10 1 1 461 7913

ISSN 1940-1884
nternational Handbook of Academic Research and Teaching
2009 Proceedings
Volume 8
Published by: Intellectbase International Consortium
INTELLECTBASE INTERNATIONAL CONSORTIUM

Academic Conference, Las Vegas, NV, Dec. 17-19, 2009
Intellectual Perspectives & Multi-Disciplinary Foundations
Conference Proceedings
Winter 2009
PROGRAM COMMITTEE
Dr. David King
Conference Chair & Editor
Mrs. Karina Dyer
Australian Affiliate & Senior Executive
Dr. Danka Radulovic
Mr. Ben Murray
Dr. Jiri Strouhal
Academic Associate
Web Manager & Research Associate
Academic Associate
CONFERENCE ORGANIZERS & INTERNATIONAL AFFILIATES

United States
Australia
Europe
Ms. Stephanie Lucero
Mrs. Karina Dyer
Mr. Kevin Kofi
Ms. Tiara Walker
Mr. Graeme William
Mr. Benjamin Effa
Mrs. Erin Murray
Ms. Michelle Joanne
Ms. Christina Maame
Ms. Loria Hampton
Mrs. Wendy Morrell
Mr. Kenneth Obeng
www.intellectbase.org
Published by Intellectbase International Consortium (IIC) Conference Committee:

Intellectbase International Consortium, 1615 Seventh Avenue North, Nashville, TN 37208, USA
ISSN (Print):
ISSN (CD-ROM):
1940-1876
1940-1884
--------- Issued by the Library of Congress, Washington DC, USA

--------- Issued by the Library of Congress, Washington DC, USA
2009. This volume is copyright to the Intellectbase International Consortium Academic Conferences. Apart from use as
permitted under the Copyright Act of 1976, no part may be reproduced by any process without prior written permission.
EXECUTIVE EDITORIAL BOARD (EEB) AND REVIEWERS TASK PANEL (RTP)

Dr. David White
Roosevelt University, USA
Dr. Dennis Taylor

RMIT University, Australia
Dr. Danka Radulovic

University of Belgrade, Serbia
Dr. Harrison C. Hartman

University of Georgia, USA
Dr. Sloan T. Letman, III

American Intercontinental University, USA
Dr. Sushil Misra

Concordia University, Canada
Dr. Jiri Strouhal

University of Economics-Prague, Czech Republic
Dr. Avis Smith

New York City College of Technology, USA
Dr. Joel Jolayemi

Tennessee State University, USA
Dr. Smaragda Papadopoulou

University of Ioannina, Greece
Dr. Xuefeng Wang

Taiyun Normal University, China
Dr. Burnette Hamil

Mississippi State University, USA
Dr. Jeanne Kuhler

Auburn University, USA
Dr. Alejandro Flores Castro

Universidad de Pacifico, Peru
Dr. Babalola J. Ogunkola

Olabisi Onabanjo University, Nigeria
Dr. Robert Robertson

Southern Utah University, USA
Dr. Debra Shiflett

Dr. Sonal Chawla

Panjab University, India
Dr. Cheaseth Seng

Dr. Jianjun Yin

Jackson State Univerrsity, USA
Dr. R. Ivan Blanco

Texas State University San Marcos, USA
Dr. Shikha Vyas-Doorgapersad

North-West University, South Africa
Dr. Tahir Husain

Memorial University of Newfoundland, Canada
Dr. James D. Williams

Kutztown University, USA
Dr. Jifu Wang

University of Houston Victoria, USA
Dr. Tehmina Khan

Dr. Janet Forney

Piedmont College, USA
Dr. Werner Heyns

Savell Bird & Axon, UK
Dr. Adnan Bahour

Zagazig University, Egypt
Dr. Mike Thomas

Humboldt State University, USA
Dr. Rodney Davis

Troy University, USA
Dr. William Ebomoyi

Chicago State University, USA
EXECUTIVE EDITORIAL BOARD (EEB) AND REVIEWERS TASK PANEL (RTP) (Continued)
Dr. Mumbi Kariuki
Nipissing University, Canada
Dr. Khalid Alrawi

Al-Ain University of Science and Technology, UAE
Dr. Mohsen Naser-Tavakolian

San Francisco State University, USA
Dr. Joselina Cheng

University of Central Oklahoma, USA
Dr. Rafiuddin Ahmed

James Cook University, Australia
Dr. Natalie Housel

Dr. Regina Schaefer

University of La Verne, USA
Dr. Nitya Karmakar

University of Western Sydney, Australia
Dr. Ademola Olatoye

Dr. Anita King

University of South Alabama, USA
Dr. Dana Tesone

University of Central Florida, USA
Dr. Lloyd V. Dempster

Texas A & M University - Kingsville, USA
Dr. Farhad Simyar

Dr. Bijesh Tolia

Dr. John O'Shaughnessy

San Francisco State University, USA
Dr. John Elson

National University, USA
Dr. Stephen Kariuki

Nipissing University, Canada
Dr. Demi Chung

University of Sydney, Australia
Dr. Rose Mary Newton

University of Alabama, USA
Dr. James (Jim) Robbins

Trinity Washington University, USA
Dr. Mahmoud Al-Dalahmeh

University of Wollongong, Australia
Dr. Jeffrey (Jeff) Kim

University of Washington, USA
Dr. Shahnawaz Muhammed

Fayetteville State University, USA
Dr. Dorothea Gaulden

Sensible Solutions, USA
Dr. Brett Sims

Grambling State University, USA
Dr. Gerald Marquis

Dr. Frank Tsui

Southern Polytechnic State University, USA
Ms. Katherine Leslie

Dr. John Tures

LaGrange College, USA
Dr. David Davis

The University of West Florida, USA
Dr. Mary Montgomery

Jacksonville State University, USA
Dr. Peter Ross

Mercer University, USA
Dr. Frank Cheng

Central Michigan University, USA
Dr. Van Reidhead

University of Texas-Pan American, USA
Dr. Vera Lim Mei-Lin

The University of Sydney, Australia
Dr. Denise Richardson

Bluefield State College, USA
Dr. Robin Latimer

Lamar University, USA
Dr. Reza Vaghefi

University of North Florida, USA
Ms. Alison Duggins

Dr. Jeffrey Siekpe

Dr. Michael Alexander
University of Arkansas at Monticello, USA
Dr. Greg Gibbs

St. Bonaventure University, USA
Dr. Kehinde Alebiosu

Dr. Mike Rippy

Dr. Gina Pipoli de Azambuja

Universidad de Pacifico, Peru
Dr. Steven Watts

Pepperdine University, USA
Dr. Andy Ju An Wang

Dr. Ada Anyamene

Nnamdi Azikiwe University, Nigeria
Dr. Edilberto Raynes

Dr. Nancy Miller

Governors State University, USA
Dr. Dobrivoje Radovanovic

Dr. David F. Summers

University of Houston-Victoria, USA
Dr. George Romeo

Rowan University, USA
Dr. Robert Kitahara

Troy University Southeast Region, USA
Dr. William Root

Augusta State University, USA
Dr. Brandon Hamilton

Hamilton's Solutions, USA
Dr. Natalie Weathers

Philadelphia University, USA
Dr. William Cheng

Dr. Linwei Niu

Claflin University, USA
Dr. Taida Kelly

Dr. Nesa LAbbe Wu

Eastern Michigan University, USA
Dr. Denise de la Rosa

Grand Valley State University, USA
Dr. Rena Ellzy

Dr. Kimberly Johnson

Auburn University Montgomery, USA
Dr. Kathleen Quinn

Louisiana State University, USA
Dr. Sameer Vaidya

Texas Wesleyan University, USA
Dr. Josephine Ebomoyi

Northwestern Memorial Hospital, USA
Dr. Pamela Guimond

Dr. Douglas Main

Eastern New Mexico University, USA
Dr. Vivian Kirby

Kennesaw State University, USA
Dr. Sonya Webb

Montgomery Public Schools, USA
Dr. Randall Allen

Southern Utah University, USA
Dr. Angela Williams

Alabama A&M University, USA
Dr. Claudine Jaenichen

Chapman University, USA
Dr. Carolyn Spillers Jewell

Fayetteville State University, USA
Dr. Richard Dane Holt

Eastern New Mexico University, USA
Dr. Kingsley Harbor

Jacksonville State University, USA
Dr. Barbara-Leigh Tonelli

Coastline Community College, USA
Dr. Joan Popkin

Dr. William J. Carnes

Metropolitan State College of Denver, USA
Dr. Chris Myers
Texas A & M University Commerce, USA
Dr. Faith Anyachebelu

Dr. Kevin Barksdale

Union University, USA
Dr. Donna Cooner

Colorado State University, USA
Dr. Michael Campbell

Florida A&M University, USA
Dr. Kenton Fleming

Dr. Thomas Griffin

Nova Southeastern University, USA
Dr. Zoran Ilic

Dr. James N. Holm

Dr. Edilberto A. Raynes

Dr. Richard Dane Holt

Veterans' Administration, USA
Dr. Cerissa Stevenson

Colorado State University, USA
Dr. Rhonda Holt

New Mexico Christian Children's Home, USA
Dr. Donna Stringer

Dr. Yu-Wen Huang

Spalding University, USA
Dr. Lesley M. Mace

Auburn University Montgomery, USA
Dr. Christian V. Fugar

Dillard University, USA
Dr. Cynthia Summers

Dr. John M. Kagochi

Dr. Barbara-Leigh Tonelli

Coastline Community College, USA
Dr. Yong-Gyo Lee

Dr. Rehana Whatley

Oakwood University, USA
Dr. George Mansour

DeVry College of NY, USA
Dr. Jianjun Yin

Jackson State University, USA
Dr. Peter Miller

Indiana Wesleyan University, USA
Dr. Carolyn S. Payne

Dr. Ted Mitchell

University of Nevada, USA
Dr. Veronica Paz

Dr. Alma Mintu-Wimsatt

Texas A & M University Commerce, USA
Dr. Terence Perkins

Veterans' Administration, USA
Dr. Liz Mulig

Dr. Dev Prasad

University of Massachusetts Lowell, USA
Dr. Robert R. O'Connell Jr.

JSA Healthcare Corporation, USA
Dr. Kong-Cheng Wong

Dr. P.N. Okorji

Dr. Azene Zenebe

Bowie State University, USA
Dr. James Ellzy

Dr. Sandra Davis

The University of West Florida, USA
Dr. Padmini Banerjee

Delaware State University, USA
Dr. Yvonne Ellis

Columbus State University, USA
Dr. Aditi Mitra
University of Colorado, USA
Dr. Elizabeth Kunnu

Dr. Myna German

Delaware State University, USA
Dr. Brian A. Griffith

Vanderbilt University, USA
Dr. Robin Oatis-Ballew

Mr. Corey Teague

Middle Tennessee State University, USA
Dr. Dirk C. Gibson

University of New Mexico, USA
Dr. Joseph K. Mintah

Azusa Pacific University, USA
Dr. Susan McGrath-Champ

Dr. Raymond R. Fletcher

Virginia State University, USA
Dr. Bruce Thomas

Athens State University, USA
Dr. Yvette Bolen

Athens State University, USA
Dr. William Seffens

Clark Atlanta University, USA
Dr. Svetlana Peltsverger

Dr. Kathy Weldon

Lamar University, USA
Dr. Caroline Howard

TUI University, USA
Dr. Shahram Amiri

Stetson University, USA
Dr. Philip H. Siegel

Augusta State University, USA
Dr. Virgil Freeman

Northwest Missouri State University, USA
Dr. William A. Brown

Jackson State University, USA
Dr. Larry K. Bright

University of South Dakota, USA
Dr. M. N. Tripathi
Xavier Institute of Management Bhubaneswar, India
Dr. Barbara Mescher

Dr. Ronald De Vera Barredo

Dr. Jennifer G. Bailey

Bowie State University, USA
Dr. Samir T. Ishak

Grand Valley State University, USA
Dr. Julia Williams

University of Minnesota Duluth, USA
Dr. Stacie E. Putman-Yoquelet

Mr. Prawet Ueatrongchit

University of the Thai Chamber of Commerce, Thailand
Dr. Curtis C. Howell

Georgia Southwestern University, USA
Dr. Stephen Szygenda

Southern Methodist University, USA
Dr. E. Kevin Buell

Augustana College, USA
Dr. Kiattisak Phongkusolchit

University of Tennessee at Martin, USA
Dr. Simon S. Mak

Southern Methodist University, USA
Dr. Reza Varjavand

Saint Xavier University, USA
Dr. Ibrahim Kargbo

Coppin State University, USA
Dr. Stephynie C. Perkins

Mrs. Donnette Bagot-Allen

Judy Piece Monteserrat, USA
Dr. Robert Robertson

Saint Leo University, USA
Dr. Michael D. Jones

Kirkwood Community College, USA
10
Dr. Kim Riordan
University of Minnesota Duluth, USA
Dr. Eileen J. Colon

Western Carolina University, USA
Mrs. Patcharee Chantanabubpha

University of the Thai Chamber of Commerce, Thailand
Mr. Jeff Eyanson

Dr. Neslon C. Modeste

Dr. Eleni Coukos Elder

Mr. Wayne Brown

Florida Institute of Technology, USA
Dr. Brian Heshizer

Georgia Southwestern University, USA
Dr. Tina Y. Cardenas

Paine College, USA
Dr. Thomas K. Vogel

Stetson University, USA
Dr. Ramprasad Unni

Portland State University, USA
Dr. Hisham M. Haddad

Intellectbase International Consortium and the Conference Program Committee express their sincere thanks to the following sponsors:
The Ellzy Foundation
The King Foundation
Tennessee State University (TSU)
International Institute of Academic Research (IIAR)
PREFACE
Intellectbase International Consortium (IIC) is a professional and academic organization dedicated to advancing and
encouraging quantitative and qualitative, including hybrid and triangulation, research practices. This volume contains articles
presented at the Winter 2009 Intellectbase International Consortium Academic Conference in Las Vegas, NV USA, Dec. 17-19.
The conference provides an open forum for Academics, Scientists, Researchers, Engineers and Practitioners from a wide
range of research disciplines. It is the eigth volume produced in a unique, peer-reviewed multi-disciplinary format and
intellectual foundation (See back cover of the proceedings).
Intellectbase International Consortium is responsible for publishing innovative and refereed research work on the following hard
and soft systems related themes Business, Education, Science, Technology, Management, Administration, Political and
Social (BESTMAPS). The scope of the proceeding (IHART) includes: literature reviews and critiques, data collection and
analysis, data evaluation and merging, research design and development, hypothesis-based creativity and reliable data
interpretation.
The theme of the proceeding is related to pedagogy, research methodologies, organizational practice, ethics, accounting,
management, leadership, policy and political issues, health-care systems, engineering, social psychology, eBusiness,
marketing, technology and information science. Intellectbase International Consortium promotes broader intellectual resources
and exchange of ideas among global research professionals through a collaborative process.
To accomplish research collaboration, knowledge sharing and transfer, Intellectbase is dedicated to publishing a range of
refereed academic Journals, book chapters and conference proceedings, as well as sponsoring several annual academic
conferences globally.
Senior, Middle and Junior level scholars are invited to participate and contribute one or several article(s) to the Intellectbase
International conferences. Intellectbase welcomes and encourages the active participation of all researchers seeking to
broaden their horizons and share experiences on new research challenges, research findings and state-of-the-art solutions.
SCOPE & MISSION
Build and stimulate intellectual interrelationships among individuals and institutions who have interest in the research
discipline.
Promote the collaboration of a diverse group of intellectuals and professionals worldwide.
Bring together researchers, practitioners, academicians, and scientists across research disciplines globally - Australia,
Europe, Africa, North America, South America and Asia.
Support governmental, organizational and professional research that will enhance the overall knowledge, innovation
and creativity.
Present resources and incentives to existing and new-coming scholars who are or planning to become effective
researchers or experts in a global research setting.
Promote and publish professional and scholarly journals, handbook, book chapters and other forms of refereed
publications in diversified research disciplines.
Plan, organize, promote, and present educational prospects - conferences, workshops, colloquiums, conventions
for global researchers.
LIST OF AUTHORS
Last Name
First Name
Institution
State
Country
Bretherton
Phil
Charles Darwin University
NT
Australia
Brown
Christopher J.
University of North Florida
FL
USA
Buchanan
June
Macquarie University
NSW
Australia
Burke
Rachel
University of Newcastle
NSW
Australia
Campbell
Jeffrey
University of Tennessee
TN
USA
Chang
Phillip
Aramis Technology LLC
CA
USA
Chavez
Joseph
Nova Southeastern University
FL
USA
Chawla
Sonal
Panjab Univeristy
Cherrie
Matt
Azusa Pacific University
Chiu
Shao-I
Taipei College of Maritime Technology
Taiwan
Choi
Chang kon
Chonbuk National University
Korea
Civi
Emin
University of New Brunswick
Canada
Costello
Carol
TN
USA
Curci
Ernie
World Disney World Company
FL
USA
Dandy
Roscoe
FL
USA
Deari
Fitim
South East European University of Tetovo
Dence
Thomas P.
Ashland University
OH
USA
DiPaolo
Peter T.
FL
USA
Douglass
Richard L.
Eastern Michigan University and

Ashesi University
MI and
ACCRA
USA and
GHANA
Dygos
Derek Kenneth
Elston
Frank
Metropolitan State College of Denver
Erkan
Birol
University of Kilis 7 Aralik
Ferrer
Mario
Central Queensland University
QLD
Australia
Geertsen
Reed
Utah State University
UT
USA
Geng
Lifeng
Lakehead University
ON
Canada
India
CA
USA
Macedonia
Canada
CO
USA
Turkey
LIST OF AUTHORS (CONTINUED)

Last Name
First Name
Institution
State
Country
Gomez
Ramon
Florida International University
FL
USA
Griffin
Thomas E.
FL
USA
Haddad
Hisham M.
Kennesaw State University
GA
USA
Hansen
David E.
Texas Southern University
TX
USA
Hansen-Brown
Laura J.
Webster University
FL
USA
Haq
Farooq
QLD
Australia
Harris
Alan
FL
USA
Hu
Hsiu-Yuan
Jackson
Carl
Cameron University
OK
USA
Jasani
Hetal
Northern Kentucky University
KY
USA
Jones
Michael
UNIVERSITY OF WOLLONGONG
NSW
Australia
Jung
Wookyung
Changwon National University
Korea
Jung
Jongyun
Korea
Kim
Jiekwan
Korea
King
Anita H.
University of South Alabama
AL
USA
Kroff
Michael W.
Montana State University
MT
USA
Kwon
Jasmin Hyunju
Middle Tennessee State University
TN
USA
Lee
Dongpo
Korea
Lin
Sue-Jen
I-Shou University
Taiwan
Mano
Ronald M.
Weber State University
Utah
USA
Martinez
Jose Gerardo Martinez
Universidad de Puerto Rico
PR
USA
Medhekar
Anita
CQ University
QLD
Australia
Mintah
Joseph K.
CA
USA
Norman
Scott
CA
USA
Olagbegi
Olayemi
GA
USA
ii
Taiwan
LIST OF AUTHORS (CONTINUED)

Last Name
First Name
Institution
Park
Youngjin
Inpack Global Inc.
Pfaffenberg
Carl
Stephen F. Austin State University
TX
USA
Pickler
Lee
Baldwin-Wallace College
OH
USA
Radovanovic
Dobrivoje
University of Belgrade
Serbia
Radulovic
Danka
Serbia
Reilly
Mike
MT
USA
Rim
Hong
Shippensburg University
PA
USA
Rodgers
Joel E.
FL
USA
Setaputra
Robert
PA
USA
Shafiezadehgarousi
Reza
Azad University
Saveh
Iran
Shin
Kyungwook
Korea
Singla
R. K.
Panjab Univeristy
India
Smith
Avis
New York City College of Technology
NY
USA
Smith
Lenford A.
MD
USA
Strouhal
Jiri
University of Economics Prague
Thompson
Jobecka
UT
USA
Toledo
Maria
FL
USA
Van
Dinh Thi Thanh
Vietnam National University
Weinstein
Lawrence
Cameron University
OK
USA
Wolf
Frank E.
FL
USA
Wood
Frank E.
FL
USA
Wu
Tung-Shen
Hsiuping Institute of Technology
Wu
Penn
Cypress College
CA
USA
Yao
Qingshuang
Thermo Fisher Scentific
ON
Canada
Yuan
Fang
FL
USA
iii
State
Country
Korea
Czech
Republic
Vietnam
Taiwan
LIST OF INSTITUTIONS, STATES AND COUNTRIES

Institution
State
Country
Aramis Technology LLC
CA
USA
Ashesi University
Accra
Ghana
Ashland University
OH
USA
Azad University
Saveh
Iran
CA
USA
Baldwin-Wallace College
OH
USA
Cameron University
OK
USA
Korea
NT
Chonbuk National University
Australia
Korea
CQ University
QLD
Australia
Cypress College
CA
USA
Eastern Michigan University
MI
USA
Florida International University
FL
USA
Hsiuping Institute of Technology
Taiwan
Inpack Global Inc.
Korea
I-Shou University
Taiwan
GA
USA
Lakehead University
ON
Canada
Macquarie University
NSW
Australia
Metropolitan State College of Denver
CO
USA
Middle Tennessee State University
TN
USA
MT
USA
Northern Kentucky University
KY
USA
NY
USA
iv
LIST OF INSTITUTIONS, STATES AND COUNTRIES (CONTINUED)

FL
Panjab Univeristy
USA
India
PA
South East European University of Tetovo
USA
Macedonia
Stephen F. Austin State University
TX
USA
Taiwan
Texas Southern University
TX
USA
Thermo Fisher Scentific
ON
Canada
Universidad de Puerto Rico
PR
USA
Serbia
University of Economics Prague
Czech Republic
University of Kilis 7 Aralik
Turkey
Canada
University of Newcastle
NSW
Australia
FL
USA
University of South Alabama
AL
USA
TN
USA
University of Wollongong
NSW
Australia
UT
USA
Vietnam National University
Vietnam
Weber State University
Utah
USA
Webster University
FL
USA
World Disney World Company
FL
USA
INTELLECTBASE INTERNATIONAL CONSORTIUM

Intellectual Perspectives & Multi-Disciplinary Foundations
EDUCATION
BUSINESS
SCIENCE
MULTI-DISCIPLINARY
SOCIAL
FOUNDATIONS
TECHNOLOGY
&
PERSPECTIVES
POLITICAL
MANAGEMENT
ADMINISTRATION
A Commitment to Academic Excellence.

www.intellectbase.org
TABLE OF CONTENT
LIST OF AUTHORS .............................................................................................................................................. I
LIST OF INSTITUTIONS, STATES AND COUNTRIES ...................................................................................... IV
SECTION 1: BUSINESS & MANAGEMENT
Information Asymmetry and Inter-Firm Relationships: Are there any Linkages?
Mario Ferrer, Anita Medhekar and Phil Bretherton ....................................................................................................... 1
The Interrelationship among ERP, Supplier Coordination, and Procurement Outcome: Exploratory
Findings from a Cross-National Study
Jos Gerardo Martnez Martnez ................................................................................................................................ 11
Golden Parachutes and their Effects on Organizational Financial Decision
Peter T DiPaolo, Ernie Curci and Thomas Griffin ....................................................................................................... 20
A Comparative Study of Vietnamese and American Customers Behavior in Negotiation Style and
Implications for Global Pricing Strategy
Dinh Thi Thanh Van, Lee Pickler, Frank Wolf and Thomas E. Griffin ......................................................................... 31
The Structure of Labor Market and Employment Elasticity
Chang Kon Choi ......................................................................................................................................................... 38
Market Entry Timing in Previously Closed (Communist) Markets: A Model to Analyze U.S. Companies in
the Czech Republic
Frank E. Wood, Thomas E. Griffin, Joseph Chavez and Fang Yuan .......................................................................... 44
Status of Certified Accountants in Czech and Macedonia
Jiri Strouhal and Fitim Deari ....................................................................................................................................... 49
An Overview of Corporate Governance in China
Frank Elston ............................................................................................................................................................... 55
Public and Private Partnership Approach for Applying the Tourism Marketing Mix to Spiritual Tourism
Farooq Haq, Anita Medhekar and Phil Bretherton ...................................................................................................... 63
Organizational and Personality Effects on Job Stress (The Case of Iranian Managers)
Reza Shafiezadehgarousi .......................................................................................................................................... 76
Part II - The Four Factors of Quality: Achieving the Circle of Acceptance and Satisfaction
Avis J. Smith............................................................................................................................................................... 84
The Hospital Leadership Dilemma: You Cant Look at a Frog and tell How High it Will Hop
Joel E. Rodgers, Maria Toledo and Thomas E. Griffin ............................................................................................... 90
I Dont Want to Read About You in The Paper
Ronald M. Mano ......................................................................................................................................................... 94
Cirque du Soleil
Derek Kenneth Dygos and Emin Civi ....................................................................................................................... 102
How do Consumers Categorize Innovative Products? Insights from Multi Dimensional Scaling
Michael W. Kroff and Mike Reilly .............................................................................................................................. 103
Impacts of the Financial Crises on Stock Markets: Empirical Study on the US and Asia
Hong Rim and Robert Setaputra .............................................................................................................................. 104
Revealed Comparative Advantages of Emerging Economies: A Comparative Export Performance
Analysis
Birol Erkan and Emin Civi ......................................................................................................................................... 106
SECTION 2: SCIENCE & TECHNOLOGY

Future Revenues and Cash Flow: Valuation of Wireless Technologies Adoption
Lenford A. Smith, Thomas E. Griffin and Roscoe Dandy .......................................................................................... 108
Network Security: An Undergraduate Course in Network Security for Computer Information Technology
Curriculum
Hetal Jasani .............................................................................................................................................................. 120
The Impact of Interactivity of Online Newspapers
Sue-Jen Lin .............................................................................................................................................................. 129
Combinatory Practices in Software Cost Estimation
Hisham M. Haddad and Olayemi Olagbegi............................................................................................................... 145
The Use of Computer Supported Analysis for Interview Data: A Cross-Cultural Example from the
Electronic Gaming Industry
June Buchanan and Michael Jones .......................................................................................................................... 153
Introducing Eulers Constant into the Calculus Classroom
Thomas P. Dence ..................................................................................................................................................... 163
Health Behavior, Medical Experience and Use of Alternative Medicine
Reed Geertsen and Jobecka Thompson .................................................................................................................. 169
The Use of Interactive Technology for Health Promotion by Caretakers of Preschool Children with Upper
Respiratory Infections
Sue-Jen Lin .............................................................................................................................................................. 178
Influencing Factors for Purchasing Decisions of Organic Food Products
Lifeng Geng and Qingshuang Yao............................................................................................................................ 189
Are Cognitive Abilities of Criminal Psychopaths Lower than Abilities of Non-Criminal, Normal Population?
Danka Radulovic and Dobrivoje Radovanovic .......................................................................................................... 199
Teaching Bing Maps in a College Web Programming Course
Penn Wu and Phillip Chang ...................................................................................................................................... 204
Using Technology in Large Statistics Classes
Ramon Gomez ......................................................................................................................................................... 207
A Study on Development and Economic Analysis of Recoverable Folding Multistage Plastic Box
Embedding RFID Chip
Wookyung Jung, Dongpo Lee, Kyungwook Shin, Jongyun Jung, Jiekwan Kim and Youngjin Park .......................... 211
Relations among Recreation Activity and Physical Fitness of Taiwan Adolescents
Shao-I Chiu, Tung-Shen Wu and Hsiu-Yuan Hu ...................................................................................................... 215
Project UpReach: A New Way for Health Care Delivery to the Developing World
Richard L. Douglass ................................................................................................................................................. 218
Promoting a Culture of Safety in the Vulnerable Diabetes Populations
Anita H. King............................................................................................................................................................. 219
SECTION 3: EDUCATION & SOCIAL ADMINISTRATION

Building a Virtual Learning Community to Engage Online Students: A Model for Instructors - Report of
Phase I of an Ongoing Study
Christopher J. Brown and Laura J. Hansen-Brown................................................................................................... 221
User Model for a Virtual Learning Environment
Sonal Chawla and R. K. Singla................................................................................................................................. 228
Using Online TV and Online Radio to Study Cultural Biases
David E. Hansen ...................................................................................................................................................... 233
Local Food Utilization: A Winner for the Environment and the Restaurant
Carl Pfaffenberg, Jeffrey Campbell and Carol Costello ............................................................................................ 236
College Student Anti-Semitism and Anti-Israeli Sentiment
Lawrence Weinstein and Carl Jackson..................................................................................................................... 245
The Proposed University of North Florida Environmental Hydrology Living Laboratory An Ideal
Framework for Active Learning
Christopher J. Brown and Alan Harris ...................................................................................................................... 248
The Influence of Motivation Upon Discipline in High School Water Polo
Matt Cherrie and Joseph K. Mintah .......................................................................................................................... 257
Paradigm Shift: Producing a Fashion Show with Deconstructionism
Jasmin Hyunju Kwon ................................................................................................................................................ 258
The International Student Program and Australian Higher Education: Students as Catalysts for Change
Rachel Burke ............................................................................................................................................................ 260
High Risk Sport Athletes Perceptions about Aggression
Scott Norman and Joseph K. Mintah ........................................................................................................................ 261
BUSINESS & MANAGEMENT
SECTION 1
M. Ferrer, A. Medhekar and P. Bretherton
Volume 8 Winter 2009
INFORMATION ASYMMETRY AND INTER-FIRM RELATIONSHIPS:

ARE THERE ANY LINKAGES?
Mario Ferrer1, Anita Medhekar2 and Phil Bretherton3

CQ University1, 2, Australia and Charles Darwin University3, Australia
ABSTRACT
This study investigates whether factors within transaction cost economics such as information asymmetry influence inter-firm
relationships. The research proposes that when factors such as high levels of information sharing is present; firms are more
likely to engage in more complex relationships such as collaboration and alliances than more complex and short-term oriented
relationships such as arms length. This study uses data from the Australian road freight transport industry mail survey and
interviews. The preliminary results demonstrate that due to the price driven and commoditised nature of the freight transport
industry, transactions costs via strategic information sharing, decrease as relationship becomes complex. This studys finding
demonstrate that in the sample taken from the Australian freight transport industry, information asymmetry is low if more
information is shared by the firms who are only in relationships that are at arms length. From the managerial perspective, the
study provides clear overview and awareness of inter-firm relationships TC elements specific to Australian road freight
transport industry and how to further improve the business relationships and minimise the risks and costs and overall improve
service delivery, the flow of supply chain, value creation, reduce opportunism, sharing of information and assets in road freight
transport industry.
Keywords: Inter-Firm Relationships, Transaction Costs Economics, Sharing Information, Information Asymmetry, and Freight
Transport.
INTRODUCTION
In the current business competitive environment, being able to manage a diverse array of inter-firm relationships is critical for
the success of any business. The success depends upon the good understanding of the characteristics of tight and loose
relationships such as arms length, cooperation collaboration and alliances. It is equally important to examine the various
transaction cost elements which influence the business relationships when making decisions about what type of relationships
firm should engage in. Firms seek to participate in any type of business relationship if the transaction costs are minimised
whether in a pure market economy or hierarchies and that efficient governance results in competitive advantage (Williamson
1991). Firms in industries such as freight transport choose to engage in either complex relationships to share critical
information, assets and risk to minimise transaction costs and improve business performance (Dyer 1997) or in loose
relationships to minimising switching costs, long term risk and assets commitment.
Freight movement is a vital activity for both the economy and business, as an efficient and effective transport system facilitates
international trade, thereby increasing economic efficiency through gains in trade and specialization (Banister, Stead et al.
2000). In Australia, transport plays a significant role as products need to be moved across long distances because of the size
of the country (7,686,850 sq km) and the dispersion of its raw materials, production and consumption centres. Road freight
carriers in developed economies such as Australia are not only integrating in reaction to the need for scope, scale, and size in
a market measured by competitive networks, but also to respond to other factors, including globalisation of businesses, and
deregulation (Everett 2002; Robinson 2002). Integration strategies, forced to a large degree by mergers and acquisitions, have
been steadily transforming the freight industry through substantial integration in all areas of the supply chains (Harrison 1999;
Burnett 2002) and this has left a few dominant manufacturing and retailing groups. The road freight industry, which operates in
an environment with very slim profit margins and high volume, has been part of this pattern. Concentration within modes, such
as road; rail; air; and sea, in the freight industry has resulted in the main volumes of freight being transported by a fewer large
carriers, as carriers gain economies and shippers gain leverage (Janelle and Beuthe 1997).
In Australia, the freight industry has remained fragmented but its individual sectors are becoming increasingly concentrated
although in recent years some multimodal operators such as Patrick and Toll logistics have emerged. The road sector which
dominates the transport industry (80 percent of value) had a four-firm concentration ratio of eight percent (Australian Bureau of
1
Statistics 2001; Murray 2002). The Four Firm Concentration Ratio, in this sector, has changed from 13.3 percent in 1998 to
eight percent in 2000 due to ownership rationalisation which means that the road sector is progressively concentrating (Everett
2002). However, small trucking firms with one or two trucks represent almost 65 percent of the industry participants and
account for nearly 12 percent of the industrys operating income while the sales of the top four firms account for only 15 percent
of the market share (Bureau of Transport and Regional Economics 2003). This indicates that the trucking industry is not
homogenous; it approximates perfect competition because it has minimal entry barriers, a large number of firms, and its small
independent truckers are mainly price takers in the freight industry (Ironfield 2001; Bureau of Transport and Regional
Economics 2003).
Transaction cost economics (Williamson 1985, 1996) firm relationships (Dwyer and Oh 1987; Heide and John 1992) advocate
that firms can address issues such as information asymmetry by engaging in relationships that are characterised by sharing
information, resources and risk. This is applicable to industries where product and service differentiation plays a vital role.
Nevertheless, extending the findings of research conducted in these industries might be challenging when applied to price
driven and commoditised industries such as the road freight transport. This paper aims to address this gap by explaining the
existence, variation and inter-relatedness between the elements of transaction costs economics and the formation of different
types of relationships.
This paper is structured as follows. The first section of the paper provides a background to the road freight transport industry
and the research. Section two puts forward a literature review specific to the theory of the firm and transaction cost theory and
one of its significant elements, information asymmetry. In addition, section two explores the various types of inter-firm
relationships first proposed by the relationships marketing literature; however our study focuses on the four (4) types of interfirm relationships as identified in the supply chain literature namely: arms length relationship, cooperative agreements,
collaboration and alliances. Further it recognises that the transaction cost theory is applied beyond the discipline of economics
and provides a critical analysis of an interplay between the transaction cost (TC) elements and the types of inter-firm
relationships specific to road freight transport industry and based on this, a research proposition was made: P1- the lower the
information asymmetry, the closer the type of inter-firm relationship freight firms engage in; Section three explains the research
methodology applied by gathering the quantitative data thorough a self administered questionnaire of inter-firm relationships
operating in the Australian road freight transport industry. Road freight transport was chosen as the research setting in
particular to examine inter-organisational relationships, since this is an industry in which inter-firm relationships, in many cases,
are exhibiting competitive patterns but face problems of survivability because profit margins are becoming much tighter over
time. Section four explains the findings of the research while section five provides some discussion and conclusions specific to
Australian road freight transport industry.
LITERATURE REVIEW
The Australian road freight transport industry has never been without challenges especially in the post deregulated
environment. While in the past many of the challenges were physical and related to the harsh physical environment, current
challenges relate to microeconomic reform, corporatisation and privatisation of the national freight as well as international
freight transport market so the change is pervasive and transforming given the dynamic nature of the business environment. It
is an industry that is extraordinarily complex and vital to the economy and has on its own an enabling role in the supply chain.
Achieving breakthrough improvements in supply chain performance requires a different approach to manage relationships. In
todays freight industry, creating this different way of doing business may be, in some cases, a matter of survival. In other
cases, different approaches to relationships have been adopted to build sustainable competitive advantage, maximise asset
utilisations, retain control of business, and increase profitability.
Participants in the supply chain such as road freight service providers need to realise the importance of understanding the
transaction costs elements that influence the establishment of inter-firm relationships to leverage the complementary strengths
of other firms within their supply chain and function efficiently.
Theory of the Firm

Ronald Coase ( 1937) famous paper on The nature of the Firm, questions the existence of perfect market and argues that
there are transaction costs involved in using the price mechanism in organising the production and determining the price and
economic activity within the institution of the firm. It has been asserted that there is no one theory of inter-firm relations
(Galaskiewicz 1985), rather a compilation of theories can help to better understand inter-firm relationships. Foss (1996) argued
that a theory of the firm is a theory that addresses the issues of the existence, the boundaries, and the internal organization of
the firm. Likewise, there are important questions related to what a firm does, how its boundaries are determined, or why a firm
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plays a significant role in economic activities. These questions have been addressed by researchers such as Jensen and
Meckling (1976); Coase (1991); Barney (1991); Williamson (1991); and Teece and Pisano (1994) in their contributions to the
theory of the firm. This theory can be found within the broader analysis of economic organization (Williamson 1975; Ouchi
1980; Podolny 1994) which has attempted to explain the variety of institutional arrangements in the economy and the
conditions that create them.
One of the conditions that firms need to take into consideration when selecting the right business partner is to minimise the
transaction costs of obtaining inputs to produce outputs efficiently (Williamson 1985; Williamson 1991; Artz and Norman 2002).
In order to minimise the cost of producing each unit of service, firms have to operate at the minimum cost function, along with
making sure that inputs such as skilled workers maximise their efforts to improve operational effectiveness. On the other hand,
the firm could still operate at a cost which is above the minimum cost function, given that the firm has the right mix of inputs.
This can occur if the firm obtains the inputs at the lowest cost, along with the workers maximising their potential skills to provide
the service. Optimal inputs can be acquired in three ways which include spot exchange, legal contract and vertical integration
(Williamson, 1996).
Spot exchange, where an informal relationship between a buyer and seller is established in which neither of the party is bound
by any legal or formal relationship between them and buyer can purchase from many suppliers (Gibbons and Murphy 1990;
Lewis and Sappington 1991). Relationships at arms length within the trucking industry are often characterised by spot
exchanges because of the commoditised nature of the industry. Legal Contracts is a formal relationship between a particular
buyer and seller (with input suppliers) and clearly outlines the agreed terms and conditions for exchange to take place over a
period of time (Klein 1978; Lewis and Sappington 1991). However, contracts clearly outlines the obligations of two parties and
are costly to write, incurring high transaction costs, not necessarily taking into account all other unforseen contingencies and
hence can be incomplete but does reduce opportunism and also provide incentives for relationship specific investment.
Vertical Integration is an arrangement where the firm produces the input to make the final output, leading to bureaucratic costs,
delay, diseconomies of scale with large organisations, and they also cannot reap the benefit of specialisation in terms of
purchasing the input from other supplier. Thus vertical integration should be the last option when spot exchange and contracts
fails (Coase 1937).
Transaction Cost Theory

Transaction cost (TC) analysis originated from the field of institutional economics (Coase 1937). However, its application and
reasoning is credited and associated to works of Williamson (1985), and constantly being built on and applied to other
disciplines and critiqued by Ghoshal and Moran (1996); Osborn and Hagedoorn (1997); Jones (2001). Theory acknowledges
that organisations incur costs to gather information about the environment, switching business partners and protecting interests
from opportunism (Dyer 1997). For instance, firms in relationships at arms length would benefit from low switching costs but
the transaction costs, that is, resources deployed to source alternative service providers, cannot be as low as desired (Dyer
1997; Ferrer, Hyland et al. 2007). Although, the cost of opportunistic risk and switching partners arises in collaborative
arrangements, as more assets are meant to be dedicated to the relationships, the transaction costs of activities, such as
procuring and monitoring, are minimised in the long run because negotiations and exchanges are carried out by parties that
hold similar information, thus, asymmetry of information is reduced (Dyer 1997). Finally, the costs associated with penalising
parties that underperformed in terms of agreement, are referred to as enforcement and policing costs, that is making sure that
the other party confirms to the terms of the contract, firms minimises transaction costs, and in case of breach of contract taking
appropriate legal action.
Information Asymmetry
Participants in a relationship can often face the challenge of the inability to get information and at the times they manage to get
access to it which has been related to the issue of information asymmetry. The foundation of asymmetric information was laid
by Akerlof, Spence and Stiglitz in 1970s. Asymmetric information or lemons problem arises from incomplete and different
information between the two organisations such as buyers or sellers, principle or agents involved when making business
decisions in transactions (Akerlof 1970). Under information asymmetry, one party has more or reliable information than the
other party, which can cause imbalance in power. This gives rise to problems such as adverse selection and moral hazard,
which inflates the cost of doing business. Adverse selection arises when an individual has hidden characteristics, that is one
party in the transaction knows all about itself, but which are unknown to the other party(Arrow 1963). For example, the freight
service provider knows its own performance capabilities, e.g., responsiveness and reliability, but the shipper does not. The
freight service providers capabilities are thus hidden characteristics, and in the selection process the shipper might end up
contracting a service with undesirable characteristics which can incur higher TC. Moral hazard is a situation where one party to
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a contract or relationship takes a hidden action that benefits one party at the expense of another party (Arrow 1963). An
example of moral hazard, in the freight transport industry would be disincentives created by freight insurance for shippers to
take measures that would reduce the amount of care demanded. An ignorant party has incomplete information about the
outcome of the agreed transaction and ability to retaliate for a breach of contract (Arrow 1963; Raphael, Brander et al. 1998).
In case of information asymmetry one party can enforce by law breach of contract, whereas other party cannot. This problem
can be addressed by signalling and screening methods (Stigler 1961; Akerlof 1970; Spence 1973). Signalling solution refers to
a situation where a credible signal is given to one party, the shipper, by the prospective freight service providers ability to
provide the service responsibly and reliably. Theory of screening refers to a situation where under informed party (e.g. shipper)
can induce the other party (freight service provider) to reveal information about themselves (Spence 1973; Rothschild and
Stiglitz 1976). This might suggest that a possible solution is to provide full disclosure of information to increase trust, reduce
conflict, opportunism, minimise transaction cost, and thus improve long term sustainable inter-firm relationship by having
collaboration (Williamson 1975).
INTER-FIRM RELATIONSHIPS
Inter-firm relationships have traditionally been studied through the use of the governance lens. The relationship marketing
literature was one of the first to propose a range of relationships from transactional, short duration and sharp ending by
performance, to relational exchange, longer duration and reflection on ongoing process (Dwyer, Robert et al. 1987;
Noordewier, John et al. 1990). In an attempt at enhancing the spectrum, some other authors have placed, in an intermediate
location, cooperative orientated relationships (Golicic, Foggin et al. 2003; Rinehart, Eckert et al. 2004). With more adversarial
oriented relationships, the likelihood of future exchange between two parties occurring is low. Conversely, a higher probability
of future interactions exists if the relationships are more collaboratively oriented (Kaufman, Wood et al. 2000).
Although the market response to growing competition has for some years been an increasing trend towards integration, it has
been asserted that not all supply chain relationships that companies enter need to be either collaborative or cooperative
(Duclos, Vokurka et al. 2003). Similarly other authors suggest that supply chain relationships do not need to be one size fits all
as the market and product circumstances are dynamically changing (Dyer, Cho et al. 1998; Bensaou 1999; Lambert and M.C.
2000). Each relationship is characterised by attributes which develop throughout the continuum. Thus, as relationship
management is a situational approach firms need to consider and clearly understand how they vary as one of the determinants
for a portfolio of inter-firm relationship selection and management (Olsen and Ellram 1997; Ferrer, Hyland et al. 2006). Interfirm relationship terms such as collaborative arrangements, partnerships, and alliances are too often used interchangeably by
both academics and practitioners and establishing a practical definition is problematic. This suggests that there is a need to
understand the differences and similarities between the types of inter-firm relationships and their expected benefits and
inhibitors.
The supply chain literature identifies four prominent types of inter-firm relationship. The first inter-firm relationship type
concerns contractual work arrangements defined as arms-length relationships. This type of relationship can best be described
as inter-organisational linkages characterised by dealings that are at arm's-length which involve spot transactions, often
based on auctions or auction like arrangements. In arms-length relationships, detailed written contracts prevent the parties
from operating and making decisions independently, however, in many cases, particularly in the road transport industry in
Australia, contracts are verbal (Dore 1992; Sako 1992). When contracts are written before the initiation of the relationships,
they describe each partners obligations in almost every possible scenario. A second type of inter-firm linkage relates to
cooperative agreements. Cooperation involves the coordination of similar or complementary activities carried out by
organisations in business relationships, aiming at attaining enhanced joint results or individual results with expected reciprocity,
as time progresses. The rationale behind cooperative efforts is based on arrangements to share resources, either tangible or
intangible, as well as the pursuit of other business goals, through the redesign of processes and products (Cousin 2002).
External and horizontal relationships between partners characterise cooperative agreements. Cooperative efforts differ from
arms-length relationships in that they rely on higher levels of trust (Mentzer, DeWitt et al. 2001), moderated levels of power and
are more long-term oriented. Cooperation appears to be one of the inter-firm arrangements affirmed to be directly influenced by
relationship trust between the parties and it is an important motivator for partners to share greater-risk, and coordinated
behaviours (Morgan and Hunt 1994). Partners in cooperative arrangements seek to lower transaction costs by sharing access
to goods, manpower, services and information (Polenske 2004), and research conducted in the manufacturing industry
indicates operational information may be shared among many cooperative firms, because cooperation agreements are nonexclusive.
The third component of the inter-firm relationships typology is collaboration, which appears to be closer to the alliance end of a
continuum proposed by several authors (Golicic, Foggin et al. 2003; Rinehart, Eckert et al. 2004). This type of relationship is
viewed as a more durable relationship in which parties bring organisations into a new structure with full commitment to working
more closely, with a shared mission, vision and trust. Such relationships require comprehensive planning, seamless linkages
(Krause and Ellram 1997), unified seeking of synergies and goals and well-structured communication channels operating at all
levels. Information exchange plays an important role in improving supply chain collaboration (Lambert and M.C. 2000). Risk
sharing is greater in inter-firm collaborative relationships because each participant commits its resources and power can be
unequal. Gain and risk sharing capabilities come from a willingness to share rewards and penalties across the firms involved.
While resource sharing cooperative firms have equal access to these resources, in collaborative agreements the firms tend to
gain unique and often unequal access to some of these resources (Polenske 2004). This can explain the motivation of firms to
collaborate to not only improve performance by reducing costs but also by controlling the market. Alliances are the fourth
relationship type that the literature discusses. Alliances can be described as a structured mode of inter-organisational
arrangement that involve exchange relationships between parties without necessarily having to create a new entity (Dickson
and Weaver 1997). Alliances are intended to be long-term, develop new resources or skills, and seek to enhance the
competitive position of each partner. It has been asserted that the success or failure of a supply chain alliance is driven by
commitment and trust between the parties (Whipple and Frankel 2000). Trust must exist in an alliance since there is interdependency between the parties to mutually achieve goals which are a pre-requisite for their initial creation, as a partner may
be a competitor or be involved in other alliances with a firms competitors. Likewise, trust needs to exist for allies not only to
share critical strategic information but also for each ally to consider that its long-term need will be better fulfilled (Moore 1998).
Some other attributes that motivate alliance formation are the maximisation of a companys ability to offer more attractive
services, share efficiency increases, risk or cost rationalisation and power balance.
THE INTERPLAY BETWEEN TC ELEMENTS AND INTER-FIRM RELATIONSHIPS

Transaction cost theory is applied beyond the discipline of economics (Barney 1990; Ghoshal and Moran 1996; Wang 2002;
Ziedonis 2004) to get a better understanding of business strategies and supply chain relationships. The two basic assumptions
of TC analysis (Simon 1957; Hill 1990; Rindfleisch and Heide 1997) include bounded rationality and opportunism . These two
assumptions limit the extent to which the two partners in a business relationship will behave rationally under the condition of
uncertainty. Governance mechanisms as determined by the firms and markets can minimise transaction costs depending on
the type of inter-firm relationship. In the extant literature of the firm, transaction cost elements; such as information asymmetry,
loss of resource control and transaction specific capital determines the quality, extent and type of inter-firm relationship
(Williamson 1985; Clemons and Row 1992; Clemons, Reddi et al. 1993; Dyer 1997). This study attempts to bring the
transaction costs and inter-firm relationships theories together and examines how various work arrangements in the freight
transport industry are influenced by the key elements of transaction cost; information assymetry. The degree of complexity of
business relationship usually determines the governance structure, terms of contract and resources commitment (Heide and
John 1992; Gulati 1995; Dyer 1997; Bunduchi 2005). For instance, in the manufacturing industry the more complex the relation
becomes, the higher the likelihood that some elements of transactions costs can be present (e.g., low switching costs, high
asset specificity). Nevertheless, the specific characteristics of the researched industry, i.e. freight transport industry, can play a
role in understanding how TC elements explain the development of inter-firm relationships.
Transaction cost analysis is based on the assumptions that, in case of arms length type of relationship, where there is spot
exchange, information sharing is low (high information asymmetry) or not required, as contracts are well defined, and buyers
and sellers interact in the market. It is a one off contract and both the parties are protected. Conversely, in long-term
cooperative, collaborative and alliances type of relationships there is more strategic information sharing, information asymmetry
is low and TC and opportunistic behaviour is minimised (Williamson 1979; Buvik and Halskau 2001). Market is the ideal
governance mechanism under transaction cost theory.
Proposition 1:
The lower the information asymmetry, the closer is the type of inter-firm relationship freight firms engage in.
RESEARCH METHODOLOGY
This research is undertaken with an exploratory purpose as the problem of inter-firm relationships among freight businesses
has had little previous empirical academic investigation. According to Sekaran (Sekaran 2003) exploratory study is undertaken
when there is a lack of understanding of the problem which leads to an unstructured problem design. Quantitative data were
gathered through a self administered mail questionnaire of inter-firm relationships operating in the Australian road freight
transport industry. Inferential and descriptive analysis of quantitative data will enable the researchers to examine the nature of
the relationship between different variables that measure the constructs of transaction costs (e.g. information sharing,
5
resources sharing) and inter-firm relationships. Using the surveys research technique facilitates gathering information from a
selected group of people by using questionnaires as an instrument to ask questions and record answers (Neuman 2003). Road
freight transport was chosen as the research setting to examine inter-firm relationships since this is an industry in which work
arrangements, in many cases, are exhibiting competitive patterns but face problems of survivability because profit margins are
becoming much tighter over time and lack of managerial skills to attain booth operational and transaction costs. A sample of
1000 trucking firms was identified. A total of 1000 road freight firms were contacted, via mail, in the first round of the survey. A
total of 73 usable surveys were completed, giving a response rate of 7.3 percent In order to increase the response rate, a total
of 60 road freight managers, chosen as a convenience sample, were contacted again for the second round of the survey
questionnaire. A total of 47 usable surveys were completed, giving a response rate of 52.2 percent. Data from both rounds
were combined into one sample. Therefore, based on a total of 1000 distributed, 120 were used in the study, for an overall
response rate of 12 percent. The research was designed to aim at subject respondents with knowledge about inter-firm
relationships. This demanded that the managers, managing directors or chief executive officers complete the survey.
Respondents were asked to respond to a series of questions related to factors that promote or inhibit inter-firm relationships.
Freight transport managers were required to provide a response selected from Likert-like scales to measure the independent
variables and from a numerical scale (anchored by (1) and (5)) to measure the dependent variables. Demographic information
about the company or division and the respondent were collected. The main purpose of the study was to explore the
relationships among transaction economy elements and the type of inter-firm relationship. Information asymmetry was
measured through the variable sharing information.
Sharing has been conceptualised as reciprocity, or a mutual exchange between parties. The review of the prompted this study
to identify two key dimensions of sharing in the trucking industry: sharing information, three levels were differentiated, being
operational, tactical and strategic (Mentzer, Min et al. 2000; Chantrasa 2005).The extent of sharing between members of the
road transport supply chain was measured through an 80-item Likert-type scale instrument, adapted from the extant literature,
devised to reflect the opinions of participants in the road freight transport industry regarding the importance and frequency of
sharing. Respondents were asked to indicate the frequency of use of sharing using a five point Likert-type scale (1 indicating
very frequently and 5 indicating never). They were also asked to rate the importance of sharing using a five point Likert-type
scale (1 indicating very important and 5 not very important). The internal consistency reliability test yielded Cronbachs
Alpha values of = 0.950 for Sharing importance and = 0.910 for Sharing usage.
The first step in the data analysis was to perform a factor analysis to reduce the dimensionality and to identify the most
important clusters set of items that group together while at the same time eliminating the items that are less representative.
The emerging factors clusters were named by using the previous knowledge about the theory. Next, Cronbach alpha
coefficients of the emergent factors were calculated and were used to assess convergent validity. Correlation coefficients were
computed to assess the strength and direction of the relationships between the variables and the types of inter-firm
relationships.
FINDINGS
The size of the respondent firms varied considerably. The smallest companies (12 percent) were trucking companies with an
annual turnover of less than $1 million. The largest companies (ten percent) were freight service providers with an annual
turnover of between $50.1 million and $1 billion (Figure 1). This indicates the sample is not restricted by firm size.
1% 3%
1%
3%
3%
6%
6%
Annual turnover
Annual
turnover
Annual
turnover
Less than AUD$1

Less
than
AUD$1
million
Less
than
AUD$1
million
1%
6% 12%
12%
million
AUD$1.1 million - AUD$5

million
AUD$1.1
million
- AUD$5 million
AUD$1.1 million - AUD$5 million
12%
AUD$5.1 million - AUD$10 million
AUD$5.1
million
- AUD$10 million
AUD$5.1 million
- AUD$10
million

million
AUD$10.1 million
29%
29%
29%
36%
13%
- AUD$50
AUD$50.1 million -million

AUD$100
million
million
36%
36%
AUD$50.1
million
- AUD$100
AUD$100.1
million
- AUD$500.1
million
million
million
Over
AUD$1 billion
AUD$100.1
million
AUD$100.1
million
- AUD$500.1
13%
13%
million
million
Over AUD$1 billion

Over AUD$1 billion
Figure 1: Firms size by annual turnover
- AUD$500.1
For the category of service provided, 35.9 percent of the responding firms carried heavy bulk cargo and chemicals, 19.2
percent carried containers, 13.3 percent carried refrigerated cargo, 7.5 percent shipped vehicles, and 29 percent transported
other types of cargo. Furthermore, of the entire sample, approximately 25.8 percent of respondents acted in the capacity of
CEOs, 29.2 percent were Managing Directors, 18.3 percent were Operations Manager, 3.3 percent were Owner Drivers, and
19.2 percent performed the role of Regional Manager. This is not a representative sample of the industry as some sub-sectors
were deliberately excluded. As the research was looking at businesses that were likely to be in supply chain relationships with
a variety of trucking businesses, i.e., removalists were not taken into consideration as their work arrangements are based
essentially on contract and are unlikely to form more complex relationships.
Correlation analysis has been performed to identify whether a relationship existed, and of what type, between the variables that
formed the transaction cost factor (e.g., sharing information, sharing resources) and the types of inter-firm relationships.
Table 1 shows the results of testing the variable sharing for their correlation with each of the types of relationships. The results
indicate than only the variable arms length relationships is correlated positively at a significant level (p < 0.05) with the variable
sharing information (Sharing-info). The positive coefficient associated with sharing information and arms Length (r = 0.18, p <
0.05) shows that the more freight businesses interpreted the sharing of information as being important, the more they are likely
to engage in relationships of arms length type. Interestingly, the variable sharing information was not significantly correlated
with much closer and long-term orientated relationships such as collaboration and alliances, as the theory would suggests.
These are surprising results given that any closeness in the relationships would prompt organisations to share critical
information.
Table 1:
Correlation of sharing information and inter-firm relationships
Sharing info
Arms Length
CooperativeR
CollaborativeR
Alliances
.188(*)
0.044
-0.078
0.093
Sig. (2-tailed)
0.04
0.633
0.399
0.314
120
120
120
120
Pearson Correlation
** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).
DISCUSSION AND CONCLUSIONS

This research provides insights into the transaction costs that can be examined in an important but under-researched context
that is the Australian freight transport industry. As this is an exploratory research, its preliminary results should be interpreted
with much caution. Nevertheless, some conclusions can be drawn from this study. In addressing research proposition one
which states that the lower the information asymmetry, the closer the type of inter-firm relationship freight firms engage in, is
important to note that the literature argues that sharing information is essential to minimise both information asymmetry and
transaction costs (Williamson 1979). Furthermore, high levels of information sharing can be obtained by engaging in long-term
orientated relationships such as collaboration and alliances. This studys finding demonstrate that in the sample taken from the
Australian freight transport industry, information asymmetry is low if more information is shared by the firms who are only in
relationships that are at arms length. Surprisingly, there was no evidence of significant relationship between information
sharing and long-term relationships such as cooperation, collaboration and alliances which suggest that information asymmetry
is present in these types of work arrangements, resulting in high transaction costs. The findings seem to contradict the theory
(Noordewier, John et al. 1990; Rindfleisch and Heide 1997) and reject proposition one. Nevertheless, these can be explained
by the price driven and commoditised nature of the trucking industry. Freight transport businesses, of similar characteristics as
the sample, are often considering that the service most of them provide is a commodity which can be easily procured
elsewhere so information is only shared based on what has been specified in the contract terms. Likewise, the findings also
suggests that moral hazard can be present as the result of lack of strategic information sharing (e.g., plans for growth,
acquisitions) between freight service providers. In this case, hidden critical decisions about the business relationships future
can be made preventing the ignorant party from retaliating for breach of the contract (Akerlof 1970; Raphael, Brander et al.
1998).
From the managerial perspective, the study provides clear overview and awareness of inter-firm relationships TC elements
specific to Australian road freight transport industry and how to further improve the business relationships and minimise the
risks and costs and overall improve service delivery, the flow of supply chain, value creation, reduce opportunism, sharing of
information and assets in road fright transport industry. It focuses on one proposition, but also identifies the benefits and costs
7
of close relationships and TC elements. This study also points out that in road freight transport industry given the arms length
type of relationships, the business partners shared critical information and there is bilateral dependence between the two
parties. However, there are more opportunities for switching partners in road freight transport industry, thus it is in the interest
of the managers to provide value adding service to avoid opportunism by the shippers in terms of switching partners, reliability
of service, timely delivery, knowledge and know-how and personal interactions between two parties (Ulaga and Eggert 2005).
Transport industry should monitor their own service quality, performance, reputation and delivery to prevent shippers from
switching to another freight provider, irrespective of risk owing to opportunism of switching business partner.
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10
J. G. M. Martnez
THE INTERRELATIONSHIP AMONG ERP, SUPPLIER COORDINATION, AND

PROCUREMENT OUTCOME: EXPLORATORY FINDINGS FROM A CROSSNATIONAL STUDY
Jos Gerardo Martnez Martnez
Universidad de Puerto Rico, USA
ABSTRACT
Global procurement has increased in importance exponentially, as it has become a corporate weapon to maintain or gain
market share. Organizational and environmental factors have significantly contributed on this change in procurement activities.
Hence, in todays international business dynamic, the procurement function cannot be viewed in isolation in a firm; it is
important that the procurement function operates in conjunction with the corporation, and that the procurement strategies are
consistent with corporate competitive strategy.
What's more, in the competitive global environment, to a greater extent, firms formulate procurement goals and implement
them with enterprise resource planning (ERP) and supplier coordination. Yet, despite the growing interest in the area of global
procurement, limited numbers of empirical studies, particularly cross-national studies, are available and little attention has been
paid to the competitive environment and internal enterprise resource planning (ERP) and external collaborative supplier
practices. This paper examines how do international companies implement their procurement strategic goals through ERP
systems and supplier coordination. It focuses on how a firms operational procurement outcomes demonstrate high levels of
improved performance. Also, it presents a research model that describes key constructs, their interrelationships, and empirical
tests of these relationships based on International Manufacturing Strategy Survey (IMSS) data. Theoretical and managerial
implications are discussed as well.
Keywords: Enterprise Resource Planning (ERP), Supplier Coordination, and Procurement Performance
1. INTRODUCTION
Currently, the purchasing function has changed from playing a supporting role to becoming a strategic activity, and now makes
a significant contribution to the competitive advantage of an organization (Quayle, 2002; Carr and Smeltzer, 1997; Croom and
Brandon-Jones, 2007). However, in spite of the attention paid to procurement, there is a lack of literature, particularly crossnational studies, regarding the interrelationship among ERP systems, supplier coordination, and procurement outcomes.
Considering all the changes and challenges that firms and supply chains are facing, the present research study makes an
important contribution to the extant body of literature concerning supply chain. This theoretical framework will help practitioners
and academicians in understanding how ERP systems and supplier coordination impact international companies procurement
outcomes. It also lays a foundation for future research.
The next section (two) of this article discusses the theory development and hypotheses investigated in this study. This will be
followed by section three, a discussion of our research methodology and section four, data analysis and results. Section five of
the article discusses the implications of the findings and conclusions. Finally, section six concludes the article with a discussion
of our research limitations and future research opportunities.
2. THEORY DEVELOPMENT
Figure 1 illustrates the research framework for this study. It depicts the relationship among supplier coordination, ERP system,
and procurement performance. ERP system influences both supplier coordination and procurement performance. Supplier
coordination, in turn, influences on procurement performance. Table 1 provides constructs definition and is followed by the
theoretical foundation for the hypothesized relationships under study.
11
The Interrelationship among ERP, Supplier Coordination, and Procurement Outcome: Exploratory Findings from a Cross-National Study
Figure 1: Research Framework

Supplier
Coordination
ERP
System
Procurement
Performance
Table 1: Constructs Definition

Construct
Definition
Literature Base
ERP System
The extent to which a firm uses ERP systems to coordinate with

suppliers the integration of business processes and functions such
as material management, production planning and control, and
supply management.
Fox (2003; Al-Mashari et al. (2003); Mabert et al.

(2001); Van Everdingen et al. (2000); Edwards
et al. (2001); Bendoly and Schoenherr (2005)
Supplier
Coordination
The degree to which a firm seeks to integrate and coordinate

procurement requirements across and within business units with
suppliers who are located worldwide.
Kotabe and Murray (2004); Moncza et. al.

