positive and significant, compared to their Cypriot counterparts.

Hypothesis 6 (H6b): The effect of initiating structure leadership on innovation for the UAE managers will be
more positive and significant, compared to their Cypriot counterparts.
3. Subjects and analytical procedure

3.1 Cyprus and UAE Samples

The study involves a questionnaire-based survey of employees from the financial sector. Both samples
completed identical questionnaires containing items measuring creativity, innovation, initiating structure and
consideration leadership. The questionnaire was written in the English language for both samples. Employees
who participated in the study were told that their responses remain confidential and anonymous, and will be
used for research purposes only. In Cyprus the sample was drawn from the banking sector, which was pursuing
entrepreneurial activities before the 2013 financial crisis. A total of 75 full time employees returned useable
questionnaires, with a response rate of 68.6%. Eight incomplete questionnaires were excluded from the final
sample. The sample is consisted of 48 percent males and 52 percent females. Although the majority of
participants (85.3 percent) were under the age of 40, it was found in a meta-analytical study that “age is not
significantly related to creativity” (Ng and Feldman, 2008, p. 400), thus, the relatively young age of the
participants could not have influenced the respective variables of creativity and innovation; 64 percent knew
their immediate leader for 5 years, and 62.2 percent were employed in the current position for ≤ 5 years. It is
thus reasonable to assume that the participants in the study have a reasonable view in evaluating their leaders
initiating structure and consideration practices. 38.7 percent were employed in the organization for ≤ 5 years,
and 69.3 percent participated in leadership training programs. Moreover, 62.7 percent attended training
programs in creativity and innovation; it is argued that such training programs develop the employees’ “sense
of general job mastery”, which is the “foundation for subsequent creative work” (Tierney and Farmer, 2002, p.
1145), which in turn could lead to new and innovative ideas. As for the participants educational level 50.7
percent had attained a university degree, and 34.6 percent had received technical college qualifications.

The United Arab Emirates sample is consisted of 69 useable questionnaires (response rate of 73.8%) from the
financial sector, which was perceived to be an entrepreneurial operation. Seventeen incomplete
questionnaires were excluded from the final sample. The sample is consisted of 73.9 percent males and 26.1
percent females. The majority of participants (79.7 percent) were under the age of 40; 82.6 percent knew their
immediate leader for 5 years, and 78.3 percent were employed in the current position for ≤ 5 years. It is thus
reasonable to assume that the participants in the study have a good understanding in evaluating the leaders’
practices. 68.1 percent were employed for ≤ 5 years in the organization, and 24.6 percent participated in
leadership training programs. Moreover, only 31.9 percent attended training programs in creativity and
innovation. It is thus reasonable to assume that the participants of the UAE sample may not have been
exposed to challenging innovative ideas and practices. As for the participants educational level 33.8 percent
had attained a university degree, and 35.3 percent had received technical college qualifications.

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3.1.1 Analytical procedure

A factor analysis (FA) was used to examine the latent structure of the factors investigated in the study. Having
confirmed which observed variables are indicators of latent factors we created a composite first order latent
construct using Politis’s (2001) approach. We accepted latent constructs with reliability α ≥ 0.70 (Hair et al.
2011), and with convergent validity of average variance extracted (AVE) to be equal to or greater than the 0.50
threshold (Fornell and Larker 1981). Having confirmed the validity and reliability of each of the first order
factors, we have then tested the hypotheses using the SPSS software through correlational analyses.

Moreover, a one-way analysis of variances was employed to detect whether there are any statistically
significant differences among the means of the two samples.
4. Results

4.1 Detecting cultural differences

To draw accurate conclusions in relation to Hypotheses 5 and 6, we performed a one-way analysis of variances
using within- and between-groups analysis. The results indicate that the observed F ratios for consideration
leadership (F = 8.76, p  0.01) and creativity (F = 3.98, p  0.05) exceeded the critical F (Fcrit = 3.91 with D =
0.05). On the basis of the calculated F values, the null hypothesis (H0) is rejected, and we may therefore
conclude that the difference in the means of these variables is highly significant. It is therefore, unlikely that
the means of consideration leadership and creativity variables are the same for the two cultures (i.e. Cyprus
and UAE) in the population. Thus, when each variable is examined separately, there is a lack of relevance for
the culture, and variation for the variables may be more applicable to individual employees in the two
cultures. Hence, there is sufficient statistical evidence to support the findings of H5a. On the other hand, the
observed F ratios for initiating structure leadership (F = 1.59) and innovation (F = 0.2) failed to exceeded the
critical F (Fcrit = 3.91 with D = 0.05), hence, the F ratios failed to reject H0. That is, there is not enough
statistical evidence to support the findings of H5a, H6a and H6b.

5. Measures

5.1 Independent constructs

Stogdill’s (1963) Leadership Behaviour Description Questionnaire (LBDQ) was employed to measure the latent
variables of initiating structure and consideration leadership. To avoid the questionnaire becoming too long
and cumbersome it was necessary to reduce it to 12 observed variables; six measuring initiating structure and
six measuring consideration. The 12 observed variables were found to be most heavily loaded on each first
order factor in an Australian study by Politis (2001, p. 567). Each item was scaled from “not at all = 1,” to “a
great deal = 5”. The FA supported the independence of initiating structure (six items, D = 0.84UAE; and five
items, D = 0.66CY), and consideration (six items, D = 0.91UAE; and five items, D = 0.63CY). Note: one item dropped
from initiating structure and one from consideration leadership from the Cypriot sample due to cross loading.

Hence, these two items were not included in the correlational analysis. The first order latent constructs of
both samples demonstrated AVE ranging from 0.25 to 0.36, lending marginal support to the convergent
validity.

5.2 Dependent constructs

Creativity was assessed using Amabile and colleagues’ (1996) 6-item instrument, which is part of the KEYS
instrument. The instrument employs a 4-point Likert response scale from “never = 1” to “always 4”. Based on
the results of a FA, the independence of the creativity factor was fully supported (6 items, D = 0.88UAE, and 6
items, D = 0.78CY), which will be used in the correlational analysis. The first order latent constructs of both
samples demonstrated AVE ranging from 0.28 to 0.34, lending marginal support to the convergent validity.

Innovation was assessed using Darroch’s (2003) 6-item scale. Each item was scaled from “never = 1” to “always
4”. Based on the results of a FA the factor of innovation was fully supported (6 items, D = 0.87UAE, and D =
0.76CY), and subsequently the six items from both samples will be used in the path model analysis. The first
order latent constructs of both samples demonstrated AVE ranging from 0.31 to 0.32, lending marginal
support to the convergent validity.

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 John D. Politis, Denis J. Politis and Nicholas J. Politis

The model of Figure 1 shows the hypothesised relationship between the dependent and independent
constructs.

Independent Constructs Dependent Constructs

(Stogdill 1963) (Amabile et al. 1996)

x Initiating Structure
leadership x Creativity
x Innovation

Figure 1: Summary of variables used in the paper

6. Results
Table I shows the correlations among the variables investigated in this study and descriptive statistics. The
findings partly supported the hypotheses. Specifically, the relationship between consideration leadership and
creativity for both samples is significant, strong and positive (rCy = 0.43, U  0.01 and rUAE = 0.36, U  0.01),
hence supporting H1. Moreover, the relationship between consideration leadership and innovation for both
samples is significant, strong and positive (rCy = 0.40, U  0.01 and rUAE = 0.30, U  0.01), thus supporting H2. As
expected, the correlations between creativity and initiating structure for both samples is significant, weaker,
and less positive (rCy = 0.24, U  0.01 and rUAE = 0.35, U  0.01) compared to those with consideration
leadership (rCy = 0.43, U  0.01 and rUAE = 0.36, U  0.01), hence supporting H3. Moreover, H4 is largely
supported because the correlations between innovation and initiating structure for both samples is weaker,
and less positive (rCy = 0.10 and rUAE = 0.24, U  0.01), compared to those with consideration leadership (rCy =
0.40, U  0.01 and rUAE = 0.30, U  0.01).

In relation to H5a the results indicate that the F ratios for consideration leadership and creativity exceeded the
critical F value. Hence, there is sufficient statistical evidence to support the findings in that the effect of
consideration leadership on creativity for the Cypriot leaders is more positive and significant (rCy = 0.43, U 
0.01) compared to their UAE counterparts, which is less positive and significant (rUAE = 0.36, U  0.01). Thus,
H5a is supported. Although the effect of consideration leadership and innovation for Cypriot leaders is more
positive and significant (rCy = 0.40, U  0.01) compared to their UAE counterparts, which is less positive and
significant (rUAE = 0.30, U  0.01), this assertion cannot be supported because the F ratios failed to exceeded
the critical F. Hence, H5b cannot be supported due to F probabilities. Similarly, the effect of initiating structure
on creativity for the UAE leaders, which is stronger and significant (rUAE = 0.35, U  0.01) compared to their
Cypriot counterparts, which is weaker and significant (rCy = 0.24, U  0.05), cannot be supported due to F
probabilities. Thus, H6a is not supported. Finally, H6b is not supported due to the F probabilities, and because
the effect of initiating structure on innovation for the Cypriot leaders is near zero and non-significant (rCy =
0.10).
Table I: Means, SD’s, alpha (α) estimates, and Pearson’s bivariate correlations of initiating structure,
consideration, creativity and innovation
Latent Construct Mean SD 1 2 3 4 5 6 7 8
Correlations for the Cypriot sample, N = 75
a
1. Initiating structure leadership 3.30 0.61 0.66
2. Consideration leadership 3.62 0.62 0.11 0.63
3. Creativity 2.78 0.50 0.24* 0.43** 0.78
4. Innovation 2.67 0.58 0.10 0.40** 0.69** 0.76
Correlations for United Arab Emirates sample, N = 69
5. Initiating structure leadership 3.16 0.71 0.84
6. Consideration leadership 3.26 0.82 0.88** 0.91
7. Creativity 2.63 0.61 0.35** 0.36** 0.88
8. Innovation 2.62 0.61 0.24* 0.30** 0.75** 0.87
Notes: Cypriot sample n = 75; United Arab Emirates sample n = 69
Cronbach Ds are located on the diagonal; **p  0.01, *p  0.05
a

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 John D. Politis, Denis J. Politis and Nicholas J. Politis

7. Discussion
The findings of the study in both the Arabic and Western cultures revealed that managers with consideration
leadership style influenced more positively and significantly the factors of creativity and innovation compared
to the managers that exercise initiating structure leadership. Therefore, one would expect higher propensity
for creativity and innovation in organisations led by consideration style leaders irrespective of the cultural
differences as defined by Hofstede (1980). This assertion is consistent with earlier studies that have shown
managers with people-oriented and relations-oriented behaviours foster more participative decision making
and less bureaucratic organisation structures (McShane et al. 2016; Chen 2001; Whitley 1997; Conger and
Kanungo 1988) allowing innovation and creativity to flourish (Politis 2015; Amabile et al. 1996).

The findings of this study also offered insights into the role played by the culture in fostering creativity.
Specifically, the support of H5a suggests that managers with consideration leadership style have greater
influence on the dimensions of creativity in the Western culture (Cyprus) compared to the managers that
exercise consideration leadership in the Arabic culture (UAE). Moreover, the high correlation between
consideration leadership and initiating structure leadership in the UAE (rUAE = 0.88, U  0.01) suggests that both
leadership styles might similarly facilitate creativity and innovation due to the collinearity effect. Since the F
probabilities did not support H6a and H6b, it is also possible the utility of initiating structure in predicting
performance outcomes (Keller, 2006) in a culture with hierarchical order where employees expect to be told
what to do, an argument supported by Ali (1986/7), influences creativity and innovation analogous to the
influence caused by consideration leadership. In that regard, Rice (2003) in the conceptual framework which
explains how knowledge creation is influenced of the Arabian Gulf culture proposed that “Arab employees
perceive their workplace to support advances in creativity and innovation to a greater degree when managers
provide a more structured work environment” (p. 469). Also in the Arabic society the boss is highly valued and
the impact on one’s life and employment might be very significant. These issues should be further
investigated.

8. Conclusion
This study is an active attempt to investigate the relationships and effects of consideration and initiating
structure leadership on the factors of creativity and innovation, and provide cross-cultural comparisons in
entrepreneurial firms operating in Cyprus and in the UAE. The study confirms that the consideration leadership
style is a better predictor of creativity and innovation in both the Arabic and Western cultures. Moreover, the
study revealed that organisations led by consideration style leaders have a higher propensity for creativity and
innovation irrespective of the cultural differences as defined by Hofstede’s (1980) cultural studies in more than
50 countries. Of particular interesting finding was the demonstration that the initiating structure leadership
style exercises comparable influence with consideration leadership on the dimensions of creativity and
innovation in the Arabic culture.

8.1 Limitations and future research directions

Although the relationships between the dimensions of creativity and innovation with the leadership styles of
consideration and initiating structure have been clearly established, there are a number of limitations that
need to be addressed. First, the assumption that the Cypriot and UAE cultures are distinct should be
interpreted with caution because Hofstede’s (1980) cultural dimensions are outdated and may not truly
st
represent the cultural environment of the two countries in the 21 century. So, in the research model further
constructs should be included by measuring the Cypriot and the UAE cultures, and the levels of hierarchy and
bureaucracy of the participating organisations. Second, the cross-sectional design of the study renders it
susceptible to the problems related with common method variance (Spector 1987). To address this problem
future research should gather data from multiple sources, and/or conduct longitudinal studies. Third, the
findings associated with H6a and H6b might be attributed to the collinearity effect between consideration
leadership and initiating structure leadership in the UAE, which needs to be further investigated through a
path analysis. In addition, the lack of support for H6a and H6b might be also attributed to other salient factors
such as inducing employees with the prevention of mind-set of avoiding losses and ensuring security (Higgins
1998), which are associated with other leadership behaviour. Although the findings should be interpreted
cautiously, it provides a springboard to further explore whether these results are valid if we include in the
research model the leader-induced prevention focus and promotion focus variables (Neubert et al. 2008) to
predict creativity and innovation outcomes.

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 John D. Politis, Denis J. Politis and Nicholas J. Politis

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Factor Model of the Network Capacity of a Firm
Evgeny Popov1,2, Viktoriya Simonova1,2 and Maxim Maksymchik3
1
The Ural branch of Russian Academy of Sciences, Yekaterinburg, Russia
2
Ural State University of Economics, Yekaterinburg, Russia
3
Ural Federal University, Yekaterinburg, Russia
popov@mail.ru
jet-russia@yandex.ru
maxim.maksimchik@gmail.com

Abstract: The key factor of competitive advantage consists in the ability of agents to integrate, exchange information and
generate new knowledge as the basis for innovations. Corresponding to dynamic shifts occurring in the technological mode
of production in transition towards, network structures are an adequate means for flexible cooperation between firms. In
this paper, the network capacity model is based on an analysis of a variety of factors from the standpoint of the influence
of the interrelationship between three structural elements – assigning, coordinating and response – on the development
and function of the network organisation’s system of interfirm interaction. The assigning element is formed according to
the resource characteristics of network organisation participants from the standpoint of their compatibility and specificity
of assets, which determine the basic conditions for building a system of interfirm cooperation. The response element
reflects the result of network organisation function in the areas of implementing the effects of synergistic cooperation and
joint innovations as well as reducing interaction expenses. The coordinating element is aimed at optimising the
transformation process between the assigning and the response elements and is aimed at the fullest realisation of
resource opportunities through adaptive and coordinative actions preventative of opportunism. A toolkit is developed by
the model representation of network capacity which is used for factor analysis of effective interfirm interaction as well as
making quantitative assessments of interrelations between factors and the management of network organisation
development possible. An empirical assessment, based on the network capacity model, was carried out on the
organisational factors of network capacity contributing to the development of interfirm cooperation. The assessment was
carried out on the example of IT sector enterprises in Russia. The research results showed that joint implementation of
innovations is a widespread strategy in this sector - one of the parameters of the response element of the system. This is
made possible due to the network capacity coordinating element being relatively highly developed, more specifically at the
level of factor development governing coordinative and adaptive actions preventative of opportunism.

Keywords: model of the network capacity of a firm, estimation of network capacity factors, IT-sector enterprises

1. Introduction
Organisation forms of economic interaction are developed in tandem with changes in the conditions for the
realisation of economic practice. The current stage of economic development is characterised, on the one
hand, by the globalisation of economic space, rapid changes in the external environment, increased
competition at the global and local levels, accelerating innovation and technological change, as well as a
general increase in environmental uncertainty. On the other hand, the rapid development in information
technologies has significantly expanded communication capabilities and greatly simplified the process of
interaction between economic agents, allowing them to carry out operations more effectively through
cooperation. Emerging in response to these two tendencies in the market environment, new organisational
forms based on contracts and other agreements, which are used to combine external components into various
network-based organisational approaches, demonstrate the advantages of flexible structures that ensure
effective adaptation to rapidly changing conditions. As confirmed by experts, it is precisely network structures,
not firms, that become the real units of economic production: the main competitive factor at the basis for
introducing technological, product-based and organisational improvements consists in the ability of economic
agents to integrate and coordinate joint actions, which reduces uncertainty as well as enabling the efficient
exchange of resources and information.

In the economic literature there is a growing interest in the role and importance of interfirm networks as a
source of competitiveness of individual firms. Furthermore, the object of research has an interdisciplinary
nature and enters into scientific fields of interest within various schools and approaches. Thus, representatives
of economic sociology stress the importance of social networks and institutions at the outset of establishing
functioning business relations. Within the framework of a resource-based approach, a strong focus on key
resources and competencies is stressed as a value. Representatives of the relationship marketing concept
concentrate their attention on the characteristics of successful inter-firm relationships, while institutional

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

theory refers to basic characteristics of inter-firm transactions. These approaches focus on certain aspects of
sustainable inter-firm relations and in many ways complement each other. In the presented works, achievable
performance resulting from synergistic effects was considered in varying degrees alongside a substantiation of
methodical approaches to the analysis of network structures using the developed research principles of
network organisations. In addition, there is a small body of work in which abilities and integration possibilities
of separate firms are analysed, thus optimising their use of network structure potential. The development and
evaluation of a factorial model of network potential will make it possible to identify and take into account
functional zones that demand close attention in the formation and development of network relations.

The purpose of this study is to develop a factorial model of a company's network potential, which enables the
company to fully realise its integration capabilities in network economy management. This goal assumes the
need to analyse the economic nature of network organisations and determine the factors affecting the
company's activities within the network structure.
2. Economic characteristics of network organisations
The increasing popularity of the network approach is determined primarily by its empirical feasibility, which
allows interdisciplinary theoretical generalisations to be made (Podolny and Page, 1998). Thus, social networks
are seen as a foundation for the formation of knowledge economy (Nieves J., Osorio, 2013). The theory of
graphs has a particular significance for empirical studies (Wang, Sharpe, Garry, Robins, 2009).

The first work is devoted to an analysis of network structures, appearing for the first time during the second
half of the 20th century (studies by E. Toffler, M. Castells), where networks were defined as the most effective
and adaptive organisational forms under the new conditions of the information economy. R. Miles and C.
Snow also viewed the network as the most effective form of organisation for company management in a
globalised economy (Miles,Snow 1986)

In Castells' work (Castells, 2010), a networked enterprise is defined as a specific form of an enterprise whose
system of funds is made up of intersections of segments of autonomous target systems. H. Hakansson (1987)
regards the network as a set of entities, institutionally independent of one another, but carrying out actions or
controlling resources, which are to some degree interdependent. Moreover, according to the author, there is
some agreement among entities of market interaction on the existence of this dependency. Gereffi,
Humphrey, Sturgeon (2005 )propose to define the network through a study of its management structure,
features of production relative to consumption, geographic configuration, as well as institutional and social
aspects of operation.

Expanding upon this model, the inter-organisational network comprises a system of contracts between
economic agents within the boundaries of one or more socio-economic systems, distinguished by a mutually
agreed and sustainable position and by a striving towards the achievement of common long-term goals
through the mobilisation, incorporation and use of resources, competencies and knowledge.

The works of Oliver Williamson are key in the development of approaches to the analysis of network
organisations. In accordance with his approach, three organisational business function forms are distinguished
using the mechanism of the market, either by creating a firm or by using a hybrid management mechanism, to
which structural class inter-firm networks belong. These organisational forms are not mutually exclusive, but
complementary; consequently, their application is determined by the level of transaction costs. The magnitude
of these costs is directly dependent on the conditions and characteristics of ongoing transactions, which are
typically divided into the categories of resource specificity, transaction frequency and degree of economic
uncertainty.

Williamson defined hybrid agreements as long-term contractual relationships that not only preserve the
autonomy of the parties, involving the creation of transaction-specific precautionary measures that prevent
opportunistic behaviour of participants, but also adapt to changing circumstances in terms of non-zero
contractual risks (Williamson, 1991). Such agreements are relevant in cases of bi- or multilateral dependencies
of participants, when this dependency already gives rise to demand for close coordination and yet is still
insufficient for full integration (Menard, 2004). The unification of the positive effects of cooperation inherent

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

in hierarchical organisational forms and the preservation of incentives for market mechanisms, based on
property rights and principles of competition, ensure the efficacy of such organisational structures.

Recent years have been characterised by an upsurge of interest in hybrid structures. Historically, this is
primarily determined by the diffusion of organizational forms in social movement (Strang, Soule, 1998).

Numerous researchers have noted a high significance of hybrid organisations for the development of social
policy (Rhodes, Donnelly-Cox, 2014). Along with that, the need for non-commercial organisation hybridization
is being actively discussed (Markstrom, Karlsson, 2013), as well as the danger of the penetration of such
structures in criminal spheres (Baker, 2013).

Hybrid organisations are capable of achieving both commercial and social goals. Thus, G. Dekker has analysed
the effect of hybrid structures on the formation of civil society in 12 countries. (Dekker, 2009). According to Y.
Jager and A. Schroer, such organisations combine the elements of civil society and market (Jager, Schroer,
2014). The formation of hybrid organisations is impossible without their institutional provision (Cooney, 2006).
In addition, the new forms of hybrid organisations have been emerging over the past three hundred years
(Kaiserfeld, 2013).

However, hybrid structures have become most widespread in the industrial sector. Thus, J. Koppell has
discussed the experience of hybrid organisation formation in the USA and its application in China (Koppell,
2007). K. Forero-Pineda et al. have investigated the advantages of hybrid organizational forms for the
agricultural sector in Colombia (Forero-Pineda, Herrera, Andonova, Collazos, Pardo, 2014). M. MacLean and J.
Brass have analysed the implementation of new hybrid forms in the sphere of renewable energy sources in
Kenia and Uganda (MacLean and Brass, 2015). The study of J. Almodovar and A. Teixeira is devoted to an
evaluation of local supporting organisation in the formation of hybrids in the automobile industry in Portugal
(Almodovar, Teixeira, 2014).

The primary feature of inter-firm networks consists in the use of the common assets of multiple firms instead
of concentrating all the resources of economic agents on a single integrated structure or an exclusive contract.
In this case, while market incentives remain relevant, cooperation becomes more adaptive in comparison with
cumbersome and unwieldy hierarchical structures. According to the resource-based theory (Barney J. B. 2001),
the striving of a company towards consolidation of resources is the primary reason for the formation of a
network structure. By pooling resources, companies strive to achieve an additional synergistic effect that is
unobtainable when firms act alone without mutually coordinated action. The threshold is the moment at
which the company concentrates on key resources and competencies in order to achieve a competitive
advantage. In the context of network interactions, the key feature becomes the complementary resource
partner compatibility inherent in any company resource, whether financial, material-and-technical,
information or intellectual. Resource non-complementarity, lack of resources or the absence of resource
multiplicity characteristics make it impossible for economic entities to successfully build and develop network
relations or benefit from synergistic effects.

As a general rule, shared resources have specific characteristics. To ensure the sustainability of transactions
that use specific resources, it is necessary to ensure the compliance of the parties with each other, involving
the implementation of mutual investments and formation of mutual relations [Wilson, Jantrania, 1996], which
increases the expense of any change in relation. In other words, there is an interdependency between
participants in network relationships despite the preservation of formal autonomy.

The common use of assets belonging to several companies involves the strategic management of joint
activities in the absence of legal control over property. This means that, irrespective of what mechanisms are
primarily employed by network organisations (market-based mechanisms or the management of
administrative processes), individual aspects of planning must be implemented collaboratively. This process
can relate to long-term goal-setting, e.g. prices, the number of products produced and resources used, quality
standards of products, training of personnel etc. In other words, planning in the context of the pooling of
resources is not primarily autonomous, but is carried out in accordance with the formation of companies'
private plans and requires the coordination of joint action [Shastitko, 2010.] .
The coordination parameter of inter-firm cooperation is structured around specific communication
mechanisms, such as effective social ties and the organisation of information exchange. Information resources

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

play a special role in the formation and development of network relations. The essential features of this role
are comprised firstly of the ability to develop an optimal strategy for the subject, and secondly, of the ability of
the company to adapt in a rapidly changing external environment. The processes of generating knowledge and
innovation become more effective if partners with different models of prior development share their
knowledge and experience. Consequently, communication between partners with different competencies is an
important factor in both organisational and production innovation. It is assumed that success is the result of
joint actions, not competition, and, accordingly, that the building of interrelations on the basis of the parity of
parties as well as the convergence of cultural values provides the norm of solidarity, which functions as the
most important coordination parameter.

Note should be made of a significant number of contemporary publications devoted to the problems of
cooperability (Hofmeister, Borchert, 2004) and networkability (Ding, Ujang, Hamid, Wu, 2015; Fitter, Rohner,
2010).

The nature of the contract of interaction is the basis for cooperation in network organisations. Cooperation
and coordination between independent economic entities that share resources takes place on the basis of
incomplete formalised contracts. At the same time, however, many authors emphasise the importance of
attitudinal contracting, reflecting the "spirit of the agreement", which is often more important for the
interaction of participants than a formal agreement (Williamson, 2008; Menard, 2004; Baker,
Gibbons, Murphy, 2002). The formal contracts used can be both long-term and short-term, but with the
mechanism of automatic extension (renewal) involving the same participants indicating the relative stability of
the interaction.

However, long-term relations under conditions of incomplete formal contracts, involving the use of specific
resources and investments aimed at ensuring the mutual compliance of parties, are necessarily realised under
conditions of uncertainty. Consequently, here ex-post problems are possible, which can be the result of
opportunism. A network organisation function is therefore necessary in order to avoid such eventualities and
ensure the security of transactions, using mechanisms for the effective prevention of "extortion", "freeriding"
and other forms of opportunism.

The solution to the problem of opportunism can have an impact on the development of formalised contracts
and agreements, the details of which will reflect transaction-specific conditions of relations, including the
development of effectively reliable obligations (fines for the premature termination of contracts, disclosure
mechanisms, various forms of pledges, etc.). To a certain extent, this legally protects the partners. However,
since this mechanism is very expensive and may be ineffective, it becomes necessary to formulate norms and
rules that are complementary to formal contracts. Such norms imply an understanding that one party should
not abuse its position or take advantage of circumstances to improve its conditions at the expense of other
participants in the network; in short, standards aimed at building confidence. Motivational mechanisms aimed
at preserving long-term relationships can also help to effectively solve the problem of opportunistic behaviour.

In such a scenario, a variety of long-term benefits can be obtained by the enterprise as a result of establishing
close relationships within the framework of hybrid organisations. In addition, a high degree of openness
between participants in inter-firm interaction makes it much more difficult to evade commitments.

Furthermore, ex-post problems are generally the result either of circumstances beyond anyone’s control or
misunderstandings. For this reason, another important function of network organisations consists in their
adaptability. For economic agents operating under conditions of uncertainty, modern networks are an
adequate means of flexible integration. Accordingly, the functioning of network organisations involves specific,
jointly developed mechanisms for adapting to unforeseen circumstances that may provoke a conflict of
interest. The presence of mechanisms for joint problem-solving is crucial for the stable functioning of inter-
firm cooperation. It is, in fact, a mechanism for filling the gaps in the contract, which are too expensive to
identify ex-ante on account of high uncertainty as well as limited rationality and herein lies the significance in
cooperation continuation. There is wide scope here for using mechanisms privately in order to resolve conflict.
This should be based on a norm of flexibility, reflecting the understanding that a formal contract is only a
starting point that will need to be modified over the course of its implementation. This norm presupposes a
certain degree of informal relations.

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Additionally, as Ian Gordon points out, enterprises that want to build long-term partnerships based on the
complementarity of specific resources will have to develop flexible capabilities in their technologies, processes,
personnel and knowledge; moreover, technologies should allow for any foreseen changes (Gordon, 1998).

Network organisations require safety mechanisms for implemented transactions and the sustainable
interaction of companies involved in cooperative activities on the basis of implied or incomplete formal
contracts, thus allowing flexibility in adapting to unforeseen circumstances. Stability of interaction means
partners coordinate their functions and mutual activities aimed at the optimal use of complementary
resources continuously over the entire course of cooperation. The disclosure of economic characteristics of
network organisations makes it possible to create a model representation of the network potential which in
turn is used to generate a factorial analysis of effective inter-firm interaction.
3. Factorial model of network potential
In this paper, the network potential model, as an aggregation of the means and cooperation opportunities of
agents aiming at increasing the effectiveness of network organisations, is based on a factor space analysis from
the perspective of the interrelation of three structural elements seen as assigning, affirming and monitoring
influence on the development and functionality of the systems (Bennett, 2006).

Monitoring element effects of

network
organisations
functioning
mechanism for managing inter-
Affirming element firm relations
Coor- Preventative Adaptive
dination control management
Control parameters parameters
Parameters

Assigning element Resource complementarity and / or multiplicity of participants

in network organisations

Figure 1: Model of a company’s network potential

The monitoring element reflects the result of network organisation functioning in areas of implementing the
effects of synergistic cooperation, reducing interaction expenses and realising joint innovations etc. The
assigning element determines the basic conditions for building a system of interrelationships and formulates
the primary motives for creating network organisations. This element is given shape by the resource
characteristics of participants.

However, the simple control of certain resources does not necessarily mean that the company will be in an
effective network structure. Here, the quality of managing network transactions is of great importance, which
involves the development of effective norms and rules for inter-firm cooperation. Consequently, along with
resources, management acts as another key factor for the success of the firm; its methods and techniques for
managing network relationships form the toolkit of the firm's network potential. This circumstance determines
the structure of the affirming element, which includes endogenous management mechanisms that facilitate
the realisation of resource opportunities through adaptive, coordinating and protective measures.

A toolkit is developed by the model representation of network capacity, which is used for factorial analysis of
effective inter-firm interaction, as well as facilitating quantitative assessments of interrelations between
factors and the management of network organisation development.

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

4. Evaluation of network potential on the example of the IT sector

The developed model formed the basis for an empirical study of the network potential of IT sector enterprises.
The investigation was conducted by surveying business leaders in order to determine the characteristics of
interaction with their strategic partners who participate or are potentially willing to participate in joint
developments and projects to create new products and/or technologies. The questionnaire included
approximately 40 questions grouped into categories e.g. enterprise resource characteristic, innovative activity
characteristics, progress of the interrelations management system towards coordination assessment,
protective and adaptive functions.

The research results of the system monitoring element showed that the combined implementation of
innovations is a sufficiently widespread strategy for this sector. Thus, 75% of the surveyed enterprises of the IT
sector noted that innovations together with partners are often created by the company. With the exception of
those enterprises not participating or rarely participating in the joint production of innovative products or
technologies, further analysis of the data obtained was primarily focused on the remaining group of
respondents.

The assigning element was assessed according to parameters such as (a) the security of resources from the
point of view of their volume and quality corresponding to the innovation development objectives, (b) the
degree of resource complementarity of a company to its strategic partners and (c) the degree of firm resource
specificity viewed from the position of their potential alternative use. The 5-point Likert scale is the proposed
evaluation method for assessing the respondents described below using these parameters. Estimates of the
overall performance of the assigning element (AE) parameters were summarised, which were then normalised.

As a result, the normalised integral index value of the assigning element needs to be between [0; 1], reflecting
the level of resource base development of inter-firm relations. It is precisely the level of development of the
resource base that initially affects the magnitude of possible synergistic effects of the functioning of network
organisations.

Data has shown that the average AE for the surveyed enterprises is 0.65. The parameters under consideration
– resource security, resource specificity and complementarity of partner resources were used equally to
achieve this result (Fig.2). Nevertheless, it can be noted that in general the average SE value is quite high;
therefore, the resource basis of inter-firm relations has the development potential to achieve a greater
synergistic effect.

Figure 2: Factor proportion in the integral index of the assigning element

The development of the affirming element determines the efficacy of the transformation of the resource base
into beneficial functional network organisation results. According to the outlined network organisation theory,
the quality of the affirming element is determined by the developmental level of inter-firm interaction factors
and characteristics performing, coordinating, adaptive and opportunism-preventive actions. The coordination
features of the relationship management mechanism were assessed using the following parameters: (a) the
level of agreement concerning the company’s operational activities with partners, (b) the degree of democracy
within management, (c) the frequency of inter-firm communications, (d) the level of inter-firm communication
regulation, (e) the technological level of information infrastructure development. The ability of the
management mechanism to prevent opportunism problems that can arise during joint efforts of innovation
can be assessed by means of the following parameters: (a) willingness to trust a partner, (b) fulfilment of

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contractual obligations, (c) information openness, (d) the level of satisfaction with established relationships,
(e) strategic orientation towards long-term relationships. In terms of assessment parameters, the following
adaptation characteristics of the affirming element were selected: (a) the ability of the company to
constructively resolve conflict situations, (b) the stability of the company in face of external changes, (c) the
willingness of the company to adapt to the requirements of its partner, (e) the technological flexibility of the
company in the introduction of new resources. The methodology for estimating and grouping indicators is
identical to that used in the evaluation of the assigning element.

The assessment of the affirming element results within the selected group of enterprises showed a high level
of development. The estimated average coordination component integral indicator of the management
mechanism is 0.74. This element is primarily characterised by a developed system of information exchange,
including technical support. However, enterprises try to avoid strict regulation for communication with
partners, which emphasises the need for flexibility in inter-firm relations. Senior managers adhere to a
primarily democratic management style, which forms the basis for an open culture and enables the
consideration of partner interests. A sufficiently high level of coordination of the partner activities is
presupposed, as in the case of the joint implementation of innovations, although full coordination of all actions
is not required. Final indicator contributing factors of the coordinating characteristic of affirming element are
shown in the figure 3.

Figure 3: Factor proportion in the integral index of the coordinating characteristic of affirming element
The affirming element adaptation characteristic is also estimated at a high level (the average value of the
integral indicator is 0.7). Adaptability efficacy is determined, firstly, by the ability of the company to
constructively resolve conflict situations and the willingness of the company to adapt to the requirements of
its partners. The company's resilience to external changes also is a determining factor; to a lesser extent, so
are matters or technological flexibility, which reflect the amount of costs that arise when the need for new
types of resources is unavoidable. Final indicator contributing factors of the adaptation characteristic of
affirming element are shown in the figure 4.

Figure 4: Factor proportion in the integral index of the adaptation characteristic of affirming element

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

An important factor in the solution of the possible problem of opportunism is the readiness of partners to trust
each other. The analysis also made it possible to establish the relationship between individual factors of the
prevention parameter. Thus, it was established that high levels of trust encourage participants to orient
themselves towards a long-term relationship, influence incentives for specific investments necessary for
technological, resource and managerial mutual adaptation of participants bearing in mind the chosen common
goal as well as promote the development of productive solutions to conflict situations. In turn, the
development of trust is facilitated by a high level of information openness and the conscientious fulfilment of
contractual obligations.

As the study showed, existing inter-firm relations are characterised by a high level of development according
to the analysed factors; the highest average integral indicator score of 0.85 belongs to the prevention
parameter. In this case, it is possible to conclude that it is the ability of firms to establish trust relationships,
thereby effectively reducing the risks of opportunism in the form of freeriding and extortion that is the key
factor in implementing the strategy of joint innovation. Final indicator contributing factors of the prevention
characteristic of affirming element are shown in the figure 5.

Figure 5: Factor proportion in the integral index of the prevention characteristic of affirming element

5. Conclusion
Network interactions are formed on the basis of the resource complementarity and / or multiplicity of
partners. In this case, resources must have a certain degree of specificity. It is this resource characteristic,
namely complementarity, that is the source of relative revenue. However, since the resources belong to legally
independent participants, certain difficulties in arise in connection with the management of shared resources:
these are related to the coordination of joint activities, the solution of the problem of free riding and the
withdrawal of shared revenue, as well as adaptation to unforeseen circumstances, since decisions have to be
applied in the conditions of uncertainty inherent in long-term relationships. The described characteristics of
network organisations form the basis for the network potential model.

In this paper, the network potential model, as an aggregation of the means and cooperation opportunities of
agents aiming at increasing the effectiveness of network organisations, is based on factor space analysis from
the perspective of the interrelation of three structural elements seen to be assigning, coordinating and
affirming influence on the development and functionality of the network organisation system of inter-firm
interaction. The assigning element is formed by the resource characteristics of network organisation
participants from the point of view of their complementarity and the specificity of assets that determine the
basic conditions for building a system of inter-firm cooperation. The affirming element reflects the result of
network organisation functioning in areas in which the effects of synergistic cooperation, reducing interaction
expenses and realising joint innovations are of implemented.

The coordinating element is aimed at optimising the transformation process between the assigning and the
affirming elements to ensure the fullest realisation of resource opportunities through adaptive, coordinating
and opportunism-preventing actions. The coordinating effect is realised due to the development of
communication mechanisms, democratic management and the conformity of participants' activities. The
prevention of opportunism is achieved by the conscientious fulfilment of contractual obligations, information

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 Evgeny Popov, Viktoriya Simonova and Maxim Maksymchik

openness, orientation towards long-term cooperation and the level of satisfaction with ongoing relations.
Adaptability efficacy is determined, firstly, by the ability of the company to constructively resolve conflict
situations, the willingness of the company to adapt to the requirements of its partners, as well as the stability
of network organisation participants to external changes and their technological flexibility.

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Empirical Study of Screening and Signalling Theory in HRM: Reasons
for Studying Management
Pavel Pudil, Lenka Komarkova, Irena Mikova and Vladimir Pribyl
University of Economics, Prague, J. Hradec, Czech Republic
pudil@fm.vse.cz
komarkol@fm.vse.cz
mikovair@fm.vse.cz
pribyl@fm.vse.cz

Abstract: The important role of signalling in labour markets was investigated already in the early 1970's by Michael
Spence. According to the signalling theory, a university education can signal qualities of particular individuals to future
employers. On the other hand, some economists argue that education builds human capital, meaning an investment in
people to increase their productivity. The objective of our research was to investigate the signalling behaviour of
individuals who enrolled in the distant form of management studies (most of them have already graduated). More
specifically, our goal was to find out if there are different associations among the reasons for those with or without a
signalling behaviour (characterized by their main reasons forstudying). Moreover, the associations between the reasons for
enrolling to the study programme and the perceived benefits of the studies were investigated. In order to pursue our
research goal, data from 532 alumni or current distant students, concerning the multiple reasons for studying management
at our faculty and also the perceived benefits, were collected by means of an anonymous questionnaire. The associations
among variables with multiple response options (reasons for studies) were analysed by loglinear models. The results of this
pilot study confirmed that there are strong associations among the reasons with a signalling character (they occur very
often together) while the clearly “non-signalling” reason of being promoted in the current employment is not associated
with any reasons having a signalling character. The findings of our study which are in accordance with the screening and
signalling theory will be discussed with cooperating business companies and then used for improving the management
studies programme.

Keywords: Human resource management, signalling and screening, management studies, labour market

1. Introduction
The important role of signalling in labour markets was investigated already in the early 1970's by Michael
Spence (1973, 1974). He investigated the problem faced by employers who want to hire employees but have
no easy way to ascertain their qualities. According to the signalling theory, a university education can signal
qualities of particular individuals to future employers. In Spence's model, education - rather than increasing
worker productivity - merely serves as a reliable signal of the qualities of individuals. On the other hand, some
economists argue that education builds human capital, meaning an investment in people to increase their
productivity.

The sociologist P. Bourdieu (1986) argues that human capital is strongly related to social upbringing. He gives
an example of the society in the UK being dominated by Old Etonians and Oxbridge graduates who gain social
capital from having the right social networks. On the other hand, related to the social capital of going to the
right school, is the idea that what constitutes human capital is often just “signalling”. He gives an example that
e.g. gaining a degree from Oxbridge improves status in the workforce and enables a higher salary for the
graduate. He states, however, that three years of studying a degree in modern history may give only a small
amount of knowledge directly related to work environment and thus to increasing their productivity.

Signaling plays an important role in the labour market. As an employer has little information about
a prospective employee, the applicant must try to prove that he/she has the required qualities. A university
education is a way of signaling intelligence. The fact that a university education can signal qualities to
employers has raised some interesting questions about why people enroll in a university education. The usual
view of economists has been that education builds human capital. It would mean it is a way of investing in
people to increase their productivity. However, more recently some economists have suggested that this view
is wrong or at best only partly true, and that university education mostly serves as a way of signaling to future
employers. Although most economists believe that education both builds human capital and acts as a signal,
the relative importance of these two functions is still disputed.

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The objective of our research was to investigate the signalling behaviour of individuals who enrolled in the
distant form of management studies (most of them have already graduated). Basically, the reasons for
studying which the respondents could have given, have either a signalling character or a screening character
(an attempt to filter from the employer) or a neutral character. Similarly, two types of distant students can be
recognized. The first ones intended to pursue their career with their current employer, thus they did not need
to transmit any signals to other potential employers and may have responded to the screening from their
current employer. On the other hand, the second ones are likely to change the employer (probably after
receiving the degree), as their reasons to study have a clearly signalling character.

Therefore, more specifically, our goal was to find out if there are different associations among the reasons for
those with or without a signalling behaviour (characterized by main reasons for studying). Moreover, the
associations between the reasons for enrolling to the studies and the perceived benefits of the studies were
investigated.
2. State of art
As the screening and signalling theory originates already from 1973, extensive research and its results can be
found in literature. However, the research connecting this theory to education and training is less frequent.

Van Mol (2017) presents the findings of a large survey conducted in 31 countries that concerned international
mobility of students. He analysed particularly whether European employers value study abroad and whether
'signaling effects' of employing international graduates exist. The findings indicate that international education
is particularly valued when employers need graduates with good foreign language and decision-making skills.

In addition, the results indicate that with higher shares of foreign graduates in a company, the likelihood that
international experience is valued increases. A contribution to the literature by explaining the phenomenon of
over-education using the signalling hypothesis was published by Yunus and Hamid (2016). Their results
indicate the presence of an over-education situation among degree-educated workers in the financial sector in
Malaysia despite enjoying higher private returns. Such over-qualification in the financial sector is due to the
mismatches in the supply of degree-educated workers for medium-skilled positions. Zax (2016) proposes
theoretical explanations for several gender-based differences observed in the labour market in Israel.

Empirical evidence indicates that females acquire more schooling than males do but earn lower wages. To
explain these phenomena, the paper analyzes an economy in which females use education to signal their
commitment to the workplace.

A theoretical base of research on the role of education in intergenerational mobility is provided by the
functionalist theory of industrial and post-industrial society. However, according to Goldthorpe (2014) the
inadequacies of this theory have become increasingly apparent. Therefore, he proposes that sociologists could,
with advantage, adapt to their own purposes theories originating in the economics of labour markets and, in
particular, three theories in some degree deviating from mainstream human capital theory: screening and
signalling theory; job competition theory; and incentive-enhancing preference theory. Based on the theoretical
considerations, derived from human capital theory and signalling theory Gajderowicz Grotkowska and
Wincenciak (2014), formulate the model explaining job satisfaction as a broad measure of labour market
success. Principal component analysis method and OLS regression were used to estimate model parameters.

The signalling role of degree education in China's rural community is discussed by Zhang et al. (2013). Patzelt
(2010) combines signalling and human capital theories to analyze how competencies of new venture CEOs
impact the amount of money technology ventures acquire in venture capital financing rounds.

The topic has received attention also in our country, e.g. Kaderabkova and Soukup (2001), Kaderabkova (2005),
Soukup (2007), Mateju and Anyzova (2015) or Marsikova (2016). Except Soukup’s (2007) paper, the other
mentioned publications are in the Czech language.
3. Data set and methods
In order to pursue our research goal, data from 532 alumni or current distant students of the faculty
concerning the multiple reasons for studying management at our faculty and also the perceived benefits, were

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collected by means of an anonymous questionnaire, conducted online. The respondents participated

voluntarily and absolutely no inducements were applied, only a personal letter was sent to all former
graduates asking them to help with the research carried out at their former faculty. Respondents’ reasons for
enrolling at a university education were identified using a multiple response question containing 9 items (more
than one reasons could have been given), see Table 1.
Table 1: List of Reason Items and their Abbreviations
Item Reasons – full name Reasons - abbreviation
R1 Long-term interest in the field; Interest in field
R2 Desire for self-development Self-development
R3 Required level of education to keep position in current employment Keep one´s position
R4 Requirement from the employer for increasing qualification Employer’s requirement
R5 Effort to get a promotion in current employment Get promoted
R6 Obtaining a degree / certificate of achieved level of education Obtain degree
R7 Change of employment and the related need for requalification Change of employment
R8 Greater flexibility in the labour market Flexibility in labour market
R9 Ensuring a higher salary Higher salary

The main benefits of study at the faculty were investigated through five items (more than one benefits could
have been given), see Table 2:
Table 2: List of Benefit Items and their Abbreviations
Item Benefits – full name Benefits - abbreviation
B1 Acquiring new knowledge, education itself as a satisfactory activity Satisfaction from education
Higher professional competitiveness based on deeper knowledge and newly
B2 Higher competitiveness
acquired competencies
B3 Change in behaviour and attitudes Change in behaviour
B4 Acquiring soft skills needed to practice the profession Soft skills
B5 Acquiring the hard skills needed to practice the profession Hard skills

In our opinion, the reasons listed above characterize:

x Signalling behaviour of respondent (R7, R8 and partly R5, R6 and R9);
x Screening (filtering) by employer (R3, R4 and partly R5);
x Neutral general attitude (R1, R2 and partly R6 and R9).

In our opinion, the reason R5 (Effort to get a promotion in current employment), has a somewhat special
position. Though generally signalling behaviour of a respondent is considered in relation to potential
employers on the labour market, it does not mean that the respondent could not be sending signals to the
current employer. This may be the case of the reason R5 as by enrolling into the university studies the
respondent is actually signalling his/her qualities also to the current employer. On the other hand, respondent
motivation may partly follow from the employer’s requirement, therefore R5 can be assigned partly also
among “screening by employer”. Consequently, the reason R5 may be considered as having a “mixed”
character.

When considering the items of benefit listed above, we can justifiably argue that:
x The only benefit corresponding to signalling is B2;
x All the remaining benefits seem to have a neutral (general) character.

Our data corresponds to Multiple response categorical variables (MRCVs). The first question (Reasons for
study) was answered by 532 respondents, the other (Benefits of study) by 529 respondents. The association
structure of items in the particular variables was detected using loglinear models (see, eg., Agresti, 2003), the
association between variables (two MRCVs) was then tested using the simultaneous pairwise marginal
independence (SPMI) test (Agresti and Liu, 1999). All the analysis was performed using statistical software R
version 3.5.0 (R Core Team, 2018), utilizing the R package MRCV (Koziol and Bilder, 2014).
4. Results and their discussion
The following chapter is divided into three parts: 1/ Relationship between the items of the first variable
Reasons; 2/ Relationship between the items of the second variable Benefits; 3/ Relationships between both
the variables.

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4.1 Reasons for university studies

The association structure was investigated using loglinear models, starting from the model with all the possible
three-way and two-way interactions. By gradual elimination of insignificant members from the model, we have
arrived at the final model involving 6 two-way and 7 three-way interactions, see Table 3. The assumption of
mutual association of signalling reasons R6 to R9 is confirmed at the significance level 1% or 5%, as can be seen
at the last three rows of Table 3. It is worth noting that one negative association (with odds ratio OR <1) was
found among homogeneous associations between items R4 – Requirement from the employer for increasing
qualification and R8 - Greater flexibility in the labour market. This negative association can be logically
explained. If the reason to study is a requirement (or pressure) from the employer to increase one’s
qualification, then one’s reason will not be a greater flexibility on the labour market and vice versa. These two
reasons are somewhat contradictory.

The overview of the resulting associations can be found in Table 4. Items R6 to R9 corresponding to the
signalling behaviour of the respondents are clearly conditionally associated. In these conditional associations,
only item R2 appears. Specifically, R2 moderates the relationship between items R7 and R8. It means that the
reason R7 - Change of employment and the related need for requalification and the reason R8 - Greater
flexibility in the labour market are found significantly associated, and, moreover, also with the reason R2 -
Desire for self-development.
Table 3: Final Model Structure for Reason Variable (n = 532) with Odds Ratios for Conditional Homogenous
Associations
Term Description Odds Ratio P-value
R3 * R4 Keep one´s position * Employer’s requirement 8.00 < 0.001
R3 * R7 Keep one´s position * Change of employment 2.51 0.074
R4 * R5 Employer’s requirement * Get promoted 2.42 0.011
R4 * R8 Employer’s requirement * Flexibility in labour market 0.50 0.044
R5 * R7 Get promoted * Change of employment 2.40 0.070
R5 * R9 Get promoted * Higher salary 2.56 < 0.001
R1 * R2 * R9 Interest in field * Self-development * Higher salary --- 0.049
R1 * R3 * R6 Interest in field * Keep one´s position * Obtain degree --- 0.020
R2 * R4 * R6 Self-development * Employer’s requirement * Obtain degree --- 0.019
R2 * R7 * R8 Self-development * Change of employment * Flexibility in labour market --- 0.022
R6 * R7 * R8 Obtain degree * Change of employment * Flexibility in labour market --- < 0.001
R6 * R7 * R9 Obtain degree * Change of employment * Higher salary --- 0.008
R7 * R8 * R9 Change of employment * Flexibility in labour market * Higher salary --- 0.012

In addition, each of items R7R9 is conditionally independent of certain two items from R1R4. Moreover,
item R5 with “mixed character” is even conditionally independent of three items R1, R2 and R3. It means that
the answers with reasons characterizing the signalling behaviour usually do not occur together with reasons
R1R4, which do not correspond to the signalling behaviour. All the non-signalling reasons R1R4 are,
however, related to the reason (item) R6 - Obtaining a degree, which partly has a ”neutral” character (to
obtain a degree may be both neutral and signalling).
Table 4: Association Structure for Reason Variable Items
Description R1 R2 R3 R4 R5 R6 R7 R8 R9
R1 Interest in field x 9 6 3 2
R2 Self-development 9 x 6 4 8 7 1
R3 Keep one´s position 6 x Homo 1 Homo
R4 Employer’s requirement 6 Homo X Homo 2 Homo
R5 Get promoted Homo x Homo Homo
R6 Obtain degree 3 4 1 2 x 8, 9 7 7
R7 Change of employment 8 Homo Homo 8, 9 x 2, 6, 9 6, 8
R8 Flexibility in labour market 7 Homo 7 2, 6, 9 x 7
R9 Higher salary 2 1 Homo 7 6, 8 7 x
Note: Empty cell – conditional independence, Homo – conditional homogenous association, Number(s) –
conditional association moderated by the item(s) with corresponding number(s).

Grayed out rows correspond to the signalling behaviour (lighter grey is used for rows that correspond only
partially).

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4.2 Benefits of study at the faculty

A similar approach was applied to the second variable Benefit, see Table 5 and 6. The following items were
evaluated as conditionally independent: items B2 - Higher professional competitiveness based on deeper
knowledge and newly acquired competencies and B3 - Changes in behavior and attitudes. Item B2 that
interests us most is conditionally homogeneously associated with item B5 – Obtaining hard skills. Additionally,
the relationship of item B2 to item B1 is moderated by item B4 and similarly, the relationship of items B2 and
B4 are moderated by B1.
Table 5: Final Model Structure for Benefit Variable (n = 529) with Odds Ratios for Conditional Homogenous
Associations
Term Description Odds Ratio P-value
B2 * B5 Higher competitiveness * Hard skills 1.66 0.028
B3 * B4 Change in behaviour * Soft skills 1.92 < 0.001
B4 * B5 Soft skills * Hard skills 5.19 < 0.001
B1 * B2 * B4 Satisfaction from education * Higher competitiveness * Soft skills --- 0.004
B1 * B3 * B5 Satisfaction from education * Change in behaviour * Hard skills --- 0.006

Table 6: Association Structure for Benefit Variable Items

Description B1 B2 B3 B4 B5
B1 Satisfaction from education x 4 5 2 3
B2 Higher competitiveness 4 x 1 Homo
B3 Change in behaviour 5 x Homo 1
B4 Soft skills 2 1 Homo x Homo
B5 Hard skills 3 Homo 1 Homo x
Note: Empty cell – conditional independence, Homo – conditional homogenous association, Number –
conditional association moderated by the item with corresponding number.

A grayed out row corresponds to the signalling behaviour.

4.3 Relationship between Reasons and Benefits

The number of entries (answers) checked for each items combination is given in Table 7.
Table 7: Pairwise positive answers for the Multiple Response Categorical Variables Reason and Benefit (n =
529)

Satisfaction Higher Change in Hard

Soft skills
Reasons / Benefits from education competitiveness behaviour skills

B1 B2 B3 B4 B5
Interest in field R1 149 139 79 89 78
Self-development R2 326 323 165 181 146
Keep one´s position R3 63 70 32 50 32
Employer’s requirement R4 24 30 14 25 14
Get promoted R5 95 107 50 64 52
Obtain degree R6 205 211 101 124 95
Change of employment R7 17 18 7 10 9
Flexibility in labour market R8 277 293 142 173 132
Higher salary R9 203 225 108 133 107

The SPMI test demonstrates a statistically significant association between Reasons and Benefits MRCVs.
Particularly, the Bonferroni-adjusted p-values shown in Table 8 indicate a total of six statistically significant
relationships, of which five are at 5% and one at 10% significance level. Specifically, statistically significant
associations were found between the R1 Interest in the field and B1 Education itself as a satisfactory activity,
or B5 Hards skills, respectively. Furthermore, also between R2 Desire for self-development and B1 Education
itself as a satisfactory activity, or B2 Higher professional competitiveness, respectively. Of the five indicators of
signalling behaviour, two, namely R8 Greater flexibility in the labour market and R9 Higher salary, are
statistically significantly associated with B2 Higher professional competitiveness (it means with the benefit
having a signalling character, too).

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 Pavel Pudil et al

Table 8: Simultaneous Pairwise Marginal Independence (SPMI) Test Results: Bonferroni Adjusted P-values
Higher
Satisfaction Change in
competitivenes Soft skills Hard skills
Reasons / Benefits from education behaviour
s
B1 B2 B3 B4 B5
Interest in field R1 0.012** 1.000 0.419 1.000 0.024**
Self-development R2 0.000*** 0.005*** 0.110 1.000 1.000
Keep one´s position R3 1.000 1.000 1.000 0.689 1.000
Employer’s requirement R4 1.000 1.000 1.000 0.312 1.000
Get promoted R5 1.000 0.375 1.000 1.000 1.000
Obtain degree R6 1.000 1.000 1.000 1.000 1.000
Change of employment R7 1.000 1.000 1.000 1.000 1.000
Flexibility in labour market R8 1.000 0.083* 1.000 1.000 1.000
Higher salary R9 1.000 0.003*** 1.000 1.000 0.419
Note: Grayed out rows and column correspond to the signalling behaviour (lighter grey is used for rows that
correspond only partially).

*** denotes 1% significance level, ** 5% significance level and * 10% significance level

5. Conclusions
The results of this pilot study confirmed that there are strong associations among the reasons with a signalling
character (they are often associated). On the other hand, conditional homogenous association was found
between the clearly “non-signalling” reasons R3 and R4. A mixed character of reason R5 Being promoted in
the current employment discussed at the beginning of section 3, is confirmed by association with “signalling”
reason R7 (Change of employment) and with “screening” reason R4 (Employer’s requirement).

As for the perceived benefits, the interesting finding is that Higher competitiveness is (homogenously)
associated with Hard skills and on the other hand Change in behaviour with Soft skills, though Soft skills and
Hard skills are associated together. The explanation may be in the fact that to gain a higher competitiveness in
1
the currently quickly changing bussiness world with all the technological changes, Industry 4.0 , etc., the
respondents feel that gaining hard skills was more important for them than soft skills (which they may already
partly posses prior to beginning studies). On the other hand, soft skills and one´s behaviour are obviously
connected, thus the confirmed strong association of perceived benefits of the study, namely Gaining soft skills
and Change of behaviour may have been expected.

Finally, the analysis of associations between the two investigated vaiables (Reasons and Benefits) confirmed
the expectation that the benefit Higher competitiveness is associated with some signalling reasons, namely
Flexibility in labour market and Higher salary. Also, it has been confirmed that those whose reasons to study
were the Interest in field or Self-development denoted as a perceived benefit Satisfaction from education. This
association seems to be also a logical one.

We are aware of the fact that the formulation of questions in the questionnaire did not allow revealing the
motivation of participants to study in detail, as it may have been very complex. The same holds for their
perceived benefits. Therefore, the results should be interpreted having in mind this limitation.

To conclude, the detection and analysis of reasons for studying management at our faculty and its perceived
benefits can serve as useful feedback to find out whether the faculty provides for its students at least partly
those benefits corresponding to their reasons to study. It has been confirmed that the students with
a signalling character of their reasons really perceive as the benefit their higher competitiveness at the labour
market. On the other hand, the students, whose reasons were the interest in the field or/and self-
development, perceive as the benefit most often the satisfaction from education itself. This positive feedback
is an important stimulus for further progressive changes in the study program of management.
Acknowledgements
This contribution is supported by the Czech Science Foundation (GA CR) under the grant number 18-01159S.

1
a name accepted for the recently introduced trend of automation and digitization in industry (originally introduced in Germany as
Industrie 4.0)

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 Pavel Pudil et al

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Librarians’ Innovative Behavior Patterns in Public Research
Universities: A Solution in Turbulent Times
Haziah Sa’ari1, Norwati Roslim1 and Mohd Roslan Mohd Tahir2
1
Universiti Teknologi MARA, Negeri Sembilan, Malaysia
2
Open University, Kuala Lumpur, Malaysia
azie.crystal2@gmail.com
roslimnorwati @gmail.com
jantananamela@yahoo.com

Abstract: This is an exploratory case study on the perspective of library leaders towards librarians’ innovative behavioural
patterns in Malaysian public research universities. The objectives were firstly, to explore academic librarians’ innovative
behaviour from the insight of library leaders. Secondly, to analyse the list of innovation projects initiated by academic
libraries in selected research universities. To meet the objectives, first, in-depth interviews were conducted with their
library leaders to determine their perceptions and pattern of behaviours regarding antecedents and inhibitors of
innovative behaviour, within the universities under study. Second, document analyses were used to check the nature and
influence of the library/parent organization vision and goals with regard to innovativeness and librarian innovative
behaviours. It included official library innovation documents and librarian’s job specification. The interviews were also set
to explore the stimulating and restraining factors during innovative processes championed by the libraries in the previous
innovation competition. The data collection methods provided significant evidence to show that the Malaysian universities’
academic libraries are dynamic in which the practices of innovative behaviours have taken place to a certain extent with
incremental award winning innovations. The innovative behaviour had been practiced in both cases within the parameter
of their professional norms focusing on processes that contribute to the bureaucratic sluggishness inherent in the
traditional structure of the academic library. The findings showed that not only in the recognition of the need to be
innovative, but also in the diversity of roles and responsibilities cited and the progressing innovations projects and
initiatives undertaken should be taken into considerations.

