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Management
St udi es

Volume 1, Number 1, December 2013 (Serial Number 1)

Contents
Human Resource Management
A Systemic-Integrative Leadership Model: The Case of Carbo Tech Composites GmbH 1
Herbert Glzner
Administration Management
Performance Measurement in Public Administrations: A Methodological Framework 14
Simone Lazzini, Vincenzo Zarone
CSR in Poland as an Important Foundation of Modern Society 27
Katarzyna Hys, Liliana Hawrysz
Educational Management
Educational Logistics and Entrepreneurial Success in Higher Education 34
Pannarat Wansavatkul Kadish, Ruja Pholsward
Information Management
A Decision Theoretic Model for Information Technology 47
Ramesh Babu Paramkusham
Management Studies, ISSN 2328-2185
December 2013, Vol. 1, No. 1, 1-13

A Systemic-Integrative Leadership Model: The
Case of Carbo Tech Composites GmbH
Herbert Glzner
Salzburg University of Applied Sciences, Puch/Salzburg, Austria

How can leaders, employees, and organizations learn and develop fast enough to deal with accelerating complexity
in a global world and with ongoing economic changes, in order to provide long-term high-level employee
performance, which is the central goal of leadership? This study proposes a systemic integrated leadership model
that combines leadership, organizational learning, and organizational development. The starting points are the
following questions: How can long-term high-level employee performance be developed and what are the key
influencing factors? To this end a new systemic-integrative leadership model has been developed. In this model,
three influencing factors at the system levels, namely, organization/structure, team, and self-management, and three
influencing factors at the process level, namely, communication, vision/purpose and trust and control, all derived
from systems theory, have been established, all of which are understood to enhance performance. The Austrian
company Carbo Tech Composites GmbH is being used as a case to demonstrate how the systemic-integrative
leadership model can be implemented in an organization, in order to meet company challenges and enhance
long-term performance. To this end a three-stage implementation process was defined. First, the methodology of
in-depth interview was applied in order to get an overview of the organization#s current situation, interdependencies
and their underlying explanations. Secondly, having analyzed the data collected from the in-depth interviews, the
results were reported to and discussed by the executives of the company. In order to reach agreement about the
objectives and the measures required to optimize long-term performance for this company in its specific situation,
the intervention method of open space technology was selected. Through an open space intervention, measures to
optimize the six performance influencing factors were elaborated and agreed upon as binding.
Keywords: systemic leadership, organizational change, change leadership, leadership, self-management, trust,
performance, structure, vision, team, system, process, organization, communication
Introduction
The process of performance can be seen from the point of view of efficiency and effectiveness. Both are
important for high-level performance. A long-term study conducted by Czipin Consulting (2013) about labor
productivity of employees has shown that 87 (out of 225) workdays per year are spent unproductively. A total
of 80 inefficient workdays can be attributed to deficient leadership. Furthermore, it is not clear to what extent
the remaining 60 percent of work input produces goal-oriented output. High-level performance is frequently

Herbert Glzner, Dr., Professor, Department Head of Human Resource Management & Leadership, Business Administration,
Salzburg University of Applied Sciences.
Correspondence concerning this article should be addressed to Herbert Glzner, Salzburg University of Applied Sciences,
Urstein Sued 1, 5412 Puch/Salzburg, Austria. E-mail: herbert.goelzner@fh-salzburg.ac.at.
DAVID PUBLISHING
D

THE CASE OF CARBO TECH COMPOSITES GMBH

2
prevented in companies, amongst other things by inadequate structures and processes, unclear objectives,
inadequate communication, and motivation deficits. To deal with the accelerating complexity in a global world
and the ongoing economic changes, individual measures for better long-term high-level performance often do
not bring the desired result. They do not capture the network of relevant factors, interrelation between cause
and effect and the learning and development necessity of employees, leaders, and the organization. Therefore, a
broader approach seems to be necessary to view the phenomenon $performance%, an approach which considers
different effects, interdependences, and counteractions at different levels of a system, which is the approach of
systems theory.
Scientific Approach
This paper is based on the social sciences systems theory. The social sciences systems theory does not
represent a consistent theory framework, but different approaches. This paper refers to the systematic
theoretical-cybernetic approach of Niklas Luhmann.
A fundamental starting point of systems theory is the reduction of complexity. In order to reduce
complexity, systems are introduced. The task of such a system is to stabilize differences in complexity.
The environment of every system is much more complex than the system itself, no matter how complexity is
operationalized. There is a complexity difference between the environment and the system. Accordingly, every relation
between system and environment has a dual reference with regard to complexity. Such a relation links selected elements of
the environment with selected elements of the system; therefore it bears the selection risk twice: it might misjudge risks or
opportunities of the environment and might not find the right positions or resources inside the system. (Luhmann, 1980, p.
1067)
Due to the distinction between system and environment $functional differentiation% is made (Fuchs, 1993).
A system distinguishes between inside and outside so that a system/environment difference is established. The
initial system functions as the environment of the subsystem. The system and the environment again form
together the initial system. Subsystems, which consist of communication, differ according to their reference.
There is no solution with regard to defining the valid and true unity of a system or a subsystem. $Everything
that has a distinction between inside and outside can be called a system, because to the extent an order is
established or consolidated, distinctive boundaries have to be drawn% (Luhmann, 1964, p. 24). At this point, the
term $autopoiesis% becomes relevant.
Autopoiesis literally means self-production. Autopoiesis implies that $the unity of the system, including
all elements it consists of, is produced by the system itself% (Luhmann, 1990, p. 30). However, autopoiesis does
not mean that the system just exists due to its own energy without any contribution of the environment or any
relation to it. Indeed, the environment provides the necessary stimuli which convert the elements of the system
into vibrations. Those vibrations are the basis for the self-production of the system, not the stimuli which cause
the vibrations. Luhmann liked to tell the story about how the biologist Maturana was driven to develop the term
autopoiesis (Horster, 2005): Maturana had dinner with a guest who was able to speak ancient Greek, but as
Maturana was not, his guest made him aware of a Greek equivalent for his theory construct. $Autos% in Greek
means $self% or $alone% and $praktikos% means $to exercise an activity without developing an object%, like
playing a musical instrument. $Poietikos%, on the other hand, signifies $to create or manufacture something so
that an object is developed%. Plato states on this subject that science is of triple nature (Horster, 2005): first
practicing (practical), second manufacturing (poietic), and third considering (theoretic). As a result Maturana


3
said that he had just found the term for his theory construct. From then on he used the nomenclature
$autopoietic system%. The self-production of a system, or autopoiesis, thus means that a system has influence
on itself and can act on its own initiative. In this process, there are different ways in which it can act. This leads
to the term $contingency%.
$Contingent is something that is neither necessary nor impossible, what can be like it is but can also be in
another way% (Luhmann, 1984, p. 152). Out of an unlimited amount of possibilities in a complex world, one
action is chosen, but also another one could have been selected. This results in freedom of choice within the
system, as well as in a starting point for many alternative actions. In other words, it provides many options for
action. If contingency is doubled, double contingency emerges. This term is attributed to Parsons, who
describes double contingency in the following way (Parsons & Shils, 1967):
There is a double contingency inherent in interaction. On the one hand, ego#s gratifications are contingent on his
selection among available alternatives. But in turn, alter#s reaction will be contingent on ego#s selection and will result
from a complementary selection on alter#s part. (p. 16)
One refers to double contingency when partners who are involved in social interaction are aware that the
other knows that they act in a contingent way. Thus they could act differently than they actually do whilst each
knowing that the other is aware of this and takes this into account.
A social system could be, for example, an organization, a group, a society.
Social systems do not consist of specific persons with heart and soul, but of specific actions. People are'according to
social science'an action system that is linked by individual actions to various social systems, and as an individual system
they are outside the particular social system. All people, even members, are therefore environment for the social system.
(Luhmann, 1964, p. 24)
Organized social systems can be seen $as systems which consist of decisions and are able to make those
decisions by themselves. By $decision% it is not a psychological procedure which is meant communication'a
social incident, and not a psychological incident, an internal awareness of self-assessment% (Luhmann, 1984, p.
166). Therefore, social reality is designed communicatively.
From the theory of self-referential systems, social systems also carry out self-observation. From
information which is gained by self-observation about internal changes, conclusions about the environment are
drawn. Incidents are code-related. Therefore codes are of high importance. Processes outside the codes are not
observed, no information about them is collected and no responsiveness or reaction is caused. The definition of
the code, that is to say the reference system, determines what may find access into the system as well as the
interaction among the particular subsystems.
$The possibilities'however they are defined'at the market are considerably more diverse than the
measures actually realized and planned. Only those opportunities noticed can be taken% (Exner, Knigswieser,
& Titscher, 1987, p. 273).
As long as commercial enterprises are only governed by the financial code (literally only talk in the language of
money) information about destruction of the environment or human suffering in developing countries, which do not
concern payment, will not find access to the internal operations of the system! If there is no $word% for micro politics it
cannot be officially recognized and treated. (Neuberger, 2002, p. 631)
Within the applied reference system that is within the codes, the categories $meaning% and $values% play
important roles. In order to define what should be observed and perceived it is necessary to introduce the


4
categories $meaning% and $values%. Meaning and values define the reference systems applied, or in other words
the codes used.
Based on this, radical constructivism assumes that insight no longer concerns objective reality but
exclusively order and organization of experiences in the world of our experience. In radical constructivism the
composition of unconnected elements is brought about by active operation on the part of the person undergoing
the experience. In this way, a certain design is created (organization and structure of the elements in relation to
each other). Through this certain design a certain object emerges.
An important question for a system that produces and reproduces the elements it consists of by itself (thus
representing an autopoietic system) is which elements produce and reproduce this system? A defined system
may be able to produce and reproduce the elements a, b, c, for instance, or perhaps the elements x, y, z.
As a result of these observations, it can be stated that:
l the importance of communication for the development of social reality;
l the presence of functional differentiation, of autopoiesis, of contingency and double contingency, of
self-referentiality, of a reference system;
l the question as to what elements a system produces and reproduces;
are important starting points for the basic structure of the systemic leadership model.
The central question in the development of the systemic-integrative leadership model is: How can
long-term high-level performance be promoted within an organization?
Leadership in this context is to promote the employees and executives:
l opportunity to perform;
l ability to perform;
l willingness to perform (Sprenger, 2010; Rosenstiel, 1995);
in order to optimize the performance of organizations.
Leadership therefore means that a leader leads his co-worker, that a co-worker leads his leader, that
colleagues lead each other, and that an employee leads himself. These are the four directions of leadership:
top-down, bottom-up, lateral, self-leadership (self-management).
From the statements made so far, the following can be concluded:
l Communication has a central meaning for the development of social reality and it plays an important role
for the influence of long-term high-level performance;
l A functional differentiation of system and subsystem is necessary, depending on the reference. In the
present paper, the reference is the promotion of long-term high level performance;
l The elements of a system are able to produce and reproduce (autopoiesis) themselves and are therefore
able to promote or hinder performance;
l A system influences itself and observes itself (self-referentiality). Thus, it is possible to have influence on
performance within a defined system;
l Social systems are able to behave in a certain way. But they are also able to act in another way
(contingency) and even know that about each other (double contingency). That means the partners involved in a
social interaction are able to act more or less in a way which promotes performance;
l The reference system of a system determines what the system perceives and observes. This determines the
interaction of the system;
l A question that comes up is: What elements does a system produce or reproduce? Are those elements


5
long-term performance-promoting or performance-hindering?
The implementation of a research process of applied sciences, in contrast to the fundamental sciences,
does not mean the enrichment of disciplinary knowledge with practical knowledge (Ulrich, 1982). The
complexity of social systems and the non-linear connection implies that $research on the application context
cannot only be carried out by methods that are focused on natural law explanations, but include hermeneutic
ideas about the understanding of human phenomenon% (Ulrich, 1982, p. 9).
This leads to the demand for a variety of methods, which means that besides empirically oriented methods,
nomothetic theory-concepts are needed (Lenk, Maring, & Fulda, 1985). In this way, systems thinking in
contrast to analytic-linear thinking leads to a holistic, process-oriented, analytic, synthetic, interdisciplinary,
and pragmatic research method.
Representatives of the systems theory justify their hypotheses based on logical formalisms rather than on
empirical truth (Kornwachs, 1994; Churchman, 1981). The conclusions in the context of systems theory have a
more descriptive, model-like, and less prognostic character; they rather ask themselves the question about the
social benefit (Churchmann, 1981) and the relevance to problem-solving.
Development of the Systemic-Integrative Leadership Model
As the first step in developing the systemic-integrative leadership model, systems and subsystems have to
be defined. Boundary criteria are different levels of complexity with reference to promotion of long-term
performance.
This leads to five system levels: the environment, the whole organization, the team, the dyad
leader'co-worker, and the system human being or co-worker.
It is of particular interest to describe the influencing factors and their effects which can be influenced
within an organization. The outer system, the initial system, represents the whole organization. $Everything
going beyond that%, the environment is $outside% and the overall organization is $inside%. Even though the
environment represents a substantial influence factor for an organization, it can hardly be influenced by the
organization to promote long-term performance to a high level. Due to this reason the whole organization is
defined as the initial system.
The subsystem $leader'co-worker% on the one hand represents a special form of the subsystem $team%,
but on the other hand it does consist of specific actions of the subsystem $human being%. The subsystem
$leader'co-worker% consists of aspects of the subsystem $team% as well as the subsystem $human being% and
therefore it does not form a separate system in this approach. Based on these considerations the following three
system levels are defined:
l whole organization;
l team;
l human being.
The question as to how long-term performance can be promoted to a high-level at $whole organization%
level can be seen as a question of organizational structure, culture, politics, and learning. These four
components represent the comprehensive term $organization% in this model. For a better understanding the term
$organization/structure% for the system, $whole organization% was chosen.
The subsystem $human being% is of interest concerning self-leadership or self management in order to
promote long-term high-level performance.


6
Based on these considerations the following influencing factors occur at system level:
l organization/structure;
l team;
l self-management.
At the process level, as already described, the following conditions influence the promotion of
performance:
l Communication is of central significance for the creation of social reality and plays an important role in
the promotion of performance;
l The reference system of a system determines what the system perceives and observes whereby the
interaction of the system is defined;
l A question that comes up is: Which elements does a system produce or reproduce? Do those elements
promote or hinder long-term performance at a high level?
As outlined previously, the reference system of a system determines what the system perceives and
observes and in this way the interaction of the systems, too. In other words, the term $vision/purpose% can be
used for the term $reference system%.
The last question mentioned, to what extent do elements produced and reproduced promote (or hinder)
long-term performance at a high level, refers to the accelerating complexity in a global world. Therefore high
autonomy and high flexibility of employees are important. Consequently, the culture of $trust% is a central
requirement to a company. Trust is a process result. A question that comes up automatically is: Where does
justified trust end and where does blind trust begin? This question might also be: Where, for reasons of logic,
does trust end and control begin?
Trust and control are terms that are closely linked. The component $trust% was therefore extended to the
term $trust and control%.
As a result, at process level the following components concerning promotion of performance can be
defined:
l communication;
l vision/purpose;
l trust and control.
The three influencing factors at system level and the three influencing factors at process level conclude the
six influencing factors of the systemic-integrative leadership model to promote long-term high-level
performance. To express it in other terms, these six influencing factors are crucial to the optimization of work
efficiency and effectiveness, are systemic, as from the scientific theoretical point of view the influencing
factors are derived from the systems theory, are integrative, as representative of a holistic leadership model
involving the organization as a whole. Figure 1 shows the six influencing factors which are interrelated.
Description of the Systemic-Integrative Leadership Models Influencing Factors
An organization is confronted with different demands, such as the carrying out of a certain order in due time
or the meeting of legal requirements. Depending on how these demands (input) are dealt with in considering the
six influencing factors (throughput), a more or less purpose and goal-oriented output emerges. This determines the
corporate success. The six influencing factors that affect job performance and as a consequence work efficiency
and effectiveness within an organization are explained in the following paragraphs.


