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Int ernat ional Journal of Business Administ rat ion, Vol. 6, No. 1, January 2015
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www.sciedu.ca/ijba International Journal of Business Administration Vol. 6, No. 2; 2015
Contents
Dividend Policy Responses to Deregulation in the Electric Utility Industry 1
Julia D’Souza, John Jacob & Veronda F. Willis
The Effects of Work Force Diversity on Employee Performance in Singapore Organisations 17
Darwin Joseph R. & Palanisamy Chinnathambi Selvaraj
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with Employee Performance
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Following Target Corporation's Data Breach
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Effect of Employee Engagement on Organisation Performance in Kenya’s Horticultural Sector 77
Brenda Beryl Achieng Otieno, Esther Wangithi Waiganjo & Agnes Njeru
Availability Bias Can Improve Women’s Propensity to Negotiate 86
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The Impact of the Unofficial Cattle Business on the Household Welfare of Cattle Traders of the Border 146
Towns of Cameroon and Nigeria
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Dividend Policy Responses to Deregulation in the Electric Utility

Industry
Julia D’Souza1, John Jacob2 & Veronda F. Willis3
1
Johnson Graduate School of Management, Cornell University, Ithaca, NY 14853, USA
2
Posthumous
3
College of Business and Technology, The University of Texas at Tyler, 3900 University Boulevard, Tyler, TX
75799, USA
Correspondence: Julia D’Souza, Associate Professor of Accounting, 368 Sage Hall, Cornell University, Ithaca, NY
14853, USA. E-mail: jd48@cornell.edu
Received: January 14, 2015 Accepted: February 16, 2015 Online Published: February 19, 2015
doi:10.5430/ijba.v6n2p1 URL: http://dx.doi.org/10.5430/ijba.v6n2p1
Abstract
This paper investigates changes in electric utilities’ dividend policies following the onset of deregulation. Consistent
with the theory of dividend clienteles, we find that utilities continue to pay high dividends after the onset of
deregulation. Under a regulated regime, we find no systematic pattern of associations between dividend changes and
abnormal stock returns or future earnings changes. Post-deregulation, however, we find that, consistent with prior
research on unregulated firms, dividend increases (decreases) are viewed by the market as good (bad) news. When
we examine earnings following changes in dividends, we do not find evidence in favor of the dividend signaling
theory.
Keywords: electric utilities, deregulation, dividend policy
1. Introduction
The Energy Policy Act of 1992 deregulated the wholesale sector of the electric utility industry and signaled that the
industry would soon undergo retail sector deregulation. However, deregulation has posed a series of challenges to
utilities. In the regulated regime, utilities were guaranteed a fair rate of return on their investment in return for
providing reliable power to customers. Limited investment opportunities and low business risk made it optimal for
utilities to pay out most of their earnings as dividends. Utilities were characterized by regular and high dividend
payments and were sometimes referred to as “widows and orphans stocks” because their regular dividends were ideal
for investors who required a fixed income.
As utilities underwent deregulation, their business risk has increased as they are no longer assured a fair rate of
return and have to operate in a competitive marketplace (Johnson et al, 1998). Utilities’ investment opportunities
have increased as they are now allowed to diversify into other industries. Thus, it is possible that the high payout
dividend policy is no longer optimal. However, if electric utilities wish to retain their existing investor clientele, they
might persist with their high dividend payout policies despite the changed business environment.
In this paper, we examine the effect of deregulation in the electric utility industry on the dividend policies of
investor-owned utilities. There are competing theories to explain firms’ dividend policies but definitive answers are
hard to find in prior research. The utility industry transition from a regulated to a deregulated environment is an
interesting setting to examine dividend policy issues. In a regulated environment, many of the traditional arguments
used to explain dividend policy do not apply. As firms move to a deregulated environment, they are, for the first time,
subject to the same competitive forces that affect other firms. The changes they make to their dividend policies and
the market’s reactions to these changes are informative about dividend policy in all firms.
We examine changes in the level of electric utility dividends following the onset of deregulation. Controlling for
other factors that could affect dividends, we find that dividends per share have remained relatively stable while
dividend yield has decreased and the dividend payout ratio has increased. This is consistent with electric utilities
maintaining their high dividends, despite lower profitability after deregulation. Next we investigate the stock market
reaction to news of electric utilities dividend changes. In the regulated period, we find little evidence of associations
Published by Sciedu Press 1 ISSN 1923-4007 E-ISSN 1923-4015

between dividend changes and abnormal stock returns around the announcement dates of these changes. After the
onset of deregulation, we do find a pattern of association similar to that of firms in unregulated industries. This
finding is consistent with both the signaling and the free cash flow theory for dividends. To distinguish between
these two theories, we examine the association between abnormal returns around dividend announcements and
proxies for firms’ investment opportunities. We also study the relation between dividend changes and future earnings
changes. Some of our results are consistent with the free cash flow theory for dividends but our results are generally
not consistent with the signaling theory.
2. Prior Research
There has been considerable prior research on dividend policy starting with Lintner (1956) (Note 1). However, the
evidence from prior research is mixed. First, relying on asymmetric information between managers and investors, the
dividend signaling theory (e.g., Bhattacharya, 1979, John and Williams, 1985, Miller and Rock, 1985), suggests that
managers who foresee a bright future pay high dividends as a credible signal to the market of their private beliefs.
Several papers have attempted to test this theory empirically with mixed results. Watts (1973) finds weak evidence
of a relationship between current dividends and future earnings. John and Lang (1991) examine the direction of
insider trading around dividend changes and document evidence in favor of this theory. Healy and Palepu (1988)
provide evidence that firms that initiate dividends are supportive of the dividend signaling theory but those that omit
dividends are not. DeAngelo et al. (1996) analyze firms that had an earnings decline after nine or more consecutive
years of growth and find no support for the signaling hypothesis. Benartzi et al. (1997) and Grullon et al. (2005)
examine earnings changes following dividend changes, and find that dividend changes do not generally predict
earnings changes in the same direction. However, results in Nissim and Ziv (2001) are supportive of the dividend
signaling theory.
Another theory is based on agency conflicts between shareholders and managers and/or debt holders. The free cash
flow hypothesis (Jensen, 1986) suggests that, in the absence of monitoring mechanisms, managers of firms with free
cash flows will invest these cash flows in negative net present value (NPV) projects. Dividend payments could be
viewed as reducing managers’ ability to make these negative NPV investments and therefore dividend increases may
be interpreted as good news. Lang and Litzenberger (1989) examine stock price reactions to dividend changes by
firms with differing investment opportunities, proxied for by Tobin’s Q, and report evidence consistent with this
theory. Jensen et al. (1992) and Agrawal and Jayaraman (1994) find a negative relationship between leverage and
dividend payout, consistent with the free cash flow theory. However, Yoon and Starks (1995) document evidence
inconsistent with this theory in their study of capital expenditures following dividend changes.
As prior evidence is mixed on dividend policy, we use the onset of deregulation in the electric utility industry to
explore the motivations of managers as they set their dividend policies. As the firms in the electric utility industry
began to face competitive pressures, they might change their dividend policies to more closely resemble other
unregulated industries. Their response to deregulation may provide a useful setting to examine some of the research
questions associated with dividend policy.
3. Institutional Background on the Electric Utility Industry
The first hint of competition in the industry was the enactment of the Public Utilities Regulatory Policies Act of 1978
(PURPA) which encouraged the growth of non-utility power production. However, power producers were not
allowed to contract with customers or to sell outside the service area of the host utility. A major step towards
introducing competition in the industry was taken in 1992 with the enactment of the Energy Policy Act which
removed legal restrictions on electric utilities forming corporate subsidiaries to produce and sell power at the
wholesale level. The Act also gave the Federal Energy Regulatory Commission the authority to require a utility to
provide other power suppliers access to its transmission system for wholesale power sales across regional lines.
Since the passage of the 1992 Act many state legislatures have initiated measures to introduce competition at the
retail level. These measures usually allow for “retail wheeling,” i.e., giving access of a utility’s transmission facilities
to a competitor to deliver power to retail customers.
Until the power crisis in California in the summer of 2001, which many attributed to a flawed deregulation process,
and the Enron debacle, deregulation in the electric utility industry appeared to be an inevitable process. The process
was slowed by these two events. We use the year 1992, the year of the enactment of the Energy Policy Act, as the
cut-off between a period in which electric utilities operated in a regulated environment and one where competition
was either already present or appeared imminent. (Note 2)

4. Research Questions and Methodology

4.1 Multivariate Tests of Factors Associated with Dividend Yield and Payout
Utilities have occasionally cut dividends; however, the cut could clearly be traced to the financial effects of
identifiable construction projects. Smith (1986) hypothesizes that a major reason that regulated firms pay high
dividends is because doing so forces them to approach the capital markets on a regular basis which serves as a
monitoring mechanism. Smith and Watts (1992) and Hansen et al. (1994) test this capital market monitoring
hypothesis and find evidence consistent with Smith (1986)’s prediction. With the onset of deregulation and the
consequent decline in the power and influence of the regulators, the necessity of such monitoring may be reduced. If
the principal reason for high utility dividends is to facilitate this monitoring, we hypothesize that dividend payouts
should decline after the onset of deregulation. As deregulation progresses, utilities’ growth opportunities will likely
increase and utilities may decrease their dividends in order to take advantage of these opportunities.
Prior research (e.g., Elton and Gruber, 1970; Allen et al., 2000; Graham and Kumar, 2006; Brav et al., 2005) also
predicts and documents the existence of investor clienteles for high and low dividend paying stock and suggests that
factors such as taxes could induce these clienteles. Therefore, firms might be reluctant to change their dividend
policies to avoid displeasing their existing clienteles. As we are unsure how utilities have responded to deregulation
in terms of their dividend policies, our first hypothesis, stated in null form is:
H1: After deregulation, there will be no change in the level of dividends for utility firms.
We test this conjecture by examining the level of dividends for firms both in the regulated and deregulated regimes.
We control for factors identified in prior research as affecting the level of dividends. Specifically, we estimate the
following equation in a sample of firms in all industries:
DIVit =  + 1Post-EPAt + 2Utilityi,t + 3Post-EPAt*Utilityt + 4Sizeit+ 5Profitit + 6Leverit
+ 7Growthit + 8Tobinit + 9Repurchasesit + it (1)
where for firm i and year t, DIVit is either annual dividends per share, dividend yield or the dividend payout ratio.
Post-EPAt is a dummy variable which takes the value one in periods after 1991 and zero otherwise. Utilityi,t is a
dummy variable that takes the value one if the observation pertains to an electric utility, zero otherwise. Sizeit is the
natural logarithm of the market value of the firm’s equity. Profitit, a proxy for the firm’s profitability, is return on
equity when the dependent variable is either dividend yield or dividend payout and is EPS when the dependent
variable is dividends per share. Leverit, a proxy for the firm’s financial leverage, is the ratio of the firm’s total
liabilities to its total assets. Growthit, a proxy for the firm’s growth during the year, is the ratio of the firm’s change
in total assets scaled by total assets at the beginning of the year. Tobinit is a proxy for investment opportunities
available to the firm, measured as the ratio of the sum of market value of common equity and the book value of debt
to the book value of total assets. (Note 3) Repurchasesit is the dollar value of the firm’s share repurchases scaled by
income before extraordinary items for the year.
This research design allows us to test for changes in dividend policies of electric utilities between periods,
controlling for economy-wide changes in dividend policy such as the one documented by Fama and French (2001).
To examine the effect of deregulation on electric utility dividends, we include the dummy variables POST-EPA (1)
positive coefficient on 2. If electric utilities have reduced dividends in the deregulated period, we would expect a
and UTILITY (2) and their interaction (3) in the regression. As utilities tend to pay high dividends, we expect a
negative coefficient on the interaction term. We include a size proxy in the regression because Fama and French
(2001) find that firm size is positively associated with the propensity to pay dividends. We include PROFIT to
capture effects of firm profitability on the level of dividends (e.g., Jensen et al (1992)). We expect a positive
coefficient as more profitable firms can pay dividends. The free cash flow theory suggests that highly levered firms
have less need to pay dividends to resolve agency conflicts between owners and managers. We include LEVER to
control for the effect of financial leverage on dividend policy and expect a negative coefficient.
The free cash flow theory also suggests that firms’ dividend policy should be related to their investment
opportunities. Firms with numerous positive NPV investment opportunities would not need to use dividends to
resolve agency conflicts between managers and owners. Firms with few such opportunities could use high dividends
to signal that they are not investing in value destroying projects. We include two proxies for future investment
opportunities: GROWTH which proxies for firms’ growth in the recent past, and TOBIN, a forward looking measure
of the market’s evaluation of firms’ prospects (e.g., Fama and French, 2001). Some prior research suggests that share
repurchases and dividends are substitutes for each other in returning cash to shareholders. We include
REPURCHASES to control for this effect. In order to test for changes in electric utilities dividend paying behavior

after deregulation, we use three measures of dividends as the dependent variable: dividends per share, dividend yield
and the dividend payout ratio.
4.2 Stock Market Reaction to Electric Utility Dividend Changes
Prior research has found that dividend increases (decreases) are accompanied by a positive (negative) stock price
reaction (see for e.g., Bajaj and Vijh, 1990). This finding is consistent with both the dividend signaling theory and
the free cash flow theory. Under the dividend signaling theory, firms use dividend increases (decreases) to convey to
the market their favorable (unfavorable) future prospects. Under the free cash flow theory, dividend increases
preclude firms from investing free cash flows in negative NPV projects and are therefore good news. Neither of these
theories predicts abnormal returns to dividend changes by electric utilities in the regulated era. Management did not
need to use dividends to signal future earnings since investors were aware these future earnings were assured by the
regulatory contract. The regulatory contract and the rate-setting mechanism also implied that all investments were
essentially zero NPV and therefore shareholders could not be hurt by over or under-investment. In the regulated
regime, therefore, dividend changes should not have lead investors to make inferences about utilities’ long-term
prospects.
As the protection afforded to investors by the rate-of-return regulatory system is eroded, changes in dividends are
more likely to contribute to investor uncertainty and result in changes in investor clientele. A fair rate of return on
investments is no longer assured and electric utilities are no longer precluded from making negative NPV
investments. Therefore, we hypothesize that:
H2: Dividend changes are associated with stronger stock price reactions in the deregulated period than in the
regulated period.
We investigate the stock market reaction to news of dividend changes in the industry through a series of regressions
where the dependent variable is the cumulative abnormal stock return (CAR) in the two-day period ending on the
dividend announcement date. Although our focus is on electric utilities, our sample is comprised of firms in all
industries to control for changes, between periods, in the market’s reactions to dividend changes across all firms. We
first estimate the model:
CARit = + 1Utilityit + 2Chdivit + 3Post-EPAit + 4Utilityit*Chdivit + 5Utilityit*Post-EPAit +
6Chdivit *Post-EPAit + 7Utiltiyit*Chdivit *Post-EPAit + 8Yieldit + it (2)
where CARit is the cumulative abnormal stock return for firm i over the two-day window ending on the day of the
dividend announcement for quarter t. Chdivit is the change in dividends for firm i for quarter t scaled by the dividend
in quarter t-1.Yieldt is the dividend yield for firm i in quarter t defined as the dividend in quarter t divided by the
stock price at the end of quarter t. Other variables are as defined earlier.
differential abnormal return to electric utilities in either the regulated or the deregulated periods, respectively. 2
We include UTILITY (1) and the interaction of UTILITY with POST-EPA (5) in the regression to control for any
captures the abnormal returns associated with dividend changes by non-utilities in the pre-1992 period. Both the
signaling and the free cash flow theories predict a positive coefficient on this coefficient since dividend increases
(decreases) convey good (bad) news for these firms under either theory. POST-EPA controls for any systematic
more muted in the regulated era and therefore expect a negative coefficient on 4. Following the same logic, we
difference in abnormal return in the later period. We expect reactions to dividend changes by electric utilities to be
coefficient on 7. 6 captures systematic differences in reactions to dividend changes by non-utilities in the post-1991
expect stronger reactions to electric utility dividend changes after deregulation and therefore expect a positive
negative coefficient on 6. Bajaj and Vijh (1990) find that, because of clientele effects, abnormal stock returns
era. As Fama and French (2001) document firms’ declining propensity to pay dividends in recent years we expect a
around dividend changes are related to the dividend yield with the reaction being more pronounced for high dividend
yield firms. The variable YIELD controls for this effect.
Prior studies have found that the magnitude of the stock price reaction to news of dividend changes differs depending
on whether the change is an increase or a decrease. The reaction was found to be stronger for dividend decreases than
for dividend increases. To examine whether this asymmetric reaction exists in our sample, we estimate:
CARit= + 1DNEGit + 2Utilityit + 3Post-PAit + 4Chdivit + 5DNEGit*Chdivit +
6DNEGit*Post-EPAit + 7DNEGit*Utilityit + 8Post-EPAit*Utilityit + 9*Post-EPAit * Chdivit +
10Utilityit*Chdivit + 11DNEGit*Post-EPAit*Utilityit + 12DNEGit*Utilityit*Chdivit +
13DNEGit*Post-EPAit*Chdivit + 14*Post-EPAit*Utilityit*Chdivit +
15DNEGit*Post-EPAit*Utilityit*Chdivit + 16Yieldit +it (3)

where DNEGit is a dummy variable that takes the value one when there is a decrease in dividends and zero otherwise,
and the other variables are as defined earlier. (Note 4) If the magnitude of the stock reaction to dividend decreases
differs from that for dividend increases, we would expect the interactions of DNEG with the dividend change
variable, CHDIV, to be statistically significant.
Findings in prior research of abnormal returns around dividend changes are consistent with both the signaling theory
for dividends and the theory that firms use dividends to resolve agency conflicts between managers and investors. To
distinguish between these two theories, we examine if abnormal returns for electric utilities around dividend change
announcements vary depending on the investment opportunities available to the firm. The free cash flow theory
predicts differences based on investment opportunities while the signaling theory does not. One of the implications
of the free cash flow theory is that the market reaction to dividend changes should differ depending on the
investment opportunities available to the firm. Increases in dividends should be interpreted negatively (positively) for
firms with (without) attractive investment opportunities.
Deregulation is likely to have increased both the business risk and the investment opportunity sets of electric utilities.
Increase in business risk may have raised the cost of capital for electric utilities making internally generated cash
flow more attractive. Dividend reductions free up cash to invest in newly available investment opportunities. It is
conceivable that the market reaction to news of dividend changes is dependent on whether investment opportunities
available to individual electric utilities are perceived to be positive NPV. Lang and Litzenberger (1989) find that the
abnormal returns associated with dividend changes are greater when firms are likely to be over-investing (defined as
firms with Tobin’s Q less than 1). They interpret this as evidence in favor of the free cash flow hypothesis. Smith and
Watts (1992) document that firms with fewer growth options have higher dividend payouts. To investigate the effect
of growth opportunities on the stock reaction to dividend changes we estimate the following regression:
CARit=+1DTOBINit+2Utilityit+3Post-EPAit+4Chdivit+5DTOBINit*Chdivit+
6DTOBINit*Post-EPAit+7DTOBINit*Utilityit+8Post-EPA*Utilityit+9 * Post-EPAit * Chdivit +
10Utilityit*Chdivit +11DTOBINit * Post-EPAit * Utilityit + 12DTOBINit * Utilityit * Chdivit +
13DTOBINit * Post-EPAit * Chdivit + 14Post-EPAit * Utilityit * Chdivit +
15DTOBINit * Post-EPAit* Utilityit* Chdivit + 16Yieldit +it (4)
where DTOBINit is an indicator variable that takes the value 1 when the Tobin’s Q for firm i in the year in which
quarter t falls is higher than the median for the year, and zero otherwise. Other variables are as defined earlier.
If stock price responses to dividend changes differ for firms based on their growth opportunities, as implied by the
free cash flow theory, we would expect significant coefficients on the interactions of DTOBIN with the dividend
change variable, CHDIV. In particular, we would expect a negative and significant coefficient on DTOBIN*CHDIV.
If the information content of dividend changes is not as strongly linked to investment opportunities for electric
utilities prior to deregulation, we expect a positive and significant coefficient on DTOBIN*UTILITY*CHDIV.
4.3 Earnings Changes around Dividend Changes
The signaling theory for dividends suggests that managers use dividends to signal future cash flows and earnings.
Prior research has examined whether dividend changes are associated with the predicted earnings changes and found
mixed results (Note 5). We predict that, if utilities use dividends to signal future earnings, this signaling is more
likely to occur in the post-deregulation period. Earnings were more predictable in the regulated regime and the need
to signal is likely to have been lower. Therefore we hypothesize,
H3: Dividend changes should be associated with earnings changes in the deregulated period but not in the regulated
period.
We examine the behavior of earnings for utilities in the years surrounding dividend changes. Using a linear
regression framework to examine the dividend signaling theory, we estimate the following model:
IBEIt+i = α + β1Utilityt + β2Post-EPAt + β3Chdivt + β4Utilityt*Post-EPAt + β5Utilityt*Chdivt +
β6Post-EPAt*Chdivt + β7Utilityt*Post-EPAt*Chdivt + εt (5)
where IBEIt+I is the percentage change in income before extraordinary items between year t and year t+i, for i = 1 to
3. Other variables are as defined earlier.
Dividend signaling among non-electric utility firms would predict positive and significant coefficients on β3, and β6.
If electric utilities did not signal their future prospects through dividend changes in the regulated regime but had

greater need to signal these prospects after the onset of deregulation, we would expect a positive and significant
coefficient on β7.
4.4 Sample and Data
We obtain two samples for each test in order to determine if utilities perform differently from a set of general firms.
For our utility sample, we identify electric utilities as firms in SIC codes 4910, 4911, 4930 or 4931 in the
COMPUSTAT and Center for Research on Security Prices (CRSP) databases. The other sample was for a general
sample of firms excluding utilities. We extract dividends and returns data from the CRSP database for the period
1962-2004, and accounting data from the COMPUSTAT database for the period 1985-2004.
In Table 1, we present a comparison of metrics for our sample of electric utilities for the years prior to the enactment
of the 1992 Energy Policy Act and the years after the onset of deregulation. To facilitate comparison, we also present
these metrics for non-electric utilities labeled ‘other firms’ in the table. The median values of the price to earnings
ratio has increased between the pre- and the post deregulation period. This could be a result of the market
recognizing the greater growth opportunities or greater efficiency of electric utilities after deregulation. Alternatively,
this could reflect the generally higher valuations in the later period as the ‘other firms’ sample show an increase in
this ratio over the period. However, the ratio reflecting profitability, return on equity, is lower for the utility sample
in the later period. It is possible that pricing pressures associated with a competitive market after deregulation is
responsible for the decreased profitability. Alternatively, as the ‘other firms’ sample also exhibits decreases in this
ratio, this decrease could be associated with economy-wide trends.
The debt to equity ratio of electric utilities has increased between periods indicating that utilities have taken on more
debt. Increases in leverage after deregulation reduce free cash flows and are consistent with the free cash flow theory.
This trend is not reflected in the sample of other firms as the debt to equity ratios in this latter sample have
marginally declined. The increase in debt in the utilities sample does not appear to be to fund their expansion
programs. Electric utilities asset growth has slowed in the later period, both in relation to the earlier period and in
relation to the ‘other firms’ sample.
Table 1. Descriptive statistics of selected metrics of electric utilities in our sample
Ratio Pre-EPA Post-EPA
Panel A Q1 Median Q3 Q1 Median Q3
Electric Price to Earnings 7.05 9.24*# 11.97 11.81 13.88*# 16.55
Utility
Return on Equity (%) 12.33 13.91*# 15.46 9.05 11.83*# 13.61
Market capitalization 4.90 5.92*# 6.80 6.61 7.68*# 8.54
Tobin’s Q 0.96 1.03*# 1.13 1.07 1.15*# 1.24
Debt/Equity 1.40 1.59*# 1.81 1.70 2.11*# 2.76
Asset Growth (%) 3.82 8.09* 12.83 -8.50 2.84*# 8.17
Dividend payout (%) 53.11 60.02*# 67.66 54.32 70.98*# 84.56
Dividend yield (%) 5.77 7.67*# 9.78 3.55 5.09*# 6.32
Panel B
Other Firms Price to Earnings 7.55 11.77*# 19.23 11.59 16.88*# 26.87
Return on Equity (%) 1.89 10.55*# 16.79 -8.24 8.11*# 16.64
Market capitalization 2.15 3.45*# 4.90 3.06 4.57*# 6.15
(million $s)
Tobin’s Q 0.93 1.12*# 1.65 1.04 1.39*# 2.37
Debt/Equity 0.50 1.09*# 2.14 0.30 1.00*# 2.61
Asset Growth (%) -1.93 7.99* 21.08 -4.85 7.04*# 26.67
Dividend payout (%) 0.00 14.31*# 37.33 0.00 0.00*# 32.22
Dividend yield (%) 0.00 0.00*# 3.37 0.00 0.00*# 1.14

Notes: Ratios are defined as follows (data item numbers refer to data item numbers in the COMPUSTAT annual
database): Price to earnings is stock price at close of fiscal year (data item 199)/ Primary earnings per share
excluding extraordinary items (data item 58). Return on equity is income before extraordinary items (data item 18)/
Total common equity (data item 60). Market capitalization is the log of (Closing stock price (data item 24) x
Common shares outstanding (data item 25)). Tobin’s Q is (Market value of common equity + Book value of debt)
divided by book value of total assets (data item 6 + data item 24 x data item 25 – data item 60)/data item 6). Debt to
Equity ratio is total liabilities (data item 181) / Total stockholders equity (data item 6 – data item 181). Asset Growth
is total assets (data item 6) – prior years total assets (data item 6)/prior years total assets. Dividend payout ratio is
common dividends (data item 21)/ Income before extraordinary items (data item 18). Dividend yield is dividends per
share by ex-date (data item 26)/ Stock price at close of fiscal year (data item 199).
* Difference between pre-and post EPA period is significant at the 1% level in the Mann-Whitney test.
# Difference between electric utilities and non-electric utilities significant at the 1% level in the Mann-Whitney
test.
The univariate statistics suggest that utilities actually increased dividend payout between the regulated and the
deregulated period. As noted earlier, profitability declined between the two periods for utilities and firms that
maintained their dividend level stable are likely to have seen their dividend payout ratio trending upwards. This is
preliminary evidence in favor of the ‘clientele’ theory for dividend policy. Firms appear to be unwilling to reduce
dividends even as profitability declines. This phenomenon is not reflected in the ‘other firms’ sample with payouts in
this sample declining between periods. This latter finding is in line with Fama and French (2001) who document a
declining propensity to pay dividends which is discernible across industries. It is also evident that electric utilities
continue to pay out a considerably larger proportion of earnings as dividends than firms in the ‘other firms’ sample.
However, utilities’ dividend yield has declined between periods. This could be related to the higher stock valuations
relative to earnings in the deregulated period reflected in the higher price to earnings ratios.
5. Empirical Results
5.1 Estimation Results for Equation (1)
Table 2 presents the results of estimating equation (1). Panel A reports the results when the dependent variable is
dividends per share, panel B the results when it is dividend yield and panel C when it is the dividend payout ratio.
The first column in each panel of the table reports results using ordinary least squares (OLS) regressions. The second
column reports results estimated using generalized estimating equations (GEE) which adjusts for clustering of
observations by firm (Note 6).
In both estimations in Panel A, the coefficient on POST-EPA is negative and statistically significant at less than the 1%
level, suggesting that dividends per share have decreased for all firms in recent years. This is consistent with the
findings of Fama and French (2001) who detect a declining propensity of firms to pay dividends across all firms.
Similarly, the coefficient on UTILITY is positive and strongly significant in both estimations confirming findings in
Smith and Watts (1992) that electric utilities paid higher dividends than other firms prior to deregulation. The results
for the interaction term are not significant at conventional levels in the OLS and GEE estimations suggesting no
changes in dividends per share associated with deregulation. The control variables, for the most part, manifest
expected signs and are statistically significant. One of the implications of the free cash flow theory is that leverage
and dividends are substitutes in dealing with the agency problems associated with free cash flows. Our results do not
support this implication. LEVER is positive and significant. However, the results for GROWTH and TOBIN are
supportive of the free cash flow theory. Both these variables are negative and significant indicating that firms that are
investing heavily in assets and those with better growth prospects pay lower dividends. Our results suggest that firms
that pay high dividends are more likely to return cash to shareholders through share repurchases.
Panel B presents the results when the dependent variable is dividend yield. The results are similar to those in Panel A
with one exception. The interactive term UTILITY*POST-EPA is negative and significant suggesting that dividend
yield for electric utilities has decreased between periods. The results in Panel A indicate that dividends per share for
electric utilities were stable between periods. The results in Panel B suggest that the denominator of dividend yield,
the stock price has increased more for electric utilities than for other firms.

Table 2. Factors associated with dividends

Panel A: Panel B: Panel C:
Dividends Per
Dependent Variable: Share Dividend Yield Dividend Payout
Predicted
VARIABLE sign OLS GEE OLS GEE OLS GEE
Intercept 0.042 0.036 1.251 1.161 14.243 13.271
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Post-EPA - -0.097 -0.084 -1.208 -0.941 -7.418 -5.950
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Utility + 0.867 0.872 6.235 6.285 25.098 27.134
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Utility *Post-EPA ? -0.010 0.012 -3.073 -2.937 11.361 10.709
(0.46) (0.78) (0.0001) (0.0001) (0.0001) (0.0001)
Size + 0.055 0.053 0.257 0.193 4.349 3.990
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Profit + 0.034 0.024 0.145 0.089 -4.221 -7.235
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Leverage - 0.001 0.001 0.009 0.008 0.328 0.438
(0.0001) (0.03) (0.0001) (0.002) (0.0001) (0.0001)
Growth - -0.040 -0.030 -0.255 -0.168 -6.270 -4.233
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Tobin's Q - -0.011 -0.010 -0.118 -0.093 -2.654 -2.447
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Repurchases - 0.026 0.023 -0.044 0.008 5.862 7.365
(0.0001) (0.0001) (0.002) (0.52) (0.0001) (0.0001)
No. of observations 176,546 176,546 175,504 175,504 121,062 121,062
R-squared (%) 27.87 22.49 7.21
Log-likelihood -85,976 -403,754 -637,119
Notes: Variables, excluding indicator variables, are winsorized at the 1% and the 99% levels. p-values in
parentheses.
Variable definitions:
Yield Dividend yield computed as the ratio of the annual dividend to stock price
Payout Dividend payout ratio computed as the ratio of annual dividends to earnings before extraordinary items
Post-EPA Indicator variable that takes the value one when the observation is for a year after 1991, zero otherwise
Size Logarithm of market value of equity in millions of dollars.
Profit ROE computed as income before extraordinary items scaled by scaled by stockholders’ equity or EPS
Lever Total liabilities divided by total shareholders’ equity
Growth Change in total assets during the year scaled by total assets in the prior year
Tobin’s Q (Market value of common equity + Book value of debt) divided by book value of total assets
Utility Indicator variable that takes the value one when the observation is for an electric utility, zero otherwise
Repurchases Share repurchases during the year scaled by income before extraordinary items.

Panel C of Table 2 presents the results when the dependent variable is the dividend payout ratio. The results are
similar to those reported in panels A and B with the following exception. The interaction of UTILITY and
POST-EPA is positive and significant in both columns. Controlling for market wide changes, the dividend payout
ratio has increased for electric utilities after deregulation. This finding is consistent with some prior research that has
documented the existence of dividend clienteles (e.g., Elton and Gruber, 1970, Allen et al., 2000, Graham and Kumar,
2006). It is possible that electric utilities might have maintained their high level of dividends, to retain their
high-dividend clientele, despite declining profitability. This would explain the increase in their payout ratio. Lintner
(1956) found that firms appear to adjust their dividends towards a target dividend payout ratio. However, more recent
survey evidence in Brav et al. (2005) suggests that firms prefer to pay stable levels of dividends rather than targeting
a specific payout ratio. The results in Panels A and C are consistent with this latter study.
Overall, the results in this section indicate that the advent of competition has not induced electric utilities to reduce
their levels of dividends. They appear to be maintaining this level even as profitability declines. We interpret this as
evidence in favor of dividend clienteles influencing electric utilities’ dividend policies. Our results for the GROWTH
and TOBIN variables, but not for the LEVER variable, also provide support for the theory that dividends play a role
in resolving agency conflicts between managers and shareholders (Note 7).
5.2 Empirical Results of Tests Related to Abnormal Returns around Dividend Change Announcements
Table 3 presents the median announcement period abnormal returns categorized by the sign of the change in
dividends. Dividend changes are categorized as increases (decreases) if they were greater (less) than 10% (-10%).
Dividends were judged to be unchanged if there was no change in dividends between adjacent quarters. Abnormal
returns are measured using two alternative methods. First, excess returns are computed as the difference between
returns for the firm and returns for a portfolio of firms in the same beta decile. The alternative measure of abnormal
returns uses the difference between the return on the firm’s stock and the return on a value weighted market portfolio.
To facilitate comparison, abnormal returns are also computed for all dividend announcements by non-electric utility
firms on CRSP. We use a two-day event window consisting of the day prior to and the day of the dividend
announcement.
Consistent with prior research, in the ‘other firms’ sample and in both periods, we find statistically significant
positive (negative) abnormal returns for dividend increases (decreases). In addition, the reaction to dividend
decreases is stronger than to dividend increases in the earlier period. However, in the later period, the magnitude of
the reaction to dividend increases is greater than that for decreases in the later period. We also observe that the
magnitudes of these abnormal returns have declined between periods. In recent years, the market does not appear to
interpret dividend increases (decreases) as good (bad) news to the same extent as it did in prior years.
Table 3. Abnormal returns following dividend changes
Panel A. Beta excess returns
ELECTRIC UTILITIES OTHER FIRMS
Median Dividend no change Dividend Dividend no change Dividend
decrease increase decrease increase
Pre -EPA -0.04 -0.03 0.52*** -1.87*** -0.12*** 0.99***
Sample size 283 6,823 460 2,257 116,682 13,019
Post – EPA 0.40 0.02* 0.36** -0.32*** -0.04** 0.48***
Sample size 61 3,310 59 1,464 48,219 4,528
Panel B. Market adjusted returns
ELECTRIC UTILITIES OTHER FIRMS

Median Dividend no change Dividend Dividend no change Dividend
decrease increase decrease increase
Pre -EPA 0.20** 0.05*** 0.93*** -1.30*** -0.05** 1.00***
Sample size 292 7,535 477 3,317 172,674 19,862
Post – EPA 0.68* 0.08*** 0.66** -0.14*** 0.04*** 0.54***
Sample size 62 3,448 59 2,076 81,290 8,716

Notes:
Abnormal returns (expressed as percentages) are measured over a two-day window ending on the date of the
dividend announcement as recorded on CRSP. Beta excess returns are the difference between raw returns and the
return on a portfolio of stocks in the same beta decile. Market adjusted returns are raw returns less the return on the
market.
*** Significant at the 1% level ** Significant at the 5% level * Significant at the 10% level
The electric utility sample appears to react less strongly to dividend changes in the regulated period. The magnitudes
of the median abnormal returns around the announcement dates are considerably lower. This is consistent with the
market interpreting dividend changes for regulated electric utilities differently from those of unregulated firms. In the
later period, the differences have narrowed, though this is partly a function of the reactions to dividend changes by
other firms being more muted in this period. We also note that the reaction to dividend decreases by utilities is
positive on average in the later period. These results, however, should be interpreted with caution because we do not
take the magnitude of the dividend change into account in these univariate analyses.
The results of estimating the multivariate regressions represented by equations (2), (3) and (4) are presented in Table
4. To reduce noise, the sample is restricted to dividend announcements where there was a change in dividends. We
include firms in other industries besides electric utilities to facilitate comparison and to control for trends that affect
all firms.
The results of estimating equation (2), using both our measures of abnormal returns around the announcement period
as the dependent variable, are presented in Panel A of Table 4. The results are reasonably consistent across both
dependent variables. The coefficient on CHDIV is positive and significant indicating that the market interpreted
increases (decreases) of dividends as good (bad) news for the ‘other firms’ sample. The coefficient on
CHDIV*POST-EPA is negative and significant suggesting that the market did not respond to dividend changes as
strongly in the later period. The coefficient on UTILITY*CHDIV is negative and significant indicating that,
consistent with predictions, reactions to utility dividend changes in the regulated regime were considerably smaller in
magnitude than for other firms. The coefficient on UTILITY*CHDIV*POST-EPA is positive and significant
indicating that, again consistent with predictions, market reactions to utility dividend changes in the deregulated
regime are stronger than in the regulated regime. F-tests indicate that changes in electric utility dividends are
associated with abnormal stock returns after deregulation. Similar F-tests in the regulated regime suggest weaker
evidence of information content. Overall, the results in this panel suggest that the information content of utility
dividends has increased after the onset of deregulation.
Panel B presents the results of estimating equation (3) which attempts to discern whether the market reacts
symmetrically to dividend increases and decreases, both by electric utilities and by firms in general. Prior research
has documented an asymmetric reaction, across all firms, with dividend decreases provoking a stronger market
reaction than increases. The coefficient on DNEG*CHDIV is positive and significant which is evidence of this
asymmetric reaction in the non-electric utility sample in the earlier period. The coefficient on
DNEG*POST-EPA*CHDIV is negative and significant which indicates that the reaction to dividend increases and
decreases has become more symmetric for these firms in the later period. Nevertheless an F-test indicates that some
asymmetry is still present in the later period. The coefficient on DNEG*UTILITY*CHDIV is negative and
significant which suggests that the reaction to dividend increases and decreases was more symmetric for utilities in
the regulated regime. F-tests do not reject the hypothesis that the reactions to positive and negative utility dividend
changes were symmetric in the regulated period. The coefficient on DNEG*POST-EPA*UTILITY*CHDIV is
positive and significant indicating that the reaction has become more asymmetric, i.e., more like other firms in the
deregulated regime. The results in this panel again provide support to the idea that the market interprets changes in
utility dividends more like they do changes in the dividends of other firms after deregulation.
The results in Panel A are consistent with both the signaling and the free cash flow theories for dividend policy.
Estimation of equation 4, helps us to distinguish between these two theories. The results in Panel C provide mixed
support for the free cash flow theory. The coefficient on DTOBIN*CHDIV is negative and significant suggesting
that the market reaction to dividend increases (decreases) in the earlier period is more negative (positive) for firms
with more attractive investment options. This is consistent with the predictions from the free cash flow theory as it
applies to dividends and also with Lang and Litzenberger (1989). However, the coefficient on
DTOBIN*POST-EPA*CHDIV is positive and significant and its magnitude indicates that this effect is largely

counteracted in the later period. The F-test does not conclusively reject the hypothesis that the sum of the coefficients
on DTOBIN*CHDIV and DTOBIN*POST-EPA*TOBIN is zero. The results for non-electric utilities in the later
period are therefore not as supportive of the free cash flow theory. The coefficient on DTOBIN*UTILITY*CHDIV
is positive and significantly different from zero (at the 5% level) suggesting that, in the regulated regime, electric
utilities with above average investment opportunities differ from their counterparts in other industries in their
reactions to news of dividend changes. The hypothesis that sum of the coefficients on DTOBIN*CHDIV and
DTOBIN*UTILITY*CHDIV is zero is not rejected suggesting that market reactions to changes in utility dividends
did not depend on investment opportunities in the deregulated regime.
The coefficient on DTOBIN*POST-EPA*UTILITY*CHDIV is, however, not significant at conventional levels
indicating that the market reaction to dividend changes by electric utilities with above average investment
opportunities do not differ from firms in other industries with similar characteristics in the deregulated period. The
F-test also does not offer strong evidence that the market reacts differently to dividend changes by electric utilities
with superior investment opportunities in the later period. The market reaction to electric utility dividend changes has
become closer to those of other firms consistent with deregulation causing changes in the way investors view utilities.
However, because of changes in how investors react to dividend changes of all firms, it is difficult to conclusively
interpret this as evidence in favor of the free cash flow theory.
Table 4. Factors associated with announcement period cumulative abnormal returns
Panel / Estimation of
A (2) B (3) C (4)
Equation
Variable Dependent variable Dependent variable Dependent variable
Market Beta Market Market
Predicted Beta excess Beta excess
adjusted excess adjusted adjusted
sign return return
return return return return
-0.449 0.079 0.230 0.572 -0.931 -0.151
INTERCEPT
(-11.02)*** (2.63)*** (3.95)*** (12.52)*** (-14.60)*** (-3.17)***
0.505 0.500 -0.021 0.135 0.629 0.603
Utility ?
(5.09)*** (4.95)*** (-0.15) -0.98 (4.59)*** (4.40)***
6.602 6.197 3.393 3.764 8.814 8.377
CHDIV +
(45.66)*** (48.78)*** (14.00)*** (18.05)*** (39.52)*** (41.67)***
0.117 0.058 -0.299 -0.338 0.273 0.179
Post-EPA ?
(2.19)** -1.24 (-3.69)*** (-4.91)*** (3.24)*** (2.64)***
-6.110 -5.022 -3.456 -3.359 -7.776 -6.494
Utility*Chdiv -
(-12.31)*** (-9.65)*** (-4.45)*** (-4.15)*** (-12.86)*** (-10.28)***
-0.437 -0.586 -0.100 -0.268 -0.545 -0.785
Utility*Post-EPA ?
(-2.15)** (-2.80)*** (-0.37) (-0.97) (-2.22)** (-3.16)
-3.047 -3.041 -1.055 -1.097 -3.839 -4.719
Chdiv*Post-EPA -
(-12.56)*** (-14.59)*** (-2.68)*** (-3.33)*** (-10.09)*** (-15.21)***
7.148 7.605 5.262 5.252 7.172 8.432
Utility*Chdiv*Post-EPA +
(5.55)*** (5.57)*** (2.22)** (2.08)** (4.92)*** (5.52)***
40.029 17.010 37.051 16.588 55.675 21.197
Yield +
(17.36)*** (11.06)*** (15.87)*** (10.75)*** (18.63)*** (11.42)***
0.086 0.387
DNEG ?
(0.39) (1.99)**
7.872 7.142
DNEG*Chdiv ?
(10.90)*** (11.17)***
-0.406 -0.515
DNEG*Post-EPA ?
(-1.39) (-1.94)*
-0.873 -0.906
DNEG*Utility ?
(-1.57) (-1.57)
1.317 2.487
DNEG*Utility*Post-EPA ?
(1.11) (1.98)**

-9.018 -7.023
DNEG*Utility*Chdiv ?
(-4.54)*** (-3.38)***
-5.975 -6.305
DNEG*Chdiv*Post-EPA ?
(-5.84)*** (-6.83)***
DNEG*Utility*Chdiv*Po 8.223 12.331
+
st-EPA (1.84)* (2.59)***
0.896 0.566
DTOBIN ?
(11.27)*** (8.07)***
-0.602 -0.423
DTOBIN*Post-EPA ?
(-4.68)*** (-3.73)***
-0.663 -0.360
DTOBIN*Utility ?
(-2.89)** (-1.55)
-5.081 -4.172
DTOBIN*Chdiv ?
(-14.49)*** (-13.47)***
DTOBIN*Utility*Post-E 1.043 1.256
?
PA (1.78)* (2.15)**
9.844 6.131
DTOBIN*Utility*Chdiv ?
(2.34)** -1.39
DTOBIN*Chdiv*Post-E 4.452 4.513
?
PA (7.25)*** (8.53)***
DTOBIN*Utility*Chdiv* -0.844 -0.711
-
Post-EPA (-0.22) (-0.17)
R2 (%) 7.26 5.04 8.08 5.48 8.49 5.75
No. of observations 35,592 55,427 35,592 55,427 28,075 43,494
F STAT. FOR 2+4 = 0 1.07 5.42**
F STAT. FOR 2+6 = 0 332.52*** 364.80***
F STAT. FOR 2+4 +6+7 = 0 15.34*** 21.03***
F STAT. FOR 5+12 = 0 0.38 0.00
F STAT. FOR 5 +13 = 0 6.78*** 1.58
F STAT. FOR 5+12 +13+15 = 0 0.08 2.11
F STAT. FOR 5+12 = 0 1.32 0.2
F STAT. FOR 5 +13 = 0 1.56 0.63
F STAT. FOR 5+12 +13+15 = 0 3.40* 1.43
Notes to Table 4
Returns are expressed as percentages.
Variables are defined as below:
CAR Compounded abnormal return (either beta or market adjusted and expressed as a percentage) over the
two-day dividend announcement window.
Utility Indicator variable that takes the value one when the observation pertains to an electric utility and zero
otherwise.
Post-EPA Indicator variable that takes the value one when the observation pertains to years after 1991 and zero
otherwise.
Chdiv Change in dividends computed as dividend minus previous dividend scaled by previous dividend.
DNEG Indicator variable that takes the value 1 if CHDIV is less than zero and 0 otherwise.
Yield Dividend yield computed as the ratio of the annual dividend to stock price.
DTOBIN Indicator variable that takes the value 1 if the firm’s Tobin’s Q is higher than the median in that year.
*** Significant at the 1% level ** Significant at the 5% level * Significant at the 10% level

To summarize our investigation of the stock market reaction to electric utility dividend changes, there is little
evidence that the market reacted systematically to changes in electric utility dividends in the period when regulation
was in effect in the industry. In the period when deregulation has been initiated, the market is beginning to react to
changes in utility dividends the same way it reacts to the dividend changes of unregulated firms. Dividend increases
are generally interpreted as good news and decreases as bad news. In the next section, we examine the pattern of
future earnings following dividend changes for electric utilities to see if we can discern patterns consistent with the
use of dividends to signal future firm performance.
5.3 Earnings Changes Surrounding Dividend Changes: Empirical Results
Table 5 presents the results of estimating equation (5). We report the results separately for cases when the dependent
variable is the one year change in IBEI, the two year change in IBEI and the three year change in IBEI. If
non-electric utilities used changes in dividends to signal their future prospects in the earlier period, we would expect
a positive and significant coefficient on CHDIV. The results are not consistent with this implication. The coefficient
on CHDIV is negative and significant when the dependent variable is change in one year out earnings and
insignificant for the other two horizons. If these firms used dividend changes in the later period to signal changed
earnings prospects, we would expect the sum of the coefficients on CHDIV and POST-EPA*CHDIV to be positive
and significantly different from zero. The results of the F-test are consistent with this prediction when the dependent
variable is two and three year out changes in earnings. There is therefore some support for the signaling theory for
non-electric utilities in the later time period.
Table 5. Multivariate analysis of relation between dividend changes and changes in future earnings
IBEIt+i = α + β1UTILITYt + β2POSTt + β3CHDIVt + β4UTILITYt*POSTt + β5UTILITYt*CHDIVt +
β6POSTt*CHDIVt + β7UTILITYt*POSTt*CHDIVt + εt
Variable Dependent Variable
One year % change in Two year % change in Three year % change in
IBEI IBEI IBEI
Intercept 1.540 1.660 3.184
(7.14)*** (4.91)*** (8.03)***
Utility -0.467 0.950 0.983
(-0.50) (0.66) (0.59)
Post-EPA -4.389 -10.987 -14.030
(-12.29)*** (-18.95)*** (-19.79)***
Chdiv -2.161 0.582 -0.149
(-5.46)*** (0.93) (-0.20)
Utility*Post-EPA 4.159 8.807 9.913
(2.22)** (2.91)*** (2.69)***
Utility*Chdiv 5.329 0.242 0.822
(1.05) (0.03) (0.09)
Post-EPA*Chdiv 1.772 2.117 2.931
(2.92)*** (2.13)** (2.41)**
Utility*Post-EPA*Chdiv -8.077 -0.441 -8.507
(-1.22) (-0.04) (-0.67)
R2 (%) 0.18 0.43 0.49
No. of observations 98,042 90,637 83,442
F for β3+ β6=0 0.72 12.34*** 8.35***
F for β3+ β5=0 0.39 0.01 0.01
F for β3+ β5+ β6+ β7=0 0.54 0.12 0.32
t-statistics are in parentheses below the coefficients. Significant at the 1% level ** Significant at the 5% level
* Significant at the 10% level
Variable Definitions:
IBEI Income before extraordinary items scaled by book value of common equity.
Utility Indicator variable that takes the value one when the observation pertains to an electric utility and zero
otherwise.

Post-EPA Indicator variable that takes the value one when the observation pertains to years after 1991 and zero
otherwise.
Chdiv Change in dividends computed as dividend minus previous dividend scaled by previous dividend.
If utilities used dividends to signal future earnings in the regulated regime, we would expect the sum of the
coefficients on CHDIV and UTILITY*CHDIV to be significantly different from zero. F-tests do not support this
hypothesis. Similarly if electric utilities used dividend changes to signal future earnings in the deregulated period, we
expect that the sum of the coefficients on CHDIV, UTILITY*CHDIV, POST-EPA*CHDIV and
UTILITY*POST-EPA*CHDIV to be significantly different from zero. Again F-tests show that this sum is not
statistically distinguishable from zero. The tests in this sub-section therefore do not support the idea that utilities are
more likely to signal future earnings using dividends after the onset of deregulation. In addition, the R2 of the
regressions are small, less than 1%, suggesting that, if there is signaling, the signals are noisy.
6. Discussion
Utilities, in the regulated regime, were characterized by high dividend payouts and stability in dividends. With the
onset of deregulation in the electric utility industry, firms in this industry faced competitive pressures for the first
time. Therefore, it is possible that electric utilities might change their dividend policies to more closely resemble
their counterparts in other industries. If clientele effects are strong, however, electric utilities might maintain their
high dividend payouts in spite of the changed environment. Overall, we find that electric utilities largely maintained
their levels of dividends even as their profitability declined and we interpret this result as being consistent with the
dividend clientele theory for dividends.
We also investigate stock market responses to announcements of changes in utility dividends, both in the regulated
regime and after the onset of deregulation. We find little evidence that the stock market reacts to utility dividend
changes in the earlier period. In the latter period, the stock market reaction to electric utility dividend changes more
closely resembles that of non-utility firms. We find weak evidence that the magnitude of the response for electric
utilities in the deregulated period is related to firms’ investment opportunity sets. The free cash flow theory for
dividends would suggest such a relationship. Lastly, we examine earnings changes surrounding dividend changes for
utilities. We do not find indications that changes in dividends are used to signal future earnings for electric utilities.
Overall, we interpret our results as being consistent with theory of dividend clienteles. Electric utilities appear to
attempt to retain their high dividend clientele even as they face greater competition and have access to greater
investment opportunities. Our results are not consistent with Smith (1986)’s theory that dividends might be used in
regulated industries to resolve agency conflicts with regulators. Some of our results are consistent with Jensen
(1986)’s free cash flow theory as it relates to dividends. However, we find very little support for the dividend
signaling theory. Changes in dividends for electric utilities do not appear to signal future firm performance in the
deregulated regime as this theory would predict.
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Notes
Note 1. Lease et al. (1999) provide a comprehensive survey of this literature. Miller and Modigliani (1961) showed
that in a world with perfect capital markets, dividend policy is irrelevant.
Note 2. We choose to treat 1992, the year of the enactment of the Energy Policy Act, as demarcating the regulated
from the deregulated regimes. To the extent that the transition between regimes was more gradual, noise would be
introduced into the analysis. We believe that this noise would bias our tests towards the null of no difference between
regimes.
Note 3. We use this measure of Tobin’s Q because Erickson and Whited (2006) find that it captures firms’ incentive
to invest almost as well as measures which use more elaborate algorithms. They also note that data to compute this
measure is available for more firms which reduces the probability of a selection bias.
Note 4. Although we are primarily interested in the coefficient on DNEG*POST*UTILITY*CHDIV, we include
DNEG, POST, UTILITY and CHDIV by themselves and their various interactions to avoid ascribing effects to this
interaction which are due to the main effects or other interactions.
Note 5. See the literature review for a summary of this research.
Note 6. In untabulated results, we also perform a firm fixed effects estimation to control for firm specific factors that
affect dividends per-share. The results are not significantly different from the OLS and GEE estimations.
Note 7. This latter result is also consistent with the pecking-order theory of corporate finance which predicts that
firms prefer internal finance for investments and adapt their payout ratios to their investment opportunities while
avoiding abrupt changes in dividends.