Keywords: innovative work behaviour, librarian, university, innovation, library leader

1. Introduction:
The demands to librarians to adopt a strategic forward looking entrepreneurial and innovatively approach
invite discussions that librarian should be creative and proactive in searching new needs and meeting user's
demands and thereby invent products or services that bring profit to the organizations. However, their roles as
innovators to perform innovatively have raised doubts. They are not only being dictated by lack of decision-
making skills and entrepreneurial approach but a failure to get involved in political issue and public
communication has also led them missing an opportunity for innovation chances. Moreover, librarians are not
well versed in many innovation performance methods and consequently, any innovations into the academic
libraries with new and better platforms for improvement are not fully implemented. As a result, the academic
librarians might be seen as not to be on the forefront of working towards innovations for competitive
advantage especially the limited discussion of innovation and its processes in the librarianship literature lead
to an inadequate opportunity to learn from each other’s successes and mistakes. There is little evidence that
librarians are reflecting sufficiently on their innovation processes and striving to enhance their own capacity
and their organizations’ capacity to innovate (Sa’ari, 2018).

In the context of a research university, with the constraints of lacking an imagination, creativity, proactively,
being un-innovative, lacks diversity and disabled in micromanaged, librarians fail to fulfil their role in
supporting research innovation and providing high-level, in-depth support to its clientele to ensure the highest
quality of research output. As innovative culture is vital to academic libraries which need to create new ideas
and to make those ideas happen to meet their role in the digital knowledge society but they are still searching
and defining their image and role. It reflects the deep insecurity and anxiety which lies at the heart of the
library profession. Librarians suffer and bemoan their low status, the lack of recognition and respect from their
clientele and the world at large, their apparent invisibility, the routine nature of their work, the low pay, and
much more. Furthermore, the economic recession and its aftermath have had a profound impact on higher
education or university and academic libraries have also influenced by these constraints. When there is no
sustainable funding, includes shrinking endowments and budgets, librarians face difficulties in managing and
expanding library services and collections. It’s a great challenge for them to justify library cost, find new

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funding sources, form new partnerships to control costs and continue to engage in change management and
shift to greater dissemination of digital resources. Therefore, this study is essential to explore the innovative
behaviours among academic librarians from the perspective of library leaders in Malaysian public research
universities. Librarians need to be equipped with skills that can foster correct attitudes and behavior to face
challenges and to accomplish the goal implied in the parent organization mission.

This study benefits other researchers to intensify their reference and induce further research on the
measurement of innovative behaviours among librarians in South East Asian universities. From the context of
librarianship landscape, librarians will find the findings helpful in their endeavour towards crafting service
innovation. The following section presents a review of the relevant literature. This is followed by a description
of the research method used to facilitate the empirical exploration according to the research objectives. Next,
the cross-case analysis of data revealed the innovative behaviours demonstrated by academic librarians from
the library leaders’ insight and perspectives. Finally, the limitation and recommendations for further research
were highlighted and followed with concluding remarks.

2. Literature review
Previous literature attests to how well academic libraries are identifying and proposing innovative solutions for
tackling the many challenges facing academic libraries (Sa’ari, 2018; Ward, 2013; Islam, Agarwal & Ikeda, 2017;
Jange, 2015). In an aging profession and one largely governed by professional norms, the library leader may
find it difficult to initiate organizational change or may, in fact, personally resist change. Given the growing
uncertainty about the role of the academic library in the university, it becomes increasingly important to
understand innovations and how library leaders can create an innovation climate in their institutions. Though
frequently discussed in the literature of academic libraries, innovation remains an ambiguous and shallowly
defined concept. Since the misperception of its definition, librarians are suggested to use the term of
“makeshift remedy” to overcome the changes within their profession’s context (Rubin, Gavin & Kamal, 2011).

The term “innovation” is used in multiple ways. It can refer to products, such as tools or behaviours, or to the
processes by which these products are created (Reader & Laland 2003). However, this “restricted” definition of
innovation is not applicable for librarianship. It is because innovation in libraries is beyond than distinguishing
or evaluating its process and later, measuring the product created from that process. Innovative librarians not
only must engage themselves in solving problem of the crises facing in their workplace but also have an ability
in initiating innovation consistent with their core values (Ward, 2013).

In the Malaysian context, the Vision 2020 together with the Economic Transfer Plan and the implementation of
the National Innovation Agenda along with the subsequent higher education reforms required by the federal
government has posted greater challenges for academic librarians than ever before. Academic librarians in
Malaysia face problems in implementing new ideas and improving their practices as prescribed by the reforms
to experiment with international standard that focus on the quality and reliability of processes that create
products and services leading to innovation and invention (Sa’ari et al., 2018). In other words, the effect of an
incessant and increasing demand by the stakeholders and the user community highlight that academic libraries
need to provide better services and facilities. On top of that, it is challenging tasks for academic librarians to
market their information resources effectively (Edewor et al., 2016). Moreover, Malaysian librarians generally
lacked the knowledge on entrepreneurship, as well as are not proactively exhibited their innovation behaviour
and skills to create products and services leading to new innovation and invention due to strictly followed the
responsibilities prescribed for them.

Focusing on the librarianship landscape, we define innovation as a continual process of identifying, solving and
improving problems pertaining to information and librarianship tasks which are demonstrated by academic
librarians for their profession’s sustainability and perseverance. As innovative processes are linked to the
individual levels’ behaviour, this paper applies the construct of innovative behaviours namely idea generation,
idea championing and idea implementation (Donohue-Perry, 2012). Hence, we propose innovative behaviour
as leading initiative, apprenticeship determination and supportive winning demonstrated by academic
librarians to create process, products, service and to improve library administrative work for effective
functioning in the university they are attached to. We propose three dimensions of innovative behaviour,
which is based on the model developed by Donohue-Perry (2012) comprising of idea generation, idea
championing and idea implementation.

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 Haziah Sa’ari, Norwati Roslim and Mohd Roslan Mohd Tahir

2.1 Idea generation

Literature suggests that idea generation as one of the domains of innovative behaviour which consists of the
traits of (i) search new ways and (ii) improve current tasks (Kratzer, Meissner & Roud 2017; Svihla & Reeve,
2016). A creative idea is a necessary condition for innovation as it precedes the exploitation of opportunities.

Idea generation includes behaviours directed at generating concepts for the purpose of improvement. The
generation of ideas may relate to new products, services or processes, the entry of new markets,
improvements in current work processes, or in general terms, solutions to identified problems (Kundu & Roy,
2010). The key to idea generation appears to be the combination and reorganization of information and
existing concepts to solve problems and to improve performance. The start of an innovation process is often
determined by chance: the discovery of an opportunity, a problem arising or a puzzle that needs to be solved.

The trigger to opportunity identification may be a chance to improve conditions, or a threat requiring
immediate response. Some opportunities for innovations may be easy to identify while are overlooked for a
long period (Svihla & Reeve 2016). Kratzer et al. (2017) and Mumford et al. (2010) found that skill in combining
and reorganizing concepts is one of the best predictors of creative achievement. Based on the analysis of the
literature, we conclude that idea generation is the process of creating, developing, and communicating ideas
which are abstract, concrete, and visual. In this case the mechanism tool includes the process of constructing
through the ideas, ideas or concepts innovating, developing the process, and bringing the concepts/ideas to
reality. Ideas from this context of discussion are either for modifications that can be made on existing
products/services or for making a new product/service.

2.2 Idea championing

In this paper, idea championing’s antecedents namely: (i) encourage key person; (ii) influence other employees
and; (iii) efforts to develop new things were used to explore innovative behaviour of the academic librarians.

Innovative individuals who take prime responsibility for the introduction of innovations are often not formally
appointed but rather those who feel strong personal commitment to particular ideas and are able to ‘sell’ it to
others. Championing includes behaviours related to encourage a person to be innovative and to influence
other employees and pushing and negotiating. When ideas are proposed, recipients will first explore how it
will affect them or their functioning. In case their current knowledge and skills would be outdated, resistance is
more likely, therefore to encourage a person to start the innovation is important. Second, people have a
general tendency to perceive information selectively, i.e. consistent with their existing views. This implies that
extremely innovative ideas receive no priority. A third source of resistance is a shared preference for familiar
actions and events. People have a built-in tendency to return to their original behaviours, a tendency that
sabotages change. In this case encouragement for the key person is necessary to minimize sabotage (Kundu &
Roy, 2010).

2.3 Idea implementation

Previous literature suggests that to implement the selected ideas often requires considerable effort from
individuals to transform ideas into practical propositions or reality. It includes behaviours such as developing
new products or work processes, testing and modifying them (e.g. Van de Ven & Rogers, 1988; Kanter, 1988;
West & Farr, 1989). To be an aspect of such behaviours, individual needs to be proactive and persistent (e.g.
Wu & Parker, 2017; Griffin, Parker & Mason, 2010; Arefin, Arif & Raquib, 2015). In addition, idea
implementation requires a person with self-efficacy’s trait to handle tasks with enthusiasm, expending great
amounts of effort, and persistence to confront challenges (Wu & Parker, 2017; Arefin, Arif & Raquib, 2015).

Since individual innovation may involve both uncertainties about future outcomes as well as possible
resistance from others affected by change, individuals do not possess a reasonable amount of self-efficacy are
less likely to put effort into implementing innovations.

Conclusively in this study, based on the above analysis of the literature, the dimensions of innovative
behaviours tested in this study consisted of idea generation (search new ways, improve current task); idea
championing (finding Support and building coalition, influencing other employees) and idea implementation
(transform ideas into reality). All of these behaviours lead to the formation of new/improve products, service
or administration process in managing academic library.

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 Haziah Sa’ari, Norwati Roslim and Mohd Roslan Mohd Tahir

3. Research methodology
The research objective of the study was to explore the innovative behaviour among academic librarians in the
library of two selected research universities. Thus, this study used a qualitative interview method which
focused on gaining an understanding from the library leaders’ points of view, experiences and interpretations.

The study was framed by the conceptual framework from the previous analysed literature. The innovative
behaviours were measured consisting of idea generation, idea championing and idea implementation. These
antecedents are widely used in investigating and rating innovative behaviour at individual level by the
immediate supervisor in organization and based on that, it was possible to explore library leader’s views and
experiences on academic librarian’s innovative behaviours within the context of their day-to-day concerns and
priorities.

3.1 Informants and populations

In order to allow purposive sampling suitable to achieve the objectives of the study and to provide answers to
the research questions, only two of five Malaysian public research universities will be chosen. These
universities over the years have been reputable on 10 areas of performance, including research impact,
internationalization, products, services and overall achievement associated with innovation. The core
specialization of CASE A is agricultural science, while CASE B specialization is science and technology. This fact
may have an impact on the innovative behaviour of both cases. Both libraries maintained the Key
Performance Index of 90% to 95% of overall achievement. The library leaders of both hold the position of
super scale JUSA (a Premier Grades in the Malaysian Civil Service consisting of JUSA ‘C’, JUSA ‘B’ and the
highest grade in this band is Premier Grade ‘A’ or JUSA ‘A’. JUSA stands for Jawatan Utama Sektor Awam or
Public Service Premier Post), with library management experience of 30 years and 5 years as chief librarian.

The gender of informant for CASE A is male whereas for CASE B is female. The age for both is between 55-60
years old.

3.2 Data collection and analysis of data

In-depth interview and document analysis questions were used to enable a detailed exploration of library
leaders’ views and experiences using a flexible and responsive approach. The informants were briefed about
the purpose of the study and requested to allow MP3 recordings of the interviews. They filled in participation
consent form with the aim to assure of their personal anonymity and the confidentiality of the responses and
the raw data (Saunders et al. 2012). The interviews were conducted and lasted between 50 minutes and one
hour. The interview transcripts were indexed and mapped on the basis of recurring themes.

4. Findings/Results
The following section is the cross-case analysis of data for CASE A and CASE B which revealed the innovative
behaviours demonstrated by academic librarians from the library leaders’ insight and perspectives.

4.1 Idea generation

The informant of CASE A perceived that along the lines of stimulating new ideas, his librarians could effectively
brainstorm problems they were encountering through collaborative efforts with the IT section of the library.

However, he perceived that his librarians had difficulty using their creative ability in understanding
technological changes, clients’ behaviour, competition, and jurisdiction related to library and information
management processes and top management requirements in order to be innovative. The needs of library
users; requirements of parent organization and the innovation process itself have helped his librarians to be
innovative and thus used their creativity to come out with innovative products and won many awards for their
innovative products.

Contrarily, informant of CASE B believed that idea generation originated once she gave freedom to her
librarians to work on what they most loved based on their talents they possess and she was personally
involved by monitoring and evaluating the outcome of their innovative products. She asserted that training
and library visits mostly to the developed countries and knowledge sharing session are the alternatives for
inspiring her staff in problem solving processes. Since a budget is the most challenging issue to be tackled, her
librarians have established special endowment and market the library space to be rented for events. She used

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 Haziah Sa’ari, Norwati Roslim and Mohd Roslan Mohd Tahir

the strategy of compliments such awards, praises and acknowledgement for encouraging librarian being
innovative. Conclusively, the analysis was relevant with the previous studies that new ways is a necessary
condition for innovation as it precedes the exploitation of opportunities and the generation of ideas which
may relate to new products, services or processes, improvements in current work processes, or in general
terms, solutions to identified problems (Kratzer et al. 2017; Svihla, & Reeve, 2016; Kundu & Roy, 2010).

From the aspect of improving current task, the informant of CASE A explained that his focus on performance
reporting of work achievement has encouraged librarians to bring new ideas and concerns they want to
discuss. It is also made the performance index easy to be measured. He added that librarians’ ability of
improving current tasks due to their focus, commitment, ICT competency and effectively communicate with
users. On the other hand, CASE B’s informant narrated that her librarians have developed an Idea Bank portal
which is resumed as a new emerging trend. Meanwhile ISO audit process improvement has also stimulated
the librarians to be innovatively and to improve the existing work process. Consistently, the key to improve
current task appears to be the combination of and reorganization of new ideas and reorganization of
information and existing concepts to solve problems and/or improve performance by improving the current
tasks (Basadur, 2004).

4.2 Idea championing

Informant of CASE A observed that the coalition building has ventured by his librarians as they are able to
convince, persuade and gain the trusts of the top university’s personnel in the meeting and event conducted.

With the good communication skills in delivering ideas, reliable, resourceful and collaboration with other
department, his librarians managed to posit the “voice of the library” to the key persons. She added, her
librarians have always looking for challenging and competiveness task to demonstrate their innovative
behaviours. Gain new understanding, subject in hand of the current knowledge and issues and masters in
research methodology have setting their academic collaboration with academicians. In order to influence
other employee, informant CASE A pointed that beside an ability to verbalize idea convincingly, dare enough to
face risk in confronting different opinions, through internal/media network to convince their subordinates to
support their innovative ideas. These attributes are practicing their ability to take challenging responsibilities in
building reputation, patient and initiative efforts progressively.

For CASE B, librarians who are skilful in leadership and coaching tend to be more innovative and going
outreach such as organizing the resources/intellectual assets located in various universities’ department.

Consequently, the personnel from other department and faculties are impressed with their skills and their
proactive actions thus have gained recognition by the university. To measure the efforts in developing new
things, after cited some of the award winnings on their innovative products, the informant of CASE A perceived
that his librarians’ innovative behaviour practices cantered around their IT capabilities for innovation works of
prototyping of data bases, user interface websites and most of the innovative projects were on the usefulness
of the products to end users. On the other hand, CASE B’s informant perceived that collaboration is the string
driver for her librarians by using social media and conferencing technologies for bringing the librarians and
people together to develop new things and constantly seeking opportunities and identify initiatives to develop
new solution. Relevant with previous studies, innovative individuals who take prime responsibility for the
introduction of innovations are often not formally appointed, but rather those who feel strong personal
commitment to particular ideas and are able to ‘sell’ it to others. Championing includes behaviour’s related to
convince people, finding support and building coalitions, such as persuading and influencing other employees
and pushing and negotiating (Kundu & Roy, 2010; King & Anderson, 2002)

4.3 Idea implementation

The librarians of CASE A were expected to plan and implement their innovative ideas in a limited budget
situation and faced less risk through their research skills. His perception is based on the tradition of rewarding
people who come up with new ideas and their implementation; it also makes a genuine effort to allocate part
of the limited budget for innovative projects. A unique policy approach includes a formal annual assessment
process based on group innovative behaviour rather than on individual basis.

Persistently encouraged others to adapt or accept new ideas were perceived by CASE B’s informant as one of
the traits of her librarians to implement their innovative behaviour. She stressed out that all her supervisions’

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 Haziah Sa’ari, Norwati Roslim and Mohd Roslan Mohd Tahir

librarians were involved in decision making process for introducing ideas to practice which involves
assimilation, analysis and adaptation or creating a totally new products or process. By using analogies by the
librarians in confronting change and innovation, she asserted that those attributes have powerful influence in
shaping and preparing the entrepreneurial direction and innovative behaviour of librarians in years to come.

Previous studies suggested considerable effort is required from individuals to transform ideas into practical
propositions and to demonstrate it, an individual need to be proactive, self-starting and persistent (Wu &
Parker, 2017; Griffin, Parker & Mason, 2010; Arefin, Arif & Raquib, 2015).

The synthesis of the findings is shown in the table below.

Table 1: Innovative Behavior Perceived by Chief Librarians in CASE A and CASE B
Domains of CASE A CASE B
Entrepreneurial Chief Librarians’ Perception Chief Librarians’ Perception
Competencies
Innovative Behaviour
Idea Generation
Brain storming, formal meeting, Gave freedom to her librarians, involved and evaluates the
Search new ways different perspectives of users, parent outcome of innovative products, instilled trust and
organization and innovation process, highlighted the importance of quality, encouraged in
strategic thinking, system thinking, developing knowledge management system (KMS).
action fit into missions.

Improve current task Proactive, incongruities ideas, Developed KMS, implement the Key Performance Indicator
energetic, cooperation and positive (KPI) based on ISO audit results.
relationship, IT skills, new work
practices, urgency and focus,
commitment, users’ insight, diagnostic
skills, personal contact,
communication.
Idea Championing
Coalition building, convince, persuade Strengthen the aspect of discipline, upgrade knowledge on
Encourage key person and gain the trusts of the top research methodology, collaboration with academicians
management and presentation skills
Influence other Humble and respect, network, Through coaching, consulting and expertise
employees persuasive, personal branding for
reputation.
Efforts to develop new Prototyping of the KMS, user interface Collaboration and social media application to venture new
things websites, testing the acceptance of the solution
product in innovation competition
Idea Implementation
Work in a team to plan and implement Work in team in systematic ways, encourage others to accept
Systematic introduction library program, research skills to new ideas, confronting change and
of ideas to practice gain perceptions, implement
rewarding people who come up with
new ideas

5. Conclusion and Recommendations

This study has shown findings that the academic librarians are highly committed to service innovativeness. One
of the factors for successful demonstration of innovativeness behaviour are all informants involved are Malay-
Muslim librarians. The religion and culture aspects moulded them to unite and are conscious of their religious
demands and obligation for the establishment of good intention, justice, cooperation and trusteeship in daily
life. The similarity in ethics and beliefs give space for cooperation in achieving the universities’ missions. Such
positive attitudes might result in higher commitment and dedication to work, creativity, and fair
competitiveness in the academic libraries. Conclusively, the trend of homogenization which implies that Malay
academic librarians of universities they are attached to is common culture and belief, structures and
organizational processes. The imitative results showed that librarians see most innovation as progressing or
incremental to achieving the world ranking, making innovations as not radical. This is due to the fact that
innovations have occurred with respect to existing systems, thus having a high degree of compatibility with
products and processes that are already in place such as upgrading book drops and web portals, linking their
organizational data bases to the international data bases, institutional repository and upgrading of work
processes common to the non-research university academic libraries.

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 Haziah Sa’ari, Norwati Roslim and Mohd Roslan Mohd Tahir

However, limitations of the study and issues for future research are recapitulated as follows:
1. The impact of innovative behaviour in research needs further investigation and detail scrutiny. Much
data for this study came from the librarians and very little was obtained from the policy community.
Since this study points out the importance of innovations in the public sectors from the perspective of
the government innovative agenda, it would be interesting to gather data from the policy makers and
find out what their perspectives and expectations with regard to innovative behaviour in this sector.
2. All the academic librarians in the two cases involved in this study are attached to research universities.
Since they are working in such a demanding environment to support their parent organization in
achieving the world ranking assessment, their internal factors and the way they perceive and respond
to the policy directives may be different from other librarians in some ways. Therefore, it would be
enlightening to study those librarians from private universities to know whether there are other
internal and external factors which influence librarians in different settings.
3. As an extension from this study, there is a possibility to carry out more research related studies to the
curriculum for librarians’ preparation to practice on innovation and innovative behaviour. One way to
approach this is through focus groups where librarians, chief librarians, top management and Library
Science faculties participate and give ideas for their learning on innovation and its implementation.
The recorded data from the focus group discussion can be used as reference for further research and
development on innovative behaviour among librarians.

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Health Care Information Technologies Innovation
Elena Serova1 and Irina Guryeva2
1
National Research University Higher School of Economics, St. Petersburg, Russian
Federation
2
Company SISTeMA srl. Rome, Italy
serovah@gmail.com
irisha.guryeva@gmail.com

Abstract: The concept of innovation in medicine is associated with something new that will have a positive effect in an area
where it will be introduced. Innovation is also about something that will work better, than whatever. Healthcare is one of
the important areas and it is open to new experts, for contemporary information technologies and innovative start-ups. In
such a socially significant sphere as healthcare industry, innovation activity has become vital especially in such areas as
automation of physician working place, creation of unified electronic medical record, distribution of intelligent decision
support systems for medical solutions, application and wide dissemination of new medical technologies, telemedicine
development. The intersection of medicine and ICT has led to the emergence of a new sector of economy - Health IT. The
main goal of this research is to identify the most attractive directions for ICT innovations in healthcare industry. This paper
deals with the issues of international researches in the field of Health IT innovation. The types of ICT innovations in health
care system are quite different and comprise several categories. The authors will consider in detail the next from them:
Electronic Health Records, Clinical Decision Support Systems, Telemedicine, and Internet of Things. It is empirical and
theoretical research in equal measure. The research is based on literature review, analysis of large volumes of information,
and findings of investigations in this field. The theoretical contribution and practical value of the work is based on
consideration and analysis of the distinction between implementation of IT innovation in Italian, Russian, and American
health care system according to Triple-Helix Model. Research methodology is methods and procedures of system and
comparative analysis, deduction by analogy and modelling. The paper also contains the comprehensive review and
comparison the types of ICT innovations in healthcare sector, and it focuses on the main characteristics of Clinical Decision
Support Systems.

Keywords: Innovations in Healthcare, Health IT, Clinical Decision Support Systems, Triple-Helix Model

1. Introduction
The concept of innovation in medicine is associated with something new that will have a positive effect in an
area where it will be introduced. Innovation is also about something that will work better, than whatever.

Healthcare is one of the important areas and it is open to new experts, for contemporary information
technologies and innovative start-ups. In such a socially significant sphere as medicine, innovation activity has
become vital, because its results are used to obtain a qualitatively new idea of treatment and process
management in healthcare. Nowadays researches notice that priorities began to change in such directions as
automation of physician working place, creation of unified electronic medical record, a distribution of
intelligent decision support systems for medical solutions, an application and wide dissemination of new
medical technologies, telemedicine development. These are all the examples of the innovative changes in the
healthcare system. Information and communication technologies (ICT) remain a key driver of innovation in
healthcare industry. The intersection of these two industries has led to the emergence of a new sector of the
economy - Health IT. Health IT can be described as the use of a suite of products and services designed to
improve and coordinate patient care, address growing health costs and confront the long-term burden of
disease using technology.

The next statements are considered as the basic hypotheses: in Russia, as over the world, Information and
communication technologies are the main driver of healthcare industry innovative development. The types of
ICT innovations in health care system are quite different and comprise several categories. The authors will
consider in detail the most significant from them: Electronic Health Records, Clinical Decision Support Systems,
Telemedicine, and Internet of Things. Clinical Decision Support Systems become especially important among
other types of innovations and leading representatives in Russian market. They can be considered as the
highest level of electronic health records (EHR) and medical expert systems, facilitating the enhancement of
Evidence-Based Medicine.

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The main goal of this research is to identify the most attractive directions for ICT innovations in Russian
healthcare industry. The study put forward the following research questions, answers to which are meant to
aid in achieving the research purpose:

x How can IT innovation leading representatives in Russian market affect healthcare industry?
x What is the distinction between implementation of IT innovation in Russian, Italian and American
health care system according to Triple-Helix Model?

This paper deals with the issues of Russian and international researches in the field of Health IT innovation. It is
empirical and theoretical research in equal measure. The research is based on literature review, analysis of
large volumes of information, and findings of investigations in this field. Research methodology is methods and
procedures of system and comparative analysis, deduction by analogy and modelling.

The theoretical contribution and practical value of the work is based on consideration and analysis of the
distinction between implementation of Health IT innovation in Russian, Italian and American health care
system according to Triple-Helix Model. The paper also contains the comprehensive review and comparison
the types of ICT innovations in the healthcare sector, and it focuses on the main characteristics of the Clinical
Decision Support Systems (CDSSs) leading representatives in Russian market.

The paper is structured as follows: Introduction; Theoretical and methodological fundamentals of ICT
innovations in healthcare industry and Literature review; Types of ICT innovations in the healthcare sector;
Innovative medical information systems: essentials of Russian market; Measuring ICT innovations in healthcare
system; Conclusion, and References.
2. Theoretical and Methodological Fundamentals of ICT Innovations in Healthcare
Industry and Brief Literature Review
To identify the main characteristics of the innovation activity in healthcare industry, first of all, the term
«innovation development process» should be defined. The most common definition was given by Rogers: «The
innovation-development process consists of all of the decisions, activities, and their impacts that occur from
recognition of a need or problem, through research, development, and commercialization of an innovation,
through diffusion and adoption of the innovation by users, to its consequences» (Rogers, 1983). In this
process, serendipity plays an important role. Nevertheless, in the field of medicine, serendipity is not enough;
it should be underpinned by clinical trials. Such experiments are designed to determine the effects of an
innovation in terms of its safety and efficacy. In addition, they help to make a positive or negative decision
about further diffusion of the innovation. Cooper describes innovation process as «a formal blueprint,
roadmap, template or thought process for driving a new product project from the idea stage through to
marker launch and beyond» (Cooper, 1994). However, both definitions have one common point. Due to the
fact that healthcare is a branch of social sphere, the economic effect, i.e. commercialization, becomes less
obvious. Therefore, creating an innovative product or service, a researcher is primarily focused on medical and
social efficiency.

There are three main approaches to introduction of innovations in organizations, providing services to the
public in general and medical services in particular: passive (let it happen), supporting (help it happen) and
active (make it happen) (Greenhalgh, Robert, MacFarlane, Bate&Kyriakidou, 2004.). Passive process of
innovation diffusion is characterized by the fact that new technology appears in the organization by accident
and then it adapts to its introduction. Innovation penetration is not particularly stimulated. Supporting process
of new technologies implementation assumes that an organization realized the need for innovation. Therefore,
new technologies are subject to discussion, their implementation is carried out by making the appropriate
decision (formal or informal) and supported by holding the special events. Active process of innovation
dissemination is based on a systematic and planned analysis of new technologies, the ordered management
procedures, built into the overall management of the organization. Most health organizations follow passive or
supporting process of innovation introduction and, therefore, the intensity of the spread of new technologies
in health care facilities is lower than in other sectors of the economy. New technologies in medicine are the
major reason of rising health care costs, that is why outcome analysis / cost-effectiveness studies for a new
medical technology are often crucial to the development of the innovation (Medical Innovation in the
Changing Healthcare Marketplace: Conference Summary, 2002). At the same time, it is a fairly common fact

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that some organizations show reluctance to conduct cost-effectiveness studies of new technology being
introduced before it will hold cost assessment.

According to Omachonu and Einspruch (2010, p.10) healthcare organizations perform such activities as
treatment, diagnosis, prevention, education, research and outreach. In serving these purposes, they must
effectively manage quality, costs, safety, efficiency and outcomes. The basis for healthcare innovation are the
needs of patients and the healthcare practitioners and providers who deliver care. Quite often, healthcare
organizations arrive at innovation by relying on new or existing information technology. Successful innovation
process focuses on three areas the most: how the patient is seen, how the patient is heard, and how the
patient’s needs are met.

Innovation in health care presents two kinds of financial challenges: funding the innovation development
process and figuring out who will pay how much for the product or service it provides. While venture
capitalists supporting IT start-ups may be able to get their money back in two to three years, investors in a
biotech firms have to wait ten years even to find out whether a product will be approved for use (Herzlinger,
2006.). Besides that, it is difficult for venture capitalists to assess the extent to which the public policy will
change, which creates a major uncertainty for them. To foster innovation public policies must be consistent in
order to have a salutary effect on prices, the investments required, and the timeframe from idea to
marketplace.

Concerning Russian experience, the authors identify the main drivers and barriers to innovation development
process in the healthcare industry. In a more strict manner, the following factors were highlighted:

x Development of new economic relations, aimed at creating a market in health care;

x Substantial and increasing private investment in medical R&D;
x Establishment of sound systems of mutually beneficial relationships between health care
organizations, enterprises and citizens;
x Formation of a business climate conducive to investment appeal for private partners.

And what about the barriers, they are:

x Product distribution (unlike consumer products, healthcare products are distributed through a more
complex supply chain that involves multiple parties, including medical device manufacturers and
distributors, physicians and nurses who provide the product to the end user, and the patient, who
generally has no input on product or pricing considerations);
x Healthcare culture (by nature and for good reason, the healthcare industry is incredibly risk averse);
x Complex value analysis model;
x Misconception about what constitutes innovation.

Information and communication technologies are contributing enormously to the improvements we can see in
health industry (Wang Y, Kung, Wang W & Cegielski, 2018). Lyle Berkowitz, MD, associate chief medical officer
of innovation for Northwestern Memorial Hospital in Chicago and Chris McCarthy noticed: «healthcare system
is not sustainable, and we certainly have to become more innovative. IT is a tool, but it is a really important
and powerful tool that will help us spread innovation more efficiently and effectively. We need to think about
how we can do things differently and how information technology can enable these changes in the safest,
quickest and most cost-effective manner» (Berkowitz&McCarthy, 2013). The development of ICT caused four
important worldwide changes that have transformed the business environment. Organizations or societies
that do not respond to these changes will not be able to survive and prosper in the new business environment.
These changes are listed in Table 1. Various types of innovations involve changes in the application of ICT.

Therefore, the concept of «ICT innovations» originated. Swanson and Ramiller defined it «as the pursuit of IT
applications new to an organization» (Swanson&Ramiller, 2004). Lyytinen and Rose claimed that ICT
innovation is «the creation and new organizational application of digital computers and communication
technologies» (Lyytinen&Rose, 2003). IСT innovations result from exponential improvements in computing
speed and data storage functions that have led over time to radically enhanced functionality in processing,
storage, transfer, and display of information. In their simplest form, IСT innovations involve only a

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technological component changes in hardware and software that are new to an industry, but they are often
complemented with organizational innovations including new forms of cognition, meaning, work process,
business process, or organizational structure. Specific IСT innovations involve these elements in different
proportions and consequently affect the content, scope, and organization of IСT innovation processes within
an organization or the industry (Swanson, 1994).
Table 1: The changing business environment

New Environment Changes to Business Environment

Globalisation Global markets

Global workgroups
Global delivery systems, Borderless world

Knowledge economy New product and services

Time-based competition
Shorter product life cycle

Transformation of Business Enterprises Flat organisations, Decentralisation

Employees' flexibility
Location independence, Empowerment
Collaborative work and teamwork

Emergence of the Digital Organisations Extensive use of digital network

Digital relationship with customers and suppliers
Digital management
Rapid sensing and responding to environmental changes

3. Research methodology
Scientific methodology of the research is methods and procedures of system and comparative analysis,
deduction by analogy and modelling. The research is based on a system point of view by taking into account all
aspects of the situation development and focuses on the interactions between different elements of complex
systems. System analysis requests the methods of modeling as the main tool of research. The research is using
the concept of Triple Helix Model applied to statistical data, drawn from OECD MSTI, Eurostat and Rosstat
Databases.

This research investigates the differences between countries in ICT innovations implementation using the
concept of Triple Helix Model. There was made qualitative analysis based on statistical data for national
science and innovation systems. The concept of the Triple Helix is an analytical construct that systematizes the
key features of University-Industry-Government interactions into an 'innovation system' format. It was
designed in mid-1990s by Henry Etzkowitz (USA) and Loet Leydesdorff (the Netherlands) as a result of
attempts to interpret the shift from a dominating industry-government dyad in the Industrial Society to a
growing triadic relationship between university-industry-government in the Knowledge Society. At the same
time, this model can be considered as a method for understanding the sources and development paths of
innovation. Since the innovation process is becoming more open and nonlinear (Chesbrough, 2011), the
emergence of the Triple Helix is the response, aimed simultaneously at promotion of innovative projects and
creation of communities, networking among economic agents.

A substantive body of Triple Helix consists of two main complementary perspectives (Etzkowitz & Leydesdorff,
1998; Etzkowitz and Leydesdorff, 2000; Etzkowitz, 2003; Etzkowitz and Ranga, 2013):

x (Neo)institutional perspective, encompasses case studies and comparative historical analyses that
explore different configurations arising from the positioning of the university, industry and
government institutional spheres relative to each other, with one as a gravitational center;
x (Neo)evolutionary perspective, inspired by the theory of social systems of communication and
mathematical theory of communication, which sees the University, Industry and Government as co-
evolving subsets of social systems.

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To make a comparison between countries researches have use the (neo) institutional perspective, which
distinguishes three main configurations (Etzkowitz and Ranga, 2013):

x Static configuration, where government plays the lead role, driving academia and industry, but also
limiting their capacity to initiate and develop innovative transformations;
x Laissez-faire configuration, characterized by a limited state intervention in the economy, with industry
as the driving force and the other two spheres acting as supporting structures and having limited roles
in innovation: university acting mainly as a provider of skilled human capital, and government mainly
as a regulator of social and economic mechanisms;
x Balanced configuration, specific to the transition to a Knowledge Society, where university and other
knowledge institutions act in partnership with industry and government and even take the lead in joint
initiatives.
4. Types of ICT innovations in healthcare sector
New digital information, nanotechnology, semiconductor products, and genetic engineering are
revolutionizing health care, making old assumptions invalid and creating unanticipated prospects for
innovation and improvement of existing processes. That means the types of ICT innovations in health care
system are quite different and comprise several categories. The authors consider in detail the most significant
from them.

4.1.1 Electronic Health Records

Implementing electronic health records (EHRs) in healthcare sector was an inevitable challenge, because they
are a way to capture and utilize real-time data to provide high-quality patient care, ensuring efficiency and
effective use of time and resources. In a more strict sense, although the terms EHR, EMR (electronic medical
record) and PHR (personal health record) are often used as synonyms, they have some principal differences.

The EHR is a longitudinal electronic record of patient health information generated by one or more encounters
in any health care delivery setting (Available from Internet: www.himss.org/ASP/topics_ehr.asp). The EMR is,
defined as the legal patient record in hospitals and ambulatory environments, and which can serve as a data
source for the EHR (Habib, 2010). The PHR is an electronic application used by patients to maintain and
manage their health information in a private, secure, and confidential environment.

What are the advantages of implementing Electronic Health Records? EHRs help providers better to manage
care for patients by (Available from the official Website of the Office of the National Coordination for Health
Information Technology (ONC): https://www.healthit.gov/faq/what-are-advantages-electronic-health-
records):

1. Providing accurate, up-to-date, and complete information about patients at the point of care;
2. Enabling quick access to patient records for more coordinated, efficient care;
3. Securely sharing electronic information with patients and other clinicians;
4. Helping providers more effectively diagnose patients, reduce medical errors, and provide safer care;
5. Improving patient and provider interaction and communication, as well as health care convenience.
6. Enabling safer, more reliable prescribing;
7. Helping promote legible, complete documentation and accurate, streamlined coding and billing;
8. Enhancing privacy and security of patient data.
9. Helping providers improve productivity and work-life balance.
10. Enabling providers to improve efficiency and meet their business goals.
11. Reducing costs through decreased paperwork, improved safety, reduced duplication of testing, and
improved health.

Using EHRs can help an organization build a sustainable medical practice. While EHRs do require investments
for technology and training, a fully functional EHR system can lead to long-term savings in a variety of areas
and better business. Studies have shown EHRs to generate a positive return on investment (Grieger, Cohen,
Krusch, 2007). Another significant ICT innovation in healthcare industry is clinical decision support systems
(CDSSs).

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4.1.2 Clinical Decision Support Systems

Clinical Decision Support Systems are «active knowledge systems which use two or more items of patient data
to generate case-specific advice» (Van der Lei&Talmon, 1997). It should be noted that the role of CDSS
becomes especially important in Russia nowadays. Incorporating EHR and CDSS together into the process of
medicine has the potential to change the way medicine has been taught and practiced (Berner, 2007). It can be
said that CDSS is the highest level of EHR. Since «clinical decision support systems are computer systems
designed to impact clinician decision making about individual patients at the point in time that these decisions
are made» (Berner, 2007), it is clear it would be beneficial to have a fully integrated CDSS and EHR.

There are two main types of CDSS: knowledge-based systems, that include compiled clinical knowledge and
non-knowledge-based, that employ machine learning and other statistical pattern recognition approaches.

Most CDSSs consist of three parts: the knowledge base, the inference or reasoning engine, and a mechanism
to communicate with the user. CDSSs, that do not use a knowledge base, use a form of artificial intelligence
called machine learning, which allow computers to learn from experiences and/or recognize patterns in the
clinical data. Two types of non-knowledge-based systems are artificial neural networks and genetic algorithms.
By delivery modes, the CDSS market is divided into web-based, on-premises and cloud computing systems.
Nowadays web-based segment occupies the largest share of the global CDSS market. However, the market for
cloud-based solutions is expected to have the highest growth rate in the near future.

The key products of clinical decision support systems' market are IBM Watson Platform for Health (USA) and
Philips Healthcare (Netherlands). The authors also would like to mention Socmedica CDSS as the most
competitive sample of such systems from Russian and Biopharma Navigator - from Italian domestic markets.
The pivot Table 2 to represents the main similarities and differences of these systems.
Table 2: Pivot table of Clinical Decision Support Systems
№ Characteristics Socmedica IBM Watson Health Philips Healthcare Biopharma Navigator
CDSS
Global pharmaceutical and
1 Targeted audience bio-tech innovative
pat, doc, pat, doc, clinic pat, doc, clinic companies
clinic
2 Personification of yes yes yes no
patients
yes yes yes no
3 Forecasting
yes yes yes no
4 Diagnostics
Decision support yes yes yes yes
5
Anesthesia, Cardiology, Critical Pharmaceutics,
Oncology, Genomics, care, Mother&Child care, Biotechnology, Drug
6 Clinical specialties all Drug discovery Oncology, Radiology, Sleep discovery and development
Apnea care
Global clinical trial registries,
MEDLINE db, adverse events
7 Input data any any sympt, lab, reporting data, approved
x-ray, epid drug products

8 Self-learning yes yes no no

Analyzing the data of the Table 2, the first thing the researches can pay attention to is that the systems are
developed for different clinical specialties. Accordingly, they have different formats of input data and targeted
audience. The second thing - Italian system has the greatest number of characteristic features. The reason for
this is quite clear. Biopharma Navigator is a particular case of company's patented Cogito technology. This
technology was designed to serve not only Life Sciences industry, but also Banking & Insurance, Media &
Publishing, Government and Oil & Gas sectors. In other words, Biopharma Navigator is an expert system,
developed for companies to achieve their strategic goals rather than to apply in clinical practice. That is why
the system does not have such characteristics, as forecasting, diagnostics and self-learning.

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On the contrary, Russian system has the most generalized set of characteristics. This is due to the fact, that
company-developer of the product pursued the goal to outperform its potential competitors - IBM Watson
Health and Philips Healthcare. Along with question-answering communication method with the system,
included into IBM Watson model, Socmedica uses a principal of background monitoring of patient clinical
material. System developers are based on the assumption that most physicians do not realize that they
commit errors therefore, they will not make any requests to the system. Other physicians are too busy to
make requests in timely manner. So Socmedica approach minimizes human factor that leads to errors. It is
worth noting that Russian and Italian systems based on the similar model for knowledge representation. Both
systems use ontologies for constructing a semantic network.

Generally, existing expert systems represent a local solution to a narrow range of questions. Meanwhile both
IBM Watson Health and Philips Healthcare are intended to solve a wide range of issues. The principal
difference with Watson Platform for Health is that Philips Healthcare presents a system of interrelated
elements that collects data from multiple sources. In contrast with IBM solution, which focuses on radically
new approach for processing patient medical data, Philips directed its activity on developing medical
diagnostic imaging and patient monitoring systems - the embedded support tools for clinical decision making.
This is what determines the differences in input data and self-learning characteristics of two systems.

4.1.3 Telemedicine
Telemedicine is the use of information and communication technologies to provide and support healthcare
services at distant locations. Telemedicine can give a new model for interaction with the patients or other
important entities such as hospitals, pharmacies, physicians and governmental agencies (Burney, 2010). It can
be divided into three main categories: store-and-forward, remote monitoring and interactive services (Ramos,
2010). According to the «Global Telemedicine Market - Industry Analysis, Size, Share, Growth, Trends, and
Forecast to 2021» report, announced by «Research and Markets» company, the global telemedicine market is
dominated by North America and Europe. North America accounted for lion’s share of the total telemedicine
market because of high demand for technologically advanced products. Europe is the second leading market
for telemedicine and is likely to maintain its position throughout the forecasting period. In the coming years,
the telemedicine market is expected to witness the highest growth in the Asia-Pacific region, with emphasis on
India, China, and Japan.

4.1.4 Internet of Things

Global Standards Initiative defined the Internet of Things (IoT) as global infrastructure for the information
society, enabling advanced services by interconnecting (physical and virtual) things based on existing and
evolving interoperable information and communication technologies. In simpler words, this concept entails
the use of electronic devices that capture or monitor data and are connected to a private or public cloud,
enabling them automatically to trigger certain events. Internet-connected devices can be introduced to
patients in various forms. Whether data comes from fetal monitors, electrocardiograms, temperature
monitors or blood glucose levels, tracking health information is vital for some patients. Many of these
measures require follow-up interaction with a healthcare professional. This creates a potential for smarter
devices to deliver data that are more valuable and reduce the need for direct patient-physician interaction.
5. Medical information systems: essential of Russian market
In Russia there are about 670 solutions in the field of medical information systems (MIS), provided by 240
Russian companies. Estimation of the quantity of MIS, installed annually is about 3 650 installations. Therefore,
the volume of the Russian market of MIS is about 11.5 bln rubles per year, taking into account the price of one
installation of about 3,0 mln rubles and annual technical support cost of about 5% of the price. At the same
time, only 25% of installed MIS contain modules of decision-making support.

Only 40% of Russian developers offer modules of decision-making support for MIS. The majority of solutions
focus only on information support regarding treatment standards, interpretation and visualization of
laboratory data. Examples of the key players working in this direction are the following companies:

1. LLC «Complex medical information systems» (K-MIS), LLC «Post Modern Technology» (Medialog):
automatic interpretation and visualization of laboratory parameters, enquiry support of treatment
standards.
2. «SP.ARM» company: information and enquiry system.

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3. PO «Vidar»: specialization on storing images of instrumental diagnostics and their analysis.

4. LLC «Torins» (Hospital): automatic analysis and visualization of deviations of laboratory parameters
from normal.
5. LLC «Siams»: automated analysis of images for laboratory diagnostics.

According to the estimations the number of clinics and hospitals, in which medical information systems were
installed, at the end of 2013 amounted 8 760. Growth rates reached 8-9% per year.

Trying to find a solution, most comparable with the best foreign practices in the field of clinical decision
support, the authors also considered residents of the «Skolkovo Innovation Foundation». The main goal of
Skolkovo Foundation is to create a sustainable ecosystem of entrepreneurship and innovation, generating a
startup culture and encouraging venture capitalism (Available from Internet: http://sk.ru/foundation/about/).

The Foundation is split into five research clusters: IT, Energy, Nuclear, Biomedicine, and Space. One of the IT
cluster residents is «Socmedica» company, which purpose is creation of an expert system for the diagnosis and
decision making support in clinical practice. In addition, its decision seems to be the most comprehensive
representative of Russian CDSSs. However, nowadays the project is still on the first stage of development. At
the current moment just working prototype of decision support system for drug therapy is ready. Investments
are needed for creation the first version of the key product of the company - decision support system for
clinical practice.

The amount of investment required – $3.5 mln, of which $1.5 mln the company plans to get by attracting
investors. In the process of key products development other separate products will be created and introduced
to the market:

x System of risk prediction for clinical complications;

x Expert system for diagnostics «Electronic physician»;
x Expert system of personal medical support «Personal doctor».

At the current stage, the company is active negotiating with prospective purchasers. Several contracts have
been signed; the first sell is expected within 4 months. It is expected that in 14 months after the required
investments the company will become self-financed. Two years after the beginning of financing, net profit
should be about $0.2 mln. The company predicts possibility of withdrawal of an investor in the beginning of
the 3rd year by selling its share to a strategic investor. As such strategic investors, the company regards large
companies, leaders of EHR market.

6. Implication of Triple Helix Model in Russian Health IT industry

In the concept of Triple Helix, the authors notice the enhanced role of the university, which becomes a basis
for innovation and practical R&D, as well as actual entrepreneurial projects. The researches see the transition
from a teaching university or a research university to an entrepreneurial university. The university creates
institutions that govern the process of commercialization of innovation (technology transfer offices), stimulate
the creation of new businesses (business incubators) and cooperation with existing companies (science parks).
For example, the academic spin-off is one of the forms of such technology transfer.

In this research, the authors focus attention on Health Information Technology sector of economy. Health IT
infrastructure varies widely in different countries, as indeed do the organization and funding of health services.

To be sure, no country has all the answers for a perfect health care system. However, all nations can learn
from the leaders. Russian economy is high-tech research oriented, in particular, in the sphere of ICT
innovations development. However, the chances for successful implementation of an innovative project
directly depend on the ability of researchers to establish strategic relations with industry and end-users. One
of the key reasons for the high importance of the network of contacts with other companies is the lack of state
support for spin-offs in Russia. The amount of capital required to implement high-tech projects is many times
higher than state subsidies. In addition, program to support medium high-tech enterprises is missing.

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The crisis of 2009 provoked a change of policy about the academic spin-off, the Federal Law №217 was
adopted to support the creation of spin-off Russian universities and research organizations. However,
according to the norms of Russian fiscal legislation, higher education organization had to transfer entire
revenue from licensing to the federal budget. Thus, the incentives for registration and maintenance of patents,
the creation of innovative infrastructure, establishment and maintenance of contacts with companies do not
exist at the proper level.

Nevertheless, there is also a positive trend: the Association of Russian Entrepreneurial Universities has been
established. This is definitely a step forward to put Triple Helix model into action. Now the Association includes
five universities, among which Moscow State University (Economics Department), Saint-Petersburg State
University of IT, Mechanics and Optics (SSUIMO). Their mission is to promote cooperation between university
and industry, and to enhance Russian competitive advantage in high-tech activities.

To summarize all of the above, for successful implementation the Triple Helix model, firstly, innovation
initiative should come from university, industry and government in relatively equal measure, and secondly, the
traditional role of university as an educational institution should be reconsidered to an entrepreneurial
university that encompasses all the previous elements but takes them to a new level and has slightly different
goals.

Most effectively, these ideas were realized in the USA. In both countries, Italy and Russia, researches see
drawbacks in the cooperation between academia and business. Meanwhile Russia's potential for the
development of Health IT sector of the economy is estimated higher than that of Italy. Firstly, due to the fact
that Italy's economy is not IT-oriented, that is why Italian government collaborates with foreign companies.
Secondly, in Italy the domestic business enterprises' contribution to the public R&D expenditures is the lowest
in comparison with Russia and USA.

At the same time, Russia is having trouble in financing R&D by government and higher education, and for this
reason in order to realize innovative projects Russian entrepreneurs attract foreign investments. Data,
supporting these findings, are given in the Table 3.
Table 3: Science base, Knowledge flows and commercialisation Indicators for Italy, Russia and United States
Public R&D expenditures (per GDP), 2013 Industry-financed public R&D expenditures (per GDP), 2013
Italy 67.993 19.673
Russia 52.607 126.221
USA 102.183 45.206

Source: (http://www.oecd-ilibrary.org/)
7. In conclusion
The key findings of the research is that CDSSs become especially important among other types of innovations.
They can be considered as the highest level of electronic health records (EHR) and medical expert systems,
facilitating the enhancement of Evidence-Based Medicine. The introduction of CDSS in a medical facility will
involve the changes in its business processes management, which will help clinicians to concentrate on things
they ought to do, spending less time on the mechanics, the bureaucracy, the paperwork, etc. The paper
describes and evaluates three key CDSSs - IBM Watson Health (USA), Philips Healthcare (Netherlands), and
determines the best representatives of such systems in Russian markets. The paper considers the main
characteristics of described systems to make the comparative analysis between them.

The objectives of this research also were to reveal factors, which cause differences in ICT innovations
implementation in Russian, Italian and American Health IT. Russian domestic innovative IT-product in
healthcare system - «Socmedica» decision support system for clinical practice was chosen as perspective,
because Clinical Decision Support Systems were identified as one of the most attractive directions for ICT
innovations in Russian healthcare industry.

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This research investigates the differences between countries in ICT innovations implementation using the
concept of Triple Helix Model. There was made qualitative analysis based on statistical data for national
science and innovation systems.
According to the concept of the Triple Helix, the best environments for innovation are created at the
intersections of university, industry and government institutional spheres. Additionally, the traditional role of
university as an educational institution should be reconsidered to an entrepreneurial university, creating
favorable conditions for the joint development of science and business.

Most effectively, these ideas were realized in the USA. In both countries, Italy and Russia, the authors see
drawbacks in the cooperation between academia and business. Meanwhile Russia's potential for the
development of Health IT sector of the economy is estimated higher than that of Italy. Firstly, due to the fact
that Italy's economy is not IT-oriented, that is why Italian government collaborates with foreign companies.
Secondly, in Italy the domestic business enterprises' contribution to the public R&D expenditures is the lowest
in comparison with Russia and USA.

At the same time, Russia is experiencing difficulties in financing R&D by government and higher education, and
for this reason in order to realize innovative projects in Healthcare Russian entrepreneurs attract foreign
investments.
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HR Analytics Models for Effective Decision-Making
Maria José Sousa
CIEO – Algarve University and Universidade Europeia, Lisboa, Portugal
maria-jose.sousa@universidadeeuropeia.pt

Abstract: Analytics can be used to evaluate human resources policies as recruiting, employee retention, compensation and
benefits and skills inventory. The purpose for conducting this study is to identify what kind of analytics organizations use to
improve their decision-making process and what kind of analytics systems they use. The central research questions are:
what are the HR analytics that can make the decision-making process more effective?; Is there differences between HR
Professionals perceptions regarding HR Analytics? Moreover, if the predictive Analytics Models have lower significance for
the HR Professionals in current scenarios of organizations than other models? To accomplish answer to those questions the
research methodology used was quantitative and the leading technique to collect data was a questionnaire to investigate
the analytics used by the organizations, and the importance of that kind of analytics for HR Professionals. The main findings
were the main HR analytics identified in the literature and that there are no relevant differences regarding HR analytics
between the Professionals of HR and also that the HR analytics predictive models are considered essential for the future
directions of the organizations.

Keywords: HR Analytics; Metrics; Organizations; Predictive Models; Decision-Making

1. Introduction
In the global competition and the connected world, decision-making in organizations has become increasingly
complex and depending on accurate data. This creates challenges for organizations and Human Resources
Managers because they are under pressures to answer quickly to the dynamic conditions of the market.

Organisation tries to redesign their structures, redefine the practices and the business processes. Analytics are
tools that can help in the decision-making process in that contexts. Literature shows that most of the
organizations that have successfully implemented Analytics can make decisions quickly and with more
accuracy. These organizations have better and faster access to the key activities and processes that the
organizations and its functional departments must pursue to meets its goals. To verify if the goals are achieved
organizations define Key Performance Indicators (KPIs) which are the primary management tools to analyses
the strategic objectives in HRM.

The literature (Wawer and Muryjas, 2011) shows that the ability of human mind is now insufficient to make
optimal business decisions in the era of the growing amount of information and the complexity of analytical
requirements. Analytics then becomes an essential tool which combines the business and information
technologies (IT), delivering valuable information to decision-makers, through tools as simulations and
scenarios which can help the optimization of organization development and also to forecasting business
results and customer behaviors.

Analysing the Analytics implementation in organisations in light of the Laursen and Thorlund (2010) scenarios
it’s possible to find the same orientation and alignment of Analytics on the strategic level: 1) Analytics and HR
strategy separation – Analytics does not deliver data to the strategic level, it is only used to answer some
questions on the operational level; 2) Passive support for the strategy by Analytics – the only role of Analytics
is to produce reports to support strategy performance; 3) Dialogue between Analytics and HR strategy – the
results of Analytics may modify the strategy; 4) Interpenetration of Analytics and HR strategies – the results of
Analytics are treated as a strategic resource of an organization, which determines the HRM strategy.
2. Literature Review

2.1 What is HR Analytics

Human Resource Analytics (HR Analytics) first appears in the HR published literature in 2003–2004 according
to the literature review (Marler and Boudreau, 2017). Lawler, Levenson, and Boudreau (2004) distinguish
between ‘HR Analytics' as separate from ‘HR metrics.' HR metrics are measures of key HRM outcomes,
classified as efficiency, effectiveness or impact. In contrast, Lawler et al. (2004) state HR Analytics is not
measured but rather represent statistical techniques and experimental approaches that can be used to show

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the impact of HR activities, including more sophisticated solutions, based on ‘predictive models' and ‘what-if
scenarios.'

For this research it was assumed the Marler and Boudreau (2017, p.15) definition of HR Analytics as “a HR
practice enabled by information technology that uses descriptive, visual, and statistical analyses of data
related to HR processes, human capital, organizational performance, and external economic benchmarks to
establish business impact and enable data-driven decision-making”.

2.2 Trends in Human Resources Management

In today's competitive and complex business environment the role of Human Resource (HR) is continuously
changing. HR with its increasing alignment to core business and integration to the bottom line is a reflection of
the constantly changing nature of HR function.

Being responsive to globalization, demographic and technological change, and turbulent, competitive, and
sophisticated environment of business, HR itself has been changing. A transformational process from the
conventional role of ‘administrative expert' (Ulrich 1997 cited in Reilly 2006, p. 8) to the evolving function of
strategic HR partner, becoming more business-integrated. This reorientation contributes to HR critical role in
the overall strategic planning of the business and also in defining the employee's goals.

The evolution of HR function leads to its integration into organizational strategy and this vertical integration of
HR with other disciplines of business involves HR professionals' direct participation in strategic planning and
implementation of the organizational mission, values, culture, strategy, and goal. This kind of direct
involvement of HR leader with core business planning reveals the new acceptance of HR as a valued
contributor in business.

Aligning HR practices with the strategy which means that each investment of HR discipline must reflect the
strategy and ‘realities of the customer' (Ulrich et al. 2009, p. 29). More precisely, in today's organizations all HR
activities, including selection and recruitment, training and development, reward and compensation systems,
are designed and practiced such an effective way which must exhibit HR's alignment with business strategy.

2.3 Analytics Supporting Human Resources Strategic Management

Analytics combines people skills, technologies, applications, and business processes to help to make better
strategic and tactical business decisions. The technologies and applications (HRIS – Human Resources
Information Systems) include data management methods for collecting, storing, and structuring data into data
warehouses or data marts as well as performing analytical queries, reporting, visualizing, and using analytical
techniques for prediction.

HR data is extensive in its variety, so an effective HRIS must address a range of administrative, statutory,
functional and technological requirements to support organization-wide planning and decision-making. The
data provided by Information System Human Resources (HRIS) enable HR specialists to become relevant
partners, both for specialists from other management functions, such as for top managers. (Mishra and Akman
2010; Singh et al. 2011). Becker and Huselid (2006) have identified the following variables to assess the
benefits of HR Analytics: Workforce Planning; Employee Benefits Administration; Payroll Administration;
Recruitment; Induction; Orientation and On-boarding; Training and Development; Skills Management;
Personnel Administration; Time Management; Travel Management; Personnel Cost Planning; and Performance
Appraisal.

HR Analytics model proposed by Delloite presents four levels: Operational Reporting (operational data and
compliance measures), Advanced Reporting (analysis and trends), Advancing Analytics (statistical analysis for
business), and Predictive Analytics (predictive models and scenario planning), as showed in figure 1:

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Figure 1: HR Analytics Model

Adapted: Bersin, 2017

Over the last decades, the number of firms investing in HRIS and their depth of applications within the
organizations has increased; thus HRIS implementation success has emerged as a significant challenge for
organizations (Ball 2001; Lippert and Swiercz 2005; Kashive 2011). There is a consensus that the spread of
these systems contributes, in a very significant way, to the development of HRIS.

Teo, Lim, and Fedric (2007) refer that for organizations which have adopted HRIS, the investments are small
and usually address tactics and administration (e.g., transaction processing for payroll and benefits
administration) with focus on administrative efficiency, rather than strategy (e.g., in knowledge management
and workforce planning) oriented to strategic applications that make organizations more effective and
competitive.

According to Lengnick-Hall and Moritz (2003), HIRS has developed through the provision of information, to an
intermediate level with the automation of transactions, and to HR Analytics function, helping HRM to become
a strategic business partner (Kashive 2011).

Analytics can have an administrative approach and a strategic approach - and if both are oriented to promote
organizational efficiency and effectiveness - only a strategic approach to Analytics allows for greater
competitiveness (Beadles II et al. 2005). As a consequence, HRIS have evolved into sophisticated IT solutions
designed to manage a wide variety of human resource data and to provide analytical tools to assist
management in HR decision-making (Hendrickson 2003).