7

Figure 1. The systemic-integrative leadership model.
Vision/Purpose
A vision can be defined as an image of the future, which creates enthusiasm. As opposed to this, purpose
answers the question $What for?% The link between vision and purpose is established by values (Frankl, 2006).
These three components'vision, purpose, and values'describe an organization#s orientation in the long run
and generate motivation of employees. If frustration prevails among employees, one reason is probably based
on this influencing factor.
Organization/Structure
Who is deciding that? How clearly are tasks distributed? How many rules does the organization have and
how detailed are they? How are departments and teams coordinated? The answer to these questions determines
if employees have many or only a few possibilities for initiating innovations? Are employee innovations
important or not? Organization and structure have an impact on the opportunity of employees to perform at a
high-level. If an organization operates well, there will be clarity, redundancy can be avoided, and an
organizational decision vacuum will not emerge.
Communication
Is there precise, authentic and open communication or does contradictory communication often occur
(Schulz von Thun, 2010)? How are conflicts dealt with? Communication is the basis for decisions. The quality
and quantity of communication determines actions and decisions.
Trust/Control
How does the organization deal with decision power and authority? Are self-responsibility and trust
among employees promoted or not? To what extent is trust possible, and where is control useful and necessary
(Sprenger, 2010; Malik, 2013)?
Purpose/
Vision
Organization/
Structure
Communication
Trust/
Control
Team
Self-management
Input
Output
Success


8
Teams
Teamwork complements different capabilities, skills, and experiences of employees in order to reach a
certain goal. Which tasks in an organization are appropriate for individual work, which ones are appropriate for
teamwork (Malik, 1998)? The composition of the team and the power of decision within the team are essential
aspects of successful teamwork.
Self-management
To fill the space afforded by actions and decisions proactively and to take self-responsibility is important
in the process of performance (Covey, 2000). Efficient and effective work is crucial to this process.
These six influencing factors are interdependent. Depending on the specific situation of an organization,
different specifications of these factors will generate long-term high-level performance. Therefore, it is
essential to find out to what extent the different factors impede or promote long-term high-level performance. If
these six influencing factors are matched to each other in the best possible way and developed, long-term
performance will be at a high-level and efficiency and effectiveness of work will increase significantly.
Implementation of the Systemic-Integrative Leadership Model!
The Case of Carbo Tech Composites GmbH
Carbo Tech Composites GmbH is based in Salzburg and is a manufacturer of carbon fibre components.
These extremely resilient, very lightweight, and expensive components are primarily used in the motor sports
and aviation industries. Rapid action and flexibility are key success factors for this organization. Fast growth
over recent years and the commencement of series production in addition to single-part production have
provided new intra-corporate challenges. To meet these challenges through long-term high-level performance,
the systemic-integrative leadership model should be implemented. At the beginning, three assumptions were
defined. Firstly, a representative overview of the actual situation (diagnosis) of the six influencing factors
which have an impact on the efficiency and effectiveness of work, and their mode of effect within the company
should be given. Secondly, measures of intervention should be agreed upon and realized in the long run by all
members of the organization. Thirdly, the necessary expenditure of time should be low and the time frame
short.
Methodology and Course of Action
Based on those assumptions a three-stage implementation process was defined. A representative overview
of the organization#s situation, interdependencies, and their underlying explanations is essential to meeting the
challenge of the first assumption, hence the methodology of in-depth interview was applied (Argyris, 1993).
After analysis of the data collected from the in-depth interviews, the results would then be reported to
executives. It is important to present the results in such a way that executives understand the background of the
information, are encouraged to discuss different points of view and are able to draw a conclusion. In the process,
influencing factors that impede or promote long-term performance and their mode of effect on efficiency and
effectiveness of work should be revealed. Objectives and measures of intervention can only be useful if they are
agreed upon and implemented by members of the organization. Therefore it was essential to choose a method
that enables executives to elaborate and agree upon measures self-responsibly. For this purpose, the procedure
of the open-space method (Owen, 2008; Maleh, 2000) was selected. Measures for the optimization of the six
influencing factors which have an impact on the long-term performance and therefore on the efficiency and


9
effectiveness of work should be elaborated and agreed upon as binding at the open space event.
In-depth Interview
In the case of Carbo Tech Composites GmbH selected executives and non-executives were asked two
opening question per influencing factor. The first questions concerning vision and purpose were, for example:
$Does the company have a perception of where it wants to be in five years? Is this in accordance with your
personal vision?% and $Does the company have a mission-statement or vision-statement? Is it deep-rooted
within the company or not?%.
At the end of each question the interviewee recorded his/her personal estimation, based on a scale of zero
to six (zero = not existing, six = very strong, clear, and consistent). The strongest scale value (six) is not
necessarily the best and most desirable value but can be estimated as one of two extreme values in the same
way as zero. For instance, it is not necessarily desirable that $control% is very strong (six). Figure 2 shows the
average scale-values of employees and executives and their differences. At Carbo Tech Composites GmbH, the
scale-values of employees and executives noted were surprisingly similar. It was interesting that employees
perceived existing behavioral guidelines as less strong than executives did. Openness in resolving conflicts and
trust in each other was perceived more strongly by employees than by executives. Employees viewed their
self-management abilities less than executives did. To react flexibly to customer requests, the low scale-value
of behavioral guidelines at Carbo Tech Composites GmbH may be important for single-part production.
However, higher behavioral guidelines with regard to series production are advisable. It can be assumed that
quality and trust in each other are less necessary in series production than they are in single-part production.
Executives Meeting
The results of the in-depth interviews were presented and reflected in great detail at the executives#
meeting. The meeting, to which all executives of the organization were invited, started with the presentation of
the average scale-values differentiated between executives and employees. Although the scale-values are not
representative, it was useful for the executives to have an orientation and starting point for a discussion of the
qualitative data. After the presentation of the qualitative information there was a discussion about the
statements and about the extent to which contradictions and friction losses appear that influence employee
performance in a negative way. The results of the in-depth interviews were reflected with a view to their
practical consequences for the company.
At the end of the meeting the executives elaborated possible approaches for the optimization of
organizational effectiveness and efficiency and the promotion of promote long-term high-level performance.
The following possible actions were recorded:
l enforce training courses;
l strengthen executive authority;
l more information and a better flow;
l different structuring of series and single-part production;
l written vision statement;
l training courses for executives.
Through intense dialogue and discussions at the executives# meeting, new viewpoints and insights
emerged. The chief executive officer (CEO), for example, expressed his surprise about the fact that employees
fear for their jobs despite the high intensity of work arising from ad hoc requests for single-part production.


10
Therefore the extension of series production represents a safety factor for those employees. The outcome of this
was the $written vision statement%.

Figure 2. Results of in-depth interviews with executives and employees.
Results of in-depth interviews with executives and employees
Average values
1. Vision/Purpose
Environmental groups
very instable very stable
Vision/purpose
not existing strong, clear and consistently existent
Employees Executives
2. Organization/Structure
Very inflexible, Very flexible,
little room for maneuver large room for maneuver
Common code of conduct
Marginally or not existing Very pronounced
3. Communication
Quantity very low High communication level
Quality hidden Open, conflicts are resolved
constructively
4. Trust/Monitoring
Trust among each other is
not existing very high
No monitoring very high
5. Team
Quantity
Only individual work only teamwork
Quality
circumstances that prevent performance circumstances that promote performance
Required of most employees
not highly highly
Applied by most employees
not highly highly
0 1 2 3 4 5 6
6. Self-management


11
Open-Space Workshop
All executives of the organization were invited to an open space workshop. The guiding theme was: $How
are we able to reach the optimum of both working efficiency and effectiveness at Carbo Tech?%. Every
participant had the possibility to bring in sub-themes. All in all, 12 themes were elaborated in three parallel and
four sequential workshops. Every workshop was provided with one notebook so that 12 records were compiled.
After the participants had read through the records at the beginning of the second day, four implementation
projects, $human resources (training, motivation, leadership, commitment)%, $vision and objectives%, $potential
for improvement%, and $information flow and documentation% were defined. Within two parallel and two
sequential implementation groups, a list of measures was elaborated for each implementation project.
Afterwards these results were presented in the large group. The open space workshop closed with either a
binding agreement on, or postponement of the elaborated measures.
Post-processing and Performance Review
Two weeks after the open space workshop a meeting of the board of directors and the planning team took
place, in which the process was reviewed. The following was recorded:
l Central success factor for the achievement of this process is the consequent implementation of agreed
measures;
l The process was an important experience for executives concerning mobilization of employee potential
(i.e., potential of executives), creativity of executives, and decentralization of responsibility towards the next
management level;
l Executives were intensely involved in the elaboration of the themes;
l The process strengthened the executives in their leadership position;
l Very different viewpoints, which the members were not aware of before, were explained within the
process;
l The perception of the participants about the company#s success factors in the long run has partly changed;
l The many different perceptions and the creativity of participants were surprising;
l Some participants in the process have changed their behavior through changed perceptions and
self-reflection.
After the post-processing meeting, an informative meeting for all employees was conducted. At this
meeting the board of directors presented the results of this project.
Half a year after the three-stage implementation process of the systemic-integrative leadership model at
Carbo Tech Composites GmbH an external monitoring of the measures agreed on was conducted. This showed
that some of the elaborated activities for optimizing work efficiency and effectiveness were no longer adequate
or had not yet been realized. About 80 percent of the agreed activities were able to be implemented
successfully.
Conclusions and Managerial Implications
Using the approach of systems theory, the systemic-integrative leadership model with six influencing
factors to promote long-term performance on a high level was developed and its implementation demonstrated
at Carbo Tech Composites GmbH. Through this procedure the following conclusions and managerial
implications can be stated:


12
l Acceleration complexity in a global world also needs complexity in an intervention process of an
organization to promote long-term performance. The approach of systems theory seems to be useful. Individual
measures for better performance often do not bring the desired result;
l Leadership cannot be seen only as a dyad between leader and co-worker, in order to fulfill its tasks.
Through the use of a broader approach leadership, organizational learning and organizational development are
bound close together and cannot be seen as separate issues;
l The focus of systemic leadership shifts from a top-down only approach to a four direction approach:
top-down, bottom-up, lateral, and self-management;
l It is important to analyze the key influencing factors of long-term high-level performance of a company,
their interdependencies and reflected actions on the part of executives and co-workers in order to root actions
deeply within the company;
l It is necessary to use intervention methods which mobilize employees and promote self-responsibility,
changes of perception and self-reflection, in order to deal with accelerating complexity.
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December 2013, Vol. 1, No. 1, 14-26

Performance Measurement in Public Administrations:
A Methodological Framework
Simone Lazzini, Vincenzo Zarone
University of Pisa, Pisa, Italy

This paper is intended to give a contribution to the debate on the measurement of performance in public
administrations, proposing a methodology aimed at reconciling the high structural complexity of some specific
types of public administrations with the requirements of measuring the efficiency of their administrative action. The
study is focused on the specificities of some peculiar entities characterized by special distinguishing features, such
as a poor capacity to standardize processes, the use of specialist skills provided with a high level of autonomy, and
a marked problem-solving attitude, and an organizational structure characterized by the expansion of the support
and staff functions. The proposed methodology deals with the assignment of resources to the activities implemented
in the structures, resulting in a system intended to weigh outputs as the expression of the effort connected with their
achievement, as well as of their potential correlation with the institutional objectives of the administrations, thus
linking the current dimension to the multi-year dimension. The assumptions of such an approach stem from the
awareness that, in providing public services, the problem to measure outcomes, and therefore the public value
generated, seems to be still topical and perhaps still far from being completely resolved. However, a
quali-quantitative methodology is proposed to extend a consistent measurement model to all the organizational
structures without debasing their different functions and simultaneously ensuring a unitary evaluation metrics. The
main criticality of the methodology consists, on the one hand, in the need to accurately define the items to be
considered as outputs and those that should not and, on the other hand, in the definition of a closed taxonomy of
outputs for each organizational structure in order to outline the individual discretion in identifying outputs, so as to
prevent their excessive parcelling out from undermining the density and reliability of the measurement.
Keywords: performance measurement, public management, methodology for performance measurement, complex
public administrations
The Assumptions and Purposes of the Research
The measurability of the performance of public administrations has always caused a great deal of
perplexity, initially on a logical and conceptual level, and then from the point of view of strict application. As
regards the former aspect, the difficulty of achieving a fair measurement of public value, intended as the result
of the harmonic combination of efficient administrative action and the qualitative attitude of performance in
addressing needs, has reduced the evaluation effort in the awareness of the many facets to be considered.

Simone Lazzini, Ph.D., Associate Professor, Department of Economics and Management, University of Pisa.
Vincenzo Zarone, Ph.D., Research Fellow, Department of Economics and Management, University of Pisa.
Correspondence concerning this article should be addressed to Simone Lazzini, Department of via C. Ridolfi, 1, Pisa, Italy.
E-mail: s.lazzini@ec.unipi.it.
DAVID PUBLISHING
D
PERFORMANCE MEASUREMENT IN PUBLIC ADMINISTRATIONS

15
As to application, the need to conceive performance evaluation systems that do not consider only
profit/loss results, but rather include the perception of the social usefulness of political-administrative action,
made it extremely complex to define measures that could really evoke the phenomena to be investigated. In
other words, the use of resources with an economic value should be considered in connection with the results
obtained, not all of which can be captured by monetary metrics because they are related with the fulfilment of
needs and with the judgement of their global institutional usefulness.
A measurement system should therefore be capable of isolating that which is measurable through the
semantics of numbers from that which can be perceived only through indirect determinations. The system used
to evaluate the state and the other elective public bodies has increasingly appraised the significant political
value for citizens by using the tools made available by the Constitution. But the political judgement
(particularly if this could imply an actual penalty) must necessarily be pursued together with public value
determination logics and models in business economics terms. This implies for public administrations the
opportunity to develop methodologies and models for the measurement of the generated output as a function of
resource consumption.
This paper will propose a methodology for the development of a performance measurement process for the
different structures of a public service organization. It should, therefore, be included among non-prescriptive
qualitative contributions aimed at injecting food for thought into the wide conceptual and methodological
debate on the measurement and depiction of performance.
Taking its origin from the implementation-related problems highlighted by the numerous contributions
offered by scholars and supported by the reports of the Independent Commission for the Evaluation, Integrity
and Transparency of Public Administrations (Commissione Indipendente per la Valutazione, Integrit e
Trasparenza delle amministrazioni pubbliche) (CIVIT) and by the Court of Audits report on the PA control
system, the analysis further pushes the boundaries of the debate and focuses on those public bodies where it is
particularly difficult to configure measurement processes due to their specific field of activity and for the
peculiar intangible nature of the services provided. Hospitals, universities, national training schools,
independent agencies, and authorities have an extremely complex range of activities, whose measurement
appears to be equally complex and whose complexity stems primarily from the implications deriving from the
contextual presence, in said organizations, of specific critical factors, such as:
a poor capacity to standardize processes;
the need to use highly qualified personnel with special skills and a marked problem-solving attitude;
the presence of an organizational structure characterized by the expansion of the support and staff
functions.
The methodologies implemented by the administrations to introduce measurement systems have been
revealed to be still perfectible. In many administrations, the measurement and evaluation system is still strongly
based on mere compliance with legal requirements and, in many cases, the factual significance of the
instruments implemented still appears to be rather limited (De Brujin, 2007).
The assumption of our work originates from the identification of the requirements, in terms of
measurement systems, that are being expressed by those public administrations whose elements of complexity
seem to be more marked. Our intention is to suggest some methods to be used to meet those requirements. In
general, the principles inspiring a performance management system should aim at:
allowing for an integrated and exhaustive measurement, assessment and, consequently, depiction of the

16
expected performance level (that which the administration is committed to pursue), as well as of the
performance level that is actually delivered, and highlight any deviation (Del Bene, 2008; Rebora, 1999;
Garlatti, 2004);
allowing for the identification of a few condensed criteria for an overall assessment of administration
practices (Anselmi, 2003);
allowing for a continuous monitoring of the administrations performance, even to identify any corrective
actions to be implemented during its activities (Anthony & Young, 1984);
assuring the technical requirements of validity, reliability, and functionality (Merchant & Van der Stede,
2003);
assuring the immediate and easy comprehension of the performance status by both internal players and
external stakeholders of the administration (DAlessio, Vermiglio, & Virginillo, 2008);
promoting the simplification and integration of performance planning and reporting documents (Fowles,
1993; Marasca & Del Bene, 2009);
clearly defining the responsibilities of the different players concerning the definition of objectives and the
related achievement of the expected and delivered performance (Beckhard & Harris, 1977);
assuring total transparency, with indication of the responsible parties (Pavan & Reginato, 2012).
Traditionally, performance measurement tends to be permanently associated with the close examination of
the cost-effectiveness of the administrations. Within this framework, auditing cost-effectiveness is closely
related with the processing of quantitative-monetary data, expressed in terms of earnings. However, the
authorities recognize a limit to cost-effectiveness, as described above, in connection with public entities, where
the absence of the price system as an effective signal of the created value sets clear limits to the use of the
typical instruments of the techniques for the reporting of corporate facts in the examination of the degree of
cost-effectiveness of the administration.
The criticality that has often ensued from this has been the triggering of a culture of measurement that
frequently revolved only around easier monetary measurement elements, with the risk of neglecting all those
componentsthat are not at all secondary, but rather essential and peculiarof public services, which,
however, clash with the difficulty to be translated into figures (J ones & Pendlebury, 1996). But the challenge of
measurement cannot be taken as a pretext to refrain from developing performance measurement and evaluation
processes. The awareness of the hard task should lead to a careful consideration of the metrics used for that
measurement and push towards an increasingly diverse range of methodologies fit for the features and
peculiarities of each individual administration.
The picture described above highlights the need to continue along two closely related lines, one aimed at
configuring the logical-functional architecture of the evaluation system in compliance with the requirements of
the administration and the recent regulations, and the second concerning the development of an information
system capable of really supporting the system at issue. A performance measurement system is not merely
limited to identifying and measuring immediate results, i.e., the outcome of the administrative action, but rather
detects the determinants of that same action and reviews its global impact. This puts forward the need to find
performance measurement systems that investigate the relationships between the use of resources with an
economic value and the results achieved, not all of which can be summarized by monetary metrics because they
concern the fulfilment of needs and the judgement of the global usefulness of the institution. The article points
out the need to use a logical system of tools that allow for the improvement and/or the investigation of the

17
economic effects of decisions and choices made. It is absolutely clear, in fact, that the configuration of the
performance assessment system must be adapted to the specific context, as it cannot be detached from
organizational, functional and process peculiarities and, in addition, it must be aimed at implementing tools for
the support of the administrative action for the achievement of better and higher levels of efficiency and
efficacy.
For these reasons, this paper will propose a methodology resulting from an approach based on the
interpretation of public administrations, whose purpose is to integrate qualitative and quantitative elements for
a global measurement of the administrative action implemented.
The Aspect of Complexity
The administrations that are characterized by a high degree of complexity, due both to institutional and
context variables, and to peculiar internal procedures, include large-size hospitals, national training schools,
and independent authorities.
At any rate, all the administrations the study referred to share a number of factors that define the level of
complexity associated with their internal management system and the cognitive interest for research themes
connected with performance measurement. These factors are primarily associated with the high professional
level of the human resources used, with the complexity of the organizational structure whose responsibility is to
ensure the effectiveness and efficiency of the entire range of duties, and with the significance of the
institutional context where said administrations operate, which is deeply affectedif not directly regulatedby
them.
The analysis of an architecture that is functional to the assessment system contemplateseven more in the
contexts defined abovea joint examination of the players (the individuals and the progressive aggregation
structures where they operate) and of the relationships that are created between them, which may be personal,
intra-organizational, or inter-organizational kinds of relationships (Granovetter, 1973).
The complexity of intra-organizational governance may be depicted by using two variables: on the one
hand, the degree of predictability of the activities to be carried out and, on the other hand, the degree of
subdivision of the structures into subunits. The more the activities are difficult to predict, as they are affected
by contingencies, the greater the need for a constant problem-solving effort, the coordination of individual
actions and the reconfiguration of processes to respond to any emerging situation. Conversely, for the second
variable, the intensity of coordination is reinforced in connection with the number of units that make up each
structure. The higher the number of sub-structures, the greater the complexity connected with their governance,
that is to say the need to establish a greater variety of tasks, set a system of responsibilities or introduce internal
specialization processes (see Figure 1).
This approach would envisage the need to analyse organizational layouts by starting from the maximum
level of disaggregation: the individual, observed from the point of view of his/her attributes (knowledge and
competencies) and relational characteristics (membership in formal/informal social networks). However, the
need to reach a unified synthesis of the organizational layout suggests the opportunity to focus on the structural
size of the organization (Daft, 2004):
the specialization level of the structures;
the centralization level of decisions;
the professionalization of work;

18
the governance system;
the amount of staff and resources;
the formalization level of the system.