The Effects of Work Force Diversity on Employee Performance in

Singapore Organisations
Darwin Joseph R.1 & Palanisamy Chinnathambi Selvaraj2
1
AQ Lecturer cum Local Program Director (MIB-GGSB), MDIS Business School, Management Development
Institute of Singapore, Singapore
2
Researcher (Chemical Industry), Singapore
Correspondence: Darwin Joseph R., AQ Lecturer cum Local Program Director (MIB-GGSB), MDIS Business
School, Management Development Institute of Singapore, Singapore. E-mail: ramdar3@yahoo.com
Abstract
Workforce diversity has been identified as one of the strategic capabilities that will add value to the organizations
over their competition. As Singapore is one of the most globally competitive countries, it attracts highly skilled and
extremely innovative people to work here. Age, gender and ethnicity are the most commonly diversified
demographic variables observed among the workforce of many organizations. Thus, the present study focuses on the
effect of the workforce diversity in terms of age, gender and ethnicity. If the diversity of the workforce is properly
managed, it will provide positive benefits. If not properly managed, however, it could lead to negative results. A
self-administered questionnaire was used to collect the views of employees in both the manufacturing as well as the
service industries in Singapore. The reliability of the survey was tested by estimating Cronbach’s alpha. The
empirical relationship of age, gender and ethnicity of the employees with the performance was computed using
Software Package for Social Science (SPSS). The analysis reveals that the three variables do not have a statistically
significant impact on the performance of employees. Human resource programmes suggested by the employees to
improve the effectiveness of workforce diversity has been recommended.
Keywords: age diversity, employee perception, ethnic diversity, gender diversity, workforce diversity
1. Introduction
Globalization and the Internet have reduced the gap in the time to market scale between large MNCs (Multi-National
Corporations) and small SMEs (Small and Medium Enterprises). Thus, hyper competition is almost unavoidable in
every field. Meanwhile, the technical challenge of industrial problems is getting more difficult as well as more
complex. Customers in today’s business world are considering the speed of delivery of solutions as one of the order
winners. Thus, industries, regardless of the field, begin to search for new ways of enhancing their organizational
performance and for identifying solutions for their business problems. In this regard, organizations are exploring the
inclusion of workforce diversity against the traditional monolithic structure. Singapore’s workforce has employees
from different countries, cultures, generations and genders. This multiculturalism has positioned Singapore as an
attractive foreign investment destination due to its mature and experienced workforce. The mix of competencies as a
result of wider diversity offers a range of opportunities. Thus, workforce diversity is regarded as an asset for
Singapore for connecting with business from all over the world and for enabling foreign communities to engage their
business within its location.
Just as organizational performance is highly influenced by individual employee performance, the positive outcomes
of workforce diversity at the employee level would also act as intrinsic as well as extrinsic motivational factors for
them and would also increase employee participation. Therefore, this study focuses on the employee’s perception
gained through their personal experience in dealing with workforce diversity - with respect to age, gender and
ethnicity in the context of their organisation in Singapore. It covers both service and manufacturing industries as the
former is a relationship dominant while the latter is a task oriented. Past research findings indicate that diversity is
beneficial to performance under facilitating contexts whereas it is detrimental under inhibiting contexts. In this
regard, this study would provide the status of diversity in the working environment in Singapore. An attempt is also

being made to identify potential solutions that the employees perceive to improve the benefit of workforce diversity
to the next level.
2. Problem Statement
A good quality decision can be made from a wider choice of alternatives. When the organization has a conducive
environment for practising workforce diversity, employees will enjoy all the positive benefits such as motivation,
knowledge and skill transfer, creativity and better decision making (Amaram, 2007) and thus they will become
catalysts for the organisation’s growth. On the other hand, if workforce diversity is not handled correctly, the
formation of various groups will occur; this could lead to miscommunication, emotional conflicts, power struggle
and ultimately to high turnover of employees (Jackson et al, 1991; William and O’Reilly, 1998; Jehn, 1995). The
diverse workforce will then become an inhibitor for organisation growth. Most of the studies reported in the
literature had focused on exploring workforce diversity to improve organizational performance and leadership skills.
In this regard, the views of employers and their upper management have been well documented. Very little attention
has been paid to study the perception of employees for the inclusion of workforce diversity in their organization.
Employees will appreciate and admire the implementation of diversity as a boon to their organization if it brings a
positive impact on their performance. On the other hand, they criticize it as a white elephant if it impacts negatively
on their performance.
2.1 Research Questions
The research questions are as follows:
1) What is the relationship between age diversity and employee performance in Singapore Organisations?
2) What is the relationship between gender diversity and employee performance in Singapore Organisations?
3) What is the relationship between ethnic diversity and employee performance in Singapore Organisations?
4) What is the relationship between workforce diversity and employee performance in Singapore
Organisations?
2.2 Hypothesis
The practice of multi-generational work places offers mentoring advantages of organizational history, culture,
accumulated knowledge and skills (Cremer, 1986). Some firms are utilizing older employees for their knowledge and
experience, as mentors for the younger team members (Uschi and Stephan, 2013). Lazear (1999) found out that the
advantages of age diversity can be gained only when organizations overcome the additional communication costs
and issues related to emotional conflicts between them. Uschi and Stephen (2009) argued that age heterogeneity can
negatively affect employee productivity due to differences in values and preferences of distinct age groups. Thus it is
proposed:
H1: There is a significant relationship between age diversity and employee performance
A mix of cognitive abilities of men and women may enhance the organization’s overall creativity and innovation
(Hoffman, 1965; Maccoby and Jacklin, 1974). A gender diverse team produces high quality decisions over a
homogeneous team (Rogelberg and Rumery, 1996). A positive relationship of gender diversity with performance
would be anticipated based on a resource-based view of the firm whereas social identity and self-categorization
theory would support a negative relationship (Mohammad et al, 2007). The negative side gender diversity slows
down the decision making process due to internal conflicts (Jackson et al, 2003). Thus, it is proposed:
H2: There is a significant relationship between gender diversity and employee performance
The ethnically diverse teams were found to take better decisions than ethnically homogeneous teams (McLeod et al,
1996; Watson et al, 1993). However, there are also reports indicating that organizational diversity tends to reduce
communication and coordination (Lazear, 1999; Morgan and Vardy, 2009) and increase employee turnover (Jackson,
et al 1991). Ensher and Murphy (1997) had observed more likings and vocational support in the relationships of the
same race than among cross race relationships. De et al, (2009) had concluded that ethnic diversity typically causes
rejection of heterogeneous group members and reduced performance. Thus it is proposed:
H3: There is a significant relationship between ethnic diversity and employee performance
3. Literature Review
3.1 Age Diversity
Firms are not effectively utilizing the talents of old workers due to false assumptions and stereotypes that they are
expensive, more prone to health problems, can’t adapt to workplace changes and new technology, perform poorly, in

comparison to their younger employees and are a poor return on training investment (Taylor, 2003; Davey, 2006;
Davey and Cornwall, 2003; McGregor and Gray, 2002). The study on simple production technology by Barton
(2004) indicated that teams with more diversity in age were significantly less productive. This finding is consistent
with observations by Leonard and Levine (2003) that retail stores with greater age diversity among its employees
tend to be less profitable. However, Ilmarinen (2005) had shown that there was no distinct connection between age
and work performance. It is observed from many studies that older employees are as productive and as skilled as
young ones. A heterogeneous age group of employees would therefore be more productive than a homogeneous age
group (Williams and O’Reilly, 1998; Zenger and Lawrence, 1989).
3.2 Gender Diversity
Wood (1987) showed that mixed gender group performed better than the same gender group. McMillan-Capehart
(2003) and Frink et al (2003) had explained the positive impact of gender diversity with organizational performance
using resource based view. The studies examining the effects of gender diversity on group performance outcomes
have found negative effects when the sample was male dominated and no effects when the sample was female
dominated (Pelled, 1997). Gupta (2013) observed that moderate level of gender diversity increases competitive
advantage while a higher level of gender diversity decreases organizational performance. Richard et al (2004) has
observed an inverted U-shaped relationship between management group gender heterogeneity and productivity, with
moderately heterogeneous management groups exhibiting better performance than gender homogeneous
management groups. Similarly, results of a study by Frink et al (2003) demonstrated an inverted U-shaped
relationship between gender composition and organization performance. Gender diversity showed a positive impact
in the services industry and a negative impact on the manufacturing industry. Thus, services industries might benefit
more from gender diversity than firms in the manufacturing industries. Therefore, high gender diversity will have a
greater positive effect on performance in the services industry than in the manufacturing industry.
3.3 Ethnic Diversity
Ethnically diverse teams showed poor performance than homogeneous teams (Jackson et al, 2003). Jones (2005) and
Jehn et al, (1999) found that groups were found to be less cohesive than teams; multiculturalism and diversity may
have a less positive impact on group performance than team performance. The context of the workplace has
significant influence over the impact of diversity on performance. Ethnically diverse teams lead to more creativity
and innovation due to complementarities and learning opportunities (Alesina and La Ferrara, 2005; Lee and Nathan,
2011; Ozgen et al, 2011). A moderate level of ethnic diversity has no effect on the business outcomes of the teams
namely sales, profit, & market share whereas a high level of ethnic diversity improved business outcomes (Sander
and Mirjam, 2012). A similar positive impact of ethnic diversity on sales, productivity, market share, and
innovativeness was reported by Gupta (2013) and the team performance of the multidisciplinary teams in oil and gas
industry by Van and Bunderson (2005). Ely (2004) has observed no relationship between ethnic diversity and sales
revenue, customer satisfaction and sales productivity.
4. Research Methodology
The main objective of this research is to analyse the impact of workforce diversity on employee performance in
Singapore organisations. The target population is the employees of both service and manufacturing sectors in
Singapore. Employees in the service and manufacturing sectors are the target respondents. Two requirements have
been set for the candidates to be qualified as the valid respondents:
1. Employees working in Singapore
2. Currently working in service and manufacturing sectors
Convenience sampling technique was used in this research as the sampling frame is irrelevant. Questionnaires were
distributed to the valid respondents and they were requested to answer the questions. The population size was set to
all the workforce in Singapore, regardless of their position or level, which is equivalent to 3.44 million in
2013(Labour Force, 2013) and the sample size was set to 316. The questionnaire was designed using the guidelines
mentioned in the literature (Jill and Roger, 2009; Patrick and Rajkumar, 2012; Kossek and Zonia, 1993; Miller et al,
1998). The respondents were requested to provide their opinion in the scale of 1-5, (1) Strongly Disagree (SD), (2)
Disagree (D), (3) Neutral (N), (4) Agree (A) and (5) Strongly Agree (SA). Pilot test was conducted with 18
respondents and the data were analysed using Statistical Package for Social Science (SPSS) software. The data from
the pilot test are shown in Table 1.

Table 1. Reliability test results

No Construct Cronbach Alpha No of items
1 Age Diversity 0.757 6
2 Gender Diversity 0.722 6
3 Ethnic Diversity 0.908 7
The Cronbach alpha for age diversity, gender diversity and ethnic diversity was measured using 6, 6 and 7 questions
respectively. Cronbach alpha values estimated are higher than 0.70, the internal consistency of the survey is found to
be good. The data from the survey questionnaire were entered into Microsoft Excel and SPSS (Statistical Package for
Social Sciences) software version 21 for data analysis.
5. Results and Discussion
The demographic profiles (namely age, gender, ethnicity, highest educational qualification attained, years of working
experience and the type of industry they are serving) collected on the respondents are tabulated in Table 2.
Table 2. Demographic profile of the respondents
Demographic profile Frequency Percentage
Age
20 – 29 years 87 27.53
30 – 39 years 180 56.96
40 – 49 years 29 09.18
50 years and above 20 06.33
Total 316 100.00
Gender
Male 201 63.61
Female 115 36.39
Total 316 100.00
Ethnicity
Ethnic Minority 233 73.73
Ethnic Majority 83 26.27
Total 316 100.00
Educational qualification
Secondary School 9 2.85
Diploma 188 59.49
Bachelor Degree 94 29.75
Master Degree 25 7.91
Total 316 100.00
Years of experience
< 10years 267 84.49
>10years 49 15.51
Total 316 100.00
Type of industry
< 10years 267 84.49
>10years 49 15.51
Total 316 100.00

The number of male respondents is about 27% higher than female respondents. The low response of females could
be attributed to their un-willingness to respond and to the natural probability of getting the female employees is
slightly lower than male counterpart as a result of 44% of female employees in Singapore workforce compares to
56% of male employees. About 267 respondents are less than 40 years old and 49 respondents are more than 40
years old. The respondents participated in the survey were Chinese, Malay and Indians. The ethnic majority
classified in this research is Chinese whereas Malay and Indians are grouped as an ethnic minority. The majority of
the respondents are diploma holders (59.49%), followed by bachelor degree holders (29.75%), master degree holders
(7.91%) and secondary school level (2.85%). About 84.49% of respondents are working more than 10 years and
15.51% have work experience less than 10 years. About 68.67% of respondents are working in the manufacturing
industry and 31.33% of them are in the service industry.
The percentage, mean and standard deviation estimated for the responses on the effect of age diversity in the
workforce is tabulated in Table 3.
Table 3. Central tendencies measurement: age on employee performance
No Question SD D N A SA Mean Std
(%) (%) (%) (%) (%) Dev
1 The expertise of young employees with
high tech tools helps older employees to
0.3 9.2 24.1 43.0 23.4 3.8 0.91
improve their knowledge on the latest
technologies
2 The risk taken by younger employee
0.3 8.9 25.9 51.3 13.6 3.69 0.83
contributed to the success of the team
3 The mentoring by older employees
benefited young employees in acquiring 0.0 3.2 27.8 41.5 27.5 3.93 0.82
job skills
4 Older employees mitigated the friction
among younger employees in the team and 0.9 7.3 34.8 41.5 15.5 3.63 0.86
promoted team cohesiveness
5 No emotional conflicts and anxiety within
the team due status difference between 1.3 17.1 32.0 30.7 19.0 3.49 1.03
young and old employees
6 I did not experience stress in the last 12
months due to age diversity issues in my 0.0 10.4 35.8 35.9 14.9 3.58 0.87
work place
Source: Data generated using SPSS version 21
About 43% of the respondents agree that they received benefit from the expertise of young employees on high
technology whereas 23.1% strongly agree and 24.1% are neutral with the fact. Reverse mentoring is becoming
popular in the last few years in the corporate world - an innovative HR strategy where the young employees mentor
their seasoned managers (Charles, 2007). The majority of the respondents accept the contribution from the risk taken
by younger employees whereas only 9% disagree with that fact. Younger employees are more risk takers than older
employees (Sproten and Schwieren, 2012) and the risk taking tendency decreases with age (Julia et al, 2004). The
advantage of mentoring by older employees during orientation has been well accepted by over 69%, while only 3.2%
disagree. Older employees are regarded as knowledge bearers of organisations (Cremer, 1986). Uschi and Stephan
(2013) claim that more effective transfer of specific know-how and cultural values from older to younger generations
as one of the benefits of age diversity.
The mitigation role played by the older employees during the friction in the team has been recognized by 57%,
whereas 7.3% disagree and 34.8% remain neutral. Older employees have a balance of socio-emotional and cognitive
capability that helps them to counsel the younger employees (Megan, 2014). About 17.1% has disagreed about the
absence of emotional conflicts and anxiety in the team due to age difference of employees whereas 30.7% agree,
19% strongly agree and 30.7% remain neutral. Milliken (1996) has reported empirical evidence that higher age
diversity leads to difficult and less frequent communication within the team. Emotional (affective) conflicts lead to
anger, distrust, fear, frustration, and other forms of negative affect (Pelled, 1996). The high standard deviation 1.87
observed for this question reflects the higher difference of opinion among the respondents. It seems that emotional
conflict issues have been perceived by the highest percentage of respondents (17.1%) as the negative impact of age

diversity. Interestingly, majority of the respondents (35.9% agree & 14.9% strongly agree) did not experience any
stress related to age diversity in the work place while a small population of 10.4% disagreed. The generation gap
resulted in age diversity might also lead to conflicts, dissatisfaction and ultimately to employee turn-over (Lau and
Murnighan, 2005; Richard and Shelor, 2002; Peeters and Van, 2008).
The mean value of all questions is in the range of 3.49 - 3.93 and the standard deviation is 0.82 - 1.03. The highest
mean value (3.93) is observed for mentoring benefit by age diversity whereas the lowest mean value (3.49) is
observed for emotional conflicts due to age diversity.
Table 4. Central tendencies measurement: gender on employee performance
No Question SD D N A SA Mean Std
(%) (%) (%) (%) (%) Dev
1 As women tend to be a good listener and
men tend to be aggressive, a balanced
0.0 18.0 23.1 45.9 13.0 3.54 0.93
work force of both sex offers the best
solution of both worlds
2 The transformational leadership style (help
each other by give and take policy) of the
0.0 14.6 29.7 39.9 15.8 3.57 0.93
female employee contributed to the
success of the team
3 Gender diverse teams showed better
problem solving and decision making 0.3 3.8 22.5 57.0 16.5 3.85 0.74
skills than gender homogeneous teams
4 Gender diversity is an asset for our
0.0 21.2 19.6 50.0 9.2 3.47 0.93
corporate image and brand value
5 Gender diverse teams achieved targets due
to the good relationship and effective 0.0 8.9 34.8 45.9 10.4 3.58 0.76
communication
months due to gender diversity issues in 0.0 9.8 20.6 49.4 29.3 3.80 0.87
my work place
Table 4 shows the percentage, mean and standard deviation estimated for the responses on the effect of gender
diversity. About 45.9% has agreed that the balance of both genders is good for team progress whereas 18.0%
disagreed with that. Research on female leadership behaviours indicates that women tend to adopt more
accommodative strategies than their male counterparts (Brad, 1975). The positive impact of female leadership has
been recognized by 55.7% (39.9% agree & 15.8% strongly agree) while 14.6% disagree and 29.7% have no
comments. Among all the questions, the problem solving and decision making advantage of gender diversity has
received the highest score 57% as agree and the lowest score 3.8% as disagree. The blend of cognitive abilities of
both men and women will enhance the innovation, creativity and quality of decision making (Maccoby and Jacklin,
1974; Rogelberg and Rumery, 1996). About 21.2% had disagreed to perceive gender diversity as corporate image
and brand value while 50% have agreed. Having more women on the board of directors has increased corporate
ratings and reputation (Bernadi et al, 2006; Stephen et al, 2010). Gender diversity has been viewed as an effective
tool for achieving targets by 56.3% (45.9% agree and 10.4% strongly agree) and 34.8% remained neutral and 8.9%
disagreed. In gender balanced teams, there are more opportunities for males and females to interact with each other.
The increased contact may weaken social identities and eliminate the undesirable in-group out-group dynamics and
performance could improve (Fields and Blum, 1997; Rogelberg and Rumery, 1996). Most of the respondents did not
face any gender related stress issues in the work place (49.4% agree & 29.3% strongly agree), but still a small
population of the workforce, about 9.8%, had felt gender related stress issues. Messick and Mackie (1989) postulated

that self-categorisation based on gender will lead to psychological groups of males and females that will trigger
in-group and out-group dynamics. This will decrease cohesion (Triandis et al, 1994) and increase conflicts (Pelled,
1996) among team members.
The mean value of all questions is in the range of 3.47 - 3.85 and the standard deviation is 0.74 - 0.93. The highest
mean value (3.85) is observed for problem solving skills by gender diversity whereas the lowest mean value (3.47) is
observed for considering gender diversity as corporate image and brand value.
Table 5. Central tendencies measurement: ethnicity on employee performance
No Question SD D N A SA Mean Stdd
(%) (%) (%) (%) (%) ev
1 The ethnic diversity in our team has
1.6 3.5 31.3 44.6 19.0 3.76 0.85
enabled to find a creative solution
2 The ethnic diversity in our team has
0.0 6.3 33.9 35.1 24.7 3.78 0.89
improved the quality of decision making
3 The ethnic diversity promoted healthy
competition in the team and contributed to 0.0 5.4 27.5 51.3 15.8 3.78 0.78
outstanding achievements
4 The ethnic diversity in our team promoted
free flow of information between ethnic 0.0 12.0 24.4 41.1 22.5 3.74 0.94
groups
5 The ethnic diversity did not affect the
0.0 6.6 47.8 37.3 8.2 3.47 0.74
professional relationship with the team
6 The ethnic diversity in our team helped to
expedite the completion of our 0.6 3.5 41.5 44.0 10.4 3.60 0.75
task/projects on time
months due to ethnic diversity issues in my 4.7 22.2 19.0 36.7 17.4 3.4 1.15
work place
About 63.6% (44.6 % agree and 19% strongly agree) had accepted ethnic diversity as an effective tool for finding
creative solutions whereas 31.3% remained neutral and 5.1% (3.5% disagree and 1.6% strongly disagree) disagreed
with the fact. O’Reilly et al (1998) showed that ethnic diversity promotes creativity and implementation of new ideas
over homogeneous teams. About 59.8% (35.1% agree and 24.7% strongly agree) had believed ethnic diversity had
improved decision making and 6.3% did not have that faith. McLeod et al (1996) and Watson et al (1993) have
found that ethnically diverse work teams make better decisions than homogeneous teams. Very few (5.4%) had
disagreed with the contribution of ethnic diversity for outstanding achievements while 67.1% (51.3% agree and
15.8% strongly agree) recognized the achievements possible with ethnic diversity. Multicultural teams will lead to a
winning mentality when moderated in constructive (task) conflicts (Jehn et al, 1999; Kochan et al, 2003). About
63.6% (41.5% agree and 22.5% strongly agree) had a perception that ethnic diversity promotes free flow of
information while 24.4% remained neutral and 12% disagree with that belief. Due to social categorization, ethnic
diversity will lead to less coordination and thus difficult communication (Lazear, 1999; Morgan and Vardy, 2009).
47.8% had neither agreed nor disagreed about the impact of ethnic diversity on the professional relationship with
employees. However, 6.6% had a belief that ethnic diversity negatively impact the professional relationship and 45%
(37.3% agree and 8.2% strongly agree) thought that there is no impact. 54.4 % (44% agree and 10.4% strongly
agree) have agreed that ethnic diversity had helped to meet the timeline of projects whereas 41.5% had no comments
and 3.5% did not agree with that. Amaram (2007) states that ethnic diversity can lead to dysfunctional conflicts,
reduced psychological identification, and guarded communication, and thus become counterproductive. The resultant
confusion could create delays in project completion. About 26.9% (4.7% strongly disagree and 22.2% disagree) had

gone through stress due to ethnic diversity whereas 19% remained neutral and 54.1% (36.7 agree and 17.4% strongly
agree) did not face any ethnic diversity stress issues. As organizations and institutions become more ethnically
diverse, racial or ethnic harassment may become more frequent and may result in multiple negative outcomes. The
targets of ethnic harassment may disengage from the work situation physically or psychologically (Kimberly et al,
2000). The highest standard deviation 1.15 among all the questions reveals that the respondents had a wide
difference of opinion about the ethnic diversity related stress issues, probably contributed by individual
organizational practice of ethnic diversity. The mean value of all questions is in the range of 3.40 -3.78 and the
standard deviation is 0.74-1.15. The highest mean value (3.78) is observed for influence of decision making and the
contribution to the achievements by ethnic diversity whereas the lowest mean value (3.40) is observed for
considering ethnic diversity related stress issues. The Pearson correlation coefficient estimated for the age diversity
is given in Table 6.
Table 6. Pearson coefficient of age diversity
Age group Employee performance
Age of the employee Pearson correlation 1 -0.011
Significance (2 tailed) 0.846
N 316 316
Employee performance Pearson correlation -0.011 1
N 316 316
H1: There is no significant relationship between age diversity and employee performance
Based on the results, there is a negative relationship (-0.011) between age group of employees and their performance.
The value of correlation coefficient (-0.011) falls in the range of 0 to -0.19 which is interpreted as “very low and
almost negligible”. The significance of the relationship is 0.846 which is greater than 0.05. Thus, the null hypothesis
is accepted that there is no significant relationship between age diversity and employee performance. Even though
age is one of the characteristics of the employee that triggers categorization among them, we observed there is no
influence of age diversity on the employee performance which agrees with the findings discussed in Williams and
O'Reilly (1998) and Jackson et al (2003). The Pearson correlation coefficient estimated for the gender diversity is
given in Table 7.
Table 7. The Pearson coefficient of gender diversity
Gender of employee Employee performance
Gender of the employee Pearson correlation 1 0.032
N 316 316
Employee performance Pearson correlation 0.032 1
N 316 316
H2: There is no significant relationship between gender diversity and employee performance
Based on the results, there is a positive relationship (0.032) between gender of employees and their performance. The
value of correlation coefficient (0.032) falls in the range of 0 to 0.19 which is interpreted as “very low and almost
negligible”. The significance of the relationship is 0.572 which is greater than 0.05. Thus, the null hypothesis is
accepted that there is no significant relationship between gender diversity and employee performance. Similar to our
observation, there are many reports that observed non- significant impact of gender diversity (Balkundi et al, 2006;
Ely, 2004; Graves and Elsass, 2005; Hobman and Bordia, 2006; Leonard and Levine, 2006). The Pearson correlation
coefficient estimated for the ethnic diversity is given in Table 8.

Table 8. The Pearson coefficient of ethnic diversity

Ethnic status of Employee performance
employee
Ethnic status of the employee Pearson correlation 1 -0.012
N 316 316
Employee performance Pearson correlation -0.012 1
N 316 316
H3: There is no significant relationship between ethnic diversity and employee performance
Based on the results, there is a negative relationship (-0.012) between the ethnic status of employees and their
performance. The value of correlation coefficient (-0.012) falls in the range of 0 to -0.19 which is interpreted as
“very low and almost negligible”. The significance of the relationship is 0.829 which is greater than 0.05. Thus, the
null hypothesis is accepted that there is no significant relationship between ethnic diversity and employee
performance. Jehn and Bezrukova (2004) had also reported a non-significant relationship of ethnic diversity on team
performance. Joshi and Roh (2007) had also reported more null findings (20) than positive (7) or negative effects (8)
of ethnic diversity. Webber and Donahue (2001) in their meta-analysis of 24 studies found that race or ethnicity had
no relationship with team cohesion or performance. The organizational strategies of individual companies are likely
to have an influence on the impact of workforce diversity. Growth and customer oriented strategies have a positive
impact; whereas stability oriented growth strategies have a negative impact of workforce diversity on organizational
performance.
Growth-oriented strategies require new ideas, experimentation, and creative processes and thus make possible the
inclusion of views and efforts from a diverse employee population (Oliver, 1990; Watson et al, 1993; Lumpkin and
Dess, 1996). Customer oriented strategies can benefit from utilizing the information of diverse employees to better
serve the needs of their customers (Jackson and Alvarez, 1992; Thomas and Ely, 1996). Stability-oriented strategic
environments are not expected to benefit from diversity. Groups in such environments demand less innovation and
focus more on efficiency achieved through centralization, specification, and vertical differentiation (Doty et al. 1993).
For these groups, diversity could decelerate group processes, increase communication problems and
misunderstanding, and hinder the speed and proficiency of decision-making processes (Milliken and Martins, 1996;
Williams and O’Reilly, 1998). The nature of the task will also have an impact on workforce diversity. The routine
task is characterised by standard, less innovation and high coordination process that gained very little or nothing
about diversity related competencies. In contrast, innovative and creative tasks are associated with complex problem
solving capabilities; diversity will be beneficial to them.
People-oriented cultures will cultivate a sense of cooperation and teamwork which may reduce intragroup bias
arising from demographic differences (Gaertner et al, 1990; Tsui et al, 1992). Competition-oriented cultures place
greater emphasis on individual accomplishment as opposed to collective accomplishment, and may cause group
members to seek differences amongst themselves (Ng and Van, 2001). This desire clearly escalates differences
between those from diverse backgrounds that may be detrimental to the efficient functioning of individuals within
the group and the group as a whole (Mannix et al, 2001; Tsui et al, 1992). Thus, the benefits of workforce diversity
observed in one organization might have been compensated by the limitations of workforce diversity in other
organizations as a result of different organizational strategies, culture and the nature of the task undertaken by each
organization.
6. Conclusion
The study reveals that the diversity of all three demographic profiles of the workforce - namely age, gender and
ethnicity - does not significantly impact the performance of employees. Thus it is concluded that the employees in
Singapore neither admire the workforce diversity as a boon to them nor do they criticise it as a white elephant and
they have shown a neutral perception about workforce diversity. It is believed that organization culture, human
resource practices, nature of work and business strategy of individual firms are different from each other and the
differences are likely to mask the impact of variables on the employee performance in one firm with that observed in

other firm. Recommendations based on the perspectives of employees for improving the effectiveness of workforce
diversity have also been made. A comparison of the effect of workforce diversity on similar or the same
organizations operating in different countries would improve the depth of knowledge, especially on the interaction of
organizational culture and national environment, and the effect of workforce diversity further. For further
understanding, a study can focus on a specific category (positions in the organization like Directors, Managers or
Executives) of employees.
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The Moderating Effect of Role Ambiguity on the Relationship of Job

Satisfaction, Training and Leadership with Employee Performance
Waleed Bin Rashed Alshery1, Fais Bin Ahmad1 & Abdullah Kaid Al-Swidi2
1
School of Business Management, University Utara Malaysia, Sintok, Kedah, Malaysia
2
College of Business and Economics, Qatar University, Al Doha, Qatar
Correspondence: Waleed Bin Rashed Alshery, School of Business Management, University Utara Malaysia, Sintok,
Kedah, Malaysia. Tel: 966-5-5546-0052. E-mail: 1bec@live.com
Abstract
People performance in any organization is the key factor of succeeding the organization with regardless of nature
business. The higher education sector of any country is considered one of the sectors which really pay attention on
achieving their goals successfully. The numerous difficulties that employees need to face because of the dynamism
of working environment had brought about troubles for employees to keep up their job performance. Employees are
considered the most imperative element that determines the success of an organization. Thus, this research focus on
the factors those positively affect the employees’ performance through job satisfaction, leadership and training by
taking role ambiguity as a moderating variable in the in higher education of KSA.
Keywords: employees’ performance, job satisfaction, leadership, training, role ambiguity
1. Introduction
The numerous difficulties that employees need to face because of the dynamism of working environment had
brought about troubles for workers to keep up their job performance. Actually, employees have a tendency to have
elevated expectations concerning workers' job performance by consistently checking their job performance through
different performance management exercises (Dessler, 2011). People performance in any organization is the key
factor of succeeding the organization with regardless of nature business. The higher education sector of any country
is considered one of the sectors which really pay attention on achieving their goals successfully. There are different
issues talked about extending from recognizing problems confronted by higher education (HE) in (Kingdom of Saudi
Arabia) KSA on issues of benefit and aptitudes deficiencies (Abdullah et al., 2009).
Employees are considered the most imperative element that determines the success of an organization. Furthermore
it’s worth noting that if employees of an organization are managed properly and give them the sense of comfort they
can go beyond the limits to perform for the organization and can directly add into the productivity and efficiency and
can reduce the counterproductive behavior in the organization (Fiorita, Bozeman, Young & Meurs, 2007).
Today’s Saudi Arabia is struggling hard to achieve some new targets and benchmarks to make its own identity in the
global market. The organizations in all over the world which are on the path to achieve their strategic goals have a
comparative low rate of employee turnover and along with this they usually have more competent and satisfied
employees with more commitment level. Oganizations in Saudi Arabia including education sector are more concern
about the job performance of their employees as it results in the organizational development (Al-Kahtani, 2002). An
employee who is well satisfied with his job will definitely perform more for the organization and can go extra miles
for the betterment of the organization. Thus, this is very important to understand the factors that affect an employee’s
job performance including job satisfaction and leader’s role (Awang, Ahmad & Zin, 2010).
Academic staff members' job satisfaction, which considered as the corner stone of the story to push forward the
efforts of Universities’ authorities to improve employees’ performance and to ensure high quality of education to
serve both local and national society (Eldin, 2012). Leadership style is one of the ways to establish the realization of
objectives in the organization by the influence of managers towards the followers to create motivation which leads to
high performance (Salmani & Taatian, 2010). On the other hand Abdalla and Al-Homoud, (1995) argued that
training is not taken as a serious factor in Arab organizations to improve the employees’ job performance and is not

considered as the strategic tool to achieve the organizational goals and same is the case of higher education.
Academia is the field which is required proper training to be on job and the public universities of KSA are not
exemptions. Universities are well thought-out as the source of knowledge generation and learning and transforming
it. So, Universities play an important role in the development of the economy and culture of any country. To perform
this vital role Universities are in need to hire skillful and knowledgeable academicians than to retain them and train
them to increase their job performance to perform their duties (Khalid, 2012).
According to the literature there are numerous reasons of job stress. Multiple roles and role ambiguity is also
considered as the stressor. Employees in organizations are subjected to clash, and the effect of clash is unavoidable,
either positive or negative and it at last impacts the organizational performance of workers (Jehn, 1997). Moreover,
studies on employee job performance concerning role ambiguity (Bhuian, Menguc & Borsboom, 2005; Lang,
Thomas, Bliese & Adler, 2007), competency (Vakola, Soderquist & Prastacos, 2007; Vathanophas & Thaingam,
2007; Hashim, 2008; Potluri & Zeleke, 2009) were mostly conducted abroad, and thus lack of evidence exists in
KSA to understand the job performance of employees especially those in the education sector. Therefore,
organizations must focus on the factors that positively affect the performance of the employees and in turn favorable
job attitudes would lead the employees to show the desired behaviors (Altrasi, 2014).
Although there has been prior research regarding the employees’ performance, very little research has concentrated
on role ambiguity for employees’ performance. Existing researches consider on the employees’ performance without
studying the role ambiguity as moderating. This paper aims to fill this gap in the research literature by focusing on
the factors that positively affect the employees’ performance through job satisfaction, leadership and training by
taking role ambiguity as a moderating variable in the in higher education of KSA.
2.1 Employee Performance
Employee performance is always considered as one of the important factors of employee management. Job
performance is generally associated with the competency of employee to perform the tasks and duties assigned to
him to achieve the certain targets and goals according to the set standards and patterns or the benchmarks set by the
organization (Eysenck, 1998; Mathis & Jackson, 2000; Bohlander, Snell & Sherman, 2001).
As cited in Winarno (2008), Dharma (2003) defined the performance as “something that is done or the products or
services produced or provided by a person or group of people”. Formerly, the research further elaborates that the job
performance can also be defined as a result that can be attained by an individual while performing his task. Finally
all the results will be judged and evaluated by the manager or any other competent authority. Besides the words by
the supervisor or manager or any other competent authority of the organization will be considered as the feedback
about the job performance of the employee. Shahzad et. al., (2010) defines performance as a result or magnitude of a
commotion for a particular time of period. Job performance can also be defined as a track record of the results
achieved from the various types of functions of a particular job or commotion during a particular period of time
(Bernardin & Russel, 2006).
In the same vein, Mayer (2000) defined job performance as “the result of work that can be achieved by a person or
group of people in a company suitable with the authority and responsibility in their respective efforts to achieve
company goals legally and not violate the law and not contrary to morals or ethics”. However, Mackin (2006)
defines job performance as an extent to which a person carries out its assigned role by considering the explicit set
standards that established by the organization.
Summing up, performance is a distinguishing feature appearance that an employee tries to achieve and should have
to attain the particular objectives. The set standards and bench marks should also be well considered while achieving
the specific goals. There are many different ways to measure the team performance. Though many researchers have
defined the performance in their own words and by taking different variables but the one common thing which is
repeated by almost all the researchers is the result that is achieved.
2.1.1 Models of Job Performance
A few authors came up with various theories and models on job performance. Each theory and model relates to
different situations. This section highlights a few theories on job performance and hence, adapts a reference model
for the study conducted. Two major categories of job performance can be found across models: in-role (task)
performance and extra-role (contextual) performance (Borman & Motowidlo, 1993; Conway, 1999). In-role
performance refers to performance on the technical aspects of an employee’s job where as extra-role performance

refers to nontechnical abilities such as being able to communicate effectively, shows high motivation level and
enthusiasm at work, or be a good team member (Jex & Britt, 2008).
Murphy, Baker and Gibbons (1994) proposed the second model of job performance. Even though the model was
specifically developed to facilitate an understanding of job performance in the U.S. Navy, the performance
dimensions are also relevant to any regular jobs. Compared to the first model, this model breaks performance down
into four dimensions. The characteristics of the model are summarized in Table 1.
Table 1. Murphy’s (1994) model of job performance according to the in-role and extra-role distinction
No Performance Dimensions Descriptions of Performance Dimensions
In-Role
1 Task-Oriented Behaviours Performing major tasks associated with the job
Extra-Role
2 Interpersonally Oriented Behaviours All interpersonal transactions that occur on job
3 Down-time Behaviours Behaviours outside of work that affect job performance
(drug, use of alcohol, extra jobs)
4 Destructive / Hazardous Behaviours Safety violations, sabotage, accidents
Campbell (1990, 1994) came up with a comprehensive model of job performance after analysing a diverse set of jobs
performed by soldiers in the U.S. Army. The model elaborates that performance on all jobs can be broken down into
eight dimensions. Table 2 shows Campbell’s (1990, 1994) Model of Job Performance according to the in-role and
extra-role distinction. Campbell’s in-role was also known as task-performance. From the eight dimensions given in
the model, it is well understood that not all of these dimensions would be relevant for all jobs. In fact, only three
(Job-Specific-Task Proficiency (core task proficiency), demonstrating effort, and maintenance of personal discipline)
were identified as major performance components for all jobs (Campbell, 1990).
Table 2. Campbell’s (1990, 1994) model of job performance according to the in-role and extra-role distinction
No Performance Dimensions Descriptions of Performance Dimensions

In-Role
1 Job-Specific-Task Proficiency Technical aspects of job performance
2 Non-Job-Specific-Task Proficiency Common tasks performed by different employees
Extra-Role
3 Written and Oral Communication Ability to write and communicate effectively
4 Demonstrating Effort Going the ‘extra mile” at work
5 Maintaining Personal Discipline Refraining from negative behaviours, following through
on tasks
6 Providing assistance to the team Being a good team member, working well with other
members
7 Supervision/Leadership Effectively supervising and leading others
8 Management/Administration Effectively organising and keeping track of critical
information
According to Jex and Britt (2008), the Murphy’s (1994) four-dimension model was considered less useful compared
to Campbell’s (1990, 1994) eight-dimension model, because the model was developed to explain job performance
for the U.S. Navy personnel; whereas, Campbell’s objective was to describe performance in a broader term of jobs.
Apart from that, Murphy’s model was so broad that it was difficult to determine the factors that led to differences
among employees on the performance dimensions.
In the perspective of job performance models, the integration of the models summarizes into a specific existence of
in-role or task performance that portrays the main tasks or technical aspects of a job that were examined and
evaluated during job performance evaluation. Hence, this study only considers task performance dimension of job
performance in measuring job performance of academicians.

2.1.2 Job Performance among Academicians

Job performance is an important outcome for any of the academician belongs to the education field. Research
pertaining to job performance among academicians has been a popular subject of discussions among the higher
education literatures. In the case of Malaysian public universities, job performance reflects the quality of the
academicians. Errors can be increased, credibility can be at stake and legalities can be raised due to the poor
performance (Fisher, 2001). Studies have been conducted involving significant variables in the behaviour of job
performance among academicians. Razali (2011) for example, conducted a study on the effect of work and family on
work performance of university lecturers. The respondents were academicians of University Putra Malaysia, Serdang.
The research found that there was a significant relationship between the respondents’ perceived effect of work and
family on work performance. It implies that work and family affect job performance of academicians.
On the other hand, observed the job motivation and job performance in the recipients for outstanding services in the
field of Higher Education Institutions. The study depicted that there was no correlation between job motivation and
job performance of academicians. In terms of gender influence on emotional self-regulations of academicians in
Malaysia, Haryani, (2010) gave an insight of how successful academicians self-regulate their emotions in facing
challenges in a new academic norm. It was also found that academicians self-regulate their emotions by motivating
own self and staying focus to achieve personal target.
David, Syed, Zaini and Nilufar (2009) explained the job stress and job satisfaction among the staff of Universities in
Malaysia. They revealed that if Universities will not provide the healthy working environment which does not have
workplace stress, role ambiguity and bullying etc. the employees will not be satisfied and it will be resulted in the
low performance of employees. Job performance is indeed a very important aspect for academicians in universities.
Roshidi (2005) in his research studied the perceptions of academicians on performance appraisal in public
universities and job performance of academicians in Business Management faculties in Malaysian public universities
were positively related to healthy workplace (Nanthini, 2007). In addition, appraisal and expression of emotion were
found to be moderately correlated to job performance among the academicians.
2.2 Job Satisfaction
Job satisfaction and employee’s performance are highly interlinked variables. Job satisfaction is an evaluative
judgment about the level of delight an employee gets from his or her employment that comprises of both emotional
and cognitive components (Hulin & judge, 2003). The relationship between job satisfaction and occupation
performance has intrigued specialists for decades and a few hypothetical clarifications have been placed to clarify
this relationship (Schleicher, Watt, & greguras, 2004). For example, social cognitive speculations foresee that:(a)
state of mind around the occupation (e-g. work fulfillment) ought to impact practices on the work (b) practices at
work (or the prizes product by performance) lead to the arrangement of state of mind at the occupation and (c) job
satisfaction and employment satisfaction are correspondingly related.
In view of examination did by Hawthorne studies, further research to demonstrate that "glad employees are
profitable" was done, which has been demonstrated negative. In view of the finish of Hawthorne studies,
administrators started their endeavors to make their representatives more content by enhancing work conditions
(Icondalkar, 2007), giving sort of administration, stretching different offices to the employees, however it has been
discovered that there is no immediate relationship between gainfulness and bliss. Robins inferred that beneficial
specialists are liable to be upbeat employees. Further research on the subject recommends that association having
upbeat specialists may have expanded benefit.
On individual level, it may not be valid because of multifaceted nature of environment, work forms, different
frameworks and sub frameworks having effect on the individual representative. However, it can be said from
authoritative perspective that association that have the capacity, develop such arrangements that make workers glad
bound to have enhanced gainfulness. Benefit is considered as prize for diligent work, which is because of abnormal
state of fulfillment. However, globalization, rate of machines and learning blast, effect of media on specialists, social
mindfulness and exclusive requirements of workers to meet social commitments are vital variables to guarantee high
fulfillment level of representatives. While developing mechanical practices, above elements ought to be considered
positively and worker development accomplished so associations become naturally (Kondalkar, 2007).
Job satisfaction is considered as one of the determinants of job performance and many researchers showed a positive
relationship of job satisfaction and job performance (Hakeern, 2008). As researchers defined that job performance is
an emotional state of mind which employee actually perceives many features about his job and its features. It is a
known fact that satisfied employees bring more customers (Ahmed et al., 2010).

It is widely observed that job satisfaction is a variable of great interest among the researchers. Employees’
involvement in their work and their loyalty to the organization is very important for the development of the
organization and job satisfaction is the best tool to make them motivated to achieve the organizational goals. So, job
satisfaction and job performance go side by side (Armstrong, 2009). Therefore, the first hypothesis can specified as
following:
H1: There is a significant impact of job satisfaction on performance of employees working in public universities of
KSA.
2.3 Leadership
To date, the evolution of leadership continues to be a focus and has received significant research attention. There are
many ways to define leadership. Based on 54 experts from 38 countries, leadership is about influencing, motivating,
and enabling others in their workplace to contribute toward the effectiveness and success of the organizations
(McShane & Glinow, 2010). Leadership is also defined by Robbins and Judge (2007) as the ability of influencing a
group toward the achievement of a vision or set of goals. Consequently, a simpler definition was given by (Kassim &
Sulaiman, 2011) as “to be part of management that involves the supervision of others”. Cited Pater (2001) in the
study of Yang (2010), safety leadership was highlighted as a sub-system of organizational leadership. Lu and Yang
(2010) also quoted Wu et al. (2007) for a definition of safety leadership as “the process of interaction between
leaders and followers, through which leaders can exert their influence on followers to achieve organizational goals
under the circumstances of organizational and individual factors.”
According to the writers above, Leadership as an activity or process comes from individual behavior towards
followers to enhance the enthusiasm and aspiration to achieve the target and accomplish the objectives. Leadership is
the ability of any group to influence them achieving the goals. So leadership can be defined as:
Similarly, the leadership is about exchanged relationship between leaders and subordinates, moreover, it is how
leaders influence the followers in establishing the vision, values and the creation of the environment so the objectives
can be completed. Leaders should convince of the staff through the consultation, negotiation and compromise to
build the confidence among them so that they can influence the employee performance to achieve the goals and gains
due to the high performance of the organizations. The leader today aims to understand how their leadership styles
can affect the motivation level and ultimately the delivery of business performance.
According to Zaccaro and Klimostki (2002), leadership in the firms these days is becoming a tough business. Today
leaders faced lots of significant challenges in their roles and the global changes around them have increased in
complexity. Stogdill (1957) defined leadership as individual behavior that guides a group to achieve the common
target. Lee and Chuang (2009) emphasized that the excellent leader not only inspires subordinate’s potential to
enhance efficiency but also to meet their requirements in the process of achieving organizational goals. In line with
that, leadership is remarkable as the main factor in enhancing the organizational performance and successfully meets
the objectives. It can be understood that there is a strong link between leadership styles and high organizational
performance (Santora et al., 1999; Venkataraman, 1997). Further studies suggested that effective leadership
behaviors can facilitate the improvement of performance when organizations face these new challenges (McGrath &
MacMillan, 2000; Teece, Pisano & Shuen, (1997). “Even though, organizational performance refers to the ability of
an enterprise to achieve such objectives as high profit, quality product, large market share, good financial results, and
survival at pre-determined time using relevant strategy for action” (Koontz & Donnell, 1993. p, 45).
For better organizational performance which aims to achieve the target and use survival strategies that could be more
practical; all that are need the right and effective leadership style (Rowe, 2001). Furthermore, the performance of the
organization can also be used to see how the company gets along in the level of benefits, a piece of the entire
industry and the issue of quality in relation to the different companies in the same industry. Therefore, it is part of the
project of printing gain measured in terms of income, good, growth, partnerships and expansion improvement.
Understanding the impacts of authority on performance is the most vital element in light of the fact that initiative is
seen by different masters as one of the key main impetuses for an enhancing association's performance. Besides,
successful initiative is seen as an intense wellspring of administration advancement and maintained focal point for
authoritative performance change (Avolio, 1999; Lado, Boyd & Wright, 1992; Rowe, 2001).
According to Robbins and Judge (2009) the leader should be both transformational and transactional and pay
attention to the concern of the development needs of individual followers so they are changing follower’s awareness
of the problems by putting them at ease level and to make possible to resolve the issues in an innovative way.
Moreover, they should be capable to make employees motivated to achieve the organizational goals by making them

excited and by putting organizational citizenship behavior in them. Virtually all theoretical treatments of
transformational leadership claim that, among its more direct effects, are employee performance and commitment
leading to the kind of extra effort required for significant organizational change (Yukl, 1989).
It’s a proved fact that the motivated and kind leadership always bring the motivation in the employees to work hard
towards achieving the organizational goals (Robbins, Judge, Millett & Waters-Marsh, 2008). The healthy
relationship between the leadership and the employees can make employees to work beyond their organizational
obligations and show an organizational citizenship behavior (Robbins & Judge, 2009).
There is a correlation between the employees’ job performance and transformational leadership style (Bass, 1985).
This is also notable that the correlation between transformational leadership and employees’ job performance is
comparatively high as compare to the correlation between the transactional leadership style and employees’ job
performance (Salmani, 2010). Basically employees perform well when they feel an attachment with organization and
these identifications comes with the appreciation by the leaders and once they get the identification it becomes even
easier for the organization to make them follow the organizational norms and values which actually gets converted
into employees’ performance and eventually the organizational performance (Bass, 1985). Therefore, the second
hypothesis can specified as following:
H2: There is a significant impact of leadership style on performance of employees working in the public universities
of KSA.
2.4 Training
The extensive literature suggests that the training is an organized process to enhance the employee’s knowledge,
competency and skills which are important to attain some job specific tasks. Training creates an impact on the
organizational competency and volume of revenue the way it affects the employee’s competency (Elnaga, 2013).
Preparing is fundamental to build profit as well as to inspire and motivate specialists by telling them how vital their
employments are and providing for all of them the data they have to perform those occupations (Anonymous, 1998).
The general advantages got from worker preparing are: expanded occupation fulfillment and spirit, expanded
inspiration , expanded efficiencies in techniques, bringing about monetary profit, expanded ability to receive new
advances and routines, build innovation in methods and items and decreased employee turnover.
According to Hawthorne studies, and various other investigation wear down advantage of worker highlighted the
truth that employees who are satisfied by their occupation will have higher occupation execution, and in this way
transcendent vocation support, than those who are not content with their occupations (Landy, 1985). Likewise, it is
communicated that delegates are more likely to turnover in case they are not satisfied and consequently de motivated
to show incredible execution. Laborer execution is higher in energetic and satisfied experts and the organization feels
that it easy to awaken high performers to achieve firm targets (Kinicki & Kreitner, 2007). The delegate could be
recently satisfied when they feel themselves ready perform their occupations, which is achieved through better
planning undertakings.
Past explores demonstrated a positive connection in the middle of training and employee performance, as training
brings advantages for the worker alongside for the firm by absolutely affecting worker performance through the
improvement of worker's abilities and conduct. A firm that concentrates on shareholders and client fulfillment
understood the significance of putting resources into training, and subsequently perceives the value of employee
improvement (Elnaga, 2013).
The organizational mechanism and market demands are changing rapidly so in this changing environment
organizations really need to adopt the rapid changes and to respond them timely and efficiently (Tai, 2006). He
further mentions that the employers need to train their employees and to equip them with new and advanced skills
and working tools to manage rapid changes and to improve their capabilities. An effective training program can
benefit the organization in various ways including the increased productivity of employees change (Lu, Tjosvold &
Kan Shi, 2010). Additionally, it also increases the job retention rate among employees as they feel that organization
is investing on them which are of mutual benefit of them and the organization by increasing their capabilities and
translating that into increased and more efficient employees’ performance.
It is noted that the effective training programs enhance the motivation level of the employees. That is the reason that
the training programs are considered one of the tools to increase the employees’ job performance to achieve the
organizational goals. As training refers to improve the existing performance and elevate it to the standardized
benchmark. So trainings in a way not only improve the personal capabilities of employees but also make the best use

of human resource of the organization (Kinicki & Kreitner, 2007). Therefore, the third hypothesis can be specified as
following:
H3: There is a significant impact of training on performance of employees working in the public universities of
KSA.
2.5 Role Ambiguity
Role ambiguity is defined as the lack of a clear set of instructions for guiding one's actions in a particular setting or to
reach a specific goal (Eys & Carron, 2001). In a seminal study that advanced the concept of role ambiguity in team
cohesiveness, Kahn et al. (1964) created a theoretical model through which role ambiguity was measured as a
multidimensional construct. In their study, the objectives included: 1) exploring the nature of role conflict and role
ambiguity in industrial positions, 2) identifying work situations or contexts which intensify role ambiguity, 3)
identifying the associations between situations or context and role ambiguity, as well as how individuals adjust, and 4)
exploring how the effects of role ambiguity might be moderated by individual characteristics. Role ambiguity occurs
when there are more number of supervisors on single employee or if there are different standards and demands
regarding one particular job. Role ambiguity can cause employees dissatisfaction and thus, decreased his organizational
commitment and ultimately results in low job performance (Shenkar, 1992). Rizzo et al., described role ambiguity as
the inharmoniousness of the organizational demands from an employee in the reference of his role.
According to the theoretical model developed in this study, those dimensions include: 1) organizational factors, 2)
personality factors, and 3) interpersonal factors. For organizational factors, role requirements were measured in three
areas. First, the role was measured in terms of the extent to which the position crossed outside of the organization's
boundaries or interacted with individuals outside of the organization. The researchers hypothesized that employees who
work close to a boundary - both of the organization or of a department or work area - experience increased conflict
about their role and increased tension. Second, the extent to which an employee's role requires innovative
problem-solving for non-routine problems were measured. There is a tendency for organizations to select individuals
with high self-confidence, high levels of career aspirations, and high engagement in the position for jobs with high
requirements for innovative problem solving. Third, the role was measured for the extent to which the position was
responsible for the work products of others. The study found that the highest levels of conflict regarding role in a job
were in the upper/middle level of management, rather than at the lower levels of management.
Employees who do not get their part of duty and feel problem to understand the instruction and it makes them confuse
about their job description often dissatisfied with their job. And there is a high probability for such employees to leave
the organization or not become the active part in achieving various organizational goals. Role ambiguity can be a cause
of the failure of an employee to show the productivity at workplace and can also be the failure of an organization in the
long run (Beard, 1999).
The relationship of job satisfaction and the role ambiguity is of core importance which actually affects the employees’
performance (McLaughlin, 2008). Many studies show a significant relation of role ambiguity and employee’s
satisfaction. Some studies have also been done on the universities’ employees to obtain the empirical results about the
relationship of employees’ job performance and role ambiguity and found the same results (O'Driscoll & Beehr, 2000).
Therefore, the fourth hypothesis can be specified as following:
H4: Role ambiguity moderates the relationship of job satisfaction and the performance of employees working in
public universities of KSA.
Correlation between leadership and employees performance is empirically proved in many studies but in the case of role
ambiguity exists, it becomes even more crucial to understand the relation of leadership and employees’ performance.
Leadership is considered as the helping role of the management to facilitate the employees to achieve the high level
goals and to make them more comfortable and loyal with the organization to increase their performance (Robbins &
Judge, 2007).
Existence of role ambiguity can be a trouble for an employee in the case of achieving a certain benchmark to perform
well. Leadership than comes forward and eliminate the ambiguities in the mind of an employee and let them perform
well (Abdullah & Kassim, 2011). Therefore, the fifth hypothesis can be specified as following:
H5: Firm category moderates the effect of IT training on IT utilization
Usually organizations want the highly skilled employees to obtain more accurate results and to avoid mistakes at the
workplace. This is also due to the changing requirement of innovation and more confidence in the changing situation of

www.sciedu
u.ca/ijba International Journ
nal of Business A
Administration Vol. 6, No. 2; 2015
the current markets. Many y organizationss offer training

g programs to thheir employeess at different leevels to enhancce their
capabilitiess (Sekaran & Bougie, 2009).
Role ambig guity confuses the employeess to understand d their role desccriptions and joob requirementts. Workers wiith low
understandiing with their job requiremeents cannot perrform well at work place. S So, by proper aand ongoing trraining
sessions reg
garding their joob description,, job goals andd other work pllace related ammbiguities can bbe removed (BBougie,
2009). Therrefore, the sixth
h hypothesis caan be specified as following:
working in the public
H6: Role ambiguity modeerates the relattionship of traiining and the pperformance oof employees w
universitiess of KSA
3. Proposeed Research Framework
hat the effects oof job satisfacttion, leadershipp, and training on the
Based on a detailed revieew of the literatture exposes th
employees’ performancee by taking ro ole ambiguity as moderatingg variable are still inconsisttent. To resolvve this
inconsisten
ncy, this study suggested the proposed fram mework which is developed iin relation to thhe hypotheses of this
hown in Figure 1.
study as sh
Figure 1. Research
R frameework
4. Discussiion, and Futurre Research Directions
D
In conclusiion, this study tried to increaase the borders of the knowleedge refer to thhe implicationss of performance, job
satisfaction
n, leadership, trraining and rolle ambiguity. The
T research m model resulted ffrom this studyy provides an ooriginal
and uniquee theoretical frramework whicch could be a reference moddel to examinee the performannce, job satisffaction,
leadership, training and role
r ambiguity as moderating g variable. Thee originality off this research framework coould be
due to thee introduction of role ambiiguity as mod derating variabble to explain the potential effect between job
satisfaction
n, leadership, training
t and jo
ob performancce. This frameework was prooposed to resoolve the inconcclusive
results regaarding the effeccts of role amb
biguity on job performance.
p
In general, this research framework cou uld be a guideeline for futuree empirical reseearch further eexplains the efffect of
job satisfacction, leadershiip, training and
d role ambiguitty as moderatinng variable onn employees’ peerformance. Thhe role
ambiguity is of core impo ortance variablle which actuaally affects the employees’ peerformance because role ambbiguity
can be a caause of the faillure of an employee to show the productiviity at workplacce and can alsoo be the failuree of an
organizatioon in the long run.
r
To gain a deeper
d understanding on the role of ambigu mployees’ perfoormance in higgher education, future
uity on the em
studies aree recommendeed to put forth h some effortss to investigatte the organizzational culturee and organizational
commitmen nt should be considered as an
a important vaariable in thes e causal relatioonships. Furthher studies couuld also
Published byy Sciedu Press 37 ISSN 1923-40007 E-ISSN 19223-4015

examine the effect of some other influential variables on these relationships. In fact, the reality is very complex and
in order for a researcher to have the clear picture, he has to take into account many other variables that might
influence the proposed model.
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Meta-Analysis of the Impact of Psychological Capital on Quality of

Work Life and Organizational Citizenship Behavior: A Study on Sadat
City University
Wageeh Nafei1
1
University of Sadat City, Menoufia, Egypt
Correspondence: Wageeh Nafei, University of Sadat City, Menoufia, Egypt. E-mail: dr.wageeh1965@yahoo.com
Received: August 3, 2014 Accepted: December 9, 2014 Online Published: February 20, 2015
Abstract
Background: Psychological Capital (PsyCap) was recently identified as a core construct in the literature. However,
there is considerably less evidence on its effects on Quality of Work Life (QWL) and Organizational Citizenship
Behavior (OCB).
Purpose: The objective of this study is to provide empirical evidence on the relationships between PsyCap, QWL
and OCB. This paper also seeks to present the theoretical development of PsyCap, QWL, OCB and their application
to employees at Sadat City University practices.
Research Design/Methodology: The method is to assess positive PsyCap (PsyCap Questionnaire, Luthans et al.,
2006), QWL (QWL Survey Seashore et al., 1983; Cammann, et al., 1983; National Institute for Occupational Safety
and Health, 2002), OCB (OCB Questionnaire Podsakoff, 1990; Konovsky & Pugh, 1994; and Konovsky & Organ,
1996). Out of the 682 questionnaires that were distributed, 315 usable questionnaires were returned, a response rate
of 46%.
Findings: It has been revealed to how PsyCap factors such as hope, optimism, resiliency and self-efficacy have an
impact on QWL and OCB. In other words, hope, optimism, resiliency and self-efficacy significantly correlated with
QWL and OCB.
Practical implications: The study suggests that the University of Sadat City in Egypt can improve QWL by
influencing its PsyCap. The study provided that it is necessary to pay more attention to the dimensions of PsyCap as
a key source for organizations to enhance the competitive advantage which is of prime significance for QWL and
OCB.
Originality/value: The study observes that there is a critical shortage of PsyCap and that a greater understanding of
the factors that influence the QWL and OCB is of great importance. Therefore, this study is to examine the
relationship between PsyCap, QWL and OCB among employees at Sadat City University in Egypt.
Keywords: psychological capital, quality of work life, organizational citizenship behavior
1. Introduction
In 1999 the new science of positive psychology emerged thanks to its founder Martin Seligman, president of the
American Association of Psychology at this time. The aim of this science is to enhance self-efficacy of the individual,
focus on how to exploit the strengths rather than on weaknesses, look for opportunities instead of looking for threats,
and, generally, activate functional, efficient and holistic health for the employee rather than focusing on disorders
and treatment (Seligman, 2002). Recently, Barack Obama was not to gain the U.S. presidency but for his courage and
hope in the future, high confidence in himself, optimism in the ability to manage the country, as well as his ability to
adapt to the economic, social and political challenges. So he wrote a book called "The Audacity of Hope" and all
these qualities represent components of PsyCap (Avey, et al., 2011).
2. Conceptual Background
2.1 Psychological Capital
It is interested in positive psychology to study how to maximize investment in human resources, the welfare of the
individual and the optimal investment for his abilities, by expanding the use of psychology in alleviating the
problems that may encounter an individual in the work environment (Avey, et al., 2010).