An HRIS can be designed in different ways, depending on the perceptions and knowledge of those involved
and therefore the role of HR function. It may be used for automating. HRIS can vary from being just a specific
‘stand-alone’ personnel software package for the use of stored, personal data, to a system which operates
beyond the usual functional HR department boundaries.

The replacement of the intervention of HR specialists and the automation of processes in the current HRM
activities can increase efficiency through HR information management allowed by HRIS (Kashive 2011; Mishra
and Akman 2010; Tansley and Newell 2007) as well as provide essential information for decision-making on
issues strategic, promoting the value generated for the organization by HRIS (Beadles II et al 2005).

We are facing a new paradigm in which, in addition to efficiency gains in the HR function, are present the
necessary conditions for HR specialists assume a new role in the relationship established with experts from
other management functions as well as the management top, the achievement of strategic organizational
objectives (Tansley and Newell 2007).

2.4 HRM Analytics supporting Better Decisions

Based on previous literature the model proposal of Analytics consists of 9 dimensions, which includes: payroll,
business process automation, HR reports, measures/metrics; HR development, cost savings, align individual

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and organizational goals, recruitment of talent, and better decision-making. These dimensions are
hypothesized to be associated with the process of decision making by the Human Resources Managers as
showed in table 1:
Table 1: HRM Analytics Model
Operational Reporting

Implementation and execution of the payroll systems to make it accurate

Payroll and in time for employees and also to give information for managers to
make decisions about the retention and progress of employees.

Advanced Reporting

Knowledge base about job functions, positions, roles and capabilities that
HR Processes are required to drive the business performance.

Give business users the ability to access reports and continuously monitor
organizational performance using KPIs which are compared to the strategic
goals and objectives. The results are utilized to monitor, further analyze and
HR Reports
act to improve performance. The advanced analytics subsystem enables
organizations to make informed decisions to align their goals and
objectives, as well as programs and budgets to the performance indicators.

Deliveries of performance indicators concerning human resources may

include employee retention, job satisfaction, compensation and rewards,
Measures/Metrics employee training, accident levels, employee absenteeism, and employee
performance. Measuring conventional core HR processes, such as payroll,
employee administration, time management, and benefits. Analyse
organizational structures, relationships, and attributes of jobs and
positions.

Advancing Analytics

Analysis of the training and development processes to maximize employee

HR Development
performance.

Predictive Analytics

Cost Savings Support HR professionals in all workforce cost-planning tasks.

Ensure that the business activities are in line with the strategic goals of the
Align individual and organizational goals
organization and help employees to have common objectives.

Monitor workforce demographics in line with your recruitment and

Recruit talent retention objectives. Analyse the efficiency of the entire recruitment
process lifecycle, understand and prevent the drivers of employee turnover.

Empower HR executives to develop effective strategies, providing access to

a broad range of workforce-related data to support proper planning,
facilitate simulated planning scenarios, and enable continuous monitoring
of actual performance relative to plan to achieve better strategic decisions.
Better decision-making
The organizations can adjust their goals and objectives, modify programs,
and re-allocate resources and funds. Performance measures, in essence,
provide a feedback loop in the process of business performance
management.

The model shows the potential relation between HRM Analytics and the decision-making process. It represents
how Analytics tools can help to analyze the employee's development and evaluate the efficiency of the
recruiting and selection processes. It helps to assess how well the succession plans prepare the employees to
assume key positions in the organization and monitor the progress of aligning employee goals with corporate
goals. It also helps to analyze the cost-effectiveness of employee compensation systems.

3. Hypothesis
Aligned with the literature review, two hypotheses were defined:

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H1: There are no statistically significant differences between HR Professionals regarding HR Analytics
Dimensions

H2: Predictive Analytics Models have lower significance for the HR Professionals in current scenarios of
organizations.

The methods of data analysis to verify these hypotheses were the ANOVA analysis and also Descriptive data
analysis with Mean and Standard Deviation tests performed by SPSS software, as explained later in this paper.

4. Methodology
This research was based on a survey research design method. It involved a self-designed questionnaire in
collecting data, with the following dimensions and measures (table 2):
Table 2: RM Analytics Dimensions and Measures
HR Analytics Dimensions Measures
Payroll Budget
Compensation And Rewards
Operational Medical insurance
Payroll
Reporting Overtime pay
Absenteeism
Taxes
Job functions, positions, and roles
Organizational structures
HR Processes
Relationships
Attributes of jobs and positions
Employee Engagement
HR Reports Employee Satisfaction
Organizational Climate
Employee Retention
Advanced Employee Training
Reporting Accident Levels
Employee Absenteeism
Employee Performance
Measures/Metrics Time Management
Hiring Metrics
Induction
Orientation and On-boarding
Travel Management
Turnover
ROI (Return on Investment)
Advancing ROE (Return on emotions)
HR Development
Analytics Employment Sustainability
Human Governance
Employee Wages Cost
Workforce Planning Cost
Cost Savings Labour Costs
Training Costs
HR Projects Costs
Succession plans
Align individual and organizational goals Workforce planning
Performance Appraisal
Leadership gap
Recruitment analysis
Performance data
Predictive
Employee mobility
Analytics Recruit talent
Candidate success profiles
Targeting available talent supplies
Conducting cause analysis of attrition
Forecasting workforce requirements
Productivity forecasting model: to help predict and diagnose problems
and define training solutions.
A predictive model for employee mobility: to look at customer and
Better decision-making employee traffic patterns, identifying new locations where salespeople
should be positioned.
Artificial intelligence for talent recruitment: analyze video interviews and
help evaluate candidate personality and improve the quality of hiring.

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4.1 Sample
The sample size for the study was 43 clients of a Human Resources software company in Portugal which send a
massive email to their almost 1000 clients to disseminate the questionnaire and to help gather responses.
Convenience sampling method was used. The convenience sampling is a basic sampling design, which allows
equal representation and selection of samples.

The subject's fill-in the questionnaire online and instructions on how to fill out the questionnaire was given on
the questionnaire first page. Confidential treatment of information was assured, and questions were ranged
from 7 point scale.

4.2 Data Collection

According to the literature review and the previous research results, the project team has developed a soft
and hard skills list. The total number of 9 HR Analytics Dimensions has been observed, these being: 1) Payroll;
2) HR Development; 3) HR Processes, 4) HR Reports, 5) Measures/Metrics; 6) Cost Savings; 7) Align individual
and organizational goals; 8) Recruit talent; and 9) Better decision-making. All items are ranked according to the
five-point Likert scale, from 1 = No Importance to 7 = Essential (for an HR Analytics Model Proposal).
Cronbach’s alpha reliability coefficient is 0,930.

5. Findings
According to the ANOVA analysis (table 3), the Hypothesis 1 is partially verified as it has been determined that
there are no statistically significant differences in the average responses of HR Professionals (HR Managers - M
and HR Technicians - T) towards the following items: payroll, HR Development, HR Processes,
Measures/Metrics, and Better Decision-making. According to the ANOVA analysis, it has also been determined
that there are statistically significant differences (p<0,05) regarding the following items: Align Individual and
Organizational goals, HR Reports, Cost Savings, and Recruit Talent.
Table 3: HR Professionals responses towards HRM Analytics Dimensions (P-values are in parenthesis)
HR Professionals
HR Analytics Dimensions (M vs. T)
Operational Reporting Payroll -0,186 (0,197)

HR Processes 0,065 (0,722)

Advanced Reporting HR Reports -0,646 (0,001)*
Measures/Metrics -0,297 (0,135)
Advancing Analytics HR Development -0,050 (0,750)
Cost Savings -0,388 (0,038)*
Align individual and organizational goals -0,475 (0,020)*
Predictive Analytics
Recruit talent -0,546 (0,004)*
Better decision-making -0,147 (0,465)
* p<0,05

The table 4 shows that H2 is not verified, because Predictive Analytics does not have lower mean values for the
HR Professionals when compared to the other levels of the HR Analytics models. The mean for HR Analytics
items amounts from 6.51 to 4.09. Standard deviation amounts from 0.779 to 1.273. Top-ranked HR Analytics is
Payroll (mean 6.51), while the bottom-ranked is HR Processes (mean 4.09).
Table 4: HR Analytics
HR Analytics Dimensions Mean St Dev
Operational Reporting Payroll 6.51 0.779
HR Processes 4.09 0.908
Advanced Reporting HR Reports 4.78 1.273
Measures/Metrics 6.43 0.856
Advancing Analytics HR Development
Cost Savings 6.02 0.798
Align individual and organizational goals 5.45 0.891
Predictive Analytics Recruit talent 5.67 1.011
Better decision-making 6.06 0.931

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6. Discussion and Conclusions

HR Analytics is different from HR Metrics; it involves more sophisticated analysis of HR-related data. Second,
HR Analytics does not focus exclusively on HR functional data and involves integrating data from different
internal functions and data external to the organization. Third, HR Analytics involves using information
technology to collect, manipulate, and report data. Fourth, HR Analytics is about supporting people-related
decisions. Finally, HR Analytics is about linking HR decisions to business outcomes and organizational
performance. This fifth component of the definition of HR Analytics captures the most compelling aspect of
this construct and links it to the strategic HRM literature. HR Analytics appears to offer more than HR Metrics
through its potential to connect HR processes and decisions with organizational performance, which is an
avenue to elevating HRM to having a more strategic role and joining other business functions at the strategy
table.

However, HR Analytics use metrics widely to help measure performance, provide means of comparing
individuals and departments to make predictions about the future strategy of the organization. Those
measurements provide numbers which can be analyzed by corporate management and used to help influence
the direction of a company.

Organizations that compete in today's knowledge-based economy recognize the growing importance of the
data analysis accuracy in promoting competitiveness and helping to improve better organizations
performance. The evolution of information technology has contributed to the growing sophistication, and
potential of Analytics applied to Human Resources Management, helping to analyze data for better decision-
making. These transformations are a paradigm shift in the HR function has to assume a new role as a partner
of top management in decision-making on strategic issues.

The main empirical findings of the research emerged in line with the literature review and demonstrated that
there are no relevant differences regarding HR analytics between the Professionals of HR and also that the HR
analytics predictive models are more and more critical for the future directions of the organizations.

In line with this conclusion, it is possible to say that HRM supported by Analytics depends on the maturity of
the organization because it conditionates the use of Analytics to achieve the HRM strategy. So the HR analytics
can be seen as a measurement process with Scorecards and Dashboards, summarizing talent management
strategies and associated measurements; Benchmarks, compared with an organization's actual practices;
Correlations, describing the statistics where two or more variables move together; Predictive analytics helping
to identify future directions; and optimization, which offers insight into where HR investments are working and
presents options for improvement.

In this context, this main research goal was achieved creating more knowledge to help predict HRM decisions
regarding future workforce planning and management based on the Analytics models concerning workforce
process, talent management, and strategic alignment. In summary, it is possible to say that Analytics models
facilitate the process of data analysis to make better decisions and helps organizations to achieve its strategic
goals.

The main findings will be shared with the organizations part of the sample to help them to improve theirs HRM
metrics systems as a mean of sharing good practices and also to give this research a practical nature.

7. Limitations and Future Research

The main limitation of this study is the reduced sample and the fact that both managers and technicians
participated in the research.

For future research it will be essential to develop a literature review on the main HR analytics tools: BSC (HR
Balance Scorecard); dashboards; tableau de board and on the primary indicators in this area: recruitment
metrics; training metrics; performance evaluation metrics, and about the workforce analytics technological
systems.

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University Social Responsibility and Direct Participation of
Academic Teachers
Katarzyna I. Szelągowska-Rudzka
Gdynia Maritime University, Gdynia, Poland
k.szelagowska-rudzka@wpit.am.gdynia.pl

Abstract: The concept of social responsibility shall be interpreted as the responsibility of an organization for the impact of
its decisions and actions on particular groups of stakeholders. In popular perception, it is viewed as the domain of
enterprises, whereas each organization may have this idea reflected in their strategy. More often it refers also to
universities. Since today modern universities are required to smoothly combine the mission of developing and transferring
knowledge with actions aiming at building relations with the environment (stakeholders). The process of building relations
with external stakeholders (e.g. university candidates and their families, secondary schools, enterprises, local governments,
NGOs) shall begin from internal stakeholders – students and university employees - in particular, academic teachers. The
socially responsible activities directed to the said group of employees are exemplified in employee direct participation. It
can be defined as individual and group participation of academic teachers in managing the university – i.e. at taking
decisions on various levels of organizational hierarchy (from workplace to strategic level), related to the functioning of
university and employees as entities implementing the university processes. The participation makes academic teachers
engaged in developing relations with the environment. It also reflects the socially responsible activities addressed to
academic teachers. If the employees are the addressee of socially responsible activities at the university, they are
encouraged and motivated to become involved in socially responsible activities addressed to other groups of internal
stakeholders (first of all – students) as well as external ones. Therefore, the aim of this paper is to identify relations
between direct participation of academic teachers in managing universities and socially responsible activities at the
university, and to prove that DPAT is an example of CSR activities addressed to academic teachers contributing to their
involvement in developing relations with other groups of stakeholders. Research methods include analysis of reference
literature and case study of two Polish universities.

Keywords: university social responsibility, stakeholders, academic teachers, direct participation of academic teachers,
socially responsible activities.

1. Introduction
The concept of social responsibility (SR) in popular perception is mainly associated with enterprises
(Spodarczyk, 2016) and understood as the responsibility of organizations for their decisions and activities
leading to sustainable development and including social and ecological aspects in their relations with
stakeholders. It follows from the guidelines of ISO 26000 (ISO 26000, 2015) that all organizations operating on
the market shall be socially responsible for the effects of their activities on stakeholders (Spodarczyk, 2016;
Spodarczyk and Szelągowska-Rudzka, 2015a). In their strategies and practices of operation they should take
account of the idea of social responsibility (Wolska and Kizielewicz 2015; Cybal-Michalska 2015), provide
stakeholders with a set of benefits falling outside lawful and ethical actions and partnership-based cooperation
for sustainable development (Szelągowska-Rudzka, 2016a; Studzieniecki, 2016). It also refers to universities
(Benedek and Takács-György, 2014). With their operations, they also fit into the main areas of SR defined by
ISO 26000, i.e.: organizational order, human rights, work relations, environment protection, relations with
consumers and social commitment (Białoń and Werner, 2012). Modern universities are required to smoothly
combine the mission of developing and transferring knowledge with actions aiming at building relations with
the environment (Piasecka 2015; Grobelna and Marciszewska, 2016; Saxena and Mishra, 2017; Geryk, 2009).

During the time of transformations, globalization, decentralization of the role and responsibilities of the state
on public institutions, demographic and financial problems, the issue of social responsibility and its boundaries
is becoming more important. Universities provide educational and social services included into public good,
with wide range and impact on the society (Kowalska 2009; Cybal-Michalska 2015; Białoń and Werner 2012).

They are the centres of knowledge, the possibilities of which should be widely used in the interest of the
environment to inspire and provide directions for regional development, to educate young people so that they
play the role of knowledge workers (Grobelna and Marciszewska, 2016), to train young people, promote active
citizenship in economy, provide conditions for the development of free competition (Geryk, 2009), as well as
create close relations with business and local government organizations. Within the aforementioned mutual
cooperation (i.e. „triple helix”) universities play an important role – they constitute a link between particular

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sectors (business, local government and university) (Spodarczyk and Szelągowska-Rudzka, 2015a). According to
K. Leja, universities will fulfil their SR, if they evolve into organizations providing services for the environment,
and developing mutual relations with stakeholders (Leja, 2008). Building such relations shall begin from
internal stakeholders, i.e. students and university employees, mainly academic teachers. The university social
responsibility (USR) cannot be fulfilled, if the core of activities fails to involve internal stakeholders (students
and university employees) (Białoń and Werner, 2012). Students sensitive to the idea of SR will become its
promoters in their future workplaces, families and local communities. However, it is difficult to develop their
proper attitudes and knowledge on CSR with no awareness of the importance of issues related to sustainable
development based on economic, social and environmental goals, without proper engagement of academic
teachers who are the first and main ambassadors of the idea of SR towards other internal and external
stakeholders at the university. Academic teachers not only pass their knowledge on particular field. Their task
is also to help and support students so that they become responsible people, able to provide reasonable and
critical analysis and assessment of the surrounding world (Geryk, 2015). Consequently, the implementation of
the idea of SR at universities shall begin with practical training for academic teachers. The examples of such
activities can be grouped by areas defined in ISO 26000 as follows (Białoń and Werner, 2012; Szelągowska-
Rudzka, 2016a):

x Organizational order: developing strategies of university social responsibility and principles and
standards of ethical social co-existence (student ethical codes, employees’ ethical codes). Pro-social
approach in strategic management of university can be recognized as approach aiming at developing
stable and pro-social relations with social environment, crucial from the perspective of university and
groups of stakeholders (Cybal-Michalska 2015).
x Human rights: respecting all human rights – rights of university employees and students, i.e.: dignity,
citizen’s rights, political, social and cultural rights, rules of personal culture, and combating any forms
of discrimination.
x Work relations: establishing relations with scientists from various science centres and between
scientists and practitioners, cooperation within innovation networks, as well as, required by
globalization, relations with academic teachers from around the world, facilitation of internal
communication, care for academic teachers’ health, balance between professional and personal life,
fair remuneration, support for professional development, talent and passion (Mazurkiewicz, 2017),
possibility to submit ideas and proposals for facilitation (direct participation).
x Environmental protection: education on environmental protection (subjects, specialties), scientific
research on the state of environment and protection possibilities, participation in activities supporting
environmental protection (e.g. waste collection, use of public transport, commuting to work by
bicycle), or selective collection of waste and promoting the idea of „eco-office” (lower consumption of
paper).
x Relations with consumers: first of all, friendly relations with students, facilitating personality and
intellectual development, care for the quality of service – from the first contact with the university,
through recruitment department, dean’s office, library, and mainly throughout the whole educational
process (Spodarczyk, 2017).
x Social commitment: active support for local community, dialog with the society on the implementation
of various social projects in fields such as: education, culture, health, access to technology, e.g.
through various projects addressed to local community.

Among various socially responsible activities addressed to academic teachers (mainly within work relations,
and human rights and organizational order) we should also distinguish their direct participation in managing
the university (Białoń and Werner, 2012; Teneta-Skwiercz, 2013). Including the university employees of all
levels in taking decisions on important issues of the organization is one of the main methods for developing
their commitment (Grobelna et al., 2016), and also constitutes the expression of socially responsible practices
addresses to them. It leads to numerous benefits and in the case of universities to building the culture of USR,
implanting these principles in students – future participants on the labour market, potential promoters of the
idea of CSR in the social and economic environment – and also developing relations with other stakeholders.

2. Research description
The study is conceptual in its nature. The research issue was defined in the form of a question: how, through
what kind of activities is the university social responsibility implemented towards academic teachers, do these

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activities include direct participation of academic teachers (DPAT) in managing the university? The aim of this
study is to identify relations between direct participation of academic teachers and implementation of
university socially responsible activities. It has been assumed that DPAT is one of the most effective methods
to implement the concept of SR towards university employees and leads to building relations with other
internal and external stakeholders. However, in order to achieve expected benefits, it should result from
university goals and strategies.

In the article qualitative research approach has been applied. Research methods include analysis of reference
literature and case study of two Polish universities. The universities have been selected on purpose as
examples of entities where socially responsible activities are addressed to academic teachers and also refer to
their direct participation in management.
3. University Social Responsibility (USR) – Review of Reference Literature
The socially responsible university is an entity serving the environment, which responsibility to the society
involves preparing alumni to play the role of knowledge workers and build close relations with economic
entities and local governments (Leja 2013; Spodarczyk and Szelągowska-Rudzka 2015a). Universities are
organizations developing and transferring knowledge; therefore, within SR they should (Piasecka 2015):

x Take account of stakeholders’ expectations (internal and external) through developing relations with
them in economic, social and ethical aspects.
x Act within regulatory laws (set of principles to meet expectations), including: legal framework on
universities, market of services rendered by universities, social pressure related e.g. to opening
Europe’s university market, academic self-governance.
x Pursue to build organizational culture supporting social innovation; be the centre of transmission and
transformation of culture and moral values (Cybal-Michalska 2015), shape mature civic attitudes, pass
values and teach responsibility (Kowalska 2009; Chmielecka 2008).

The basic scope of university responsibility involves developing socially useful educational offer, established in
full knowledge of social roles alumni will be able to play in the future, training future academic researchers and
developing and supporting various lines of research (Cybal-Michalska 2015). SR of modern universities also
involves providing proper quality of education, transferring knowledge to boost the economy, educating future
elites, ensuring active social policy towards students and university employees, and also removing social
barriers (Piasecka 2015). One of its main tasks will always remain up-to-date, i.e. „responsibility towards
society for starting thought processes, presenting wide scope of topics for analysis, reflection, namely
improving intellectual level, creating thinking society” (Samsonowicz 2008).

The university responsibility should be based on managing the university under code of good practices
(resulting from strategy based on SR principles) and developing socially required attitudes among stakeholders
(Piasecka 2015). The university internal stakeholders include students, academic teachers, and administrative
employees. External stakeholders include: university alumni, candidates, their parents, advisory or supervisory
bodies at the university senate, regional community, employers, bodies of local, regional and central
authorities, national and international universities (Cybal-Michalska 2015) and natural environment as non-
personal, „silent” stakeholder the universities should also care for.

The university responsibility, just like individual responsibility has got two levels. It includes universal
responsibility for common good related to a certain attitude reflecting respect and care towards the world and
also particular responsibility for the implementation and effects of particular activities and responsibilities
towards the environment (stakeholders) (Kowalska 2009). ‘Lisbon Declaration reads as follows: „Europe’s
universities accept their public responsibility for promoting social equity and an inclusive society. They are
making great efforts to widen the socio-economic basis of their student populations”. Therefore, SR is
becoming a value almost equal to traditional values of academic ethos’ (Białoń and Werner, 2012). The ethos
involves the feeling of community, a condition for its cohesion and possibility to cooperate based on professed
and followed values, the most important of which is truth (Chmielecka, 2008).

Activities directed towards the environment, taken by universities, require, first of all, developing socially
responsible practices referring to internal stakeholders, in particular academic teachers. As entities

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implementing basic processes within universities (mainly education), they develop, through their attitudes,
opinions and activities, the awareness, system of values and future graduate profile. In order to become
promoters of the idea of CSR in workplaces, families, local or global communities, alumni must learn these
ideas during their educational process. It places responsibility on academic teachers (Kowalska, 2009). They, in
turn, to be efficient ambassadors of SR must have knowledge on the subject and possibilities to promote the
idea at the university during the educational process – various subjects related to CSR or additional activities,
such as e.g. cooperation with research clubs. Moreover, they themselves must experience socially responsible
activities addressed to them by university authorities. Care of socially responsible universities for academic
teachers may be reflected for example in (Białoń and Werner, 2012; Kowalska, 2009; Beck-Krala and
Klimkiewicz):

x proper culture within the community – care for academic ethos

x support for employees in everyday professional responsibilities through proper infrastructure of their
workplaces
x protection of the freedom of scientific research and other academic freedoms
x possibility to cooperate with students in terms of scientific research
x good relations between students and academic teachers and other employees
x possibility to improve qualifications by academic teachers
x friendly atmosphere at work, ensuring stabilization and development, investing into employees
x analysis of the needs and expectations of employees
x development and implementation of policy supporting balance between the professional and private
life of employees
x preparing people performing managerial functions to support their co-workers in developing required
attitudes towards the professional and private life
x building dialog and open communication with employees
x encouraging to use instruments of personal policy offered by the employer
x providing knowledge on employees’ rights and possibilities to enforce them
x launching initiatives, teaching independence and commitment of academic teachers in fulfilling the
university mission
x playing the role of experts for university management
x and possibility to co-manage the university (participation)

Therefore, as follows from the above, DPAT in management is one of the examples of university socially
responsible activities towards their employees.

4. Direct Participation of Academic Teachers as Indication of University Social

Responsibility
The development of employee direct participation (EDP) results from dynamic development of sciences on
management and increasing demand for knowledge in modern, global economy; the knowledge (intellectual
potential), the increasing assets of which – not fully used – remain at the disposal of university employees of
all levels (Rudolf and Skorupińska, 2012). In particular, it remains at the disposal of knowledge workers –
creative, talented, focused on their development, learning and creating new ideas, and innovation at work –
who require effective motivation and encouragement to become involved, e.g. through their participation in
the decision-making process (Juchnowicz, 2007; Mazurkiewicz, 2017).

EDP in a narrower perspective – understood as "democracy at workplace" – means personal participation of

employees in taking decisions which refer first of all to shaping workplaces and the work process (Juchnowicz,
2002). It involves consulting, individually or in groups, methods for performing tasks and providing executive
employees with rights and responsibilities for decisions taken on the organization of work and its conditions
(e.g. organization of own workplace, methods for performing work, hours of starting and finishing work,
breaks at work, etc.). As a result, the employees become co-deciding entities (Wratny, 2002; Geary and Sisson,
1994; Gładoch, 2008]. In a broader perspective, EDP means individual and group participation of employees in
all stages of decision-making process related to the performance on various levels of organization hierarchy, as
well as employees as participants and implementers of these processes and principles and conditions for their
participation in organization activities (Moczulska, 2011).

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Individual participation of employees involves flexible working hours, selection of tasks (and even their
periodical changes), forms of remuneration (material, non-material) and impact on the selection of
management system applied by supervisors. Group participation involves participation of employees in
organizational forms such as: group organization of work, arranging teams, quality groups or autonomous
groups. In order to perform the above, very helpful are various methods and techniques for management,
both individual (e.g. developing and extending work, flexible working hours, telework) and group ones (e.g.
temporary teams, teams for solving problems, management through goals, autonomous groups) (Moczulska,
2011; Rudolf and Skorupińska, 2012). EDP may also have different content (i.e. may refer to different issues,
e.g. organization and conditions of work, organizational structure or issues of strategic importance), scope
(operational, tactical, strategic) and organizational level of participation (workplace, medium or high
management level, bodies of owner’s supervision), level of formality (formal, non-formal), intensity (passive,
i.e. co-operation – means right of employees to information, to be heard out (complaints, demands), to speak
and to advise; active – co-decision – refers to the right of employees to object, express consent, take joint
decisions and sole decisions), level of specificity (real and perceived), may refer to all (full) or selected (partial)
stages of decision-making process (Moczulska, 2011; Ignyś, 2014).

EDP provides numerous benefits, e.g. in the form of improving effectiveness and productivity, innovation,
organizational climate, increase in employees’ motivation, their satisfaction from work, increased enterprise
potential, developing its value and competitive edge (Chandler et al, 2000; Summers and Hyman 2005; Ignyś,
2014; Szelągowska-Rudzka, 2017). The benefits refer to all types of organization, not only enterprises.
However, EDP is most widely disseminated in enterprises and is gaining more and more importance (Summers
and Hymen, 2005; Rudolf and Skorupińska, 2012). There is no research and studies on direct participation of
academic teachers, despite the fact that they are knowledge workers of broad competence in their fields and
could provide important contribution to the university development, implementation of key activities, also
based on the concept of social responsibility.

Direct participation of academic teachers can be defined as individual and group participation of this group of
workers in managing the university – i.e. in decision-making process, on various levels of organizational
hierarchy (from workplace to strategic level), regarding functioning of university and workers as implementers
of university processes; the participation contributes to making academic teachers involved in implementing
key tasks at the university, i.e. educating students, scientific advance and building relations with the
environment; it is also an indication of socially responsible activities addressed to academic teachers. The
content of direct participation of academic teachers (issues concerning them) may refer to submitting
proposals for modifications and facilitations of educational process, implementation and development of new
educational methods in cooperation with students and university environment (employers); proposing new
subjects, specialties and even fields of study, meeting the needs of economic practice and resulting from the
conducted scientific research. It may involve establishing scientific and research cooperation with researchers
from other universities in the country and abroad, establishing interdisciplinary teams, joint application for
external funding for research, and joint preparation of publications in the main scientific journals. It may
include widely understood expert and research cooperation with other entities of social and economic life in
the country and abroad leading to building relations, science advance, solving certain problems of modern
organizations, and consequently developing the educational techniques. It may also involve participation of
academic teachers in designing and implementing university strategies resulting from the identification of
needs and expectations of its internal and external stakeholders. Academic teachers participate in the process
of identifying stakeholders’ needs and expectations through performing key tasks of the university. Therefore,
DPAT may refer to operational and strategic issues, all or selected stages of decision-making process, may be
formal or non-formal, with different intensity (form of cooperation or co-decision). DPAT may also provide
numerous benefits resulting from the involvement of academic teachers in the university issues (Szelągowska-
Rudzka, 2017) and reflect the university socially responsible activities addressed to its employees. It is
conducive to the involvement of academic teachers in promoting socially responsible activities towards other
stakeholders. Here, we will present two case studies of universities confirming the said situation.
5. Case studies

5.1 Case Study of Gdynia Maritime University

In 2008, the Department of Economic and Management (DEM) Faculty of Entrepreneurship and Commodity
Science (FECS) Gdynia Maritime University established an informal autonomous group which – based on direct

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 Katarzyna I. Szelągowska-Rudzka

participation of academic teachers – developed curricula for seven new specialties for FECS of the 1st and 2nd
degree (Szelągowska-Rudzka, 2016b). The curricula, under the decision of Faculty Council and Rector of GMU,
were implemented at part-time studies and funded from EU resources – within "Rozwijaj żagle Akademio!"
program. The most popular specialties among students included – Accounting and Finances of Enterprises and
Human Capital Management – after the project was completed, the curricula were implemented at full-time
studies.

The work of the group was initiated by the Director of DEM, which fell into the goals and strategies of
university (faculty) development. It was reflected in academic teachers’ attitude as knowledge workers,
recognition of their competence and invitation to participate in management. The group comprised 16
assistant professors and graduate assistants who took co-decisions and developed the final form of curricula
for the specialties. If necessary (formal requirements), they consulted the director. Their direct participation in
management was based on group work (autonomous, non-formal group) with elements of individual
participation (extension of work, enrichment and design, flexible working hours, remote working). Members of
the group organized their work themselves - its course and scope, defined rules for cooperation and deadlines
and agenda of meetings. Within regularly organized meetings, they discussed, agreed on, analysed and
specified the educational content and took final decisions on particular subjects (their names, content, and
number of hours) and specialties. They took care of innovative and competitive character of proposed
solutions. They participated in all stages of decision-making process, from identifying the need to establish
new specialties, collecting ideas and proposals, generating particular solutions, assessing them, up to selecting
the final curricula for specialties and their implementation (developing syllabuses for particular subjects,
running classes and preparing documentation required by the project). Their direct participation in
management was passive in its form – included co-operation – obtaining more information, possibilities to
discuss and consult - and active - co-decision – joint agreement of adopted solutions. The participation led to
reaching the goals and following the strategies of university development, which was reflected in socially
responsible activities addressed to university employees (Szelągowska-Rudzka, 2016b).

In 2009, some members of the said autonomous group started cooperation with the Bogdan Jański Academy in
Warsaw, Branch Faculty in Elbląg, and them in 2010 with Katolícka univerzita v Ružomberku Teologická fakulta
v Košiciach aiming at joint organization of conferences dedicated to the issues of social responsibility of
organizations. At the first conference it was agreed that the cooperation would lead to developing common
research areas – identifying common issue and aim of research – and directions for its implementation,
including establishing the international science centre integrating researchers of public and non-public
universities and economic entities around the idea of CSR, supporting scientific development of the young
through scientific seminars, contests, science camps, etc. (Spodarczyk and Szelągowska-Rudzka, 2015b). The
initiative led to establishing cooperation with the municipality and town of Sztum, small and medium sized
enterprises in Pomerania province and non-governmental organizations (e.g. Fundacja Helisa from Gdynia,
Fundacja Instytut Społecznej Odpowiedzialności Organizacji from Olsztyn) („triple helix”) interested in
promoting the idea of social responsibility, developing expert-based cooperation, science and research
cooperation (joint projects), educational cooperation (diploma dissertations on CSR completed in these
institutions) and organization of yearly conferences dedicated to the issue of CSR. The cooperation lasted till
2015 when the 5th International Science Conference was held, entitled „Social Responsibility of Organizations:
Local Government – Science – Business".

The aforementioned initiative constitutes an example of using DPAT in managing the university to fulfil the
development goals and strategies through establishing relations with internal and external stakeholders of
GMU Faculty of Entrepreneurship and Commodity Science. It is reflected by socially responsible activities
addressed to university employees.

5.2 Case Study of Wroclaw University of Economics (retrieved from http://www.ue.wroc.pl)

At Wroclaw University of Economics (WUE) there is a group of academic teachers – enthusiasts promoting the
issues of sustainable development and social responsibility of organization in their educational, academic and
organizational work for a long time. The cooperation of this group with students resulted in establishing
research club, Enactus UE Wrocław. The club is part of international non-profit organization established in
1975 in USA, supporting and connecting students, lecturers and business leaders, managers and companies
who respond through their entrepreneurship to economic, ecological and social challenges supporting the
development of local communities. The club is very active at their own Alma Mater and cooperates with

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students’ organizations at other universities in Poland. In 2017, they were granted the first award in Enactus
Poland contest, co-organized CSR University project (series of closed workshops for the most entrepreneurial
students) and 1st National Scientific Conference entitled „Sustainable Development – students’
entrepreneurship – socially responsible university" (2017).

On the initiative and with the participation of the aforementioned group of academic teachers in 2017 at WUE,
Rector’s Commission for Social Responsibility (Green Team) was established. Its tasks involve developing
strategy for social responsibility of WUE and widely understood promotion of the socially responsible idea and
activities within the university and local community as well as developing the international cooperation
platform. On the initiative of Green Team, WUE – as one of the 23 Polish universities – signed the Declaration
of University Social Responsibility. The Declaration includes four areas of university functioning, regarding care
for academic values, completion of programs, implementation projects and research important for the
development of social responsibility, organization of university activities and cooperation with stakeholders.

Significant importance is attached to mission which involves developing social and civic attitudes of future
elites, supporting the creation of community and social sensitivity, promoting the idea of tolerance, equality
and diversity, as well as respect and protection of human rights related to the entire academic community. The
Declaration gives significant attention to science and business partnership which enables the development of
research works and consequently social and economic development of the country
(https://www.nauka.gov.pl/aktualnosci-ministerstwo/23-szkoly-wyzsze-podpisaly-deklaracje-spolecznej-
odpowiedzialnosci-uczelni.html).

Green Team initiated the participation of WUE in 100% Committed Campaign Project (100% commitment in
green energy) organized by Climate Reality Project (undertaking established by Al Gore Nobel Peace Prize
winner and former vice-president of the United States, aiming at prompt action to shift towards clean energy
and solve the climatic crisis). In the signed declaration Wroclaw University of Economics – as the first university
in Poland (!) - agrees to shift towards clean, renewable electric energy till 2030 at the university campus.

The described Green Team initiatives reflect large-scale socially responsible activities of WUE started as
grassroots initiatives by university employees who, within the direct participation of academic teachers, began
these activities and managed to give them more formal character, within the implementation of university
goals and strategies, making the university more socially responsible. Such activities aim at promoting the idea
of social responsibility and based on its principles, building stable relations with the university environment
(stakeholders).

6. Conclusions
Social responsibility of organization is not the domain of enterprises. It is the concept, strategy of activities
which could and should be implemented by various organizations to pursue sustainable development based on
the implementation of economic, ecological and social goals.

More and more often, socially responsible activities are becoming the university approach which helps
transform universities into socially responsible organizations. The socially responsible university is a university
serving the environment, seeking to build close relations with its internal and external stakeholders. It is
achieved by educating young people so that they become knowledge workers committed to the social and
economic development based on the principles of fair play. Such university conducts research works in
cooperation with various economic entities from the sector of science and high education, bodies of local
government and non-governmental organizations meeting the needs of economic practice and society. It also
seeks to respect and protect the environment. It develops relations and versatile cooperation with various
groups of stakeholders based on the principles of social responsibility.

To make the university socially responsible activities effective, people involved in their implementation must
include, first of all, internal stakeholders, mainly academic teachers. Through their knowledge, activity and
commitment, they transfer the idea of social responsibility to students – future social and economic elites in
the country and build relations with other stakeholders. The efficiency of university CSR activities requires
beginning the activities with academic teachers. If this group of university employees is satisfied with widely
understood working conditions established for them by the university, based on CSR principles (work relations,

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 Katarzyna I. Szelągowska-Rudzka

human rights, organizational order), they will be motivated to promote this idea among other stakeholders.
Therefore, the university employees – academic teachers are key to the effective development,
implementation and completion of university socially responsible strategy. If within the socially responsible
activities they have possibility to directly participate in the university management, they may become more
committed to socially responsible activities and implementation of the university key objectives. They may –
just like the employees of the two described Polish universities - become crucial factors of success at the
university regarding design and planning of its socially responsible objectives.

The article has fulfilled this objective which involves identification of relations between direct participation of
academic teachers and implementation of the university socially responsible activities. The article has also
attempted to indicate that DPAT is one of the most efficient methods for implementing the concept of SR
towards university employees, leading at the same time to their deeper involvement in the implementation of
socially responsible activities addressed to other stakeholders. The relations identified under analysis of
reference literature have been confirmed by the examples of two Polish universities. The article has also
specified that other Polish universities become involved in the socially responsible activities, e.g. by signing the
Declaration of University Social Responsibility.

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IT support to improve organisational problem-solving abilities
Emőke Takács1, Orsolya Keményffy1 and Toon Abcouwer2
1
ERI Hungary – European Research Institute Nonprofit Kft
2
University of Amsterdam, the Netherlands
t.emoke@eri.net.in
k.orsolya@eri.net.in
Abcouwer@uva.nl

Abstract: Dynamic developments within and in the vicinity of organisations demand significantly more attention and
approach as they often have an immense, or even disruptive effect on individuals, organisations and on broader society. In
many cases, the reasons of this impact are related to the presumption that current successes are not sustainable. Modern
organisations confront more frequently with this development. The question of how to deal with these developments
cannot be elucidated with a single and unified answer. We recognise that this setting is originated in the discontinuation of
knowledge and hence inability to collectively solve societal problems. Therefore, we aim to find a solution which relates to
the plethora of dynamic developments and requires access to knowledge, being able to assess its quality and integrating it
in current insights and existing systems of values and norms. The related conflicts we recognise in society are: The strong
tendency of academia and research institutions to focus on mono-disciplinary research and specialism and opposed
researches spanning a variety of fields and topics. Larger institutions/organisations are benefiting more from research
funding whereas smaller ones are discouraged which leads (un)intentionally to commercially monopolised researches by
large corporations. See e.g. the so called Frightful five in the US (Amazon, Google, Apple, Microsoft and Facebook). There is
little collective effort devoted to receiving knowledge input from SMEs, NGOs, or individual end-users. Identifying areas of
common interest and facilitating the knowledge exchange between all participants can be seen as a new source for
knowledge development. In our paper we describe a method for knowledge exchange based on the assumption that in our
society solutions are available for many of the problems organisations are facing with. The paper will also illustrate the
approach by describing some cases of experimenting the method.

Keywords: Knowledge sharing, co-creation, knowledge profiling

1. Setting the scene

Current society faces rapid changes, often with disruptive impact on individuals, organisations as well as
society. We illustrate the diversity of the emerging problems with three examples from different societal
levels, with variable occurrence timeframe.

1.1 The individual level.

Greta Jansen, 76 years old, lives in a block of flats in Amsterdam with a central entrance on the second floor
without an elevator. As her health condition is slowly deteriorating, her need for assistance is growing. In the
meantime, other circumstances are making her more dependent on other’s help - like a recent a governmental
decision that everyone has to fill in their tax declaration online. She is member of the Catholic association of
elderly (CAE) where she can contact volunteers for help to overcome the challenges of modern life. Via the
association she got to know Piet de Vries, a former bookkeeper with a computer. Piet used to help Greta with
the tax declaration but unfortunately, he passed away recently. Her health is deteriorating more, she
increasingly sleeps badly. Even though the problem on its own is not terrifying and easily could be solvable by
any of us, for Greta, as a single elderly woman the combination of challenges she is facing with, causing her a
lot of stress.

This short description shows that what is a simple, easily solvable problem for one, for another the same
problem could be a real disruptive crisis. Greta can ask for help from the CAE, but what if CAE can’t find a
volunteer to help her? Tax-consultants are way too expensive for her. We will have to find a way to simplify
the process of co-creating a solution for her.

1.2 The organisational level

The government decided to merge several organizations in the sector of public services. The real challenge of
the merge was the completely different organizational structure and culture of the involved organizations and
that the effected organizations had no time to make appropriate action to prepare themselves for the change.

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In the meantime, constant public service was expected from the organizations. Realizing the overwhelming
effect of the change and in order to avoid negative consequences, the management decided to involve
expertise in the field of organizational structural development.

A change management project was set up with an approach that not only the management, middle managers
of the organizations but a great number of the employees should be involved, as it was recognized that the
structure of any organization is based on individuals and organizations would not be able to fulfil their
achievement without individual’s knowledge, skills, abilities. The involvement of employees was also necessary
to get access to the appropriate information in order to merge workflows of the different organizations and be
able to set up new and effective operation in a reasonably short period of time. The project achieved a deeper
level of cooperation; therefore, it was far quicker to find and realize strategic and critical points of the change
management.

The involvement of employees not only helped to deal with the change more efficiently in short term, but also
caused greater commitment and responsibility of the employees towards the organization in long term. The
way of this change management had also an educational effect as it trained the organization – by training of
employees – to be able to adjust to a constantly changing environment more easily.

1.3 Disruptive change in society

Defence management is a typical area where we rarely can forecast the events of the future. It is hard to
foresee disasters, crises, threats to security or peace, or needs for humanitarian aid, and for this reason it is
also hard to allocate the right amount of resources -time, people, money – which could dissatisfying the staff
and also the public. Defence White Paper was published in early 2018 with the title of “Investing in our people,
capabilities and visibility” by the Ministry of Defence of the Netherlands, a future-oriented plan for spending
extra budget allocated for strengthening trust within the organisation and the employees and the trust of
society. Testing our iSolution approach a diverse group has gathered to use their knowledge available to
analyse and co-create solutions for problems set in the Paper. The diverse expertise and strengths of the
different participants were valuable for each of the identified topics. The co-creating groups used different
techniques depending on their own variety of skills, attitudes and personalities. Regardless of these
differences, each of the working teams concluded that it is extremely important to identify and use all the
available knowledge within the organisation, create an organisational culture where regular communication is
used to share, facilitate and store ideas and knowledge. Such involvement of the staff could ensure trust,
dedication, and a better way to understand and find solutions to problems. An intelligent platform may be a
solution to use.

2. Generalising the setting

2.1 The issue of time and dealing with uncertainty

The above reasoning describes that there is a permanent need for an organisation to reach a fit between the
requirement of its resources and the ability of fulfilling those needs. The focus changes in time and the
concept of predictability plays an important role where we have to face with unforeseen future(s). Reaching
alignment between supply and demand for resources is way more difficult when we do not have any idea
about what future may bring. In order to vary extents and differ the implications of the scale of future
skill/competencies/requirements, the focus on the ability of the staff to deal with the developments is
essential. The requirement - regarding the competencies of the current staff as well as the new entrants of the
labour market -make it clear that attention has to be paid to bridging the existing gap between future
requirements and current competencies. In many sectors, the gap between the demanded and supplied skills –
both now and in the future - is growing rapidly. When dealing with this problem a distinction need to be make
on the time aspect of the impacts we are facing with. This development can be characterised along the lines of
3 “fits” based on different levels of uncertainty (Gigerenzer, 2014).

1. Certainty: More clarity needed regarding the workforce/knowledge requirements of the economy.
Change-requirements are known for the problems society faces. In most cases, the intervention
repertoire is available and sufficient to deal with the problems. Therefor the focus is on building well-
defined competencies of the staff for today (learning for a Person/Job fit (Carless, 2005)).
The first illustrative case of Greta fits well within this type of problem.

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 Emőke Takács, Orsolya Keményffy and Toon Abcouwer

2. Risk: Economy and industry can forecast some of the future developments regarding skills and
competencies but the final outcome is unsure. The workforce should have flexibility to adapt to
developments of the organisation (learning needed to reach a Person/Organisation fit (Cable & Judge,
1996)). We can foresee and forecast the developments if they take place in a short-to mid-term
timeframe. By building up new competencies, the staff will be able to deal with the current challenges
as well as with the mostly known or foreseen future requirements.
Even though the development for the organization in the second case came by surprise, the impact and
countermeasures were knowable.
3. Uncertainty: In the long run developments are not predictable therefore organisations need to be
prepared for unknown futures to be able to deal with unforeseen developments. In this case flexibility
is not enough, building up resilience is an absolute necessity. It means that competencies will have to
be built for a situation that is not known yet. (learning will need a Person/future fit (Abcouwer and
Takács, 2018)
In our third case the societal problems the ministry is facing, cannot be predicted at all, therefore a
basic need for being adaptive is an absolute must

.
Figure 1: Dynamics and (un)certainty
It is clear that the need for specific knowledge in these three types of settings differs in a great extent. Our
assumption is that the solution to these problems can only be built on an appropriate way of knowledge
sharing. In the next paragraph we will first sketch our solution and indicate our approach to knowledge sharing
and thereafter we will link to the relevant theoretical foundation of the problem-solving approach.

2.2 iSolution
Our objective is to improve problem-solving capabilities in society through bridging the education-to-
employment gap, by:

1. Creating a web-based digital platform that hosts a repository of academic resources relating to the
subject. The profiles of the contributors of the actual resources will be available to the open platform
users in order to share knowledge. The available resources on the platform will be indexed and tagged
in various ways to search and find the relevant knowledge easily.

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2. With the approach of de-linearized learning accessibility, the platform will not be limited to the
members of the alliance and will be optional for any stakeholder/individual to contribute a
publication/resources to its repository. The resources will be publicly available.

Figure 2: The iSolution approach

Identifying the needs of current job market and building a Digital collaborative platform to assist people
becoming more marketable via:

1. (KSB) Building up the iSolution platform knowledge base with societal partners, including their
priorities and needs, legal, regional and cultural information and information to support start-ups; self-
employed; entrepreneurs, based on best practices throughout the world.
2. (MI) Providing opportunities to enhance citizens’ marketability via tools and resources for traditional
and self-education, aiming at digital innovation methodologies to facilitate co-creation.
3. (CI) Facilitating an innovative communication infrastructure to facilitate the exchange of knowledge
between partners.
4. (CC) Engaging active dialogue with companies to identify future needs and facilitate co-creation to
develop new insights future requirements.

As a result, we strive for:

x Building skills to enable citizens to adapt to changes 1, 3

x Promoting sustainable and quality employment by empowering citizens 1, 2, 3
x Strengthening transnational cooperation to address challenges 2, 4
x Reducing economic and social disparities by building more inclusive societies, giving chances to all,
including less privileged, migrants, minorities, poor, and those with disabilities 1, 3, 4
x Reaching gender balance and equality in learning and working in Europe by an open, inclusive, efficient
education program 3, 4
x Adding value by Open Innovation solutions, consistent with sustainable development, long-term
economic growth, social cohesion 4

2.3 The role of knowledge-sharing in different timeframes

The iSolution approach can be used in different sequences, regarding the nature of the problem we wish to
solve and the knowledge that is needed to share. We have identified the following processes of problem
solving in relation to knowledge sharing.

2.3.1 Certainty
The objectives are clear in the setting where we opt for dealing with certainty and the knowledge we are
looking for is (more or less) clear. The question may be - where to find it and how to assure the quality and
integration (1). This requires communication (2) between specialists to facilitate co-creation (3). Identifying the

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problem setting, forecasting may be necessary. Realizing the nature of the problem, categorizing
characteristics and applying appropriate countermeasures are recommended. The objective is to reach a new
equilibrium state as quickly as possible.

Figure 3: Knowledge sharing in certainty

2.3.2 Risk
When we are unaware of the outcomes, it is necessary to agree on the analysation of the actual situation. The
dynamics of the developments are requiring a different type of knowledge usage. Via communication (1),
agreement can be reached on what knowledge (2) is necessary for facilitating the co-creation process (3),
generating solutions for foreseeable future problems (Person/ Organisation fit). Because the nature of the
problem may not be known completely, a solution might not be available right away. By trying to identify
analogies, we can take advantage of solutions that were previously successful. The approach is based on the
ability of entrepreneurship and the analysis can lead to co-create a solution for the problem.

Figure 4: Knowledge sharing under risk

2.3.3 Uncertainty
When we do not have any idea of the nature of the problem we are facing with, the problem setting could
easily be called a crisis, a state when traditional way of problem solving does not work anymore. Finding new
countermeasures is the key for being able to solve problems and requires scenario analysis to set of
opportunities that can facilitate a contingency approach (linked to a Person/Future fit). In this setting the
required knowledge is not known yet and being experimental might be the only way to deal with the situation
(1). Monitoring and communication (2) will be crucial to identify the necessary knowledge to solve problems
(3).

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 Emőke Takács, Orsolya Keményffy and Toon Abcouwer

Figure 5: Knowledge sharing in uncertainty

These three approaches - dealing with the different types of uncertainty - will be analysed in more detail later
on, but before that we focus on the theoretical foundation of our method.

3. The theoretical bases of the iSolution approach

The theoretical foundation of the iSolution approach is based on knowledge sharing in order to solve complex
problems, therefore it is crucial to cover the fundamentals of dynamics, leaning, problem solving, adaptiveness
and resilience.

3.1 Dynamics - The adaptive cycle of resilience

To understand the logic of change, we link our research to the theory of the adaptive cycle of resilience
(Abcouwer and Smit, 2015a, Abcouwer and Smit, 2015b), a model which is describing why change is a
permanent phenomenon, combining the tensions of organisations in a quadrant model about what they want
and what they can achieve. Quadrant 1. equilibrium from the point of view of the management is simple: the
goals and the way to implement them are clear. External influences or a ‘Black Swan’ (Taleb, 2010) may disturb
equilibrium resulting a situation in what the organization is too far from a phase to find a way out. The change
in this awareness suddenly moves the organization to quadrant 2, Crisis. Usually there should be a way to
develop new options, for a new combination 3. phase by carrying out pilot studies, scenario analyses, etc.
Once a set of options are available, the reaction is no longer defensive to the internal and external threats.

Since it is impossible to realise all opportunities, it is necessary to make a choice, and develop that further. The
moment of making the final choice for the option to be implemented, marks the change from quadrant 3 to
Operationalisation phase 4. The actual decision may lead to uncertain results. It may happen that the
organization is not yet ready to proceed to implement it, or the experiences acquired in the pilots or the
scenario analyses did not lead to scaling up towards actual production circumstances. The switch to a new
equilibrium (a new quadrant 1) demands unremitting labour and reorganization, and/or rationalisation of the
processes before the organization gets back to a relatively stable state of ‘want’ and ‘can’. The cycle
continuously starts all over again. This cyclical process induces attention for life-long-learning as a necessity for
society.

Figure 6: The adaptive cycle of resilience

3.2 Learning uncertainty - De-linearized learning

Learning in our complex and dynamic world is a life-long process and the need for a more informal way of
learning has a growing importance. Based on the “roles approach” of different stakeholders (Thijssen and

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Gijselaers, 2006, Thijssen et al., 2002) of the learning process, traditional education institutions will change.
The role-based approach identifies students (looking for knowledge), teachers (delivering knowledge),
researchers (developing knowledge) and practitioners (using knowledge).

But it is possible to achieve a much closer relationship with market requirements when someone can play all
these roles and in this learning environment, the scientific division between rigor (teacher and researcher) and
relevance (student and practitioner) comes into full practice. The relevance of this approach is partly based on
that education needs to bring us the future that we cannot grasp yet. All in all, a completely different approach
to roles in learning and learning institutions should be facilitated by new forms of education via sharing
knowledge. This approach is called the de-linearizing learning approach (Abcouwer et al., 2016, Abcouwer and
Dömölki, 2016, Abcouwer and Takács, 2016). According to this approach a course should help people to
overcome the challenges they are facing with:

1. The process of acquiring, making accessible, and where is necessary developing new knowledge and
skills: finding appropriate knowledge is essential and is has to be studied in full detail in order to define
the requirements for a collaboration system as a facilitator.
2. Assessment and quality assurance: the approach of our research leads to an new aspect. Given the fact
that every person involved in the learning process can play the role of supplier of knowledge, the
quality of the knowledge itself should be assessed. This is exactly the contrary to the traditional
approach where teachers/researchers are responsible for this.
3. Integrating in the worldview / The actual teaching process: when other parties are involved as source
of knowledge, a growing number of specialists will be involved in the knowledge gaining process. This
challenges the integrations of the insights into the existing values and norms.

The above description of the principles behind De-linearized learning will be used to build a bridge between
the three types of fit and the aspects of the importance to define the way of knowledge-sharing.

3.3 Fundamental approaches of problem-solving

Problem-solving in an organisation requires dealing with a state of disorder. When a problem occurs, the
solution is not automatically clear and different ways of problem-solving are required. The Cynefin framework
of Snowden (Snowden and Boone, 2007) helps to understand better the context and nature of the situation.
The situation can be viewed within an ordered context where any analysis gets good insight into the problem
at stake. Possible interventions can be based on logical thinking and the results of these interventions are
more or less predictable. In this respect he uses the terms simple and complicated. In both circumstances, a
thorough analysis of the situation may lead to a solution that can help the organisation to overcome the
problem. In contrast to that he identifies the unordered state. The terms he uses here are complex and chaos.

In these circumstances analysis is helpful but not enough to deal with the problems. The effects of any
intervention are unpredictable and different. The nature and impact of a dynamic change is only known
afterwards: if we had known where to look, we could have foreseen the crisis. In line with this view on states
of disorder, Tsoukas (Tsoukas and Shepherd, 2004) developed a set of techniques that can be used as
guidelines for problem-solving, identified as:

x Forecasting techniques that are helpful when the initiation of change is reasonably predictable and the
way to deal with it is clear too. In terms of the Cynefin approach, the setting can be categorised as
being simple. Forecasting in many cases follows the style of reasoning as suggested by Snowden for
the simple form of disorder: Sense – categorise – respond, that is actual in the Equilibrium state of
ACoR.
x Analogical reasoning works well in situations when future developments are known but nobody knows
how to deal with them. Sensing what is happening is crucial, analysing the settings compared with
previous experiences and responding appropriately appears to work best. This is in line with the
Cynefin complicated type of disorder: Sense – analyse - respond. In ACoR this state is identifies as
Operationalisation.
x Scenario based learning is the suggested approach in case the future is relatively unpredictable and
also the way to deal with it is unknown. The Cynefin chaos characterisation is relevant here and
suggest: Act – sense – respond. Predicting the effects of an intervention is impossible. ACoR describes
this situation as the Crisis quadrant.

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 Emőke Takács, Orsolya Keményffy and Toon Abcouwer

x Contingency planning is the proposed approach in the case of unforeseen future developments but
with high capabilities for dealing with it. Cynefin suggests in this complex type of disorder: Probe –
sense – respond. Trying potential actions will lead to insights to identify the right course of action. In
terms of the ACoR we use the term New Combinations for this state.
Low
Scenario based
learning
Analogical reasoning

The extent to e.g. Disruptive

e.g. Nation building
which there is a technologies; abrupt
stock of political changes
knowledge on
which the draw Contingency
for undertaking Forecasting planning
ac5on techniques
e.g. Man-made
e.g. Seasonal demand catastrophes; natural
calamities
High
High Low
The extent to which there is a
knowledge base for
an5cipa5ng important events

Figure 7: Approaches of problem-solving

3.4 Adaptiveness and resilience

In very different problem areas the concept of resilience has become increasingly central during the last
decade and it is relevant to the changes organisations are facing with.

According to Chandler (2014) there are three important aspects that make resilience important. First, there is
a tendency to focus on intractable and complex problems. Second, resilience does not start at the top level but
traces processes back where they started, at the level of the root causes. Third, resilience seeks to work with
existing capabilities and practices to make them work more effectively and efficiently.

The rise of the resilience concept is based on the insight that the difference between internal and external is
declining. The focus of traditional risk management theory was dealing with internal disruptions, while now
growing attention is on external disturbances. The capacity to withstand pressures and stresses can be
generated both internally and externally. Resilience is understanding the non-linearity of the world that we are
currently living in, and a growing awareness in a world in which contingency and complexity play a crucial role.

Chandler defines it as the discursive field through which we negotiate the emerging problem of governing
complexity.

Figure 8: Resilience in the ACoR model

Holling (1996) makes a difference between two faces of resilience: Engineering resilience concentrates on
stability near an equilibrium: a steady state where resistance to disturbances and speed of returning to the
equilibrium are used to measure this type of resilience. Ecological resilience emphasises conditions far from
any equilibrium or steady state, where instabilities can flip a system into another regime of behaviour to
another stability domain. According to him ‘the measure of resilience is the magnitude of disturbances that

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can be absorbed before the system changes its structure by changing the variables and processes that control
behaviour’.

The concept of resilience in organisations attracts more and more attention. The growing dynamics that
organisations are facing with, requires the management to deal with complex adaptive systems (CAS) settings
(Kauffman, 1995). The decisions made by the management in specific part of the organisation as CAS
influences the developments in the rest of the organization, makes it impossible to take full responsibility for
the overall functioning of the organisation. In an overview article of Westley (2002), he states that current
developments in an organisation can be categorised by its level of diversity, continuous change and learning
complex interactions that make them unpredictable. The different solutions that are suggested are
improvisation (Ciborra, 2002), storytelling (Snowden, 1999), humour (Weick and Westley, 1999) discovery of
harmony (Coveney and Highfield, 1992) and sense-making (Weick, 1995). The role of resilience focuses on the
actions and changes that needed to be done to overcome obstacles like lack of understanding, unwillingness
to change, lack of adaptive capacity. (Gallopín, 2001). Solutions are meant to influence the outcome of the
change. Resilience in that respect has a different role: to influence the ability of finding a new state of
equilibrium. To distinguish this aspect of the concept of resilience Ensor (2011) introduces a third kind of
resilience: Social Resilience. Together with the continuous interaction between partners of co-operation,
setting this type of resilience leads to a situation where permanent attention is needed from management, to
deal not only with one single disturbance, but leading the organisation through dynamic times of continuous
disturbances. To summarise:

Resilience is the ability of an organization (and its systems) to withstand, recover and adjust to changes
in its environment while keep functioning.

A modern society cannot afford to impair this delicate balance by not dealing with the known and unknown
causes of risk and failure. Therefore, we have a look at the issue of predictability and the role of the managers
and other members of an organisation deal with unpredictable changes.
4. The importance of management / leadership
We link to the tripartite approach of Gigerenzer (2014) for the differentiating Certainty, Risk and Uncertainty.