Figure 1. Determinants of the complexity of intra-organizational governance.

The organizational layout of said complex organizations is essentially described in the coordination
mechanism proposed by Mintzberg (1979, 1992) as a model of professional bureaucracy, although it departs
from it in some peculiar aspects. According to this model, the answer to complexity is not the standardization
of processes, as in the mechanistic model, but rather the constant adequacy of the employees capacity to
achieve the purposes of the institution. Activities, closely connected with primary functions, are placed in the
hands of employees endowed with top-level skills, who have been selected by previously examining their
specific qualifications.
The peculiar feature of this organizational approach is the high level of autonomy of the employee, who is
allowed a wide field of discretion. This brings about a strong decentralization, both horizontally and vertically.
The conditions for the operation of professional bureaucracies are a core of solid knowledge that allow for
the development of a problem-solving approach rather than pre-packaging solutions to be adapted to individual
situations. Further typical traits can be identified in the expansion of support and staff activities, as well as in
the direct contact with the reference user who, in some regards, plays the role of a sort of controller of the
implemented activities (Moore, 1995).
The deep influence exercised by the institutional context and by national and international industry
regulations for national training schools is a considerable distinguishing feature: in the case of large-size
hospitals and authorities, they are associated to the high significance of the values to be protected and actually
ratify (particularly in the case of authorities) the distinguishing feature of institutional independence. In the
system of public bodies and units (Anselmi, 2003), these administrations are very complex entities because
they are particularly exposed to the constant dynamism of the sectors under their influence and regulation, as
well as to the instability of the scenarios where they carry out their activity.
In fact, the study of the level of complexity of a given administration refers to the action of two types of
environmental forces: institutional and technical forces (see Figure 2).

L
e
v
e
l

p
r
e
d
i
c
t
a
b
i
l
i
t
y

o
f

t
h
e

a
c
t
i
v
i
t
i
e
s

(+)
(-)
Degree of complexity
of the structure
(-) (+)

19

Figure 2. Institutional and technical forces. Source: Adapted from Scott (1987, 1994).

The intensity of their action is deemed to be capable of inducing a lesser or greater degree of complexity
to the administration by requesting increasing skills both as regards the structuring of processes and in
connection with the continuous reconfiguration of organizational layouts. While technical forces usually
dominate in contexts where competencies are discriminating feature, institutional forces prevail in the
environments where administrations are called to fulfil a set of regulations and requirements to carry out their
institutional activity.
The availability of performance assessment systems is essential to guide long-term strategies of the
administration and constantly review the consistency between operations and the institutional purposes of the
administration. The prevailing purpose is to impart a continuous pressure on the review of the alignment
between present behaviours and the achievement of long-term objectives (Kaplan & Norton, 1992). In other
words, there is a need for tools capable of managing complexity, unravel tangled situations and become real
and effective supports to the making and implementation of decisions (Lazzini, 2004).
The requirements identified in the administrations considered can be summarized, in the first place, as the
need to expand the focus on performance measurement by using tools for an analysis of strategic objectives and
an assessment of their achievement by fruitfully connecting the different management dimensions with the
different contributions provided by the structures.
In the second place, operational and organizational peculiarities require an important diversification of the
methodologies used for the assessment of the efficiency of processes, which must take into consideration the
quality of the output produced, the intensity of the resources absorbed, and the extensive discretionary content
they expressed.
Current trends in many administrations seem to aim at developing multidimensional systems, where the
qualitative dimension of the phenomena observed coexists with the traditional economic dimension.
Many tools can be abstractly used the balanced scorecard (Kaplan & Norton, 1992) or the performance
prism (Neely, Adams, & Kennerley, 2002), for example, have obtained broad consensus among scholars,
especially for the role they can play in improving decision-making processes. In many cases, however, the
Authority Hospital
National School
of Public Service
Training
Strong
Weak
T
e
c
h
n
i
c
a
l

e
n
v
i
r
o
n
m
e
n
t
s

Strong
Weak Institutional environments

20
challenge implied in the passage from their abstract potential to their concrete implementation has not seldom
shown such operating limits and inadequacies as to create not a few perplexities concerning their actual
usefulness. These tools fulfil the need to build a sophisticated control system, where the dimensions of the
detection of administration facts, operating and strategic choices, and organizational functionalities find a
profitable interaction.
The Conceptual Logic of the Model
Every performance measurement system requires an accurate application in and adaptation to the
administration where it is used. One of the most significant aspects of any such system is not merely the
evaluation of its potential usefulness, but its actual configuration and specific adaptation. The criticalities
defined by scholars may be summarized as follows:
inadequacy of the information available for measurement requirements;
difficulty to allocate costs to the individual organizational units;
difficulty in identifying outputs and their related processes, particularly for administrative and corporate
functional activities;
poor definition of the activities implemented;
difficulty in defining and nourishing the system of indicators;
excessive focus on forecasts and final considerations based on financial accounting.
In the light of these criticalities, the article suggests a methodology based on the principles and
characteristics of the most sophisticated assessment tools, while simultaneously ensuring the necessary capacity
to grasp specific peculiarities.
The goals of our evaluation process are:
to determine the degree of achievement of institutional objectives;
to measure performance in terms of administrative action;
to implement an easy-flowing process to be integrated in the corporate information flow without being
invasive or redundant;
to reinforce a control culture.
The organizational characteristics, the generated output and outcome, the intangible and discretionary
nature of many activities, as well as the difficulty to measure them, all make it necessary not to focus the
evaluation on the exclusive measurement of costs, but to extend the assessment metrics to include the
comparison between the value absorbed and the value generated by activities.
The benefits derived from this approach can be summarized as the possibility to perform this analysis
without having to use a cost allocation and accounting system with cost and responsibility centres, and have a
unifying measurement criterion available that can be globally used in the different structures, as they have
different governance layouts and use different types of resources.
The passage from the measurement of the cost per structure to the notion of value absorbed by the
activities carried out in the structures allows us to isolate the weight of each individual process, correlate their
intensity to the output produced, and finally express the contribution offered by the structures to the different
administrative processes.
According to Porters (1985) original approach, the production of value by each individual entity is
connected to the activities that are carried out within that entity.

21
Therefore, to examine the formation process of the created value, the different types of activities must
necessarily be identified and isolated within the combination of:
primary activities, linked to the basic reasons of the existence of the institution;
support activities, which ensure the global operation of the body.
The value chain is the expression of the individual activities that take place within the organization and,
most of all, of the interrelation, integration, and coordination between and among individual activities. Each
entity corresponds to one and only one value chain, which is, therefore, a peculiar and unique entity that
represents the essential link between its constituents.
Porters notion of value chain leads to two considerations: the first is that the value generated by an
organization stems from how its processes have been configured in the perspective that:
Each activity implemented has the purpose of producing value;
Each activity is connected to at least another activity;
Each activity absorbs resources and generated outputs.
The second consideration is that each administration has its own value chain, which is the utmost
expression of its peculiarity and specificity. This requires the value chain to be adapted to the specific functions,
processes, and activities that are carried out and combined in that administration.
The logical sequence includes the identification of the resources, their use for the activities (absorption),
the definition and measurement of the generated outputs, and finally their correlation with the institutional
objectives of the administration (see Figure 3).

Figure 3. Basic logic of the model.

The measurement method reflects the organizational structure and must therefore be subdivided into
departments, divisions, units, and offices. As regards the first part of the model, which regards the allocation of
resources to the activities, in consideration of the fact that, in many cases, it is not possible to directly allocate the
standard cost of personnel to individual activities, and the suggested methodology solves the problem by assigning
personnel in connection with the percentage absorbed by each activity, with a value determined based on the gross
administration personnel cost. Then, each activity is allocated the amount borne for the forms of outsourcing used
according to the flexible employment and/or service agreements/contracts signed with third parties.
The cost of personnel employed on a permanent basis and personnel coming from other public
administrations and/or institutions and used in executive positions or on secondment basis or under any other
legal framework allowing for the availability of professionals are allocated in a similar manner, based on a
percentage per activity.
Measuring Outputs
The second part of the model, which concerns the measurement of outputs, may be broken down into three
Input Activity Output
Input-output correlation

22
sub-steps: the definition, classification, and weighing of the output.
As regards the first step, two approaches may be identified: a finalist type of approach, which identifies
the output as the conclusion of a production process that is achieved on the basis of a number of different
factors; and a second approach that identifies the final output as the result obtained by a chain of intermediate
outputs (see Figure 4).

Figure 4. Basic approach to the notion of output.

The need to determine the value of the contribution of each player involved in the process against the
output achieved made it appropriate to adopt this second approach. Output may be conceived as any factual and
explainable element obtained as a result of specific contributions or activities or multiple activities, even
differing from one another, teleologically connected with each other. The finalistic logic has been mitigated by
the logic of the fractionability of the production process, and consequently, intermediate outputs will be
possibly identified alongside with the single final result, provided that they can, in their turn, be identified as
the final outcome of a process or sub-process that is connected, preparatory or functional to the main process.
This first distinction, however, is not sufficient to ensure the actual identification of all the outputs. In fact,
although it is true that, as regards primary activities (cf. the value chain), the result obtained can be immediately
perceived because it is the direct consequence of the institutional function of the body, the same distinction is
not as applicable to the intermediate results generated by organizational units with accessory functions because
they are ongoing activities, and this makes it difficult to determine their contribution. Abstractly speaking, in
order to assess the output produced by the salary payment process, one might be induced to count each
procedure individually, with the effect of triggering an excessive measurement process (the measurement
paradox) (Guthrie, 2005), a condition that may involve the risk of missing the significance of the measurement,
which would be invalidated by the excessive relative weight of micro-outputs against the total.
The opportunity to combine the visibility of the activities with an adequate degree of the density of the
measurement may be preserved if the activities that are repeated on a regular and constant basis (e.g., payroll
time reporting systems, calculation and payment of salaries and any other entitlement) were taken as reference
on the whole, to describe a single periodic output connected to an activity that can be reiterated.
In the event of operations that are repeated without a specific time sequence or periodicity, the outputs
produced may be identified not as individual operations, for the reasons specified above, but in connection with
their unifying elements, to eventually proceed with a conventional enumeration on a periodic basis. After
identifying the output, the subsequent logical step consists in establishing some categories of outputs depending
on the generating structure, and then proceed to weighing the output.
Weighing becomes necessary because, without a differentiation mechanism, all the outputs would be
enumerated homogeneously (one at a time) without considering a discriminant factor that is the consequence of
the appreciation of the intrinsic complexity of the achievement of the specific output. This will trigger a
Intermediate
output
Input Input

Output

Intermediate
output
Output

Finalistic
approach
Internal customer
approach

23
weighing mechanism of the different outputs whose purpose is not to enumerate each of them individually, but
rather deal with them in terms of points that can be referred to them, so as to obtain an express differentiation
implicit to the score itself. In other words, a qualitative variability must be introduced, which takes into
consideration the differences among the outputs in connection with the intensity of activities connected with
their implementation.
The weighing mechanism suggested is based on the use of explicative parameters, which, in their turn, can
be broken down into attributes that qualify their assessment method. The methodology is based on the
identification of qualifying parameters that express the intensity of the effort and the complexity required to
obtain the output. In their turn, these parameters are explained by some attributes that drive the discretionary
power of the assessor. A higher or lower weight will be assigned based on whether one or more attributes is
(are) are identified. Assigning a numerical score to qualitative variables is always a very subjective process, so
the uncertain nature of the assessment ends up by being confined to a defined range of variability.
The first parameter considered to be qualifying as a discriminant among outputs is problem-solving (see
Table 1), i.e., the capacity to find solutions, which is measured from a qualitative point of view by using
attributes associated with:
the professional skills required;
the degree of discretion used;
the ordinary or extra-ordinary nature of the issue considered.

Table 1
Problem-Solving Parameter
Description of attributes Attribute intensity Score (weight)
1. Professional skills required High-Medium-Low Scale from 1 to n
2. Degree of discretion used High-Medium-Low Scale from 1 to n
3. Ordinary or extra-ordinary nature of
issue considered
High-Medium-Low Scale from 1 to n

The second parameter may be identified as the use of resources in connection with the achievement of the
output (see Table 2). This parameter is measured by using relative attributes:
the intensity of intra-departmental coordination of the available resources;
the degree of structuring of the procedures connected with the achievement of the output.

Table 2
Degree of Exploitation of Resources in Connection With Achievement of Output Parameter
1. Intensity of intra-departmental
coordination of available resources
2. Degree of structuring of procedures
connected with achievement of output

The third parameter concerns inter-departmental coordination, because any organizational structure needs
to use the contribution of other structures to achieve its output (see Table 3). An increasing score is assigned as
a function of the intensity and number of the contributions received.


24
Table 3
Inter-departmental Coordination Parameter
1. Intensity of required contribution from
other structures
2. Number of required contributions from
other structures

The last parameter concerns time pressure that is the need to achieve the output within a short time for
induced causes (see Table 4).

Table 4
Time Pressure Parameter
1. Intensity of time pressure High-Medium-Low Scale from 1 to n

A relative score is assigned for the existence of this condition. The range of discretionary power in the
configuration of the weighing metric is linked to the width of the range of the global score, which actually
reflects the relative scale of incidence of the different outputs.
The performance measurement model is therefore based on the assignment of a value to the activities
associated with their resulting outputs, within a process framework where the output itself reflects the
magnitude of the effort made to achieve it. Finally, the outputs expressed in points can be correlated to the
institutional objectives of the authority, thus expanding the reference horizon to the strategic dimension of
management. Likert scales can be used to perform a conventional measurement of the value of an output,
expressed in points, as they offer a consistent metric for all the outputs of the administration, those that derive
from its core functions and those achieved by the support and staff functions. More specifically, this
methodology measures the value absorbed by output-generating activities without a detection system based on
cost centres and assigns each output a score, whose progressive aggregationat office, unit, division, and
department levelallows for the measurement of the contribution of each individual structure to the overall
result of the body. The construction of a system of indicators for the measurement of efficiency becomes
extremely simple when one is in the condition to compose measures that express both the output (in
conventional points) and the input expressed in monetary and non-monetary terms.
In other words, the development of administrative action can be monitored without confining that aspect to
the sole dimension that stems from the general accounting system. In addition, this method supports strategic
control processes and highlights the correlation existing between the outputs and the institutional objectives of
the body. Finally, it offers the opportunity to compose a wide range of indicators that express the administrative
action implemented.
Conclusions and Final Remarks
This article should be seen in the wide framework of the methodologies for the measurement of
performance in public administrations. It contributes to the debate by suggesting a quali-quantitative method
for the measurement of the inputs and outputs of the processes implemented in complex public administrations.