(2005); Faes et al (2003); Rozemeijer (2003);
Trent and Monczka (2002)
Procurement
Performance
The extent to which operational procurement outcomes

demonstrate high levels of improved performance in lead time,
cost, labor-productivity, and capacity utilization.
Gebauer et al. (1998); Quintens et al. (2006);

Craighead et al. (2007); Choi and Krause (2006);
Knudsen (2003); Fitzgerald, (1997); Rozemeijer,
(2003)
2.1. ERP System

Today's global business environments are characterized by unprecedented competitive pressures and sophisticated customers
who demand innovative and speedy solutions. Understanding and optimizing business processes is a cornerstone of success
in these fast-changing environments. Global distribution channels, numerous international plant sites, and closely integrated
sourcing arrangements have changed the way hundreds of companies do business. According to Jacobs and Bendoly (2003) a
key component of managing these organizations is Information Technology (IT). Over the past few years, many companies
have embraced a new class of planning and resource management software systems to integrate business processes and
functions such as material management, production planning and control, and supply management (Fox 2003). These package
systems are broadly classified as Enterprise Resource Planning (ERP) systems (Al-Mashari et al., 2003).
Furthermore, numerous studies have concluded ERP systems can bring benefits in operational efficiency and reduced costs to
organizations and enforce a discipline of best practice and consistency (Robinson and Wilson, 2001; Bose et al. 2008). The
suppliers have access in real time to information regarding orders, supply plans and the quality of their supplies. Once the
services offered to each supplier is the possibility of having online the entire history of its orders. In the same way, company
buyers can evaluate different offers, archive orders in a shared database and, above all, activate a series of automated
procedures during the procurement cycle, which reduce or even eliminate many of the activities, which have fewer added
values (Mabert et al., 2001; Van Everdingen et al., 2000; Edwards et al., 2001; Bendoly and Schoenherr 2005). Based on the
previous literature, the researcher suggests:
Hypothesis 1:
ERP system has a direct impact on supplier coordination.
In fact, adopting ERP systems as the primary platform for sharing and exchanging of organizational information and providing
access to it through internet technology is considered a hallmark of leading organizations (Davenport, 2000). Moreover, not
only implemented internally, but ERP systems are also being extended to include internet capability, customer relationship
management (CRM), supply chain management (SCM) and support for the electronic market places (Sammon et al., 2001).
Researchers pointed various benefits the organizations gain because of adopting ERP (Al-Mashari et al., 2003; Fox 2003).
This view is based on the idea that an ERP system is not simply a tool that provides a single output, but rather an infrastructure
that supports the capabilities of all other information tools and processes utilized by a firm. In recent series of case studies,
12
J. G. M. Martnez
Palaniswamy and Tyler (2000) and Bose et al. (2008) emphasize this point. The authors state that ERP systems provide critical
functionality by integrating information technologies relevant throughout the enterprise. Besides, the process of ERP system
implementation forces organizations to increase their understanding of their core capabilities and make necessary changes to
business processes that may otherwise have been ignored. Therefore, not only the package but also the process of
implementation should be viewed as an opportunity to attain and maintain positions as market leaders.
The possibility of connecting many-to-many in real time offered by Internet allows sellers and buyers the opportunity to
communicate and carry out transactions online. The advantage of carrying out electronic business are cost reduction, improved
productivity, and customer service and the possibility to redesign inefficient company processes and increase the management
and control of the relationships with the various players along the supply chain (Weller, 2000; Tan, 2001; Craighead, et al.
2007).
Thanks to the new web-based application, it is possible to reduce the lead time of the supply process and increase the
reliability of the entire system. Furthermore, by improving efficiency, administrative costs are reduced and the resources
dedicated to procurement are optimized (Bendoly and Schoenherr, 2005). Based on the previous literature, the researcher
suggests:
Hypothesis 2:
ERP system has a direct impact on procurement performance.
2.2. Supplier Coordination

Real global sourcing refers to the integration and coordination of procurement requirements across worldwide business units
(Monczka et al., 2005; Rozemeijer, 2003; Faes et al., 2003) and with other functional groups, particularly R&D, manufacturing
and marketing, within business units (Kotabe and Murray, 2004; Monczka et al., 2005). However, the integration and
coordination of procurement requirements across business units (external interfaces) is challenging and difficult to master
(Rozemeijer, 2003). The same can be said about the internal interfaces within individual business units.
Close cooperation inside the firm between purchasing and other departments is needed to facilitate foreign outsourcing (Mol et
al., 2004; Quintens et al., 2006). To achieve maximum procurement benefit, firms often have to challenge entrenched systems
and behaviors that work against collaborative efforts between and within business units (Trent and Monczka, 2002). This
context raises a variety of questions concerning the nature, the organization, and the impact of global sourcing. How to source
globally and how to manage a global supply base (i.e., how to develop effective business relationships with suppliers who are
located worldwide) have become critical competences (Kotabe and Murray, 2004).
In many of today's globalizing industries, procurement is one of the strategic functions with the highest potential impact on a
firm's long-term profitability (Leenders et al., 2002). Cammish and Keough (1991), Keough (1993), and Kotabe and Murray
(2004) emphasize on the importance of giving procurement a strategic role in the organization, and they agree that achieving
world-class status in procurement requires many efforts in leadership, recognition of procurements importance, and new
metrics for procurement performance. Gebauer et al. (1998) and Quintens et al. (2006) establish that effective business
relationships with suppliers impact procurement performance in term of cost, time, labor productivity, and capacity utilization.
Frohlich and Westbrook (2001) and Humphreys et al. (2005) stress the strategic importance of integrating operations with
suppliers and customers in supply chains by providing empirical evidence of the impact of upstream and downstream supply
chain integration on performance improvement. Strategic alliances are no longer a strategic option but a necessity in many
markets and industries (Praise and Henderson, 2001; Cagliano et al., 2006). Four elements of more cooperative relationship
discussed in the literature are supply base reduction, single sourcing, strategic partnerships, and early supplier involvement in
product design (Stanley and Wisner, 2002; Adenfelt and Lagerstrm (2006). Stanley and Wisner (2001) empirically test the
relationship between cooperative procurement/supplier partnerships and service quality to external customers by analyzing the
mediating effect of procurements service quality performance. Fynes and Voss (2002) provide further empirical evidence of the
impact of buyer-supplier relationships on performance by analyzing it as a moderating variable in the relationship between
quality practices and performance. Based on the previous literature, the researcher suggests:
Hypothesis 3:
Supplier coordination has a direct impact on procurement performance.
13
2.3. Procurement Performance

Easton, Murphy et al. (2002) present a summarized history of the procurement performance measurement in the literature,
supporting mainly short-term gains until the late 1980s and early 1990s. One problem with those traditional metrics where that
they worked to improve the procurement performance at the expense of other departments performance, not achieving a
global organizational measure of performance but a local measure working alone.
The global competitive environment drives organizations highly dependent on the success of supplier selection process. Any
deficiency in coordination of the process will lead to excessive delays and poor customer service (Chung et al., 2004). In fact,
suppliers are manufacturer's external organizations or business partners, and indeed their performance will decide the future
performance of the whole supply chain (Samli and Browning, 2003).
At a tactical level, procurement involves numerous activities, consisting of many material and information flows. It is not as
simple as to just convey a need from an internal customer to a supplier and deliver the item to the internal customer. Instead,
this process consists of activities that are continuously changing in intensity, duration, and quality, thus producing variations in
performance (e.g., time, cost, labor productivity, and capacity utilization), efficiency, and effectiveness of the purchasing
departments work (Craighead et al., 2007; Choi and Krause, 2006). Therefore, the key elements that should be investigated in
the procurement performance measurement system are resources, procedures, and output (Knudsen, 2003).
Porter (1980) states that procurement, as one of the functions of the firm, impacts the ability of the firm to achieve its goals,
and therefore, it impacts the firm performance. Further studies (Carr and Smeltzer, 2000) suggest the importance of achieving
higher levels of procurement performance in order to improve the firms performance. The impact of procurement performance
on firm performance is widely supported also from the practitioners point of view.
The current globalized market trend identifies the necessity of the establishment of long-term business relationship with
competitive global suppliers spread around the world. As companies are seeking ways of reducing costs, speeding time-tomarket and improving product quality, supplier performance plays a critical role in maintaining the competitiveness of value
chains (Fitzgerald, 1997; Rozemeijer, 2003). Sanchez-Rodriguez, Martinez-Lorente et al. (2003) provide evidence of a
significant positive relationship between procurement performance and firm performance using a structural equation model.
3. RESEARCH METHODS
Data were collected to test the relationship under study in 2005 during the International Manufacturing Strategy Survey (IMSS),
a global research project. The IMSS was started in 1992 to gather data related to manufacturing strategies in a global setting.
In nations where English is not commonly used, the questionnaire was translated into the local language by research
coordinators and a typical full-time university faculty in the areas of operations and supply chain management, thus ensuring
reliable translation by someone familiar with the concept of business and operations strategy practices. Further information
about the survey administration of IMSS can be found in Voss and Blackmon (1998), Frohlich and Westbrook (2001), and
Cagglino et al. (2006).
Data were collected by national research groups within the global network using a standard questionnaire. Seven hundred
sixty-one (761) plant managers or manufacturing executives completed a standard survey instrument, representing firms with
more than one-hundred (100) employees, from twenty-four (24) countries throughout the Asian Pacific, European, North
American, and South American regions. All firms included in the study are considered to be manufacturers according to
International SIC (Standard Industrial Classification) code standards. Specific manufacturing industries included: (1) fabricated
metal products, (2) machinery and equipment, (3) office, accounting, and computing equipment, (4) electrical machinery, (5)
radio, television, and communication equipment, (6) medical, precision, and optical instruments, (7) motor vehicles, trailers,
and semi-trailers, (8) other transportation equipment, and (9) other miscellaneous manufactured products. Firms were
contacted prior to mailing to assess participation interest. The response rate varied by country, however, all exceeded 25%,
which is commonly considered as adequate for a survey method research.
4. DATA ANALYSIS AND RESULTS

The purpose of the study guided the procedure to select items relevant to measure the concepts (Cagliano et al., 2006).
Exploratory factor analysis deemed suitable to identify and distinguish factors among variables (Hair et al., 2006). In addition,
all of the measures were theorized and supported by virtue of literature review as discussed earlier and displayed in Table 1.
14
J. G. M. Martnez
4.1. Measures
All the items displayed in Table 2 exhibit factor loadings. SPSS 16.0 was adopted for the analysis. Factor loadings were the
result of utilizing Principle Components Analysis extraction method with Varimax rotation. The analysis filtered factors with
Eigenvalues > 1.0, while the absolute coefficient values were suppressed at < 0.4 as these values are considered small (Hair
et al., 2006) and not indicative of cross-loadings. Factor loadings were also analyzed for convergent and discriminant validity.
Three factors emerged in the analysis, all with loadings above 0.6, an evidence of well defined structure (Hair et al., 2006).
Table 2: Factor Analysis and Reliability Results
ES
Loadings
SC
Loadings
PP
Loadings
ERP System
To what extent are the following management areas supported through the use of
Enterprise Resource Planning systems? (1-no use; 5-high use)
ES1
Material management
0.916
ES2
Production planning and control
0.852
ES3
Purchasing and supply management
0.918
Supplier coordination
How do you coordinate planning decisions and flow of goods with your key/strategic
suppliers? (Level of adoption: 1-none; 5-high)
SC1
Share inventory level knowledge
0.712
SC2
Share production planning decisions and demand forecast knowledge
0.651
SC3
Order tracking/tracing
0.726
SC4
Agreements on delivery frequency
0.623
SC5
Dedicated capacity
0.715
Procurement Performance
How has your operational performance changed over the last three years? (deteriorated
more than 10% - 1; Improved more than 50% -5)
PP1
Procurement lead time
0.742
PP2
Procurement costs
0.840
PP3
Labor productivity
0.785
PP4
Capacity utilization
0.711
Eigenvalue
2.466
2.425
1.844
Cronbach's alpha
0.893
0.751
0.772
Composite reliability
0.749
0.895
0.779
Average Variance Extracted
0.556
0.781
0.610
*Varimax rotation method was used for Factor analysis.
Reliability was tested using Cronbachs alpha. All of the factors scored adequately, well over accepted standard of 0.7
suggested by Hair et al. (2006) for confirmatory research. In addition, most factor loadings exceeded 0.7 and Cronbachs
alphas and composite reliabilities are all above 0.7, demonstrating convergent validity (Bagozzi and Yi, 1988). Factor loadings
also demonstrated adequate discriminant validity among the factors as no cross-loadings exceeding 0.4 are present.
Furthermore, all Average Variance Extracted (AVE) values are above 0.5.
4.2. Measurement Model

Analysis of Moment Structures (AMOS 5) was employed to test the measurement model as it is customary for theoretical
model testing (Hair et al., 2006). Hair et al. (2006) recommend the use of one absolute fit index, one incremental, and the chisquared result as measures for the overall fit of the measurement model. Absolute indices directly measure how well the
specified model reproduces the observed data (Kenny and McCoach, 2003; Hair et al., 2006). The Root Mean Square Error of
15
Approximation (RMSEA) test is an absolute fit index which considers values < 0.05 to demonstrate good-fit (Hair et al., 2006).
The RMSEA found in our model was 0.037, which is considerably lower than 0.05.
Incremental fit indices differ from absolute fit indices in that they examine fit of a specified model relative to some alternative
baseline model, commonly referred to as a null model. The Comparative Fit Index (CFI) and the Tucker-Lewis Fit Index (TLI)
were employed in this study as they are widely accepted as incremental model fit indices which consider values > 0.9
associated with a model that fits well (Hair et al., 2006). The CFI and the TLI obtained from the analysis of our research model
were 0.97 and 0.96 respectively, which show strong evidence of incremental fit.
The Chi-squared is a key model fit test which examines the extent that a perfect fit exists between observed and estimated
covariance matrices. Chi-squared increases as the extent that a perfect fit is not the case, as such, the objective here is for
model fit performance to result in a small Chi-squared/degrees of freedom (X2/df), typically < 3.0. It turned out to be 2.01 in our
model, which shows that the research measurement model is a good fit. All measurement model fit indices fell within the
acceptable ranges for scientific investigation. Table 3 summarizes the research model fit indices.
Table 3: Measurement Model Fit Indices
X2/df
NFI
CFI
RFI
IFI
TLI
RMR
RMSEA
2.01
0.95
0.97
0.93
0.97
0.96
0.067
0.037 (.029, .044)
4.3. Structural Model

Figure 2 summarizes the structural equation modeling (SEM) that tests the relationships posited in the study (Anderson and
Gerbing, 1988; Swink and Song, 2007). Hypothesis, namely H1, was empirically supported at a p < 0.001 level, and the other
two, namely H2 and H3 were supported at a p < 0.05 level. ERP system has a direct impact on both supplier coordination (H1)
and procurement performance (H2). Finally, supplier coordination has a direct impact on procurement performance (H3).
Figure 2: Structural Equation Model Results
H3
=0.26
t=5.46
ERP
System
H4
=0.10
t=1.95
Procurement
Performance
Supplier
Coordination
H5
=0.13
t=1.99
Fit indices: X2/df: 1.878 (X2=135.217, df=72); CFI: 0.979; NFI: 0.957; RMSEA: 0.03
5. IMPLICATIONS AND CONCLUSIONS

In the twenty-first century, it will no longer be single companies competing against each other. The individual company must
position itself into a competitive supply chain and the different supply chains will compete against each other. The big return in
ERP investment and future revenue and profit growth comes from integrating the company to its entire supply chain. A
company will compete in the market based on the overall strength of its supply chain.
This study suggested that good management of supplier involvement and an agile supply chain can lead to better supplier
performance, improved manufacturing, and product and process improvements that in turn enhance customer satisfaction and
firm performance. External environment or culture may have an impact on using ERP systems in the company. One reason is
that the use of ERP is not pervasive. If partnering suppliers do not use ERP, the company is also reluctant to use it either to
integrate supply chain across companies.
This research shows that ERPs main added value is its combination of financial control with multi-facility coordination, but ERP
does not deliver supply planning and demand and demand planning functionality for the company. The systems are not
designed to support internal supply chains. However, integration of supply chain management and ERP gives the company the
16
J. G. M. Martnez
opportunity to build effective processes with suppliers they trust, so they can get the maximum return on relationship with all
their suppliers on a continuous basis.
The main conclusion from the study is that individual company should look at an effective purchasing function as one of the
competencies essential to supply chain success. It is found that breaking the traditional decentralized system and introducing
the concept of a single, integrated plan, which a company could work together with their suppliers lead to cost reduction and
increased efficiency. This unique practice is suited to new market requirements.
6. LIMITATIONS AND FUTURE RESEARCH OPPORTUNITIES

The study extends previous scholarly research on how a firms operational procurement outcomes demonstrate high levels of
improved performance through ERP systems and supplier coordination. In doing so, a large-scale, multi-industry sample of
manufacturing firms was investigated, reducing concerns regarding generalizability. That said the study is certainly not without
limitations. First, it addresses the traditional research questions of what and how. The primary limitation of this study is
consistent with any scientific investigation employing survey method in that while this approach is very useful for hypothesis
testing, it requires further in-depth inquiry of why the findings resulted. Second, the sample under study excludes service
firms, which are fundamentally different from manufacturers given the role of the customer as a co-producer in the
product/service. As such, a rich research opportunity exists to investigate how ERP systems and supplier coordination may
impact a service firms operational procurement outcomes differently from that which occurs in a manufacturing environment.
Third, while this study examines a broad array of firms from around the world, a comparative cross-cultural study could improve
scholarly understanding of not only differences in firms approaches, but also best practices. Finally, scholarly findings should
be regularly replicated intentionally at first and later as a routine research task.
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Golden Parachutes and Their Effects on Organizational Financial Decision
GOLDEN PARACHUTES AND THEIR EFFECTS ON ORGANIZATIONAL

FINANCIAL DECISION
Peter T DiPaolo1, Ernie Curci2 and Thomas Griffin3

Nova Southeastern University1, 3, USA and World Disney World Company2, USA
ABSTRACT
Businesses owners are looking at structure from the wrong perspective. It is NOT an organization it is an ORGANISM.
Business should be like an amoeba. It must adapt and change to meet the needs of external environment and market
demands.
Because the market is composed of many biological factors, the most significant being the participants that are the
shareholders and customers, organizational decisions become very complex.
Some of the problems this paper will attempt to identify are the costs and problems associated with Golden Parachutes and do
they reinforce the culture and policies needed to support the behavior of the members of the organization in order to maximize
the wealth of the investors?
It will also talk about the effects of value driven management to promote control of the market and fend off competitors and the
dangers of failing to protect markets with continually adding value drivers and allowing competitors entry.
Finally, it will investigate whether the executive perquisites, such as golden parachutes, make a difference in maximizing
investor wealth by comparing the earnings of different firms.
INTRODUCTION
This paper addresses the Golden Parachute and their effects on corporate performance. Golden Parachutes and executive
compensation have long been the focus of many research studies. In the current business environment, it is becoming
increasingly important for shareholders to understand how theses executive perquisites affect organization decisions. Because
investors continually search for different ways to increase executives commitment to the firm, this study will investigate some
of the correlates of Golden Parachutes and executive compensation and their effect on certain financial criteria. The research
contained in this paper is an extension, not a replication of previous works on Golden Parachutes that can be a critical factor in
a firms success.
STATEMENT OF PURPOSE
The purpose of this research was to evaluate the empirical data that has been collected on the relationship between Golden
parachutes and company performance to determine to what extent Golden Parachutes predict organizational commitment and
positive company performance.
REVIEW OF THE LITERATURE

Theories that affect Golden Parachutes
Agency theory
The theory of Agency predicates the expectations of representation by executives and others that represent the interests of an
organization for the well-being of the owners. When an executive takes on the responsibilities of an organization, their prime
purpose is to support, maintain, and maximize the financial performance of all assets. This responsibility is the fiduciary
responsibility and is extended to all members of the organization that are involved with the financial activities of the
organization.
When a CEO decides to expose an organization to public investors and other sources of investment it assumes a liability to
preserve and protect those investments made by individuals and institutions external to operations and internal information.
The source of sharing this information about the operations and performance are the various financial reports that have to be
released to share any organizational information. The fiduciary responsibilities associated with the agency theory are the
20
P. T. DiPaolo, E. Curci and T. Griffin
protection that investors rely on to make certain that their investment is safe and that the organization is operating in the best
interest of the investor.
Essentially, the executive body and board of directors are ultimately responsible to the shareholders and other investors. There
seems to be some confusion by the average investor, there is a lack of concern and little activism on the part of shareholders
and owners to make sure that the executives and board members perform and deliver the expected results, and when they fail
to achieve these results there are not many alternatives or actions that can be initiated to resolve the problems or remove
members from their positions.
As owners of an organization, shareholders and other members that have ownership of an organization need to be more active
and have to demand performance and take appropriate action for rewarding and punishing the executives and board for the
results that are delivered. Failure to take action by owners will only make an organization vulnerable to takeover, merger, or
acquisition, bankruptcy and diminished returns on their investment.
The prestige
CEOs of large organizations have several real benefits. The brand that they represent is established and recognized which
allows them a certain amount of prestige. A recognized brand can also promote a trust with the general public and an
expectation on ethical perspective and fortitude. This reliance allows the CEO to operate without restraints that an organization
without this trust might. The CEO must maintain and promote the purpose and cooperation of all constituencies internal and
external to grow the organization and increase the value of goodwill. The CEO has to protect these assets from diminishing
returns and exposure to harm.
Everything from the company name to recognized properties, trademarks, and brands perpetuate value that can be converted
into financial and material gains for an organization. These elements provide much of the core of the competitive advantage
that companies use to promote, solidify, and enforce their market position and continue to expand as opportunity presents.
Just as the activities of the members of an organization can leverage these assets to maximize their value the unexpected
misgivings and misbehaving of the members and failure of control of the CEO can negate any value and cause the erosion of
the value that may have previously existed. This can cause diminishing returns and loss in value for brand and other properties
that held value for the organization.
In the events that became evident in the Enron scandal, there is a direct correlation between the behavior of the CEO and the
members of the organization and the harm to the organization, its value, and the shareholders equity. The impropriety and
violation of trust and violation of laws and procedures caused the greatest loss in value and worth in a company in the U.S. and
lead to the exposure of the dangers of power that a CEO has over the value and performance of an organization. Ken Ley is
now known infamously for his part as the CEO whose failure to protect and maintain the value for shareholders and
constituencies by making selfish financial decisions.
These activities and behaviors caused the elimination of value for all the constituencies of Enron. The local communities and
other ancillary services that relied on Enron for their survival and existence were essentially destroyed because of the harmful
effects caused by this behavior.
The unfortunate element is that this has not been an isolated incident, this has become the introduction of a stream of events
of CEO behavior that has lead to the NY attorney General Eliot Spitzer levying charges against these guys and other members
of the executive body that have been associated with these situations. This has lead to a parade of CEOs being brought up on
criminal and other charges associated with fraud and embezzlement.
The bizarre thing is that these CEO do not feel that they have done anything wrong. They fail to see how they are responsible
for protecting the organization and its integrity from the damage associated with their behavior. They have the perspective that
they own this entity and that they should be able to do what they want, when they want and how they want to with any and all
of the property contained within. This perspective destroys all shareholder value and trust and therefore it may take an
incredible effort to recover the previous levels of trust and value.
Events like these create a stigma that remains in the psychology of all the constituencies involved with the organization. Even
after the recovery and the perception of conditions, returning to normal there is still a concern in the long-term memory of
anyone that had been previously harmed or was aware of the events that did harm. This psychological dilemma is similar to the
psychological contract that employees have with their organization or the deprecation mentality that was common among
21
Americans that survived the Great Deprecation and found it difficult not to save every penny they made waiting for another
deprecation to occur. As with these other psychologies, the Executives a Thief psychology forces members of all
constituencies to expect improper behavior and cheating by the CEO. While things are going well and everyone is satisfied
there is no mention of this perspective but as soon as things are not going as planned and there is uncertainty about the
activities and performance of the organization, the rumblings and innuendo about cheating and stealing starts to become more
vocal, causing question about the legitimacy of the activities of the CEO. This is more exaggerated when members of an
organization are being laid off or having their pay cut while the CEO and other executives are still receiving bonuses and other
beneficial compensation.
These events can create the stress on an organization and the CEO that can be the distraction that a competitor can use to
penetrate the market hold and barriers that had existed by the organization and can be used as the force needed to gain
cooperation of the constituencies that had previously been an active part of the organization. This penetration by a competitor
can be converted into a barrier or obstacle for the organization to have to overcome to regain its previous position, but because
of the psychology associated with the events that lead to this situation it can never regain all of its constituents and will remain
vulnerable to continued approaches by this and other competitors because of the inappropriate actions of the CEO.
Establishing an identity
There are a number of CEOs that have found ways to differentiate their organization and secure their market position. Jack
Welch at General Electric examined the value of having all the different operations and decided that GE would be a market
leader or that operation would be sold or closed. This strategy allowed GE to focus on reinforcing their position in the market
and recapture the value of operations liquidated that were no longer essential to his plan. CEOs that have this ability and vision
continually adapt and change to meet the changes of various markets and capitalize on them to maximize value. This creates
confidence for the constituencies and promotes confidence in the executive and management teams.
Some CEOs are brought into organizations to turn the operation around and attempt to regain value in the organization. This
may require the elimination of jobs and the downsizing of the organization to reform the operation. In many cases, these CEOs
lose focus on value growth and expansion, diversification and focus on reducing the organization to a small operation that has
little or no strategy for increasing its value. This was the case for Sunbeam
It is now time for shareholders and other investors in organizations to stand up and be heard. However, what should they be
asking? How do they make intelligent suggestions and recommendations for measuring the results and compensation for the
CEO? These are difficult questions to answer. Some of the questions are as follows:
What are the problem and costs associated with Golden Parachutes?
What financial results should be the mechanisms for determining the compensation for the CEO?
How should shareholders manage their CEO?
What processes and rights do stockholders have?
Should the organization have to outperform the market?
Should the organization have an overall percentage goal as a marker?
What should government do to regulate how a CEO distributes funds from an organization when they are essentially
bankrupting it?
What funds should be legally available to them for compensation or bonus?
Economic Value Added (EVA) a new method of measuring the real profitability of an organization.
Is there a valid and reliable succession plan for the CEO?
Executive compensation
The issue of executive compensation and fiduciary responsibility has been elevated to one of the most paramount topics in
American business, law, and justice. There are indictments issued almost daily against CEOs all over the country. There is
pressure mounting not only at the state level by New York Attorney General Eliot Switzer, but also at the federal level by SEC
chairman Cox who has been receiving a great deal of criticism for salaries of CEO escalating while the organizations
performance is diminishing.
The evidence exposed about CEO behavior declares that there is something very wrong with the return on investment for
shareholders while the CEOs are seeing financial rewards that are astronomical. While shareholders of some organizations are
losing money on the value of their stock and the dividends returns of 1% or 2% are not even adequate to make the investment
acceptable, while the CEOs are receiving compensation gains of tens of percent to several hundred percent. This is causing a
22
concern surrounding the information and activities that is available for CEOs and other executives that are exercising stock
options to receive incredible financial gains while the average shareholder of the organization is incapable of having the
Upward mobility long an American right in recent years has become limited to a select few. Corporate CEOs have enjoyed
record levels of compensation and corporations have seen record profits, as more and more middle-class Americans are
experiencing stagnant wages and vanishing benefits.
CEO compensation is out of orbit: At the 350 largest public companies. The average CEO compensation is $9.2 million.
Compensation for oil and gas execs increased by 109 percent between 2003 and 2004.
In 2004, the average CEO received 240 times more than the compensation earned by the average worker. In 2002,
the ratio was 145 to 1. (Center for American Progress, 2005)
Some major concerns for shareholders is how safe is their investment, is everything being done to maximize overall value of
the assets that have been given to management, who is responsible for any failures of negative results, will the organization
meet the expectations of the shareholder and will it lead or be a top performer in its industry market. When shareholders invest
in an organization they have to decide whether to accept the risk for a return that will outperform other investments and
alternatively, risk free market securities. The expectation is that the organization that they choose will meet this expectation and
additionally espouse the values of the shareholder.
Golden Parachute Decisions

According to an article in the CCH Financial Planning Toolkit (2007), the term "golden parachute" is a wonderfully descriptive
term for a defensive measure used by a company to prevent hostile takeovers. With golden parachutes, employers enter into
agreements with key executives and agree to pay amounts in excess of their usual compensation in the event that control of
the employer changes or there is a change in the ownership of a substantial portion of the employer's assets. Top executives
are provided with a financial soft landing in the event that a takeover results in discharge. The company initiating the hostile
takeover, on the other hand, will either have to pay this associated increased costs when acquiring the corporation or back
down from the takeover.
Strategic motives
One of the strategic motives for Golden Parachutes is to promote stability for mergers. In their article in Ideas and Trends,
Kefgen and Mahoney (1997) indicate that because of the increased merger activity, executive pay and golden parachutes are
now being scrutinized more to determine their affect on stability and performance.
Beyond the IRS defined benefits, golden parachutes provide a number of other advantages. One is that they assist in attracting
and retaining top management talent. The security of a golden parachute makes it easier to attract executives to a takeover
target, and in times of heavy M&A activity, that includes just about every company. As golden parachutes become more
prevalent in employment agreements, not offering them will put companies at a strict disadvantage.
Another quality of golden parachutes is that they act as a deterrent to anti-takeover tactics. The presence of a parachute allows
management to evaluate a takeover bid more objectively. Without a golden parachute provision in place, executives might
selfishly implement costly defensive tactics to save their jobs, regardless of what is in the best interest of shareholders.
A third argument is that golden parachutes actually dissuade takeover attempts by creating a change of control liability that
renders the takeover financially unsound. Historically, this has simply driven up the cost of parachute payments. According to
our HCE survey of lodging corporations, the average parachute is now equivalent to approximately two years of total
compensation and is extended to only the top 10 to 15 executives in the organization.
Whether a golden parachute dissuades a takeover or not, it can benefit a corporation by attracting top executives, thwarting
costs associated with takeovers and promoting stability. (Kefgen & Mahoney)
Economic motives
In an attempt to curtail golden parachute activity many activist shareholders are seeking to limit the amount the plans can pay
without separate authorization. The shareholders are actually the owners of the company and they feel that they are entitled to
approve these larger optional compensation plans.
In an article in Brown Digest For Compliance Professionals (2007) abstracted from M&A Lawyer (Vol. 11, No.2, Pgs. 9-13)
corporate/securities attorney Jonathan Gordon and executive compensation attorneys Jeremy Goldstein and David Kahan
23
report that many companies seek to deflect public opprobrium or avoid bruising shareholder fights by adopting limitations
voluntarily. Most limitation policies cap severance payments at a multiple of the executive's base earnings, and then exempt
certain types of payment from the computation. The capped amounts often include cash, stock, and the present value of posttermination perquisites and periodic payments. Typical exclusions cover equity vesting and long-term bonus settlements and
other compensation earned before termination, and payments from benefit plans in which employees other than the executives
participate.
The article also claims that the adoption of a golden parachute limitation plan gives the board an opportunity to reflect on and
articulate its compensation philosophy for senior executives. In practice, the authors find, the pressure to adopt almost anything
that deters shareholder resolutions and lawsuits overwhelms the opportunity for reflection. Companies are left with plans that,
through vagueness, rigidity, and other flaws, hamper sound compensation policy and invite litigation. The chief complaint is that
policies cannot, in their typically terse wording, address the many hard-to-categorize situations, such as gross-ups for federal
excise tax on golden parachute payments and prorated bonuses for the year of termination. Moreover, if shareholders meet
only annually, they cannot approve exceptions in advance of the termination event, which (for acquisitions) often must be kept
confidential until the last minute. Any exceptions a board might authorize to a parachute capfor example, to secure a key
executive of an acquired companycould trigger shareholders' lawsuits claiming that the company violated its own policy.
(Brown Digest For Compliance Professionals, 2007)
The authors (Brown Digest For Compliance Professionals, 2007) also note that compensation policy is a matter which
corporate law leaves to the board, and a rigid compensation policy dependent on shareholder overrides may violate directors'
fiduciary duties. Companies are well advised to resist shareholders' demands to adopt such policies. Since managements must
respond to shareholder initiatives under the SEC proxy rules, it may seem prudent to offer a plan as an alternative to a
shareholder-proposed one. Yet, the authors stress, a well-articulated compensation philosophy is a better solution than
arbitrary limits on compensation. If the board nevertheless feels it must adopt a limitation on golden parachutes, the plan
should give the directors the final word on how to interpret it and how and when to grant exceptions.
In an earlier study by Berkovitch and Khanna (1991, p. 149) they developed a economic model of the acquisition market in
which the acquirer has a choice between two takeover mechanisms: mergers and tender offers. A merger is modeled as a
bargaining game between the acquiring and target firms; whereas a tender offer is modeled as an auction in which bidders
arrive sequentially an compete for the target. At any stage of the bargaining game, the acquiring firm can stop negotiating and
make a tender offer. In equilibrium, there is a unique level of synergy gains below which the acquiring firm makes only a merger
attempt as it expects to lose in the competition resulting from a tender offer. For synergy gains above this level, tender offers
can occur. However, to get tender offers, target shareholders must give their managers gold parachutes that give higher
payoffs in tender offers than in mergers.
Behavioral motives
While working stiffs suffered another real pay cut in 2005, it was another year of record-setting raises for America's CEOs. A
Pearl Meyer & Partners survey of large companies found the median CEO received a 10.3 percent raise last year to $8.4
million. In addition, those at the top got packages that were truly jaw dropping. CEO William McGuire's accumulation of $1.6
billion worth of UnitedHealth Group's stock options was so huge and fortuitously timed that the Securities and Exchange
Commission has taken an interest. Moreover, drivers around the country fumed when they learned that Exxon's retiring CEO
Lee R. Raymond not only took home $49 million just for last year but also is now collecting a pension worth $98 million. (Clark,
2006)
It has gotten so bad that a few chagrined CEOs, worried about the effect of this entire largess on investors and workers, have
started to hand back some of the goodies. One of these is Edward J. "Ned" Kelly, CEO of Mercantile Bank, who earlier this
year canceled a standard golden parachute contract that would have given him three times his annual salary and bonusa
total of $9 millionif he had sold the bank holding company. Kelly is a veteran of boardrooms who has served on the
compensation committee of Constellation Energy Group and now heads the audit committees of CSX and the Hartford. (Clark,
2006)
When asked why he does not have one he said that that he was confident he could get another job because of his unique
background and that he believed that if you are being paid for performance, there is no need to worry about finding another job.
An example of Golden Parachutes gone wrong is Bob Nardellis Reward for a job badly done at Home Depot. Nardellis
handsome reward has brought the inequities of extreme capitalism into the spotlight, says Chandran Nair. (Nair, 2007)
24
There was no surprise when Bob Nardelli decided to quit as chairman and chief executive of Home Depot. The worlds biggest
home improvement retailer suffered falling sales and a slide in its share price on his watch. What sent eyebrows arching was
the size of his payout: Nardelli walked away with $210 million.
The size of his severance package prompted editorial outrage in many of the worlds leading newspapers. It drew anger from
labor unions, which described the payout as extreme and obscene. It has moved leading investors to launch an
unprecedented campaign to curb such packages. If he has done nothing else, Nardelli has helped bring worries about
extreme capitalism to mainstream consciousness. These golden parachute agreements are the norm, with executives paid
huge sums regardless of their companys performance. They embody the kinds of excess that poison capitalism and
globalization in many peoples minds (Nair, 2007). Interestingly, these excesses are uncommon in Asia, for all its flaws. It is
Asian shareholders and business leaders vital challenge to keep them from taking root even while they clean up their
corporate governance act. (Nair, 2007).
Disney: an example.
In the investigation for how CEOs are compensated there is great concern for the behavior of the trustees of the boards of the
organizations that are awarding these salaries. It has been a concern of a number of experts and is evident as an abuse but
despite all the scandals with CEOs and financial abuses, this practice remains at the forefront of abuses that are continued. In
an article in Tulsa world, it is documented that Michael Eisner is compensated at a rate that diametrically opposes his
performance from 1991 to 2002.
For instance, Walt Disney Co.'s outgoing CEO Michael Eisner was paid $38 million above the industry average from 1991
through 2002. That's even though the company's performance declined when compared with others in the business, according
to Robert Daines, a Stanford University law professor who co-authored a study on the link between CEO skill and pay. (Beck,
2005)
For CEOs who dodge the bullet or are doing a fine job, the trappings remain handsome: Paychecks for American CEOs grew
7.2 percent in 2003 and 10 percent in 2002, according to a survey of 350 companies conducted by Mercer Human Resource
Consulting. The median CEO compensation in 2003 was $2.1 million. Mercer's latest survey, with 100 companies reporting so
far, shows their CEO pay was up 25.3 percent in 2004.
No tears. That such largeness comes with strings attached--you might be fired if you underperform--would hardly seem unfair
to the average salaried worker. "If you want job tenure, there's a great position in the mailroom," says Minow.
However, not in Disney's mailroom, at least not for Magic Kingdom kingpin Eisner. Last week he announced that his 21-year
reign over the House of Disney will end in September, a year earlier than planned. Eisner has long been a poster boy for
outlandish executive compensation, having taken home over $1 billion during his tenure at Disney. Though he transformed the
company from a sleepy but well-known brand into a media and entertainment powerhouse, the board seemed to want to know
what he had done for shareholders lately. "Eisner overstayed his welcome," says securities analyst Dennis McAlpine. "He did
very well when he had things he could do, but after he got those cleared up, what was he going to do for an encore, go after
the window washers?" (Beck, 2005)
Figure 1 shows the financial performance of The Walt Disney Company. Figure 2 is the evaluation of the gain in financial
performance of the organization and the rate in change in Michael Eisners salary. These results show a dramatic discrepancy
between organizational performance and the CEOs compensation.
Fig 1:
Financial performance
1999
2000
2001
2002
2003
2004
Percentage in change of
revenue from previous year
N/A
7.9727%
-0.6041%
0.6237%
6.8380%
13.6396%
Percentage of change in
Michael Eisner's Salary
N/A
6654.67%
43.80%
-98.62%
0.10%
628.16%
Michael Eisner's Salary
$750,000
$50,660,000
$72,848,000
$1,004,000
$1,005,000
$7,318,000
25
Fig. 2:
Change in income, salary, & revenue.

7000.00%
6000.00%
5000.00%
4000.00%
Change in Net Income
3000.00%
Change in Mr. Eisner's Salary
2000.00%
Change in Revenue
1000.00%
0.00%
-1000.00%
Change in Net
Income
2000
2001
2002
2003
2004
5.51% -46.11 0.08% 0.08% 0.31%

%
Change in Mr. 6654.6 43.80% -98.62 0.10% 628.16

7%
%
%
Eisner's Salary
Change in
Revenue
7.9727 -0.6041 0.6237 6.8380 13.639

%
%
%
%
6%
In the data above, there is valid and reliable measure or formula for evaluating the organizations financial performance to the
value or compensation of the CEO, this is a measurement of change in percentage of financial activity. In this data, a modest
or expected level of gain in the results of the organization translates into astronomical compensation for the CEO and negative
results present no real harm to the compensation. The discrepancy between the financial results and CEO compensation fails
to discern any specific, measurable, logical, or identifiable pattern that is predictable or a calculation for consistency.
In an examination of the organizational assets and value it is apparent that there is a reason for concern for shareholders and
that excess compensation for management has caused financial challenges for the organization and has diminished the value
of the stock.
In 2001 The Walt Disney Company experienced some financial difficulty and initiated a Voluntary Separation Period (VSP), this
gave members of the organization the opportunity to decide their own fate and volunteer to accept a severance package.
During this time and continuing for the next fiscal year there were additional freezes on wages for members of the organization,
but Mr. Eisners salary increased dramatically and then dropped to just over his base of $750,000.00 but still in excess of his
base salary, while other members didnt receive any rise in compensation and stock holders continued to receive only $0.21
per year from the period of 2000 through 2002.
Financial results
Shareholders invest in a firm to achieve positive financial gain. This is in either dividends or the increased value of a stock in
the growth of the stock price. As a measure of these results, shareholders will use an Expected Rate of Return calculation that
is the sum of the original cost of the stock, the dividend it pays, and the percentage gain that they are anticipating. In figure 3
below the 1999, stock price for The Walt Disney Company is calculated with varying percentage returns expected from that
time through to 2005. Based on figure 4 the results of the actual return on the investment are evident.
Fig. 3:
Expected stock price

Expected Stock Price based on actual 1999 price
1999
2000
2001
2002
2003
2004
2005
8% Rate of Return
$29.56
$31.92
$34.48
$37.24
$40.22
$43.43
$46.91
7% Rate of Return
$29.56
$31.63
$33.84
$36.21
$38.75
$41.46
$44.36
6% Rate of Return
$29.56
$31.33
$33.21
$35.21
$37.32
$39.56
$41.93
5% Rate of Return
$29.56
$31.04
$32.59
$34.22
$35.93
$37.73
$39.61
4% Rate of Return
$29.56
$30.74
$31.97
$33.25
$34.58
$35.96
$37.40
1% Rate of Return
$29.56
$29.86
$30.15
$30.46
$30.76
$31.07
$31.38
26
Fig 4:
Actual return
The REAL price of Disney Stock

on the first trading day of the year
$29.56
$29.88
$27.94
$21.45
$17.26
$23.67
$27.85
In the trend of stock value prices for The Walt Disney Company stock price from 1999 2005 (Figure 5) the results are
sporadic and inconsistent and for this period inclusive would result in a yield that translates into a negative value for their
owners. The year-to-year comparison of results has some extreme variances for each period, which would result in extremely
negative losses of extremely positive gains. This pattern would be exceptionally difficult for investors to prepare for or predict to
take advantage of for the desired gain. The CEO on the other hand has the information that would be necessary to execute a
stock option for their optimal gain.
Fig 5:
Performance items
Year
1999
Percentage change in value from

1999 to any other year
Percentage gain/loss in stock
value compared to previous year
0.00%
Over timeframe 1999-2005

gain/loss
2000
2001
2002
2003
2004
2005
1.08%
-5.48%
-27.44%
-41.61%
-19.93%
-5.78%
1.08%
-6.49%
-23.23%
-19.53%
37.14%
17.66%
6%
The performance and value of The Walt Disney Company has demonstrated unacceptable results and has performed
negatively. The risk-free rate for investing in market securities is about 4% at that level The Walt Disney Company should have
achieved a stock price of 37.40 in 2005. In figure 6 below, it is evident that it failed to achieve a positive return for investors. For
every $1000.00 invested in The Walt Disney Company stock there is a loss of $57.85 for the period of 1999 2005.
Fig 6:
Performance & value units

1999
Percentage gain/loss in stock

value
2000
2001
2002
2003
2004
2005
1.08%
-6.49%
-23.23%
-19.53%
37.14%
17.66%
Over the lifetime gain/loss
-6%
1%
4%
5%
6%
7%
8%
Loss based on expected % gain
-11.25%
-25.54%
-29.70%
-33.58%
-37.22%
-40.63%
$1000 invested in 1999 is in 2005

valued at
$942.15
1%
4%
5%
6%
7%
8%
$1,061.52
$1,265.32
$1,340.10
$1,418.52
$1,500.73
$1,586.87
Expected return on $1000

invested in 1999 on Disney Stock
to value in 2005 at a given
percentage rate
Compensation
The CEO of any organization receives a base salary; this is the compensation he receives regardless of his performance and is
the obligation of the owners or shareholders and secondary components are added based on performance of the organization.
This is essential for attracting and maintaining any executive in any organization. The secondary or additional components in
the compensation for a CEO are stock options, perquisites, profit sharing, and other incentives that are of value by the CEO.
27
The board of directors compensation committee are responsible for putting a package together that will be rewarding and
satisfactory for both the shareholders and the CEO. They are charged with the fiduciary responsibility of maximizing value for
the shareholders and acting as an agent to protect them. In the recent past, the compensation committees have not been
acting with due diligence for the shareholders. There are now some activities and behavior of the CEO that is noticeable to the
boards of directors at all organizations. In the recent legal action by ENRON shareholders suing the Board of directors and the
out of court settlement there is now concern for how a CEO should be compensated and the board can now be held
accountable for not acting carefully. (Benjamin, 2005)
First, academic research indicates that shares of companies with what are perceived to be good corporate governance
provisions tend to outperform other stocks. Second, "investors view governance as a risk factor, says Patrick McGurn,
executive vice president of Institutional Shareholder Services, which tracks corporate governance issues. The firing of CEOs
who don't perform according to shareholder expectations is discussed.
So perhaps it is no surprise that the list of ousted executives includes both those whose sin was failing to deliver on their
promises to shareholders--like Hewlett-Packard's Carly Fiorina and Disney's Michael Eisner--as well as those whose sin was,
well, real, such as Boeing's Harry Stonecipher, who lost his job after acknowledging an affair with a subordinate. Such
entrenched imperial leaders as AIG's Maurice "Hank" Greenberg are not above boardroom discipline as soon as a whiff of
scandal arises. Even the Japanese, whose love of ritual and respect for hierarchy are legendary, are getting into the act: Sony
directors replaced CEO Nobuyuki Idei with Welsh-born American Howard Stringer in an attempt to shake up the company and
boost its sagging stock price.(Benjamin, 2005)
Perquisites
As part of any compensation plan in an organization, all members receive some perquisites or benefits that are not necessarily
financial rewards. These can be intrinsic or extrinsic, or tangible or intangible but still allow the individual to exercise these
benefits based on achievement or as part of affiliation with the organization. These are personal use of organizational assets,
prestige of being the figurehead or leader of the firm, discretionary use and distribution of organizational assets, access to
organizational knowledge and information, and other activities. Although a dollar figure could be associated with these items, it
is usually not a consideration in any financial representation of compensation for the CEO.
These benefits should have an associated weight for offsetting some of the compensation for the CEO as acquisition would
have a real cost if not accessible within the organization. These items should also carry value to the CEO or should not be
available for use and should be part of a conversion into other savings or revenue for shareholders.
Association with a successful organization will provide numerous opportunities for the executive to enhance their value to the
organization while increasing their earning potential from external sources. These will have to meet with approval of a
committee to make certain that they are not in violation of the contract with the organization and will not diminish the value of
the executive to the organization.
CONCLUSIONS
The failure to reinforce value driven management elements that have diminished the value and return of the organizational
assets must be a concern for the shareholders and anyone that has authority to plan and deliver a compensation package for a
CEO. How a CEO is measured and compensated must be based a number of elements and there should be safeguards in
place to protect the interests of both the CEO and investors in the organization.
There is a formula for extracting the economic performance of an organization that should include the Cost of Capital,
Plowback Rate, ROA, ROE and change in EPS from one year to the next, and based on these element the formula for CEO
compensation can be derived.(Keown, 2003) In addition to this the potential for stock options can be allowed with placing
controls that would force the escrow of those funds for a period of one to two years to be used for preventing CEOs from using
them as an escape plan and the results of any actions that the CEO may have taken to harm to organization, which in turn
could be used to penalize the CEO and offset the harm to investors by recapturing part or all of these funds.
The behavior of the board should be of concern to the shareholders, as they are the responsible party for releasing the
financial assets that make up the compensation package and affect the other financial activities affecting the performance of
organizational assets. A process for governing the board or making them directly responsible for the harm to shareholders
must be established and enforced.
28
To present a fair and balanced presentation of the material a request of Michael Eisner to participate in this research was
offered. Due to his schedule and other conflicts, he was not able to offer any essential information that might provide insight
into the intricacies of the responsibilities of a CEO and justification for the compensation schedules that are evident in this
analysis and reflected in the position in firms across the U.S.
REFERENCES
Beck, R. (2005) News Analysis: Benchmarking inflates CEO salaries; [FINAL HOME EDITION] Associated Press. Tulsa
World. Tulsa, Okla.:
Benjamin, M, Lim, P.J. Streisand, B. (2005) Giving the boot; Boards with new backbone are dumping imperial CEOs U.S.
News & World Report. Washington: Vol.138, Iss. 11
Boyd, R. (2005) SEC to CEOs: Reveal all; New York Post, New York, N.Y
Berkovitch, E., & Khanna, N. (1991). A Theory of Acquisition Markets: Mergers vs Tender Offers, and Golden Parachutes.
Retrieved from University of Michigan, School of Business Administration, Ann Arbor Web Site:
http://http://rfs.oxfordjournals.org/cgi/content/abstract/4/1/149
Brown Digest For Compliance Professionals. (2007). Limits on Golden Parachutes May Please Activists ut Harm the Company.
Retrieved
from
Brown
Digest
for
Compliance
Professionals
Web
Site:
http://www.bowne.com/securitiesconnect/details.asp?storyID=1472http://
Burton, Christian E., and Burton, John A. (2005). How CEO Pay Took Off While Americas Middle Class Struggled. Washing
DC: Center for American Progress.
Cch Financial Planning Toolkit. (2007). Golden Parachutes. Retrieved July 30, 2007, from CCH Wolters Kluwer Buisness Web
Site: http://www.finance.cch.com/text/c40s10d490.asp
Clark, K. (2006, May 17). Thanks, but I don't want a Golden Parachute. Retrieved from US New and World Report Web Site:
http://http://www.usnews.com/usnews/biztech/articles/060517/17kelly.htm
Garsten, E. Struggles at General Motors: Kerkorian targets GM Offer. Retrieved from CNN Money.
http://www.detnews.com/2005/autosinsider/0505/09/A01-172472htm
Kefgen, K., & Mahoney, R. (1997). Golden Parachute Packages Promote Stability in Heavy Merger Market. Retrieved from
Ideas and Trends Web Site: http://www.hotel-online.com/Trends/HVS/Kefgen?ParachutesPromoteStability.html
La Monica, P. R. Icahn calls for for Time Warner Breakup, Buyout. Retrieved from Detroit News.
http://money.cnn.com/2006/02/07/news/companies/timewarner_icahn/index.htm
Nair, C. (2007). Executive Pay: Shooting Holes in Golden Parachutes. Retrieved from Ethical Corporation Magazine Web Site:
http://www.ethicalcorp.com/content.asp?ContentID=4945
Keown, A.J., Martin, J.D., Petty, J.W., Scott, Jr., D.F., (2003) Foundations of Finance; The logic and Practice of Financial
Management; 4th Ed. Prentice Hall Publishers, Pearson Education, Inc., Saddle River, N.J.,
Michael Eisner Salary Information
2004 http://www.forbes.com/static/execpay2004/LIRC3YW.html?passListId=12&passYear=2004&passListType=Person&unique
Id=C3YW&datatype=Person
2003http://www.forbes.com/finance/lists/12/2003/LIR.jhtml?passListId=12&passYear=2003&passListType=Person&uniqueId=C
3YW&datatype=Person
3YW&datatype=Person
3YW&datatype=Person
3YW&datatype=Person
3YW&datatype=Person
29
BIOGRAPHY
Ernest Curci
Ernest Curci, II is a 30 year veteran of businesses in the IT, Construction Trades and Hospitality industry. Currently he is a
Technical Specialist for The Walt Disney World Company in their IT domain in the Content Management arena. He holds an
MBA from Nova Southeastern University with a specialization in Leadership and is currently perusing a Doctorate of Business
Administration (DBA) from Kennedy Western University. As an Owner, Manager, Consultant, and Project Manager for
companies like Computer Associates and Disney as well as other SMBs and Government Agencies he has experienced the
challenges that businesses have in all delivering products and services in every situation. His education has lead him to
explore more creative and efficient solutions for the organizations that he supports
Dr Peter T DiPaolo
Dr. DiPaolo currently serves as an Assistant Professor of Finance and Economics at the H.Wayne Huizenga School of
Business and Entrepreneurship teaching courses for both the Masters of Business Administration and the Undergraduate
Business Programs and is the lead instructor for several undergraduate business courses.
Dr DiPaolo became a full-time instructor after more than 30 years as an engineer, executive, consultant, and educator in the
information technology industry where his unique combination of behavioral and quantitative skills reinforced by an advanced
education in business management, led to a proven record of bringing successful products to the marketplace, the
development of several strategic business plans, and the ability to become an effective educator and mentor. During his
corporate career, DiPaolo patented a mechanical sorting apparatus he developed for the Burroughs Corporation and was the
first in the Modular Computer Systems Corporation to be promoted to the position of Corporate Fellow, the apex in engineering
titles, recognizing his outstanding contributions to the science and technology of the company.
Dr. DiPaolos undergraduate degree (Villanova University) is in Mechanical Engineering and his MBA and DBA (Nova
Southeastern University) degrees are in Business Administration with Management as a major. His doctorate dissertation
research was on the topic of Capital Budgeting Techniques in Direct Foreign Investment.
Dr Tom Griffin
Dr Griffin is a Professor of Decision Sciences at Nova Southeastern University. He has held numerous academic leadership
positions including academic dean. He has extensive manufacturing management background and held positions as VP of
Corporate Quality System and President. He has published in Quality Management Journal, International Journal of Production
Research, Journal of Managerial Issues, etc.
30
D. T. T. Van, L. Pickler, F. Wolf and T. E. Griffin
A COMPARATIVE STUDY OF VIETNAMESE AND AMERICAN CUSTOMERS

BEHAVIOR IN NEGOTIATION STYLE AND IMPLICATIONS FOR GLOBAL
PRICING STRATEGY
Dinh Thi Thanh Van1, Lee Pickler2, Frank Wolf3 and Thomas E. Griffin4
Vietnam National University1, Vietnam, Baldwin-Wallace College2, USA
and Nova Southeastern University3,4, USA
ABSTRACT
Many researchers have sought to explain how different customers behavior might be different across cultures. One way that
customers always exercise to maximize the benefits in an offer is by negotiation. Understanding how customers negotiate will
help organizations offer appropriate pricing strategies that retain profitable businesses in the context of globalization. This
research, using the authors primary data, examines negotiation skills of American and Vietnamese customers. Two samples,
taken separately from the U.S. and Vietnam, were used to test several hypotheses. The results confirmed that cultural
differences lead to different negotiation styles and perception. Consequently, theoretical and practical implications of these
findings about global pricing strategies as well as directions for future research are discussed.
INTRODUCTION
With the tremendous growth in international markets during the last few decades, managers are increasingly trying to enter
foreign markets. Theory suggests that price sensitivity and shopping practices differ substantially between cultures (Ackerman
& Tellis, 2001). Negotiation is one shopping practice that people normally use to create and maximize opportunities in
business, in the marketplace, and with others (Levison, Smith, & Wilson, 2000). Global pricing to offer an effective marketing
mix, has to take into account how customers in different cultures evaluate high and low prices (Johansson, 2006).
Understanding a foreign customers own style, characteristics, prejudices, and how he or she would negotiate the best deal are
the key factors for a successful global manager when setting up appropriate prices.
Studies about negotiation skills across cultures have been done for years to help managers effectively respond in foreign
markets (Graham & Sano, 1984). However, few studies have been conducted in the Vietnamese market. Vietnam is a
developing country in the Southeast Asian region, which attracts masses of foreign direct investment (FDI). U.S.-related FDI
actually increased significantly in 2003, two years after implementing the Bilateral Trade Agreement in 2001 (Prasso, 2005).
Especially since Vietnam became a member of the World Trade Organization in 2007, FDI has increased steadily. In 2008, the
amount of disbursed capital soared to $11.5 billion; up 43.2% compared with 2007 (The China Post, 2008); thus demonstrating
the importance of understanding how differences in cultures, gender, experiences, and other characteristics could affect
Vietnamese customers negotiating behavior. Therefore, the study explores and compares the differences between Vietnamese
and American customers negotiation styles to find out how these are reflected within both cultures. Content provides
knowledge of implications for managers in cross-culture marketing.
The paper is divided into five sections. The first section discusses customer type, conceptual framework of cross-culture
customers negotiating behavior, and how culture differences influence a customers negotiation style. The second section
develops the studys hypotheses. The studys methodology is discussed in the third section and results are analyzed in section
four. The last part of the paper discusses theoretical and practical implications for global pricing strategies as well as
recommendation for direction of future research.
CUSTOMER TYPES
Effective managers making pricing decisions must understand buying behaviors associated with different types of customers.
One way of segmenting customers is relative price sensitivity. Customers will choose alternatives for better prices. Some
customers pick sellers based on differentiated brand value; other customers prefer to establish a long term trusted relationship
with the sellers. Nagle and Holden (2002) specified four types of customers: price, relationship, value, and convenience.
Price buyers: They prefer obtaining a deal and make the purchasing decision with the seller providing the lowest price. They
accept the lower level of quality as well. Price buyers start the buying process with the bottom line in mind. The suppliers
31
A Comparative Study of Vietnamese and American Customers Behavior in Negotiation Style and Implications for Global Pricing Strategy
cannot negotiate to offer a trade-off between price and other specs. There are several supplier strategies used such as raising
the value of the product, or effective communication to increase willingness to buy. However, research suggests that most price
buyers will never change, so managers should not try to participate with them in a price resolution without gaining any profit.
Because price buyers are usually a large market segment, negotiation takes an important role in order not to lose these tough
customers.
Relationship buyers: They already have a strong preference of one particular brand and have good experience with the brand
and do not want to try alternatives. They value a consistent product with high quality and performance. A loss in trust could
lead to switching the seller. For these buyers, maintaining the existing relationship by reminding the past performance is
critical. Trying to understand their source of value will help companies to serve and satisfy in the future. Not only focusing on
experience, managers should also place an emphasis on future commitment.
Value buyers: These seek both value and quality products. They might try negotiating different alternatives to get the best
trade-offs between price and other variables. They often are the largest market of any business. Unlike price buyers who focus
on only price, value buyers are aware of the quality of option for each price and carefully analyze the economic value in each
offering. Value buyers are also willing to try new products and services if they feel the value is acceptable. This brings more
opportunity for sellers. When negotiating with value buyers, the unique value of each sale should be pointed out. It is always
hard to convert these into loyal customers. However, negotiation skills of salespersons for each situation will be critical. By
recognizing customer needs for either lower price or commitment to the seller, salespersons will reduce much selling effort
when price negotiations occur.
Convenience buyers: These do not try to distinguish the differences between brands. They minimize the effort of evaluating
price or negotiating when time is critical. However, in order to be profitable, a company should have price differences for
different types of customers (Nagle &Holden, 2002).
High
Pain
of
Price
Value
Buyers
Price
Buyers
Convenience
Buyers
Relationship
Relationship
Buyers
Buyers
Low
Low
High
Value of Differentiation
Graph 1: Customer Segmentation by Value Perception

(Adapted from the Strategy and Tactics of Pricing, Thomas T. Nagle and Reed K. Holden. 3th edition, page 106)
CULTURE DIFFERENCES INFLUENCE CUSTOMERS NEGOTIATION STYLE

Negotiation is a joint decision-making process in which two or more parties have conflict of interests (Bazerman & Lewicki,
1984). Research has shown that having different cultural backgrounds will distinguish one individual negotiation style from
another. Culture affects the range of strategies that negotiators develop as well as the tactics they implement (Salacuse, 1995).
Culture is defined as a group-level phenomenon in which beliefs, values, and behavioral expectations are shared and learned
among members. Faure (1999) and Sebenius (2002) agreed that identifying central values and norms help in the
understanding of how these norms and values influence negotiation within a culture (Ready, 2005). Cross-cultural comparisons
in customers behavior differentiate the particular values and norms among cultures. Identifying how these differences influence
buying decisions needs to be made.
32
According to McGinnis (2005), a widely accepted framework for assessing cultures was developed, beginning in the 1980s, by
the work of Geert Hofstede, a Netherlands native who did his research within large, multinational corporations. There are four
dimensions of culture that distinguish one individuals negotiation style from another:
Individualism/Collectivism: Each society will place an emphasis on individual or group value. Individualistic societies
encourage its members to be independent and look out for themselves. Collectivist societies emphasize the groups
responsibility for each individual. Hofstede suggested that relationships in collectivism would play a critical role. Negotiation is
also about building a long-term relationship for future negotiation. In individualistic societies, negotiators are considered
interchangeable; and yet competency is the focus in negotiation. Collectivist society values price consciousness and
sophistication in money handling differ from Americans in an individualistic society that traditionally does not have the same
values. As a result pricing tactics may differ in response to or to attract consumers of different cultural orientation. Price
conscious shoppers would take more time and search alternatives for the best trade they can get (Ackerman &Tellis, 2001).
Vietnamese customers are more likely to be value customers. Most stores in Vietnam allow bargaining. Therefore, price setting
for this market should be realistic. Americans on the other hand value time and more likely to be convenience customers.
Power Distance: describes the degree in which a society accepts unequal power distance. In less power distance cultures, the
equality among people will be greater. Decision making is more likely to spread throughout the organization. In cultures with
high power distance, there is little consultation between superiors and subordinates. Hofstede suggested that leaders in high
power distance would finalize the important decisions (McGinnis, 2005). People in different status levels of a society will have
different styles of negotiation and purchasing. For instance, in a higher power distance culture like Vietnam, consumers have a
fear of embarrassment or "losing face" when using coupons to buy goods (Huff et al., 1998). This is a very important indicator
for American managers when using a pricing strategy in a sale promotion for customers from different cultures
Masculinity/Femininity refers to the values more likely to be held in a society. Masculine societies are characterized as
emphasizing the importance of things and money. Feminine cultures are characterized by concerns for relationships, nurturing,
and quality of life. The motives for luxury consumption in different level of power distance societies are different. In a feminine
society, the meaning of the good is more important than the price itself (Ackerman & Tellis, 2001). So when negotiating,
businesses should place an emphasis on the symbolic meaning of the good rather than trying to reduce the price. Furthermore,
Hofstede (1989) said that this dimension influences negotiation by having more competitiveness between masculine
negotiators, and more empathy between feminine negotiators (McGinnis, 2005).
Uncertainty avoidance: This dimension concerns individual levels of tolerance with unstructured situations. In societies with
high uncertainty avoidance, negotiators prefer stability, structure, and precise managerial direction. These will implement and
follow stable rules in negotiation. In contrast, negotiators in low uncertainty avoidance societies are comfortable with ambiguity;
unstructured situations (McGinnis, 2005; Ready, 2005). Research has shown that the saving rate of Asian people is higher
than that of most Western society (Ackerman &Tellis, 2001). Asians are known as being risk adverse. As a result, they tend to
search and negotiate for a better tradeoff between price and value more than Americans do.
In their research, Ackerman and Tellis (2001) also found that consumer shopping practices across culture are very different in
retail stores. Since collectivism and low level of power distance customers are willing to bargain and negotiate for small items,
retailers normally, come up with very small margins and daily price changes (Ackerman & Tellis, 2001). This also demonstrates
what an American business should consider when setting prices in the Vietnamese market. Vietnamese seem to be more
naturally price customers due to their cultural characteristics.
THE STUDYS HYPOTHESES