In a setting of certainty, we know what and how to do. Risk is quite low and when everyone works in
compliance with objectives, problems can be solved. Predictability of the outcomes are crucial. Predictability is
defined as a consistent repetition of a state, course of action, behaviour, or the wish to make it possible to
know in advance what to expect. But reality does not always work like that. Designing the strategy of an
organisation is about making a plan to deal and forecast predictable and unpredictable events where
teamwork comes into practice, based on advanced ways of cooperation. Implementing such a cooperation
requires strong leadership from the management and an organisational culture of trust. Organizations in
stable and settled environments can benefit from classic strategy models and processes, but most of the
knowledge-intensive organizations in a competitive environment face with unclear circumstances, more
demanding and knowledgeable customers, where traditional strategy is not appropriate any longer. Also, as
mentioned earlier, rapid change and technological innovation require to be resilient and flexible. In some
cases, organisations in a certain setting can forecast what will happen, but they are growingly face the
problems of uncertainty. This is a gliding scale and not being right in the forecast is an increasing risk and the
certainty could switch over to Uncertainty where traditional cause-effect relations no longer are valid.

Organisations in these cases need real guiding from the leaders. In terms of Gigerenzer, current developments
force organisations from certainty via increasing risk to uncertainty. The challenge in this development is to
manage the balance between stability and flexibility or what we earlier called it, make it resilience. In terms of
our approach, the role of knowledge sharing has to facilitate two opposing lines of thinking. One that is based
on the assumption of the availability of cognitive qualities of individuals, Mindfulness. The key qualities of a
mindful state of being involved: openness to novelty, alertness to distinction, sensitivity to different contexts,
implicit, if not explicit, awareness of multiple perspectives and orientation in the present (Sternberg, 1990). In
case of uncertainty when it is not clear what and how to adapt to, getting lost in our activities is a sort of
mindlessness. In a setting of unforeseen future this is the most typical state of mind. To be mindless does not
sound to be good, still, there are circumstances of high uncertainty in which mindlessness may be adaptive,

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and therefore may constitute a reasonable course of action. It leads to the difference in ‘thinking first’ versus
‘doing first’, as a sharp distinction between the first and the third method of knowledge sharing as introduced
earlier. But how does this work in practice? Without any generalisation we try to describe in the next
paragraph the cases we introduced earlier and illustrate our suggested way of thinking related to our
reasoning.

5. Returning to practice

5.1 The individual level

For Greta the problem she is facing is really disruptive. Finding a solution is a sheer impossibility for her. On
logical grounds it is rather easy to find a solution. The problem and the solution are clear, but for her to realise
it is far from easy. Realising the solution is not based on defining the logic but on availability, implementation.

The solution can be described as certain. Realisation might be an issue but not the logic. Knowledge sharing
can be organised in line with the person/job approach.

5.2 The organisational level

In the case as described on this level, the risks the organisation is facing with is way higher than in the previous
case. Impact of the interventions are unclear, because they were based on a growing involvement of
employees. And the growing need for cooperation automatically introduced higher risk of failure. This risk is
not based on a lack of insight in the effects but merely that individuals may not willing to cooperate.

Calculating what could happen leaded to quite clear effects. So, the issue is a right estimation of the risks. In
terms of knowledge sharing insights and based on that searching for knowledge sources appears to be the
appropriate approach.

5.3 Disruptive change in society.

In the third example of the defence organisation finds its origin merely in the uncertainty of future
developments. While in the past they could estimate where the threats were probably coming from, today it
became clear that societal developments force the organisation to be cautious and prepared to act anywhere
it may be necessary.

In general, future can be unpredictable, therefore the knowledge sharing approach of doing first and sharply
sensing the effect of the countermeasure might help.
6. Conclusions and further research
Through the above detailed reasoning, we developed a logical approach for knowledge sharing to solve
different problems. The need for adaptivity and the accompanying logic of knowledge sharing in relation to
problem solving approaches are based on a broad range of knowledge in the scientific world. The
multidisciplinary approach we are suggesting, gives room for new insights, new approaches and clearly
indicates the need for permanent development in regards of individual development. The growing complexity
when moving from certainty, via risk to uncertainty makes it impossible to develop a one-size-fits-all approach.

Our suggestion for knowledge sharing gives opportunities to facilitate problem solving in different settings.
Societal circumstances of growing uncertainty also make it clear that “proving the truth” is almost impossible
and general solutions do not exist. Resilience, adaptive capability and flexibility are crucial. Further research in
this respect is an extreme necessity.
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When Public Leadership is Destructive: Crimes Committed by Italian
Mayors
Roberta Troisi1 and Vittorio Guida1, 2
1
University of Salerno, Italy
2
University of Trento, Italy
rtroisi@unisa.it
vittorio.guida9@gmail.com

Abstract: This study investigates crimes committed by Italian mayors as a case of the destructive use of public leadership.
Drawing on crime opportunity theory, we propose a theoretical model based on crimes as destructive behaviour,
considering as internal opportunity factors i) the type of positional power, ii) the type of collusion with followers, and iii)
the type of criminal action, in order to define the seriousness of the crimes. The primary data source for the study are the
judgments of the Italian Court of Cassation, the highest judicial body below the Constitutional Court. As external
opportunity factors, the study focuses on party switching (as a micro factor), collusion with political staff (as a meso factor),
and the large size of the municipality (as a macro factor) impacting on the seriousness and the destructiveness of the
crimes.

Keywords: destructive leadership, public administration, crimes, Italian Mayors, positional power, active followers.

1. Introduction
The debate over public leadership has intensified with the widespread reform of public management in Europe
and the US. Increasing levels of responsibility have enhanced the freedom of elected officials and
opportunities to exercise leadership. Despite warnings of the risks associated with this freedom in terms of its
unintended consequences, including unethical and illegal misconduct (Hood 2000), limited attention has been
paid to the negative side of public leadership. As a research topic it has been neglected as it was considered an
oxymoron since by definition leadership was a positive force (Howell and Avolio, 1992; Kellerman, 2004). Only
recently there has been increased interest among scholars in the darker side of leadership, or destructive
leadership, seen as “the systematic and repeated behaviour by a leader, supervisor, or manager that violates
the legitimate interest of the organization by undermining and/or sabotaging the organization’s goals, tasks,
resources, and effectiveness and/or the motivation, well-being or job satisfaction of subordinates” (Einarsen et
al, 2007). This concept seems to be primarily based on studies of management in the private sector (Einarsen
et al, 2007; Keelan 2000), whereas studies addressing crimes committed by public leaders tend to adopt a
narrower concept of destructive leadership as corrupt behaviour deviating from accepted norms to serve
private ends (Huntington, 1989) associated with political corruption (Kellerman, 2004; Neal and Tansey, 2010).

This study investigates Italian mayors as public leaders. Mayors are important actors in the Italian public
system: from an institutional point of view, decentralization has brought municipalities closer to citizens, and
mayors are directly elected. However, an excess of freedom may result in an abuse of power, undermining the
institution and public confidence. From a functional point of view, mayors lead the municipal council and are
directly responsible for the administration in a hybrid leadership position, both political and administrative.

In contrast to past studies of individual cases of destructive leadership, we examined 280 cases of mayors
prosecuted as primary perpetrators of crimes against the public administration over the last ten years. Italian
political and administrative decentralization has brought with it, as an unintended consequence, the
decentralization of these types of crimes. As a result, the number of local rather than central cases of
corruption has increased (Ivanyna and Shah, 2011).

We consider crimes against the public administration as destructive behaviour by mayors for several reasons.
According to Krasikova et al. (2013), when examining destructive leadership, it is necessary to focus on harmful
behaviour by the leader embedded in the leadership process. As public leaders, mayors have positional power
provided by law, in the pursuit of the public interest. If negative leadership is a negative exercise of power
(Kets de Vries and Manfred 2003), as in our case, it should correspond to a misuse of positional power, by
deviating from the norms, and acting against the interests of the public administration. This results in a

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 Roberta Troisi and Vittorio Guida

concept of destructive leadership that is more specific than the one outlined above, but broader than the
concept of corrupt leadership (Kellerman, 2004; Neal and Tansey, 2010) in public-sector studies.
The focus on crimes as a type of destructive behaviour is consistent with Aasland et al. (2010) who argue that
destructive leadership is not so much a type of leadership behaviour but rather the sum of a range of
behaviours that must be identified to define the type of destructive leadership.

With regard to the sources used, whereas existing empirical studies of destructive leadership are primarily
based on questionnaires filled in by followers, we rely on the Italian Court of Cassation judgments concerning
Italian mayors. As the judgments are final and not subject to further appeal, this source provides more reliable
evidence than that provided by questionnaire respondents. We combined the data from these judgments with
information about the mayors’ political careers using data from the Ministry of the Interior website and the
National Institute for Statistics (ISTAT).

The aim of the present study is to contribute to the growing body of literature on destructive leadership by
investigating Italian mayors’ crimes as negative exercises of public positional power. Drawing on crime
opportunity theory, we develop a theoretical model in which 1) the type of positional power, 2) the type of
collusion with followers, and 3) the type of criminal actions contribute to defining the seriousness of the crime
(the average sentence handed down in the judgments) as an indicator of destructiveness. Our findings
highlight micro, meso and macro factors that can influence the probability of a serious crime and thus major
destructiveness.

This paper is structured as follows: Section 2 examines the concept of destructive leadership, Section 3
outlines the theoretical model, Section 4 explains the dataset, Section 5 presents the empirical analysis, and
Section 6 concludes.

2. Conceptualization of destructive leadership

The growing literature on this topic includes two primary strands of research: the behaviour of destructive
leaders and that of their followers. We add a third strand as we discuss crimes investigated in the framework
of crime opportunity theory.

1. Destructive leadership has been defined primarily in terms of leadership traits and/or behaviour
(Padilla, 2012; Schilling, 2009; Thoroughgood et al., 2016). We focus on behaviour as it is consistent
with the aim of this study. It has been argued that destructive leadership is not one type of leadership
behaviour but instead involves a number of behaviours that should be categorized by their prevalence
(Aasland et al., 2010). Among destructive leadership behaviours we consider the case of leaders
engaging in corrupt, unethical and illegal behaviour (Lipman-Blumen, 2005). Moreover, how these
negative leadership behaviours are defined can vary considerably across different social, cultural, and
occupational contexts (Kaiser et al, 2008).
Our examination of leadership behaviour is consistent with this definition. In the public sector, powers
are primarily governed by law, and destructive leadership takes the form of illegal acts. However,
whereas previous studies of the private sector have categorized behaviour based on prevalence (Schat
et al, 2006; Aasland et al, 2010), we adopt a different criterion. In our opinion, what differentiates
illegal acts violating the public interest is their seriousness, rather than their occurrence. The violation
of the public interest is thus a matter of quality rather than quantity.

2. The followers: Although leaders need followers to achieve their aims, much of the previous writing on
leadership is leader-centric, highlighting the primary leadership traits, behaviour, and perceived
effectiveness as evaluated by subordinates (Kaiser et al, 2008). In this framework, the followers are not
in collusion but rather the victims of destructive leaders. Research on destructive forms of leadership
has primarily focused on its detrimental effects on subordinates (Tepper, 2000; Zellars et al, 2002).
However, scholars are increasingly aware of the need for more comprehensive approaches that
recognize not only leadership traits and behaviour but also active followers and the environmental
settings in which leaders and followers interact (Padilla et al., 2007; Thoroughgood et al., 2016).
Followers can be placed in two categories: conformers and colluders. Conformers comply with
destructive leaders out of fear, whereas colluders actively participate in the destructive leader’s

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 Roberta Troisi and Vittorio Guida

agenda (Padilla, 2012). This analysis identifies a toxic triangle (Padilla et al, 2007) made up of leaders
and followers as well as their interaction and the environmental context.
We contribute to the literature moving from the concept of followers as passive subordinates towards
a concept of colluders as active participants. Moreover, we cast light on the interaction between
leaders and followers, considered central in the new approaches to destructive public leadership
(Thoroughgood et al., 2016), where the actors involved are characterized as either political or
administrative. Specifically, we examine which of the two categories is likely to be involved in the most
serious crime.

3. The crime and the opportunity structure approach:

Crimes committed by mayors can be likened to the criminological concept of white-collar crime, “a
violation of the law committed primarily by groups such as businessmen, professional men, and
politicians in connection with their occupations” (Sutherland, Clinard 1952).
More recently it has been underlined that offences committed by the high-status individuals who
interested Sutherland can depend on opportunity structures that are often occupationally related
(Felson 2002). The concept of an “opportunity structure” in criminology is associated with the idea that
crime derives from the access to and capacity for exploiting legitimate and illegitimate possibilities of
realizing goals available to groups from different social classes (Cloward and Ohlin 1960). The more or
less explicit ideas advanced in white-collar research can be classified according to different types of
factors facilitating crime. These factors are understood in terms of access to authority, social contact
networks, and technical-administrative systems (Enghdal, 2009). We adopt this approach identifying
the factors enabling the crime to occur by distinguishing between those that are internal to the crime
and those that are external. Finally, we contend that various opportunity structures can have a
different impact on the seriousness of the crimes.
3. Theoretical model
Our research idea can be summarized as follows. We distinguish between internal and external opportunity
structures. Internal factors concern the nature of the crime in itself: their combinations are necessary for the
occurrence of a variety of crimes and, at the same time, for defining their seriousness. The seriousness of the
crime is given by the average length of the sentence handed down in the judgments for crimes of the same
kind. External factors are not necessary but where present, they can impact on the seriousness of the crimes.

Finally, the different degrees of seriousness of the violation of the interests of the public administration could
indicate different degrees of destructive leadership. For this reason, we develop a theoretical model consisting
of three logical steps:

1. The external opportunity structure is based on factors, both organizational and environmental, that
can influence the crime, with implications for its seriousness. We consider factors at three levels. The
micro-level consists of factors relating to individuals and their work. The meso-level concerns the
characteristics of the organization. Finally, at the macro-level a range of factors are to be found,
concerning the characteristics of the environment.
2. Different degrees of crime (high / low seriousness) depend on the different internal opportunity
structures as a combination of the following factors: i) the positional power of the mayors, ii) the type
of collusion with followers, and iii) the type of criminal act.
3. Different degrees of seriousness of the violation of the interests of the public administration indicate
different degrees of destructive leadership.

The theoretical model is also consistent with research defining destructive leadership as “a dynamic, co-
creational process between leaders, followers, and environments” (Thoroughgood et al., 2016). (Figure 1)

1. For the micro-factors, we examined the mayors’ socioeconomic characteristics, such as education,
gender, age, and political career in terms of years in office and party switching, where relevant. For the
meso-factors, we considered the size of the municipality and the type of followers involved in the
crimes, differentiating between political and administrative actors. The macro-level concerns the size
of the reference population and its social vulnerability index. In terms of size, approximately 70% of
Italian municipalities have less than 5,000 inhabitants. Due to this demographical factor we decided to

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consider two population groups. The social vulnerability index was provided by the Italian National
Institute of Statistics and it reflects the socio-economic conditions of the local population.
2. The internal opportunity structure of the crime is based on evidence taken from the judgments
including the facts of the case, the crime itself and its circumstances. In an analysis of the judgments it
is clear that understanding the process by which an offence is committed is not the same as
understanding why it is committed and the damage it entails. These three questions – how, why and
the extent of the damage – are analytically separable but all necessary to define the occurrence and
the seriousness of the crime. In examining “how” we define the internal opportunity structure as a
combination of the nature of the abuse of power, and the type of collusion. Then we add the type of
actions that involve “why” and “the extent of the damage”.

First, we analysed the nature of the abuse of power adopting the Crozier (1964) dichotomy between “expert
power”, within the competence of the individual; and “control power”, or the power to coordinate or monitor
the actions of staff. In the judgments, control power is considered more serious than expert power, with
implications for sentencing. In practice, the mayors’ control position includes the bulk of the municipal activity,
whereas the expert position is marginal.

Second, participation in white-collar crime appears to be more likely when individuals associate with others
who engage in and favour such crime. These others may provide assistance in committing crime and
differentially reinforce crime (Clinard and Yeager 1980; Coleman 1987; Coleman and Ramos 1998; Reed and
Yeager 1996). We therefore classified the type of collusion as “simple criminal association” or as “organized
crime”. Simple criminal association is when mayors and their staff jointly commit one or more criminal actions
within an ongoing criminal plan (Article 110 Italian penal code: complicity). Organized crime is when mayors
and their staff adopt an ongoing criminal plan and a lasting organizational structure (Article 416 Italian penal
code: conspiracy). The seriousness is based on the penal code, with organized crime taken to be more serious
than simple criminal association.

Third, the criminal offences were classified in the following ascending order, taking account of the type of
damage, the mayor’s purpose and the sentences handed down:

1. Abuse of functions to serve collective ends, in which behaviour deviates from accepted norms. It is
formally illegal but at the same time it is meant to serve the public interest. For example, we examined
the case of a mayor who moved the city garbage tips because of citizens’ complaints about the
proximity to their homes, acting without the approval of the higher local authority. In such cases, there
is no damage to the public administration or the population. In contrast, there is a collective
advantage: the mayors’ purpose is to confirm their roles and consolidate social consensus.
2. Abuse of functions against one or more individuals, when it is clear that there is damage caused to
specific individuals, and the mayor’s purpose is to confirm their role through a prohibition and/or
sanction.
3. Embezzlement, when there is limited damage to the public interest, and the mayor’s purpose is private
gain.
4. Criminal exchanges founded on clienteles, such as bribes, fraud and illegal favours. In these cases,
there is significant damage to the public interest and the mayor’s purpose is private gain.
5. Extortion, where the damage to the public interest is significant, and the mayor’s purpose is private
gain through the threat or use of violence. This does not necessarily coincide with the legal
classification of the offence.

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INDIVIDUAL and WORK

KIND OF POWER
Education
Expert power
Gender
Control power
Age

HIGH/LOWER DEGREE OF
SERIOUSNESS OF CRIME
Political career

KIND OF ACTION HIGH DESTRUCTIVENESS

Abuse of functions
ORGANIZATION
Size of the municipality Embezzlement
Clienteles LOWER DESTRUCTIVENESS
Kind of follower
Extortion

ENVIRONMENT KIND OF COLLUSION

Population size Criminal plan
Vulnerability index Lasting organization

Figure 1: The theoretical model

4. The dataset
This section describes the data from the online archives of the Court of Cassation and the Ministry of the
Interior. We examined a total of approximately 280 judgements from the Court of Cassation concerning Italian
mayors prosecuted for crimes against the public administration over a 10-year period (2006–2016).

We selected cases in which the mayors were the primary perpetrators of the crime, and the followers were
colluders (Padilla et al, 2007). Followers are considered colluders when the destructive leaders plan, direct,
and coordinate, and the followers act to facilitate, or have a merely executive function. In any case, colluders
were not in a position to determine the nature or terms of the action. External networks were not considered.
Moreover, from the judgments, we selected the variables for our analysis by distinguishing the type of crime,
the type of collusion, and the nature of the abuse of power. In the next stage, we provided a composite
indicator of the seriousness based on the nature of the crime by assessing these variables, ranked according to
the above criteria.

In the model in Section 5, the composite indicator is the dependent variable, which is the result of the rank-
sum. From a semantic point of view, every rank of the variables indicates a greater seriousness of the crime. As
a result, we first normalized the indicator, then defined it as a binary variable (1 = more serious crime, 0 = less
serious crime).

We refer to three levels (micro, meso and macro) to define the external factors (the predictors) of the
seriousness of the crime. We define most of the predictors as dummy variables. Individual characteristics (age,
education, sex) and the mayors’ political career before the crime (term of office, party switching) were placed
at the micro-level. The meso-level reflects the organizational dimension. This variable categorizes followers as
either political or administrative: the variable is equal to 1 if the follower is a member of the administrative
staff, and 0 if the follower held a political position. Finally, at the macro-level two predictors refer to the
environment: the size of the reference population and the social vulnerability index.
Table 1: Definition of predictor variables
Variable Values
Sex 1 = male 0 = female
Age 1 = more than 50 0 = less than 50
Education 1 = high school / degree level 0 = lower schooling
Terms of office No. of prior terms of office (discrete variable)
Party switching No. of party switches (discrete variable)
Follower 1 = administrative 0 = political
Population size 1 = population > 5000 inhabitants 0 = population < 5000 inhabitants
Vulnerability 1 = mid-high social vulnerability 0 = mid-low social vulnerability

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5. Empirical model and result

Our empirical analysis relies on the estimate of multiple logistic regression models. The dependent variable is
the indicator of the seriousness of the crime, defined as a binary variable. The first formulation of the model is
as follows:

§ p  y 1 ·
logit  p  log ¨¨ ¸¸ E0  E1 * x1 } E k * xk (1)
© 1  p  y 1 ¹

Equation (1) indicates the linear predictor (or logit) that is equal to the logarithm of the odds ratio. This
formulation provides a better understanding of the relations between the predictors and the odds ratios of the
dependent variables. Independent variables are usually considered to be risk factors in models of this type.
The β-coefficients estimated within the model describe the effects of the predictors on the logarithm of the
odds ratio. Logistic regression models adopt the maximum likelihood estimation method to assess the β-
coefficients.

To estimate the probability that the seriousness of a crime is high, through the exponential operator, Equation
(1) is applied as follows:

exp  E0  E1 * x1 } E k * xk 
p (2)
1  exp  E0  E1 * x1 } E k * xk 

In our case, p denotes the probability that the crime is more serious. In considering the effects of micro-,
meso-, and macro-level variables in the probability assessment, we can define which of the contextual effects
increases the degree of seriousness, making a leader more destructive.

The figures in Table 2 confirm that mayors with a history of party-switching are more likely to commit the most
serious crimes. As Heller and Mershon (2005) argued, party switching does not necessarily reflect a lack of
party identification, but a desire to escape party discipline. The more destructive the leader is, the more likely
they are not to follow ideologies or party discipline.

In contrast, the level of education, gender, and age did not have any impact. A likely explanation is that our
sample includes only mayors who committed crimes, and these mayors have an educational level more
homogenous (and lower) than the national average.

Let us consider at the meso-level variable the kind of follower committing a crime. When collusion involves
administrative staff, serious crimes are less likely to occur. We believe that this depends on the greater degree
of autonomy of administrative staff compared to political nominees. This is coherent with the argument of
Padilla et al. (2007) that colluders participate in different ways in a destructive leader’s agenda. We add a
concrete measure of collusion in that the more autonomous the member of staff, the more difficult it is to
involve them in a crime, especially if it is particularly serious.

Finally, we focus on the factors correlated with the mayors’ crimes at macro-level. In medium-to-large
municipalities a serious crime is more likely to be committed by the mayor than in smaller or larger
municipalities. One explanation for this is that smaller municipalities provide fewer opportunities for illegal
actions and illicit gain. A further possible explanation is the absence of control because mayors have
considerable authority and responsibility.

In contrast with Kaiser et al. (2008), who observed how destructive leadership behaviour is defined and how
the effects differ across different contexts, we found that the social vulnerability index had no effect. Finally,
our study shows that micro-, meso-, and macro-level factors can have an impact on the seriousness of the
crime. This is in line with the toxic triangle conceptualization (Padilla et al, 2007) consisting of leaders,
followers, their interactions, and the environmental context, moving from an anecdotal to an empirical
perspective.

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Table 2: Linear Logistic Model estimations

Coefficients Coefficients Coefficients Coefficients Coefficients
Variables
(st. err.) (st. err.) (st. err.) (st. err.) (st. err.)
Model 1 2 3 4 5
(Intercept) 0.43781 (0.68) 0.4995 (0.47) 0.4164 (0.44) 0.6687* (0.33) 0.4933° (0.29)
Sex 0.06197 (0.49)
Age -0.32503 (0.27) -0.3279 (0.27) -0.3281 (0.27) -0.3305 (0.27)
Degree -0.40867 (0.27) -0.4112 (0.26) -0.4268 (0.26) -0.4338 (0.26) -0.4252 (0.26)
Term of office 0.14407 (0.17) 0.1438 (0.17) 0.1475 (0.17)
Party switching 0.44434** (0.14) 0.4448** (0.14) 0.4358** (0.14) 0.4380** (0.14) 0.4274** (0.14)
Follower -0.66899* (0.27) -0.6685* (0.27) -0.6672* (0.27) -0.6393* (0.27) -0.6424* (0.27)
Population size 0.63864* (0.27) 0.6363* (0.27) 0.6483* (0.27) 0.6649* (0.27) 0.6284* (0.27)
Vulnerability -0.12703 (0.28) -0.1274 (0.28)
AIC 353.36 351.38 349.59 348.34 347.83
Significance codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘°’ 0.1 ‘ ’ 1
The analysis was carried out using R software. We estimated five models to have the best result by excluding non-significant variables
and improving the Akaike Information Criterion (AIC). The AIC indicates the relative goodness of the model by balancing its general fit-
goodness with the minimum information loss. Significant coefficients in this model are also validated by Wald single-tests that R runs
automatically on the model.

6. Conclusions
The destructive leadership analysed is based on behaviour that is specific to public leadership, rather than
limited to the corrupt leadership typically described in the public sector. Our analysis addresses the crimes of
Italian mayors in terms of their position as heads of local authorities, with both a political and an
administrative role. This approach differs from previous studies in four ways.

First, our emphasis is on destructive public leadership, primarily in the form of crimes against the public
interest, classified by degree of seriousness instead of occurrence. Second, we rely on criminological
framework of opportunity structures to justify the occurrence and seriousness of the crimes. Third, in contrast
with the literature on destructive leadership, that has often reduced followers to passive subordinates, in our
research followers are not victims but colluders. Fourth, the research hypotheses are tested using data from
judgments of the Court of Cassation.

The study and interpretation of the results is subject to limitations. First, our findings are related to a specific
research context. Even if we propose the criterion of the seriousness of the illegal act as more suitable to the
public context, only further studies can determine whether it can be applied more widely.

A further potential limitation of the study is related to the number of cases in our sample, which is smaller
than the number usually employed in logistic regression. To detect primary tendencies between variables, the
decision to use such a sample may reflect its specific characteristics rather than its dimension.

By way of conclusion, it may be useful to highlight the practical implications of our findings. We show that a
high degree of seriousness of crimes is likely to occur when the external opportunity structure is the following:

1. the mayor has a history of party switching,

2. the mayor colludes with political staff,
3. the mayor leads a medium-to-large municipality. This proposition underlines how the problem of
control plays a key role as an unexpected effect of decentralization.

There is a public leader, with a personal story of lack of political control, with a substantial degree of
institutional autonomy, which is de facto uncontrollable. Then, there is a challenge with regard to control that
is exacerbated in medium-to-large municipalities because the increase in the size and complexity of public
activities are positively correlated. Conversely, there is an excess of control by mayors over the political staff,
whose degree of autonomy is limited. It is evident that control functions are imbalanced. Public reforms
should take this factor into account: an increase in measures of accountability, such as a limited number of
terms of office, the provision of a different form of control of the political activity, and greater autonomy for
the political staff, might not be able to prevent but could minimize destructive behaviour. Finally, the current
anomalous lack of control in Italian local government could be characterized as the vector of crimes against

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the public administration. Our analysis calls attention to this factor and offers insights into the most important
features of this domain.

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Strategic Alignment and Financial Performance Indicators
René van Dinten and Benny M.E. De Waal
University of Applied Sciences Utrecht, The Netherlands
rene.vandinten@hu.nl
benny.dewaal@hu.nl

Abstract: After 1993, the concept of strategic alignment is evaluated from the connection between IT and business to
much broader definitions in which the connection between all business functions, horizontally and vertically, and later also
with projects and stakeholders is mentioned. To achieve stategic alignment there must be a coordination between the
strategy of organizations and those who contribute to the implementation of the strategy and the actual performance of
an organization. This process is called Human Oriented Performance Management (HOPM). The HOPM model consists of
four dimensions: strategy translation, information and visualization, dialogue and action orientation, and continues
improvement and organizational learning. To measure the effect of strategic alignment a range of financial performance
indicators are used. Based on a literature review this paper explores which financial performance indicators could be used
to measure the effect of HOPM. The literature was selected over a period from 1996 – 2015. The research is not only
focused on the top of the strategy map, but also on the cause-effect relationships in the strategy map. The underlying
performance indicators in the strategy map can show on which figures the dialogue in the HOPM model about strategy
implementation must be based. This dialogue is the input to action in which strategic alignment comes about. The goal of
the research is to optimize this dialogue by looking for performance indicators that can show the effect of HOPM.

Keywords: Strategic alignment, Human Oriented Performance Management, Financial performance indicators,
Organization performance, Literature research.

1. Introduction
In 1993, Henderson and Venkatraman wrote an article with the title ‘Strategic Alignment: leveraging
Information technology for transforming organizations’. From that moment, they were the founding fathers of
the concept IT alignment. Alignment between business and IT is about the contribution of IT for business
processes and management decisions. When the cooperation between business professionals (managers) and
IT professionals is perfect, than they are aligned. Twenty years later, Labovitz and Rosansky (1997) published a
book with the title ‘The power of alignment: How great companies stay centred and accomplish extraordinary
things’. In this book the focus on the way how alignment can be achieved. According to Blomme (2003), this
was an issue which received little attention in the literature. In the meantime, more publications are appeared
who pay attention on this process of alignment (Crosby, 2016; Phillips and Phillips, 2012; Miller, 2013;
McCauley and Fick-Cooper, 2015; Papke, 2013; Harrington and Voehl, 2011; Van Dinten, 2013; Eiler and
Austin, 2016). In this process, the human factor seems to be an important factor (De Waal and Ter Hedde,
2014; De Waal et al, 2015). The question is however, what triggers individuals (employees) in this process and
what are the (performance) indicators to stimulate their behaviour.

In the next session we give an overview of strategic alignment and introduce the Human Oriented
Performance Management (HOPM) model. Thereafter, we describe the literature research on financial
performance indicators and the results. We will close this paper with the conclusions of this research and
opportunities for further research.
2. Theoretical foundation

2.1 Strategic alignment

Strategic alignment is a concept that is closely related to performance management (Van Dinten, 2016). So, it
th
is not surprising that Kaplan and Norton who became well-known in the early ’90 with their construction of
the balanced scorecard published a book named ‘Alignment’ (Kaplan and Norton, 2006). They published
articles about the balanced scorecard concept that show how intangible (soft) factors can be made hard,
tangible and measurable. In their first article they already wrote about de pivotal role of the organizational
strategy: “The scorecard puts strategy and vision, not control, at the center” (p.78). A new insight that was
provided by their study of organizations showing these organizations using the balanced scorecard more often
in that way. In 1996 their book ‘The Balanced Scorecard: Translating Strategy into Action’ (Kaplan and Norton,
1996) was published, here we find these insights of their study on their way becoming well-known. Four years
later they published another book: ‘The Strategy Focused Organization’ (Kaplan and Norton, 2000). In this

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book they describe the result of their 10-year experience of working with organizations, people, using the
balanced scorecard. In these years the focus shifted from getting information, insights in the present
performance of the organization, to getting a solid foundation for target setting and so creating an instrument
that can be used for strategy development, strategy execution and the use of the PDCA-cycle. Another four
years later they published ‘Strategy Maps: Converting Intangible Assets into Tangible Outcomes’ (Kaplan and
Norton, 2004) in which they show how critical success factors, playing an important role in the balanced
scorecard, are connected and influencing each other and also how they are connected with the process of
value creation. Everything that is of a critical importance (the critical success factors) is direct or indirect
connected with each other which makes optimization possible. Here we see alignment, a concept consisting of
the components connection, tuning and commitment (Van Dinten, 2013). Alignment is often a problem
hindering the execution of an organizations strategy. Unfortunately, also in case of an excellent strategy.
Without a good execution you’re still empty handed (Martin, 2010). Beer’s book ‘High Commitment, High
Performance’ (2009), learns us about blockades, roadblocks that hinder getting aligned. All these blockades
have a relation with leadership and communication and he considers them as silent killers because the people
who contribute to the execution of the strategy know them, but staff members almost never openly discuss
them with the members of the management team, although they discuss them among peers frequently. Beer
(2009) considers this an organizational silence, making it possible for these silent killers to do their destructive
work undisturbed. We find all the blockades as ’a team’ doing its destructive work in organizations. It’s never
just one or two. Therefor it is a syndrome, the complete set of symptoms of an illness. An illness hindering
organizational success or making it even impossible. According to Van Dinten (2013) this can be seen as a
misalignment syndrome, which he made visible and measurable for specific situations. So, this makes it
possible to calculate the extent of this problem and as we know “What gets measured gets managed” (Peter
Drucker is often quoted having said this: however, there is no reference proving it). Misalignment is no
innocent illness. It makes it, we mentioned it before, impossible or problematic to execute strategies or sub
optimizes the success of the organization. Regardless the definition of this success. Because both profit and
not for profit organizations can be a high commitment, high performance (HCHP) organization according to
Beer’s definition. A HCHP is “an organization that achieves sustained high levels of performance through
organizing and managing to: (1) implement its strategy, (2) elicit commitment, and (3) enable ongoing learning
and change” (Beer, 2009). Therefore, controlling human behaviour in organizations is the essence of
management control writes Vaasen (2015), who came to a definition of management control from the work of
Anthony (1965): “…the process by which managers influence other members of the organization to implement
the organization’s strategies”. From this we conclude that management control is closely connected with
strategic alignment, since his definition uses the concept of alignment implicit in the same way we do.

Alignment in an organization is always directed on getting everybody on the same page, on making them show
behaviour that is in line with the strategy. Alignment is the capability to tune the contribution each and
everyone makes to the realization of the organizational strategy. What gets tuned is concrete behaviour.

Departments, processes, but also individual employees can be aligned or not. It’s always people who tune with
each other, so blockades that hinder this are something between people as well (Van Dinten, 2013). Poor
alignment makes an organization fragile: one is not able to do anything useful with the options that are
available (Taleb, 2012). In literature we find, as we mentioned before, also IT alignment and alignment from a
HR/Communication perspective. In the case of alignment in the HR/Communication perspective, it is
commitment what we are talking about. Employee commitment regarded as a key to success (Aarnoutse,
2016). From a strategic perspective (strategy realization) the emphasis is placed on tuning. Commitment can
be considered to be a success factor therefore.

Another issue is mentioned by Barr (2017). She describes alignment as follows: “Alignment means that goals
and measures and activities throughout an organization sensibly and usefully relate to one another. These
relationships make it possible for everyone to see how they contribute to the organisation” (p.110). When
alignment becomes visible in the set of aligned scorecards that we can find in organizations (as soon as they
have departments), an organization is aligned. Not necessarily good aligned, but aligned anyway. The use of
(critical) performance indicators can result in insightful cause-effect relations that are useful for employees
and make learning (PDCA-cycle) possible. This is important for the continuous improvement of the
organization. Therefor ‘learning (and growth)’ is one of the standard balanced scorecard perspectives. Often,
performance indicators are used to judge employees (sometimes gentle words like ‘assess’ are used instead of
‘judge’). Judging employees can do more harm than is helpful for the organization. In that case the balanced

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scorecard with its performance indicators isn’t a tool that can be used to lead the organization substantiated
(based on evidence) towards the targets it aims at, but a stick to beat them towards the target. According to
Barr (2017) “… high-performance organisations don’t use measures for judging. They see measures as tools in
people’s hands, not rods for their backs” (p.55). According to Barr it is possible to keep them “accountable for
using measures to continually improve business results; they are not accountable for hitting the targets for
those measures”(p.56). What we learn from this analysis is that paying attention to the human side of
alignment is crucial to be successful for any organization, as employees are each and every one a bracelet in
the process of executing the strategy. In the next section we will describe how this process occurs and which
dimensions are important.

2.2 Human Oriented Performance Management

Performance Management (PM) is described by Gartner Inc. (2006) as follows: “Performance Management is
the combination of management methodologies, metrics and IT (applications, tools and infrastructure) that
enable users to define, monitor and optimize results and outcomes to achieve personal or departmental
objectives while enabling alignment with strategic objectives across multiple organizational levels (personal,
process, group, departmental, corporate or business ecosystem).” According to this definition performance
management can be considered a multidisciplinary domain. In order to achieve increased performance many
factors (organization, management, employees, processes, IT-systems) need to work together. In practice this
multidisciplinary cooperation seems to be very difficult (Gartner Inc., 2013). It seems that more is needed than
just data gathering and reporting the outcomes. The influence of human behaviour on performance is more
and more important (Jaenka, 2013; Nazier et al, 2013; Schläfke et al, 2013). Based on these observations, De
Waal and Ter Hedde (2014; Ter Hedde and De Waal, 2015) have developed a Human Oriented Performance
Management (HOPM) model. The HOPM model is presented in Figure 1.

Figure 1: Human Oriented Performance Management-model

The main setup of the HOPM model is based on Argyris’ theories on double loop learning and the Ladder of
Inference (Argyris, 1992; Argyris and Schön, 1974, 1978). The first learning loop is the bottom loop around the
question: Are we doing things right? It concerns all the actions that are taken place within organization as a
result of strategic choices made. The second learning loop is concerning the question in the top part of the
model: Are we doing the right things? This concerns the evaluation whether the actions taken have resulted in
outcomes that were predicted within the strategy. The Ladder of Inference (Argyris and Schön, 1974) describes
the process of thinking that people go through to get from a fact to a decision or action. The thinking stages
can be seen as rungs on a ladder. Starting at the bottom of the ladder, we have reality and facts. From there,
we experience these selectively, based on our beliefs and prior experience. Next, we interpret what they mean
and apply our existing assumptions, sometimes without considering them. Thereafter, we draw conclusions
based on the interpreted facts and our assumptions and develop beliefs based on these conclusions. Finally,
we take actions that seem "right" because they are based on what we believe. This can create a vicious circle.

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Our beliefs have a big effect on how we select from reality, and can lead us to ignore the true facts altogether.
Soon we are literally jumping to conclusions – by missing facts and skipping steps in the reasoning process.
Translated to the HOPM model, the Ladder of Inference theory assumes that to improve organizational
performance it is crucial to start the dialogue with facts about the execution of the strategy and the results of
the actions taken. Within the HOPM context these facts mostly concern the scores on the organization’s KPI’s
as visualised in management reports and on dashboards.

The HOPM model consists of four main dimensions:

1. Strategy translation: To what extend are the objectives and strategy of the organization translated into
a focused, well-balanced set of Key Performance Indicators?
2. Information, measurement tools and visualization: To what extend is the information within reports
and dashboards easy to understand and can it easily be communicated? Furthermore does the
information reflect current (KPI) performance?
3. Dialogue and action orientation: To what extend are management and employees involved in
dialogues and focussed on actions to improve performance?
4. Continuous improvement and organizational learning: To what extend are management and
employees focused on challenging themselves and the current performance of the organization?

In this model is measurement of performance indicators a key element. Not only to give feedback to individual
performances, but also to measure the progress of human oriented interventions of performance
management. However, the question is which performance indicator can be used to measure this progress. To
answer this question, a literature review is conducted to find out which indicators are used to measure
performance management. For practical reasons, the literature review is restricted to financial performance
indicators.
3. Research methodology
A literature review was conducted to identify papers which describe financial performance indicators. Full-text,
peer reviewed articles were searched worldwide libraries in a combination of 8 databases, including
WorldCat.org, Business Source Complete, ScienceDirect, Academic Search Complete, Directory of Open Access
Journals, ACM Digital Library, Emerald Group Publishing Limited, and SAGE Journals. The selected databases
were searched based on the topic-related keyword “financial” AND “performance” AND “measurement” in the
title for articles published between 1996 and 2015. This resulted in 578 articles. The further selection of the
articles were based on the following criteria:

x The object of the study must be financial performance measurement;

x The full text must be available in public or through the university library;
x Only articles in English were selected.

Application of the criteria on the keywords and the perusal of abstracts, resulted in 24 articles that could be
used for this study.
4. Results
The findings of the literature review are presented in Appendix A. In total, 60 different performance indicators
were indicated in the studies. It is remarkable that many indicators are used only in one study. The most used
indicators are Return on Assets (ROA), Economic Value Added (EVA), Return on Equity (ROE) and Return on
Investment(ROI), followed by Earnings Per Share (EPS) and Net Profit Margin (PM). Furthermore, we can see
that some studies use more indicators and some studies only one or two.
5. Discussion and conclusion
From the results we can conclude that in most studies high level financial performance indicators are used to
indicate organizational progress. From an organizational perspective, these indicators are at the top of the
strategy map. Herein come together the underlying perspectives of what is important for the organization and
what the focus is to carry out the strategy (Marr, 2012). These underlying perspectives are for a human
oriented approach of performance management extremely important. Figure 2 gives an example of a simple
strategy map.

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Figure 2: A simple strategy map showing the relations between critical success factors (from McKnight, Kaney
and Breuer, 2010)
The strategy map can be used to see which aspects contribute to the overall (financial) success and which
elements are essential for the result to be achieved (Van Dinten, 2016). If we descend into the series of
performance indicators that influence each other and different organizational levels, than gradually the person
who performs this performance becomes more and more visible. To investigate the success of a human
oriented approach of strategic alignment it is therefore important to construct a strategy map and indicate
which team or person is responsible for a specific (sub) performance indicator. In the construction of the
strategy map must first and foremost be the perspective of the individual employee. Strategy maps are the
visual presentation of the connections in the balanced scorecard, making it more useful for communicating
about the strategy. If the connections are visible and the importance of this is recognized, tuning of the
different roles and contributions is next. These important factors are called critical success factors for a good
reason. Their importance is critical, it is decisive of nature for the organizational success. The (critical or key)
performance indicators that are used to measure the qualitative critical success factors and so giving them a
value are buttons used to test the effects of interventions. These effects flow through the strategy map from
one critical success factor to one or more others. This makes it easy to communicate. Management already
had a language of its own to discuss important issues. Now they can visualize what they are discussing.

What (financial and other) performance indicators at the operational level are relevant can be seen in the
strategy map of the particular organizational unit. First we can distinguish two types of relevant indicators:

1. Indicators linked to indicators of a higher organizational level. It is easy to see the relevancy of these
indicators to the most important organizational success. In case of profit organizations this means that
that they are relevant to their financial success.
2. Indicators that measure hygiene factors on the particular organizational level/unit. For example: An
indicator monitoring how well a unit respects the limits of its budget. If they are not successful in
avoiding to overstep the budgetary limitations it will be their problem at the beginning. But, the
question ‘to what extend’ is important when problems get out of hand, because eventually they will be
problems that harm the organizational success.

What performance indicators measure hygiene factors depends on the organization and the level or unit.
What performance indicators form the main road to –for example- the most important financial indicator in
case of a profit organization can be seen in the successive strategy maps. Because they are all connected,
basically any performance indicator can become literally a critical performance indicator. We suppose that any
performance indicator that conquered a place in the balanced scorecard (and obviously also in the strategy
map) is relevant. By a direct connection to the main performance (cat.1) or indirectly (cat.2). An indicator that

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is not, has no right to exist. By steering on a particular indicator this can change its influence and relevance
(Kaplan & Norton, 2004, 2006). What we need is further research and discussion about what indicators are
influenced most by a human oriented performance management approach and whether these indicators can
be found in operational level scorecards alone or also in the balanced scorecard at organization level.

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Appendix 1: Overview of financial performance indicators

Muhammet Mercan (2003)

Kaplan and Norton (1993)

Davis and Albright (2004)

Hoque and James (2000)
Lipe and Salterio (2000)

Grigouroudis (2012)
Ponraj Priya (2009)
Dalton et al (2003)

Abernethy (2013)
Ittner et al (1997)

Koufteros (2014)
Rylkováa (2013)
Striteska (2012)
Johnson (2009)
Laitinen (2002)

Cooper (2013)
Brocke (2007)
Bardia (2008)
Cohen (2008)
Evans (2004)

Jakub (2015)
Ittner (2013)
Ely (1991)

Li (2008)

Total
• Annual earnings X 1
• Asset turnover X 1
• Average return on equity X 1
• Business unit profit X 1
• Cash flow X X 2
• Cashflow Return on Investment (CROI) X X 2
• Catalog profits X 1
• Cost of capital X 1
• Cost of Funds X 1
• Cost reduction X 1
• Current Ratio (CR) X X 2
• Daily Sales Outstanding (DSO) X 1
• Debt Ratio (DR) X X X 3
• Earning Assets/Total assets X 1
• Earnings Before Interest and Taxis (EBIT) X X X 3
• Earnings Per Share (EPS) X X X X 4
• Economic Value Added (EVA) X X X X X X X X X 9
• Equity dept X 1
• Free cash flow X 1
• Generation of cash flow X 1
• Inventory turnover X X 2
• Loan Volume X 1
• Loan Yield X 1
• Market share relative to retail space X 1
• Market value X 1
• Net Charge-Offs X 1
• Net income X 1
• Net profit /Total Liabilities X 1
• Net Profit Margin (PM) X X X X 4
• New store sales X 1
• Non-Interest Deposit Volume X 1
• Non-Interest Expense X 1
• Non-Interest Income X 1
• Operating income X X 2
• Operating Revenu (OR) X 1
• Operational cash flow X 1
• Personnel expenses/ Earning assets X 1
• Profit forecast reliability X 1
• Profitability X 1
• Project profitability X 1
• Quick ratio X 1
• Return on Assets (ROA) X X X X X X X X X X X 11
• Return on Capital (ROC) X X 2
• Return on Capital Employed (ROCE) X X X 3
• Return on Equity (ROE) X X X X X X 6
• Return on Investment(ROI) X X X X X X 6
• Return on Sales (ROS) X X X 3
• Return on total assets (ROTA) X 1
• Revenue / Salary Expense X 1
• Revenue growth X 1
• Revenues per sales visit X 1
• Sales X 1
• Sales backlog X 1
• Sales growth X X 2
• Shareholder value X X 2
• Shareholders’ equity X 1
• Stock price return X 1
• Stock return X 1
• Total expenses/ Total income X 1
• Value based management X 1

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Digital Leadership: As the Only Way to Survive a Changing Digital
World?
Frank van Outvorst1, Cinty Visker2 and Benny M.E. de Waal1
1
University of Applied Sciences Utrecht, the Netherlands
2
Hanze University of Applied Sciences, Groningen, the Netherlands
frankvanoutvorst@hotmail.com
cintyvisker@hotmail.com
benny.dewaal@hu.nl

Abstract: Due to the rapid development of information systems and information technology, everybody can have
information on anything and everyone at any moment and any place. However, information systems are arranged in such a
way that the context rather than the individual or organisational need for information actually determines what
information an individual or organisation will retrieve and use. And due to algorithms in the internet, confirmation bias and
the use of standard (ERP) software organisations (conform the theory of isomorphic systems) information becomes context
bound. In general this results in organisations as well as individuals retrieving information that they have already found and
used before, rather than open minded looking for information (the phenomenon of echo chambers). For good decision
making it is necessary that people and organisations make use of complete and adequate information. In this paper we
provide an overview of recent literature and non-academic media on this topic (published over the last five years). We
combine theoretical concepts in order to define countermeasures against the negative consequences IT developments.
Digital leadership has to be a frontrunner in order to facilitate the quality of information within society or organisation.
Digital leadership must be able to identify the risks and dangers that come with the use of new information technology and
must be dealt with in a proper way. Frameworks or standard like IDQ (at the data level) or BiSL (at the context level) or
ISO38500 (at the organisational level) can be used as guidance for this analysis.

Keywords: Digital Leadership, Echo chambers, Quality of decision making, Business information management, Literature
study

1. Introduction
This paper is one in a series of publications in which we discuss the concept of digital leadership. We seek for
the added value of digital leadership by identifying situations in which some form of digital leadership is
required and simultaneously identify guidance that is available. In this paper we make a connection between
certain sociological or psychological aspects and concepts from the area of business science in order to provide
some guidance as to how digital leadership might fill in its role or responsibilities. This paper focusses on the
way individuals, societies or organisations handle all kind of disturbances in the quality of information.

Use of modern information and communication technology (IT) and advanced new information systems (IS)
bring many advantages (King, 2006). Sharing, retrieving and using information is possible at any place around
the world at any time and by anyone (Maymand, 2016). This enables new ways of living and working together
and new ways for organisations to communicate and deliver their products or services to their markets (Spil,
Kijl and Salmela, 2016). In this paper we will focus on the use of IT and information. With all new IT
developments it appears that available information is very rich, complete and multi perspective. However,
information that is actually used seems to be of less quality and biased. This could negatively influence
decisions that are based upon this information. Venkatraman (2011) already pointed out there is a dark side to
use of new IT developments as well. Among other things he addresses the risk of excluding people and the risk
of misinformation.

In this paper we provide an overview of recent (published over the last five years) literature and research as
well as non-academic media. Our goal is to combine different concepts from different fields of expertise into
guidance for digital leadership that has to fulfil a crucial role in facilitating adequate use of IT and information
and enabling organisations and networking communities by use of IT and information. The following topics will
be addressed:
x How can use of modern information technology and information systems contribute to the use of
multi perspective information?
x What are the negative consequences of use of modern information technology?
x To what extent are the consequences valid at an individual level as well as an organisational level?

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x How does digital leadership come in place to resolve this situation?

2. Research approach
This paper is based on publications that are found in a combination of databases: including Academic Search
Premier, Business Source Premier, Cochrane Database of Systematic Reviews, Communication & Mass Media
Complete, Directory of Open Access Journals, EBSCOhost, Google Scholar, ScienceDirect, and Web of Science.
The literature search has been conducted by combinations of topic-related keywords: including echo chamber,
information (technology, quality), filters, customized information, personalized information, isomorphic
systems and decision making. In current articles published in the period 2010-2017. From the selected articles
a snowball-method was used to find more relevant information. When searching for concepts that may
provide guidance we searched after concepts in the field of information management, business information
management and information quality. We did not seek to be complete. Our goal at this stage merely was to
find if any concept would be available. No extensive literature study was executed. Instead we had discussions
with professionals in this field in the Netherlands. In the analysis and discussion of IT and IS we bring in the
methods of BiSL, as a framework for business information management, and IDQ, as a model for enterprise
data quality.

3. Use of modern information technology

3.1 Use of modern information technology at the individual level

Information technology and information systems keep evolving (Van Outvorst et al 2017). It is interesting to
see all new applications of modern information technology. Data is shared very easily by use of Application
Programming Interfaces (API) and internet. Data are no longer connected to specific information systems. As a
result of this the world becomes a small village with all information available to anyone at anytime and
anywhere (Maymand et al., 2016). And as Flaxman (2016) states the Internet has dramatically reduced the cost
of producing, distributing, and accessing diverse (political) information and perspectives. Production and use
of data is also not only the sole domain of companies and government any longer. Also individuals contribute
largely to the information stream. With the rise of social media individuals can easily share their favourite
stories, and facilitated by search engines they can retrieve a very wide variety of information or data (Flaxman,
2016).

Along with the tremendous growth of information, information distribution and retrieval is getting more and
more personalized (Pasi 2010). This leads to situations in which the context of the individual determines the
results of information retrieval: search engines that take into consideration previous search requests and data
already known about the individual. The search engine is recommending content an individual is likely to agree
with (Flaxman 2016). Flaxman identifies “filter bubbles” that may be created by machine-learning models of
search engines, news aggregators, and social networks that are increasingly personalizing content. The
algorithms that are used automatically recommend content an individual is likely to agree with. By doing so
the algorithms inadvertently amplify ideological segregation. Algorithms within the search engines are decisive
for what the individual’s search results will be. In no way these search engines will guarantee a comprehensive
and complete search result.

As discussed by Edmunds (2000) a factor that influences the effectiveness of information is the information
overload factor. Individuals need to protect themselves against information overload. At such a moment
individuals who look for information (e.g. on the internet) try to find what they regard as relevant and useful.
In these situations echo chambers and filter bubbles may seem useful to the individual despite the fact that
this may lead to biased and incomplete information. Thus on one hand information is becoming more available
to an individual while on the other hand the available information is filtered by the individuals context in such
a way that less information is actually used or absorbed: this is described by the phenomenon of echo
chambers. Echo chambers are discussed in more detail in a next paragraph.

3.2 Use of modern information technology at the organisational level

Can analogies be found within (business) organisations? What we find within organisations is that new
business models are created and enabled by modern IT. This leads to all kind of requirements to (the use of)
information (Van Outvorst et al 2017). Examples of these requirements that can be found are transparency,
inclusion and actuality.

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Organisations try to be as cost effective as possible. IT service suppliers try to facilitate this by offering
standard software solutions like ERP systems or component building blocks. ERP systems cover the
information needs in the field of logistics, finance and administrative functions. ERP software is constructed of
modules. To some extent these modules are industry specific. But the aim is to offer modules that can be used
by many organisations in order to reduce the cost. This leads to isomorphic systems that all have the same
information content (DiMaggio and Powell (1983). Despite the fact that individual user organisations have the
option to configure it or parametrize the information systems there is an undeniable trend towards isomorphic
systems. The algorithmic driven software solutions of ERP systems in this way show analogy to the way
individuals are influenced by algorithmic driven software solutions in their search for information.

As well as individuals workers in an organisation are confronted with the factor of information overload.
Workers in organisations are in the same way protected against an information overload as individuals. These
workers use the internet in the same way as individuals who are looking on the internet for information. This
means that organisations are in the same way confronted by filter bubbles and echo chambers which at an
organisational level may lead to a seriously biased information position and lack of multi perspective
information.

All in all we see both at an individual level and an organisational level that information retrieval and use of
information is heavily influenced by algorithms and filtering causing biased information position and lack of
multi perspective information. Individuals and organisations may not be fully aware of these influencing
factors. In analogy with the phenomenon of echo chambers at an individual or group level we might
distinguish organisational echo chambers.
4. Echo chambers and information

4.1 Definition of echo chambers

Echo chambers are a relatively new phenomenon. In 2001 Sunstein (2001) wrote about echo chambers in the
context of a political debate. Sunstein describes echo chambers as the risk of fragmentation on the internet
resulting in innumerable homogeneous groups with often amplified pre-existing views. Bright (2017) describes
echo chambers as a phenomenon of self-organisation into groups along ideological lines. Williams (2016)
suggests a simple definition of an ‘echo chamber’ as a community where at least 90% of members share the
same view. Bessi (2016) defines echo chambers as largely closed, mostly non-interacting polarised
communities centered on different narratives where enclaves of like-minded people consume information in
strikingly similar ways.

4.2 Emergence of echo chambers

The emergence of echo chambers is less free of debate than the definition of echo chambers. Bessi (2016)
states that recent studies clearly show that confirmation bias, more than algorithms of content promotion
plays a pivotal role in the formation of echo chambers.

Flaxman (2016) discusses more variety in the effects of technical innovation related to the emergence of echo
chambers. The aforementioned developments in production, distribution and retrieval of information enabled
by the rise of internet is one effect. Another effect observed by Flaxman (2016) is that individuals may choose
to consume only content that accords with their held beliefs. Which leads to individuals exposed to
conforming opinions. Also, individuals are more likely to share information that conforms to opinions in their
(virtual) group. Groups thus emerge that cluster individuals. A phenomenon that is called homophily.
Homophily is further explained by Williams (2016) by two factors. Firstly from preferential connection to
similar individuals when forming/breaking links by the individual. Bright (2017) calls this the impulse to form
social ties with others that are similar to oneself in some way. And secondly from peer influence making linked
individuals more similar (Williams, 2016). To these mechanisms Bright (2017) adds the concept of selective
exposure. A phenomenon whereby people select information or sources they already agree with whilst
filtering out others. And the tendency of individuals to moderate their opinions into line with what they
perceive the group norm to be. Zuiderveen Borgesius et al (2016) mention that media content is becoming
increasingly personalised and that personalisation lead to selective exposure.

However, one should keep in mind that there are also many theories that argue that use of modern IT
prevents the emergence of echo chambers. As Bright (2017) states theories in this area help explain why, in

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general, echo chambers are often not complete when they are observed in the real world, and that evidence
of cross cutting ideological exposure is also common.

5. Risks of echo chambers

5.1 Prerequisites
Modern organisations (Van Outvorst et al 2017) have certain information requirements in order for them to be
able to perform effectively. These correspond to Sunstein (2007) who argues that two requirements must be
met: 1. a well-functioning system of free expression must expose people to materials (information) they would
not have chosen in advance; and 2. in a democratic policy most citizens must have a range of common
experiences to support their mutual understanding and sympathy. If these two requirements are not fulfilled
there will be three major unfortunate unintended consequences. First, there will be social fragmentation, as
diverse groups polarise. Second, people will use available technology to create information goods tailored to
themselves, rather than creating goods that are valuable for many people. Third, satisfaction of preferences
will be taken as definitive of people's well-being, ruling out alternative conceptions that take into account the
possibility of extra value being provided by heterogeneous influences.

5.2 Polarisation
Echo chambering holds the risks of fragmentation and polarisation. Bright (2017) mentions the worries
emerging because of fragmentation. He describes fragmentation as a process in which people are not exposed
to alternative viewpoints anymore, but get in their echo chambers a repetition of their own views. Individuals
and groups are caught within their own argument. And also, in the context of Facebook, the spreading of
information tends to be confined to communities of like-minded people (Quattrociocchi, 2017). Echo
chambers lead to polarisation (Bessi, 2016). Sunstein (2002) describes how this group polarisation lead to
profound misunderstanding with individuals outside the group.

Polarisation has effects on online social dynamics (Bessi, 2016). And as Zollo et al (2015) mentioned that
discussion with like-minded seem to influence user emotions negatively. The real separation occurs with
people who hold extreme ideologies (Bright, 2017). They become separate from people with other viewpoints
and also from people who hold more moderate versions of their viewpoint.

5.3 Quality of information

Echo chambers affect the quality of information. Bessi (2016) states that the mechanism of confirmation bias
leads to situations in which information, concepts and debate get flattened and oversimplified. The self-
reinforcing echo chambers can prevent engagement with alternative viewpoints and promote extreme views
(Sunstein, 2007). In the discussion on climate change for example, Williams (2016) found that the users that
were most active in online discussions tended to have strong attitudes while neutral views were largely
absent. Or as Zuiderveen Borgesius et al (2016) say, echo chambers have an adverse effect on the democratic
discourse, open-mindedness and a healthy public sphere. Information in echo chambers also inclines to get
another emotional bias. Williams (2015) states that messages between like-minded users typically carry
positive sentiment, while messages between sceptics and activists tend to carry negative sentiment.

Chen et al (2015) mentioned it is more the catchiness, rather than truthfulness, that drives information (and
misinformation) diffusion on social media. Chen et al (2015) states that unlike the traditional media, the social
media lacks the rigorous quality control mechanisms. Social media applications make it also very easy to
disseminate information, a simple mouse click. And it is often the inaccurate messages that continue to go
viral even after being debunked, whereas the correct information does not receive as much attention (Friggeri
et al, 2015).

5.4 Acceptance of information

An important ingredient of echo chambers is the confirmation bias. Bessi (2016) states that experimental
evidence shows that confirmatory information gets accepted even if containing deliberately false claims while
dissenting information are mainly ignored or might even increase group polarisation.