The positive outlook gained interest of many researchers in the management of human resources, because of its
positive impact on many variables, personal and organizational, such as productivity, motivation, job performance,
organizational commitment, OCB, and the quality of work life (Sin & Lyubomirsky, 2009; Mortazavi, et al., 2012
Etebarian, et al., 2012).
Some affirm the importance of the role of PsyCap in reducing the level of stress and pressures of the individual, and
thus reduce the consequences of the additional costs incurred by the organization (Avey, et al., 2008).
Many organizations focus on the development of the PsyCap of their employees as it is one of the most important
factors that can raise the level of productivity and support the competitiveness of the organizations (Luthans &
Youssef, 2004).
PsyCap can, therefore, be defined as the positive potentials an individual has. It can be harnessed for
self-development, reflected on his behavior in order to enhance the competitiveness of the organization. This is to be
attained through recruitment of the positive potentials in self-development (Luthans, et al., 2005).
It must be noted that the emergence of PsyCap as a new approach in the management of human resources has
enabled managers to take advantage of it to invest in effective capacities of subordinates, and that by focusing on the
positive aspects of workers rather than on weaknesses, which is beneficial to both the worker and the organization
(Luthans, et al., 2006).
2.2 The Basic Components of PsyCap
Most of the previous studies suggest that PsyCap consists of four basic dimensions as follows (Luthans, et al., 2008).
2.2.1 Hope
Hope can be defined as a case of positive stimulus about the future and is based on the individual's sense of
Interactive success, which consists of (1) the will, which is the potential energy of the individual that enables him to
achieve the target, (2) the existence of alternative pathways to reach the target, which refers to the multiplicity of the
individual available alternatives to ensure access to the target. Although the studies of hope did not receive sufficient
attention in the work environment, the results indicate a correlation between the level of availability of hope among
the workers and some of the wanted trends within the work environment, such as job satisfaction, and job
embeddedness, worker psychological health, and the extent of his feelings of happiness while doing his job.
Therefore, training efforts in contemporary organizations have become focused on the development and giving of
hope in the hearts of workers, and training them on how to formulate their goals, and increase their ability to develop
alternative routes that would enable them to reach their goals and provide support and assistance to them in the case
of the emergence of obstacles (Luthans, et al., 2008; & Youssef & Luthans, 2007).
In light of this, the importance of the role that hope can play emerges as it influences the trends of workers (job
satisfaction, organizational commitment) on the one hand, and the functionality of the workers on the other hand.
The researcher expects that the high levels of hope among the workers can contribute to increase the levels of job
satisfaction, organizational commitment and therefore their level of functioning within the organization.
2.2.2 Resilience
Resilience is the positive reaction shown by the individual when exposed to crises and problems (Masten & Reed,
2002). Resilience can be defined as workers' positive potential psychological energy, which enables them to get a
bounce back to the normal case during exposure to a specific problem in the work environment. The results of the
previous studies indicate an importance of the existence of a minimum level of resilience to the individual, as it plays
an important role in influencing the increase of the rates of job satisfaction and organizational commitment, as well
as the feeling of happiness and psychological comfort (Larson & Luthans, 2006; Youssef & Luthans, 2007).
Hence, it is clear that the individual's capacity for resilience and adaptation in sense of their former conception does
affect the level of job satisfaction and organizational commitment, and therefore the level of functionality, as
individuals who have a high capacity for resilience and to cope with the problems that occur within the organization
may have increased feelings of satisfaction and organizational commitment. Therefore, the level of their functioning
within the organization is higher.
2.2.3 Optimism
The level of optimism of any individual is due to certain reasons, including a set of properties and relatively stable
positive qualities he has. The optimistic man realizes ordeal as a temporary setback and that the chance of a new start
is still available. Therefore, the level of optimism of the individual affects his performance, as well as the level of
sense of happiness and job satisfaction (Luthan et al., 2005; Youssef & Luthans, 2007).

In light of the previous view, we can say that the level of optimism of the individual affects the level of ability to deal
with adverse events within the organization. The researcher expects that the high levels of optimism among workers
can affect the level of their sense of happiness and job satisfaction, organizational commitment, and therefore the
level of performance of the individual within the organization.
2.2.4 Self-efficacy
Self-efficacy is the conviction of the individual of his ability to develop internal motivation and recruitment of his
cognitive resources to identify alternatives that would enable him to act to achieve a particular task successfully. The
self-efficacy is a criterion for the beliefs of ability, as the individual's belief of his inability to do something is an
index of low self-efficacy. Some argue that self-efficacy plays a vital role in maintaining high levels of performance
of the individual, even in the most difficult circumstances, and that self-efficacy raises some sort of positive thinking
to the individuals. (Norman et al, 2010).
In light of the above, it can be said that the higher the level of the individual' self-efficacy, the higher the level of his
achievement is, and the higher is his desire to make more effort to perform the work. The level of his steadfastness in
the face of the problems facing him to reach objectives is also higher.
2.3 Quality of Work Life
Quality of Work Life (QWL) is a concept of behavioral science, and the term was first introduced by Davis in 1972
(Mathur, 1989; Hian & Einstein, 1990). QWL can be defined as a process by which an organization responds to
employee needs by developing mechanisms to allow them to share fully in making the decisions that design their
lives at work. QWL is a philosophy, a set of principles, which holds that people are the most important resource in
the organization as they are trustworthy, responsible and capable of making valuable contribution and they should be
treated with dignity and respect (Robbins, 1989).
The key elements of QWL in the literature include job security, job satisfaction, better reward system, employee
benefits, employee involvement and organizational performance (Havlovic, 1991). Studies demonstrate that
employees with high QWL tend to report high levels of identification with their organizations, job satisfaction, job
performance and lower levels of turnover and personal alienation (Efraty, et al., 1991).
QWL is defined as employee satisfaction with a variety of needs through resources, activities, and outcomes
stemming from participation in the workplace (Sirgy & et al. 2001).
QWL has been well recognized as a multi-dimensional construct and it may not be universal or eternal. The key
concepts captured and discussed in the existing literature include job security, better reward systems, higher pay,
opportunity for growth, participative groups, and increased organizational productivity. In the scientific management
tradition, satisfaction with QWL was thought to be based solely on "extrinsic" traits of the job: salaries and other
tangible benefits, and the safety and hygiene of the workplace. By contrast, the human relations approach stresses
that, while extrinsic rewards are important, "intrinsic rewards" are key predictors of productivity, efficiency,
absenteeism and turnover. These intrinsic rewards include traits specific to the work done, the "task content": skill
levels, autonomy and challenge (Beauregard, 2007).
One conceptualization of QWL, based on need-hierarchy theory of Maslow, regards QWL as employee satisfaction
of seven sets of human developmental needs: (1) health and safety needs, (2) economic and family needs, (3) social
needs, (4) esteem needs, (5) actualization needs, (6) knowledge needs, and (7) esthetic needs (Marta et al, 2011).
In sum, QWL is defined as the favorable condition and environment of employees benefit, employees’ welfare and
management attitudes towards operational workers as well as employees in general.
There are eight aspects in which employees' perceptions towards their work organizations could determine their
QWL: adequate and fair compensation; safe and health environment; development of human capacities; growth and
security; social integrative constitutionalism; the total life space and social relevance (Walton, 1974).
There much literature highlighting the factors critical for the assessment of QWL (Srinivas, 1994). Comprehensive
delineation of the QWL concept is found in three major works. Other researchers have attempted to measure QWL in
a variety of settings using combinations of various questionnaires such as job satisfaction, organizational
commitment, alienation, job stress, organizational identification, job involvement and finally work role ambiguity,
conflict, and overload were studied as proxy measures of QWL (Levine et al., 1984). The key concepts captured in
QWL include job security, better reward systems, higher pay, opportunity for growth, and participative groups among
others (Straw & Heckscher, 1984).
QWL can be measured by the feelings that employees have towards their jobs, colleagues, and companies would
enhance a chain effect leading to organization’s growth and profitability (Heskett, et al., 1997).

According Robins (1995) QWL is a process by which an organization responds to employee needs by developing
mechanisms to allow them to share fully in making the decisions that design their lives at work. The key elements of
QWL in the literature include job security, job satisfaction, better reward system, employee benefits, employee
involvement and organizational performance (Scobel, 1975).
For the purpose of this study, QWL is defined as the favorable condition and environment of employees benefit,
employees’ welfare and management attitudes towards operational workers as well as employees in general.
2.4 Organizational Citizenship Behavior
Bateman and Organ (1983) were the first to use the term “OCB” in 1983 (Podsakoff et al, 2000). OCB is one of the
most widely studied topics in organizational behavior research (Podsakoff & MacKenzie, 1997; Ehrhart & Naumann,
2004).
OCB is one of the emerging management concepts that are being emphasized for the organizational effectiveness,
efficiency and profitability of the organizations (Ertürk, et al. 2004). OCB is an extra role and behaviours such as
teamwork with employees, approaching workplace earlier and leaving late, helping other employees, using
organizational possessions with care, disseminating positively in organization (Turnispeed & Rassuli, 2005).
OCB can improve co-worker and managerial productivity, provide superior efficiency in resource use and allocation,
reduce managerial expenses, provide better coordination of organizational activities across individuals, groups and
functional departments, improve organizational attractiveness for high quality new recruits, increase stability in the
organization’s performance, enhance organizational capability to adapt effectively to environmental changes (Cohen
& Vigoda, 2000).
OCB is individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system,
and that in the aggregate promotes the effective functioning of the organization. OCB can be defined as behaviors
that are not formally rewarded is equally too broad, as few "in-role" behaviors actually guarantee a formal reward.
High levels of OCB should lead to a more efficient organization and help bring new resources into the organization.
In Organ’s explanation, securing needed resources refers not only to the attraction of new members or raw materials,
but also to such intangible factors as company good will, or the external image and reputation of the organization.
Thus, customer perceptions of the organization’s products or services could be an external assessment of
effectiveness influenced by OCB (Organ, 1988).
OCB can assist organizations to develop performance and increase competitive periphery as it encourages employees
to perform beyond the formal job requirement. It can assist the organization to be successful in current environment
and accelerate novelty and creative approaches for organizations (Nemeth & Staw, 1989).
OCB can be classified into two groups. They are OCB-Organizational and OCB Individual. OCB-Organizational
benefits the organization in general, such as adhering to informal rules devised to maintain order. OCB-Individual
benefits specific individuals and indirectly contribute the organization, such as taking a personnel interest in other
employees (Williams & Anderson, 1991).
OCB is individual behaviours that promote the good of the organization by contributing to its social and
psychological environment. Such behaviours include helping another employee finish a project, providing helpful
advice or suggestions, and offering positive feedback on work tasks (Podsakoff, et al., 1993).
OCB has been related to wide range of antecedents such as job satisfaction, leadership, fairness, perceived
organizational support, psychological contract, and commitment (Ravichandran, et al., 2007).
OCB is referred to as “contextual performance” or “prosocial organizational behaviour” to emphasize the voluntary
nature of the activity and to distinguish it from “task performance” or one’s assigned duties (Borman & Motowidlo,
1993).
There are some features of OCB. They are (1) beneficial and informal behavior or gestures, (2) discretionary; not
enforceable requirement of the role or job description, (3) not directly or explicitly recognized by formal reward
system; uncompensated individual contributions in the workplace that does role requirement, and (4) enhances the
effective functioning of the organizations in the aggregate (Paine & Organ, 2000).
Organ (1988) identified five categories of OCB (1) Altruism: the helping of an individual coworker on a task, (2)
Courtesy: alerting others in the organization about changes that may affect their work, (3) Conscientiousness:
carrying out one’s duties beyond the minimum requirements, (4) Sportsmanship: refraining from complaining about
trivial matters, and (5) Civic Virtue: participating in the governance of the organization. There are five dimensions of
OCB. They are as follows (Organ, 1988; Podsakoff et al, 1990):

1. Altruism can be called simply helping or helpfulness. Altruism consists of voluntarily actions that help others with
an organizationally relevant task such as voluntarily helping orientation of a new employee, sharing sales
strategies, teaching employees useful knowledge or skills, showing employees how to accomplish difficult tasks
(Borman et al., 2001). Altruism (e.g., helping new colleagues and freely giving time to others) is naturally
concentrating toward other individuals but adds to group efficiency by increasing the performance of individuals.
2. Conscientiousness is a discretionary behavior that goes well beyond the minimum role requirement level of the
organization, such as obeying rules and regulations, not taking extra breaks, working extra-long days (MacKenzie
et al, 1993). More conscientiousness for an employee means more responsibility and less supervision (Podsakoff
& MacKenzie, 1997). Altruism and conscientiousness are the two major or overarching dimensions of OCB
(Borman et al., 2001). Conscientiousness (e.g., efficient use of time and going beyond minimum expectations)
increases the efficiency of the individual and the group.
3. Sportsmanship is demonstration of willingness to tolerate minor and temporary personnel inconveniences and
impositions of work without grievances, complaints, appeals, accusations, or protest, thus conserving
organizational energies for task accomplishment and lightening the loads of managers (Organ & Ryan, 1995).
Sportsmanship (e.g., avoiding complaining and whining) improves the quantity of time spent on productive
activities in the organization.
4. Courtesy, or gesture, is demonstrated in the interest of preventing creations of problems for co-workers. A
courteous employee avoiding creating problems for co-workers reduces intergroup conflict so managers do not fall
into a pattern of crisis management (Podsakoff & MacKenzie, 1997). Courtesy (e.g., advance notices, reminders,
and communicating appropriate information) facilitates avoidance of problems and boosts productive use of time.
5. Civic Virtue is a behavior on the part of an individual that indicates that the employee responsibly participates in,
is involved in, or concerned about the life of the company (Podsakoff et al, 1990). This dimension represents a
macro level interest in, or commitment to the organization. This behavior shows willingness to participate actively
in managerial events, to monitor organization’s environment for threats and opportunities, to look out for
organization’s best interest. These behaviors reflect an employee’s recognition of being a part organization
(Podsakoff et al, 2000). Civic Virtue (e.g., serving to communities and voluntarily attending functions) endorses
the interests of the organization.
Each dimension of OCB offers a different rationale for this relationship. Altruism or helping coworkers makes the
work system more productive because one worker can utilize his or her free time to assist another on a more urgent
task. Acts of civic virtue may include offering suggestions for cost improvement or other resource saving ideas,
which may directly influencing efficiency. To a lesser extent, conscientious employees, as well as those who avoid
personal gain or other negative behaviors, demonstrate compliance with company policies and maintain predictable,
consistent work schedules, increasing the reliability of the service. As reliability increases, the costs of rework are
reduced, making the unit more efficient (Berry & Parasuraman, 1991).
3. Research Model
The proposed comprehensive conceptual model is presented in Figure 1. The diagram below shows that there is one
independent variable of PsyCap. There are two dependent variable of QWL and OCB. It shows the rational link
among the variables. From the above discussion, the research model is as shown in Figure 1 below.
Hope
Independent Variable
Psychological Capital
Dependent Variable
H1 Quality of Work Life
Optimism
Resilience Organizational Citizenship
H2
Behavior
Self-Efficacy
Figure 1. Proposed comprehensive conceptual model

The research framework suggests that PsyCap have an impact on QWL and OCB. PsyCap as measured consists of
hope, optimism, resilience and self-efficacy (Luthans, 2006). QWL is measured in terms of the moral conditions of
the work environment, job characteristics, wages and rewards, team work, head's method in supervision, and
participation in decision-making (Seashore et al., 1983; Cammann, et al., 1983; National Institute for Occupational
safety and Health, 2002). OCB is measured in terms of altruism, courtesy, sportsmanship, conscientiousness, and
civic virtue (Podsakoff, 1990; Konovsky & Pugh, 1994; and Konovsky & Organ, 1996).
4. Research Questions and Hypotheses
The researcher found the research problem through two sources. The first source is to be found in previous studies,
and it turns out that there is a lack in the number of literature reviews that dealt with the analysis of the relationship
between PsyCap, QWL and OCB for employees at Sadat City University in Egypt. This called for the researcher to
test this relationship in the Egyptian environment.
The second source is the pilot study, which was conducted in an interview with (30) employees at Sadat City
University in Egypt in order to identify the relationship between PsyCap, QWL and OCB at Sadat City University in
Egypt. The researcher found through the pilot study several indicators; notably the important and vital role that could
be played by PsyCap in developing and improving QWL and OCB at Sadat City University in Egypt
The research process includes both questions and hypotheses. The research questions of this study are as follows:
Q1: What is the nature and the extent of the relationship between PsyCap (Hope, Optimism, Resiliency, and
Self-efficacy) and QWL at Sadat City University in Egypt.
Q2: What is the statistically significant relationship between PsyCap (Hope, Optimism, Resiliency, and Self-efficacy)
and OCB at Sadat City University in Egypt.
The following hypotheses were developed to test if there is a significant correlation between JE, QWL and OCB at
Sadat City University in Egypt.
H1: PsyCap (Hope, Optimism, Resiliency, and Self-efficacy) of employees has no statistically significant effect on
QWL at Sadat City University in Egypt.
H2: PsyCap (Hope, Optimism, Resiliency, and Self-efficacy) of employees has no statistically significant
relationship with OCB at Sadat City University in Egypt.
5. Research Methods
5.1 Research Population
The study subjects are employees at Sadat City University in Egypt. The total population is 692 employees. The
research population is illustrated in the following table:
Table 1. Distribution of the population
Faculty Members Number Percentage
Faculty of Veterinary Medicine 137 19.8%
Faculty of Tourism & Hotels 89 12.9%
Genetic Engineering Research Institute 117 16.9%
Faculty of Physical Education 174 25.1%
Faculty of Education 33 4.8%
Faculty of Commerce 55 7.9%
Faculty of Law 43 6.2%
Institute for Environmental Studies and Research 44 6.4%
Total 692 100%
Source: Staff Members Affairs Department, Sadat City University, Egypt, 2014
Due to the small number of members of the research community at Sadat City University, it was decided to study this
community using comprehensive inventory (Complete Numeration or Census) in order to get the highest percentage
of survey lists. Table 2 illustrates features of sample units.

5.2 Method of Data Collection

The goal of this study was to examine the relationships between PsyCap, QWL and OCB at Sadat city University in
Egypt. A survey research method was used to collect data in this study.
The questionnaire included four questions, relating to PsyCap, QWL, OCB and biographical information of
employees at Sadat City University in Egypt.
A total of 682 questionnaires were sent out in May, 2014 and collected in July 2014. Three hundred and fifty
effective questionnaires were collected (51% collection rate). Thirty five ineffective ones (with unanswered
questions, duplicated entries and inappropriate marks) were excluded, and the number of effective ones was 315
(46% valid collection rate).
Table 2. Characteristics of the sample units

Variables Number Percentage
Male 200 63.5%
1- Sex
Female 115 36.5%
Total 315 100%
Professor 60 19.5%
Associate professor 80 25.4%
2- Academic Degree Assistant professor 120 38.1%
Lecturer 20 6.3%
Demonstrator 35 11.1%
Total 315 100%
Married 220 69.8%
3- Marital Status
Single 95 30.2%
Total 310 100%
Less than 30 years 60 19.0%
4- Age From 30 to 45 190 60.3%
More than 45 65 20.7%
Total 315 100%
Less than 5 years 130 41.3%
5- Period of Experience From 5 to 10 145 46.0%
More than 10 40 12.7%
Total 315 100%
5.3 Research Variables and Methods of Measuring

The 24-item scale PsyCap section is based on Luthans, 2006. There were six items measuring hope, six items
measuring optimism, six items measuring resilience, and six items measuring self-efficacy.
The 36-item scale QWL section is based on Seashore et al., 1983; Cammann, et al., 1983; National Institute for
Occupational Safety and Health, 2002. There were six items measuring the moral conditions of the work
environment, six items measuring job characteristics, six items measuring wages and rewards, six items measuring
team work, six items measuring the head's method in supervision, and six items measuring the participation in
decision-making.
The 15-item scale OCB section is based on Podsakoff, (1990), Konovsky & Pugh (1994), and Konovsky & Organ
(1996). There were three items measuring altruism, three items measuring courtesy, three items measuring
sportsmanship, three items measuring conscientiousness, and three items measuring civic virtue.

Responses to all items scales were anchored on a five (5) point Likert scale for each statement which ranges from (5)
“full agreement,” (4) for “agree,” (3) for “neutral,” (2) for “disagree,” and (1) for “full disagreement.”
5.4 Methods of Data Analysis and Testing Hypotheses
The researcher has employed the following methods: (1) The Alpha Correlation Coefficient (ACC), (2) Multiple
Regression Analysis (MRA), and (3) the statistical testing of hypotheses which includes F- test and T-test.
6. Hypotheses Testing
Before testing the hypotheses and research questions, descriptive statistics were performed to find out means and
standard deviations of PsyCap, QWL and OCB.
Table 3. The mean and standard deviations of PsyCap, QWL and OCB
Standard
Variables The Dimension Mean
Deviation
Hope 3.30 1.16
Optimism 3.24 1.01
PsyCap Resilience 3.45 0.98
Self-Efficacy 3.60 0.97
Total Measurement 3.40 0.98
The Moral Conditions of the Work Environment 3.70 1.32
Job Characteristics 3.68 1.27
Wages and Rewards 3.77 1.23
QWL Tam Work 3.80 1.24
Head's Method in Supervision 3.75 1.25
Participation in Decision-Making 3.79 1.18
Altruism 3.65 1.22
Courtesy 3.70 1.22
Sportsmanship 3.64 1.31
OCB
Conscientiousness 3.63 1.22
Civic virtue 3.73 1.38
Table 3 lists the mean and standard deviation among variables. The mean of each variable is more than 3, and this
result indicates that the study subjects in general have a higher level of PsyCap, QWL and OCB.
The different facets of PsyCap (hope, optimism, resilience and self-efficacy) are examined. Most respondents
identified the presence of self-efficacy (M=3.60, SD=0.971). This was followed by resilience (M=3.45, SD=0.980),
hope (M=3.30, SD=1.16), and optimism (M=3.24, SD=1.01).
The different facets of QWL (the moral conditions of the work environment, job characteristics, wages and rewards,
team work, head's method in supervision, and participation in decision-making) are examined. Most respondents
identified the presence of the moral conditions of the work environment (M=3.70, SD=1.32). This was followed by
job characteristics (M=3.68, SD=1.27), wages and rewards (M=3.77, SD=1.23), team work (M=3.80, SD=1.24),
head's method in supervision (M=3.75, SD=1.25), and participation in decision-making (M=3.79, SD=1.18)
The different facets of OCB (altruism, courtesy, sportsmanship, conscientiousness, and civic virtue) are examined.
Most respondents identified the presence of altruism (M=3.65, SD=1.22). This was followed by courtesy (M=3.70,
SD=1.22), sportsmanship (M=3.64, SD=1.31), conscientiousness (M=3.63, SD=1.22), and civic virtue (M=3.64,
SD=1.21)

6.1 Evaluating Reliability

Table 4. Reliability of PsyCap, QWL and OCB
Number of
Variables The Dimension ACC
Statement
Hope 6 0.89
Optimism 6 0.80
PsyCap Resilience 6 0.80
Self-Efficacy 6 0.77
Total Measurement 24 0.95
The Moral Conditions of the Work Environment 6 0.97
Job Characteristics 6 0.96
Wages and Rewards 6 0.97
QWL Tam Work 6 0.97
Head's Method in Supervision 6 0.95
Participation in Decision-Making 6 0.94
Altruism 3 0.97
OCB Courtesy 3 0.92
Sportsmanship 3 0.95
Conscientiousness 3 0.91
Civic virtue 3 0.95
ACC was decided to exclude variables that had a correlation coefficient of less than 0.30 when the acceptable limits
of ACC range from 0.60 to 0.80, in accordance with levels of reliability analysis in social sciences (Nunnally &
Bernstein, 1994). To assess the reliability of the data, Cronbach’s alpha test was conducted. Table 4 shows the
reliability results for PsyCap, JE and OC. All items had alphas above 0.60 and were, therefore, excellent, according
to Langdridge’s (2004) criteria.
The 24 items of PsyCap are reliable because the ACC is 0.95. The six items of hope scales are reliable due to the fact
that the ACC is 0.89. The optimism, which consists of six items, is reliable since the ACC is 0.80. The six items
related to resilience are reliable as ACC is 0.80. Furthermore, the self-efficacy, which consists of six items, is reliable
due to the fact that the ACC is 0.77.
The 36 items of QWL are reliable because the ACC is 0.99. The six items of the moral conditions of the work
environment scales are reliable due to the fact that the ACC is 0.97. The job characteristics, which consists of six
items, is reliable since the ACC is 0.96. The six items related to wages and rewards are reliable as ACC is 0.97.
Furthermore, the six items of team work scales are reliable due to the fact that the ACC is 0.97. The head's method in
supervision, which consists of six items, is reliable since the ACC is 0.95. The six items related to participation in
decision-making are reliable as ACC is 0.94.
The 15 items of OCB are reliable due to the fact that the ACC is 0.98. The altruism, which consists of three items, is
reliable since the ACC is 0.97 while the three items related to courtesy is reliable as the ACC is 0.92. Furthermore,
the sportsmanship, which consists of three items, is reliable due to the fact that the ACC is 0.95. The
conscientiousness, which consists of three items, is reliable since the ACC is 0.91 while the three items related to
civic virtue is reliable as the ACC is 0.95.
6.2 The Correlation among the Research Variables
Table 5. Descriptive statistics and correlation matrix for all variables
Std.
Variables Mean PsyCap QWL OCB
Deviation
Psychological
3.40 0.98 1.000
Capital
0.439
Quality
3.74 1.23 1.000
of Work life
0.390  0.969 
Organizational
3.64 1.21 1.000
Citizenship Behavior

Table 5 shows correlation coefficients between the research variables, and results indicate the presence of significant
correlation between variables (PsyCap, QWL and OCB).
The level of PsyCap of employees is average (Mean=3.30; SD=0.98), while QWL is higher (Mean=3.74; SD 1.23)
which led to high level of OCB (Mean=3.64; SD. 1.21).
Table 5 reveals the existence of a positive correlation between PsyCap and QWL (R=0.449; P < 0.01), which means
that the high level of PsyCap leads to higher QWL.
The table shows the existence of a positive correlation between PsyCap and OCB (R= 0.390; P < 0.01), which means
that the high level of PsyCap leads to higher OCB.
Finally, Table 5 refers to the existence of a positive correlation between QWL and OCB (R= 0.969; P < 0.01)
implying that the high level of QWL led to high level of OCB.
6.3 The Relationship between PsyCap (Hope) and QWL
Table 6. MRA results for PsyCap (hope) and QWL
The Variables of PsyCap (Hope) Beta R R2
1. When I find myself under pressure, I think how to get out of this
0.16 0.33 0.11
predicament.
2. I have a strong will to achieve my goals. 0.05 0.29 0.08
3. I have several alternatives to resolve any problem I may face. 0.28  0.22 0.05
4. I feel that I have achieved great success in my career. 0.28  0.31 0.10
5. I can think of more than one way to achieve my goals. 0.25  0.39 0.15
6. I have achieved most of goals I have persued. 0.02 0.38 0.14
 Multiple Correlation Coefficients (MCC) 0.45
 Determination of Coefficient (DF) 0.21
 The Value of Calculated F 13.60
 Degree of Freedom 6, 308
 The Value of Indexed F 2.80
 Level of Significance 0.01
* P < .05 ** P < .01
According to Table 6, the regression-coefficient between PsyCap (Hope) and QWL is R= 0.46 and R2= 0.21. This
means that the QWL can be explained by the dimensions of PsyCap (Hope), for example, “I have several alternatives
to resolve any problem I may face” (β= 0.286, R= 0.224, and R2= 0.050), “I feel that I have achieved great success
in my career” (β= 0.289, R= 0.318, and R2= 0.101), and “I can think of more than one way to achieve my goals” (β=
0.254, R= 0.397, and R2= 0.156).
Because of the calculated F (13.60) more than indexed F (2.80) at the statistical significance level of 0.01, the null
hypothesis is rejected.
6.4 The Relationship between Psycap (Optimism) and QWL
Table 7. The relationship between PsyCap (optimism) and QWL
The Variables of PsyCap (Optimism) Beta R R2
1. When I'm not sure of something, I usually expect the best. 0.05 0.19 0.04
2. I can easily feel relaxed. 0.10 0.33 0.11
0.10 
3. When I feel indignant on the performance of the work, I delay it for
0.20 0.04
another time.
4. I am always optimistic about my future. 0.06 0.31 0.10
5. I expect events to ensure continuity in achieving my goals. 0.09 0.39 0.15
6. I expect pleasant events, rather than unpleasant ones. 0.18 0.38 0.15

According to Table 7, the regression-coefficient between PsyCap (Optimism) and QWL is R= 0.44 and R2= 0.19.
This means that the QWL can be explained by the dimensions of PsyCap (Optimism), for example, “When I feel
indignant on the performance of the work, I delay it for another time” (β= 0.10, R= 0.20, and R2= 0.04), “I expect
pleasant events, rather than unpleasant events” (β= 0.18, R= 0.38, and R2= 0.15), and “I expect events to ensure
continuity in achieving my goals” (β= 0.09, R= 0.39, and R2= 0.15). Thus, the null hypothesis is rejected because
PsyCap (Optimism) and QWL have a statistical relationship at the significance level of 0.01.
6.5 The Relationship between PsyCap (Resilience) and QWL
Table 8. The relationship between PsyCap (resilience) and QWL
The Variables of PsyCap (Resilience) Beta R R2
1. I restore my normal mood quickly after unpleasant events. 0.20  0.18 0.03
2. I enjoy dealing with new and unusual events. 0.11 0.33 0.11
3. I usually succeed to form positive impression about others. 0.10  0.22 0.05
4. I prefer following more than one route to achieve goals. 0.12 0.32 0.11
5. I prefer work that is both new and challenging. 0.52  0.38 0.15
0.19
6. I overcome feelings of anger that I may have toward a particular
0.29 0.15
person.
* P < .05 ** P < .01
According to Table 8, the regression-coefficient between PsyCap (Resilience) and QWL is R= 0.44 and R2= 0.19.
This means that the QWL can be explained by the dimensions of PsyCap (Resilience), for example, “I prefer work
that is both new and challenging” (β= 0.52, R= 0.38, and R2= 0.15), “I restore my normal mood quickly after
unpleasant events” (β= 0.20, R= 0.18, and R2= 0.03), and “I prefer following more than one route to achieve goals”
(β= 0.12, R= 0.32, and R2= 0.11). Therefore, there is enough empirical evidence to reject the null hypothesis.
6.6 The Relationship between PsyCap (Self-Efficacy) and QWL
Table 9. The relationship between PsyCap (self-efficacy) and QWL
The Variables of PsyCap (Self-Efficacy) Beta R R2
1. I enjoy a great deal of self-confidence. 0.22  0.23 0.05
2. I'm in the best mood when I'm actually in a situation of challenge. 0.09 0.22 0.05
3. I face many problems and I can solve them. 0.14 0.21 0.04
4. I prefer self-reliance to find a solution when things go wrong. 0.07 0.32 0.11
5. I think that I have a very good chance to realize my goals in life. 0.15 0.39 0.16
6. I finish my work on time and do not wait until the last minute. 0.17 0.38 0.15
* P < .05
According to Table 9, the regression-coefficient between PsyCap (Self-Efficacy) and QWL is R= 0.45 and R2= 0.21.
This means that the QWL can be explained by the dimensions of PsyCap (Self-Efficacy), for example, “I enjoy a
great deal of self-confidence” (β= 0.22, R= 0.23, and R2= 0.05), “I finish my work on time and do not wait until the
last minute” (β= 0.17, R= 0.38, and R2= 0.15), and “I face many problems and I could solve them” (β= 0.14, R= 0.21,
and R2= 0.04). Thus, the null hypothesis is rejected because PsyCap (Self-Efficacy) and QWL have a statistical
relationship at the significance level of 0.01.

6.7 The Relationship between PsyCap (Hope) and OCB

Table 10. MRA results for PsyCap (hope) and OCB
The Variables of PsyCap (Hope) Beta R R2
1. When I find myself under pressure, I think how to get out of this
0.19 0.32 0.09
predicament.
2. I have a strong will to achieve my goals. 0.04 0.27 0.07
3. I have several alternatives to resolve any problem I may face. 0.34 0.19 0.03
4. I feel that I have achieved great success in my career. 0.29  0.27 0.07
5. I can think of more than one way to achieve my goals. 0.17 0.35 0.12
6. I have achieved most of goals I have persued. 0.09 0.36 0.13
* P < .05 ** P < .01
According to Table 10, the regression-coefficient between PsyCap (Hope) and OCB is R= 0.43 and R2= 0.19.
This means that the OCB can be explained by the dimensions of PsyCap (Hope), for example, “I have several
alternatives to resolve any problem I may face” (β= 0.34, R= 0.19, and R2= 0.03), “I feel that I have achieved great
success in my career” (β= 0.29, R= 0.27, and R2= 0.07), and “I can think of more than one way to achieve my goals”
(β= 0.17, R= 0.35, and R2= 0.12).
Because of the calculated F (11.79) more than indexed F (2.80) at the statistical significance level of 0.01, the null
hypothesis is rejected.
6.8 The Relationship between PsyCap (Optimism) and OCB

Table 11. The relationship between PsyCap (optimism) and OCB
The Variables of PsyCap (Optimism) Beta R R2
1. When I'm not sure of something, I usually expect the best. 0.01 0.13 0.02
2. I can easily feel relaxed. 0.11 0.30 0.09
3. When I feel indignant on the performance of the work, I delay it
0.08 0.17 0.03
for another time.
4. I am always optimistic about my future. 0.04 0.27 0.07
5. I expect events to ensure continuity in achieving my goals. 0.01 0.35 0.12
6. I expect pleasant events, rather than unpleasant ones. 0.28 0.36 0.13
* P < .05 ** P < .01
According to Table 11, the regression-coefficient between PsyCap (Optimism) and OCB is R= 0.40 and R2= 0.16.
This means that the OCB can be explained by the dimensions of PsyCap (Optimism), for example, “I expect pleasant
events, rather than unpleasant events” (β= 0.28, R= 0.36, and R2= 0.13), “I can easily feel relaxed” (β= 0.11, R= 0.30,
and R2= 0.09), and “When I feel indignant on the performance of the work, I delay it for another time” (β= 0.01, R=
0.13, and R2= 0.02).
Thus, the null hypothesis is rejected because PsyCap (Optimism) and OCB have a statistical relationship at the
significance level of 0.01.

6.9 The Relationship between PsyCap (Resilience) and OCB

Table 12. The relationship between PsyCap (resilience) and OCB
The Variables of PsyCap (Resilience) Beta R R2
1. I restore my normal mood quickly after unpleasant events. 0.15 0.12 0.01
2. I enjoy dealing with new and unusual events. 0.08 0.29 0.08
3. I usually succeed to form positive impression about others. 0.08 0.19 0.04
4. I prefer following more than one route to achieve goals. 0.13 0.27 0.07
5. I prefer work that is both new and challenging. 0.46 0.35 0.12
6. I overcome feelings of anger that I may have toward a
0.11 0.29 0.08
particular person.
* P < .05 ** P < .01
According to Table 12, the regression-coefficient between PsyCap (Resilience) and OCB is R= 0.38 and R2= 0.15.
This means that the OCB can be explained by the dimensions of PsyCap (Resilience), for example, “I restore my
normal mood quickly after unpleasant events” (β= 0.15, R= 0.12, and R2= 0.01), and “I prefer work that is both new
and challenging” (β= 0.46, R= 0.35, and R2= 0.12). Therefore, there is enough empirical evidence to reject the null
hypothesis.
6.10 The Relationship between PsyCap (Self-Efficacy) and OCB
Table 13. The relationship between PsyCap (self-efficacy) and OCB
The Variables of PsyCap (Self-Efficacy) Beta R R2
1. I enjoy a great deal of self-confidence. 0.19 0.22 0.05
2. I'm in the best mood when I'm actually in a situation of challenge. 0.08 0.20 0.04
3. I face many problems and I can solve them. 0.13 0.18 0.03
4. I prefer self-reliance to find a solution when things go wrong. 0.05 0.27 0.07
5. I think that I have a very good chance to realize my goals in life. 0.05 0.35 0.12
6. I finish my work on time and do not wait until the last minute. 0.26 0.36 0.13
* P < .05 ** P < .01
According to Table 13, the regression-coefficient between PsyCap (Self-Efficacy) and OCB is R= 0.41 and R2= 0.17.
This means that the OCB can be explained by the dimensions of PsyCap (Self-Efficacy), for example, “I finish my
work on time and do not wait until the last minute” (β= 0.26, R= 0.36, and R2= 0.13), “I enjoy a great deal of
self-confidence” (β= 0.19, R= 0.22, and R2= 0.05), and “I face many problems and I could solve them” (β= 0.13, R=
0.18, and R2= 0.03).
Thus, the null hypothesis is rejected because PsyCap (Self-Efficacy) and OCB have a statistical relationship at the
significance level of 0.01.
7. Research Finding
The findings support the view that the dimensions of PsyCap (hope, optimism, resilience, and self-efficacy) were
positively related with QWL at Sadat City University. More PsyCap is more effective in achieving QWL. High
PsyCap will be more likely to achieve high OCB.

The high PsyCap would lead to better group communication, more satisfaction of the group members, QWL and
more OCB at Sadat City University.
The results of this research refer to a direct exponential influence relationship between the PsyCap and QWL among
employees at Sadat City University, as the low level of PsyCap reduced their agreement with the Sadat City
University.
The results support the view that PsyCap is one of constructs contributing to the formation and increasing of QWL.
The results are consistent with research conducted by Mortazavi, et al., 2012.
Several meta analytic studies have found a negative relationship between PsyCap and OCB. The findings reveal that
PsyCap among employees positively influences OCB.
Our findings support the view that PsyCap is a significant predictor of OCB of executives. The results are consistent
with research conducted by Murthy, 2014.
8. Recommendation
1. The need to focus on the four dimensions of PsyCap and use them to increase the QWL and OCB among
employees.
 Hope, it is found out, affects the attitudes of employees and then influences the QWL they have, where high
levels of hope make employees contribute to the increase of OCB.
 As for resilience, we find out that an individual's ability to adapt and be flexible may affect the QWL.
Individuals who have a high capacity and flexibility to cope with stressful circumstances might have higher
feelings of OCB.
 As for optimism, we find that the level of an individual affects the level of his ability to deal with adverse
events in the work environment and then controls the feelings of OCB towards the organization.
 As for the last dimension of self-efficacy, we find that the decline in self-efficacy makes an individual
contribute significantly to the increase of OCB towards the organization. Also, we find that the higher
self-efficacy is, the higher of QWL.
2. The need to train managers on how to develop the four dimensions of PsyCap through training courses targeting
the spread of the spirit of hope and optimism among managers, and equipping them with skills to deal with
different situations in order to ensure the achievement of positive feedback in the work environment.
3. Sadat City University managers and leaders must attend development of the PsyCap as competitive advantage that
can actualize very important goals such as reinforcement of meaning in work, OCB, commitment, and
performance.
4. Managing and increasing the level of PsyCap in Sadat City University require deliberate interventions. For
example, organizations can increase the level of PsyCap by using short training sessions of one to three hour micro
interventions in which they measure PsyCap before and after the interventions.
5. Sadat City University can increase PsyCap through Strengths, Opportunities, Aspirations and Results (SOAR) a
strategic thinking framework that integrates whole system and strengths-based perspectives to create a strategic
transformation process with a focus on creating sustainable value to achieve desired performance results.
9. Limitations and Future Research
This research focuses on the components of psychological factors of people, that is, PsyCap. Incorporating trait-like
components such as psychological hardiness, personality of personnel will provide further insights into the role of
psychological aspects of people in their effort for promoting QWL. This is also an appropriate area for future
research. There is a need to accomplish subsequent research in other industries, similar industries or other treatment
invigorate our hypothesizes. Confirming these results in other industrial settings to reinforce them.
10. Conclusion
One of the most important factors that play a positive role is PsyCap of human resource of an organization. Then, in
this research, we try to test this assumption until help managers to invest on PsyCap of their organization and
improve QWL and OCB.
Mirkamali & Narenji Thani (2011) identify the factors related to faculty QWL which are of great importance,
because they have positive and significant relation with job satisfaction. Therefore, we can improve job satisfaction
by changing and manipulating QWL factors, and thus move toward the development of the organization.

Woolf (2004) suggests few ways to help people create QWL. They are as follows:
1. An individual must create a personal vision by articulating something to be accomplished in career. Such vision
will set a target of where an individual wants to be in life and must be prepared to make adjustment at any time.
Employees need to be flexible and ready as life’s journey is all about twists and turns. It keeps employees focus
and strives towards their vision and when they pull off, it will be a meaningful accomplishment.
2. An individual must not perplex real identity with role played at work. Let the vision manifest who each
individual really. The role played at work is intended for the work game. It does not replicate true identity. To
guarantee job satisfaction, employees must let their vision lead them.
3. Individuals must develop healthy personal habits by taking care of their body, mind and spirit to withstand all
those challenges and pressures they face at work. Eating habits, sleeping routines and exercising will help
employees live a healthy life style and resilient enough to face anything coming. It helps employees to be
positive and accept almost everything in a positive way.
PsyCap can create a situation that promotes QWL. These contributions can be provided based on this point. Having a
favorite level of PsyCap in totality and in framework of its dimensions (hope, optimism, resiliency and self-efficacy)
can provide situation that personnel can provide needs of survival, belonging and knowledge (QWL) and improve
their performance in workplace. For example, a hopeful (as a element of PsyCap) employee can create a career
vision of where he/she wants to be in life. A resilient person withstands all those challenges and pressures at work.
Research shows that PsyCap is a more state-like factor than personality traits, that is, it is more open to be developed
and managed (Luthans et al. 2008). Therefore, recruiting employees with high levels of PsyCap and establishing
appropriate human resource policies and practice to further develop employees’ PsyCap (hope, optimism, resiliency
and self-efficacy) are desirable for University.
University could enhance the performance of its employees, leading to an increase in university performance. This
also improves employees’ QWL, which is a critical factor for productivity (Wright & Cropanzano 2004).
Mirkamali & Narenji Thani (2011) discuss identifying the factors related to faculty QWL. This is of great importance
because it has positive and significant relation with JS. Therefore, we can improve JS by changing and manipulating
QWL factors, and thus move toward the development of the organization.
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The Implementation of EMV Chip Card Technology to Improve Cyber

Security Accelerates in the U.S. Following Target Corporation's Data
Breach
Dahli Gray1 & Jessica Ladig2
1
Keiser University, Ft. Lauderdale, Florida, USA
2
Premier Baths, Inc., Port Orange, Florida, USA
Correspondence: Dahli Gray, DBA, CPA, CMA, CFE, CGMA, Keiser University, 1900 W. Commercial Blvd., Ft.
Lauderdale, Florida, 33309, USA. Tel: 443-465-4559. E-mail: DGray@KeiserUniversity.edu
Received: February 18, 2015 Accepted: February 27, 2015 Online Published: March 2, 2015
Abstract
This study explored the adoption of the Europay, Mastercard, and Visa (EMV) standard for authenticating debit and
credit card transactions among corporations in the United States, in response to high profile cybercrimes. According
to the research, the Target Corporation data breach in 2013 appears to be the event that motivated the technological
change. Target Corporation was the victim of cybercrime through a chain of events, several U.S. organizations have
suffered severe financial losses due to data breaches, and U.S. technology is vulnerable regarding debit and credit
card transaction processing. Further, U.S. organizations other than financial institutions (e.g., banks) do not typically
bear the financial burden for fraudulent transactions, and hesitate to invest in costly new security measures, such as
machines that accommodate EMV chip cards, which are debit and credit cards with embedded microchips for added
security.
Keywords: data breach, internal controls, target, EMV chip cards
1. Introduction
In February 2013, U.S. President Obama signed an executive order to establish a national framework to strengthen
cybersecurity (USDHS 2013). However, this did not prevent massive data breaches such as the one experienced by
the Target Corporation. As anticipated by President Obama, most organizations were slow to adopt cybersecurity
improvements because they did not perceive benefits to outweigh costs (USDHS 2013, 4). As noted by
PricewaterhouseCoopers, “Claims by businesses that they are unaware of cybercrime risks and the need to invest in
updated cybersecurity safeguards have become increasingly unconvincing” (PricewaterhouseCoopers, 2014, 5).
The national framework published in February 2014 provided a set of “standards and best practices to help
organizations manage cybersecurity risks” (NIST 2014). Also in February 2014, Target announced it would upgrade
its proprietary credit cards (“REDcard”) and debit and credit card readers in each U.S. store with EMV chip card
technology by early 2015, more than six months ahead of previous plans. “The accelerated timing is part of a $100
million effort to put in place chip-enabled technology in all of Target’s nearly 1,800 U.S. stores” (Target 2014b).
An increasing number of cybercrimes are committed in America. A major data breach happened at Target toward the
end of 2013. The problem could be that the U.S. had not changed to embedded chip debit and credit cards. Most
other countries have already adopted this new technology because it allegedly reduces fraud activity. The numerous
attacks in the U.S. over a short period suggest the country's payment processing technology is vulnerable and weak.
Advanced technology has proven to reduce the risk of a breach; thus, the U.S. should increase its efforts to provide a
secure payment processing structure. Otherwise, consumers may stop using debit and credit cards if they their
personal data continue to be at risk.
The Target breach affected more than 70 million customers (Clark, 2014). Information technology (IT) personnel
missed opportunities to alert Target executives about data protection issues or company executives ignored guidance
received. This study examines the Target data breach and shows how accounting-focused legislation (e.g., the

Sarbanes-Oxley Act of 2002) and internal controls investment and development cannot compensate for a failure to
invest in technological advancements, such as EMV technology──debit and credit cards with embedded microchips
and machines that read the embedded chip cards.
This study suggests Target’s IT professionals missed opportunities to recommend improvements (e.g., changing to
EMV chip cards) that would have helped to ensure suitable data protection. The study presents evidence that became
available after the Target data breach that suggests resources (e.g., time and funds) invested in building customer
confidence did not replace the need to invest in systems such as EMV chip card readers. In July 2014, Wal-Mart and
Sam’s Club were the first retailers in the U.S. to adopt EMV chip card readers. The following sections include a
literature review, research analysis, conclusions, and research limitations and proposals for future research.
2.1 Introduction
Security breaches have increased over the past decade, particularly in the years 2013 and 2014. These breaches affect
millions of customers worldwide and cost billions of dollars. Outdated technology and security measures are partly
responsible, including the Payment Card Industry Data Security Standard (PCI DSS), which supports using magnetic
strip debit and credit cards instead of the latest technology (EMV chip cards).
2.2 PCI DSS
“Data breaches at Target and Neiman Marcus have once again shown that compliance with the Payment Card
Industry Data Security Standard (PCI DSS) is no guarantee against an intrusion” (Vijavan, 2014). “The PCI DSS
requirements for merchants, vendors, and security consulting companies … [were] created to mitigate data breaches
and prevent payment cardholder data fraud” (PCI, 2014). However, data breaches have multiplied. It is possible that
without the PCI DSS requirements, data breaches would have been even more numerous. It would be difficult to test
this; however, events speak for themselves. An example is the data breach experienced by Home Depot in September
2014, which was one of the biggest data breaches in retailing history affecting more than 60 million customers
(Perlroth, 2014). Stolen customer data appeared on the “black market” and the data could potentially cause $3 billion
in illegal purchases (Creswell & Perlroth, 2014).
2.3 Target Corporation
Harris (2014) examines whether Target will change to EMV chip cards, whether Target changed security measures
after prior breaches at other companies, and Target’s reaction in the aftermath of its data breach. The article focuses
on how Target plans to improve its payment processing system technology. It reviews Target's plan of action by
examining a letter written by the retailer to its shareholders and filed with the Securities and Exchange Commission.
It hypothesizes Target will overcome its data breach by improving its security systems and possibly changing to
EMV chip card technology.
Target has doubled staff in its IT security department, spent millions of dollars on security improvements, and is
trying to recover from the security breach by moving toward a more secure payment processing system, such as
using EMV chip cards for the company’s proprietary credit card, the REDcard. Target reported it made security
improvements to its payment processing system prior to the 2013 breach to address cybercrime activity, and it
continues to look for better solutions to protect confidential information and payment processing systems (Harris
2014). Such research findings confirm updating technology and improving security measures will reduce the risk of a
future data breach. The letter from Target to its shareholders has limited information on what actions the retailer is
taking after the resignations of the chief executive officer and the chief information officer. The replacements for
these two positions will have a major effect on how Target will move forward.
Following the data breach, the press examined Target, questioning how Target handled the aftermath of the data
breach. Significant events that took place from the day the data breach occurred until the end of February 2014
indicate Target is in a vulnerable state and is not coping with the data breach aftermath well (Clark, 2014). Clark’s
(2014) work indicates Target could have handled the situation differently, and points out Target and the investigators
of the data breach announced different conclusions. Other concerns relate to the hundreds of layoffs, Target’s efforts
to boost workplace morale, and the fact that customers would have preferred to hear about the data breach from the
company itself. Clark (2014) outlines the significant events that occurred over the five-month period ending
February 2014, but does not elaborate further, leaving unresolved questions including why Target did not initiate
installation of technology to accommodate both magnetic strip cards and EMV chip cards.