25
A wide range of positions has been formulated on this theme in the scientific literature, toggling between
two extreme concepts. The first extreme is based on the assumption that the performance of public
administrations should be the expression of their capacity to generate public value. However, since this
criterion cannot be measured by monetary metrics, any approximation would be misleading. Choosing the path
of a forceful extension of financial indicators used to approximate public value would imply the risk of
assessing easy-to-measure, although not primary, aspects, while missing the actual characteristics of the public
service due to the intrinsic difficulty in translating that value into quantitative terms.
The second extreme pertains more to a rationalist line of thought and defines the performance of
administrations as their attitude in managing public resources; as a consequence, the primary aspect to be
measured, and the only one worthwhile appraising, is efficiency. Both positions lead to potentially harmful
conclusions.
While the first position may lead to think that, being impossible to measure significant aspects, it would be
better not to measure anything, the second, measuring only a partial aspect, may lead to an inversion of the
relationship between means and purposes. Being a constraint, resources become the objective of the
administrative action, and the true goalto fulfil a public needis reduced to a mere accident.
The mainstream of business economics doctrine has been trying to walk a middle way. Aware of the
impossibility to appreciate the attitude to generate public value in monetary terms, it developed
quali-quantitative methods that combine typically financial dimensions with, on the one hand, qualitative
indicators expressing internal operating conditions and, on the other hand, methods to estimate the efficiency of
the service. Many criticalities, anyhow, have emerged along these paths, including, inter alia, inadequacies
associated with the availability of information for measurement requirements, the difficulty of allocating costs
to individual organizational units, and the complication of identifying outputs in connection with corporate
processes.
Starting from these requirements, this paper has proposed a methodology for the assignment of resources
to the activities implemented in the structures and a system to weigh outputs as the expression of the effort
connected with their achievement, as well as of their potential correlation with the institutional objectives of the
administrations, thus linking the current dimension to the multi-year dimension.
The assumptions of such an approach stem from the awareness that, in providing public services, the
problem to measure outcomes, and therefore the public value generated, seems to be still topical and perhaps
still far from being completely resolved. However, a quali-quantitative method is proposed to extend a
consistent measurement model to all the organizational structures without debasing their different functions and
simultaneously ensuring a unitary evaluation metrics (conventional measurement through output scores).
The main criticality that can be identified in this method consists in the need to accurately define the items
to be considered as outputs and those that should not. For the application of the method, researchers should first
define a closed taxonomy of outputs for each organizational structure in order to outline the individual
discretion in identifying outputs, so as to prevent their excessive parcelling out from undermining the density
and reliability of the measurement.
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Giappichelli.

26
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valore pubblico nelle amministrazioni statali). Roma: RIREA.
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December 2013, Vol. 1, No. 1, 27-33

CSR in Poland as an Important Foundation
of Modern Society
*

Katarzyna Hys, Liliana Hawrysz
The Opole University of Technology, Opole, Poland

In contemporary Polandwhich followed the path of evolution of other developed countriesadvanced concepts
of society development draw particular attention? The first references, in the socio-economic-political context, to
corporate social responsibility (CSR) and activity based on its assumptions started to appear at the beginning of the
2000s. The paper aims to present organizations, key legal records and activity connected with CSR framework
implemented in Poland. These practices and activities constitute a vital part of process of building modern society.
Over a span of the last decade knowledge of the concept and involvement of decision-makers and entrepreneurs in
socially responsible activity have been growing. It seems, however, that activities that have been undertaken so far
have satisfied only a small fraction of actual social needs.
Keywords: idea of corporate social responsibility (CSR), stages of development of the concept, CSR in Polish
context
Contemporary Social Contexts of Corporate Social Responsibility in Poland
After many years of difficult history, Polish society has finally achieved a relative economic stability. The
existing structures, although they need continuous improvement, contribute to development of self-awareness
of decisions-makers at every level of decision-making. It implies a synergistic effect on society development.
In this context, after basic social needs had been satisfied (Maslow, 1954), in the year 2000, interest in
framework of corporate social responsibility (CSR) as well as the first activities prompted by it started to
emerge.
Both the concept and atavistic definition of CSR, according to written resources, was introduced by
Bowen. In 1953 he published a book Social Responsibility of Businessmen (Carroll, 2008)
1
. Due to its
originality and controversial subject the book gained recognition; its content and assumptions put forward by
Bowen were developed and discussed widely in scientific circles. Initially, the CSR was defined as duty of
managers to run policy, to make decisions and to plan business activities, which are in accordance with aims
and values of [a given] society (Bowen, 1953). It is worth noticing that the first approach conceived of social
responsibility as a sole attribute of an entrepreneur. The approach has been reformulated, however, and today
CSR is considered to be an inherent attribute of the whole organization.

*
The paper was supported from Research Project by National Science Centre, No.2011/01/B/HS4/04796.
Katarzyna Hys, Ph.D., Department of Production Engineering and Logistics, The Opole University of Technology.
Liliana Hawrysz, Ph.D., Department of Economics and Management, The Opole University of Technology.
Correspondence concerning this article should be addressed to Katarzyna Hys, 75 Ozimska St., 45-370 Opole, Poland. E-mail:
k.hys@po.opole.pl.
1
There is an opinion that works of Bowen make him a social father of corporate social responsibility.
DAVID PUBLISHING
D
CSR IN POLAND AS AN IMPORTANT FOUNDATION OF MODERN SOCIETY

28
Caroll, one of the leading classics and experts in the field, defined the nature of CSR as a set of particular
areaseconomic, legal, ethical, and philanthropic; within this fields society has peculiar expectations of
organizations at a given point in time (Carroll, 1979, p. 500). Responsible company is a company that manages
its economic responsibilities (makes a profit), legal responsibilities (comply with the law), ethical
responsibilities (acts ethically), and shares with a profit that was made responsibly (supports development of
society it belongs to) (Carroll, 1983).
Caroll, after many years of in-depth studies of the subject, slightly revised his definitions of CSR. He
added that The idea of social responsibility requires the individual to consider his (or her) acts in terms of a
whole social system, and holds him (or her) responsible for the effects of his (or her) acts anywhere in that
system (Carroll & Buchholtz, 2012, p. 30). It is less ideological and more common-sense approach to social
organization of business. It seems that this shift was necessary; from a practical point of view it made the
process of implementation of CSR in a given society more down-to-earth.
There is a large amount of world-known literature that thoroughly documents historiography of CSR
concept. Among many authors of the best-known contemporary accounts are: Carroll and Buchholtz (2012);
Lantos (2001); Fifka (2009); De Bakker, Groenewegen, and Hond (2005); Steurer (2009); Matten and Moon
(2008); and Dalhsrud (2008). It is astonishing, however, that the higher the theoretical and practical
understanding of the nature of CSR, the more it seems to be inherent to humans nature. In other words, social
responsibility as a derivative category existed since the dawn of the time. Currently, we witness a peculiar
enlightenment, rise of awareness, and operationalization of strategies at all levels.
CSR in Polish Context Successive Stages of Development of the Concept
Despite the fact that Polish society has taken the role of an observer and a follower of CSR concepts in its
different manifestations
2
, we may also point out successive stages of CSR development in Poland.
It has to be emphasized, however, that classification presented below is merely an attempt to systemize all
activities connected with CSR. The actual evaluation belongs to the next generations.
We can thus distinguish the following stages of development of CSR concept in Poland
3
:
The period of embryonic development (1997-2000), described as a stage of silence and complete lack of
interest;
The stage of awakening (2000-2002), when the idea of CSR aroused reservations or even opposition
among business leaders or publicists;
The stage of interest (2002-2004), at this stage burst of interest in the idea of CSR took place and leading
companies publicly were recognizing the importance of rules of ethics and social responsibility;
The stage of activity (2004-2005), at this stage specific projects in some, crucial for functioning of
companies, areas were implemented;
The stage of advanced activities (since 2006), at this stage the aim is to link CSR to other strategies.
The successive stages of CSR concept development in Poland seems to be rather classic. To some extent
they were reflection of maturity of the society at a given point in time, its self-awareness and ability to
understand the nature of CSR, which are results of involvement and activity; with transcendence and

2
In Polish context three kinds of attitudes towards CSR may be distinguished: active, passive, and negative. The attitude is often
a result of the awareness and knowledge of CSR.
3
CSR in Poland. Basic analize, Copyright by CeDeWu, Warsaw, 2007, p. 22.

29
postulation on behalf of other people as culmination. Yet it demands a special effort and it is an expression of
the highest values man can subscribe to. It has to be emphasized, that is also true that sometimes one life it is
not enough to fathom this wisdom.
Currently in Poland, at operational level, infrastructure that embraces all institutions is being developed. It
is of great importance since it means building the awareness in society and active involvement of many people
on behalf of CSR. In other words, a positive shift has taken place: from reactive attitudes to changes of
transformative character. All these processes can be explored within the framework of comprehensive system
dimension (Hys & Hawrysz, 2011, pp. 79-92).
The Contribution of Poland Into Development of Corporate Business Responsibility
Both in Polish language and in other languages there are many terms for CSR. The following terms are in
use: CSR, social responsibility of enterprises, social responsibility of organization, responsibility of enterprise,
or undertaking socially responsible activity by organization. Equivocality indicates the subject is being
explored and constitutes a part of scientific discourse. Multidimensionality suggests that the issue is
ambiguousdepending on context it carries a different semantic load or axiological dimension.
Nevertheless, it should be stressed that the question of CSR has been gaining a greater importance and
attention in wider and wider scientific and business circles, in the context of its broadly understood role in the
society in particular.
The most significant legal act, which regulates key questions regarding social responsibility is the
Constitution of the Republic of Poland
4
. The special attention should be paid to the following constitutional
records concerning:
(1) All citizens of the Republic of Poland:
The Republic of Poland shall safeguard the independence and integrity of its territory and ensure the
freedoms and rights of persons and citizens, the security of the citizens, safeguard the national heritage and
shall ensure the protection of the natural environment pursuant to the principles of sustainable development
(art. 5).
(2) Freedoms, rights, and duties of man and citizen, in particular:
The inherent and inalienable dignity of the person shall constitute a source of freedoms and rights of
persons and citizens. It shall be inviolable. The respect and protection thereof shall be the obligation of public
authorities (art. 30);
Freedom of the person shall receive legal protection. Everyone shall respect the freedoms and rights of
others. No one shall be compelled to do that which is not required by law. Any limitation upon the exercise of
constitutional freedoms and rights may be imposed only by statute, and only when necessary in a democratic
state for the protection of its security or public order, or to protect the natural environment, health or public
morals, or the freedoms and rights of other persons. Such limitations shall not violate the essence of freedoms
and rights (art. 31);
All persons shall be equal before the law. All persons shall have the right to equal treatment by public
authorities. No one shall be discriminated against in political, social, or economic life for any reason
whatsoever (art. 32).

4
The Constitution of the Republic of Poland, 2nd April 1997.

30
(3) Economic, social and cultural freedom and rights:
Everyone shall have the right to safe and hygienic conditions of work. The methods of implementing this
right and the obligations of employers shall be specified by statute (art. 66, item 1);
Public authorities shall protect consumers, customers, hirers, or lessees against activities threatening their
health, privacy, and safety, as well as against dishonest market practices. The scope of such protection shall be
specified by statute (art. 76).
(4) Duties:
Everyone shall care for the quality of the environment and shall be held responsible for causing its
degradation. The principles of such responsibility shall be specified by statute (art. 86).
In the context of legal acts concerning CSR it is worth to pay attention to issues of rights and duties of
employees, which are regulated by detailed records of Labor Code
5
. Although initially the legal records of the
Code were not created with reference to CSR, after the analysis, we may indicate the crucial elements, which
jointly create the foundations of contemporary rights of employees and employers based on rules of social
co-existence. From Labor Code stem the rules defining: right to work, a minimum wage, the discretionary
character of establishing a work relationship, respecting by employer dignity and personal good of employee,
ban on discrimination, decent wage, ensuring the proper working conditions, satisfying basic needs (i.e.,
material, social and cultural), freedom of association, creating the conditions for participative management.
These regulations, though they are of legal character, allow to formalize crucial questions with regard to
different aspects of social responsibility. They concern all fields of CSR defined by Carroll: economic, legal,
ethical, and philanthropic.
The legal record of equal importance is Environment Protection Law
6
, which gives a framework for
ecological policy of Poland. It regulates questions regarding: preservation of natural resources, counteracting
pollution, serious breakdowns, legal and financial resources, responsibility in environmental protection, organs
of administration and institutions of environmental protection, adaptation programs. In Poland, the important
role is played by ISO 14000 norms (2005) and EMAS regulations concerning environmental management.
They seem to be the best-known and the most popular among Polish entrepreneurs.
In this context we should also mention two documents:
II Ecological Policy of the State (Retrieved from
http://mos.gov.pl/artykul/329_polityka_ekologiczna/339_II_polityka_ekologiczna.html);
A vision of sustainable development for business in Poland (Retrieved from
http://www.mg.gov.pl/files/upload/8383/MG_WIZJA.pdf).
In this year, in Poland, the norm regarding CSR was issuedISO 26000: 2010, Guidance on social
responsibility. Within the framework of ISO 26000 the principles of social responsibility have been defined.
They include
7
: accountability, transparency of actions, ethical behavior, respect for stakeholder interests,
respect the rule of law, respect for international norms of behavior and last but not least, respect for human
rights. These principles translate directly into guidelines concerning core aspects of social responsibility
defined as: organizational governance, human rights, labor practices, the environment, fair operating practices,
consumer issues, community involvement and development. Since this norm has been implemented in Poland

5
Labor Code, Dziennik Ustaw, No. 24 item 141, Statute from 26th June 1974, with subsequent changes.
6
Statute from 23th April 2001, Dziennik Ustaw, No. 62, item 627.
7
PN-ISO 26000: 2012, Guidance on social Responsibility, PKN, Warsaw 2012, pp. 22-74.

31
only recently we have to wait to draw some conclusions.
In Poland various organizations were established (Hys & Hawrysz, 2012, pp. 3-17) to perform different
tasks within the framework of CSR. The most known and active organizations are presented in Table 1.

Table 1
Some Institutions Acting on Behalf of CSR in Poland
Date Institution
NGOs
1993 Vonteluer Centre
1998 Academy for the Development of Philanthropy in Poland
2000 Responsible Business Forum Poland (FOB)
2003 Polish National Federation of NGOs, OFOP
Governmental organizations
Statute from 27th August
2001, Dziennik Ustaw, No
100, item 1089 from 18th
September 2001
Department of social dialogue and partnership. Within the department there are three institutions:
Tripartite Commission for Social and Economic Affairs;
Tripartite Sector Teams;
Provincial Committees for Social Dialogue.
Order No. 38 of 8 May 2009
The Polish Prime Minister established the Group for CSR Issues, which acts as a subsidiary body to
the Prime Minister, serving as a pool of knowledge and forum for the exchanging of experiences
and devising of solutions for the government administration that will intensify CSR promotion. In
order to ensure swift implementation of their tasks, Group members adopted Resolution No. 2 of 21
July 2009, establishing:
The Working Group on the CSR promotion system in Poland;
The Working Group on responsible investment;
The Working Group on CSR and education;
The Working Group on sustainable consumption.
The private sector
1991 Business Centre Club
1999 Polish Confederation of Private EmployersPKPP Lewiatan
Academic institutions
1991 Centre of Ethics in Business (CEBI) in Kozminski University in Warsaw
2000 International students for sustainable economics and management (oikos)
2009 Center for Leadership and Social Responsibility of Nicolas Copernicus University in Torun
Media
Specialized magazines, industry magazines (e.g., Parkiet, Puls Biznesu, Gazeta Prawna).
Thematic inserts in newspapers called green pages (e.g., Rzeczpospolita, Manager Magazin, Forbes, CEO, Harvard Business
Review Poland).
Internet: CSRinfo (www.CSRinfo.org), Odpowiedzialne Inwestowanie. Nowe spojrzenie na Inwestycje
(www.odpowiedzialne-inwestowanie.pl), The academic thematic vortal EtykaBiznesu.pl (www.etykabiznesu.pl), CR Navigator
(www.crnavigator.com), and Portal of non-governmental organizations (www.ngo.pl).
Note. Source: Retrieved from http://www.wolontariat.org.pl; www.odpowiedzialnybiznes.pl; www.csr.mg.gov.pl;
www.mpips.gov.pl; www.dialog.gov.pl; www.csrinfo.org/pl; www.filantropia.org.pl; www.pkpplewiatan.pl/en/;
http://www.mg.gov.pl/; www.CSRinfo.org; www.odpowiedzialne-inwestowanie.pl; www.etykabiznesu.pl; www.ngo.pl;
www.crnavigator.com.

These organizations run the active policy within the framework of CSR. Their activity takes different
forms, for instance:
social campaigns;
conferences, seminars, meetings;
projects, initiatives, actions;
reports, publications, research.