The other ingredient is preference. In online social media users consume different information according to
their preferences (Bessi, 2016). Users avoid cognitive discord by consuming information that supports their
pre-existing beliefs, and they share that information widely (Quattrociocchi, 2017).

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6. Organisations and echo chambers

An important question is if the situation with regard to echo chambers, filter bubbles, polarisation and
acceptance or quality of information is different in organisations compared to individuals. From earlier
research it seems that organisations and individuals follow the same paths in information. Michailidou (2017)
states, for example, that organisations, governments and political parties increasingly incorporate social
media. And as discussed in this paper, workers in organisations tend to behave and follow the same paths as
individuals. This is further shown by Fischer et al (2015) in the climate change debate. In this debate they
conclude that they hope that in other debates on other political issues that they avoid echo chambers and
their persistent effects. Echo chambers are not just about opinions but also about emotions. Toubiana (2017)
found that echo chambers can create serious issues for organisations. He found that when an organisation’s
communications contradict the emotional language expected by its stakeholders, the anger and betrayal
experienced by the stakeholders can escalate through social media echo chambers to result in stakeholder
activism, with serious material consequences for the organisation. All in all it seems likely to assume that
organisational echo chambers may lead to serious problems in or for organisations.
7. Discussion: how to counteract misinformation
Echo chambers, filter bubbles and other algorithms and social behaviour may affect the quality of information
and affect the ways people act upon information (acceptance of information, polarization). Individuals and
organisations risk to lose the diversity of information and / or become vulnerable to biased information. And
this ‘misinformation’ has large impact on decision making within organisations as well as on public opinion
about the organisation (Michailidou, 2017). This development can be progressing slowly without even being
noticed.

Counteraction to prevent misinformation is necessary, but what is a proper approach? Bessi (2017) observes
that collective mechanisms based upon a community-driven approach in counteracting misinformation are
controversial because they may hinder free flows of ideas and information. Another observation by Bessi
(2017) is that approaches based on algorithms may not be effective due to the heavily by group standards and
individual cognitive factors influenced claims to be adopted by the algorithms. However, there is hope as long
as the analogy between organisations and individuals holds. Because Michailidou (2017) found that
established ‘super users' of media as well as established news media are considered trustworthy sources of
information that are likely to be believed and positively appraised by individuals.

On the level of organisations, modern organisations (Van Outvorst et al 2017) have certain information
requirements in order for them to be able to perform effectively: a continuous negotiation on knowledge and
the use of information systems. These requirements also play a role in the counteraction of echo chambers.
They correspond with Sunstein (2007) who argues that two requirements must be met: 1. a well-functioning
system of free expression must expose people to materials (information) they would not have chosen in
advance; and 2. in a democratic policy most citizens must have a range of common experiences to support
their mutual understanding and sympathy.

A solution for an organisation in counteracting echo chambers seems available in establishing a trustworthy
role in information management in the organisation. This role, a part of digital leadership, should be leading
the organisation towards useful and usable information which provides the necessary biased-free, divers
information. A role that is also aware of the mechanisms that affect information and cause misinformation.
Digital leadership that can fulfil the role of the trustworthy super user and creates the necessary space for
diversity.

When looking for some form of guidance for digital leadership in this respect there seems to be lack of
guidance. ISO38500 provides a standard for corporate governance of IT (ISO2015). This standard clearly
indicates the aspect of human behaviour in relation to the use of information systems as well as the state of
information and information systems. A possibly useful framework the digital leader has at his disposal is
Business information Services Library (BiSL, by Van der Pols, Donatz, Van Outvorst, 2012). BiSL as a framework
for business information management covers the above mentioned aspects of the digital leader role. It pays
explicit attention to information and the quality of information. Another possible tool is given by the Integral
Data Quality framework (Valori 2016). IDQ gives in an extent way priorities to quality attributes of information
and helps to create awareness on information quality in organisations.

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8. Conclusions and next steps

8.1 Conclusions
Modern information technology offers an increasing potential for individuals as well as organisations to
produce, retrieve and use all kinds of information. Time, place and other boundaries for retrieval and use of
information have disappeared. At the same time certain technical aspects of the internet (filter mechanisms
and algorithms) and sociological aspects (such as homophily, social group behaviour, confirmation bias and
emotional bias) lead to polarisation, the formation of echo chambers. Echo chambers have an adverse effect
on the quality of information. Echo chambers enlarges pre-existing views and leave little room for diversity.
Because organisations and individuals seem to use the internet in the same way, the risks involving echo
chambers exist at individual level and organisational level. The risks of echo chambers involve misinformation
and lack of diversity in information. To counteract these risk of echo chambers the role of digital leader needs
to be broader than the traditional view on digital leadership which seems to focus on influence by individual or
social relationships only. An ‘enhanced” digital leader could make use of ISO38500, use Business information
Services Library or the Integral Data Quality framework to help counteract the risks of echo chambers.

8.2 Next steps

Echo chambers are a relatively new phenomenon. In this paper a connection is made between the concept of
digital leadership and misinformation due to echo chambers and other phenomena. The role of digital
leadership has to counteract this loss of quality of information. Further research is needed to explore the
influence of echo chambers on organisations and conducting business. And also on the use and adaptation of
standards or methods like ISO38500, BiSL and IDQ to provide guidance to digital leaders and/or business
information management.

Further research is needed in order to verify the hypothesis of the existence and consequences of
organisational echo chambers. It will be very interesting to see empirical research results that show if and how
business information management contributes to mitigation of the risks of organisational echo chambers.

Also further research is needed into the similarities between echo chambers at the level of individual people
that participate in society and echo chambers at the level of organisations. Also it may prove valuable to
merge the relatively new knowledge of organisational echo chambers and filter bubbles with work done in the
field of business information management.
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Parental Labour: Labour Market Acceptance Driven by Civil Activism
József Veress1 and Anna Bagirova2
1
Corvinus University, Budapest, Hungary
2
Ural Federal University, Ekaterinburg, Russia
jozsef.veress@uni-corvinus.hu
a.p.bagirova@urfu.ru

Abstract: There are global demographic tensions generated by ageing and increasingly shrinking population in developed
economies, and rapid population growth (especially in young cohorts) in developing countries. Although these challenging
trends would require enhanced social support for parents and parenting increasingly robust and sophisticated austerity
policies roll back existing social services, decompose the very idea of the welfare state. As social activism, including
feminist and gender movements argue the parental labour must be reflected in statistics and incorporated into economy
and Economics together with household activities and other traditionally neglected forms of (often primarily social) value
creation. In developed and transition countries there is growing interest toward and recognition of the parental work as
the analysis of empirical data collected in Russia indicate. 1) The parenting is work upon majority of responding students
and young adults as surveys and case studies point out. These institutional changes are in line with broader tendencies
appearing among volunteers participating in civil society organizations carrying out multi-coloured activities. 2) The
parental labour is characterized by similar, often contradictory effects and trends as any other (type of) work in developed
countries. Parents have to mobilize increasingly sophisticated and expensive skilled work, involve more and more experts
in order to ensure their children’s sound physical, intellectual, moral, artistic development. The interplay between
stagnation of the labour income, ageing and decline of the population drives growing participation of women in salaried
jobs by decreasing their time and energy available for parental work. 3) The analysis of the parental labour requires
combining multi-disciplinary and process approach with methodological pluralism. The exploration of the parental work
and its potential labour market acceptance requires considering broader tendencies, including (potential impacts of) the
activism of civil society providing its capacity of social agency. The younger generations perceive parenting as labour and
important mechanism of value creation. They are aware of the focal aspects of civil activism, including the significance of
gender issues, the importance to overcome and prevent further growth of inequality in context of digitalization, and to
facilitate cooperative, sharing, and genuinely sustainable trends during the emergence of a knowledge driven-society.

Keywords: parental labour, demographic decline, digital transformation, civil activism, association-prone dynamics.

1. Introduction
The labour markets are exposed to increasing tensions due to feed baking tendencies like demographic
imbalances and accelerating digitalization. In addition, in our opinion, today's labour market must accept that
parenting is a difficult but empowering work creating unique value of societal significance. Such acceptance
demonstrates slow if any progress among labour market players. The civil activism can play significant role in
promoting changes among others in institutional, legal, educational, media, and multiple other dimensions, by
catalysing - ultimately even enforcing - such acceptance.

While the population decreases and ages on the global North in the global South a rapid population growth
takes place with primary increase of young cohorts. The resulting significant demographic imbalances (OECD,
2012; WB, 2015; UN, 2017) interplay with effects of the accelerating climate change by triggering mass-
migration (as expected in the Sahel zone) especially in areas of (local and regional) conflicts (as in Syria). These
demography-related challenges in many developed and transitional countries interact with accelerating
digitalization feed backing with broad range of trends from increasing participation in tertiary education till
growing work intensity requiring enhanced social support. However, the dominance of austerity enforces
marketization and monetization of the welfare services by questioning the necessity and utility of the very
welfare state and promoting its decomposition. Systematic ‘descaling’ of the welfare services make child-
rearing growingly difficult task what brings about delayed readiness to get married and have children by
aggravating the challenging demographic tendencies. This constellation is important driver of the long-term
demographic decline generating multi-dimensional tensions in Europe, Russia and also Asian countries
including China and Japan that currently become more and more visible. The emerging tensions on the labour
market generate growing research interest toward their underlying causes catalysing the exploration of
feedbacks among multiple mutually catalytic phenomena. The growing awareness of these contradictory
trends contributes to institutional shifts and growing social acceptance that parenting is a complex work - the
analysis of empirical data shows (Bagirova and Shubat, 2017).

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By considering the literature describing findings from previous research (Bagirova, 2017) this study proceeds
from the perception that activities involved in birthing, raising, educating and developing children amount to
parental labour. The awareness, energy expenditure, goal orientation, creation, legitimacy, and public utility
are among the important characteristics which childbirth and childcare share with other types of labour. The
parenting currently exhibits controversial trends similarly to any other types of labour. In order to ensure their
children’s sound physical, intellectual, moral, artistic development, readiness to tackle challenges that the
accelerating digitalization creates the parents are subject to growing pressures to incorporate increasing
volume of paid services, mobilize more experts to provide more sophisticated and expensive skilled work
(Bagirova and Shubat, 2017). These tendencies aggravated by austerity driven marketization and monetization
of the social services enforce parents to generate growing revenue by increasing the time and intensity of their
participation in paid jobs. It creates a trade off at the expense of the volume (and quality) of the time spent
with the child(ren) by bringing about significant pressures of mass-alienation also in domain of parental work.

The analysis of relevant empirical data reflecting the perception of students and young parents on parenting as
work (Bagirova and Shubat, 2017) indicates institutional changes promoting its growing social recognition as
complex and demanding producing value of special quality and importance. This study capitalizes on the
conceptual frame and analytic toolset provided by feed backing constructs generative of the civil society
organizations’ transformational dynamism (Veress, 2016) that facilitate to consider also the catalytic role and
multidimensional effects of the civil activism in context of the parental labour.
2. Data and Methods
For our research into parental labour, we carried out a series of empirical studies in Russia. We note that
Russia’s fertility-related demographic problems feed backing with effects of the accelerating digitalization
generate increasing tensions on the labour market provide a scenario typical for many European and Asian
developed and transition countries. Due to this context the findings from the analysis of empirical data
indicating growing recognition of parenting as work among actual and future parents reflects institutional
trends relevant also for this broader circle.

The study argues that the analysis of the parental labour requires following multidisciplinary approach and the
realist view of science (Bhaskar, 1975; Tsoukas, 1989) by deploying process approach (and ontology) and
methodological pluralism (Van de Ven and Poole, 2005). Feed backing constructs describing the civil society
organizations’ transformational dynamism (Veress, 2016) provide a useful exploratory frame and toolkit for
analysing the interplay between civil activism and parental work. The correct interpretation of the parental
work related weak signals (Ansoff, 1975) about nascent patterns and trends appearing in the early phase of
the emergence of long term developments require: (i) to deploy “non-traditional”, innovative methodological
tools as well as (ii) carry out primarily quantitative analysis of longitudinal data subject to further research. In
line with this view we used a mixed research design combining:

1. Quantitative studies:
x A sample survey of students from Ural Federal University, located in one of the biggest cities in Russia,
Ekaterinburg. We used stratified sampling, with an error rate of less than 3% and a sample size of 400
people;

2. Qualitative studies:
x Content analysis of essays written by Masters students from Ural Federal University (Ekaterinburg,
Russia). In these essays respondents who do not have children (who we seen as potential future
parents) we asked to share their thoughts on two topics: 1) the family in which they grew up (did their
parents struggle with raising them, did they have enough knowledge for this); 2) the family in which
they will be parents themselves (they were asked the following sorts of questions: What do they
associate parenting with? Is it hard to be a parent today? Does parenting require special knowledge
and do you have it?)
x In-depth interviews with “current” parents, who are raising children. In these interviews we tried to
ascertain whether the parents themselves consider looking after, raising and developing children to be
work.

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3. Statistical analysis of indicators of the extra-curricular education system in Russia. We view the system
of extra-curricular education as providing the opportunity for parents to “delegate” parental labour
functions by bringing in experts with professional competencies to develop certain skills and
knowledge in their children. Using official Russian statistics, we analysed among others the number of
these organisations, specialists involved, children studying to explore the dynamics of the extra-
1
curricular education system .
3. Results
Findings from this research can be summarized as follows:
1. An analysis of the views of young people revealed polarized opinions by indicating that the
overwhelming majority of students, potential future parents, consider parenting to be work. When
asked, “do you consider parenting to be work?”, 9 out of 10 respondents answered affirmatively. Only
one-tenth of those we spoke to disagreed with this statement. Some of the arguments surfaced for
polar opinions were stated by parents raising children. Here are some excerpts:

Woman, 34 years old: “Of course this is work! Work to create and raise a new generation.”

Man, 46 years old: “No, I do not consider parenting to be work. It may be hard, but when you look at it in time,
you realise that this was the ultimate joy, the best days of your life.”

Man, 31 years old: “No. Work is something done for the good of society, we have children for ourselves, not
society. By the same token you could call sex work.”

In describing the substance of parental labour, mothers highlight its stressful and monotonous, yet creative
nature, the emotional intensity of this type of activity:

Woman, 43 years old: “Well, in substance… even just feeding a child, cleaning up after him, taking him for a
walk. This is very physical. And it takes time.”

Woman, 34 years old: “This is both routine and creativity. Routine in day-to-day matters, which turns into
creativity when you do everything together with your child, helping him to learn about the world. This is
physical work in the first few years, when you’re physically carrying him around. Emotional, too - raising,
supporting, soothing and teaching him to accept himself and the world. This is more emotional creativity.”

2. Our analysis of young people’s readiness for parental labour, whether they have the necessary skills
for this showed that young people aged 22-24 (i.e. potential parents) have insufficient knowledge for
raising children. Respondents highlight a certain deficit of knowledge about children for their parents
too.

In assessing their parents’ experience, young people often say in their essays that their parents
managed to generally cope fine with raising them, “despite financial difficulties”. However, there are
other views as well, for example:

Young woman, 24 years old: “My parents had to use a lot of trial and error to deal with my personality and
changes throughout adolescence… It was difficult to build a trusting relationship and share everything that was
going on in my head”.

Young man, 22 years old: “I have an older brother, he is 3 years older. And the entire upbringing process,
methods, ways, approaches and so on were “test-driven” on him. I was subject to certain experiments, but for
the most part - he took most of the brunt”.

Young man, 23 years old: “Most likely my parents didn’t have enough knowledge of fundamental behavioural
psychology and sociology. It may be to do with them only having vocational, not higher education”.

1
In Russia this type of education is governed by the federal law “On education” and is aimed at “comprehensively satisfying a person’s
educational needs for intellectual, moral, physical and/or professional improvement and does not entail an increase in the level of
education” (Federal law “On education” 2012. p.75.1).

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Thinking about future parenthood, young people shared concerns about difficulties and a lack of specialist
“parental skills”. Interestingly, many expect to learn about raising children from their parents, evidently not
thinking about how quickly parental labour technologies are changing, which inevitably leads to the ageing of
corresponding knowledge. Here are some essay excerpts:

Young woman, 22 years old: “I have some information from friends and parents, but I couldn’t say that I know
everything I need to raise a child”.

Young man, 23 years old: “I know almost nothing. When I start planning to have kids, I will definitely reach out
to my family, they should share their experience”.

Comparing parental labour then and now, our respondents state that this work has become harder (“Raising
children today has become harder. There is so much now in terms of entertainment, areas for development -
and they want to do it all. New kids are somehow innovative. And parents need to accept this and play catch
up to the needs of such children,” writes a 23-year-old young man).

At the same time, we note that the perceived difficulties that accompany parental labour and the lack of
knowledge is not seen by young people as a serious obstacle to having and raising children in the future. This is
what a 24-year-old young man said on the topic: “I am not sure that today I know enough to be a parent. But I
am still developing as a person and I am not ready to take this step. I see my future children first of all as a
continuation of myself, decent and well-mannered people, who will not only make me proud, but also make
others around me proud. Children are the meaning of life!”’

1. Analysis of official Russian statistics for the past six years shows a rapid development of the system of
extra-curricular education for children (table 1).
Table 1: Dynamics of indicators of the development of the system of extra-curricular education for children in
Russia in 2012-2017
Growth
Indicators 2012 2013 2014 2015 2016 2017 rate 2012-
2017 %
Number of organisations involved in
children’s extra-curricular 8 371 10 410 11 549 14 022 13 723 12 892 154.0
education, units
Number of children involved in
extra-curricular education activities, 7.973 8.866 9.593 10.021 10.017 9.618 120.6
mln persons
Share of children involved in
activities offered by extra-curricular
47.8 52.6 55.7 56.1 55.4 51.4 107.5
education organisations (out of all
children aged 5-16), %
Number of pedagogical workers of
children’s extra-curricular education 183.0 217.6 241.3 298.4 295.7 273.3 149.3
organisations, thousands of persons
Number of children per pedagogical
43.6 40.8 39.7 33.6 33.9 35.2 80.7
worker
Source: Federal State Statistic Service, 2018, authors’ calculations.

Over the past six years Russia has seen a one-and-a-half-fold increase in the number of organisations offering
extra-curricular education services. There has also been a significant growth in the number of specialists
working in this field. We note that over the same period the state has given a 20% “easing” in workload for
specialists in the field of extra-curricular education: if in 2012 one worker looked after almost 44 children, in
2017 this number fell to 35.

Our calculations showed that over one-third (34.75%) of all organisations offering extra-curricular education
for children provide the whole spectrum of activities, 31% engage in sports, another 18.2% - arts programs
(calculations by authors on the basis of Education in the Russian Federation, 2014). Parents and children are
less drawn to programs aimed at developing environmental, technical, tourism and local history and military-
patriotic skills.

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 József Veress and Anna Bagirova

We note that this data concerns only the field of extra-curricular education financed by the state 2 [1]. Yet this
is only half of the children’s extra-curricular education market - for example, in Russia only 51.6% of parents
don’t pay for extra-curricular activities for their kids (calculated using data from: Higher School of Economics,
2014). Moreover, the marketization of extra-curricular education and the expectation that children are the
“results of parental labour” today force parents to invest their money, time and effort in developing their
children above and beyond the core education system. Perhaps the motivation to send children to more and
more additional courses is - at least partly - driven by the parents’ presumption that these complementary
skills are necessary and potentially useful for the children given the (growing) competition on the labour
market.
4. Discussions
The empirical data observable in empirical domain indicate institutional changes reflecting growing social
awareness of the significance of parenting as complex and growingly sophisticated work that generates
important social value: is significant source of GDP, (co-) creates crucial social and economic values, has major
role in counteracting the demographic decline, and enables empowerment of parents and children. The
parental work in the actual domain carries out expanded human reproduction as value laden voluntary activity
with strong focus on life quality. It is the aggregate (rather the process of aggregation) of the (inter-personal)
interactions involved in birthing, raising, educating and developing children and is characterised primarily by
awareness, goal orientation, creation, legitimacy, energy expenditure, and public utility.

The study argues that the labour market acceptance of parental work is worth to discuss in context of feed
backing effects of challenging demographic trends, accelerating digitalization, and their interplay with
(potential) impacts of the civil activism. The demographic imbalances between the global North and South and
the frequently conflicting tendencies of digitalization interplay, mutually affect each other. The increasing
demand on and shortage of workforce /human resources/ having proper skills and knowledge affect impede
the digitalization. In turn the spread of digital technology depending from patterns of enactment (Orlikowski,
1992, 2000) can generate growing welfare for the majority of society as well as robust destructions connected
to jobless growth (OECD, 2012) and environmental damages - by affecting demographic trends.

The emerging digital second economy (Arthur, 2011) has important specificities since it “…will certainly be the
engine of growth and the provider of prosperity for the rest of this century and beyond …[however] it may not
provide jobs, so there may be prosperity without full access for many. Perhaps the very idea of a job and of
being productive will change over the …decades. …The second economy will produce wealth no matter what
we do; distributing that wealth has become the main problem… the main challenge of the economy is shifting
from producing prosperity to distributing prosperity [italics in original]. …if we do solve it we may at last have
the freedom to invest our energies in creative acts” (Arthur, 2011, p. 6-7).

The more the resultant patterns of the enactment (Orlikowski, 1992, 2000) of the digital technologies follow
the logic of social capital accumulation generating growingly cooperative, sharing, and sustainable dynamics
across social fields the more it can bring about social value focused life quality improvements and more equal
distribution of (increasing) welfare. To overcome and prevent the re-emergence of current value creation
trends following capital accumulation logic bringing about social and environmental disruptions requires
(enhanced) social activism.

The social activism historically was and remains intertwined with the industrial society’s emergence and
development. It aimed to deploy into daily practice the “glorious triad” of freedom, equality, and fraternity
(currently coined as solidarity). This activism enforced new, declining standards of work time and
redistribution of wealth by allowing spending growing ‘volume’ of (liberated from wage work) time on
voluntary activities facilitating to improve (shared) life quality. Through this activism the civil society can
transform itself into a functional system of society that provides the “...stability for joint collective action ...for
the common good and social coherence …to solve those [wicked] problems that are not solved by any other
part of society” (Reichel, 2012, p. 58-60). The weak signals and nascent trends indicate that the civil society

2
We intend to thoroughly check data about the state-funded extra-curricular education in Russia from 2018 and beyond in order to clarify
whether the decline over 2015-2016 was only a temporary phenomenon or the start of a possible trend shift.

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 József Veress and Anna Bagirova

can become a contemporary “third estate” which plays similar role in emergence of networked knowledge
societies of a new collaborative era, much as merchant capital did at dawn of industrial society 3.

The civil activism can play significant, even decisive role in shaping digital technology. The technology is
embedded (Granovetter, 1985) in particular local cultures which in turn can affect and shape the patterns of
enactment (Orlikowski, 1992; 2000). The civil activism can play important role in ensuring that the
technological development stops catalysing the growing dominance of (perverse) upward redistribution
(Milanovic, 2010; Piketty, 2014) and dis-continues to generate social and environmental externalities
accelerating the emergence of the Anthropocene bringing about mass-destructions (Heikkurinen, et al., 2017).
4
The digital technology can promote empowering individuation (Grenier, 2006 ), for example it can facilitate to
overcome and prevent (especially the children’s) disempowering dependence on gadgets and (frequently
commercial) applications. In broader sense the resultant pattern of the digitalization can enable empowering
socio-economic developments, facilitate to overcome and prevent the re-emergence of mass-alienation
pressures such as enforcement of increasing standards of work time, frequently causing physical and
psychological damage and burnout through intensifying wage work. Civil activism can play a significant role
either in preventing the further decline of the volume and quality of state-funded education, healthcare and
social services, and overcoming pressures generated by these tendencies. Not by chance the civil activism aims
to promote innovative forms of distribution, similar to basic income (variants). “Unconditional basic income is
not “free money”. It’s freedom. And freedom belongs to all of us. It’s time for technology to serve all
humankind. Jobs are for machines. Life is for people” – emphasizes Santens (2018). The basic income can
decrease pressures that force the participation of women in often lower-paid salaried work and increase its
intensity by declining the (volume and quality of) time available for parenting labour. Consequently, the civil
activism can capitalize on and facilitate the deployment of various requirements that feminist and gender
theories and movements argue for (Tong, 2006; Treas and Drobnic, 2010; Federici, 2012).

These tendencies capitalize on growing presence and significance of association-prone institutional-relational

trends, which allow and presuppose the institutional dual primacy of a non-zero sum approach and
interdependence (Veress, 2016). Overcoming the institutional twin-dominance of zero-sum paradigm and
resource scarcity view, characteristic for the market and public sectors, enables enhanced cooperation among
volunteers, who aim to multiply and share resources by replacing dominance-seeking competition for their
proprietary control. The logic of social capital accumulation focuses on improving life quality by increasing the
effectiveness of resourcing, i.e. co-creating associational advantage. The civil activism can facilitate
cooperative dynamism in digitalization serving as driver of mutual approximation among the societal macro-
sectors by enabling cooperative and sharing patterns of the emerging knowledge-driven society (Veress,
2016). It promotes (and capitalizes on) association-prone institutional and relational dynamics. This activism
brings about and enhances new, inclusive and un-fragmented - often large-scale patterns of - cooperation feed
backing with participative competition providing altered dialectics of peer production that “transforms
markets and human freedom” (Benkler, 2002). The emergence of the knowledge-driven society characterized
by cooperation, sharing, and genuine sustainability is the outcome, a resultant of various, often conflicting
societal dynamics. It is a derived, longer-term envelope curve or ‘cover trend’ which emerges through
enhanced diversity rather than as linear process.

Consequently, the civil activism can counteract the interplay between the perverse (income and wealth)
redistribution driven by growing dominance of austerity pressures which by enhancing the global
demographical imbalances create growing strains on labour markets. The recognition of and support to
parenting work provides significant potential to offer solutions for these challenges. Although the perception
and handling of the parental labour - similarly to other types of works - is shaped by controversial trends partly
through its enhanced labour market recognition it can contribute to overarching changes constitutive and
generative of the knowledge society’s ongoing emergence.

3
This important similarity is indicated by Professor Risto Tainio in connection with research on the civil society’s transformational effects.
4
“…There is an important distinction between…- what could be called selfish individualism - and what is sometimes referred to as
individuation …Beck and Giddens…argue. Individuation is the freeing up of people from their traditional roles and deference to
hierarchical authority, and their growing capacity to draw on wider pools of information and expertise and actively chose what sort of life
they lead. Individuation is…as Beck points out… about the politicization of day-to-day life; the hard choices people face …in crafting
personal identities and choosing how to relate to issues such as race, gender, the environment, local culture, and diversity” (Grenier, 2006,
pp. 124-125).

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 József Veress and Anna Bagirova

5. Conclusions
The controversial global demographic trends and the accelerating digitalization generate growing tensions
affecting the labour markets. The civil activism can encourage – even enforce - major players to accept the
perception that parenting, raising and caring for children is hard work which creates value of primary
economic and social importance. The empirical data indicate growing social recognition of parenting as labour.

This change is promoted also by activism that capitalizes on profoundly cooperative dynamism intertwined
with significant association-prone institutional alterations generating the civil society’s robust transformational
potential. This dynamic constellation provides the capability of social agency enabling to facilitate
multidimensional, socio-economic changes, including contributions to cooperative, sharing and genuinely
sustainable patterns of emergence of a knowledge-driven society.

The analysis indicates similarities between the parental labour and the voluntary cooperation in civil society
organizations. Both are quality-oriented dimensions of life which take place through voluntary efforts co-
creating social (rather than economic) value and unfold as self-reinforcing feedback loops of mutually catalytic
phenomena. The parental work, its social acceptance and support is a focal issue of civil activism since the care
for offspring (as well as the elderly) has the highest social value and is a fundamental component and task of
human life both culturally and genetically. The growing social attention and recognition probably will affect
and urge participants of the labour market to accept parenting as work. To crosscheck the presence and longer
term dynamics of these tendencies requires quantitative analysis of longitudinal data collected on focused
manner from labour market players.
Acknowledgements
The article is processed as one of the outputs of the research project “Fertility and parenting in Russian
regions: models, invigoration strategies, forecasts“, supported by the President of Russian Federation, project
no. NSh-3429.2018.6.
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PhD Research
Papers

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316
Canonical Analysis of Perceived Leadership Styles and Employees’
Commitment in Nigeria
Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo
Covenant University, Ota, Ogun-State, Nigeria
ugochukwu.abasilim@covenantuniversity.edu.ng
daniel.gberevbie@covenantuniversity.edu.ng
ade.osibanjo@covenantuniversity.edu.ng

Abstract: This paper examines the relationship between leadership styles (transformational, transactional and lassiez-faire
leadership) and employees’ commitment and also identify the specific leadership styles sub-variables that relate more to
the employees’ commitment in Lagos State Civil Service Commission of Nigeria. The paper employed a cross-sectional
survey research design. All current employees of the organisation were the population of the study, while the sample for
this study included employees who were selected through simple random sampling technique. The Multifactor Leadership
Questionnaire (MLQ) and Organisational Commitment Questionnaire (OCQ) developed by Bass and Avolio (2004) and
Meyer and Allen (1997) respectively were used to collect data. Data obtained from the organisation were analysed using
the Statistical Package for Social Sciences (SPSS) 22.0 version. The results were the outcome of the analysis of the data
obtained from respondents. The significance level was considered when p<0.05. The result shows that there is a positive
relationship between leadership styles (transformational and transactional leadership) and employees’ commitment and
on the contrary a negative relationship between and lassiez-faire leadership style and employees’ commitment in the study
context. Furthermore, the result revealed that the most prominent sub-variables among the leadership styles that related
more to employees’ commitment are inspirational motivation, intellectual stimulation, contingent reward and idealised
behaviour respectively. The study recommends that the management of Lagos State Civil Service Commission of Nigeria
should adopt more of transformational leadership style, with specific reference to idealised behaviour, inspirational
motivation and intellectual motivation sub-variables in ensuring employees’ commitment and also note that leadership
styles of management are crucial to the attainment of appreciable employees’ commitment for organisational
performance.

Keywords: Civil Service Commission, employees’ commitment, Lagos State, leadership styles, Nigeria

1. Introduction
Organisations all over the world, both in the public and private sectors are established primarily to accomplish
pre-determined set goals and objectives. In achieving these goals and objectives, the role of human elements
(employees) cannot be overemphasised (Mokgolo, Mokgolo & Modiba, 2012; Mottoh, 2015, Gberevbie, 2017).
This is because organisations, irrespective of other resources (financial, land, technological) at their disposal,
cannot achieve anything meaningful in terms of organisational effectiveness, without the human resources
galvanising all other resources (Jain & Duggal, 2015).

However, several factors such as innovative remuneration structures, access to employee benefits,
comfortable work environment, core values of an organisation, career advancement opportunity and
recognition among others have been adduced to be responsible for enhanced employee and organisational
performance (Armstrong & Murlis, 2004; Armstrong & Taylor, 2014; Folakemi, Adenike, Olumuyiwa &
Osibanjo, 2018). Moreover, top on the list has been leadership which pertains to the style adopted by the
leader and the impact it has on the commitment level of organisational workforce (Trottier, Van, Wart &
Wang, 2008; Avolio, Walumbwa & Weber, 2009; Yasir, Imran, Irshad, Mohamad & Khan, 2016).

Today, organisational leaders in some part of the world have been accused of adopting leadership styles that
favour top-down, command and control technique in leading their subordinates which most often than not,
causes negative reactions from their subordinates (employees) and hampers cordiality between both parties
(Akinbode & Fagbohungbe, 2012). The results of these styles of leadership would include the demotivation of
employees and erosion of employees’ organisational commitment, among others. This is usually obvious when
such employees have no opportunity to leave the organisation, they become emotionally detached from the
goals of the organisation (Lok & Crawford, 2004; Nasurdin, Ahmad & Razalli, 2014).

From the above, the importance of leadership (especially the style adopted by the leader) and employee
commitment to the achievement of either job or organisational goals become apparent and critical. Leadership

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 Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo

has always been considered as a critical element and function of management, which helps to manage the
dedication level of employees within the organisation and the attainment of organisational goals (Ojukuku,
Odetayo & Sajuiybe, 2012; Keskes, 2014).

From the aforementioned, it has been noted that the nexus between leadership styles and employees’
commitment has received considerable scholarly attention. Most studies on leadership have recognised
numerous sorts of leadership styles that leaders adopt in managing organisations (Yukl, 2013, Sudha,
Shahnawaz & Farhat, 2016; Kelly & MacDonald, 2016). Transformational leadership, transactional leadership
and laissez-faire leadership styles have been categorised as the most commonly adopted styles used in
organisational leadership studies (Rukmani, Ramesh & Jayakrishnan, 2010; Rehman, Shareef, Mahmood &
Ishaque, 2012; Salau, Oludayo, Falola, Olokundun, Ibidunni & Atolagbe, 2018). Also, three typologies of
commitment (affective, normative and continuance commitment) are exhibited by employees in organisations
(Othman, Mohammed & D’Silva, 2013). Likewise, most of the studies about the nexus between leadership
styles (transformational, transactional and laissez-faire) and employees’ commitment have shown a positive
relationship between transformational leadership style, and transactional leadership style with employees’
commitment while laissez-faire leadership style has yielded a negative relationship with employees’
commitment, irrespective of the work settings (Yahchouchi, 2009; Fasola, Adeyemi & Olowe, 2013; Garg &
Ramjee, 2013; Othman, Mohammad & D’Silva, 2013; Wiza & Hlanganipai, 2014; Dariush, Choobdar,
Valadkhani & Mehrali, 2016).

However, these studies rarely identify which sub-variables within the leadership styles that relate more to
employees’ commitment, thereby leaving a gap as to what specific leadership styles sub-variables relate more
to the employees’ commitment to Lagos State Civil Service Commission of Nigeria. It is in these light that this
study examines the relationship between leadership styles and employees’ commitment and also ascertain the
specific leadership styles sub-variables that relate more to the employees’ commitment in the Lagos State Civil
Service Commission of Nigeria. The following research hypothesis stated in null form is tested to achieve the
goal of this study:

There is no significant relationship between leadership styles (transformational, transactional and laissez-faire
leadership) and employees’ commitment in Lagos State Civil Service Commission of Nigeria.

This study is organised into five sections, introduction, literature review, methodology, data presentation and
analysis, discussion of findings and conclusion respectively.

2. Methodology
The motivation behind this study is to examine the connection between leadership styles and employees’
commitment and also identify the specific leadership styles sub-variables that relate more to the employees’
commitment in Lagos State Civil Service Commission of Nigeria. In order to achieve these objectives, the cross-
sectional survey research design is employed in carrying out this study. This is justified by the fact that the
measurements of the independent (leadership styles) and dependent (employees’ commitment) variables
were taken at approximately the same time without any intention of controlling or manipulating the variables
under study (McNabb, 2012).

The target population for this study is the one hundred and forty current employees in Lagos State Civil Service
Commission of Nigeria, located in Alausa, Ikeja, Lagos State, Nigeria. While ninety-seven (97) employees were
sampled through the use of systematic sampling technique. For the instruments for data collection, two sets of
standardised questionnaire namely: Multifactor Leadership Style Questionnaire (MLQ) by Bass and Avolio
(2004) and Organisational Commitment Questionnaire (OCQ) developed by Meyer and Allen (1997) were
adapted and modified to suit the study’s environment in eliciting responses from the population of the study.

The questionnaires were categorised into three sections. Section A focuses on the demographic data of the
respondents, which include sex, age, marital status, highest qualifications, employment status and years of
service. Section B assesses the leadership style(s) of the organisation and Section C evaluates the type of
commitment exhibited by the employees in the study area. For the data collected through the questionnaire
administration, canonical correlation analyses were used to test the null hypothesis at 0.05 level of
significance. The reliability of the instrument was established using Cronbach Alpha method and the reliability

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 Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo

coefficient of 0.73 and 0.78 was obtained for Leadership Style Questionnaire and Employees’ Commitment
Questionnaire respectively. These reliability coefficients are high enough to justify the reliability of the
instruments. The canonical correlation analysis was deemed suitable because it allows for the test of the
interrelationship between two sets of multiple dependent variables (employees’ commitment) and multiple
independent variables (leadership styles). All data were analysed with the Statistical Package for Social
Sciences (SPSS version 20.0).

3. Data Presentation and Analysis

3.1 Demographic Data of Respondents

This section presents the demographics of respondents with respect to their sex, age, marital status, highest
educational qualification, employment status and years of service.
Table 1: Demographics of respondents from employees in Lagos State Civil Service Commission of Nigeria
Variables No. of Respondents (97) Percentage (%)
Gender
Male 28 28.9
Female 69 71.1
Age(years)
20-30 58 59.8
31-40 22 22.7
41-50 13 13.4
51 and Above 4 4.1
Marital Status
Single 55 56.7
Married 40 41.2
Divorced/Separated 2 2.1
Highest Academic Qualification
SSCE 4 4.1
OND 42 43.3
HND 9 9.3
B.Sc 33 34.0
Masters 9 9.3
Employment Status
Management Staff 19 19.6
Senior Staff 27 27.8
Junior Staff 51 52.6
Years of Service
Less than 5 years 51 52.6
5-10 years 22 22.7
Above 10 years 24 24.7
Source: Field Survey 2018
The result in Table 1 above shows that 28 respondents (28.9 percent) were male and 69 respondents (71.1
percent) were female. Fifty-eight respondents, 58 (59.8 percent) were between age bracket, 20-30 years while
22 respondents (22.7 percent), 13 respondents (13.4 percent) and 4 respondents (4.1 percent) were between
age brackets, 31-40 years, 41-50 years and 51 and above years respectively. The table also reveals that
majority of the respondents were single (56.7 percent) and in terms of their highest academic qualifications,
most of the respondents were OND holders (43.3 percent). Nineteen respondents, 19 (19.6 percent) were
management staff, 27 respondents (27.8 percent) were senior staff and 51 respondents (52.6 percent) were
junior staff. From this result, it can be deduced that more than half of the respondents were junior staff. The
distribution of their year in service reveals that 51 respondents (52.6 percent) had less than 5 years, 22
respondents (22.7 percent) have spent 5-10 years in service while 24 respondents have spent above 10 years
(24.7 percent).
3.2 Test of Hypothesis

Ho: There is no significant relationship between leadership styles (transformational, transactional and laissez-
faire leadership) and employees’ commitment in Lagos State Civil Service Commission of Nigeria.

H1: There is a significant relationship between leadership styles (transformational, transactional and laissez-
faire leadership) and employees’ commitment in Lagos State Civil Service Commission of Nigeria.

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 Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo

Table 2: The relationship between leadership styles (transformational, transactional and laissez-faire
leadership) and employees’ commitment in Lagos State Civil Service Commission of Nigeria
Organisation Variables r-value p-value Extent of the relationship Significance
Lagos State Civil Transformational 0.362 0.000 Medium Positive Significant
Service (N=97) Leadership Style Relationship
Idealized 0.111 0.277 Weak Positive Not Significant
Attribute Relationship
Idealised 0.287 0.004 Weak Positive Significant
Behaviour Relationship
Inspirational Motivation 0.488 0.000 Medium Positive Significant
Relationship
Intellectual Stimulation 0.447 0.000 Medium Positive Significant
Relationship
Individual Consideration 0.158 0.121 Weak Positive Not Significant
Relationship
Transactional Leadership -0.032 0.758 Weak Negative Not Significant
Style Relationship
Contingent Reward 0.423 0.000 Medium Positive Significant
Relationship
MBE-Active -0.204 0.045 Weak Negative Significant
Relationship
MBE-Passive -0.127 0.216 Weak Negative Not Significant
Relationship
Lassiez-Faire Leadership -0.093 0.363 Weak Negative Not Significant
Style Relationship
Avoidance -0.093 0.363 Weak Negative Not Significant
Relationship
Leadership Styles 0.029 0.021 Weak Positive Significant
Relationship
Source: Field Survey, 2018
Table 2 above presents the degree to which transformational leadership style relate to employees’
commitment in Lagos State Civil Service Commission of Nigeria. For Transformational Leadership Style, a
correlation coefficient of 0.362 with a p-value of 0.000 was obtained. Which implies that there is a significant
positive relationship between transformational leadership style and employees’ commitment. However, the
result shows a weak positive relationship between idealised attribute and employees’ commitment with a p-
value of 0.277 (p<0.05) which signifies that there is no significant weak positive relationship between the
idealised attribute and employees’ commitment. Also, the result reveals that idealised behaviour has a
significant weak positive relationship with employees’ commitment (r=0.287, p=0.004, p<0.05) while
inspiration motivation (r=0.488, p=0.000, p<0.05) and intellectual stimulation (r=0.447, p=0.000) both have
significant medium positive relationship with employees’ commitment (p<0.05). There was no significant
medium positive relationship between individual consideration and employees’ commitment (r=0.158,
p=0.005, p<0.005).

The result also indicates no significant negative weak relationship between transactional leadership style and
employees’ commitment with the R-value of -0.032, a p-value of 0.758, where p<0.05. For the sub-variables,
the table reveals a significant medium positive relationship between contingent reward and employees’
commitment (r= 0.423, p=0.00, p<0.005) while MBE-Active (r= -0.204, p=0.045, p<0.05) reveals a significant
weak negative relationship with employees’ commitment. MBE-Passive (r= -0.127, p=0.216, p>0.05) reveals
insignificant weak negative relationship with employees’ commitment.

The Table 4.2 above shows that no significant relationship exist between laissez-faire leadership style and
employees’ commitment (r=-0.093, p=0.363, p>0.05). In all, for the relationship between leadership styles and
employees’ commitment, r-coefficient of 0.029 was obtained which means that a weak positive relationship
exist between leadership styles and employees’ commitment in the Lagos State Civil Service Commission of
Nigeria. The result also shows a p-value of 0.021 (p<0.05) meaning that a significant weak positive relationship
exist between leadership styles and the employees’ commitment.

3.2 Discussion of Findings

The study concentrates on examining the relationship between leadership styles and employees’ commitment
and identified the sub-variables that relate more to employees’ commitment in Lagos State Civil Service
Commission of Nigeria. In line with the analyses done, the study reveals that a positive relationship exist

320
 Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo

between leadership styles and employees’ commitment in Lagos State Civil Service Commission of Nigeria.
Specifically, amongst the leadership style tested with employees’ commitment, transformational and
transactional leadership style had a positive relationship with employees’ commitment, while laissez-faire
leadership style had a negative relationship between employees’ commitment in Lagos State Civil Service
Commission of Nigeria. These findings are in line with previous studies done in this regard (Yahchouchi, 2009;
Fasola, Adeyemi & Olowe, 2013; Garg & Ramjee, 2013; Othman, Mohammad & D’Silva, 2013; Wiza &
Hlanganipai, 2014; Dariush, Choobdar, Valadkhani & Mehrali, 2016).

However, the sub-variables of the leadership styles that relate more to employees’ commitment in Lagos State
Civil Service Commission of Nigeria are inspirational motivation, intellectual stimulation, contingent reward
and idealised behaviour respectively. Details can be seen in Table 4.2. What this implies is that even though
leadership styles have a role to play in achieving employees’ commitment, there is need to know which of the
leadership style to be adopted in an organisation that would bring the expected committed needed to be
manifested by the employees.

4. Conclusion
This study is aimed at examining the relationship that exists between leadership styles and employees’
commitment in Lagos State Civil Service Commission of Nigeria and also to identify the sub-variables of the
leadership styles that relate more with the employees’ commitment in the organisation. The findings of the
study revealed that a relationship exist between leadership styles and employees’ commitment. Meaning that
the role of the style of leadership employed in an organisation is imperative to the extent to which employees’
commitment would be achieved.

In addition, the study also pointed out the sub-variables of the leadership style that relate more on the
employees’ commitment in the organisation. In order of significance, they are inspirational motivation,
intellectual stimulation, contingent reward and idealised behaviour respectively. What this implies is that apart
from the fact that transformational leadership style has a significant positive relationship and transactional
leadership styles a positive relationship that is not significant, there are specific sub-variables in the leadership
style that needs to be taken into consideration in achieving the desired commitment from the employees.

In all, an organisation can be said to have performed when there is an appropriated leadership style adopted
by the leaders that guarantees employees' commitment through the identification of the particular sub-
variables in the leadership styles. In line with these findings, it is recommended that the management of Lagos
State Civil Service Commission of Nigeria should adopt more of transformational leadership style, with specific
reference to idealised behaviour, inspirational motivation and intellectual motivation sub-variables in ensuring
employees’ commitment and also note that leadership styles of management are crucial to the attainment of
appreciable employees’ commitment.

Acknowledgements
The article is a subset derived from the ongoing PhD thesis of Abasilim, U. D. (2018) on Leadership Styles and
Employees’ Commitment in Selected Public and Private Organisations in Nigeria (Doctoral Thesis, Covenant
University, Ota, Ogun State, Nigeria). I especially appreciate my co-authors who are my supervisors - Professor
Daniel Eseme Gberevbie and Dr. (Associate Professor) Adewale O. Osibanjo for their immeasurable guidance
all through this work. I also appreciate Covenant University for the publication fee of this article.

Suggested Citation
Abasilim, U. D., Gberevbie, D. E. & Osibanjo, O. A. (2018). Canonical Analysis of Perceived Leadership Styles
and Employees’ Commitment in Nigeria. A Paper Presented at the 14th European Conference on Management
Leadership and Governance at HU University of Applied Sciences, Utrecht, Netherlands, 18 - 19 October 2018.

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Avolio, B. J., Walumbwa, F. O. & Weber, T. J. (2009). Leadership: Current Theories, Research and Future Directions. Annual
Review of Psychology, 60, 421-449.
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Bass, B. M. & Avolio, B. J. (2004). Multifactor Leadership Questionnaire: Manual and Sampler Set (3 ed.). Redwood City:
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Dariush, L., Choobdar, G., Valadkhani, P. & Mehrali, E. (2016). Leader Facilitating Organizational Commitment of Employees
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322
Do Leadership Styles Relate to Personnel Commitment In Private
Organisations In Nigeria?
Ugochukwu D Abasilim, Daniel E Gberevbie and Adewale Osibanjo
Covenant University, Ota, Ogun-State, Nigeria
ugochukwu.abasilim@covenantuniversity.edu.ng
daniel.gberevbie@covenantuniversity.edu.ng
ade.osibanjo@covenantuniversity.edu.ng

Abstract: In this paper the question of the relationship between leadership styles and personnel commitment in private
organisations in Nigeria is addressed. This is done through exploratory study by the adoption of the survey research design
that utilised the administration of questionnaire to the employees of the organisation as its major source of data
collection. The data collected were analysed using Pearson Moment Correlation Analysis with the aid of the Statistical
Package for Social Sciences (SPSS) 22.0 version software. The study revealed a significant positive relationship between
leadership styles (transformational, transactional and laissez-faire leadership style) and personnel commitment of the
selected private organisations in Nigeria. It also showed that transformational leadership style is mostly related to
personnel commitment in the selected private organisations in Nigeria. In line with the findings, the paper suggests that
management of the selected private organisations should pay keen interest to the leadership styles such as
transformational leadership style to be adopted to facilitate personnel commitment in Nigeria for higher performance.

Keywords: Breweries, leadership, personnel commitment, private organisations, transformational leadership style, Nigeria

1. Introduction
Studies have shown that leadership is one of the crucial variables that determine the level of performance in
any organisation (Abasilim, 2014; Amin, 2016; Gberevbie, Joshua, Excellence-Oluye & Oyeyemi, 2017). This is
so because all activities of any organisation all over the world (Nigeria inclusive) whether public or privately
owned are initiated and determined by the leaders of organisations with regard to leadership styles adopted,
along with the commitment level of personnel among others. Previous studies from various cultural settings
have shown that a nexus exist between leadership styles and personnel commitment in organisations
(Osibanjo, Abiodun. & Adeniji, 2014; Sayadi, 2016; Hallinger, Hosseingholizadeh, Hashemi & Kouhsari, 2017;
Tavares, Sobral, Goldszmidt & Araújo, 2018; Salau, Osibanjo, Adeniji. & Igbinoba, 2018).

However, despite past studies in this regard, there seems to be little research done in Nigeria’s work context,
especially in beverages (brewers and distillers) organisations. Rather, attention in literature has been in the
education sector (Yahchouchi, 2009), banking sector (Mert, Bas & Keskin, 2010), power sector (Raja &
Palanichamy, 2011) and public agencies (Garg & Ramjee, 2013; Dariush, Choobdar, Valadkhani & Mehrali,
2016). It is based on the aforementioned, that this study investigated the extent to which leadership styles
(transformational, transactional and laissez-faire) relate with personnel commitment in selected private
organisations in beverages (brewers and distillers) organisations namely Nigerian Breweries Plc, Guinness
Nigeria Plc and International Breweries Plc. In addition, this paper is structured as follows: The article begins by
giving a brief insight into what the paper is all about. It then presents the theoretical framework upon which
the paper is anchored. This is followed by the methodology adopted for the investigation, data presentation
and analysis, and discussion of the findings of the study. The article concludes with proffering suggestions for
the way forward.

2. Theoretical Framework
This paper adopts the full range leadership theory (FRLT) associated with the works of Bass & Avolio (1997)
and Meyer & Allen (1997) theory of employees’ organisational commitment as its theoretical framework of
analysis on the relationship between leadership styles and personnel commitment in the selected private
organisations in Nigeria. The FRLT focuses on three styles of leadership behaviour; transformational,
transactional and laissez-faire. This is premised on the notion that whatever leadership style that is employed
in an organisation can be subsumed into the styles of leadership identified by them. Transformational
leadership style is characterised by the leader’s preference of leading followers beyond the traditional
method, which relies solely on directing subordinate. In contrast, transactional leadership focuses strictly on
the implementation of structure and is concerned with enticing followers/subordinate to perform by
introducing rewards to them when assignments are achieved and punishes or reprimands them when they

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 Ugochukwu D. Abasilim, Daniel E. Gberevbie and Adewale Osibanjo

default (Bass, 1985; Bass, 1990; Bass, 1995). The last style of leadership identified in this theory is laissez-faire.
Which is different from the transformational and transactional leadership style and does not interfere with the
activities of the followers/subordinate. This style is also known as delegative leadership/free rein leadership
and is characterised by the non-appearance of leadership or the avoidance of intervention or both (Avolio,
Gardner, Walumbwa, Luthans & May, 2004).

While Meyer & Allen (1997) theory of employees’ organisational commitment assumes that different mindsets
characterise commitment among employees and these mindsets can be viewed from their emotional
attachment to the organisation, obligation to remain with the organisation and the way they perceive the cost
of leaving the organisation. All these mindsets or attributes of commitment were later broken down to
affective commitment, normative commitment and continuance commitment respectively. They further
justified the three components of commitment, stating that these typologies of commitment were necessary
because the individual component of commitment have different consequences for behaviour (Meyer,
Stanley, Herscovitch & Topolnytsky, 2002).

These theories are justified appropriate for this paper because the investigation is primarily concerned with
probing the relationship between leadership styles and personnel commitment and the variables addressed by
these theorists are the focus of this paper. Also, these theories have been considered as the most
contemporary theories that have the potential of explaining leadership styles and employees’ commitment
sub-constructs, and it has undergone various empirical scrutiny and adaptation evidenced in the previous
studies reviewed (Sayadi, 2016; Hallinger, Hosseingholizadeh, Hashemi & Kouhsari, 2017; Tavares, Sobral,
Goldszmidt & Araújo, 2018).

3. Research Hypotheses
The following hypothesis stated in null form is tested to achieve the objective of this paper:

H0: There is no significant relationship between leadership styles (transformational, transactional and laissez-
faire leadership) and personnel commitment in the selected private organisations in Nigeria.

4. Methodology
This paper utilised a cross-sectional survey research design. The respondents were systematically selected to
give each personnel an opportunity to be selected as the unit of analysis. The study area was Nigerian
Breweries Plc, Guinness Nigeria Plc and International Breweries Plc. The Multifactor Leadership Questionnaire
(MLQ) and the Organisational Commitment Questionnaire were the major instruments used for data collection
from the respondents in the selected private organisations. A sample of 268 personnel took part in the survey.
Data analysis was done using Statistical Package for Social Sciences Version 22. Specifically, descriptive
statistics and Pearson’s Product Correlation analysis were used to test the hypothesis.

4.1 Data Presentation and Analysis

The demographic data of the personnel were analysed using descriptive statistics. The aggregate number of
the respondents who partook in the study were 268. The demographic data include gender, age, marital
status, educational status, employment status and years of service. The frequency distribution in the table is
presented in numbers and percentages. The majority of the respondents were females (117), and were
between the ages brackets of 31-40 years. Most of the respondents were married (147), 47.4% had a B.Sc,
41.8% were senior staff and 52.6% had less than five years of service.

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 Ugochukwu D. Abasilim, Daniel E. Gberevbie and Adewale Osibanjo

Table 1: Demographics of respondents from the selected private organisations in Nigeria

Variables No. of Respondents (268) Percentage (%)
Gender
Male 151 56.3
Female 117 43.7
Age(years)
20-30 102 38.1
31-40 96 35.8
41-50 54 20.1
51 and Above 16 6.0
Marital Status
Single 120 44.8
Married 147 54.9
Divorced/Separated 1 0.4
Highest Academic Qualification
SSCE 8 3.0
OND 31 11.6
HND 35 13.5
B.Sc 127 47.4
Masters 50 18.7
PhD 17 6.3

Employment Status
Management Staff 19 19.6
Senior Staff 27 27.8
Junior Staff 51 52.6
Years of Service
Less than 5 years 51 52.6
5-10 years 22 22.7
Above 10 years 24 24.7

Source: Field Survey 2018

4.2 Test of Hypothesis

Ho: There is no significant relationship between leadership styles (transformational, transactional and laissez-
faire leadership) and personnel commitment in the selected private organisations in Nigeria.
Table 2: Extent to Which Leadership Styles Relate to Personnel Commitment in the Selected Private
Organisations in Nigeria
Organisation Variables r-value p-value Extent of The Significance
Relationship
Nigerian Breweries Leadership Styles 0.329 0.002 Medium Positive Significant
Plc (N=86) Relationship
Transformational 0.371 0.000 Medium Positive Significant
Leadership Style Relationship
Transactional Leadership 0.046 0.672 Weak Positive Not Significant
Style Relationship
Laissez-faire Leadership -0.150 0.167 Weak Negative Not Significant
Style Relationship
Guinness Nigeria Plc Leadership Styles 0.011 0.924 Weak Positive Not Significant
(N=84) Relationship
Transformational 0.303 0.005 Medium Positive Significant
Leadership Style Relationship
Transactional Leadership -0.181 0.099 Weak Negative Not Significant
Style Relationship
Laissez-faire Leadership -0.328 0.002 Medium Negative Significant
Style Relationship
International Leadership Styles 0.474 0.000 Medium Positive Significant
Breweries Plc Relationship
(N=98) Transformational 0.303 0.005 Medium Positive Significant
Leadership Style Relationship
Transactional Leadership 0.449 0.005 Medium Positive Significant
Style Relationship
Laissez-faire Leadership 0.359 0.000 Medium Positive Significant
Style Relationship

Source: Field Survey, 2018

325
 Ugochukwu D. Abasilim, Daniel E. Gberevbie and Adewale Osibanjo

Table 2 presents the extent to which leadership styles relate with personnel commitment in the selected
private organisations in Nigeria.

Nigerian Breweries Plc: The r-coefficient of 0.329 with a p-value of 0.002 was obtained which shows a
significant positive relationship exist between leadership styles and personnel commitment to Nigerian
Breweries Plc. Based on this findings the alternate hypothesis was accepted, which is a significant relationship
exist between leadership styles and personnel commitment to Nigerian Breweries Plc.

Guinness Nigeria Plc: The result shows a correlation coefficient of 0.011 between leadership styles and
personnel commitment which implies that a positive relationship exist between leadership styles and
personnel commitment. The p-value of 0.924 was obtained (p>0.05) which indicates that there is no significant
relationship between leadership styles and personnel commitment to Guinness Nigeria Plc. Based on this
findings the null hypothesis was accepted, which states that, no significant relationship exist between
leadership styles and personnel commitment to Guinness Nigeria Plc.

International Breweries Plc: The correlation coefficient of 0.474 was obtained between leadership styles and
personnel commitment. This result implies that a positive relationship exist between leadership styles and
personnel commitment. The result also shows a p-value of 0.000 (p<0.05) which indicates that there is a
significant medium positive relationship between leadership styles and personnel commitment. Based on this
findings the alternative hypothesis was accepted, which states that a significant relationship exist between
leadership styles and personnel commitment International Breweries Plc.

5. Discussion of Findings
The main purpose of the study was to investigate the extent to which leadership styles (transformational,
transactional and laissez-faire) relate with personnel commitment in selected private organisations in Nigeria.
The research question that guided the study is:

RQ1. Does leadership styles relate to personnel commitment in private organisations in Nigeria?

The results suggest that leadership styles relate to personnel commitment in the selected private organisations
in Nigeria. More so, the results show that transformational leadership style was significantly related to the
personnel commitment in the selected private organisations in Nigeria, and are in alignment with previous
studies outside of Nigeria (Sayadi, 2016; Hallinger, Hosseingholizadeh, Hashemi & Kouhsari, 2017; Tavares,
Sobral, Goldszmidt & Araújo, 2018).

6. Conclusion
The objective of this paper is to decide if there was a relationship between leadership styles and personnel
commitment in selected private organisations in Nigeria. The result from the study showed that there is
indeed a relationship between leadership styles and personnel commitment in the selected private
organisations in Nigeria. The study also revealed the particular leadership style that predicts personnel
commitment in the selected organisations, which is observed to be transformational leadership style. This
implies that the leadership style plays a role in determining the level of personnel commitment in the selected
organisations in Nigeria and transformational leadership style relate more with personnel commitment in
Nigeria. The finding of this study call for the need of the selected private organisations’ Managers to be
conscious of the role of leadership styles in determining the personnel commitment level and also implement
more of transformational leadership style in fostering the desired personnel commitment in their
organisations for enhanced performance.

Acknowledgements
The article is a subset derived from the ongoing PhD thesis of Abasilim, U. D. (2018) on Leadership Styles and
Employees’ Commitment in Selected Public and Private Organisations in Nigeria (Doctoral Thesis, Covenant
University, Ota, Ogun State, Nigeria). I especially appreciate my co-authors who are my supervisors - Professor
Daniel Eseme Gberevbie and Dr. (Associate Professor) Adewale O. Osibanjo for their immeasurable guidance
all through this work. I also appreciate Covenant University for the publication fee of this article.

326
 Ugochukwu D. Abasilim, Daniel E. Gberevbie and Adewale Osibanjo

Suggested Citation
Abasilim, U. D., Gberevbie, D. E. & Osibanjo, O. A. (2018). Does Leadership Styles Relate With Personnel
Commitment in Private Organisations in Nigeria?. A Paper Presented at the 14th European Conference on
Management, Leadership and Governance at HU University of Applied Sciences, Utrecht, Netherlands, 18 - 19
October 2018.