2.4 Fraud Reduction

Groenfeldt (2014) examines whether changing to EMV chip cards in the U.S. would be beneficial, whether changing
to EMV chip cards would actually reduce fraud, and discusses the challenges faced by Americans if the U.S. does
not adopt EMV chip cards. The article investigates transactions in the U.S. conducted with EMV chip cards
(Groenfeldt 2014). Adopting EMV chip cards without installing appropriate technology to read the chip cards does
nothing to reduce fraud. EMV chip cards have both an embedded microchip and a magnetic strip. Machines in the
U.S. currently only read the magnetic strip and do not process the embedded microchip, which means chip cards
used on current machines in the U.S. currently provide no additional protection against fraud. Other countries already
embrace EMV chip card technology, but the U.S. has not yet installed appropriate equipment to read the embedded
chips (Groenfeldt 2014). The continued increase in cybercrime suggests current technology used in the U.S. is
vulnerable and needs updating to reduce fraud (Chandler, 2014).
2.5 Credit Unions and Costs
The next issue to examine is the damage the Target data breach has caused──how the breach affected the credit
unions that issued the compromised cards, and the estimated total cost of Target’s data breach (Morrison, 2014). A
survey conducted by the Credit Union National Association (CUNA) estimated the costs of reissuing the
compromised Target debit and credit cards. The survey covered 1,112 credit unions and detailed the number of cards
impacted, the number needed to be re-issued, and the cost of reissuance for each card. Morrison (2014) suggested
Target's data breach had a significant effect on credit unions, causing millions of dollars in costs. CUNA's survey
also shows credit unions have experienced overextended call center traffic as a direct result of the breach, and some
credit unions will either not reissue new cards or are being selective about which cards will be reissued (Morrison
2014). In this context, the credit unions survey has not shown how non-reissuance of cards affects customers
(Morrison 2014).
2.6 Was Target Responsible for the Data Breach?
Yadron, Ziobro, and Barret (2014) examined how Target’s security system was hacked, and whether Target
conducted any internal audits of its information systems. Target seemed to have known about its system weaknesses
prior to the data breach (Yadron et al., 2014). The retailer received a favorable audit report regarding its information
systems just months before the breach occurred; however, according to Yadron et al. (2014), investigators found
other vendors also connected to the remote server used by Target’s payment processes. Hackers used one of these
other vendor’s connections to install malware. Then the hackers navigated through the system network to gain access
to Target's payment terminals (Yadron et al. 2014). Target must have been aware of security vulnerabilities within its
system because an audit would have identified weak applications and processes (Yadron et al. 2014). Management
should have acted on any known information system vulnerabilities.
2.7 Small and Mid-Sized Entities
Large corporations, such as Target, may be more desirable to hack than small and mid-sized organizations (SME)
resulting in two concerns (Miller, 2014): First, are SMEs as vulnerable to attacks as large corporations? Second, are
SMEs possible gateways to gain access to large corporations? The answer to both questions is yes. In the case of
Target, hackers used a small vendor to gain access to the corporation's system. Hackers are able to use a connection
between an SME and a large organization to achieve a data breach. Further, large corporations generally tend to
experience more security breaches than smaller organizations; however, this does not mean SMEs are not equally
susceptible. Miller (2014) provides useful insights about how a data breach can affect numerous organizations.
2.8 Security Awareness
Boose (2014) considers two questions related to security awareness. First, did the data breach at Target affect other
organizations' information security budgets? Second, did the Target data breach have an impact on executives’
security awareness? A survey addressed these two questions. Attendees at an RSA information security conference
completed a survey that compared Target’s security breach with Edward Snowden’s leak of highly classified
documents. The survey results suggest Target could have prevented its data breach by observing the challenges faced
by other organizations, and improving system measures and controls accordingly (Boose, 2014). Further, the survey
identified concerns organizations have following a security breach. Organizations can learn from the experiences of
other hacked organizations (e.g., Neiman Marcus, Sony, and Michaels). Thus, the experience of one organization
could influence the preventive measures taken by another.

2.9 Embedded Chip Technology

Europay, Mastercard, and Visa formed a joint venture, EMVCo LLC, in 1999 to facilitate global acceptance of
secure payment transactions──the inter-operation of integrated circuit cards and compatible point of sale and
automated teller machines (EMVCo, 2014). Today EMVCo is comprised of six equal members: American Express,
China UnionPay, Discover, Japan Credit Bureau (JCB), Mastercard, and Visa──Europay merged with Mastercard in
2002 (EMVCo, 2014). The company manages the EMV global standard for authenticating debit and credit card
transactions worldwide, which includes using debit and credit cards embedded with microchips and machines that
read the cards. Dozens of banks, merchants, processors, and vendors support the standard globally (EMVCo, 2014).
Rutledge (2014) examines the process a consumer can expect when using an EMV chip card, and suggests debit and
credit cards with embedded microchip technology are safer and more secure than magnetic strip cards. Rutledge
(2014) demonstrates how the new technology is used and describes how card issuers have the option to choose
whether the cards require a personal identification number (PIN) or a signature. The recommendation is to use a PIN
in combination with a microchip for added authentication. The microchip encryption changes with each transaction,
thereby making it more difficult for hackers to retrieve information (Rutledge 2014). Consequently, the
chip-and-PIN system allows card usage without the dissemination of information to others. However, U.S.
consumers might raise questions relative to its usefulness, timeliness, and completeness. In contrast, consumers and
merchants have used magnetic strip cards for decades and know exactly how it operates. However, another
consideration is that outside the U.S. (especially in Europe), retail payment processing frequently uses EMV
technology. For example, U.S. travelers abroad frequently experience automated payment machines in airports and
train stations, etc. that do not accommodate magnetic strip debit and credit cards. Therefore, upgrading to the global
EMV technology standard would aid U.S. travelers abroad as well.
2.10 Biometrics
Finally, a biometric system could be an alternative to chip-and-PIN cards. Bidgoli (2012) questions whether
biometric measures can be used for debit and credit cards, shows how biometrics are applied in real case scenarios,
and recommends organizations incorporate these security measures to help reduce risk. For example, hackers can
steal PIN numbers, but biometrics requires a fingerprint or palm print, which makes fraud difficult; thieves would not
possess the cardholder biometrics required to use the debit or credit card (if stolen). The results of Bidgoli's (2012)
study are inconclusive. Biometrics provides a unique identifier; however, there are concerns about using fingerprints.
First, scanning fingerprints can be difficult and some individuals may refuse (for a variety of reasons) to provide
biometrics. In addition, biometric measures would not resolve fraud activity associated with card transactions where
the purchaser is not present (e.g., online transactions).
Payment-processing procedure in the U.S. needs to improve. The Target data breach is a good example of a
significant security issue related to the use of magnetic strip cards. EMV chip card technology is costly to implement
but the results confirm the process is more secure. The data breach at Target affected other organizations.
Understanding how Target's data breach occurred, and how the company handled the aftermath, could make
organizations stronger and wiser. Further, new technology in general can improve the payment process system and
reduce the risk of fraud. This study suggests there are measures a country can take to reduce the amount of fraud that
occurs. Upgrading to EMV chip card technology should significantly reduce the amount of fraud in the U.S.
Nonetheless, further investigation is needed──why was Target a data breach victim, and why, as of July 2014, are
Wal-Mart and its subsidiary Sam’s Club the only large U.S. organizations to adopt EMV chip card technology?
3. Research Analysis
The research analysis section of this study addresses two concerns: why Target was a victim of a data breach, and
why, as of July 2014, Wal-Mart and its subsidiary Sam’s Club are the only major U.S. organizations to adopt EMV
chip card technology. With regard to why Target was a data breach victim, one could first question why the retailer
did not implement change after numerous security breaches had happened to other companies during the prior
decade. A change in technology could have prevented the type of breach Target experienced. Global Payments, Inc.,
a company that provides electronic processing services to organizations, had already had a similar breach. An
estimated 1.5 million U.S. debit and credit cards were exposed and it cost the company almost $100 million (Kitten
2013), despite the fact that the processing systems at Global Payments, Inc. underwent a regular compliance test and
had passed each time. Thus, there is a growing concern that compliance standards are outdated in the U.S., whereas
other countries can confirm the success of their compliance standards.

3.1 The Security Breach at Sony

Another breach prior to Target's was at Sony, a major electronics retailer that provides a digital media service called
the PlayStation Network. The breach exposed the confidential information of more than “100 million customers and
resulted in a 23-day closure of the PlayStation Network” (Goodin 2011, 1). Such a closure would significantly affect
any company’s sales and profits. Hackers alleged Sony’s security measures were weak and easily accessible. Further,
these hackers, known as Lulz Security, stated the data Sony stored was not encrypted (Goodin 2011); in fact, it was
stored as plain text, which is easy to steal with little effort (Goodin 2011, 1). One could wonder why these
forewarnings did not result in changes that could have prevented future data breaches, such as the one at Target.
3.2 The Breach at Target
Change in a company can be good as long as it benefits the overall organization. Thus, an organization should ensure
each decision-making unit works toward a common goal, such as preventing a security breach. Further, executives
observe activities within a company and make decisions based on facts and relevance. The IT security staff at Target
warned management about suspicious activity. Management decided to ignore the activity, thereby causing Target to
experience one of the largest security breaches of all time (Harris 2014).
3.2.1 The Changes Introduced at Target
Since the data breach, Target has made significant changes. The number of IT staff doubled and the company’s
entire IT system was upgraded (Harris 2014). In addition, two highly ranked executives resigned. “Six months before
the attack, Target began installing a $1.6 million malware detection tool made by the computer security firm,
FireEye, whose customers also include the CIA and the Pentagon” (Riley, Elgin, Lawrence, & Matlack, 2014). The
detection software at Target spotted the intrusion and immediately notified the corporate office. However, managers
did not respond to the possible threat. Thus, in theory, Target could have prevented the data breach from happening.
Riley et al. (2014) comment that Target is possibly attempting to mislead when it says it did not know of the data
breach until the U.S. Department of Justice notified the retailer in mid-December. The security software Target had
installed was able to detect the malware on both November 30, 2013 and December 2, 2013 (Riley et al. 2014).
3.3 Why Wal-Mart Is the Only Major U.S. Retailer to Adopt EMV Chip Card Technology
The second topic explored in this section is why Wal-Mart is the only major retailer in the U.S. to adopt EMV chip
card technology; the company also began issuing new cards in July 2014. Retailers are concerned about
implementing EMV chip card technology because banks are not convinced this is the best move (Chandler 2014).
New technology would require new equipment and the issuance of new cards. This is a significant cost to both
retailers and banks. The latter would rather absorb the costs of fraud than invest a significant amount of money in
new technology (Chandler 2014). In addition, adopting EMV chip cards could potentially cause a shift in fraud
liability from card issuers to merchants (Weisbaum, 2014). Consequently, retailers in the U.S. did not start installing
EMV chip card point of sale terminals until 2014.
3.3.1 Concerns about Fraud Reduction
There have been some concerns in the U.S. about whether EMV chip cards will actually reduce fraud. Miller (2014)
points out EMV chip cards will make physical retailers more secure but online merchants will not benefit from the
new technology that reads the chip cards. Sam’s Club was the first retailer to implement technology to read EMV
chip cards in the U.S. (Weisbaum, 2014). Other retailers are not far behind. Target announced in its 2013 annual
report it “plans an investment of approximately $100 million to equip our proprietary REDcards and all of our U.S.
store card readers with chip-enabled smart-card technology by the first quarter of 2015” (Target 2014a, 23). “Visa,
MasterCard, American Express, and Discover want the U.S. converted to chip-based credit cards by October 2015.
After that date, they say, fraud losses will shift to the retailer if they don't have point-of-sale payment terminals that
read smart cards” (Weisbaum, 2014). Considering the amount of fraud the U.S. has experienced in the past year,
retailers should be willing to update to the latest technology.
3.3.2 Who Bears the Financial Burden of Fraudulent Transactions?
In the U.S., banks are the main organizations that issue debit and credit cards. They typically bear the financial
burden of fraudulent transactions and enjoy protection and support from the federal government. There is also no
established method to write off losses, and card users and retail merchants where breaches occur (e.g., Target) are
not held responsible for the costs. Because financial intermediaries (banks) have assumed most of the financial
burden, this resulted in merchants (e.g., Target, Michaels, and Sony) lacking motivation to invest funds in EMV chip
card technology. However, the U.S. is moving toward making merchants at least partly responsible for the financial

losses resulting from fraud. This helps explain why Wal-Mart and its subsidiary Sam’s Club changed to EMV chip
card technology in July 2014.
3.3.3 The Role of Accountants and IT Professionals
Accountants and IT professionals also have a significant role to play; they help design, implement, and maintain
internal control systems and procedures to assure data security, which should help prevent, detect, and resolve data
breaches, fraud, and errors. From the legislative perspective, the Sarbanes-Oxley Act of 2002 helps protect data. It
mandates the improvement of internal control systems and procedures that fail to protect organizations and
individuals from data breaches.
3.3.4 Organizations' Failure to Report Small Data Breaches and Fraud
Organizations tend not to report small data breaches or fraud occurrences. Such reports can prove embarrassing to
organizations and reduce consumer confidence because data breaches result in the loss of real assets. Target’s
approach to addressing consumer confidence issues has been to advertise free credit reporting services. Such an
attempt to build consumer confidence without making tangible technological changes reflects the idea that improving
consumer attitudes instead of improving technology resolves problems. However, this study suggests the answer to
resolving data breach problems in the U.S. is to invest in new technology.
3.4 Addressing the Shift in Liability
“Major credit card issuers have published detailed schedules [called EMV Key Dates Chart-Card Networks] about
the upcoming shift in liability” (Kossman, 2014, 1). They include major U.S. credit card merchants including Visa,
MasterCard, American Express, and Discover that want to make the transition to EMV chip card technology as
smooth as possible. Each key date includes an explanation. For instance, fuel dispensers must comply with EMV
chip card technology by October 2017, otherwise liability for fraudulent transactions at fuel dispensers will shift
from the card issuer to the merchant (VeriFone Systems, Inc. 2013).
3.5 Future Adoption of EMV Chip Card Technology
Together, the research results suggest upgrading to EMV chip card technology should reduce fraud activity in the
U.S. “EMV technology will not prevent data breaches from occurring, but it will make it much harder for criminals
to successfully profit from what they steal” (Kossman, 2014, 1). Hesitation in the U.S. to change to EMV chip card
technology may have been partly to blame for the significant increase in cybercrime over the past decade. Most
countries have moved to EMV chip card technology, a situation that makes the U.S. an easy target. However, the U.S.
is now heading toward adopting EMV chip card technology, starting with Wal-Mart and Sam’s Club.
4. Conclusion
The purpose of this study was to determine the status of the U.S. after the Target Corporation data breach in 2013,
relative to upgrading to EMV chip card technology. This technology can help to reduce data breaches, such as the
one at Target. The study found that despite the cost of changing to EMV chip card technology, the U.S. is moving in
that direction to help prevent future data breaches. EMV technology uses embedded microchips in debit and credit
cards to distinguish transactions using encryption codes. Target plans to change to the new technology in 2015.
Wal-Mart and Sam’s Club made the change 2014. This study suggests many further technological changes will occur
in the year 2015, and recommends relevant professionals stay well informed about how the new technology will
affect consumers.
There are some limitations to the study, including the inability to answer some questions left unresolved because of
ongoing investigations or upcoming changes. First, is there a connection between the Target and Neiman Marcus
data breaches? Research suggests these breaches are similar. Second, how does Target plan to move forward? In
Target’s 2013 annual report (Target 2014a), words such as “suffer” and phrases such as “if efforts are unsuccessful”
are used in the context of descriptions about Target’s future. This suggests Target could be unsure about how to
move forward. For example, Target suggests it may need to offer more promotions and incentives to increase sales
and establish a better relationship with its customers (Target 2014a, 10). Finally, it is reasonable to ask whether EMV
chip cards will completely replace magnetic strip cards. Many countries have already changed to EMV chip card
technology. Future research should explore the aforementioned topics regarding Target’s future.
In conclusion, Target was a victim of a security breach because the U.S. was vulnerable to attack; the U.S. hesitated
to change to EMV chip card technology because of the high cost of investment required. However, the U.S. is finally
taking action by requiring merchants to change to EMV chip card technology by the end of 2015. If an organization
does not change by the deadline, it will be liable for financial loss due to fraudulent activity. However, EMV chip

card technology should bring value to the U.S. because it has already done so in other countries. With the
introduction of such technology, future research could test the theory that EMV chip card technology can actually
reduce fraud in the U.S. As Kim and Vasarhelyi (2012) recommend, based on their research findings, a fraud detection
model “using fraud/anomaly indicators to detect potential fraud and/or errors on real data” could also be beneficial for
the efficient identification of cyber fraud.
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The Role of Heuristic Methods as a Decision-Making Tool in Aggregate

Production Planning
Mahmood B. Ridha1
1
Department of Business Administration, Faculty of Economic and Administrative Sciences, Al-Zaytoonah
University, Amman, Jordan
Correspondence: Dr. Mahmood B. Ridha, Department of Business Administration, Faculty of Economic and
Administrative Sciences, Al-Zaytoonah University, Amman 11733, P.O. Box 130, Jordan. E-mail:
m.alobidi@zuj.edu.jo
Received: January 31, 2015 Accepted: February 27, 2015 Online Published: March 2, 2015
Abstract
This study aims to explain the role of heuristic methods in the decision making process and as a tool for knowledge
capture. As a result, we conclude that heuristic methods give better support to the decision maker than mathematical
models in many cases especially when time and cost are critical factors in decision making.
Keywords: heuristic method, production planning, decision making, dynamic programming
1. Introduction
Many studies indicate that Arab managers do not utilize quantitative methods in decision making (Ahmed, 1998,
Alshaikh, 1993, Alsameraai, 1999, Alsameraai, 2003, Yusef, 1991). The result is poor quality of decisions and low
efficiency and less effective performance of Arab organizations. The Arab managers used traditional methods like
(personal judgment, trial by error, past experience… etc.). This study aims to familiarize Arab managers with
heuristic methods as simple quantitative methods but more effective and efficient than traditional methods and more
user -friendly in comparison with mathematical models.
2. Production Planning
Production planning is one of the classical problems in Operations Research and has received considerable attention
from both academia and industry during the last two decades (Gaither, 2002, Heizer, 2004, Krajewski, 2002, Naylor,
2002). Production planning has received much attention in the literature. Many different approaches to the problem
have been suggested. These can be categorized into three main areas:
 Optimal approach,
 Heuristic rules,
 Artificial intelligence application.
In this research we deal with the heuristic approach to determine production rates. We will focus on aggregate plan
that specifies how the company will work for the next periods or so toward those goals within existing equipment
and facility capacity constraints.
Among the managerial activities, production planning is probably the most complex (Gaither, 2002, Heizer, 2004,
Krajewski, 2002, Naylor, 2002). The complexity of the planning activity stems from two main factors. The first is
turbulence of the environment that introduces frequent disturbances as a result of demand fluctuation, changes in
commercial priorities, raw materials availability and production capabilities. Therefore production planning is a
highly dynamic activity and these leads to a tendency for a short term view. Secondly, there are numerous factors and
objectives that have to be considered, the most important of which can be grouped as follows:
 To maintain a smooth and stable production pattern and to keep slack in order to be able to accommodate
alterations imposed by disturbances, due to demand change.
 To maintain appropriate end products inventory levels so that inventory outages and delays in meeting
customer’s orders are avoided.

 To keep costs as low as possible by reducing inventory and through full plant utilization. The translation of
these objectives into operational forms within the planning activity is very difficult.
From the above mentioned factors, we can say that production planning involves many complex problems where the
decision maker is confronted with conflicting objectives under the presence of scarce resources. The particular
problem the production manager faces in production planning is the determination of how much to produce and
when to produce.
This problem is particularly difficult in production to order where demand for the products is highly uncertain and
there is no possibility for having substantial stocks on hand. Therefore it is necessary to assume that most production
to order plants can only plan from customers order backlogs. The basic objective of production planning is meeting
demand and minimizing the total cost of decisions over a finite number of periods in the future. The number of
periods can be four weeks, a month or a quarter but more commonly it ranges from six months to a year.
3. Principal Notions
The following are notions used in this study:
 t = discrete time (t ε N);
 Dt = customers' orders in period t;
 PRt = production rate in period t;
 PCt = maximum production capacity
 SCt = maximum storage capacity in
 S = inventory level;
 CSt = costs of set up in period t ;
 CPt = variable production unit costs;
 CHt = holding unit costs in period t;
 TCt = total cost in period t;
 i = counter for time.
Out of many problems that manufacturing firms face in production planning, we have chosen the following features
of production planning problem that form the basis for all experiments:
 Planning horizon includes (0 < t < 6)
 Dt for (0 < t < 6) are known,
 Initially, all resources for production are available for (0 < t < 6),
 PCt, SCt are available and fixed for (0 < t < 6),
 SCt > PCt for (0 < t < 6),
 S0 at the beginning of the first period should be zero,
 St at the end of the last period should be zero,
 CPt, CSt, CHt are known for (0 < t < 6),
 CHt < CSt for (0 < t < 6),
 Dt for (0 < t < 6) should be produced and backlog in each period should be zero,
 Dt   PCt
6 6
 t 1 t 1
 Released Dt for (0 < t < 6) should be shipment in the last of its period,
 TCt = CSt + CPt (PRt) + CHt (St + PRt - Dt) for (0 < t < 6).
 One production run should be scheduled in each period.
According to the above mentioned assumptions, the problem of this research is "How the production manager can
meet all customers' orders over six periods without delay, by using fixed resources, and keeping total costs at a

minimum". The variables of the problem are "customers' orders, production level and inventory level. And the
parameters are production and storage capacity, setup cost, variable production cost and holding unit cost.
4. The Concept and Characteristics of Heuristic Methods
One of the quantitative methods is called a heuristic, which is used to solve a given problem by searching for
reasonable and quick answers. A heuristic can be defined as any means, particularly a rule, principle or procedure
intended to facilitate problem solving (Anderson, 2003, Goodwin, 2004, Klein, 1991, Leong, 1990, Smith, 1990). In
other words, taken to its logical limit a heuristic is a rule of thumb. The heuristic solution process relies on intuitive
or empirical rules, which, when applied to the problem, provide one or more solutions.
The heuristic approach has become increasingly popular in recent years as a fast method of obtaining good solution
but not necessarily the optimal ones. It has been noted that managers generally look for adequate rather than optimal
solution to their problems (Guignar, 1992, Hillier, 1990, Lawrence, 2002, Render, 2003, Taylor, 2007, Wästlund,
2015).
It is now recognized that one important way to improve management decision making without finding optimal
solution is using the heuristic method (Lawrence, 2002, Heizer, 2004). It is widely used in management decision
making to combat problems of size because, even with computers it is rarely possible to conduct an exhaustive
evaluation of all possibilities, as a means of discovering the good or optimal solution (Anderson, 2003, Smith, 1990,
Render, 2003, Taylor, 2007, Teale, 2003, Turban, 1990, Wisniewski, 2006). It may also be applied when the time or /
and cost required to find optimal solution for the problem is likely to be high (Goodwin, 2004, Alvarado-Valencia,
Barrero, 2014). One of the areas in which a heuristic provides either the only feasible or the best method of analysis
is production planning. Many heuristic rules are developed by researchers in this field. In production planning, the
basic idea of any heuristic is to analyze the structure of major decisions which determine how customer’s orders are
transformed into production plans. If we can represent this structure with fair precision by few a simple rules, we
may be able to get a good representation. This representation may be adequate for planning purpose. However,
unlike many quantitative techniques, the heuristic gives the production manager a significant amount of freedom to
compose production plans that take into account features that he believes are important.
Since the methodology pursued in finding solutions is not difficult to understand it is likely to be employed.
Moreover, since the heuristic method does not require special mathematical skills, it is widely used in solving
practical decision making problems (Hauser, 2014, Hu, Z., Wang, 2014, Pendharkar, ,2015).
The general characteristics of the heuristic can be understood from close scrutiny of the strategies of building any
heuristic. The following four strategies are involved in building a heuristic:
 The construction strategy,
 The improvement strategy,
 The component strategy,
 The learning strategy.
The input for method based on this strategy is nothing more than the data defining a specific instance of the problem.
A solution is built up one component at a time. On other hand, the input for the second strategy is a solution to the
problem. This solution is then progressively improved by the application of a series of modification. The component
analysis strategy is used when the problems are so large or/and so complicated that the only practical approach is to
break them up into manageable portions. Some times these portions are then dealt with independently by heuristics
or even algorithms. And the solutions for portions are then married to form master plan. The fourth strategy used a
tree – search diagram to chart their progress. That is, the different options which appear at various stages are
represented by different branches of a tree. The sequences of choices actually made can be traced by a path through
the tree, and the choice of which branch to take is guided by learning from outcome of earlier decisions (Bang, etl,
2014). From the above we can conclude that heuristic thinking does not necessarily proceed in a direct manner. It
involves searching, learning, evaluating, judging and then again searching, relearning, and reappraisal as exploring
and probing take place. The knowledge gained from success or failure at some point is feed back and modifies the
search process (Maashi, etl, 2015).
Each of these strategies has its own desirable characteristics. It is necessary to account for the desirable
characteristics in designing any heuristic for a specific problem. These desirable characteristics include:
 Simplicity of both design and computational requirement,

 Execution in reasonable computational time,

 Solutions which are close to optimality,
 Only a small probability of any one solution being far below optimality.
The major advantages of a heuristic are as follows:
 Is simple to understand and therefore is easier to implement,
 Helps in training managers to be creative and come up with heuristic for other problem,
 Saves formulation time ,
 Produces multiple solutions.
5. Algorithm of Applied Model
The objective of this model is to ascertain that all customers' orders are scheduled for production in such a way that
due dates are met as well as being possible, while the total cost is kept low.
The model consists of four heuristic rules which are used to solve the problem of research. The output of this model
will be obtained by comparing the results of each heuristic rule and the heuristic that meets all customers' orders with
minimum total cost will be selected. Links will be established between the four heuristics in such a way that if any
one of these fail, it is possible to return to the previous one. Furthermore more we compare the results from the
heuristic with results from dynamic programming model to determine the efficiency of the heuristic model.
5.1 Heuristic 1 (Hl)
In this heuristic, demand and production capacity are compared on a monthly basis to determine the level of
production. These are used as level of production.
The algorithm is as follows:
If
Dt < PCt for (t ε N)
Then
PRt = Dt
else
PRt = PCt
5.2 Heuristic 2 (H2)
In the second heuristic the solution is calculated using the demand of two months and production capacity. It consists
of three cases which illustrate the valley and peak of demand of two periods. Three procedures are formed to find the
desired production level. When the conditions of the procedure are not met (Hl) will be used.
The descriptions of the cases and algorithm for the procedures are as follows:
Case 1: (the total demand for two periods is equal to or less than production capacity of the present Period)
Procedure P1:
PRt = Dt + Dt+1
PRt+1 = 0
Case 2: (the demand valley in the present period and demand peak in the next period are at equilibrium).
Procedure P2:
PRt = PCt
PRt+1 = PCt+1
Case 3: (the demand valley in the present period and the peak demand in the next period are not at equilibrium. The
valley is greater than the peak).
Procedure P3:
PRt = Dt + Dt+1 - PCt+1
PRt+1 = PCt+1


In this heuristic, effort is made to achieve the desired level of production oven three periods, by comparing the
demand and production capacity of the periods. Fourteen cases are considered, each illustrate situations of valley and
peak of demands for the three periods. Fourteen procedures are designed to achieve the desired production level and
each procedure will be used to solve the problem of its case.
In the fourth heuristic, attempt is made to attain the desired level of production over six periods and it also compares
demand and production capacity. Sixty eight cases are considered, where each present situations of valley and peak
of demands. Two procedures are formed to build a production plan.
6. Dynamic Programming
One of the mathematical programming techniques receive attention in the Operation Research is dynamic
programming. It is a valuable planning technique and a problem solving tool (Anderson, 2003, Heizer, 2004,
Lawrence, 2002). Essentially, dynamic programming is a mathematical optimization technique that can be applied to
decision problems of a sequential nature. It involves the division of a large problem into a number of smaller
problems. Each sub-problem should be solved in such a way that an overall optimal solution is obtained (Taylor,
2007, Wisniewski, 2006).
Dynamic programming is based on the principle of optimality. It suggests that: "an optimal policy must have the
property that, regardless of' the decision made to enter a particular state, the remaining decision must constitute an
optimal policy for leaving that state" (Taylor, 2007).
In each process of applied dynamic programming, the functional equation governing the process was obtained by an
application of the principle of optimality. It guarantees that a system is overall optimal if each stage is optimized with
consideration being given only to the stage immediately preceding it.
One of the successful applications to which dynamic programming has been applied is multi-period production
planning, and this is so because the determination of a production plan over a planning horizon of several time
periods involves a series of sequential decisions. In such application, dynamic programming has proven to be very
useful in relating to various production and inventory decisions over time (Anderson, 2003, Taylor, 2007).
In production planning, dynamic programming is often convenient to begin with output requirements for the period
at the end of the planning horizon, as in backward induction, to determine what products must be produced in current
period in order to optimize (for example minimize costs) over total horizon. The optimal production quantities,
inventories, and so forth will determine the optimal combination to produce the subsequent results. The algorithm of
applied model will be solved using software package of computerized dynamic programming model. The general
recursion relationship of model as follow:
Ft* (S)  min[TPPR  TSS  Fn*1 (S  PRt  Dt )]
 min[CSt  CPt (PRt )  CHt (S  PRt  Dt ) 

PRt t t
PRt
Fn1 (S
*
 PRt  Dt )]
for t = 1,2,...,N,
where S = 0, 1, 2, . . . , 8 and minimization is carried out over only non-negative values of the decision variable, PRt,
in the range:
Dt + S ≤ PRt ≤ min
7. Numerical Examples
Let us now consider some numerical examples to explain the difference between dynamic programming model and
the heuristic model. Table 1 demonstrates the parameters of the problem including "production capacity, storage
capacity, setup cost, production unit cost and holding unit cost".
Table 2 shows (36) a set of random numbers generated by a program on microcomputer system. The input data has
been used to simulate pattern of the normal distribution which is applicable in many practical problems. Each set of
data simulates customers' orders for six Periods. Input data will help us to explain how the production manager can

operate in such a way that make good use of the fixed resources so as to get a smooth production level. This implies
variation in aggregate inventory levels to fill the peaks and valleys in the aggregate customers' orders.
Table 1. Parameters of problem
Production capacity 4
Storage capacity 8
Setup cost 4
Production unit cost 10
Holding unit cost 1
Table 2. Set of random numbers for experiment plans

Test Demand in periods Total
number 1 2 3 4 5 6
1 4 3 3 5 1 1 17
2 3 3 5 1 1 3 16
3 2 2 3 1 5 4 17
4 3 2 2 4 4 4 19
5 3 1 6 5 5 4 24
6 2 2 4 1 5 6 20
7 4 2 4 1 3 4 18
8 3 4 4 1 6 4 22
9 3 2 5 3 5 1 19
10 2 6 2 6 4 4 24
11 1 1 10 3 5 1 19
12 3 2 5 6 4 3 23
13 4 3 5 2 6 4 24
14 1 2 7 6 3 5 24
15 4 4 2 6 2 6 24
16 4 4 4 1 5 3 21
17 2 3 3 4 1 7 20
18 1 6 4 3 3 5 22
19 2 1 1 7 4 4 19
20 1 1 1 5 4 2 14
21 2 5 4 5 2 2 20
22 2 2 2 6 4 3 l9
23 3 3 3 5 2 1 17
24 1 7 3 4 2 2 19
25 4 4 3 3 5 4 23
26 1 2 9 3 5 3 23
27 4 1 1 10 4 3 23
28 4 1 1 1 1 10 18
29 4 1 1 7 6 2 21
30 4 1 3 3 6 2 19
31 3 2 7 4 4 1 21
32 1 6 3 4 2 1 17
33 1 1 5 9 4 1 21
34 4 1 5 2 1 7 20
35 4 2 2 1 2 9 20
36 3 2 3 4 3 5 20

8. Analysis of Output Data

The objective of the output data is to explain the performance of the heuristic model with numerical data, and to
compare its performance with the optimal result from dynamic programming model. This comparison will enable us
to select which of them is better to employ.
Table 3. Comparison between total production and total cost of dynamic programming and heuristic models
Dynamic programming model Heuristic model
Test Total
Total Total
number demand Total cost Total cost
Production production
1 17 17 192 17 192
2 16 16 182 15 171
3 17 17 193 17 193
4 19 19 212 19 212
5 24 24 272 24 272
6 20 20 227 20 227
7 18 18 202 18 203
8 22 22 246 22 246
9 19 19 216 18 205
10 24 24 268 24 268
11 24 24 274 24 274
12 23 23 260 23 260
13 24 24 267 24 267
14 24 24 275 19 213
15 24 24 268 24 268
16 21 21 235 21 235
17 20 20 227 20 227
18 22 22 247 22 247
19 19 19 214 19 214
20 14 14 162 14 162
21 20 20 226 20 226
22 l9 l9 214 l9 214
23 17 17 192 17 192
24 19 19 215 19 215
25 23 23 255 23 255
26 23 23 263 23 263
27 23 23 263 23 263
28 18 16 194 18 210
29 21 21 243 21 243
30 19 19 217 18 202
31 21 21 238 21 238
32 17 17 193 17 193
33 21 21 248 21 248
34 20 20 228 20 228
35 20 19 228 20 230
36 20 20 225 20 225

From Table 3 we can identify the following:

 In the dynamic programming model, all customers' orders are met with optimal total cost in 34 tests. In tests
numbers 28 & 35 (underlined) it does not meet all customers' orders.
 In the heuristic model, we obtained the same result from dynamic programming model in 29 tests. In tests
number 2, 9, 14, 30, (underlined) heuristic does not meet all customers' orders. In test number 7 (underlined)
we got a total cost more than optimal.
9. Conclusions
 From the results of this work we can conclude that heuristic methods gives better support in problems of
production planning.
 Moreover, there are a number of reasons to support out our preference for heuristic methods. The most
important are:
o Development time and cost of heuristic methods are less than exact optimization model;
o Heuristic methods requires substantially less time to solve a problem either by computer or by
manually;
o Heuristic methods can often be implemented and understood without undue difficulty and this is
attributable to their simplicity. This character will enable managers to establish good
communication with other managers. Furthermore , it will encourage them to extend delegation of
authority;
o It tends to be more flexible than exact algorithms, which are fairly restrictive in terms of both their
assumption and the types of constraints they can handle. It can be more responsive to change. A
production manager faces & operates within a dynamic environment. Exact algorithms, because of
their static nature, lose some of their effectiveness within such as environment. The heuristic
method, on other hand, can often be formulated to adopt more easily to these changes.
 Heuristic methods can be used as useful tools for knowledge capture through building a link between expert
managers and information technology to transform tacit knowledge to explicit knowledge (Alsameraai,
2003, Becerra-Fernandez, 2004).
 Due to time limitations, we could not test the heuristics developed in this paper on an organization from the
Arabian industry. Therefore, we recommend future researches that test these heuristics in field, so we can
explore the benefits and limitation of applying heuristics methods in solving the problems of aggregate
production planning.
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Effect of Employee Engagement on Organisation Performance in Kenya’s

Horticultural Sector
Brenda Beryl Achieng Otieno1, Esther Wangithi Waiganjo1 & Agnes Njeru1
1
School of Human Resource Development, Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya
Correspondence: Brenda Beryl Achieng Otieno, Business Administration, School of Human Resource Development,
Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya. E-mail: achieng1573@gmail.com
Abstract
The horticulture sector is estimated to employ over 50,000-60,000 people directly and 500,000 people indirectly
through affiliated services to the industry for example farm inputs, transport, packaging and banking (Kenya Flower
Council, 2010). It is therefore imperative that the welfare of the workers working in this sector is given paramount
importance by both government and the stakeholders as a whole. This study therefore sought to explore the effect of
employee engagement on organization performance in Kenya’s horticultural sector. This study was carried out in
flower farms in Kenya. The population of this study was all flower farms in Kenya which were the 14 flower farms
registered in the KFC directory (2013) and based in Naivasha. The study targeted the employees in the identified farms.
Cross sectional survey research design was used for the study. Stratified sampling technique was used to sample the
study respondents. A total of 2460 respondents were targeted by the study out of which 1888 responded giving a
response rate of 76.7%. Questionnaires were used as instrument for data collection. Both quantitative and qualitative
data analysis techniques were used. Quantitative data was analyzed using descriptive statistics while qualitative data
was analyzed thematically. Inferential statistics such as correlation and regression analysis were used to test on the
relationship between the variables of the study. The study found that 55% of the respondents agreed that there were
clear policy on staff supervision and performance development. It was also found that 55% of the respondents agreed
that there are clear guidelines on time for reporting to work and leaving. The results of correlation analysis show that
employee engagement is statistically significant with a Pearson correlation coefficient of 0.533 at a level of
significance of 0.000. The study concluded that employee engagement is a major determinant of organization
performance in the horticultural sector in Kenya. The study recommended that organization should emphasize on
induction training as it will help in clarifying the roles of employees thus improving the general organization
performance.
Keywords: employee engagement, organization performance
1. Introduction
The history of the export of fresh horticultural produce from Kenya dates back to the period before independence when
Kenya, then a British colony, was required to contribute to the running of the budget for East Africa. After
independence the industry continued to flourish with exports starting to go to Europe and thus opening up the potential
for Kenya in the export market (Maplecroft, 2010). Kenya is primarily an agricultural economy. Agriculture plays a
critical role in national economic growth and development. The major roles of agriculture include; employment,
foreign exchange creation and overall contribution to Gross Domestic Product (GDP).
Agriculture accounts for about 24% of Kenya’s GDP with an estimated 75% of the population depending on the
sector either directly or indirectly (Maplecroft, 2010). Agriculture is the mainstay of the Kenyan economy and
currently represents 24 per cent of GDP. More than one-third of Kenya’s agricultural produce is exported, and this
accounts for sixty five per cent of Kenya’s total exports (Dolan, 2004). The agricultural sector accounts for eighteen
per cent of total formal employment in the country. The Cut-Flower Industry has been active in Kenya since the 1980's,
but only in the 1990's has it transformed into a major player in the international market.
Several factors made Kenya attractive for growing flowers: a cheap and relatively educated labour force, suitable
climate conditions and proximity to Europe's big markets. These factors attracted capital and the knowledge needed for
boosting the industry (Maplecroft, 2010). Today, the Cut-Flower Industry is the fastest growing segment in Kenya. It is
also the largest export industry in the country responsible for annual turnover of nearly 600 Million Dollars. Kenya is

the fifth largest flower exporter in the world. It exports primarily to the Netherlands, Germany and the U.K. The
development of the flower industry in Kenya is an example of regional economic development that exploits
comparative advantages to export to developed markets (Derek, 2005).
Companies in the horticultural sector are now increasingly coming under pressure to ensure decent working conditions
for their workers. The horticulture sector is under threat from the above factors and it is imperative that attention must
be shifted to address the labour relations practices in this industry since competitiveness in this sector if it is to remain
the mainstream of foreign exchange earnings for the government and continue creating employment for the country.
This research explored the effect of employee engagement on organization performance in Kenya’s horticultural
sector.
1.1 Statement of the Problem
importance by both government and the stakeholders as a whole.
According to Maplecroft (2010), there have been poor human resource management practices in the horticultural
sector as a result of companies ignoring labour relations practices. Some of these poor practices include unethical
labour practices, for example dismissal of workers, without proper reasons and denying them the freedom of
association by refusing them to join trade unions. The horticultural sector is now increasingly coming under pressure to
ensure decent working conditions for their workers.
A research by Dolan (2004) focused on poor labour practices and environmentally damaging production processes
without getting into the reason why employers were guilty of such poor practices and the effect that arose to both
employees and employers as a result of such actions. Suffice to say the researcher tried to analyze how ethical trade can
enhance the economic and social rights of women and men in African export Horticulture and identifying best practice
in implementing gender sensitive ethical trade based on worker and stakeholder participation.Collinson (2010)
research mainly focused on the gains of labour productivity and management efficiency arising from implementation
of social codes in a company. Again, it did not analyze the relationship between labour relations practices in the
horticulture sector. Other researchers (Omwega, 2007; Riungu, 2006; Riungu, 2007; Barrientos et al., 2003; Opondo et
al, 2003; Opondo et al, 2005; Utting, 2002) have also researched on various areas within the flower industry including
gender rights, multi stakeholder participation and working conditions in the industry. Going through these researches
there is a gap on the relationship between labour relations practices in the horticulture sector. This study therefore
sought to explore the effect of employee engagement on organization performance in Kenya’s horticultural sector.
This section presents theoretical and empirical review.
2.1 Human Capital Theory
The concept of Human capital has relatively more importance in labour-surplus countries. These countries are
naturally endowed with more of labour due to high birth rate under the given climatic conditions (House, 1996). The
surplus labour in these countries is the human resource available in more abundance than the tangible capital resource.
According to Kelly (2007) this human resource can be transformed into human capital with effective inputs of
education, health and moral values. The transformation of raw human resource into highly productive human resource
with these inputs is the process of human capital formation. The problem of scarcity of tangible capital in the labour
surplus countries can be resolved by accelerating the rate of human capital formation with both private and public
investment in education and health sectors of their National economies.
The tangible financial capital is an effective instrument of promoting economic growth of the nation. The intangible
human capital, on the other hand, is an instrument of promoting comprehensive development of the nation because
human capital is directly related to human development, and when there is human development, the qualitative and
quantitative progress of the nation is inevitable. Human capital is the stock of competencies, knowledge, social and
personality attributes, including creativity, cognitive abilities, embodied in the ability to perform labor so as to produce
economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to
capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic
transactions (Rosen, 1987).
Many theories explicitly connect investment in human capital development to education, and the role of human capital
in economic development, productivity growth, and innovation has frequently been cited as a justification for
government subsidies for education and job skills training. There is also strong evidence that organizations that possess

and cultivate their human capital outperform other organizations lacking human capital (Crook, Todd, Combs, Woehr,
and Ketchen, 2011). This study assessed the relevance of this theory in relation to the organisational performance of
Kenya’s horticultural sector which is very labour intensive.
2.2 Path Goal Theory
The path–goal theory, also known as the path–goal theory of leader effectiveness or the path–goal model, is a
leadership theory developed by Robert House (1996). The theory states that a leader's behavior is contingent to the
satisfaction, motivation and performance of her or his subordinates. The revised version also argues that the leader
engages in behaviors that complement subordinate's abilities and compensate for deficiencies. The path–goal model
can be classified as a transaction leadership theory.
According to the first of all theory, the manager’s job is viewed as guiding workers to choose the best paths to reach
their goals, as well as the organizational goals. The theory argues that leaders will have to engage in different types of
leadership behavior depending on the nature and the demands of a particular situation. It is the leader’s job to assist
followers in attaining goals and to provide the direction and support needed to ensure that their goals are compatible
with the organization’s goals (Crook, Todd, Combs, Woehr, and Ketchen, 2011).
A leader’s behavior is acceptable to subordinates when viewed as a source of satisfaction and motivational when need
satisfaction is contingent on performance, and the leader facilitates, coaches, and rewards effective performance. The
original path-goal theory identifies achievement-oriented, directive, participative, and supportive leader behaviors:The
directive path-goal clarifying leader behavior refers to situations where the leader lets followers know what is expected
of them and tells them how to perform their tasks. The theory argues that this behavior has the most positive effect
when the subordinates' role and task demands are ambiguous and intrinsically satisfying (Peter, 1997). The
achievement-oriented leader behavior refers to situations where the leader sets challenging goals for followers, expects
them to perform at their highest level, and shows confidence in their ability to meet this expectation. Occupations in
which the achievement motives were most predominant were technical jobs, sales persons, scientists, engineers, and
entrepreneurs (Peter, 1996).
The participative leader behavior involves leaders consulting with followers and asking for their suggestions before
making a decision. This behavior is predominant when subordinates are highly personally involved in their work (Peter,
1996).The supportive leader behavior is directed towards the satisfaction of subordinates needs and preferences. The
leader shows concern for the followers’ psychological well being. This behavior is especially needed in situations in
which tasks or relationships are psychologically or physically distressing (Peter, 1996).
Path–goal theory assumes that leaders are flexible and that they can change their style, as situations require. The theory
proposes two contingency variables, such as environment and follower characteristics, that moderate the leader
behavior-outcome relationship. Environment is outside the control of the follower-task structure, authority system, and
work group. This theory will go to support the variable on leadership styles (Cole, 2002). This theory of leadership will
be tested against the variable on democratic leadership style and its effect on labour relations and organizational
performance.
2.3 Empirical Literature
Biloch and Lofstedt (2013) created a model that promotes employee engagement partially based on established
concepts within performance management and motivation and partially based on a pioneer concept within business,
referred to as gamification. The aim of their study was to adapt this model to an organizational setting characterized as
potentially unengaging to be able to identify possible benefits and concerns with the model developed. The data
collection was done through a case study involving both qualitative semi-structured interviews and observations with
professionals within haulage firms. The model created was thereafter configured to the work situation of a truck driver,
in order to illustrate how employee engagement can be promoted within haulage firms. An important finding of this
thesis is that each component of the performance management cycle can, to various extents, be supported by game
elements to drive employee engagement within the performance management process. It has also been found that this
model can be adapted to different work situations on the basis of the appropriate style of management control and a
means-ends analysis of the constituent game elements that underlie the model. Moreover, this thesis propose how
haulage firms, through this model, can promote employee engagement and thereby an opportunity to command a
source of competitive advantage. This study therefore sought to explore the effect of employee engagement on
organization performance.
AbuKhalifeh and Ahmad (2013) studied the antecedents that influence employee engagement in food and beverage
service department. Literature reviewed indicated that there is a significant relationship between employee
communication, employee development, rewards and recognition, and extended employee care. Among the

antecedents, employee development forms the most significant contributor. The study concluded that employee
engagement for the food and beverage department in the hotel industry is highly significant to the hotel industry. The
literature shows that the antecedents of employee engagement influence employee engagement and have a significant
impact on the level of engagement among employees. The findings also indicate that employee development is the
highest contributing factor to employee engagement. Hence, it is important for hotels to increase the level of
engagement among their employees as an investment in employee development. Spending more on programs that
develop the skills of the F&B employees by carrying out suitable workshops and training curriculum that enhances
skills and improves the service performed is highly beneficial for hotels. This study was done in horticultural sector to
assess how the antecedents that influence employee engagement influences organization performance.
Miller (2008) carried out an assessment on employee engagement in XYZ Company. Data was collected data from
the production employees at XYZ Manufacturing Company, on employee engagement. Production employees were
asked to fill out a Q-12 survey developed by the Gallup organization to measure employee engagement (Buckingham
and Coffinan, 1999). This data was collected and analyzed in order to show the level of employee engagement within
the production employees of XYZ Manufacturing Company. XYZ Manufacturing Company is a suspension
manufacture company. There are 239 production employees in assembly manufacturing. A total of 169 surveys were
returned which is a 70.2% return rate. The survey sample of the production employees was chosen because these are
the employees that have the greatest influence on the production, quality, and changes in the current systems.
Employee engagement is a key driver for organizational success. High levels of engagement promote retention of
talent, foster customer loyalty, and improve organizational performance. Engagement is influenced by many factors:
workplace culture, communication, managerial styles, trust and respect (Lockwood, 2007). This study was carried in
the manufacturing where organization performance was one of the indicators. In this study, the focus was to assess
how different aspects of employee engagement impacts of organization performance.
Bakar (2013) examined the factors that influence and shape employee engagement in the context of the financial sector
in Malaysia. It does this by studying multilevel factors at three levels, the individual, organizational and societal levels.
Specifically, the thesis focuses on three increasingly prominent concepts: empowering leaders’ behaviour, high
performance work practices (HPWP) and the possible role of religiosity. Drawing on institutional theory, an important
argument in this thesis is the limitation of the mainstream single-level conceptualizations of employee engagement,
which fail to capture the relational interplay of the contextual factors and the multilevel nature of engagement. Earlier
research in HRM, particularly on employee engagement, has been conducted primarily from a micro-perspective that
has focused on a specific function with little acknowledgement of contextual setting. This study uses a framework that
bridges the macro- and microinstitutional levels of analysis in understanding employee engagement. To achieve this
objective, this study adopted a mixed-method approach. The first method, a qualitative study of 41 interviews with
employees in the financial sector, was designed to explore the most salient factors in the employees’ levels of
engagement. The secondmethod, a quantitative survey of 278 employees, was designed to investigate the associations
between the studied variables. Findings from both analyses suggest that empowering leadership behaviour has the
largest effect on employee engagement. In particular, employees experience a significant level of engagement when
their leader shows concern. At the organizational level, HPWP do seems to be practiced in the organizations and to
have an effect on engagement. However, problems that occur within the organizations cause the ineffectiveness of
HPWP implementation. Interestingly, religiosity was found to play a crucial role in engaging employees at work
among the Malay Muslims. This study was carried out in the financial sector where the focus was on factors
influencing employee engagement. This study focused on how employee engagement influences the general
3. Methodology
This study was carried out in flower farms in Kenya. The population of this study was all flower farms in Kenya
which were the 14 flower farms registered in the KFC directory (2013) and based in Naivasha. The study targeted
the employees in the identified farms. Cross sectional survey research design was used for the study. Stratified
sampling technique was used to sample the study respondents. A total of 2460 respondents were targeted by the
study out of which 1888 responded giving a response rate of 76.7%. Questionnaires were used as instrument for data
collection. Both quantitative and qualitative data analysis techniques were used. Quantitative data was analyzed
using descriptive statistics while qualitative data was analyzed thematically. Inferential statistics such as correlation
and regression analysis were used to test on the relationship between the variables of the study.
Multiple regression model presented below was used
Y = β0 + β1X1 + β2X2 + β3X3+ β1X1 Z+ ε
Where

Y = is the dependent variable (Organizational performance)

Z= Leadership styles
Xi = is the three independent variables i.e. employee communication, employee involvement and human resources
procedures where ( i=1,2,….n)
X1 = Employee communication
X2= Employee engagement
X3= Human resource procedures
Z = product term between moderating variables and each independent term
βi (i=1,2,3,4) are the parameters associated with the corresponding independent variable that are to form part of the
partial regression coefficients
βo is the intercept
ε is the error term
4. Findings of the Study
The study adopted factor analysis in order to reduce the number of indicators or factors under each research variable
and retain the indicators capable of explaining the responses to globalization adopted by manufacturing firms in Kenya.
The retained factors had loading values of above 0.4 and were used for further analysis.
To measure the reliability of the gathered data, Cronbach’s alpha was used. Cronbach’s alpha is a coefficient of
reliability that gives an unbiased estimate of data generalizability (Zinberg, 2005). An alpha coefficient of 0.70 or
higher indicated that the gathered data is reliable as it has a relatively high internal consistency and can be generalized
to reflect opinions of all respondents in the target population (Zinbarg, 2005). Table 1 shows Cronbach’s alpha of all
indicators. Cronbach’s alpha results in the component column were computed using the results of all indicators. The
results revealed that ten out of 11 indicators/factors had a loading of more than 0.4.
Table 1. Factor analysis for employee engagement indicators
Cronbach’s Alpha Component Cronbach Alpha

before after
I have the materials and equipment I need to do
.881 .826 .887
my job right.
I received recognition or praise for doing good
.801
work
I have a best friend at work. .801
My supervisor, or someone at work, seems to care
.769
about me as a person
In the last six months, someone at work has talked
.769
to me about my progress.
At work, my opinions seem to count .723
I know what is expected of me at work. .644
There is someone at work who encourages my
.593
development.
This last year, I have had opportunities at work to
.593
learn and grow.
My associates or fellow employees are committed
.450
to doing quality work
The mission or purpose of my company makes me
.336
feel my job is important

Table 1 shows that Cronbach’s alpha result of all employee engagement indicators was 0.881 and the factor loading
results were between 0.336 and 0.826. This implies that ten of the eleven indicators were retained for further analysis.
Using the retained employee engagement indicators, the value of Cronbach’s alpha was computed again and generated
a value of 0.887. This indicated that data collected using all the employee engagement indicator values were reliable
since the Cronbach’s alpha value was above 0.70. These indicators were later used for further analysis.
Descriptive statistics were used to describe the basic features of the data in the study. They provide simple summaries
of the sample and measures. Descriptive statistics such as frequencies and percentages were used to analyze the data.
Table 2 presents the findings on the effect of employee engagement on organization performance.
Table 2. Effect of employee engagement on organization performance
Statement Strongly Disagree Neither Agree Strongly
disagree agree nor agree
disagree
Employees are well aware of their roles and 0% 10% 20% 30% 40%
responsibilities in the organization
There is a clear policy on health and safety 0% 0% 25% 45% 30%
procedures in the organization
There is clear policies and processes for 0% 5% 20% 40% 35%
recruitment of staff in the organization
There is clear staff exit procedures 0% 15% 25% 25% 35%
There is a clear policy on staff supervision 0% 5% 15% 55% 25%
and performance development
There are clear procedures for carrying out 10% 10% 15% 34% 31%
staff appraisals within the organization
There is a policy on staff training and 0% 0% 20% 30% 50%
development
There are clear guidelines on time for 5% 5% 15% 55% 20%
reporting to work and leaving
There are clear codes of conduct in the 5% 0% 41% 31% 23%
organization
Security is provided within the work 0% 10% 25% 32% 33%
environment in the organization.
Table 2 shows that 55% of the respondents agreed that there were clear policy on staff supervision and performance
development. It was also found that 55% of the respondents agreed that there are clear guidelines on time for reporting
to work and leaving. The findings further revealed that 50% of the respondents strongly agreed that there was a clear
policy on staff training and development, 45% agreed that there was clear policy on health and safety procedures in the
organization and that 40% agreed that there is clear policies and processes for recruitment of staff in the organization.
4.1 Correlation Analysis
This study conducted correlation analysis to test on the strength of association/relationship between the study
variables. Correlation is a measure of the relationship or association between two continuous numeric variables. It
indicates both the direction and degree to which they vary with one another from case to case without implying that
one is causing the other. Correlation analysis results give a correlation coefficient which measures the linear
association between two variables (Crossman, 2013).
Employee Engagement correlation analysis
The symmetric matrix with Pearson correlations given in Table 3 shows that the Pearson correlation coefficient was
0.533 and this demonstrates that employee engagement have a positive correlation with globalization.