32
The above classification is not accidental, it stems from convention, which was adopted by Forum
Odpowiedzialnoci Biznesu (Forum of Business Responsibility). Every year
8
Forum publishes an annual report
on good practices; the report is the result of cooperation with institutions from all over Poland and includes
basic details on undertaken activities for social responsibility with name of organizer and date of
implementation.
Conclusions
It is worth stressing that although implementation of the concept of CSR is not obligatory, it has been
gaining more and more recognition among decision-makers in Poland. Despite the fact that there is no longtime
tradition of CSR in Poland one may observe both development of existing organizations oriented towards
socially responsible activity and emergence of new ones. Paradoxically, when in moments of crisis more
attention is paid to efficacy and efficiency of actionssocially responsible activities to some extent seem to
satisfy these needs; they have an impact on awareness of decision-makers and draw their attention to the way
available resources are used. The perspective is shifted: the process of analysis of the situation does not end
when the deal is done, and the perspective is constituted by circumstances conditioning the exchange. A profit
and loss balance is still made, but after taking into account legal, economic, ethical, and philanthropic aspects.
Given all these facts, socially responsible actions appear as a vital part of building a modern society based
on principles of sustainable development. In Poland, over the last decade, involvement of decision-makers and
entrepreneurs in socially responsible activities has been growing. It seems, however, that actions which have
been undertaken so far, only in a small fraction have satisfied social needs.
The fact that significance of social and environmental issues is growing, and entrepreneurs are recognized
as key partners who have a significant impact on social reality is of great importance. The growing awareness
gives a sense of personal responsibility for society and influence on broadly understood environment, and these
are in turn the necessary conditions for its preservation and continuous development.
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8
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33
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Policy Sciences, 43(1), 49-72.

December 2013, Vol. 1, No.1, 34-46

Educational Logistics and Entrepreneurial
Success in Higher Education
Pannarat Wansavatkul Kadish, Ruja Pholsward
Rangsit University, Patumthani, Thailand

The higher education sector is rapidly changing and growing along with its desire for global competitiveness.
Entrepreneurial strategies contributing to the competitive advantage of a firm as an organization are to improve
operations and add value to products being served to final customers. This in turn enhances customer satisfaction
and ultimately leads to increased profits. It has been well documented that the higher education sector has used
business models in their managerialistic approach to organizational structures as well as applied entrepreneurial
strategies in satisfying the needs and preferences of their stakeholders. In this regard, the researcher reviewed
concepts and theories on entrepreneurship as applied to the business sector and to the field of education. This is for
the purpose of identifying and investigating entrepreneurial strategies which universities apply to the six processes
of educational logistics (Bergstrm & Bulter, 2009). These processes are: (1) student information management; (2)
examination; (3) flexible study path of the individual student; (4) staff workload planning; (5) planning and
timetabling; and (6) space management. A structured interview based on these six processes was conducted to
obtain data regarding entrepreneurial strategies carried out by six of the top universities in Thailand. Through the
research, it was found that universities use strategies that are not limited to the educational logistics processes
defined by Bergstrm & Bulter (2009). The results of the study are expected to shed light on opportunities for
universities about innovations and client-oriented strategies for educational entrepreneurship via educational
logistics in order to achieve competitive advantage in the long run.
Keywords: entrepreneurship, academic entrepreneurship, entrepreneurial success, higher education, logistics,
educational logistics, processes of educational logistics
Introduction

Thailands education reform instigated by the National Education Act of 1999 started the transformation
of the Higher Education sector. One of the aims of the reform is to empower public universities to have more
autonomy when it comes to its management of academic affairs and personnel as well as the management of its
financial and budget affairs. Traditionally, Thai higher education institutes were mainly public entities. But
during the last two decades, private colleges and universities, supported by the Thai private sector, have
provided a significant portion of delivering higher education as the demand for it has increased to meet the
demand of manpower for modern economic development. Consequently, the application of business models to

Pannarat Wansavatkul Kadish, Doctor of Education, Faculty of Education, Rangsit University.
Ruja Pholsward, Associate Professor, Faculty of Education, Rangsit University.
Correspondence concerning this article should be addressed to Pannarat Wansavatkul Kadish, 88/380 Narathiwasratchanakarin
Rd. Sathorn Bangkok, 10120, Thailand. E-mail: pannarat@laminationthailand.com.
DAVID PUBLISHING
D
EDUCATIONAL LOGISTICS AND ENTREPRENEURIAL SUCCESS IN HIGHER EDUCATION

35
the higher education sector has precipitated a managerialistic approach to organizational structures (Preston,
2001). As the objective of businesses is to create value to customers, the higher education industry also aims to
create value to its customers.
Nowadays, desirable strategies and models for higher education have to be on par with global competition;
globalization raises the expectations for service quality, availability, and reliability of these higher education
institutions. The traditional universities function is not sustainable, as industrialization demands more from
graduates, thus graduates demand more from academic institutions. Higher education institutions who neglect
to strategize and plan their future course of action, as well as disregard the development of new business
models may not survive the highly competitive global higher education environment. Accordingly, to enable
these changes, the costs of education is consequently and constantly increasing while the perceived surplus
acquired from these universities is surprisingly less or not commensurate when compared to the increase in cost.
Thus, universities need to identify a source of competitive advantage through its ability to differentiate itself
from other competitors by operating its business at a lower cost and at the same time giving more value to its
customers.
In the creation of differentiated value, universities need to innovate and engage themselves in
entrepreneurial strategies that identify opportunities in the economic system (Penrose, 1980) and utilize existing
resources to create new wealth-producing endeavors (Drucker, 1985). Entrepreneurship is composed of
processes and strategies that are not generally done in ordinary business routines (Schumpeter, 1949).
Moreover, entrepreneurship exploits innovations and inventions to create new products, new means of
production, and new forms of organization, in which all must add value to the society (McGrath & MacMillan,
2000, as cited in Schumpeter, 1934). Entrepreneurship involves behaviors such as initiative thinking and the
ability to organize and reorganize social and economic mechanisms in order to maximize efficiencies of
resources and situations. In addition to this, entrepreneurs accept that there is always a risk of failure (Hisrich,
Peters, & Shepherd, 2007). In an ever increasing and hyper-competitive world (Porter, 1996), entrepreneurial
strategies are essential to encouraged businesses to nurture and maintain continuous innovation (Antoncic &
Hisrich, 2001). It is because of the exact same reasons that it is also imperative that universities engage in
entrepreneurial strategies and behaviors in order to satisfy their consumers needs and preferences (Eyal &
Inbar, 2003).
Entrepreneurs need to undertake entrepreneurial strategies to create value that consumers are seeking. The
students of universities are considered as the consumers of educational output (Vanderstraeten, 2004) whereas
professors, lecturers, teachers, and the administration are considered as product providers. A strategy or an
activity is recognized as entrepreneurial if it is built on innovation and defies the dominant logic of
competition in an industry, for the purpose of profit creation (Prahalad & Bettis, 1986). An entrepreneurial
activity involves the process of change, emergence, and creation (Bruyat & J ulien, 2000). Furthermore,
entrepreneurial strategies involve four key considerations: the enterprising human activity, the assembly of
unique bundles of resources, identification of market opportunities and/or utilization of innovative capabilities,
the significance of the business and wider environments, and the creation of value (Ahmad & Seymour, 2008).
It should be noted that good entrepreneurs cope well with change. In implementing any change,
entrepreneurs take different approaches such as an introduction of a new good or quality, new method of
production, opening a new market, new supply source of new materials, and establishing a new form of
organization in an industry (Schumpeter, 1934). Since entrepreneurial activity requires innovation, creativity,

36
and originality, entrepreneurs are said to be risk takers (Covin & Slevin, 1989); entrepreneurs use creativity and
innovation to break through the norms and seize opportunities; entrepreneurs also explore and embark on new
territories such as business ventures to generate value (Hisrich, Peters, & Shepherd, 2005). Entrepreneurs are
business owners, incorporated or otherwise (Ahmad & Seymour, 2008) who manage to redistribute economic
resources from a low productivity area into a high productivity area, which yields a greater return (Drucker,
1985). In addition, an entrepreneur is a person or an entity who identifies, creates, and innovates business
opportunities, as well as manages new combinations of resources to gain the most profit (Leibenstein, 1968).
Moreover, entrepreneurs are pro-jectors (Defoe, 2001), whom are speculators dealing with the uncertainty of
conditions in the future (von Mises, 1996), a co-ordinator (Walras, 1954), and an arbitrageur who identifies
profit-earning activities and acts upon it (Kirzner, 1973).
In the educational or academic context, the word entrepreneurship does not directly imply concepts of
profit creation, risk taking or the increased leaning to execute market activities. It simply refers to the
organizations attitude towards self-reliance (Yokoyama, 2006). Entrepreneurial strategies, as defined in an
educational setting, refer to the strategies that encourage social awareness regarding the institutions
accountability. Accordingly, entrepreneurialism is the process by which the universities become increasingly
involved in these so called entrepreneurial strategies (Yokoyama, 2006). In our modern society, educational
success is not achieved if it is limited and static. Dynamism, adaptability, and the ability to respond to the
current changes of society, economy, human behavior, and experience are all incorporated in the
university-industry collaboration, which results from being an academic entrepreneur. More so, entrepreneurial
success is often equated to a firms success and its success depends on the effective methods being
implemented to gain satisfaction from various stakeholders such as customers, employees, suppliers,
government, and the community (Pickle & Friedlander, 1967; Robinson, 1983). Also, entrepreneurial success
of a university can be measured and expressed using financial and non-financial measures (Ramana, Raman, &
Aryasri, 2009). A firms success is generally measured using three factors: profit, which is the essential
outcome of an entrepreneurial activity (Cantillon, 1931); employment creation, which indicates a firms growth
and social success, that is, it helps provide jobs to the community; and lastly, duration, or the length of active
period (Lussier & Pfeiffer, 2001).
Academic entrepreneurship is not a new concept. By definition, it is the leadership process of creating
value through acts of organizational creation, renewal or innovation that occurs within or outside the university
and results in research and technology commercialization (Yusof & J ain, 2010). It is an environment that
actively supports knowledge exploitation to stimulate entrepreneurial behavior among all the members of the
institution as well as the academic community such as the increase of intellectual patenting and licensing and
the creation of spin-off companies among academic researchers (Wright, Clarysse, Mustar, & Lockett, 2007;
Siegel, Waldman, & Link, 2003). Universities and higher educational institutions tend to be more engaged in
the entrepreneurial concept through understanding the market value of research and the continuous search for
new institutional methods that utilizes the benefits of both scientific research and innovation (OECD, 2003;
Siegel, 2006; Rothaermel, Agung, & J iang, 2007). To these universities, research has become an essential part
of the process of innovation and in turn has served as a tool in realizing their responsibility to their
stakeholders.
In 2009 the Council of Supply Chain Management Professionals stated that logistics in different areas of
operations could play a vital role in attaining entrepreneurial success for organizations, including those in the

37
field of higher education. Logistics can be helpful in improving the capabilities of an institutions management,
product generation and in specific the ability to create improved curricula, teaching methods, and research to
fulfill consumers expectations. When higher education institutions focus on improving, the institutions often
increase their competitiveness in the market by being more customer-focused (Bentley, Habib, & Morrow,
2006). As a result of this, universities can be more effectively develop academic products and services, which
often leads to an increased demand for the universities products. It is this specific chain of events that
ultimately led to the entrepreneurial success of the institution.
In order to understand educational logistics on the entrepreneurial success of universities, this paper aims
to identify entrepreneurship as applied to the field of education as well as investigate educational
entrepreneurship components and entrepreneurial strategies which universities apply to the six processes of
educational logistics.
Objectives
This paper aims to: (1) identify entrepreneurship as applied to the field of education; (2) identify and study
the educational entrepreneurship components and their classified process on the basis of logistics application.
Research Methodology
Subjects
The subjects in this study were university administrators, department heads, and/or professors of top
universities in Thailand. Three private universities and three public universities were selected on the basis of an
excellent quality assurance rating given by the Ministry of Education, Office of National Education
Standards and Quality Assessment (ONESQA) Thailand. Four interviewees per university were asked several
questions pertaining to the entrepreneurial strategies implemented in the operations of the university
contributing to its success in terms of quality assurance components.
Materials for Research Instrument: Entrepreneurship Components of Universities
The researchers identified entrepreneurship components of universities as: (1) universitys competency; (2)
product; (3) human resource management; (4) research and development; (5) financial flexibility; (6) estate
management; (7) student population growth; (8) business industry collaborative efforts; (9) contribution to the
economic development of the country; and (10) social responsibility of the university. The researchers used six
processes of educational logistics adopted by Bergstrm and Bulter (2009). These processes are: (1) student
information management; (2) examination; (3) flexible study path of the individual student; (4) staff workload
planning; (5) planning and timetabling; and (6) space management.
Research Instrument
The researcher used information on entrepreneurship components of universities and the six processes of
educational logistics to develop specifications and questions for a structured interview with the respondents.
The purpose of the research instrument is to secure data on entrepreneurial strategies being implemented by the
universities.
Data Collection
The author made appointments with the subjects for the research instrument in order to conduct a
structured interview; subjects of the study were university executives, department heads, and/or professors of

38
three public and three private universities according to the quality assurance scores reported by ONESQA
Thailand. Four interviewees per university were asked 10 questions pertaining to the entrepreneurial strategies
implemented in the operations of the university. After obtaining data from the use of the research instrument,
the researcher then analyzed and identified the frequency of answers for each question in the interview.
Data Analysis
The authors summarized and classified entrepreneurial strategies being implemented by the universities
according to the components of entrepreneurship, logistics, and educational logistics. The authors presented
qualitative data based on the questions of the structured interview. A summary of data was generated in order to
present the findings.
Discussion of Results
The research instrument gathered data from structured interviews with four subjects from each of the six
different universities. The frequency of answers per question is stated below.
Question 1: How does the university encourage and support innovation and creativity throughout the
university, including teaching, research, service, and all operations?
This question pertains to data regarding the first entrepreneurship component of universities, which is
competency. Expected data gathered include innovation or creativity in teaching methods, research, and
academic services. A summary of results from the six universities is presented in Table 1.

Table 1
Frequency of Answers to Question 1
The university offers study trips and company visits in and out of Thailand to expose students to different industries and experts
in the field. [22/24 or 91.67%]
The university uses social media networks to post and share ideas such as new breakthroughs, case studies, etc. to reach a wide
number of audiences. [4/24 or 16.67%]
The university uses an ERP system in its operation to manage its information flow between its stakeholders. [14/24 or 58.33%]
The university uses an e-office (used for example: online conferences) to effectively communicate between departments and
campuses. [3/24 or 12.5%]
The university uses Learning Management System (LMS), which utilizes media technologies in teaching and learning. [2/24 or
8.33%]
The university has an online database and an open-access journal wherein students, staff, and the faculty can use for research.
[24/24 or 100%]
The university utilizes computer assisted instruction (CAI) medium of teaching such as on-line writing labs, e-classrooms,
e-learning portals, etc. [7/24 or 29.17%]
The university houses their own commercial businesses (restaurants, airlines/aviation institute, etc.) to serve as training grounds
for the students. [4/24 or 16.67%]
The university emphasizes active learning wherein students get to learn more on real world situations rather than textbook
teaching. [4/24 or 16.67%]

Table 1 presents answers from the 24 respondents regarding the innovative practices and strategies
supported by the university. It is of specific interest to note that 100% of the respondents confirmed that they
offer online database and an open-access journals wherein students, staff, and the faculty can use for research
as a way of encouraging and supporting innovation and creativity. This response was followed in popularity by
study trips and company visits offered to students by the university. In addition to this nearly 30% of the
respondents stated that the use of computer assisted mode of instruction is seen as innovative. Another common
answer to Question 1 was the use of an in-house newspaper used for the dissemination of information.


39
Question 2: How does the university offer a course profile that reflects student demand and meets
workforce needs?
This question pertains to data regarding the second entrepreneurship component of universities, which is
regarding the product of the university. Expected data gathered includes course profiles offered by the
university, as well as the process of offering new courses/programs. A summary of results from the six
universities is presented in Table 2.

Table 2
The university regularly and rigidly evaluates the need to create or change curriculum through surveys and meetings with experts
in the field of study, alumni, and academic administrators. [22/24 or 91.67%]
The university regularly evaluates its lecturers and professors performance in terms of teaching, advising, and research. [21/24
or 87.5%]
The university hires professional experts in the field to teach courses offered. [23/24 or 95.83%]
The university conducts follow-up surveys on its graduates in order to gauge the compatibility of teachings and real-life working
conditions. [3/24 or 12.5%]
The university offers courses which focus on the vocational field. [2/24 or 8.33%]
The university offers courses that would meet the ASEAN standards. [2/24 or 8.33%]
The university regularly amends the course syllabus to make it more current. [2/24 or 8.33%]
The university offers a special course for entrepreneurial students, taught by successful business owners and CEOs, with the aim
of doing a collaborative project between the business and the students. [2/24 or 8.33%]
The university has opened an international program to accommodate the growing number of foreign students who want to enroll
at the university. [2/24 or 8.33%]

In this section, the authors received three main answers from the respondents. The most common answer
to Question 2 was that the university hired professional experts in the field to teach university courses offered.
The strategy of the university to hire experts in the field is in response to the demand on course profiles relevant
in todays market. It is also worth mentioning that the university applies due diligence when it comes to
creating or changing the curriculum or the program being offered; that is, a thorough investigation is conducted
through surveys and meetings with experts in the field, alumni, and academicians before a new
curriculum/program/course offered are created or even a change in the curriculum/program/courses offered is
released to students. The subjects also mentioned that this process is to ensure that skills attained by students
through these new or modified course programs are in line with what the business industry needs. The third
highest response confirmed that professors and/or lecturers are constantly evaluated to ensure the quality of
teaching methods, advising skills, and research works.
Question 3: How does the university attract and maintain a high quality workforce?
This question pertains to data regarding the third entrepreneurship component of universities, which is
human resource management. Expected data gathered include strategies to attract and maintain a high quality
workforce. A summary of results from the six universities is presented in Table 3.
The researchers found the answers to Question 3 to contain the least overlap. Although the researchers
only received a total of 12 different answers, only two of the answers were common to the six universities.
There were two answers in specific, which received the same number of responses and were perceived by the
respondents to be very good selling points of the university in terms of competing for a qualified workforce.
The first and most common answer involved trainings and workshops provided by the university, for skill
development of their employees. The second most common answer involved rewards and incentives to

40
employees such as recognitions, promotions, scholarship grants, and financial incentives. Most of the
interviewees stated that rewards given by the university motivates the employees to work harder and remain
with the university they are currently employed by. They also stated that trainings and workshops, although
primarily for the purpose of skill development of the employees, also help the university to plan for the future
with regards to maximizing the utility of in-house talents.