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(Tehran). International Journal of Economics, Commerce and Management, 4(5), 640-655.
Garg, A. K. & Ramjee, D. (2013). The Relationship between Leadership Styles and Employee Commitment at a Parastatal
Company in South Africa. International Business and Economics Research Journal, 12(11), 1411-1436.
Gberevbie, D., Joshua, S., Excellence-Oluye, N., & Oyeyemi, A. (2017). Accountability for Sustainable Development and the
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327
Is Organizational Identification Affected by Employee and Student
Value Systems?
Dagmar Balgová, Miloslava Hiršová, Lenka Komárková and Martina Bednářová
University of Economics, Prague, Czech Republic
dagmar.balgova@vse.cz
miloslava.hirsova@vse.cz
lenka.komarkova@vse.cz
martina.bednarova@vse.cz

Abstract: Organizational identity and employee identification with the organization are currently gaining increasing
attention of researchers, as these variables can represent overall phenomenon which make it possible to monitor complex
processes and interactions between the various levels and elements of organizational behaviour. However, the crucial
question is what the content of organizational identity is. We believe that in this respect more attention should be paid to
shared values that play the key role in strategic decision-making. Our paper brings the results of two pilot studies on the
congruence of members’ value preferences and perceived strategic organizational values depending on the degree of their
identification with the organization. Research was conducted in two phases: the first one in the spring of 2017 and the
second one at the beginning of 2018. Both studies used a questionnaire based on the Schwartz Value Survey. The level of
organizational identification was assessed on a graphical scale featuring the proximity of the respondent and the
organization. We assume that the degree of organizational identification is linked to the degree of sharing values. We also
wanted to find out if there are some values that are typical for the high degree of organizational identification. The first
study sample included the staff of the Faculty of the Management, University of Economics, Prague; the second one was
aimed at the Faculty’s students. The first study discovered that the degree of identifying with the Faculty is significantly
influenced by two values in Schwartz’s concept: Conformity and Tradition. The second study compares these outcomes
with those obtained from the sample of students. At both samples two values showed a significant relationship with the
level of identification, but only one of them, the Conformity value, was present at both samples and thus seems to have a
universal effect. The impact of remaining two values, Tradition at the first study and Security at the second one, rather
reflects the specific motivational conditions of respondents. The main benefit of our research consists contribution to
better understanding of employees values and therefore in better work with human resources.

Keywords: Individual identity, organizational identification, values, Schwartz value theory, behaviour

1. Introduction
Performance, achievement and efficiency; these are the most commonly used words in the field of
management. However, since the time of Taylorism, the approaches and measures by which managers achieve
goals of their organizations have changed significantly. External motivation based on the application of
rewards and punishments is being replaced by incentives for internal motivation of employees. This approach
is based on the necessity to create conditions in which employees are willing to release even more of their
inner energy for the benefit of the organization. Research on factors that can influence employee inner
motivation is focused on identifying specific approaches of leadership, influencing organizational culture.

However, one of the main research topics in this field are the issues of employee identification with the
organization (Cooper and Thatcher, 2010; He and Brown, 2013).

The process of identifying oneself with the organization does not depend only on organizational conditions
and the degree to which they satisfy employee needs, but also on the degree of harmony between employee’s
and organization’s value system (Fuchs, 2012). This leads to the idea that knowledge of individual’s value
system and its concordance with organizational values should be an important part of personnel work, as HR
staff know and apply in their practice. No wonder that since the beginning of this century the attention paid to
the concept of values has been growing up (Fuchs, 2012, Sagiv and Roccas, 2017; Schwartz, 1994, 2003, 2012).

The interest of researches is aimed not only at forming the theoretical framework for this concept but also at
the role of values in influencing human behaviour (Bardi and Schwartz, 2003; Roccas and Sagiv, 2010).

If an organization wants to be successful, it needs, among others, employees who share its values and accept it
as a part of their identity (Brickson, 2007; Ye, 2012; Fritzsche and Oz, 2007). The factors that influence these
processes of organizational identification are also in the centre of researchers’ interest, but they mostly deal

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with external conditions (Fuchs, 2012). We would like to contribute to this research by an attempt to find out if
there are specific values that generally increase an individual's willingness to identify with a particular social
group or organization. To know this might contribute to prediction of future social behaviour of individuals and
thus help in personnel work, for example when selecting new staff.

Our paper is based on a pilot study trying to confirm the above mentioned assumption as a starting point for
further research. It is divided into two main parts. The first one (section 2) briefly summarizes the basic
knowledge about organizational identification and about values and introduces two research questions. The
second part deals with methodology (section 3) and the outcomes of our research (section 4) using the
Schwartz’s Value Survey for exploring whether some of the value preferences of individuals, in our case
employees and students of the Faculty of Management at the University of Economics, Prague, have
a significant impact on higher organizational identification and whether there are significant differences
between employees and students.

2. Theoretical background

2.1 Organizational identification

An organization can be defined as a structured social unit formed by a group of people who seek to achieve
a common goal (Etzioni, 1964). If each member of the organization identifies himself/herself with the goal and
perceives himself/herself as a member of that social unit, this state is referred to as organizational
identification. It has turned out that strong employee identification can make a positive contribution to the
organization's success and that it may also explain the continued prosperity of organizations. Employees who
strongly identify with their organization have better attitudes to work and take decisions that are in line with
organizational goals (Smidts, Pruyn and Van Riel; 2001, Cooper and Thatcher, 2010; Fisher and Wakefield,
1997). Managers, whether of small or large organizations, are more and more aware of this fact and know that
achieving their goals, work outputs and organizational efficiency depends on their ability to create the proper
organizational identity and the identification of members with the organization (Smidts, Pruyn and Van Riel,
2001; Millward and Postmes, 2010; Cooper and Thatcher, 2010).

Yet, if managers want to make use and benefit from this approach, they must understand the essence of the
phenomenon of identification as well the characteristics of factors that can influence identification processes.

Organizational identification is considered to be a key psychic state that explains the nature of the interaction
between an individual and an organization and as such it is able to illuminate and anticipate important
attitudes and behaviour in the relationship between an employee and organization (Fuchs, 2012). The degree
of identification is influenced both by external and internal factors. Among the external factors there are
usually presented those described by Fuchs (2012). That is the external image of organizations, perceived
organizational support and perceived organizational distributive justice. However, more importance should be
ascribed to internal factors as they represent the basic impulse from which the identification processes arise.

In the research history of this field, we can find several approaches that explain main motives leading an
individual to identify himself/herself with a social group or organization. First among them are Tajfel and
Turner (1986, 1979) with their social identity theory. According to them, the leading motive in identification is
the need for positive distinctiveness (the need to belong to such social groups, the membership in which
increases the individual’s self-esteem). Dutton, Dukerich and Harquail (1994) put stress on the individual’s
need to perceive his/her life as a continuous process giving the answer to the question ‘’who am I?“.
Comparing of one’s identity with organizational identity and identifying with it helps to satisfy this need of self-
continuity. Foreman and Whetten (2002) argue that the process of identification is influenced by comparing
existing and expected organizational identity. In organizational identity, employees look for features that are
consistent with their identity, and if their expectations are met, the degree of their identification with the
organization grows. Brickson (2013) tries to interlink these approaches and outlines a framework of social
comparison content based on organizational identity orientation and how it works in different organizational
conditions.

Extensive research in this field and the complexity of its subject matter are giving rise to valuable survey
studies (Ashforth, 2016; Ashforth, Harrison and Corley, 2008; Ashforth and Mael, 1998). Regardless on which
aspects of the identification process the emphasis is here put, it is clear that the degree of identification with

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something or somebody affects one's relationship to that object as well as his/her behaviour. Thus, if we
understand the factors that are the source of identification processes, we can predict and influence this
phenomenon. This issue has already been widely explored, both in terms of external (Smidts, Pruyn and Van
Riel, 2001) and internal (Lipponen, Bardi and Haapamäki, 2008) factors. We are interested in the internal ones,
namely the value preferences of an individual and their possible influence on the willingness to identification.

Values as the core of identification processes

In publications dealing with organization identification, we can find the concept of values and goals of the
organization and their accordance with the values and goals of the individual (Fuchs, 2012). Even the three
types of organizational identity orientation (individualistic, relational and collectivistic ones) introduced by
Brickson (2000, 2005, 2007, 2013) represent different types of behaviour based on principles which include
different value systems of organizations as well those of individuals.

There are different views on the conceptualization of values and their content (Rokeach, 1973; Hitlin and
Piliavin, 2004; Schwartz, 1994), but most social scientists agree, that values are deep-anchored abstract
motivations that conduct, interpret or substantiate norms, actions, opinions, and attitudes and can be
distinguished by the function that is attributed to them (Schwartz, 1994, 2003). They are based on
hierarchically arranged cognitive structures closely interwoven with emotional experiences. These structures
determine, which general goals are desirable for an individual and they function as the principles by which an
individual regulates his/her behaviour (Schwartz, 2012, 1994; Sagiv and Roccas, 2017). Thus, values are the key
factor for explaining the social and personal organization of an individual and its changes.

This applies not only for individuals but also for organization. Values of an organization themselves that can be
taken for the core of organizational culture and organizational identity. They represent a range of important
regulatory processes that lead to various patterns of behaviour and interactions, which are shared by
members of the organization. Organizational values define acceptable standards that regulate the behaviour
of individuals in the organization (Ye, 2012). However, they do not exist separately in themselves, they are
always bound to a particular individual and only their sharing, identifying with the agreed goals and values of
the organization releases their motivational potential and leads to desirable behaviour. Thus, we can assume
that value sharing and identification processes are tied to the opportunity to meet specific needs associated
with individual value preferences. But we can also assume that there is a general need to identify with the
values of others that acquires a character of lasting value, that is to play a role of a general regulating principle.
In our research based on Schwartz's (2012) Value Theory we made an attempt to verify this assumption.

This theory is focused on the basic values that are accepted by individuals in all cultures. It presents ten
motivationally different types of values (self-direction, stimulation, hedonism, achievement, power, security,
conformity, tradition, benevolence and universalism) and determines the dynamic relationships between
them. Some values are mutually conflicting (for example benevolence and power), while others are compatible
(for example conformity and security). The structure of individual or group values always reflects the
relationship of conflict and compatibility between values. In culturally diverse groups, values are structured
similarly. Although the nature of values and their structure may be universal, individuals and groups differ
significantly in the meaning which they attribute to values. This means that individuals and groups have
different value priorities (Schwartz, 2012). This statement can be for example supported by the research of
Kremenkova (2015) who focused on the value preferences of Czech humanities students and workers
(educational or public administration staff) and using the Rokeach (1973) Value Survey questionnaire detected
significant differences in both terminal and instrumental values.

According to Schwartz´s Value Theory, the dynamic relations of conflicts and compatibility between individual
values can be visualized by a circular structure which can be divided into two bipolar dimensions:

1. openness to change vs. conservation – the contrast between openness to change and conservative
values,
2. self-enhancement vs. self-transcendence – the contrast between values that stress the efforts to
pursue interests of one's own, personal success and dominance over others and those, which prefer
respect and welfare of others (Schwartz, 2012). This structure will be explained in more detail during
the presentation of our pilot study outcomes.

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Schwartz (2012) argues that the basic motivational functioning of values is more similar the closer the values
are placed in his diagram. On the other hand, the more distant they are, the more different their motivational
content is. Hedonism is associated with the value of openness to change and self-enhancement, as it contains
elements from both categories. Because tradition and conformity have the same motivational goal, they are
placed in one sector. However, tradition lies more on the edge, while conformity is oriented toward the
centre. This means that values of tradition are more conflicting to contradictory values than values of
conformity (Schwartz, 2012).

As mentioned, values are an important factor in self-regulation but they are often mixed with other personal
attributes such as personality features, particular goals and attitudes. According to Clarkson et al (2017),
attitudes also play an important role in organizational identification processes. However, they are based on
values and are applied in behaviour patterns typical for an individual, while values become durable
components of personality; they are advanced patterns of dispositions that are used by an individual for
acquiring and processing information about his/her environment and consequently regulate his/her behaviour.

These patterns can predispose individuals to varying degrees of identification with the environment. To
conclude, we can say that there are differences among individuals in their tendency and willingness to identify
with their environment and this willingness is closely interlinked with the compatibility between individual’s
values and his/her social environment. Yet, are there also specific values that contribute to the general
willingness to identify, regardless of their compliance with the values of the organization or any other social
group?

Based on the literature review presented, we asked ourselves the following research questions:

RQ1: Which value preferences of employees are significantly associated with higher tendencies to identify with
the organization?
RQ2: To what extent do these value preferences differ from students’ ones?

3. Data and methods

The presented study follows our previous study serving as a basis for the Czech conference contribution
(Balgová et al, 2017) which dealt with the values of the Faculty's staff and their identification with the Faculty.

The results received through the correlation analysis contained data from only 32 employees. A statistically
significant correlation between identification and Tradition value and between identification and Conformity
value was shown. Now, we wanted to find out if this applies also for another social group and we added a new
sample consisting of students of the same organization. Moreover, another type of statistical analysis is used.

Data for answering the research questions were obtained through a questionnaire survey among employees
and students of the Faculty of Management, which is located in Jindřichův Hradec, at the University of
Economics, Prague. In the case of students, we distinguished the type of their learning which could be full-time
students or distance students who attend school only for 4 weekends per a term. The questionnaire was used
to both the value orientation of the individual and the degree of their identification with the organization. The
questionnaire was based on the Schwartz Portrait Value Questionnaire (PVQ 40, PVQ 21) (Schwartz, 2012)
which was created as a tool for measuring value preferences and contains ten values mentioned in the
previous chapter. The value of Hedonism was not included in our survey. The reason is that the research was
primarily focused on the values of the faculty where the value of Hedonism did not seem appropriate to us in
assessing organizational values. Thus, we investigate nine values instead of ten.

The degree of each value preference should be expressed by respondents using one item on a nine-point
ordinal scale -1 to 7 (-1: contradictory, 0: unimportant, 3: important, ..., 6: very important, 7: absolutely
important). This scale was used in the Schwartz Value Survey (Schwartz, 2012) and is used widely by
researches (e.g. Lindeman and Verkas, 2005; Ye, 2012). The degree of identification was determined using
a five-point graphical scale (Schubert and Otten, 2002) based on the penetration rate of two circles (0: no
intersection, 1: touch, 2: moderate intersection, 3: greater intersection, 4: full overlap).

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The questionnaire survey was conducted in three phases: in June and September 2017 (employees) and in
March 2018 (students). The questionnaire was filled in by 39 employees and 116 students (71 full-time and 45
distance students). This study was based on answers from 155 respondents. The response rates are 54.2% in
the case of employees, 16.4% in the case of full-time students and 7.8% in the case of distance students. Given
the ordinal nature of the identification degree variable, the relationship between the identification degree and
value preferences was analysed by using the ordinal regression model belonging to the class of generalized
linear models (GLM). Statistical analysis was performed in the statistical software R (R Core Team, 2018).

4. Results and Discussion

This chapter outlines the most important findings of our research. First, Table 1 summarizes the average
degrees of respondents’ values on the scale of -1 to 7 and their identification degree with the faculty on the
scale of 0 to 4. Second, the main results of the ordinal regression analysis can be found in Table 2.
Table 1: Descriptive Statistics Results: Sample means and standard deviation for 9 investigated Value variables
according to the type of respondents (an employee, a full-time or distance student, respectively).
Employees Full-time Students Distance Students Total
Variable mean sd mean sd mean sd mean sd
Power 1.56 1.48 3.01 2.09 3.13 1.90 2.68 2.00
Achievement 3.33 1.61 4.51 1.76 4.69 1.66 4.26 1.77
Stimulation 2.74 1.79 4.51 1.89 4.27 1.95 3.99 2.01
Self-direction 5.00 1.62 5.27 1.66 5.33 1.58 5.22 1.62
Universalism 5.23 1.65 4.76 2.02 4.58 2.06 4.83 1.95
Benevolence 5.15 1.68 5.56 1.39 5.29 1.75 5.38 1.58
Tradition 3.97 2.19 3.76 1.96 3.47 2.10 3.73 2.06
Conformity 4.26 1.63 5.07 1.69 4.29 2.03 4.64 1.82
Security 5.26 1.35 5.17 1.80 5.11 1.63 5.17 1.64
Identification 2.74 0.85 2.17 1.16 1.58 0.97 2.14 1.11

Remark. The three most preferred values (in total) are highlighted in grey.
From Table 1, it can be seen that the highest level in value preferences of employees was achieved by Security
(5.26 on average), which is the value based on the sharing of values, beliefs, norms or strongly embedded
attitudes in the social group culture. These shared experiences are reflected in stable patterns of behaviour,
symbols or practices that strengthen group solidarity and contribute to its survival (Parsons, 1951). In the
Schwartz’s system of value preferences, it is ranked at the fourth place. Secondly, Universalism (5.23) has been
defined as understanding, appreciation, tolerance and protection of the welfare of all people and nature.

Surprisingly, the value of Benevolence (5.15), which is aimed at preserving and increasing the well-being of
other people with whom we are most likely to be in contact (Schwartz, 2012), took third place, while in
Schwartz’s ranking it is the first one. It is also worth mentioning the value of Self-Direction (5.00), which
reflects an independent mind, a selection of activities, creation, exploration) that follows and is usually ranked
third.

For full-time students, the results are somewhat different which is in accordance to Kremenkova’s (2015)
results. First of all, we can see that Benevolence (5.56 on average) is a priority, which shows that maintaining
good relations with others is very important for this group of respondents. The second place is occupied by
Self-Direction (5.27), and Security (5.17) is followed by the Conformity value (5.17) in the third place, for which
the rejection of any activity that would lead to annoyance or damage to others and disruption of social
expectations or norms is typical. The most important value for distance students is Self-Direction (5.33). They
have higher demands on organizing life because these students have more difficult living conditions, such as
the need to combine work and study. The next one is the value of Benevolence (5.29) followed by Security
(5.11).

In summary, the main respondents’ values as seen in Table 1 are in accordance with Schwartz's (2012)
conclusions. The values of Benevolence, Universalism, and Self-Direction, which should, according to Schwartz
value theory, be at the top of the value list, are also among the top-ones for all the three categories examined,
both separately and altogether. Further, focusing on identification (see the last row in Table 1), the highest
average level of identification was found for employees (2.74). For full-time students, the average degree of
identification with the faculty was 2.17. The lowest level of identifying with the faculty was reported by
distance students (1.58 on average). This result is not surprising and can be easily explained. Organization

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members who spend a lot of time in a given physical and social environment and know each other well, are
willing to identify with their organization more than those who see each other once a month and do not need
to build deeper relationships (in the case of distance students), or take the organization as a transfer station
(though acknowledged and beloved) to the future aims of their lives (in the case of full-time students).

The differences between employees and students are mainly in case of three values Power, Achievement and
Stimulation. The Power value represents an effort to achieve good social status and prestige, control or
dominance over people and resources. People who hold the value of Power need to demonstrate authority,
social power, and wealth (Schwartz, 2012) and according to Schwartz´s Value Theory, the Power is in the
bottom of his value list. The fact that the average degree of the Power value for both groups of students is
roughly twice higher than for employees can be explained by some differences in professional orientation and
expectations: teaching management at the faculty with very friendly and democratic relations and
environment may attract persons for whom this value is not of the highest importance, while studying
management requires certain personal characteristics and motivational resources, where the need to
dominate and control certainly has its rightful place.

The next big difference between categories of employees and students can be seen in the value of
Achievement, which means reaching personal success through demonstrating competences corresponding to
socially recognized standards and, the need for success due to ambition (Schwartz, 2012). We can explain this
difference as at the value of Power. It is not surprising that young people have ambitions to be successful and
influential. They have many goals requiring a lot of power and personal commitment, they have more energy
than older generations, and they also have much more personal uncertainty as to whether they will be able to
achieve their goals. Employees have probably achieved or are achieving some success and have satisfied some
ambitions and thus their need to achieve is not so high as at students.

The last major difference was recorded for Stimulation. The difference between employees and students is
almost the same as for the value of Achievement. Stimulation, in the value preference system arranged by
Schwartz, occupies the penultimate place and is defined by the need for an interesting and intriguing life and
courage (Schwartz, 2012). We believe that this result can be explained once again by the nature of differences
between generations. The older generation has more experience, both good and bad, and it can sometimes be
over-stimulated or discouraged. In contrast, the younger generation has not tried many things yet, thus it is
more eager to look for new experiences. This reflects the motivational nature of this value, which is based on
excitement, new experiences and life challenges (Arieli and Tenne-Gazit, 2017).

These outcomes are in accordance with other studies aimed at the impact of values on behaviour at work.
Gandal et al (2005) find out that Achievement and Power, as Self-enhancement values, are positively related
to behaviour based on career orientation. Arieli, Sagiv and Cohen-Shalem (2016) specify that management as
a profession bound to enterprising environment is closely associated with the Self-enhancement values of
Power and Achievement. They also find out that this block of values is present in the content of business
schools websites.

To answer both research questions, the dependence of the ordinal response, the identification level with
faculty on individual value preferences by ordinal regression was examined. The type of a respondent was also
taken into the account. Particularly, predictors in the model were nine covariates representing the nine value
variables (Benevolence, Universalism, Self-direction, ..., Power) and one factor characterizing the type of the
respondent. The factor predictor was actually represented by two dummy variables, where the reference
category was an employee group. Specifically, the multiple ordinal regression model with cumulative logits and
proportional odds was chosen. The initial ordinal regression model was considered with interactions of the
factor predictor with all the value variables. However, these interactions were shown as statistically
insignificant (the sub-model test: p = 0.661). In other words, the respondent type does not (statistically
significantly) influence the dependency relation of the identification level on values variables. It means that the
respondent type variable does not act as a moderator. Thus, as a final model, the ordinal regression model
without interactions was used.

The results of the ordinal regression analysis are summarized in Table 2. Value predictors are ranked top-down
according to the level of the statistical significance in the table. The dependency of identification level with our
faculty is statistically significant on the Conformity variable at the 5% significance level and further on Security

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at the 10% significance level, both adjusted to the effects of other considered explanatory variables. Notice
that Conformity is described by Schwartz (2012) as a need to refrain from behaving in a manner that conflicts
with the interests of other members of the group and conflicts with norms and social expectations linked to
the roles of an individual in the group. Therefore, the individual is motivated to regulate his/her behaviour in
such a way that he/she does not interfere in interaction with the others and abstains from the manifestations
that would endanger the functioning of the group as a whole. Security is based on safety, stability and
harmony of society, social relationships, and of oneself. Security values are characterized by the need for a
certain place in the social rankings, national security and family safety. Some Security values are based on
individual interests, others include the interests of the whole group (Schwartz, 2012).
Table 2: Ordinal Regression Results: Estimates for odds ratios (OR) with related 95% Wald confidence intervals
and p-values.
Variable OR Confidence Interval P-value
Conformity 1.30 (1.02, 1.65) 0.037**
Security 0.81 (0.63, 1.03) 0.086*
Achievement 1.16 (0.91, 1.48) 0.238
Tradition 0.91 (0.76, 1.09) 0.299
Benevolence 1.12 (0.87, 1.44) 0.379
Universalism 1.02 (0.84, 1.24) 0.842
Power 0.98 (0.80, 1.21) 0.874
Self-direction 1.01 (0.81, 1.26) 0.925
Stimulation 0.99 (0.82, 1.19) 0.926
Full-time student vs. Employee 0.22 (0.09, 0.53) < 0.001***
Distance student vs. Employee 0.09 (0.03, 0.22) < 0.001***

Remark. Statistically significant results are highlighted in grey.

Moreover, the estimates for odds ratio in Table 2 demonstrates that 1/ the more people prefer the Conformity
value, the more they identify with the faculty (OR > 1) on the contrary, 2/ the less people prefer the Security
value, the more they identify with the faculty (OR < 1), both regardless of the respondent type. However, the
statistical significant effect of the respondent type factor, adjusted to the value variables effects, on the
identification level was also demonstrated (p < 0.001). A higher identification level predominates for
employees (OR <1 for students) and is statistically significantly different from students with the same value
preferences. Particularly, for the same portfolio of values, the identification level decreases with the student
absence at the faculty (OR = 0.22 for full-time, OR = 0.09 for distance students) compared to the staff.

Comparing our results with the preliminary results of Balgova´s et al (2017) pilot study, based on the sample of
32 employees, the Conformity value also prevailed in relation to the identification level. However, differently
from the current study, it was accompanied by the Tradition value. Tradition and Conformity are values that
have a strong social motivation potential. They differ mainly in objects that the individual subordinates to.

Conformity means subordination to people that we often meet - parents, teachers and bosses. Tradition
means subordination to more abstract objects - religious and cultural habits, life beliefs, attitudes to the
outside world. In both survey studies, third place was occupied by the Achievement value with the statistically
insignificant relation to the identification level.

5. Conclusion
Based on our study, we found that employees and students´ value preferences greatly differ in Power,
Achievement, and Stimulation, where students have a higher average score than employees. According to
Schwartz (2012), the Achievement and Power values belong to the Self-Enhancement block, which is
characterized in particular by favouring the interests of individuals. The Stimulation value falls into the
Openness to change block. It is not surprising that young people, who are studying management, desire
success, they need to lead others and have a certain amount of power over them and that they prefer an
interesting and exciting life.

Willingness to identify with the Faculty of Management is linked to the value of Conformity, which is also no
surprise. However, it is noteworthy that in the above mentioned study of Balgova et al (2017) conducted on
a minor sample of employees and no students, this identification was further associated with the Tradition
value, while in this larger study, Tradition was replaced by Security. Conformity values express subordination
to authorities while at the Tradition value it is subordination to higher living principles. Both Conformity and

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Security values, along with Tradition, belong to the Conservation block, characterized by social focus and the
need for protection against loss or threat and anxiety. We could assume that individuals, who have the need
for protection against potential dangers and anxiety in the motivational grounds of their behaviour, will be
drawn to participating in social structures and hence to a higher degree of identification with them. But in our
sample this works just in the opposite way – the higher the preference of Security, the lower the degree of
identification with faculty. Thus, we deduce from our results that in this area only the Conformity value has
the universal effect and is able to generally increase the willingness to identify, whereas the effects of the
remaining values in these processes will be more responsive to individual needs and environmental conditions.

We can speculate as far as it concerns the employees of the faculty, who prefer the value of Tradition, the
environment provides the opportunity to fulfil the need for subordination to higher living principles and, in the
spirit of the concepts of Dutton, Dukerich and Harquail (1994), also the need for self-continuity and due to it to
show greater willingness to identify with their organization. But in case of Security value and its reverse impact
on identification it is very difficult to offer some adequate interpretation from data we have at disposal. We
can think about the transient nature of students' relationship with the faculty, when learning is not always
a safe way to their main goals and it is often associated with the threat of failure. At employees we can take
into consideration the nature of their contractual relationship with the faculty, which usually has the form of a
fixed-term contract and does not provide a high level of job security. As it has been told, these are only
speculations but they indicate the complexity of this issue and serve as a challenge to further exploration.

Moreover, the response rates in the case of students are quite low. Further limitation of our study is using only
one item for each value preference and also for identification degree. Our results are not generalizable at
other faculties of the University of Economics, Prague, as our faculty is the only one located outside Prague
and is rather smaller.

We can then conclude that the results of our study suggest that individual value preferences affect his/her
willingness to identify with an organization or a social group, but the more universal impact shows only the
value of Conformity. For other values, it is necessary to seek out the relationship between the motivational
resources of the individual to which they are associated and the conditions that organizations or social groups
offer to satisfy them. Since identification of members with the organization is very important not only for
organizational performance, but it is also reflected in other aspects of organizational life, this issue becomes an
important part of human resource management. Values as a tool for self-regulation play a significant role here,
so we believe that further research on this issue is needed, and based on our past experience, Schwartz's
theory is a good starting point.

Acknowledgement
The work was supported by the Internal Agency of the University of Economics, Prague, under the number IGS
VŠE F6/49/2017.

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Characteristics of Head Nurses’ Leadership Style and Its Impact on
Patient Satisfaction
Martina Bednářová, Lenka Komárková and Miloslava Hiršová
University of Economics, Prague, Czech Republic
xbedm00@fm.vse.cz
komarkol@fm.vse.cz
miloslava.hirsova@vse.cz

Abstract: The most valuable capital within healthcare organisations are human resources. Nurses, in particular, present the
key component in the provision of quality services since they form the most numerous healthcare professionals. Lead
workers, or more precisely head nurses, play a vital role in providing healthcare services. Through their everyday contact
with employees, they influence not only their performance but also the atmosphere within a workplace. The lead worker’s
attitude and workplace atmosphere can influence employee job satisfaction in a significant way and this can project in
patient satisfaction and the perceived quality of healthcare services. Research that is focused on leadership within
healthcare frequently utilises the transformational leadership theory. But this applies mainly to leadership research
abroad, in the Czech Republic we have only a few studies using this approach. The transformational leadership theory
consists of transformational, transactional and laissez-faire style. According to the conceptualisation of the original theory
by Bass, the transformational and transactional styles present two different constructs that do not need to exclude each
other but on the contrary, they can complement each other. This pilot study is focused on finding out differences between
the assessment of leadership style (only in terms of transformational style) of head nurses and the perception of this style
by junior nurses. The aim is to find out whether the nature of this difference has some impact on patient satisfaction and if
so, in what ways. The study took place in a profit-oriented hospital in the Czech Republic. Data were collected through the
Multifactor leadership questionnaire and an internal patient satisfaction survey. Data analysis was conducted using
standard statistical methods. The conclusions of the study point out that head nurses’ behaviour at the workplace is vital
and that this importance can be projected in the extent of patient satisfaction.

Keywords: leadership, leadership styles, head nurses, patients’ satisfaction, multifactor leadership questionnaire

1. Introduction
Human resources represent the most valuable capital an organisation can have at its disposal (Sarojani and
Thiranagama, 2017). It is managers/leaders that play a crucial role in the arrangement of a relationship
between an organisation, its goals and vision and employees who act as an instrument in order to achieve
those goals (Mosadeghrad and Yarmohammadian, 2006). Leaders have everyday contact with their staff, and
therefore can significantly influence the way employees feel in a workplace, the overall atmosphere,
teamwork, communication and subsequently their work performance. An important implement at leaders’
disposal is their leadership style. It can be argued that a leadership style is used by leaders more or less
automatically and subconsciously and it is influenced by a whole range of factors such as personal
characteristics. As long as a manager is familiar with the leadership theory, he or she can choose such
behaviours and actions that will meet with the desired effect (Giltinane, 2013). The basis for success is to
understand employees’ expectations and needs that a manager can deal with effectively and purposefully. In
case that a manager applies theoretical findings only in a theoretical sphere without reflecting on a real
situation, any effects of a preferred leadership style are missed.

Our study is based on the assumption that a leadership style effects employee satisfaction (e.g. McCutcheon et
al, 2009; Saleem, 2015; Tsai, 2011), as well as patient satisfaction (e.g. Bahadori et al, 2016; McCay et al, 2017;
Wong et al, 2013). However, the study is not concerned with a relation between particular styles or substyles
and its direct impact on satisfaction but on the differentiation in perceiving of this style and its effect on
patient satisfaction. One view on an exercised style thus offers leaders’ self-evaluation and another view offers
subordinate employees. Arguably, the ideal scenario would be corresponding results in both evaluations,
however in practice, differences might occur. It could be assumed that if a leader does not have sufficient self-
reflexion and views himself or herself as, for example, highly transformative whereas his or her staff views him
or her the other way, differential expectations form. When these expectations are not fulfilled, it leads to
progressive tension which can be expressed in the level of patient satisfaction.

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2. Theoretical Background
One of the important indicators of quality within healthcare services is patient satisfaction (Hung and Jerng,
2014; Naidu 2009). The quality of healthcare is included in the group of the outcome indicators which are
getting primary importance as they show us the results and effect of healthcare (Chan et al, 2013). This
indicator is frequently used as a benchmark to evaluate the level of quality of care. In the last years, increasing
attention has been paid to patient opinions and this interest demonstrates a leading trend in healthcare
management, that is an orientation toward patients (Mead and Bower, 2000; Sherwood and Barnsteiner,
2017). The scale of patient satisfaction in each particular area of nursing care represents an important
information about the overall quality of care in each healthcare facility (Al-Abri and Al-Balushi, 2014).

Frequently, patients judge the level of quality in nursing care according to whether their basic needs are met
during their stay in hospital and to what extent. As the results of the study by Cleary and McNeil (1988)
showed, the more personal care the healthcare facility provides, the more satisfied patients are. Emphasis
should be placed on a personal approach that manifests the sensitivity of the nurses, their attentive manner,
communication, respecting or good behaving towards patients (Bolster and Manias, 2010). Quality does not
only mean the professionals’ ability to provide the best care possible but above all the ability to meet all
patients’ needs and expectations. Fulfilment of expectations and patients’ experiences are significant
predictors of their satisfaction (Bjertnaes et al, 2011).

However, an employee satisfaction also plays a significant role in patient satisfaction (John et al, 2013). Job
satisfaction reflects a subjective perception, judgement and experience of activities and conditions in the
workplace (Furnham et al, 2002). Armstrong (2007) states that job satisfaction is influenced by internal and
external motivational factors, management quality and social relationships in the workplace. The resulting
employee satisfaction therefore depends on needs and expectations, as well as the workplace conditions. It
has been proven in foreign research, that employee satisfaction has a direct impact on how successful an
organisation is (Janicijevic et al, 2013; Kaliannan and Adjovu, 2015). As a result, this leads to a greater
employee performance and efficiency, the development of an organisational culture and lower organisational
costs (Judge et al, 2001; Nikic, 2008; Riketta, 2008).

As long as employees are involved in their work through positive leadership, which often has a form of
transformational leadership (Liu et al, 2010), their work determination, psychological well-being and
empowerment rises (Attari, 2013). Their vitality, willingness to dedicate their energy to work and loyalty is
demonstrated through their satisfaction with their tasks and the ability to become committed to work (Arnold
et al, 2007; Nielsen et al, 2008). A number of published studies is concerned with evaluating nurses’ leadership
styles towards patients (e.g. Raup, 2008; Tomey, 2009) and some of them have found that nurses who
adopted the transformational style were contributing to lower number of adverse patient outcomes (Boamah
et al, 2017). Applying transformational style brings greater patient satisfaction (Choi et al, 2016).

At present, the transformational leadership theory in the majority of available literature is referred to as the
most important theory of leadership in general (Herbst, 2014). There has been a major focus on the
transformational leadership theory within leadership research in the healthcare area (Wong et al, 2013). The
history of the transformational leadership theory goes back to the 1978 when Burns published his concept for
the first time. At that time, leadership research was at its very beginning and researchers were facing a new
challenge. A significant point in the development of transformational leadership research was the
conceptualization by Bass (1985). Bass (1985) understood transformational leadership and transactional
leadership as complementary elements of the approach to leadership, not as opposed to. Today, it is believed
that a leader can also use both transactional and transformational elements to manage people Bass et al,
2003.

The role of the transformational leader involves creating a vision, ensuring a change and development in the
organisation, strengthening followers and encouraging their transformation, building trust and cooperation
(Bass and Stogdill, 1990). Transformational leadership is typically understood as a construct with four main
components and summaries of the behaviour of a leader influencing its performance improvement and
subordinate development. These include: idealized influence, inspiring motivation, intellectual stimulation,
individual consideration (Bass and Riggio, 2006). See Table 1 for more detailed characteristics of individual
components.

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Table 1: Characteristics of substyles of transformational leadership

Transformational leadership substyle
Idealized influence attribution
behaviour
Inspiring motivation
Intellectual stimulation
Individual consideration
Description
It is based on the perception of a leader by his subordinates. A leader shows confidence
and emotions, selflessness and inspires followers. Leaders are respected and trusted.
It is based on observing a leader's behaviour. A leader is goal-orientated and encourage
the completion of work through a collective sense of beliefs, values, purpose and mission.
Describes a leader who inspires employees by increasing their commitment, vision of
society and team spirit.
A leader stimulates employees to greater creativity, innovation, higher challenges and
desirable values. He or she encourages and supports employees to approach and solve
problems.
A leader creates an environment where he or she listens to individual needs and considers
other available options. A leader acts as a coach and counselor until followers are at full
potential. The leader may delegate, or give orders directly to help followers develop.

Source: modified according to Bass and Riggio, 2006; Loon et al, 2012
Although a number a of studies confirm that transformational leadership influence employee efficiency in
a positive way (e.g. Bass et al, 2003; Howell and Avolio, 1993; Lowe et al, 1996), this cannot be argued
definitely since a negative influence has also been proved. This is why there is an area for an investigation of
differences between a leader’s self-evaluation and an evaluation of his or her style by subordinates with the
aim to find out impacts of the present difference on employee satisfaction. Our study tries to answer these
research questions:

RQ1: Are there differences in how leadership style and its dominant components are perceived by head nurses
and staff nurses?

RQ2: If differences in the perception of leadership style exist, how do these differences influence patient
satisfaction?

3. Data and Methods

In this study, head nurses’ leadership style was assessed using the transformational leadership model. The
main purpose was to identify possible differences in the perception of the transformational leadership style
and in particular, its individual substyles as perceived by head nurses and staff nurses. In other words, we
aimed to look at whether there were any differences in the evaluation of the transformational leadership
predominant substyles provided by head nurses and staff nurses and how these possible differences were
reflected in patient satisfaction. Primary data on leadership style assessment were collected from nurse
leaders and staff nurses working in a selected hospital in the Czech Republic. The hospital was selected on the
basis of sufficient size and especially willingness to participate in the research from the side of hospital
management. The research was carried out in 7 hospital departments including: the child care department,
surgery, internal department, gynaecology and obstetrics department, follow-up care department,
orthopaedics and ENT department. The hospital participating in the research is modern, medium sized (300-
499 beds with 10 inpatient departments) with the number of employees ranging from 500 to 1000. The
hospital is profit-oriented in the legal form of joint- stock company, owned by the local government. It
provides both inpatient and outpatient care. In addition to accreditation, the hospital holds several certificates
concerning the vote on the best hospital from the Czech patients´ point of view.

This research study is based on a quantitative research design. Two questionnaires were used to collect data
for the purpose of this study. The questionnaires included the Multifactor Leadership Questionnaire (MLQ-5X)
and a questionnaire designed to evaluate internal patient satisfaction with healthcare. The MLQ-5X was
developed by Bass and Avolio (2004), subsequently validated and now serves as an instrument used worldwide
to measure a leadership style. It consists of 45 questions using a Likert rating scale from 0 to 4 (0 = not at all,
1 = once in a while, 2 = sometimes, 3 = fairly often and 4 = frequently, if not always). Five sub-scales (each
evaluated by 4 items) measure the transformational leadership style and thus we were able to identify the
predominant leadership substyle of head nurses from their perspective / point of view, as well as from the
staff nurses’ perspective. The questionnaire was completed by 7 head nurses and 90 (out of 150) staff nurses.

The response rate was 60% for staff nurses. When considering how staff nurses assessed the leadership style
of their supervisors, the department average was used to further compare the assessment of their supervisors
(head nurses). The Cronbach alpha measuring an internal consistency of corresponding items for the five

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transformational leadership substyles ranged from 0.68 to 0.79. In one case, specifically for the Idealized
Influence – behaviour substyle, the value was slightly lower than the threshold of acceptability 0.7.

To measure patient satisfaction with healthcare provided in the hospital, eleven questions on the scale from -2
to 2 (-2 = very dissatisfied, -1 = dissatisfied, 0 = neutral, 1 = satisfied, 2 = very satisfied) were asked. Only six
questions in total were selected for the analysis in accordance with the aim of the study. These questions
related exclusively to the work of nurses (questions number 2, 3, 5; further marked in the table as “nurse
care”) and to overall satisfaction based mainly on trust (questions number 1, 4, 6; further marked in the table
as “department atmosphere”). The remaining questions could not be used for the purposes of the study as
they did not reflect the possible influence on the nurses’ leadership style. They were concerned with work
satisfaction and care provided by doctors. One of the excluded questions also concerned diet satisfaction. The
questionnaire was completed by 2,232 patients in total. For the purpose of our analysis, the average
satisfaction for the examined departments was used.

The selected questions were as follows:

1. To what extent / have you felt confident and assured during your stay in our hospital?
2. Have nurses dealt with you in a polite/approachable and accommodating manner?
3. Have nurses informed you about the daily regime in the department?
4. Has the department been kept quiet overnight (excluding acute/urgent admissions), i.e. from 22:00 to
6:30?
5. Have you felt that nurses have been interested and empathic about your difficulties and problems?
6. How would you rate your overall care provided to you in our hospital?

Data from the MLQ-5X and internal patient satisfaction with healthcare questionnaire were analysed by using
standard statistical methods including descriptive statistics (minimum, maximum, median, mean) and the
Spearman correlation analysis. An analysis was conducted in a statistical software R version 3.4.0 (R Core
Team, 2018).
4. Results
Table 2 summarises data collected from the questionnaires completed by head nurses and their subordinates
in the seven hospital departments. From the head nurses’ perspective, intellectual stimulation appeared to be
the most dominant substyle among all the transformational leadership substyles (mean 3.23, median 3.38 on
a scale 0 to 4). This could point out that they want to build a space for self-realization and encourage creativity
and performance in their subordinates. On the other side, the least present substyle was the idealised
influence – attributes (average 2.45, median 2.88). As this substyle is closely connected with the admiring of
the leader and prioritizing higher goals for the team, the head nurses do not see themselves in the position of
such leader. Probably they focus on day-to-day running of the organisation more than being leader who is
a model for others.

From the junior nurses’ point of view, idealised influence (behaviour) seemed to be perceived highly (mean
2.60, median 2.61). Idealised influence (attributes) was on the lowest score (mean 2.38, median 2.28) not only
from the junior nurses’ point of view, but from the head nurses themselves. From the aspect of their capacity,
head nurses do not consider empathy and respect as important. This view is shared with staff nurses. This
reflects the general conception about a leadership style in healthcare that is based on algorithms and clearly
specified roles. It is clear that junior nurses perceive head nurses rather as a power-oriented leader than as
a value-oriented and powerful leader, who can inspire a sense of purpose. Junior nurses perceived the
transformational substyles of their leaders on a lower average and median rank than the head nurses. Looking
at inspiring motivation, intellectual stimulation and individualised consideration, it can be said that over 0.5
point of the average difference was achieved. Nevertheless, with the exception of the individualised
consideration, some junior nurses scored the transformational substyles higher than their head nurses. From
the point of view of managerial practice, this result clearly shows the need of nurses to be approached by their
superiors individually with respect to their specific needs. Looking at idealised influence (attributes), the most
significant range in divergent perception between a junior and head nurse was found (-1.81 to 0.98). This
result points to the presence of differentiation in the perception of values and individuals’ needs, and one of
the possible causes could be the different level of employees’ identification with their organisation which is

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subsequently reflected in the way a leader’s personality is judged. It would be necessary to verify this by
conducting another study.
Table 2: Summary statistics (minimum, mean, median, maximum) for transformational leadership substyles
perceived by head nurses, junior nurses, and for differences in such perception
Leadership Head nurses Junior nurses Difference
Substyle Min Mean Med Max Min Mean Med Max Min Mean Med Max
Idealized Infl. (attr.) 1.00 2.45 2.88 3.25 1.87 2.38 2.28 2.81 -1.81 0.07 0.48 0.98
Idealized Infl. (beh.) 1.75 2.88 3.00 3.50 2.31 2.60 2.61 2.96 -0.78 0.27 0.44 0.76
Inspiring Motivation 2.00 2.96 3.00 3.75 2.02 2.44 2.44 2.85 -0.31 0.52 0.70 0.98
Intellectual Stimul. 2.75 3.23 3.38 3.75 2.31 2.55 2.42 2.95 -0.02 0.68 0.76 1.10
Individual Consider. 2.50 3.09 3.25 3.75 2.17 2.50 2.52 2.88 0.25 0.59 0.58 0.87

Patient satisfaction did not appear to differ when considering the different departments and areas. The lowest
value was 1.77 and the highest was 1.97 on a five-rate scale. Both apply to the satisfaction with nursing care
(see Table 3).
Table 3: Summary statistics (minimum, mean, median, maximum) for patient satisfaction with nurse care,
department atmosphere and in total
Patient Satisfaction Minimum Mean Median Maximum
Nurses (Nurse Care) 1.77 1.89 1.92 1.97
Others (Department Atmosphere) 1.81 1.90 1.91 1.95
Total 1.79 1.90 1.91 1.96

The Spearman correlation coefficient values amongst the transformational leadership substyles and patient
satisfaction can be found in Table 4. The first three columns show Spearman correlation coefficients amongst
substyles perceived by head nurses and patient satisfaction with nursing care, the department atmosphere
and overall satisfaction which includes satisfaction with nursing care, as well as the department atmosphere.

Similarly, the last three columns describe correlations amongst the perceptions of head nurses and junior
nurses and patient satisfaction. Taking into consideration that only seven departments were included in the
study, no correlation is statistically significant at the 5% significance level. Only correlation between
intellectual stimulation judged by head nurses and overall patient satisfaction (r = 0.67) was statistically
significant at the 10% level. If nurses support active problem solving and exciting new and creative solutions, it
might influence their work performance and subsequently patients might find their care as more satisfactory.

Due to the great difference in the perception of this substyle, it is necessary to consider what the nurses
imagine under it. If it is perceived as an increased performance orientation associated with a higher workload,
the connection with patient satisfaction could exist in this case.
Table 4: The Spearman correlation analysis between transformational leadership substyles perceived by head
nurses and patient satisfaction (with nursing care - NCare, department atmosphere - DAtm, overall), between
the transformation leadership substyles perceived by junior nurses and patient satisfaction and between
differences in the perception of the transformational leadership substyles (by head and junior nurses) and
patient satisfaction
Leadership Perception Head nurses Junior nurses Difference
Substyle / Satisfaction NCare DAtm Total NCare DAtm Total NCare DAtm Total
Idealised Influence (attr.) -0.25 0.27 -0.04 0.00 -0.68 -0.04 -0.14 0.57 -0.04
Idealised Influence (beh.) 0.00 -0.64 -0.04 0.13 -0.67 0.09 -0.02 -0.56 -0.07
Inspirational Motivation -0.11 -0.05 0.07 0.00 -0.61 0.04 0.46 0.61 0.61
Intellectual Stimulation 0.58 0.22 0.67 -0.07 0.61 0.04 0.39 -0.07 0.50
Individual Consideration -0.36 0.24 -0.29 -0.43 0.36 -0.36 0.16 0.61 0.27

Nevertheless, a correlation in the absolute value above 0.5 was achieved in 12 cases out of 45. In these 12
cases 7 were positive and 5 were negative. Patient satisfaction (with the atmosphere and overall one) seemed
to increase surprisingly when the leaders view themselves in inspirational motivation substyle higher than
their subordinates (r = 0.61). An interesting conclusion could be that employees might not always value the
leaders’ aspiration to communicate a collective vision to engage employees in teamwork in order to run the
department positively. On the contrary, when looking at the department atmosphere, patient satisfaction
drops with the growing difference between head nurse’ and junior nurse’ perception of idealised influence -

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 Martina Bednářová, Lenka Komárková and Miloslava Hiršová

behaviour (r = - 0.56). One possible explanation is that a conflict in the head nurse's perception of themselves
as a follow-up model and different perception from nurses’ point of view, can cause stress and tension in the
workplace, which can further be reflected in the overall climate perceived by the patient.
5. Discussion and Conclusion
Healthcare organisations are a complicated and complex organism functioning in a turbulent and demanding
environment. Complicated structures amongst individual elements of a system exist within a healthcare
organisation. The significance of a healthcare facility reaches a high level as the primary aim of a healthcare
facility is to increase population’s health. The nature and work division is based on putting well-established
processes into practice and the subsequent evaluation of the extent to which they are followed. This was one
of the reasons why the study was focused on elements of transformational leadership, and more specifically to
what extent a transformation of workers is applied through means that form the basis of this style in a specific
environment. It is important not only to map whether this style is present in a workplace but also to map the
differentiation in how the style is perceived. Leaders’ self-reflexion could be confronted with subordinate
employees’ evaluation. Any detected difference can subsequently influence employee satisfaction which is
further projected in patient satisfaction.

The conclusions from our study brought an interesting perspective on how an applied leadership style is
perceived by a leader herself or himself and how this style is perceived by staff. It can be concluded that
differences exist in this perception. Head nurses valued substyle intellectual stimulation. It is apparent that
they put an emphasis on efficient and creative staff who also allow for their self-realisation. In contrast, for
staff nurses, idealised influence (behaviour) appears to be the most important element. That means that they
require a charismatic leader who is a good role model and who is consistent in his or her demands related to
work performance. From the results relating to the perception of the element individual consideration,
a recommendation follows for head nurses. Whereas for head nurses it is this element that is important, and
they regard it highly from their point of view, staff nurses do not have the same perception. It is desirable that
head nurses focused more on individual approach and were more attentive to employees’ needs and wishes.

A significant relationship has been identified between the element intellectual stimulation and the overall
satisfaction which positively influenced the level of patient satisfaction. This result would point to the fact that
work of head nurses who are able to activate their staff has an effective impact which would subsequently
project in patient satisfaction in a positive manner. In contrast, patient satisfaction falls with the increasing
difference in the perception of the element idealised influence (behaviour). A conflict between self-evaluation
and the perception of a head nurse as a role model by subordinates could lead to tensions and discomfort in
a workplace which logically results in lower quality care provided to patients.

Employers search for effective instruments in order to activate employees and encourage them to perform
better and achieve better quality when completing tasks. They take into consideration motivation programs
and introduce expensive benefit systems, sometimes to no desired or guaranteed effect. In some cases, all
that is needed is a change in leadership style. A manager performs various activities, such as planning,
organising and control. A leader’s main goal is to motivate, inspire and innovate. Leadership should give
a greater purpose to activities in such a way that employees identify themselves with it. In contrast, people use
management in such a way that goals are achieved without their greater personal engagement. In recent
years, a number of authors focusing on leadership point out the benefit of leadership in compare to
management (Avolio et al, 2009; Dinh et al, 2014). Nowadays, it is modern to combine elements from
traditional management in a sense of operating, and transformational leadership in a sense of leading.
Acknowledgement
This research was supported by internal grant of the University of Economics Prague [F6/78/2017].
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The Buffering Role of Ethical Leadership in Moral Disengagement:
Anticompetitive Behavioral Tendency Link
Salim Khan, Dapeng Liang, Adnan Muhammad Shah and Rizwan Ullah
Harbin Institute of Technology, China
salim@hit.edu.cn
ldp0920@hit.edu.cn
adnanshah486@gmail.com
Rizwanhit@yahoo.com

Abstract: Drawing on social cognitive theory of moral thought and action (Bandura, 1999, Bandura, 1991), we examine the
interplay of moral disengagement, ethical leadership and the tendency toward unethical behaviour in marketplace
competition context. We propose the positive relationship between employees’ moral disengagement and their tendency
for anticompetitive behaviour in marketplace competition. Besides, the social learning perspective presents ethical
leadership as a strong social factor that influences a variety of (un)ethical behaviour in the workplace. Taking this
perspective, the moderating role of ethical leadership was examined by proposing that the positive relationship between
moral disengagement and tendency for anticompetitive behaviour is mitigated by ethical leadership. We collected data
from field employees working in financial sector located in Pakistan (N = 393) to test the proposed relationships. Structural
equation model (SEM) was used to analyse the data. The results supported our proposed model. The findings of the study
have theoretical and practical implications and are discussed below.

Keywords: Ethical leadership, Moral disengagement, Unethical behaviour, Anticompetitive behaviour, Market competition

1. Introduction
Understanding the individual psychological process has long been considered as the best way to explain
unethical behaviour in organizations. The different psychological mechanisms such as: stress (D'Arcy et al.,
2014), self-control (LEE et al., 2016) and emotions (Duffy et al., 2012) are related to unethical behaviour in
organizational context. A possible reason behind this is that little evidence is found to support the
effectiveness of rule enforcement in handling unethical behaviour in organizations (Sackett and DeVore 2002).

Although ethical codes of conduct have commonly been established to curb unethical behaviour in
organizations, the effectiveness of this approach is still inconclusive (Weeks and Nantel, 1992). The problem of
unethical behaviour in workplace becomes more alarming because the majority of people who are involved in
wrongdoing in the workplace are not necessarily inherently bad (Bersoff, 1999). In fact, most of the unethical
practices in the workplace are committed by ethical individuals (Vikas et al., 2004) which advocates that the
unconscious, hidden forces of their psychological states may initiate or control such behaviours. In the same
line, the employees’ psychological states possibly define their anticompetitive behaviour in competitive
market, an area which has largely been overlooked. Although it has been previously suggested that the actions
of employees of a firm toward the rival firms are driven by their psychological states (Clark and Montgomery,
1998), yet there is lack of well-organized and empirical investigation that could relate such psychological states
to anticompetitive behaviour.

Given that strong market competition activates an instrumental frame of organizational members to perceive
the actions related to the market competition as business oriented instead of being ethically right or wrong
(Desmet et al., 2015). It implies that the organizational members will be motivated to put extra efforts into
their work to outperform their rival organizations, even may sometime intend to do unethical acts. Thus, we
define the tendency toward anticompetitive behaviour as the organizational members’ intentions to secure
their organizational/personal interests at the cost of violating the norms of competitive market. The opposite
is the tendency to competitive behaviour which represents the intentions of employees to indulge in activities
that help to give benefits to their business without violating the norms of the competitive market.

Going to know about the psychological process behind the anticompetitive behaviour, we propose a model
based on Bandura’ s social cognitive theory of moral thought and action (Bandura, 1999) to study the impact
of ethics related psychological factors on employees’ tendency for anticompetitive behaviour. The theory
assumes that environmental factors, personal factors (i.e., cognition and emotion) and behaviour, all interact
with, and affect each other. Based on the theory, we propose that the propensity of employees toward

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anticompetitive behaviour is influenced by the interaction of their cognitive and contextual factors. Moral
disengagement can be considered as maladaptive cognition because it labels a conglomeration of self-
regulatory process that allows people to reframe an unethical action as right and permissible without feeling
bad (Bandura, 1999). The ethical leadership is an important social factor which through the aspect of moral
manager, directs followers’ ethical behaviour or inhibits unethical behaviour (Brown and Treviño, 2006) and so
is proposed to have a buffering effect on the relationship of moral disengagement and tendency for
anticompetitive behaviour. The logic behind this proposition is that, the strong situational factors let the
individuals to know that a particular unethical behaviour is inappropriate under that situation and so reduce
the influence of internal cognitive factors in shaping the behaviour.

By proposing and empirically testing the model, we address an important research gap, that is, the joint effect
of moral disengagement and ethical leadership on the tendency toward unethical behaviour, though the
relationship is theoretically well explained by a previous study (Cianci et al., 2014). It is important to mention
that the direct relationship between authentic leadership and moral disengagement already exists (Knoll et al.,
2015). Also, the transformational leadership to have the attenuating effect on the positive relationship of
moral disengagement and unethical behaviour (Saidon et al., 2013), has also been empirically proved.
However, these two kinds of leadership are considerably quite distinct constructs from ethical leadership
(Brown and Treviño, 2006).

By doing so, the study aims to achieve that the tendency of employees toward anticompetitive behaviour is
vulnerable to ethics related psychological factors, both, internal (moral disengagement) and external factors
(ethical leadership).
2. Hypothesis development

2.1 Moral disengagement and Anticompetitive behavioural intentions

Moral disengagement has been said to be associated with unethical behaviour because it detaches such
behaviour from the feelings of self-censure and guilt that otherwise prevent an individual from doing unethical
acts (Bandura et al., 1996). This in turn reduces the cognitive dissonance that exists due to the inconsistency
between the personal moral standards and situationally demanding moral standards. Furthermore, moral
disengagement declines the saliency of ethical implications (Baron et al., 2015) because it interprets the
desired action as right or wrong in terms of self-interest (Paharia et al., 2013) instead of being morally right or
wrong. Moral disengagement also distorts the perceptions and rationales in such a way such that unethical
behaviour is not recognized as such (Martin et al., 2014). The previous research, both empirical and
theoretical, has established a positive relationship between moral disengagement and unethical decisions and
actions (Baron et al., 2015, LEE et al., 2016, Petitta et al., 2017, D'Arcy et al., 2014, Fida et al., 2015, Huang et
al., 2017, Bandura, 1991).

Based on the above discussion, we propose that moral disengagement is positively related to the tendency for
anticompetitive behaviour. Through moral disengagement, employees will reframe the anticompetitive actions
as right and permissible. For example, they may consider such actions to be an order from higher authority or
practiced by a whole group. This rationalization may tend them toward anticompetitive behaviour. Thus, it is
hypothesized that;

H1; Moral disengagement is positively related to the tendency for anticompetitive behaviour

2.2 Moderating role of perceived ethical leadership

From the perspective of social cognitive theory of moral thoughts and actions (Bandura, 1999, Bandura, 1991),
the effect of cognitive factors on tendency toward anticompetitive behaviour should depend on situational
influences. The previous study supported this reasoning by empirically verifying that high situational strength
buffers the effect of individuals’ moral disengagement on their tendency for engaging in unethical behaviour
(Knoll et al., 2015). The social learning theory describes ethical leadership as an important part of employees’
social environment that influences a wide range of behaviours including the (un)ethical behaviours in
workplace. The social learning view (a core concept of ethical leadership) recommends that followers practice
what they learn from their leaders by considering them as their role models (Bai et al., 2017). Some of the
characteristics of ethical leadership such as authenticity may discourage moral disengagement among their
followers by making them less vulnerable to self-esteem challenges, and so can make them to have a lower

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 Salim Khan, Dapeng Liang, Adnan Muhammad Shah and Rizwan Ullah

tendency for engaging in self-protecting and self-enhancing strategies (Heppner and Kernis, 2007). This notion
is consistent with a previous empirical finding that authentic leaders have lower tendency toward moral
disengagement and so toward unethical behaviour (Knoll et al., 2015). Furthermore, moral disengagement
driven by self-interest motive (Baron et al., 2015) can be said to convey promotion focus by pursuing personal
gains. The promotion focus in turn, has weak negative effect on moral judgement if there exists strong social
approval (e.g., ethical leadership) for the ethical judgement (Zoua and Chan, 2018).

Given the current context, the above discussion suggests that the moral traits of ethical leadership may
downplay the positive effect of employees’ moral disengagement on their tendency toward anticompetitive
behaviour.

Thus, we propose that;

Hypothesis 2;
Ethical leadership moderates the effect of moral disengagement on the tendency toward anticompetitive
behaviour.