Vietnam is one of Asias most diverse travel locations. The signing of the U.S.-Vietnam Trade Agreement in July 2000 after
three years of negotiations has opened a new page in Vietnam-U.S. trade relation history. The agreement has created
opportunities for U.S. investors in Vietnam. The agreement also gave Vietnamese businesses access to the U.S. market on the
same terms as other nations (Prasso, 2005). In the global economy, the negotiations between Vietnamese and U.S. partners
has grown to be a norm. In order to target the new Vietnamese market, American managers should recognize their
counterparts negotiation styles. This study examines whether research findings about factors of influence across cultures are
applied to Vietnamese and American students negotiation styles. Based on the theoretical analysis of factors that influence
ones personal negotiation style in the above section, this study tries to explore and confirm the extent to which Vietnamese
and American students have differences in their negotiation skills. Specifically, the hypotheses of this study are as followings:
Hypothesis 1a: Both Vietnamese and American students have the same assessment about winner, loser in negotiation.
33
Hypothesis 1b: Both Vietnamese and American students feel that they are effective negotiators.
Hypothesis 1c: Both Vietnamese and American students think their cultures encourage negotiation.
Hypothesis 1d: Both Vietnamese and American students think men are better negotiators than women.
Hypothesis 2a: Both Vietnamese and American students feel like negotiating when they feel there is a high probability of
winning.
Hypothesis 2b: Both Vietnamese and American students set bottom line before they begin negotiating.
Hypothesis 2c: Both Vietnamese and American students continually consider the other partys limitations during the
negotiation.
Hypothesis 3a: Both Vietnamese and American students feel comfortable negotiating with women more than with men.
Hypothesis 3b: Both Vietnamese and American students are more successful in negotiations with women than with men.
METHOD
Sample
Two samples were used to test the hypotheses in this study. The first sample consisted of 456 responses from students at a
Midwestern university in the U.S. The second sample consisted of 390 responses from students at the National University in
Vietnam. All students who participated in this study are either juniors or seniors. The percentages of males and females are
approximately equal in the U.S. sample, whereas 34% are males and 66% are females in the Vietnamese sample. The
students reported their most negotiated items in Table I.
Students who participated in the study were volunteers. The questionnaires in both samples contained no identifiers and were
therefore completely anonymous. American students filled out on-line surveys at the web server of University of Wisconsin,
Eau Claire. The English version was translated into Vietnamese, and then being reverse- translated to firmly confirm the
relevant content and items. Vietnamese students filled out paper surveys in Vietnam. The Vietnamese paper surveys were
converted into an electronic format to match with the American online surveys.
Table I : Most Often Negotiated Items
Negotiated Items
Country surveys conducted

US
Vietnam
Work related issues
41
10.1%
67
27.3%
Pricing/Purchasing issues
71
17.6%
34
13.9%
Domestic issues
52
12.9%
13
5.3%
Not specific issues
59
14.6%
46
18.8%
Social issue
97
24.0%
14
5.7%
Study related issues
14
3.5%
30
12.2%
Relationship issues
0.7%
12
4.9%
67
16.6%
29
11.8%
404
100.0%
245
100.0%
Money/Financial issues
Total
Measures
All items in the questionnaire were assessed on a 1 to 7 Likert scales where 1= strongly disagree and 7= strongly agree. A
single item was used to measure students negotiation skills and their perceptions toward negotiation. Survey items are
designed based on negotiation perception of a student customer. For example, sample items are In negotiation, there is
usually a winner and losers or I feel that I am an effective negotiator.
34
Analysis
To test the hypotheses, this study used independent-sample t-test for the difference between means in the SPSS software. To
do this, however, the study first tested for the assumption of equal variances by using Levenes F-test. All results revealed that
there were unequal variances between two samples. Thus, the study reports here all the results under the assumption of
unequal variances.
RESULTS
Table II reported the means, standard deviations, and mean differences of the Vietnamese and U.S. samples. Table II also
reported the t-tests and the significant levels for the mean differences between two samples. All the means for each factor in
both U.S. and Vietnamese samples varies from 3 to 6, indicating that there are differences in negotiation styles. In addition, the
level of difference of each item varies between U.S. and Vietnamese students. The specific results for hypothesis testing are
as follows:
Table II: Negotiation Perception and Skills
Items testing
In negotiation, there is usually a
winner and a loser
I feel that I am an effective
negotiator
I grew up in a family culture that
encouraged negotiation
In general, men are better
negotiators than women
I will only negotiate when I feel
there is a high probability of
winning
I determine my bottom line
position before I begin
negotiating.
I continually consider the other
partys limitations during the
negotiation
I am more comfortable
negotiating with women than I am
negotiating with men.
I am more successful in
negotiations with women than I
am in negotiations with men
Country
surveys
conducted
Mean
Std.
Deviation
US
457
3.66
1.497
Vietnam
388
4.35
1.966
US
455
5.08
1.258
Vietnam
378
4.67
1.438
US
457
4.53
1.522
Vietnam
378
4.28
1.645
US
456
3.01
1.551
Vietnam
380
3.64
1.881
US
454
3.94
1.413
Vietnam
374
4.44
1.713
US
454
5.05
1.327
Vietnam
382
5.57
1.575
US
455
4.57
1.207
Vietnam
380
4.91
1.452
US
454
3.80
1.487
Vietnam
381
4.39
1.654
US
456
3.75
1.373
Vietnam
372
4.03
1.553
Mean
Difference
t-test
Sig.
(2-tailed)
.57
-5.74
.000
.05
4.33
.000
.63
2.29
.022
.59
-5.29
.000
.93
-4.65
.000
.57
-5.25
.000
.61
-3.66
.000
-.13
-5.44
.000
.43
-2.74
.006
Negotiation Perception
There is difference between Vietnamese and American students in the perception about negotiation before they negotiate or
buying an item. Hypothesis 1a (t=-5.741, p<.001) suggests that Vietnamese students agree that there are winners and losers in
negotiation, while American counterparts think more about win-win outcomes. Hypothesis 1b (t= 4.335, p<.001) suggests that
both American and Vietnamese students think they are effective negotiators and purchasers. However, American students are
more confident with mean = 5.08. Hypothesis 1c (t= 2.29, p<.05) suggests both American and Vietnamese students believe
35
their cultures support negotiation. Hypothesis 1d (t= -5.294, p<.001) also point out both Vietnamese and American students
disagree that men are better negotiators.
Negotiation Skills in General Context

Hypothesis 2a (t=-4.65, p<.001) suggests that there is a significant difference in the perception between Vietnamese and
American students. Vietnamese students with mean = 4.44 agree that they only negotiate when they feel there is a high
probability of winning, while American counterparts will negotiate in any circumstance. Hypothesis 2b (t=-5.25, p<.001)
suggests that both Vietnamese and American students set a bottom line before they begin negotiating. Hypothesis 2c (p=-3.66,
t<.001): Both Vietnamese and American students continually consider the other parties limitations during the negotiation.
Gender difference
Hypothesis 3a (p=-5.44, p<.001) shows that Vietnamese and American students have different feeling when negotiating with
women and men. Vietnamese students agree that negotiating with women is more comfortable than with men, while American
students feel comfortable negotiating with both. Hypothesis 3b (t=-2.7, p<.05) suggests that there is a significant different
between Vietnamese and American students in negotiating experience with women and men. U.S. students with mean = 3.75
disagree that they are more successful in negotiation with women than with men, while Vietnamese students feel they have
more successful experiences in negotiating with women.
Overall, all hypotheses are supported. This indicates that differences in culture lead to different negotiation skills in purchasing
decisions.
DISCUSSION AND IMPLICATION

Emerging as one of Asias new industrialized countries, Vietnam represents a fascinating prospect for Western businesses
interested in investing in a country rich in economic opportunity, as well as political and cultural history (Engholm, 1995;
Naisbitt, 1996). A fast growing population (85.7 million in mid 2007) and a more than 90% literacy rate among those less than
30 years of age strengthen Vietnams move toward a market economy. The market liberalization process, begun in 1986, was
further enhanced by Vietnams entrance into the Association of Southeast Asian Nations (ASEAN), a trade agreement signed
by the U.S. and Vietnam in 1995, and the countrys membership in The World Trade Organization (WTO) in 2007. For Western
investors in general and American investors in particular, Vietnam has become a potential marketplace. Differences in values
and beliefs create challenges for American managers in entering the market. This study explored and compared the
differences between Vietnamese and American perceptions about customers negotiation styles. It also examined factors
hidden behind the two cultures that influence the purchasing decision. Specifically, the study, by using samples from U.S. and
Vietnam, tested several hypotheses about Vietnamese and American levels of perception and factors influencing negotiation
styles.
The findings in this study show the importance of cultural context in the problem-solving approach. Because in high context and
collectivist cultures such as Vietnam, it is suggested that negotiation is relationship-oriented, and concentrates on a long-term
single source relationship. The implication is that it is collaborative and will lead to some mutual satisfaction with their foreign
counterparts. In a low culture context and highly individualistic American society, on the other hand, focus is more on results
(Anonymous, Lecture 3, 2005). The American culture values openness, objectivity, fairness, cooperation, reason, and mutual
trust. The results of this study show that American and Vietnamese students have certain cultural perceptions before they
begin a negotiation. American students are very open to a win-win solution approach and Vietnamese students seem to accept
a different approach based on their culture. It might suggest a merging of global culture between the East and the West. Both
parties are trying to understand and open to each others problem-solving approach.
Pricing globally is much more challenging than pricing in a domestic market. Many factors need to be considered to determine
the actual price of the product. This final price might be quite different from the intended price since in global marketing it is not
easy to control the final price due to regulations, exchange rates, number of agents, and especially local customers behavior
(Johansson, 2006). Again, the findings in this study indicates some important practical implications for both Vietnamese and
American managers who are doing or will implement business transaction in the Vietnam market. There are general tactics and
strategies to set the right price that could improve the sales based on different types of customers. However, when entering
new foreign market, managers need to be aware of cultural factors that could influence their pricing strategies. While it is
helpful to use cultural dimensions as guidelines in decision making, these should not be considered as absolute measure to
prejudice individuals about a specific culture.
36
Getting into the Vietnam market, American managers will interact not only with local customers, but also with prospective
employees and foreign businesses. Because the findings suggest that negotiation style is primarily driven by differences in
cultures, this information is critical in hiring and training prospective cross-cultural salespersons and marketers. Companies in
Vietnam and the U.S. should provide assistance to improve the negotiation skills and experiences of their employees. They
might hold cross-culture training sessions for their marketing staffs and sale managers before entering a foreign market.
LIMITATIONS AND CONCLUSION

There are limitations noted for this research. First, the study used student samples in both Vietnam and the U.S. Although
students in this study were those who reported having some work experience and negotiation participation, it is not accurate to
generalize those students negotiation styles to the whole population. Of all the students who answered the questions about the
most negotiated items, there are only 17.6% of American students who stated they negotiated on pricing and purchasing
issues, while this number of Vietnamese students is 13.9%. Second, because the measurement of perceptions and negotiation
skills was based on single items, which were, created by culture experiences, it may not capture the concepts and thus not
yield precise results. Future research can therefore address these limitations to achieve additional information.
Future research needs to be conduct with a focus on business to business negotiating processes. Some business to business
research has been done by (qut. Graham et al., 1994; Graham et al., 1988; Schurr & Ozanne, 1985; Clopton, 1984).
Despite these limitations, this paper still provides worthy information about the Vietnamese and American customers
perceptions and their negotiation behavior. In addition, the study shows how cultural differences affects those perceptions and
the negotiation skills. This is important for both Vietnamese and American managers who are and will be doing business in
Vietnam.
REFERENCES
Ackrman, David & Tellis, Gerard. (2001). Can culture affect prices? A cross- cultural study of shopping and retail prices.
Retailing. 77, 57-82.
Anynomous. Cross cultural negotiations lecture 3:The incredible shrinking world. Retrieved February 26, 2009 from
http://www.tristate.edu/faculty/herbig/pahccne.htm
Bazerman, H. Max & Lewicki, J Roy. (1983). Negotiation in organization. California: Sage Publications Ltd.
Bies, J. Robert, Lewicki, J. Roy, & Sheppard H. Blair. (Eds).(1999). Research on negotiation in organizations. Connecticut: Jai
Press INC.
Engholm, C. (1991). When Business East Meets Business West: The Guide to Practice and Protocol in the Pacific Rim. New
York: John Wiley & Sons.
Graham, L. John & Sano, Yoshihiro. (1984). Smart bargaining: Doing business with the Japanese. Massachusetts: Harper &
Row, Publishers, Inc.
Huff, C. Lenard & Dana, L. Alden. (1998). An investigation of consumer response to sales promotions in developing markets: A
three country analysis. Advertising Research. 38. 3.
Johansson, K. Johny. (2006). Global Marketing: Foreign Entry, Local Marketing, and Global Management. (4th). Singapore:
McGraw Hill.
Kolb, M. Deborah & Williams, Judith. (2003). Everyday negotiation: Navigating the hidden agendas in bargaining. San
Francisco: Jossey Bass.
Levison, C. Jay, Smith, A. Mark, & Wilson, R. Orvel. (1999). Gurerrilla negotiating: Unconventional weapons and tactics to get
what you want. Toronto: John Wiley & Sons, Inc.
Nagle, T. Thomas & Holden, K. Reed (2002). The strategy and tactics of pricing: A guide to profitable decision making. New
Jersey: Prentice Hall.
Prasso, Sheridan. (2005). Vietnam. Business Week. 3922.
Salacuse, W. Jeswald (1995). The top ten ways culture affects negotiation style. Retrieved February 26, 2009, from
http://fletcher.tufts.edu/salacuse/topten.html.
The China Post (2008). Foreign direct investment in Vietnam triples in 2008. The China Post. Retrieved February 20, 2009,
from http://www.chinapost.com.tw/business/asia/vietnam/2008/12/27/189529/Foreign-direct.htm
37
THE STRUCTURE OF LABOR MARKET AND EMPLOYMENT ELASTICITY
Chang Kon Choi

Chonbuk National University, Korea
ABSTRACT
Recently, job creation problem is one of most challenging tasks in both developing and developed countries. It is often argued
that job creation by economic growth is not so large as in the past. To understand this issues, so far, many papers looked at
data of GDP and employment growth to estimate the so called employment elasticity or employment intensity of growth,
which is defined as growth rate of employment divided by growth rate of GDP. They find indeed that the measured value of
elasticity has decreased in most countries. While there have been many empirical studies about that issue, no study has
identified the structural determinants of employment elasticity. That is, while most studies estimate the empirical elasticity, they
did not look upon the question of what determines the employment elasticity. This paper aims to address the question. This
papers goal is to employ an equilibrium labor market model and to find the structural determinants of employment elasticity.
This paper shows theoretically that employment elasticity is determined by the structure of technology and preference, thus,
the labor demand and supply. The theoretically derived formula of employment elasticity allows us to identify its determinants.
In testing and applying the theoretical result, first, some calibrated values of parameters and estimated values of labor supply
structure found in other studies are applied to the theoretically derived formula to calculate the employment elasticity. And we
compare the empirically estimated elasticities and theoretically calculated ones. Secondly, we try to identify which determinant
has contributed to change (allegedly, decrease in most empirical studies) in the employment elasticity.
I. INTRODUCTION
This paper aims to examine the employment effect of economic growth, which is called employment elasticity or employment
intensity of growth.1 While there have been many studies about that issue, no study has identified the structural determinants
of employment elasticity. Most studies look only at empirical data of output growth and employment growth and estimate the
empirical value of the elasticity. This papers goal is to employ an equilibrium labor market model in addressing this question
and to find the structural determinants of employment elasticity. It will allow us to look at how labor market structure is related
to the job creation and employment effect of economic growth.
Recently, most countries have persistent job shortage and unemployment problem. And apparently, since the employment
does not increase enough while the economy grows, the phenomenon has been called as Jobless growth. Due to the chronic
high unemployment in many countries, it has become an important and imminent question in Macro or Labor Economics to
understand how employment growth is related to economic growth.
Among many previous studies, following ones are some examples of recent papers in this line research. Kapsos (2005) looks
at the growth rate of GDP and employment in many countries and estimates employment elasticity. Kapos (2005) finds that the
elasticity has indeed decreased in some countries. Seyfried (2006) estimates that employment elasticity is in the range from
0.31 to 0.61 in specific states with an average estimate of 0.47 for the whole U.S economy. Padalino and Vivarelli (1997) is
an empirical study on the G-7 economies over the period 1960-1994.2 Piacentini and Pini (2000) estimate the
employment elasticities - both in aggregate and in individual economic sectors - for the G-6 + Sweden over the
period 1960-97.3 So far, however, no paper has tried to identify structural determinants of employment elasticity with respect
to economic growth. While looking at empirical data of output and employment and estimating the elasticity, the basic
underlying premise in the most previous studies is that employment effect of growth is (mainly) determined only by
1
2
It is measured as employment growth with respect to output growth. Here, for a convenience, employment elasticity is used to denote it.
They derive several interesting results. For example, they find that job creation in North America has been much greater than in Europe. Importantly, they argue that long
run evolution has to be distinguished by short run correlation; while North America and Europe structurally differ in their job creation capacity in the long run, both of them
keep on showing a strong and statistically significant short run correlation between growth and employment.
During 90s, negative elasticities were found in Italy, Germany, UK and Sweden. Unlike other countries, Japan did not experience a decrease in the employment elasticity.
They also compare elasticity in manufacturing and services.
38
C. K. Choi
technological factor (so, labor demand), not giving attention on other side of market (so, labor supply). That is, most studies are
based on an implicit presumption that labor-saving technology may reduce the employment elasticity as the economy grows.
The problem is that they do not distinguish the role of labor demand and labor supply, and ignore the most basic fact that
employment is determined in the labor market as intersection of labor demand and supply.4 In sum, there are two problems in
this line of research. One is that there has been no theoretical modeling effort of identifying the structural determinants of
employment elasticity, and the other is that they do not look at both sides of labor market jointly. This paper aims to address
these shortcomings.
Like other elasticity in the economy, the employment elasticity of output growth should be affected by structural characteristics
of the economy, the preference and technology structure. More specifically, this paper emphasizes that in identifying its
determinant, we need to distinguish labor demand and labor supply effects in determining employment elasticity of output
growth. Thus, it points out that it could be wrong to ascribe the apparently decreasing employment elasticity only to laborsaving technology, but necessary to look at the other side of labor market, labor supply.
The results of this paper are following. First, this paper shows theoretically that employment elasticity is determined by the
structure of technology and preference, thus, the labor demand and supply structure. The theoretically derived formula of
employment elasticity allows us to identify its determinants. Secondly, in testing and applying the theoretical result, some
calibrated values of parameters and estimated values of labor supply structure found in other studies are applied to the
theoretically derived formula to calculate the employment elasticity. And we compare the empirically estimated elasticities and
theoretically calculated ones. This exercise shows that values of employment elasticity obtained in two different ways do not
match well. Extending the methodology to other variable of labor market, we look at how wage increases as output grows, for
which wage elasticity of output growth is calculated and estimated. Thirdly, we try to identify which determinant(s) is (are)
responsible for changes in empirically estimated values of employment elasticity. Finally, reversing the application of the
method, it is shown that the theoretically derived formula of employment elasticity may be used to infer the structure of labor
supply in the aggregate labor market.
This paper is developed as following. In section 2, using a simple model of growth and labor market, we derive employment
elasticity as a function of structural parameters. In section 3, we calibrate the structural parameters and calculate the
theoretical values of employment elasticity and compare them with empirical values estimated from data of output and
employment growth. In section VI, concluding remarks close the paper.
II. A MODEL FOR GROWTH AND EMPLOYMENT

2.1 Growth and Labor demand.
There are infinite number of workers supplying labor and firms demand labor. It is assumed that production structure is
following, which satisfies constant returns to scale: 1 .
Y AF ( K , N ) AK N .................................................................................................................................. (1)
Here, Y , K , N , A are output, capital stock, employment and technology shock respectively. The labor demand condition is
following, equalizing marginal productivity to real wage.
AFN ( K , N ) (1 ) A(
K
) W ..................................................................................................................... (2)
N
To focus on the effect of economic growth on labor demand, we use the concept of labor per capital,
L
n , which simplifies
K
the labor demand function as following.
(1 ) An W ................................................................................................................................................... (3)
Capital accumulation through economic growth affects labor demand as following.
To my knowledge, Kennan (1988) and Choi (2006) are only studies of dealing with the identification problem in understanding labor supply and demand.
39
n 1 ( 1) ln
<0 ....................................................................................................................................... (4)
( 1)n 1
It means that labor demand per capital decreases as the value of gets larger. As mentioned above, this parameter is the
elasticity of output with respect to capital and affects the convergence speed in transitional dynamics of neoclassical growth
model. In other words, one can see that the same parameter may affect both the growth rate and job creation in the growing
economy.
2.2 Determinants of Employment elasticity

Note that the above discussion is concerned only with labor demand, but not with employment. Since the employment is
determined in the labor market equilibrium of labor demand and supply, we need to specify labor supply and demand functions
as following.
N S N S (W , ) .................................................................................................................................................. (10)
AFN ( K , N D ) W ............................................................................................................................................... (11)

In (10), N , are labor supply and other structural determinants of labor supply respectively. First, the equilibrium
employment is determined by substituting (11) into (10).
S
N N S ( AFN ( K , N ), ) ................................................................................................................................. (12)

Using this employment equation, one can derive elasticity of employment with respect to capital.
NK
S NW NK
(1 S NW NN ) .......................................................................................................................................... (14)
Here, NW = labor supply elasticity with respect to real wages,5 NK and NN are elasticity of marginal product of labor with
respect to capital and labor respectively. Employment elasticity with respect to output growth may be defined as following.
S
NY
S NW NK KY
(1 S NW NN ) .......................................................................................................................................... (15)
This derivation shows us that the employment elasticity is affected by preference and technology structure. There are four
factors determining the elasticity: the elasticity of labor supply with respect to real wages, elasticity of marginal product with
respect to labor, elasticity of marginal product with respect to capital, elasticity of output with respect to capital. The first one is
from preference structure and the other three from technology structure. Important point is that employment elasticity with
respect to output growth is determined both by preference and technology structure.
Next, one can also derive wage elasticity of output growth (hereafter, call wage-output elasticity) as following.
WY
NK KY
(1 S NW NN ) .......................................................................................................................................... (16)
Interestingly enough, we can see that the same four factors determining employment elasticity also determines wage-output
S
S
elasticity. Other factors except NW are affecting both elasticities in the same direction. As the value of NW gets bigger,
however, employment elasticity increases while wage-output elasticity decreases. The larger the value of NK , NN and KY
is, the bigger the employment elasticity is, which is a quite intuitive result.
To be more specific, if we assume that production function is Cobb-Douglass, employment and wage-output elasticity is
simplified as following.
5
Unless specified otherwise, for simplicity, it is called labor supply elasticity.
40
C. K. Choi
NY
WY
S NW
(1 S NW ) .............................................................................................................................................. (17)
1
(1 S NW ) .............................................................................................................................................. (18)
These derivations are more readable than (15) and (16). Employment elasticity has a negative relationship with capital
coefficient and a positive relationship with wage elasticity of labor supply. On the other hand, wage-output elasticity has a
negative relationship with capital coefficient and the labor supply elasticity. This result is intuitively right. As the elasticity of
labor supply with respect to wage becomes more elastic, the resulting increase of labor demand from economic growth may be
transformed into more employment rather than higher wage.
III. EMPIRICAL RESULT AND INTERPRETATIONS

3.1 Data and Specification
Here, we look at data of Korean economy: time series of GDP, employment and wages in the aggregate labor market. Sample
period is from 1971 to 2005 and data are yearly data. And for a calibration exercise, Cobb-douglass production function is
assumed
3.2 Empirical Results

Table 1 summarizes the estimation results for the whole economy. First of all, one can see that the employment elasticity has
decreased since 1970s until the end of 1990s. However, it has been rising again since 2000. Thus, the so called jobless
growth is not found during 2000s. While the employment elasticity was 0.31 from 1991 to 1996, it has rebounded to 0.38 since
2000. Wage-output elasticity has been larger than employment elasticity, but has decreased since 2000.
Table 1: Empirical result: Employment and wage elasticity
Workers
Employed
Real GDP
(Billion Won)
Growth rate of
Employment
Real
Wages
Growth rate of
GDP
Growth rate
of Wage
Employment
Elasticity of
Output
Wage Elasticity
of Output
1971~1980
12,030
3.62
107,617.2
7.3
368,567
6.86
0.49
0.93
1981~1990
15,668
2.84
223,583.4
8.7
614,789
6.18
0.34
0.71
1991~1996
19,668
2.40
418,577.6
7.7
1,045,960
6.72
0.31
0.93
1997~1999
20,481
-0.84
514,432.5
2.4
1,225,344
0.73
-0.35
0.30
2000-2005
22,075
2.01
578,664.5
5.2
1,450,969
4.41
0.38
0.85
Note: The period 1997-1999 is separated because of economic crisis in Korea

We also estimate employment elasticity for individual industry.
The theoretical derivation of (17) and (18) allows us to calculate both elasticities based on other structural parameters. First, it
is assumed that capital coefficient in the technology is 0.4. Concerning the elasticity of labor supply with respect to wage in
the aggregate labor market, there are only a few studies in Korea, one of which is Choi (1995). For example, when the number
of workers employed is used, Choi (1995) estimates the labor supply elasticity with respect to wage to be from 0.06 to 0.12.
Using these values about economic structure, the calculated employment elasticity is in the range of [0.05, 0.11], which is quite
different from the estimated one in the range of [0.3, 0.5]. Choi (1995)s estimate of labor supply elasticity becomes 0.18 when
total hours worked are used for quantity of labor. Using this value, the employment elasticity is calculated to be 0.17 which is
not close to the estimated value.
Other study of Choi (2006) estimating labor supply and demand jointly suggests that wage elasticity of labor supply is about
0.48. This value implies that employment elasticity is 0.40, and is very close to the above empirically estimated value which is
in the range of [0.3, 0.5]. The former elasticity looks consistent with the latter one.
41
Secondly, looking at the empirical result for each individual industry, one can see that estimated employment elasticity is
different for different industry. And it is shown that while the value has been decreased for some industries (like mining,
manufacturing), it has been increased for others (like finance, insurance and education). Under the assumption of CobbDouglas production function, the main determinants of employment elasticity are the elasticity of labor supply with respect to
wage and capital coefficient. One possible conjecture is that if the elasticity has been changed (decreased or increased) mainly
because of change in labor supply elasticity, one can observe corresponding change in wage growth with respect to GDP
growth. Otherwise, no remarkable change in the latter would be observed. This conjecture is easily applicable to the result in
table 2 since capital coefficient can be estimated using the ratio of labor income to GDP while the estimation of labor supply
elasticity is controversial. Table 3 contains estimated value of capital coefficient for each industry. Following this conjecture,
first, among industries having experienced an increase in the employment elasticity, one can see that the capital coefficient has
decreased in the industries of finance and insurance, real estate and service while it has not changed in the industry of
electricity, gas and water. Thus, one sees that unlike the former, the labor supply elasticity has increased in the latter.
Secondly, among industries having experienced a decrease in the employment elasticity, only mining and manufacturing
industries has been accompanied with a remarkable increase in capital coefficient. This outcome implies the labor-saving
technology improvement in these industries, but not in other industries.
Table 2:
Employment Elasticity (Industry)
I = Agriculture, Forestry and Fishing, II =Mining, III= Manufacturing, IV= Electricity, Gas and Water, V=Construction, VI=Whole
sale, retail restaurant and hotel, VII=Transport, Storage and Telecommunication, VIII= Finance and insurance, IX =Real estate
and services, X= Government and Military service, XI=Education, XII=Health and Social services
I
II
III
IV
1971~80
0.17
0.54
0.88
1981~90
0.38
0.30
0.51
0.49
1991~96
-3.24
6.55
0.24
1997~99
-0.60
2.61
2000-05
-0.65
12.06
VI
VII
VIII
IX
XI
XII
0.33
0.52
0.52
0.06
9.63
1.07
0.33
0.53
1.48
0.96
1.05
0.26
0.35
21.59
1.27
0.65
0.42
0.47
2.74
9.15
0.68
0.20
0.05
1.20
0.78
0.01
0.33
1.24
5.95
-6.08
2.02
-0.24
0.92
Table 3: Capital Coefficient (Industry)

I = Agriculture, Forestry and Fishing, II =Mining, III= Manufacturing, IV= Electricity, Gas and Water, V=Construction, VI=Whole
sale, retail restaurant and hotel, VII=Transport, Storage and Telecommunication, VIII= Finance and insurance, IX =Real estate
and services, X= Government and Military service, XI=Education, XII=Health and Social services
Total
II
III
IV
VI
VII
VIII
IX
XI
1993
0.40
0.72
0.35
0.85
0.38
0.37
0.31
0.61
0.82
0.20
0.66
1994
0.42
0.78
0.40
0.86
0.37
0.38
0.37
0.63
0.82
0.22
0.67
1995
0.43
0.85
0.43
0.88
0.38
0.40
0.37
0.64
0.79
0.20
0.68
1996
0.41
0.84
0.44
0.86
0.38
0.51
0.35
0.64
0.77
0.13
0.65
1997
0.41
0.82
0.46
0.87
0.35
0.54
0.38
0.63
0.76
0.12
0.64
1998
0.43
0.84
0.53
0.90
0.48
0.59
0.40
0.63
0.77
0.08
0.59
1999
0.44
0.37
0.85
0.58
0.90
0.47
0.38
0.39
0.63
0.74
0.13
0.56
2000
0.42
0.46
0.87
0.58
0.90
0.37
0.41
0.42
0.59
0.70
0.13
0.41
2001
0.42
0.43
0.85
0.58
0.90
0.39
0.43
0.46
0.62
0.65
0.11
0.29
2002
0.40
0.36
0.83
0.58
0.91
0.32
0.46
0.34
0.65
0.65
0.06
0.29
2003
0.39
0.72
0.83
0.59
0.86
0.32
0.57
0.38
0.62
0.62
0.06
0.30
2004
0.39
0.49
0.84
0.60
0.87
0.32
0.61
0.38
0.60
0.59
0.07
0.25
2005
0.36
0.61
0.81
0.60
0.88
0.30
0.70
0.37
0.59
0.53
0.19
0.15
2006
0.34
0.72
0.79
0.62
0.86
0.23
0.75
0.34
0.56
0.48
0.34
0.11
42
C. K. Choi
IV. CONCLUSION
This paper shows that one can identify the structural determinants of employment elasticity with respect to output growth. It is
shown that the elasticity is determined by preference and technology parameters. So, this paper point out that the apparently
labor-saving technology alone may not be responsible for the slow increase in employment for GDP growth. It point out that we
should also look at the other side of labor market, labor supply. We found that the elasticity of labor supply with respect to wage
is another important determinant of employment effect of economic growth. It means that a policy helping workers to supply
labor or encouraging them to participate in labor market is very useful.
REFERENCE
Choi, C.K., 1995, The Theory and evidence of Intertemporal Substitution in Labor Supply Function, Journal of Korean Labor
Economic Associations, 18, 1.
Choi, C.K., 2006, Building an identified Equilibrium Model of Aggregate Labor Market, Journal of Korean Econometric
Association, 17, 4
Kapos, Stepen, 2005 The employment intensity of growth: Trends and macroeconomic determinants ILO.
Dpke, J. 2001. The employment intensity of growth in Europe. Kiel Working Paper No. 1021, Kiel Institute of World
Economics.
Islam, I. and Nazara, S. 2000. Estimating employment elasticity for the Indonesian economy. ILO Technical Note, Jakarta.
Mazumdar, D. 2003. Trends in employment and the employment elasticity in
Manufacturing, 1971-92: an international comparison. Cambridge Journal of Economics 27:563-582 .
Padalino, S. and Vivarelli, M. 1997. The employment intensity of economic growth in the G-7 countries. International Labour
Review: Summer 1997; 136, 2.
Piacentini, P. and Pini, P. 2000. Growth and Employment, in Vivarelli, M. and Pianta, M. 2000 (eds). The Employment Impact
of Innovation: Evidence and Policy, London, Routledge, 44-76
William Seyfried, Examining the Relationship Between Employment and
Economic Growth in the Ten Largest States Southern Economic Journal
APPENDIX
Conversely, one can use the formula of employment elasticity in conjecturing the elasticity of labor supply with respect to wage.
That is, we can infer it by equalizing the calculated and the empirically estimated employment elasticity. As the value of the
latter is in the range of [0.3, 0.5], the labor supply elasticity of wage is inferred to be in the range of [0.5, 0.8] with the calibrated
value of 0.4 . These values are too larger than the empirically estimated values, making the comparison inconsistent.
Nest, wage elasticity of output is calculated by (16), which is from 0.97 to 0.95 depending on the labor supply elasticity of wage
from 0.06 to 0.12. The value of 0.48 in Choi(2006) implies it to be 0.84. These values are very close to the empirically
estimated wage elasticity in Table.
43
Market Entry Timing in Previously Closed (Communist) Markets: A Model to Analyze U.S. Companies in the Czech Republic
MARKET ENTRY TIMING IN PREVIOUSLY CLOSED (COMMUNIST) MARKETS: A

MODEL TO ANALYZE U.S. COMPANIES IN THE CZECH REPUBLIC
Frank E. Wood, Thomas E. Griffin, Joseph Chavez and Fang Yuan

ABSTRACT
Multinational enterprises who desire to enter previously closed (communist) markets will benefit from research finding on
market entry timing. Understanding and employing the most effective methods and efficient timelines for market entry can be
critical to the success of multinational enterprises who seek to benefit from these potential opportunities. The knowledge of
antecedents, strategies, and outcomes from recent similar market entry attempts by others will be indispensable to future
market entry success.
MARKET ENTRY TIMING

History has witnessed the conversion of several Communist countries into open market economies. Fari, Kearny, and Bell
(1996) found that these new markets have created opportunities for many industries as business activities change from
government sponsored operations to private enterprises. Communist countries that move to become open market economies
can benefit greatly from crucial investments by foreign companies (Alter, 1994).
A study by Isobe, Makino, and Montgomery (2000) shows that, Emerging economic regions have been playing a critical role in
global economies. Since their market liberalization and privatization policies were formally set forth, these areas have attracted
many foreign investors (United Nations Conference on Trade and Development [UNCTAD], 1997).
The remaining Communist states in the world are the People's Republic of China, Laos, Vietnam, North Korea, and Cuba
(Aneki, 2008). Of special interest to multi-national enterprises are the potential opportunities that will arise when Cuba converts
to an open market economy. From a vantage point of geographic proximity and previous emigrant and cultural relationships,
Cuba will be especially significant. Cuba has recently begun timid steps toward a more market-oriented approach. It is argued
that the centerpiece of a new strategy should be a rapid privatization which can be designed to absorb the monetary overhang,
widely distribute assets and control, and protect the social safety net that has characterized the Cuban economy (Pastor &
Zimbalist, 1995).
Understanding and employing the most effective methods for market entry will be of prime interest and paramount to the
success of multinational enterprises desiring to benefit from this potential opportunity. Knowing the antecedents, strategies,
and outcomes from recent similar market entry attempts by others would be indispensable to future success. Research states
findings suggest the timing of entry affects competitive position, specifically the ability and competencies of a firm to realize its
objective in attaining or sustaining a competitive advantage (Green, Barclay, and Ryans, 1995).
In an effort to understand the effect of timing of entry in these countries on the success of creating sustainable competitive
advantage from FDI, an evaluation of recent country changes would be useful. Most previous studies have examined the
determinants and performance of the timing and resource commitment of entry in a domestic context. Of the studies that have
examined these issues in an international context, most have focused on either North American multinationals entering foreign
countries or foreign firms investing in North America (Isobe et al., 2002).
One country that can provide new insight and that also matches the criteria of evolution from a Communist market to an open
market, is the Czech Republic. As reported by the United Kingdoms Foreign & Commonwealth Office (FCO), . . . in 1989, the
Czechoslovakian Velvet Revolution saw the Communists ousted and a democratic government installed with Vaclav Havel as
President. Differences between the Czechs and Slovaks led to the Velvet Divorce on 1 January, 1993, and the formation of the
Czech Republic. The Czech Republic became a member of the European Union on 1 May 2004 (Foreign & Commonwealth
Office, 2007).
44
F. E. Wood, T. E. Griffin, J. Chavez and F. Yuan
The FCO continues, the Czech Republic is one of the most stable and prosperous of the post-communist states. Economic
growth has been driven, in particular, by high levels of foreign direct investment (FDI), domestic consumer spending, and
Czech exports. Some 70% of trade is with the EU, notably Germany. Unemployment stands at 7.1 % (FCO, 2007).
In an effort to provide a basis of strategy for multinational enterprises future entry to previously closed markets, this research
uses appropriate current market indicators to show correlation and effect of market entry timing on sustainable competitive
advantage. Is there a first-mover advantage for FDI in these countries or is there benefit from waiting for others to experience
the learning curve? The purpose of this study is to identify the effect of market entry timing on the competitive position of
multinational enterprises that enter markets previously closed (Communist) to outside investment.
THEORETICAL BACKGROUND
When considering international expansion, three questions are posed to multinational enterprises: which market to enter, how
to enter, and when to enter (Gaba, Pan, & Ungson, 2002). Gaba et al. found that . . . studies have focused on the first two
questions, with particular attention to the prevalence, sequence, trade-offs, and effectiveness of different modes of entry (Kim
and Hwang, 1992; Woodcock, Beamish, and Makino, 1994; Madhok, 1997). In contrast, research on the third question the
timing of entry has received relatively little attention.
Prior research on the timing of market entry used ownership advantages to determine modes of entry (Hymer, 1976).
According to John Dunning, . . . refer to my own work of the late 1950s through to the early 1970s, which I think is best
depicted in my Oxford Economics Papers article in 1973. Here I reviewed the different approaches to explaining the growth of
MNE activity, focusing on the interaction between the competitive (which I called ownership) advantages of such firms, relative
to the indigenous firms in the countries in which they were investing and the locational attractions of the countries in which the
investment might be made (2003). Dunnings work generated additional studies that featured ownership advantages and
subsequent research geared to timing of entry (Buckley and Casson, 1981) and modality. These two elements of timing and
modality were augmented with empirical studies and, according to Dunning, created an eclectic framework that combines the
ownership and internalization advantages of firm and location advantages of counties (1988).
Later studies (Agarwal and Ramasqami, 1992) used Dunnings eclectic framework that joined a firms advantages of ownership
and internalization with location advantages of countries to explain firms market entry strategies. Markets in transition
represent untapped opportunities, and firms can use these strategies to gain the above-stated advantages of ownership and
internalization.
As stated in the IMF Working Papers, Ideal conditions for flexible open market operations exist in few developing or transition
economies. Nevertheless, open market operations of one sort or another can and should be undertaken in markets that may
not be entirely ideal but are at varying stages of development toward a deregulated, competitive system (Axilrod, 1997). The
attractiveness of market conditions in transition economies is a matter of academic debate, leading to widely differing
assessments of the balance of risks and returns associated with market entry and development by businesses (Fallon & Jones,
2004).
According to a study by Green et al., New products entering a new or existing market make an impact on the market from their
time of entry. A premise of entry strategy research is that the decisions a firm makes around a products entry, namely, the
product entry strategy, will affect the long-term performance of the product in a market (Green, Barclay and Ryans, 1995).
Previous research on timing included studying the order of entry into international markets (Mascarenhas, 1992, 1997). These
studies relied heavily on self-reported, after the fact, PIMS data. A problem with this methodology exists in that self-reporting
created biases (Lieberman & Montgomery, 1998), and many firms were claiming first mover status.
Building on extant theory and empirical studies, this research seeks to expand practical knowledge in the understanding of
timing of market entrys effect on competitive advantage in newly transitional markets. The hypothesis of this research is that:
H1. Using current market share as a measure of sustainable competitive advantage for U.S. companies in the Czech Republic;
there is a positive relationship between early entry and market performance/share.
The future application of these findings will be useful to firms desiring to enter yet-to-be open market economies. The ensuing
regression analysis can be used to predict future success for multinational enterprises in creating sustainable competitive
advantage as a function of market entry timing in newly open markets.
45
The Research Problem

The purpose of this study is to identify the effect of market entry timing on the competitive position of multinational enterprises
that enter markets previously closed (Communist) to outside investment.
Delimitations
1. This study would be limited to US companies with business operations in the Czech Republic.
2. The study would focus on dates of entry into the Czech market (since becoming an open market economy).
3. This study would not research or draw conclusions about individual companies other entry factors such as economies of
scales, market familiarity, or other FDI history.
RESEARCH METHODOLOGY & DATA ANALYSIS

The methodology for this research consists of analyzing a population of American companies that are currently registered to
conduct business in the Czech Republic, determining date of market entry, and finally noting current market share.
The list of companies will be derived from company listings from the Embassy of the Czech Republic in Washington, D.C. On
their web database, 486 American companies are shown to be registered in the Czech Republic. For the purposes of this
study, the businesses will be grouped by category: goods or services. Of the 486 firms, the sample for this study would
segregate the companies into of service-related firms and goods-related firms. Note that each category has different
challenges to new market entry, it becomes important to compare like firms in order to reach valid conclusions. The year a
company enters the Czech Republic market will be assigned a value.
For example:
Year of Entry
Value
1990
1991
1992
1993
The appropriate assigned value for each company (based on year of entry) will be used as the independent variable. Market
share, expressed as a percentage, will be the dependent variable. Statistical analysis of these two data points will be derived
from correlation and through regression analysis.
The year of entry into the Czech Republic for each of the companies is derived from secondary data that can be resourced
from the Czech Business Web Portal: Official Registers. Each companys market share (a percentage) will be calculated from
each companys annual Czech sales divided by the total countrys annual sales for that product/service category. These data
will come from two secondary sources. The samples annual company sales are resourced also from the Czech Business Web
Portal: Official Registers ARES, Access to Registers of Economic Subjects. The product/service category annual sales are
resourced through the Global & NTDB (National Trade Database). The NTDBs Industry Analysis by Country report allows the
query to drill down to only Czech Republic industry reports where annual data is found. Market share of companies in the
Czech Republic can also be determined from data listings in Major Market Share Companies: Eastern Europe, Middle East and
Africa (2008).
To provide a context of terminology usage in this study, a discussion of applicable operative terminology meaning is needed.
The use of the phrases multinational enterprise, international business and foreign direct investment has, over the past
decades, experienced interchangeable uses (Wilkins, 1970). The major point of contention in the definition stems from whether
the enterprise/business is a firm or an activity. Business historians have defined enterprise/business as a firm (Toyne & Nigh
1997, 31-50), but have since conceded to include activity as a valid meaning. For the purpose of this study, multinational
enterprise refers to both firms and activities engaged in cross border operations.
Research on market entry has evolved over the past years to include the international arena. Studies on First-Mover
Advantages (Lieberman and Montgomery, 1988) and resource-based perspectives (Wernerfelt, 1984) have given attention to
the potentially important strategy. Luo (1998) has argued that ordinal ranking is sufficient and appropriate for analyzing
46
F. E. Wood, T. E. Griffin, J. Chavez and F. Yuan
oligopolistic market structures (i.e. few producers and competitors) in that one can readily identify first movers from followers
(Gaba, Pan, Ungson, 2002). For this study, ordinal ranking will be used to determine the order of market entry.
To understand how competitive advantage emerges, a cursory understanding of what competitive advantage is necessary.
Competitive advantage can be defined as:
When two or more firms compete within the same market, one firm possesses competitive advantage over its rivals when it
carries a persistently higher rate of profit (or has the potential to earn a persistently higher rate of profit) (Grant, 1991). For the
purpose of this research, competitive advantage is defined as the ability of an enterprise to outperform competitors on the
primary performance goals of profitability and/or market share.
SUMMARY
Multinational enterprises who desire to enter previously closed markets will benefit from these findings. Understanding and
employing the most effective methods and efficient timelines for market entry can be critical to the success of multinational
enterprises who seek to benefit from these potential opportunities. The knowledge of antecedents, strategies, and outcomes
from recent similar market entry attempts by others will be indispensable to future market entry success.
REFERENCES
Agarwal, S. & Ramaswami, S. (1992). Choice of foreign market entry mode: Impact of ownership, location and internalization
factors [Electronic version]. Journal of International Business Studies, 23(1), 1.
Alter, R. (1994). Investing in Eastern Europe: Catalyst for transition. Organization for Economic Cooperation and Development
[Electronic version]. The OECD Observer, (186), 28.
Aneki Services (2008). Retrieved June 24, 2008 from http://www.aneki.com-/communist.html.
Axilrod, S. (1997). Transformations to Open Market Operations. IMF Working Paper, 95/146. Retrieved June 11, 2008, from
http://www.imf.org/external/pubs-/ft/issues5.
Buckley, P. & Casson, M. (1981). The optimal timing of a foreign direct investment [Electronic version]. The Economic
Journal, 91(361), 75.
Czech
Business
Web
Portal:
Official
Registers.
(2008)
Retrieved
June
16,
2008.http://www.businessinfo.cz/en/section/company -information/1001058/.
Coe, N., & Wrigley, N. (2007). Host economy impacts of transnational retail: The research agenda [Electronic version]. Journal
of Economic Geography: Transnational Retail and Supply Networks, 7(4), 341-371.
Czech
Business
Web
Portal
BusinessInfo.cz
(2008)
Retrieved
June
23,
2008
from
http://www.businessinfo.cz/en/section/companyinformation/1001058.
Dunning, J. (2003). Some antecedents of internalization theory [Electronic version]. Journal of International Business
Studies, 34(2), 108.
Embassy of the Czech Republic (2008.) American companies doing business in Czech Republic. Retrieved Jun 18, 2008 from
http://www.mzv.cz/wwwo-/default.asp?ido =15698&idj=2&amb=87&ParentIDO=10651.
EuroMonitor
International
(20080
{Electronic
version].
Retrieved
June
19,
2008
fromhttp://www.euromonitor.com/Major_Market_Share_Companies_Eastern_Europe_Middle_East_and_Africa .
Fallon, G., & Jones, A. (2004). Marketing in Russia by UK businesses: Lessons from a survey of trade missioners to Moscow
{Electronic version]. Journal of Small Business and Enterprise Development, 11(2), 174-185.
Farra, F., Kearney, A.T., & Bell, D. (2006, July). Globalization strategies: How to crack new markets [Electronic
version]. European Business Forum, (25), 40-45.
Gaba, V., Pan, Y., & Ungson, G. (2002) Timing of entry in international market: An empirical study of U.S. Fortune 500 firms in
China [Electronic version]. Journal of International Business Studies, 33, 39-55.
Globus & National Trade Database (2008) Industry sector analysis reports by country. Retrieved June 24, 2008 from http://0www.stat-usa.gov.novacat.nova.edu/mrd.nsf/vwISA_Country?OpenView&Count=-1.
Grant, R. (1991). The nature and source of contemporary advantage [Electronic- version]. Contemporary Strategy Analysis,
(pp. 173-174). Malden, Massachusetts: Blackwell Publishers.
Green, D., Barclay, D., & Ryans, A. (1995). Entry strategy and long-term performance: Conceptualization and empirical
examination [Electronic version]. Journal of Marketing, 59(4), 1. Hymer, S. (1976) The International Operations of national
firms, Cambridge, MA: MIT Press.
Isobe, T., Makino, S., & Montgomery, D. (2000). Resource commitment, entry timing, and market performance of foreign direct
investments in emerging economies: The case of Japanese international joint ventures in China [Electronic
version]. Academy of Management Journal, 43(3), 468-484.
47
Lieberman, M., & Montgomery, D. (1998). First-mover (dis) advantages: Retrospective and link with the resource-based view
[Electronic version]. Strategic Management Journal, 19, 1111-1125.
Pastor Jr., M., & Zimbalist, A. (1995). Waiting for change: Adjustment and reform in Cuba [Electronic version]. World
Development, 23(5), 705.
United Kingdom Government (2007) Czech Republic. Foreign & Commonwealth Office. Retrieved June 18, 2008 from
http://www.fco.gov.uk/en/about-the-fco/country-profiles/europe/czech-republic?profile=economy&pg=2.
48
J. Strouhal and F. Deari
STATUS OF CERTIFIED ACCOUNTANTS IN CZECH AND MACEDONIA
Jiri Strouhal1 and Fitim Deari2

University of Economics Prague1, Czech Republic and
South East European University of Tetovo2, Macedonia
ABSTRACT
Changes in economic environment in the beginning of 90s of last century in Central and Eastern Europe have led towards new
requirements for accountants. By the year 1997 have existed in the Czech Republic just certification for auditors (CPAs). Due
to the aim of some standardization and harmonization of the knowledge of all professional accountants (not only auditors), the
certification system based on the British ACCA professional scheme was started in the Czech Republic from 1997. Adepts who
fulfill all examination criteria are associated in their professional organization Chamber of Certified Accountants CR. Members
of this Chamber are subject to a system of continued professional education (CPE) in line with the requirements of IFAC
(International Federation of Accountants).
The accounting profession in Macedonia is not adequately organized. Two accounting and auditing associations compete to
represent the professional community: Association of Accountants and Auditors and Macedonian Association of Certified
Auditors, which was established more recently. Both membership are voluntary and do not confer any privileges on members.
Unfortunately these associations lack the capacity to sustain themselves as modern professional organizations and therefore
some changes in the future are proudly awaited.
This paper is primarily aimed at the requirements for the fulfillment of the continued professional education as well as to show
the requirement for becoming certified professional in Czech Republic and Macedonia.
Keywords: Accounting Profession; Professional Development; IFAC; Czech Republic; Macedonia (FYROM)
1. INTRODUCTION
According to Fisher and Murphy (1995) accounting is firmly established as an important profession and as a major employment
destination. In addition they believe that there is some ambivalence regarding the image of the accounting profession as well
as the status of accounting as an academic discipline. Due to the aim of some standardization and harmonization of the
knowledge of the professional accountants, the certification system based on the British ACCA professional scheme was
started in the Czech Republic in 1997. It was developed under the supervision of the Czech Ministry of Finance, EU PHARE
and of course the British ACCA.
The education and examination system was arranged in order to follow the original International Education Guideline 9 (IEG 9).
This Guideline with the UNCTAD Qualification Guideline (from 1983) has been taken into account while forming education and
examination systems.
It shall be stated that the International Education Standards (IES) stress or shape newly the tendencies which have been
influencing the development of the accounting profession in the last decade (especially professional ethics, development of
communication and interpersonal abilities, ICT etc.).
During the period 1997 2008 was used three level system of the certification in Czech which especially stresses the attention
of the triumvirate Accounting Law Taxes. Each adept should fulfill the following papers:
technician level
P1 Financial Accounting
P2 Law System in the Czech Republic
P3 Quantitative Methods and ICT
P4 Economics
P5 Tax System in the Czech Republic
49
executive level (equivalent of the German Bilanzbuchhalter level)

P6 Financial Reporting
P7 Tax System in the Czech Republic (Advanced)
P8 Financial Management
P9 Management Accounting
P10 Quantitative Methods and ICT (Advanced)
P11 Law System in the Czech Republic (Advanced)
expert level
P12 Financial Strategy
P13 IFRS
P14 Financial Analysis
P15 Auditing
Table 1:
Exam
Precision Ratio at the Exams (2003 2007, in %)

12/2007
6/2007
12/2006
6/2006
12/2005
6/2005
12/2004
6/2004
12/2003
6/2003
P1
55.22
64.62
83.33
73.97
64.29
63.51
86.81
77.97
65.38
80.67
P2
66.38
78.75
55.43
76.60
66.67
62.80
86.02
83.03
71.38
62.14
P3
51.72
55.56
69.09
55.00
61.90
69.80
55.80
47.50
28.31
67.86
P4
59.38
19.18
51.82
38.83
63.38
64.08
51.05
41.88
61.08
65.92
P5
80.00
86.61
78.63
67.52
84.62
66.67
60.43
64.68
71.34
62.45
P6
86.90
84.78
64.18
75.79
89.90
85.39
71.43
70.24
95.83
79.52
P7
73.17
72.41
69.47
68.75
59.38
60.26
76.32
57.33
86.72
67.83
P8
78.85
84.75
75.86
80.82
61.90
73.33
66.67
48.84
65.05
62.50
P9
81.20
67.03
58.88
57.48
37.21
52.90
33.09
41.06
35.54
20.00
P10
54.17
76.92
73.08
85.70
88.20
70.00
80.00
63.30
60.71
77.42
P11
82.35
96.23
56.72
85.94
91.67
73.17
81.25
99.12
74.04
68.13
P12
68.75
68.75
52.17
60.87
65.52
59.09
53.33
56.52
56.67
65.38
P13
25.00
71.43
94.44
87.50
96.30
60.00
84.00
70.59
77.78
90.91
P14
93.33
100.0
94.12
93.75
100.0
77.78
99.45
100.0
94.74
95.24
P15
100.0
100.0
100.0
100.0
100.0
87.50
100.0
100.0
100.0
100.0
(Source: Institute of the Union of Accountants CR, 2003 - 2007)
There can be seen differences in the precision ratio of some exams given especially by the changes of the examiners. Quite
surprising could be the jump in the paper P4 (period 12/2006 to 6/2007) the reason was the change of the scheme of exam.
Same reason could be named for the paper P13 and the difference between the periods 6/2007 and 12/2007. From December
2007 is used for this exam the ACCA paper Diploma in Financial Reporting (DipIFR). On the other hand there could be named
exams from the 3rd level with the very high precision ratio Financial Analysis and Auditing. Its especially given by the good
professional knowledge of the adepts of the 3rd level.
It shall be stated that the system respect the IEG 9 recommendation that experts involved in the developing and reviewing
exam papers should not participate in the pre-qualification education courses. With respect to this limitation there is and effort
to assure the experts rotation in their functions. It necessary to eliminate the possibility that an expert staying too long at the
position of examiner can become exhausted regarding the extend of assessed knowledge.
To be able to enter this system it is necessary to be educated minimally at the high school (having a school-leaving exam). For
the finalizing of all of the levels its also necessary to fulfill the practical experience: 2 years for technician level, 4 years for
executive level and 6 years for the expert level. On the other hand it is also possible to apply for the system of the controlled
practice: 1 year for technician level, 2 years for executive level and 3 years for the expert level.
50
Currently, after 10 years of the running of this scheme, it could be made first findings:
more than 9 300 adepts of certification;
4 326 certified accountants in Czech
3 105 technician accountants (72 %)
1 036 executive accountants (24 %)
185 expert accountants (4 %)
From the winter examination period of the year 2008 were established following changes (also due to new ACCA professional
scheme) just 2 level system and fewer exams:
executive level
P1 Financial Accounting
P2 Law System in the Czech Republic
P3 Quantitative Methods and ICT
P4 Economics
P5 Tax System in the Czech Republic
P6 Financial Reporting
P7 Professional Ethics
P8 Financial Management
expert level
P9 Management Accounting
P10 IFRS
P11 Financial Management (Advanced)
P12 Marketing Management
P13 Auditing and Corporate Governance
There is also introduced the new paper for adepts of the executive level about the professional ethics. Also due to the
compatibility with ACCA there is awaited that the level for the successful passing of the paper will be 50 %. Until July 2008
there has been used the limit of 60 %.
2. CZECH CHAMBER OF CERTIFIED ACCOUNTANTS (KC)

All certified accountants are encouraged to enter the Czech Chamber of Certified Accountants. This body associates
professionals holding certificates of any of the three degrees of the certification system. The primary goals of the Chamber of
Certified Accountants are to contribute to the development and improvement of the accounting profession in the Czech
Republic by implementing an accounting professional certification system, providing the continued professional education of
accountants, issuing a Code of Ethics and other standards regulating the activities of professional accountants, supervising
professional accountants adherence to standards, collaborating in the development of accounting professions and in the field
of accounting methodology and the assertion of legislative regulations of the accounting profession with other professional
organizations and schools both bilaterally and within the scope of the National Accounting Board.
According to the Statute of the Chamber of Certified Accountants, the supreme body of the Chamber is the Assembly of the
Chamber, regular sessions of which are held on a yearly basis. The primary tasks of the Assembly include approving the
Statute of the Chamber, Code of Ethics, Assembly Rule of Procedure, Disciplinary and Electoral Regulations of the Chamber
and other standards regulating the rights and obligations of certified accountants; electing and removing members of elected
bodies of the Chamber prior to the expiration of the electoral term; electing delegates to participate in the assembly of
delegates of the Association; approving candidates for membership in the Senior Committee and Audit Committee of the
Association; approving the budget and income from the operations of the Chamber; discussing and approving the Report on
the Activities of the Committee of the Chamber, Report of the Audit Committee of the Association and Auditors relating to the
Chamber, and Chamber Disciplinary Commission Report; discussing and approving other standards of the Chamber; deciding
on the dissolution of the Chamber; and rendering decisions on other issues falling within the competence of the Chamber
reserved by the Assembly.
The executive body managing the activities of the Chamber in the periods between two assemblies, the Board of the Chamber
reports to the Assembly. The Board has seven members electing the Chairman, two Vice-Chairmen and other officers from
51
their midst. The Chairman and the Vice-Chairman are the representatives of the Chamber authorized to act on its behalf. The
Board decides on all issues relating to the Chamber, namely: preparation of underlying materials for the session of the
Assembly and the execution of its resolutions, preparation of a draft budget, and liability for the Chambers economic
operations, preparation of draft standards of the Chamber, adoption of decisions regarding any appeals against the decisions
of the Disciplinary Commission, and establishment of executive bodies or professional councils of the Chamber. Other bodies
of the Chamber include the Disciplinary Commission and Auditors.
3. ACCOUNTING PROFESSION IN REPUBLIC OF MACEDONIA

Audit companies granted certificates to work, are registered in the Register of Audit Companies, and maintained at the Ministry
of Finance. The audit company, other than auditing, may perform activities from the area of providing accounting services and
advice, financial activities, operation analysis, evaluation of the subjects value, organization and introduction of internal audit,
tax advice, organization and control of the business activity of legal entities, as well as other similar activities.
Registered auditor must satisfy the following requirements:
1.
2.
3.
4.
High level of education graduated economist;

Passed exam for registered auditor and acquired certificate for registered auditor;
Not convicted for crimes which might make him inappropriate for the audit profession;
To declare a statement that in the course of performing his work, he shall apply the regulations determined by the Code
of Ethics for the Professional Accountants of the International Accounting Association.
A candidate for passing the exam for the title of registered auditor should have at least 5 years of working experience in the
field of accounting or financial activities, i.e. 3 years of working experience in the field of audit and control.
To receive a license becoming certified state auditor in Macedonia, each candidate has to follow these exams:
-
Accounting and financial reporting;

Accounting for state and nonprofit organizations;
Methodology of auditing;
Law and professional regulation;
Auditing technology information basic;
Ethic codec of professional accountants and auditors.
According to ROSC6 (2003) in Macedonia there are some necessary changes that should be done at accounting profession,
parts of which are presented as following:
The auditing profession in FYR Macedonia is not adequately organized. Two accounting and auditing associations
compete to represent the professional community: (a) the Association of Accountants, Financial Workers, and Auditors
(Sojuz), which was established in 1956; and (b) the Macedonian Association of Certified Auditors, which was established
more recently. Both membership are voluntary and do not confer any privileges on members. These associations lack the
capacity to sustain themselves as modern professional organizations.
In the absence of a robust professional organization, the Ministry of Finance regulates the auditing profession. The
Ministry of Finance is sponsoring draft legislation recognizing the profession as self-regulated and independent and
requiring a professional organization to regulate professional performance as a matter of public interest. In the meantime,
the Ministry remains the regulatory body, as evidenced by its prominent role in the organization and conduct of
professional examinations and licensing of auditors.
The auditing profession is in disarray and the Ministry of Finance lacks the capacity to regulate it effectively, which
severely hampers the auditors watchdog function. The financial architecture of Macedonia is missing one of the required
pillars to ensure the reliability of financial statements: a reliable, independent auditing profession whose ultimate
allegiance is to a companys creditors, shareholders, and other stakeholders. The Ministry of Finance does not have the
resources to organize and monitor continuing professional education; enact and implement auditing standards and a
professional code of ethics for auditors; and control the quality of audit activity and auditors professional conduct. These
fundamental activities, which are generally handled by a professional organization, are simply not addressed in
Macedonia.
6
Report on the Observance of Standards and Codes (ROSC)-FYR Macedonia. (2003). Accounting and Auditing, June 24, pp. 4-5.
52
Although approximately 900 companies are required to be audited, there are only 24 licensed auditors in public practice
and only 11 audit firms are registered with the Ministry of Finance. This shortage is exacerbated by the December 31
year-end. Reducing the number of firms that must be audited, by taking maximum advantage of the EU Fourth Directives
auditing exemption for small- and medium-size enterprises when there is no public interest requirement for the audit of
financial statements, would help resolve this issue. Establishing a well-functioning professional organization would also
help address the shortage of auditors. Macedonia has enacted the 1998 version of the International Federation of
Accountants (IFAC) Code of Ethics for Professional Accountants, however the existing auditor independence
requirements are not enforced. The Audit Law prohibits a statutory auditor from performing bookkeeping, appraisal, or tax
services for a client contemporaneously with the audit of the financial statements of the client.
The Macedonian legislation relating to the liability of audit firms and auditors is vague and untested. Under the Audit Law,
an auditor or an audit firm is obliged to provide auditing services duly and carefully and to observe the rules of the
profession. An auditor has so-called objective liability for any damages incurred in connection with the services the
auditor provides, and may be released from such liability only if he/she proves having exercised all reasonably required
efforts. However, the Law fails to say expressly whether parties other than the audited company (e.g., creditors,
investors, or any person relying in good faith on the auditors opinion) may have a direct recourse against the auditor. In
the absence of such provision, Macedonian lawyers contend that third parties would be in a difficult position to prove
before a Macedonian court that they have privacy and legal standing to pursue the claim for damages against the auditor.
It is also uncertain whether the auditor is liable for damages vis--vis the regulatory authorities other than the National
Bank. This issue appears even more significant considering a lack of landmark Macedonian court decisions on these
matters. The ROSC team is unaware of any civil or criminal decision of Macedonian courts on a claim against auditors.
The Audit Law requires audit firms to take out professional indemnity insurance, but the amount of insurance coverage is
not in the public domain. In the event that the auditors insurer does not satisfy the plaintiffs claim for damages, plaintiff
may initiate judicial proceedings against the audit firm and against any or all of the auditors (individuals) who have
participated in providing the audit services. Audit firms are incorporated as a limited liability company with very low share
capital, which offers little protection to claimants.
4. CONTINUAL PROFESSIONAL DEVELOPMENT OF ACCOUNTING PROFESSIONALS