Table 3
The university provides orientation for new staff and faculty in order to communicate the expectation of the university, as well as
motivate them by expressing their role in its success. [7/24 or 29.17%]
The university offers free workshops and training seminars to faculty and staff for skill development. [23/24 or 95.83%]
The university offers teacher and staff exchange programs to widen their perspective and knowledge. [7/24 or 29.17%]
The university awards promotions, scholarships, recognition, and financial rewards based on work performance and/or research
quality. [23/24 or 95.83%]
The university awards promotions to faculty members who can integrate the findings of their research in their teaching strategies.
[3/24 or 12.5%]
The university encourages each department to conduct peer-evaluation in terms of teaching strategies and to give constructive
criticism to its faculty members. [3/24 or 12.5%]
The university allows faculty members to maintain the practice of their profession aside from conducting classes (e.g.,
engineering faculty can still work in the private sector as engineers, professors in college of medicine still work as doctors in
hospitals, etc.). [3/24 or 12.5%]
The university provides other benefits (health insurance, scholarships, etc.) to the immediate family members of the employee.
[2/24 or 8.33%]
The university maintains the high standards of its lecturers through filteringonly lecturers with a doctorate degree or in the
process of getting their doctorate degree, high standards of English skill, and is research active gets accepted and retained. [2/24
or 8.33%]
The university offers very good healthcare plan/benefits for employees. [4/24 or 16.67%]
The university has open communication between high management and the faculty and staff. [2/24 or 8.33%]
The university encourages its faculty and staff to pursue post-graduate studies and academic rankings for better academic
preparedness. [2/24 or 8.33%]

Question 4: How does the university demonstrate their role as co-creators and custodians of knowledge in
terms of research?
This question pertains to data regarding the fourth entrepreneurship component of universities, which is
the research, and development plans of the university. Expected data gathered include the universities role in
the creation of knowledge through research and its role as custodians of knowledge gained through research. A
summary of results from the six universities is presented in Table 4.

Table 4
The university offers adequate funding to support its faculty in doing research. [24/24 or 100%]
The university houses an intellectual property center wherein it creates, protects, and utilizes intellectual property as well as
enforces the rights of its author/originator through patents. [4/24 or 16.67%]
The university provides recognition and rewards for published researches made by the faculty. [20/24 or 83.33%]
The university supports researches, which aid the community and/or the country by collaborating with other departments and
outside organizations to disseminate the information either through seminars and workshops or through project creation. [24/24
or 100%]
The university provides funding for projects, which portray innovation in the field. [4/24 or 16.67%]
The university awards promotions and rewards to faculty members who can integrate the findings of their research in their
teaching strategies. [3/24 or 12.5%]

Table 4 presents the responses given to Question 4, which refers to the role of universities in the creation

41
of knowledge through research. One hundred percent of the subjects who were interviewed mentioned the
importance of the following.
The university supports research, which aid the community and/or the country by collaborating with other
departments and outside organizations to disseminate the information either through seminars and workshops
or through project creation.
Since the three public universities interviewed for this study pride themselves for being research
universities, subjects of the study reiterated that they are encouraged by administrators to pursue research based
on their area of expertise and were also given free rein in terms of topics to choose from for their research.
It is the speculation of the researchers based on the responses received that adequate funding for research
and the provision of rewards and incentives for published works motivates students, faculty, and staff in
conducting their own research.
Question 5: How does the university establish a sustainable financial position?
This question pertains to data regarding the fifth entrepreneurship component of universities, which is the
financial flexibility of the university. Expected data gathered include strategies in sustaining financial position.
A summary of results from the six universities is presented in Table 5.

Table 5
The university employs a risk management system, and an investment analysis and planning system, to avoid unnecessary risks,
control the probability and/or impact of unfortunate events, and to maximize the realization of investment opportunities. [19/24
or 79.17%]
The university aims to balance its short and long term plans in terms of finances. [2/24 or 12.5%]
The university has a financial expert (e.g., university management company) as its partner/investor, which plans its finances.
[4/24 or 16.67%]

This section of the questionnaire aims to understand the financial flexibility of the university in terms of a
perceived sustainable financial position. While, almost all of the respondents stated that they were not very
familiar or directly involved with the finances of the university, they said that they could relate this to the
annual and interim reports they receive or discuss during meetings. They also reiterated that every department
has adequate budgets but every project, which requires a substantial amount, needs to go through a process or a
committee to be evaluated and get approval. Some also mentioned that they have a clear audit process or
checks and balances when it comes to finances.
Question 6: How will the university expand and maintain its estate over the next five years?
Question 6 pertains to data regarding the sixth entrepreneurship component of universities (estate
management of the university). The data gathered for this question include answers to estate expansion
planning for a window of time starting now until the next five years. Data also include how the university is
maintaining its own estate and how it will continue to maintain its estate in the future. A summary of results
from the six universities is presented in Table 6.
Table 6 presents the findings on entrepreneurial strategies pursued by the university for the management
of its estate. All of the respondents affirmed that the universities they are currently employed by have long term
plans of increasing their investments on fixed assets. Respondents also reiterated that continuous expansion;
improvements and renovations have been on-going every year to maintain the universities. This is for the
purpose of accommodating a growing number of students, as well as improving and updating the facilities used

42
by students, staff, and faculty alike. Respondents from three universities mentioned that some of its assets are
being rented out for commercial purposes. The primary purpose of this is to make commercial establishments
(convenience store, restaurants and fast food stalls, banks, etc.) easily accessible to the students, staff, and
faculty, while its secondary purpose is to earn extra income through rental fees.

Table 6
The university regularly checks the satisfaction rate of users (students, staff, and faculty) of universitys assets. [7/24 or 29.17%]
The university has ongoing renovations of old buildings and construction of new buildings. [2/24 or 8.33%]
The university keeps an updated database of all its assets. [3/24 or 12.5%]
The university has long-term plans of increasing the number of its investments in terms of fixed assets. [24/24 or 100%]
The university has plans of increasing its business and commercial zones (e.g., malls/restaurants/stalls inside the campus that are
paying rent). [9/24 or 37.5%]
The university effectively manages its wastelands and garbage collection in support of the universitys image of being a green
university. [4/24 or 16.67%]
The university continuously improves its estate through the construction of land improvements (e.g., bicycle lanes, tram lanes)
and expansion and renovation of rooms and buildings (e.g., skywalks to connect buildings, new building for library, new
laboratories, mock rooms for special trainings, etc.). [20/24 or 83.33%]
The university has a regular maintenance schedule for all its assets. [8/24 or 33.33%]
The university keeps a master plan for flood crisis management. [2/24 or 8.33%]

Question 7: How will the university improve its student population growth over the next five years?
This question pertains to data regarding the seventh entrepreneurship component of universities, which is
the student population growth of the university. Expected data gathered include strategies, plans, and projects
used in improving student population growth over the next five years. A summary of results from the six
universities is presented in Table 7.

Table 7
The university is planning to increase more on its international aspect such as using English as the medium of teaching in
certain subjects in the Thai program and offering an ASEAN Language Program in support of the ASEAN Economic
Community (AEC). [8/24 or 33.33%]
The university is offering student exchange programs to current and prospective students. [24/24 or 100%]
The university is offering student scholarships to current and prospective students. [8/24 or 33.33%]
The university is aiming to increase the number of students in its graduate programs (Master and Doctorate Degrees) by
integrating an international aspect in their programs. [4/24 or 16.67%]
The university offers programs with broader scope in terms of job field (e.g., business management). [2/24 or 8.33%]
The university aims to raise the quality level of vocational education. [2/24 or 8.33%]
The university is aiming to increase the number of students through public relations, road shows in and around Thailand and
other media advertising. [4/24 or 16.67%]
The university aims to raise the level of quality assurance and improve business service to motivate prospective students to
enroll. [4/24 or 16.67%]
The university has overseas recruitment agencies and is utilizing several forms of advertising to reach a wide number of
audiences. [4/24 or 16.67%]

This part of the interview questionnaire sheds light on the strategies being implemented by the university
to attract and expand their student body. One hundred percent of the respondents mentioned that offering
exchange programs to current and prospective students was a key factor in growing its student population.
Subjects also reiterated that it is essential that the university offers exchange programs to their students because
more and more students are interested in gaining international exposure and experience. The respondents

43
revealed that since it is now a demand of students for the universities to have connections with other
educational institutions preferably outside the country, the university has no choice but to comply and supply
this demand. This in turn can also be a great mechanism for universities to strengthen their connections and ties
with the academic community, which may potentially result in dissemination of information and new
knowledge from research. This response falls under the educational logistics process of providing a flexible
study path of the individual student. Moreover, three of the six universities stated that they are using advertising
methods (road shows, print, commercial, and online advertisements), in reaching their target market. It should
be noted that the universities, which make use of advertising strategies, are all private universities.
Question 8: How does the university demonstrate a provision of academic expertise to the needs of
business development and growth?
This question pertains to data regarding the eighth entrepreneurship component of universities, which are
business industry collaborative efforts of the university. Expected data gathered include universitys provision
of academic expertise in response to the needs of business development and growth. A summary of results from
the six universities is presented in Table 8.

Table 8
The university has an intellectual database, storing original patented researches, wherein companies can have access. [8/24 or
33.33%]
The university has a research department, which offers consultation and actual research for companies. [22/24 or 91.67%]
The university forms partnerships and collaborations with companies in order to communicate business practices through
seminars and conferences. [4/24 or 16.67%]
The university offers seminars, workshops, and trainings to various companies for the dissemination of best industry practices
(e.g., HR practices, usage of IT software, etc.). [4/24 or 16.67%]

Table 8 highlights the answers to Question 8, which focuses on the act of sharing knowledge and current
business practices and methods with local industries. In conducting the interviews as well as performing
secondary independent research of the universities it was found that all universities offered business advice,
consultations, industry, market, scientific, and technological research to businesses in one form or another.
Question 9: How does the university contribute to the economic development of the community in terms
of job creation?
This question pertains to data regarding the ninth entrepreneurship component of universities, which is the
universitys role in the economic development of the community specifically for job creation. Expected data
gathered focus on job creation through universitys strategies, action plans, and projects. A summary of results
from the six universities is presented in Table 9.

Table 9
The university promotes and encourages students to apply for internships and on-the-job trainings to increase their experience
before they become part of the workforce. [24/24 or 100%]
The university provides seminars, workshops, and in-house job training in order to increase the working skills of students for
better job placement. [24/24 or 100%]
The university encourages students to create business plans and market research for local businesses and entrepreneurs in order to
help the community. [16/24 or 66.67%]

All subjects of the study indicated that their university, especially the advisers of students, encourages
students to apply for an internship program or an on-the-job training. Student advisers argue that these

44
opportunities will widen the students perspective, increase their interpersonal skills, and assist in developing
the skills which are necessary to be a good team player working with a diverse group of people. Although some
of the respondents stated that an internship course is not a requirement for the completion of a degree, it is still
part of the curriculum and offered as an elective. Additionally, in order to better prepare their graduates to be
more effectively employable by companies, universities deem it is necessary to offer skill building,
improvement seminars, trainings and workshops. Even though not all of the universities stated that they
encourage their students to join seminars, conferences, and workshops on creating business plans and research,
most of the subjects stated that they motivate students to get connected with the local industries through these
types of strategies. In this way, not only will the skills of the students be enhanced but also they will have the
opportunity to connect with local companies with whom they will have the greatest chance of finding
employment with. This is also a strategy of many of the universities to facilitate the hiring of their graduates by
exposing their students to the companies who have witnessed the skills of students through these types of
strategies.
Question 10: How does the university ensure the dissemination of existing best practices in the field to
other universities, government agencies, and stakeholders?
This question pertains to data regarding the last entrepreneurship component of universities, which centers
on the social responsibility of the university. Expected data gathered include strategies, action plans, and
projects to ensure the dissemination of existing best practices in the field to other universities, government
agencies, and stakeholders. A summary of results from the six universities is presented in Table 10.

Table 10
The university joins and/or hosts seminars, workshops, and conferences to share knowledge from published academic works and
researches (sample topics: strategies and procedures in starting up a business, knowledge about health and how to improve their
daily lives, farming techniques and practices, etc.). [24/24 or 100%]

Subjects of the paper stated that seminars, workshops, and conferences are the means through which they
share knowledge and keep up to date in their respective fields. Other responses in terms of fulfilling the social
responsibility of the university include outreach programs, Thai cultural immersion programs, medical and
dental missions and volunteer work such as teaching kids in rural areas, etc..
Conclusions
This study explored the entrepreneurial strategies, which universities have employed in operating different
processes of educational logistics in order to develop an approach to capture their target market, which may
result in being one of the universities competitive advantages. The results of the study reveal that most of the
entrepreneurial strategies identified by the subjects in response to the research instrument: Structured
interviews can to a certain extent be categorized in the framework of six classified processes of educational
logistics. These findings point to the current trend, which shows universities in Thailand are adopting business
strategies in order to meet the demands of their customers. Having secured such empirical information on the
strategies of universities perceived as innovative and creative, the authors feel that more research is needed to
look into details of these categorized strategies that account for entrepreneurial success of a universitys
operations regarding on how they can effectively satisfy and earn respect from their stakeholders.

45
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December 2013, Vol. 1, No.1, 47-63

A Decision Theoretic Model for Information Technology
Ramesh Babu Paramkusham
KM Collaboration, Justin, USA

The decision-making process is a complex and intricate set of activities, an exercise that is compounded of both
objective and subjective goals. In organizations decisions that are made can be explained using descriptive and
normative decision process. The gap between decisions that should be made and decisions that are made is the key
factor this research paper addresses via building a decision model from foundational theories of Jeremy Bentham,
Ward Edwards, and Dempster Shafer. Subjective values and uncertainty nature of some decision steps within a
larger decision process are to be considered to include other side of decision-making. Subjective values are
determined by personal choices, preferences and often times dominate the decisions relative to objective values.
Uncertainty, on the other hand makes the decisions vulnerable to overall decision results. The research model is
applied to information technology (IT) outsourcing problem that is pertinent to multiple industries globally. The
findings throw light on the importance of modeling subjective values while considering tangible goals in the
context of present day organizational decision-making realities. Decision theories are analyzed and the implications
of these are studied for their role in organizational decision environments. The important contribution of this paper
is the identification and recognition of subjective values and the role played by these operatives.
Keywords: information technology projects, information technology (IT) outsourcing, decision theories, decision
analysis, decision process, decision models, subjective and objective values
Introduction
Decision-making is considered as an activity that people perform to make a choice or set of choices to
meet their needs, preferences, and to align their values to arrive at a conclusion about group of activities
(Byrnes, 2013). There are choices, options, series of steps involved, needs and/or wants, preferences involved
in the process. Decision process activities such as problem-solving, making implicit and explicit assumptions,
and interactions with the environment, lead to a number of smaller decisions that aggregate into a larger
decision-making mission. Consequently areas of studies in psychology especially cognitive and normative
perspectives, probability, management, and statistics contribute to decision-making and allows for creating
better decision models.
Decisions in organizations, often, follow through ambiguous processes with uncertainties, personal
beliefs, political environment, and subjectivity, identifying subjective and objective goals of the decision
situation. The ambiguous and uncertain conditions in the decision environment make it harder to determine
exact values for a given decision problem. This problem can be resolved using a probabilistic approach to
computing the values of the parameters. This requires probabilities that can be calculated from Bayes

Ramesh Babu Paramkusham, Ph.D., IT Management, KM Collaboration.
Correspondence concerning this article should be addressed to Ramesh Babu Paramkusham, 1808 Copper Mountain Dr, Justin,
TX 76247, USA. E-mail: Ramesh@paramkusham.com.
DAVID PUBLISHING
D
A DECISION THEORETIC MODEL FOR INFORMATION TECHNOLOGY