3. Methods

3.1 Sample
The participants were recruited from financial sector in Pakistan and were included those employees who
were in close contact with the marketplace such as sales personnel, marketing staff, and branch managers. A
total of 450 surveys were returned, out of which 57 were found incomplete which reduced the final number to
393 to be considered for further analysis. Among the 393 respondents, 377 of them were male. Most had
bachelor’s degrees (55.2 %). Age ranged from 22 to 55 years old, the majority of whom were 20-30 years old
(52%). Most of them were employed in banks (79.4 %) while the rest of them were employed in insurance
(9.2%), financing companies (6.4 %) and mutual funds (5.1 %).

3.2 Measures
Measurement items in the survey instrument were either adopted or adapted from well-established scale in
the extant literature. Moral disengagement was measured with its two dimensions; displacement of
responsibility and diffusion of responsibility as they were found to be the most widely used mechanisms of
moral disengagement in the literature. The nine items adapted scale was taken from three different studies
(Moore, 2008, Barsky, 2011, Hystad et al., 2014). Cronbach’s alpha (α) for the scale was 0.95. The tendency for
anticompetitive behaviour was measured with participants’ responses to assumed statements that construed
morally questionable behaviour in the context of market competition. The items were taken from previous
studies (Longenecker et al., 2006, Abratt et al., 1992). Some of them were adapted to match the context of the
current study. The responses ranged from 1 (never acceptable) to 7 (always acceptable). α for the scale was
0.89. Ethical leadership was measured with 10 items adopted from (Brown et al., 2005). α for the scale was
0.93. The items of both moral disengagement and ethical leadership were measured on 7-point scale ranging
from completely disagree (1) to completely agree (7). See appendix A for study questionnaire.
4. Results
SPSS and AMOS were used to analyse the data. We followed a two-step approach to conduct analysis and
deduce results.

The measurement model was estimated using confirmatory factor analysis (CFA). The hypothesized three
factors structured model for the 24 items fitted the data very well. The model fit indices suggested an
2
excellent model fit (χ /df = 1.06, CFI = 0.99, TLI = 0.99, SRMR = 0.026, RMSEA = 0.01). The composite reliability
(CR) for the constructs ranged from 0.891 to 0.937, and the average variance extracted (AVE) ranged from 59.8
% to 62% (Fornell and Larcker, 1981). To check for discriminant validity, the square root of AVE (the diagonal,
bold letters in the table) was greater than the correlation between each pair of constructs (Fornell & Larcker,
1981). See table 1 for the correlation.
Table 1: Descriptive statistics and Pearson correlations

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 Salim Khan, Dapeng Liang, Adnan Muhammad Shah and Rizwan Ullah

Mean SD Moral Anticompetitive behavioural Ethical

disengagement tendency leadership
Moral 5.3670 1.46919 0.773
disengagement
Anticompetitive 5.3679 1.31626 0.384** 0.842
behavioural tendency
Ethical leadership 2.5160 1.23422 - 0.416** - 0.290** 0.788

The proposed relations among the latent variables were examined through structural equation model (SEM).
2
The model fit indices showed an excellent model fit (χ /df = 1.33, CFI = 0.99, TLI = 0.99, SRMR = 0.023, RMSEA
2
= 0.02). The R for the model was 0.25, above the threshold value of 0.10 (Chitsaz et al., 2017). Regarding the
path coefficient of the structural model analysis, the direct effect of moral disengagement on tendency toward
anticompetitive behaviour (H1) was significant (β = 0.33, p < 0.001). Regarding hypothesis 2 (H2), the
interaction term (moral disengagement × tendency for anticompetitive behaviour) was significant and was in
the intended direction ( -0.30, P < 0.001), indicating the moderating effect. See figure 1 for the moderating
effect of ethical leadership.

Figure 1: Interaction effect of ethical leadership

Also see table 2 for the regression results.
Table 2: Regression Analysis
β SE Sig

Hypothesis 1 0.33 .04 <.001

Hypothesis 2 -0.30 .06 <.001

5. Discussion and implications

Results of the present study provided evidence that moral disengagement is directly related to the tendency
for anticompetitive behaviour and that ethical leadership has a buffering role against this relationship. The
results suggest that the perception of ethical leadership sends the cues about the inappropriateness of
anticompetitive behaviour and so moral disengagement doesn’t work anymore to tend employees for
anticompetitive behaviour. Thus, the current findings support the view of situational strength in behavioural
ethics research (Knoll et al., 2015). The role of ethical leadership in current study also highlighted the
importance of organizational leaders to oversee the unethical behaviour of their followers in market
competition context in contrast to the previous finding that leaders discipline their employees’ ethical
transgressions based on their financial value for the company in the same context (Desmet et al., 2015).

Theoretically, the present study supports approaches that conceptualize unethical behaviour as a function of
personal and situational factors (Moore and Gino, 2013, Martin et al., 2014) and extends our understanding of

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 Salim Khan, Dapeng Liang, Adnan Muhammad Shah and Rizwan Ullah

how these factors’ effects might be integrated. About the influence of personal factors, our research indicates
that moral disengagement is positively related to tendency for anticompetitive behaviour, but at the same
time, such effect depends on the nature of situation.

The present study offers practical implications especially for those employees who are primarily responsible
for increasing organizational sales target against the rival organizations in a competitive market. As the
findings suggest that ethical leadership promotes ethical behaviour or inhibits unethical behaviour among
employees, organizations should design structure (i.e., hierarchical arrangement of lines of authority,
communication etc.) in such a way that could facilitate the transmission of ethical leadership traits from the
leaders to followers. Several studies have proposed different models that detail how senior leaders influence
their followers’ ethical conduct in organizational context. Schaubroeck et al. (2012) developed and empirically
tested a multi-level “ethical leadership embeddedness model” based on previous theorizing (Schein, 2010,
Schein, 1985) that describes how leaders influence their followers’ ethical cognition and behaviour within and
across organizational levels. According to this model, ethical leaders embed their ethical leadership traits into
lower level followers by a hierarchy of subordinate ethical leaders, and by fostering an ethical culture through
shared understanding of leadership traits that diffuses into lower level employees by developing such culture
at lower level units. The model also describes that how subordinate ethical leaders promote the senior ethical
leaders’ thoughts by developing ethical culture at their respective work units.

Given that organizational leaders build employees’ morality, the organizations should invest resources to
develop their leaders as ethical role models for their followers. The ethical behaviour of such leaders should be
regularly evaluated, developed and rewarded. The degree of ethical leadership behaviour could be added into
a 360-degree feedback assessment and reward system in HRM practices. Subsequent training programmes
could involve ethical leadership development.

Lastly, it is clear from the findings that moral disengagement and ethical leadership have simultaneously
opposing effects on anticompetitive behavioural tendency. Ethical leadership works against the moral
disengagement by highlighting the wrongness of anticompetitive behaviour to the actors. This role of ethical
leadership reflects its previously studied role (Bormann, 2017). This finding should inform leadership training
intervention to strongly focus on the role of contrasting stimuli in the followers’ behaviour.
6. Limitations
The current study has certain limitations. One of the limitation is our dependent variable is based on assumed
statements that don’t capture the actual behaviour. Due to the difficulty of collecting data, we followed the
previous approach (Baron et al., 2015) by using such statements to measure unethical behaviour but it would
be useful for future research to collect data on respondents’ actual unethical behaviour in order to accurately
access the hypothesized relationships. Second, our results cannot completely rule out the causal mechanisms
other than the ones that we proposed. Our results merely verified the associations between the focal variables
instead of predictions. Future studies should use experimental designs to establish the causality of these
associations.
Acknowledgement
We acknowledge that

1. There is no conflict of interest among the authors.

2. All procedures performed in studies involving human participants were in accordance with the ethical
standards of the institutional and/or national research committee and with the 1964 Helsinki
declaration and its later amendments or comparable ethical standards.
3. Informed consent was obtained from all individual participants included in the study.
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Appendix A: Study Questionnaire

1. Moral disengagement
1. A person from a group should not be blamed for the damage that a group of people causes.
2. In a marketplace, where everyone ignores rules, there is no reason not to do so.
3. It’s okay to do anticompetitive tactics if the whole company agrees that it is the best way to handle the
competitive situation.
4. If a group of business competitors agrees to do something that violates the rules of a market, it is
unfair to blame an individual in the group for it.
5. If employees are working under threatening competitive marketplace, they cannot be blamed for
violating rules.
6. If employees are not properly supervised in a marketplace, they should not be blamed for violating
rules.
7. Employees cannot be blamed for any wrongdoing in marketplace if they feel that their boss pressured
them to do so.
8. Employees are not at fault for wrongdoing if their boss puts too much pressure on them to perform in
marketplace.
9. If an employee perceives that his/her company wants him/her to do something unethical in
marketplace, it is unfair to blame the employee for doing it.

2. Ethical Leadership
The leader at your organization:

1. Conducts his/her personal life in an ethical manner

2. Defines success not just by results but also the way that they are obtained
3. Listens to what employees have to say
4. Disciplines employees who violate ethical standards
5. Makes fair and balanced decisions
6. Can be trusted
7. Discusses business ethics or values with employees
8. Sets an example of how to do things the right way in terms of ethics
9. Has the best interests of employees in mind.
10. When making decisions, asks “what is the right thing to do?”
3. Anti-competitive behavioural tendency
1. As part of the competitive strategy for an offering, the firm just changed its name and marketed it as
“new and better,” even though its other characteristics were unchanged.
2. A company president found that a competitor had made an important scientific discovery which would
sharply reduce the profits of his own company. An employee is given the responsibility to hire a key
employee of the competitor in an attempt to learn the details of the innovation.
3. A representative of the firm deplored the chaotic bidding situation and cutthroat competition. He
therefore, reached an understanding with other major contractors to permit bidding which would
provide a reasonable profit.
4. You hire a competitor’s employees to learn competitor’s trade secrets.
5. You indulge in a personal relationship with a competitor’s employee in the hope of gaining privileged
information.

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Leadership in Social Care: A Case Study from the Czech Republic
Agáta Marková
University of Economics, Prague, Czech Republic
xmara32@vse.cz

Abstract: The study connects two current and important topics: Leadership and leadership styles represent one of the
most frequently discussed topics in connection with Human Resource Management (HRM) while the issue of social care is
becoming more and more topical from the view of the ageing population. The provision and quality of social care services
are dependent on human resources. Therefore, a deeper understanding of HRM in this field is strongly required to ensure
quality social care services in the near future. The aim of this study is to identify the predominant leadership style of lower-
level managers in social care, identify how caregivers perceive this style and assess how this style impacts the selected
factors. This is done by utilising the transformational and transactional leadership theory. Although it is currently one of
the most researched and influential theories of leadership worldwide, not enough attention has been paid to it in the
Czech Republic. The main reason is most likely that the Czech translation of the Multifactor Leadership Questionnaire
(MLQ), the most frequently used measuring method constructed by the authors of the theory, was not validated. As a
result, the Czech Leadership Questionnaire (CLQ), which has been recently constructed and validated for the Czech
Republic, is used in the study. The research took place in the chosen organization providing social care for the elderly in the
Central Bohemian Region, which was established by the state. The findings of this study show that the predominant
leadership style is transformational leadership. This leadership style has been confirmed by both managers and caregivers.
There were no differences in leadership between the retirement home and home care services in this organisation.
Correlation analysis suggests that leadership style has a statistically significant impact on job satisfaction, staff intent to
leave or organizational identification; however, the correlation is weak or moderate and the differences between the
impact of the transformational and transactional leadership styles are small. Considering the ageing population, further
research in this field is desirable. Studies such as this can contribute to a better understanding of social care leadership and
to preparing better training of social care managers with the aim of quality care; nevertheless, a sample extension is
necessary.

Keywords: Leadership in Social Care, Leadership Style, Transformational Leadership, Retirement Homes, Home Care, Czech
Republic

1. Background
While the ageing population is a well-known demographic trend, which is also typical for the Czech Republic,
there are many issues resulting from this trend that still require greater attention. One of these issues is social
care for seniors. Both society and family structure and behaviour have changed (fertility rate, divorce rate,
singles, job mobility, etc.) and these changes have been making the ageing of individuals not a family, but a
public affair, which demands to develop public policies (McSweeney-Feld and Oetjen, 2012). Most countries
offer a range of both institutional and non-institutional social care services. Nevertheless, existing capacities
will be not sufficient in the future in the Czech Republic and, thus, social care should be strategically planned
(Průša, 2017).

Ensuring social care for the elderly has many aspects that need solving and planning (financing, availability,
quality, etc.). Human resources represent the most valuable resource for each organisation. Since social care is
a service, then especially caregiver staff are absolutely essential. Moreover, they are supposed to be one of the
key performance factors in social and healthcare (Ghenţa, 2015). Consequently, proper HRM is exceedingly
needed to achieve high-quality and better outcomes from care (Kabene et al., 2006). HRM is not only job
administration, recruitment and remuneration, but also leadership.

Leadership is a phenomenon which has been examined for over 100 years but is still not fully understood
(Antonakis et al., 2004). There are almost as many definitions of leadership as there are researchers addressing
the issue. Yukl (2012) maps different definitions and brings his own, which could be adopted to this paper:
“Leadership is the process of influencing others to understand and agree about what needs to be done and
how to do it, and the process of facilitating individual and collective efforts to accomplish shared objectives.”

Leadership and leadership styles are such an interesting research subject because they are supposed to
influence many aspects (Cummings et al., 2010). This influence has also been tested in the care sector;
however, more attention is focused on healthcare than social care. Some studies indicate that leadership style
could directly or indirectly affect the quality of care (Westerberg and Tafvelin, 2014), job satisfaction (Lok and

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Crawford, 2004; Madlock, 2008), employees’ stress levels and well-being (Skakon et al., 2010) and
organisational identification (Zhu et al., 2012). If so, it is highly desirable to know which leadership approaches
lead to satisfied, motivated, and engaged employees providing high-quality social care – which is required both
now and even more so in the future.

1.1 Theoretical Framework

Since leadership has been at the forefront of researchers’ attention for many years, there are numerous
theories that attempt to explain this phenomenon (Antonakis et al., 2004). Transformational and transactional
leadership theory (Bass, 1985; Burns, 1978) ranks among the most widespread theories and theories
establishing a new paradigm in the leadership field (Conger, 1999). Despite this, a critique of this theory has
also been made. For example, although the main leadership styles are further divided into more components
(way of behaviour), these components have similar relations with different factors (Van Knippenberg and
Sitkin, 2013). Similarly, the positive results on behalf of transformational leadership could be selective and
ignore the unsupportive results (Tourish, 2013). Therefore, these theories should be further tested and
eventually modified and thus, this study utilises these theories.

Briefly put, transactional leadership is typically connected with objective setting, outcome controlling and
rewarding (Procházka and Vaculík, 2015). This leadership is based on the fulfilment of contractual obligations –
transaction (Antonakis et al., 2003). Alternatively, transformational leadership is based on uneconomical
authority sources. A transformational leader is proactive, aids employee development and raises awareness of
organisational interests and goals (Antonakis et al., 2003; Procházka and Vaculík, 2015). Nevertheless, it must
be said that transformational and transactional leadership styles are not mutually exclusive opposites and one
leader can combine them depending on the situation (Bass, 1985). One possibility is even the absence of
leadership (Laissez-faire).

Research into transformational and transactional leadership has not been widespread in the Czech Republic
although these theories are popular abroad where there exists the MLQ measuring method constructed for
research purposes by the authors of the theory (Bass and Avolio, 2004). The main reason is most likely that the
Czech translation of the MLQ questionnaire has not been validated and until recently there has been no
alternative. However, in 2016, CLQ was constructed and validated, which enabled to start leadership research
in the Czech Republic (Procházka et al., 2016) and this will also be used in this paper. MLQ and CLQ work on
the same principles of data collection and evaluation is very similar. Table 1 shows the components of the
individual leadership styles, which are described in detail by Antonakis et. al. (2003). As can be seen, the only
difference between MLQ and CLQ is that CLQ compounded Idealised attributes and Idealised behaviour in
Charismatic behaviour.
Table 1: Components of leadership – comparison of MLQ and CLQ
Leadership style MLQ CLQ
Idealised attributes
Charismatic behaviour
Idealised behaviour
Transformational Inspirational motivation Inspirational motivation
Intellectual stimulation Intellectual stimulation
Individual consideration Individual consideration
Contingent reward Contingent reward
Management-by-exception (active) Management-by-exception active
Transactional
Management-by-exception Management-by-exception passive
(passive)
Passive Laissez-faire Laissez-faire

Comment: Based on (Bass and Avolio, 2004), (Procházka et al., 2016)

This introduction should demonstrate that the two current topics are connected. On the one hand, there is
social care for the elderly, which will acquire importance. On the other hand, leadership and leadership style
could lead to “better” social care, whether this means being more effective, with higher quality, with satisfied
and motivated employees or something else. This study is an initial part of the prepared social care leadership
research. The results of this research should contribute to understanding leadership in this area in the Czech
Republic. More specifically, it should investigate which leadership style is mostly used in Czech social care, the

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impact it has on caregivers and consequently on social care and if social care leadership fundamentally differs
from the other areas. Moreover, it should also provide practical contributions, for example, preparation of
better training courses for future managers who will lead their subordinates in the provision of quality social
care.

Since there has been lack of leadership research in the Czech Republic (Procházka et al., 2016) and insufficient
attention is paid to social care worldwide, this partial study intends to, in accordance with the whole of the
prepared research, identify the predominant leadership style in the selected Czech organisation. As managers
do not have to evaluate themselves objectively (Kokkinen et al., 2007), it is appropriate that subordinates also
evaluate their managers. Furthermore, as social care leadership is an unexplored area enabled by the selected
organisation, it is relevant to investigate the differences between different social care services. To the best of
my knowledge, no research currently exists regarding this question although this finding could lead to better
and maximum personalised preparation of the managers. Finally, this study intends to explore the impact of
leadership styles on job satisfaction, the intent to leave or organisational identification, which has occurred in
other studies. With this in mind, these research questions were formulated:

x RQ1: Which leadership style is used from the superiors’ and subordinates’ point of view? Are there any
differences in the perception of leadership?
x RQ2: Are there any differences in leadership between retirement home services and home care
services?
x RQ3: What impact does the leadership style have on the selected factors?

Although the study makes a practical contribution only for the analysed organisation and the theoretical
contribution is also limited, it enables to attempt the research and evaluation methods and to interpret the
initial results of the prepared research.

2. Data and Methods

The research is focused on analysing the situation in the Czech social care market. The Social Services Act
(Czech Republic, 2006) identifies eleven different social care services intended for the elderly. These services
are divided into three groups – residential, outpatient and terrain social care services. In 2017, there were over
2300 organizations providing these services in the Czech Republic. One provider can offer more than one kind
of service. The most frequented services are terrain service home care (712 providers) and residential service
retirement home (525 providers). In Figure 1, it can be observed that over half of the organisations providing
these two services were established by the state (by the Ministry of Labour and Social Affairs or lower self-
governing units). It is a typical that in the entire social care services market in the Czech Republic that social
care is mostly ensured by state organisations.

Figure 1: Retirement homes and home care providers by sector (Source: Based on (MPSV, 2017))

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 Agáta Marková

2.1 Place and Method of Data Collection

This study was implemented in a selected centre of social care services located in a district town in the Central
Bohemia Region during April 2018. The centre was established and is owned by the state and provides further
social care services. Two such services are intended for the elderly, i.e. a retirement home and home care.
Thus, this organisation represents the most common case on the Czech social care market. The coexistence of
both services in the chosen organization enabled them to be compared.

The study is based on a quantitative research design. To answer the research questions, a questionnaire was
constructed and primary data was collected. The questionnaire consisted of three thematic areas. The first
area of the questions investigated the respondent’s demographic and job information. The second part was
adopted CLQ concerning leadership style. In the last part, the respondent’s opinion on different statements,
which could be influenced by leadership style, was investigated. The respondents were the employees, both
superiors (lower-level managers) and subordinates (caregivers), who were all involved in the provision of
retirement home and home care services. In Figure 2, there is the partial organisational structure of the
selected organisation. The superiors (S1–S6) had to self-evaluate their own leadership. Each of them
supervises their own team of caregivers (T1–T6) who evaluated them.

Figure 2: Organisational structure

2.2 Data Description and Methods of Analysis

Firstly, basic information about the respondents was analysed by descriptive statistics. The results are in Table
2. It was shown that 44 respondents completed the questionnaire (6 managers and 38 caregivers). All lower-
level managers and also all caregivers are women. Therefore, gender differences cannot be observed. The
average age is 44.8 years. Although the total average age of managers and caregivers does not differ much, the
managers are older than the caregivers in the retirement home while the managers are younger than the
caregivers in home care. Most managers (83.3%) have a university education and most caregivers (81.6%) have
completed secondary school. The average length of employment is over 6 years. Managers only stay in their
positions for 2.3 years although they have worked in the organisation for over 4 years. There are more stable
care staff in home care (9 years) than in the retirement home (6.1 years).
Table 2: Respondents description
Retirement home Home care Total
Total 15 29 44
Frequency Managers 3 3 6
Caregivers 12 26 38
Total 15 female 29 female 44 female
Sex Managers 3 female 3 female 6 female
Caregivers 12 female 26 female 38 female
Total 46.8 42.1 44.8
Average age Managers 50.3 37.7 44.0
Caregivers 43.2 46.5 45.5
Total - - -
Education Managers 100.0% university 66.6% university 83.3% university
Caregivers 66.6% secondary 88.5% secondary 81.6% secondary
Average length Total 5.6 6.4 6.2

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 Agáta Marková

Retirement home Home care Total

of employment Managers 5.0 (2.0) 3.7 (2.7) 4.3 (2.3)
Caregivers 6.1 9.0 8.0

Data from the second (CLQ) and the third part (statements) of the questionnaire was first analysed using
descriptive statistics. Comparison of the leadership style evaluation by managers and by caregivers was
conducted by paired t-test. The same method was used to compare social care services. The impact of the
leadership style on the other factors was examined by correlation analysis. The results of the analysis are
presented in the next part.
3. Results
The first research question asked which leadership style was used in the selected organisation providing social
care for the elderly. The second part of the questionnaire (CLQ) served to investigate it. The managers had to
evaluate themselves while the caregivers evaluated their superiors. Table 3 shows the average scores for
individual leadership styles by superior S1–S6 and teams of caregivers T1–T6. The highest average score should
denote the predominant leadership style (highlighted). Both the superiors and teams mostly evaluated the
leadership style used as transformational (especially the charismatic behaviour component).

RQ1 also asked if the perception of superiors and subordinates differed. The difference between pair ST (S1T1,
S2T2…) was tested by paired t-test. In most cases, there was no statistically significant difference (p-values in
Table 3). This shows that the managers’ self-evaluation and teams’ perception are almost the same. There
were two exceptions: pair S5T5 evinced a statistically significant difference at 5% confidence level (p-value
0.005) and pair S2T2 at 10% confidence level (p-value 0.052).
Table 3: Comparison of the leadership style evaluation by managers and caregivers (average scores)
S1 T1 S2 T2 S3 T3 S4 T4 S5 T5 S6 T6
Charismatic behaviour 7.0 5.7 6.0 6.1 5.8 6.0 7.0 6.4 6.3 6.4 6.8 5.7
Inspirational
6.8 5.3 5.0 6.0 5.3 5.3 6.8 6.4 5.8 6.1 6.5 5.6
motivation
Intellectual stimulation 7.0 5.6 5.5 6.0 5.5 5.4 6.5 6.2 5.8 6.1 6.3 5.9
Individual
6.8 4.8 6.0 5.7 5.5 5.8 6.3 6.4 6.0 6.5 7.0 5.7
consideration
Contingent reward 6.3 4.6 5.0 4.9 5.5 5.1 5.5 6.0 5.3 6.2 5.5 5.1
Management-by-
6.8 6.0 5.3 5.8 5.8 5.3 6.5 6.3 5.8 6.4 6.5 5.3
exception active
Management-by-
1.0 3.7 1.3 3.1 3.5 2.4 2.8 1.6 2.3 3.1 2.0 3.6
exception passive
Laissez-Faire
1.0 3.4 1.3 2.9 2.0 3.3 1.5 1.7 2.0 2.1 1.5 3.5
Leadership
P-value of paired t-test 0.527 0.052 0.907 0.246 0.005 0.665

The second research question addressed the potential differences between the retirement home and home
care. The results did not show any. The summary results (Table 4) confirmed the predominant style of
transformational leadership (especially charismatic behaviour). The answers from the home care teams (T4–
T6) represented the only deviation from the others; the maximum score got another transformational
leadership component - individual consideration, but this was not statistically significant.
Table 4: Comparison of leadership style by social services (average scores)

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 Agáta Marková

Retirement home Home care Total

S1–S3 T1 –T3 S4–S6 T4–T6 S T
Charismatic behaviour 6.3 5.9 6.7 6.1 6.5 6.0
Inspirational motivation 5.7 5.5 6.3 6.0 6.0 5.9
Intellectual stimulation 6.0 5.6 6.2 6.1 6.1 5.9
Individual consideration 6.1 5.4 6.4 6.2 6.3 5.9
Contingent reward 5.6 4.9 5.4 5.8 5.5 5.5
Management-by-exception active 5.9 5.7 6.3 6.0 6.1 5.9
Management-by-exception passive 1.9 3.0 2.3 2.8 2.1 3.0
Laissez-Faire Leadership 1.4 3.2 1.7 2.4 1.5 2.9
P-value of paired t-test 0.857 0.909 0.662

Finally, the impact of the leadership style on the selected factors was verified (RQ3). Caregivers had to
evaluate six statements on a scale from 1 (“I do not totally agree”) to 7 (“I totally agree”). The statements were
concerned with total job satisfaction, feelings at work, potential turnover (intent to leave) and organisational
identification. There is a list of the statements with the average scores in the brackets:

x ST1 – I am satisfied with my job (5.3)

x ST2 – I like my job (5.9)
x ST3 – I feel comfortable/happy in my work (5.3)
x ST4 – I will not change my job next year (6.1)
x ST5 – I will not change my job in the next 5 years (5.3)
x ST6 – My identification with the organisation (2.9; managers 3.5)

The results of the correlation analysis are in Table 5. With the exception of ST2, it was shown that there are
statistically significant relations between the statements and leadership styles. The strongest relations are
between the statements and the transformational style components (highlighted) although the differences are
relatively poor. Moreover, the value of correlation coefficients varies at around 0.4, which means weak or
moderate correlation. Furthermore, it is necessary to highlight that the management by exception passive and
laissez-faire components indicated a negative correlation with all the statements, unlike the others.
Table 5: The correlation analysis between leadership style and selected factors
ST1 ST2 ST3 ST4 ST5 ST6
Charismatic behaviour 0.44*** 0.26 0.45*** 0.42*** 0.49*** 0.47***
Inspirational motivation 0.44*** 0.26 0.46*** 0.56*** 0.56*** 0.42**
Intellectual stimulation 0.36** 0.15 0.34** 0.53*** 0.50*** 0.41**
Individual consideration 0.45*** 0.26 0.46*** 0.54*** 0.37** 0.44***
Contingent reward 0.40** 0.29* 0.43*** 0.55*** 0.42*** 0.18
Management-by-
0.28* 0.10 0.29** 0.34** 0.55*** 0.24
exception active
Management-by-
-0.41*** -0.27* -0.47*** -0.04 -0.25 -0.42***
exception passive
Laissez-faire -0.35** -0.26 -0.39** -0.16 -0.32* -0.35***

Comment: *, **, *** indicate statistically significant results at 10%, 5% or 1% sig. level

3.1 Discussion
The findings of the completed study show that the transformational leadership style is predominant in the
selected organisation providing social care for seniors. This leadership style is considered to lead to
effectiveness, satisfaction with leaders and extra effort by employees, also in social work (Gellis, 2001).

Moreover, transformational leadership should support creating a long-term relationship between

subordinates and customers (Liao and Chuang, 2007), which is also important in social care. However,
although this style is generally perceived to be better than transactional or laissez-faire, some results from the
healthcare area show that this style could contribute to the subordinates’ emotional exhaustion (Gaudet et al.,
2014). As a transformational leader is able to stimulate subordinates to maximize their performance, this could
even contribute to burnout syndrome (Harrison, 1987), which is common problem in the care professions

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(Pines and Maslach, 1978; Narumoto et al., 2008). Therefore, it is not possible to draw strict conclusions and
make recommendations until the consequences of this style in social care have been thoroughly explored.

Furthermore, no differences were discovered between the managers’ and caregivers’ perception of leadership.

This indicates that the managers evaluated themselves objectively. It is not uncommon that lower-level
managers present their own leadership skills in a favourable light while they are, for example, dissatisfied with
their superiors (Kokkinen et al., 2007). In the selected organisation, the lower-level managers have self-
awareness, which could have a positive impact on both their own and their team’s performance (Atwater and
Yammarino, 1992).

The second research question asked if leaders in the retirement home have another leadership style compared
to the leaders in home care. The findings of this study do not indicate any difference. This could be caused by
the fact that, especially in this case, the services compared are very similar. Usually, a retirement home is
residential social care services connected with long-term care in an appropriate institution. On the other hand,
home care should be provided at the senior’s home. Nevertheless, there is home care provision in so-called
“homes with home care”. However, residence is not a part of social services, it is not provided in a natural
home environment and it is very similar to retirement home. If home care had been provided in the typical
way, the results would have differed so this is a question for further research.

The last research question investigated if there is a relation between leadership style and selected factors such
as job satisfaction, intent to leave (potential turnover) and organisational identification. The results of the
correlation analysis can be seen in Table 5. Previous studies (Lok and Crawford, 2004; Madlock, 2008; Skakon
et al., 2010; Zhu et al., 2012) suggested that there should be a relation between the leadership style and all
factors. The correlation analysis shows that there are statistically significant relations but only on a weak or
moderate level. Moreover, the differences between the impact of transformational and transactional
leadership styles are small, which is in accordance with the previously mentioned critique (Van Knippenberg
and Sitkin, 2013). It is possible that the leadership style is not the only single influencing factor. To verify the
previous research results, the research sample should be extended, other factors added and their moderation
role tested.
4. Conclusion
A rising proportion of people aged 65 and over in society raises the question of who will care for them when
they have become infirm and dependent on others’ help. Although family members have historically been the
major caregivers for their older relatives, this solution will probably not be possible and appropriate in the
future. Not only that the number of potential caregivers is declining (the caregiver support ratio) (Reinhard et
al., 2015), but the structure of the family and individual’s behaviour have been changing (divorce ratio, single-
parent households, job mobility, etc.) (McSweeney-Feld and Oetjen, 2012). Therefore, the system solution has
to be finding.

In view of the fact that social care is a labour-intensive sector, human resources are crucial for its proper
functioning. Nevertheless, recruitment, job descriptions and remuneration do not represent the core of a good
HRM. The employees have to be satisfied, motivated and involved in strategy achievement. In other words, to
ensure organisational success and satisfied customers, it is necessary to take care of the employees (Chuang
and Liao, 2010). In addition to other practices, leadership should contribute to achieving set goals.

In general, the aim of this study is to bring social care and leadership in social care into focus. More specifically,
the study is the initial part of broader research, which should contribute to a deeper understanding of social
care leadership and subsequently to preparing training courses for future social care managers. This study
investigates the predominant leadership style in the chosen organisation providing social care services for the
elderly in the Czech Republic and utilising the transformational and transactional leadership theory. In
addition, the differences between superiors’ and subordinates’ leadership perception and between two social
care services are identified. Finally, there is the verification of the leadership impact on job satisfaction, intent
to leave and organisational identification.

358
 Agáta Marková

The results show that the transformational leadership style is predominant in the selected organisation. No
differences were found between the managers’ self-evaluation and the evaluation by the caregivers and
between the social services. Although the cited studies suppose the influence of leadership style on selected
factors, the correlation coefficients indicate weak or moderate correlation. Moreover, with the exception of
the laissez-faire leadership style, there were few differences between the transformational and transactional
leadership styles.

The results of this study raise more questions than they answer. Is the transformational leadership style typical
of all social care organisations? Does this style have a positive impact on caregivers? Is the leadership style
only one way to influence the required factors? The contribution of this study lies in opening up the discussion
on this topic and the research area, especially in the Czech Republic. In addition, it enables trying research and
evaluation methods and the interpretation of the initial results. The main limitation was the sample size, which
makes any generalisation of the result impossible. Thus, to fulfil the goal of the introduced research and make
real theoretical and practical contributions, the sample should be extended.
Acknowledgements
This contribution was supported by the internal grant of the University of Economics, Prague [F6/17/2018].

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Masters
Research
Papers

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362
Labour Flexibility as Management Practice
António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio
University de Evora, Portugal
anevesdionisio@gmail.com
martamotasampaio@gmail.com
ruiahgoncalves@gmail.com

Abstract: The issues related to labour flexibility in the field of human resources management have been subject of
numerous reflections in the academic field. Given the competitive and dynamic context of the contemporary business
environment, organizations seek to find solutions that allow them to create value, either by introducing structural changes
or by incorporating operational strategies. However, globalization and technological and economic development are
factors that systematically influence companies and organizations around their strategic planning and flexibility, it also
appears as an obvious need nowadays, both in the way the organization structures itself to survive the intense competitive
climate of the markets and as its employees address the adversities that arise from the processes that involve the
management itself. So, if these processes adopt new work practices such as labour flexibility or multipurpose functions, do
they promote the development of employees' competencies? And how do the employees react to change? This article is
the result of an empirical study carried out in a service sector company whose employees act in the international area,
using diversified dynamics and being subject to constant technological changes. In this context, the study was conducted
through an online questionnaire, directed to employees who were able to survive to organizational strategies of flexible
work and multidisciplinary tasks over time. The results show that labour flexibility has a positive relation in the
development of the employees' competences, although there are differences between flexibility as a practice and the
expectation regarding the expected performance. On the other hand, although people agree that these processes promote
motivation and creativity, there is resistance to change and assimilation and adaptation to new practices. It is emphasized
that it is in this kind of environment that the profile of the employee who is able to perform different tasks, to think, to
innovate and to plan strategically.

Keywords: Labour Flexibility, Learning, Competencies, Organizational Change.

1. Introduction
Globalization, technological and economic developments are factors that systematically influence the strategic
planning of companies and organizations. In today's dynamic and organizational competitiveness, supported
by this evolution, by changes in consumer practices and socio-political changes, organizations are forced to
realign their processes and implement new management models using skills to an effective management of
their human capital (Neves et al., 2015).

The issues on labour flexibility processes are in this context, a very important domain of analysis in the current
economic reality, from the theoretical and conceptual terms, down to the practical level of everyday life of the
company (Carvalho, 2004). These practices, although divergent in their analysis, are mainly related to the way
in which people seek to operate with competitiveness and sustainability (Drucker, 2000). Harness the potential
of employees to the maximum in their roles through their knowledge and skills and have a set of components
adapted to the new realities, are now factors of utmost importance for the success and performance of an
organization (Gillen, 2000).

It is in this context that labour flexibility can make the approach to new realities and new challenges more
sustainable, giving greater coverage to the knowledge and experiences in the development of capacities and
the increasing demand for competent, flexible and differentiating employees (Camera, 2007). This type of
paradigm, based on the construction of new ideas, new methods and new approaches based on studies,
forecasts and processes, thus composes the whole system of management, will help to increase value and
build new knowledge (Ferreira et al, 2011). It was also these paradigm shifts that demanded of employees an
extreme ability to adapt to new work contexts.

Flexibility at work is a much discussed topic in academia and business, since depending on how organizations
apply and put it into practice, it can have the most distinct implications (Cardoso, 2006). According to
Gonçalves (2014), it is the people who contribute most to the success of organizations, and it is fundamental
to foster the development of their competencies. It is according to this assumption that the development of
competencies can arise directly through the stimulation of the individual skills of employees based on training,

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

flexibility and internal dynamics that allow the exchange of knowledge at a formal and informal level
reinforcing the employees' own relational networks (Ferreira et al., 2011).

One of the most important characteristics of changes in the work organization in recent decades is the use of
flexible forms of work. Since the 1980s, the idea of flexibility has begun to spread in companies and to be seen
as a form of workforce management, strongly supported on the increasing use of flexible work, thus
generating competitive advantage in dynamic environments (Prieto and Santana , 2012). However, there are a
number of internal and external factors that affect organizations, such as the tasks that employees develop,
perform, or execute. With the use of functional flexibility, companies are looking for other solutions that meet
their pretension to respond more easily to the current challenges, especially with the reduction of labour costs
(Archive, 2014). In practice, flexibility can enhance the organization's ability to reconfigure and position itself in
the marketplace through the worker dynamic capabilities (Prieto and Santana, 2012; Liao and Marsillac, 2015).

Furthermore, flexibility has been associated with constant organizational changes, creating a bigger support to
strategic planning and in the direct benefits it can provide to organizations (Bessant and Tidd, 2015). On the
other hand, associated with this reality, there is a need to redefine human resource management policies,
such as compensation, performance evaluation or rewards, being labour flexibility capable of modifying the
circumstances in which these tasks take place (Prieto and Santana, 2012). Thus, the development of human
potential based on the flexible, diversified and integrated workforce in the organization's strategy will be
considered as the pillar of support for the entire competitive structure in organizations, regardless of the
market where they may be inserted (Thompson et al., 2008). In fact, it is increasingly evident that the
organization's sustainability and productivity depends on the value created by human capital. The complexity
and technical diversity, with which organizations are confronted in competitive markets, makes mandatory the
development of practices that allow them to prepare and anticipate the constant changes in the labour market
(Sekhar et al., 2016). It is in this scenario that the tendency for the use of labour flexibility shows the ability of
employees to increase their performance by increasing their efficiency and quality (Rebelo, 2006).

It is in this area that the interest arises in focusing in this article some reflections on the new approaches in the
management associated to the labour flexibility, bearing in mind that the strategic vector of the change brings
this reality in its essence and capacity for adaptation. The objective of this study is to show what can be the
impact of flexibility in an organization and how can it influence also employee skills development and its ability
to adapt to new realities. Also, see if flexibility can be a source of organizational innovation.

This article is divided into three parts. In the first one, theories are presented in the context of labour flexibility
with management practice in a multidisciplinary organizational concept including the importance of the
development of skills and knowledge management as an important factor for the development of the flexible
work strategy. In the second, it is explained the methodology used. In the third results are presented and
discussed. Finally, the conclusions are drawn regarding the study objectives.
2. Theorethical Approach
The problem of labour flexibility has an important ideological dimension, often provoking debates and
sometimes extreme positions as to its legitimacy, necessity and even limitations in its functionality. The
multiplicity used in the classification of a set of management practices is by itself one of the reflexes of this. In
recent years, organizations have been undergoing various modernization processes, avoiding efforts to
respond to emerging markets in order to remain competitive and sustainable (Ferreira, 2011).

The evolution of work methods has led to an increase and diversification of qualification, to individual
technical and bureaucratic work and to the development of group and integrated work (Sousa et al., 2006).

According to Rebelo (2006), the fundamental problem that arises in the labour and employment market is how
to reconcile the implementation of flexibility in the organization of work, essential for economic
competitiveness. On the other hand, it is necessary for organizations and employees to see a way of
articulating flexibility with the proper qualification of human resources.

The constant macroeconomic downturn and the lack of sustainability of the companies provoked an
immediate sense of opportunity for organizations to exercise power over employees who, in order to avoid the

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

direct consequences of losing their jobs, became more available and predisposed to adapt to new functions. It
is therefore a challenge for management to be able to provide employees with an environment of professional
achievement, with opportunities for personal growth and development (Lima and Ferreira, 2007). The success
of organizations depends on their resources and on a flexible adaptation of employees to new processes such
as turnover, flexibility and internal mobility within the organization (Drucker, 2000).

Technological evolution itself and its predominance in organizations may imply a greater diversity of
professionals and a coexistence of people with differentiating characteristics (Lasierra, 2007). It is therefore a
myth to consider that in the middle of the 21st century one can still think that things happen by chance and
that a professional should only keep focused on what he was asked to do (Archive, 2014). The professional
must have an adaptability to work with a diversity of colleagues, under the guidance of different superiors, in
short periods of time and before levels of high competitive requirement.

Depending on the point of view adopted by the organization, functional flexibility can be considered as one of
the preferred strategies by reducing the levels of division and fragmentation of the work, developing the
multidisciplinary tasks and the polyvalence of the collaborator (Thompsom et al., 2008; Gerling and Aptel,
2014). Thus, the employee is able to perform different tasks, to act, to think, to act, to plan strategically, as
well as to innovate in the solution of new problems (Sequeira, 2008). With this new profile, the behavioural
requirements and qualifications essential to the desired performance, such as: adaptability, specialized
training, global comprehension capabilities for a set of tasks and functions, and the ability to select or
appropriately manage information arise (Neves et al., 2015).

More than the simple reasons pointed out to the different variants of flexibility used by organizations, these
organizations are looking for more and more employees capable of adapting to various work contexts
(Gonçalves, 2014). This is a trend that will be reflected in the models of recruitment and selection and in the
contractual management of organizations. On the one hand, the need to recruit more flexible and versatile
employees for the function / project and, on the other hand, the need for them to use temporary work to
make their cost structure more flexible (Rebelo, 2006; Gonçalves, 2014; Mantovani, 2014).

The past competition models were about big business – meaning managerial hierarchy, vertical integration,
Taylorist work organisation, uniform standards and long-lasting production runs – the ‘new competition’
involves continuous improvement, industrial restructuring, networked districts of firms and a multi-skilled
workforce. In employment policy, it signals the collapse of old employment standards – especially job-for-life
norms, standard working hours and collective wage negotiation. New forms of ‘open innovation’ in services,
for example, suggest organisations may need to access specialised creative, technical and professional skills on
a temporary, part-time or freelance basis in an effort to build ‘outside-in knowledge’ (Chesbrough, 2011).

Where competitive strategies are based on flexible employment forms, the risk is that employers neglect
investments in training and HR practices that strengthen employee motivation and raise productivity.
Employers tend to match their use of flexible employment with a strategic preference for hierarchical
management models, tight controls over the pace of work, limited worker autonomy and weak investment in
worker competences. Research evidence has also long confirmed the argument that employment flexibility
negatively interacts with innovation and productivity.

Zhou et al. (2011) argue that ‘functional flexibility on internal labour markets has advantages for the continuity
of (organisational) learning and strengthens the historical memory of firms’ (Zhou et al., 2011: 960). The labour
market flexibility strategy is therefore in contradiction with a policy goal of shifting out of low value-added
business segments into higher productivity activities. The second contradiction is that flexible employment
displaces various advantages that the standard employee relationship offers for productivity performance.
Broad job definitions and the willingness of employees to operationalize their tacit knowledge for an agreed
wage are more likely to embed sustainable performance improvements at a workplace than an HRM approach
focused on negotiating a series of sales contracts for work tasks, as currently applies to temporary, zero hours
or freelance contracts.

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

3. Methodology

3.1 Research model

This study relies on data from January and March 2015 in companies who operate in Portugal, with a variety of
industries insurance with more than 2.500 employees, differentiating themselves from the other markets for
their ability to innovate and diversity core business.

Considering the purpose of the study to try to understand and analyse the relationship that labour flexibility
has in the performance of the function, an empirical study was focused on a survey applied online to
employees of service organizations. In this sense, a questionnaire was elaborated, based on an organized
mapping that aims to present the theoretical base model of this investigation. The main objective of the survey
was to collect as much information as possible about the opinions of employees who were part of the
company's turnover processes and if they felt that this influenced their performance or development at work.

3.2 Research Questions

For a more detailed specification of the data under study, table 1, allows the analyses of the relationship
between the objectives of the study, the research questions elaborated in the chapter of the theoretical
approach and the connection with the previous literature review.
Table 1: Model of analysis that relates the study objectives to the research questions and the literature review
Study objectives Research Questions Literature review

It is intended to check if the

Q1 - Given the employee's vision, is flexibility at
employee's expectations regarding the Caetano, 2011; Pomi, 2005; Thompson et al.,
work the right way for the organization to
path that the organization should take 2008; Lasierra, 2007
survive?
should be linked to a greater flexibility
in the employee duties.

It is intended to verify the perception

Q2 - Does the employee's view of the companies Drucker, 2000; Ferreira and Martinez, 2008;
that the employee has about the ideas
flexibility, added value to promote and develop Thompson et al, 2008; Gerlin and Aptal,
of the organization regarding the
their skills? 2014.
development of his competencies.

It is intended to verify the employee's

Q3 - Evaluate if there is a reaction of the
perception regarding his ability to
employees to the change in the assimilation of Atkinson, 1988; Archive, 2014; Bresciani,
accommodate new functions
the new processes, when faced with labour 1997; Neves et al., 2015; Kovacs, 2006.
supported in multidisciplinary
flexibility
processes.

It is intended to verify, by age groups,

Q4 - Does job flexibility improve the worker's
if, from the employees perspective, Cardoso, 2006; Gillen, 2000; Gonçalves e
creativity and motivation? Are the young people
flexibility promotes motivation and Gonçalves, 2014; Pomi, 2005
doing better at this level?
performance improvement.

Source: Author's elaboration

3.3 Data gathering and analysis

For the accomplishment of this study we used a process of exploratory nature through a sample for
convenience (Vilelas, 2009). In this context, the criteria for verification and demonstration of what is claimed in
terms of the research, in terms of the purposes that support it, implied an exploratory nature with the
obtaining of answers by the respondents belonging to directorates, managers and other collaborators in the
most diverse functions (except Call Centre and Back Office).

In order to avoid responses of workers with Back Office functions and the like, the sample was defined for
convenience. The characteristics of the population desirable for the empirical study fell on workers who
exercised various functions (flexibility) in their day to day activities or whose professional career had been
marked by internal changes (turnover).

Considering the purpose of the study, an empirical study was carried out, using a survey applied online to
employees of companies in the services sector, 200 questionnaires (built on the Google Forms application)
were sent by e-mail, with the mention of the objectives and with a Link, in order to give immediate access to

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

the questionnaire online. After the survey was completed, IBM® SPSS® Statistics statistical analysis program
was used for data analysis - a likert scale from 1 to 7 was used, where 1 - completely disagree and 7 -
completely agree.
4. Results And Discussion
There were 51% of responses (102 from a total of 200), of which 40% were female and 60% male, with a
higher prevalence of respondents between the ages of 36 and 44 (55.9%). The sample is concentrated in the
age group between 36 and 44 years (mean age of the 42-year-old sample). It can also be verified that 84.3% of
respondents currently perform management and leadership roles within the organization. In regard to the
academic background, most of the respondents have a major degree (83.3%), 80% of which intend to continue
updating their academic education.

4.1 Q1 - Given the employee's vision, is flexibility at work the right way for the organization to survive?
As far as these data are concerned, the results of the study are practically in contrast with the literature
(Caetano, 2011; Pomi, 2005), since the respondents see the experience of this reality as something that must
be assimilated and natural. In this context, we can affirm that flexibility, as a management practice should be
implemented because it can have a positive relation to performance.

Also, employees show a strong involvement with flexibility (78 employees have already been involved in these
dynamics), which reveals a high knowledge of the results that these processes can mean for the organization.
This position is in line with Pomi (2005), who emphasizes the importance of employees in adopting learning
that can easily adapt to rapid organizational changes.

From a performance perspective, it was found that there is a significant correlation as to whether respondents
recognize that labour flexibility processes have a greater impact on the organization (87.3% consider the
existence of these processes and dynamics very important for the companies) than on themselves, which
reveals the importance management strategies, but also the opinion that they are based on the fact that
certain practices may undermine their own performance.

4.2 Q2 - Does the employee's view of the companies flexibility, added value to promote and develop their
skills?
It is in this learning capacity that competency management and the implementation of consistent strategies
that allow its employees to build new skills and new capacities through actions and training. It is noticeable
that this context is framed by the study, since the training is assumed to be extremely important for
employees, as it is supported by 80% of the respondents that shows the intention to continue to develop their
training. On the other hand, the study was demonstrative in identifying flexibility as an opportunity to develop
skills, with 48% of the respondents agreeing with the statement "I am going to take the opportunity to learn
more and help the company" (presenting an average in the item of 6.2) and 38.2% fully agreeing.

However, although the skills management may have a high degree of association with the organizational
change itself, it is certain that when labour flexibility is accompanied by technological evolution, invariably,
there must be the involvement of the organization and of the employee in order to meet the new
requirements. In this context, the literature refers to the fact that the organizations' strategy in the
implementation of these practices should be treated with reservations and cautions since there must always
be an investment in training by the organization (Thompsom et al., 2008, Gerlin and Aptel, 2014).

4.3 Q3 - Evaluate if there is a reaction of the employees to the change in the assimilation of the new
processes, when faced with labour flexibility
Considering the study sample, the respondents do not have a good perception about the practice of these
processes since the average shows a low value (4,56). It is also worth noting that in this analysis, "I always did
this function, I do not want to do anything else that has nothing to do with me", only 7.8% of the respondents
agree or totally agree with this assumption, with about 74.5% (76 respondents) who disagrees partially (1 to 3)
with the same assertion.

Also, labour flexibility can boost the employees’ qualification and motivation by the influence of the
multidisciplinary functions that they can assume throughout their professional life (Ferreira and Martinez,

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

2008). This assumption is in line with the results obtained, since 77.5% of the respondents have already been
involved in these practices and see it as important in helping to break routines (average of 6.3).

At the same time, the overall mean values of the practices are quite satisfactory (5.82), varying from 5.2 for
"the accumulation of functions is important for all" and 6.3 for "polyvalence allows breaking routines" being
this item the most valued. It is also showed that 48% of respondents present a high expectation regarding
performance in these management practices, agreeing or fully agreeing with the questions of the survey.

4.4 Q4 - Does job flexibility improve the worker's creativity and motivation? Are the young people doing
better at this level?
On the other hand, the organization's own role in the implementation of culture and organizational climate
that can stimulate the employee to develop new ideas, skills and different forms of action is crucial for their
survival. It is these employees’ creative capacities that can generate value, add differentiation, and generate
flexibility in reaction to change and ability to adapt quickly to the constant adversities of the market. In this
context, it is reported that 89.1% of the respondents agree or absolutely agree with the importance of the
processes of flexibility for the development of their capacity for motivation and creativity.

If we consider that the organization in this study has invested in the areas of innovation and differentiation, it
can be seen that respondents seem related with this assumption and see in the organization an organizational
environment and culture that allows them to put into practice their ideas, opinions and suggestions.

It was verified that the older ones are the ones that give greater agreement (57.1%) to the fact that being
flexible helps to be more creative and motivating, although it is in the younger group that shows a greater
homogeneity in responses.

Considering that the group of the youngest (64.7%) shows an average of 12 years of service and that the older
ones shows an average of 23 years, it can be seen that the older ones followed the evolution in a continuous
way, being that they recognize it as a necessity and identify and assume it.
5. Conclusions
This study aims to reinforce, and above all enhance, the role of people in the success of organizations. If, since
the 1980s, there has been a paradigm shift on the view of people as a competitive advantage for organizations
(Carvalho, 2004), it is imperative in the current market to think that organizations need to invest more and
more in their resources (Archive, 2014).

The reality of today's markets forces management to have a determining role in the organization's strategy in
order to realign its processes and management models based on skills, competence and behaviours (Neves et
al., 2015). It is clear that organizations are increasingly exposed to extreme reality and hallucinating rates of
change, surviving only those that are empowered with all their resources in a differentiating and sustainable
way (Cardoso, 2006). It is in this context that the problem of flexibility in work arises. Although it is a very
controversial and debatable issue, it is also the process that is adjusting more to the economic reality of the
companies and more has changed the current labour market (Gerling and Aptel, 2014).

Although each organization has its own specification, the study demonstrates that it is possible to implement
flexibility processes at work, resisting the adversities that the changes in these practices involve, and promote
the development of the skills of its professionals. In this study, it is noticeable, the reason why organizations
use current and sustained flexibility processes in their management strategy.

It should be noted that these processes usually promote the internal competitiveness of the organization.
However, it is the employees themselves who recognize the need for this practice for the survival of
organizations. Given these facts, we must consider that organizations are compatible with a long-term vision in
the use of processes such as flexibility since this involves the valuation and developments of their human
capital.

This study allows us to conclude that the new and current dynamics developed by strategic management
usually entail consequences that must be analysed and weighed against the risk of undermining the entire

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 António Luís Dionísio, Rui Henriques Gonçalves and Marta Correia Sampaio

strategy of the organization. The responsibility for the success of these strategies lies in the way all processes
are implemented and how change is managed by all the areas.

However, although the results presented in the study indicate that labour flexibility is well understood by the
people, the relationship with these new dynamics depends very much on factors and variables that must be
adequately taken care of. In order for these dynamics to meet the needs of the organizations, as it can be
seen, there must be a great deal of training and adaptability for new functions, new practices and / or ways of
working. For this, it is extremely important to recognize the need for new learning and the development of the
skills of all involved.

It is up to the organization to accept the challenge and implement new processes in a world that is too
complex by this transformation. It is necessary to continue to study and understand this reality in the
increasingly interdisciplinary world of work and to identify the knowledge necessary to better understand new
ways of working in an increasingly virtual world in organizations. On the other hand, the findings allow us to
pave the way for further and more extensive investigations, associated with a more segmented approach,
especially in its functional applicability.

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370
Privacy Governance and the GDPR: How Are Organizations Taking
Action to Comply with the New Privacy Regulations in Europe?
Xander Seerden1,2, Hannu Salmela1 and Anne-Françoise Rutkowski2
1
University of Turku, Finland
2
Tilburg University, the Netherlands
xanderseerden@hotmail.com
hannu.salmela@utu.fi
a.rutkowski@uvt.nl

Abstract: Information Privacy is increasingly important for IT Governance. Prior research has identified several actions with
which organizations can govern information privacy. Internet, mobility, big data and analytics is, however, creating more
data and also new threats. This has led the European Union to improve data protection legislation by introducing the
General Data Protection Regulation (GDPR). In this study, a multiple case study was performed to find actions that
organisations take to comply with the GDPR. This study has identified 33 actions that organisations take to prepare for the
GDPR. 21 of these actions were not discussed in previous literature analysed. Some of these “new” actions have to do with
the change management project the GDPR requires. More interestingly, GDPR specific actions are found that show how
Europe’s legal climate changes organizational privacy governance through DPOs, DPIAs and other measures. For
researchers, this paper extends findings on how organisations are responding to privacy issues and regulations.
Practitioners can use the results to compare their own actions with those identified in this study. This was, however, only
one study conducted in nine organizations. Further research is needed to understand how the GDPR and privacy
governance will continue to evolve and mature.

Keywords: General Data Protection Regulation, IT Governance, Change Management, Information Privacy.

1. Introduction
One of the earliest books on the negative side of information discussed privacy issues (Benton, 1964). Benton
noticed that the coming of the digital age had many benefits, but considerations had to be made about its
risks. It was then already, that privacy issues were recognized as a potential negative side of the information
technology. More would be written over the years, and different perspectives are taken to discuss information
privacy (IP) (Smith et al., 2011). These different perspectives varied from philosophical, psychological,
sociological and legal aspects. The legal aspects and the response of organisations is of interest to this paper.
As the use of information technology increased, more risks concerning the handling of personal data raised the
need for adequate legislation (Clarke, 1999).

The legal aspect of IP has gotten quite some attention over the years (Pavlou, 2011). In 1995, Europe released
legislation (95/46/EC) to protect privacy of individuals. The European directive caused researchers to analyse
its contents (Fromholz, 2000). It was identified that the new directive gave a more radical stance towards
protection of privacy, making it a fundamental human right. The implications of the directive were studied to
find how they could impose difficulties for organisations (Walczuch and Steeghs, 2001). The same research
also discussed the ambiguity for organisations on how to respond to the new regulations. The European Union
(EU) has now released its new privacy regulation in 2016 called the General Data Protection Regulation (GDPR)
(The European Parliament, 2016). This regulation changes the way organisations should handle the privacy of
their data subjects, like the directive in 1995 did before. The new regulation will require organisations to aim
for a different approach to privacy governance. This will force organizations to adapt for years to come (Voss,
2016). Neglecting the regulation leads to significant financial consequences (The European Parliament, 2016).

Although parts of the regulation itself have been studied (Barnard-Wills, 2017; Rodrigues et al., 2016), the
actions required for business to reach compliance have not been identified yet.

The goal of this research is to discover implications the GDPR has for organizations and how this relates to
previous literature. To do this, the actions organisations take or plan to reach GDPR compliance will be
identified. This will be done by applying a (multiple) case study method. Expert interviews will be held and
documentation will be collected to gather data on nine case organisations operating in the Netherlands and
Finland. These actions will be compared to what previous literature wrote on the topic, to identify how the
GDPR changed the legislative climate. The following research questions summarize the research goal:

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 Xander Seerden, Hannu Salmela and Anne-Françoise Rutkowski

RQ1: “What actions are organisations taking and planning to comply with the GDPR?”

RQ2: “How do the actions that organizations are taking and planning to comply with the GDPR compare to
previous literature on privacy governance?”

2. Theoretical Background
Organizations are incentivized to address the way they handle personal information by governmental
regulations to protect the privacy of civilians. In this paper, the GPDR is the regulation of interest. The GDPR is
a legislation that has been introduced by the European parliament under the title: Regulation (EU) 2016/679
(The European Parliament, 2016). The regulation is the tool used by the EU to assure the protection of
information privacy of data subjects that reside in the EU. Organisation holding or handling data of these
individuals should adhere to the requirements of the GDPR legislation, also when they operate outside the EU.

The GDPR replaces the old data protection directive (Directive 95/46/EC) from 1995 (de Hert and
Papakonstantinou, 2012). The old 1995 directive was outdated and required to be adapted to the
technological changes that occurred since its implementation. The new regulation has been adopted in April
2016. This has been followed by a two-year transition period, after which the regulation was applied in May
2018. Article 29 Working Party (WP29) is an independent party set up by the European Union that advises on
the GDPR and its implications. Previous research has concluded that the GDPR is a sound system for the
protection of individuals and cause for celebration for human rights (de Hert and Papakonstantinou, 2016)
while other research shares this positive attitude towards the increase of human rights, but still sees some
challenges ahead (Easton, 2016).