Table 3. Employee engagement and organization performance

Correlations
Employee engagement Organization
Performance
Pearson Correlation 1 .533**
Employee engagement Sig. (2-tailed) .000
N 1888 1888
**
Pearson Correlation .533 1
Organization Performance Sig. (2-tailed) .000
N 1888 1888
**. Correlation is significant at the 0.01 level (2-tailed).
4.2 Regression Analysis

Regression Analysis on Employee Engagement and Organization Performance
Regression analysis was done to determine the relationship between employee engagement and organization
performance
Table 4 shows that the coefficient of determination R square is 0.284 and R is 0.533 at 0.05 significant level. The
coefficient of determination indicates that 28.4% of the variation in the response to organization performance is
explained by employee engagement.
Table 4. Model summary
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
a
1 .533 .284 .284 .823
a. Predictors: (Constant), Employee engagement
Table 5 presents the results of Analysis of Variance (ANOVA) on employee engagement versus organization
performance. The ANOVA results for regression coefficient indicates that the significance of the F is 0.00 which is less
than 0.05 hence implying that there is a positive significant relationship between employee engagement and
Table 5. Anova
ANOVAa
Model Sum of Squares df Mean Square F Sig.
Regression 253.753 1 253.753 374.275 .000b
1 Residual 1784.538 1886 .678
Total 1784.828 1887
a. Dependent Variable: Organization Performance
b. Predictors: (Constant), Employee engagement
Further analysis was done to determined beta coefficients of employee communication versus organization
performance. Table 6 shows that there is significant relationship between employee communication and organization
performance. Since the coefficient of adoption of technology is 0.614 which is statistically greater than zero. The t
statistic is 19.346 which is greater than zero. This demonstrates that employee engagement have a positive influence on

Table 6. Coefficients
Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 1.631 .138 11.858 .000
1
Employee engagement .614 .032 .533 19.346 .000
5. Discussion
The factor analysis results on employee engagement had an Alpha of 0.881 and the loading results between 0.336 and
0.826. Using the retained employee engagement indicators, the value of Cronbach’s alpha was computed again and
generated a value of 0.887. The study therefore deduced that ten out of the eleven indicators of employee engagement
were reliable in assessing the effect of employee engagement on organization performance. Employee engagement
indicators such as availability of materials and equipment, recognition and praise, friendship at work, supervision on
progress at work, opinion count, role awareness, motivation and encouragement and job commitment were later used
for further analysis.
Descriptive statistics results showed that employee engagement is one of the strategies by organizations in the
horticultural sector to improve their performance. This is evidenced by 68% of the respondents indicated that they
knew what is expected of them at work. The finding is in line with that of Sani (2012) who found that strategic HRM
alignment, line management training, career planning system and job definition are the key strategic HR practices that
influence organizational performance in the Nigerian insurance industry. Results also suggest that the relationship
between strategic HRM practices and organizational performance in the Nigerian insurance industry is moderately
influenced by organizational climate.
The study also found that 67% indicated that someone at work who encourages their development. The findings further
revealed that 67% of the respondents agreed that they had an opportunity to learn and grow in the organization over the
past one year. These findings corroborates with that of Nassazi (2013) who found that training have a clear effect on the
performance of employees.
Pearson correlation analysis of employee engagement results gave a correlation of 0.533 which demonstrated that
employee engagement has a positive correlation with organization performance. Regression model of employee
engagement versus organization performance gave a coefficient of determination of R square of 0.284 and R as 0.533
at 0.05 significant level. The coefficient of determination indicated that 28.4% of the organization performance is
explained by employee engagement. This implies that there exists a strong positive relationship between employee
engagement and organization performance.
6. Summary of Findings
Employee engagement is one of the strategies by organizations in the horticultural sector to improve their
performance. The study found that 68% of the respondents indicated that they knew what is expected of them at
work. The study also found that 67% indicated that someone at work who encourages their development. The
findings further revealed that 67% of the respondents agreed that they had an opportunity to learn and grow in the
organization over the past one year, 61% of the respondents strongly agreed that their associates or fellow employees
are committed to doing quality work and 57% agreed that they are recognized or praise for doing good work.
The findings from the correlation analysis revealed that organization performance is positively related with the
employee engagement with a Pearson’s correlation coefficient of r = 0.533 and at a level of significance of 0.000, an
indication that employee engagement is statistically significant with p value less than 0.05
7. Conclusions
Employee engagement was found to encourage employee development thus affecting the general organization
performance. This is based on the fact that when employees are motivated and also given opportunity to participate in
decision making processes, they became committed to their work.

8. Recommendations
The study also recommends that organization should emphasize on induction training. This will help in clarifying the
roles of employees thus improving the general organization performance.
9. Limitations of the Study
One of the limitations of this study is that it only focused on employee engagement which is one of the determinants of
organization performance. Thus, the study left out other determinants of organization performance.
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Availability Bias Can Improve Women’s Propensity to Negotiate

Yellowlees Douglas1 & Samantha Miller2
1
Hough Graduate School of Business, Warrington College of Business Administration, University of Florida,
Gainesville, FL, USA
2
Heavener School of Business, Warrington College of Business Administration, University of Florida, Gainesville, FL,
USA
Correspondence: Yellowlees Douglas, Ph.D., Hough Graduate School of Business, Warrington College of Business
Administration, PO Box 117150, University of Florida, Gainesville, FL 32611-7150, USA. Tel: 1-352-273-3215.
E-mail: jane.douglas@warrington.ufl.edu
Received: February 19, 2015 Accepted: March 3, 2015 Online Published: March 5, 2015
Abstract
Women’s reluctance to negotiate aggressively on their own behalf has long been thought to account for the striking
disparities between the salaries earned by men versus women. Extensive research has documented women occupying
a low-wage “sticky floor,” encountering mid-level career bottlenecks, or being confined by a glass ceiling. In
numerous studies, women have undervalued themselves, responded to stereotypes on women’s lack of
aggressiveness, or placed greater value on interpersonal relationships even in negotiating salaries. However, this
study found that, contrary to most studies on women’s and men’s propensity to negotiate, women negotiated as
aggressively as did their male colleagues. Not only did more women than men negotiate aggressively for a reward,
but women relied on heuristics usually seen as misleading in decision-making to make demands in their favor. This
study focuses on women’s and men’s reliance on availability, anchoring, and framing—staples of understanding
negotiating behavior independent of sex—in requesting rewards, linked notably to perceptions of the value of their
highest-earned salaries and to their job performance compared to their workplace colleagues’. When faced with
situational ambiguity and an absence of targets in negotiating a first offer or reward, women may improve their
negotiating skills through training that uses priming, availability, or counterfactual thinking.
Keywords: women and negotiation, availability bias, framing, priming, anchoring, heuristics
1. Introduction
1.1 Women Underperform in Negotiation
Women and their performance in negotiation has long been a conundrum—puzzled over by researchers, amply
attested to in both simulations and longitudinal studies. For decades, studies have attested to different attitudes and
behaviors that distinguish the way men and women handle negotiation. In addition, the implications for women
negotiating salaries—particularly an initial negotiation of starting salaries—is profound. In the initial negotiation of
starting salaries, men negotiate more aggressively to increase their original offers, bolstering their salaries. Even for
players in what should be a level playing field—graduates of an Ivy League MBA program—men negotiated starting
salaries that were 4.3% higher on average than the salary their new employers offered them. In contrast, women
negotiated increases that averaged only 2.7% higher than their first averages (Gerhart & Rynes, 1991). For that
single negotiation, male employees enjoy a payoff that is 59% higher than the amount earned by female employees.
If men at every stage of their careers negotiate raises more aggressively than women, by the time they retire male
employees make nearly double the salaries earned by female employees (Babcock & Laschever, 2003).
As Gerhart and Rynes (1991) found more than two decades ago, even credentials fail to make significant impacts on
women’s propensity to negotiate less aggressively than men. In addition, women still negotiate, on average, starting
salaries 30% lower than their male colleagues’, demonstrated in a study of MBA students schooled in negotiation
and at competitive Ivy League programs that should have produced some of the most capable and tough-minded
female negotiators in the workplace (Riley, Babcock & McGinn, 2003). Apparently, schooling and training in
negotiation fail to compensate for the dramatic differences in negotiation tactics used by men and women.

Ultimately, researchers agree on one point concerning women and negotiation: the “accumulation of disadvantage”
(Babcock & Laschever, 2003). Furthermore, researchers have attributed to differences in performance and outcomes
in negotiation between men and women everything from corporate glass ceilings (Tesch, Wood, Helwig & Nattinger,
1995; Yap & Konrad, 2009) and underpaying sticky floors (Kee, 2006; Rainbird, 2007) to “slow elevators” to top
positions in their chosen fields (Greig, 2008).
1.2 Why Do Women Negotiate Less Aggressively than Men?
To date, the literature on women and negotiation has focused on a range of social and cognitive biases. Both men and
women alike undervalue women compared to men (Albeida & Tilly, 1997; Stuhlmacher and Walters, 1999; Trout,
2005), while women value interpersonal relationships over compensation (Kray & Thompson, 2005; Kray &
Babcock, 2006). Women also set lower initial targets in making first offers than men (Kray & Gelfand, 2009),
potentially due to risk aversion (Rosette, Kopelman & Abbott, 2014). In addition, women’s social networks have
fewer career mentors in them (Babcock & Laschever, 2007) and also fewer casual ties that can benefit women in
securing job offers and promotions (Granovetter, 1983).
However, evidence increasingly points to the utility of cognitive explanations that include some of the same
heuristics that impact negotiations both inside and outside the workplace. In particular, heuristics that play significant
roles in behavioral economics—anchoring, priming, and availability—play significant roles in self-perception and
performance (Aronson & Steele, 1995; Shih, Pittinsky & Ambady, 1999) and, specifically, in negotiation itself
(Magee, Galinsky & Gruenfeld, 2007; Haselhuhn & Kray, 2011). Although Fiona Greig’s 2008 study focused on
behavioral constraints on women in negotiation, her study provided compelling data, partly based on her manner of
measuring participants’ propensity to negotiate via a seemingly casual invitation to participants to identify the
amount they wanted on a rewards card as compensation for completing her questionnaire. Greig’s participants
included employees at a major investment bank, where women would have a greater propensity to negotiate than
employees at other organizations or in other fields. In addition, her questionnaire elicited feedback on promotion,
enabling her study to identify correlations between the amounts employees requested on their rewards card and the
speed with which they received promotions. On average, employees who showed lower propensity to negotiate
earned promotions seventeen months later than employees who negotiated more aggressively—even for a simple
rewards card (Greig, 2008).
1.3 Hypothesis: Women Will Negotiate Less Aggressively than Men in Responding to a Seemingly Innocuous Request
for Rewards
We hypothesized that students enrolled in a competitive MBA program, with work experience in a range of fields
and less disposable income than bankers and traders, would behave similarly to Greig’s participants. However, we
expected men to display more aggressive negotiating behavior because they had less disposable income than Greig’s
populations. We also anticipated that these economic factors would lead to a greater disparity between the more
aggressive and mostly male requests for rewards and the amounts requested by female participants.
2. Existing Explanations for Why Women Negotiate Less Aggressively than Men
A variety of factors may account for differences between the way men and women negotiate, including social
perceptions of value, stereotyping, differing attitudes toward interpersonal relationships, and social networks that
provide valuable cues for establishing target values. Certainly, wider social perceptions weight women as less adroit
at negotiation than men. In studies of car dealerships, Ayres and Siegelman (1995) found women and minority car
buyers paid significantly more for cars, following initial offers and negotiations by Chicago car salesman, than did
white male buyers. However, when female and minority buyers negotiated automobile purchases online, where their
sex and race were masked, buyers paid nearly the same prices as those paid by white males (Morton, Zettelmeyer &
Silva-Risso, 2003). Apparently, sex is a potent cue of an individual’s willingness to negotiate aggressively, a finding
supported by Solnick’s 2001 study of negotiation between two pairs who never met one another. Told only the sex of
the other negotiator, men and women nevertheless both made less generous offers when they believed they were
negotiating with a woman, rather than a man—averaging 12% lower than offers given to men (Solnick, 2001).
Women may also link negotiation to self-perceptions of their efficacy, particularly in supervisory or managerial roles.
Even in a simulated organization, men designated “supervisors” reported scores of their managerial ability 31%
higher than those reported by women participants (Instone, Major & Bunker, 1983). Women even expect to earn less
on the job than men do, as much as 15% less in their first year on the job and over 45% less than men in their
peak-earning year (Major & Konar, 1984). In the same study, Major and Konar (1984) found that women expected
others working the same jobs as them to make less than men did of the same position. Tellingly, women paid

themselves considerably less for a fixed amount of work than men did—but only when comparison information they
might gain from colleagues was absent. When women had access to comparables for pay, both men and women paid
themselves similar amounts (Major, McFarlin & Gagnon, 1984).
2.1 The Role of Social Networks and Cues in Negotiation
Women may negotiate more poorly because they are deprived of access to anchors to suggest a salary, first offer, or
consulting fees. Notably, women form networks with other women, while men network socially and in the workplace
with other men. Men benefit from access to their networks, as men typically control decisions on promotions and on
salaries (Babcock & Laschever, 2007). In addition, men’s social networks form the weak ties that provide men with
access to promotions, salary targets, and consulting fees (Granovetter, 1973). However, these same
counter-intuitively powerful weak ties that help men negotiate higher salaries and fees fail to benefit women, as
women’s weak ties bind them to colleagues with the same lack of access to salary targets and promotions
(Granovetter, 1983). The absence of social comparatives on salaries also plays a role in women negotiating lower
first offers than men, increasing women’s anxiety at getting their first offer rejected, exacerbated by women’s lower
feelings of self-worth compared to male colleagues or job candidates (Rosette, Kopelman & Abbott, 2014).
2.2 Behavioral Explanations for Disparities between Sexes in Negotiation
Researchers have already employed behavioral explanations to explore differences between the sexes in negotiation,
including stereotyping (Stuhlmacher & Walters, 1999; Bowles, Babcock & McGinn, 2005), framing (Tversky &
Kahneman, 1981) and priming (Magee, Galinsky & Gruenfeld, 2007). In particular, heuristics, used heavily in
behavioral economics, plays an interesting role in potentially explaining the disparity between women’s and men’s
efficacy in negotiation via anchoring (Rosette, Kopelman & Abbott, 2014), the halo effect (Kahneman, 2011) and
similarity (Burger, Messian, Patel, del Prado & Anderson, 2004). In particular, similarity heuristics explain the
“sticky floor,” where women’s loose ties and reliance on similarity biases prompt low-level supervisors to hire other
women for low-paying jobs, at the same time similarity prompts men to hire other men for higher-level positions
(Kee, 2006; Rainbird, 2007; Shambaugh, 2007).
Similarity, anchoring and the halo effects likely play a central role in men’s skill in negotiation. However, we
understand less clearly the role played by behavioral heuristics in women’s performance in negotiation. Here we
encounter an unanticipated outcome on women’s negotiating behaviors best explained by availability biases, which
have hitherto played few explicit roles in explanations of women’s negotiating behavior but which may play a vital
role in enabling women to negotiate higher salaries.
3. Methods
3.1 Women Traditionally Low-ball Negotiation Requests
Much of the literature on women and negotiation has focused on social attitudes toward women’s reluctance to
negotiate salaries as aggressively as their male counterparts. Studies have used simulated negotiations with
Prisoner’s Dilemma-type scenarios (Stuhlmacher & Walters, 1999; Wheeler & Petty, 2001; Bowles, Babcock &
McGinn, 2005), negotiation scenarios (Magee, Galinsky & Gruenfeld, 2007; Kray, Kennedy & Van Sant, 2014), and
behavioral negotiation tasks (Kray & Haselhuhn, 2007; Kray, Galinsky & Markman, 2009). However, these
simulated scenarios may skew participants’ responses, especially given the constructs typically used in studies
conducted within the confines of academic programs, the case with the majority of the interactional studies (Bowles,
Babcock & McGinn, 2005; Kray, Galinsky & Wong, 2006; Kray, Galinsky & Markman, 2009, Rosette, Kopelman &
Abbott 2014). Scenarios and simulations within an academic environment may measure baseline propensities of men
and women in handling negotiation, but if participants have an opportunity to negotiate a measurable reward which
they will receive, their behavior may provide a more accurate reflection of their negotiating strategies. As a result,
we followed Greig’s 2008 experimental design, since her study relied on a survey created to elicit and capture
behavioral responses in the throes of an actual negotiation. In her survey, Greig (2008) used a then-novel approach to
assessing propensity to negotiate by closing her survey with a casual question, similar to one used in many online
measures of consumer satisfaction, informing participants that they could receive a Starbucks card as a reward for
answering the survey. However, Greig deliberately avoided providing any anchors for the amount participants could
request, leaving the response open-ended, theoretically enabling participants to request nothing or as much as $100
(Greig 2008).
3.2 Experimental Assumptions
Consistent with Babcock and Laschever (2003), Greig anticipated women would be more reluctant to negotiate, in
addition to requesting lower amounts than men surveyed (Gerhart and Rynes 1991; Greig 2008) and would also rely

on self-evaluations of their self-worth anchored by performance evaluations within the preceding twelve months
(Greig 2008). Given the characteristics of students enrolled in the University of Florida’s one- and two-year MBA
programs, we had a pool of participants with diverse but mostly extensive work experience, largely in fields where
quantitative skills were de rigueur, thus providing us with a snapshot of women working in traditionally
male-dominated fields from biomedical engineering to financial analysis. Given the selectivity of the on-campus
MBA cohorts at Florida, these candidates, both male and female, were typically high achievers and had left careers
where they earned substantial salaries to return to academia, either to change fields or to bolster their earnings
potential still further.
3.3 Framing of the Hypothesis
We hypothesized, consistent with Greig (2008), that women would request substantially lower sums on their
Starbucks cards. We also hypothesized that these requests might reflect influences from other workplace experiences.
These influences including prior success in negotiations (Kray & Haselhuhn, 2007) and receiving high scores on
performance evaluations within the preceding twelve months (Greig, 2008). We also anticipated value requests
might reflect influence based on self-perceptions about risk aversion or risk-seeking behavior at work, reflecting
women’s anxiety in making an initial first offer when requesting a salary (Kray & Gelfand, 2009; Rosette, Kopelman
& Abbott, 2014). Consistent with our survey eliciting information about participants’ prior work experience, we also
solicited information on the highest salaries they had earned to date. We anticipated that our survey would find
correlations between self-perceptions about negotiating skill and participants’ salaries, which would be consistent
with either a negotiating strategy more like approaches used by men or a lack of inhibition in setting a high initial
target amount in an initial salary request, both of which would generate higher salaries for women. However, we
expected that self-perceptions of skill in negotiation and in taking risks, as well as self-reported efficacy in prior
negotiations would be more closely correlated with the amount requested for the Starbucks reward card, rather than
participants’ salaries. We anticipated that the cross-section of organizations and fields in which our participants had
work experience could skew correlations between salary and requested amounts, as some of our MBA students had
as many as fifteen years’ more work experience than their younger counterparts.
3.4 Experimental Design
The primary research instrument was a short 16-question survey conducted with a sample of 25 (10 female and 15
male) students enrolled in the 2 year MBA program at the University of Florida. The participants were sent a link via
email to complete an online questionnaire. The email contained a short introduction from a widely-known professor,
with whom 80% of the sample have taken at least one course with. The participants were informed that the
questionnaire results were completely anonymous and contained no questions with unique identifiers. We designed
the survey to include sham questions about novelty and risk aversion to avoid biasing answers and outcomes.
3.5 Survey Design
Information about demographic, perception, and constraint-related variables were collected as follows:
1. Demographics: Questions 1, 2, 3, 4, 5 and 7, asked for the respondent’s age, sex, race, and nationality, highest
level of education completed, and marital status, respectively.
2. Work experience: Questions 6, 8, 9, 10, and 12 asked the respondent to answer questions about his/her work
experience (i.e. current title and company employed by, highest salary received, is he/she currently receiving that
salary, and last two performance review numbers).
3. Workplace constraints: Question 11 asked the respondent to list any workplace constraints he/she has experienced.
4. Self-confidence and self-perception: A 5-point Likert scale was used for questions 15-19 asking the respondent to
state the level with which he/she agrees or disagrees with the statements listed below (1= strongly disagree, 5=
strongly agree).
a. I feel I perform better than my co-workers in similar job positions in terms of work performance last year.
b. I spend too much time at work.
c. I am an average negotiator.
d. I avoid risk whenever possible.
e. I am very open to novelty.
In addition, questions 13 and 14 asked the respondent to answer the following open-ended questions:

f. What prior experience have you had negotiating over the past 12 months?
g. Do you feel you have taken significant risk in the past 12 months?
3.6 Coding
All responses were given a numerical code, corresponding to established divisions (i.e., coding male as 1 and female
as 2). We were unable to code for previous negotiating experience, due to highly varied results ranging from no
experience to experience negotiating tax penalties with the IRS. We were also unable to code for responses related to
last two performance review numbers due to the majority omitting an answer, claiming they did not know the
number, or that they have not received a performance review. Similarly, we were unable to code for experience
taking significant risks, with results ranging from no experience taking risk to reporting taking risk by riding a
motorcycle without a helmet.
In this study, propensity to negotiate for oneself is observed as the tendency to initiate an interaction with the
intention of improving the rewards for the duties performed (Greig, 2008). Propensity to negotiate was measured
using a behavioral method: at the end of the questionnaire, participants were told they could receive a Starbucks card
using the phrasing, “In appreciation for your participation, you will receive a free Starbucks card. However, the value
of this Starbucks card has not yet been determined. How much do you request your Starbucks card to be for?” to
replicate Greig’s study closely (Greig, 2008). A Starbucks card was offered because the University of Florida
campus has three Starbucks locations on the campus itself, and several more located within two miles of the campus.
The final question was designed to be open-ended and provide no anchors or format restrictions that could influence
the participants’ requests. As such, each participant had identical opportunity to negotiate for a monetary reward.
Following Greig’s study, propensity to negotiate was assessed by coding participants’ responses requesting any
monetary amount from $0 to $25 as 2 for “Made Request” and requests of $0 as 1 for “Made Request of $0.”
Responses such as “I don’t drink coffee” and “N/A” were coded as 0 for “Made No Request.”
4. Results
4.1 Participant Demographics
The sample consists of 25 subjects with ages ranging from 22 to 40. The average age was 26.92, which is roughly 9
years younger than the reported average age of respondents in Greig’s study. The survey was sent to 108 MBA
candidates across a 1-year MBA program and a 2-year MBA program. Of the 108 in the program, 32 are women,
making up 29.63% of the program. Men make up 70.37% of the program with 76 students. Of the 25 students who
responded (23.15% response rate of the 108 in the programs), 10 were women and 15 were men. The survey
respondents accurately reflected the proportion of women in the MBA programs’ student enrollment, with 31.25% of
the respondents being female. Men, on the other hand, were underrepresented, with only 19.74% responding of the
76 in the program.
4.2 Reward Values Requested
The average value requested by those who made a request is $7.58. The average values requested by women were
$9.70, contrasting with men’s requests for an average of $4.65, with women asking for approximately $5 more than
men. This outcome is different from that of Greig’s 2008 study which reported the average request made by women
was $19.34 and the average request made by men was $21.47, which shows men asked for marginally more.
Starbucks gift cards were given to the two participants who negotiated for the highest amount ($25). One man and
one woman each asked for $25. The woman, age 29, reported her highest salary as $125,000, claiming she performed
on par with her coworkers, and was an above average negotiator. The man, age 25, reported his highest salary as
$43,500, claiming he performed far better than his coworkers, and was an average negotiator. Comparatively, the
second highest amount requested of $15 was made by a woman, age 29, who reported her highest salary as $47,000,
claimed she performed far better than her coworkers, and was a below average negotiator (see Table of Relevant
Survey Questions and Responses).
Table of Relevant Survey Questions and Responses
I feel I performed
better than my
coworkers in similar I feel I am
job positions in terms an above
Respondent of work performance average Request Amount
Number Age Sex Race Salary last year negotiator Made Code Requested

1 29 Female White $ 47,000.00 Strongly Agree Disagree 2 $15.00
2 23 Male White $ 16,640.00 Neutral Agree 0 N/A
3 22 Female White $ 55,796.00 Agree Agree 2 $10.00
4 29 Male White $ 110,000.00 Agree Neutral 2 $5.00
5 26 Female White $ 75,000.00 Agree Agree 2 $5.00

I don't drink
6 25 Male White $ 47,000.00 Agree Neutral 0 coffee :)
7 25 Female White $ 40,000.00 Strongly Agree Agree 2 $10.00
8 27 Male Asian $ 40,000.00 Agree Agree 0 N/A

Strongly
10 25 Male White $ 50,000.00 Agree Agree 1 $0.00
11 24 Female Hispanic $ 40,000.00 Strongly Agree Agree 2 $5.00
12 27 Female White $ 71,400.00 Agree Neutral 2 $10.00
13 24 Female White $ 33,000.00 Strongly Agree Neutral 2 $10.00
14 32 Female White $ 60,000.00 Agree Neutral 2 $5.00
15 26 Male White $ 52,000.00 Strongly Agree Agree 2 $3.00
16 26 Female White $ 89,440.00 Neutral Disagree 2 $2.00
17 37 Male White $ 55,000.00 Strongly Agree Neutral 2 $5.00
20 29 Female White $ 125,000.00 Neutral Agree 2 $25.00
21 26 Male White $ 62,000.00 Agree Agree 1 $0.00
24 26 Male White $ 35,000.00 Strongly Agree Agree 2 $6.75
25 25 Male White $ 41,600.00 Agree Disagree 2 $5.00

5. Discussion
5.1 Heuristics and Negotiation
Where we had anticipated our survey would merely confirm Greig’s (2008) findings, instead, our outcomes
strikingly ran contrary to what most researchers have discovered about women and negotiation. First, Greig observed
that higher-earning employees tended to ask for a lower or no reward, presumably because their salaries dwarfed the
value of the rewards card. Second, in Greig’s study, while 90% of men requested a rewards card, only 76% of
women made a request, although the differences in value between the amounts requested by men versus women was
statistically insignificant. In contrast, in our study, 100% of women requested a rewards card, compared to only 73%
of men, a near-inversion of Greig’s findings. More important, women not only requested, on average, twice the value
requested by men but also requested two of the three highest card values. The disparity between amount requested
and perception of oneself compared to peer group most likely stems from an availability bias.
5.2 Availability Bias
While underused as an explanation for disparities in negotiation between the sexes, availability has long played a
role in decision-making, when frequent or recent exposure leads individuals to make correlations between the most
frequently or recently observed phenomenon and the scenario at hand (Tversky & Kahneman, 1973). In particular,
availability biases play such a muscular role in medical misdiagnoses made by recent graduates of medical school
that Tversky and Kahneman’s original paper on availability bias sprang from earlier studies of medical misdiagnoses
(Chapman & Chapman, 1967). In addition, medical residents and fellows, continuing their training, continually
receive schooling to steer them away from availability biases. As medical studies emphasize rare diseases and
conditions, clinicians new to practice tend to diagnose patients with the same rare diseases they most recently studied,
rather than the more mundane and routine diagnoses their patients present to them (Redelmeier, 2005). To counter
availability biases in recently-trained clinicians, senior or attending clinicians train them to ignore recently-studied
rare diseases in favor of the diseases they are statistically most likely to encounter (McDonald, 1996). Availability
biases figure so strongly in medicine that evidence-based heuristics direct clinicians’ attention deliberately away
from them, ultimately making difficult the diagnosis of actual rare conditions and diseases (Sareli, Janssen, Sterman,
Saint & Pyeritz, 2008).
5.3 How Availability Biases Shaped Survey Responses
Similarly, in negotiation, availability accounts for the both “sticky floor” and “glass ceiling” that keep women from
receiving the lucrative salaries of their male counterparts. Relying on their most recent salary, negotiation,
experiences or discussions of either among their social networks, women set targets for first offers lower than those
set by men, accounting for lower first offers made by women, as observed by researchers from Babcock and
Laschever (2007) through Rosette, Kopelman, and Abbott (2014). In our study, the top requests were both made by
participants who felt they were making relatively high salaries. However, the woman’s availability bias, linked to her
$125,000 salary as an intern, being groomed for top management in a multinational Fortune 500 company, made her
perceive herself as performing merely on par with her peers, while she ranked herself as an above-average negotiator.
Similarly, the second-highest value requested by female respondents was also made by a woman with experience in a
multinational Fortune 500 organization, with an availability bias linked less to her own salary—significantly lower
than some of the other women in her cohort—than those of the mostly male colleagues around her. Significantly,
both women worked in the mostly male-dominated financial services sector, which may have provided them with
availability biases canted toward the comparatively lucrative salaries earned by men working alongside them. Since
Greig’s entire 2008 sample consisted of participants in banking, men and women alike would have probably relied
on availability biases of salaries of colleagues of the same sex within their organization, eliminating the cross-sex
availability bias we discovered.
5.4 Framing as a Significant Influence in Negotiation
Framing effects also played a role in the values requested by study participants. Both men and women, in requesting
values, reporting performance, and estimating their skill in negotiation were influenced by their workplace, peers,
and age group—in some instances, more markedly by these frames than they were by availability, which seemed to
influence only the top-value requests. For example, the man who also requested the top amount as his reward
reported a salary only a third of his top-requesting female classmate’s but felt he outperformed his colleagues in the
workplace but was merely an average negotiator. As a 25 year-old man who had worked only in a small municipal
government, with little experience outside his home state, he clearly felt he earned a relatively high salary for his age
and work peer group, rating his skill ranking his performance amongst his workplace peer group as superior. Notably,
despite the high value he requested as his reward, he ranked his skills as a negotiator as merely average.

5.5 Heuristics Guide Judgment in Ambiguous Contexts

Our participants were also likely guided by heuristics stemming from the contextual ambiguity generated by our
survey, which included sham questions to mislead participants about its purpose—a condition that somewhat mimics
the lack of cues many negotiators face in making first offers for compensation (Tversky & Kahneman, 1974; Bowles,
Babcock & McGinn, 2005; Magee, Galinsky & Gruenfeld, 2007). Contextual ambiguity can cue stereotyping
behavior (Wheeler & Petty, 2001) that glues women firmly to the sticky floor or mid-level bottleneck (Yap &
Conrad, 2009). However, in our study, women seemed to have relied, instead, on representativeness heuristics
(Tversky & Kahneman, 1974), using their salaries to guide their sense of worth and performance relative to their
workplace peers, even as their tendency to negotiate higher-value rewards was inversely correlated to their belief in
their own abilities as negotiators. Significantly, women tended to make significantly higher salaries than the men in
the study before their salaries influenced the amount they requested as a reward for completing the survey (see Table
of Relevant Survey Questions and Responses). Deprived of anchors to guide their value requests (Galinsky &
Mussweiler, 2001), women in our survey relied, instead, on availability, framing, and representativeness heuristics in
making value requests.
5.6 Study Limitations
As behavioral economists have themselves noted, small sample sizes can lead to misleading conjectures as to their
representativeness of larger phenomena (Kahneman, 2011). However, many studies of women and negotiation have
relied on atypical but convenient samples, including undergraduates enrolled in researchers’ courses or in MBA
programs (e.g., Galinsky & Mussweiler, 2001; Kray & Haselhuhn, 2007; Kray, Galinsky & Markman, 2009; Rosette,
Kopelman & Abbott, 2014). In addition, our small sample size might have resulted in the findings contradicting
those reported in the study on which ours was modeled—Greig’s 2008 study. However, Greig inconsistently reports
the number of participants. The study first reports that Greig randomly selected 50 men and 50 women from a
financial institution to complete her survey, then later reports a total sample size of 319 employees, of whom 305
apparently completed her survey—despite Greig reporting an average response rate of 49% (Greig 2008). Ultimately,
our findings jibe with outcomes in other studies with larger sample sizes that similarly found that situational factors
exert more influence over negotiation tactics than participants’ sex (Gerhart & Rynes, 1991).
5.7 Implications: When Heuristic Biases Become Beneficial
Researchers consistently equate heuristic biases with quick and dirty thinking that more often than not leads to
misleading conclusions, including errors from representativeness (Tversky & Kahneman, 1974; Tversky &
Kahneman, 1981), leading to stereotyping (Ayres & Siegelman, 1995; Wheeler & Petty, 2001) or to susceptibility to
manipulation (Wheeler & Berger, 2007; Morewedge & Kahneman, 2010; Kahneman, 2011). However, this study
provides an example of beneficial effects stemming from heuristics like availability. Moreover, our findings support
other studies documenting the benefits from another heuristic, anchoring, which resulted in greater satisfaction with
negotiation outcomes (Galinsky & Mussweiler, 2001; Magee, Galinsky & Gruenfeld, 2007). For female negotiators
who lack access to the higher salaries and perceptions of self-worth of our participants, MBA programs can provide
female graduate students with priming exercises prior to negotiation, prompting them to reflect on situations in
which they outperformed their peers in either the classroom or in a workplace setting (Magee, Galinsky & Gruenfeld,
2007).
For women who fail to summon memories of an effective performance, their negotiation skills can even improve
through exercises in counterfactual thinking. In what researchers have identified as additive counterfactual thinking
(Kray, Galinsky & Markman, 2009; Kray et al., 2010), individuals identify regrets over failed opportunities to
negotiate, gaining competitive advantage in future negotiations (Galinsky, Seiden, Kim & Medvec, 2002; Galinsky,
Leonardelli, Okhuysen & Mussweiler, 2005). Together, availability, anchoring, priming, and counterfactual thinking
can work to encourage women to make higher first offers, become more aggressive negotiators, and enable them to
free themselves from the sticky floor, mid-level bottleneck, and glass ceiling alike. Even a simple workshop, short
course, or module within a course in negotiation could significantly benefit women in negotiating their next salaries
by including exercises using priming, availability, and counterfactual thinking.
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The Practice of Knowledge Management in Private Higher Education

Institutions in Egypt: The Demographics Effect
Tarek A. El Badawy1 & Mariam M. Magdy1
1
Department of Management and Organization, Faculty of Management Technology, German University in Cairo,
Cairo, Egypt
Correspondence: Dr. Tarek A. El Badawy, Assistant Professor of Management, Department of Management and
Organization, Faculty of Management Technology, German University in Cairo, Cairo, Egypt. E-mail:
tarek.el-badawy@guc.edu.eg
Abstract
Managing knowledge in higher education institutions is under scrutinizing due to the mismatch between the demands
of the labor market and the education output. Knowledge management research focuses on the technical aspect rather
than the humane one which includes the employees who directly interact with the system. The aim of this paper is to
analyze the interaction of age and gender of Egyptian academicians, and its effect, on Knowledge Management. Data
was gathered using questionnaire in which 73 academicians from two private HEIs in Egypt. Results have shown
that age and gender did not affect knowledge management processes. The generalized linear model reflects that the
interaction of age and gender affects the knowledge disseminating process. Several trends regarding the interaction
of age and gender are discussed. This paper raises the attention to how important it is to implement KM processes
and communicate KM initiatives within educational institutions.
Keywords: knowledge management, higher education institution, Egypt
1. Introduction
The 1990s marked the beginning of the rising interest in Knowledge Management (KM) in the academia and
management fields (Schmitz, Rebelo, Gracia &Tomas, 2014). Knowledge is the means individuals use to solve
problems. It constitutes of theoretical knowledge, general wisdom and attitudes. Knowledge is also defined as the
individual’s store of information that contributes to the fulfillment of tasks. It is also acknowledged as the developed
and executed processes in the brains of the knowledge bearer, growing slowly and shaped into unique direction by
the means of hundreds of daily choices and decisions. This would be the basis of productive activities (Madhar,
2010).
In Higher education institutions (HEIs) per say, the integration of KM systems is countered with two main concerns.
First, many faculty members regard the knowledge they have as a trademark that is not to be shared freely. This is
normal according to the nature of the academia and the prominence it places on conducting primary research as
faculty members view knowledge as a source of differentiation (Wiig, 1993). Second, HEIs are usually organized
around functional areas such as research and development or marketing, which are operating independently.
Accordingly functional areas at the HEIs usually fail to share knowledge that can be the result of establishing higher
standards of education (Ramachandran, Chong & Ismail, 2009).
Very few studies focus on the humane aspect of KM; mostly, studies analyze the technical aspects of implementing
KM in an organization. However, the people element faces many challenges when it comes to KM. Employees are
reluctant to participate in KM initiatives and specifically participate in sharing knowledge due to several reasons.
Alyateem (2014) reports that employees see many challenges when it comes to integrating KM in an organization.
Among those challenges were lack of enough time, de-motivating culture and lack of awareness about the returns of
KM. In addition, employees do not realize the benefits; there are no incentives or funds for KM. This represents a
significant problem in any institution or organization aiming to implement KM.
The importance of this study lies in the lack of understanding of the underlying assumptions of the aforementioned
problem. For example, to the authors' knowledge, there is a lack of studies on the interaction of age and gender with

KM implementation (Pejorava & Klimek, 2014; Stam, ND; Darvish, Ahmadnia & Qryshyan, 2013). The problem
heightens in educational institutions as they are considered knowledge manufacturers. Educational institutions face
challenges to remain competitive in articulating adequate curricula and graduating qualified candidates. Al-Zoubi
(2014, p. 32) believes that "universities can shift from managing teaching staff and students to managing knowledge
and innovation to achieve their goals" (2014, p. 32).
This paper is a continuation of the study conducted by researchers El Badawy, Kamel and Wagdy (2014) in which
KM processes in Egyptian HEIs were analyzed. However, the focus of this paper is on analyzing the interaction of
age and gender with KM processes. A Generalized Linear Model regression test was performed on the data collected.
The organization of the paper is as follows. First, a brief on the literature focusing on Knowledge Management, KM
processes and the demographics affecting KM is explored. This is followed by discussing the high education system
in Egypt. Afterwards, the methodology of how this study was conducted is explained. This is followed by the results,
discussion and concluding remarks.
1.1 Knowledge Management
Knowledge is the means individuals use to solve problems. It constitutes of theoretical knowledge, general wisdom
and attitudes. Knowledge is also defined as the individual’s store of information that contributes to the fulfillment of
tasks. It is also acknowledged as the developed and executed processes in the brains of the knowledge bearer,
growing slowly and shaped into unique direction by the means of hundreds of daily choices and decisions. This
would be the basis of productive activities (Madhar, 2010).
Knowledge Management (KM) refers to the management of useful information to make decisions that maximize the
outcome of the organization. KM usually relates to the competitive advantage of companies that have managed to
succeed in using knowledge resources to enhance their position in the market. Consequently, they increase profits
due to knowledge accumulation. Nowadays, knowledge is considered a primary resource for individuals and for the
economy as a whole. Indeed globalization and increased competition have clarified the importance of KM and
brought it to its new heights (Drucker, 1992). Effective KM is the key to creating competitive advantage. For that
reason organizations are standing on different levels of planning and execution of knowledge-based strategies with
efforts to enhance their productivity, competitiveness, efficiency and customer service.
KM initiatives have several drawbacks. First, they are expensive to integrate as financial resources tend to hinder the
expansion of knowledge activities. Second, KM initiatives bear some risks. KM integration requires massive
contributions in areas such as knowledge capture, storage and distribution. However, the actual returns may not be
satisfactory. On the other hand, there is a huge demand for skilled managers opt for the challenges brought about by
KM (Basu & Sengupta, 2007). It is believed that KM initiatives in business schools need to be studied as schools are
knowledge concentrated organizations.
In Higher education institutions (HEIs) per say, the integration of KM systems is countered with two main concerns.
First, many faculty members regard the knowledge they have as a trademark that is not to be shared freely. This is
normal according to the nature of the academia and the prominence it places on conducting primary research as
faculty members view knowledge as a source of differentiation (Wiig, 1993). Second, HEIs are usually organized
around functional areas such as research and development or marketing, which are operating independently.
Accordingly functional areas at the HEIs usually fail to share knowledge that can be the result of establishing higher
standards of education (Ramachandran, Chong & Ismail, 2009).
1.2 Knowledge Management Processes
Different studies have managed to properly address KM processes with regard to identifying certain aspects of KM.
These processes include acquisition, innovation, protection, dissemination and integration (Lee & Yang, 2000);
acquisition, conversion, application, and protection (Gold, Malhotra & Segars, 2001); development, utilization, and
capitalization (Kalling, 2003); creation, accumulation, sharing, utilization, and internalization (Lee, Lee & Kang,
2005); identification, collection, organizing, storage, sharing, and evaluation (Kiessling, et al., 2009). A detailed
examination of these different views made researchers able to group them into five groups: Knowledge identification,
acquisition, storage, sharing, and application (Liao & Wu, 2009; Kiessling et al., 2009; Daud & Abdul Hamid, 2006;
Gold et al., 2001; Lee & Yang, 2000).
First, Knowledge Identification is the process where knowledge value and flow are located; in addition, occasions
that influence the value of the knowledge are identified (Hall & Andriani, 2002; Zack, 1999). It is the stage where
knowledge gaps are identified based on the level of knowledge expertise and the strategic capabilities of the
organization. Knowledge from this point of view can be discovered by either individual employees or organizations

(Liao & Wu, 2009; Darroch, 2005). It is crucial to identify the knowledge gap correctly to be able to support the staff
daily work effectively. Therefore, the knowledge identification process influences the improvement in the academic
performance of institutions greatly (Sarawanawong et al., 2009).
Second, Knowledge Acquisition is the process after knowledge is identified. Knowledge has to be located and
captured. Therefore, the acquisition process is oriented towards acquiring the needed knowledge from both external
and internal sources (Abu-Nahleh, Mohammad, Hamdeh, & Sabri, 2010; Bouthillier & Shearer, 2002). This requires
accessing knowledge in knowledge-based sources to capture the new knowledge, and take advantage of already
available knowledge. Knowledge capturing through searching can be done by ways such as scanning, focused
research, and performance monitoring. Organization learning takes an essential part in knowledge capturing since the
organization is required to improve its performance continuously. Furthermore, it focuses on how important it is for
organizations to decide the best practices to be implemented in order to attain excellent performance (Liao & Wu,
2009; Asoh, Belardo & Crnkovic, 2010; McKeen et al., 2006).
Third is the Knowledge Storage process. Knowledge is a valuable asset; for this reason it should be handled carefully.
The storage process is when knowledge is put in a certain code and recorded for easy accessibility (Kiessling et al.,
2009). Knowledge is stored in a certain kind of database that is referred to as “knowledge base”. The knowledge base
system collects, organizes and retrieves knowledge in a computerized and automated way. In HEIs, a reliable
integrated system is adopted to measure the academic performance and students' achievements. For the system to be
successful, it requires an effective process of knowledge storage that provides valid and reliable data.
Fourth, Knowledge Sharing process is when knowledge and information are exchanged within different sources.
According to Botthillier and Sheare (2002), the success of any KM process in any organization highly depends on
how effective knowledge sharing is. There is a common problem in organizations, they are not aware of the valuable
knowledge stored inside the organization due to departments and employees not discussing it together (Kiessling et
al, 2009; Liao & Wu, 2009). Therefore, it is very crucial to keep knowledge sharing as a vital support of KM in
higher-education context (Daud & Abdul Hamid, 2006).
Finally is the Knowledge Application process. After identifying, acquiring, storing and sharing the knowledge, the
final process is application of knowledge. Knowledge without application is considered as information. Knowledge
application is referred to as knowledge utilization. According to many researches the knowledge management
process represents actual utilization of the knowledge (Asoh, Belardo & Crnkovic, 2010; Lee et al., 2005; Gold et al.,
2001; Zack, 1999).
1.3 Knowledge Management and the Workforce Demographics
Employers currently face the question of whether to keep older employees or substitute them with younger ones.
Older employees are considered more knowledgeable and with higher qualifications and expertise. However, they
are stereotyped to be slow, inefficient and resistant to the new technology and business mindsets. On the other side,
the youth join organizations with fresh blood and new ways of doing business, beside their energy and strive to
compete and achieve. Pejorava and Klimek (2014) believe that employees above the age of 50 are the knowledge
source of the organization. They (older employees) are the organization's main reason it stays competitive and hence,
all KM efforts should be guided to them. The researchers' survey reveals that younger employees appreciate the
elder's knowledge; however, they believe that older employees are not interested in their newly developed ways of
doing business and they are reluctant to change their mind-set. Stam (ND) believes that KM is suffering due to "the
underutilization of older employees" and "loss of knowledge" as a result (p. 1). It is believed that KM needs planning
and putting strategies; in addition to constructing communication channels between generations to try to narrow the
gap. Accordingly, the following hypotheses were developed:
H10: Age has no effect on KM.
H11: Age affects KM so that older employees will have more knowledge of KM than younger ones.
Hasnain (2013) studied the effect of age and gender on KM transfer in NGOs operating in Bangladesh. His results
reveal that concerning gender, females are more successful in indulging and transferring knowledge than males. In
addition, the interaction of age and gender shows that females of the younger generation (20-35 years old) are more
successful. Darvish, Ahmadnia and Qryshyan (2013) found no statistical differences between males and females with
respect to their level of knowledge management. It is believed that females are more successful as they show more
commitment to KM. Nevertheless, the effects of gender and age have not yet received wide recognition in the
research field. Accordingly, the following hypotheses were developed:
H20: Gender has no effect on KM.