The Chamber of Certified Accountants implements a system of continual professional development (hereinafter referred to as
the CPD system) in compliance with International Education Standard IES 7 and CCA Regulation No. 7/2006. The CPD is
obligatory for all certified accountants; newly certified accountants are obliged to join the education system from the year
following the year of their certification. The appropriate fulfillment report must be handed over (in written or electronic form) by
31 January of the subsequent year.
The main goal of the CPD system definitely lies in the improvement and refinement of the professional knowledge and skills of
certified accountants, as well as the development of their professional and ethical values.
The CPD can be broken down into two parts: structured and non-structured. The structured part of the CPD represents active
forms of education, e.g.:
lectures, seminars and courses; the actual length (not more than 7 hours per day) is registered in the CPD system;
professional university education in the field of economics,
professional teaching activities; 30 and 10 hours are registered in the CPD system with the full and partial teaching load,
respectively;
professional lecturing activities; the actual length (not more than 10 hours per course) is registered in the CPD system;
and
professional publishing activities; one hour per standard page is registered in the CPD system.
The non-structured part of the CPD lies in the self-study of the literature and magazines (e-sources are of course included as a
possible and from the accountants point of view major alternative), discharge of the office of a member of an expert board,
council or committee in a professional association provided that the member concerned takes an active part in the activities of
such bodies.
Members of the Chamber of Certified Accountants are obliged to complete 40 hours of the CPD per year; of this, at least 30
hours must be structured education. Should a member fail to comply with this obligation in a given period of time, the fulfillment
of the obligation may be postponed to the subsequent two years, with at least 120 hours of the CPD completed in all three
53
successive periods. It is deemed that the CPD may be terminated only in the event of the given members terminating the
discharge of his/her profession.
The Accounting Profession desires a wider range of capabilities (over and above technical ability) that accounting graduates
should possess, e.g. the ability to manage stress, an awareness of personal values, a basic knowledge of psychology,
communication skills, motivation, persistence, empathy and a sensitivity to social responsibility (Scott et al., 1998). The
profession has a responsibility towards members to encourage the cultivation of some of these skills and not focus so severely
on only technical ability. The current accounting education is often focused on the acquisition of knowledge and an overemphasis on technical knowledge in order to pass the professional examinations, rather than focusing more on the utilisation of
knowledge and more holistic attributes (Bayou and Reinstein, 2000; Koch and Kriel, 2005).
REFERENCES
Bayou, M.E. and Reinstein, E. (2000). The dual role of critical thinking in accounting education, Advances in Accounting
Education, Teaching and curriculum innovations, 2.
Fisher, R. and Murphy, V. (1995). A Pariah Profession? Some Students Perceptions of Accounting and Accountancy, Journal
of Higher Education, 9 (1).
Koch, E. and Kriel, M. (2005). An argument for integrating language or language-related skills in the accounting curriculum,
Journal of Higher Education, 19 (3), 218-229.
Scott, M.R. et al. (1998). A discriminant analysis profile of the early development of professional accounting capabilities, Issues
in Accounting Education, 13 (2), 341356.
Directive of the Czech Chamber of Certified Accountants No. 7/2006, defining the system of continued professional education,
amended by Directive No. 9/2007
Guideline on National Requirements for the Qualification of Professional Accountants UNCTAD/ITE/EDS/9, Intergovernmental
Working Group of Experts on International Standards of Accounting and Reporting (ISAR), www.unctad.org
Internal documents of the Chamber of Certified Accountants
International Education Guideline 9: Prequalification education, Assessment of Professional Competence and Experience
Requirements of Professional Accountants, www.ifac.org
International Education Standards for Professional Accountants, IFAC 2003, www.ifac.org
www.icu-praha.cz (official website of the Institute for Certification of Accountants CR)
www.kcu.cz (official website of the Czech Chamber of Certified Accountants)
54
F. Elston
AN OVERVIEW OF CORPORATE GOVERNANCE IN CHINA
Frank Elston
Metropolitan State College of Denver, USA
ABSTRACT
The paper reviews the meaning and importance of corporate governance, the institutional structures that exist, and the
corporate governance problems that typically arise. A significant problem with achieving good corporate governance lies with
the agency problem. Overcoming this problem therefore is crucial. Key characteristics of good corporate governance emerge.
Good corporate governance depends upon company specific structures such as the board of directors as well as market
information flows. Corporate governance is examined in its peculiarly Chinese setting. The paper traces the development of
reform in China and how it has impacted corporate governance. Developments such as domestic listing and foreign listing are
examined as to their impact on corporate governance. Chinese corporate governance still faces many challenges. Corporate
governance is often weak because of a variety of problems. Among these are fragmented stock ownership, lack of a bond
market, and poor quality information. Improving monitoring and the incentive structure remain significant challenges. Capital
formation and securitization are often politically driven. State owned companies may have multiple masters, whose priorities
may not lead to value creation. At the same time describing Chinese markets involves a moving target. Substantial changes
have occurred in the last decade improving corporate governance and more changes will surely come soon.
Keywords: China, Corporate Governance
CORPORATE GOVERNANCE PROBLEM

Corporate governance can be defined or described in a variety of ways. Riepe (2006, p. 44) defines corporate governance as
simply a system by which companies are directed and controlled. To a significant degree weak corporate governance means
that the organization is not creating as much value as it would with improved corporate governance. This paper will examine
corporate governance in general and corporate governance particularly in China.
One might wonder whether good governance is worthwhile. Does good governance pay? In theory, it should increase the
market valuation of companies by improving their financial performance, reducing the risk that boards will make self-serving
decisions, and generally raising investor confidence. Indeed, surveys suggest that institutional investors will pay as much as 28
percent more for the shares of well-governed companies in emerging markets (Newell & Wilson, 2002, p 20). The market
rewards firms for improving corporate governance. The reward for good corporate governance is large. By moving from worst
to best in corporate governance, companies in our sample could expect, on average, to experience roughly a 10 to 12 percent
increase in their market valuation (Newell & Wilson 2002, p 22). Higher valuations in emerging market companies result from
policy changes that improve corporate governance (Morey, Gottesman, Baker, & Godridge, 2009). Newell and Wilson (2002, p.
21) found that companies with better corporate governance did have higher price-to-book ratios, indicating that investors will
pay a premium for shares in a well-governed company. La-Porta, Lopez-de-Silanes, Schleifer, and Vishny (2002) show that
the better protection of small shareholders or minority shareholders the higher the valuation of the company. Doidge, Karolyi,
and Stulz (2002) demonstrate that foreign firms listed in the US have greater value than comparable foreign firms not listed in
the US. Therefore, improvement of corporate governance in China would be a very significant event for China as well as the
world.
Problems with the Modern Corporation and Efforts at Reform

Despite the benefits to financial markets and to all economies, weak corporate governance may be a persistent problem. This
section discusses the corporate governance problems that arise in the modern corporation and how they might be ameliorated.
Managers and shareholders have diverging interests. Managers frequently can follow their own interest at the expense of the
shareholders (Berle & Means, 1933). This is the agency problem. Shareholders are usually passive, especially when the
ownership of a corporation is greatly dispersed. They suffer a distinct information deficit when compared to the managers.
Moreover, each shareholder does not have enough at stake to monitor the firm and to seek any appropriate remedies.
55
Consequently, corrective action is not taken even when there are sufficient benefits for the shareholders as a whole. This
phenomenon results from the free rider problem (Grossman & Hart, 1980). The agency problem can worsen when the firm
enjoys ample amounts of free cash flow (Jensen, 1989). With sufficient cash the firm may have the wherewithal to spend the
money unwisely from the viewpoint of shareholders. This could entail spending on corporate executive perks such as corporate
jets, on unwise value destroying acquisitions, or unwise corporate expenditures. Also with ample amounts of free cash a firm is
not so beholden to lenders who provide outside monitoring.
One antidote to the agency problem is greater alignment of managerial and shareholder interests so that managers would
more likely engage in shareholder value creation. This greater alignment may occur when managers hold large amounts of
stock or stock options. It could also arise when salaries reflect manager performance. Jensen and Murphy (1990), however,
show very little connection between compensation and performance. Another solution to the problem of inadequate incentives
for managers is through the market for corporate control. Manne (1965) envisioned takeovers as an essential remedy to
ineffective shareholder control. The takeover itself would remove the value destroying management while the threat or real
possibility of a takeover would discipline management toward value creation.
In 1992 the British Cadbury Committee reported on corporate structure and practice. Specifically the Committee recommended
that British boards have a minimum of three outside directors and that different people hold the positions of CEO and Chair of
the Board of Directors. Not only did much of British industry adopt these recommendations, but the Committee has shaped the
development and research in corporate governance for decades. While compliance has been voluntary, the London Stock
Exchange added impetus to companies adopting the Committees recommendations when it required listed companies to
comply or explain why they were not complying with the recommendations. Dahya, McConnell, and Travos (2002) found that
outside directors constituted 47% of the total, a sharp rise from the pre-Cadbury 26%. Moreover, companies with a joint
CEO/Chair position fell from 37% to 15%. Those companies that moved toward the three outside director minimum enjoyed
improved performance (Dahya & McConnell, 2007). Specifically, the return on assets improved by almost two percentage
points. However, the separation of CEO and Chair positions did not appear to make any operational difference (Dahya &
McConnell, 2007). Independence of directors is necessary but not sufficient when the directors are not competent for the task
at hand. In the recent financial crisis it appears that boards of leading financial firms included unqualified outside directors.
Guerrera and Larsen (2008, p. 9) note the sorry state of the boards of eight leading US financial institutions: More than twothirds of the occupants of those board seats had no significant recent experience in the banking business. Fewer than half had
any financial services industry experience at all.
Efforts in the United States to improve corporate governance have not always been so welcomed. In the wake of the Enron and
WorldCom accounting scandals, Congress passed the Sarbanes-Oxley Act in 2002. It demanded certain measures such as
CEO certification of accounting statements that remain controversial. Whether it represents a step forward for US corporate
governance is unclear given the costs of implementation. Compliance to Sarbanes-Oxley is expensive, notably for small
companies (Switzer, 2007). As a generality, effective regulation requires cost effective and enforceable measures. However
debatable particular steps may be, governmental policies and country conditions can make a considerable difference in the
efficacy of corporate governance. Among critical country factors are the legal structure, GNP per capita, and stock market cap
to GDP. (Doidge, Karolyi, & Stulz, 2007). The last two items are widely used as indicators of developed countries. Newell and
Wilson (2002, p. 21) organize corporate governance characteristics into four major groups: accountability, disclosures and
transparency, independence, and shareholder equality. In turn accountability incorporates transparent ownership, board size,
board accountability, and ownership neutrality. Disclosure and transparency entails two things: broad, timely, and accurate
disclosure and accounting standards. Independence depends on dispersed ownership, independent audits and oversight, and
independent directors. Shareholder equality refers to one share, one vote. Bebchuk, Cohen, and Ferrell (2009) try to make
corporate governance more concrete by considering what matters in corporate governance. In an article with that phrase as the
title they found six governance items of most importance: staggered boards, limits to shareholder amendments to by-laws,
supermajority requirements, poison pills, and golden parachutes. These six items that matter in corporate governance concern
the effective power of shareholders and the ability of outsiders to do takeovers.
CORPORATE GOVERNANCE AND REFORM IN CHINA

After the fall of communism in certain eastern European countries, the changes were sweeping. Poland is an example, where
under development guru Jeffrey Sachs the reforms became known as shock therapy. In contrast the Chinese approach has
been characterized as gradualist. They have preferred to build upon the existing structure rather than to tear it down. This can
be illustrated by the over arching philosophy of the system. As long as Mao lived China could only be rigidly socialist and in fact
under Maoism revolutionaries had to strive continually to achieve true socialism as bourgeois tendencies tended to creep back
into the system. In contrast under Deng Xiaoping China became less ideological and yet did not cleanly break with the ideology
56
F. Elston
of socialism. State owned enterprises continue to dominate the commanding heights of the economy. And it is this part of the
economic system that has had substantial corporate governance problems. Thus with the desire to adopt a more market
oriented system while continuing to pledge fealty to the socialist system China has embarked on incremental, but continuous
change. In contrast, the desire to maintain the socialist system in Eastern Europe was decidedly less of an imperative.
In 1992 Deng toured the Southern Chinese area known as the Pearl River Delta. There he endorsed the idea of a Special
Economic Zone, a Chinese version of free trade zones. While this trip to the South may have been a small step its
consequences have been monumental, as anyone can attest who has spent any time in the Pearl River Delta. Yet, moving
society away from the socialist model would be incremental. The 14th Party Congress in 1992 endorsed the socialist market
economy (Chiu & Lewis, 2006, p. 41) and the 15th Party Congress of 1997 upgraded the role of private ownership as a way to
achieve socialist goals (Chiu & Lewis, 2006, p. 48). For the first time in the history of the Peoples Republic of China outright
privatization was possible. In adhering to a gradual reform approach, however, the large state owned enterprises were not
privatized. They were publicly traded, but the bulk of ownership and control resided in the state (Wong, 2006, p. 392). These
state owned enterprises represent most of heavy industry in China (Chiu & Lewis, 2006, p. 56). The state has retained the
control of the commanding heights of the Chinese economy.
With the gradualist approach regulation remains, but evolves. Gradualism should not be taken as a permanent adoption of a
mixed economy that eschews the more open and free versions of capitalism. It is a process that allows for change at a slower
pace than shock therapy. At the same time the Chinese authorities are aware of the pitfalls associated with a fast pace of
liberalization (Yue & He, 2008, p. 199). Mindful of the Asian crisis of the late 1990s, they have adopted a cautious approach
most notably in respect to financial liberalization (Yue & He, 2008, p. 199). For instance they have allowed convertibility of the
Renminbi, but limited to particular institutions such as the qualified foreign institutional investor and qualified domestic
institutional investors (Yue & He, 2008, p. 199). This way they can test the waters, incrementally moving from socialism
towards capitalism. With the recent worldwide financial crisis the Chinese may be less anxious to liberalize their financial
markets and to open them to foreigners. The result may be an even slower pace to gradualism. It may also mean a greater
commitment to extensive regulation as a long term end.
In contrast to the gradualist, wise Party, mixed economy model is the thesis put forward by Yasheng Huang, who argues that
increasing private property rights and private entrepreneurship propelled the Chinese economy in the 1980s and 1990s. The
great advances were associated with the rural economy especially in the 1980s:
What actually happened is that early local experiments with financial liberalization and private ownership, in the
1980s, generated an initial burst of rural entrepreneurialism. Those earlier gains --- not the massive state-led
infrastructure investments and urbanization drive of the 1990s --- laid the true foundation for the Chinese miracle
(Huang, 2009, p. 150).
Huang (2008, p. 36) distinguishes between the security of property and the security of oneself. Rights in property today in
China are not well defined and secure, but security of oneself is much greater today than in the China before 1980. This is a
great improvement in incentive for entrepreneurship and can explain in part the Chinese miracle.
Shareholding System
In looking at corporate governance one can examine outside control or monitoring mechanisms such as governmental
regulation, industry self-regulation, Party influence, transparency, lenders, rating agencies, and investment bankers. Within the
firm one can examine the effectiveness of the shareholding system and the board of directors. In general the system of
shareholding has resulted in ineffective control (Chiu & Lewis, 2006, p. 132). Moreover, just as the shareholding system
provides weak corporate governance the board of directors is not particularly important in corporate governance in China (Fan,
Lau, & Young, 2007). According to Huang and Orr (2007, p. 108): In Chinas state-owned enterprises, the board of directors
often seems to have no more than the ability to rubber stamp the big decisions. In the year 2000, only 8 of 3,000 corporate
directors in China were considered independent and of these eight several had just lent their name to the firm (Green, 2003,
p. 185). From this situation improvement should not be too difficult. The China Securities Regulatory Commission now requires
listed firms to have three independent or non-executive directors (Green, 2003, p. 185).
The Chinese shareholder system can be compared to those in US and the corporatist models in Germany and Japan (Chiu &
Lewis, 2006, p. 141-146). The US model of corporate governance emphasizes disclosure and shareholder rights, whereas the
corporatist model emphasizes concentrated ownership and cross holdings. In terms of the US market model and the European
control model, Coombes and Watson (2001, p. 90) place China closer to the European control model. In light of that
57
perspective Coombes and Watson (2001, p. 92) suggest these reforms for Chinese corporations: greater transparency,
internationally recognized legal standards, enhanced shareholder rights, more effective board practices, and listing on a major
international stock exchange. Ferreira and Laux (2007) show that firms that are not particularly susceptible to takeovers are
likely to exhibit reduced flow of information. Chinese firms would fit the model of very low likelihood of takeover. Green (2003,
p. 150) attributes the low rate of hostile takeovers to the need to seek governmental approval. The low incidence of hostile
takeovers does not facilitate the removal of incompetent managers nor aligning the interests of shareholders and managers.
The Chinese stockholding system is itself a problem in securing better corporate governance. Ironically, its evolution, if not
creation, was aimed at improving corporate governance. Expanding ownership by selling stocks raises capital. It also partly
privatizes state owned companies, a step which may help improve corporate governance. Opening ownership to Chinese
individuals, who lack good avenues for investing, leads to partial privatization of state owned companies. But this step may lack
the muscle to install effective corporate governance. An investment stake from a single foreign firm, however, is promising for
two reasons: the concentrated ownership of a new owner and the expertise of that owner. One example is the investment of
Blackstone into BlueStar, whose chief executive Ren Jianxin saw as a pivotal development of BlueStar, transforming the
corporate governance and incentive system (Koch & Ramsbottom, 2008, p. 7).
Chinese shareholding consists of three major forms: state shares, company or legal person shares, and private shares. Legal
person shares can be thought of as indirect government shares. As a general rule these shares cannot be sold so that large
state owned companies are not privatized. Less than one-third of listed companies shares are actually listed and traded.
(Chiu & Lewis, 2006, p. 112 and 132; Wentao, 2007, p. 203). This situation of having no trading by the large dominant
shareholders, but trading by the small relatively powerless shareholders is unique (Shi & Yong, 2007, p. 3). China lacks the
control and efficiency improvements that may result from activity of private equity firms and other activist institutions such as
Calpers and TIAA-CREF. Shareholder rights in China have been treated as something of an oxymoron. A landmark study of
shareholder rights rated Chinas shareholder rights lower than those of other transitional economies (LaPorta, Lopez-deSilanes, Schleifer, and Vishny, 1998). Moreover, enforcement of shareholder rights is not good (Tenev & Zhang 2002).
Generally people believe that this system of shareholding has a deleterious impact on corporate governance. (Wentao, 2007,
p. 205). Besides this fragmentation of shareholders, the type of individuals holding and trading stocks in China is not conducive
to effective governance. Chinese stock markets are dominated by a multitude of small individual investors who are neither well
informed nor protected. (Eun & Resnick, 2009, p. 88). About 75 percent of the liquidity on the Shanghai Stock Market is
estimated to be in the hands of individual investors who bring something of a gambling mentality to their trades. (Trippon,
2009, p. 3). Without effective protection of minority shareholders, controlling shareholders are able to extract private benefits to
the detriment of other shareholders (Albuquerue & Wang, 2008). Nonetheless, in analyzing corporate governance some
scholars advocate de-emphasizing shareholder rights and instead focusing on decision making (Chiu & Lewis, 2006, p. 132;
Pound, 2000, p. 81).
There is another way in which some scholars view the apparently defective shareholding system in China as posing less of a
problem for corporate governance. La Porta et al. (1998) consider concentration of ownership as a partial substitute for
shareholder rights. Their idea is that where ownership is concentrated it has the power and the incentive to monitor firm and
management performance to effect needed changes. The dominant shareholder for many large Chinese firms is the state. With
the dominant shareholder monitoring the firm there will be spillover benefits accruing to the other shareholders, who are not
expending resources in monitoring so that the level of monitoring will be suboptimal (Schleifer & Vishny, 1986). Moreover, it is
not clear that the state owned enterprises are sufficiently motivated to monitor and that the party or state interest coincides with
other shareholders. Ordinary shareholders are interested in value creation, whereas the government qua shareholder may be
interested in societal and Party goals such as maintaining employment. Apart from the incentive to monitor the ability to monitor
may not be as great as one might assume. Chiu and Lewis (2006, p. 132) report that generally those entrusted with managing
state assets lack the requisite information to do a good job so that the SOEs continue to operate without effective oversight.
Private firms may be expected to have better performance because of the incentives for value creation, while state owned firms
may be expected to perform less well. Indeed, Bai, Liu, Lu, Song, and Zhang (2004) demonstrate that when the largest
shareholder is the government market value suffers. Yet, other research purports to show that problems develop in the mixed
control case. When the state is a dominant shareholder it can monitor management with a degree of effectiveness. With mixed
control, state and private, there is no dominant shareholder to mitigate the agency problem. Ng, Yuce, and Chen (2008)
showed with a sample of 4315 firms during 1996-2003 that mixed control firms performed significantly worse than state or
private controlled firms. Still others have emphasized whether the executives of a firm manage the firm like a private enterprise
despite significant government ownership (Farrell, Gao, & Orr 2004, p. 28). Farrell, Gao, and Orr (2004, p. 28) cite the cases of
Haier and TCL, two state owned enterprises in the consumer electronics industry. This industry can be characterized as very
58
F. Elston
competitive with ease of entry. One might reason that competitive conditions have influenced the state to adopt a private
enterprise like management.
The story of mixed control does not just involve divided control between state and private interests, but it also arises when
control is divided among state entities. In 2003 the Chinese government established the State Assets Supervision and
Administration Commission (SASAC) to make decision making and governance more timely, effective, and rational. The
establishment of SASAC in March 2003 represented a significant departure from the previous anarchic situation where
hundreds of government ministries and other bureaucratic entities got to have their say in the daily operations of SOES [state
owned enterprises] (Fernandez-Stembridge & Huchet, 2006, para. 4).
Stock Exchange Listing

The integration of Chinese companies into the world economy continues. The listing of companies on exchanges facilitates the
raising of capital and the improvement of corporate governance, particularly if they become listed on foreign exchanges.
Regardless of the motivation for listing, it can serve as a gatekeeper, whereby Chinese companies are subject to greater
assessment and transparency. In fact before the actual listing companies are subject to scrutiny. Initially local governments
under the Chinese quota system had the central role of determining which firms could proceed to public trading. Naturally many
listed firms were not the best firms. By 2000 the securities firms became the important player in determining which firms could
go public. For the securities firms and the market to accept candidates, the firms had to be cleaned up. Listing standards in
China are not as high as those on foreign exchanges.
As of late 2009 forty six Chinese companies were listed on the New York Stock Exchange. Such listing requires firms to meet
and to continue to meet certain standards. By listing on foreign exchanges Chinese companies are immediately exposed to
outside pressure and to objective measures of performance. (Desvaux, Wang, & Xu, 2004, p. 102) Non-US firms may elect to
meet the domestic standards or the Alternate Listing Standards. The Alternate Standards allow foreign firms to meet minimum
stockholding standards on a world rather than a North American basis. Large Chinese firms usually easily meet the size and
earning requirements, domestic or Alternate Standards. For instance under the Alternate Standards a foreign firm must show a
minimum of 5,000 shareholders (100 or more shares), 2.5 million public shares, and $100 million market value. Also the foreign
firm must meet minimum amounts of one of the following three: earnings, operating cash flow, or revenues and market cap. In
general the obligation to continue to meet standards entails a somewhat lower level to achieve the initial listing. In addition to
NYSE Chinese companies are listed on the Nasdaq and the OTC market. NYSE standards are the highest. Both Nasdaq and
NYSE have required the provision of financial statements at international standards. Yet, some believe that public listing failed
its primary objective of effecting changes in corporate governance. (Walter & Howie, 2003, p. 115).
Governmental And Societal Parameters

The role of the Communist Party in China (Gongchan Dang) is pervasive. This is true in regard to formal structures.
Appointment of the CEO and other senior executives of large SOEs must be approved by the Party organization (Chiu &
Lewis, 2006, p. 175). Chiu and Lewis (2006, p. 120) regard SOE managers as political appointees of the Party, like mayors,
ministers and Politburo members. The Party also exercises control apart from the formal structure. The Party is like an
invisible force that makes the important decisions (Huang & Orr, 2007, p. 108). Yet it can be very visible and very human: Any
one party secretary in a small city can have a huge impact (Thornton quoted in Barton & Huang, 2007, p. 104). Chinese
companies explicitly recognize the long-term importance of their government relationships, routinely meet with officials at all
levels of government (especially the highest), and constantly look for areas where the governments agenda and their own
interests overlap (Grant, 2006, p. 31). Many managers are oriented toward the state and Party. They may define success in
terms of output and employment rather than profits or value creation (Desvaux et al., 2004, p. 98). Moreover, the dictates of a
market economy may be decidedly unpalatable to many managers. The government and management of banks may not wish
to cutoff distressed borrowers or demand restructuring (Berger, Nast, & Raubach, 2002, p, 142). Indeed many Chinese banks
had excessive levels of nonperforming loans at the beginning of this century to a significant degree because they had made
loans at the behest of the government to state controlled entities. Influential organizations and people meddle in the lending
decisions of banks (Bekier, Huang, & Wilson, 2005, p. 112). Moreover, fraud was involved in about a third of new
nonperforming mortgages (Bekier et al., 2005, p. 114).
The political character of the management and of the firm interferes with achieving the rule of law. Improvements of corporate
governance would require the triumph of the rule of law, which at a minimum means that the identity of the person or company
should not impact government support, formal or informal. Thus SOEs should not enjoy preference over private firms, domestic
firms over foreign firms, or firms or people associated with certain ethnic groups over others. If the rule of law is not observed
then the allocation of capital would be adversely impacted. Regulation could prevent egregious cases of fraud, require greater
59
transparency, and in general improve corporate governance. Yet regulation can be counter productive and regulatory agencies
can become corrupt. Green (2003, p. 213) concludes that many of the institutions set up by the government actually foster that
corruption and poor governance rather than act to limit and resolve it.
Any examination of business or more specifically corporate governance must come to grips with the role of Chinese culture. To
get what one needs or get things done the Chinese may rely on guanxi (connections). Guanxi may bring success in the job
market and may continue to operate in business relationships. For example, many industrial managers in the mid 1980s owed
their jobs to the personal connections they held with bureaucratic superiors and depended on these connections for bail-out
from serious economic problems that plagued their firms (Su, 2003, p. 44). While western business, of course, is not immune
from the role of connections, guanxi has played a most prominent role over the centuries in China. Formal structures may
count for less than informal guanxi created structures in actual decision making (Seligman, 1999, p. 180). Guanxi gains greater
significance in a society with weak legal development, especially regarding commercial relationships. Peerenboom (2002)
writes extensively about the China with weak legal development, lacking the rule of law. As Chinese business develops,
matures, and integrates itself in the world the role of guanxi may erode. Grant (2006, p. 30) acknowledges the role of guanxi,
but notes that fewer decisions affecting businesses are being made for the first time, and precedents can be difficult to break
no matter whose ear a senior executive can bend. Moreover, players on both sides of the table are much more professional
than they were a decade ago. Guanxi may also play an interesting role in mitigating the effects of corruption. As a whole
corruption has a negative effect on economic growth. . . . However, this negative effect may be reduced when corruption
interacts with a higher level of social trust (Li & Wu, 2007, para. 30). China is a country with substantial social trust built on
guanxi. This means that the bribes can be extended beyond friends and family, perhaps to the highest bidder who has the
most efficient business operation (Li & Wu, 2007, para. 9). In this guanxi society corruption can be more efficiency enhancing
than in the society with weak social connections.
Another very important Chinese cultural attribute that affects corporate governance is mianzi (face). Chinese are said to
emphasize greatly the need to save face. This of course refers to oneself, but can also entail avoiding confrontation with others
where they might risk losing face. Berger et al. (2002, p. 142) relate the story in which Chinese bank officers were too
embarrassed to telephone delinquent borrowers to inquire why payments were late. Where bank officers have greater
incentive to monitor risk, where they have their own wealth or bonuses at stake, they might very well be more effective at
monitoring despite cultural inhibitions in doing so. In other words, cultural considerations are real, especially where
countervailing incentive effects may be weak. To the extent that corporate governance improves in China, certain cultural
effects like mianzi may recede in importance.
Discipline exercised by outside parties can be an important way in which corporate governance works. These may consist of
the legal system as well as various financial and market interests. Reforms in the legal system have attempted to enhance the
role of the latter. For instance, the 1999 Securities Law changed the allocation system for IPOs toward greater supervision
from securities firms and away from state bureaucratic processes. Securities firms can play a significant role in producing
information about a firm. Such information flows shape attitudes and decisions of investors and potentially the government and
the firm itself. So far, institutional investors, such as mutual funds, pension funds, and insurance companies, who can produce
high quality information about listed companies and effectively protect shareholders rights, play a relatively minor role in China
(Eun & Resnick, 2009, p. 88). There is a distinct lack of bond issues (Wentao, 2007, p 209-210). The same types of
infrastructure projects that are financed by revenue bonds in the US are financed by equity in China (Walter & Howie, 2003, p.
107). Thus bond analysis and bond ratings are not as plentiful in China as they are in the US. As few Chinese firms issue debt
to the public, there is very little market driven assessment of these securities and hence of the firm by investment analysts and
rating agencies. Other sources of information are the firms, financial press, and accounting statements. The Chinese
government appears open to greater information flow and citizen access to information (Bandurski, 2007, para. 7). But much of
the actual information flow from firms appears to be public relations (Bandurski, 2007, para. 8). Nonetheless, slowly new rules
requiring greater disclosure and accounting standards are improving corporate governance (Green, 2003, p. 184).
SUMMARY AND CONCLUSIONS

Corporate Governance refers to the way corporations are governed or directed. Better corporate governance should enhance
market value and should result in better allocation of capital and well-being of society. Corporate governance in China has
been particularly weak. Corporations, especially the SOEs which dominate the commanding heights of the economy, are
riddled with inefficiencies, agency and incentive problems. Generally these can be laid at the footsteps of the government and
the Party. Nonetheless, Chinese corporate governance has made notable strides. One of these is the foreign listing of Chinese
companies, which has aided firms in improving corporate governance. Table 1 below highlights some of the key corporate
governance factors in the context of China.
60
F. Elston
Table 1: Corporate Governance Factors in China

Factor
Accounting
Board of directors
Bondholders
Concentration of ownership
Guanxi
Possible Impact
Disclose condition of firm, improve accuracy of pricing
and allocation of capital
Discipline, monitoring
Overcome free rider problem, monitor, effect change
Override economic factors, overcome bureaucratic
obstacles, inadequate monitoring and management
Lenders
Mianzi
Party
Override economic factors
Property rights
Incentives for efficient use of capital
Regulation
Require disclosure, protect minority shareholders
Rule of law
Efficiency and rationality
Security firms
Screen firms for IPOs, research
Shareholders
Takeover
Monitor, control for value creation

Discipline from threat or actual change
Agenda other than value creation
Impact in China
Improving
Weak but more independent directors
Very few debt securities
Not dynamic as large owner is state
May help to offset partially the deleterious
impacts of corruption
State owned banks provide substantial
funding to SOEs, apparently politically driven
Profit incentive, if strong, may offset it
Extensive power over SOEs
Unclear, but mild improvement overall;
substantial increase in personal security
Some streamlining and improvement, but also
corruption
Weak, but slowly developing
Greater role; previously government had main
role in taking firms public
Shareholder rights weak, little activism
No credible takeover threat
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62
F. Haq, A. Medhekar and P. Bretherton
PUBLIC AND PRIVATE PARTNERSHIP APPROACH FOR APPLYING THE

TOURISM MARKETING MIX TO SPIRITUAL TOURISM
Farooq Haq1, Anita Medhekar2 and Phil Bretherton3

Charles Darwin University1, 3 and CQ University2, Australia
ABSTRACT
This conceptual paper discusses the growing importance of spiritual tourism in particular as a separate niche market segment
in the world economy. This paper presents the view that considerable potential exists for spiritual tourism product if marketed
effectively. The paper proposes the application of the public and private partnership approach (PPP) from economic theory to
design effective marketing strategies for spiritual tourism. In this paper, the PPP framework is presented as to effectively apply
the tourism marketing mix for marketing spiritual tourism. Further, all elements of the tourism marketing mix are separately
analysed and their application for spiritual tourism is discussed, which critically suggests their usefulness to create and apply a
new PPP framework-model for marketing strategy for spiritual tourism. The important role of PPP as a critical element of the
marketing mix for spiritual tourism is an outstanding contribution of this research paper. This study suggests that PPP will
enhance the competitive advantage of the spiritual tourism product through collaboration, and partnerships between the
various stake holders. The research offers a unique combination of economics and marketing theories to illustrate the
significance, growth and economic sustainability of spiritual tourism in the 21st century and beyond.
Keywords: Spiritual Tourism, Marketing Mix, Strategy, Public and Private Partnerships
INTRODUCTION
The significance of tourism in the world economy has grown stronger over the years and people are still indulging in various
types of tourism even during the current global economic recession (Rosentraub & Joo 2009; Smith 2009; Vu & Turner 2009;
Cohen 2008). Tourism expenditure is also growing and contributing to monetary circulation in the world economy. Tourism
expenditure was observed to be US$533 billion in 2003 and it has been increasing by 4% annually since 1995 (Fleischer &
Rivlin 2009; Kulendran & Dwyer 2009). Tourism has consistently been ranked as one of the fastest growing industries in the
world and the largest industry in terms of employment (Vu & Turner 2009). Despite the 2008 slowdown in tourism growth,
global tourist arrivals grew by 2% and reached 924 million, an increase of 16 million over 2007 (WTO 2009).
Tourism has become one of the worlds largest service sector industries with enormous potential for further growth; however, it
is sensitive to external factors, like terrorism, natural disasters and infectious diseases which can cripple the local economy at
destinations in the poor developing countries. Therefore it is important to have a diverse basket of tourism destinations and
types such as recreational, historical, cultural and spiritual religious, supporting the tourism industry in general. Religious
tourism according to Timothy and Olsen, (2006) is one of the ancient forms of non economic travel. According to World
Tourism Organisation WTO (2004), 689 million people travelled to foreign countries in 2000, out of which nearly 40 million
people travelled for spiritual purposes from Christian, Muslim and Hindu families and there is a growing trend in the spiritual
tourism market segment (mosques, churches, synagogues, temples, cultural and historical sites linked with spirituality) along
with cultural and heritage tourism, spending US $ 478 billion. Factors such as globalisation, education, high disposable income,
industrialisation, opening up of foreign markets, better advertising and strategic marketing policies and techniques have
contributed to the growth of tourism as an important service sector for the economy.
Throughout history, oral, archaeological and written records document peoples involvement with spiritual experiences and their
journeys to engage in spiritual activities (Blomfield 2009; Timothy & Olsen 2006; Sharpley & Sundaram 2005; Rountree 2002;
Shackley 2002; Rinschede 1992; Burton 1855). The term spiritual tourism is largely unheard of in both the academic literature
and the tourism trade press, yet more people visit Mecca, the Vatican and/or Bethlehem/Jerusalem per year than attend the
World Cup, for example. Currently there are no industry recognised standard marketing strategies that could be applied to this
growing spiritual tourism product. The research study in this paper suggests that the tourism marketing mix could be applied by
adopting the PPP framework derived from economic theory as an important business framework for effective marketing of
spiritual tourism (Montanheiro, Kuznik & Ochojski 2003).
63
This paper is structured as follows. The first section of the paper provides a background introduction to the growing importance
of the spiritual tourism industry in general as a separate niche market segment in the world economy. Section two puts forward
a literature review specific to the spiritual tourism, tourism marketing mix strategies and the public and private partnership
theory. Section three explores the tourism marketing mix proposed by Morrison (2002) based on product, price, place,
partnership, promotion, people, packaging and programming and analyses its application for spiritual tourism . Section four
applies the public and private partnership approach as an important business framework for effective marketing of spiritual
tourism with examples. Section five provides some conclusions and directions for future research.
LITERATURE REVIEW
Spiritual Tourism
It has been observed by various authors that spirituality in general has recently become an important subject of research in
social and business areas (Cochrane 2009 ; Simpson, Cloud, Newman & Fuqua 2008; Pesut 2003; Delbecq 2000; Konz &
Ryan 1999). The mounting interest in spirituality has influenced a number of industries around the world (Brownstein 2008;
Fernando & Jackson 2006; Heintzman 2003; Mitroff & Denton 1999). The tourism industry is one of the industries which have
been affected by this growing interest in spirituality (Andriotis 2009; Cochrane 2009; Finney, Orwig & Spake 2009; Geary 2008;
Tilson 2005; Cohen 1972). Spiritual tourism is growing and is an important segment of a massive tourism industry catering to
needs of spiritual tourists in particular and facing competition as well as problems of survivability with other segments of the
tourism industry. Spiritual tourism is a new concept but it is certainly not a new phenomenon. Based on the review of the
literature, the interviews with spiritual tourists in Australia, Pakistan and the UK, this research defined a spiritual tourist as
someone who visits a specific place out of his/her usual environment, with the intention of spiritual meaning and/or growth,
without overt religious compulsion, which could be religious, non-religious, sacred or experiential in nature, but within a Divine
context, regardless of the main reason for travelling (Haq & Jackson 2009, p. 145).Therefore, this study considers spiritual
tourism as a type of travel taken by people from any religious background, with the goal of achieving spiritual development by
realising a better connection with God, the High Spirit or the Supreme Being.
Marketing Mix Strategies for Spiritual Tourism

The marketing mix based on 4Ps has been reviewed and analysed repeatedly over the years by various marketing scholars
(Constantinides 2006; Moller 2006; Hakansson & Waluszewski 2005; Rafiq & Ahmed 1995; Gronroos 1989, 1997). Booms &
Bitner (1981) who acknowledged the gap left in the marketing mix for services, they added 3 more Ps for services marketing
that included process, physical evidence and participants. In marketing tourism products and services, Morrison (2002) is
recognized as the authority to derive the 8Ps of the marketing mix, the application of this marketing mix to spiritual tourism will
be discussed in this paper.
Gronroos (1997) has criticised the adoption of the marketing mix in marketing strategy theory and suggested the paradigm shift
towards relationship marketing. In his study he completely relied on relationship marketing as the only solution and failed to
realise the virtues of the marketing mix. Moreover, relationship marketing has been criticised for being too conceptual and
failing to provide any testable theory (Palmer & Wilson 2009). The social marketing concept has also been observed to be
missing in the marketing mix (Dann 2009). However, Rafiq and Ahmed (1995) and Borden (1964) illustrated the usefulness of
the marketing mix as a generic marketing strategy. Constantinides (2006) also analysed the potential application of the
marketing mix and its value to real world marketing. Various authors have analysed the potential application of the marketing
mix and its value to real world marketing (Constantinides 2006; Moller 2006; Rafiq & Ahmed 1995). There is a significant gap in
the literature on tourism marketing strategy as little research has been conducted on the marketing strategy applicable to
tourism products and this area warrents considerable attention (Das & DiRienzo 2009; Hassan & Craft 2005; Riege & Perry
2000; March 1994; Chon & Olsen 1990).
A number of public and private tourism organisations have been aggressively marketing tourism products and services at
national and international levels. Thus, marketing tourism products is of great interest to a range of stakeholders involved with
the business of tourism (Tribe 2008). However, it should be noted that regardless of the potential, there is a lack of empirical
research into tourism marketing (Li & Petrick 2008; Buhalis 2000; Riege & Perry 2000; Chon & Olson 1990). The research on
tourism marketing has been limited by being conducted within specific settings or about specific products and this applied
research has prevented generic concepts being derived from the research. Spiritual tourists are special interest tourists
undertaking travel to achieve specific objectives and they have very specific needs. It has been suggested that since services
inherently have an intangible nature and they have intensive customer interaction, customer orientation plays a critical role in
terms of commercial success for service organisations (Dann 2009; Wagner, Hennig-Thurau & Rudolph 2009; Daniel & Darby
1997).
64
Public and Private Partnership

From a traditional Keynesian policy approach of totally publicly funded projects, to a Monetarist approach of totally privately
funded projects, along with Porters idea which is based on the premise that each group will look after itself almost in
competition on the notion of being strategically desirable cannot be totally suitable today. PPP is justified on the basis that the
gains from bringing together the key players improves quality and availability of goods and services without requiring additional
tax to fund new projects.
Various forms of the Public-Private Partnership (PPP) instrument are now widely used to deliver infrastructure and other public
good type services (Montanheiro, Kuznik & Ochojski 2003, Medhekar 2003 and 2005; Barczyk & Montanheiro 2001). It
accounts for a very diverse range of cooperative or collaborative efforts that, implies a commonality among them which does
not exist (Schaeffer and Loveridge 2002).The term PPP has at least six distinctive meanings. PPP as management reform,
problem conversion, moral regeneration, risk shifting, restructuring the public service and as power sharing (Linder 2000). The
Ministry of Public Affairs in British Columbia (1999) defines PPP in the following terms:
Public-Private Partnerships (PPPs) are arrangements between government and private sector entities for the purpose
of providing public infrastructure, community facilities and related services. Such partnerships are characterised by
the sharing of investment, risk, responsibility and reward between the partners. (cited in Schaeffer and Loveridge
2002, p.170).
Public-Private Partnership defines cooperation between the public sector or government and the private sector, non profit
organisations and international groups and institutions. Partnerships are essential for planning and implementing federal, state
and local government tourism related infrastructure initiatives necessary for supporting sustainable tourism development.
Initially, it was the government sector that played a major role in infrastructure provision in general. Since the privatisation
initiatives begun in the 1980s by the Reagan and Thatcher governments, which were then adopted widely, the public sector
was keen to shift the provision of health, education, telecommunications and transport services etc, to the private sector and
non-profit organisations to keep expenditure under control and reduce debt. Now after the mass privatisations of the 1980s and
1990s, there is a move towards partnerships between the private and public sectors on a large scale in the UK, European
Union, Canada, Australia and more recently in many developing countries. Provision of Infrastructure has been opened up to
competition in many countries developed and developing, encouraging the private sector participation due to high deficit in the
public sector to finance all infrastructure facilities. Thus high congestion cost, budgetary and fiscal deficits, inadequate
provision, poor quality and maintenance of transport infrastructure facilities can be avoided by encouraging Public Private
Partnership (PPP) or Private Finance Initiatives (PFI) similarly adopted by other developed countries(Montanheiro, et al. 2003;
Mbone-Enie 2003, Markell 2009).
The public sector was also criticised for inefficiency, bureaucratic delays and red tape, high costs and budget deficits. It was a
general belief that government had failed in the provision of public goods and services and that the private sector would
provide similar goods of better quality at a lower cost. This led to privatisation initiatives around the world in major developed
countries. But in many cases, privatisation without proper regulation and corporate governance resulted in private sector failure
and the collapse of many large firms. Given these failures, a new form of governance PPP of a cooperative nature is often
necessary for the provision of public goods and services including spiritual tourism destination related infrastructure to achieve
common goals and objectives of sustainable growth of this market segment. Sustainable partnership in spiritual tourism
involves sharing of responsibilities, planning, developing objectives, product innovation, promotion, packaging, and marketing,
undertaking financial risks, accountability and implementing programs.
DISCUSSION
Application of the Marketing 8Ps, to Spiritual Tourism
To ensure that there was a first-order fit between the proposed marketing strategies and the marketing activities selected to
implement each strategy, the discussion of spiritual tourism marketing strategies for specific groups in this paper adopted the
tourism marketing mix classified by Morrison (2002). It has been suggested that despite its simplicity and applicability, the
marketing mix requires modification but it has not been suggested how this modification should take place or how it would
improve the existing concept (Constantinides 2006; Moller 2006; Hakansson & Waluszewski 2005). The elements of the
tourism marketing mix and their application for spiritual tourism is discussed below.
65
The product consists of what is being offered to the spiritual tourists and its features and benefits (Yuan, Cai, Morrison & Linton
2005; Lee, Morrison, Lheto, Webb & Reid 2005; Feng, Morrison & Ismail 2003). Although the spiritual tourism product has long
been in existence, with the recent increase in interest in spirituality it seems likely that spiritual tourism is on the move towards
the growth phase (Piedmont & Leach 2002). Adopting the perspective of McKercher (2002), spiritual tourism could be viewed
as a broad concept that involves tangible and intangible products. The tangible items include churches, mosques, temples,
shrines and other centres with a spiritual focus. The intangible products and services include organized spiritual events,
seminars, festivals and gatherings with spiritual motives. Moreover, the spiritual tourism product consists of uni-religious, multireligious and non-religious brands linked to the attitudes and understanding of the spiritual tourists. These products offer
different value to different spiritual tourists, for example, religious fulfilment, understanding various spiritual traditions, religious
or non-religious spiritual growth in a sense of knowing better or getting closer to God, the High Spirit or the Supreme Being.
Product differentiation plays an important role in a competitive advantage strategy although differentiation by itself is not
sufficient to engineer a competitive advantage (Tollin & Jones 2009). Spiritual tourism being part of the broader industry of
tourism, it has to be differentiated from other tourism products. Spending money on product innovation, development,
improvement, promotion and distribution to achieve a dominant position in the market is a critical strategy for spiritual tourism
(Read, Dew, Sarasvathy, Song & Wiltbank 2009).
People play an important role in a marketing strategy for a service product (Dev, Zhou, Brown, & Agarwal 2009, Lee et al.
2005). In spiritual tourism many people interact with the tourists at various places during the experience. These people range
from the travel agents to the destination guides who have the opportunity to transform transaction to relationships (Palmer &
Wilson 2009). These people need to be selected and trained so that they meet tourists expectations. The spiritual destination
guides should be well trained, educated and informed about the religious traditions, history and culture connected to the place
and the visitors. The training programs should also focus on English or any other relevant language skills. Well trained people
during the spiritual tourism process will be able to build good communication channels to facilitate the delivery of messages
between service providers and buyers of spiritual tourism products (Farrell & Oczkowski 2009; Hunt, Arnett & Madhavaram
2006; Lindgreen 2001; Gronroos 1997). An effective interaction of the people with the spiritual tourists will lead to strong
relationship marketing that will result in long term marketing of spiritual tourism of the particular destination (Li & Petrick 2008;
Moliner, Snchez, Rodrguex & Callarisa 2007).
Packaging and programming has become an established element of the marketing mix for services (Alzua et al. 1998;
Morrison, Hsieh & O'Leary 1994). Packaging combines all types of relevant services presented as a single-price offering
(Moliner et al. 2007; Nishimura, King & Waryszak 2007; Morrison 2002). Programming presents the design and delivery of
special activities, events, or programs to motivate customers to spend more and provide more value in a package (Mowlana, &
Smith 1993; Morrison 2002). The spiritual tourism programs should offer spiritual education and knowledge about various
traditions leading to global spiritual unity and growth by seeking God, the High Spirit or the Supreme Being. Packaging for
spiritual tourists should be designed for two issues, the religious and non-religious segments and the individual and group
segments. The group segments need to be further divided into familiar groups such as family or friends, and the unfamiliar
groups where strangers meet and travel together for spiritual growth.
Place refers to the distribution of spiritual tourism products and services to spiritual tourists (Yuan, Cai, Morrison, & Linton
2005; Feng, Morrison & Ismail 2003). Several authors in tourism marketing agree that the distribution of any type of tourism
product is critical for the success of marketing the product (Huang, Chen & Wu 2009; Pearce, Reid & Schott 2009; Smith 2007;
Pearce & Schott 2005). A recent study revealed that tourism distribution intermediaries generally consist of third party
websites, control reservation offices, global distribution systems, travel agents, wholesalers, switch companies, direct sellers
and inbound operators (Pearce, Tan & Schott 2007). The tourism literature suggests that the distribution system is becoming
more and more complex due to the evolution of many new intermediaries (Kavaratzis & Ashworth 2008; Pearce & Schott
2005). The rise of the internet as a distribution channel has been accepted, though it is still more appreciated as an information
channel (Huang et al. 2009). These latest trends have created two major practices in tourism distribution, intermediation and
disintermediation. Intermediation stresses on the expansion of distribution channels, while disintermediation emphasises upon
the contraction of distribution channels (Clerides, Nearchou & Pashardes 2008). In spiritual tourism, the operators need to
carefully select only one option depending upon the destination. For example, for spiritual tourism to Mecca or the Vatican,
intermediation should be used. While, for spiritual tourism to the shrine of a specific Catholic Saint or a Shiite Muslim,
disintermediation would be preferred.
Promotion of tourism products involves communication between tourists, tourism operators and other stakeholders (Feng,
Morrison & Ismail 2003; Yuan, Cai, Morrison & Linton 2005). Effective communication develops product awareness and
persuades tourists to purchase specific products (Scott 2008; Iyer, Soberman & Villas-Boas 2005; Buhalis 2000; Mahajan &
Muller 1999). Advertising, personal selling, sales promotion, merchandising, public relations and publicity are tools of promotion
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and should be selected thoughtfully by the tourism operators. Various types of promotional techniques; above the line
(television, radio, the internet and print media) and below the line (participation in tourism fairs, festivals and conferences)
could be used for marketing tourism (Buhalis 2000). The adoption of both above and below the line promotional techniques has
been suggested for reaching particular spiritual tourism market segments. Above the line techniques would include
participation in travel programs on television, advertisements in religious and spiritual magazines and on relevant websites.
Below the line techniques would involve participation in multi-faith/religious/cultural festivals and seminars to attract the spiritual
tourism coming from different back grounds.
Pricing is critical as it underpins the profit element in a marketing strategy (Sousa & Bradley 2009; Cassidy & Guilding 2007;
Jiang 2007; Lee et al. 2005; Pellinen 2003; Morrison, Hsieh & O'Leary 1994). The literature suggests that, in general, pilgrims
or religious tourists are not price conscious (Timothy & Olsen 2006; Sharpley & Sundaram 2005; Shackley 2002; Eade 1992;
Rinschede 1992). Many authors have proposed various types of pricing techniques that could be applied for tourism products
but it has been recognised as a complex process (Sousa & Bradley 2009; Cassidy & Guilding 2007; Pellinen 2003; Buhalis
2000). This paper recommends using the price bundling strategy in order to cater for all spiritual tourists visiting for various
reasons. It is further suggested to select from the two options of discriminatory pricing techniques to attract the regular spiritual
tourists, and target pricing to attract the specific tourist segments interested in spirituality and related affairs (Sousa & Bradley
2009; Cassidy & Guilding 2007; Buhalis 2000).
Partnership brings about operating efficiencies among various stakeholders involved in the spiritual tourism industry; the
partnership strategy must benefit all partners (Tilson 2005; Feng, Morrison & Ismail 2003; Augustyn & Knowles 2000; Alzua,
OLeary & Morrison 1998; Selin & Chavez 1995). A means of ensuring that all the significant partnership elements have been
incorporated in the partnership strategy is to work through the five stage partnership model checklist (Selin & Chavez 1995).
The first stage requires the development of a shared common vision, an examination of existing networks, determining
leadership and setting incentives. The second stage advocates problem setting based upon recognition of interdependence
and common problems. The third, direction setting stage consists of setting ground rules for goal achievement, searching for
information on options and organising of sub-groups. The fourth stage of partnership structure establishes the relationship
between the partners, linking them specifically to a monitoring system. The outcome stage delineates the programs, results
and rewards desired from the partnership strategy. While presenting partnerships as part of marketing strategies for spiritual
tourism, the public and private partnerships between the tourism operators, government agencies, destination managers local
community and religious organisations are very significant and their applications are discussed in the next section. The
important role of PPP as a critical element of the marketing mix for spiritual tourism is an outstanding contribution of this
research paper.
PPP Approach as a Strategy for Marketing of Spiritual Tourism

The application of public and private partnership approach for tourism in general (McKercher 2002; Tilson 2005; Markell 2009;
APEC 2002; Montanheiro, et al. 2003; WTO 2009; GOI 2008) and spiritual tourism in particular, is critical for planning, product
and destination development, infrastructure provision, pricing, determining demand, promotion, packaging and programming.
The growing demand for tourism and need for spirituality at a time of war, economic instability, natural disasters and global
financial crisis, which is healing to the human soul as well as the increasingly high cost of provision of meeting infrastructure
needs by the public sector, requires PPP strategy for marketing and long term sustainability of spiritual tourism. Public and
private sector partnership application to the tourism industry in general is very recent since 2002, mainly due to the competitive
nature of the tourism industry, as it is assumed that it may escalate the cost (OECD 1997 & 2006). Moreover, the application of
PPP to spiritual tourism marketing is a unique aspect of this research study. Proper application of PPP brings the stakeholder
resources together in terms of expert knowledge, capital and innovative ideas. The tourism industry benefits from PPP
particularly in terms of coordination, organising, planning, management, quality delivery of the product and problem solving by
identifying common goals, problems, partnership programs to achieve these goals and evaluation of partnership programs,
outcomes and incentives. This study suggests that PPP enhances the competitive advantage of the spiritual tourism product
through collaboration, and partnerships between the various stake holders: public( government and its departments and
Government Business Enterprises) , private, local community, business organisations and international bodies such as (World
Tourism Organisation (WTO), World Travel and Tourism Council (WTTC) , Asia Pacific Economic Cooperation (APEC) , Asia
Pacific Tourism Association (PATA) NGO and industry (UNESCAP 2004; Bramwell and Lane, 2000).
Spiritual tourist destinations such as Mecca, Vatican in Rome, Lady of Fatima in Portugal, Jerusalem and other religious places
around the world, require private finance initiatives (PFI) and public and private partnerships (PPP) (Augustyn & Knowles
2000). These will support the provision of tourist infrastructure to underpin the economys growth, international
competitiveness, environmental and sustainable development of spiritual tourism destinations as a niche market. According to
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Tilson (2005), a partnership approach that is church-state collaboration where the community organisations, companies,
government representatives, government organisations, come together to form a collective and consensual approach to
investment into the communitys future is essential for the success of spiritual destinations. The main function of the public
sector is to provide key infrastructure and supporting services, innovation, training, education, employment and destination
management, pricing, promotion and marketing of the (Elliott 1997; Mbone-Enie 2003) spiritual tourist destination for its longterm sustainability and economic viability.
Support from the private sector in the development and management of, and provision of essential spiritual tourism products
such as hotel accommodation, travel-airlines, tours, retail shops meals and handicrafts, restaurant, safety and security etc to
the spiritual tourist is critical. For example, South Asia foot-step of Lord Buddha circuit integrated with eco-tourism has been
identified by the ADB (2008) report, which will appeal to spiritual tourist and Buddhist pilgrimage, representing 376 million
Buddhists, which is approximately 6% of world population. The governments of South Asian countries along with the private
sector are working in partnership in developing and promoting this new product. This paper also suggests that spiritual tourism
is going to treble in the next 20 years and PPP and PFI for infrastructure investment is necessary. Wide range of stake holders
(see Table-1 ) from the demand side and from the supply side can be categorised (APEC 2002, p.2) to provide investment in
infrastructure, through the development of budget hotels as well as other tourist facilities and amenities required for spiritual
tourist.
Table -1: Stakeholders in the tourism industry
Supply Side (SS)
Demand Side
Category
Examples
Resource owners
Traditional landholders
Resource managers
National park managers
Providers of infrastructure
Construction, design, power, gas, water, waste treatment, roads
Planners & development control
Local govt authorities
Deliverers of product
Enterprise operators-hotels, airlines, hire cars, attractions, tour

operators, travel agents, farm stays, convention centres,
restaurants, museums, sporting ( world cups) and religious events
e.g. Hajj, youth catholic congress
Destination developers and marketers
Tourism commissions; local government
Employees
Managers, hospitality, planning , communication, ICT, Finance,

construction
Tourist
Domestic and international- e.g. package holidays, eco-tourist,

business travellers, backpackers visiting friends and relatives,
conferences, cultural, spiritual and medical tourists.
Source: Adapted from (APEC, 2002, p. 2)
Long term sustainability of any tourism project and particularly spiritual tourism cannot be achieved without PPP between the
various stake holders. Zamani-Farahani & Henderson (2009) in their paper discuss the effects of Iran and Saudi Arabias state
religion-Islam on tourism development, policies, management, marketing where PPP is essential for its success along with
community involvement in Muslim countries. In 2008, nearly 1.73 million foreign pilgrims performed Haj along with
approximately 750,000 Saudi pilgrims. Increase in demand for religious tourism from worlds 1.8 billion Muslims continues to
drive Saudi Arabia real estate growth in Jeddah for Pilgrims visiting the holy cities of Mecca and Medina to perform Umrah and
Haj are expected to reach 8 million by 2010 according to Saudi Government. Given the high, risk free and guaranteed return on
investment according to a study carried out by Proleads research house for Cityscape Saudi Arabia, throughout the Kingdom of
Saudi Arabia, there are 812 active projects in real estate, leisure and entertainment and infrastructure sectors with a total
budget of $543 billion, supporting spiritual tourism market.
Saudi Arabia's real estate sector now contributes an estimated 5.1%, or SAR 55 billion, to the kingdom's GDP, with forecasts
for further growth of 5.8% by the end of this year. Land that surrounds the holy sites is being developed and the property
market is now attracting residential, commercial infrastructure and real estate such as roads, railways, ports, hospitals clinics
retail etc given that in 2008, 1.5 million pilgrims arrived by air, 131,000 by land, and nearly 23,000 by sea. Therefore PPP has
promising opportunities for developing spiritual tourism related infrastructure (Cityscape 2009). Across the Mena region there is
an increasing realisation that spiritual tourist infrastructure needs cannot be met by the public sector alone and (PFI) in
infrastructure as well as PPP is necessary. Most countries preferred model of private involvement goes beyond mere
subcontracting, but stops short of full privatisation. PPP strategy with the public and private partners sharing project risks and,
68
in many cases, asset ownership, is increasingly applied. This process should be strengthened by ongoing reforms in public
sector transparency, sound fiscal practices, regulatory reform and a commitment to open markets for the success of PPP PFI
in the countries participating in the MENA-OECD Initiative (OECD 2006).
In case of India, there are many examples of successful PPP for spiritual tourism initiatives. From the Himalayan spiritual
destinations of Buddhist monasteries and Hindu temples such as Vaishnu-Dewi in Kashmir to the temples, mosques, sikh
temples and colonial churches in India, is seen as having great potential for the growth and development of spiritual tourism
destinations by the government at the state and central level for employment generation and earning foreign exchange
revenue. World Tourism Organisation (WTO) prepared a holistic infrastructure plan for PPP, with the Government of India,
State Government of Uttarakhand, Tourism Board of Uttarakhand to promote eco tourism, adventure tourism, and spiritual
tourism, as three mantras to be followed up by the state, so that adventure, nature and spiritual experience all can be
enjoyed by the Indian and international tourist (Sagar 2007; GOI 2008). Further, states of Kerala, Rajasthan and Goa, have
also capitalised on marketing eco-tourism, medical and spiritual tourism and recognised the benefits PPP can bring to the state
through mutually beneficial partnerships (Varkey 2006; Chandran 2007; GOI 2008). The state Government of Rajasthan is also
actively involved in organizing new festivals to promote Rajasthan as a 'Year Round Tourism Destination', by implementing the
PPP model in key tourism projects in the state, offering historical monuments and temples for adoption to private sector etc
(GOI 2008; GOR 2009). Similarly in the State of Uttar Pradesh places like Varanasi-Sarnath, Bodhgaya, Rajgir and the
Nalanda triangle is developed to be promoted on a PPP model for spiritual tourism besides yoga, spiritual and meditation
ashrams which form part of spiritual experience to present India as a symbol of religious destinations with a spiritual trial
(Varkey 2006; GOI 2008).
The State Government of Jharkhand has given priority to the development, promotion and marketing of its eco, spiritual and
rural tourism segments through PPP, to put it on the global tourist destination map by 2010.On average 1.25 million domestic
tourists from the states of West Bengal, Orissa, Bihar and Madhya Pradesh visit Jharkhand, of which one million are spiritual
tourist visiting the temples of Deoghar or Baidyanath Dham. The state government along with the private sector is constructing
star category budget accommodation, as well as improving and investing in road-rail infrastructure network, electricity and telecom connectivity to the state capital under the PPP model. To attract foreign tourists into Jharkhand region, the state
government along with the private sector has not only embarked on an aggressive marketing and tourism promotion exercise
by participating at major travel and tourism conferences such as World Tourism Market London in 2008 and ITB Berlin event in
2009, but also identified the famous Ranchi-Netarhat-Betla circuit for developing an inter-religious circuit in Parasnath temple
situated at 4431 ft above sea level about 190 Km from its capital Ranchi , the most sacred place for the believers of Jain
religion and attracts Jain tourists throughout the year (Chavan 2008).
Application of PPP approach to 8 Ps of marketing mix should be applied and integrated in such a way that the objective of
planning, developing, promoting and marketing spiritual tourist destinations is achieved in a sustainable manner. To innovate
and develop this new product (spiritual tourism and the goods and services that complement spiritual tourism) it is important to
have a PPP marketing strategy by involving all public and private stake holders (see Table-2). Market research along with PPP
is required to identify the key customers, people who are going to generate demand for the spiritual-religious tourist product
locally, nationally and internationally as well as the suppliers of the various spiritual tourist products. PPP is necessary to get
the support of the local people as well to open their religious places of worship of historical importance to the tourist from all
over the world and capitalise on their spiritual significance. Further educational institutions also play a key role in providing
training and education to travel agents, tour guides and operators about the spiritual destination, its geography, history and
culture in partnership with the religious organisations and scholars.
69
Table-2: Applying PPP to 8Ps of Marketing

8 Ps of
Morrison:
Tourism
marketing
mix
Examples of 8 ps
Applying Public & Private Partnership Approach
Product
Tangible and intangibles, Development of product Spiritual

destinations, Church, Mosques, souvenirs (pictures, religious
beads statues), multi faith/ religious/cultural annual festivals,
events, fairs and conventions.
PPP is essential (collaboration, coordinated marketing, cooperation

& consensus) to develop product, innovate, restore, preserve and
market, cultural, historical and spiritual monuments and destinations
for tourism. Investment in Infrastructure, human and capital (tangible
and intangible).Improve and enhance product quality.
Price
Entry ticket, air-road travel cost, accommodation, Price

Discrimination, cost-plus pricing, average cost &, marginal
cost pricing, competitive pricing, bundling pricing.
PPP for determining the price for domestic and international tourists,
discriminatory pricing for spiritual tourists and target pricing for
specific tourist groups & related affairs. Government and the private
tourism product operators and providers to have consensus on
pricing price discrimination for different groups ( so every one can
visit)
Place
Distribution of products and services, third party websites,

control reservation office, global distribution systems, travel
agents, wholesale and retailers, switch companies, direct
sellers and inbound-outbound tourism operators of spiritual
tourist destinations.
Selection of disintermediation or intermediation for distribution of

spiritual tourism product. PPP to develop infrastructure facilities
(physical, building transport, roads as well as website, brochures
etc) needed to support the Spiritual tourism business at the point of
destination as well as at the source of tourist to provide necessary
travel services for planning the trip.
People
Local, national and international tourists. Spiritual tourism

operators involved in spiritual tourism processes; travel
agents, religious leaders, family and peer groups & tour
guides at the source as well as destination.
Govt to provide infrastructure investment such as road, rail airways