48
theorem of priors. Priors are probabilities of previous events of similar situation. These priors help project
and identify decision values for a future decision support. Bayes theory computes the probabilities on a
conditional basis with known priors. It makes perfect sense that if certain variables in a decision situation are
experienced before these can be used to evaluate the future values.
There are decision theories that support normative, descriptive, and behavioral decision models.
Normative decision theory primarily deals with choices that should be made in a given situation, while
descriptive decision-making analyzes choices that are actually made. Objectives of a decision scenario along
with norms have to be identified in order to model a system given the primary requirement involves gathering
the steps in the process such as understanding of interactions, and identifying variables. Normative decision
theories make use of the norms established for a decision situation and follow through a set logic to come up
with decision findings. The system modeler, in this context, has also an obligation to embed, somehow, the
subjective norms into the model. Behavioral decision-making takes into account both normative and
descriptive methods (Barron, 1974). There is a gap between choices that should be made and the choices that
are made and this difference can be explained using decision makers values and beliefs or subjectivity
(Slovic, Fischholf, & Lichtenstein, 1977).
In this paper, decision theories form the basis of creating a decision model and the model is applied to
IT outsourcing scenario. Subjective and tangible values of a decision process in practice make up a
decision-making process. Decision theories that are foundational to decision-making processes which are
studied in this paper and include Thomas Bayes (1702-1761), a theologian and mathematician, pioneer in the
subjective values using probability, Edwards Ward (1954), an American Psychologist who worked on
formation and revision of beliefs, Aleatory uncertainty (Helton, 1997), Demster-Shafer theory (Shafer, 1976).
A decision model is synthesized from the analysis of the theories and the application of the findings.
Addressing the gap between the decisions made and decisions that should be made, which swing from
descriptive to normative decision process is the contribution of this paper apart from constructing the
proposed decision model. This model is applied to information technology (IT) problem to validate with an
example.
Research Goal
The research goal stems from analyzing the problem of decision-making in organizations which often
times is complex and comprises of both subjective and objective aspects of achieving business tasks towards
primary goals of improved productivity and return on investments. As the decisions are compounded of
imperfect and intricate underlying objectives, the analysis of foundational theories yields a better understanding
of how the decisions could be made logical, scientific, robust, and reusable. Towards that goal in mind this
paper attempts to put forward the findings of the analysis of the theories into formulating a decision model. An
example is elaborated to demonstrate on how model could be employed.
Decision Theories and Analysis From the Literature Review
Decision theory is compounded of complex and imperfect knowledge that embodies many disciplines
such as psychology, mathematics, statistics, and economics and is in fact an interdisciplinary area (Hansson,
1994). It is not often possible to represent decision problems in organizations with simple models. People
make decisions every day, some simple and some complex, at work, at home in professional, academic and

49
personal situations; and during any ones life, there are decisions that take place and with varying degrees of
successes and based on access to different sets of information and knowledge. Decision theories allow
understanding typical decision-making process and the possible intricacies, which when unfolded can make
future approaches much more manageable and well understood.
There are decision models researched in the literature and include model/system perspectives ranging
from project inputs to group dynamics and more research needs to be done to include subjective and
uncertainty paradigms and to minimize the gaps between normative and descriptive decision processes. The
project management model includes inputs such as project parameters, time, budget, money, IT methods, and
IT tools utilizing specific software project management model (Kowalczuk, 2007). Group decision-making
needs some kind of sequencing the decision components and requires these sequences to be processed by
members of different teams usually dispersed in time and space (Wu, 2002). Evidence plays a role in all
decision-making scenarios and warrants that experts need to be available to render their valuable opinion and
advice (ONeill, Dluhy, Fortier, & Michel, 2004). Causal mapping is another technique used to model
decision situations and necessitates domain and existing knowledge is leveraged (Chowdary & Chan, 2005).
Domain expertise and task knowledge in certain models propagate the idea of task conceptualization and
orientation apart from domain methods (Abdelkader, 2006). Correcting and preventing problems in business
allow both learning and devising new techniques to alleviate the issues associated with a decision story (Lari,
2003). Often times experts differ in their opinions and it mandates a need to measure the degree of aligned
opinions and maximizing the opinion strength (Alonso, Chiclana, & Herrera, 2007). Negotiating among
experts with proposals and modifications to the proposals and equalizing these with appropriate changes
enable to come out with better decision models (Jaramillo, Smith, & Andrew, 2005). Language action
perspective is another method used in decision models and follows through argumentation theory (De Moor
& Aakhus, 2006; Marashi & Davis, 2007). Software maintenance perspectives and IT governance based
models also are reported in the literature (Krishnan, Mukhopadhyay, & Kriebel, 2004; Xue, Liang, & Boulton,
2008). Statistical, probability priors are used to compute IT investments in certain models (Chowdary & Chan,
2005; Edieb, 2007). In this paper emphasis is given to perspectives especially in subjective and uncertainty
areas that are found deficient in the current literature and in modes. A research approach to study basic and
foundational theories is attempted so that a fresh understanding of these is included to create a simple and an
effective decision model that can be applied to IT investments. The proposed model can also be designed into
a decision support system to aid in decision for complex decision domains. The exploratory research can be
extended and narrowed down to specific decision problems faced in todays organizations.
Jeremy Benthams utility is the tendency of an event to wither increase or decrease the overall happiness.
This is different from the decisions that are actually made. While the measure of utility can be considered as
boundless, the marginal utility can be gazed as the variance of waves in an ocean. Marginal utility can be
mathematically represented as the following equation series (Georgescu-Roegen, 1968).
MU1/p1 = MU2/p2 = = MUi/pi, for all i = 1, 2, 3
where MUi is the marginal utility for the ith utility and pi is the ith price for the utility.
Utilities are not independent and are relative to the measured utility objects. Benthams experienced
utility can be proposed (Ryan, 1987) attributesutility is experienced, utility has a value, utility is something
that makes good or bad experience, total utility constitutes of all instincts of utilities, and total utility can be
measured using these instant utilities that must be measureable. Kahneman (2000) considered that there are

50
systematic differences between decision utility and experienced utility. One reason he attributes to this
difference is the use of only a sampled experience from a persons experience and especially using peak
experience. Instant utility measurements should be added to yield the aggregate utility factor and this gives
the total utility and does not depend on the temporal context for each of the instant utilities.
The concept of universal interest incorporates into utility theory, according to Benthams moral
philosophy, that attains public utility (Postema, 2006). Benthams utility theory is meant to serve the good of
the largest population possible. Bentham laments that foundations of all virtue are embedded in utility.
According to Bentham, pleasure and pain essentially dictate overall happiness of people. Bentham
established a relationship between utility and the interest of the community. Aggregation of individual
interests constitutes, according to Bentham, universal interest of people that leads to happiness. Aggregation
does not necessarily mean sum of the interests but a collection of people interests that make up common and
greatest utility. There are two separate interests, people usually have: One relates to community level and the
other to individual level. Community or higher level of interests relate to universal interests and personal
ones relate more specific to individuals that may not contribute to larger interests of the public. Bentham
happens to use universal interest in the context of sum of interests of the greatest number in the community
rather than the interests of all people (Postema, 2006). Since people have to be interdependent, to some extent
to achieve their personal and/or universal goals, it becomes mandatory for them to align their interests with
those of public, causing a shift for universal efforts of utility (Postema, 2006). Through this way people can
get motivation, to a certain extent, and realize the importance of larger interests of community and society.
According to Bentham, happiness that is supposed to be derived from utility cannot be segregated from
people themselves and makes it nonsensical to consider happiness without any attributions to human beings.
Benthams utilitarian theory suggests that the benefits of universal interest should ultimately include one and
all and no one should be left out, although the degree of benefit may vary according to the individual choices
made. Bentham believed that aggregate or individual utility factors could not be measured with any precision,
but only follows through qualitative judgments (Warke, 2000). Benthams utility function contains pleasure
and pain dimensions that builds up for irreducible and multidimensional model. Bentham, to that fact,
proposes pleasures and exemptions from pains, m, originating from n communities yielding m-n dimensional
pleasures and pains. In Benthams theory everybody counts for one and so also nobody counts for one and
this impartiality warrants appropriate weights to be used in making utilitarian decisions in the context where
this theory is employed (Warke, 2000). This leads to some kind of rank ordering for all these pleasures and
pains. The values that are coming from judgments, according to Bentham, determine utility factors which
aids in decision-making. The value of pleasure or pain depends on situations and circumstances and on the
degree of variation of duration, intensity, certainty or uncertainty and propinquity (Bentham, 1789). These
factors arise because of ambiguity that exists in people for a single pleasure or pain and there may be no
common denominator for this factor that can determine the index unambiguously.
Bayesian theory makes use of probabilities to account for the measurements made for a specific
parameter. Subjective probabilities depend on personal assessments of the problem on hand and including
personal biases. The subjective nature of finding out values for parameters in an experiment makes Bayesian
decision theory different from other decision theories. Bayesian decision maker has the information coming
from personal probabilities, and those sampled from the situation. Using this data, decisions can be made
more reasonably and accurately (Birnberg, 1964). Bayesian theory puts emphasis on experience of the

51
person(s) making decisions which includes qualitative factors. Experience includes knowledge about a
specific domain; intricacies of the subject matter in the domain, previously held projects, perspectives,
capabilities, and skills and associated analytical and problem solving skills. These make up for the subjective
probabilities in Bayesian analysis for decision-making.
Subjective utility is the basis for considering subjective probabilities in Bayesian theory. Bayesian
decision maker updates their beliefs regardless of future events and independently of their valuations of
outcomes. Karni (2005) recognized three drawbacks of subjective utility theory (SUT). These
includedecision makers probabilities do not necessarily represent their beliefs; the theory does not imply
updating of subjective probabilities based on their beliefs; preferences should be state independent. Karni
discussed necessary and sufficient conditions for unique subjective probabilities representing their beliefs and
updating. There are two components that make up for the subjective probabilitiesstate-independent
preferences and state-dependent preferences in Bayesian theory. Karni identified that the state-independent
utility is not axiomatic, while state-independent preference is axiomatic. Failure to represent beliefs via
probabilities, in Bayesian statistics, is a fundamental flaw and has to be addressed. By dynamically
modifying the prior probabilities according to Bayes rule makes it appropriate in considering the SUT
(Ghirardato, 2002). Preference relations defined solely on acts and especially unconditional acts may not be
sufficient and considering conditional acts along with unconditional acts in establishing preference relations.
Karni (2005) indicated that it is necessary to use corrected probability representations of individual beliefs to
avoid making errors using Pareto condition to justify social preferences (Gilboa, Samet, & Schmeidler, 2004).
Choice set should include all conditional and unconditional sets. Karni (2005) established the following
sufficient and necessary conditions for the Bayes rule:
Bayes decision maker updates their beliefs regardless of events and independently of their outcomes.
State independent preferences are a subset of state-dependent preferences;
There exists a unique subjective probability distribution on the site of states representing the decision
makers beliefs;
Posterior are probabilities obtained from the given prior Bayes rule;
State-dependent utility function on the response sets of outcome representing the decision makers
valuations;
Consider subjective expected utility representations of decision makers conditional and unconditional
references.
In the available literature one thought is that decisions take non-sequential patterns and follow through
various phases before a decision is taken. Decision phases can largely be divided into three
componentsidentification, development, and selection (Mintzberg, Raisinghani, & Thort, 1976). These
phases are similar to what Simon (1960) has described with corresponding namesintelligence, design, and
choice. Identifying the phase recognizes the problem and possible solutions. This diagnosis can be used to
create new information. Development phase has two tasks, one for searching for available and ready-made
solutions and second for customizing and/or creating new solutions. Final phase, selection, determines what
needs to be taken into account for making decisions by filtering the available solutions followed by a choice
of the evaluated solutions and followed by an approval process (Hansson, 1994). These phases follow a
cyclical model flowing from identification to development to selection and to identification.
Ward Edwards has extended utility theory by modifying the expected value (EV) that essentially

52
substituted subjective probabilities for objective probabilities, and called it subjective expected utility (SEU),
which took care of gaps between normative and descriptive decision-making (Shanteau, 2001). The existence
of subjective probabilities takes part in the decision-making due to choices available for people, and their
associated preferences. Subjective probabilities have to be measured to use these in the decision-making
exercise. The objective probability axioms may not apply to subjective probabilities due to the nature of values
that can be associated with these and the sum of probabilities of events, where there are more than two events
in play, cannot be additive (Edwards, 1954). The fundamental notion of utility maximization is based on the
premise that an economic man always chooses the best alternative from the available choices.
Memory plays an important role in decision-making, in that people remember their previous experiences
with similar situations and try to apply and/or improve on those experiences. Kuhl (1994) depicted two types
of decision makers: One is state-oriented; the other is action-oriented and as far as behavioral impact on
decisions is concerned. While state-oriented decision styles are based on behavioral inhibitions,
action-oriented styles involve more of behavioral activation basis. Kuhl developed an action control scale to
differentiate these two types of behavioral intentions. State-oriented people use scenario-like memory
representations to a greater extent than action-oriented people from a study conducted by Svenson, Sal, and
Loo (2007). These two styles follow different methods of using memory to evaluate and come to a decision,
and although the decision arrived may be the same, the route it takes to arrive at the decision happens to be
different. Decision representation is another factor that affects the decisions. Quite often people tend to make
wrong decisions solely because of inadequate representation of the problem that leads misinterpretations
about intended action. The role of memory certainly adds an additional parameter to the decision system in
establishing a perception for the decision maker. These perceptions drive the decisions in one way or the
other.
Decision and action paradigm can be explained in the following example in educational institutions for
selecting the students. Decisions often take place from various types of tests in educational institutions, where
the test results are taken to support the decisions. For example, in schools and/or colleges, students are
admitted based on various tests such as grade point average at a previous study, aptitude tests, skill test and
more. The results of these tests are used in the equation of selection of students. According to Van der Linden
(1987) there are four basic decisions making problems that can be distinguished: selection decisions, mastery
decisions, placement decisions, and classification decisions. Selection decisions outcome include either
selection or rejection and this type of decision problem can be seen in student selection in educational
institutions. The tests are, in this case, conducted before the decision criterion and the criterion is measured
after the decision. To emphasize, tests are conducted before the treatment in this case. Mastery decisions are
made after the treatment and examples include passing or failing in courses administered in a college or
school. Placement decisions involve multiple treatments and the decision is to include the best treatment for a
specific group to yield best possible results and the criterion remains the same regardless of the type of
treatment. In classification criterion each treatment has its own criterion and groups are assigned to different
criteria with maximum predicted utility.
Measuring utility can be conceived using two conceptsordinal utility and coordinal utility. The ordinal
utility of goods and services cannot be measured objectively as there is a lack of value associated of personal
preference. Cardinal utility refers to a meaningful scale of measure to indicate utility across consumption
options. There needs to be a common scale to measure utility that includes personal preferences as well as

53
economic value to measure total utility for any goods or service. The aggregate utility can be measured using
subjective utility that replaces for objective utility. Lack of common scale makes the utility theory difficult to
measure and adequately aggregate utility function. People who make the decisions have different choices for
varying products and/or services which results in an uneven scale of measure and weights for each of the
alternative choice must be taken into account in order to produce a meaningful outcome representing maximum
subjective utility. The theory of riskless choices and theory of riskless choices contribute towards behavioral
decision theory. Theory of riskless choices indicate people making decisions in riskless events where they
assume that there would be no risk associated in the events and the examples may include utility for economic
welfare. Theory of risky choices may include choices made under risk and/or people being aware of the
associated risk with the events. One good example of risky choices is gambling, where people are aware of the
risks in gambling or betting, and still they take part in the activity with a set of mind that assumes a certain
amount of risk (Edwards, 1954).
Preferences are drawn from personal choices that are often difficult to measure and cannot be measured
based on utility considerations (Edwards, 1954). Preferences are choices that are based on the values of the
person making the choice, and the satisfaction perceived by the subject. The measurement scale does not
necessarily correspond to zero to one as in the case of conventional probability. The major issues in subjective
probability measurements are that of scaling with weights of preferences along with utility functions. Additive
mathematical formulations cannot be applied to subjective probabilities. Uncertainty and risk add to complexity
of decision-making and behavioral decision theory addresses these by adding subjective expected utility to
compensate for lack of personal choices under both risk and uncertain conditions of the events. In the decision
theories it is assumed that people behave rationally, have transitive preferences, and they choose to have
maximum expected utility. There are proofs that people follow through patterns of intransitive choices and this
requires a more robust decision model that involves some kind of stochastic inferences.
One example of riskless choices is to buy text books for your college course. There are two books that are
prescribed for the course and books are available from several vendors including campus store. Clearly, in this
example, there is no risk involved regardless of the choice selected from available vendors. There are multiple
choices and the decision can be made using attributes of these vendors and by aggregating the values for these
attributes. This way one can take the help of subjective utility and in the process of maximizing subjective
utility one reaches a decision. Since there are multiple attributes stemmed from all choices being the same, and
follows multi-attribute utility theory (MAUT) (Thompson, 2002). Uncertainty is another environmental
condition that influences the dictions where the uncertainty leads to lack of appropriate information to make a
sound decision and there are no probabilities that can be associated with the event. For example, consider ban
activity of booking for a flight to attend a seminar, and the person attending the seminar has booked the ticket
three months in advance. The uncertain situation in this example is that if the flight will be delayed or cancelled
and depending on the weather patterns on that day. It is obviously difficult to get the necessary information
ahead of three months. In the same example there is another factorrisk, where the decision maker knows and
tries to address it by having alternate plans to avoid or mitigate the risk in the unfortunate event. This requires
the person to assess the risk to take care of the situation by adding personal values to variables such as possible
discomfort, loss of time and/or money.
In classical probability theory probabilities follow additive axiom. Consider two random events A and B
and the random behavior dictates equally likely of happening of either event A or event B and the additive