H21: Gender affects KM so that females exhibit more knowledge of KM than males.
1.4 Education in Egypt
Higher education institutions are challenged with the problem of the curriculum's quality. The majority of university
graduates are unemployed or are seeking job opportunities unrelated to their fields of study. This is due to the
unfitting between the university output and labor market requirements (Belal & Springuel, 2006). In addition, the
quality of education provided by Egyptian universities was dramatically affected following reforms introduced in
1952, making higher education accessible to a huge number of students. The move increased the numbers of students
and did not provide for the necessary resources to maintain the quality of education. Therefore, after Egyptian
universities enjoyed high rankings worldwide, by 2005 none were among the top 500 (Belal & Springuel, 2006).
Currently, there are 19 new private universities running joint programs with foreign universities. The outdated
Arabic education systems have been gradually replaced with the American semester and credit hour systems. English
now has become more noticeable medium for education. Most of the current universities in Egypt are linked with
some university programs overseas. Therefore, universities need to differentiate themselves by offering high quality
service and ensuring that their students are satisfied with the services provided. In order to do this, universities will
need to implement quality assurance methods to show that the services provided are meeting the international
standards on all accepted benchmarks (Heshmat, 2008).
In a paper discussing the relationship between KM and innovation, the author, Numair (2012), compared KM
methods in the American University in Cairo (AUC) and Al Mansoura University (Daqahlia governorate). Numair
(2012), who similarly found difficulty finding previous literature on KM in Egypt, found that AUC enjoys a far
better KM system than Al Mansoura University. He attributed the problem to the public higher education system in
Egypt at large. He described it as lacking the structure to promote knowledge sharing and having a centralized
system in which the concerned Ministry is the only body responsible for the process. He added that this constitutes
an obstacle hindering Egyptian universities’ ability to cooperate and collaborate with other universities or business
organizations to improve their knowledge bases (Numair, 2012). Knowledge sharing is considered the most
important process for academics in higher education institutions. Research shows that effective KM systems are not
only beneficial for practitioners, but also help students develop their creativity and understanding (Wang, Lin, Li &
Lin, 2014).
Researchers El Badawy, Kamel and Wagdy (2014) analyzed the KM processes applied in HEIs. They conceptualized
KM as constituting of the following processes: creating, capturing, organizing, storing and disseminating knowledge.
Their results showed the ranking of KM processes. The highest was knowledge dissemination (M = 63.1, SD =17.3).
Capturing Knowledge recorded the lowest mean score (M = 44.3, SD = 18.7).
Table 1. Multiple comparisons of KM processes
Capturing Organizing Storing Disseminating Applying
knowledge Knowledge Knowledge knowledge Knowledge
Creating 0.038927 0.081423 0.558732 0.000776 0.018759
knowledge P < 0.05 P> 0.05 P> 0.05 P < 0.001 P < 0.05
Capturing 0.626646 0.006389 0.000000 0.834544
knowledge P> 0.05 P < 0.01 P < 0.001 P> 0.05
Organizing 0.024755 0.000000 0.475775
Knowledge P < 0.05 P < 0.001 P> 0.05
Storing 0.004575 0.002714
Knowledge P < 0.01 P < 0.01
Disseminating 0.000000
knowledge P < 0.001
In addition, multiple comparisons of the KM processes where every two processes were intersected to explore which
pair is significantly different were conducted. There was high statistical significant difference for comparisons
between storing knowledge and capturing knowledge, disseminating knowledge with all four processes, and applying
knowledge with both storing knowledge and disseminating knowledge (P < .01). Also, there was statistical
significant difference in the comparisons between capturing and creating knowledge, storing and organizing
knowledge, and applying and creating knowledge (P < .05).

Finally, correlation analysis of knowledge components using Spearman’s rho was conducted. All correlation
coefficients show positive direct relations between Knowledge processes. All of the relations were of intermediate
strength (Coefficients about 0.50) and statistically highly significant (P < 0.01).
There were two questions measuring the respondents’ knowledge of KM and whether they are aware that their
institution has a formal KM program in place or not. The results for knowledge of academicians about KM in their
institutions show that 42.5 % do not have any knowledge of the KM in their institutions which is nearly half of the
respondents, 27.4% possess some knowledge, 19.2 % responded having average knowledge, only 5.5 % had more
than average knowledge which also happened to be the same percentage as those who were very knowledgeable
about the KM 5.5%.
When it came to whether their institution had formal KM program, 2.7 % of the respondents were sure that they had
a formal KM program in their institution. On the other hand, 21.9% were sure that they had no formal KM program.
Finally, 75.3% were not even sure if they had a formal KM program implemented in their institution.
This paper continues to analyze the same data collected but with a niche focus on the demographics of age and
gender.
2. Method
2.1 Sample and Procedures
123 self-reported questionnaires were distributed in two private educational institutions: the German University in
Cairo (GUC) and Misr International University (MIU) of which only 73 applicants responded with a 59.3% response
rate. Academicians were surveyed and were chosen according to their responsibility in how they generate knowledge
through research and dissemination of knowledge by the means of teaching. Academicians are the ones who are
usually faced with pressure to provide good results requiring practitioner-based research initiatives.
The participants were asked whether they had any formal KM program in place in their colleges as a pre-requisite to
be selected to participate in this survey. Hence, the sample chosen was considered purposive. The questionnaires
were sent to all the academicians in both universities so as to ensure a maximum return rate of the questionnaires.
Moreover, the nature of the study was explained in a cover letter accompanying the questionnaires. This step took
approximately about 3 to 5 weeks. Questionnaires were brought back and analyzed using the IBM SPSS program.
2.2 Questionnaire
A self-reporting questionnaire was used in data collection. Questions were adapted from the Knowledge
Management Assessment Instrument (KMAI) developed by Lawson (2003). The questionnaire is divided into two
sections: Identifying the level of practices of KM processes and analyzing the respondents’ knowledge of KM in
private HEIs.
Section One contains 24 statements measuring the KM processes. The questions were adapted from the KM
assessment instrument (KMAI) developed by Lawson (2003), utilizing a five-point Likert scale ranging from 1 =
strongly disagree to 5 = strongly agree. The KMAI is considered in view of its comprehensiveness in addressing all
the dimensions of the KM processes (Ramachandran, Chong & Ismail, 2009). Section Two contains two questions
measuring the respondents’ knowledge of KM and whether they are aware that their institution has a formal KM
program in place.
Table 2. Cronbach's Alpha
Dimensions Alpha
Creating knowledge 0.766
Capturing knowledge 0.736
Organizing Knowledge 0.803
Storing Knowledge 0.704
Disseminating knowledge 0.614
Applying Knowledge 0.670
Total Knowledge 0.902

www.sciedu
nal of Business A
Reliability test, using Crronbach's Alph

ha, was condu ucted in whichh Total Knowwledge showedd excellent reliiability
while otherr Knowledge factors
fa showed good reliabilitty as shown in the table.
3. Results
The aim ofo this paper is to analyze the t effect of agea and gendeer on KM proocesses in Egyyptian HEIs. F For the
hypothesess, the researcheers believe thaat there are no adequate studdies addressingg the humane aaspect of KM and its
implication
ns on strategicc Human Reso ource Managem ment inside anny institution. Moreover, thee effects of agge and
gender on KM are rareely discussed. However, mo ostly studies ffocus on the ttechnical impllementations oof KM
processes.
The two saample T-test an
nd the Wilcoxo
on Mann-Whitn
ney test were uused to test the first hypothesiis.
H10: Age has
h no effect on
n KM.
H11: Age affects
a KM so that
t older emplloyees will hav
ve more knowlledge of KM thhan younger onnes.
Figure 1. Im
mpact of age oon KM
The diagram
m shows the reeported means of knowledge levels of KM pprocesses accoording to age.
Both t-testt and Mann-WWhitney showeed no statisticaally significantt difference beetween age annd the differennt KM
processes as
a well as the total KM leveel. Therefore, we
w fail to reje ct the null hyppothesis; age hhas no effect oon KM
processes in our sample.
Figure 2. Im
mpact of genderr on KM
For the seccond hypothesis, the diagram shows the repo
orted mean levvels of knowleddge by males aand females.
H20: Gender has no effecct on KM.
H21: Gender affects KM so that femaless exhibit more knowledge off KM than malees.
Published byy Sciedu Press 101

1 ISSN 1923-40007 E-ISSN 19223-4015
www.sciedu
nal of Business A
Both t-test and the Mann-Whitney testss showed no staatistical signifiicant differencee between malles and femaless when
it comes too their level off knowledge off the KM proceesses as well aas the total KM
M knowledge. Therefore, we fail to
reject the null
n hypothesis; gender did no ot affect KM in
n our sample.
A Generaliized Linear Model
M was draw wn where diffeerent KM proccesses (dependdent variables)) were consideered as
functions of
o age, gender and age*gend der interaction (independent variables). Thhe GLM was uused as it alloows for
creating interactions betw
ween variabless. In this case, the aim was tto understand whether changges between yoounger
and older age
a groups are the same as ch hanges for malees and females . The followinng table summaarized the resullts:
Table 3. GL
LM for the inteeraction
KM Prrocess Significancce of T
Trends
Interaction
Creating knowledge Not
N significant Forr males: almostt no difference between both age groups.
Forr females: the leevel of creatingg knowledge ddecreased by agge.
Capturing kn
nowledge Not
N significant Forr males: the levvel of capturingg knowledge inncreased by agee.
Forr females: theere was a reeverse effect; capturing knnowledge
decreased by age.
Organizing knowledge
k Not
N significant Theere was a deccline for bothh males and ffemales as theey aged;
how
wever, males shhowed an acutee decline.
Storing know
wledge Not
N significant Theere was an inccrease for botth males and females as theey aged;
how
wever, males shhowed a higherr increase.
Disseminatin
ng Significant
S efffect of Malles witnessed a high increasse as they age while womenn showed
knowledge age*gender
a intteraction the reverse; there was a steady ddecrease as theyy age.
[F
[ (1) = 3.77,
p=0.056)].
p
Applying kno
owledge Not
N significant Forr males: the levvel of applying knowledge inccreased as theyy age.
Forr females: thee reverse happpened, applyiing knowledgge levels
decreased as they age.
Total knowleedge Not
N significant Thee overall levells of KM proccesses showedd that males iincreased
theiir KM knowleddge as they agee while females showed the oopposite.
20.0 e level = Large Age group ‐ Small Age ggroup

Differencce of the meaan knowledge
14.85
15.0 13.89
9.25
10.0
5.00
5.0 ‐5.96 2.92 ‐9.59 ‐4.58
‐1.96 ‐1.88 1.80 ‐5.18 ‐2.97
‐1.20
0.0
‐5.0
‐10.0
Male
‐15.0
Fem
male

Figure 3. Differences
D in m
means
The diagraam shows a simmpler visualizaation of the chaange due to agge between maales and femalees as depicted by the
difference in mean valuess.

2 ISSN 1923-40007 E-ISSN 19223-4015
The following remarks are derived from the diagram:

 For females, the mean levels of KM knowledge were lower for the older age than the younger one except for the
process of Knowledge Storage.
 For males, the mean levels of KM knowledge were higher for the older group in all KM processes except for
Creating and Organizing KM.
 Focusing on total KM knowledge, the total knowledge for older males was higher than younger ones. However,
females showed the opposite, where younger females had a higher mean level than older ones.
 The greatest difference between means with respect to age was for males, in Knowledge Storing process.
4. Discussion
As "most of the sources dealing with intellectual capital point to the fact that intellectual capital can have significant
contributions and serve as a basis for competitive advantage… especially in the so-called knowledge era of the 21st
century" (Harazin & Padar, 2013, p. 38), understanding the underlying assumptions of effective KM integration is
crucial. Strategic Human Resource Management should be considered a value-adding partner in the transition
process to ensure proper implementation of KM processes and high economic returns for the organization or
institution.
The aim of this paper was to analyze the interaction of age and gender with KM processes in Egyptian HEIs. The
first author of this paper already did a study on KM processes in HEIs and had several important results. It was
discovered that 42.5 per cent have no knowledge of KM and only 5.5 per cent have more than average knowledge or
very knowledgeable. In addition, capturing and applying knowledge processes have scored the least means; however,
it is supposed to be high as HEIs are considered to be knowledge-intensive institutions (2014).
Both hypotheses were rejected reflecting that differences in age and gender do not significantly affect the levels of
implementing the different KM processes in Egyptian HEIs. Concerning age, the differences between both age
groups were minimal. However, there was an increase in storing knowledge with the higher age group. It is argued
that as employees age, they focus more on accumulating expertise and knowledge in certain areas and storing them
for continuous use in the present and the future. Moreover, there was a higher decrease in creating knowledge for the
higher age. This could be justified that the younger ages are more competitive and eager to learn and discover new
ways of doing their work; hence, they focus more on creating knowledge. Such results provide support to Pejorava
and Klimek (2014) and Stam (ND) who believe that older employees are knowledge catalysts who should be utilized
to create successful KM systems.
Concerning gender, differences on KM processes were almost the same except for capturing knowledge. Such results,
however, are inconsistent with the status quo of the society. As the Egyptian society is high on masculinity, females
tend to work harder to prove themselves and scan for ways to accumulate knowledge. However, the inconsistency
may be related to the nature of the organization. In HEIs, the percentage of female academics to males is higher.
Hence, males are focusing more on accumulating knowledge for their careers. Such results provide support to
Darvish, Ahmadnia and Qryshyan (2013) who found no statistical differences between males and females with
respect to their levels of knowledge management. However, the results contradict Hasnain's (2013) findings, in
NGO's, which reflected that females are more successful in disseminating knowledge.
The Generalized Linear Model reflects no significant effect of the interaction between age and gender in all KM
processes except for the dissemination of knowledge. Males showed a high increase as they aged while females
showed the reverse. Such results support Hasnain's (2013) finding that there is a difference between males and
females on KM dissemination; however, the results of Hasnain's were the opposite. He found that the interaction of
age and gender shows that females of the younger generation (20-35 years old) are more successful in transferring
knowledge. The GLM model also highlights several trends. First, the mean levels of KM processes for females were
higher in the younger age than the older one. Second, for males, the mean levels of KM processes were higher for the
older group and its total KM level was also higher. Third, with respect to age, males showed the highest difference in
storing knowledge.
5. Conclusion and Recommendations
It is believed that this area of research is still a gap with a lot of underlying assumptions unexplored. First, the
organizational culture is considered an important aspect that affects KM integration and its influence on employees
of different age and gender. Second, perceptions of organizational commitment to KM can have an effect on its
success. Third, employees' perceptions of intrinsic and extrinsic motivation are important to implementing KM

systems. Specifically motivation has a significant effect that differs between males and females. Minbaeva, Makela
and Rabbiosi (2012) believe that females care more for intrinsic motivation and social interactions whilst males look
for extrinsic motivation. The same authors recommend studying the interaction between HRM and KM processes to
understand and correctly utilize the individual employee. Finally, this study provided results that yet need further
exploration and explanation.
This study has several limitations. First, the sample size is considered small relative to the whole population. Future
studies should focus on enlarging the sample to further validate the results and allow for generalization. Second, the
focus was on private institutions; more care should be provided for public ones. Third, the survey was distributed to
institutions in the Greater Cairo area; exploration of other governorates is considered important. Forth, it is believed
that culture plays an important role in KM integration; hence, conducting comparative studies with other countries
will reflect how differences in cultures affect KM. Fifth, the authors believe that different instruments, other than a
quiestionnaire, should be used to provide additional clarifications.
It is recommended for decision makers inside HEIs to focus on KM processes as HEIs's main function is to
manufacture and nurture knowledge. Second, efforts must be made to integrate an effective KM system inside the
institution. Third, all staff must be provided with complete information on the system and its processes in order to
utilize it and add their knowledge to it. Forth, the culture of the institution must explicitly support KM. Finally,
incentives must be provided for staff as a result of their usage of the KM system.
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A Comparison between Generation X and Generation Y in Terms of

Individual Innovativeness Behavior: The Case of Turkish Health
Professionals
Sema Yigit1 & Kadir Aksay2
1
Unye Faculty of Economics and Administrative Sciences, Ordu University, Ordu, Turkey
2
Fatsa Faculty of Marine Sciences, Ordu University, Ordu, Turkey
Correspondence: Sema Yigit, Unye Faculty of Economics and Administrative Sciences, Department of Business
Administration, Ordu University, Ordu, Turkey. E-mail: sema.yigit@odu.edu.tr
Abstract
Today the criterion of innovation has become a paradigm for all institutions to maintain their success. Innovation is
essential for service industry as well as production industry. It is the individual that is in the center of innovation,
which can be defined as the difference between a good idea and a good product. The innovative work behavior of
individuals is an area that needs to be scrutinized in terms of innovativeness. Because innovation directly effects the
quality of life, it has a significant role in the health sector.
In this perspective, this study aims to identify the innovativeness level of individuals working in health industry
where innovation is of significance; to identify the differences of innovativeness levels between generations; and to
identify the relationship between individuals’ perception of whether the institution they work have learning
orientation and their level of innovativeness.
The data in this study, which specifically addresses health institutions with their increasing role in the information
society, were gathered from the three private hospitals in Black Sea Region in Turkey. 274 health professionals
working in those three private hospitals and accepting to take part in the study formed the sample group of the study.
The results of the study show that there is a difference of innovative behavior scores between the participants coming
from Generation X and Y. This difference indicates that Generation X is more innovative. Moreover, majority of the
participants from Generation X are physicians. In this respect, it can be noted that in terms of innovative behavior the
difference between physicians and other health professionals (professional difference) is more significant than the
difference between generations.
Keywords: generation X and Y, individual innovativeness, organizational learning, health industry, Turkey
1. Introduction
Health sector is in sectors that are dense in technology and information. As innovations and developments in health
sector directly effects human life and quality of life, innovation plays a vital role in health sector, different from other
sectors (TÜSİAD, 2011). The portfolio of innovation in health sector consists mostly of product/service and process
innovations. While product/service innovation offers a new treatment service, process innovation focuses on the
internal processes in hospitals and covers the improvement of clinical examination techniques (Schultz,
Zippel-Schultz, & Salomo, 2012).
Health professionals have an important role in the efficient application of innovation. In this role, individuals’
innovativeness characteristics is one of the most important factors that create the difference. As an individual
characteristic, innovativeness can be related to taking risks, being open new experiences or age (Goldsmith & Foxall,
2003). Indeed, it would not be completely wrong to note that age factor is relatively more important, taking into
consideration its impact on other factors.

Individuals belonging to different generations of age have different experiences, different views, different habits and
different work style. Although there are five different groups of generation in the literature, workforce can be
regarded to be formed by individuals from Baby Boomers, Generation X and Generation Y, considering the fact that
majority of the members of the traditionalist generation (those born before 1943) and generation Z (those born after
2000) are not in the working life. As for the generational structure of the workforce in Turkey, those from the
generation of baby boomers form 10% of the workforce, Generation X forms about 44%, and Generation Y, which is
the last generation employed, forms about 46% of the workforce (TÜİK, 2014). Thus, the total rate of generations X
and Y in total workforce is 90%.
There are many studies in the literature investigating the impact of generational differences on workplaces.
Differences between generation in terms of values about profession (Meriac, Woehr, & Banister, 2010; Cogin, 2012;
Schullery, 2013); organizational commitment (Benson & Brown, 2011; Dixon, Mercado, & Knowles, 2013), career
paths (Lyons, Schweitzer, & Ng, 2015), job satisfaction (Benson & Brown, 2011; Young, Sturts, Ross, & Kim,
2013), motivation factors (Montana & Petit, 2008) intention to leave (Benson & Brown, 2011) have been intensively
studied. However, to our knowledge, no study has investigated the possible differences between generations in terms
of innovative behaviors.
In this study, individual innovativeness characteristics of Generation Y, the largest group in the business world, were
scrutinized in comparison with Generation X. Within this line, comparative analyses were made between Generation
X and Generation Y by determining the profiles of those generations’ innovative behaviors.
2. Background
2.1 Generational Diversity
The concept of generation is studied by social scientists from various perspectives. While the concept of generation
can be described as a group of individuals that are related to each other or have mutual characteristics, it can also be
handled as a stage of life or a historical period (Kertzer, 1983). However, generation is generally regarded as the
differences between the age groups of certain time periods (Pilcher, 1994). Generation is a concept which refers to a
group of individuals that have similar birth years and experiences, and whose thoughts, attitudes, values, beliefs and
behaviors are effected by various factors, and who effects those factors in turn (Kupperschmidt, 2000; Johnson &
Johnson, 2010). These factors are a result of political, economic or cultural structure of the period they live
(Guillot-Soulez & Soulez, 2014). Generations are majorly influenced by the historical events individuals encounter
until they become adults. As a result of the power and impact of these shared events, each generation constructs
unique structure of belief, attitude and behavior (Giancola, 2006) and a unique identity that shapes the feelings that
they have for the authority and organizations (Gürsoy, Maier, & Chi, 2008).
Although there is consensus on the names of the first two of these generations, it is seen that there are various names
for Generation Y. A similar dispute exists in the classification of the age groups that define the generations (Smola &
Sutton, 2002). In this study, age groups were determined based on Gürsoy et al.’s (2008) classification.
Baby boomers: It consists of individuals born in 1943-1960 and those born during the World War II or during the
population growth after the war. Individuals from this generation are 7.5% of Turkey’s population (TÜİK, 2013).
Generation X (Gen X): These are the member of the generation who were born in 1961-1980 and are about 26% of
Turkey’s population. Generation X is the first generation to grow up with personal computers in the age of
information; however, they were intensively affected by the social and economic disorder, and thus they are less
optimistic than the previous generation but they believe in themselves (Sayers, 2007).
Generation Y (Gen Y): This is the generation of individuals who were born in 1981-2000 and it is about 33% of
Turkey’s population. It is also called Millennials, Generation Me, Echo Boomers and Nexters (Twenge, 2010; Parry
& Urwin, 2011). The members of this generation are the children of the previous generation who increased the
quality of their lives thanks to the industrial evolution in the 70s, and have a good standard of life in a good
environment (Puybaraud, Russell, MsEwan, & Leussink, 2010).
Table 1 shows the professional characteristics of Generations X and Y, who are about 90% of the workforce in
Turkey.

Table 1. Generations X and Y in terms of their professional characteristics

Professional Characteristics References
They work to live. Gürsoy, Maier, & Chi, 2008
They are easy-going, independent, and creative; they may Zemke, Raines, & Filipczak,
object to the system; they are suspicious and impatient. 2013
Generation X
They believe in themselves; they do not like being watched. Shragay & Tziner, 2011;
(1961-1980)
They would rather show loyalty to their occupation and those Jorgensen, 2003
they work with than organization. Although they take their
occupation seriously, they do not rely on a single organization
for their career.
They try to have a balance between work and life. They have a Kupperschmidt, 1998; Bova &
hunger for learning; they can do many things at the same time. Kroth, 2001
They are reluctant to have a leadership role. Jorgensen, 2003
They interrogate. They would like to know all about what the Martin, 2005
organization demands from them, what career opportunities
they have and what the rewards are.
They like to take responsibility and prove themselves. They Martin, 2005; Morton, 2002;
expect respect rather than money. They have strong feeling for Lowe, Levitt, & Wilson, 2008;
success. Gürsoy, Maier, & Chi, 2008;
Generation Y
(1981-2000)
Eisner, 2005
They care about the meaning of the occupation. They can do Eisner, 2005; Bennett, Pitt, &
jobs from various fields at the same time. Price, 2012.
They do not hesitate to leave the job when they are not happy Lowe, Levitt, & Wilson, 2008;
with. Moreover, they would like to work in organizations that Deloitte, 2014
are innovative, creative, energetic and environmentally
friendly.
They care about family and they would like to have a balance Gürsoy, Maier, & Chi, 2008;
between work and life. However, they are willing to work Maxwell, Ogden, &
hard to make progress in the early stages of their career. Broadbridge, 2010.
2.2 Individual Innovativeness

Although many variables influence how individuals react to innovation, individual innovativeness, which can be
regarded as the most important one, has been a part of innovation distribution studies for a long time (Agarwal &
Prasad, 1998). The concept of innovativeness can be defined as differences among individuals that characterize how
individuals react to new things. As an individual characteristic, individual innovativeness can be related to taking
risks, being open new experiences or age (Goldsmith & Foxall, 2003). Individual innovativeness is a factor that
determines whether one individual accepts innovation before others (Agarwal & Prasad, 1998). In this line,
innovativeness can be defined as one individual’s or other organizations’ level of accepting a new idea relatively
earlier than other members of the society (Rogers, 1983; Daft & Marcic, 2011). Individuals react differently to a new
idea, application or product due to their characteristics of individual innovativeness. Rogers (1983) categorizes
individuals or other unit of adoption into five groups according to their level of innovativeness as follows: (1)
innovators, (2) early adopters, (3) early majority, (4) late majority, and (5) laggards (Rogers, 1983).
According to Scott and Bruce (1994), innovation is a multi-level process which requires certain behaviors and
actions in each of its levels. They described innovation as sectional activities where individuals can get involved in
any level rather than an activity consisting of different and successive levels (Scott & Bruce, 1994). From this
perspective, innovative behavior can be approached as the activity of searching new ideas and solutions,
development and application. The generation that one belongs, influences performing innovative behavior in line
with age. According to Rogers (1963), innovators are younger than those who adopt innovation afterwards (Rogers,
1963). Then, factors such as technology, which are specific to generations, are seen. In a study focusing particularly
on Generation Y, which is more involved in technology, it was found that other generations considered Generation Y
different from themselves in terms of their creativity and innovation ability. They ranked Generation Y high for their
ability to create and innovate (Moon, 2014).
A research company did a research on Generation Y in 2014 and found out that this generation consisted of
individuals willing to innovate and preferring to work in the organizations encouraging innovative activities (Deloitte,
2014). In this context, the first hypothesis of the study is:

Hypothesis 1: There is a significant difference between Generation X and Generation Y in terms of individual
innovativeness.
Individual innovativeness is influenced by both individual characteristics and the characteristics of the social system
the individual belongs to (Rogers, 1983). This study focuses on organizational learning orientation, one of those
characteristics.
2.3 Organizational Learning Orientation
An important concept put forward in the 90s was Peter Senge’s “learning organizations.” This concept, then,
enlightened various companies that accomplished evolutionary changes in the business world. Senge (1990) defined
learning organization as an organization that continuously acquire information, unify and form this information with
their activities by improving it, and thus aim to gain competitive advantage by achieving continuous improvement.
Senge specifically focused on the importance of the concept of learning organizations by underlining organizations’
non-learning problem, criticized the attitudes and activities of human resources in organizations and pointed out the
significance of an organization where team learning was used effectively. Obviously, the premise of team learning is
the human resource that forms the team and their desire to learn. However, organizational learning is an
accumulation of individual learning processes and a key element placed in the structure, process and culture of the
organization (Sağsan, 2009). At this point, the concept of learning orientation comes out in the literature. Learning
orientation is defined as individual’s interest and devotion to improve themselves (Gong, Huang, & Farh, 2009).
With the concept of learning orientation, it is focused on the individual dimension of the concepts of learning
organizations or organizational learning. Sinkula et al (1997) investigated learning orientation on three dimensions,
which are commitment to learning, shared vision/purpose and open-mindedness.
The relevant literature (Hurley & Hult, 1998; Baker & Sinkula, 1999, 2002; Calantone, Cavusgil, & Zhao, 2002; Lee
& Tsai, 2005; Keskin, 2006; Lin, Peng, & Kao, 2008; Jiménez-Jiménez & Sanz-Valle, 2011) shows that there is a
high correlation between learning orientation and organizational innovativeness. The common finding of those
studies is that the outcome of innovation is significantly linked to the organization’s effectiveness during the process
of learning. Moreover, many studies have found that organization with an efficient learning process
(learning-oriented) are more successful in innovating (Baker & Sinkula, 2002). Individual or behavioral
innovativeness, two overlapping concepts, is considered as a sub-dimension of organizational innovativeness
(Dulger, Alpay, Yilmaz, & Bodur, 2014). Accordingly, it would not be incorrect to assume that there is a relationship
between organizational learning and individual innovativeness.
Hypothesis 2: There is a significant relationship between health professionals’ perception of organizational learning
and their level of innovativeness.
3. The Study
3.1 Aim and Design
This study aims to determine the innovativeness level of individuals working in health sector where innovation is
highly important; to determine whether innovativeness level differs from one generation to another; and to
investigate the relationship between individuals’ level of innovativeness and their perception of whether the
organization they work in have learning orientation. This is a quantitative study. The data were analyzed through
factor, t-test and correlation analysis in line with the aims of the study.
3.2 Sample/Participants, Data Collection and Limitations
According to the data from 2013, there are 735.159 health professionals employed in 1.517 health institutions.
139.933 of those health professionals are employed in 550 private institutions (Ministry of Health, 2013). The data
were gathered from health professionals employed in the private health institutions in the Black Sea Region. The
questionnaires constructed in line with the aims of the study were handed out personally and collected after a while.
The three private hospitals have 850 employers in total. 500 of those employers were included in the study; however,
only 283 questionnaires were sent back due to reasons such as employers’ shifts and their being on leave. 9 of those
questionnaires were excluded from the study as some parts of them were incomplete. Thus, 274 questionnaires were
included in the study. Questionnaire rate of return is 69.5%, which is adequate for the study to be carried out
(Altunışık, Coşkun, Bayraktaroğlu, & Yıldırım, 2005).
The limitation of the study is that it was carried out with health professionals employed in three hospitals in the
Black Sea Region because of cost and time constraints.
3.3 Survey Instrument and Data Analysis
In the study, “Individual Innovativeness Scale” was used, which was developed by Hurt, Joseph and Cook (1977) to
determine health professionals’ level of innovativeness and the innovation groups they belong to, and which was
adopted into Turkish by Kılıçer and Odabaşı (2010). The scale is known to be one of the four best scales for

measuring innovativeness, which are Jackson Personality Inventory, Kirton Adaption-Innovation Inventory, NEO
Personality Inventory and Innovativeness Scale (Goldsmith & Foxall, 2003).
The five-point Likert scale consists of 20 items about individuals’ characteristics. 12 of the scale items are positive (1,
2, 3, 5, 8, 9, 11, 12, 14, 16, 18 and 19), and 8 of them are negative (4, 6, 7, 10, 13, 15, 17 and 20) statements.
Innovativeness score is calculated by subtracting the total score gathered from the negative statements from the score
gathered from the positive statements, and adding 42 points to that. The lowest score one can get in the scale is 14,
and the highest 94. Thus, those who get above 80 are “Innovators”; those who get between 69 and 80 are “Early
Adopters”; those who get between 57 and 68 are “Early Majority”; those who get between 46 and 56 are “Late
Majority”; and those who get below 46 are “Laggards” (Kılıçer & Odabaşı, 2010).
As for organizational learning orientation, the “learning orientation scale” was used, developed by (Sinkula, Baker,
& Noordewier, 1997). The scale has three sub-sections and 11 items. It was adapted to Turkish language for the
study. Then, individual innovativeness scale and learning orientation scale were merged and one single questionnaire
was created.
The analysis of the data was performed using SPSS 22.0 and the level of significance was accepted as 0.005 in the
interpretation of the results. The construct validity was investigated via exploratory factor analysis.
3.4 Validity and Reliability
A high degree of internal consistency was observed for the Individual Innovativeness Scale (Cronbach’s Alpha value
of 0.792). According to the factor analyses carried out, the KMO and Bartlett value was found as 0.842 (Sig. 0.000).
As seen in Table 2 and Figure 1, as a result of the factor analysis and Varimax orthogonal rotation, all of the 20 items
of Individual Innovativeness Scale analyzed are gathered under 5 factors whose eigenvalue is higher than 1.0. The
explained variance of those 5 factors is 57.531%. In the light of the literature and properties of the items, these
factors have been respectively named as follows; opinion-leadership, openness to experience, resistance to change,
cautiousness and risk-taking.
Table 2. Individual innovativeness scale factor analysis results
Factors Factor
Loadings
Factor 1. Opinion Leadership
Item 8: I feel that I am an influential member of my peer group. ,776
Item 9: I consider myself to be creative and original in my thinking and behavior. ,724
Item 11: I am an inventive kind of person. ,668
Item 12: I enjoy taking part in the leadership responsibilities of the groups I belong to. ,677
Item 14: I find it stimulating to be original in my thinking and behavior ,576
Item 18: I am receptive to new ideas. ,559
Factor 2. Openness to experience
Item 1: My peers often ask me for advice or information ,635
Item 2: I enjoy trying out new ideas. ,828
Item 3: I seek out new ways to do things. ,800
Item 5: I frequently improvise methods for solving a problem when an answer is not apparent. ,532
Factor 3. Resistance to change
Item 4: I am generally cautious about accepting new ideas. ,740
Item 6: I am suspicious of new inventions and new ways of thinking. ,742
Item 7: I rarely trust new ideas until I can see whether the vast majority of people around me ,518
accept them.
Item 10: I am aware that I am usually one of the last people in my group to accept something ,583
new.
Item 13: I am reluctant about adopting new ways of doing things until I see them working for ,571
people around me
Item 20: I often find myself skeptical of new ideas. ,538
Factor 4: Cautiousness
Item 15: I tend to feel that the old way of living and doing things is the best way ,812
Item 17: I must see other people using new innovations before I will consider them ,633
Factor 5: Risk-taking
Item 16: I am challenged by ambiguities and unsolved problems ,798
Item 19: I am challenged by unanswered questions. ,590

6
5
Eigenvalue
4
3
2
1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Component Number
Figure 1. Scree plot of items
Learning Orientation Scale was analyzed for reliability, and the 11th item of the scale, “We rarely collectively
question our own biases about the way we interpret customer information”, was removed from the scale because of
its low reliability alpha.
Analysis was performed with the rest of the items and the Cronbach Alpha value was found to be 0.879. The
exploratory factor analysis for learning orientation scale resulted in KMO and Bartlett value of 0.888 (Sig. 0.000).
The dimensions of the scale showed a different distribution from the original scale: via varimax rotation technique,
one single factor was determined consisting of 10 questions whose eigenvalues are 1 and above. The explanatory
value of this one factor for total variance was determined to be 48.282%.
Table 3. Learning orientation factor analysis results
Factor
Loadings
Items
Item 1:There is a commonality of purpose in my organization 0.810
Item 2:There is total agreement on our organizational vision across all levels, functions, and 0,775
divisions
Item 3:All employees are committed to the goals of this organization 0,762
Item 4: Learning in my organization is seen as a key commodity necessary to guarantee 0,759
organizational survival
Item 5: The sense around here is that employee learning is an investment, not an expense 0,739
Item 6: Employees view themselves as partners in charting the direction of the organization 0,730
Item 7: Personnel in this enterprise realize that the very way they perceive the health 0,605
marketplace must be continually questioned
Item 8:Managers basically agree that our organization’s ability to learn is the key to our 0,603
competitive advantage
Item 9: We are not afraid to reflect critically on the shared assumptions we have made about 0,555
customers
Item 10:The basic values of this organization include learning as the key to improvement 0,543
3.5 Results
3.5.1 Sample Overview
Table 4 shows descriptive statistics about participants. According to Table 4, majority of the participants (73.7%) are
females. This is due to the employment structure of the health sector. In terms of occupations, it is seen that
physicians are mainly from Generation X and nurses are mainly from Generation Y. Also 38% of participants are
nurses, 27.4% are health/laboratory technicians, 24.4% other health professionals and 10.2% are physicians. While
82.8% of the participants are from Generation Y, 17.2% of them are from Generation X. 96% of the participants
have worked in their present hospitals less than six years. 11.7% of the participants have worked in their present

hospitals for 13 years or more. It is observed that the duration of employment in the hospitals is short. This could be
due to the fact that workforce turnover rate in private health institutions is high and that the hospitals joined the study
have a history of about ten years.
Table 4. Demographic characteristics of participants
Variable Category Gen X (%) Gen Y (%) Total (%)
Gender Male 25 (53,2) 177 (78) 202 (73,7)
Female 22 (46,8) 50 (22) 72 (26,3)
Total 47 (100) 227 (100) 274 (100)
Profession Physician 21 (44,7) 7 (3,1) 28 (10,2)
Nurse 10 (21,3) 94 (41,4) 104 (38)
Technician 4 (8,5) 71 (31,3) 75 (27,4)
Other health pro. 12 (25,5) 55 (24,2) 67 (24,4)
Total 47 (100) 227 (100) 274 (100)
Years of 1-3 26 (55,3) 153 (67,4) 179 (65,3)
experience in 4-6 17 (36,2) 67 (29,5) 84 (30,7)
the present 7-9 4 (8,5) 7 (3,1) 11 (4)
hospital Total 47 (100) 227 (100) 274 (100)
Total years of 1-3 5 (10,6) 117 (51,5) 122 (44,5)
work 4-6 5 (10,6) 58 (25,5) 63 (23)
experience 7-9 4 (8,6) 36 (15,9) 40 (14,6)
10-12 5 (10,6) 12 (5,3) 17 (6,2)
13 and 13+ 28 (59,6) 4 (1,8) 32 (11,7)
Total 47 (100) 227 (100) 274 (100)
Table 5. Distribution of health professionals according to individual innovativeness categories

Categories of Frequency Percentage
innovativeness (f) (%)
Innovators 16 5,8
Early Adopters 72 26,3
Early Majority 148 54,0
Late Majority 32 11,7
Laggards 6 2,2
Total 274 100
Participants were divided into categories after their individual innovativeness scores were calculated. According to
this categorization, 54% of the participants are “Early Majority” while only 2.2% of them are “Laggards”.
Table 6. Innovativeness scores for professions
Professions Individual Innovativeness
Score
Physician 71,00
Nurse 64,45
Technician 63,46
Other health professionals 65,34
The analysis of individual innovativeness scores for participants’ occupations shows that physicians are the most
innovative group, which places them into “Early Adopters” group. Other employees are in “Early Majority” group
and their scores are close to each other.

3.5.2 Comparison by Age-Generation

According to Table 7, there is a significant difference between individual innovativeness scores when health
professionals are grouped into Generation X and Generation Y. It is seen from the mean score of individual
innovativeness that members of Generation X are more innovative than those of Generation Y. It is thought that this
outcome is due to the fact that majority of the physicians that are more innovative are members of Generation X.
Table 7. T-test results for individual innovativeness scores of Generation X and Generation Y
Groups Average Standard Levene’s Test t Sig. (two
Individual deviation tailed)
F Sig
Innovativeness
Score
Generation Y 64,10 8,797
0,11 0,915 -4,030 0,000
Generation X 69,74 8,443
Table 8. T-test results for sub-factors’ score of individual innovativeness scale for Generation X and Generation Y
Groups Mean Standard Levene’s Test t Sig.
deviation (2-tailed)
F Sig
Factor Score 1: Y -0,053 1,027 Equal variances 3,578 0,06 -1,944 0,053
Opinion 2 assumed
Leadership X 0,256 0,819 Equal variances -2,253 0,027
8 not assumed
Openness to 4 assumed
experience X 0,165 0,754 Equal variances -1,541 0,127
9 not assumed
Resistance to 6 assumed
change X 0,350 0,977 Equal variances -2,697 0,009
9 not assumed
Factor Score 4: Y 0,003 0,980 Equal variances 0,612 0,435 0,123 0,902
Cautiousness 4 assumed
X -0,016 1,099 Equal variances 0,114 0,909
4 not assumed
Risk-taking 1 assumed
X 0,319 0,825 Equal variances -2,790 0,007
3 not assumed
The analysis of the answers given by Generation X and Generation Y to sub-factors of Individual Innovativeness
Scale shows that there is a significant difference in the confidence interval of 95% in the factors of “resistance to
change” and “risk taking.” There is no significant difference between generations in the sub-factors of
“opinion-leadership”, openness to experience “and “cautiousness”.

Table 9. Relationship between individual innovativeness score and organizational learning

Perception of Organizational
Learning Orientation
Individual innovativeness Pearson Correlation 0,187**
Score Sig. (2-tailed) 0,002
**P<0,01
As seen in Table 9, there is a low-level but significant and positive relationship between individual innovativeness
score and organizational learning.
Table 10. Relationship among the sub-factors of individual innovativeness scale

Factors Opinion Openness Resistance Cautiousness Risk-tak
Leadership to to change ing
experience
Opinion Pearson Correlation 1 0,646** 0,067 0,001 0,431**
Leadership Sig. (2-tailed) 0,000 0,271 0,987 0,000
Openness to Pearson Correlation 1 -0,021 -0,063 0,327**
experience Sig. (2-tailed) 0,729 0,300 0,000
Resistance to Pearson Correlation 1 0,474** -0,027
change Sig. (2-tailed) 0,000 0,653
Cautiousness Pearson Correlation 1 -0,049
Sig. (2-tailed) 0,420
Risk-taking Pearson Correlation 1
Sig. (2-tailed)
**P<0,01
Table 10 demonstrates that there is a medium-level positive relationship among “opinion-leadership”, “openness to
experience” and “risk-taking” sub-factors of Individual Innovativeness Scale. Meanwhile, the factors of “resistance
to change” and “cautiousness” also have medium-level, significant and positive relationship between each other.
4. Discussion
According to Drucker (1993), innovation is remarkably important for gaining and maintaining competitive advantage
in contemporary economies (Drucker, 1993). This is true for not only production industry but also service industry.
In the developed economies, 7% of Gross National Product (GNP) is products and services coming from health
sector, and the employment created within this sector is 10%. It is estimated that the rate of total health expenses to
GNP will increase to 16% by 2020. Health sector, growing rapidly, is one of the greatest sources and users of
innovative technologies (TÜSİAD, 2011). In this sense, individuals’ innovativeness becomes an important factor.
Individuals with high score of innovativeness play role in both creation and effective use of innovation. One of the
most credited classifications regarding innovation level belongs to Roger (1983), which consists of five innovation
levels: Early Adopters, Early Majority, Late Majority and Laggards. More than half of the participants in this study
(54%) are in Early Majority group. Those in this group have adopted new ideas slightly earlier than an average
member of the social system they belong to. They prefer to consult to others before they adopt any ideas (Rogers,
1983).
Generation individuals belong to is thought to be one of the factors influencing their innovativeness level. That is
why, this study investigated whether there was a significant relationship between innovativeness levels between
generations. Initially it was assumed that members of Generation Y would be more innovative since they were
younger and more inclined towards technology; however, the analysis of the data showed that there is a significant
difference of innovativeness levels between the two generations and that members of Generation X are more

innovative. Though it looks controversial, this outcome is thought to have resulted from the fact that almost all of the
members of Generation X who participated in the study are physicians because they are one of the highest-educated
professional groups within their society and institutions. Accordingly, it can be noted from the point of health sector
that professional groups are more effective in innovative professional behavior, rather than generational dimension.
On the other hand, this study also indicates that the existing innovative professional behavior of individuals who
have reached a certain level of maturity in professional life can be higher than those individuals that are new in the
profession and have less experience. In terms of generation theories, Generation Y, assumed to be more innovative,
may demonstrate less innovative characteristic considering factors such as working conditions, professional life and
experience. These results highlight that issues regarding organizational behavior should not be discussed merely
from a generational perspective, rather they should be approached from a multi-dimensional perspective.
Another issue investigated in the study was whether there was a relationship between individuals’ perception of their
institutions’ learning orientation and their innovativeness level. It was initially assumed that individuals’ belief that
their institutions had learning orientation would be an encouraging factor for innovation and would increase
innovativeness. The study shows that there is a significant and positive relationship between those two variables. The
results are consistent with similar studies (Lee & Tsai, 2005; Keskin, 2006; Jiménez-Jiménez & Sanz-Valle, 2011).
This can be considered to have resulted from the close relationship between innovativeness, individual and
organizational learning. Indeed innovativeness is a product of an effective individual and organizational learning
process.
This study was conducted in health institutions, which are bound to provide individuals with more innovative and
more quality services. The results show that younger generations may not always be more innovative. The results of
this study need to be compared with future studies. Future studies carried out in various sectors and more institutions
will show these two generations’ understanding of innovation.
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The Price Mechanism Analysis of Parking Fees on Economic

Perspective
Liqin Shan1 & Shaodan Qian1
1
School of Management, Northwest University for Nationalities, Lanzhou, China
Correspondence: Liqin Shan, Associate professor, School of Management, Northwest University for Nationalities,
Lanzhou 730030, China. E-mail: 1599864485@qq.com
Abstract
Growing number of vehicles brings sever negative external effects to cities such as traffic congestion and tail gas
pollution, especially to big cities. However it is the tail gas pollution which is a significant factor for the formation of
haze. Gradually serious congestion and haze problems force us to face and solve the contradiction between growing
demand for motor vehicles and the scarce resources of urban traffic. This paper analyzes residents’ tenure and travel
vehicle cost by constructing the parking price model and the linkage mechanism of parking fees-vehicle cost from
the vehicle and complementary relationship of parking space in economic perspective. And this condition will affect
people’s desire of shopping and vehicle travel indirectly. From the consumer perspective, it will affect their choice to
effectively control of motor vehicle growth, decrease usage amount, and promote the allocation of urban
transportation resources. Finally, we can get a policy enlightenment that city managers can use price mechanism of
parking fees to improve the efficiency of the urban traffic from several aspects, like speeding up the property rights
reform bus, establishing adjustment system of dynamic price, implementing the policy of differentiation parking,
optimizing the bus system and appropriately limiting parking supply.
Keywords: parking fees, economics, supply-demand model
1. Introduction
With the improvement of social economy and people's living standard, the number of China's vehicles is increasing
sharply. However, this has caused serious negative impact: traffic congestion and exhaust pollution, with the latter as
the major reason for smog. Such problems not only harm the efficiency of production and life and sustainable
development, but also threaten the well-being and life safety of urban residents. The effective management of urban
traffic relies on the balance between traffic supply and demand. Therefore, one solution is to step up the development
of transportation infrastructure (including the upgrading of relevant technologies). The other is to strengthen the
management and control of traffic demand, so as to curb the excessive growth of it.
According to the famous Coase Theorem in transportation economics, “Once the Government does not exercise
effective control of urban traffic, new roads will induce a new traffic problems, so that, the traffic demand always
exceeds supply”, we know that it is always limited to reduce traffic demand by increasing the transportation
resources. Transportation demand management has become highly regarded as the governance focusing on the total
amount of the traffic increasement. Usually the city governance manages the traffic demand by using restriction
method such as odd-even traffic restrictions and limitation of car number, not only the infringement of private
property rights, and these measures only inhibition on the surface, and obscures the real needs, palliative, short-term
effect is obvious. But soon, the real demand will purchase more vehicles released by consumers and appear new and
more severe congestion. The growing demand for vehicles with limited urban transportation resource capacity to
produce increasingly sharp contradiction, and traditional public governance thinking helpless or little effect in terms
of solving this contradiction.
Economics is the study of the best allocation of scarce resources. From an economic perspective, the use of fully
complementary relationship between the vehicle and the parking spaces and parking fees and parking fees price
mechanism linkages effects between the cost of the vehicle, the impact of consumer ownership and cost of travel of
the vehicle, and then the impact of car travel willness and wishes of consumers, the impact of their travel mode
choice, and to achieve effective thinking this contradiction effective control of the vehicle growth and promote

optimal allocation of urban roads, parking and other transportation resources is the solution to solve the growing
problem of urban blocking and haze for the fundamental problem .
2. Pricing Mechanism Analysis of the Parking Fee
2.1 The Economic Analysis of the Parking Spaces and the Vehicles
Economic significance of perfectly complementary products always refers to a fixed percentage of consumer goods
together. From an economic point of view, parking and vehicle are mutually complementary and the perfect
complements. The ratio of parking and vehicle is 1:1, that is, for the tenure of one to be matched with a parking
space in order to perform its functions.
Starting from the hypothesis of economic man, consumer vehicle and the parking utility function can be expressed as
U(x1,x2)=min{x1,x2} (1)
Where, x1 represents the number of vehicles, x2 is the number of parking spaces, symbols min indicate the minimum
level of utility.
Consumer indifference curves are shown as shown in Figure 1. The horizontal line represents a parking space, and
matching accommodates a car, any excess vehicle configuring only one parking space is unnecessary. The vertical
line represents for a car needed only one parking space, any excess parking spaces be configured when a car is
superfluous.
Figure 1. The indifference curve (parking space, vehicle) of fully complements

Economics is the analysis of limited resources for the realization of optimal selection problem. Consumer choice
theory at finite resources of urban traffic conditions is to pursuit urban residents' welfare in which the city managers
should select transportation resources and afford optimal consumption bundle. As shown in Figure 2, the best choice
is the point on the diagonal no matter how the price of the vehicle and the parking space, consumer car parking
spaces should be equal to the number.
Figues 2. The optimal choice for fully complements

Determining the optimal choice of using algebraic methods of reasoning as follows

Vehicle price is P1, P2 parking charges. X1 is the number of vehicles, X2 indicates the number of parking spaces.
Urban traffic resources m of its budget constraint as follows:
p1x1+p2x2=m (2)
Solving x, we have the number of vehicles and the number of parking spaces in the best choice
x1*=x2*=x=m/(p1+p2) (3)
From the above conclusions we should get that best objectives of urban governance of the vehicle: urban growth
should be subject to the limit on the number of vehicles parking spaces, the best growth should maintain the same
speed and parking. Consumer choice model described above can be used for analysis of consumer willingness to
purchase the best choice. Consumers’ vehicle (ownership, travel) and fully complements parking utility function is:
U(x1,x2)=min{x1,x2} (4)
Where the number of vehicles is x1, number of parking spaces for x2, consumer spending for car is m, the budget
constraint equation is p1x1 + p2x2 = m, where the vehicle price is p1, parking fees is p2.
As consumers the best choice for buying a car can be drawn
x1*=x2*=x=m/(p1+p2) (5)
That is whether consumers will consider not only the vehicle purchase price, will be considered after the car in
parking fees. P2 higher parking fees, m / (p1 + p2), the smaller the value, the smaller the number of vehicles x1 *.
2.2 Parking Pricing Mechanism Analysis
Based on the above analysis, we can make parking pricing leverage to achieve more rational allocation of limited
transportation resources.
First we have the parking supply and demand model as the Figure 3. The basic assumptions are as follows: all
parking spaces provided by the Government, because the value of land and land restrictions, the parking spaces
provided by the Government is ultimately limited. Parking space supply curve for the Government during a certain
period in a variety of possible pay is willing and able to provide the number of parking spaces for rent. It initially
rises with increasing of parking fees. Because land is influenced by urban ultimately limited and fixed number shown
as a vertical line; vehicle owners to the parking to the demand side are the demand curve D1, D2, D3. With the
growth of vehicle, the owner increased demand for parking spaces, characterized by moving up the demand curve to
the right. Parking fees are demand-side price of renting parking space. Because vehicles have externalities can bring
traffic congestion, pollution and other negative externalities, external costs, therefore, city managers through parking
vehicles of external costs into account in order to achieve the aim of regulating vehicles and traffic balancing
resources. E1, E2, E3, E4 is the market demand and supply of parking spaces between the two opposing forces
balance. P1, P2, P3 are different demand curves formed by the forces of supply and demand balance in case the
equilibrium price and Q1, Q2, Q3, is proportional to the number of parking spaces.
Figure 3. Supply and demand model of parking

Using the model of supply and demand we first analyze the traffic jams, which are how the excessive vehicles occur
in the case of traffic demand over the supplies of vehicles. Parking supply and demand curve initial balanced at
points E1, when vehicles increase, the complementary relationship cause parking needs to increase in the first round,
the demand curve right moves right to D2, the new equilibrium point will be in E2, the price of parking fees is P2
reflecting the increase in vehicle brought about by external costs (congestion, exhaust pollution, etc.), the actual
parking demand and supply are equal, the equilibrium quantity is Q2. However, if the parking fee increases Q3 level
lags behind the vehicle speed increases, remains at P1 level, it did not reflect the increase in external costs caused by
vehicles, the actual parking demand intersect at equilibrium E4, and because the lower parking fees will increase to
because the parking spaces and vehicles are completely complementary relationship, then the actual vehicle demand
growth to Q3 levels. The numbers between Q2 to Q3 is excess demand for urban transportation resources, urban
transport will be a serious shortage of resources.
Therefore, how to solve the excessive growth of vehicle and traffic congestion problems? Parking fees apply price
leverage to adjust parking fee increases speed, external costs caused by an increase in the vehicle included parking
fees, parking fees through timely price increases to reduce resident car or vehicle travel demand, in terms of price
and limited leverage to make parking supply and demand balance, the optimal allocation of limited resources, urban
transport, it will significantly reduce traffic congestion, exhaust pollution. In Figure 3, the fixed supply curve S and
the initial demand curve intersects D1 E1 point. In equilibrium point E1, parking fees is P1, the equilibrium quantity
is Q1. Residents of the vehicle growth has led to increased demand for parking spaces, so parking demand curve to
the right level to move the position of the curve D2, D2 curve and S-curve intersect at the point E2. In equilibrium
point E2, parking fees rise to P2, Q2 is the maximum number of urban equilibrium parking supply. With the
continued growth in demand for vehicle parking flat curve to the right to move to D3, D3 curve and S-curve intersect
at E3 points. In equilibrium E3, parking fees rise to P3. With the growth in vehicle parking fees increases, the
external costs of vehicles are recognized, the actual demand for parking restrictions effectively, through the fixed
ratio (1:1)of parking spaces and vehicle configuration costs linkage effects will effectively limit the growth in vehicle
population, to achieve the most optimal allocation of resources in urban traffic.
The model shows that to achieve optimal allocation of resources in urban traffic parking fees, rental of parking
spaces that price to reflect the growth in demand for parking spaces, to reflect the increase in external costs caused
by vehicles. To increase the speed of synchronization with the rising parking demand, but also because completely
complementary relationship with vehicle parking, increasing in parking fee should keep pace proportional to the
speed of the vehicle growth rate.
2.3 Vehicle Parking Charges Cost-Effect Analysis
Parking price mechanism to play the role of market allocation of resources to achieve a relatively balanced urban
transportation resources and the number of vehicles, including a parking fee - played vehicle cost linkage effects. In
the parking fees - the cost of vehicles linkage effects, the level of parking fees by fully complementary relationship
between the direct impact on consumer vehicles (ownership, travel) of the static and dynamic costs, thus their
willingness to purchase, whether travel, travel mode and other consumer vehicles choose an important impact,
specifically in the following:
2.3.1 The Impacts of Parking Fees on Private Travel Consumptions
Because those who travel by car parking fee is the cost of a part directly affects the price of car travel demand.
Increase parking fees will lead to the desire to reduce private car travel, prompting more people to choose public
transport.
2.3.2 Parking Fees on Consumer Choice and Travel Time Have Important Implications Parking Duration
Parking fee price differentiation can inhibit the relevant area, parking demand within the relevant time, reduce
traffic-related areas.
2.3.3 Parking Fees on Consumer Impact of Route Options
If travelers expect higher parking fees, they will change their route, or you can choose lower-cost parking in parking,
then change to the other means of transport to reach their destinations. If some large cities, due to central area
parking stress, coupled with higher parking fees, travelers tend to park your car at the edge of the city, public
transport interchange station (subway), own and ride public transport into the city centre. From this aspect, the
parking is to adjust the structure of urban traffic plays a certain role, relieve traffic congestion.
2.3.4 The Effects of Parking Fees for Consumers to Buy Vehicles
Parking places and vehicles are perfect complements, the parking fee is an important factor to consider for

consumers to buy vehicles. Stop setting prices, negative external effects of vehicles, namely traffic congestion and
exhaust pollution in the external cost into consideration, through higher parking fees lower car buyers will influence
consumer choices and achieve optimal social configuration of the number of vehicles and traffic resources.
Figure 4. Vehicle cost- the linkage effect of parking

3. Conclusions and Policy Implications
From the perspective of economic use of pricing mechanisms can be implemented on vehicles parking fees effective
control of excessive growth, is one of the most direct means to manage traffic demand, but play a role into practice
also need to implement a series of scientific and rational policy on parking fees and other complementary measures.
Specifically the following several points:
3.1 Speeding up Property Rights Reform of the Bus
According to the data issued by The Ministry of Finance, Development and Reform Commission of the People's
Republic of China, the total numbers of official vehicles in the government departments and institutions and other
relevant departments was more than two million, purchase of official vehicles increase every year with 20%.
Compared with cars, bus property right deficiency and birth defects, and aimed at the efficient consumer choice
theory does not apply to bus purchases and travel. Under our current system characteristics of bus management of
soft budget constraint, pursuing his own most effective bus users tend not to consider parking fees when you factor in
travel, parking fees leverage to influence consumer buying decisions, and the bus trip decision. Therefore, the
Government should promote the reform of property rights of bus and achieve clear ownership and large bus groups
included in the category of market economy operating efficiency in governance, the parking lever in the larger
context of the promotion of the optimal allocation of resources.
3.2 Establishing the Dynamic Parking Price Adjustment System
The regional dynamic adjustment mechanism of parking price should be formed. Increasing in parking fee should
maintain the same growth rate proportional to the motor vehicle. The use of the price mechanism are parking fees
prior management nature, that is, before the problem occurred on controls to prevent more serious traffic congestion,
haze, difficult parking and other conditions arise oriented. The growth of motor vehicles subject to personal
disposable income, prices, price alternatives and preferences and other factors change, so the dynamics of price
adjustment system, parking fees should be made to adjust the standard deviation warning system and according to
many influencing factors, according to the market in advance orientation, to establish a scientific parking fees
formation mechanism.
3.3 Implementing Differentiated Parking Fees Policy
At present, the standard of most parking fees and traffic resource scarcity appears upside down, for example, parking
for convenient on-street parking, above-ground parking fees, underground parking, parking charge is higher. Bad
parking policy to mislead the flow direction of the vehicle, leading to increased traffic congestion, inefficient use of
scarce resources, but also had a negative impact on the enthusiasm of developers to build parking lots. Scientific and
reasonable parking fees policies should be based on vehicle type, region, time period, and the difference in the
growth of motor vehicles has made different adjustments.