(easy access) for the private sector providers of accommodation
restaurants, retail business to function well. Training of the tourism
operators, guides etc-HRM
Promotion
Advertising religious destinations, places of worship, annual

religious festivals and conventions, conferences, promotion
objectives, message, media and budget. Usages of TV, radio
programs, relevant magazines, travel news and internet
websites.
PPP required at all levels by participating in trades conventions and

world tourism fairs and conferences. Marketing strategy off and online involving all stake holders involved in spiritual tourism business.
Coordinated marketing by web-sites, posters, print, TV& radio-above
the line and fair, festivals & conferences below the line.
Packaging
Packaging spiritual destinations along with air fare, overnight

in transit stop over visits to spiritual places, accommodation,
business travel and conferences, adopting product
differentiation (religious and combined with non-religious
segments, price discrimination (individual, pensioners, adults,
children, families, strangers and groups on a spiritual
journey).
PPP for packaging and branding spiritual tourist destinations and

tours for example to Mecca, Kerala as destination for medical and
spiritual Tourism, Rajasthan as year around tourism destination,
state of Punjab and Uttar Pradesh have been developed and
marketed as spiritual tourist triangles, Banding Greece, through
PPP measures.
Programming
Information about spiritual programs to attract people to

specific destinations and events to understand global
spirituality, for global peace and spiritual culture and
traditions. Preparing special travel itinerary by travel agents
(brochures) similar to other types for skiing, cruising etc
available in detail. Program for Hajj, Hindu religious festival in
India, carnivals of various catholic saints, world religious
conventions etc.
Education and training in spiritual tourism education, religious

studies, history and culture for the tourism operators, web site
designers and tour guides.
Partnership
Government departments & agencies (tourism, religious

affairs, cultural heritage, travel and communication,
infrastructure rail-road, airways) Private sector (businesses,
wholesale and retailers of tourism service providers, religious
organisations, destination managers. Partnership essential for
identifying common goals, problems, partnership programs to
achieve these goals and evaluation of partnership programs,
outcomes and incentives.
Enabling partnership with private sector, NGOs and international

organisations. PPP between Governments at all levels, Government
departments, Government business enterprises, WTO, private
sector businesses, NGO, local business communities, local
population, police, defence force, Religious organisations and
institutions, community organisations, educational institutions, travel
agents, key religious leaders, private business philanthropy and
support for planning, development, implementation, pricing,
maintaining, preserving and marketing cultural heritage and spiritual
destinations to the world.
Source: (Designed for this paper)
Price determines the value and quality of the spiritual tourist destination that the consumers are willing to pay compared to
other substitute type of tourist activities available. People may be willing to pay $5000 or more for a specialist tour to holy place
of Jerusalem, Mecca, Lady of Fatima or Vatican, because the perceived value, benefit and spiritual experience gained will be
70
more than the cost of the tour to the spiritual tourist. PPP is essential to determine the price in case of spiritual destinationsplace, so that all people (low or high income) have ability to pay to consume these spiritual tourist products and have tangible
and intangible spiritual experience. Thus resorting to price discrimination in case of spiritual tourism is essential as it will
provide access to all income groups based on their ability to pay, otherwise people belonging to low income groups can be
excluded from such spiritual experience. Generally, a unique destination does command a high value; however, in case of
spiritual destinations, in spite of being unique, like a visit to Mecca, or Vatican, PPP is essential to set different prices so that
people from different groups (age, income) can have spiritual experience and are motivated to visit. PPP can be used as a
distribution channel (direct to the tourist-consumers and indirectly through intermediaries like tourism service and providers and
operators and travel agents, online advertising for package tours etc) to market the spiritual destination in the local, domestic
and international market to the spiritual-religious oriented tourist. Promotion, packaging and programming the spiritual
tourism segment as a new product by itself and bundling with either cultural, heritage, historical or eco-tourism destinations to
the niche market, requires public and private partnership at all levels to get the spiritual message across to all potential spiritual
oriented consumers as well as tour operators nationally and internationally. The aim is to target these consumers and inform
and educate them about the spiritual tourism destinations and tours, complementary goods (product and services available)
price etc so that they finally make their spiritual journey.
CONCLUSION
Spiritual tourism is a fast growing global phenomenon. The tourism market has been observed to be growing world wide and
its the fifth largest in case of Australia after iron-ore, coal, education and gold (ABS 2007); a slowdown in tourism requires
tourism operators to apply different marketing strategies for business success. Due to the lack of any literature on spiritual
tourism marketing, the literature from the parent marketing discipline was adapted to assist in the development of appropriate
spiritual tourism marketing theory. The spiritual tourism product, as a type of special interest tourism, has the potential for
growth since interest in spirituality related matters is on the rise. New pilgrimage routes are developed and old pilgrimage
routes upgraded, revived and marketed through PPP in South Asia to promote the sustainability of spiritual tourism (ADB
2008).
In agreement with the OECD (1997) conference on partnerships in tourism, it was concluded that the establishment of public
and private sector partnerships is instrumental as it is closely linked with the improvement of the effectiveness of national
tourism administrations (NTAs) and national tourism organisations (NTOs). PPP further is useful for implementing tourism
policies more effectively in the areas of employment, education and marketing and other areas of tourism policy. Governments
have to play an important role in new ways of organising this co-operation, notably by defining a clear national strategy for
tourism policy which will stimulate and guide innovative partnerships, develop new products and give incentives to all individual
partners to participate in the development. Partnerships should seek to establish a balance between competition and cooperation, focusing on the advantages of economies of scale and the creation of synergies between the partners in marketing
of spiritual tourism products. European Union Commission (2007) also concluded in its report that in the field of cultural
heritage management, Public-Private Partnerships (PPP) is a promising new governance mechanism to balance increasing
pressure of market forces on the one hand and governments responsibilities in protecting public cultural values on the other
hand.
Moreover, spiritual tourists tend to travel to satisfy their specific needs even when the economic, financial and political situation
is not favourable. This paper presents the view that considerable potential exists for spiritual tourism product if marketed
effectively. In this research, the PPP framework is presented as one approach to effectively apply the tourism marketing mix for
marketing spiritual tourism. Future research would involve an attempt to empirically test the application of the PPP and tourism
marketing mix for spiritual tourism by adopting a quantitative as well as qualitative methodology. In the next stage a research
survey instrument will be designed and distributed to selected public and private tourism operators in India, Pakistan, Italy and
Thailand to test the application of the PPP to tourism marketing mix for the product of spiritual tourism as suggested in this
paper.
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Organizational and Personality Effects on Job Stress: The Case of Iranian Managers
ORGANIZATIONAL AND PERSONALITY EFFECTS ON JOB STRESS

(THE CASE OF IRANIAN MANAGERS)
Reza Shafiezadehgarousi
Azad University Saveh Branch, Iran
ABSTRACT
The two main objectives of this study are: first, to determine the influence of organizational variables (conflict, blocked career,
alienation, work overload and unfavourable work environment) and second, to examine the effects of personality variables
(neuroticism, extraversion, openness, agreeableness and conscientiousness) on job stress among managers working in the
vehicle manufacturing sector of Iran. Analyses of 285 responses using hierarchical regression revealed that four of five
organizational variables (blocked career, alienation, work overload and conflict) had significant positive effects on job stress.
In terms of the personality traits, neuroticism and conscientiousness were found to be significantly and positively related to
stress. Extraversion and agreeableness, on the other hand, had significant negative effects on job stress. Theoretical and
managerial implications of the findings are discussed.
Keywords: Personality, Job Stress, Organizational Effects, Work Environment
1. INTRODUCTION
Job stress has long been an important concept in the study of employees responses to their work surroundings. The many
challenges in the work environment, characterized by heightened competition, lack of time, lack of space, continuous
technological development, conflicting demands from organizational stakeholders (Hall and Savery, 1986), increased use of
participatory management and computerization (Murray and Forbes, 1986), greater uncertainty and others have resulted in
higher job stress. In the era of globalization, survival of firms particularly manufacturing ones depends on their ability to
compete effectively. Managers in these organizations would be working under highly stressful circumstances. The findings by
Jestin and Gampel (2002) provide empirical support for this phenomenon.
In Iran, the same phenomenon may hold true. This is because the weakening of the global economy during the last several
years has resulted in substantial downsizing and retrenchments within the vehicle manufacturing sector which accounted for 60
per cent of the countrys total exports (Central Bank of Iran, 2001). Although there have been several studies on job stress
within the Iran context (Yahya, 1998; Nasehi and Ramayah, 2006), these studies have been somewhat fragmented.
Specifically, the objectives of this study are: (1) to gauge the influence of organizational variables (conflict, blocked career,
alienation, work overload and unfavourable work environment) and second, to examine the effects of an individuals personality
traits (neuroticism, extraversion, agreeableness, openness and conscientiousness) on job stress.
2. REVIEW OF LITERATURE
2.1. Organizational Sources of Stress
Job stress has been defined as the non-specific response of the body to any demands made upon it (Selye, 1976). It is
considered to be an internal state or reaction to anything a person consciously or unconsciously perceive as a threat, either
real or imagined (Clarke and Watson, 1991). Robbins (2001) defines stress as a dynamic condition in which the individual is
confronted with an opportunity, constraint or demand related to what he or she desires and for which the outcome is perceived
to be both uncertain and important. Stress can be caused by environmental, organizational and individual variables (Matteson
and Ivancevich, 1999; Cook and Hunsaker, 2001).
Organizational variables have been known to create stress for employees at the workplace (Greenhaus and Beutell, 1985).
Although there are numerous organizational sources of stress, this study focuses on only five, namely conflict, blocked career,
alienation, work overload and unfavourable work environment. Role conflict has been found to have a positive relationship with
job stress (Roberts, Lapidus and Chonko, 2004). When individuals are required to play two or more roles that work against
each other, they are likely to experience job stress. This is because role conflicts create expectations that may be hard to
76
R. Shafiezadehgarousi
reconcile. Previous scholars (Foot and Venne, 1990; Rahim, 1996) discovered a positive relationship between barriers to
career advancement and job stress. When employees perceived a lack of career opportunity, they are likely to feel uncertain
about their future in the organization, which in turn, is likely to induce stress.
Working alone on ones job without social support from ones peers and supervisors would lead to job stress (Mirovisky and
Ross, 1986; Thoits, 1995; Eugene, 2007). According to Kanungo (1981), when workers believe there is a separation between
their own job and other work related context, a sense of frustration that finally manifested in a behavioural state of apathy is
likely to occur. This is particularly intense for employees with high social needs.
Work overload, both quantitatively and qualitatively, has been empirically linked to a variety of physiological, psychological and
behavioural strain symptoms (Beehr and Newman, 1978; Miller and Ellis, 1990; Roberts et al., 2004). According to Greenhaus,
Bedeian and Mossholder (1987), heavy workload lowers ones psychological wellbeing resulting in job stress.
Additionally, a work environment associated with unpleasant organizational climate, lack of privacy, a lot of hassle in
conducting work and physical distractions can result in higher stress (Miller and Ellis, 1990; Eugene, 2007). Therefore, the first
hypothesis posited for this study is:
H1: Organizational variables (conflict, blocked career, alienation, work overload and unfavourable work environment) will
be positively related to job stress.
2.2. Personality Traits as Sources of Stress

Past studies have indicated the potential impact of personality traits on job stress (Goldberg, 1993; Deary and Blenkin, 1996).
Over the years, five personality dimensions that have been identified as being able to explain a majority of the variance in
behavioural outcomes are neuroticism, extraversion, openness, agreeableness and conscientiousness (John and Srivastava,
1999).
Neuroticism involves a sense of emotional instability and negative affect (Costa and McCrae, 1985; John and Srivastava,
1999). People with neuroticism traits are those who experience more negative emotions, which would be reflected in poor job
attitudes and high levels of job stress. According to Tellegen (1985), neuroticism functions as a warning system, activated by
perceptions of environmental uncertainty and tends to interfere with ones ability to adapt. Thus, individuals with elevated levels
of neuroticism would be expected to be associated with higher stress since they are more likely to view stimuli as a threat to
them. Prior studies have provided empirical evidence on the positive relationship between neuroticism and job stress (Tellegen,
1985; Deary and Blenkin, 1996; Birch and Kamali, 2001).
Extraversion relates to social facility, ambition, energy, enthusiasm, dominance and positive affectivity (Watson and Clark,
1997). Individuals who are high in extraversion exert more leadership, being more physically and verbally active and are more
friendly and outgoing around others than most people tend to be (Costa and McCrae, 1992). According to Moberg (2006),
extraversion taps the individuals predispositions to view his/her actions as positive, emotionally satisfying and effectual. Such
information seems to suggest that individuals who are high on extraversion are more likely to experience lower stress since
they are more likely to perceive stimuli in a positive and favourable manner. Birch and Kamali (2001) discovered that
extraversion had a negative relationship with job stress.
Openness involves intellectual activity, cultural sophistication, thoughtfulness, originality, imagination, need for variety and
preference for cognitive complexity (McCrae, 1996). According to Costa and McCrae (1992), the openness factor includes
behaviours that convey a willingness to entertain and experience novelty, whether in interests, people, situations, values or
ideas and a sense of divergent and creative thinking. According to Moberg (2006), individuals who have high openness are
less likely to emphasize rules, order and conformity, are more flexible, and find it easier to understand others point of views.
Hence, one would expect individuals with elevated levels of openness to be associated with lower stress since they are able to
adapt to the different environmental stimuli. Agreeableness reflects the ability to be kind, considerate, likeable, cooperative and
helpful (Graziano and Eisenberg, 1997). People who are high in agreeableness are sympathetic, helpful and cooperative,
whilst those who are low in agreeableness are antagonistic, skeptical and competitive (Costa and McCrae, 1992). According to
Moberg (2006), individuals who have high agreeableness are more likely to emphasize cooperation and consideration for
others. Since highly agreeable individuals tend to be friendly to other people, they are more likely to experience lower stress.
77
Finally, conscientiousness has been defined as social conformity and impulse control, cautiousness, orderliness, persistence,
dependability, responsibility, carefulness and preference for predictability (Hogan and Ones, 1997). Those who are high in
conscientiousness are thought to exhibit high levels of perseverance, low impulsiveness, a strong disposition toward
achievement and a responsible orientation toward work (Moberg, 2006). Costa and McCrae (1992) viewed conscientiousness
as a group-based responsibility relating to activities of planning, organizing and task completion. Deary and Blenkin (1996)
found that conscientiousness contributed to positive feelings of personal achievement since highly conscientious individuals
have a greater inclination to apply themselves to solving the practical aspects of a stressor. Moberg (2006) added that
individuals with high conscientiousness are able to address conflict situations promptly and resolve disputes in an organized
fashion that benefits the group. Such information seems to suggest that conscientiousness would be negatively related to job
stress.Hence, the second hypothesis conjectured in this study is:
H2: Personality traits (extraversion, agreeableness, openness, conscientiousness except neuroticism) will be negatively
related to job stress.
3. METHODOLOGY
3.1. Subjects
Participants in the study consisted of managers attached to 20 randomly selected vehicle manufacturing firms (both local and
foreign) in Penang, Iran. A total of 400 questionnaires were distributed with the help of company officials in proportion to the
population of managers in these firms. Respondents were given three weeks to answer the questionnaires.
3.2. Measurements
The predictor variables in this study consist of organizational and personality variables. Organizational variables include
conflict, blocked career, alienation, work overload, and unfavourable work environment. Organizational variables were
measured using a 25-item questionnaire (Davis, Elizabeth and Matthew, 2000). Each organizational stressor was measured
using 5 items based on a 5-point Likert response format ranging from (1) Strongly Disagree to (5) Strongly Agree. The mean
scores were computed by averaging the scores for all the items associated with a particular stressor. Another set of
independent variables relates to personality. Personality variables include extraversion, neuroticism,agreeableness, openness
and conscientiousness. These five dimensions of personality were gauged using 60 items derived from the NEO Five Factor
Inventory (Costa and McCrae, 1992). Each personality trait was assessed using 12 items. A 5-point scale ranging from (1)
Strongly Disagree to (5) Strongly Agree was utilized. The mean score for each personality trait was obtained by averaging
the scores for each of the 12 items. On the other hand, the criterion variable in this study is job stress.
Job stress was measured using a 20-item screening inventory (Goldberg and Hillier, 1998) based on a 5-point scale ranging
from (0) Never to (4) Almost Always. The job stress level for each respondent was computed by summing the total score for
all the 20 items. Subsequently, the total scores obtained were averaged in order to gauge the overall job stress level for the
sample in accordance with Davis et al.s (2000) suggestion as follows: 025 (coping adequately with job stress), 2640
(suffering from job stress), 4155 (suffering from high job stress) and 5680 (experiencing very high job stress or burnout).
Job stress can be influenced by personal factors (Matteson and Ivancevich, 1999). Six personal variables (age, marital status,
number of children, working experience and job tenure) were controlled in the statistical analysis following previous
researchers (Cooper, Kirkaldy and Brown, 1994; Roberts et al., 2004; Smith, Stanley and Frank, 1998). The first and second
hypotheses were tested using a two-step hierarchical regression (Cohen and Cohen, 1995) where the control variables were
entered in the first step, followed by the main effects of the five organizational variables (conflict, blocked career, alienation,
work overload and unfavourable work environment) plus the five personality variables (neuroticism, extraversion,
agreeableness, openness and conscientiousness) in the second step.
4. RESULTS
4.1. Response and Profile of Respondents
At the end of the stated period, of the 400 questionnaires sent out, 285 useable responses were obtained representing a
response rate of 71.25 per cent. The sample profile is shown in Table 1.
78
Table 1:
Sample Profile
Demographic
Categories
Gender
Gender
Age Less Than
Frequency
Percentage
Male
162
56.8
Female
123
43.2
30 years
108
37.9
30 to 35 years
101
35.4
36 to 40 years
66
23.2
41 to 45 years
10
3.50
Marital
Single
136
47.7
Status
Married
149
52.3
None
144
50.5
One
42
14.7
Two
72
25.3
Three
27
9.50
Less than 1 year
48
16.8
1 to 5 years
83
29.1
6 to 10 years
91
31.9
11 to 15 years
53
18.6
More Than 15 years
10
3.50
110
38.6
1 to 5 years
83
29.1
6 to 10 years
87
30.5
11 to 15 years
1.80
Number of
Children
Work
Experience
Job
Less than 1 year
Tenure
As shown in Table 1, the majority of the sample (56.8 %) consisted of males. Almost all of the respondents (96.5 %) were 40
years and below. The majority (52.3 %) of them were married, of whom 50.5 per cent had no children. In terms of work
experience, 54 per cent had been working for more than six years. As for job tenure, 67.7 per cent of the respondents had
been in their current job for five years or less. Table 2 depicts the reliabilities of the survey instruments.
Table 2:
Reliability Coefficients of the Instruments

Variable
Cronbachs (Alpha Value)
Conflict
0.87
Blocked Career
0.86
Alienation
0.89
Work Overload
0.85
Unfavourable Work Environment
0.80
Neuroticism
0.96
Extraversion
0.95
Agreeableness
0.91
Openness
0.95
Conscientiousness
0.94
Job Stress
0.92
As observed from Table 2, the instruments used in this study were reliable, with coefficients ranging from 0.80 to 0.96, which
exceeded the minimum acceptance level of 0.7 (Nunnally, 1978). The mean scores and standard deviations for each study
variable are shown in Table 3.
79
Table 3:
Mean Scores and Standard Deviations of the Study Variables

Variable Mean Std.
Deviation
Conflict
2.667
0.716
Blocked Career
2.806
0.647
Alienation
2.652
0.839
Work Overload
3.011
0.736
Unfavourable Work Environment
2.506
0.663
Neuroticism
3.146
0.910
Extraversion
2.989
0.720
Agreeableness
2.782
0.631
Openness
2.860
0.704
Conscientiousness
2.973
0.735
45.382
10.721
Job Stress
From Table 3, it can be seen that the mean value for each of the organizational variables ranges from 2.51 to 3.15, with a
standard deviation of 0.63 to 0.91. The mean score for job stress was 45.38 with a standard deviation score of 10.72. Based
on Davis et al.s (2000) interpretation, this score indicates that respondents in this study, on the average, experience high job
stress.
The results of the two-step hierarchical regression undertaken to test the first and second hypotheses of this study are
depicted in Table 4.
Table 4:
Results of Hierarchical Regression Analysis
Independent Std Beta

Std Beta Variable
(Step 1)
(Step 2)
Control Variables
Age
0.207 *
-0.172 **
Marital Status
-0.116
0.142 *
Number of Children
0.301**
-0.225
Work Experience
-0.011
-0.058 **
Job Tenure
-0.705**
0.181 **
Model Variables
Conflict
0.126 *
Blocked Career
0.395**
Alienation
0.298**
Work Overload
0.118**
Unfav. W. Environ.
-0.011
Neuroticism
0.579**
Extraversion
-0.131**
Openness
0.032
Agreeableness
-0.131**
Conscientiousness
0.133 *
R2
0.370
0.891
Adj R2
0.358
0.884
R2 Change
0.370
0.521
Sig. F Change
0.000
0.000
p < 0.05, p < 0.01
80
As shown in Table 4, when the five personal variables were entered into the regression equation in the first step, the coefficient
of determination (R2) was found to be 0.37 indicating that 37 per cent of the variance in job stress is explained by the
demographic variables. Specifically, age and number of children had significant positive relationships with job stress whereas
job tenure had a significant negative relationship with job stress. In step 2, by adding the ten independent variables, R2
increased to 89.1 per cent. This R2 change (0.521) is significant. This implies that the additional 52.1 per cent of variance in job
stress is explained by the organizational variables (conflict, blocked career, alienation, work overload and unfavourable work
environment) and personality variables (neuroticism, extraversion, openness, agreeableness and conscientiousness).
As for the independent variables, eight out of the 10 organizational and personality variables were found to have an impact on
job stress. Of the organizational variables, blocked career (b = 0.395), alienation (b = 0.298), conflict (b = 0.126) and work
overload (b = 0.118) were found to have significant and positive relationships with job stress. Unfavourable work environment,
however, had no effect on stress. These results provide partial support for the first hypothesis of the study. As for the
personality variables, four of five dimensions had significant relationships with j ob stress. Specifically, neuroticism (b = 0.579)
and conscientiousness (b = 0.133) were found to have significant and positive relationships with job stress. In contrast,
extraversion (b = 0.131) and agreeableness (b = 0.131) had significant and negative effects on stress. Openness, however,
had no impact on job stress. Thus, the second hypothesis is partially supported.
5. CONCLUSION, IMPLICATIONS AND LIMITATIONS

The purpose of the current study is two-fold: first, to determine the influence of organizational variables (conflict, blocked
career, alienation, work overload and unfavourable work environment) and second, to examine the effects of personality
variables (neuroticism, extraversion, openness, agreeableness and conscientiousness) on job stress among managers working
in the vehicle manufacturing sector of Iran. The regression results from this investigation indicated that four of five
organizational variables (conflict, blocked career, alienation and work overload) had positive relationships with job stress.
Hence, the first hypothesis of the study is partially supported.
The finding on the positive relationship between conflict and job stress is consistent with those obtained by Roberts et al.
2004). When employees are required to fulfil conflicting role requirements, they are likely to experience job stress. This is
because role conflicts create expectations that may be hard to satisfy. The finding pertaining to the positive relationship
between blocked career and job stress supports those by previous researchers (Foot and Venne, 1990; Rahim, 1996). Seeing
ones opportunities for career advancement being diminished is perceived as a threat, which in turn, leads to increased job
stress. The finding on the relationship between alienation and job stress is also consistent with those discovered by prior
scholars (Kanungo, 1981; Mirovsky and Ross, 1986; Thoits, 1995; Eugene, 2007). Alienation at the workplace suggests that
employees may not be able to fulfil their social needs. Thus, this sense of isolation is likely to be viewed as a threat to the
individual resulting in stress. The finding pertaining to the positive relationship between poor working conditions and job stress
supports those by previous researchers (Miller and Ellis, 1990; Eugene, 2007). The positive relationship between work
overload and job stress as discovered in this study is consistent with those of prior scholars (Beehr and Newman, 1978; Miller
and Ellis, 1990; Roberts et al., 2004). A heavy workload lowers ones psychological well being resulting in job stress.
Unfavourable work environment, on the other hand, was found to have no relationship with job stress. This finding may be
related to the sample itself. It is possible that managers in the vehicle manufacturing firms sampled may have perceived their
work climate as relatively conducive. Within such a context, this variable may not be viewed as an organizational stressor.
In terms of personality variables, neuroticism had a significant and positive relationship with job stress. The finding is consistent
with previous researchers (Deary and Blenkin, 1996; Tellegen, 1985; Birch and Kamali, 2001). Individuals with elevated levels
of neuroticism would be expected to be associated with higher stress since they are more likely to view stimuli as a threat.
Conscientiousness, too, was found to have a significant and positive relationship with job stress. One plausible explanation
may be due to the fact that conscientious individuals have a responsibility orientation towards work and are more likely to
perceive their job responsibilities seriously, which in turn, is likely to increase their stress.
In contrast, two other personality traits, namely extraversion and agreeableness, had significant and negative relationships with
stress. The finding on the negative impact of extraversion on job stress is consistent with previous researchers (Moberg, 2006;
Birch and Kamali, 2001). Individuals who are high in extraversion tend to view stimuli favourably, positively and emotionally
satisfying, thereby, they are more likely to experience lower stress. The finding on the negative influence of agreeableness on
job stress is consistent with previous researchers (Hogan and Ones, 1997; Birch and Kamali, 2001).
81
Individuals who are high in agreeableness are sympathetic, helpful, cooperative and friendly. As such, they are more likely to
feel positive towards others and more likely to experience lower stress. Openness, on the other hand, had no relationship with
job stress. This finding may be related to the sample itself. Openness implies the possibility that one has to be candid and
expressive in communicating ideas and feelings to others. Given that the act of preserving face has a lot of significance to Irans
regardless of ethnicity (Asmani, 2007), they tend to be less forthcoming in expressing views and opinions. As such, openness
may not be perceived as having an effect on ones stress level.
From the managerial point of view, the findings from this research suggest that employing organizations need to attend to
organizational factors as well as the individuals personality traits that are likely to act as job stressors. In order to reduce stress
among managers, organizations should provide sufficient opportunities for their managers to move to higher positions in the
organizational hierarchy, build cohesive cross-functional work teams, avoid burdening managers with heavy workloads and
communicate clearly its expectations. Additionally, employers should consider tapping the per sonality potentials of their
candidates during the interview process so that they would be able to select qualified candidates that exhibit extraversion and
agreeableness traits for managerial positions.
There are three major limitations in this research that need to be noted. Firstly, this study makes use of cross-sectional data,
which limits inferences with regard to causality between the independent variables and the dependent variable. The use of a
longitudinal approach would improve the ability to make causal statements. Secondly, this study is limited to managers within
the manufacturing industry of Iran. Thus, the validity of the findings cannot be generalized to other job incumbents in other
sectors. Future research may be conducted to compare the predictive validity of the model across different jobs and industries.
Thirdly, given that there may be other individual, occupational, organizational, and non-work factors that also affect and
moderate stress, researchers interested in this area should try to explore these factors in future.
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83
PART II - THE FOUR FACTORS OF QUALITY: ACHIEVING THE CIRCLE OF

ACCEPTANCE AND SATISFACTION
Avis J. Smith
New York City College of Technology, USA
ABSTRACT
Part II of The Four Factors of Quality: Achieving The Circle of Acceptance and Quality, is a continued discussion explaining
views of the author, and articles obtained from other sources. The information pertains to the business areas of manufacturing,
distribution, sales, and professional/social customer. Much focus is given to the areas of concern with respect to the internal
and external factors that can create greater efficiency or adversity in the efforts to achieve acceptance and satisfaction, as well
as profit and value; depending on ones approach. It explains the need for divisional analysis of the Four Factors of Quality and
the internal and external factors. It is suggested by the author, that to investigate these areas separately would be best as an
analytical tool because of the attention to detail it can provide. It is believed that when the areas suggested for analytical
investigations are properly performed, that the results will equal the achievement of the circle of acceptance and satisfaction.
The approach also serves as a logical approach to study customer satisfaction surveys.
Keywords: Divisional Analysis, Internal Factors, External Factors, Business Variation, Divisional Process.
INTRODUCTION
The social economic environment of business rules as the primary determinant for success and acceptance in all levels of the
Four Factors Of Quality. There must however, be diligent observance and assessment of the internal and external factors,
which are the avenues towards helping businesses to obtain success. These avenues towards success must be ventured into
separately (divisional process) in an effort to develop detailed strategies, which will coincide with the benefits of overall
performance for achieving success in the business process. The primary factors of internal and external implementation are
cross-sectional and include the various areas of business fields previously mentioned (manufacturing, distribution, sales,
professional/social customer), but are not always specific to each area of business variations covering the four factors. Further
studies into The Four Factors of Quality, reveals opinions of others who have written on related subjects. For example, in one
report it was noted that a significant change in the manufacturing phase of business had taken place. This change particularly
reflects the changes taking place from manufacturing to the service sector; it also reveals information about how technology
has affected manufacturing trends. It continues to explain how the service sector has increased in size, while the
manufacturing sector (the foundation of a strong economy), has decreased in size; a trend which affects the overall economy of
the United States. Because of the significant change in manufacturing, it is important to examine all of the factors which are
common to the Four Factors of Quality, manufacturing, distribution, sales, and the professional/social customer. It is also
necessary to assess those factors, which can adversely affect the achievement of goals at each level of the various phases in
the assessment of the Four Factors of Quality. There are major factors that can have an adverse or positive effect on the
success of strategic planning, solutions planning, inventory control and planning around economic conditions. The divisional
process for assessing these factors in efforts to work towards success, and development, are common for all areas from
manufacturing to the professional/social consumer.
FACTORS AND CONCERNS FOR MANUFACTURING

A recent assessment based on a poll taken to determine the major causes for declines in manufacturing turned up very
interesting results. The assessment was done by polling/surveys of executives, and was performed by the Fabtech
International & AWS Welding Show, and included a company by the name of Metalform.
(http://www.qualitymag.com/copyright/BNP-GUID-9-5-2006-A-10000000000000452788... viewed on 8/27/2009). As an
explanation for the increase in the service industry and decreases in the manufacturing industry, the results from executives
polled determined the following to be the cause:
1. Lack of employee skills
2. Oil prices
63%
20%
84
A. J. Smith
3.
4.
5.
6.
Taxes
Weak dollar
Iraq (financial commitment)
Credit crisis
Total:
11%
10%
9%
7%1
100%
Chart 1 below, depicts a graphical picture of the responses from the executives who were polled/surveyed. These executives
expressed their opinions as to why there is a decrease in manufacturing. As a result of the polling/surveys suggestions, which
serve to give a greater focus of how to increase the interest of future generations in manufacturing was also determined. It was
suggested that an increase in parental involvement, might help to encourage young people to go into the field of
manufacturing. At the educational level, it was suggested that teachers get involved to encourage students to seek
employment, and careers in manufacturing. It was also felt that greater offerings of compatible math and science programs at
the level of high school and college would be used to serve, and support an increased interest in manufacturing. Technology
programs that help to facilitate greater knowledge in high-tech and computer skills could also serve as an investment, which in
turn would help to develop a greater interest in manufacturing as well. (http://www.qualitymag.com/copyright/BNP-GUID-9-52006-A-10000000000000452788..., viewed on 8/27/09. The final results from those polled, determined that 58% of the
respondents felt that competitive salaries would increase interest in manufacturing, while 27% felt that parental/teacher
involvement would increase interest. Also of those surveyed, 23% supported the idea of more relevant math and science
courses in high school and college, while 22% supported the need for increased computer and high-tech skills. The pie chart in
Chart 2, shows the percentage of those respondents who expressed possible solutions for increasing future generational
interest in manufacturing.
Chart 1:
Explanation for decreased manufacturing.
Chart 2:
Solutions to support future generational interest in manufacturing.
Taking another look into these concerns, it is also useful to assess the various planning processes which can help to support
manufacturing by investigating supportive internal and external possibilities. The author has found based on articles published
by others, which although not directly stated; supports the following as internal factors for supporting quality in manufacturing
and increasing the infrastructure of the companies and industry itself. Table 1, is a list of some of the internal factors, which
support improving manufacturing, and is followed by Table 2, which displays the external factors.
85
Table 1: Internal Factors

1.
2.
3.
4.
5.
Invest in infrastructure
Resource allocation
Human resource system
Quality control system
Measurement analysis system
6.
Six Sigma Training
7.
8.
9.
10.
11.
Human resources system

Quality control system
Process development
Product development
Information processing
4.
5.
Product based strategy

Price based strategy
Table 2: External Factors1.

2.
3.
Market based strategy

Capability based strategy
Changing markets
FACTORS AFFECTING DISTRIBUTION

The major factors affecting distributors is the continuous increase and improvements in technologies such as those, which are
inspired by ecommerce. Generally it is believed that the larger the distribution company size, the greater the need exists for
investment into ecommerce. It is also believed that ecommerce is responsible for the increasing profits and value in
distribution. It is assumed that larger scale distribution companies are more financially stable allowing the affordability for more
advanced technology to support their operations. If true, this may create a competitive disadvantage for small scale
distributors, as indicated in the article How Much Are Small-to-Midsized Distributors Losing When They Ignore eCommerce?
authored by Cheyne Rood. It is also noted in this article, that the capacity of larger size distributors creates the need to develop
departments within their companies which are dedicated to handling ecommerce as a means to increase profits and value on a
consistent level in their functions; (www.distisuite.com/articles/distisuite-ecommerce-stats), viewed on November 1, 2009).
The Distisuite Company provides web-sites for distribution companies to facilitate the ecommerce process. They have found
that the benefits out way the cost, but can differ based on the difference between their non-installation and installation
processes. The following revenue costs/profits, were determined by the Distisuite Company: a. for the non-installation year
where clients are only paying their monthly rate, average revenue to cost ratio of 91:1 was achieved, which indicates an
average $91 dollars of revenue for every $1.00 spent on the DistiSuite system annually. The installation revenue cost ratio was
21:1, or $21 dollars of revenue for every $1.00 spent. The DistiSuite Company determined that the average lowest performing
clients of the Distisuite system investment, produced revenue to cost ratios of 20:1 for the non installation year, and 7:1 for an
installation year. They also determined that top performing clients average about 400 new customers each year;
(www.distisuite.com/articles/distisuite-ecommerce-stats,viewed on 1 November 2009). The findings indicate that ecommerce
can obviously put a distributor of large scale, at a greater advantage than that of a midsize or smaller size distributor; however
it is the balance sheet in any business that tells the final story. What is important however is that distributors assess the internal
and external factors, which help to facilitate progress in efforts to improve profits and value. The article Distributors Search For
Bright Spots, Industrial Distribution, March/April 2009, viewed on 11/01/2009, indicates the following internal factors that can
help to add profits and value to distributors; and external factors that should be assessed to develop strategic planning in
support of the internal factors for establishing profits and value as seen in Tables 3 and 4:
Table 3: Internal factors for adding profits and value for distributors.
1.
2.
3.
4.
5.
Develop new growth strategies

Facility closings
Enhance catalog offerings
Suspend salary increases
Reduce staff
6.
7.
8.
9.
10.
Consolidation
Create full service warehouses
Seek alternative energy sources
Reduce work hours
Layoffs
Table 4: External factors

1.
3.
5.
Mergers and acquisitions

Seek new external business opportunities
Find new customers
2.
4.
6.
Geographical territories
Find new markets
Nationwide highways
86
A. J. Smith
FACTORS AFFECTING SALES

As for any major factors having affects on sales activity, issues surrounding economy and employee training are paramount to
understand. As it has been previously stated in the article, Survey: Lack of Skilled Workers Hurts Economy Most, unskilled
workers create a trickle down affect which is a hindrance to sales potential. Employers must establish internal procedures to
perpetuate significant training of employees, however they must also make full use of their investment into employees by
determining the variety of skills those employees may poses, which can add to their value
(http://www.qualitymag.com/copyright/BNP-GUID-9-5-2006-A-10000000000000452788... viewed on 8/27/2009).
As sales represent the consistent purpose of the companys strategic goals and objectives (value and profit), it is
understandable that if workers (for example), in a dental company which sales complete dentures, and not partials dentures;
that company would be considered as a single aggregate company despite the fact that various workers may possess skills in
the partial denture process. A company in this situation could be in a position to explore and develop workers skills by
establishing methods for identifying such skills for the purpose of making full use of their investment in their employees. This
can help to increase the flexibility of sales output and add value to both the company and the economy. The ability of a
company to develop training as a creative marketing approach is necessary to increase sales. There are internal and external
strategies for general use by sales facilities that are needed to enhance specific employee related training skills, and methods
that help to increase sales goals (value/profit), as seen in Table 5.
Table 5: Internal factors which help to promote sales.
1.
3.
5.
Training and training up-dates

Brand focus
Developing methods to continuously address consumer needs.
2.
4.
Establishing of research of consumer markets

Analysis of social networks
Table 6: External factors that help to promote sales.

1.
3.
5.
Relationship building
Set focus on customer success
Maintain a professional relationship
2.
4.
Invest in customers
Open communication
FACTORS AFFECTING THE PROFESSIONAL

The greatest factor which can have a serious impact on the professional is the location of choice. As distributors and
manufactures generally depend on a variety of transportation means, the professional commonly establishes local
relationships. This is particularly true for individual professionals such as doctors, dentists, podiatrist, lawyers, accountants etc.
The geographical locations of such professionals are important due to the potential to select a location, which is overcrowded
or much of the time selected based on the popularity of a state or city; or selection just based on what they like. There must be
analysis made by these professionals to determine the population ratio which they intend to serve. There may be concerns for
age variations within a population, as particular professional services to be offered may better serve a particular age group
population or other qualitative population. In dentistry for example a prosthodontists who specializes in dentures, and seek an
area where there is an older population assuming the restorative needs of older patients. It has been assumed by many
dentists, that the state of Florida is a state where dentures may sale more, due to an elderly population that prefers warm
weather year round.
Using the field of dentistry again as an example, the New York State Dental Association, is a professional organization which
supports more than 13,000 dentists in New York State. Members have special access to clinical, education and business
resources. NYSDA is one of the largest state constituents of the American Dental Association, and is dedicated to ensuring the
highest standards of dental care for the State of New York. (newyork.citystar.com/mall/dentists01.html; viewed on 6 November
2009). This organization is a valuable resource for dental professionals, as it can assist in their decision of locations within the
state. Decisions both internal and external which are commonly used in the process of the professional, which work to develop
profits and value, are those which are stated in Tables 7 and 8, and are also listed as internal and external factors.
Table 7: Internal factors supporting value and profits for the professional.
1.
3.
5.
7.
Establish methods of consumer courtship

Limited social networking
Establishing methods of sales courtship
Quality assurance
2.
4.
6.
87
Web-based planning
Accounting and record keeping
Pricing
Table 8: External factors which can affect the professional.

1.
3.
Geographic selection
Review and up-dates of professional organizational information
2.
Demographic selection
FACTORS AFFECTING THE SOCIAL CUSTOMER

The social customer has an array of choices, consumer information and redress in the business process. The orientation of
their satisfaction and choices primarily reflects the quality of the manufacturer, the ability of the distributor to manage
transportation of goods, the professionalism of sales personnel and consumer knowledge. The social customer is ruled by
economic conditions, which influence by the decision making of manufacturing, distributions, sales and the professional as a
result of the economy. It is this that sets the social customer apart from the rest. It is the ability of the social customer to
maneuver in the ever changing currents of the economy, which determines their economic survival. The ability to separate
needs from wants under specific economic conditions determine their longevity, and the longevity of their offspring. The
dynamics for the social consumer are quite different from those of the manufacturing, distribution and the professional
customer, but all are participants in the Four Factors of Quality, areas and are all social consumers in their daily lives; having
commonly shared concerns that back track from professional services to manufacturing. One would assume that the unified
experience at the social customer level would create a greater determination on the part of all to ensure quality and service
based on their empirical experience. This however leads into ethical issues, which must be continuously addressed. The social
customer must be aware of the following internal and external factors relevant to their survival in all economic conditions as
listed in Tables 9 and 10.
Internal: factors supporting the social customer.
1.
2.
3.
Education
Earning capacity
Life style
External: factors needed for the social customer to be aware of.

1.
2.
Economic awareness
Social awareness
ANALYSIS ASSESSMENTS COMMON TO ALL FACTORS

When assessing The Four Factors of Quality, there are specific methodologies used in each area for evaluating processes,
values and quality. Most of the methods are common to all areas however; the variation in the size of a business does
influence the need to use particular methods. This helps to distinguish between primary and secondary methodologies used.
For example, it seems more common for manufactures to spend a significant percentage of time focusing on process analysis
to maximize quality in the production process as a primary method. They are more likely to use methods such as the simulation
methods used in the Monte Carlo simulation for making decisions significant to production. Various production factors require
the need for evaluating time and time cycles, which directly relate to equipment used. There are also defects that may occur in
the production process as a result of machinery or equipment used, where established parameters for calculating making
assessments of the overall value of the production process can be made. With such information obtained, manufactures can
use a simulation process for the following reasons: a) variable relationships indicate a lack of linear relationship (outliers), or a
situation that involves too many variables, b) a simulation experiment where processes can be performed without interrupting
an actual process. This method is used as a cost control factor, and helps to perfect timing and quality in the manufacturing
process.
ETHICAL CONSIDERATIONS
Ethical considerations in todays business world include an increased concern about the environment, and ways to preserve life
on our planet. Aside from this increased concern, the business world has also been devastated by corruption which has
affected the economy; having an impact on every level of the Four Factors of Quality from manufacturing to the social
customer. Ethics is something that must be a part of every society, and must serve society for the better. How well it is
understood or institutionalized in society is still in question. There was once someone who said, Every man is a gentleman and
a saint, depending on the expediency of the moment, (Parrish, P. (2009, October 18). Napoleon Hill Review - The Law of
Success in Sixteen Lessons. Retrieved November 17, 2009, from http://ezinearticles.com/?Napoleon-Hill-Review---The-Law-ofSuccess-in-Sixteen-Lessons&id=3113317), viewed on November 17, 2009. The expediency of the moment can be seen clearly
in how we respect the need for adhering to the principles related to the achievement of acceptance and satisfaction.
88
A. J. Smith
CONCLUSION
There are many ways to make greater strides towards the achievement of perfection in the areas of manufacturing, distribution,
sale and the professional/social consumer. The divisional process of breaking down these business functions can provide the
most detailed means for investigating each area, with correlations made to determine interdependent relationships. What is
very clear, is that the sum of all of the four factors, manufacturing, distribution, sales, professional/social customer and the
internal and external measures taken in support of progress to make improvements; all equal the efforts to achieve quality and
satisfaction.
SOURCES
Buxton, K.V.; Gatland, R., (1995), Simulating the Effects of Work-in-Process on Customer Satisfaction in a Manufacturing
Environment, Simulation Conference Proceedings, 1995. Winter Volume, Issue, 3-6 Dec 1995 Page(s):940 944 Digital
Object Identifier.
Festus O., and Hsu, M. (2007) An Investigation of Customer Experience with Professional Services; Service Marketing
Quarterly, Retrieved November 7, 2009 from http://web.ebscohost.com/ehost/detail?vid=3&hid=11&sid-50c742d2-b49e487e-80952e...
Gustafsson, Anders, Johnson, Michael D., Ross, Inger, (2005), The Effects of Customer Satisfaction, Relationship
Commitment Dimensions, and Triggers on Customer Retention, Journal of Marketing, Vol. 69, Issue 4, Business Source
Elite.
Homburg, Christian, Koschate, Nicole, Hoyer, Wayne D., (2005), Do Satisfied Customers Really Pay More? A Study of the
Relationship Between Customer Satisfaction and Willingness to Pay, Journal of Marketing, Vol. 69, Issue 2, Business
Source Elite.
Hutson, K., (2004) 10 Things every promotional products salesperson should know, Retrieved November 3, 2009 from
http://www.empirepromos.com/promote-huston1004.php
Kickham, V., (2009) Distributors search for business bright spots, Industrial Distribution, Retrieved www.inddist.com
Levine, David M., Stephan, David; Krehbiel, Timothy C.; Berenson, Mark L., Statistics for Managers Using Microsoft Excel, 4th
Edition, Prentice Hall, 2005.
McKenna, M. Distributors play a critical role in the supply chain, Retrieved November 2009 from www.adhesivesmag.com.
Mithas, Sunil, Krishnan, M. S., Fornell, Claes, (2005), Why Do Customer Relationship Management Applications Affect
Customer Satisfaction? Journal of Marketing, Vol. 69, Issue 4, Business Source Elite.
Morgan, Neil A., Anderson, Eugene W., Mittal, Vikas, (2005), Understanding Firms Customer Satisfaction information
Usage, Journal of Marketing, Vol. 69, Issue 3, Business Source Premier.
Reilly, T (2009).Strictly for sales, the power of business relationships. Industrial Distribution, Retrieved from
http://www.inddist.com.
Seiders, Kathleen, Voss, Glenn B., Grewal, Dhruv, Godfrey, Andrea L., (2005), Do Satisfied Customers Buy More? Examining
Moderating Influences in a Retailing Context, Journal of Marketing, Vol. 69, Issues 4, Business Source Elite.
Steiger, Darby., Keil, Linda and Gaertner, Greg; "Mode Effects in Customer Satisfaction Measurement" Paper presented at the
annual meeting of the American Association For Public Opinion Association, Fontainebleau Resort, Miami Beach, FL,
<Not Available>. 2009-08-13 http://www.allacademic.com/meta/p15954_index.html.
Economy: The rapid change in both manufacturing and service sectors, Retrieved November 27, 2009 from
http://ops.fhwa.dot.gov/freight/theme-papers/final-thm2-v3.htm.
http://www.ask.com/bar?q=how+should+historical+data+be+used_research&page=1&qsr...
CONTACT
Avis J. Smith, Associate Professor
Restorative Dentistry (P409)
300 Jay Street
Brooklyn, New York 11201
Phone: 718-260-5141
Fax: 718-254-8557
89
The Hospital Leadership Dilemma: You cant Look at a Frog and Tell how High it will Hop
THE HOSPITAL LEADERSHIP DILEMMA: YOU CANT LOOK AT A FROG AND

TELL HOW HIGH IT WILL HOP
Joel E. Rodgers, Maria Toledo and Thomas E. Griffin

ABSTRACT
In a previous study, Rodgers and Griffin (2009) found a strong positive relationship between a subordinates empowerment
level and the subordinates willingness to be empowered. The purpose of this study was to determine whether employers could
use tuition reimbursement to identify potential candidates for placement in jobs that require employees to act in an empowered
fashion. The results indicate that hospital workers that elect to pursue advanced education have a high level of willingness to
be empowered. Even though you cannot look at them and determine their willingness to be empowered, you can use tuition
reimbursement to find candidates for placement in jobs that require them to act in an empowered fashion.
Keywords: Empowerment, Willingness, Tuition Reimbursement
THE HOSPITAL LEADERSHIP DILEMMA

Hospitals and other service organizations are emulating the very successful corporations that employ Six Sigma and other
participative management platforms in which middle managers have become problem solvers. Hospitals are leading the way
with programs aimed at improving patient quality of care and reducing cost by having patients needs resolved by the first
person the patient comes in contact with. A Success Profiles study determined that hospitals with the highest patient
satisfaction are more financially successful than the average hospital (Makris, 2009). Achieving high levels of patient
satisfaction requires that key hospital employees must act in an empowered fashion. Rodgers and Griffin (2009) found that
employees that were not willing to be empowered could not be empowered by a supervisors actions. Many leaders falsely
think they are empowering subordinates when they merely involve them in decisions. Empowerment is the sharing of a leaders
power by a subordinate. Not all subordinates are willing to accept the risks involved with accepting additional power and the
resulting responsibility. A Kentucky colloquialism accurately describes the dilemma by stating the obvious, you cant look at a
frog and tell how high it will hop. Hospitals and other service providers need a mechanism that will help predict which
employees can be successfully trained for key positions, which require the employee to act in an empowered fashion. In a
previous study, Rodgers and Griffin (2009) found a strong positive relationship between an employees willingness and
resulting empowerment. The primary purpose of this study was to determine if hospitals could successfully use a tuition
reimbursement program to identify which employees are willing to be empowered.
In this study, the researchers examined the level of willingness of hospital employees that pursued a Masters of Business
Administration or a Masters of Science in Leadership at Nova Southeastern University. The study used the instrument used by
Rodgers and Griffin (2009) to determine willingness to be empowered. The instrument had 15 questions and demographic
information. Some employees avoid risk by resisting opportunities to perform tasks or make decisions, which are considered by
the employee to be beyond the scope of his or her job. The questions used for this study were:
A. In the normal course of business, I perform tasks that can and often are performed by my supervisor(s) _______ % of
the time
B. In the normal course of business, I resist performing tasks that are often performed by my supervisor.
(a) Almost Always (b) Usually (c) Frequently (d) Seldom (e) Almost never
C. In the normal course of business, I resist making decisions normally made by my supervisor.
(a) Almost Always (b) Usually (c) Frequently (d) seldom (e) Almost never
Literature Review
Empowerment has been a buzz word for the last quarter century. Hersey and Blanchard conceptual framework for the
examination of the construct empowerment was a first step. (Hersey & Blanchard, Life Cycle Theory of Leadership, 1969)
90
J. E. Rodgers, M. Toledo and T. E. Griffin
(Dixon & Dogan, 2003). Empowerment is defined as the sharing of power which is manifested as the level of freedom a
subordinate has to make decisions. This freedom is given to the subordinate by his or her supervisor. However, unless an
employee has a willingness to be empowered and a sufficient level of maturity, he or she will not act in an empowered fashion.
Researchers continue to discuss the role of leadership behavior and subordinate behavior (Ozaralli, 2003). Recent research
state the need for novel approaches to leadership and followership to deal with organizational designs that handle
environmental complexities (Bligh, Pearche, & Kohles, 2006). Yate (1991) proposed that a subordinates level of empowerment
is dominated by the level of delegation of power offered by the leader. His research determined the level of freedom that a
subordinate has to act was significant (Walumbwa, Orwa, Wang, & Lawler, 2005). Rodgers and Griffin (2009) concluded that
empowerment is positively related to the subordinates willingness to be empowered. More importantly, their study concluded
that empowerment was not positively related to a supervisors perceived willingness to empower as viewed by the subordinate.
Their research concluded that employees that are expected to act in an empowered fashion must be selected based on the
trait, willingness to be empowered. In their study of one hundred thirteen middle managers, they determined that subordinates
with a willingness to be empowered scored of 1.34 to 2.88 on a Likert scale of one to five had an empowerment mean of 39.3
with a standard deviation of 5.84. The population was divided into five groups based on the variable willingness to be
empowered. Eighty seven of the one hundred thirteen studied fell into groups 1, 2 , and 3. Groups 1, and 2, and were not found
to be significantly different than group 3. Group 5 was not found to be significantly different than group 4.
POPULATION
Mean
Empowerment
36.26
39.3
43.10
Willingness
1.34
2.60
4.1
GROUP 2 and 3
Mean
Empowerment
36.26
38.45
40.01
Willingness
1.34
2.24
2.88
GROUP 4
Mean
Empowerment
40.2
41.65
43.10
Willingness
2.95
3.53
4.1
Conger and Kanugo (1988) concluded that empowerment of subordinates may prove to be an important path to organizational
change. They found that empowered individuals have higher expectations than they had prior to empowerment. Zimmerman
(1990) determined that participation is necessary to achieve empowerment but participation alone will not yield empowerment.
Hollander and Offerman (1990) described the delegation of decision making responsibility as situational. They found that
delegation, unlike participation, distributes power selectively rather than equally. Leaders that delegate consider the ability and
the responsibility of the follower for the task. Leana (1987) determined that managers do distinguish between delegation and
participation. Leana found that managers determine the level of delegation versus participation on a situational basis; based on
the specific decision rather than their overall trust in a subordinate. Vroom (1976) found that no manager used the same
decision process for all decisions. He found that the subordinate is the important element in the choice of leadership style and
technique. Leana (1987) and Yate (1991) focus on the importance of determining the willingness of a subordinate to be
empowered and the willingness of the leaders to empower the subordinate. Subordinates will make decisions and perform
tasks in accordance with their level of empowerment.
In this study, the researcher examined and measured the willingness levels of employees of South Florida hospitals. The study
focused on the employees willingness to be empowered. All of the employees studied have completed a Masters Degree at
Nova Southeastern University. The resulting level of willingness will be compared to Rodgers and Griffins (2009) study to
determine if students who self select to pursuing additional study while full time employees of hospitals are more willing to be
empowered than the population.
91
The Hospital Leadership Dilemma: You cant Look at a Frog and Tell how High it will Hop
RESEARCH QUESTIONS AND HYPOTHESES

Research Question
Can hospital employees with the trait, willingness to be empowered , be positively identified by selecting employees whom
have pursued advanced education while employed by the hospital?
Hypothesis
Null: Across hospital employees, the level of willingness to be empowered will be unrelated to whether the employee has
pursued advanced education while employed by the hospital.
Alternative: Across hospital employees the level of willingness to be empowered will be positively related to the employees
pursuit of advanced education while employed by the hospital.
Thirty-two hospital employees that had completed their Masters in Business Education or Masters in Leadership were studied.
The groups mean level of willingness to be empowered was compared to the level of willingness to be empowered of the most
empowered subordinates in Rodgers and Griffins (2009) study.
The variables and their relationships are demonstrated in Table 1.
Table 1:
Variables and their relationships
Variables
Variable
Relationship
Type
X1 Employee Willingness
Dependent
Metric
Y1 Employee Education
Independent
Non metric
RESEARCH DESIGN
Sample
A study was conducted by sampling Nova Southeastern University Masters students that were full time employees of hospitals
in the South Florida Region. The sample consisted of 32 Nova Southeastern Masters students that were full time hospital
employees. The sample was obtained through Nova Southeasterns Masters in Business Program Office. Respondents were
assured of data confidentiality.
Research Instrument
The original concept of measuring empowerment by determining an employees method of performing tasks was developed in
1992 by Dr. Rodgers and used by Rodgers and Griffin (2009) for their study on empowerment. To establish reliability the
survey was given to 10 Nova Southeastern University DBA Students. Validity was confirmed by using Chi Square tests. The
survey instrument was the same instrument used by Rodgers and Griffin (2009) for their study on empowerment. It was not
modified for this study.
Table 4: Demographic Characteristics of Respondents
AGE
Male
Female
Less than 30
30 to 50
15
51 to 65
Greater than 65
Total
1
9
23
The primary purpose of this study was to determine if hospitals could use tuition reimbursement to select employees to be
trained for positions requiring employees to act in an empowered manner. The researcher examined the level of willingness of
92
J. E. Rodgers, M. Toledo and T. E. Griffin
full time hospital employees that have self-selected for advanced education. It was determined that tuition reimbursement could
be used by the hospitals to identify potential candidates for empowerment.
In this study, the researchers determined that the mean level of willingness of the hospital employees studied to be empowered
was 3.15. Sixty three percent of the employees studied had a willingness level higher than 2.88 .This is outside the range of
group two and three and well within the range of group four, which were the most empowered middle managers of the previous
study. Using tuition reimbursement hospitals can expect two thirds of employees selected to act as empowered employees
given training.
REFERENCES
1. Bligh, M. C., Pearche, C. L., & Kohles, J. C. (2006). The importance of self- and shared leadership in team based
knowlege work: A meso-level model of leadership dynamics. Journal of Managerial Psychology , Vol. 21, No. 4, pp. 296318.
2. Conger, J. & Kanungo, R. (1988). The Empowerment Process: Integrating Theory and Practice. Academy of Management
Review, V. 13. pp. 46-78.
3. Dixon, J., & Dogan, R. (2003). A philosophical analysis of managemnt: improving praxis. Journal of Management
Development , Vol. 22, No. 6, pp. 458-482.
4. Hersey, P., & Blanchard, K. H. (1969). Life Cycle Theory of Leadership. Training and Development Journal , pp. 25-37.
5. Hersey, P., & Blanchard, K. H. (1996). Management of Organizational Behavior. Englewood Cliffs: Prentice Hall.
6. Ozaralli, N. (2003). Effects of transformational leadership on empowerment and team effectiveness. Leadership and
Organizational Development Journal , Vol. 24, Nol. 6, pp. 335-344.
7. Hollander, E.P., & Offerman, L.R. (1990). Power and Leadership in Organizations. American Psychologist, Vol. 45, No. 2,
pp. 179-189.
8. Leana, C.R. (1987). Power Relinquishment Versus Power Sharing: Theoretical Clarification and Empirical Comparison of
Delegation and Participation. Journal of Applied Psychology. V. 72-2. pp. 228-233.
9. Rodgers, J & Griffin, T. (2009). Empowerment: Trait relatedness. Journal of Applied Business Research. V.25-5 pp
10. Spreitzer, G.M. (1995). Psychological Empowerment in the Workplace: Dimensions, Measurement, and Validation.
Academy of Management Journal. V. 38-5. pp. 1442-1465.
11. Vroom, V. (1976). Can Leaders Learn to Lead? Organizational Dynamics. Winter, pp. 17-28.
12. Walumbwa, F. O., Orwa, B., Wang, P., & Lawler, J. J. (2005). Transformational leadership, organizational commitment,
and job satisfaction: A comparative study of Kenyan and U.S. financial firms. Human Resource Development Quarterly ,
Vol. 16, No. 2, 235-256.
13. Yate, M. (1991). Delegation, The key to Empowerment. Training Development Journal. Apr. pp. 23-24.
14. Zimmerman, M.A. (1990). Toward a Theory of Learned Hopefulness: A Structural Model Analysis of Participation and
Empowerment. Journal of Research in Personality, Vol. 24. pp. 71-86.
BIOGRAPHY
Dr. Joel E. Rodgers is an Adjunct Professor at Nova Southeastern University School of Business and Entrepreneurship. He is a
retired Vice President of Allied Signal and former CEO of Baron Blakeslee Inc. He teaches master level courses in Leadership
and Strategy.
Maria Toledo is an Associate Director for the H. Wayne Huizenga School of Business and Entrepreneurship at Nova
Southeastern University. She teaches Human Resource Management.
Dr. Thomas Griffin is Professor of Management at the H. Wayne Huizenga School of Business and Entrepreneurship at Nova
Southeastern University. He teaches master lever and doctoral level courses including strategy, statistics, operation
management, and finance.
93
I Dont Want to Read About You in the Paper
I DONT WANT TO READ ABOUT YOU IN THE PAPER
Ronald M. Mano
Weber State University, USA
ABSTRACT
This paper is based on a speech on ethics that was given by the author to two separate professional groups.
The objective is to encourage participants to always choose to do the right thing. The theme is that the author never wants his
students to be written up in the newspaper or other news media for doing improper activities. Especially, he does not want any
more of his students to go to jail for improper behavior.
The paper includes examples of people who did improper activities. They include both individuals with whom the author is not
acquainted and those with whom he is acquainted. The author is nearing the end of his academic career and refers to several
articles which he and colleagues have published over the years.
The Continental Vending/Valley Mortgage case of the late 1960s and early 1970s are a critical part of the paper. That is the
first case in which auditors were tried and convicted as criminals in a failed audit. A critical lesson should have been learned
from that case but it appears the profession has failed to do so.
An important part of the paper is a discussion of condition and criteria. These are related to Principles-based and Rulesbased accounting. These are related to the Enron and Global Crossing cases or recent years.
Keywords: Ethics, Continental Vending, Valley Mortgage, Condition, Criteria, Principles-Based, Rules-Based, Accounting,
Enron, Global Crossing.
INTRODUCTION
I have often seen articles published that were actually speeches given by the author that was then picked up and published as
an article. These were typically speeches made by rather famous people made to fairly high profile audiences. I am certainly
not a famous person but I recently gave a speech to two different audiences that were not particularly high profile at least on
the national scene. However, the speeches did seem to go over quite well so I decided to write it up as an article and see if a
journal would pick it up and publish it as an article.
Both organizations asked me to give a presentation on ethics and thus I chose as the title of my presentation a statement that I
often make to my students. I often tell them about ethical situations either from the past or sometimes from current news. The
recent Madoff and Rajartnam cases (Wall Street Journal October 17th and 20th, 2009) are two cases in point. I also tell them of
cases regarding former students and colleagues from the professional world of whom I have read about in the paper for doing
improper activities and in some cases actually went to jail.
I happen to be a golfer and one of the people who asked me to make the presentation was the person who introduced me to
golf so I began with a couple of golf stories. I have been a professor for over 35 years so I am nearing the end of my academic
career and these two golf stories relate to some elderly golfers so I can relate to both stories. The first story is about a 70 yearold golfer who was still quite good but his eyesight was beginning to fail so he had difficulty seeing where his ball was landing.
After telling his dilemma to a friend, the friend mentioned that he knew 90 year-old who did not like golf but loved to go walking
and had perfect eyesight. The friend suggested that the two of them get together the next time and thus made the
arrangement. When they got together, the 70 year-old teed it up and hit a wonderful drive right down the center of the fairway.
He immediately turned to the 90 year-old and said, did you see where it went? The 90 year-old immediately replied, yes.
The 70 year-old asked where it went and the 90 year-old replied, I cant remember. I am getting to the point where I can relate
to the frailties of both the 70 and 90 year-old.
The other golf story relates to an interesting clip that aired during the 2008 British Open. An old guy, like myself, and a young
buck were on the tee box and between them and the green was a large bushy tree. The old guy said to the young buck, When
I was your age, I used to hit the ball right over that tree and onto the green. Recognizing the challenge, the young buck teed
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up the ball and hit a terrific shot only to see it hit a branch at the top of the tree, trickle through the tree and land at the base of
the trunk. The old guy then said, When I was your age that tree was this tall (holding his hand about five feet above the
ground).
USING SLIDES IN MY PRESENTATION