To get an overview of the actions organisations are taking in regard to privacy governance, previous literature
is analysed. Perhaps surprisingly, no study was found that covered a comprehensive identification and
classification of all related actions. Therefore, an analysis is done in this Chapter to create an overview of how
literature described the organisational response to privacy issues before the GDPR existed. Five papers are
discussed in the following paragraph that give a representation of what research has found to be focus points
for organisations in terms of IP governance. (1) The first study that was analysed assesses the critical role of IS
auditors and privacy issues (Al-Alawi and Hafedh, 2006). The study identified advice for management regarding
privacy governance. (2) A second paper has looked at the implications of privacy issues on the organization
(Henderson and Snyder, 1999). The study proposed a normative model for privacy governance in the
organization, consisting of multiple actions that have to be taken to ensure detection of potential privacy-
related problems. (3) The third source is a book by Ohlhorst (2012). The book discusses important goals for
enterprises to reach in order to keep data secure and aligned with compliance. The book has summarized
previous studies to discover the privacy governance requirements for organisations regarding big data. (4) A
research on the concerns of individuals in regard to privacy was able to highlight how management could be
proactive in responding to privacy issues (Smith et al., 1996). (5) The last source used in this chapter is a book
on privacy and security in cloud computing (Marther et al., 2009). The book discusses compliance and risk
issues for enterprises in the security and privacy domain for cloud computing. They have combined
information of multiple researches to discover the way privacy should be handled in enterprises. Table 1
shows the actions identified in the previously discussed papers on where organizations should focus regarding
privacy governance. The fields that are marked grey indicate that the action is discussed in the corresponding
source.
Table 1: Comparison of action points regarding privacy governance found in previous literature
Smith, Henderson & Al-Alawi & Ohlhorst Marther,
Milberg & Snyder Hafedh (2012) Kumaraswam
Burke (1996) (1999) (2006) y & Latif
(2009)
Ascertain that data collection is relevant for the
organisation
Create documentation
Create privacy policy
Designate individual responsible for IP
Educate personnel on IP
Ensure data access controls
Ensure data security

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 Xander Seerden, Hannu Salmela and Anne-Françoise Rutkowski

Smith, Henderson & Al-Alawi & Ohlhorst Marther,

Milberg & Snyder Hafedh (2012) Kumaraswam
Burke (1996) (1999) (2006) y & Latif
(2009)
Ensure data correctness
Ensure data deletion
Identify databases and processing of personal
information
Inform individuals on the use of their personal
information
Take precautions to limit damage in case of
issues
Track physical data location

3. Study Design
This study has conducted a (multiple) case study based on the description of this method by Yin (2014). The
method is described as an investigation into a contemporary phenomenon in its real-world context. The case
or unit of analysis for this paper is an organisation, or more specific its project towards GDPR compliance. The
advantage of applying the multiple case study to the topic of interest is that it enables an in-depth analysis of
the subject. For the case organisations, the decision was made to only study Organisations with at least 250
employees for this study. This choice was made as the GDPR depicts that with this amount of employees, a
data protection officer (DPO) is required (The European Parliament, 2016). Having a DPO gives us more
certainty that a organisation is serious in preparing for the requirements of the GDPR. One exception was
made, as one organisation with less than 250 employees was part of this study. The exception was made
because the organisation still had to comply with the GDPR due to the processing of sensitive information on a
large scale. Table 2 shows the organisations analysed in this study. As the organisations are kept anonymous
throughout this study, a letter is used as a reference for each organisation.
Table 2: Data sample of the case study
Organisation Industry No. of Customer No. of Employees
A Education 10 000 – 100 000 1000 – 10 000
B Housing 10 000 – 100 000 100 – 250
C Distribution > 1 000 000 10 000 – 100 000
D Education 10 000 – 100 000 1000 – 10 000
E Distribution > 1 000 000 10 000 – 100 000
F Utility > 1 000 000 10 000 – 100 000
G Banking > 1 000 000 10 000 – 100 000
H Semiconductor - 10 000 – 100 000
I IT Services 1 000 000 250 – 1000

The data for the study was collected through interviews and internal documentation of the case organisations.
Not all organisations were willing to share the internal documentation of their projects to reach GDPR
compliance due to confidentiality. For organisations A, B, C, D and H documents were collected. The
documents collected consisted of project documentation regarding the projects initiated to reach GDPR
compliance. All the case organisations participated in interviews which resulted in interview transcripts. The
interview schedule can be found in table 3. The role of the researcher was focussed on listening and
responding to what the interviewees discussed. Specific areas of interest were further discovered by probing
(Edwards and Holland, 2013). The questions of the interview were open ended to allow for more informative
answers. For the same purpose, the interviews were semi structured (Edwards and Holland, 2013). The
questionnaire was grouped on four topics: information processed in organization, background of employee
and organisation, the actions which the case organisation is taking and planning in response to the GDPR and
GDPR readiness in Mai 2018. No references to specific articles of the GDPR were made, to prevent the
researcher from influencing the topic of discussion.
Table 3: Interview schedule
Organisation Date Role in organisation Location
A 16-05-2017 Information Security Officer (ISO), acting Data Finland
Protection Officer (DPO)
B (1) 18-05-2017 Compliance Officer (CO)
B (2) 19-05-2017 Chief Information Officer (CIO)
C 19-05-2017 Development Manager (DM)
D 01-06-2017 Data Protection Officer (DPO) The Netherlands

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 Xander Seerden, Hannu Salmela and Anne-Françoise Rutkowski

Organisation Date Role in organisation Location

E 08-06-2017
F 09-06-2017
G 12-06-2017
H 14-06-2017
I 23-06-2017
Chief Privacy Officer (CPO)
Data Protection Officer (DPO)
Chief Privacy Officer (CPO)
Compliance Officer (CE)
Chief Information Security Officer (CISO), acting
Data Protection Officer (DPO)

The data collected was analysed using NVivo software. Interviews were transcribed to allow for coding. All
interviews and documents were coded to allow for analysis. First cycle coding consists of the initial coding of
data and can be done with 25 different methods (Miles et al., 2014). This research used descriptive and
process coding. Process coding was used for coding the pieces of data related to actions taken to comply with
the GDPR. Descriptive coding was used for all non-activity coding. Since descriptive coding was found to be
sufficient and other coding methods did not fit, no other coding methods were applied. Second cycle coding
looks at the first level codes and aims to group the coding into more general themes (Miles et al., 2014).

During this phase, the previous coding was revised. Improvements were made to the coding. Similar codes
were merged to create more consistency in the codes of different cases.

4. Results
The results describe the actions that organisations are taking or planning in response to the GDPR. The section
is divided into five parts. The actions that organisations plan or take to comply with the GDPR were grouped in
a classification that was developed in this study. These five groups are: (1) Situation analysis of the privacy
measures, (2) Adaptations needed in data processing, (3) Development and improvement of governance and
controls, (4) Activities involving internal and external actors and (5) Creating processes for specific regulatory
articles. For each of the five groups, a table is added in the following paragraphs to show which organisation is
taking or planning which actions. Fields that are marked in grey mean that a organisation has taken or is
planning a corresponding action. The columns A to I represent the case organisations, depicted by their
assigned letter. The column GDPR on the far right of the table depicts any directly related articles of the GDPR.

Some actions are not linked to any articles of the GDPR directly but are indirect results. These are filled with a
dash. The actions are divided between actions that were found in this study and already described in previous
literature and actions that were identified by this study but not discussed in previous literature.

4.1 Situation analysis of the Privacy Measures

Table 4: Actions relating to situation analysis of the privacy measures per organisation
A B C D E F G H I GDPR
Actions found in previous literature analysed
Create processing and data overview 5, 24
Actions not found in previous literature analysed
Perform gap analysis -
Data Protection Impact Assessment (DPIA) 35, 36
Do risk assessment -
Determine implementation maturity level -

In the first group, actions regarding the situational analysis of the privacy measures are discussed. They are
depicted in table 4. The most important actions in this group look at the situation of the organisation in terms
of privacy measures and assesses whether this is in line with the requirements. Organisations often performed
gap analyses and created an overview of their processing activities. Organisation B discussed how this gap
analysis is “made from the angle of the GDPR”. The gap analysis required most of the case organisations to
reanalyse the data they are processing. The Data Protection Impact Assessment (DPIA) is new as a direct result
of the GDPR. Organisation D discussed using it for “big projects” as “a governance risk and compliance tool”.

About when the assessment is used, organisation H discusses: “for every new project you start within the
organisation, you have to do the privacy impact analysis. If it's not related to any privacy related data, then you
don't have to do anything.” Only one case organisation described the determination of an implementation
maturity level. Organisation E has created levels of privacy maturity, to determine the maturity of their privacy
efforts. In this five-step model, the maturity of the privacy management is assessed.

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 Xander Seerden, Hannu Salmela and Anne-Françoise Rutkowski

4.2 Adaptations Needed in Data Processing

Table 5: Actions relating to adaptations needed in data processing per organisation
A B C D E F G H I GDPR
Actions found in previous literature analysed
5, 24, 25,
Address data security
28, 32, 39
Address data retention 6
Prevent data from leaving EU -
Actions not found in previous literature analysed
Address data portability 20
6, 25, 32,
Anonymize data
40, 89
Address data purpose limiting 6

Table 5 describes the actions organisations are taking to adapt their data processing activities to the
requirements of the GDPR. Organisations are addressing security in multiple ways, which shows how closely
this is linked to privacy. Data retention is also important in this group of actions, as most organisations see the
need to address this issue in their way of data processing as a direct requirement of the GDPR. For
organisation B, this means: “those applications which have come to our systems with personal data, those
should be deleted after a year from now. So, we need to create a process for it”. Furthermore, the GDPR has
articles on the anonymization of data. Interestingly, not all organisations are doing or planning this yet. For
organisation C, this means: “we are looking into how we can get either generated data or anonymized data
into our test environments”. Data purpose limiting is regulated in the GDPR, but only applied by one of the
case organisations.

4.3 Development and Improvement of Governance and Controls

Table 6: Actions relating to the development and improvement of governance and controls per organisation
A B C D E F G H I GDPR
Actions not found in previous literature analysed
Improve privacy policy -
Implement privacy by design 25
Implement privacy by default 25
Improve security policy -
Actions found in previous literature analysed
Create GDPR project planning -
Improve outsourcing contracts 28, 29
Improve privacy notice -
Improve log management -
Improve continuity plan -
Create binding corporate rules 46, 47, 49
Create NDA for employees -

The next group of actions relates to the development and improvement of governance and controls. The
actions are depicted in table 6. The actions in this group address how organisations plan, create and improve
structural changes in their rules and regulations. Of the seven case organisations that discussed improving
outsourcing contracts, three of the case organisations discussed finding it difficult to update all outsourcing
contracts to the GDPR standards. Organisation D discussed: “we have already a lot of contracts with external
suppliers and we have to check if we have also... if the privacy statement/agreements are sufficient. And if not,
most of them are not because we have the GDPR coming, we have to set up new contracts. We have to set up a
DPA, a data protection agreement”. The GDPR requires organisations to implement privacy by design and
privacy by default, which some organisations are working on. Organisation E does this by: “create
masterclasses privacy by design for the IT architects, change management and the enterprise data managers
as well, because they are responsible for the new structures in the future”. Further structural changes required
by the GDPR are put in place in the privacy policies and notices. In general, this group consists of actions that
aim to make sure that the governance system requires employees to follow the GDPR standards by utilizing
multiple regulatory and control instruments.

4.4 Activities Involving Internal and External Actors

Table 7: Actions relating to activities involving internal and external actors per organisation

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 Xander Seerden, Hannu Salmela and Anne-Françoise Rutkowski

A B C D E F G H I GDPR
Actions found in previous literature analysed
Assign Data Protection Officer (DPO) 37, 38, 39
Train and inform employees -
Actions not found in previous literature analysed
Set up project team -
Collaborate with externals -
Hire external expertise -
Get leadership support -

Table 7 shows the actions that organisations discussed in relation to activities involving internal and external
actors per organisation. These actions directly involve employees or external parties, relating to the GDPR
implications. As organisations assigned employees, they created project teams to govern the change required
for the GDPR. The Data Protection Officer (DPO) was assigned in eight of the nine case organisations. While
previous literature discussed putting a responsible person in place for privacy governance, the DPO is a term
introduced in the GDPR. The background of the DPO varied from sales, IT security, law, IT management and
human resources. About the specific responsibilities of the DPO, organisation A stated: “The DPO needs to be
independent. And that means that it cannot, the DPO cannot have authority to demand or to give orders. The
DPO can only consult and advice. The role of the DPO is to be an adviser to the leadership and the leadership
takes the advice”. To train and align employees with the new privacy governance requirements, organisations
performed workshops, invited speakers, set up e-learning, wrote blogs, privacy officers joined department
meetings, organized masterclasses and a knowledge app was created. For organisation E this was even the first
step they took in their GDPR efforts, stating: “It’s the first step. First raising awareness, not creating policy but
raising awareness”. Almost all the case organisations worked together with external parties, mostly with
subsidiaries or organisations operating in the same industry. Five of the case organisations hired external
expertise.

4.5 Creating Processes for Specific Regulatory Articles

Table 8: Actions relating to creating processes for specific regulatory articles per organisation
A B C D E F G H I GDPR
Actions found in previous literature analysed
33, 34, 70,
Create process for data breaches
83, 84
Create process to inform data subjects 15
Actions not found in previous literature analysed
Create process to deliver processing data 15
Create process to be erased or forgotten 17, 19
Create process for new consent regulations 4, 6-9

The last group of actions concerns the creation of processes for specific regulatory articles and are depicted in
table 8. In this group, the actions are found that are a direct result of specific articles of the GDPR that were
not mentioned in the previous groups. The most important action here is the need for a process for data
breaches. The GDPR requires organisations to have a timely response when data breaches occur. Organisation
E stated about their data breach notifications procedure: “create a frequent reporting line, a standardized
reporting line also about incident response reporting. It’s creating a data breach notification, a data breach
notice, a data breach escalation plan, incident response planning and training it in practice”. The other actions
in this group are seen in less of the case organisations, mostly because they are more situation dependent and
are therefore not needed in all organisations. The ground on which data is collected requires organisations to
act accordingly. An example is data collection on the basis of consent. The GDPR made consent harder to
obtain through stricter rules. In organizations that collect on the legal basis, less much changed by the coming
of the GDPR. Informing data subjects is changed under the GDPR. About this, organisation A stated: “We need
to inform the person that your information was gathered from the national registry and we didn't need to do it
actively before GDPR. That’s a new thing, more active informing”.

5. Discussion and Conclusion

This study has conducted a multiple case study to discover what actions organisations are taking to reach
GDPR compliance. A total of 33 actions were found and a classification for these actions was created that
divided actions into 5 groups. A detailed answer to the first research question of this study relating to the
actions organisations take to reach GPDR compliance can be found in the results section. It can be concluded

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that the actions differ per case organisation. This can be caused by their different characteristics and
conditions. Another explanation could be that the organisations do not understand the GDPR yet and are
therefore addressing the parts they are aware of. This is backed by the fact that some of the case companies
addressed their difficulty in understanding the implications of the GDPR. Organisations are therefore advised
to thoroughly analyse the GDPR and their data processing to determine the changes the GDPR requires for
their specific situation. Furthermore, organisations are advised to not only focus on the requirements of the
GDPR, but also on the change management process required for the GDPR. The many requirements of the
GDPR ask for a thorough planning and should not be underestimated.

To answer the second research question regarding to the actions found in this study and relating this to
previous literature, it can be concluded that of the 33 actions found 21 actions were not discussed in previous
literature that was analysed. It is expected that these 21 actions were not previously discussed for two
reasons. (1) First, the GDPR brings new requirements that organisations did not previously address. The new
regulation has different rules and therefore the compliance with old regulations no longer suffices. (2) A
second reason is the fact that some actions relate to the change management process required to reach GDPR
Compliance itself, which is not part of the privacy literature this study compared it to. While the change
management process shows the significance of the changes required by the GDPR and the organizational
complexity set up to comply with it, the most interesting actions relate to the GDPR requirements itself. The
actions relating to DPOs, DPIAs and privacy by design are examples that show that Europe aims to develop a
climate in which privacy governance is proactively managed and therefore further developing the way
organizations handle privacy issues.

For future research, three recommendations are stated. (1) The first recommendation is to study how far
organisations are progressing in reaching GPDR compliance or whether they are addressing all requirements
set by the GDPR. As case organisations in this study planned different actions towards GDPR compliance, this
might suggest a varying understanding or ability to reach GDPR compliance. (2) Secondly, there is a need for a
standardized audit process or framework that aids organisations in meeting the required standards of the
GDPR. As five of the nine case organisations discussed they had difficulties in understanding the implications of
the GDPR, this could aid these organisations. (3) A last interesting field for research might be the way culture
impacts the implementation of privacy regulations. Organisation F discussed the differences they experienced
in cultural stance towards privacy. As they organized their GDPR project on a European basis, these differences
arose. This lead to more work needed in some of the countries that were less privacy aware.

The most important limitations are summarized into three topics. (1) Firstly, the classification that was
developed grouped the actions found in this study into five categories. For the actions found in this study, the
categories depict the main topics in which the organisations are taking action to comply with the GDPR. Still, it
could be further developed by further research. (2) Secondly, not all practical implications of the GDPR are
known as the EU is still to release further guidance and the GDPR has not yet come into force. (3) A third
limitation is the fact that this study has only analysed nine case organisations. More research is needed to
further generalize the findings of this study.

References
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Clarke, R. (1999), “Internet Privacy Concerns Confirm the Case for Intervention”, Communications of the ACM, Vol. 42 No.
2, pp. 60–67.
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461–484.
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Management, Vol. 36 No. 4, pp. 213–220.
de Hert, P. and Papakonstantinou, V. (2012), “The proposed data protection Regulation replacing Directive 95/46/EC: A
sound system for the protection of individuals”, Computer Law & Security Review, Vol. 28 No. 2, pp. 130–142.

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de Hert, P. and Papakonstantinou, V. (2016), “The new General Data Protection Regulation: Still a sound system for the
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Compliance, O’Reilly Media, Inc., Sebastopol.
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at:https://doi.org/10.1080/0140528790010406.
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Pavlou, P.A. (2011), “State of the Information Privacy Literature: Where Are We Now and Where Should We Go?”, MIS
Quarterly, Vol. 35 No. 4, pp. 977–988.
Rodrigues, R., Barnard-Wills, D., de Hert, P. and Papakonstantinou, V. (2016), “The future of privacy certification in Europe:
an exploration of options under article 42 of the GDPR”, International Review of Law, Computers & Technology, Taylor
& Francis, Vol. 30 No. 3, pp. 248–270.
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No. 4, pp. 989–1015.
Smith, H.J., Milberg, S.J. and Burke, S.J. (1996), “Information Privacy: Measuring Individuals’ Concerns About Organizational
Practices”, MIS Quarterly, Vol. 20 No. 2, pp. 167–196.
The European Parliament. (2016), “General Data Protection Regulation (Regulation (EU) 2016/679)”, Official Journal of the
European Union, Vol. 59, pp. 1–88.
Voss, W.G. (2016), “European Union Data Privacy Law Reform: General Data Protection Regulation, Privacy Shield and the
Right to Delisting”, Business Lawyer, Vol. 72, pp. 221–234.
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corporations”, Information Technology & People, Vol. 14 No. 2, pp. 142–162.

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Academic
Paper

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380
The Four-Step Approach for the Creation of the HR Concept for the
EPIC Centre of Excellence in Production Informatics and Control
(EPIC CoE)
Fabian Hecklau1, Ronald Orth1, Florian Kidschun1 and Gábor Nick2
1
Fraunhofer IPK, Division Corporate Management, Berlin, Germany
2
Hungarian Academy of Sciences, Institute for Computer Science and Control Research
Laboratory on Engineering & Management Intelligence, Hungary
fabian.hecklau@ipk.fraunhofer.de
ronald.orth@ipk.fraunhofer.de
florian.kidschun@ipk.fraunhofer.de
gabor.nick@sztaki.mta.hu

Abstract:The Centre of Excellence in Production Informatics and Control (EPIC CoE) was established with the objective to
be a leading, internationally acknowledged and sustainable focus point in its field, representing excellence in research,
development and innovation related to Cyber-Physical Production. Within this paper a comprehensive four-step approach
for the HR concept for the EPIC Centre of Excellence, which contains of the four processes attraction, recruitment,
development and retention of a highly skilled and qualified workforce, is developed. This approach allows a structured
analysis of the requirements a holistic HR concept needs to fulfil and guides through a standardized process to develop a
profound HR Concept. In the first step of the approach (attraction), the vision, mission and concrete targets of the EPIC CoE
are analysed to build the strategic basis for the derivation of strategic objectives for the HR-concept to identify necessary
roles and an employment structure to be able to provide an attractive working environment for highly experienced
professionals. In a second step, a comprehensive career plan for each defined employee group is derived from the core-,
management- and support-processes of the EPIC CoE. It includes the academic formation and technical experience profiles,
necessary skills and attitudes as well as future activities and responsibilities within the CoE. This information will be
gathered within a competence profile for each role, which builds the basis for the recruitment of suitable employees
(recruitment). Based on that career plan, necessary training and qualification programs are defined considering the
employees’ strengths and weaknesses to ensure the development on their specific career paths (development). Finally, the
CoE needs to be able to retain its qualified workforce. Therefore, different retention mechanisms, like an incentive system
is developed (retention). As a result, this research work will help the CoE to implement a HR management and
development concept based on the developed career plans. This research work is integrated in the EU H2020 funded
project EPIC (Excellence Center for Production Informatics and Control).

Keywords: Competence Management, Competencies, Human Resource Management, Digitization, Industry 4.0

1. Introduction
The Centre of Excellence in Production Informatics and Control (EPIC CoE) was established with the objective
of representing excellence in research, development and innovation related to Cyber-Physical Production
(CPP). The big challenges of the new technological era, when information and communication technologies are
fundamentally transforming and revolutionizing production, are responded by EPIC CoE as a leading-edge
knowledge centre of cyber-physical production systems. Its aim is to accelerate innovation, realize industrial
solutions, train new generations of highly qualified professionals and support the development of a
sustainable and competitive European manufacturing ecosystem. In this regard, EPIC CoE will be active in
applied research and provide services to the Hungarian industry.

To reach these goals and assure an effective HR Management, a structured and thorough approach for the
creation of a holistic HR concept that will continuously qualify human resources during their lifetime at the CoE
is needed, considering individual adaptations due to organizational condition changes. Therefore, in the first
part of this contribution a generic approach is developed that allows a structured analysis of the requirements
a holistic HR concept needs to fulfil and guides through a standardized process to develop a comprehensive HR
concept suitable for companies. Subsequently this methodology will be used to specifically create the HR
concept for the EPIC CoE. The main results will finally be presented through selected examples.

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2. Concept Outline of the four-step approach

The essential purpose of this paper is to support organisations with a comprehensive four-step methodology
that can be used to create a HR management and development concept. Therefore, the main processes which
need to be described and executed are: attraction, recruitment, development and retention of a highly skilled
and qualified workforce. The approach combines the development of a substantial career plan for this
workforce and the definition of required competence profiles in order to derive necessary actions, such as
trainings or incentives. As a result, this methodology will help organisations to implement a generic HR
management and development concept based on the developed career plans. The following figure gives an
overview on the four steps of the methodology, which will be explained in detail in the following.

Figure 1: Concept outline of the four-step approach to develop a HR concept for companies
The first part focuses on the attraction of employees by suggesting general strategies to provide an attractive
working environment for prospective employees. To guarantee the recruitment of the right person followed
by an appropriate professional development, a comprehensive career plan is required. It includes an academic
formation and technical experience profile, the necessary skills and attitude as well as future activities and
responsibilities in the company. Based on that career plan, necessary training and qualification programs can
be derived to ensure a suitable development considering an employee’s strengths and weaknesses. At last, the
company needs to be able to retain its qualified workforce. Therefore, the HR management and development
concept highlights essential instruments for the organisation to keep its employees. Identified instruments are
for example the introduction of incentives, target agreements, variable salary or recognition strategies.
(Jochmann 2013; Meifert 2013; Schmeisser, Sobierajczyk et al. 2014).

2.1 Step 1: Employees Attraction

Business success becomes increasingly dependent on a qualified workforce. Especially in the area of R&D&I
people and their talents are the company’s most important asset. Thus, the effective management of human
resources can provide competitive advantages. In particular, employers need to develop awareness for the
importance of being attractive to young talents.

Some of the most critical drivers for the attraction and recruitment of new employees are the image and
reputation for applied R&D&I as well as the reputation of the company in this sector. Furthermore, the
attractiveness highly depends on the exposure to industrial research work as well as the general mind-set and
culture for innovation and entrepreneurship.

Another major driver for the attractiveness of an employer are the opportunities for learning and growth
offered, which include academic degrees, professional experience, exchanges, language classes, responsibility
and recognition. Providing an attractive working environment (e.g. through a good laboratory infrastructure
for R&D&I, prototyping and pilot applications, collaborative atmosphere, feedback culture, etc.) and benefit
plans (e.g. health care, relocation packages, national and international exchange, etc.) also increase the
attractiveness of an employer.

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

In addition, partnerships with universities and national research institutes, which are renowned
internationally, attract young talents. Applied research institutes also need to think of competitive
compensation models with excellent universities (e.g. through variable remuneration).

2.2 Step 2: Recruitment

In this chapter, the required competence profiles consisting of academic formation and experience, activities
and responsibilities, soft skills and attitude are explained in more detail. For the recruitment process, it is
mandatory to have pre-defined roles that are well described in competence profiles. As a result of having that,
the company knows what competences are needed when recruiting new personnel, while at the same time
the employee will have a better understanding of the profile for his/her own role which will make the overall
process clear for both sides.

Since all organisations have specific processes like technical processes (e.g. production process), or
administrative processes (e.g. procurement process), the required competences needed for the execution of
these processes should be matched with the competences of employees. Therefore, the roles and functions
that are gradually developed are described as process-based competence profiles. The details for each role are
derived from the sub-processes and aggregated into the respective components. (Schreiber, Rietiker 2010)

Each competence profile includes four pillars: an academic and technical experience profile, the necessary
skills and attitude as well as common activities and responsibilities for the specific role (based on Bernien
1997; Eck, Claus, D., Rietiker 2010; Solga, Ryschka et al. 2011; Wien, Franzke 2013). This comprehensive list of
required competences ensures that the right person fills the certain job and therefore is able to support
effectively the business processes. The following table shows a generic competence profile.
Table 1: Generic Competence Profile
ƒ In this part the formal qualifications that are required to fill a certain competence profile are defined.
They comprise both aspects, the technical experience and the academic background, which are both
Academic and
important to define who should act in a certain job position, e.g.:
technical
o Academic degree (M.Sc.) in the field of Engineering, Exact or Biological Science or
experience profile
ongoing PhD
o Experience with portfolio management of R&D&I projects (1+ years)
ƒ The necessary skills and attitude required to be able to fulfil the tasks. In other words, the abilities and
the behaviour of the employee should match the required ones in the competence profile, e.g. as the
Skills and attitude
managerial positions vary from the technical positions, the first need decision making skills and how to
manage people, where the second need analytical ability and being organized in documenting the work.
Activities and
ƒ Responsibilities and processes directly linked with that role. For instance, one of the primary
responsibilities
responsibilities of an employee in his/her role as a researcher is to conduct research projects and
Primary
scientific work.
(responsible)
Activities and
ƒ Responsibilities and processes that are needed or desirable for a better fulfilment of primary
responsibilities
responsibilities, but is not a goal in itself. For instance, one of the secondary responsibilities of a
Secondary
researcher is to do the Education and Training.
(supporting)

Each of the employees has to have a certain set of skills and behaviours to be able to face the tasks appearing
in the individual institutes of innovation. The most important organizational and specific as well as optional
skills and behaviours are shown in the following table.
Table 2: Examples of skills and behaviours (based on Solga, Ryschka et al. 2011; Wien, Franzke 2013; Kadishi
2008)
Organizational skills Specific skills Optional skills
and behaviours and behaviours and behaviours
x Cooperation x Responsibility x Being organized
x Innovation/ creativity x Flexibility x Client-orientation
x Communication x Analytical ability x Analytical ability
x Interpersonal relationships x Project and process management x Negotiation
x Goal-orientation x People management x Orientation for knowledge
x Change management x Networking (building relationships)
x Decision making x Systemic vision
x Market-orientation

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

In order to progress to the next higher level of the career plan, certain new activities will have to be gradually
overtaken. Furthermore, competences, skills and attitudes have to be developed. For this reason, a training
concept is constructed, which is described in the following section 2.3. However, the requirements are
imposed with an initial flexibility to ensure an agile human resource development process. Requirements that
are not fulfilled upon employment may be made up for within a restricted timeframe. This initial flexibility is
transferred to permanent flexibility that is however limited in terms of deviation from the required profile and
foresees an even shorter timeframe for the requirements fulfilment.

2.3 Step 3: Qualification and Training Programs

In order to cope with current challenges, companies need well-qualified employees. Therefore, continuous
qualification helps companies to remain competitive in an always-changing market environment. Skills always
have to be aligned towards current and future challenges. It is necessary to keep the employees in the range of
“flow” to ensure that tasks are accomplished appropriately and that employees remain motivated. This will
further lead to the achievement of prominent business success. (Meifert 2013; Wien, Franzke 2013)

The word “career” defines the sequence of related jobs and work activities a person holds during his/her
lifetime. From a company’s perspective, the concept of a career only relates to all work activities and positions
of an employee within the company. Therefore, career planning is defined as the process of analysis where a
person stands today and where this person needs and wants to develop herself/himself into the future. During
this process, individual development expectations are matched with pre-defined career paths to ensure that
an employee meets current challenges while being highly motivated. (Frank 2009; Holtbrügge 2015)

To support the employees on their individual career paths, career plans are developed. The structure of a
career plan implies that in order to progress to the next higher level certain activities as well as competences,
skills and attitudes have to be developed. For this reason, an approach to create a specific training concept is
developed and described in the following section. First, the integration of the qualification and training in the
HR management and development concept is discussed. In addition, the strategic role of qualification and
training is further explained and the developed qualification and training concept is given.

2.3.1 Integration of Qualification and Training into the HR management and development concept
Focusing on all activities concerning the professional education, learning and training of individuals and teams,
human resource development heavily influences the organizational development and thus, the present and
future performance of any organization. Therefore, the three main functional areas of human resource
development can be defined as personal development (qualification and training), team development
(collaboration) and organizational development (structure and processes). (Becker 2013; Neuberger 1994;
Flato, Reinbold-Scheible 2006; Wilson 2012)

As part of the personal development, qualification and training have an essential role for the HR management
and development concept. Qualification is defined as knowledge or skills in a certain area that make someone
eligible for a job or position. In this regard, education generally includes all purposeful and conscious activities
to provide the necessary skills and to ensure the proper performance of specific tasks. It includes all learning
processes offered by the company. Subsequently, qualifying someone means to prepare this person for
prospective work activities. (Becker 2013; Hentze, Metzner 1991)

Training, on the other hand, is the action of teaching someone a specific skill or knowledge, so that trainings
can be defined as the instrument for qualification. Since a qualified workforce can be a company’s competitive
advantage, qualification and training become strategic functions have a great influence on business success.

Since not only the performance of an individual, but also the sum of all individual achievements has a strong
influence on the company's success, also group dynamics must be considered. Teams are a special form of
group in which several individuals interact with each other to fulfill a specific task together (Alter 2016; Becker
2016; Schiersmann, Thiel 2014). During this fulfilment process, the performance of the team may be weakened
by new tasks, requirements or composition (Becker 2016). Thus, the team development takes over all
measures that initially ensure the maintenance of performance and further increase the efficiency of a team
(Alter 2016, p. 22). This includes measures such the change of work tasks, the composition or change of teams
as well as the clarification of roles, rights and duties (Schiersmann, Thiel 2014). In summary, team

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

development thus forms an important pillar for successful personnel development in addition to qualification
and trainings.

2.3.2 Definition of general qualification areas and exemplary trainings

The following table presents the most essential qualification areas for the R&D&I sector and lists some
exemplary trainings that could be used to qualify employees at the EPIC CoE.
Table 3: General qualification areas and exemplary trainings
Qualification area Exemplary trainings
x Basics on project management
x Agile project management
Project management
x Project planning & controlling
x Conflict resolution
x Acquisition techniques
Marketing, acquisition & utilization
x Scientific publication
x Transferring ideas into solutions
x Leadership in difficult situations
Leadership & management x Business simulation
x Selecting suitable employees
x Business process management
Business administration & organization x Process optimization
x Contract design
x Prevention of corruption
Compliance
x Privacy policy
x IT-tools & -skills
IT-service management
x E-learning
x Strategic self-management
Career & self-management x Effective time management
x Systematic career development
x Professional presenting
Communication x Communication techniques
x Solving conflicts constructively
x Basics for team assistants
Office management x Information & task management
x Event management
x Business trip planning
Travel management
x Travel expense accounting
x Portuguese for foreign scientists
x Scientific writing skills
Language skills
x Smart small talk
x English for researchers
x Staff development
HR management x Employment law
x Payments

2.4 Step 4: Retention Strategies

The retention strategy is a basis to be able to retain well-qualified personnel. Besides activities of rewarding
employees for performing their jobs effectively and efficiently, one part of the retention strategy is to ensure
harmonious working relations between employees and managers. Furthermore, the maintenance of a safe and
healthy work environment has to be considered. Responsibilities for the management are:

x Fair treatment of employees

x Open communication
x Face-to-face resolution of conflicts
x Promotion of teamwork
x Respect for the dignity of each employee

Retention strategies can comprise different aspects and elements. As retention strategies need to match the
special need of each company individually, only the performance management of employees as well as the
salary as a retention incentive are described in this chapter. Many other strategies that are not mentioned can
also be successful, if they consider the needs of the company and the employees.

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

2.4.1 Performance Management for Employee Retention

Each employee of the CoE should go through a standardized evaluation process. The management of the CoE
should assess the skills, work and behaviour of the staff in order to help them to improve weaknesses as well
as strengthen strengths.

To consider performance management of employees as part of the retention strategy, first the goals /
objectives for each individual employee have to be defined. They build the basis for an individual evaluation
process that can be of different nature. As the goals should be easy to measure, target agreements of the
following fields should be considered as purposeful: finance, planning, articulation and influence as well as
execution and operation. Each of the goals can have a medium, high or critical impact.

After a review of the defined goals, the evaluation process of managers, employees as well as peers and clients
is conducted. Therefore, subsequently after the (self-)evaluation is prepared, first the managers, peers and
clients are evaluated by the employees, who then evaluate the managers. In a next step, the immediate
managers validate the assessment results. At the end of this process, the feedback is presented. This supports
each individual employee to have a clear understanding of his / her personal development and thus helps to
ensure a strong motivation for current and future job roles and tasks. A final visit completes the evaluation
process. (Armstrong, Taylor 2014; Becker 2013; Meifert 2013)

2.4.2 Salary as a retention incentive

The salary depends on different factors but it can also be used as an incentive system. Depending on the
performance of the individual employee as well as the qualification, the salary can be increased. According to
the possibilities of salary adjustments, the terms framework, designation and realignment are defined as
follows in this context:

x The framework is the need for career advancement due to changes in roles and responsibilities. Even
the termination of roles and responsibilities, or the change in the structure of position creates the
need for career advancement.
x Whereas the designation is the movement of an employee within the framework to ensure the
reliability of a function. If it were necessary to hire a new employee in order to ensure the reliability of
a function, it would be the role of admission and not the role of designation.
x The realignment is the change of the salary of employees resulting from a salary range adjustment in
order to maintain competitiveness.
x A promotion is the change of an employee’s job position to a higher level due to the good employee
performance (vertical career growth).

3. Results of the execution of the methodology to create a HR concept for the EPIC CoE
After the generic 4-step-methodology has been described, the results of its application for the development of
the HR concept of the EPIC CoE will be described in the following. Within the European research project EPIC, a
Center of Excellence in Production Informatics and Control (EPIC CoE) will be designed and established in
Budapest in Hungary. Therefore, the know-how and the infrastructure of the already existing and well-
established STAKI institute is used and builds the basis for further developments of the EPIC CoE.

3.1 Step 1: Employees Attraction of the EPIC CoE

Based on the experiences of the HR strategy of SZTAKI some good practices for the attraction of employees
can be derived and are presented below for the new HR Concept for the EPIC CoE Ltd.

SZTAKI has many advantages because of its linkage to young students as well as graduates, which supports the
build-up of a solid relationship between universities and the industry. This ensures the preparation of the next
generation of workforce to be able to enter the industry efficiently. Consequently, this relationship will
support the development of a professional network that could be extended to all international relationships.
The role of SZTAKI is to maintain this network that includes industrial contacts (e.g. from Hungarian I4.0
Platform) and working groups.

Another advantage is that the SZTAKI has the freedom to further develop the network, e.g. researchers can
build/initiate own groups for their personal development.

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As the EPIC CoE is just starting its operations in 2018, it has no own attraction yet. As the Centre grows and
establishes services of high quality, the own reputation will increase and will be more and more attractive for
employees in the future.

3.2 Step 2: Recruitment of employees for the EPIC CoE

The following table shows a set of functions and roles that are developed for the EPIC CoE. Roles with similar
activities and responsibilities are clustered into groups. This allows the development of career paths within
one group (e.g. Research Assistant to researcher, etc.).
Table 4: Overview about roles within EPIC Ltd.
Director
Management R&D Manager
Industrial Coordinator
Leading Researcher
Researcher
Research Staff
Research Assistant
Project Manager
System Engineer
Technical Staff Developer
Analyst
Finance
IT Support
Marketing & PR
Operations IPR & Legal
HR Coordinator
Account Manager
Administration

For each specific role, a competence profile is developed that states the requirements for the fulfilment of the
role. It comprises the needed academic and technical experience, skills and attitude as well as primary and
secondary activities and responsibilities of each position. The following table shows an example of a
competence profile of a researcher that is derived from the core-, management- and support-processes of the
EPIC CoE.
Table 5: Example of Competence Profile - Researcher
ƒ Academic degree (M.Sc.) in the field of Engineering, Exact or Biological Science or ongoing
PhD
ƒ Proven experience with applied research (1+ years)
Academic and technical ƒ Experience with industrial projects (1+ years)
experience profile ƒ Experience with acquiring of R&D&I projects (1+ years)
ƒ Experience with portfolio management of R&D&I projects (1+ years)
ƒ Experience with team management (focus on multidisciplinary teams, 1+ years)
ƒ International experience (3-6 months)
ƒ Capacity planning, sense of priorities and deadlines
ƒ Practice leadership, attract responsibility, decision making
Skills and attitude
ƒ Focus on results and goals
ƒ Flexibility, being able to work under pressure
ƒ 1. Management Processes
ƒ Strategic Planning
ƒ Stakeholder Management
Activities and responsibilities
ƒ 2. Core Processes
Primary (responsible)
ƒ Research Projects
ƒ Scientific Work
ƒ 3. Support Processes
ƒ Communications Management (internal & external)
ƒ Visits /Business Trips
ƒ 1. Management Processes
ƒ Change Management
ƒ 2. Core Processes
Activities and responsibilities ƒ Industry Projects
Secondary (supporting) ƒ Education & Training
ƒ 3. Support Process
ƒ Conferences & Events
ƒ Marketing & PR

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

3.3 Step 3: EPIC CoE Qualification and Training Programs

Supporting an employee to be qualified for the next career stage is part of the qualification and training
concept. With the help of selected trainings, the competence profile of an employee will be continuously
aligned to current and future challenges. In this regard the following figure shows the possible career paths
that are identified for the EPIC CoE, where some of the career paths are within the same group (e.g. researcher
gets promoted to be a leading researcher) while other career paths reach from one group to another (e.g.
researcher gets promoted to be a project manager).

Figure 2: Possible Career Paths

Skills and trainings are needed to enable employees to develop into new roles on their specific career paths
within their groups or beyond. In this regard, table 6 shows an example of formal requirements for the
qualification and trainings for the transition of a researcher to a project manager. Only if those formal
requirements are fulfilled, the employee can fulfil the new competence profile of the project manager.
Table 6: Example of Qualification and Trainings from Researcher to Project Manager
ƒ Leadership skills (e.g. Delegation skills, organizational skills)
ƒ Time-management

New skills ƒ Negotiation skills

ƒ Industry oriented mind-set
ƒ Interface between research and industry
ƒ Leadership skills
Soft skill’s Trainings
ƒ Professional communication skills (negotiation)

Professional Training
Management Training
Activities and responsibilities
Primary (responsible)
Activities and responsibilities
Secondary (supporting)
ƒ Specific on-the job specialization trainings: industrial applications, technologies
ƒ Project and time-management
ƒ Strategic-, change-, & risk- management
ƒ Industry Projects
ƒ Communications Management (internal & external)
ƒ Stakeholder Management
ƒ Risk Management
ƒ Change Management
ƒ Quality Management

3.4 Step 4: Retention Strategies for the EPIC CoE

Final retention strategies are not implemented yet and still being discussed due to the early stage of
development of the EPIC CoE. However, the stated options for retention incentives (chapter 2.4), like an
effective performance management with individual and adaptable target agreements as well as salary
incentives, can be already seen as very important pillars for the retention of the EPIC CoE employees.

4. Conclusion
In this contribution, a four-step approach for the development of an HR-concept for companies has been
developed. The four steps were designed to establish a clear understanding of the complexity of the HR

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 Fabian Hecklau, Ronald Orth, Florian Kidschun and Gábor Nick

development process throughout the hierarchy levels and functions of organizations. Furthermore, their
description is the foundation of an integrated competence management for companies.

The methodology could be successfully applied at the EPIC CoE through its modularity and transparency. The
results deliver comprehensive competence profiles for the specific job roles and groups as well as qualification
and training requirement profiles for the development of the employees’ job roles on their individual career
paths. Moreover, they build a solid knowledge basis for the further development of the EPIC CoE HR concept.

Thus, retention of the employees is crucial, in this regard, strategies still have to be developed and applied.

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Key Factors of Effective Communication in Multicultural
Collaborative Teams
Ľubica Pechanová, Dagmar Cagáňová and Natália Horňáková
Slovak University of Technology in Bratislava, Trnava, Slovakia
Lubica.pechanova@stuba.sk
Dagmar.caganova@stuba.sk
Natalia.hornakova@stuba.sk

Abstract: The main aim of the paper is to point out key factors of the communication in multicultural collaborative teams.
Introduction emphasizes the need of innovation approaches in higher education to form personal skills of students to
prepare them to the practice. The theoretical part is conducted by processing data obtained from the study of Slovak and
foreign literature and internet resources. In the analytical part, the authors describe the information about the team
communication and leadership collected from the qualitative interview with the members of multicultural collaborative
teams in industrial enterprises. The third part describes the proposed key factors of effective communication in
multicultural collaborative teams. In the conclusion, facts presented in the previous parts are summarized.

Keywords: Effective Communication, Multicultural Collaborative Team, Leadership, Innovative Education, Industrial
Enterprises

1. Introduction
The phenomenon of globalisation has been prevalent throughout the last decade of 20th century and is still a
significant factor influencing organisations (management and employees) today: businessman, entrepreneurs,
public sector, employees, and professionals communicating with people from other cultures face to face or in
an electronic form (Woolliscroft et. al. 2014; Cagáňová et. al. 2011). It is necessary to use all available
resources, including the knowledge and skills of its employees, to enable enterprises to respond flexibly to
globalization changes. Knowledge management needs to be understood as a whole and defined as “any
processor practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to
enhance learning and performance in organizations” (H. Scarborough et. al. 1999), represents a significant
challenge and great opportunity for any organisation operating in a competitive globalised marketplace
(Woolliscroft et. al. 2014). Education is important aspect not only for obtaining education of the studied field,
but also for forming personal skills, such as communication skills, presentation abilities and social behavior.

The key competency is communication skill, as knowledge management requires, in addition to collaboration
also effective communication. In the case of insufficient communication and inefficient use of the knowledge
and potential/creative potential of employees, there is a low probability of a successful implementation of
knowledge management. Creative potential represents a complex combination of knowledge, abilities, skills,
motivation and personal moral characteristics of an employee which can be witnessed during meetings which
involve a creative process (Lenhardtová, Cagáňová 2010). Teamwork is unavoidable in study and science
during solving various projects, as well as in practice. Modern media provide communication channels which
enable collaboration with people of different cultures from different places, which lead to forming
multicultural collaborative teams. These teams are specific for corporations with industrial plants and offices
all over the world. To assure competitiveness among the graduates in the labor market, the higher education
should apply innovative approaches in education to prepare students for work in such environment.

The contemporary situation in the area of knowledge management, particularly in intercultural management
underlines the main concepts and directions that academics and industrial enterprises should focus on
(Cagáňová et. al. 2011).

2. Theoretical background
In the following part, the authors define the key terms used further in the analysis of studied subject. The
information is obtained by the study of Slovak and foreign books, scientific papers and other available sources.

Harausová (2013) defined effective communication as "sending the message in such way that the received
message was very close to the intended activity". Harausová (2013) also defines three indicators of effective

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communication. The message the sender sends must be accurate – when what the sender wanted to say
matches what the recipient actually understood, influential - if the message changes, will be the behavior of
the recipient affected in a desirable way and effective - whether the sender’s intention is fulfilled.

An effective team can be considered as a team with a clear understanding of team goals, team members have
the skills and knowledge needed to effectively perform team tasks, team members trust each other, and they
are respected as individuals, even for their individual contribution to overall performance of the team and
there is some form of team reward and system premiums for the whole group (Brooks 2003).

Members of multicultural teams hold diverse cultural identities which affect their understanding
interpretation and manner of responding to various situations (Erez et al. 1993).

Cagáňová (2011) perceives culture as “a set or system of norms, values, believes shaping the behavior and is
learned and shared by the people. It is the way how to solve problems, reconcile dilemmas, it determines social
behavior in environment as well as it is also one of factors that influence the success of society.”

Multicultural teams around the world struggle with intercultural conflicts, racial prejudice and socioeconomic
inequalities. With increasing migration and highly different international cities, multicultural teams are
becoming more common. But a large number consists of one dominating culture where people from minority
cultures must adapt to survive (Hibbert et al. 2014).

Multicultural teams often suffer because individuals struggle to understand, trust or relate to people with
different backgrounds or perspectives which can lead to tension, hostility, lack of cooperation and poor
communication, which ultimately undermine team performance (Paunová 2014).

Multicultural teams need more time for decision-making and problem solving than homogeneous groups. They
constitute the major complications in discussions and conflicts in the elaboration of assigned tasks.
Multicultural team members often misinterpret what their colleagues say, and it slows down the progress of
the team. In order to communicate effectively in another language, we need not only to learn its vocabulary
and grammatical structures, but also to learn about the social structures, values, and assumptions of the
culture (Hibbert et al., 2014).

Hoecklin (1995) describes the situation where a group of British and Italian managers were joined for
a common project in chemical company. Their mutual perception is shown in Table 1.
Table 1: Mutual perception of British and Italian managers (Hoecklin 1995)
British perception of Italian managers Italian perception of British managers
Excessive adaptation Obsessed with rules/procedures
Active Not adjusting
Creative Good planners
Focused on people Formal
Emotional Avoiding confrontation
Not disciplined Disciplined
Do not watch the time Hide emotions
Unable to meet the deadline

In the situation, it is possible to notice that there is a possibility of misunderstanding, confusion and even
resistance when the respective managers bring their mutual perceptions into mutual negotiations. Hoecklin
(1995) explains that the company has devoted time to scrutinizing these perceptive differences in joined teams
to find a suitable way of working together. Finally, their project was successful. This case highlights the crucial
role of communication in dealing with perceptive prejudices and stereotypical vision. Cultural stereotypes can
only be mastered with people from other cultures by effective communication (Brooks, 2003).

On the other hand, multicultural teams also have advantages. First, different perspectives cause that team
members from different countries and cultures bring their own unique cultural experiences to the team they
face in the company. These broader perspective views add new ways to solve the problem. Second, market
coverage is wider, which means that employees of different origins can offer the company broader coverage
on the global market. For example, an enterprise operating in ten countries can better meet the needs of given

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markets, if it has employees who know them. Ability to speak and write in a given language, to master cultural
barriers and communication barriers, and to know what customers want employees to enjoy, which are
acceptable to customers (Kokenmuller 2016).

Previous statements are the main reasons why multicultural teams need skilled leaders with experience in
cooperating with people of different cultures and nationalities in order to make a team’s work effective.

The environment in which team exists is constantly changing. Leaders of teams have to rely more and more on
their members, whose numbers increase. Team members are people with specific skills or competencies who
are no longer just concentrated in one place in the business, but are often in different places, living in different
countries or frequently travel, so personal communication is impossible. These are factors typical of
collaborative teams.

For that reason, electronic communication tools are increasingly being applied to businesses to facilitate
collaboration between individuals and groups, both inside and outside the business boundaries. Mentioned
trend is shifted by motivating businesses to exploit the collaborative potential of such tools as fast
management, group calls to simplify communication, and coordination without time and place restrictions
(Kock et al. 2009).

From this information, the authors can define a multicultural collaborative team as "a group of people of
different cultures and nationalities with long-term closed relationships who work together towards a shared
goal through new means of communication that also respects the principles for simplification of collaboration".

After collecting theoretical information about the specifics of the work and communication of the multicultural
collaborative team, the second part discusses the given topic from the point of practice in the industrial
enterprises.

3. Analysis of the current state by using interview method

The analysis contains records from the interviews with the experts in the field of teamwork in multicultural
collaborative teams of industrial enterprises. The way of communication in the team, positive and negative
experiences are discussed and obtained data are processed to conclusions. The analysis followed the steps
shown in Figure 1.

Determination of Data collection and Results evaluation

Interview process
the aim and objects processing and interpretation

Figure 1: Steps of analysis using the interview method (own elaboration)

3.1 Determination of the aim and objects of the analysis

The interviews were conducted with the aim to:

x get an overview of effective communication, multicultural teams and multicultural collaborative teams
in terms of practice,
x acquire deeper findings and knowledge (realistic picture of practice) on the solved issue.

The addressed respondents were experienced members of multicultural collaborative teams of industrial
enterprises, who helped to obtain the necessary information for the paper and also to create an image of how
communication works in multicultural collaborative teams in business practice. The objects of the survey were
large industrial enterprises. The competent people working in these enterprises were addressed mostly in
manger positions. Together, five interviews were conducted focusing on the current state of communication
solutions in the company and the team, on the complications arising from effective communication in
multicultural collaborative teams and on their consequences. Individuals were selected based on their job
position, specialization, field of action, and the nature and size of the business they are working in. The names
of the people are not mentioned because of the preservation of the anonymity addressed and the prevention
of internal data leak.

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 Ľubica Pechanová, Dagmar Cagáňová and Natália Horňáková

x Respondent A has been working for a managerial position for 3 years in a large industrial enterprise ZF,
who is a global leader in driveline and chassis technology as well as active and passive safety
technology.
x Respondent B has been in a test technician position for 5 years in a large industrial enterprise Brose,
that develops and produces mechatronic components and systems for vehicle doors, seats and body.
x Respondent C has been in HR department for 12 years in a large industrial enterprise Bekaert, that is a
world market and technology leader in steel wire transformation and coatings.
x Respondent D has been working on managerial position for 6 years in a large industrial company
Yanfeng, that is a global leader in automotive interiors.
x Respondent E has been working as manager for 10 years in a large industrial company Kromberg
& Schubert, that focuses on the development and production of complex wiring systems and
production of plastic parts for the automotive industry.

3.2 Interview process

Respondents were subjected to a semi-structured interview where some questions were prepared in advance,
others were created during the conversation. Using this method, the necessary information was obtained on
the issue. The interview method was chosen for several reasons:

x as people responding to the questions are selected, choice of suitable respondents is possible;
x interview provides the fastest feedback and a better understanding of the issue;
x in case of uncertainty, clarification and explanation is possible;
x there is no misunderstanding of questions or misleading responses.

The interviews were flexible. The interviews received further insights from the field of multiculturalism and
management of multicultural collaborative teams, from the area of effective communication, causes of
ineffectiveness and its consequences.

3.3 Data collection and processing

The interviews were planned from January 2018 to March 2018. Responses were recorded and after final
interview, all data were summarized and evaluated. Information about effective communication, multicultural
teams and multicultural collaborative teams were collected, as well as possible reasons of ineffective
communication in multicultural collaborative teams.

A great contribution to the collection of real knowledge from practice was the interview with a respondent
from ZF, especially in terms of:

x providing practical information from the solved issue,

x providing a real picture of how communication works in business practice in Slovakia and abroad,
x providing information on the management of a multicultural team and the diversity of cultures,
x searching of other options when dealing with solved issues.

3.4 Results evaluation and interpretation

The information obtained from the interview with experts from multicultural collaborative teams in
multicultural collaborative teams in industrial enterprises were analyzed, evaluated and interpreted. The
participating respondents state, that:

x they work in multicultural teams in industrial enterprises;

x they are aware of differences between working in monocultural and multicultural team;
x some respondents see difficulties with working in multicultural team:

1. Respondent A: „The Mexicans are late, the Germans pay too much attention on presence list, while
other team members want to discuss given problem.“
2. Respondent D: „The only multicultural problem I see is difficulty with language, sometimes it is
hard to understand English with accent.“
3. Respondent E: „My experience with team members from Ukraine is, that at the beginning they
weren’t honest. It took me 3 months to build trust with them.”

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 Ľubica Pechanová, Dagmar Cagáňová and Natália Horňáková

x some respondents see advantages of working in multicultural team, such as more experienced people,
more opportunities for projects.
x they work in collaborative teams;
x the primary language for communication in team (and usually whole enterprise) is English;
x they communicate in team by using:

1. Respondent A: e-mail, Skype for Business, webinars, share point portals;

2. Respondent B: e-mail, conference calls, video conferences, phone calls, online calendar, internal
chat, e-learning software;
3. Respondent C: e-mail, Skype, telephone;
4. Respondent D: e-mail, online calls via company PC communication system, internal communication
by using applications;
5. Respondent E: e-mail, telephone, video conferences;

x they see effective communication as:

1. Respondent A: “Effective communication is when rules are defined.”

2. Respondent B: “For making communication effective, we try to standardize everything.”
3. Respondent C: “Effective communication requires from members to communicate openly.”
4. Respondent D: “When you want to have effective communication, set rules at the beginning of the
task. Everybody have to know what their task is and what is the goal of the task.
5. Respondent E: “To communicate effectively, make sure everybody understands their task and get
the correct information. Spend more time communicating at the beginning, you will save time
afterwards because less errors and misunderstandings occur.”

x the main difficulties in team communication:

1. Respondent A: “When you have everything standardized, people show less initiative in solving
problems and tasks.
2. Respondent B: “The main reason why communication fails is that we do not have complete
information on time.”
3. Respondent C: “The difficulties with the communication, especially with collaborative team, are:
with language, technical problems, missing nonverbal communication, some people do not keep
rules and hierarchy.”
4. Respondent D: “The difficulties happen especially with written communication. People try to be
short and it leads to misunderstandings and problems.”
5. Respondent E: “We have problems with communication because of the multicultural differences.
People did not trust us first, they saw us as their enemies. We had to learn how they see things,
understand each other.”

x when problem occurs in team, they usually solve it by:

1. Respondent A: “Try to understand the reason of the problem and search for solution and
prevention.”
2. Respondent B: “When problem appears, we do not try to find the responsible person but the
solution.”
3. Respondent C: “Team leader is the one who communicates the problem with superiors and discuss
next steps with them.”
4. Respondent D: “When problem occurs, we contact superiors and let them decide.”
5. Respondent E: “When we solve problem, we follow three basic rules: collect information about
what happened from everybody, do not make quick conclusions and make preventive
measurements to avoid repetition.”

By following the established steps of the analysis, actual state of the effective communication in multicultural
collaborative teams in practice was identified.

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4. Key factors of the effective communication in multicultural collaborative teams

It is important to integrate individuals into the team and lead them to teamwork during higher education. In
enterprises, most of the work takes place in teams that, in order to be successful and effective, must be
managed by educated and responsible managers and leaders with personality assumptions.

The previous part describes in detail the interviews, that were conducted with employees of five large
industrial enterprises, who are in a leading position for a period of between 3 and 12 years. They all work in
multicultural collaborative teams in which they communicate primarily in English. Respondents feel the
difference in working with a monocultural and multicultural team, encounter problems in working in a
multicultural team (language, mistrust, different behaviors), but also see the benefits of working in a
multicultural team (more experienced people, more opportunities for new projects). They communicate most
frequently by using email, telephone, online calls, video calls, either one-to-one or group calls and applications
like online calendar, online file sharing or chat. The main difficulties perceived in team communication are,
that the information is not sent complete on time and people are trying to be brief in online communication,
which creates misunderstandings. Also, non-verbal communication is missing, the team members do not know
each other which lead to mistrust. Respondents also perceive language barriers, technical problems and the
feeling that standardization of everything reduces people's initiative. Problems are usually solved by
contacting superiors, by discussion of the team members and by finding the best solution and prevention to
avoid repetition of the problem. Respondents perceive communication as effective when: rules, project goals
and team members' tasks are defined, enterprise has established standards, communication is open, and a
correct understanding of the information is ensured.

Based on collected facts, authors conclude following key factors of effective communication in multicultural
collaborative teams (Table 2).
Table 2: Key factors of effective communication in multicultural collaborative teams
Description of the factor
Factor
Specifics of the factor
What is specific for team where team members work from different places in different time zones
and with different native language.
Collaborative factor
The team does not require a physical office, team members are in various places, may work online in
different times.
What is specific for team whose members are different nationalities, with different culture, habits,
traditions and behavior.
Multicultural factor
Team members are not located in the same demography, are different nationality and religion with
different habits and speak different native language. .
Usage of various means of communication in such way that the recipient understands the message
as it was meant to fulfil the purpose for which it was sent with as little side effect as possible.
Effectiveness
Team members use simple language, specific terms and templates, react without delay, choose the
correct means of communication and save time by working online.
How the influence of language impacts the understanding and performance of the individual
members and results of the whole team
Language
Team members must understand and speak common language, learn nonverbal communication,
signs and correct usage of means of communication.
How are new means of communication used in the team and their influence on the teamwork.
Innovation Team members use new means of communication, foreign experts are easy to contact, the
communication is simple, but technology requires support and higher safety precautions.

By implementation of mentioned key factors into the education process, the higher education can offer space
for learning and practice of modern team environment. Students will improve their communication skills, both
verbal (written or spoken) or non-verbal (different meaning of the same signs in various cultures) to avoid
misunderstanding, learn how to use new means of communication correctly – for example, how to adjust
surrounding and light during video conference to avoid noise and be easy to understand or create and use e-
mail templates and mailing lists. Safety cannot be forgotten. The students have to be warned and be careful
about the possible threats of data sharing and learned about the protection in the online world. They have to
take into account possibility of different rules and law of team members from different countries and find
common way to reach the given goal.

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 Ľubica Pechanová, Dagmar Cagáňová and Natália Horňáková

5. Conclusion
Multicultural collaborative teams differ from classical teams in particular by their size, variety of cultures and
native languages, distance of the team members and way of communication. New means of communication
enable team members to work with leaders and professionals from all around the world, thereby increasing
the ability to solve the task. Distance stops being an obstacle and team work becomes more efficient. For this
reason, higher education institutions should adjust the way of training to the requirements of the practice. By
creating associations with foreign institutions and inviting the foreign students and researchers into daily
education process, training will be more effective, as new ideas, viewpoints, possibilities of collaboration
among students and new information sources from experts will be easier to obtain. The graduates will be
better prepared for their following jobs and the employers will gain people with new innovative ideas.

Acknowledgement
This article is a part of an approved project KEGA No. 030STU-4/2018"E-platform for Improving Collaboration
among Universities and Industrial Enterprises in the Area of Education".

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