3.3.1 Charging on Different Types of Vehicles

The number of different models of car parking spaces occupied by the degree of occupancy costs and exhaust
pollution vary. Parking standards should be developed according to the proportion of fixed-size car parking fees,
when exceptions occur, or reduce parking fees may be charged different amounts on the basis of this standard, and
how much money should the city decide according to their own economic situation
3.3.2 Charging on Different Locations and Places
In the cities, the downtown area is located in the city center due to gather a lot of business, entertainment, finance,
and other places a tremendous amount of traffic, which is more likely to cause traffic congestion, parking tension and
exhaust pollution and other issues. Thus, in the development of the parking fee policy, the city should be divided into
different parking area, the most expensive downtown parking fees, in order to reduce fees outward from the central
region.
3.3.3 Charging on Different Period of Time
The daytime parking demand is rigid demand caused by the work, and is the focus of regulation of traffic, parking
demand at night caused the vehicle to maintain a static traffic demand. Two different demands determine the
mechanism parking standards should be different. In order to achieve the maximum benefit of parking spaces,
parking fees should daytime hourly rate, calculated using a progressive system. The night parking flexible approach
should be a monthly subscription or pay per view.
3.4 Optimizing Transportation System
A rise in parking fees by controlling the number and usage of the vehicle, while the city manager should also develop
and optimize its alternatives: urban transit systems. Status quo for the development of urban public transport itself,
can take a variety of car incentives: Increase bus lanes, increasing bus station (buses) and some bus routes for free
and so on. Improve the public transport system can change the way people travel, try to guide the public to take in
the central city bus travel, reduce the amount of travel of the vehicle in the center of the city, improve transportation
access speed, promote the optimization of the structure of traffic travel, ease traffic congestion and parking
difficulties situation. Ride transportation development, promote traffic volume grew to a large volume of
transportation transfer, guide the way residents travel in order to reach a new equilibrium transportation resources.
3.5 Appropriate Restrictions on the Supply of Parking Spaces
According to a complementary relationship between the parking, the vehicles, the restrictions vehicles from parking
supply can limit the demand. Therefore, the city manager on policy arrangements by limiting the supply of parking
spaces, especially the supply of parking spaces in the heart of the city, to maintain a high level of parking a vehicle to
increase consumer costs, reduce car use to guide their frequency and flow, reduce vehicle use external costs caused to
achieve optimal allocation of transportation resources.
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Organizational Learning: A Case Study of an International Non-profit

Organization
Olivera Andjelkovic1 & Mehraz Boolaky2
1
Business Consultant, The Hague, Netherlands
2
Professor of Marketing, Asia Pacific Institute of Management, New Delhi, India
Correspondence: Mehraz Boolaky, Honorary Lecturer and Dissertation Adviser, University of Liverpool/Laureate;
Professor of Marketing, Asia Pacific Institute of Management, New Delhi, India. E-mail: mehz51@yahoo.co.uk
The study was carried out as part of Master in Science studies of the lead author at the University of Liverpool,
United Kingdom.
Abstract
From the late 1990’s onwards, the concepts and domains of organizational learning (OL) within an organizational
setting and management practice have become the most debated topics among both management researchers and
practitioners. At the same time, non-profit organizations endure a rapid organizational growth and re-structuring
which provoke significant organizational changes in return, making the way how they learn and what they do with
gained knowledge crucial for their development. However, up until now, OL remains a research area where
theoretical and operational definitions fluctuate, and it is, generally, insufficiently empirically explored by both
private and non-profit sectors. The role of OL in non-profits remains vague in particular, and it is yet to be fully
discovered what the main barriers to OL are, or how exactly OL practices impact capacity building, performance and
other important organizational areas. By using a case study approach and by focusing on working environment and
operations in a single international non-profit organization, this study provides a holistic picture of OL processes by
considering and integrating various important dimensions: sector to which an organization belongs, an organizational
context and influence of various organizational factors. The goal is to assess the employees’ awareness of the OL
concept, to explore the social context and the system levels within which the learning occurs in the subject
organization, and to identify the main OL challenges.
Keywords: organizational learning, non-government organization, knowledge transfer, case study, organizational
factors, organizational politics and power, organizational culture, management, leadership
1. Introduction
At the beginning of the 21st century, a need emerged to observe and explain ongoing organizational phenomena, such
as innovation, alliances or technology implementation, and various OL concepts were there to offer new and fresh
perspectives (Bapuji and Crossan, 2004). Consequently, OL has become a vital link that connects mission and
economic sustainability in many organizations. Although there are many differences between researchers regarding
OL definition, methodology and the role and importance of specific OL features, all of them address the issue of
knowledge transfer and recognize the importance of different system levels of learning – individual, group and
organizational. The large part of OL literature also agrees on the notion that a group/team is a fundamental unit
where learning occurs, so, learning at team level can be considered a doorway to OL (Senge, 2006). But in general,
despite the rising importance of OL, little has been done to theoretically compare and integrate the existing
theoretical frameworks. Pawlowsky (2003) made an important contribution to systematization of OL theory by
developing a conceptual framework of four integrative dimension of OL – learning levels, learning modes, learning
types and learning processes. Nevertheless, this and other theoretical contributions to OL practice still remain
insufficiently empirically explored.
In particular, the majority of organizational theories have been developed based on research in the private (for-profit)
sector, and although the authors such as Drucker (1990) and Allison and Kaye (1997) offer comprehensive

explanations of management and strategy in non-profit organizations in general, the lack of broader empirical
research on this sector is still present. This applies to empirical research on OL as well. Unlike for-profit
organizations, a mission of non-profits is to fill the gaps with their services that the private sector and local
government have failed to address (or sometimes to also challenge the governmental role), but without providing any
profits to inner or outer shareholders (member states, board members, employees, private donors, customers,
legislators, etc) (Gill, 2010). Thus, rather than profit, their missions are socially and educationally driven. OL is an
important concept for non-profits as the process that drives continuous organizational improvement, goal
achievement and ultimately results in an organizational capacity building (Gill, 2010). Nevertheless, learning is
different in different types of non-profits, therefore, in order to understand OL in any of them, it is necessary to
understand their organizational context first (Senge, 2006).
The uniqueness of non-profits is further visible in the fact that there is no easy or simple way for their accountability
and performance to be measured, which makes them more complex comparing to their for-profit “counterparts”.
There is a great donor influence usually present as well, and a significant political pressure on non-profits to deliver
“desirable” results, which can (and often it does) conflict with non-profits’ aspiration to learn from failures without a
fear of losing credibility.
2. Aims and Objectives
The main aim of this study is to advance an understanding of OL in the non-profit sector by focusing on working
environment and operations in a single international non-profit organization. By using a case study approach, the
goal is to assess the awareness of the organizational members of the OL concept, as well as to explore the social
context and the system levels within which the learning occurs in the subject organization. The study also aims to
explore the impact of various organizational factors on OL processes, the role and impact of organizational politics
in particular, and to identify overall OL challenges.
3. Research Questions
The following research questions have been formulated to guide this study:
 What is the degree of understanding of the concepts of OL in the subject organization, and how knowledge is
created, shared, gathered, stored and used (on individual, group and organizational learning level)?
 How are the processes of OL (knowledge creation, transfer, capture, storage and use) influenced by the
following organizational factors: organizational structure, organizational policies, leadership and management,
organizational culture and organizational politics?
 What are the main impediments and barriers to OL and how could they be surpassed?
4.1 Organizational Learning
Since Cyert and March (1992) introduced the concept of OL almost half a century ago, the divergence of its
perspectives is continually increasing. As expected, different perspectives have brought different definitions of OL.
From the management perspective, OL is a change in people’s knowledge, cognition and behavior which is closely
related to other organizational changes (Argote, 2011). Lόpez, Peόn and Ordás (2005, p.228) explain OL as “a
dynamic process of creation, gaining and assimilation of knowledge for developing the resources/capabilities that
contribute to higher organizational effectiveness and better performance”. Other authors explain OL as a dynamic
process of an individual that involves social, behavioral and technical dimensions and that take place within an
organizational context (Crossan, Lane and White 1999; Nonaka, Toyama, and Byosiere, 2003; Rashman, Withers
and Hartley, 2009). All these definitions suggest that OL goes far beyond individual knowledge and learning, and
that it acts as a catalyst between learning and performance through numerous structural variables. Specifically, the
role of OL is to ensure that individual knowledge and learning ultimately leads to organizational knowledge and
learning.
There are numerous OL perspectives and their different theoretical basis, namely, system-theory, cultural,
cognitive/knowledge or action-learning point of view. The differences that exist are manly related to the terminology
that is still not quite aligned and to epistemological/ontological differences. The Theory of Organizational
Knowledge Creation, one of the most known OL theories, was conceptualized two decades ago by Nonaka and his
colleagues. It was an attempt to clarify the vague theoretical ground of OL processes and explain how organizational
knowledge is created and shared. Von Krogh, Ishijo and Nonaka (2000, p.22) describe knowledge as “a justification
of one’s beliefs” and knowledge sharing as public justification of one’s beliefs. Consequently, as knowledge is

highly dependent on people’s ideas and values, the nature of knowledge is described as tacit (unarticulated) and
explicit (formulated and captured) (Nonaka and Van Krogh, 2009, p.636).
The authors introduced the knowledge spiral where knowledge is created in the mutual interaction of 3 important
layers: knowledge creation and conversion mechanisms (SECI model), context (called as “Ba”) and knowledge
assets. The SECI model, as the first layer, shows how tacit and explicit knowledge interact and convert through
social processes (socialization, externalization, combination and internalization) between individuals and describes
the dynamic nature of knowledge (mobility across organizational levels and externally). Originating Ba - contexts,
platforms for knowledge creation (social, cultural, historical, physical, mental or virtual) and knowledge assets
(specific resources essential for the value/knowledge creation) are the other two layers necessary for forming the
knowledge spiral which ultimately creates knowledge (Nonaka, Toyama and Byosiere, 2003, p.493). The authors
highlight the role of knowledge activists (leaders, managers) as knowledge creation catalysts and coordinators. They
underline care, knowledge vision, communication, the right context and common language as vital enablers of
knowledge creation. Furthermore, they also stress the importance of organizational processes and organizational
structure through the concepts of the middle-up-down management, the hypertext organization and distributed
leadership (Von Krogh, Nonaka and Rechsteiner, 2012).
Another important theoretical approach was offered by Crossan, Lane and White (1999) as the 4I Framework – a
dynamic model of OL that includes 4 stages of knowledge conversion: intuiting (a development of new insights
based on experience), interpreting (explaining new insights), integrating (shared understanding on group level) and
institutionalizing (implementation of shared understanding on organizational level). Crossan’s model also includes
two types of knowledge - tacit and explicit, and tree knowledge levels – individual, group and organizational. This
model explains OL as a multidimensional and dynamic process where learning occurs on different levels over time
and it creates “a tension” between assimilation of new and exploitation of existing knowledge (Crossan, Lane and
White, 1999, p.532).
Senge (2006) also contributed to the OL theory with the Concept of Systems Thinking. From the management
perspective, Senge’s system thinking is an ability to discover structural causes of behavior and it is necessary for
sustaining generative learning which is a foundation for people’s creativity and an essence of OL. Furthermore,
together with other 4 disciplines for building the learning organization – personal mastery, mental models, shared
vision and team learning, systems thinking enables organizations to recognize long-term patterns of change (Senge,
2006, p.190). Accordingly, Senge advocates a shift of leadership from the traditional concept as well, suggesting that
“leaders must become teachers, designers and stewards” (2006, p. 321).
Pawlowsky (2003) tried to bring different OL perspectives closer to management through the integrative framework
that shows all main dimensions of OL: system levels, learning modes, learning types and phases of the learning
process. He stressed the importance of values, emotions and behavior in learning (cultural learning mode) and
pointed out trust in organizational members and in management as the factor of the organizational culture that must
not be ignored.
However, even though the theoretical frameworks of OL described above significantly contribute to an
understanding of learning within organizations, they all show some weaknesses. While both Nonaka’s and Crossan’s
frameworks systematically address OL, they fail to include other important dimensions that are closely related to
people’s behavior, such as political and cultural. These models also disregard people’s values, ethics, motivation,
affective reactions, and generally, people’s emotions and feelings as important aspects of knowledge and learning.
Senge’s holistic organizational approach also gives the realistic perspective of knowledge dissemination throughout
an organization and it helps to understand the role of different organizational factors. Yet, it describes OL rather as
an organizational state that waits to be achieved, than a continuous process.
4.2 Organizational Learning and Organizational Factors
Although it is still not fully clear what organizational factors affect the development of OL and in which way, recent
studies on OL show that organizational type/structure, strategy, leadership and organizational culture influence
individual, team, organizational and (in the case of non-profits) community learning as well - either as enablers or
impediments.
So far, organizational structure is the most frequently addressed factor in empirical studies on OL. The findings in
some studies (Ashton, 2004; Martínez-León and Martínez-García, 2011; Rebelo and Gomes, 2011) indicate that OL
development involves flatter organizational structures with open communication channels and circulation of
information and that relies on management that practices the right balance of control and authority. As the part of the

organizational infrastructure, the role of IT systems in the processes of OL is also very important, particularly when
it comes to the transfer of explicit knowledge (Alavi and Leidner, 2001).
When it comes to organizational policies, Suppiah and Sandhu (2011) discovered that certain human resource (HR)
policies, such as recognition and rewarding, are particularly influential managerial instrument for encouraging the
sharing of tacit knowledge. López, Peón and Ordás (2006) also found a positive correlation between OL and the HR
practices of training and selective hiring. Similarly, Droege and Hoobler (2003) discuss that employment policies
that cause relatively high employee turnover, like temporary employment or limited tenure, could ultimately result in
losing knowledge, expertise and experience of the members who leave the organization. Zell (2001) suggests that
this could cause a disruption and discontinuity of organizational memory, which ultimately affects and hinders
knowledge storing and implementation of innovation (new practices and ideas).
Contrary to traditional, autocratic command-and-control leadership, in learning organizations leaders/managers are
described as teachers, coaches, stewards and designers (Senge, 2006). More precisely, current OL literature suggests
that, in order to develop a fertile ground for OL, leaders/managers should provide the right amount of employee
autonomy, a high level of mutual trust (high-care environment) and employee empowerment. Likewise, Von Krogh,
Ishijo and Nonaka (2000) refer to mutual trust in organizations as the primary dimension of organizational care. The
studies of Liao (2006) and Holste and Fields (2010) confirmed the crucial role of trust in OL processes by finding
that trust strongly positively influences knowledge sharing. The studies of Wielenga-Meijer et al. (2011) and Li et al.
(2010) found that a successful balance between full managerial autonomy and full managerial control positively
affects the processes of knowledge creation and sharing. These results suggest that finding such balance might
depend on the leadership style applied. Von Krogh, Nonaka and Rechsteiner (2012) pointed out that leadership in the
OL theory is viewed either as activity/process/position centrally controlled (centralized leadership), or as a
distributed activity between individuals, team members or departments (distributed leadership). The authors argue
that, in reality, however, leadership styles usually oscillate between these two styles and their complementary roles is
playing a fundamental part of the successful knowledge creation process (Von Krogh, Nonaka and Rechsteiner, 2012,
p.269).
According to Nonaka, Toyama and Byosiere’s beliefs (2003), organizational culture (as one of the Ba contexts)
enables tacit and explicit knowledge to be created and shared without restraint. Communication and collaboration are
probably the most important dimensions of organizational culture which promote knowledge creation and sharing
(Janz and Prasarnphanich, 2003). In their empirical study, López, Peón and Ordás (2004) found that collaborative
organizational culture promotes OL. Suppiah and Sandhu (2011) came to similar conclusions – clan (team,
collaborative) and adhocracy (empowered, risk-oriented) organizational cultures strongly promote sharing of tacit
knowledge, while bureaucratic (high-hierarchy) and competitive (market) organizational cultures influence
negatively. Naturally, organizational cultures are usually a mixture of two (or more) types that are described above,
so positive or negative influence on OL processes would be determined by the cultural type that dominates.
Organizational politics are usually referred to as self-serving, self-interested behavior of individuals who want to
achieve benefits and advantages at the expense of others and it is inseparably linked to power (Vigoda, 2000). The
existing body of literature mainly focuses on OL through psychological and social processes, while organizational
politics and power remain rarely theoretically and empirically addressed, particularly in the non-profit sector.
Organizational politics and power within OL context do not necessarily have to carry a negative connotation (Roome
and Wijen, 2006; Blackler and McDonald, 2000). Townley (1993) suggests that, besides individual (episodic) power,
the systemic form of power affects perception, imagination and behavior of individuals, which ultimately affects the
OL process. Lawrence et al. (2005) also argue that organizations are primarily political systems where predominantly
self-interested actors operate, and where different forms of power and political strategies determine whether and how
successful OL cycle will be. The authors used the Crossan’s 4I model of OL to explain the political dynamics of OL.
In their framework, they suggest that every learning process is connected to a specific form of episodic or systemic
power – intuiting to discipline, interpreting to influence, integrating to force and internationalizing to domination,
and if properly balanced, these forms of power enhance OL. The way organizational members perceive the level of
organizational politics at their workplace is crucial. According to some authors, the higher the perceptions of politics
are, the lower will be the perceptions of equality and fairness, which ultimately leads to the low level of openness
and trust, thus, to reluctance towards knowledge sharing (Ferris and Kacmar, 1992; Vigoda, 2000).
4.3 Barriers to Organizational Learning
In recent years, an increasing amount of literature addresses various factors that impede OL. As mentioned earlier,
Lawrence et al. (2005) consider organization politics and power as potential and serious obstacles to OL. Schilling

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and Kluge (2009) went fu urther; they exp

panded the Cro ossan’s 4I frammework and syystematically caategorized barrriers to
OL. The authors ideentified threee types of barriers: acctional-personaal, structural--organizationall and
societal-environmental, and
a explained their complex x and interconnnected influeence on the inndividual, grouup and
organizatio
onal learning th
hrough 4I proceesses (intuiting
g, interpreting, integrating annd institutionaliizing).
4.4 Researcch Gap and Un
naddressed Isssues
Although there
t is a growwing body of literature on OL,
O it is mainnly connected to for-profit ssector. There iis little
evidence ofo how learning g occurs in non-profit organiizations, are thhey aware of tthe OL conceppt and to what extent
and what th he main obstaccles to learningg are. Moreoveer, the researchh on factors thhat have influence on OL is m mainly
theoreticallly based and still in the co onceptual dom main of propos itions, so, maany of OL conncepts are yett to be
empiricallyy tested. For instance, while the
t impact of organizational
o sstructure, policcies and leaderrship on OL is w
widely
acknowledged and studieed for some tiime now, the influence
i of oorganizational culture has jusst recently started to
attract the closer
c “empiriccal” attention of
o researchers through
t the cooncept of learniing culture. Allso, the existingg body
of OL literaature poorly adddresses powerr and politics and
a their influeence on OL proocesses and theese factors are almost
completely y ignored when n it comes to non-profit secctor. The impoortance of thee role of organnizational poliitics in
knowledgee and learning is even more pronounced
p wh hen non-profitts have a largee number of staakeholders andd when
their missioon/work is of a global importtance.
4.5 Theoretical Framewo
ork
A review ofo Nonaka, Toyama and Byo osiere’s (2003)) and Crossan’’s (1999) fram meworks of OL L and other impportant
empirical studies listed above yielded d some imporrtant conceptss for this reseearch and enaabled the theooretical
framework k to be developed. In this stud
dy, relations beetween the proccesses of know wledge sharing,, capture, storaage and
use, organiizational contex
xt and organizaational factors,, are explored tthrough the asppects and variaables as shownn in the
theoretical framework dev veloped by thee authors (Figuure 1).
Figure 1.
1 Theoretical framework
f for studying OL pprocesses and bbarriers in NGO
OX
The theoretical concepts and research studies
s presenteed earlier are ccrucial for understanding, fraaming and addrressing
the research questions in several ways. First, the Theo ory of Knowleedge Creation aand the 4I moddel offer the baasis for
understandding of how OLO in NGOX (the ( name of the
t organizatioon is changedd to keep it coonfidential) occcurs at
individual, group and orgganizational levvel, thus, enablle the first reseearch question to be answered. In order to aanswer
the secondd research quesstion, the reseaarch of Martínez-León and M Martínez-Garcíía (2011) and Droege and H Hoobler

8 ISSN 1923-40007 E-ISSN 19223-4015
www.sciedu
nal of Business A
(2003) are used as a guiddeline for exploring the influuence of organnizational struccture and organnizational policcies on
knowledgee creation, sharring, storing an
nd use. Techno ology and the processes of ccommunicationn are used to iddentify
what the doominant type of
o organization nal structure is and whether tthe current traiining and tenurre policies act as OL
enablers orr not. And finaally, Crossan’ss (1999) 4I fraamework and the upgraded version providded by Schillinng and
Kluge (20009) are used to determine and d systematize thhe types of leaarning barriers in NGOX, thuus, to answer thhe third
research qu
uestion.
5. Researcch Design and Methodology
o a single case study of an iinternational noon-profit organnization. The aauthors
The overall research strattegy is based on
chose NGO OX because its operations hig ghly rely on kn
nowledge and llearning and it is large enouggh to provide riich and
sustainablee research dataa. The case stu
udy approach is based on thhe method of ttriangulation inn order to proovide a
greater validity to researcch results (Mo
olina-Azorin, 2010),
2 as well as to collect eenough relevannt data and linkk them
with theoryy through the theoretical fraamework. Quan ntitative and qqualitative reseearch methods were combineed and
both questiionnaire and in
nterview techniiques were applied throughouut two large ressearch phases.
In the quanntitative phasee, the target po
opulation incluuded all 350 eemployees at N NGOX, and 149 participants were
selected by
y using the random (probability) sampling technique.
t Thee SurveyGizmoo software wass used and the online
questionnaire was created d and made av vailable to the participants duuring the periood of 4 weeks on the SurveyGizmo
website (SuurveyGizmo, 2012).
2 All the participants were
w anonymouus. The SurveyyGizmo softwaare was also ussed for
gathering, analyzing
a and presenting the research data.
In creating
g the questionn naire, various closed-ended
c question
q types were used: muutually exclusiive multiple chhoices,
checkbox questions
q and the Likert scale questions (B Brace, 2008). T The questionnnaire was basedd on the typollogy of
questions presented
p in th
he Dimensions of the Learnin ng Organizatioon Questionnaire (DLOQ) (M Marsick and W Watkins,
2003). Thee final questionnnaire includedd 30 closed-end d questions andd it was divideed into 4 sectioons: the conceppts and
levels of orrganizational leearning, organiizational structture and policiees, learning bar
arriers and geneeral informatioon.
The qualitaative phase of data collection n included the use of interviiews, with a noon-probability,, purposive sam mpling
technique (maximum
( varriation samplinng) (White, 20 000). The reprresentative sam mple was seleccted from 3 diifferent
organizatio
onal levels - maanagement, adm ministration an nd field operatiions. It includeed 6 staff mem
mbers – 2 manaagers, 2
administrattive/technical officers
o and 2 field experts.. The aim is tto explore the differences inn perceptions oon OL
between members
m at diffferent organizattional levels. A semi-structurred type of intterview and an individual interview
technique with
w open-end ded questions were
w used (Fo ontana and Freey, 2003). Thee final intervieew protocol inncluded
topics and questions relatted to: employeee perception of o the organizaation and its coontext; knowleddge creation, trransfer,
capture annd use; organ nizational stru
ucture and po olicies; managgement and leeadership; orgganizational cculture;
organizatio
onal politics annd power and leearning barrierrs. The particippants were encoouraged to disccuss them in ann open
manner.
6. Analysiss and Results
Data collecction lasted eig
ght weeks. As for
f the first phaase, 62 responddents had startted answering the questionnaaire, 57
of them fully completed it, of which on ne third are feemale. 5 partiall questionnairee responses aree disqualified, so the
total questiionnaire responnse rate is 38..2%. In the seccond phase, 6 interviews weere conducted:: 2 with managgers, 2
with field officers
o and 2 with administtrative employeees. It is worthh noting that oon the educatioon front, most of the
persons intterviewed posssessed a good level
l of educattion and only 88.8 % of respoondents studiedd up to the secoondary
level (Figu
ure 2 refers).
Figure 2.
2 Education leevel
6.1 Undersstanding of the Concept of Orrganizational Learning
L and thhe Way Organnizational Proccesses Occur
According to the researcch results, NG
GOX’s employyees are highlyy aware of thhe concepts off OL, which iis very
encouragin
ng and implies that employ yees are mosttly willing to further learnn, share know
wledge, and addvance

9 ISSN 1923-40007 E-ISSN 19223-4015
professionally in general. Such strong commitment to learning might also be a result of respondents’ high levels of
education (Figure 2). However, although NGOX emphasizes training and officially offers new learning opportunities
equally to all, motivation to learn is most likely individually driven, particularly within the technical experts who
tend to be always up to date with the latest technical developments in their fields, in order to stay competitive as
employees. Also, the role of team leaders and branch/divisional managers who act as mentors, plays an important
part in employees’ professional advancement, but yet, this is still an exception rather than a rule.
Table 1. The employees’ perception of the organizational structure
Total Responses/Participants:
Number of
Responses Percent
participants
Highly hierarchical (many vertical levels with the authority figure on top), bureaucratic
29 50.9%
and formalized (focuses on positions and roles and has fixed set of rules).
Hierarchical, but our management is supportive and encourages people to participate,
27 47.4%
show flexibility in their work and express their opinions freely.
Decentralized (decision-making authority is delegated down to the lower
organizational levels), with proactive employee participation and important role of 1 1.8%
team/group work.
N/A. 0 0.0%
Total Responses/Participants: 57
From Table 1, it is noted that 47.4 % of respondents confirmed that although the structure of the organization is
hierarchical, there are considerable levels of care, trust, respect, equality, recognition and support among
organizational members within groups at NGOX enabling flexibility, participation and opportunities to express
opinions freely. Since these variables, and particularly trust and care, have positive influence on knowledge creation
and sharing (Von Krogh, Ishijo and Nonaka, 2000; Liao, 2006; Holste and Fields, 2010), these aspects of
organizational context in NGOX (i.e. originating, dialoguing and exercising Ba) make a fertile ground for knowledge
creation and conversion. Since NGOX possesses and uses various forms of advanced information technology
(systemizing Ba), that also makes a good basis for efficient explicit knowledge creation and transmission (Nonaka,
Toyama and Byosiere, 2003). Nonetheless, the majority of the interviewees (50.9 % as noted in Table 1) think that,
contrary to the atmosphere in groups/branches, the atmosphere between divisions is rigid, official and competitive.
Such situation suggests that, although there is a reasonable chance for OL to become institutionalized due to high
levels of trust, care, respect and assistance in a group/team work, the links are probably broken at the organizational
level where various organizational schemes (reflected in routines/systems) fail to develop, also failing to make an
impact on group and individual learning in return (Crossan, Lane and White, 1999).
Generally speaking, the research results offer a relatively clear answer to the part of the first research question related
to the processes of knowledge creation, transfer, capture, storage and assimilation at NGOX. These processes occur
partially since all of them face various obstructions and difficulties at different levels. The conversion from tacit to
tacit knowledge (socialization) is somewhat enabled, firstly, because the willingness, competence and capability to
learn exist, and secondly, because the organizational context within a group (originating Ba) is nurturing (Nonaka,
Toyama and Byosiere, 2003). Conversely, there is no sufficient individual autonomy in work, which has a negative
impact on employee creativity and innovation, thus, negatively affects the processes of tacit knowledge creation and
utilization, as the study of Prugsamatz (2010) also revealed. Moreover, due to strong bureaucracy and politics,
innovative ideas are either very slowly or not accepted at all, which is a serious impediment to knowledge creation
and use.
Interview findings confirm that people at NGOX are generally interested in learning and the actual opportunities for
that are officially given to them, which means that good foundation for knowledge conversion from explicit to tacit
(internalization) should exist. But in reality, learning opportunities are often either financially limited or have been
manipulated by managers. So, some employees, although willing to learn, often end up pushed aside from some
objective or subjective reasons. These findings are typical for hierarchical and bureaucratic organizations and they
are in accordance with Ashton’s study (2004) which revealed that in such organizations, although officially
everybody has a fair chance for professional advancement, in practice the chance is mostly given to the people with

more influence or on higher positions. So, ultimately, the process of internalization of knowledge in NGOX is
affected by this, and in many cases, at least partially disabled.
Table 2. Work place perception
I would describe my organization as:
Number of
Responses Percent
participants
Friendly place with developed teamwork and employee commitment to organization and
17 29.8%
vice versa.
Creative workplace with empowered and risk-taking employees. 3 5.3%
Competitive workplace where knowledge is power. 6 10.5%
Workplace with standardized procedures, practices and rules with little (or none)
30 52.6%
collaboration between divisions/units.
N/A. 1 1.8%
Questionnaire results suggest that the process of externalization (tacit to explicit) is mainly enabled, since 29.8
percent of respondents do not significantly refrain to share new ideas with others and training programs
(learning-by-doing) are highly valued at NGOX (Table 2 refers). However, interviews further show that this is the
case manly with the people on the same team or working group (branch, division). Even there, a good majority of
employees (52.6 %) as shown in Table 2, subjects to the tenure policy, believe that there is little collaboration
between units and divisions implying that they prefer to withhold their knowledge or new ideas. So, the process of
externalization in NGOX does face some difficulties when it comes to people’s willingness to share knowledge and
ideas. This leaves negative consequences on tacit-explicit knowledge conversion, particularly among the people with
the very specific or high expertise.
The knowledge conversion from explicit to explicit (combination) faces some obstacles too. The main problems
identified are, again, insufficient communication and collaboration between divisions, high employee turnover and
inconsistent implementation of tenure policy. Also, although appropriate modern technologies that should be
facilitating this type of knowledge conversion exist, they are not user-friendly. Ultimately, explicit knowledge in
NGOX is not combined, collected or disseminated properly, so it is questionable how much such knowledge is really
usable for organizational members. It is pretty discouraging that, despite all NGOX’s technological potential, there
are still no appropriate (or efficient) mechanisms established for collecting, combining, upgrading and storing
knowledge or making such knowledge widely available.
6.2 Organizational Structure and Organizational Learning
Communication channels and information flow in NGOX are mostly open within a team, branch or a division, but
not between divisions. A high level of bureaucracy makes communication at the organizational level official, formal
and restrained, consequently making knowledge creation, transfer, capture, storage and use more difficult to occur
(Table 3).
Table 3. The impediments to knowledge storing and implementation
In my opinion, new knowledge storing and implementation in my organization is mainly hindered by:
Number of
Responses Percent
participants
The lack of skills both of employees and management or their opportunistic
9 15.8%
behavior.
High employee/management turnover or inconsistent organizational systems,
28 49.1%
practices and policies.
General problems (technical/structural) in storing certain kinds of
18 31.6%
knowledge.
N/A. 2 3.5%

For instance, the knowledge creation suffers because of the slow bureaucratic procedures where many new ideas or
solutions remain unknown, or they become acknowledged but not approved and implemented at the end. The OL
processes are generally hindered by too many rules about interdivisional communication and by many restrictions
(visible or invisible) in accessing the information from different organizational levels.
Moreover, IT potential to act as OL enabler is mostly lost, because it constantly faces barriers imposed by the high
hierarchy and bureaucracy. Such findings are actually in accordance with the empirical studies of Martínez-León and
Martínez-García (2011) and Rebelo and Gomes (2011) that found that with the flatter organizational structure the OL
processes become more open and vice versa.
6.3 Organizational Policies and Organizational Learning
Tenure and training policies are strongly mutually connected and influenced by other organizational factors,
particularly by organizational politics and management, which, in turn, affect the levels of motivation, trust and
respect, and the perception of fairness and justice within the organization.
The research results suggest that the 7-year tenure policy mostly negatively affects OL processes in NGOX. Firstly,
because the implementation of this policy is politicized and it directly hinders knowledge creation and transfer, and
secondly, because the OL processes are generally disturbed since the outflow of knowledgeable people is often
accompanied by the inappropriate or insufficient mechanisms for gathering, storing and dissemination of their
knowledge and expertise. Similarly, although training polices are well designed, their implementation is very often
politicized. This inconsistency in applying the organizational policies creates an atmosphere where employees start
to see organizational processes as unfair and the use of power and influence as the only way to go ahead. The
processes of recruitment and promotion face similar problems, so generally speaking, it appears that implementation
of the HR policies in NGOX is mainly politicized and under various individual influences.
Such results support the previous research and findings of Zell (2001) and Droege and Hoobler (2003) – the
employment policies that cause relatively high employee turnover (i.e. temporary employment, tenure) result in
losing knowledge, expertise and experience of the members who leave the organization and cause disruption and
discontinuity of organizational memory. Therefore, although the policies in NGOX are essentially well designed,
their inconsistent and selective implementation leads to obstructions in the organizational processes where
knowledge is created, shared, further combined and used. This also accords with the earlier observations of Schilling
and Kluge (2009) that inconsistent organizational polices are the most common barriers to OL at organizational
level.
6.4 Leadership/Management and Organizational Learning
While the questionnaire findings illustrate management as the creator of trusting and caring working atmosphere and
the promoter of learning (which is mostly the perception of male employees), the interview results show that, in
practice, this is true mostly when it comes to team leaders and middle managers. Top management is nominally
dedicated to the advancement of knowledge and learning, but there is no real action to underpin such determination.
Some of the middle managers and team leaders, however, do act as tutors and coaches and show the right balance of
managerial autonomy and control, empower employees and create the atmosphere of trust, respect and collaboration
within their unit/branch/division. By doing that, they promote OL processes and act as knowledge activists and
catalysts, as their role should be, according to Von Krogh, Ishijo and Nonaka (2000). However, this is not the case
within all the teams and branches, and as the interview findings confirmed, management in NGOX is still more about
command-and-control.
Given this and the fact that the actual strategy or support to knowledge and learning from top management is missing,
it can be concluded that leadership/management at NGOX generally does not act as enabler of OL. Obscure
communication between organizational levels and in the huge political influence of external stakeholders on top
management decisions and actions do not make the situation any easier. Moreover, NGOX’s high hierarchy and
bureaucracy do not allow managers to act much beyond the limitations that such organizational structure impose; i.e.
it will be hard for NGOX’s managers to move from centralized to distributed management style, unless the
organizational structure becomes more flatter, as Von Krogh, Nonaka and Rechsteiner (2012) also concluded.
6.5 Organizational Culture and Organizational Learning
There is a mixture of three types of organizational culture present at NGOX: clan (team, collaborative), bureaucratic
(high-hierarchy) and competitive organizational culture (Suppiah and Sandhu, 2011). These types of culture are,
conversely, the most contradictory ones when it comes to their impact on OL. While clan culture enhances OL,
bureaucratic and competitive impede it. Also, clan culture in NGOX is more typical for teams, branches and, in rare
cases, divisions, while hierarchy and competitive cultures dominate the relations between divisions and at

www.sciedu
nal of Business A
organizatio
onal level in geeneral (Table 2). Given this, it
i is most likelyy that organizaational culture iin NGOX affects OL
more negattively than positively.
6.6 Organiizational Politiics and Organiz
izational Learn
ning
Power gam
mes and indiviidual influencees significantly
y determine w
work processess and relationss between peoople in
NGOX (Figure 3).
Figure 3. Organizatio
onal politics annd work relatioons
Fairness annd justice are present mostlly within the groups or braanches. What is surprising iis that, despite such
findings, the majority of
o respondents claim they do d not withhoold their know
wledge becausse they perceiive the
atmospheree at their workp
places as unfaiir (Figure 4).
Figure 4. Organizational
O politics and woorkplace atmosphere
Such results differ from earlier finding gs of Vigoda (2000)

( and Feerris and Kacmmar (1992) thaat revealed how w high
perceptionss of organizatiional politics make
m employeees perceive thheir workplacee as unjust annd untrustworthhy and
have negative influence ono their knowleedge sharing behavior. Howeever, the resultts are in accorddance with som
me later
studies (Laawrence et al., 2005; Room me and Wijen, 2006) that peerceive organiizations as preedominately poolitical
systems, annd that suggesst that connections between learning
l proceesses and diffeerent types of ppower should not be
a negative by default. Thereefore, in the caase of NGOX, the role of inddividual influennces in the proocesses
perceived as
of sharing knowledge an nd new ideas dod not have to o necessarily bbe an impedim ment to OL. F For instance, foor new
solutions/id
deas to be acknowledged, acccepted or dissseminated in N NGOX, it is neecessary to relyy on and use vvarious
individual influences on n different orrganizational levels.
l So, froom that persppective, influeence, as a foorm of
power/politics, could acctually enhancce the processses of OL byy enabling knnowledge transsfer and know wledge
assimilation to actually occcur.
However, judging from the interview ws, organizatio onal politics w with their direect or indirectt influence onn other
organizatio
onal factors, heence on OL, do
d not generally y create a fairr “playground”” for the majorrity of organizational
members in n NGOX. Insteead, politics diistort and dictaate actions andd events, havinng largely unfaavorable influence on
organizatio
onal processes.
6.7 The Ma
ain Barriers to Organizationa
al Learning in NGOX
The resultss of the NGOX
X’s case study answered
a the th
hird research qquestion and revvealed that leaarning difficultiies and
blockages in the processees of OL are, more
m or less, present
p at everyy organizationnal level. At thhe individual leearning
level wheree knowledge creation
c occurss, the only set of
o barriers thatt exists is strucctural-organizaational: the low
w level

3 ISSN 1923-40007 E-ISSN 19223-4015
of freedom in general, either due to the centralized, command-and-control management approach or due to strict
working rules and procedures as revealed in Table 3.
The processes of knowledge transfer and sharing from an individual to a group level are mostly hindered by the
employees’ perception of interpersonal relationships (actional-personal barrier). If they refrain to share knowledge,
this is because of the low trust and respect or weak individual influence - ultimately the result of insufficient
managerial support and the influence of ubiquitous organizational politics (Table 3 refers). This can be also seen by
looking through the organizational-structural prism in the interrelations determined by the organizational culture that
values power, status and influence, and in highly hierarchical organizational structure. Environmental-societal
barriers to knowledge transfer and sharing are mainly comprised in existing differences between divisions -
conflicting objectives or values and hidden agendas as well.
At the organizational learning level, the largest number of barriers is present in the processes of knowledge transfer,
capture, storing and use. Factors such as lack of true commitment and support to learning from top management, low
communication and collaboration between divisions, and strong bureaucracy and political influence have created a
situation where some teams, branches, and in rare cases divisions in NGOX do learn, while the whole organization
does not, because that knowledge is not properly addressed and integrated into organizational practices. Moreover,
there is the predominant belief in NGOX that innovative ideas and solutions are not welcome, because the existing
mindsets are mainly reluctant to change.
Structural-organizational barriers to knowledge capture, storing, dissemination and use are identified as inconsistent
implementation of tenure and training policies, high turnover of field experts, lack of clear strategy and responsibility
for knowledge storage and implementation and general technical difficulties in knowledge storage and dissemination
(Table 3). All these barriers make knowledge integration ultimately dependent on individual influences and power,
as Lawrence et al. (2005) suggest. As a result, there is no sustainability in the OL processes whatsoever, and it is
hard to say whether and how such barriers can be successfully surpassed. However, some recommendations are
further given.
7. Conclusions and Recommendations
7.1 Summary of Conclusions
 General conclusion about the first research question is that knowledge creation, sharing, capture, storage and
use in NGOX occur partially and discontinuously, and despite the fact that employees are highly committed to
learning and fully understand the concept of OL, NGOX do not nurture or exploit such potential further, so
learning is trapped somewhere between individual and group level.
 In relation to the second research question, it can be concluded that organizational structure, organizational
policies (tenure, training), leadership and management, organizational culture and organizational politics in
NGOX affect the processes of OL more negatively than positively due to complex linkages between them.
Moreover, organizational politics, i.e. individual and particularly stakeholders’ influence and power games,
have a dominant influence on all other organizational factors.
 The conclusion about the third research question is that structural-organizational barriers are the most frequent
barriers to OL in NGOX and present at all learning levels. Thus, in order to facilitate OL processes in NGOX,
significant changes in organizational structure, policies, procedures and practices are needed. Interestingly
enough, among all OL processes, knowledge creation appears to face the lowest number of obstructions and all
of them are structural-organizational. Adding the fact that team leaders are identified as the ones that most
frequently act as mentors and learning activists, the conclusion is that learning occurs mostly at individual and
team level.
 Another conclusion emerged from this study is that NGOX, as an international non-profit organization, has
similar issues when it comes to OL as the for-profits described in studied literature. However, what makes
non-profits such as NGOX specific when it comes to learning is the role of stakeholders. Specificity and a
global importance of NGOX’s operations inevitably comprise the large number of member states with various
interests, political agendas and political games. Consequently, power and influence of stakeholders simply
cannot be avoided, which puts a challenge and constraint on organizational processes in general, including OL.
7.2 Recommendations to Management
 In order to achieve learning at organizational level, NGOX must be fully devoted to develop a
learning-friendly environment that will turn learning orientation and commitment of individuals into group
and organizational commitment and goal. This can be achieved, for instance, by forming cross-functional
teams from members of different divisions to fulfill some of the organizational goals. In that way, knowledge
creation and diffusion among members would be enabled, and this might ultimately decrease some divisional

gaps and improve collaboration at organizational level. Moreover, work in cross-functional teams will make
authority and responsibility more dispersed across organizational levels, which is, again, beneficial for
learning.
 Managers at every level, and particularly and especially divisional managers and the Director General, must
provide contextual and resource-based support for learning, while they simultaneously change the
command-and-control approach into approach that makes them become learning activists and facilitators. It
means that, while guiding, they should enhance work related autonomy as precondition for innovation and
creativeness, and communication across organizational levels as a prerequisite for knowledge integration and
diffusion.
 Organizational factors should be put in service of OL. NGOX should adopt organizational structure that is
more flat and decentralized in order to mitigate or remove the existing structural barriers to learning.
E-learning should be seriously considered for all training where possible – it will not only give more
flexibility in learning to temporary dispersed employees (on field), but also significantly cut the training costs
in the long run. Furthermore, roles and responsibilities about who is accountable for knowledge capture,
storage and assimilation should be clearly defined, and all related processes as well. Consequently, the
functioning of technology platforms (databases, networks) will be less complicated and more user-friendly.
 However, some issues related to OL in NGOX will still be hard or even impossible to resolve. Power and
politics are, for instance, obviously “here to stay” because the very nature and purpose of NGOX imply that
stakeholders will keeps to politically interfere in organizational activities and influence them through the
upper management. Power games and individual influence, however, might be mitigated by improving
communication and collaboration between organizational levels through the creation of cross-functional teams
and by providing transparency in managerial actions and decisions and in organizational processes and
practices in general. The negative impact of organizational politics could be also mitigated if managers
succeed to align individual needs and goals with those of the organization.
 Proper implementation of incentives that recognize and reward learning-related behavior should be enabled by
giving transparency in procedures and practices that result in one’s promotion, public recognition, training
approval or other types of incentives. When people start to perceive such processes as just and fair, the overall
organizational climate will start to change and it will become more collaborative, caring and empowering. As
a result, NGOX’s organizational culture will probably lose its competitive side.
 Implementation of tenure policy will probably remain an issue, up until those who are responsible for deciding
who will stay and who will go become fully aware that they are also responsible and accountable for
continuity in the processes of knowledge creation, transfer, capture, storing and dissemination.
 Finally, since a single learning barrier could simultaneously influence different levels and different processes
of learning, in order to make efficient strategies for surpassing learning barriers, managers have to consider all
the barriers as a complex system, rather than analyze them and resolve them as separate factors.
7.3 Limitations and Recommendations for Future Research
This study contributes to the body of knowledge by filling the existing gap in research on OL processes and practices
in the non-profit sector. The study value primarily lies in the fact that it clarifies and explains in more depth the OL
processes and the role of NGOX’s organizational factors in the processes of OL, the role of organizational politics in
particular.
First limitation to this study would be the number of conducted interviews. A larger number of interviewees would
give more width to research and more possibility for some new, unaddressed themes to appear. Second, the study
research was designed and conducted to answer the questions about OL in a single and specific non-profit
organization that operates globally and for the public interest. As such, the research results cannot be generalized to
other non-profits. However, the method of triangulation was deployed so cross-confirmation from different data
sources (questionnaire end interview) ensures the validity of research. For more comparative treatment and if time
had permitted, the author would have considered a multiple case study approach with at least two different types of
non-profits.
There are several suggestions for further research. From the single case study perspective, further closer research on
stakeholders’ political influence in NGOX would be a valuable source of information related to OL and other
organizational processes, policies and practices. Also, the influence of other organizational factors that were not
included in this study should be examined in order to better understand learning constraints and enablers in NGOX -
for instance, the influence of limited resources or of organizational mission, vision and strategy on OL. Furthermore,
for providing the answers about OL that could be applied in the non-profit sector in general, further correlational
quantitative research on a large number of different non-profits is needed in order to explore and determine exact

correlations among organizational politics, organizational structure, organizational policies, organizational culture
and leadership, and their influence on OL.
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Effect of Employee Communication on Organisation Performance in

Kenya’s Horticultural Sector
Brenda Beryl Achieng Otieno1, Esther Wangithi Waiganjo1 & Agnes Njeru1
1
School of Human Resource Development, Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya
Correspondence: Brenda Beryl Achieng Otieno, Business Administration, School of Human Resource Development,
Jomo Kenyatta University of Agriculture & Technology, Nairobi, Kenya. E-mail: achieng1573@gmail.com
Abstract
importance by both government and the stakeholders as a whole. This study therefore sought to explore the effect of
employee communication on organization performance in Kenya’s horticultural sector. This study was carried out in
flower farms in Kenya. The population of this study was all flower farms in Kenya which were the 14 flower farms
registered in the KFC directory (2013) and based in Naivasha. The study targeted the employees in the identified farms.
Cross sectional survey research design was used for the study. Stratified sampling technique was used to sample the
study respondents. A total of 2460 respondents were targeted by the study out of which 1888 responded giving a
response rate of 76.7%. Questionnaires were used as instrument for data collection. Both quantitative and qualitative
data analysis techniques were used. Quantitative data was analyzed using descriptive statistics while qualitative data
was analyzed thematically. Inferential statistics such as correlation and regression analysis were used to test on the
relationship between the variables of the study. The study found that 65% of the respondents strongly agreed that
communication facilitates exchange of information and opinion with the organization. It was also found that that 63%
of the respondents were found by the study to agree that communication helps in improving operational efficiency thus
improving organization performance. The results of correlation analysis show that employee communication is
statistically significant with a Pearson correlation coefficient of 0.466 at a level of significance of 0.000. The study
concluded that employee communication is a major determinant of organization performance in the horticultural sector
in Kenya. The study recommended that organizations should develop effective communication strategies. This will
facilitate passing of information both within and outside the organization thus improving performance.
Keywords: employee communication, organization performance
1. Introduction
The history of the export of fresh horticultural produce from Kenya dates back to the period before independence when
Kenya, then a British colony, was required to contribute to the running of the budget for East Africa. After
independence the industry continued to flourish with exports starting to go to Europe and thus opening up the potential
for Kenya in the export market (Maplecroft, 2010). Kenya is primarily an agricultural economy. Agriculture plays a
critical role in national economic growth and development. The major roles of agriculture include; employment,
foreign exchange creation and overall contribution to Gross Domestic Product (GDP).
Kenya is primarily an agricultural economy. Agriculture plays a critical role in national economic growth and
development. The major roles of agriculture include employment, foreign exchange creation and overall contribution
to GDP. Agriculture accounts for about 24 % of Kenya’s GDP with an estimated 75% of the population depending
on the sector either directly or indirectly (Maplecroft, 2010). Agriculture is the mainstay of the Kenyan economy and
currently represents 24 per cent of GDP. More than one-third of Kenya’s agricultural produce is exported, and this
accounts for sixty five per cent of Kenya’s total exports (Dolan, 2004). The agricultural sector accounts for eighteen
per cent of total formal employment in the country. The Cut-Flower Industry has been active in Kenya since the 1980's,
but only in the 1990's has it transformed into a major player in the international market.