Several days prior to my presentation I was asked to submit any powerpoint slides or handouts that I would be using. I told
them that I was not planning on using any of them. Then at the presentation I told them the following story. Several years ago
on the very first day of class I found an article in the Wall Street Journal that was perfect for the class. So I made copies of the
article which was less than a single page and took them to class. I handed out a copy to each student and we discussed it and
how it related to the class.
A few days later I was attending a CPA breakfast or lunch meeting and the speaker was discussing intellectual property. As he
was speaking, I was getting increasingly anxious. Finally I raised my hand and asked, If I were to find an excellent article in the
Wall Street Journal and made copies for my students and took them to class and discussed it, would I be in trouble? Instantly
the speaker said, Yes. Then someone else raised his hand and said, If Ron just made a transparency of it would that be
okay? Instantly the speaker said, That would be worse. He never explained why that would be worse and I never asked
because I had heard enough. Therefore whenever I speak, I seldom use powerpoints or slides and I never make copies of any
articles or jokes that I might see published and would like to use.
BERNIE MADOFF
I was asked if I knew enough about Bernie Madoff to speak about him. I told the requester that all I knew about Bernie was
what I had read in the papers just like everyone else. However, I replied that I did have some opinions that might shed some
light on why the Bernie Madoffs of the world are able to succeed in what they do.
DONT GO TO JAIL
I began my speech by reading parts of an article that I wrote and which appeared in the October 25-November 7, 1999 issue of
Accounting Today. The article is titled, Dont go to Jail and Other good advice for Accountants. I read the following parts from
the article:
When I was a youth, one of my heroes was Ray Edmonds. Ray had been my scoutmaster. As I was about to
graduate with my accounting degree, Ray was close to death. I went to visit him at his home. Although he was
bedridden, he was still very much alert.
He was pleased to see me and asked what I was doing at the time. I told him that I was about to graduate from
college with a degree in accounting. He looked at me and said, Dont go to jail. I just chuckled and completed our
visit, which was wonderful but was the last time I say Ray before his passing.
I had often thought, What a strange thing for Ray to say to me. Now I think, That was about the best advice I ever
received in my life.
I am now an accounting professor and I often tell my students that I dont want to read about them in the paper (at
least not because of improper behavior). I also tell them that if I did read about them in the paper, they would not,
unfortunately, be the first former student whose name had appeared in the paper for improper behavior. I have a
former colleague with whom I worked in public accounting who actually did go to jail. So let me give Rays advice to
accountants everywhere Dont go to jail.
We often hear of management fraud. For many years, I thought that it was a terrible thing that management could
be as dishonest as to intentionally falsify financial statements in order to deceive investors or auditors. As I think
about the issue of management fraud, it occurs to me that management fraud that results in falsified financial
statements could never happen if all accountants were so completely honest that they would not allow the quality of
their financial statements to be influenced by management pressures.
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We accountants must be interested in figuring out how much was made and reporting it. Unfortunately, too often we
seem to be told how much management wants to report in income or earning per share and then we set out to
manipulate the financial statements to make it happen.
On Sept. 28, 1998, Arthur Levitt, chairman of the SEC (now former chair) gave a speech at New York University. In it,
he criticized what he called earnings management. Little discussion is necessary for readers of this article to
understand the meaning of earnings management. We accountants tend to lay blame for this type of behavior at the
feet of management. I believe that a major portion of the fault for such financial reporting lies right at our feet, as well
at the feet of management. There are probably few managements of companies who could report managed earnings
if their accountants absolutely refused to go along with the ruse.
I recently viewed for the umpteenth time, the video Billion-Dollar Bubble. That video is the story of the massive
Equity Funding fraud of the late 1960s and early 1970s. It is a classic case of where the accountant failed to insist
that the financial statements be presented fairly and went along with managements desire to manage income. In that
case, several company executives, including the accountant, actually went to jail.
A long-time friend of mine, Bob Sterling, talks of what he calls truth in accounting. Few phrases have a sweeter ring
to me than that. I happen to believe that there is some truth out there and it is our function as accountants to see that
what we report is the truth. Frankly, I dont believe that generally accepted accounting principles necessarily represent
the truth. In fact, when auditors say, Fairly presented in accordance with generally accepted accounting principles, I
have always believed that two statements were being made rather than only one statement.
As accountants, we must insure that our financial statements are fairly presented. In my opinion, it is even more
critical that they be fairly presented than it is that they be in accordance with GAAP.
Remember, it is better to sleep well than to eat well. So let me conclude by repeating the words of Ray Edmonds
Dont go to jail.
SAMPLE AUDITOR REPORTS

Kim Anderson, who invited me to speak gave me an audit report that someone had prepared as a joke stating that it was the
audit report of the audit of Bernie Madoffs company. It states:
We done the best we could on this audit and considering all things involved, we figure its pretty close. You know its
darn hard to hit it right on the button cause theres so many changes from year to year. Good help is hard to get and
in order to keep down the cost of the audit, we had to estimate some of the items like the cash receipts and cash
disbursements.
We were able to do this by projecting figures we had on other companies, we worked on a few years ago. However,
we verified the petty cash and come out pretty close to what they figured should be left. Some of the stuff we did
check was pretty far off but we figure if they aint worried about it, why get everybody upset.
Well, as we said above, we done the best we could and whatever figures aint exactly right, aint too far off. It itll
make you feel any better, remember this is the same way we done it last year.
Since Kim had given me the above auditors opinion to use in my presentation, I decided to go to my files and find a couple
other of my favorites. The following one appeared in the Wall Street Journal around 1980. I did not even copy the specific date
of the issue. I hope it is not a violation of intellectual property rights to use it without a specific reference.
We examined the Consolidated Balance Sheets of the Barrel-Proof Company as of December 31, 1880 and
December 31, 1980. Our examination was made in accordance with what we will maintain, under oath are generally
accepted auditing standards and included the record we considered necessary to cover ourselves under the
circumstances.
In our opinion, the Consolidated Balance Sheets of The Barrel-Proof Company display a uniquely creative exception
to generally accepted accounting procedures.
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However, my favorite one appeared on the cover of the March 15, 1977 issue of Forbes magazine.
To the Directors and Stockholders:
We have examined the Consolidated Balance Sheet of the company and consolidated subsidiaries as of December
31, 1976 and 1975. In our opinion, these financial statements present fairly the financial position of the companies, in
conformity with generally accepted accounting principles consistently applied.
On the other hand, there is a growing body of opinion that holds that our opinion is not worth a damn.
CONTINENTAL VENDING CASE

Usually when I speak to groups of professional accountants, I work in the Continental Vending case. I believe that this is
perhaps the most important case to ever affect accountants but is perhaps one of the most forgotten cases.
To briefly introduce this case, I read from an article titled, Principles-Based Accounting that I wrote with two colleagues in the
February, 2006 issue of The CPA Journal.
Continental Vending was one of the first major criminal cases successfully brought against auditors.The auditors
were engaged to audit Continental Vending Machine Corporation. A Continental affiliate, Valley Commercial
Corporation, borrowed a large sum of money from Continental. Valley then loaned the funds to a dominant officer and
significant shareholder of both Valley and Continental. The auditors learned that the dominant officer would not be
able to repay Valley, and the auditors knew that as a consequence Valley would be unable to repay Continental.
Nevertheless, the Continental financial statements showed the receivable from Valley as an asset, with only a
relatively obscure footnote explaining the circumstances surrounding the receivable.
Continental never did collect payments from Valley on the receivable in question: in fact, Continental went bankrupt
shortly after the financial statements were issued. When the U.S. government brought criminal charges against the
auditors, the auditors maintained that they properly followed generally accepted auditing standards (GAAS) during the
audit and that the footnote also complied with applicable standards. Moreover, several experts testified that the
footnote disclosure explaining the receivable from Valley complied with generally accepted accounting principles
(GAAP) and that the auditors had followed GAAS.
the district court judge instructed the jury that mere compliance with professional accounting standards was not a
complete defense. Rather, the critical test was whether the financial statements fairly represented Continentals
financial status. The jury found the defendants guilty.
The appellate court judgetold the accounting profession that fairly presentedin accordance with generally
accepted accounting principles is two statements rather than one. Furthermore, the clear message was that if one is
to prevail over the other, it must be fairly presented. Fairly presented is principles based accounting and in
accordance with GAAP is rules based accounting.
WE SHOULD DO SMART THINGS

I then told a story about my daughter when she was about five years old. She is now in college. I was trying to get her to say
something nice to me so I was saying things like, youre cuter than cute or youre nicer than nice, After several of those, she
finally looked up at me with a twinkle in her eye and I thought that finally she was going to say something nice to me. She said,
youre dumber than dumb. I use that story to introduce the fact that I believe that in several ways, we accountants have been
dumber than dumb. Lets talk about a few examples.
On August 5, 2005 I read a Wall Street Journal article about the sentencing of Betty Vinson and Troy Normand of WorldCom,
the largest bankruptcy in the history of mankind. They were sentenced for their participation in the preparation of fraudulent
financial statements after being pressured by their superiors Scott Sullivan and David Meyers. Just five days later on August
10, 2005 I was at the American Accounting Association annual meeting in San Francisco, California. One of the keynote
speakers was Cynthia Cooper who was the internal auditor of WorldCom that found and exposed the fraud there. As Cynthia
Cooper was talking about Betty Vinson and Troy Normand she read letters of resignation which were written by them. Parts of
those letters are included in her book, Extraordinary Circumstances. According to her book, Troy Normand wrote:
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Due to circumstances surrounding the third quarter 2000 close, I feel I have no choice but to resign. I have chosen
not to participate in the recommended course of action and have decided not to take any future risk.
Betty Vinson wrote:
Dear Buddy,
This letter is to serve as notice of my resignation from WorldCom effective today. The actions proposed regarding
quarter close entries has necessitated this action. If needed, I can assist with any transition issues that may arise. My
income situation is such that I request wework out an equitable arrangement regarding some sort of salary and
benefits continuation until I can obtain other employment, because I feel that upper management has forced my
decision surrounding my resignation. This is not the course of action I prefer, but feel I must take. It has truly been a
pleasure working for you.
As I was sitting in that meeting in San Francisco and listening to Cynthia Cooper read those letters of resignation I was asking
myself what was going on. You see, I actually had the Wall Street Journal article about the sentencing in my hand as I was
listening. Then Cynthia Cooper said, They never sent the letters. I suppose they had a house payment and a car payment
and decided to go along with the fraud rather than resign and now are convicted and sentenced criminals. They were probably
dumber than dumb.
I next told the attendees a good story. It is about Ryan Thomas a student of mine. Ryan was not a typical accountant. He had
long hair and maybe even an earring (I dont recall for sure). When Ryan was a student, he used to tell me that he would take
me fishing and would often show me pictures of huge trout he had caught. He never did take me fishing but for many reasons, I
took a particular liking to Ryan. I really did like him.
A few years after he graduated, I got a call from Ryan. He wanted to talk about a situation that he was facing at his
employment. He said that his employer was pressuring him to do some things that he felt were not right and perhaps even
fraudulent. He asked for my advice. I told him that I would definitely not participate and that he should get out of that situation
as soon as possible. After I hung up the phone, I had a totally sick feeling. I was sure that Ryan was going to go along with
management and bow to the pressure just as Betty Vinson and Troy Normand had done at WorldCom.
At that time I used to have one of the most outstanding accountants and a person of impeccable integrity come to speak to my
auditing class. His name is Joe Knudsen. That fall when Joe came to speak to my class, there was Ryan Thomas at his side.
After the presentation, I asked Ryan what had happened. He told me that he had a mortgage and car payment and family to
feed. But after our conversation he went in and resigned his position. He did not have another job lined up but was able to get
hooked up with Joe Knudsen and was pleased with his situation. I am convinced that he will never face those same pressures
with Joe Knudsen as he did with his prior employer. I have always been proud of Ryan Thomas and know that he was NOT
dumber than dumb. He did just the opposite of Betty Vinson and Troy Normand.
CONDITION AND CRITERIA

In the February, 2006 CPA Journal article mentioned above, we talked about condition and criteria. Here is what we wrote:
Internal auditors use what they call condition and criteria. Condition is the current situation: what actually exists.
Criteria is what the ideal situation would be. The internal auditor must determine what to use as criteria. This is done
by a careful analysis of the business situation based on the internal auditors experience and knowledge. There is no
rulebook for the internal auditor to use. Each situation is different and demands different analytical skills. The auditor
must decide on the best practice.
To determine criteria, the external auditor turns to GAAP. The external auditor applies those rules, and if the
companys practice can be squeezed into the confines of GAAP, the external auditor declares that the practice is
fairly presented in accordance with GAAP. The external auditor might not agree with the presentation yet support it
because it fits within the rules. There is no commitment to the rule for the external auditor as there must be a
commitment to criteria for the internal auditor.
Criteria in internal auditing would be principles-based accounting. Criteria in external auditing would be rule-based
accounting. It seems clear that the profession needs principles-based accounting today. It needs external auditors to
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take some ownership in the criteria that they apply when they profess that the financial statements are fairly
presented.
I believe that Andy Fastow of Enron was the worlds foremost expert on accounting for Special Purpose Entities. However, in
my opinion, he used that expertise not to provide full disclosure of Enrons financial condition but used that knowledge to hide
the truth. Quoting from an article that two colleagues and I wrote and was published in the May/June, 2003 issue of CPAFocus
titled, Present Day Lessons from Robert R. Stelings Lecture on Accounting Power, we wrote the following about this
disclosure.
In the Nov. 5, 2001 Wall Street Journal, an article titled, Andersen Faces Scrutiny on Clarity of Enron Disclosures
described how parts of the Enron annual report were indecipherable. The article quotes an Enron spokesperson,
Karen Denne, as stating, They comply with reporting requirements. She continues by saying, investors who didnt
understand the transactions didnt have to buy Enron stock.
Exactly one month after the first Enron article reference above, another Enron article appeared in the Dec. 5, 2001,
Wall Street Journal. That article stated, The company (Enron) hired legions of lawyers and accountants to help it
meet the letter of federal securities laws while trampling on the intent of those laws. It became adept at giving
technically correct answers rather than simply honest ones.
When accountants rely on GAAP rather than their own criteria which they believe in their heart-of-hearts, accounting such as
happened at Global Crossing occurs. We discussed that case in the same February, 2006, The CPA Journal article referenced
earlier.
On March 11, 2004, the Wall Street Journal reported that Global Crossing had just reported a quarterly profit of
$24.88 billion which dwarfed the prior record of $6.7 billion held by Exxon for its fourth quarter of 2003. Global
Crossing had been under Chapter 11 bankruptcy protection. It managed to turn things around quickly on revenue of
$719 million, or $34.60 of profit on every $1 of revenue a fantastic profit margin. And that is net profit margin, not
gross profit margin.
To understand how it was able to claim this, remember the equation:
Assets = Liabilities + Owners Equity
In bankruptcy, the liabilities are forgiven. Therefore, to keep the equation in balance, either assets must go down or
owners equity must go up. Without being privy to internal discussions, one might still reasonably assume that the
company accountants challenged the auditors to show them where in the rules it says they could not do that. In fact,
the rules do recommend that liabilities forgiven in bankruptcy be handled in exactly this manner.
The authors believe that both the in house accountants and the auditors of Global Crossing would have been well
served had they gone back and studied the statements made by the appellate court in Continental Vending. The
application of Rule 203, the definition of criteria as used in internal auditing, and the lessons of Continental Vending
would have clearly indicated that a better reporting approach would have been to take these gains directly to retained
earnings rather than through earnings, and avoid a situation where a bankrupt company reports the highest quarterly
profit (by fourfold) in the history of American business.
WHY DO WE HAVE SO MANY RULES?

I am a firm believer that we need principles-based accounting. We need accountants who take ownership of the financial
reporting of which they are partially responsible. A case that illustrates the need for this type of ownership is the situation that
occurred in 1999 when the SEC issued their rule on revenue recognition (SAB 101). I discussed that problem in an article
published in Accounting Today, April 17-30, 2000, titled The SEC Promulgates the Obvious.
On Dec. 6, 1999, I received The Wall Street Journal, which contained an article titled, SEC Lists Revenue-Booking
Guideline, Says It Aims to Curb Dot-Com Abuses. I read the article with some interest. It seems that the Securities
and Exchange Commission had issued an official rule on the criteria that must exist before a company is allowed to
book revenue.
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That day, I took the article to class with me and asked my undergraduate class at Weber State University what they
thought should exist before a company recognized revenue. They came up with the following list:
An actual sale or goods or services

A specified price and
The ability to collect
It turned out to be a pretty simple exercise because it took them about three minutes to come up with the list.
Two days later, I spoke at an Institute of Internal Auditors meeting in Salt Lake City. Since the issue fit in well with my
topic, I did the same exercise with that group of professionals. They came up with the same list in about the same
amount of time.
Next, I went to a faculty colleague and did the same exercise. In about the same amount of time, he came up with the
same list. I have conducted the exercise a few additional times with other groups but always with the same result.
Here is the list of criteria that the SEC came up with as reported in The Wall Street Journal on Dec. 6, 1999:
An agreement to deliver products and services

They have actually delivered the product or services
They have a fixed price for the product or services
They can collect the specified price
Now I ask readers of this article: Why do we need a formal SEC rule to require what several different groups took
about three minutes each to develop? Could it be that there are some problems out there that relate to the recognition
of Revenue? It is regrettable when the SEC feels a need to promulgate as a formal rule, which should be totally
obvious to even marginally qualified accountants.
Exactly one month later (Jan. 6, 2000), while again reading The Wall Street Journal, I saw an article titled, Auditors
Miss a Fraud and SEC tries to Put Them Out of Business. The title caught my eye so I read the entire article which
mentioned a particularly bold fraud where the company, Cal Micro, was booking bogus sales to fake companies for
products that didnt exist. Now surely, Cal Micros accountants did not need the SEC rule to tell them that booking
bogus sales to fake companies for products that dont exit is really not proper accounting.
WHO GETS INTO TROUBLE WITH ETHICS?

Remember the title I choose for this article. I often tell my students that I dont want to read about them in the paper, at least
not for doing improper activities. I also tell them that I dont want them to go to jail. However, I tell them that if I did read about
them in the paper, they would not, unfortunately, be the first former student about whom I have read in the paper. I also tell
them that if they were to go to jail, they would not be the first former student who actually went to jail.
The next two people I am not going to name because I am pretty close to them personally. However, if you would like to google
their names, please contact me directly and I will give you the names. Also, just putting some key words into Google from the
information provided will pull up their names. Putting the names of two former students whom I knew had gotten in trouble into
Google yielded the following:
On February 5, 2007, in Salt Lake City..(name withheld) was sentenced on January 10, 2007, to five months in
prison, five months home detention, and one year of supervised release.(name withheld) was also ordered to pay
$11,378 in restitution to the United States. On March 22, 2007(former student and father) were indicted in separate
indictments charging them with multiple counts of aiding and assisting in the preparation and presentation of false tax
returns
In a case that is still pending google yielded the following:
A special agent of the Office of Inspector General at the Department of Housing and Urban Development was
arrested in Salt Lake City for making a false statement to federal authorities and bank fraud, according to the U.S.
attorneys office for the District of Arizona.
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The indictment alleges that (name withheld) of Layton, Utah failed to report on a 2005 financial disclosure form that
he held a position outside his duties as a federal agent in the company Funding Matrix LLC. He also failed to report
on that same form that he conducted real estate business dealings.
A conviction for bank fraud has a maximum penalty of 30 years in prison, a $1 million fine or both. A conviction for
making a false statement has a maximum penalty of five years in prison, a $250,000 fine or both.
There are some other rather ordinary people who have gotten into trouble and whom I will not name because they were my
neighbors. However, I will provide enough information that if you would like to look them up on the internet you could find them
using some of the key words that I will provide. I hope disclosing these people does not give the impression that all my
neighbors and students are crooks.
The first person is one whom my daughter worked for when he owned a video rental shop in our neighborhood when such
businesses were quite new.
The Idaho Department of Finance today issued a Cease and Desist Order against a Utah-based company and its
promoter ordering a halt to the offer and sale of a purported international, elite bank trading program in Idaho.
Nations International LLC and (name withheld) are named in the order. Nations International operates from Sandy,
Utah.
This person was a fugitive for several months and was ultimately apprehended in Las Vegas, Nevada.
The second person was an officer in my church.
Hansens co-defendant, (name withheld), of Salt Lake County, pleaded guilty to two second degree felony counts of
Securities Fraud and a single count of Sales by an Unlicensed Broker-Dealer or Agent. Both defendents will be
sentenced May 10, 2004 in Third District Court.
The next person is one whom I have spent many a night with at scout camps. At one of those camps, for a half-hour he
explained his business to me. At the end of that discussion, I said to myself, I have been a CPA for over 30 years and have a
Ph.D. in business and I dont have any idea what he was talking about. When I returned home the next day, I told my wife that
it sounds like money-laundering to me.
Attorney, (name withheld), of Sandy, Utah was convicted on tax and fraud charges after a two week jury trial, the
Justice Department and Internal Revenue Service (IRS) announced today.(name withheld), along with his coconspirators, were indicted in November for conspiring to defraud the United States and to commit mail fraud and
wire fraud. (name withheld) was also charged with tax evasion and assisting in the filing of false tax returns.
This person is currently serving a ten-year prison sentence in federal prison.
CONCLUSION
Accounting is a discipline that has had a wonderful reputation (at least prior to Enron). I believe that reputation is still strong but
it is up to the current generation of accountants to see that it remains strong. I have often said to my students, I am not proud
of what my generation has done with this profession. However, I tell them that I have great confidence that they will do better.
Truly, if I did not have confidence in the next generation, I would not be able to continue to do what I do.
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Cirque du Soleil
CIRQUE DU SOLEIL
Derek Kenneth Dygos and Emin Civi

University of New Brunswick, Canada
ABSTRACT
This case is about Cirque du Soleil, a leading entertainment organization in Canada. The Montreal based company tours the
world with 8 shows and entertains audiences with 7 resident shows in Las Vegas, New York and Orlando, fascinating
spectators of all ages with a blend of traditional and non-traditional circus acts with new innovative ideas for costume, set
design and choreography. Cirque du Soleil already employs approximately 1000 artists from 50 nationalities and 2500 other
employees in the organization estimating that over 10 million people around the world have seen a Cirque du Soleil show in
2007. In 2006 Guy Laliberte was listed on the Forbes Worlds Richest People with an estimated net worth of $1.4 billion
grossing a stated $650 million in revenue, this after pouring 70% of profits back into new productions. The case discusses one
of the biggest Canadian service exporters internationalization experiences.
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M. W. Kroff and M. Reilly
HOW DO CONSUMERS CATEGORIZE INNOVATIVE PRODUCTS?

INSIGHTS FROM MULTI DIMENSIONAL SCALING
Michael W. Kroff and Mike Reilly

Montana State University, USA
ABSTRACT
The academic literature is rich with theoretical and empirical research involving product innovativeness. Various definitions and
dimensions have been proposed and measured. These definitions and dimensions, however, come primarily from a firm-based
perspective. Little research exists regarding how consumers go about categorizing innovative products. Specifically, there is
little research dealing with the dimensions that consumers consider when encountering innovative products. This research
explores a variety of possible dimensions that consumers might consider important when assessing the innovativeness of a
variety of products. These dimensions include technological sophistication, ease of use, benefits, daily impact, change of
behavior, and innovativeness in form. An experiment is conducted in which pictures of a variety of new products pre-tested to
vary in innovative across these dimensions are presented to respondents. These respondents are asked to individually group
the products based on similarity in perceived innovativeness. Multi dimensional scaling (MDS) is subsequently used to tease
out the dimensions most commonly used by respondents. While technology expectedly appears as in important dimension, the
unexpected dimension of information innovativeness also appears. This dimension includes products that are perceived to be
innovative in the type of information offered and/or the method in which this information is presented. Examples include a
power surge protector that glows when it heats up and a portable meat bacteria indicator. This dimension of information
innovativeness and its impact on the area of overall product innovativeness are explored conceptually.
Keywords: Product Innovativeness, New Products, Product Categorization
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Impacts of the Financial Crises on Stock Markets: Empirical Study on the US and Asia
IMPACTS OF THE FINANCIAL CRISES ON STOCK MARKETS: EMPIRICAL

STUDY ON THE US AND ASIA
Hong Rim and Robert Setaputra

Shippensburg University, USA
ABSTRACT
In consideration of the severity of the US financial crisis (2007), this study analyzed and compared the impacts of the two
crises --- the US financial crisis and the Asian economic crisis --- on the financial markets and economic activities around the
world. First, the Asian economic crisis (1997) had been relatively confined within the region without having any significant
impacts on other economies. Second, the US financial crisis (2007) had spread out fast to other economies with significant
negative impacts on various economic entities (e.g., governments, banks, tax payers, and investors). To prevent the crises of
this nature in the future, governments need forward-looking policies to establish systemic-risk measures at the national level for
fast reaction to high systematic risk and to minimize the amplification effects on economic activities. In the end, more
fundamental reform of financial infrastructure should be considered for greater transparency and accountability for
policymakers to follow. To be more effective, policymakers should stress the importance of capital adequacy at financial
institutions and remain vigilant in seeking the right balance between prudent and indiscriminate risk taking.
Keywords: Financial Crisis, Systematic Risk Measures, Transparency, Capital Adequacy, Risk Taking.
IMPACTS OF THE FINANCIAL CRISES ON STOCK MARKETS: EMPIRICAL STUDY ON THE

US AND ASIA
In recent years, global trading and cross-border investing significantly increased due to open economic and market policies.
Globalization (trade liberalization, foreign entries) enabled domestic firms to improve competitiveness but to become more
exposed to additional (e.g., financial, economic, business, and market) risks. The current US financial crisis (Sept. 2007)
rapidly escalated and spilled over to other financial markets around the world and raised serious questions on the costs of
financial integration and the benefits of financial innovations. Empirical results suggest that financial shocks had been
transmitted through equity prices in the short run but other variables (e.g., cost, amount of credits) became more important in
the long run. The stock price, among others, was the main channel of information transmission across financial markets during
the time of high volatility. Financial crises have been pervasive phenomena in history, but their frequency and severity have
been more on the rise in recent years, compared to the previous eras (e.g., Bretton Woods (1945-1971), Gold Standard (18801993)).
Most bubbles occurred in an era of fast financial innovation (e.g., tech bubble in 2000). For example, the tech bubble in the
1990s focused on the promising but unrealized profits of new technologies, reflecting investors optimism on high-tech
industries. Banking crises (2007) were the result of bubbles in real estate markets, preceded by credit booms and asset price
bubbles. Crises result in a 35% real drop in housing prices over a period of 6 years, equity prices fall around 60% over 4 years,
output falls by 9% over two years, unemployment rises 7% over 4 years, and central government debt rises 96% compared to
its pre-crisis level.
The US economy experienced chronic international imbalances in the current and capital accounts, mostly during the Bretton
Woods II period. During this time, both Japan and China accumulated unprecedented current account surplus and huge foreign
currency reserves (mainly in US dollars). They could maintain exchange rates low and earn the foreign currency necessary for
strong economic growth. Due to low-priced Chinese goods, the Fed could keep the US interest rates low for a long time without
generating inflation rate. In addition, the introduction of innovated financial assets enabled US consumers to finance
consumption by increasing their indebtedness.But the increase of sub-prime mortgage loans induced various forms of fraud
(e.g., inflated valuations, false incomes, ).The sheer complexity of the products in which these mortgages are bundled made
risk assessments more difficult (or almost impossible) for investors.
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H. Rim and R. Setaputra
The US financial crisis can be traced back to the low interest rates by the Federal Reserve Bank and other central banks after
the collapse of the dot-com bubble in 2000. The US financial crisis (Sept. 2007) was mainly due to 1) rapid innovation without
proper valuation models, 2) the speculation on housing (20~ 30% (even 30~40% in some places) annual increases in house
prices), 3) financial market inefficiencies, 4) inconsistency in monetary policies, 5) strong market interconnectedness, and 7)
the insufficient constraints. In considering the severity of the US financial crisis on capital markets and economies, this study is
to analyze and compare the effects of the two crises --- the Asian economic crisis (1997) and the US financial crisis (2007) --on stock markets and economic activities in the US and Asian countries. It is of great importance for investors and policy
makers to understand how economic/financial information and shocks are transmitted between financial markets and between
the real and financial sectors across borders. It is also important to know the dynamic linkages between financial markets for
investors and portfolio managers to better manage their foreign exposures especially during the period of high volatility.
This study uses daily return of the MSCI for the US and the Asian countries (ASEAN countries (Indonesia, Singapore,
Malaysia, the Philippines, and Thailand); non-ASEAN countries (Hong Kong, Japan, S. Korea)) for a period of 1992 to 2009.
Empirical results show that the Asian economic crisis (1997) was relatively confined within the region without having any
significant impacts on other economies whereas the US financial crisis (2007) had spread out fast to other economies with
significant negative impacts on various entities (e.g., governments, banks, tax payers, and investors).
To prevent the crises of this nature in the future, governments need forward-looking policies to establish systemic-risk
measures at the national level for fast reaction to high systematic risk and to minimize the amplification effects on economic
activities. In the end, more fundamental reform of financial infrastructure with greater transparency and accountability for
policymakers to follow should be considered. To be more effective, policymakers should stress the importance of capital
adequacy at financial institutions and remain vigilant in seeking the right balance between prudent and indiscriminate risk
taking.
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Revealed Comparative Advantages of Emerging Economies: A Comparative Export Performance Analysis
REVEALED COMPARATIVE ADVANTAGES OF EMERGING ECONOMIES: A

COMPARATIVE EXPORT PERFORMANCE ANALYSIS
Birol Erkan1 and Emin Civi2

University of Kilis 7 Aralik1, Turkey and University of New Brunswick2, Canada
ABSTRACT
During the last two decades, these countries have started transforming their manufacturing from labor intensive to technology
intensive. This change has helped these countries to take larger portion of the global trade, start playing more dominant role in
international trade arena and engage in more value creating activities. The paper draws on a sample of twenty five emerging
economies to calculate their revealed comparative advantages (RCAs), indicate similarities and differences of each countrys
RCAs. The study has also shown each emerging economys comparative advantages and disadvantages towards other
emerging countries along with the whole world. The results would be helpful for the policy makers, industry leaders and
exporters to be able to make their long term strategies.
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SCIENCE & TECHNOLOGY
SECTION 2
FUTURE REVENUES AND CASH FLOW: VALUATION OF WIRELESS

TECHNOLOGIES ADOPTION
Lenford A. Smith, Thomas E. Griffin and Roscoe Dandy

ABSTRACT
The wireless industry is one of the most capital intensive high-technology industries (Harmantzis & Tanguturi, 2007). The rapid
advancement of wireless technologies has seen the industry shift from voice-centered communication to a combination of high
speed data communication and multimedia (Zhanwei, 2005). This intensely competitive industry (Eshghi, Haughton, & Topi,
2007) requires information technology (IT) managers to justify large investments in wireless technologies. How will the stock
market react to the announcement to adopt new wireless technologies? Will this adoption decision be rewarded by investors?
FUTURE VALUE AND CASH FLOW IN WIRELESS INDUSTRY

BACKGROUND
The wireless industry is one of the most capital intensive high-technology industries (Harmantzis & Tanguturi, 2007). The rapid
advancement of wireless technologies has seen the industry shift from voice-centered communication to a combination of high
speed data communication and multimedia (Zhanwei, 2005). This intensely competitive industry (Eshghi, Haughton, & Topi,
2007) requires information technology (IT) managers to justify large investments in wireless technologies. How will the stock
market react to the announcement to adopt new wireless technologies? Will this adoption decision be rewarded by investors?
Three benefits are expected from investments in new wireless technologies: Revenue increases, cost reductions, and
competitive advantage developments.
This paper has a focus on a new generation of technology that will change the wireless industry. Fourth generation (4G)
wireless mobile technologies will give people more convenience and ease in lifestyle. With the anytime, anywhere, anything,
capability, 4G will benefit every individual regardless of time and place. Considering a global standpoint, this technology stands
to be the way to communicate and connect all the time with more ubiquitous means (Hwang, Consulta, & Yoon, 2007).
The wireless industry is still a very young industry and difficult market conditions persist; therefore, it is crucial to examine the
impact of an anticipated investment (Sabat, 2005). At present second generation (2G) wireless technology also called global
system for mobile communications (GSM) is an open, digital cellular technology used for transmitting mobile voice and data
services, is widely used worldwide. The problem with 2G is that the data rates are limited. This makes it inefficient for data
transfer applications like video conferencing, music or video downloads. To increase speed, various new technologies have
emerged. The first was 2.5G technology that allowed data transfer at a better rate than GSM; and recently 3G technologies
have emerged. The maximum theoretical data transfer rate with 3G technology is 2Mbps (practically it could be a max of
384Kbps or even less). 4G technology which is at its infancy supposedly, allows data transfer up to 100Mbps outdoor and
1Gbps indoor.
Managers use non-financial and financial disclosures in different ways as part of an impressions management strategy
(Walden & Schwartz, 1997). It is likely that disclosures of innovation, particularly those concerning the firms long-term
strategies or non-financial leading indicators, can provide investors with more value-relevant information (Amir & Lev, 1996).
Traditional financial statements are incapable of evaluating fully the significant differences that exist in the high-tech industry
between book values and underlying fair market values (Liang & Yao, 2005). This means that the accounting measurement
and reporting system is ill-equipped to provide value-relevant information in emerging high-tech industries, such as wireless
communications (Amir & Lev, 1996).
Few studies on technology investment (Zhanwei, 2005; Sabat, 2005; Harmantzis & Tanguturi, 2007; and Eshghi et al., 2007)
focus on the wireless industry. This paper contributes to the voluntary disclosure literature by examining the effect of
managements disclosure of long-term innovation strategies in the wireless industry on share price. According to Entner (2008),
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L. A. Smith, T. E. Griffin and R. Dandy
the United States has outpaced Japan and the European Union in labor productivity growth. The widespread and thorough
adoption of information technology, computers, and telecommunications to reengineer business practices and improve
productivity was the main reason for the improved productivity. Entner (2008) found that even though the Internet and
computers have helped to improve productivity, wireless telecommunications, has become an essential component in
generating productivity gains for American businesses. Mobile voice telecommunications devices are now in common use by
consumers and businesses alike (p. 4).
The announcement of 4G adoption by firms in the wireless industry will be the proxy for voluntary disclosure of non-financial
information by management. This papery contributes to the growing literature on business valuation of technology in general by
examining investor reaction to the adoption of new wireless technology.
THEORY BACKGROUND
Capital markets transfer funds efficiently between suppliers and users (Fama, 1970). Three different efficiencies exist:
operational, allocational, and informational. This paper will focus on informational efficiency. The efficient market hypothesis
(EMH) implies that in an informational efficient market, information is free and securities prices reflect perfectly all information
available to the market. Theoretical and empirical research indicate that inside managers with access to detailed information
about a firm will reduce information asymmetry among outside investors by voluntarily disclosing nonfinancial information
(Narayanan, Pinches, Kelm, & Lander, 2000). Voluntary disclosure provides investors with the necessary information to make
informed decisions. According to (Narayanan et al., 2000) voluntarily disclosing qualitative information is an attempt by
management to influence investor decisions about a firms value.
Diffusion of innovation theory is used to outline the meaning of adoption of new technology. Innovation diffusion theory has
been widely applied to the study of technology innovations for more than a decade, and has provided insight into the adoption,
implementation, infusion, and diffusion of technology innovations (Prescott, 1995).
RESEARCH QUESTION
Do economic rewards actually accrue to organizations which are the first to adopt innovative technologies (Dos Santos &
Peffers, 1995)? The effect of technology announcements on stock prices indicates that investors perceive innovative
technology investments to have positive net present values (NPV) (Dos Santos & Peffers, 1995). Unlike Dos Santos and
Peffers (1995) who examined investment in a new technology application, this study examines investment in a new technology
(4G). A new technology can spawn a multitude of new applications. This study examines managements voluntary disclosure of
the intent to invest in 4G technologies by announcing the adoption of 4G technologies. In the cellular industry, the valuerelevance of non-financial information overwhelms that of traditional financial indicators (Amir & Lev, 1996). Key financial
statement variables - earnings, book values, and cash flows - fail to provide value-relevant information to investors in cellular
companies (Amir & Lev, 1996). This paper extends the related literature by posing the following question: Is the value of a firm
in the wireless industry related to the announcement of the adoption of a new technology? The following hypotheses drive
analsis:
Hypothesis 1:
A firms market value is either not related or is negatively related to an announcement of the adoption of
a new technology.
Hypothesis 1A: A firms market value is positively related to an announcement of the adoption of a new technology.
KEY ASSUMPTIONS
Adoption occurs when a decision is reached to invest resources necessary to accommodate the implementation effort (Cooper
& Zmund, 1990).
According to Dardan, Dardan, and Stylianou (2005), Announcements that that impact stock prices include changes in dividend
policy, stock splits, layoff announcements, key personnel changes, and even celebrity endorsements. This new and
unpredicted information received by the financial market can be perceived as contributing positively or negatively to future cash
flows and has been associated with a stock price reaction (valuation) in the same direction (Dardan et al., 2005).
IT investments result in some direct benefits that contribute to future cash flows. In addition, the investments may have indirect
benefits in the form of new investment opportunities. For example, investment in a new technology project may improve a firm's
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ability to use this new technology in future projects, thus affecting its future investment opportunities (Dos Santos, Peffers, &
Mauer, 1993).
Non-financial information refers to qualitative information outside of the four financial statements and footnotes (Flostrand &
Strom, 2006).
Wireless segment is the most competitive of the telecommunications industry and is the key driver behind its current growth
(Zhanwei, 2005).
Wireless carriers compete in a fiercely competitive environment. Since the introduction of wireless number portability, the
wireless industry in the United States experienced a significant transformation: Cingular bought AT&T Wireless in 2004, and
Sprint merged with Nextel in 2005, reducing the number of national providers to four (Eshghi et al., 2007).
DESCRIPTION FOR A PROPOSED STUDY

This paper assumes a market model event study consistent with Dardan, Dardan, and Stylianou (2005). Market model event
studies assume a linear relationship between the return of any security to the return of the market portfolio:
(1) Ri,t = i + iRm,t + i,t ,
where Ri,t = the rate of return on the share price of firm i on day t, Rm,t = the rate of return on a market portfolio of stocks (S&P
500 index) on day t, i = the intercept term, i = the systematic risk of stock i, and i= the error term, with (i,t)=0. Using
equation (1) and following McWilliams and Siegel (1997), the abnormal returns (AR) for the ith firm follow are:
(2) ARit = Ri,t (i + i Rm,t),
where i and i are the ordinary least squares (OLS) parameter estimates obtained from the regression of Ri,t on Rm,t over an
estimation period (T) preceding the event. The abnormal returns (ARi,t) represent stock returns after the events effect on equity
prices has been adjusted for the normal return process. If the difference is statistically significant, there is an abnormal or
excess return. The standardized abnormal return (SAR), where the abnormal return is standardized by its standard deviation
(Dardan, et al., 2005), follows:
(3) SARit = ARi,t / SDi,t,
where
(4) SDi,t = {S2 [ 1 + 1/T (Rm,t Rm)2 / t=1 (Rm,t Rm)2]}1/2,
where Si is the residual variance from the market model as computed for firm i, Rm is the mean return on the market portfolio
calculated during the estimation period, and T is the number of days in the estimation period (Dardan, et al., 2005). The
standardized abnormal returns are cumulated over a number of days, or the event window, to derive a measure of the
cumulative abnormal return (CAR) for each firm. This equation is shown as:
(5) CARi = (1/k1/2) t=1 SARi,t,
The values of CARi are assumed to be independent, normal, and identically distributed (Dardan, et al., 2005). As a result,
these values are identically distributed variables when dividing CARi by its standard deviation, which is equal to [(T-2)/(T-4)]1/2.
It follows that the average standardized cumulative abnormal returns across n firms (ASCAR) over the event window can be
expressed as:
(6) ASCARi = 1/n 1/[(T-2)/(T-4)]1/2 i=1 CARit,
and the Z-value for the average standardized cumulative abnormal return is:
(7) Z = ASCARt n1/2
The event window will include the day prior to the announcement, the day of the announcement (day 0) and the day after the
announcement. There are three reasons to choose a three-day event window. First, by narrowing the event window the
likelihood of confounding events impacting the data set will be reduced (Dardan et al., 2005). Second, prior studies (Dehning,
Richardson, & Zmud, (2003); Dos Santos & Peffers, 1995; Dos Santos et al., 1993; and Pettit, 1972) have used this technique
to examine the impact of earnings, dividend, stock split, IT investments, ERP, and accounting practices announcements. Third,
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this assumes that investors will respond quickly and positively to the announcements. According to McWilliams & Siegel
(1997), it takes 15 minutes for a stock to fully adjust to the release of firm-specific information.
DIFFUSION OF INNOVATION
Research examining innovation of diffusion often cites the work of Everett Rogers (Robertson, 1967, Fischer & Caroll, 1988,
and Katz, 1999). Rogers studied diffusion traditions in the spirit of logical empiricism and attempted to create a synthesis of
seemingly diverse outcomes (Kinnunen, 1996). Diffusion is not a single theory. It is several theoretical perspectives that relate
to the overall concept of diffusion; it is a meta-theory (Rogers, 2003). Diffusion is the process by which an innovation is adopted
by members of a certain community. Four factors influence adoption of an innovation: The innovation itself, the communication
channels used to spread information about the innovation, time, and the nature of the society to whom it is introduced (Rogers,
2003). Rogers (2003) advances four theories concerning the diffusion of innovations. These are the innovation-decision
process theory, the individual innovativeness theory, the rate of adoption theory, and the theory of perceived attributes.
This paper focuses on the innovation-decision process theory. The innovation-decision process occurs over time and involves
five distinct stages. The first stage is knowledge. Potential adopters must first learn about the innovation. Second, they must be
persuaded as to the merits of the innovation. Third, an individual or organization must decide to adopt or reject the innovation.
Fourth, subsequent to innovation, an adoption must be implemented. Fifth, adopters must confirm that their decision was
appropriate. Once these stages are achieved, diffusion results (Rogers, 2003).
Perhaps the founding father of innovation of diffusion theory is Gabriel Tarde (1843-1904). Kinnunen, (1996) argues vigorously
that Tarde made numerous insightful and practical observations that have benefited diffusion research. Nineteenth century
anthropologists embraced a meta-theory of cultural change for which diffusion would be the key. This diffusion concept was
borrowed from physics, where it means interpenetration of substances. Tarde was convinced that general laws similar to
natural sciences could be found for sociology, as well (Kinnunen 1996). Katz (1999) heralds Tarde as an elder statesman of
diffusion theory. He argues that based on Tardes contribution, the study of diffusion theory belongs in the custody of mass
communication. According to Katz (1999), Tarde posits that innovation spreads in concentric circles, flowing smoothly until it
encounters hostile barriers, whether environmental or cultural, including the onset of a competing invention. The process
occurs in stages, a slow advance in the beginning, followed by rapid and uniformly accelerated progress, followed again by
progress that continues to slacken until it finally stops.
The adoption of innovation is generalized through an S Curve on a cumulative basis along with more sophisticated models. A
normal S Curve frequency distribution is a bell curve that encompassing five categories of adopters: (1) innovators; (2) early
adopters; (3) early majority; (4) later majority; and (5) laggards (Rogers, 2003).
Diffusion of innovation in businesses is widely based on the work of economist Joseph A. Schumpeter (Robertson, 1967).
Schumpeter envisioned innovation as being characterized by: (1) construction of new plants and equipment, (2) introduction of
new firms, and (3) the rise of new individuals to leadership. Thus, Robertson (1967) views innovation as a discontinuous event.
A discontinuous event is part of Robertsons (1967, p. 16-17) framework for classifying diffusion of innovation:
1. A continuous innovation has the least disrupting influence on established patterns. Alteration of a product is involved,
rather than the establishment of a new product. Examples: Fluoride toothpaste; new-model automobile change-overs;
menthol cigarettes.
2. A dynamically continuous innovation has more disrupting effects than a continuous innovation, although it still does not
generally alter established patterns. It may involve the creation of a new product or the alteration of an existing product.
Examples: Electric toothbrushes; the Mustang automobile; Touch-Tone telephones.
3. A discontinuous innovation involves the establishment of a new product and the establishment of new behavior patterns.
Examples: Television; computers.
This paper supports 4G as a discontinuous innovation, given it will supersede the current 3G technology when fully adopted.
Karshenas and Stonemans (1993) diffusion theory states that when a firm adopts new technology, its profits will depend on:
The firms characteristics (rank effects), the number of other firms that adopt the technology (order effects), and the firms
position in the order of the adoption (order effects). Oliva, (1991) used McCardles (1985) stochastic model and extended it
using chaos theory to examine the interaction of information and profitability estimates on the firm's adoption of a new
technology or innovation. According to Oliva (1991), a firm evaluating an innovation or new technology begins with information
and a corresponding estimate of the innovation's profitability. One of three conditions exists: (1) the profit estimate is very high
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and the firm adopts because the potential gains greatly outweigh the risks; (2) the profit estimate is very low and the firm does
not adopt; or (3) the profit estimate is inconclusive causing the firm to gather more information before making a decision. As
familiarity with an innovation increases, and as its adaptability to variations in environment become more clear, the element of
risk declines for innovations of high utility to the point where the greater risk favors the non-adopter (Colman, 1968). Thus, it is
likely that companies faced with innovation (4G) will experience a process that ultimately results in a decision to adopt or not to
adopt 4G (Rogers, 2003, Karshenas & Stoneman 1993, Oliva, 1991, and Robertson 1967).
VOLUNTARY DISCLOSURE
Leftwich, Watts and Zimmerman examined interim reporting and determined that, in the absence of mandatory interim
requirements, some firms voluntarily publish interim reports (1981). Leftwich et al. (1981) also examined the incentives for
voluntary disclosures, and considered the cost-benefit trade-offs influencing managers reporting frequency. They sampled
firms listed in 1948, a time before interim reports were mandated. They analyzed capital structures, asset composition, and
monitoring devices employed by those firms using Jensen and Mecklings (1976) framework, and found a stock exchange
effect, inertia, and anomalies. The lack of a finance theory on capital structure limited their examination, and included
measurement problems in both dependent and independent variables (Leftwich et al., 1981).
Subsequent studies incorporated the capital market hypothesis (Verrechia 1983, Healy and Palepu, 1993 and 1995, Lang and
Lundholm, 1993) and examined voluntary disclosure to reduce information asymmetry between managers and investors, and
ultimately the cost of capital. Gibbens, Richardson, & Waterhouse, (1992) also determined that management may strategically
disclose information in a variety of settings. They identify eight categories of managed disclosures including data content, data
organization, medium, timing, and credibility. They concluded that incentives for more disclosures include improved managerial
reputations, resulted in more effective firm monitoring, and reduced both the cost of information collection by investors and the
cost of raising capital in equity markets.
Strict application of accounting regulations without any additional disclosures can certainly lead to an image that is by far not
comparable to the true economic state of the company (Vergauwen & Alam, 2005). This scenario occurs if large investments
are made in intangible assets such as information technology and professional services. When the presence of intangibles is
not disclosed symmetry among companies and the users of the financial statements may result. Users and other outsiders
have no knowledge of a companys decision to not disclose. This asymmetry may result in insider trading (Vergauwen & Alam,
2005).
Bontis (2002) examined intellectual capital (IC) disclosure in Canadian firms. Vergauwen and Alam (2005) used Bontis
methodology to examine IC disclosures in the Netherlands, France, and Germany. Their findings revealed that IC related
voluntary disclosures vary strongly among countries. They found significantly higher average disclosures in French annual
reports relative to their Dutch counterparts, while the German disclosures were between both countries but significantly
different. They also found much larger disclosure rates than those reported by Bontis (2002) in his study of Canadian firms.
Finally, Vergauwen and Alam (2005) conclude that disclosure practices lag globally, despite their perceived importance by
corporate managers.
Amir and Lev (1996) performed an empirical analysis of the value-relevance of disclosed financial and non-financial information
of wireless companies. They augmented their examination by regressing stock prices and returns on combinations of reported
financial variable. The resulting impression was that wireless industry capital market values are unrelated to reported financial
variables (Amir & Lev, 1996). Their findings revealed that financial analysts following cellular companies rarely mention
earnings in their industry analyses.
Analysts pay close attention to cash flows of wireless companies. Moreover, Amir & Lev (1996) determined the value-relevance
problem does not lie primarily with noncash depreciation and amortization charges, but rather with the large costs associated
with the investment in cellular franchise and in customer-base creation. Amir and Lev (1996) conclude that these specific
investments involved intangibles, such as R&D and franchise development, and substantial spending on the development of
customer-base and market share. Finally, their overall findings indicate that financial information (earnings, book values, and
cash flows) is largely irrelevant for the valuation of cellular companies, and that nonfinancial information (e.g., customer
penetration rate of cellular companies) has incremental value-relevance over financial information (Amir & Lev, 1996). Since
then, there is a paucity of research focusing on non-financial disclosure in the wireless industry. This study adds to the
valuation literature by examining how the stock market values the disclosure of nonfinancial information (4G adoption
announcements) in the wireless industry. There have been a few studies on value relevance of non-financial disclosure in high
technology industry following Amir and Lev (1996). The following section looks at some of those studies.
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Dehning, Richardson, Urbaczewski, and Wells, (2004) reexamined the value relevance of e-commerce announcements using
an event study methodology. They found evidence that traditional event study methodology may not provide an accurate
measure of abnormal returns during periods of high market volatility, and propose an alternative methodology. Their research
takes into account extreme or unusual market movements in the period in which the e-commerce announcement was made.
Their findings revealed positive abnormal returns for e-commerce announcements.
Dehning, Richardson, and Zmud, (2003) studied transformational IT announcements by high technology firms using event
study methodology. They expected to find abnormal positive returns compared to firms that did not make announcements.
Their analysis was based on the samples used by (Dos Santos et al., 1993), (Im, Dow, & Grover, 2001), and (Chatterjee,
Pacini, & Sambamurthy, 2002). They found positive abnormal returns to firms investing in IT with a transform strategic role.
EMH AND EVENT STUDIES

EMH is an important concept that has become widely accepted since the late 1950s and early 1960s under the rubric of the
theory of random walks in the finance literature and rational expectations theory in the mainstream economics literature
(Dimson and Mussavian, 1998). EMH was taken seriously by only a few scientists in the economics and finance communities
but has now emerged as a dominant paradigm in finance and macroeconomics. In mainstream finance and accounting
research, the EMH is widely accepted (Dimson and Mussavian, 1998).
Fama (1970) classified market efficiency into three forms; weak form efficiency, semi-strong efficiency and strong efficiency.
The weak form market efficiency claims that all past prices of a stock are reflected in todays stock prices. Past stock prices
cannot be used to predict future stock prices, and the stock prices follow a random walk. Technical analysis cannot be used to
predict and defeat the market. The weak form market efficiency supports using companies financial statements, not historical
stock prices, to identify under- and overpriced stocks.
Semi-strong market efficiency asserts that all public information, as well as future expectations, is reflected in a stocks current
price. The semi-strong form implies neither fundamental nor technical analysis can be used to achieve above normal returns. A
passive, diversified buy-and hold strategy will generate the highest returns in a semi-strong form efficiency market since an
active strategy will not be more profitable due to the related transaction costs. All public information is embedded in the current
stock price; therefore, investors needs private information to achieve above normal return.
The strong form market efficiency implies that all information in a market, both public and private, is reflected in a stocks price.
Profits exceeding normal returns can not be obtained irrespective of the amount of research or information an investor has. The
strong form implies that above normal returns cannot be achieved by investors with insider information since the market
predicts future stock behavior and has taken all private information into account.
Studies of the semi-strong form of the EMH can be categorized as tests of the speed of adjustment of prices to new
information. The principal research tool in this area is the event study. An event study averages the cumulative performance of
stocks over time, from a specified number of time periods before an event to a specified number of periods after. Performance
for each stock is measured after adjusting for market-wide movements in security prices. Seminal event studies were
undertaken by Fama et al. (1969), and Ball & Brown (1968). Using the market model or capital asset pricing model as the
benchmark, these two event studies provide evidence on the reaction of share prices to stock splits and earnings
announcements respectively. In both cases, the market appears to anticipate the information, and most of the price adjustment
is complete before the event is revealed to the market. When news is released, the remaining price adjustment takes place
rapidly and accurately.
The strength of an event study is inherent in its capturing of the overall assessment of a large group of investors about the
discounted future and current value of the firm as reflected in the stock price and market value of the firm (Mcwillliams &
Siegel, 1997, Subramani & Walden, 2001). The future performance is attributable to individual events such as the
announcement of a new wireless technology. Subramani and Waldens (2001) research shows a list of prior studies that use
event studies to examine the effect of an individual event (announcement) (p 151): Jarrell and Poulsen (1989) examined the
effect of successful takeover bids announcements. MacKinlay (1997) examined the effect of earnings announcements. Menzar,
Nigh, and Kwok (1994) examined the effects of withdrawal from South Africa announcements. Wright, Ferris, Hiller, and Kroll
(1995) examined the effects of affirmative actions awards announcements. Das, Sen, and Sengupta (1998) examined the
effects of strategic alliances announcements. Horsky and Swyngedouw (1985) examined the effects of change in firm name
announcements. Lane and Jacobson (1995) examined the effects of announcements of brand leveraging announcements.
Wright, Ferris, Hiller, and Kroll (1995) examined the effects of being found guilty of discrimination announcements. Chaney,
113
DeVinney, and Winer (1991) examined the effects of new product announcements. Agrawal and Kamakura (1995) examined
the effect of celebrity endorsement announcements. These prior studies examined CARs to determine effects of each
announcement (individual event) on firm value.
ISSUES WITH EVENT STUDIES

Event study methodology is increasingly being used by researchers to assess the effect of strategic decisions on firm
performance (McWilliams, Siegel, & Teoh, 1999). There appears to be little controversy about the statistical properties of event
study methods because the underlying conditions provide information; and permit well-understood inferences (Kothari &
Warner, 2004). Event studies provide estimates of the short run impact on shareholders and findings are sensitive to small
changes in the research design and lack of robustness should be minimized by additional methodologies (McWilliams et al.,
1999). Hayes, Hunton, and Rick (2000) design a two day event window to limit extraneous noise affecting their result. They
argue against expanding the event window beyond two days because doing so would not increase its explanatory power
significantly (Hayes et al., 2000).
Tsiotsou and Lalountas (2005) propose the application of multiple regression models and bootstrapping independently from the
sample size because they view a problem of non-normality on distribution of the abnormal returns. Event studies must address
several basic issues including risk adjustment, expected/abnormal return modeling, the aggregation of security-specific
abnormal returns, and the calibration of the statistical significance of abnormal returns (Kothari & Warner, 2004). These issues
become critically important with long horizons which are beyond the scope of this research.
Other event study research (Sankarshan, 1993) posits alternative methods that measure the impact of latent information not
completely available to the market. Latent information includes endogenous events related to management decisions leading
up to the announcements of technology adoption. Information privately acquired by the firm that is imputed in its decision to
adopt can only be partially extracted by the market. Therefore, Sankarshan (1993) argues that a latent variable model
accounts for market inference and computes the inferred value of information underlying an event announcement process. (p.
364) Additionally; this latent variable model provides a framework for testing the impact of firm specific variables on expected
abnormal return thus minimizing the inconsistency and selectivity bias in the standard event model. Sawyer and Gygax (2001)
issue with event studies involves the uniqueness of the event. They argue that focusing on the single variable of abnormal
return purges the uniqueness of the event and proposes a methodology involving recursive abnormal return. According to
Sawyer and Gygax (2001), a simultaneous equation system based on the abnormal returns across a small event window
provides more understanding of the learning of markets, and of the information effects of events.
This paper considers investor reaction to announcements of 4G adoption in the wireless communication industry. The
evaluation of historical information will form the basis of this research design. Event study methodology will be used to test the
semi-strong form of EMH using firms in the U.S. wireless communication industry. Consistent with MacKinlay (1997), and
Dardan et al., (2005), a narrow event window will reduce the likelihood of confounding events impacting the data set. These
confounding events may include other general market and/or firm specific events. Therefore, a three-day event will be used to
include the day prior to the announcement, the day of the announcement, and the day after the announcement. The selection
of this sampling timeframe will allow the inclusion of the first mover effects. This window is used to reduce the impact of other
firm related events on the adoption announcement to a minimum (MacKinlay, 1997). This methodology will also rely on the
recommendations of Brown and Warner (1985), and McWilliams and Siegel (1997) for performing an event study. Their
research indicate that a longer event window causes difficulty in controlling for confounding effects and reduces the power of
the test statistic (Dardan et al. 2005). Mcwillliams and Siegel (1997) outline the following ten steps for implementing an event
studies.
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
Step 6:
Step 7:
Step 8:
Step 9:
Step 10:
Define an event that provides new information to the market.