54
axiom states that sum of P(A), probability of event A and P(B), probability of event B, is equal to one. For
example:
P(A) + P(B) = 1 or P(A) = 1 P(B)
Subjective probabilities are used differently for reasons due to lack of certainty resulting from various
sources and where the sources may be unknown in the epistemic uncertainty. Probabilistic analysis requires that
all probabilities be known in order to compute the probability and is obviously suitable only for Type A
uncertainties. Additive axiom is widely used to compute the probabilities following additive theorem in
traditional probabilistic computations. Clearly this axiom of additivity cannot be employed to compute similar
probabilities in subjective probabilities where the probability of happening of an event does not necessarily add
up in the equation to a total of one. This is due to the likelihood of success or failure of an event does not
necessarily translate to corresponding failure or success due to the fact that uncertainties involved may depend
on other sources that are unknown. Dempster-Shafer provided with how this problem of representing subjective
probabilities can be resolved as depicted in the following paragraphs.
Type B uncertainty stems from a decision situation, where little available information about an event is
known or information is ambiguous, un-comprehendible or conflicting in nature. In these cases classical
probability theory fails to address these issues and hence Bayesian theory does not apply. Subjective probability
can be measured as an interval or set of possibilities and has characteristics such as imprecise measurement.
Laplaces principle of insufficient reason (Savage, 1972) is not imposed, which states that simple events where
probability distribution is not known in given sample space are equally likely. The axiom of additivity is also
not imposed to take care of multiple and unknown sources of information. Dempster-Shafer theory (DST) can
be considered as more general theory for classical probability theory. There are three basic functions that
constitute DSTbasic probability assignment function (m), belief function (bel), and plausibility function (pl).
Basic assignment function, m, defines a mapping of the power set, containing all possibilities of events,
representing the set of multiple events, to the interval between zero. A zero value of m for null set is assigned
and sum of the m values for all subsets become equal to one, following the uniformly mapped scale. The value
of basic probability assignment (bpa) function for a given set A, represented by m(A), expresses the proportion
of all relevant and available sources that supports the claim. The value of m(A) indicates only to the set A and
not necessarily to that of subsets. The upper and lower limits of DST probability function are determined by
two non-additive continuous measures: belief and plausibility. Consider a power set A containing a subset B.
The belief function, bel and plausibility function pl, can then be given by, according to DST (Klir, 1989):
bel(A) = Sum m(B) where B|A contains Bincludes all subsets;
pl(A) = Sum m(B) where B|B A! = nullincludes subsets that intersect set A;
In DST framework bel(A) <= pl(A);
pl(A) = 1 bel(A) plausibility and belief functions follow additive rule.
The major task in DST probabilities is computation of belief and plausibility functions. There are various
rules that use mathematical axioms for finding out summation of the subsets of the belief and plausibility
functions. The aggregation of information using one of many rules provided in the literature including
Dempster combination rule (Dempster, 1967) provides a method to compute the DST functions. These rules are
based on three conjunctive pooling, disjunctive pooling, and tradeoff between the two (Dubios & Prade, 1992).
Many combination rules fall between these two cases of conjunctive and disjunctive pooling. Conjunctive
pooling follows A union B rule and assumes the intersection of set A and set B is not null. Disjunctive pooling

55
follows the union rule. The Demspters combination rule is purely conjunctive operation (AND operation).
Mathematically this can be represented by:
m12(A) = SUM(m1(B).m2(C)/(1-K)) where B C = A, A! = null (1)
where m12 represents aggregation of two belief functions m1 and m2;
m12(null) = 0;
K = SUM(m1(B).m2(C)) where K is the basic probability mass associated with conflict.
In the equation (1), (1-K), the denominator, represents normalization factor. In this rule it associates any
conflict to the null set. This results in errors which may be counterintuitive. A tradeoff method can be used to
alleviate the problem of errors due to conflict in the use of Demsters combination rule. The sources that create
the conflicts can be first discounted and then Demsters rule or a variation of the rule can be applied to carry
out the aggregation of belief and plausibility functions in DST (Shafer, 1976). Accordingly this can be
represented mathematically:
bel(ai)(A) = (1-ai)bel(A)
where ai represents series a1, a2, a3 ;
(1-ai) represents degrees of reliability, the overall belief function can then be drawn from the average of
the above discounted belief functions. This can be written as:
bel(A) = (bel(a1)(A) + .+ bel(an)(A))/n
The discounted rule is generally employed when strongly conflicting information from sources are part of
the belief equation. DST can be applied to practical situations of decision-making utilizing different
combination rules. The combination, in essence, depends on type, number, reliability, dependency, and conflict
of the sources; type of evidence, amount of evidence, and accuracy of evidence; and type, algebraic properties,
handling of conflict, advantages, disadvantages of combination rules.
Methodology
The research in this paper used exploration of decision theories from a critical angle and analyzed these
theories in the context of present day decision-making process in organizations. Subjective and objective divide in
research methodological philosophies drive the underlying research methods leading to multiple research methods.
Ontological assumptions and epistemological assumptions derived from corresponding theories through light on
the subjectivity and objectivity of research paradigms. Reality, from an ontological perspective, begins with
human imagination and changes forms via social construction, symbolic discourse, contextual information,
concrete process, and finally leading to a concrete structure. Assumptions about human nature include man as a
conscious being, man as social constructor, man as an actor, man as information processor, man as an adapter, and
man as a responder. Epistemic view focuses on phenomenal insights, understanding how social reality is created,
understanding symbolic discourse, to map contexts, to study systems, process, change, to construct positivist
science (Morgan & Smircich, 1980). Transformation from subjective approaches to objective direction takes the
research paradigm from transcendental, to language game, to culture, to organism, and to machine. Corresponding
research methods follow through exploration of subjectivity, hermeneutics, symbolic analysis, contextual analysis,
historical analysis, lab experiments, and surveys (Morgan & Smircich, 1980).
The degree of uncertainty ascertains the research methodology (Zikmund, 1984). Exploratory research, the
method that suits this type of research, was adopted. Describing a phenomenon of interest and finding
relationships among various factors are commonly categorized into exploratory research (Reeves, Higgins,

56
Ramsay, Shea, Tugwell, & Wells, 2013). New theoretical insights are drawn inductively via the use of
exploratory research methodology qualitatively for deeper understanding of a phenomenon in information
systems research (Punch, 1998; Walsham, 2006; Venkatesh, Brown, & Bala, 2013). In this research work,
finding relationships, mapping, integration, and synthesis formulate exploratory research from foundational
decision theories. This meets research goals of this paper in revealing existing theoretical perspectives on
decision theories, process, and analysis and creating a decision model and application of the model to a
business problem.
Research Findings
The analysis of decision theories from the foundational theories of decision-making allows codifying into
decision attributes, goals for the underlying theories and its subjective and tangible components. This helps in
formulating into a decision model. Decision theories with the decision goals are summarized in Table 1.

Table 1
Decision Theories Summary Based on the Analysis
SNo Decision attribute Decision goal Input parameter Applicable decision theory
Category:
Subjective (S)
Tangible (T)
1 Utility
Overall happiness
Universal interest
Greater good
Aggregate utility
Experience
Value
Jeremy Bentham
Utilitarian theory
Multi-attribute utility
theory
S
T
2
Quantifying
subjective values
Measure values
Experience
Values
Beliefs
Bayes theoryobjective
probabilities
Require common scale
T
3 Subjective utility
Measure subjective
values
Subjective beliefs
Conditional probabilities
Bayes theorysubjective
probabilities
S
T
4 Decision phases Decision outcome
Identification
Development
Selection
Decisions in stages
S
T
5 Behavioral decisions
Subjective expected
utility
Gap between descriptive and
normative decision process
Edward Wards behavioral
theory
S
6 Decision styles Decision approach
State oriented
Memory
State independent
Memory
Role of memory
Karnis sufficient and
necessary conditions of
Bayes rule
Problem representation
S
T
7
Decision and action
paradigm
Decision to action to
decision
Mastery
Placement
Classification
Decision action continuum
S
T
8
Decision
uncertainties
Type A uncertainty
Probabilities are
unknown
Type B uncertainty
Lack of and/or
conflicting
information
Probability assignment function
Range of probable values for
the event to occur (not limited
to 0-1 range)
Normalization factor
Demster Shafer theory
S
T
9
Belief and
plausibility factors
Computing belief and
plausibility functions
Belief and plausibility functions Demster Shafer theory
S
T
Synthesis of Proposed Research Model
The decision model proposed and depicted in Figures 1 and 2, has decision problem identification and the

57
spanned decision components on which decision computing is performed. Problem identification in its entirety
is crucial to decision analysis and decision conclusions. The identified problem is then divided into independent
and dependent decision components which are sequenced. Decision factors (DFs), on a scale of 0-1 (as
probabilities or certainties and are normalized) are computed based on objective and subjective utilities along
with decision uncertainty probabilities. The decision factor is then computed using a mix of decision factors for
each of the decision component. Some of the decision components may have predecessors decision factors that
are required to calculate its decision factors. Once all the DFs are computed it is a matter of adding all of these
normalized decision factors to derive overall decision factor (ODF). So the overall ODF can be represented by
the following equation.
ODF = DF-DC-11 + DF-DC-21 + + DF-DC-MN

Figure 1. Decision model-decision components.
Computing the Individual Decision Factors
Each decision component (DC) is computed the same way, and requires stating the decision goal from
which a number of sequential questions are prepared with a scale that should be normalized. It is possible to
have different scales for different questions or groups of questions and the only requirement is to get it
normalized at the final step of the computation for each DC. The way the computation is carried out is that the
queries are prepared for subjective, objective utilities and then from these utilities filter any questions that may
Identify decision components
Identify decision problem
DC-11 DC-12 DC-1N
DC-21 DC-22
DC-2N
DC-MN
DC-M1 DC-21
.
.

.
.
.

.
.
.

.
.
.


58
have decision uncertainties due to lack of information or lack of possible probabilities. All of the decision
uncertainties are gathered for each of the decision component and are collected to create a new set of
questionnaire that contains a set of related questions relative to what was prepared as part of subjective and
objective utilities, with a set of belief and plausibility values per DST theory. The uncertain decision questions
with a belief value that indicate the value of probability for the corresponding hypothesis and the plausibility
can be inferred by subtracting sum of all the values that support the hypothesis from 1. The following are the
steps to computing the decision values that make up of a decision factor for each DC.
Create a set of questions for all of the participating decision makers that contain the same questions for
both subjective and objective probabilities. Questions have possibility for UNKNOWN as an answer.
(1) Create objective utility questions with masses for each question, aggregate, and normalize the result;
(2) Create subjective utility questions with masses for each question, aggregate, and normalize the result;
(3) Collect all of the questions with answers UNKNOWNthese become the uncertain questions for
each of which require a related question or questions that have a possibility of an answer with probabilities;
(4) Aggregate all of the values in steps from 1 through 3 with normalized values to provide a DF for each
of the DC;
(5) Compute the ODF from these DFs obtained by adding.

Figure 2. DF Computation for each decision component DC-MN.

Application of Research Model to Information Technology Outsourcing
Outsourcing in organizations has been an old management mantra for leveraging resources, to balance
budgetary concerns and to plan both tactically and strategically. Outsourcing is not new to IT and had started
decades ago and continues to be in place in organizations and for the research in this paper the problem of
Decision uncertainties Objective utility Subjective utility
Subjective expected utility Belief and plausibility functions
Decision Factor (DF)
(Normalized)
DF-DC-MN

DC-MN

59
outsourcing is selected to demonstrate an example of how this complex and daunting decision process can be
broken down to yield better results using the proposed decision model. The problem considered is to outsource
some of the IT work to another company and the solution is to decide if it is profitable to outsource a defined
work and if so what are implications of doing so. Before we apply the decision model to this problem it is
necessary to define the problem and structure the problem precisely. The problem is to outsource a set of the
work that now is being done internally within the company. First define the specifics of the work and then
scope, time, and budget requirement. Create the questionnaire to decision makers to fill-in their opinions. Scope
and the quality of the work can be fixed as an example.
Prepare objective utility questionnairethe answers would be 0 if the budget requirement is more than
scheduled budget locally and 1 if the budget, time, and total number of hours are under a specific limit. Masses
for each question can be indicated by mqo and the answers are represented by aqo.
QO1. What is the budget allocated?
QO2. What is the time allocated?
QO3. What is the number of resources requiredrepresented in total number of hours?
Prepare subjective utility questionnaireon a scale of 1-10 and normalized to 0-1, masses for each
question can be indicated by mqs.
QS1. Are we eliminating the current positions?
QS2. Is this new work for outsourcing?
QS3. Do we need the positions locally?
QS4. Do you expect the same quality of work?
QS5. Do you need local teams to interact with outsourced teams?
QS6. Do we allow time for interactions?
QS7. Do you like the work outsourced?
QS8. Do you see benefits from this exercise?
QS9. Do you see advantages in local workforce?
Derive uncertainty questionnaire from the objective and subjective questionnaireanswers in probabilities
(0-1). Masses for each question can be indicated by mqu.
QU1. What was the budget allocated for a recent and similar project?
QU2. What was the time spent for a recent project that has similar work?
QU3. How long did it take to work on a project in the past year?
QU4. Do you agree to eliminate the current positions?
QU5. What is your experience on outsourcing work quality?
QU6. Do you like local teams to interact with outsourced teams?
QU7. Are you willing to let outside teams to help you in your work/projects?
QU8. Do you believe in working with local teams relative to remote teams?
Computation of the objective, subjective, and uncertainty values to find the overall decision factor is given
in Table 3 with parameter definition in Table 2. In this example all individual decision factors are represented
by following a single question for each of the three values (objective, subjective, and uncertainty). Decision
scenarios in organizations could be complex, however, this simple example demonstrate how the proposed
model can be used.


60
Table 2
Definitions of Parameters Used in the Computation of Decision Factors
Parameter Definition
QOx
Objective question for which answer is sought by the decision-making team member and the value assigned to
question number x
QSx
Subjective question for which answer is sought by the decision-making team member and the value assigned to
question number x
QUx
Uncertainty question for which answer is sought by the decision-making team member and the value assigned to
question number x
mqoX Mass assigned for a decision question number X for an objective question
msqsX Mass assigned for a decision question number X for an subjective question
msquX Mass assigned for a decision question number X for an uncertainty question
Oqo Combined value for all objective questions
Sqo Combined value for all subjective questions
oqX Combined value for all objective questions
PQO Probability for combined objective questions
PQS Probability for combined subjective questions
PQU Probability for combined uncertainty questions
ODF Overall decision factor for all objective, subjective, and uncertainty questionsaverage of all these
QO Representation of combined objective questions
QS Representation of combined subjective questions
QU Representation of combined uncertainty questions

Table 3
Computation of Probabilities for Overall Decision Factor
Objective value Subjective value Uncertainty value Probability
QO1 oqo1 = mqo1 aqo1
QO oqo = oqo1 + oqo2 + oqo3 PQO = oqo/(mqo1 + mqo2 + mqo3)
QS1 sqo1 = mqs1 aqs1
QS sqo = sqo1 + sqo2 + sqo3 PSO = sqo/(mqs1 + mqs2 + msq3)
QU1 uqo1 = mqu1 aqs1
QU uqo = uqo1 + uqo2 + uqo3 PUO = uqo/(mqu1 + mqu2 + mqu3)
Overall Decision Factor = ODF (PQO + PSO + PUO)/3

61
Conclusions and Further Researches
Decision theories by Jeremy Bentham, Edwards Wards, Bayesian, and Dempster Shafer are explored and
analyzed to yield relationship among objective, subjective, and uncertainty decision paradigms. The decision
theories are studied to provide dividing perspective on how the decision scenarios can be handled in
organizations for better tracking of the decisions apart from making intelligent decisions and considering
multiple angles when making these decisions. A model is created to represent the gap that usually exists in
decisions that are taken and decisions that should be taken. Risk and uncertainty are going to be present in all
decision situations and these have to be managed yield better decision outcomes.
The decision model in this paper is applied to a simple IT outsourcing exercise to demonstrate how it can
be used. Although this exercise does not attempt to have real life IT sourcing scenario it helps in understanding
how the model could be employed in order to arrive at decisions that can be more informed, track how the
decision are made, and how decisions at different levels could affect the overall decision in a complex
organizational context. The decision model can be used for each of the decision components and the decision
outcome can be reviewed before finally agreeing for the decisions and doing so will provision refined results.
The key to using the model is developing questions for the decision teams with right set of questions within
each of the areas of objective, subjective, and uncertainty values that the management considers. Each decision
component can have multiple set of questions defined and dependencies of these components on each other can
be defined. The important contribution of the paper is decision theory analysis from an organizational
decision-making perspective while identifying the importance of key elements of any decision-making process
and their role as depicted in the model. These elements fall into objective, subjective, and uncertainty domains
and important attribute of the model discussed in this paper is a balanced approach to incorporating these into
decision inputs.
The research can be extended and developed into much narrower business problem and be approached
from a domain specific and contextualized research work. The research works for future may include working
in healthcare, finance retail or others. More complex computational methods can be devised and adopted to take
care of complex decision scenarios requiring rigor in corporate environments. The quantitative research
methodology can be employed to work towards research problems involving decisions in information
technology organizations servicing core business. This can narrow down the problem towards a single and
specific problem and allow understanding the dynamics of the problem with deeper underpinnings.
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Management Studies

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