Several factors made Kenya attractive for growing flowers: a cheap and relatively educated labour force, suitable
climate conditions and proximity to Europe's big markets. These factors attracted capital and the knowledge needed for
boosting the industry (Maplecroft, 2010). Today, the Cut-Flower Industry is the fastest growing segment in Kenya. It is
also the largest export industry in the country responsible for annual turnover of nearly 600 Million Dollars. Kenya is
the fifth largest flower exporter in the world. It exports primarily to the Netherlands, Germany and the U.K. The
development of the flower industry in Kenya is an example of regional economic development that exploits
comparative advantages to export to developed markets (Derek, 2005).
Companies in the horticultural sector are now increasingly coming under pressure to ensure decent working conditions
for their workers. The horticulture sector is under threat from the above factors and it is imperative that attention must
be shifted to address the labour relations practices in this industry since competitiveness in this sector if it is to remain
the mainstream of foreign exchange earnings for the government and continue creating employment for the country.
This research assessed the effect of employee communication on organization performance in Kenya’s horticultural
sector.
1.1 Statement of the Problem
importance by both government and the stakeholders as a whole.
According to Maplecroft (2010), there have been poor human resource management practices in the horticultural
sector as a result of companies ignoring labour relations practices. Some of these poor practices include unethical
labour practices, for example dismissal of workers, without proper reasons and denying them the freedom of
association by refusing them to join trade unions. The horticultural sector is now increasingly coming under pressure to
ensure decent working conditions for their workers.
A research by Dolan (2004) focused on poor labour practices and environmentally damaging production processes
without getting into the reason why employers were guilty of such poor practices and the effect that arose to both
employees and employers as a result of such actions. Suffice to say the researcher tried to analyze how ethical trade can
enhance the economic and social rights of women and men in African export Horticulture and identifying best practice
in implementing gender sensitive ethical trade based on worker and stakeholder participation. Collinson (2010)
research mainly focused on the gains of labour productivity and management efficiency arising from implementation
of social codes in a company. Again, it did not analyze the relationship between labour relations practices in the
horticulture sector. Other researchers (Omwega, 2007; Riungu, 2006; Riungu, 2007; Barrientos et al., 2003; Opondo et
al, 2003; Utling, 2002) have also researched on various areas within the flower industry including gender rights, multi
stakeholder participation and working conditions in the industry. Going through these researches there is a gap on the
relationship between labour relations practices in the horticulture sector. This study therefore sought to assess the
effect of employee communication on organization performance in Kenya’s horticultural sector.
This section presents theoretical and empirical review.
2.1 Human Capital Theory
The concept of Human capital has relatively more importance in labour-surplus countries. These countries are
naturally endowed with more of labour due to high birth rate under the given climatic conditions (House, 1996). The
surplus labour in these countries is the human resource available in more abundance than the tangible capital resource.
According to Kelly (2007) this human resource can be transformed into human capital with effective inputs of
education, health and moral values. The transformation of raw human resource into highly productive human resource
with these inputs is the process of human capital formation. The problem of scarcity of tangible capital in the labour
surplus countries can be resolved by accelerating the rate of human capital formation with both private and public
investment in education and health sectors of their National economies.
The tangible financial capital is an effective instrument of promoting economic growth of the nation. The intangible
human capital, on the other hand, is an instrument of promoting comprehensive development of the nation because
human capital is directly related to human development, and when there is human development, the qualitative and
quantitative progress of the nation is inevitable. Human capital is the stock of competencies, knowledge, social and
personality attributes, including creativity, cognitive abilities, embodied in the ability to perform labor so as to produce
economic value. It is an aggregate economic view of the human being acting within economies, which is an attempt to

capture the social, biological, cultural and psychological complexity as they interact in explicit and/or economic
transactions (Rosen, 1987).
Many theories explicitly connect investment in human capital development to education, and the role of human capital
in economic development, productivity growth, and innovation has frequently been cited as a justification for
government subsidies for education and job skills training. There is also strong evidence that organizations that possess
and cultivate their human capital outperform other organizations lacking human capital (Crook, Todd, Combs, Woehr,
and Ketchen, 2011). This study assessed the relevance of this theory in relation to the organisational performance of
Kenya’s horticultural sector which is very labour intensive.
2.2 Universal Theory
The universal theory of leadership is the belief that there are certain traits that contribute to leadership effectiveness in
all situations. The elements to this theory are Personal characteristics, behaviors, and skills. According Rosen (1987)
the elements of the universal theory of leadership the leader has to have several traits to become an effective leader.
First of all, an effective leader has to have a vision about how organization could or should be the in the future.
Secondly, the leader needs to have self-confidence to become an effective leader because if the leader has great ideas
without confident in himself he will not achieve anything. Also, an effective leader needs to have great skills of
communication to convince others to follow him. Additionally, an effective leader needs to have humility when he
treats people even though, the leader has great ideas, often most of the ideas come from someone else (Keeley, 2007).
As a result, the leader has to surround himself by those people who have those ideas. However, based on the prior traits
of an effective leader, we can notice the difference between management and leadership in several aspects. First of all,
the manager does not have to have vision because the manager has plans and budget to follow. Secondly, the manager
does not need to have to be a great communicator to convince others because he gives directions and rules that others
have to follow. In other words the manger is controlling the power in the organization and enforces others to achieve
their tasks. Another difference between the management and the leadership is that the manager does not need to have
humility such as the leader (Cole, 2002).
However, the universal theory of leadership has a limitation because the leader may have all traits in this theory but he
is not an effective leader. The reason that the theory has limitation because leadership’s elements are: leader, group
members, and situation. Sometimes the group members are not effective or the situation inappropriate. This theory will
support the variable on leadership styles and how this impacts on organizational performance.
2.3 Empirical Literature
Inedegbor et al. (2012) investigated the impact of business communication on organizational performance in Nigerian
companies. The study specifically investigated the relationship between business communication and organizational
performance in Nigeria using a contextualized and literature based research instrument to measure the application of
the investigated “constructs”. Using the survey method, the study obtained sample data from 100 small and large
manufacturing and service companies operating in Lagos State of Nigeria. The research instrument showed
encouraging evidence of reliability and validity. Data were analyzed using descriptive statistics, percentages and t- test
analysis. The study found that effective business communication is emphasized to a reasonable extent in the surveyed
Nigerian companies. However, the ‘level of emphasis’ was a question of degree. It was also found that the extent of
practices of effective business communication, were related to the category of business (service versus manufacturing)
and its size. This study therefore sought to assess the effect of employee communication on organization performance
in Kenya’s horticultural sector.
Neves (2012) used a cross-lagged panel design to examine the temporal relationship between management
communication and perceived organizational support (POS), and its consequences for performance. Assessed was
done on management communication and POS 2 times, separated by a 3-year interval, in a social services organization
(N = 236). The findings suggest that management communication was positively associated with a temporal change in
POS. In addition, it was found that POS fully mediates the relationship between management communication and both
in-role and extra-role performance. The study advanced the theoretical knowledge concerning how management
communication affects performance, with implications for practice. Specifically, it revealed that management
communication affects performance mainly because it signals that the organization cares about the well-being and
values the contributions of its employees. This study also adopted the use the perceived organization support in terms
of communication as indicators on the effect of communication on organization performance.
Rho (2009) assessed the impacts of organizational communication on the perception of red tape by comparing internal
communication with external, especially client-oriented, communication in both public and nonprofit organizations.

This study was based on the questionnaire data from the National Administration Studies Project (NASP)-III, closed in
January 2006, gathered from a survey of public and nonprofit managers in the states of Illinois and Georgia. Results
showed that frequent communication with clients plays an important role in reducing perceived red tape, and
sector-based differences between public and nonprofit sectors influence the impact of communication type on red tape
perception. The analysis controls for the organizational characteristics, job characteristics, and personal characteristics.
This study looked at the effect of the use of communication as a tool on the general performance of organizations in the
horticultural sector in Kenya.
3. Methodology
This study was carried out in flower farms in Kenya. The population of this study was all flower farms in Kenya
which were the 14 flower farms registered in the KFC directory (2013) and based in Naivasha. The study targeted
the employees in the identified farms. Cross sectional survey research design was used for the study. Stratified
sampling technique was used to sample the study respondents. A total of 2460 respondents were targeted by the
study out of which 1888 responded giving a response rate of 76.7%. Questionnaires were used as instrument for data
collection. Both quantitative and qualitative data analysis techniques were used. Quantitative data was analyzed
using descriptive statistics while qualitative data was analyzed thematically. Inferential statistics such as correlation
and regression analysis were used to test on the relationship between the variables of the study.
Multiple regression model presented below was used
Y = β0 + β1X1 + β2X2 + β3X3+ β1X1 Z+ ε
Where
Y = is the dependent variable (Organizational performance)
Z= Leadership styles
Xi = is the three independent variables i.e. employee communication, employee involvement and human resources
procedures where (i=1,2,….n)
X1 = Employee communication
X2= Employee engagement
X3= Human resource procedures
Z = product term between moderating variables and each independent term
βi (i=1,2,3,4) are the parameters associated with the corresponding independent variable that are to form part of the
partial regression coefficients
βo is the intercept
ε is the error term
4. Findings of the Study
The study adopted factor analysis in order to reduce the number of indicators or factors under each research variable
and retain the indicators capable of explaining the responses to globalization adopted by manufacturing firms in Kenya.
The retained factors had loading values of above 0.4 and were used for further analysis.
To measure the reliability of the gathered data, Cronbach’s alpha was used. Cronbach’s alpha is a coefficient of
reliability that gives an unbiased estimate of data generalizability (Zinberg, 2005). An alpha coefficient of 0.70 or
higher indicated that the gathered data is reliable as it has a relatively high internal consistency and can be generalized
to reflect opinions of all respondents in the target population (Zinbarg, 2005). Table 1 shows Cronbach’s alpha of all
indicators. Cronbach’s alpha results in the component column were computed using the results of all indicators. The
results revealed that one of the indicators had a loading less than 0.4.

Table 1. Factor analysis for employee communication indicators

Cronbach’s Component Cronbach
Alpha before Alpha after
.807 Communication helps in improving teamwork thus
.807 .816
decreasing grievances
Communication boosts employee morale thus improving
.795
their job performance
Communication improves job satisfaction among
.765
employee thus improving organization performance
Communication helps in improving operational efficiency
.760
thus improving organization performance
Communication helps in execution of decisions and
.651
accomplishing tasks
Communication in improving public credibility and
.567
corporate image
Communication facilitates exchange of information and
.399
opinion within the organization
Table 1 shows that Cronbach’s alpha result of all employee communication indicators was 0.807 and the factor loading
results were between 0.399 and 0.807. This implies that six of the seven indicators were retained for further analysis.
Using the retained employee communication indicators, the value of Cronbach’s alpha was computed again and
generated a value of 0.816. This indicated that data collected using all the employee communication indicator values
were reliable since the Cronbach’s alpha value was above 0.70. These indicators were later used for further analysis.
Descriptive statistics were used to describe the basic features of the data in the study. They provide simple summaries
of the sample and measures. Descriptive statistics such as frequencies and percentages were used to analyze the data.
Table 2 presents the findings on the effect of employee communication on organization performance.
Table 2. Effect of employee communication on organization performance
Strongly Disagr Neither Agree Strongly
Statement disagree ee agree nor agree
disagree
Communication facilitates exchange of 0% 0% 0% 35% 65%
information and opinion within the
organization
Communication helps in execution of 0% 0% 5% 55% 40%
decisions and accomplishing tasks
Communication boosts employee morale 0% 0% 5% 45% 50%
thus improving their job performance
Communication in improving public 1% 1% 3% 54% 41%
credibility and corporate image
Communication helps in improving 0% 1% 5% 63% 31%
operational efficiency thus improving
organization performance
Communication improves job satisfaction 0% 11% 8% 47% 34%
among employee thus improving
organization performance
Communication helps in improving 0% 1% 29% 44% 26%
teamwork thus decreasing grievances
The findings on Table 2 show that 65% of the respondents strongly agreed that communication facilitates exchange of
information and opinion with the organization. It was also found that that 63% of the respondents were found by the
study to agree that communication helps in improving operational efficiency thus improving organization performance,

55% of the respondents agreed that communication helps in execution of decisions and accomplishing of work and that
44% of the respondents also agreed that communication help in improving teamwork thus decreasing grievances.
4.1 Correlation Analysis
This study conducted correlation analysis to test on the strength of association/relationship between the study
variables. Correlation is a measure of the relationship or association between two continuous numeric variables. It
indicates both the direction and degree to which they vary with one another from case to case without implying that
one is causing the other. Correlation analysis results give a correlation coefficient which measures the linear
association between two variables (Crossman, 2013).
Employee Communication Correlation Analysis
The symmetric matrix with Pearson correlations given in Table 3 shows that the Pearson correlation coefficient was
0.466 and this demonstrates that employee communication have a positive correlation with globalization.
Table 3. Employee communication and organization performance
Correlations
Employee Communication Organization Performance
Pearson Correlation 1 .466**
Employee
Sig. (2-tailed) .000
Communication
N 1888 1888
Pearson Correlation .466** 1
Organization
Sig. (2-tailed) .000
Performance
N 1888 1888
**. Correlation is significant at the 0.01 level (2-tailed).
4.2 Regression Analysis

Regression Analysis on Employee Communication and Organization Performance
Regression analysis was done to determine the relationship between employee communication and organization
performance.
Table 4 shows that the coefficient of determination R square is 0.217 and R is 0.466 at 0.05 significant level. The
coefficient of determination indicates that 21.7% of the variation in the response to organization performance is
explained by employee communication.
Table 4. Regression analysis on employee communication and organization performance
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .466a .217 .216 .861
a. Predictors: (Constant), Employee Communication
Table 5 presents the results of Analysis of Variance (ANOVA) employee communication versus organization
performance. The ANOVA results for regression coefficient indicates that the significance of the F is 0.00 which is less
than 0.05 hence implying that there is a positive significant relationship between employee communication and
Table 5. Anova
ANOVAa
Model Sum of Squares df Mean Square F Sig.
Regression 193.921 1 193.921 261.525 .000b
1 Residual 1396.986 1886 .742
Total 1784.828 1887
b. Predictors: (Constant), Employee Communication

Analysis was done to determined beta coefficients of employee communication versus organization performance.
Table 6 shows that there is significant relationship between employee communication and organization performance.
Since the coefficient of adoption of technology is 0.793 which is statistically greater than zero. The t statistic is 16.172
which is greater than zero. This demonstrates that employee communication have a positive influence on organization
performance.
Table 6. Coefficients
Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) .793 .215 3.687 .000
1
Employee Communication .793 .049 .466 16.172 .000
5. Discussion
The factor analysis results on employee communication had an Alpha of 0.807 and the loading results between 0.399
and 0.807. Using the retained employee communication indicators, the value of Cronbach’s alpha was computed again
and generated a value of 0.816. The study therefore deduced that six out of the seven indicators of employee
communication were reliable in assessing the effect of employee communication on organization performance.
Employee communication indicators such as improving team work, boosting employee morale, improving job
satisfaction, improving operational efficiency and execution of decisions and accomplishing tasks were later used for
further analysis.
Descriptive statistics results showed that employee communication is one of the strategies by organizations in the
horticultural sector to improve their performance. This is evidenced by 65% of the respondents strongly agreeing that
that communication facilitates exchange of information and opinion with the organization. It was also found that 63%
of the respondents agreed that communication helps in improving operational efficiency thus improving organization
performance. These findings are in line with Inedegbor et al. (2012) findings that effective business communication
positively affects the performance of the surveyed companies in Nigerian. A study by Neves (2012) also revealed that
management communication was positively associated with a temporal change in perceived organizational support
(POS). Neves study advanced the theoretical knowledge concerning how management communication affects
performance, with implications for practice. Specifically, it revealed that management communication affects
performance mainly because it signals that the organization cares about the well-being and values the contributions of
its employees.
Pearson correlation analysis of employee communication results gave a correlation of 0.466 which demonstrated that
employee communication has a positive correlation with organization performance. Regression model of employee
communication versus organization performance gave a coefficient of determination of R square of 0.217 and R as
0.466 at 0.05 significant level. The coefficient of determination indicated that 21.7% of the organization performance
is explained by employee communication. This implies that there exists a strong positive relationship between
employee communication and organization performance
6. Summary of Findings
Employee engagement is one of the strategies by organizations in the horticultural sector to improve their
performance. The study found that 65% of the respondents strongly agreed that communication facilitates exchange
of information and opinion with the organization. It was also found that that 63% of the respondents were found by
the study to agree that communication helps in improving operational efficiency thus improving organization
performance, 55% of the respondents agreed that communication helps in execution of decisions and accomplishing
of work and that 44% of the respondents also agreed that communication help in improving teamwork thus
decreasing grievances.
The findings from the correlation analysis revealed that organization performance is positively related with the
employee communication with a Pearson’s correlation coefficient of r = 0.466 and at a level of significance of 0.000,
an indication that employee communication is statistically significant with p value less than 0.05

7. Conclusions
Employee communication is a key determinant of organization performance. This is based on the fact that it facilitates
exchange of information and opinion with the organization and that communication helps in improving operational
efficiency thus improving organization performance.
8. Recommendations
The study also recommends that organizations should develop effective communication strategies. This will facilitate
passing of information both within and outside the organization thus improving performance.
9. Limitation of the Study
One of the limitations of this study is that it only focused on employee communication which is one of the determinants
of organization performance. Thus, the study left out other determinants of organization performance.
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The Impact of the Unofficial Cattle Business on the Household Welfare

of Cattle Traders of the Border Towns of Cameroon and Nigeria
Saidou Baba Oumar1 & Salihu Zummo Hayatudeen2
1
Department of Economics & Management, University of Buea, Buea, Cameroon
2
Department of Economics, Modibbo Adama University of Technology, Yola, Nigeria
Correspondence: Saidou Baba Oumar, Department of Economics & Management, University of Buea, Buea,
Cameroon. E-mail: saidoubo@gmail.com
Received: January 21, 2015 Accepted: March 4, 2015 Online Published: March 18, 2015
Abstract
This paper examines the impact of the unofficial cattle business on the household welfare of cattle traders of the
border towns of Cameroon and Nigeria and relates that impact to the household access to basic needs or services of
life such as income, employment, food, shelter, education, potable water, electricity, and health care that have been
extensively used in the literature as indicators for the attainment of well-being and freedom from the yoke of poverty
in the society. It uses primary and secondary data on the trade activities and employs descriptive as well as
inferential techniques of data analysis to capture the objectives of the inquiry. The findings of the paper show that
despite the unofficial character and unnoticed impact of the business by the governments of Cameroon and Nigeria,
the traders who partake in the business acknowledge to have enhanced their living conditions with it. Poverty
reduction being implicitly or explicitly cited as a strategy for household welfare improvement by the government in
Cameroon and Nigeria, the paper recommends the enforcement, review and continuation of the existing poverty
reduction programs irrespective of the leadership choice in the countries.
Keywords: trade, livestock, well-being, family, Cameroon, Nigeria
1. Introduction
Trade entails the exchange of goods and currencies between people, institutions or countries and it can be official or
unofficial. With official trade between countries for instance, the volume and monetary value of all exported and
imported items are adequately recorded in the balance of payment of the trading partners. However in the case of
unofficial trade, it is difficult to arrive at a proper account of the volume and value of the goods and services traded
between the partners. According to Uyenuga (1993), this form of unofficial cross-border business occurs in almost
all sub-regions of the African continent at various degrees of intensity and is mostly influenced by factors such as
weather or climatic conditions, socio-cultural and anthropological knots that are generally beyond the control of the
trading partners. In the case of Cameroon and Nigeria, such factors influence and sustain livestock informal trade
activities between the Northern Area of Cameroon (NAC) and Adamawa State of Nigeria (ASN).
Though Nigeria promotes formal cross-border trade, the practice of unofficial cross-border trade is still very
significant in her economy due to factors such as differences in exchange rate, anthropological ties between trading
countries, complexities of her trade licensing system, poor transportation and insecurity in the border areas that
hinder the proper functioning of formal trade in the country (Balami, 2003). As the country prolongs the operation of
unofficial businesses alongside the formal trade with her neighboring countries of Benin, Cameroon, Chad, and
Niger Republic, such factors may continue to influence and sustain informal cattle trade activities in the country.
Yet, informal activities may not necessary be bad even though some of them are illegal based on local regulations.
Therefore, there are costs and benefits associated with the minimization of informal practices. While constraints and
restrictions still exist in the formal trade, any attempt to eliminate informal practices may lead to more costs than
benefits. For instance Uche, Oumar, and Gazali (2003) argued that the cross-border cattle trade between NAC and
ASN has contributed to increase the state revenue and economic growth over the years through cultural linkages
involving people from Cameroon, Ethiopia, Somalia or Sudan and led to the growth in incomes of individual traders
and their respective economies. Besides, Igene (2008) observed a high profit margin in the traded commodities,

while Mwaniki (n.d) explained that this form of trade is perilous to internal economies of the trading partners but
highly advantageous to individual traders who derive substantial benefits from it. Again, Holtzman (2009)’s study on
cross-border trade between Ghana and Burkina-Faso showed that ethnicity plays a less dominant role in cross-border
trade compared to a shared religion in particular Islam that plays a prominent role in facilitating it.
Once upon a time a large net exporter of food and animal products, Nigeria has now become an importer of some of
these products mostly through informal cross-border trade with neighboring countries like Cameroon, Chad, and the
Republic of Niger. It was noted that the value of cross-border cattle trade between Cameroon and Nigeria accounted
for about 8% of Nigeria’s total value of trade in 2007, thus making the income generated from it as one of the
sources of income and food for the country (Iya, 2008). From the little documentation on Nigeria’s cross-border
trade activities, it is observed that the annual total volume of the foreign trade ranged between 5% and 10% in 2008.
Evidence and data from neighboring countries suggest that the actual value could be more than what was stated.
Furthermore, the value of the unofficial cross-border cattle traffic for Nigeria was estimated at over N15 billion ($75
million at N1 = $0.005 as at 20/01/2015) in 2009 and if this estimate was officially recorded, the actual value of
cross-border cattle business would have accounted for about 20% of Nigeria’s total value of trade in that year
(National Bureau of Statistics [NBS], 2010).
The unofficial cross-border cattle business between Cameroon and Nigeria existed before the demarcation of their
current border limits because of the linkages between the two areas. The trade has become a permanent feature of the
region but its contribution to the two governments still remains officially unnoticed because of its informal nature.
The traded cattle are supplied to almost all parts of Nigeria to supplement the growing demand for meat consumption
in the country but the gap between the aggregate demand and supply in the markets is still wide. Although
agricultural products are the major commodities for cross-border trade, the most common commodities that cross the
border; both formal and informal through the border exits of Cameroon to ASN, are cattle and food products. Yet,
the cattle business engages a considerable portion of the population across borders but it is also observed that people
in the border towns are poorer than their counterparts in the inner parts of the countries. Hence, there is need to
investigate the socio-economic impact of the cattle trade on the border towns. Therefore, the main objective of this
paper is to analyze the impact of the unofficial cattle business on the household welfare of cattle traders of the border
towns of Cameroon and Nigeria. Other specific objectives of the paper are:
1. To examine the socio-economic characteristics of cattle traders,
2. To examine the accessibility of cattle traders to basic needs or services of life,
3. To determine the impact the cattle business on the lives of traders, and
4. To suggest ways of mitigating poverty for welfare enhancement in the countries.
There is very little documentation relating to Nigeria’s cross-border cattle trade. This is mainly because cross-border
activities between Nigeria and its neighbors are mostly informal and so reliable secondary data do not exist to reflect
the actual situation. However, the few studies that examined the phenomenon emphasized less on the access of
participants to basic needs or services of life and the welfare of their households. This paper relates the welfare of the
households to the trade and explains how the trade mitigates the effects of poverty in the study area.
The determinants of household welfare can be classified into income and non-income indicators. The World Bank
(2001) used income, education, self-esteem, livelihood, and sustainability as indicators that promote the well-being
of the household and the community in harmony with their needs and aspirations. Mukherjee and Benson (2003), and
Okojie (2002) argued that per capita expenditure is the major determinant of welfare of a household. Yet for Siddiqui
(2001), the welfare of the household depends on its capability of having access to food, shelter, health care, and
education based on the level of income it earns. Dolgoff (2010) substantiates by adding the access to social influence,
legal protections, or personal fulfillment that are not economic terms because general household welfare is not solely
an economic phenomenon. Therefore, household welfare is a broad concept referring to a state of living of an
individual or group in a desirable relationship with the total environment including both the social and economic
aspects of the unit. The concept of household welfare implies the welfare of man, his family and his community.
However, this paper assesses the welfare of the household against the accessibility of cattle business households to
basic needs or services such as income, employment, food, shelter, potable drinking water, electricity, and health
care which aim at alleviating distress and poverty in the society. Consequently, the rest of the paper is organized as
follows. Section 2 explores works related to the subject matter of the paper. Section 3 explains the methodology.
Section 4 focuses attention on data analysis and discussion of results, while section 5 gives the conclusion and
recommendations of the paper.

2. Review of Literature
The informal sector is that part of an economy that is not taxed, monitored by government or included in any gross
national product (GNP), unlike the formal sector. In developing countries about 70% of the potential working
population earns a living through informal sector (Bromley, 1978). Perberdy (2002) posits that the informal sector
forms a substantial percentage of economic activities in the African economy, even though the trade records are
entirely unavailable. Hart (1973) argues that the informal sector is mainly characterized by the reliance on
indigenous resources, small scale operation, labor intensive and adopted technology, and low receipts of income or
skills required outside the school system. Furthermore, activities of this sector are not captured in official records and
usually they have no formal income remunerations. Similarly, Edward (2008) maintains that the informal sector is
nothing more than heterogeneous enterprises outside any contractual arrangement or as pointed by Aryeetey (2009)
enterprises without neither official status nor any social security by the government and involved in smuggling. In
short, Nduru (2004) concludes that the informal trade takes different forms and is known under different names
(unrecorded trade; illegal trade; unofficial trade; trade subject to over and under invoicing, smuggling, hoarding). It
is best characterized by its non-inclusion in the national accounts of a country or region in terms of its domestic and
international transactions.
Cross-border trade is a feature of regional trade and occupies a central position in the international trade theories as
explained by most economists. In the course of defeating the mercantilist school of thoughts of the recently
acclaimed technological theories, the key element in all is the principle of comparative advantage which stipulates
that no matter how strong or absolutely weak a country is, it can still maximize the profit available to it by
concentrating on those activities in which it is relatively more powerful and hiring the services of specialist in those
activities in which it is relatively weak (Thom, 1971). In trying to obtain information on the volume and value of the
unrecorded trade flows between Kenya and Uganda, Ackello-Ogutu and Echessah (1997) revealed that Kenya has a
comparative advantage in manufacturing and processing goods such as hardware, textile, beverages, wheat, and flour
over Uganda, whereas Uganda’s comparative advantage over Kenya largely rests on unprocessed agricultural
commodities such as maize, beans and fish. Within the same theoretical underpinning, Macedo (1987) shows that the
cross-border trade between Nigeria and its neighbors can be understood within the context of the
relative-factor-availability theory for the trade is being facilitated by the relative abundance of livestock and gum
Arabic in Niger, Chad and Cameroon and the relative abundance of petroleum products and manufactured goods in
Nigeria as also upheld in Balami (2007). By examining the dynamics of informal livestock cross-border trade
between Cameroon and Nigeria; Hayatudeen, Oumar, and Gazali (2005) revealed that on the average more than 50%
of the livestock, in particular cattle, being traded in ASN come from Cameroon. They also argued that differences in
factor endowment between the two countries as well as socio-cultural ties greatly influence the trade sustainability in
the sub region.
While analyzing the role of informal cross-border trade in Myanmar, Winston (2009) showed that cross-border trade
activities have more positive effect on income levels amongst men than women. In term of age, the channels of
younger respondents having a higher income are over four times higher than that of older respondents. He further
revealed that on the average, most households involved in small business experience negative effect of the trade
because of the increase in the prices of goods at the border areas. Conversely, Marin and Verdier (2014) and Mayer,
Melitz, and Ottaviano (2011) assessed the economic gains of informal cross-border trade between Kenya and
Uganda and found that the economic gains from informal trade between the two countries include job creation,
provision of agriculture and industrial goods that would otherwise be unavailable and reduction of food shortage
conditions. Yet, the lack of working capital was singled as the largest barrier to business expansion beside high
interest rates, bureaucratic bottlenecks such as licenses, poor infrastructure, and increased corruption at the border.
The authors concluded that trade liberalization through regional cooperation initiatives such as harmonization of
domestic food policies, relaxation of trade barriers, and government willingness to enforce these initiatives would
enhance the large existing trade potential between Kenya and Uganda.
In the horn of Africa, Azeze (2010) studied cross-border cattle trade and food security issues and found that
cross-border trade finances grain imports with a considerable impact on food security in the region. He further
argued that most of the herders surfer as a result of downward trends in cross-border cattle trade in the region. In the
same region, Hussein (2010) examined the role of cross-border cattle trade on the livelihood systems of pastoral and
agro-pastoral population revealing that export trade is supported by a network of regional cross-border trade, where
the interior range lands are linked to the ports through a series of clan-based corridors. He also argued that the
regional cross-border cattle trade network supports about 17 million people in the horn of Africa including livestock
producers, traders, and other groups such as trekkers, fodder traders, brokers and middlemen who directly or
indirectly derive their entitlements from cattle production and trade.

As regards intra-regional trade, Holtzman (2009) analyzed the informal cross-border trade conditions in Ghana and
Burkina-Faso for livestock, kola nut and onions listing four main problems that have negative impact on the
livestock business between the two countries. These problems are: prohibitive import duties, bribery and corruption,
non-commercialization of livestock producers, and exchange rate issues; adding that the first and second problems
encourage cross-border smuggling. Finally, Nkendah (2010) in a study on the volume and value of unrecorded
cross-border trade flows on agricultural commodities between Cameroon and its Communauté Economique et
Monetaire de l’Afrique Centrale (CEMAC) neighbors explained that in 2008 over 155 thousand tons of agricultural
and horticultural commodities were officially shipped from Cameroon to its CEMAC neighbors for an estimated 38
billion FCFA ($76 million at 1FCFA = $0.002 as at 20/01/2015), representing 4% of the GDP in Cameroon. The
comparison in relative terms indicates that informal trade between the trading parties represents 96% of the
transactions mainly involving agricultural and horticultural commodities. In a country specific analysis, Iya (2008)
collected data in four cattle markets in ASN to assess the effects of informal cross-border cattle trade on the economy
of ASN, and found that the revenue accruing to the government increased tremendously, while the income of traders
increased by 40%.
A critical examination of previous studies reviewed shows the extent to which efforts have been invested in
identifying and explaining the advantages and disadvantages of the unofficial business across international
boundaries. According to the authors, the specific gains of the unofficial business ranged from it being a source of
employment and spring board for income generation to many people, a means of encouraging social cohesion
between people living across the borders to it being explained by some trade theories. Conversely, the particular
disadvantages associated with the business covered a wide range of socio-economic problems such as the lack of
reliable official records of the terms of trade between trading countries, over-reliance of actors on indigenous
business practices, exchange rates bureaucracies breeding the growth of parallel foreign exchange market, and
corruption. Beside these important elements in explaining the unofficial business across international borders from
the macro-economic perspective, this study undertakes the analysis on the micro-economic perspective to understand
the weight of the business vis à vis the welfare of households partaking in its activities.
3. Methodology
This section explains the methodology used in achieving the objectives of the inquiry. It starts with a description of
the study area before discussing the data, instruments of data collection, sample size and sampling technique, and
techniques of data analysis.
3.1 Description of the Study Area
This study covers the livestock border markets and control posts in NAC and ASN. In NAC the markets concerned
are Adoumri, Garoua, Mokolo, and Ngaoundéré, while in ASN the targeted cattle markets are Ganye, Konkol,
Madagali, Mubi, Ngurore, and Shigari. These localities are the main cattle supply centers in the study area. ASN
covers an area of about 42 159 square kilometers (Km2) and is a combination of former Adamawa Province (AP)
with some part of Sardauna Province (SP). It is inhabited by the Bura, Bwatiye, Chamba, Fali, Fulani, Gira, Gude,
Hausa, Higgi, Kanakuru, Kilba, Lunguda, Margi, Mbulo, Nzanyi, and Yungur people. Each social group has its own
language but Fulfulde and Hausa languages are lingua-franca in the state. The communities in ASN earn a living
through public service work, farming, rearing of animals, fishing and trading activities (Sa’ad, 1979). The state has
an estimated population of 3.2 million people (National Population Commission [NPC], 2006). The climate of the
area is dominated by the same movement of wind system from November to February, and then from March to June
hot air dominates the wind system with an average temperature of about 350C and a rainfall average of 959
millimeters (mm) in the northern parts and 987 mm in the southern zone (Sa’ad, 1979). Conversely, the NAC
stretches over an area of 164 054 Km2 (Carte Administrative du Cameroun [CAC], 2008 cited in Institut National de
la Statistique [INS], 2013:86-87). The total population of NAC is about 7.25 million people (INS, 2013:85). The
people in NAC share common religion and culture with the people in ASN. The area is inhabited mostly by the Fali,
Fulani, Nzanyi, Shoa-Arabs people among others and their major occupations include farming, rearing of animals
and trading (Sa’ad, 1979). The climatic condition of the area is dominated by the movement of wind system from
November to March; generally conducive for livestock breeding with an average temperature of about 32.50°C and
an average rainfall of 1011mm (Sa’ad, 1979).
3.2 Data and Techniques of Analysis
Both primary and secondary data were used to capture the objectives of the paper. Primary data were generated from
surveys, interviews, and personal observations. Secondary data were obtained from INS for Cameroon, National
Bureau of Statistics (NBS), and NPC for Nigeria. Purposive sampling and random sampling techniques were used to
organize the data. To obtain a reasonable set of data, 4 markets in Cameroon were purposively selected for being
main cattle supplying centers in NAC. Also 6 out of the 21 local government areas were purposively selected in ASN

for their border proximity and possession of larger cattle markets compared to other markets in the state.
Furthermore structured interviews were randomly conducted beside 20 cattle traders in the 10 markets, giving a total
of 200 respondents drawn from both NAC and ASN. The markets visited were: Adoumri, Garoua, Mokolo and
Ngouandere in Cameroon and Ganye, Konkol, Madagali, Mubi, Ngurore, and Shigari in Nigeria. In order to capture
the objectives of the paper, both the descriptive and inferential techniques of data analysis were utilized. The
descriptive method employed tables, averages, and simple percentages to interpret the data. Conversely, the
inferential approach used the EXCEL software package of data analysis to compute the theoretical (expected) scores
from the actual (observed) scores of the sample and the Chi-square (χ2) statistic for the testing of stated hypotheses at
some given level of significance. The number of traders interviewed in each market constitutes 10% of the sample
drawn and this information is summarized in Table 1.
Table 1. Sample elements from the border towns of Cameroon and Nigeria
Area Market Trader Interviewed Percentage (%)
Adoumri 20 10
Cameroon Garoua 20 10
Mokolo 20 10
Ngaoundéré 20 10
Ganye 20 10
Konkol 20 10
Nigeria Madagali 20 10
Mubi 20 10
Ngurore 20 10
Shigari 20 10
Total 200 100
Source: Authors
4. Data Analysis and Discussion of Results

This section deals with data analysis and discussion of results. It attempts to address the specific objectives of the
investigation one after the other under separate headings.
4.1 Socio-economic Characteristics of Cross-border Cattle Traders
Table 2 presents a summary of selected socio-economic characteristics of the respondents. It shows that the mean
age of cattle traders is 45 years old, average number of years of experience for the traders in the business is about 7
years long, and mean size of households is 7 people. These demographic statistics can be attributed to the fact that
both Cameroon and Nigeria are characterized by more young people than old ones given their large base pyramid of
ages of the population; traders are risk averse to venture into new activities for a livelihood; having a large family
procures honor and security against old age, respectively in the study area. All other things being equal, it reveals
that the mean income of households is N98 000 ($490) per month or N3266.66 ($16.33) per day (98 000 ÷ 30 =
3266.66) for a typical cattle trading household, which in turn translates to N466.66 ($2.33) per person per day
(3266.66 ÷7 = 466.66) due to the profitability of the business in the study area. Also, it discloses that the average
amount to disburse for transporting a medium size cattle from a supply center to a destination market approximates
N2208 ($11.04). Furthermore, it explains that 4% of the respondents are female and 96% are male because in most
rural and semi-urban households of the border towns in the study area, household decision making is the prerogative
of men. Therefore in any random selection for studies involving household decision making, the proportion of males’
representation is likely to be higher than that of females. As regards the educational background of the respondents,
it indicates that 42% have Quranic education, 21% have completed primary education, 19.5% have achieved
secondary education, and 17.5% have attained tertiary education. The relatively higher percentage of Quranic
education in the study area is connected to the flexibility in the study mode of the system, low costs of study and the
willingness of the people to understand their religion. About the main occupation of the respondents, it reports that
84% of the respondents primarily depend on the informal cross-border cattle trade for a living, while the remaining
16% are occupied in some sort of activities within the formal sector in the area owing to their proximity to the border
towns through which transit the informal trade activities and the lack of lucrative alternative job opportunities to
explore. Furthermore, it shows that over 80% of the traders obtain their foreign exchange through parallel markets
due to the bureaucratic and long documentation procedures of the official foreign exchange market, which people try
shunning for sake of reduction of transaction costs and saving of time. A recap of the discussion is given in Table 2.

Table 2. Summary of selected socio-economic characteristics of the respondents

Quantitative Variable Maximum Mean Minimum
Age (Years) 75 45 19
Experience (Years) 10 7 5
Household Size (People) 20 7 1
Household Income (N) 500 000 98 000 50 000
Transportation Costs (N) 5475 2208 1163
Qualitative variable Options Frequency Percentage (%)
Female 8 4
Gender Male 192 96
Quranic 84 42
Primary 42 21
Education Secondary 39 19.5
Tertiary 35 17.5
Farming 24 12
Schooling 5 2.5
Main Occupation Trading 168 84
Others 3 1.5
Official 37 18.5
Foreign Exchange Access Parallel 163 81.5
Source: Authors
4.2 Accessibility of Cattle Traders to Basic Needs or Services of Life

Table 3 shows the estimate of a typical cattle business household daily expenditure in the study area. It reveals that
the highest average amount of money spent for daily consumption was recorded in Madagali as N5112 ($25.56) per
day and the least amount of N1068 ($5.34) per day was registered in Ganye. As a result, an average cattle business
household in the study area spends about N2378.20 ($11.89) per day for its up-keep. This implies a daily
consumption expenditure of N339.74 ($1.69) per person for a household. Compared to the daily per capita income of
N466.66 ($2.33), it follows that a member of a household is capable of saving N126.92 ($0.63) per day (466.66 –
339.74 = 126.92) or N3807.60 ($19.03) per month (126.92 * 30 = 3807.60), which is often utilized to acquire
household assets and equipment to enhance the welfare of the household in the study area.
Table 3. Estimate of a typical cattle business household daily expenditure

Market Amount (N) Percentage (%)
Adoumri 1497 6.29
Garoua 1391 5.84
Mokolo 1975 8.30
Ngaoundéré 2321 9.75
Ganye 1068 4. 49
Konkol 1726 7.25
Madagali 5112 21.49
Mubi 1428 6.00
Ngurore 3674 15.44
Shigari 3590 15.09
Total 23 782 100
Source: Authors
Table 4 displays the total monetary value of assets in a typical cattle business household in the study area. It explains
that the highest average money value of household assets was recorded in Garoua as N2 309 500 ($11547.5) or
24.81% of the gross total and the least was observed in Konkol as N241 000 ($1205) or 2.58% of the gross total. On
the average, the worth of household assets for a typical cattle trading household in the study area translates to N930

586 ($4652.93). The profitability of the business in the study area explains the ability of households to accumulate
assets of more than N500 000 ($2500).
Table 4. Total monetary value of a typical cattle business household assets

Market Asset Value (N) Percentage (%)
Adoumri 1 871 150 20.11
Garoua 2 309 500 24.81
Mokolo 1 302 500 13.99
Ngaoundéré 439 450 4.72
Ganye 275 611 2.96
Konkol 241 000 2.58
Madagali 842 500 9.05
Mubi 485 000 5.21
Ngurore 495 900 5.32
Shigari 1 043 250 11.21
Total 9 305 861 100
Source: Authors
Table 5 captures the aspect of the ownership of houses by the cattle business traders in the study area. It shows that
70% of the cattle traders own house in Ganye, 85% in Mubi and Ngurore, 90% in Adoumi, Garoua, and Shigari, 95%
in and Ngaoundéré and Konkol, and all of them possess a house in Mokolo and Madagali. On the aggregate, an
average of only 10% of the cattle traders in the study does not own a house. This may be explained by the savings
opportunity the business offers to its actors since the daily per capita income exceeds the daily consumption
expenditure, and the general tendency of people in the study area to guarantee their progeny a family house on which
to fall back in periods of difficulties in accommodation.
Table 5. Ownership of a house by cattle business traders

Market Owning Not Owning
Adoumri 18 (90) 2 (10)
Garoua 18 (90) 2 (10)
Mokolo 20 (100) 0
Ngaoundéré 19 (95) 1 (5)
Ganye 14 (70) 6 (30)
Konkol 19 (95) 1 (5)
Madagali 20 (100) 0
Mubi 17 (85) 3 (15)
Ngurore 17 (85) 3 (15)
Shigari 18 (90) 2 (10)
Percentage Average (%) 90 10
Source: Authors Figures in brackets represent percentages.
Table 6 shows the proportion of the cattle business households with access to pipe-borne water in the study area. It
reveals that more than 50% of the households have access to pipe-borne water in Garoua and Ngaoundéré. Just 50%
of the households enjoy potable drinking water in Adoumri and Ngurore, while in the rest of the localities the access
rate of households to pipe-borne water is below 50%. On the average, only 42.5% of the households have access to
pipe-borne water in the study area. The remaining 57.5% of the households manage water collected from boreholes
or wells to undertake their domestic activities. The percentage of below 50% of the households having access to
potable drinking water in the study area is reflective of the general situation of poor access of people to basic utilities
affecting the rural and semi-urban areas in developing countries.

Table 6. Access of cattle business households to pipe-borne water

Market Pipe-borne Water Non-pipe Borne Water
Adoumri 10 (50) 10 (50)
Garoua 11 (55) 9 (45)
Mokolo 9 (45) 11 (55)
Ganye 8 (40) 12 (60)
Konkol 5 (25) 15 (75)
Madagali 5 (25) 15 (75)
Mubi 5 (25) 15 (75)
Ngurore 10 (50) 10 (50)
Shigari 6 (30) 14 (70)
Percentage Average (%) 42.5 57.5
Table 7 displays the proportion of the cattle business households with access to electricity in the study area. It shows
than more than 65% of the households in the border towns have access to electricity through the connection to the
national electricity supply network of the countries or operation of personal power supply generators as opposed to
Adoumri, where only 50% of the households have access to electricity. On the average, 89% of the households enjoy
electricity supply in the study area. The remaining 11% of the households without access to electricity depend on
candles or bush lamps to light their houses. The high percentage rate of access of households to electricity is
associated with the execution of the rural electrification programs embraced by the government in both Cameroon
and Nigeria.
Table 7. Access of cattle business households to electricity

Market Electricity Others
Adoumri 10 (50) 10 (50)
Garoua 18 (90) 2 (10)
Mokolo 20 (100) 0 (0)
Ganye 14 (70) 6 (30)
Konkol 19 (95) 1 (5)
Madagali 20 (100) 0
Mubi 18 (90) 2 (10)
Ngurore 19 (95) 1 (5)
Shigari 17 (85) 3 (15)
Table 8 shows the proportion of the cattle business households with access to health care services in the study areas.
It reveals that at least 70% of the households in each border town have easy access to health care services in the
study area. On the average more than 80% of the households enjoy easy access to health care services with only 14%
expressing difficulty in accessing the services in the study area. This situation is reflective of the reaction and
commitment of the government in Cameroon and Nigeria to build more low costs health centers in rural and
semi-urban localities to offer a collective response to the fight against pandemic diseases.

Table 8. Access of cattle business households to health care services

Market Easy Access Difficult Access
Adoumri 19 (95) 1 (5)
Garoua 18 (90) 2 (10)
Mokolo 18 (90) 2 (10)
Ganye 14 (70) 6 (30)
Konkol 20 (100) 0
Madagali 18 (90) 2 (10)
Mubi 17 (85) 3 (15)
Ngurore 17 (85) 3 (15)
Shigari 15 (75) 5 (25)
4.3 Impact of the Cattle Business on the Lives of Cattle Traders

Table 9 displays the responses of the cattle business households on the influence of the business in reducing poverty
in the study area. It discloses that at least 85% of the households in each border town agree with the ability of the
cattle trade to reduce the poverty of households in the study area. On the average, 94% of the households are of the
view that the cattle business is influential in reducing their level of poverty in that it has improved their lives in terms
of feeding, income generation, employment opportunity, shelter, and access to services such potable drinking water,
electricity, education, and health care. The remaining 6% of the households claim to have witnessed no improvement
in their lives as a strategy of hiding their well-being and happiness to unknown people.
Table 9. Influence of cattle business in reducing poverty of households

Responses
Market Yes No Total
Adoumri 20 (100) 0 20 (10)
Garoua 18 (90) 2 (10) 20 (10)
Mokolo 20 (100) 0 20 (10)
Ngaoundéré 17 (85) 3 (15) 20 (10)
Ganye 19 (95) 1 (5) 20 (10)
Konkol 20 (100) 0 20 (10)
Madagali 20 (100) 0 20 (10)
Mubi 19 (95) 1 (5) 20 (10)
Ngurore 20 (100) 0 20 (10)
Shigari 15 ( 75) 5 (25) 20 (10)
Total 188 (94) 12 (6) 200 (100)
To test the impact of the unofficial cattle business on the household welfare of cattle traders using the χ2 statistic,
traders were asked to give a general assessment about whether or not the trade has spared them from poverty and
advanced their conditions of life. The responses of the traders as presented in Table 9 are the actual (Observed)
scores of the sample on that assessment in the study area. Based on the responses of the traders, two hypotheses are
formulated as follows.
Null hypothesis: H0: The unofficial cattle business has no significant impact on the household welfare of cattle
traders of the border towns of Cameroon and Nigeria.
Alternative hypothesis: H1: The unofficial cattle business has significant impact on the household welfare of cattle
traders of the border towns of Cameroon and Nigeria.

The mathematical formulae required to undertake the χ2 test are specified in the following equations. The χ2 statistic
formula that transforms the sample scores into a test statistic is given in equation (1). The formula for computing the
corresponding theoretical (Expected) scores based on the actual (Observed) scores obtained from the responses of the
traders is represented in equation (2). The formula for the degree of freedom (Df) to consider in the running of the χ2
test is given in equation (3), while the level of significance for the test is set at α = 5%.
 
 A  Ti 
2
2 i
(1)
  
Ti
Ti 
ri ci
(2)
N
Df = (R – 1) * (C – 1) (3)
Ai: Actual score of category i
Ti: Theoretical score of category i
Σri: Summation of row i
Σci: Summation of column i
N: Total number of sample scores
R: Number of rows
C: Number of columns
To compute the χ2 statistic, contingency tables for the actual and theoretical scores of the sample are constructed and
then pooled together in a single χ2 computation contingency table (See Appendices). The theoretical scores of the
sample are computed in EXCEL by applying the formula in equation (2), while the calculation of the χ2 statistic is
done by applying the requirements of equation (1) and equation (3). The decision rule for the χ2 statistic is that the
null hypothesis is rejected if the value of the χs2-Stat (Computed χ2) is greater than the value of the χt2-Crit (Critical χ2
value obtained from the χ2 distribution table), that is, χs2 > χt2 at a given Df. In contrast, the null hypothesis is
accepted if the value of the χs2-Stat is less than or equal to the value of the χt2-Crit, that is, χs2 ≤ χt2 at a given Df. By
applying equation (1) and equation (3) for the test, it follows from Table 10 that at α = 5% with Df = (10 – 1)*(2 – 1)
= (9)*(1) = 9, χs2-Stat = 22.695 and χt2-Crit = 16.919. Consequently, since the χs2-Stat is greater than the χt2-Crit, that
is, χs2 > χt2 (22.695 > 16.919), the null hypothesis that the unofficial cattle business has no impact on the household
welfare of cattle traders of the borders towns of Cameroon and Nigeria household is rejected, implying that it
significantly impacts on the household welfare of cattle traders in the study area.
Table 10. Summary of outcome of Chi-square Statistic Test

Parameter Entry
H0 No Impact of Unofficial Cattle Business on Household Welfare of Cattle Traders
H1 Impact of Unofficial Cattle Business on Household Welfare of Cattle Traders
Control Variable (CV) Cattle Market Centers
Category for CV Adoumri, Garoua, Mokolo, Ngaoundéré, Ganye, Konkol, Madagali, Mubi, Ngurore, Shigari
Decision Variable (DV) Responses
Category for DV Yes, No
Row for CV 10
Column for DV 2
Degree of Freedom (Df) 9
Significance Level (α %) 5
Sample Size 200
Χs2-Stat 22.695
Χt2-Crit 16.919
Decision Rule Χs2 > Χt2
Decision Reject H0
Source: Estimation

5. Conclusion and Recommendations

Drawing from the analysis of data, it is observed that majority of the cattle traders; except in Ngaoundéré; were
employed in the informal sector, implying that the unofficial cattle trade is a major source of employment and source
of income to people in the study area. Since priority is normally given to ensuring the contributions of the trade
sector to the economic development, its contribution to poverty reduction is highly acknowledged by the cattle
traders in the study area. It was found that the average money value of the household assets owned by the cattle
traders was N930 586 ($4652.93) and most of them live in their personal houses. Though on the average less than
50% of the cattle business households have access to pipe-borne water, except in Adoumri, Garoua, Ngaoundéré, and
Ngurore in the study area, this is not a strange phenomenon affecting the rural and semi-urban areas in the
developing countries. Furthermore, it was observed that a greater proportion of the cattle business households have
electricity in their houses and easy health care services in the order towns of the study area. Above all a considerable
fraction of the cattle business households recognized an improvement in their lives since they joined the business,
especially in terms of in terms of feeding, income generation, employment opportunity, shelter, and access to
services such potable drinking water, electricity, education, and health care; thus implying that the unofficial cattle
business has the potentials of reducing the poverty of people in the study area. As a result of these, the following
recommendations are advanced. One, in order for the unofficial cattle trade to grow and contribute to the poverty
alleviation of more people, a pro-poor approach through which more disadvantaged people are allowed to participate
is imperative. Two, the existing poverty alleviation schemes should be executed, revised, and continued irrespective
of the whims and caprices of the leadership in the countries.
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Appendices: Contingency Tables

Appendix A. Contingency table of actual scores
Responses Total
Market Yes No
Adoumri 20 0 20
Garoua 18 2 20
Mokolo 20 0 20
Ngaoundéré 17 3 20
Ganye 19 1 20
Konkol 20 0 20
Madagali 20 0 20
Mubi 19 1 20
Ngurore 20 0 20
Shigari 15 5 20
Total 188 12 200
Appendix B. Contingency table of theoretical scores

Responses Total
Market Yes No
Adoumri 18.8 1.2 20
Garoua 18.8 1.2 20
Mokolo 18.8 1.2 20
Ngaoundéré 18.8 1.2 20
Ganye 18.8 1.2 20
Konkol 18.8 1.2 20
Madagali 18.8 1.2 20
Mubi 18.8 1.2 20
Ngurore 18.8 1.2 20
Shigari 18.8 1.2 20
Total 188 12 200
Appendix C. Chi-square computation table

A (Actual Scores) T (Theoretical Scores) A–T (A – T)2 (A – T)2 ÷ T
20 18.8 1.2 1.44 0.076596
18 18.8 -0.8 0.64 0.034043
20 18.8 1.2 1.44 0.076596
17 18.8 -1.8 3.24 0.17234
19 18.8 0.2 0.04 0.002128
20 18.8 1.2 1.44 0.076596
20 18.8 1.2 1.44 0.076596
19 18.8 0.2 0.04 0.002128
20 18.8 1.2 1.44 0.076596
15 18.8 -3.8 14.44 0.768085
0 1.2 -1.2 1.44 1.2
2 1.2 0.8 0.64 0.533333
0 1.2 -1.2 1.44 1.2
3 1.2 1.8 3.24 2.7
1 1.2 -0.2 0.04 0.033333
0 1.2 -1.2 1.44 1.2
0 1.2 -1.2 1.44 1.2
1 1.2 -0.2 0.04 0.033333
0 1.2 -1.2 1.44 1.2
5 1.2 3.8 14.44 12.03333
- - - - Χs2-Stat = 22.69504

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