Outline a theory that justifies the financial response to the new information.
Identify a set of firms that experience this event and identify event dates.
Choose an appropriate event window and justify its length, if it exceeds two days.
Eliminate or adjust for firms that experience other relevant events during the event window.
Compute abnormal returns during the event window and test their significance.
Report the percentages of negative returns and abnormal Z or Wilcoxon test statistic.
For small samples, use bootstrap methods and discuss the impact of outliers.
Outline a theory that explains the cross-sectional variation in abnormal returns and test this theory econometrically.
Report firm names an event dates in data appendix. (p. 652)
114
An eventual study should utilize the market model. Dardan et al. (2005) examine the efficacy of the market model using
arguments from the research of MacKinley (1997) and McWilliams and Siegel, (1997); therefore rely on the market model
approach to measure the relationship between the security return and return of the market portfolio. Structural equation
modeling (SEM) normal return, abnormal return, and cumulative abnormal return could then be measured for each security
within the data set.
Firms that announce the adoption of 4G should be compared to firms with similar characteristics (e.g. firm size) in the industry
that did not announce 4G adoption. A SEM model is a useful tool for selected firm characteristics consistent throughout the
industry. Firms that announce will be labeled as 1, and firms that did not announce will be labeled as 0 as a control variable.
Figure 1 below represents the theoretical model that drives this research design.
Firm
Characteristics
Adoption Decision
EMH
EMH
VOLUNTARY
VOLUNTARY
DISCLOSURE
DISCLOSURE
DIFFUSIONOF
OF
DIFFUSION
INNOVATION
INNOVATION
THEORETICAL MODEL
Adoption
Announcement
Firm
Financial
Information
Value
Relevance
Stock Price
Figure 1: Theoretical Model

Firm characteristics in the model represent order and rank effects (Karshenas & Stoneman, 1993) should be tested using SEM.
Firm financial information represents R&D, sales, market capitalization, and cash flow.
STATISTICAL ANALYSIS PROPOSED7

The proposed research would use an event study methodology consistent with Dardan, et.al, (2005) where they used the
market model. This is the same standard used by Brown and Warner (1985), Mackinlay (1997), and McWilliams and Siegel
(1997). The market model assumes a linear relationship between the return of any security to the return of the market portfolio:
(1) Ri, t = i + iRm,t + i,t ,
where Ri,t = the rate of return on the share price of firm i on day t, Rm,t = the rate of return on a market portfolio of stocks (S&P
500 index) on day t, i = the intercept term, i = the systematic risk of stock i, and i= the error term, with (i,t)=0. Using
equation (1) and following Dardan et al., (2005), the abnormal returns (AR) for the ith firm are:
(2) ARi,t = Ri,t (i + i Rm,t),
where i and i are the ordinary least squares (OLS) parameter estimates obtained from the regression of Ri,t on Rm,t over an
estimation period (T) preceding the event. The abnormal returns (ARi, t) are assumed to reflect the stock markets reaction to
7
Eventus software can be used for event study using the CRSP stock database or other stock return data and provides fast event-oriented data retrieval from the CRSP
stock database. Eventus software is available for use through WRDS (Wharton Research Data Services).
115
new information (McWilliams and Siegel, 1997) and represent stock returns after the events effect on equity prices has been
adjusted for the normal return process. If the difference is statistically significant, then there is an abnormal or excess return.
The standardized abnormal return (SAR), where the abnormal return is standardized by its standard deviation (Dardan, et al.,
2005), follows:
(3) SARi, t = ARi, t / SDi,t,
where;
(4) SDi, t = {S2 [1 + 1/T (Rm, t Rm)2/t=1 (Rm,t Rm)2]}1/2 ;
where Si is the residual variance from the market model as computed for firm i, Rm is the mean return on the market portfolio
calculated during the estimation period, and T is the number of days in the estimation period. This procedure controls for
multicollinearity (Dardan, et al., 2005). The standardized abnormal returns can then be cumulated over a number of days, or
the event window, to derive a measure of the cumulative abnormal return (CAR) for each firm. This equation is shown as:
(5) CARi = (1/k1/2) t=1 SARi, t,
The values of CARi are assumed to be independent, normal, and identically distributed (Dardan, et al., 2005). As a result,
these values are identically distributed variables when dividing CARi by its standard deviation, which is equal to [(T-2)/ (T-4)] 1/2.
It follows that the average standardized cumulative abnormal returns across n firms (ASCAR) over the event window can be
shown as:
(6) ASCARi = 1/n 1/ [(T-2)/ (T-4)] 1/2 i=1 CARi, t,
and the Z-value for the average standardized cumulative abnormal return is:
(7) Z = ASCARt n1/2
The Z-value test statistic, if significant, will represent the cumulative abnormal return of the potential investment in 4G.
A testable model depicting the research variables and the hypotheses tested using the SEM approach can be formulated from
the theoretical model (see Figure 1above) as follows:
4G
Announcemen
t
Change in
stock price
Sales
Cash flow
Market Cap.
R&D
Figure 2: SEM Approach

The model shows 4G announcement as the independent variable, change in stock price as the dependent variable, and sales,
market capitalization, cash flow and R&D as moderating or interaction variables. The 4G announcement variable is
operationalized as a 0 1 dummy variable. The moderating variables are drawn as sending arrows into the relationship
between the independent and dependent variables. These moderating variables are operationalized as products of the
individual moderator variable and the independent variable 4G announcement. It is expected that here will be mutli co-linearity
between the moderator variables themselves and the moderator variable and the independent variable 4G announcement.
SEM was chosen as the analysis method for a number of reasons: Multiple regression cannot model co-linearity between
independent and moderator variables unless a number of regressions are performed. However, multi co-linearity will occur if
product variables are used to test moderating effects as stated above. SEM can test the complete research model
simultaneously which is a more valid approach than a series of piecemeal regressions simply because the research variables
have their actual effect simultaneously in the real market. Thus, the co-efficient obtained in analyzing the data will be closer to
the true parameters.
116
SUMMARY
This paper contributes to the voluntary disclosure literature by examining the effect of managements disclosure of long-term
innovation strategies in the wireless industry on share price and proposing a research design to investigate. According to
Entner (2008), the United States has outpaced Japan and the European Union in labor productivity growth. The widespread
and thorough adoption of information technology, computers, and telecommunications to reengineer business practices and
improve productivity was the main reason for the improved productivity.
The announcement of 4G adoption by firms in the wireless industry is proposed to serve as a proxy for voluntary disclosure of
non-financial information by management. This paper contributes to the growing literature on business valuation of technology
in general by examining investor reaction to the adoption of new wireless technology.
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Network Security: An Undergraduate Course in Network Security for Computer Information Technology Curriculum
NETWORK SECURITY: AN UNDERGRADUATE COURSE IN NETWORK

SECURITY FOR COMPUTER INFORMATION TECHNOLOGY CURRICULUM
Hetal Jasani
Northern Kentucky University, USA
ABSTRACT
An undergraduate computer information technology course in network security is presented which is developed based on many
hands-on lab activities. In learning the concepts of network security via hands-on labs, students have ample opportunities to
understand the underlying network security. These hands-on labs are chosen to provide sufficient challenges to the students
that prepare the engineers and technologists for the next generation solutions. The level of difficulty for this course requires the
prerequisites of networking course. For each hands-on lab, the student must carry out the lab activities in order to successfully
implement the particular network security technology. The course requires the students to collaborate among them and
participate in active learning based modules.
Network security courses become increasingly popular in colleges (including community colleges) and universities. This paper
elaborates innovative projects that are suitable for laboratory work in computer information technology curriculum. It explores
both hardware and software components that are now being used for practical exercises in network security courses. This
paper discusses the hands-on labs for network security technologies, especially configuring the firewall (Access Control List ACL), VPNs (Virtual Private Networks), IPS (Intrusion Prevention Systems) on various devices such as Cisco routers and
Adaptive Security Appliances (ASA). In addition, this paper also discusses the wireless network security labs which discuss
how to set up WPA/WPA2 on wireless access points. Wireless security is very important topic due the growth of wireless LAN
in recent mobile and wireless evolutions.
Keywords: Firewalls, Virtual Private Networks (VPN), Intrusion Detection Systems (IDS), Intrusion Prevention Systems (IPS),
Wi-Fi Protected Access (WPA)
INTRODUCTION
The field of network security is dynamically changing due to the advances in the technologies. It becomes more and more vital
as people spend more and more time connected to the Internet from anywhere anytime. Intruding into networked resources is
often much easier than compromising physical security. Many areas of network security demand highly trained personnel to
solve the new challenges such as firewall, VPN, IDS (intrusion detection system), IPS, wireless LAN security, etc. There is a
great demand of technicians and engineers who can maintain and secure the networked environment.
While theory oriented electrical and computer engineering and computer science curricula offer students few network security
courses, this may not be enough to train network engineers with the proper background on the newer security technologies.
Although many courses on computer and network security have been developed in these programs, they are primarily focused
on in-depth mathematics, algorithms, and theory. Most of these courses dont use hands-on labs that are the preferred learning
style of information technology students (Helps & Ekstrom, 2008). Since computer information technology (CIT) program
emphasizes the hands-on based active learning, the previous approaches taken by other programs (computer
science/engineering programs) are not suitable for CIT program.
The goal of the network security course is to teach students with several different network security technologies through a
series of laboratory experiments using small-scale test beds. Hands-on experiments are the best way to enhance the students
learning which facilitates collaborative based active learning (Rosenberg & Koo, 2002). Additionally, the evolution of network
security equipments has made it possible for students to perform many levels of experiments to design and implement the
secure networked systems.
120
H. Jasani
CURRENT NETWORK SECURITY COURSES

Network security course training is often integrated into existing courses or as separate courses using various tools in projects.
Many universities have used different network security protocols and devices for hands-on labs in network security courses.
Hands-on based training in these network security technologies is not common at the college level for undergrad curriculums
due to the cost and complexity devices/configurations.
Oh, et al. (2009) discusses the use of OPNET modeler to model the HAIPE (High-Assurance Internet Protocol Encryption)
technology. The problem of using OPNET is that students may not be engaged as much as they do in doing hands-on labs.
They have used OPNET because HAIPE is a fairly new encryption technology similar to Internet Protocol Security (IPSec), and
it is not easy to teach different components of it with hands-on labs. They also mentioned in their conclusion that some
students learn faster and have a better understanding of the concept when using a hands-on approach. Hartpence (2009)
emphasizes QoS and less security in his paper with various hands-on experiments. Meiselwitz (2008) developed a general
education course covering information security for all majors. However, it didnt involve many hands-on labs but involved
presentation and discussion components to improve the skill set. His course didnt involve the advanced level of network
security exercises such as intrusion prevention systems, WPA2 for wireless networks, etc. Abbott-McCune et al. (2008)
presented the reconfigurable networking labs for their networking courses. However, they havent discussed the network
security component at all. Cao et al. (2009) discusses the development of networking lab for teaching and research. They have
used various tools such as OPNET, Network Simulator (NS-2), Virtual PC, and CPLEX, which enable students to conduct
various network modeling, and simulation. However, this is not the best way to enhance the students learning as they
mentioned that building a hands-on experimental lab environment is a challenging for many institutions due to space
constraints, budget limitations, maintenance difficulty.
There is a need to create such more comprehensive, dedicated course to teach network security technologies that could give
students a practical experience. This course is proposed to satisfy this demand and provide college graduates a practical
hands-on training. In newly designed network security course with enhanced laboratory experiments have demonstrated
effectiveness in teaching the concepts of different network security technologies (Northcutt, et al., 2005). This course has been
proposed to provide a practical view of network security using real equipment configurations. The course assumes that
students have the knowledge of networking (i.e., students had taken the first course of network administration/troubleshooting).
It includes lectures covering the relevant concepts needed to understand the different security technologies including VPN,
IDS, IPS, etc. and their applications. Some Cisco networking equipments are used to enhance these laboratories experiments.
COURSE DEVELOPMENT
The objectives of network security course are that students should be able to:
Use the security appliances to configure firewalls, intrusion prevention, VPNs

Harden Cisco routers
Understand and implement wireless network security
Configure and debug network security appliances using the IOS (Internetwork Operating System) command line
Design network security architecture
For the hands-on network security labs, students configure several networking devices such as Cisco routers, Cisco switches,
Cisco adaptive security appliances (ASA) (Frahim & Santos, 2005), wirelesses access points, etc. to provide various security
features of the networks. To accomplish the above mentioned objective, the following topics are included:
Network security fundamentals

Firewalls
Access control lists
Network address translations
Wireless network security
Hardening the routers
Security protocols and virtual private networks
Intrusion detection systems
Intrusion protection systems
121
172.31.11.41/16
Internet
Main
361Lab
Router
10.255.1.1/16
Main Lab Cisco

Switch 361
FastEthernet0/0
10.255.1.252/16
10.255.1.2/16
FastEthernet0/0
10.255.1.253/16
Dell Switch
Dell Switch
FastEthernet0/0
10.255.1.251/16
Cisco
Router251
10.255.4.XX/16
10.255.4.XX/16
FastEthernet0/1
10.251.0.1/16
Ethernet0/0
(outside)
Dell Switch
Lab PCs
ASA251
Lab PCs
Regular lab setting
connected via Dell
switches
10.255.4.XX/16
Cisco
Router253
Cisco
Router252
FastEthernet0/1
10.252.0.1/16
Ethernet0/0
(outside)
ASA252
(DMZ)
(inside)
Ethernet0/2 Ethernet0/1
FastEthernet0/1
10.253.0.1/16
Ethernet0/0
(outside)
ASA253
(inside)
(DMZ)
Ethernet0/1
Ethernet0/2
(inside)
(DMZ)
Ethernet0/2 Ethernet0/1
Cisco
Switch252
Lab PCs
Cisco
Switch253
Cisco
Switch251
PCs used for lab activities

Network Security course lab setting connected via
stacks of Cisco routers, ASAs and switches
Figure 1: General Lab/Classroom Network Diagram

Figure 1 shows the network setup that students use for various courses. This network is set up in the regular classroom, in
which many classes are being taught. On left side, regular lab network setting is shown and connectivity to Internet can be
identified via Dell switch, Cisco switch and Internet router. However, on the right side, network connections for networking and
security labs are shown using additional Cisco switches, routers, and ASAs that could be configured in various
networking/security lab exercises. Students perform hands-on labs using command line interface to configure the access
control lists (ACL) on the Cisco routers. Students configure standard and extended control list to filter the various networking
traffic. Students also configure the Cisco Access Point (AP) to enhance the wireless security (Cisco, 2002). Students configure
Cisco ASA (adaptive security appliances) to create site-to-site VPN, and remote-access VPN. Moreover, IPS lab activities are
also carried out to solidify the knowledge of intrusion detection and prevention systems.
FIREWALL TECHNOLOGIES
The perimeter security is very important in today's networking world. It could be provided by the network-based firewalls.
Detailed understanding of how firewalls and their related technologies work is extremely important for all network security
professionals. The knowledge of firewall helps them to configure and manage the security of their networks precisely and
efficiently. Students are taught two types of firewall: network firewall and personal firewall. The network firewall could be
systems or devices that are placed between an outside and an inside network. Numerous network firewall solutions that
students learn in this course offer user and application policy enforcement that provide attack protection for different types of
security threats. Students also learn the logging capabilities of these firewall devices that allow them to identify, investigate,
validate, and mitigate such threats that could be carried out in the real world. The personal firewall could be software
applications that can run on a system to protect only that host. In this network security course, the focus is the network firewall.
The primary duty of a network firewall is to deny or permit traffic that tries to enter the network based on explicit preconfigured
policies and rules. The filtering techniques that are used to allow or block traffic may include the following (Frahim & Santos,
2005):
Simple packet-filtering techniques
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H. Jasani
Multifaceted application proxies

Stateful inspection systems
Figure 2 shows the network setup for setting up the filters (firewalls). This experiment aims to create and apply the standard
and extended ACL (Odom, 2008) to filter specific network traffic that pass through the router.
Lab361
Router
172.31.11.41/29
Internet
10.255.1.1/16
10.255.1.2/16
Cisco Lab
Switch
Dell Switch
Blue Console Cable
FastEthernet0/0
10.255.1.25X/16
Cisco
Router
FastEthernet0/1
10.25X.0.1/16
Lab PCs
Cisco Switch VLAN1
10.25X.0.2/16
10.255.4.XX/16
Blocked
PC
Unblocked
PC
10.25X.0.100/16
Main Network PCs
(connected via Dell switch)
Subnet25X PCs
(connected via Cisco
Switch)
10.25X.0.101/16
Figure 2: Network Setup for ACL

Students connect PCs to Cisco switch that has already been configured for normal connectivity as shown in Figure 2. Students
configure a standard IP access list on the Cisco router using console/rollover cable, which filters traffic based on source IP
addresses. This process is carried out in two steps. First, the list is created using a console terminal connection and configured
in global configuration mode. Second, the list is applied to the appropriate interface as either an inbound or an outbound
direction in interface configuration mode. Students create standard access list and apply in order to deny traffic from particular
host IP. Finally, students monitor and test the list. In the second part of the lab, students create an extended list. The process
of creating extended list is the same as creating the standard access list. An extended list will allow students to filter traffic
based on source address, destination address, source port and destination port. In this case, students block the ICMP (Internet
Control Message Protocol) traffic to specific destination host from the specific source host using ping utilities. After creating
standard and extended list, students are asked to create more advanced ACLs such as named list, reflexive list, use of object
grouping, etc. Students are also asked to submit a lab report discussing their learning experience (i.e., student reflections)
based on this lab.
VPN
The virtual private networks (VPNs) are useful to provide the low-cost, widespread medium to transport data while providing
data integrity and confidentiality to protect the information within the data packets. Students are introduced to two types of
VPNs (site-to-site & remote access VPNs) using the various protocols (Frahim & Santos, 2005): Point-to-Point Tunneling
Protocol (PPTP) (Hamzeh, et al., 1999), Layer 2 Forwarding (L2F) (Cisco Systems, 1998) Protocol, Layer 2 Tunneling Protocol
(L2TP) (Townsley et al., 1999), Generic Routing Encapsulation (GRE) (Farinacci et al. 2000) protocol, Multiprotocol Label
Switching (MPLS) (Rosen, et al., 2001) VPN, and Internet Protocol Security (IPSec) (Kent & Atkinson, 1999).
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Site-to-Site VPN
Cisco Lab
Switch
FastEthernet0/0
10.255.1.25x/16
10.255.0.2/16
Cisco
Router
Cisco
Router
Site-to-Site
IPSec Tunnel
10.25x.0.1/16
FastEthernet0/0
10.255.1.25y/16
Dhcp enabled IP
10.25y.0.1/16
Dhcp enabled IP
ASA
ASA
Cisco Switch
Dhcp enabled IP
Cisco Switch
Dhcp enabled IP
Team1
Team2
Dhcp enabled IP
Dhcp enabled IP
Figure 3: Site-to-Site VPN

Two or more offices of a corporation can establish a VPN connection using the site-to-site protocols so that they can send
traffic back and forth using a shared medium such as the Internet. This is cost effective solution since it eliminates the need to
have dedicated leased lines to connect the remote offices to the corporate network. The high maintenance cost of point-topoint WAN links can be reduced by using the IPSec VPN tunnel in site-to-site mode. The network administrators can use
broadband connections, including DSL (digital subscriber line) or cable modem, to achieve Internet connectivity at a
considerably cheaper rate, and they can deploy IPSec VPN on top of that to connect the remote locations to the central site in
a secure way.
Students configure a site-to-site IPSec tunnel between two ASAs, as shown in Figure 3, using Cisco IOS commands. Here are
some steps involved in order to create site-to-site VPN (Jasani & Hao, 2009):
1.
2.
3.
4.
5.
6.
7.
8.
9.
Enable ISAKMP.
Create ISAKMP policy.
Set the tunnel type.
Configure preshared keys.
Define the IPSec policy.
Specify interesting traffic.
Configure the crypto map.
Apply the crypto map to the interface.
Configure traffic filtering.
This lab provides a challenging real world experience to the students since students have a unique opportunity to create siteto-site VPN using Cisco ASA.
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Remote Access VPN

Cisco Lab
Switch
10.255.1.2/16
DHCP
Address
Dell Switch
Remote Access
IPSec Tunnel
ASA
10.255.4.XX/16
Cisco client on
Windows PC
Figure 4: Remote-Access VPN with local authentication
The remote-access VPN is another kind of VPN connection. It could be beneficial to an organization by allowing mobile users
to work from remote locations such as home, hotels, and Internet cafes. Previously, the only way to provide this kind of
connection was through dialup connections using analog modems. To accommodate remote users, corporations had to
maintain a huge pool of modems and access servers. Moreover, it was quite expensive due to the use of toll-free and longdistance phone service charges. More and more dialup mobile users are migrating to broadband DSL and cable-modem
connections due to the rapid growth of the Internet technologies. Consequently, corporations are in the process of moving
these dialup users to remote-access VPNs for faster and secure communication. Therefore, it is very important for students to
know this technology and how to configure it.
Students are taught that there are many remote-access VPN protocols as in the case of site-to-site VPN such as Point-to-Point
Tunneling Protocol (PPTP) (Hamzeh, et al., 1999), Layer 2 Forwarding (L2F) (Cisco Systems, 1998) Protocol, Layer 2
Tunneling Protocol (L2TP) (Townsley et al., 1999), Generic Routing Encapsulation (GRE) (Farinacci et al. 2000) protocol,
Multiprotocol Label Switching (MPLS) (Rosen, et al., 2001) VPN, and Internet Protocol Security (IPSec) (Kent & Atkinson,
1999). Those protocols could be used to provide the secure network access. Figure 4 shows the network set up which students
create in order to perform this lab. In this part, students use the local authentication on Cisco ASA to create a tunnel for provide
privacy and confidentiality.
Students follow the following steps in order to configure the remote-access VPN on Cisco ASA using Cisco IOS commands:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Enable ISAKMP.
Create the ISAKMP policy.
Configure remote-access attributes.
Define the tunnel type.
Configure preshared keys.
Configure user authentication.
Assign an IP address.
Define the IPSec policy.
Set up a dynamic crypto map.
Configure the crypto map.
Apply the crypto map on the interface.
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10.255.1.1/16
10.255.1.2/16
Cisco Lab
Switch
Dell Switch
Remote Access
IPSec Tunnel
Ethernet0/0
Outside
DHCP address
ASA 5510
10.255.4.XX/16
Ethernet0/1
Inside
Cisco client on
Windows PC
Authentication Server
Figure 5: Remote-Access VPN with Remote/External Authentication

Students are made aware of two types of modes that could be used for creating IPSec. It is recommended to use main mode
for IKE authentication using RSA signatures because of the known vulnerabilities in aggressive mode (Frahim & Santos, 2005).
There are two different types of authentications (step 6 above) that could set up for this lab. Figure 4 shows the local
authentication while Figure 5 shows the remote authentication using external authentication server (i.e., RADIUS (Remote
Authentication Dial-in User Service). IAS (Internet Authentication Service) has been configured on Windows server 2003 in
order to provide remote authentication. User account database has been created in Active Directory and Certificate has been
created and installed.
This lab is very important due to the importance of technology for providing secure connection for employees to the corporate
data networks. Creating remote access VPN with external authentication server using 802.1x framework is a significant
challenge to the CIT student. However it is a skill of significant importance to the IT (information technology) industry. In this
course, the students are facilitated to master these skills and tools.
IDS & IPS

Intrusion detection system is used to identify attacks and security incidents. Network intrusion detection systems are designed
to sniff network traffic and analyze it to identify threats in the forms of reconnaissance activities and attacks. By detecting
malicious activity, network intrusion detection enables the network professionals to identify and react to threats against their
environment (Northcutt, et al. 2005). An IDS can detect reconnaissance activity that may indicate future targets of particular
interest. It generates alerts for the subsequent attempts to breach host security. Alerts are usually generated through one of
two methods: 1) anomaly detection and 2) signature detection. The anomaly detection relies on statistical analysis to identify
traffic that falls outside the range normally seen in this environment, or it relies on protocol analysis to identify traffic that
violates protocol standards or typical behavior. The signature detection identifies known attack signatures observed in traffic.
While intrusion detection technology generally only reports attacks against monitored systems, intrusion prevention technology
adds an active layer of defensive technology by attempting to stop the attacks before they are successful. Students can
effectively detect and react to security threats using the Cisco Intrusion Prevention Software that is integral part of Cisco ASA.
This device could detect attempts from malicious users to steal information or to gain unauthorized access to a network or a
host to create performance degradation such DDoS (Distributed Denial of Service). In this lab, students learn about the Cisco
IPS software architecture. In addition, they also learn how to configure and monitor the AIP-SSM (Adaptive Inspection and
Prevention Security Services Module), and several troubleshooting techniques. By performing this lab, students achieve the
efficient network intrusion protection skill which is vital to maintaining a high level of protection. Students learn that the cautious
protection ensures business continuity and minimizes the effects of costly interruption of services.
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H. Jasani
The CIPS 5.x CLI on Cisco ASA provides a user interface for all direct connections to the AIP-SSM (e.g., Telnet, SSH, and
session from the ASA). By performing this lab, students learn: how to log in to the AIP-SSM via the CLI, CLI command modes,
and initial AIP-SSM configuration. In addition, students also configure the different types of users in the AIP-SSM with different
roles associated to them. Each AIP-SSM user account has a role associated to it. There are a total of four roles that can be
assigned to a specific account: administrator account, operator account, viewer account, and service account. Students also
learn about the advanced features and configuration of the AIP-SSM CIPS software, such as IPS tuning, custom signatures, IP
logging, and shunning.
WIRELESS LAN SECURITY

Wireless networks are becoming more and more popular due to mobile and wireless network evolutions and demand. Wireless
networks are open by nature, so network designers have to take extra steps to protect wireless networks. Without entering into
company building, attacker may have access to company network resources. Because a wireless access point (AP) typically
connects wireless and wired networks, nodes that are located on networks on both sides of an AP participate in the same
broadcast domain. Therefore, an attacker can use techniques that apply to wire-based networks, including attacks such as
ARP cache poisoning (Northcutt, et al., 2005).
Without including the wireless network security, course objectives could not be fully fulfilled as wireless network security is very
important topic. Students perform the following learning activities to setup the security on wireless access point:
Set a MAC address filter on Cisco AP

Configure open authentication with WEP on Cisco AP
Set dynamic WEP keys on Cisco AP
Setting up WPA (Pre-shared Key) on the Cisco AP
Setting up WPA2 on the Cisco AP
Discussion of IEEE 802.11i
Discussion of wireless DoS (Denial of Service) attack (Jamming, etc.)
Discussion of wireless Man in the Middle (MITM) attack (Rogue access point, etc.)
172.31.11.41/16
Internet
Lab Router
10.255.1.1/16
10.255.1.2/16
Cisco AP
Dell Switch
DHCP
enabled
Cisco Lab
Switch
Lab PC
Console Cable
10.255.4.x/16
Use Nearest PC for CLI
configuration
Laptop
Figure 6: Wireless Network Setup

Figure 6 shows the general setup of WLAN that students use for performing the lab activities for securing the wireless
networks. In addition to the above activities, students are exposed to the weakness of WEP, and dynamic WEP. Students also
understand the WEP could be cracked easily with tools available for free. Students also configure the WPA and WPA2 which
are more secure ways of providing the wireless access to the users. Students learn that the enterprise should use WPA2 in
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order to provide confidentiality and privacy of data communication over the wireless link. In addition, 802.1x framework should
be used in enterprise wireless network for external authentication.
CONCLUSIONS
A course in network security has been developed for undergraduate computer information technology students. Due to the
shortage of similar courses, this is the first of its kind providing the students solid practical skills at the undergraduate level.
Students perform advanced labs including network security technologies such as Firewalls, VPN, IDS, IPS, etc. for wired
networks. In addition, WPA2 and 802.1x based wireless security labs also carried out by the students. These labs help
graduating students to improve their skills that enhance the job hunting skills and marketability of them. Moreover, this course
will also benefit industry by offering skills which are practical and valuable. Students carry out experiments using Cisco
networking devices such as switches, routers and ASAs, submit lab reports. Students found this course along with lab
assignments useful in understanding the theory of network security, and gaining practical experience. Consequently, students
have shown great enthusiasm in this course, and student interest is expected to grow as we offer this course.
REFERENCES
Abbott-McCune. S., Newtson, A. J., Girard , J., Goda, B. S., (2008). Developing a Reconfigurable Network Lab, Proceedings of
the 9th ACM SIGITE conference on Information technology education, pp255-258
Cao, X., Wang , Y., Caciula, A., Wang, Y. (2009). Developing a Multifunctional Network Laboratory for Teaching and Research,
Proceedings of the 10th ACM SIGITE conference on Information technology education, pp155-160.
Cisco Systems Inc., (2002). A Comprehensive Review of 802.11 Wireless LAN Security and the Cisco Wireless Security Suite,
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October
30,
2009,
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Cisco
website:
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Cisco Systems, (1998). RFC2341 - Cisco Layer Two Forwarding (L2F) Protocol, Retrieved October 30, 2009, from FAQs
website: http://www.faqs.org/rfcs/rfc2341.html
Farinacci, D., Li, T., Hanks, S., Meyer, D., Traina, P. (2000). RFC2784 - Generic Routing Encapsulation (GRE), Retrieved
October 30, 2009, from FAQs website: http://www.faqs.org/rfcs/rfc2784.html
Frahim., J., Santos, O. (2005). Cisco ASA: All-in-One Firewall, IPS, and VPN Adaptive Security Appliance, Cisco Press.
Hamzeh, K., Pall, G., Verthein, W., Taarud, J., Little, W., Zorn, G., (1999). RFC2637 - Point-to-Point Tunneling Protocol
(PPTP), Retrieved October 30, 2009, from FAQs website: http://www.faqs.org/rfcs/rfc2637.html
Hartpence, B. H. (2009). QoS Content and Experiences for IT, Networking and Security Programs, Proceedings of the 10th
ACM SIGITE conference on Information technology education, pp60-64.
Helps, C. R. G., Ekstrom, J. J. (2008). Evaluation of a Computer Networking Class in Information Technology, Proceedings of
the 9th ACM SIGITE conference on Information technology education, pp259-268.
Hill, J. M. D., Carver, C. A. Jr., Humphries, J. W., Pooch, U. W. (2001). Using an isolated network laboratory to teach advanced
networks and security, ACM SIGCSE Bulletin archive, 33(1), pp36-40.
Jasani, H., Hao, W. (2009). Innovative Network Security Course Development, ASEE Annual Conference & Exposition, Austin,
TX.
Kent, S. Atkinson, R., (1999). RFC2401 - Security Architecture for the Internet Protocol (IPSec), Retrieved October 30, 2009,
from FAQs website: http://www.ietf.org/rfc/rfc2401.txt
Meiselwitz, G., (2008). Information Security across Disciplines, Proceedings of the 9th ACM SIGITE conference on Information
technology education, pp99-104.
Northcutt, S., Zeltser, L., Winters, S., Kent, K., Ritchey, R. (2005). Inside Network Perimeter Security, 2nd Edition, Sams
publication.
Odom, W., (2008). CCNA Official Exam Certification Library (CCNA Exam 640-802), 3rd edition, Cisco Press.
Oh, T., Mishra, S., Pan, Y., (2009). Teaching High-Assurance Internet Protocol Encryption (HAIPE) Using OPNET Modeler
Simulation Tool, Proceedings of the 10th ACM SIGITE conference on Information technology education, pp161-165.
Rosen, E., Viswanathan, A., Callon, R. (2001). RFC3031 - Multiprotocol Label Switching (MPLS) Architecture, Retrieved
October 30, 2009, from FAQs website: http://www.ietf.org/rfc/rfc3031.txt
Rosenberg C., Koo, S. G. M. (2002) Innovative and easy-to-deploy communication networking laboratory experiments for
electrical and computer engineering students, 32nd Annual conference on Frontiers in Education, Como, Italy.
Townsley, W., Valencia, A., Rubens, A., Pall, G., Zorn, G., Palter, B. (1999). RFC2661 - Layer Two Tunneling Protocol (L2TP),
Retrieved October 30, 2009, from FAQs website: http://www.faqs.org/rfcs/rfc2661.html
Yuan, D., Zhong, J., (2009). An Instructional Design of Open Source Networking Lab and Curriculum, Proceedings of the 10th
ACM SIGITE conference on Information technology education, pp37-42.
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S.-J. Lin
THE IMPACT OF INTERACTIVITY OF ONLINE NEWSPAPERS
Sue-Jen Lin
I-Shou University, Taiwan (R. O. C.)
ABSTRACT
Many unanswered questions on interactivity concern the relationship between interactive features and perceived interactivity
and their respective impact on the users attitudes and behavioral intentions. This study attempts to answer these questions by
documenting how readers browsed online newspapers that varied in number and types of interactive features. 169 participants
were randomly assigned to a 2 x 2 between-subject experimental design to browse one of four online newspapers, and their
interactive behaviors were recorded. Participants were asked to evaluate the interactivity levels of the online newspapers and
provide their attitudes and behavioral intentions after the experiment.
The results suggest that the more interactive features a Web site had, the more interactive an individual would perceive the site
to be. This study also found strong support for the impact of both feature-based and perception-based models of interactivity on
an individuals attitude and behavioral intentions toward a Web site.
THE IMPACT OF INTERACTIVITY OF ONLINE NEWSPAPERS

As the number of daily newspapers offering online products continues to grow rapidly and more and more people read online
newspapers on a regular basis, it has become increasingly important for online newspaper publishers to determine the
effectiveness of their Web sites. Although there is no consensus yet as to how to measure the effectiveness of an online
newspaper, it is reasonable to argue that, for an online newspaper to be effective, its readers should at least have favorable
attitudes toward the site and have the intention to revisit the site in the future.
Therefore, it would be important to examine what factors might influence attitudes toward online newspapers and the intention
to revisit online newspapers. Interactivity is often cited as a central characteristic that separates online newspapers from their
traditional counterparts (Massey & Levy, 1999; Kenny, Gorelik, & Mwangi, 2000), and many believe that online news services
can transform journalism (Pavlik, 1997; Regan, 1997; Brooks, McKean, & Morris, 1997). Regan (1997) went even further by
stating that interactivity is the magic bullet that papers have been searching for since circulation began to drop in the 60s (p.
62). Hume (1995) suggested that interactive online newspapers may change the function of those who earn a living in the news
industry. Instead of gathering facts, they may wind up gathering sources of related information, and establishing these sources
as hot links within a Web site. The fact that interactivity may change the roles of readers, the traditional practices of journalism,
and the function of news workers strongly suggests that online newspapers constitute an important site for the study of
interactivity. Therefore, this study aims at examining the impact of interactivity on readers attitudes toward online newspapers
and on readers behavioral intentions.
LITERATURE REVIEW ON INTERACTIVITY

Interestingly, although surrounded by a staggering degree of hype, interactivity is rarely defined or measured. When it is, a
different range of conceptualizations and operationalizations emerges. One of the most quoted definitions of interactivity,
introduced by Rafaeli (1988) from an interpersonal communication perspective, is as follows: an expression of the extent that,
in a given series of communication exchanges, any third (or later) transmission (or message) is related to the degree to which
previous exchanges referred to even earlier transmissions (p. 111). Rafaeli and his colleagues (Rafaeli, 1990; Rafaeli &
Sudweeks, 1997) conducted a number of studies operationalizing interactivity as one-dimensional, process-related variables
based on relatedness of communication messages.
But not all communication researchers use relatedness of communication messages as a standard to evaluate the interactivity
of mediated communication. Acting from a functionalists perspective, some define interactivity as the ability of communication
technologies to facilitate communication among users. Jensen (1998) defined interactivity as A measure of a medias potential
ability to let the user exert an influence on the content and/or form of the mediated communication (p. 201). Heeter (1989)
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further suggested interactivity as a multi-dimensional concept where interactivity levels fluctuate depending on the technical
capacity of the medium to: 1) provide complexity of choices to users; 2) require effort from users to access information; 3) be
responsive to users; 4) monitor information use; 5) allow users to add information; and 6) facilitate interpersonal communication
among users. Heeters multi-dimensional concept provided a standard for measuring what makes one medium more interactive
than another. Applying Heeters conceptual definition, several researchers (Massey & Levy, 1999; Kenney, Gorelik, & Mwangi,
2000; McMillan, 1999) operationalized interactivity by counting the amount of functional features such as e-mail links, search
engines, feedback forms, chat rooms, and online polls/forums to determine interactivity levels of a medium.
While some communication researchers see interactivity as more technologically determined, others believe interactivity
resides in the perspective or perceptions of those who use interactive media. Newhagen, Cordes, and Levy (1995) suggested
that varying levels of interactivity are dependent upon users perceptions. In their study, e-mail messages intended to be read
by large audiences was considered low level of perceived interactivity, while those addressed to individual audiences were
deemed to possess a high level of perceived interactivity. Wu (1999) measured perceived interactivity by asking Web site
visitors questions that, falling into two groups, sought to determine (1) how responsive a Web site was and (2) how easy it was
for users to navigate a Web site. Downes & McMillan (2000) designed an interactivity scale to measure perceived interactivity8.
In the empirical literature, functional- and/or perception-based definitions of interactivity were employed as independent
variables to predict three possible user-responses: users attitudes toward the Web site (McMillan, 2000a, McMillan, 2000b,
McMillan, 2000c; Wu, 1999); users perceived relevance of the topic of a Web site (McMillan, 2000c); and their behavioral
intentions (Bezjian-Avery, Calder, & Iacobucci, 1998; McMillan, 2000a; McMillan, 2000b). The results of these studies serve
more as confusion than as clarification. In studies that directly compared the impact of interactive features and perceived
interactivity, some studies (McMillan, 2000a; McMillan 2000c) suggested that there was no significant relationship between
functional- and perceived interactivity. That is, users did not perceive Web sites possessing more interactive features as more
interactive than Web sites possessing less interactive features. But one study (McMillan, 2000b) found a strong correlation
between the total numbers of features and perceived interactivity among trained coders.
Not surprisingly, there is no consensus as to how interactivity affects users attitudes and behaviors. Some studies (Wu, 1999;
McMillan, 2000a; McMillan, 2000b) suggested that perceived interactivity, while influencing users attitudes toward both a given
Web site and relevance of site topic, did not affect behavioral intentions. Moreover, the sheer number of interactive features
presented on the sites did not have any impact on any of the users attitudes or behaviors. On the contrary, another study
(McMillan, 2000b) found that perceived interactivity only had impact on one of many behavioral intentions measured, but not on
users attitudes toward the Web site. The study also suggested that relationships between attitudes toward the site and
interactivity tended to be strongest among trained coders, particularly when interactivity was measured as interactive features
rather than as perceptions.
Why do these inconsistencies exist? The answer lies on different user traits and levels of user activities among the studies. For
those studies that did not find a correlation between interactive features and perceived interactivity, only those who were
unfamiliar with the Web sites were used as respondents. Given that the respondents were allowed to spend approximately 510 minutes on each site, they had to make their judgment of interactivity based on their idiosyncratic definitions of interactivity.
Thus, there was no correlation between the number of interactive features and perceived interactivity. Also, given the short
time-frame, the interactive features of the sites were not fully explored, and perceived interactivity was obtained
idiosyncratically. Thus, it can be of little surprise that interactive features had no impact on users attitudes and behaviors, and
that the effects of perceived interactivity were inconsistent. On the other hand, in the study where the responses of trained
coders, who spent averagely 20-30 minutes on each site and sometimes more than one hour, were examined, the number of
interactive features correlated with perceived interactivity, and both interactive features and perceived interactivity had an
impact on viewers attitudes toward the Web sites.
These results indicated that, for experienced users, the more they experienced interactive features (that is, the more they
initiated interactive behavior with the medium) the better they made a judgment of the interactivity-level of the medium, and
thus the more positive their attitudes were toward the medium, and the more likely they were to recommend the medium to
others. This leads to a reasonable assumption that a users perceptions of the interactivity level of a Web site should be
influenced by the amount of interactive behavior employed by the user. Perceived interactivity, in turn, should have impact on
the users attitudes and behavioral intentions toward the medium.
8
The scale asks respondents to indicate their agreement with the following statements so as to gauge perceived interactivity levels: This site facilitates two-way
communication, When I visit this site I get the sense that I am in a place in cyberspace, This site seems to allow site visitors to communicate at times that are most
convenient for them, I feel that I have a great deal of control over my visiting experience at this site, Visitors to this site need to take an active role in order to fully
experience the site, This site seems to be designed primarily to inform rather than persuade, and This site is interactive (Downes & McMillan, 2000, p. 6).
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S.-J. Lin
LITERATURE REVIEW ON THE STRUCTURAL CHARACTERISTICS OF ONLINE NEWSPAPERS

To know what characteristics of online newspapers allow interactivity, two questions have to be addressed first: What
interactions can be made possible by online newspapers, and what features allow those interactions?
As Massey & Levy (1999) pointed out, online newspapers can make two types of interactions possible by: content interactivity
and interpersonal interactivity. Content interactivity refers to the degree to which consumers of online newspapers can have
control over content, while interpersonal interactivity refers to the extent to which a reader can have computer-mediated
conversations with other readers/reporters/editors.
Features that Facilitate Content Interactivity

Hume (1995) described how Internet technologies are able to create a bottomless news hole for online newspapers and to
increase the opportunity for interactivity by providing online readers with a wide range of content choices. The degree of
content interactivity could be measured by the diversity of the content that an online newspaper serves to its reader.
But the topical range of content of online newspapers alone cannot determine the interactivity of an online newspaper. After all,
readers of traditional newspapers can also leaf through a sectionalized, ink-and-newsprint newspaper to find content that
matches their own interests. Although the capability of an online newspaper to provide diversified content is an important
indicator of content interactivity, what makes an online newspaper differ from its traditional counterpart is that readers of online
newspapers have not only many choices but also control over the messages. Readers of online newspapers can search,
select, edit, and modify the form and content of mediated messages; they can also choose to forward the messages to their
friends or print out the messages for later uses. Features that allow readers to manipulate and customize the messages, such
as hyperlinks, hypertext links, search engines, and multimedia elements should be another sub-dimension of interactivity.
Features that Facilitate Interpersonal Interactivity

Another type of interaction made possible by online newspapers is the interaction between readers and news content creators.
Traditional newspapers rely heavily on letters to the editor or on readers phone calls for feedback, but only editors read this
type of feedback. Even if it is printed on the papers, the audience for these messages still amounts to other newspaper
readers, not news writers. Journalists of traditional newspapers have no way of connecting or relating to their readers unless
readers have the ability to call them or write to them personally. The interaction between readers and content creators of
traditional newspapers is often infrequent, indirect, and delayed. Online newspapers become interactive when the provision of
e-mail links to the newsroom creates opportunities for online readers to interact with content creators.
Interpersonal interactivity made possible by online newspapers also involves readers on both ends of the interactive processes.
It refers to the extent to which a news Web site presents itself as a conduit for a reader to engage in communication with
another reader (Massey & Levy, 1999, p. 141). Online newspaper features such as chat rooms and opinion forums enable
communication between two people or among a small group of people in which each participant can send and receive
messages to and from all others.
But how these interactive features are actually used by online newspapers? Several studies (Gubman & Greer, 1997; Tankard
& Ban, 1998; Kamerer & Bressers, 1998; Preston, 1998; Schultz, 1999; Massey & Levy, 1999; Kenny, Gorelik, & Mwangi,
2000; Li, 2000) that examined the structure of online newspapers provide information as to how interactive features of online
newspapers have been used by online newspaper publishers. Table 1 presents a detailed summary of the results of six studies
on the uses of interactive features by online newspapers.
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Table 1: Summary of the results of six studies on uses of interactive features by online newspapers
AUTHOR
Gubman, &
Greer (1997)
Tankard & Ban,

(1998)
Kamerer, &
Bressers,(1998)
CONTENT INTERACTIVITY
Content diversity
Links and search engine
Multimedia
INTERPERSONAL
INTERACTIVITY
89% provided local news

54% provided national news
53% had news stories on the
first screen
70% had news headlines on
the first screen
69.9% had archives

15.7% used any type of
linked boxes or nontraditional storytelling
10% linked to searchable
news wires.
Only 14.5% of sites used

audio, video, or animation
in news section.
95% had e-mail addresses

55% had e-mail links to newsrooms
40% had forums
57.8% were responsive to readers
comments
The average % of material

written by online staff was
13%
94% contained no links

64% had search engine and
news archives
77% used photographs,

but less than 10% used
animated graphics, audio
clips, video clips, tables,
or graphs.
96% had e-mail addresses

26%had discussion
forums/electronic bulletin boards
12% chat rooms
91-91% provide local news

45-53% provide national news
37-39% had search engine

34-52% had archives
33-42% had animation,

6% audio, 2% audio
73-94% had e-mails to papers

47-57% had e-mails to individuals
94% had e-mail addresses to
newsrooms
29% provided directories that listed
their editors and reporters with
personal e-mail links.
92% offered no synchronous chat
rooms
3% provided links to other chat
providers
Only 5% has their own chat rooms.
33% had discussion forums
Schultz, (1999)
High on news but low on

entertainment and
commercials
10% had hypertext links

75% had search engines;
only 3 (out of 44) had news
customization features
83% had news on homepage
33% had hypertext links

52% had hyperlinks
23% had search engines
Massey, & Levy

(1999)
Kenny, Gorelik,
& Mwangi,
(2000)
Multimedia features found

at 2(out of 44) sites.
42 (out of 44) had e-mail links to

papers
50% had links to webmasters
Only 2(44) had links to
papers/online editors and reporters.
4 had moderated chat rooms; 4 had
unmoderated chat rooms; only one
had both
51% had at least one e-mail address
on the home page,
64% had email addresses to
reporter; 69% did not respond,
51% had email addresses to
webmaster, 70% did not respond
12% had chat rooms
17% had discussion groups
49% had feedback mechanisms
Based on the results of the above studies, what are the similarities and differences between sites with high interactive options
and sites with low interactive options? As we can see from Table 1, almost all the sites are pretty good at providing headlines
on the home page and local news sections. What distinguishes sites with high interactive options from sites with low interactive
options is that high interactivity sites tend to have more news stories on the first screen, more national news, and more
entertainment coverage. Low interactivity sites typically do not provide hypertext links and search engines, but, as with high
interactivity sites, they provide hyperlinks9. Almost all the sites provide e-mail links, but the difference is that high interactivity
sites provide links not only to webmasters and subscription/service departments, but also to individual reporters/editors within
news stories, while low interactivity sites tend to provide links only to webmasters and subscription departments. In some cases
where low interactive sites provide links to reporters, readers have to click on the link to news department to find an individual
reporters email address (Schultz, 1999) so that they can email reporters. In terms of providing features that allow interactions
among online readers, very few sites have synchronous chat rooms, while asynchronous chat rooms and opinion forums are
found at high interactivity Web sites, but are less common at low interactivity sites. Based on these findings, Table 2
summarizes what key characteristics distinguish a high interactive site from a low interactive site.
9
Hypertext links refer to those that connect one document (news story) to another within the same site while hyperlinks refer to those that connect to a location on the
Internet outside the site where the current page is located.
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S.-J. Lin
Table 2: Key characteristics that distinguish a high interactive site from a low interactive site
Type of Interactivity
Concept of Interest
Interactive Features
Diversity of content
Number of stories within the

site
Content interactivity
Hypertext links
Control over content

Interpersonal interactivity
Search engine
Communication with content creators
E-mail links to reporters/editors
Communication with other readers
Bulletin boards
Therefore, the structural characteristics of an online newspaper that enable content interactivity is operationalized in this
study as both the number of stories that an online newspaper serves to its reader and the presence of features that enable
users control over content, features such as hypertext links, and search engines. The capability of an online newspaper to
provide interpersonal interactivity between readers and content creators and among readers is operationalized as the
presence/absence of e-mail links to reporters/editors and bulletin boards.
HYPOTHESES
Although the structural characteristics of online newspapers alone can not determine the interactivity level of online
newspapers, the structural characteristics do it place limits on interactions that can be made possible within the medium.
Therefore, this study proposes the following hypothesis:
H1:
An online newspaper with more interactive features will lead to more time spent on the site and more page-viewed
by readers than one with fewer interactive features.
A key question that stems from the existing literature, but still rests on inconsistent findings, concerns the relationship between,
on the one hand, interactive features of a Web site and, on the other, perceptions of interactivity and their respective impact on
users. Conclusions from previous studies on interactivity seem to imply that the number of interactive features presented at
Web sites affects neither users attitudes nor their behavioral intentions, while the effects of perceived interactivity on users
attitudes and behavioral intentions are inconsistent. This study argues that, by counting interactive features without tracking the
use of interactive features, a method employed by previous studies, researchers only obtained measurements of the
interactivity potential of a medium. Researchers who asked users to make judgments regarding the interactivity levels of a
medium when these same users were not familiar with the medium (another methodological problem found in previous studies)
eventually amassed nothing more than users idiosyncratic definitions of interactivity.
This is especially true when one looks at the statements used to tap perceived interactivity. When a researcher asks the
respondents to indicate their agreement with statements like This site is interactive and This site facilitates two-way
communication, there is an unanalyzed assumption that people are capable of evaluating not only what interactivity and twoway communication are, but whether these two concepts share the same meaning, as well. To the extent that people can and
do make such evaluations, there exists the possibility that interactivity may have an impact on favorable attitudes/behavioral
intentions toward the site. To the extent that people cannot make such evaluations, there exists the possibility that favorable
attitudes/behavioral intentions may come from somewhere else.
This study argued that the reason for the inconsistent findings is due to the fact that participants in those studies were not
given enough time to use the interactive features at the sites so that they did not perceive Web sites with more interactive
features as more interactive than Web sites with less interactive features. Asking participants to spend at least 20 minutes at
the online newspapers created for this study should allow participants to have enough time to use those interactive features,
and then to make experientialnot idiosyncraticjudgments regarding their perceptions of interactivity. Therefore, one can
expect to find
H2:
An online newspaper with more interactive features will lead to a higher perception of interactivity of that Web site.
While the literature has begun to explore the relationship between interactive features of a Web site and users perceptions of
interactivity, no study has attempted to examine the reasons as to why users can/cannot make a connection between
interactive features presented at the site and the perceived interactivity level of that site. If allowing participants to spend more
time to use interactive features will lead to a higher perception of interactivity of a Web sitethat is, if hypothesis 2 is
133
supportedit should be reasonable to argue that it is the use of those interactive features, that is, interactive behavior, that
leads to a higher perception of interactivity. Therefore,
H3:
The greater the interactive behavior, the higher degree of perceived interactivity.
As for the respective impacts of feature-based and perception-based interactivity on users, results of previous studies suggest
that the impact may lie with changes in users attitudes and behaviors. The impact of perceived interactivity in the effectiveness
of online newspapers can also be explained through the concept of information processing. More interactivity among readers,
between online news readers and messages, or between readers and reporters/editors should yield more intensive and active
information processing. And this active information processing through interactivity may result in more favorable and desirable
reader attitudes and actions (e.g., a favorable attitude toward the newspaper Web site; the likelihood of returning to the site).
The following hypotheses explore relationships between feature-based and perception-based interactivity, as well as attitudes
toward newspaper Web sites and users future actions.
H4a: An online newspaper with more interactive features will lead to more favorable attitudes toward the newspaper Web
site.
H4b: An online newspaper with more interactive features will lead to more favorable behavioral intentions toward the
newspaper Web site.
H5a: The higher the perceived interactivity of a Web site, the more positive the attitudes toward the newspaper Web site
will be.
H5b: The higher the perceived interactivity of a Web site, the more positive the behavioral intentions toward the
newspaper Web site will be.
METHOD
Stimuli
To test the hypotheses, a 2 (presence or absence of features that facilitate content interactivity) x2 (presence or absence of
features that facilitate interpersonal interactivity) between-subject factorial design was used to create four treatment conditions.
Table 3 showed how the interactive features were manipulated in the four experimental conditions.
Table 3: Interactive features presented in a 2x2 experiment conditions
Content Interactivity
Low
Low
Interpersonal Interactivity
High
High
--50 news stories
--100 news stories

--200 hypertext links
--search engine on each page
--50 news stories

--email links to reporters within
news stories
--8 bulletin boards
--100 news stories

--200 hypertext links
--search engine on each page
--email links to reporters within news
stories
--8 bulletin boards
Participants and Procedures

A total of 263 students signed up for this research. Students who were enrolled in a large sociology class at a large Midwest
university in the United States were asked to participate in this research. The students were told that the study was to examine
how college students browsed online newspapers and their media use habits. Those who agreed to participate filled out a signup sheet that asked their e-mail addresses and basic information. The students were randomly assigned to one of the four
experimental conditions. An e-mail confirmation for participation was sent to the signed-up students, which included the URL of
the site to be examined. The instructions as to how to complete the study were also included in the e-mail. The e-mail asked
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S.-J. Lin
sign-ups to browse an online newspaper for at least 20 minutes10, and then to click on the survey link to fill out a questionnaire
(10-15 minutes). After the students submitted the questionnaire online, a Web page that contained debriefing information
appeared on the screen, debriefing the students and thanking them for their participation. Participants were compensated for
their time with five dollars.
Net Tracker, a software program designed to view the individual click stream path of each visitor to Web sites, to analyze the
use of Web site content, and to measure site response times and page delivery, was used to gather information on participants
interactive behaviors. Because the participants names and e-mail addresses were recorded on log files, Net Tracker was then
able to match each participants name and e-mail address with his/her own browsing activities, and thus to provide information
necessary for data analysis.
Dependent Measures
The dependent variables are interactive behavior, perceived interactivity, attitude toward Web sites, and behavioral intentions.
Interactive behavior was measured in two ways: by recording the time a participant spent on the site and by recording the
number of pages that a participant visited while he/she was browsing the site. As previously argued, allowing participants
enough time to use interactive features is the key to understanding the relationship between interactive features and perceived
interactivity and how interactive features and perceived interactivity respectively affect users attitudes and behavioral
intentions. Therefore, time spent on the site is used as one way to measure interactive behavior.
As for how to operationalize the use of interactive features, that is, interactive behavior, the way Tremayne & Dunwoody (2001)
measured the use of interactive features was adopted in this study. By recording how many pages have been requested and
received by users, Tremayne and Dunwoody successfully obtained an interactivity measure that takes not only the availability
of interactive features but also the use of interactive features into account. Therefore, in this study, a participants use of
interactive features was obtained by recording the number of news pages that had been successfully requested and received.
Perceived interactivity was measured by asking respondents to use a seven-point Likert type scale to indicate their agreement
with 13 statements that were used in McMillan (2000a, 2000b, 2000c)s studies and Wu (1999)s study. According to these
studies, these 13 statements corresponded to four dimensions, which, themselves, related to how individuals perceive
interactivity. These four dimensions are responsiveness, navigation, control, and direction of communication.
Attitudes toward the online newspaper Web site was measured by five, seven-point, semantic, differential items. These items
are commonly used in advertising, marketing, consumer behavior, and communication research (e.g. Gardner, 1985;
MacKenzie, Lutz & Belch, 1986; Mitchell & Olson, 1986; McMillan, 2000a; 2000b) to reflect a broad range of attitudinal
information about the Web site. These five items are bad/good, unpleasant/pleasant, irritating/not irritating, boring/interesting,
dislike/like.
As the readers responded to seven carefully formulated statements, a 7-point scale ranging from very unlikely (=1) to very
likely (=7) was used to measure the readers behavioral intentions toward their respective online newspaper Web sites.
Specifically, the seven questions asked respondents to indicate their intentions to return to the site/to tell someone about this
site/to bookmark the site/to send e-mails to the site/to forward what they found interesting at the site to friends/to print out what
they found interesting at the site/to purchase the online newspapers print version. These statements were adapted from
McMillan (2000b; 2000c)s studies, Wu (1999)s study, and Cho & Leckenby (1999)s study.
Measurement Results
Among the 263 recruits, 209 visited the sites and 169 completed the study. The instructions for the experiment asked the
participants to spend at least 20 minutes on the online newspaper and then to fill out the survey. The mean of the time that the
participants spent on browsing the newspaper was 24 minutes and 49 seconds, ranging from 2 minutes and 2 seconds to 1
hour, 17 minutes, and 3 seconds. The mean of pages viewed was 11.18 pages, ranging from 2 pages to 45 pages. There were
5 participants who spent fewer than 5 minutes browsing the online newspaper to which they had been assigned. The decision
was made to drop these 5 participants from the study. As mentioned in the previous chapters, not spending enough time on the
site could be the reason for the inconsistent and/or null findings of past research. As for the number of pages-viewed, the home
page was the only page that was exactly the same across experimental conditions. So, as long as the participant ventured out
10
A clock was placed on the top of each Web page to remind the participants of how much time that they had spent on the site. Under the clock was a reminder that the
participants could click the survey link to fill out the survey after the passage of 20 to 30 minutes.
135
to view at least 2 pages of the site, they should have been able to experience the difference in the design. Since the minimum
pages-viewed was 2, no case was dropped for this reason.
After dropping these 5 participants, among 164 participants whose information was used for the following analyses, 97 (59.1%)
were female and 67 (40.9%) were males. The mean age of participants was 20.93.
Interactive behavior was operationalized as the time spent on the online newspaper and the number of Web pages viewed.
After dropping the five participants who spent fewer than five minutes on browsing the online newspaper that they were
assigned, the mean of the time that the remaining participants spent on browsing the online newspaper was 25 minutes and 28
seconds, ranging from 5 minutes and 37 seconds to 1 hour, 17 minutes, and 3 seconds with 11 minutes and 25 seconds as the
standard deviation. The mean of pages-viewed was 11.40 pages, ranging from 2 pages to 45 pages, with a standard deviation
of 8.47 pages.
A factor analysis was conducted using the principal component analysis with the varimax rotation. Applying eigenvalues
greater than one or equal to one criterion, a three-factor model was adopted. The first factor consisted of five items, the second
consisted of three items, and the third factor consisted of two items11. The first factor accounted for 35.71% of the total
variance, the second factor accounted for 12.76%, and the third factor accounted for 8.50%. These three factors account for
56.98% of the total variance. Clearly, the first factor can be denoted as the navigability dimension of perceived interactivity,
the second one can be denoted as the communication interactivity dimension of perceived interactivity, and the third one as
the activity dimension of perceived interactivity. Alpha for the 5 items in the navigability component was .80, alpha for the
three items in the communication interactivity component was .64, and alpha for the two items in the activity component was
.55. Table 4 shows the factor loadings for the 11 statements.
Table 4: Factor loadings on 11 scale items that measured perceived interactivity of online newspapers.
Rotated Component Matrix a
Component
Scale Items
While I was on the site, I always knew where I was going.
.831
.137
-.045
While I was on the site, I was always able to go where I thought I was going.
.822
.117
-.085
I was delighted to be able to choose which link and when to click.
.510
.355
.347
While I was on the site, I could quickly jump from one page to another.
.705
-.024
.356
I was pleased to express my feelings and opinions on the spot through

email or feedback form.
.033
.727
-.092
This site facilitates two-way communication.
.031
.581
.516
When I visit this site, I get the sense that I am in place in cyberspace.
.151
.736
.289
This site seems to allow site visitors to communicate at times that are most
convenient for them.
.229
.489
.470
I feel that I have a great deal of control over my visiting experience at this
site.
.622
.228
.305
Visitors to this site need to take an active role in order to fully experience
the site.
.066
-.065
.768
This site is interactive.
.104
.298
.712
Extraction Method: Principle Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations
Attitudes toward the online newspaper Web site were measured by five seven-point, semantic, differential items. The grand
mean for these five items was 4.48, a score that was higher than the mid-point on a seven-point scale. A factor analysis was
conducted on these five items using the principal component analysis with the varimax rotation. All these five indicator
variables had high communalities (all over .70) and loaded on a single factor, which accounted for 75.49% of the total variance.
11
Three items were dropped because of low communality or violation of items-on-factor criterion.
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S.-J. Lin
An individuals attitudes toward the site score was therefore calculated by averaging the scores of these five items that were
non-missing to avoid losing too many cases with missing values on the items. Alpha for the scale was .92.
Behavioral intentions toward the online newspaper Web site was measured by asking respondents to use a seven-point Likert
scale to indicate their level of agreement with the seven statements. The grand mean for these seven items was 2.77, a score
that was lower than the mid-point on a seven-point scale.
A factor analysis was conducted on these seven items using the principal component analysis with the varimax rotation. All
these seven indicator variables loaded on a single factor, but the factor only accounted for 58.43% of the total variance.
Therefore, instead of using the Kaiser Criterion, which dropped all components with eigenvalues under 1.0, variance-explainedcriterion was used to determine the number of factors. As a result, a two-factor model was selected because it accounted for
71.21% of the total variance (when the first factor had an eigenvalue of 4.09 and the second factor had an eigenvalue of .90).
Two factors emerged: The first consisted of five items and the second consisted of two. The first factor accounted for 58.43%
of the total variance and the second factor accounted for 12.78%. These two factors accounted for 71.21% of the total
variance. Clearly, the first factor can be denoted as behavioral intentions toward the Site dimension, while the second one
can be denoted as behavioral intentions toward the Content of the Web site dimension. Alpha for the five items in the Site
component was .87, and Alpha for the two items in the Content component was .77. This scale proved to be reliable overall.
Table 5 shows the factor loadings on seven items that measured behavioral intentions toward the online newspaper.
Table 5: Factor loadings of seven items that measured behavioral intentions toward the online newspapers
Rotated Component Matrix a
Component
Scale Items
How likely would you be to tell someone else about this site?
.77
.33
How likely would you be to send e-mail to this site?
.63
.40
How likely would you be to bookmark this site?
.85
.19
How likely would you be to forward a message you found interesting at this site to your
friends?
.30
.84
How likely would you be to subscribe to this online newspapers print version?
.76
.15
How likely would you be to return to this online newspaper website?
.80
.32
How likely would you be to print out a message you found interesting when you browsed the
site?
.22
.88
Extraction Method: Principle Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations
RESULTS
Hypothesis 112 predicts that an online newspaper with more interactive features will lead to greater interactive behavior. The
results of the GLM multivariate analysis of variance showed that participants who were assigned to high content interactivity
experimental conditions spent more time (M=00:26:57) on the site than those who were assigned to low content interactivity
conditions (M=00:23:52) and the difference approached significant levels, F(1, 163)=3.04, p=.08, but participants in high
content interactivity experimental conditions viewed fewer pages (M=10.66) than did participants in low content interactivity
conditions (M=12.11); however, this difference was not statistically significant, F (1, 163)=1.21, p=.273.
The results of the GLM multivariate analysis of variance also showed that participants who were assigned to high interpersonal
interactivity experimental conditions spent more time (M=00:28:46) on the site than those who were assigned to low
interpersonal interactivity conditions (M=00:22:04), and the difference was statistically significant, F(1, 163)=15.32, p=.00. The
former group of participants also viewed more pages (M=13.67) than did participants in low interpersonal interactivity
12
Several GLM (General Linear Model) were conducted and checked first to see if there were interactions between types of interactions on all the dependent variables. The
results indicated none of the interactions were significant. Thus, only the interpretations of the statistical results on main effects were discussed.
137
conditions (M=8.99), and the difference was also statistically significant, F (1, 163) =13.51, p=.00. Hypothesis 1 was mostly
supported. Table 6 shows the results of the effects of interactive features on interactive behaviors.
Table 6: Means and F-ratios of time spent on the site and number of pages-viewed for participants in different
experimental conditions
Type of Interaction allowed
Experimental condition
Time spent on the site
Number of pages-viewed
Mean
Mean
High
0:26:57
10.66
Low
0:23:52
12.11
3.03
1.21
High
0:28:46
13.67
Low
0:22:04
8.99
F-ratio
Interpersonal Interactivity
F-ratio
15.32**
13.51**
**Significant at the 0.01 level

*Significant at the 0.05 level
Hypothesis 2 predicts that an online newspaper with more interactive features will be associated with a higher perception of
interactivity belonging to that Web site. The results of a GLM multivariate analysis of variance show that participants in high
content interactivity conditions reported higher means scores on all three dimensions of perceived interactivity (M=5.49 on
Navigability; M=3.53 on Communication Interactivity; and M=4.57 on Activity dimension) than participants in low content
interactivity conditions (M=5.29 on Navigability; M=3.13 on Communication Interactivity; and M=4.09 on Activity dimension).
The difference on Communication Interactivity dimension of perceived interactivity and the difference on Activity dimension
were statistically significant (F=3.83, df=1, p=.05 on Communication Interactivity, and F=5.42, df=1, p=.02 on Activity
dimension), although the difference on Navigability dimension was not (F=1.62, df=1, p=.21). Table 7 shows how participants
in high versus low content interactivity conditions differed in scores of each component (dimension) of perceived interactivity.
Table 7: Mean scores, F-ratios, and p-values on the three dimensions of perceived interactivity for participants in high/low
content interactivity conditions
Interactivity scores
Dimension
(Component)
Assigned to high content

interactivity condition?
Navigability
no
5.29
yes
5.49
Communication
Interactivity
no
3.13
yes
3.53
Activity
no
4.09
yes
4.57
Mean
p-value
1.62
.21
3.83
0.05 *
5.42
0.02 *

Participants in high interpersonal interactivity conditions reported higher means scores on all three dimensions of perceived
interactivity (M=5.53 on Navigability; M=3.83 on Communication Interactivity; and M=4.55 on Activity dimension) than did
participants in low interpersonal interactivity conditions (M=5.27 on Navigability; M=3.46 on Communication Interactivity; and
M=4.12 on Activity dimension). The difference on Communication Interactivity dimension of perceived interactivity and the
difference on Activity dimension were statistically significant (F=3.89, df=1, p=.05 on Communication Interactivity, and
F=4.56, df=1, p=.03 on Activity dimension), although the difference on Navigability dimension was not (F=2.62, df=1, p=.11).
Table 8 shows how participants in high versus low interpersonal interactivity conditions differed in scores of each component
(dimension) of perceived interactivity.
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S.-J. Lin
Table 8: Mean scores, F-ratios, and p-values on the three dimensions of perceived interactivity for participants in high/low
interpersonal interactivity conditions
Interactivity scores
Dimension
(Component)
High interpersonal
interactivity condition?
Navigability
no
5.27
yes
5.53
Communication
Interactivity
no
3.46
yes
3.83
Activity
no
4.12
yes
4.55
Mean
p-value
2.62
.11
3.89
0.05 *
4.56
0.03 *

Hypothesis 3 predicts that the greater the interactive behavior is, the higher degree of perceived interactivity there will be. No
significant relationship was found. The correlations between time spent on the site and the three dimensions of perceived and
the correlations between number of pages-viewed and the three dimensions of perceived interactivity were also small and not
statistically significant. Therefore, hypothesis 3 was not supported.
Hypothesis 4a predicts that an online newspaper with more interactive features will lead to more favorable attitudes toward the
newspaper Web site. The results of the GLM univariate analysis of variance showed that those who were assigned to high
content interactivity experimental conditions had more positive attitudes toward the site (M=4.70) than low content interactivity
groups (M=4.24), and the difference was statistically significant, F(1, 158)=4.54, p=.04. In addition, participants assigned to
sites that had more features that allowed interpersonal interactivity also displayed more positive attitudes toward the site
(M=4.85) than low interpersonal interactivity groups (M=4.09), and the difference was statistically significant, F(1, 158)=13.11,
p=.00. Hypothesis 4a was supported.
Hypothesis 4b predicts that an online newspaper with more interactive features will lead to more favorable behavioral intentions
toward the newspaper Web site. The results of the GLM multivariate analysis of variance showed that those who were
assigned to high content interactivity experimental conditions had a more positive behavioral intentions toward Site dimension
score (M=2.68), and had a more positive behavioral intentions toward Content dimension score (M=3.65) than low content
interactivity groups (M=2.27 for Site dimension, and M=3.28 for Content dimension), and significant relationship was found
only for behavioral intentions toward Site dimension (F=4.08, df=1, p<.05).
The results of the GLM multivariate analysis of variance also showed that those who were assigned to high interpersonal
interactivity experimental conditions had a more positive behavioral intentions toward Site dimension score (M=2.73), and had
a more positive behavioral intentions toward Content dimension score (M=3.67) than low interpersonal interactivity groups
(M=2.22 for Site dimension, and M=3.26 for Content dimension), and significant relationship was found for the behavioral
intentions toward Site dimension (F=6.29, df=1, p<.05). Hypothesis 4b was mostly supported. Table 9 summarizes the results
of statistical tests on hypothesis 4a and 4b.
Table 9: Means and F-rations of attitude toward the online newspaper measure and behavioral intentions toward the online
newspapers measures for participants in different experimental conditions
Type of Interaction
allowed
Experimental
condition
Attitudes toward the

online newspaper
Behavioral intentions
toward Site Dimension
Behavioral intentions toward

Content Dimension
Mean
Mean
Mean
High
4.70
2.68
3.65
Low
4.24
2.27
3.28
4.54*
4.08*
1.64
High
4.85
2.73
3.67
Low
4.09
2.22
3.26
F-ratio
3.11**
6.29*
2.11
F-ratio
Interpersonal
Interactivity

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Hypothesis 5a predicts that the higher the perceived interactivity of a Web site is, the more positive the attitude toward the
newspaper Web site will be. Bi-variate correlations were used for examining this hypothesis. Strong positive correlations were
found for the relationships between the three dimensions of perceived interactivity scores and attitudes toward the online
newspaper (r=.59, p<.01 for Navigation and attitudes, r=.41, p<.01 for Communication Interactivity and attitudes, and r=.37,
p<.01 for Activity and attitudes). Support for hypothesis 5a was found.
Hypothesis 5b predicts that the higher the perceived interactivity of a Web site is, the more positive the behavioral intentions
toward the newspaper Web site will be. Strong positive correlations were found for the relationships between the three
dimensions of perceived interactivity and all behavioral intentions measures. Thus, strong support for hypothesis 5b was found.
Table 10 summarizes the results of hypothesis 5a and 5b.
Table 10: Correlations between perceived interactivity measures and attitudes/behavioral intentions measures
Attitudes toward the
online newspaper

Site dimension

Content dimension
Navigation Dimension
R=.59**
r=.33**
r=.30**
Communication
Interactivity Dimension
R=.41**
r=.49**
r=.38**
Activity Dimension
R=.37**
r=.21**
r=.23**
**Correlation is significant at the 0.01 level (2-tailed).

*Correlation is significant at the 0.05 level (2-tailed).
DISCUSSION
The present investigation sought to understand the relationship between interactive features and perceived interactivity and
their respective impact both on users attitudes and behavioral intentions toward a Web site. The data presented in this study
give clear answers to the above questions. Participants assigned to high interactive experimental conditions reported higher
perceived interactivity scores, which suggests that the more interactive features a Web site has, the more interactive an
individual will perceive the site to be. That is, the number of interactive features at a Web site is a predictor of perceived
interactivity.
This study also found strong support for the impact of both feature-based and perception-based models of interactivity on an
individuals attitude and behavioral intentions toward a Web site. Participants in high interactive experimental conditions had
more favorable attitudes and behavioral intentions toward the online newspaper Web site. Also, the higher an individuals
perceived interactivity score was, the more favorable his/her attitudes and behavioral intentions were toward the online
newspaper Web site.
As the literature contains contradictory evidence when it comes to the relationships between feature-based and perceptionbased models of interactivity and their respective impact, the finding that differences in the availability of interactive features
that were presented at Web sites resulted in significant differences in readers perceived interactivity, attitudes, and behavioral
intentions toward the online newspaper has profound practical and theoretical implications.
Despite the trials and tribulations of creating a digital publication, most analysts are convinced that creating interactive news
sites is the only way that newspapers can continue to provide information and survive as institutions. But, if adding more
interactive features to a newspaper Web site does not increase perceived interactivity in the mind of online readers and does
not result in favorable attitudes and behavioral intentions toward the online newspaper as previous research has found, then
what is the point of building up a computer version of the printed newspaper? Intuition suggests that creating an interactive
online newspaper for online news readers would have positive consequences for online news publishers. The results of this
study confirm this hypothesis by finding evidence that adding more interactive features to a Web site does increase online
readers perceptions of interactivity, producing favorable attitudes and behavioral intentions toward online newspapers. If online
newspaper Web site developers want their online readers to have not only favorable attitudes toward their sites, but also the
intention of revisiting their sites, then these developers should devote more effort to designing features that are capable of
facilitating interactivity, because, as evidence found in this study and Newhagen and Rafaeli (1996) suggested, good choices
and crafty implementation of interactivity are often the difference between successful and failing Web sites (p. 6).
Theoretically, this finding suggests that both counting the number of interactive features available in a medium and measuring
users perceptions of interactivity of a medium are useful ways to define interactivity. But findings of a positive relationship
140
S.-J. Lin
between the availability of interactive features and perceived interactivity and the fact that interactive features and perceived
interactivity have affected an individuals attitudes and behavioral intentions toward a Web site would seem meaningless if we
do not know why this occur.
This study is pioneering in the sense that it is the first formal research that tried to examine the underlying mechanism through
which users of online newspapers make their judgments of perceived interactivity of an online newspaper based on the
interactive features that they encounter while browsing an online newspaper Web site. It was hypothesized that the underlying
mechanism through which users of online newspapers made their judgment of perceived interactivity centered on the number
of interactive behaviors that they initiated when they browsed an online newspaper. Although participants who were assigned
to sites that had more interactive features spent more time and viewed more pages and this effect was more pronounced for
those who were assigned to high interpersonal interactivity conditions, the complete lack of significant relationships between
measures of interactive behaviors and measures of perceived interactivity is somewhat unexpected.
LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH

There are some limitations to the present study. Although the use of four versions of a fictitious online newspaper as the stimuli
for this experiment created tight control over the variables of research interest, problems inevitably arise when one attempts to
reproduce real world behaviors and processes using a not-so real world object. It could very well be that the participants in
this study evinced different news reading behaviors than they otherwise would have when using real-world, online newspapers.
However, one can reasonably argue that the experimental groups differ from their ordinary online news reading behaviors in a
similar way. Thus, it is quite probable that a good portion of the observed effects was due to the differences in the number and
types of interactive features manipulated in each experimental condition.
Another weakness of this study is that, based on previous studies that content-analyzed the most prevalent interactive features
available at newspaper Web sites, this preliminary study only examined the impact that a limited number of interactive features,
news stories, hypertext links, search engines, e-mail links to reporters/editors, and bulletin boards had on users attitudes and
behaviors. As Internet technologies become more advanced and users Internet experiences become more sophisticated,
future research might need to identify other interactive features that make using the Web a more interactive experience. For
example, research might need to focus on how the addition of other interactive features, such as hyperlinks, synchronous chat
rooms, audio and video, or breaking news stories change both the nature of the online news service and users perceived
interactivity of that online newspaper.
Also, this study involves the scales used therein to measure perceived interactivity. Items that were used in measuring
perceived interactivity had been used in previous research, but the factor analysis of these 13 items performed in this study
produced different results than those found in previous research. In addition, the result of the factor analysis suggested there
were three dimensions of perceived interactivity: Navigability dimension, Communication Interactivity dimension, and Activity
dimension. These dimensions are more useful when are used to gauge the degree of interpersonal interactivity of online
newspapers, but are less helpful when are used to assess the degree of content interactivity of online newspapers. Also,
McMillans perceived interactivity items were derived from in-depth interviews with 10 individuals who work and teach in the
field of interactive communication (Downes & McMillan, 2000); none of the items was based on users perceptions of
interactivity. Although the resulting three scales of perceived interactivity from factor analysis all had high inter-item reliability, a
more rigorous scale development for perceived interactivity is desirable, especially in relation to scale items that take users
definitions of interactivity into consideration.
In addition, items that measured behavior intentions were mental measures (i.e., intention of future behavior). They may not
represent actual behavioral measures (i.e., real future behavior). By adding features that allowed participants to e-mail this
message to a friend, print out this news, or bookmark this site on each page of the online newspapers used in this study, it
sought to determine whether the measure of intentions of future behavior would match real behavior. However, no participant
actually used these features probably because of the artificiality inherent in any experiment. Also, behavioral intention scores,
both in previous research and in this study, were all found to be lower than the mid-point on a seven-point scale. But the result
of factor analysis in this study suggests that the mean for items that measured behavioral intentions toward the Site (i.e., How
likely would you be to tell someone else about this site?) may be low (M=2.48 in this study), but the means for items that
measured behavioral intentions toward content (i.e., How likely would you be to forward/print out a message that you found
interesting while browsing the site?) were close to the mid-point on a seven-point scale (M=3.47). Therefore, especially when
examining behavioral intentions toward an online newspaper, future research should consider using items that would
differentiate distinct types of behavioral intentions: one toward a Web site itself, one toward a Web sites content.
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Most importantly, future studies should address the most perplexing finding of this exploratory study. Why is there so scant a
relationship between interactive behavior and perceived interactivity, especially when the increased number of interactive
features at an online newspaper has led to greater interactive behavior and higher perceived interactivity?
One possibility is that there could be a better way to measure interactive behavior than the focus on both time spent on the
site and number of pagesviewed has thus far indicated. Using a qualitative research method, Smalik, Hawkins, Pingree,
Gustafson, Boberg, and Bricker (1998) examined how HIV-infected individuals used an interactive health software package
called CHESS (Comprehensive Health Enhancement Support System) and found that particular patterns of CHESS useand
not time spent on CHESS or the number of times a user turned CHESS onaccounted for significant improvements in quality
of life.
Problems associated with using time spent on the site and number of pages-viewed as indicators of interactive behavior may
be due to the fact that, for example, the number of pages-viewed, as Smaglik et al. (1998) would argue, cannot show depth of
use. Likewise, any overemphasis of time spent on the site runs the risk of ignoring differences among users in terms of
reading, as well as differences among types of interaction allowed in each experimental condition. Although total number of
pages-viewed could not show depth of use, if we break total number of pages-viewed into conceptually meaningful categories
(i.e., pages for e-mailing reporters; pages for using search engines; and pages for using bulletin boards) and correlate these
pages-viewed categories with related dependent measures, we should be able to get a more detailed information about the
relationships among the availability and uses of interactive features, perceived interactivity, attitudes and behavioral intentions.
Therefore, future research should investigate alternative ways to measure interactive behaviors. Navigation patterns of online
newspaper Web sites that pursue, for example, a particular theme indicate that these sequences of clicking behaviors are far
more involving than the same number of clicks based on a random selection of news stories.
Another possibility is that the sample used in this study is non-representative, and, as compared to the general population of
Web users, the sample may be more representative of long-term, sophisticated Web users. Analyzing Web users navigational
behavior, Novak, Hoffman, and Yung (2000) found that recent Web users displayed a greater heterogeneity in skill levels than
did long-term Web users. By applying this finding to this study, one can see that long-term, sophisticated Web users, such as
the participants in this study, may not need to use many interactive features or venture out to so many pages in order to make
an acute judgment regarding the interactivity level of the site. That is why participants in high interactivity conditions reported
high perceived interactivity scores, even though there was no correlation between interactive behaviors and perceived
interactivity scores. Nonetheless, future research is needed to augment our understanding of how people use the Internet and
of how the combined use of quantitative and qualitative research methods can help researchers to perform better evaluations
of users navigation behavior and its impact.
Mark Porat, the president of General Magic Incorporated, a US technology company that designs software for computer
communications, once said that, before people can actually drive on the information highway, three pre-conditions must be
met: Firstly, there has to be a great vehicle, which is to say, easy-to-use computers, intelligent TVs, etc; secondly, there has
to be a real, electronic highway, one that has enough bandwidth so that users do not need to spend hours on on-ramps,
downloading information; and finally and most importantly, there must be an interesting place to go (Burstein & Kline, 1995).
This study suggests that adding interactive features is one of the factors that make online newspapers an interesting place to
visit. More studies are needed to see what other factors play a role in the ultimate goal of attracting as many people as possible
onto interesting places once the information highway is technologically realized and financially affordable.
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H. M. Haddad and O. Olagbegi
COMBINATORY PRACTICES IN SOFTWARE COST ESTIMATION
Hisham M. Haddad and Olayemi Olagbegi

ABSTRACT
The frequency of software projects being over budget continues to be a concern in the business and software engineering
industry. Software cost estimation practices significantly contribute to this phenomenon. Cost estimation is software project
planning process for forecasting the cost (effort) required to develop the application. Various cost estimation models have been
proposed since the late 1960s. None of these techniques give a hundred percent accuracy. To address this concern, some
work has been done to investigate the reasons that lead to inaccurate estimates obtained from various cost estimation models.
This research investigates current practices in software cost estimation. It draws from actual cases and industrial experiences
to address various approaches to cost estimation. One approach of interest is the combination of different estimation methods
and models to predict the required effort to develop an application. This work highlights combinations of estimation methods
that have been used in actual projects. This work contributes to the understanding of cost estimation models and best practices
for accurate estimates.
Keywords: Software Cost Estimation, Software Cost Models, Effort Estimation, Cost Estimation Practices.
1. INTRODUCTION
The success of a software project is part of a cost-driven business process in todays business environment. If the project cost
is not analyzed and controlled properly, the project is likely to be doomed as a failure regardless of its technical achievements.
Software development costs are constantly on the rise. Decision makers of software projects estimation need a thorough
understanding of effort estimation analysis and the intricate details necessary for software estimation accuracy. Hence it
becomes necessary to have experienced individuals work on the process and ensure its validity in order to realize a successful
project. Faced with the difficulty to decide what estimation model to use and what size metrics to utilize, project managers
sometimes rely on expert judgment to predict effort estimates. This approach has been widely criticized as it does not have a
defined approach to deriving estimates and is its not repeatable.
Quantitative cost models have leveled over the years and they range from empirical models (models that use data from past
projects to predict cost estimates for current project) to analytical models (models that use mathematical formulas based on
assumptions such as problem size and experience to develop cost estimates for current project). Some models utilize project
size metrics to develop cost estimates, such as lines of code [1], function points [2], feature points [3], object points [4] , or
code length and volume metrics [5]. Its clear that cost estimation is not a perfect science because of the large number of
variables that result from the human, technical, environmental and political factors [4]. By modeling cost estimation through a
series of systematic steps, the estimates approach figures with acceptable risks. Though it is mainly used to make estimates of
software development cost; the results can be referenced in order to support important decision making such as resource
allocation, component reuse, and others. In addition, the lack of qualified estimation experts, lack of historical cost
measurements, and lack of accountability for poor estimates have contributed to the difficulty of practicing precise software
cost estimation.
A broad range of methods have been used to develop cost models. The classification of cost estimation models based on the
methods they employ includes Experiential Models, Static Models (linear estimation and non-linear estimation), and Dynamic
Models. With Experiential models, results are derived from earlier projects similar to the current project. Under these models,
experts come up with three different cost predictions: a pessimistic estimate, a most likely estimate, and an optimistic estimate.
The final estimate is realized as the mean of the beta probability distribution (i.e., Estimated effort = (Sum of three cost
predictions) / 6). Static models on the other hand make use of regression analysis to relate cost factors to effort with a linear or
nonlinear equation. However, most static models require that the size of the project be estimated in lines of code. This is not
always feasible and hence, dynamic estimation models are utilized. One of the advantages of dynamic models is that they can
145
be used to estimate the effort required for a particular development activity. Hence, dynamic models are useful to answer the
questions when effort will be required and how much effort is required?
The goal of this work is to study software estimation models and current practices in outlining best cost estimations. The work
is motivated by case studies and industrial experiences that address specific approaches to cost estimation for software
projects. One particular approach is the combination of different estimation methods for a single project, which is the focus of
this research. This work highlights investigated method combinations that have been used in software projects. This is an effort
to increase the awareness and understanding of cost estimation methods and best practices for effective cost estimation.
Knowledge of such approaches helps project managers and technical leads adopt effective estimation practices. The paper is
organized as follows: section 2 highlights the research methodology; section 3 provides brief overview of commonly used
estimation models; section 4 describes selected case studies results analysis; and section 5 presents a discussion of the
findings, concluding remarks, and future work.
2. RESEARCH METHODOLOGY
This work is a study of software estimation models and current practices in cost estimation. The research method adopted for
this work is based on qualitative study and analysis of case studies and reports relevant to this work. It also involved a study of
published cost estimations models and their analysis reported in the literature. The case studies and reports are considered a
valuable research methodology as they involve factors that planned experiments do not exhibit, such as unpredictability,
scalability, complexity and dynamism [6]. The first step in this direction was to research the various cost estimation models that
evolved over the years. These models were developed using different methods. To narrow the discussion of these models,
they are grouped into two categories: Algorithmic models and Non-algorithmic methods.
The next step was to study, analyze, and document selected case studies for their findings on cost estimation practices and
how project costs were determined for different project types. Additional case studies are being collected and analyzed as this
work continues to progress. The last step was to compare the various approaches to cost estimation and understand the
reasoning for combinatory approaches. The outcomes of these steps led to the derived conclusion of this work. Two
researchers were involved in this process. A limitation in this study is the accessibility to document practical experiences in cost
estimation for real projects. Such information is not readily available and organizations are reluctant to share. In addition, the
researchers limited the literature search to referred literature mostly published in the ACM and IEEE digital libraries. As the
work continues, more cases studies and reports on combinatory practices will be collected and studies in an effort to explore
better ways to combat cost and effort inaccuracy.
3. COST ESTIMATION MODELS

Software cost estimation models have been around as early as software projects themselves. Every software project is
appraised in terms of cost in dollars, man power, size and resources, and therefore there needs to be accurate ways to resolve
software project cost estimates. Research has revealed that several methods used for this purpose. Some of the most
common approaches include the Wideband Delphi technique and Parametric models. The Delphi method [7] has been in use
since 1940 and was developed by the RAND Corporation as a forecasting tool. It was used across many companies for
estimation. A variant of the Delphi method was later developed in the 1970s by Boehm and Farquhar and they called it
Wideband because compared to the existing Delphi method, it involved more interaction and communication [8]. The
Wideband Delphi involves a few steps which require a coordinator and a group of estimation experts. The experts fill out forms
anonymously; results are collected; summarized and compared. Next, experts discuss widely varying result areas, and finally
the team reviews the results to determine if the estimation results are sufficient to continue with further planning. Another
variant of the Delphi was also developed later.
Parametric models such as COCOMO [9] and Putnam [10] were evolved in the 1980s. They weigh factors or cost drivers
related to the domain, environment, and constraints of the project to transform an estimate of size into an estimate of personmonths, or team size and duration, hence leading to cost. These models are calibrated using data collected across ranges of
projects. Software cost estimation practices has been categorized in differed way in the literature, including methodologies,
techniques, heuristic approaches [11]. Here we categorize them into two main broad categories: Algorithmic models and Nonalgorithmic methodologies. Both categories are briefly outlined below.
3.1 Algorithmic Models

Algorithmic models are based on mathematical formulas and differ extensively in mathematical sophistication. A few are based
on easy arithmetic formulas which use means and standard deviations. The rest are based on regression models and
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differential equations. To improve the accuracy of algorithmic models, there is a need to adjust or calibrate the model to local
circumstances. As a result, estimation methods are designed based on these models. Algorithmic methods are designed to
provide some mathematical equations to perform software estimation. These mathematical equations are based on research
and historical data and use inputs such as lines of source code, number of functions to perform, and other cost drivers such as
language, design, methodology, skill-levels, risk assessment, and others [16]. Commonly used models are the following:
1. Constructive Cost (COCOMO) Model: It was developed by Barry Boehm in 1981. Initially it was only used in building
new applications in the traditional software development. COCOMO II was later developed in order to be applicable to
newer software development practices [9].
2. Lawrence Putnam (Putnam) Model: Also known as Putnam SLIM, it was developed by Lawrence Putnam to determine
the time and effort required to finish a project of a specified size. The model is based on Norden/Rayleigh manpower
distribution and historic data. The major part of the model is what is known today as the Software Equation [10].
3. Function Point Analysis (FPA) Model: It was developed by Allan Albrecht (IBM) in 1979. Another method of quantifying
the size and complexity of a software system in terms of the functions that the systems deliver to the user. A number of
proprietary models for cost estimation have adopted a function point type of approach such as ESTIMACS and
SPQR/20 [13].
3.2 Non-Algorithmic Methodologies

Non-algorithmic estimation methodologies are solely based on reasoning and differ greatly in judgment from algorithmic
models. These methods do not utilize mathematical calculations; they are developed based on analogy and expert judgment.
Just like algorithmic models, methods have been developed based on non-algorithmic models. Commonly used methods are
the following:
1. Expert Judgment Method: This method uses one or more experts who provide estimates using their own methods and
experience. Expert-consensus mechanisms such as PERT and the Delphi technique are used to resolve any
inconsistencies that may exist in the estimates [15].
2. Analogy Costing Method: This method is based on actual project experience and it depends on one or more completed
projects that are similar to the new project. Through analogy, it uses the actual costs of previous projects to reason for
the current project estimates. However, the risk is with the previous projects representation of the current projects
functions, environment, and constraints [14].
3. Bottom-up Method: Under this method, each component of the software is estimated separately. The total cost estimate
for the overall application is the aggregate of all component-level estimates. This method assumes that the application
design is in place and it indicates how the application was decomposed into components. Reported advantages include
allowing the team to develop an estimate in an almost traditional fashion, allowing the team to estimate components for
which the team has a better feel, and it is relatively stable as it allows for estimation errors to balance out. On the other
hand, this method my not account for costs associated with integration, configuration management, quality assurance,
and other costs. Also, it tends to be more time-consuming and not feasible when time and personnel are limited [11].
With these documented advantages and disadvantages, some researchers have reported success and failures in using
this method.
4. Top-down Method: This method (also called Macro Model) is the opposite of the bottom-up method. An overall cost
estimate for the system is derived from global properties, using either algorithmic or non-algorithmic methods. It is more
applicable to early cost estimation when only global properties are known. In the early phase of the software
development, it is very useful because there is no detailed information available. Unlike the bottom-up method, this
method focuses on system-level activities such as integration, documentation, configuration management, and others.
On the other hand, this method often does not identify low-level problems that are likely to escalate costs and sometime
tends to overlook low-level components [12].
4. PRACTICES IN COST ESTIMATION

Several cost estimation methods like COCOMO model, Putnam model, and expert judgment method are still in use. In many
cases, researchers have reported low to medium level success rates and only very few have reported satisfactory success rate
levels using both algorithmic and non-algorithmic cost estimation models. At the present time, it has become common for
researchers to utilize a combination of methods for cost estimation.
In order to increase the effectiveness of cost estimation analysis, combination practices are utilized in diverse settings. It is not
unclear whether a combination of methods has improved or changed the outcome of cost estimation results. However, the
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COCOMO model variations have been used in conjunction with function point and use-case points methods. Non-algorithmic
methods have also been combined like the expert judgment method has been combined with the analogy costing method. All
these practices seem to be experiments which are carried out in an attempt to continue the search for effective and accurate
cost estimation means.
4.1 Analysis of Selected Case Studies

For the purpose of this work, a number of case studies were selected for analysis. The case studies were examined and
analyzed to better understand some of the problems behind inaccurate cost/effort estimates in software projects. Below is a
description of the analysis results for each case study, its focus, and results.
Case Study #1: An approach of a technique for effort estimations of iterations in software projects: This case study discussed
a cost estimation technique (combination of COCOMO II and function points) to estimate the effort needed for each
development phase in software developments that use iterative development lifecycles. The technique is divided into 2 phases;
determination of use-cases for software iteration and completion of cost estimation for software iteration. Activities in the first
phase utilize a precedence diagram (preconditions of every use-case is represented) which matches use-case functionalities or
information that is managed and or used by others. Activities in the second phase are centered on effort estimation in
iterations; function point and COCOMO II model are proposed to determine the effort in iterations. This technique was
demonstrated in a university setting where juniors enrolled in an Informatics program were required to utilize the technique in a
Software Engineering course from spring 2004 to spring 2005.
The students were put in teams of 11 or 12 where every team had to develop a software system which was different for each
team but had similar input/output processes. A teacher assistant (TA) was assigned to every team and was in charge of the
team and helped them throughout the project supporting the students to obtain an adequate SRS for business processes of a
real company. It is necessary to mention that TAs were constantly working in real software projects at Peruvian companies of
software development with an average of 7 years of experience in the field. The results of these projects revealed that the
magnitude of relative error (MRE) was less than 12% in second iteration in all three semesters which indicates the technique is
accurate, estimated adjusted factors (EAF) used to calculate estimated effort were the same for all teams. The analysis
confirmed that though the results show that the technique was well suited under these circumstances, it may not fit well in
another context [16].
Case Study #2: Effort estimation of use-cases for incremental large scale software development: This study discussed the
results of an empirical study on effort estimation of use-cases in a large industrial system that was developed incrementally.
The Use-case Point (UCP) method is used for the complex use-cases in this study with some modification and also elements
of the COCOMO model. The system used for the study is a large distributed telecom system built by Ericsson. The system is
characterized multi-site development, development for reuse (almost 60% of software components are shared with another
product) and several programming languages (C, Erlang, Perl and Java). The software process uses RUP; each release had
typically 5 to 7 iterations with iterations lasting 2 to 3 months. The definition of several factors were modified, a few include
actors, use-case weights, technical complexity factor, environmental factor and others.
The first software release (release 1) used in this study was made up of 288 use-cases (15 were modified based on a previous
release 0) and the second release (release 2) was made up of 21 use-cases (18 of them were modified). The estimation results
reveal that the UCP estimates were 21% lower for release 1 and 17% lower for release 2 than the actual effort which is fairly
accurate for large projects according to the authors. When compared, the effort to develop release 1 was 2 to 3 times the
estimated effort; while the effort to develop release 2 was 35% lower than the actual effort. This indicates that the adapted UCP
method for this study seems to have lower relative error than expert estimates. The contribution of this study include the
discussion of how to adapt the UCP method for a large industrial project and to a specific context, how to adapt the UCP
method for incremental development, and how to identify the impact of effort distribution profile on estimation results [17].
Case Study #3: Enhancing the COCOMO Estimation Models: This study is based upon improving both the COCOMO I and II
models by assigning individuals to a single task. The process is referred to as Task Assignment Metrics (TAMs) and the
manner in which tasks are shared among the members as Task Assignment Patterns. The TAMs are categorized into three;
intensity which measures the degree of focus on a particular task, concurrency refers to the degree to which team members
are working together cooperatively on given tasks, and fragmentation measures the degree to which a teams time is
fragmented across multiple tasks. Each TAM category is computed using a mathematical formula and defined with respect to
tasks instead of individuals. The authors studied a client-server application for a state government agency supporting about
400 users distributed through a statewide network and encompassing agency accounting, procurement, inventory control, and
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personnel. The project was supervised by an external contractor with sixteen developers. The external contractor used the
COCOMO model, constructed 160 modules, and successfully completed user testing and acceptance. The TAM was used on
the modules developed by the contractor. It was concluded that the development decreased as intensity increased,
development effort increased with concurrency (degree of team collaboration), and development effort increased with
fragmentation. As a result, the three TAMs significantly impacted the development effort and applied the TAMs to improving the
COCOMO model.
Four models were examined; an intermediate COCOMO I model tuned to the specific development environment, the
COCOMO II post architecture model using the 1997 calibrated parameters, and two additional models augmenting COCOMO I
and II with the three TAMs. Two forms of metrics were utilized to compare these four models namely the average square root
error (ASRE) which measures the ability of the model to fit the data which it was derived and the percentage of estimates
having a MRE of 30% or less. The TAM models showed a significant improvement compared to the regular COCOMO models.
The analysis concludes that the three TAMs have the potential to significantly enhance the predictive power of the COCOMO
effort estimation method. The study lists the basic steps for augmenting cost and effort estimation models. Lastly, it was found
that the prediction accuracy increased to 35% from 29% on the COCOMO I model and to 43% from 37% on the COCOMO II
model [18].
Case Study #4: Estimating Software Based on Use-case Points: This is a case study of how a large multi-team software
engineering organization (over 450 engineers) estimates project cost accurately and early in the software development lifecycle
using Use-case Points, and the process of evaluating metrics to ensure the accuracy of the model. The goal of the team was to
provide their customers with accurate costs early on in the software development lifecycle. The estimation process was used
over a period of five years on over 200 hundred projects with teams of 6 to 12 members. A process known as the Use-case
Point estimating model is utilized; the process starts with an actor who is categorized as simple, average, or complex. A simple
actor represents a system with a defined API, an average actor is a system which interacts through a protocol such as TCP/IP
or a person interacting through a text based interface, and a complex actor is a person interacting through a GUI. The next
step is to compute the total number of actors by multiplying each actor by a weighted factor in order to determine the total
number of actor points. Then each use-case is grouped as either simple (3 or fewer transactions), average (4 to 7
transactions), or complex (more than 7) based on the number of transaction including scenarios. The number of simple,
average, or complex use-cases are determined and multiplied by another weighting factor and are summed up.
Other factors like weighting technical factor and experience factor are also computed and identified. In order to estimate effort,
man-hours are calculated from use-case points (UCP). The effort rate (ER) is obtained by calculating an effort rate (based on
historical data) and multiplying that value by the number of UCPs. Finally, a performance analysis is conducted to include
performance analyses, deliverable analyses, schedule analyses, effort analyses, defect analyses and casual analyses. The
quantitative management analyses easily identifies anomalies: outside of predetermined limitations (9% for upper and lower
control limits), one standard deviation (5.2% below), and showing clear deviation trends. High and low points crossing out of
limitation indicate anomalies that require further explanation. It was concluded that the UCP model continues to accurately
predict the cost of a project early in the lifecycle of the software product [19].
Case Study #5: Do adaptation rules improve web cost estimation? This case study is a comparative study of several analogy
based estimation methods. The study focuses on evaluating the use of adaptation rules as a way to better estimation accuracy.
A few analogy based effort estimation methods are compared in this study. This study uses two datasets; the first dataset
presents a continuous cost function, translated as a strong linear relationship between size and effort. The second dataset
presents a discontinuous cost function where there is no linear or log-linear relationship between size and effort. Analogy
based methods are also referred to as Case Based Reasoning (CBR). The CBR parameters used in this study are as follows:
feature subset selection, similarity measure, scaling, number cases, case adaptation, and adaptation rules. All the results for
this study were obtained by using a CBR tool known as CBR-Works. The results were obtained by using four similarity
measures (unweighted Euclidean (UE), weighted Euclidean using Subjective Weights (WESub), Weighted Euclidean using
Correlation-based Weights (WECorr) and Maximum (MX)). The analysis of this study is based on two datasets that contain
information about Web hypermedia applications developed by Computer Science Honors and postgraduate students, attending
a Hypermedia and Multimedia Systems course at the University of Auckland.
The jack knife method was used to compare the CBR techniques used for this study. For each dataset, comparison steps were
conducted 34 times for the first dataset and 25 times for the second data. All together, there were 34 projects in the first
dataset and 25 projects in the second dataset respectively. The authors conclude that the best predictions were obtained from
the first dataset which utilized a continuous cost function reflected as a strong linear relationship between size and effort. In
addition, for datasets that have a discontinuous cost function, there is a strong relationship between the nature of the cost
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function and prediction accuracy. The authors also concluded that, except for Weighted Euclidean, the best predictions were
obtained without the use of adaptation rules and by applying adaptation rules without weights [20].
Case Study #6: Comparing Effort Estimates Based on Use-case Points with Expert Estimates: This case study is part of three
courses in a large international IT company. All course schedules were the same and the participants were experienced
professionals; developers, business analysts, and project managers. All study participants had requirements engineering
experience and effort estimation experience respectively. The course duration was two days and for the coursework, students
made presentations on different aspects of use-case modeling and two assignments. On the first day, study participants were
provided with a problem statement and a context diagram for the system to be built. The participants were encouraged to
understand the problem statement in order to be prepared for the second day. The participants were randomly selected and
split up into groups. All the groups worked on building a use-case model for most of the day and at the end, they were given a
complete solution consisting of 5 actors and 22 use-cases. Participants were also given a 30 minute lecture on estimation on
estimation and on how attributes of a use-case model can be used as a measure of the size of the functionality. However, the
use-case points method was not presented during the lecture. Based on the use-case model, each group took 15 minutes to
estimate team size, elapsed project time in months, and total effort in person months. The company did not permit the author to
present the complete problem statement and use-case model in the paper. The problem statement provided in the paper states
The system will be the IT part of a service for shopping through the Internet and the delivery of products to the customers
homes. The service should be available through a call-centre or the Internet. The system will consist of an order taking facility
for both the server and the clients.
The results of the study reflect that both the experts and the use-case points method produced reasonably accurate estimates
based on the available information. On average the groups of experts estimated a total effort of 19.8 person months, and the
Mean Magnitude of Relative Error (MMRE) is 0.37. The Magnitude of Relative Error for the use-case points estimate is 0.21 or
0.29 depending on how the values for the environmental factors were assigned. The use-case points method produced
estimates that were closer to the actual effort than the estimates produced by 8 of the 11 groups of professional software
developers. The groups of experts, on the other hand, did not know exactly how to use the information in the use-case model.
They chose different estimation strategies leading to estimates of various precision. The results therefore support earlier results
which indicate that the use-case points method may support expert knowledge in producing accurate estimates. The analysis
concludes that the use-case points method produced estimates that were quite close to the actual effort spent on a
development project. They were closer to the actual effort than most of the estimates produced by the groups of professional
software developers. The results also show that the combination of expert estimates and method based estimates may be
particularly beneficial when the estimators lack specific experience with the application domain and the technology to be used
[21].
Case Study #7: Combining Regression and Estimation by Analogy with in a Semi-parametric model for Software Cost
Estimation: In this study, a parametric model used in conjunction with a non-parametric model. Regression analysis is
combined with estimation by analogy, which are two of the most common techniques in literature, to form a semi parametric
study. The study demonstrates the procedure of building two datasets from regression analysis and estimation by analogy and
compares the results based on the predictive accuracy of the new combined technique. Equations were derived in order to
compute the datasets. For the parametric model, the dataset is a popular one from the literature dataset that contains 21
projects from a major Canadian financial organization. The dependent continuous variable is effort (actual effort days), whereas
there are also 10 independent ratio-scaled predictors.
The non-parametric model utilizes the jackknife procedure, from one up to twenty analogies were adopted but only four
analogies were used for the study. The general results of the study show that the semi-parametric model had a higher
accuracy than both the parametric model and the non-parametric model, the semi-parametric and parametric model out
performed the non-parametric model, and the parametric model tends to overestimate while the non-parametric model tends to
underestimate. The improvement was evaluated through various accuracy measures and graphical inspection. Statistical tests
were used to check for error in order to assess the superiority of the method. The results confirmed that the semi-parametric
model derived in this study needs to be tested on various data sets before the conclusion that regression analysis combined
with estimation by analogy is better than parametric or non-parametric models [22].
5. FINDINGS AND CONCLUSION

The analysis of selected case studies affirmed that using combination of estimation models and methods may lead to better
estimates. Table-1 shows combinatory practices and the MMRE and MRE values reported in the selected case studies.
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The first and second case studies, which are a combination of two algorithmic methods, show an MRE of < 12% and MMRE of
19% respectively. Thus, the combination of algorithmic models may lead to more accurate estimates compared to applying
individual models.
The third case study, which sought after improvements to the COCOMO I and II models, illustrates improvement in the
prediction accuracy from 29% to 35% and from 37% to 43% respectively. This implies that as a result of augmenting both
models, the prediction accuracy increased based on having an MRE of 30% or less. The fourth case studys aim was to
educate the public on how to achieve 9% deviation from actual estimation costs using the UCP method. The results indicate
that for most projects estimated costs deviated less than 9% from the actual costs.
Table-1: Combinatory practices and their MMRE and MRE values.
Case
Study
Practices
Findings
(The lower MMRE/MRE, the more accurate the estimation).
COCOMOII + FPA
MRE < 12%. The technique was well suited under the circumstances of the study
COCOMO + UCP
21% lower for release 1 and 17% lower for release 2 than the actual effort. The
adapted UCP (UCP + elements of COCOMO) worked better.
COCOMO
MRE <= 30%.The prediction accuracy of COCOMO I & II models rose to 35%
from 29% and 43% from 37% respectively.
UCP
< 9% deviation from actual to estimated cost on 95% of projects.
Algorithmic methods + Analogy
No adaptation rules, MMRE: 12% to 25%. Adaptation rules without weights,

MMRE: 14% to 33%.
UCP + Analogy
MMRE= 37%, MRE is 21% or 29% depending on environmental factor values.
Regression Analysis + Analogy
MMRE = 9%, MRE = 19%
The fifth case study combined analogy based estimation with algorithmic methods. It shows an MMRE of 12% to 25% when no
adaptation rules were applied; while an MMRE of 14% to 33% when adaptation rules were applied without weights. The sixth
case study demonstrates that estimation by analogy and use-case points yield an MMRE of 37% and an MRE of 21% to 29%
depending on environmental factor values. In the seventh case study, the combination of regression analysis and estimation by
analogy resulted in an MMRE of 9% and an MRE of 19%. The findings derived from combining analogy and algorithmic based
methods force the question: Do analogy based estimation methods improve estimation accuracy when combined with
algorithmic methods?
From these findings, MRE values seem to be highest when algorithmic methods are used in isolation even after augmentation.
A combination of algorithmic methods produced lower MRE and MMRE values. In addition, the best combination seems to be
combining algorithmic methods with non-algorithmic methods. The case studies that combined analogy based methods with
algorithmic method appear to have the best prediction accuracies and consistent findings judging from the case study analysis.
From the analysis of these case studies, it has been established that the lower the MRE or MMRE of a software cost/effort
project calculation, the less likely for errors to abound in the projection. This finding was also confirmed by other researchers
who participated in those case studies. As shown in Table-1, all case studies used modified versions of original methods to
erase or reduce errors in calculation. Despite the variety of combinations and manipulations of methods in all case studies,
interestingly the analysis confirmed (and the researches warn) that these practices need to be further verified as they are not
conclusive due to limitation to certain environmental limiting factors.
Automation of estimation techniques is a continuous effort. Many project management tools support estimation. Thus,
organizations must adapt and customize estimation methodologies to their requirements to improve accuracy. For better
estimation, M. Nasr [11] outlined the following recommendations:
- For better accuracy, any estimation technique should be applied through both the top-down and bottom-up approach.
- Estimate the software size using different techniques and then average these results to produce a combined estimate.
- Estimation should be based on several methods. If these do not return approximately the same result, then one has
insufficient information available to make an estimate.
- With a mature metrics program, use the data collected from past projects to develop specific estimation procedures and
formulas.
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- Re-estimate as the project progresses and adjust cost and effort estimates accordingly.
- Estimate the size of each program component independently.
This research provided an initial theoretical and conceptual study of cost estimation practices in software projects.
Furthermore, the results of combinatory practices can be affected by other factors such as the project size, available
resources, facilities, culture, and market value. To address such variations in the context of the combinatory approach, this
work continues to identify and analyze more case studies to isolate trends that could further support the current findings combinatory practices may improve the accuracy of cost estimation. The limitations to this work include a restriction in literature
search as being limited to refereed literature published in the ACM and IEEE digital libraries, a modest experimentation of
combinatory practices especially of algorithmic and non-algorithmic methods, and limited access to the real projects and their
cost estimation information.
6. REFERENCES
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International Conference on Software Engineering, Artificial Intelligence, Networking, and Parallel/Distributed Computing
(SNPD06), Las Vegas, Nevada, June 2006.
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Engineering, SE-23:12, 1997, pp. 736-743.
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Proceedings the 13th Asia Pacific Software Engineering Conference 06 (ASPEC), IEEE, December 2006, pp 367-376.
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[19] Kusumoto, Shinji and et al., Estimating effort by use-case points: method, tool and case study, Proceedings of the 10th
IEEE International Symposium on Software Metrics (Metrics 04), September 2004, pp 292-299.
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Hypertext and Hypermedia, August 2003, pp 173-183.
[21] Bente, Comparing Effort Estimates Based On Use-case Points with Expert Estimates, Empirical Assessment in Software
Engineering, 2002, pp 1-13.
[22] N. Mittas and L.Angelis, Combining Regression and Estimation by Analogy with in a Semi-parametric model for Software
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J. Buchanan and M. Jones
THE USE OF COMPUTER SUPPORTED ANALYSIS FOR INTERVIEW DATA: A

CROSS-CULTURAL EXAMPLE FROM THE ELECTRONIC GAMING INDUSTRY
June Buchanan1 and Michael Jones2

Macquarie University1, Australia and University of Wollongong2, Australia
ABSTRACT
Computer assisted analysis has long been a major factor of quantitative analysis. This paper illustrates the use of computer
assisted analysis for qualitative research, looking specifically at research in the Electronic Gaming Industry, across two country
sectors New South Wales, Australia and Nevada, USA, where empirical data are collected and analysed. The paper
highlights the important place that computer assisted analysis holds in social and societal marketing. A detailed discussion
explains how analysis was undertaken in the Electronic Gaming Industry, and how concepts and theory emerged. This paper
discusses the qualitative approach used in this research. In particular, it highlights the benefits of using computer mediated
tools for analysis, showing that qualitative research and analysis packages, such as NVivo, can both add value to, and reduce
the complexity of, research, especially in cases where data are sensitive, limited or confidential. A combination of grounded
theory and case study methodology was also utilised to guide the research, with the former highlighting the importance of
continuing to explore the extant literature during and after analysis of the primary data. The paper also presents some of the
findings of the research, developing a conceptual model for legitimacy.
Keywords: Qualitative Analysis; Computer Assisted Analysis; NVivo; Societal Marketing & CSR; Gambling and
Stakeholders, Legitimacy
INTRODUCTION
The controversial nature of gambling generally and electronic gaming machines (EGMs) more specifically came to the
researchers attention some four to five years ago. After conducting an extensive literature review, it was discovered that, whilst
there is a plethora of academic literature on research related to aspects of problematic gambling, a dearth existed in the nonproblem gambling literature. In fact, a gaping chasm appears to exist in regard to any published material on the marketing of
EGMs. As a consequence, it was necessary to generate primary data due to the total absence of available empirical data in
this area (in addition to the aim of generating insights into the gaming industry in terms of marketing).
While there is a need for research in the area, data collection is difficult due to the widespread negative perception of the EGM
industry by many stakeholders, particularly the media, along with non-governmental organisations (NGOs) and many in the
community. As a result, information generated from within the gaming industry is considered to be highly sensitive.
Respondents were cautious and required assurances of total confidentiality.
A qualitative methodology was considered most appropriate for the purposes of this study as it is known for its ability to
generate in-depth knowledge in an area that has no existing research. Patton (2002) refers to the power of qualitative data (p.
17) in its ability to go beyond mere numbers and yield rich insights. A hallmark of qualitative analysis is its thick description,
which in turn is balanced by analysis and interpretation (Patton 2002, p. 503). A qualitative approach also ensures that high
quality data are acquired from a relatively small sample, thus managing the issues of sensitivity and participant confidence.
This paper discusses the qualitative approach used in this research. In particular it highlights the benefits of using computer
mediated tools for analysis especially NVivo showing that qualitative research and analysis packages, such as NVivo, can
be used for social and societal marketing, especially when data are sensitive, limited or confidential.
LITERATURE REVIEW
Analysis of qualitative data can be described as a task which is demanding, repetitive and arduous. Although predominately a
mechanical exercise, it requires an ability of the researcher to be dynamic, intuitive and creative, to be able to think, reason and
theorise. The object of qualitative analysis is to deconstruct blocks of data through fragmentation and then have them coalesce
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The Use of Computer Supported Analysis for Interview Data: A Cross-Cultural Example from the Electronic Gaming Industry
into collections of categories which relate conceptually and theoretically, and which make assumptions about the phenomenon
being studied (Jones 2005). Richards calls this process decontextualizing and recontextualizing (2002, 200). He regards this
process as a fundamental component in the analysis of qualitative data. Typically, qualitative research is a one researcher
domain. Data are acquired through firsthand experience as a result of subjective interpretation. Understandings of phenomena
are tempered through experience, bias and knowledge (Ely, Anzul et al. 1991).
It is argued that qualitative analysis is among the most demanding and least examined areas of social research (Miles 1979;
Basit 2003). This could be due to the larger investments of time and effort that qualitative inquiry requires. This is especially
relevant since the researcher needs to spend time becoming familiar with the data and the subjects of the research this
process being far more peculiar to qualitative research rather than quantitative. Qualitative research does not permit short-cuts
(Delamont 1992). It is a continuous process which dominates the research activity, beginning with data collection through to
conceptualisation and beyond (Ely, Anzul et al. 1991). The analytical approach requires a process of reduction and
accumulation to manage and classify data. This process requires context specific textual segments to be removed from their
source and accumulated into context independent repositories. A textual segment is defined by Tesch as a segment of text
that is comprehensible by itself and contains one idea, episode, or piece of information (1990, 116). This activity constitutes
the decontextualizing and recontextualizing that Richards (2002, 200) discusses.
The researchers ability to code is an essential part of analysis (DeNardo and Levers 2002; Basit 2003). Coding requires the
researcher to firstly identify the meaningful segments of text among the less valued data, and secondly, to tag or label these
data so that they can be located along-side equally salient data. In doing so, tags must be descriptive and sufficiently abstract
to encompass other similar, yet unique, datum (Glaser 1978). Miles and Huberman (1994) discuss two methods of code
creation. The first method, which is preferred by inductive researchers, involves coding the data without a priori knowledge and
labelling the data, at least initially, using the data itself as the tag (Glaser and Strauss 1967). This is often called in vivo coding.
The second method uses an established list of codes (or tags). These usually come from the data collection instrument.
Up until recently, qualitative analysis has been kept mainly in the domain of manual, hand wrought techniques. Applications
range from pen and paper methods through to computer assistance with programs like Microsoft Word and Excel. In recent
years however, dedicated software have been designed to assist researchers with the processes of qualitative analysis. One of
the first computer programs to provide real assistance to qualitative researchers was NUD*IST 1.013 (Richards 2002).
NUD*IST standing for: Non-Numerical Unstructured Data by Indexing Searching, and Theorising was developed to provide
to qualitative researchers a program like SPSS but as a non-Statistical Package for Social Scientists. The fundamental
purpose of NUD*IST was to provide functions which would assist researchers in the retrieval of text from data, allow users to
code that data, and to develop a system of relating codes to each other using a tree structure (Jones 2007).
Computerised packages for qualitative analysis have become far more sophisticated than these early systems. Software, like
QSR-NVivo, provide many tools for analysis, reliability, management and reporting. However, the uptake of these products has
not been without controversy. The research community is divided in regard to the deficits and benefits of digital intervention in
what is fundamentally a human endeavour (Crowley, Harr et al. 2002; Basit 2003). Opponents argue that methodological
impurities may result as data are transferred into a digital ones and zeros environment. The abstraction that results from
this transfer may misrepresent or simplify the multi-dimensional qualities of the original data. This can certainly be the case with
simple, plain text programs, where expression and emphasis can be lost, but the latest generation of augmented, rich text
programs tend to mitigate this deficiency (Bourdon 2002; Crowley, Harr et al. 2002). Another argument emphasises the utility
of computers for counting and producing numbers. It is seen by some, that this may force researchers into the trap of turning
qualitative accounts into semi-quantitative arrays of analysis by enumerating the facts rather than interpreting them. While
qualitative analysis software will often provide these facilities, it is not their strength and it detracts from their purpose (Crowley,
Harr et al. 2002; Welsh 2002). Software can also be seen to distance the researcher from their research by providing a buffer
between the person and their data (Bourdon 2002; Welsh 2002).
Proponents see qualitative analysis software as the genesis of the new age in qualitative research. Software can assist
researchers by providing better data management, reducing time consuming repetition and offering greater flexibility. Computer
supported analysis can provide higher accuracy and greater transparency (Welsh 2002). In addition, software can provide
faster and more comprehensive methods of inquiring into the data, and much more versatile and efficient systems of collecting,
storing and reporting (DeNardo and Levers 2002; Basit 2003). It is often misconstrued by critics that software does the analysis
for the researcher this is not the case. The researcher must still collect the data, decide what to code and how to
conceptualise. However, the software does increase the ease at which analysis is undertaken, by minimising repetitive,
13
QSR International Pty Ltd
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mechanical tasks (Bourdon 2002). Computer assistance is merely a tool which facilitates more effective and efficient analysis
(Coffey and Atkinson 1996). Researchers who use the packages are often amazed that this kind of work, with its thousands of
pages of data, could ever have been conducted by hand (Basit 2003, 145).
Despite these debates, the use of computer assisted analysis is on the increase (DeNardo and Levers 2002; Basit 2003, 145;
Bringer, Johnston et al. 2006; Bazeley 2007; Wong 2008). A number of notable qualitative theorists have encouraged the use
of qualitative data analysis software within their research: (Miles and Huberman 1994; Denzin and Lincoln 1998; Krueger 1998;
Berg 2001; Merriam 2001; Silverman 2001; Morse and Richards 2002; Patton 2002).
In this research using NVivo 8.0 (QSR International Pty Ltd, 2008) the software approach has been an invaluable tool.
Large amounts of data were managed relatively easily. Data were coded more generously than would have been achieved with
paper and pen methods, and while this most probably led to over-coding (this is a problem reported by Blismas and Dainty
(2003, 460), it allowed ideas and issues to emerge more freely without the compulsion to force data into already established
categories. The software also permitted easier reporting and reflection
Initially, a literature review was conducted on gambling (particularly relating to harm minimisation), a list of nine topics was
developed and arrangements made for interviewing respondents in the gaming industry. During the process of analysing the
interviews using NVivo, distinct patterns began to emerge, largely driven by the nine topic areas developed for the interviews.
Following this analysis a further review of the extant research ensued covering three substantive areas societal marketing,
stakeholder theory and corporate social responsibility (CSR). This led to theoretical development. The next section will review
the literature associated with gambling.
Societal Marketing, CSR, Gambling and Stakeholders

Kotler et al.s (2001) societal marketing concept recognises that marketers need to consider the long-run interests of society in
addition to economic and other considerations such as customers and employees. This concept however does not elaborate
on the social aspect in terms of who the various stakeholders are and how companies can become more socially responsible.
Accordingly, the societal marketing concept needs to be elaborated on, and strengthened by, a robust explanation and
inclusion of stakeholder and CSR theories. Many authors stress the imperative of including stakeholders in an organisations
social responsibility (see for example Aguilera et al. 2007; Black and Hartel 2004; Breen 2005; Carroll 1991; Maignan et al.
2005; Miles et al. 2006; Mitchell et al. 1997; Polonsky et al. 2003). Branco and Rodriques (2007) state that any useful notion of
CSR should be based on a stakeholder view (p. 5). Accordingly, any societal marketing and CSR concept needs to include
identification and inclusion of key stakeholders. The most prominent in the gaming industry in New South Wales, Australia
being the Government and the media, in addition to the gaming industrys target market. The influence of key stakeholders
cannot be under-emphasised. For example, the media and NGOs in Australia appear to have exerted a certain amount of
pressure resulting in increased regulation of EGMs.
In practice, organisations have a long way to go in terms of being socially responsible. For instance Rundle-Thiele et al.s
(2007) study into consumers knowledge of safe consumption levels of alcohol showed that, whilst alcohol marketers
communicate the drink responsibly message throughout their policies and programs and can therefore arguably be
considered socially responsible, the majority of respondents (adults aged 18 years and over) were not aware of safe levels of
alcohol consumption. Accordingly, the authors call for a focus on corporate social performance (CSP) in order to address the
gap between stakeholder knowledge, and company policies and practices. Hing (2000) also found significant gaps between
NSW Registered Clubs views, policies and practices in terms of dealing with problem gambling, against an array of
expectations from their key stakeholders. This highlights the importance of organisations identifying and responding to key
stakeholder expectations in a manner that is also beneficial to the organisation (i.e. in a strategic manner).
Other authors focus on different aspects of CSR. For example, Polonsky et al. (2003) build on Porters value chain to develop a
harm chain whereby the creation of harm occurring within marketing exchange networks can be examined and dealt with by
policy makers and firms. The Reno model developed by Blaszczynski et al. (2004) also incorporates policy makers in the
provision of responsible gaming, further emphasising the importance of including key stakeholders in any socially responsible
program.
The importance of ethical programs throughout all levels of the organisation is endorsed by Moore (1999), who emphasises the
salience of having a code of ethics by which business people can make ethical decisions, as governments cant legislate
moral behavior (p. 305). Hemingway and Maclagan (2004) recognise the importance of personal values on corporate values
and hence CSR. They endorse the role of individual managers as champions of social responsibility, as opposed to simply
155
acting as agents of corporate policy, [who] may inspire or remind employees that they can make the difference in an
organization without a formally adopted CSR culture (p. 41). This should not be seen as negating the need for an on-going
code of ethics training program throughout all levels of an organisation, however. Given that the vast majority of EGM
operators in NSW are SMEs, their role in developing a socially responsible culture throughout their business is paramount.
Accordingly, all staff throughout the organisation need to adhere to ethical and CSR practices, for example by having staff who
seriously look out for, and, where appropriate, are willing and empowered to intervene to protect problem gamblers from
themselves.
Legitimacy
Institutional theory postulates that organisations influence, and are influenced by, society and that a social contract between
the two entities exists. Organisations therefore, in order to develop or protect their legitimacy, try to ensure they have policies,
processes and practices that meet societal expectations (Hoque 2005). As a result of the centrality of this concept, legitimacy
theory has emerged as an important area of scholarly research. According to Brinkerhoff (2005), three types of organisational
legitimacy exist: normative; pragmatic; and cognitive, with Patten (1991) stating that the concept of economic legitimacy was,
until recent years, largely the only constraint placed on business by society: (p. 298). Dowling and Pfeffer (1975) state that
when the social values of an organisation are congruent with the the norms of acceptable behaviour in the larger social system
of which they are a part, organisations achieve legitimacy (p. 122). Suchman (1995) found that many researchers refer to the
term legitimacy but very few define it. Accordingly, he develops a definition of organisational legitimacy: Legitimacy is a
generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially
constructed system of norms, values, beliefs, and definitions (p. 574).
THE STUDY
This study entails a multi-case, multi-site, case study to understand the motives (or lack thereof) of electronic gaming providers
to act in a socially responsible manner. Our research question was: To what extent do operators in the gaming industry
consider that they are socially responsible in terms of their marketing of EGMs?
Staff of electronic gaming facilities, gaming consultants and government regulators, were interviewed in two jurisdictions,
namely Nevada (USA) and New South Wales (Australia). A nine-item, open-ended questionnaire was developed to focus
discussion on the salient issues during the interviews, whilst at the same time encouraging the respondents to talk freely and
include other aspects they felt were important.
Table 1 indicates the location, category and number of respondents interviewed at each jurisdiction.
Table 1: Respondent Classification
Number of
Respondents
Size
Gaming consultant and gaming conference organiser
SME
Las Vegas (Nevada)
Gaming consultant
Individual
Las Vegas (Nevada)
Gaming Machine Manufacturers
Large
Las Vegas (Nevada)
International Casinos
Large
Las Vegas (Nevada)
Locals Casinos
Large
Lake Tahoe (Nevada)
Gaming Machine Manufacturer
Large
Lake Tahoe (Nevada)
Problem-Gambling Consultant
Individual
New South Wales
Gaming Legislators
Large - government
New South Wales
Gaming consultants
Individual
New South Wales
Gaming Machine Manufacturers
Large
New South Wales
Casino
Large
New South Wales
Hotels (Pubs)
SME
New South Wales
Registered Clubs
SME
Location
Category
Reno (Nevada)
Source: Adapted from Buchanan et al. (2009), p.86
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METHOD
The research method adopted in this paper synthesises two accepted methods of analysis: Grounded Theory (Glaser and
Strauss 1967) and Case Study (Yin 2009).
Grounded theory is an inductive, theory discovery methodology that allows the researcher to develop a theoretical account of
the general features of a topic while simultaneously grounding the account in empirical observations or data (Martin and
Turner 1986, 141). Grounded theory provides a detailed, rigorous and systematic method of analysis, which has the advantage
of reserving the need for the researcher to conceive preliminary hypotheses, thus providing greater freedom to explore the
research area and allow issues to emerge (Glaser 1978; Glaser 1992; Glaser 1998; Glaser 2001; Bryant 2002). As a
consequence, grounded theory is useful in providing rigorous insight into areas which are relatively unknown by the researcher.
The benefits offered by grounded theory include the methods capacity to interpret complex phenomena, its accommodation of
social issues, its appropriateness for socially constructed experiences, its imperative for emergence, its absence from the
constraints of a priori knowledge, and finally, the methods ability to fit with different types of researchers.
Although grounded theorists emphasise the importance of an inductive approach (see for example the seminal work of Glaser
and Strauss 1967), it is generally accepted that no researcher goes into the field totally devoid of a priori experiences (Goulding
2005). This paper does not purport to adopt grounded theory as it is proposed by Glaser and Strauss, rather, for reasons of
necessity, purposive sampling has been adopted, in place of the grounded theory approach to select participants progressively
through theoretical sampling (Glaser 1978; Suddaby 2006).
The middle ground approach taken by Glaser and Strauss (1967) between the extremes of rigid positivism and the postmodern approach of constructivism, best describes the ontological and epistemological philosophies of this study.
Postpositivism is a term that also appears to amalgamate the belief that an external reality exists which can be discovered
(valid belief) and the belief that knowledge is inherently embedded in historically specific paradigms and is therefore relative
rather than absolute (Patton 2002, pp. 92-93, italics in original). The inescapable influence of hermeneutics is also
acknowledged, in that all analysis and meaning generated from, for example, interviews, is interpretive in the sense that
different people from different backgrounds, and/or using different methods but using the same texts, would arrive at different
meanings. This influence occurs even when following the more positivistic stance of case study researchers such as Yin
(2009).
A case study is an empirical enquiry that investigates a contemporary phenomenon within its real-life context; when the
boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used (Yin
1989, 23). Case studies allow the researcher an opportunity of explaining the causal links in real-life interventions that would be
too complex for surveys or experimental strategies (Yin 1989, 25). The method is most appropriate when there is a desire to
find broad definition, rather than narrow discovery (Yin 1993). Case study research is primarily about particularisation. When
responses or issues link across multiple cases, as opposed to a single case, generalisations can be drawn: valid modification
of generalization can occur in case study (Stake 1995, 8). In terms of interpretation of data, Stake (1995) asks whether it is the
researchers or the respondents interpretation that is being reported, although it is accepted that it is the qualitative
researchers interpretation that takes precedence, with the importance of maintaining multiple realities being emphasised.
Continual and progressive focusing is recognised in that initial research questions may be modified or even replaced in midstudy by the case researcher, as initial observations lead to renewed inquiry and further explanation (Stake 1995, p. 9).
Researchers draw their own conclusions from observations and other data. These in turn lead to assertions, which lead to
speculation or theory.
The process of case study research can be intrinsic (we need to learn about a particular case), and/or instrumental (when we
have a research question and we need to gain a general understanding). When several cases are studied, each case might be
instrumental in terms of learning about, for example, the effects of regulations on the gaming industry and therefore the
coordination between the different cases. This research might therefore be referred to as a collective case study.
Data were collected through these combined methods, and while analysis was undertaken using NVivo, the analysis was
guided by these methods. Thirty-eight in-depth interviews were undertaken with gaming operators and gaming machine
manufacturers in both the Nevada (USA) and NSW (Australian) jurisdictions during 2005-2006. Interview data were augmented
through observation, resulting in a rich collection of data. The data were coded and initially entered into nodes within the
NVivo program. A pre-defined set of themes was derived from topic areas of the interviews. Each theme then became a node.
As each interview was read, additional themes were identified and nodes created for each theme. The nodes were fleshed out
157
as data were extracted from each interview referring to the same theme. Thus a range of themes was created as a result of
going through the data and coding according to themes within each transcript. Once all data had been placed into various
nodes, themes were checked through the matrix function within NVivo to ensure that the various themes were distinct from
each other and that there was no redundancy.
Further analysis of emerging themes resulted in a conceptual model. This is discussed in the next section.
ANALYSIS AND FINDINGS

A conceptual model which integrates analysed data from the interviews and observations with related literature is exhibited in
Figure 1. This model postulates the theoretical finding that in order to be viewed as legitimate, EGM operators need to ensure
that: a) socially responsible programs are implemented throughout their businesses, (b) they adhere to the law, and (c) they
satisfy a range of stakeholder expectations (or at least come to some mutually acceptable compromises). Further, in order to
be considered socially responsible, firms are expected to act beyond economic imperatives and legal requirements, by
adopting ethical programs and voluntarily donating a percentage of their profits to charitable causes (refer to Carrolls 1991
CSR Pyramid).
As can be seen in Figure 1 below, a number of stakeholders have been identified, with media influence on government policies
being one example of their importance. Gambling issues in turn influence community, media and government perceptions of
social responsibility, such as whether technological advances of EGMs with their flashing lights and seductive sounds leads to
increased enticement/inducement for the player. A number of respondents stated that their patrons preferred EGMs with higher
volatility and many stated that a higher return to player (RTP) certainly adds to the appeal. Controversy exists as to whether
EGM expenditure should be viewed as part of the larger social issue of problem gambling, or whether it can be legitimately
viewed as entertainment for the majority of people who enjoy EGM play without any associated addiction or resultant problems.
Certainly the vast majority of academic literature and media stories (the latter at least in NSW) focus on issues of problem
gambling. Observation in Las Vegas however highlighted to one of the researchers that a number of EGM players appeared to
be enjoying the process as a form of entertainment, with one patron in a wheel chair who otherwise might be socially isolated
or at least perhaps have less opportunities to go out and be involved in a wider socially constructed environment. Although
evidence points to the majority of EGM profits being derived from at risk and/or problem gamblers (Livingstone and Woolley
2007, Symond 2007), as an overall indication showing perhaps the predominance of adults who enjoy EGM play without any
reported problems is the Productivity Commission report (1999), stating that approximately 2% of the adult population in
Australia exhibit symptoms of at risk or problem gambling. One could argue therefore, based on these statistics, that the
majority of adults (98%) can enjoy EGM play as a form of entertainment, similar to other forms of entertainment expenditure
such as going to a concert, show, nightclubbing etc. Because of a higher risk of addiction to EGM play than to many other
forms of entertainment, however, EGM operators need to ensure socially responsible policies, processes and practices are an
integral part of their organisation.
A number of factors were also conceptualised which highlighted the importance of legitimacy in the gaming industry. One such
concept is the influence of historical roots:
New South Wales, like Nevada, owes its gambling origins to criminal involvement (for example, Mafia chiefs such as Meyer
Lansky and Bugsy Siegel were major investors in Las Vegas casinos and hotels). The 1973 Moffitt Royal Commission of
Inquiry into Organised Crime in Licensed Clubs in New South Wales found a significant risk from criminal elements (Kirby
2007). Part of the evidence put forward during this Royal Commission stated that Bally Australia was alleged to have used
intimidation and bribery to convince registered clubs in NSW to buy Bally poker machines (Kretschmar 2004). In 1966 Nevada
gained its respectability largely due to Howard Hughes, with his buying of casinos and large tracts of land in Nevada (Kilby et
al. 2005) and also to the corporatisation of casinos. Unlike their counterparts in NSW, the press in Nevada rarely focuses on
the negative aspects of gaming activities, with one respondent attributing this to the fact that there are many more murders to
report on than there are in NSW! The NSW gaming industry is considered to operate in the most heavily regulated jurisdiction
in the world. Certainly, the introduction of the Registered Clubs Act in 1976, the Casino Control Act in 1992, the Responsible
Gambling Act of 1999 and the Gaming Machines Act of 2001 has meant that NSW EGM operators have far less opportunity to
practice voluntary socially responsible activities than their largely self-regulated counterparts in Nevada. That being said,
however, our analysis of the interviews, along with official published government documents and the media, found that, overall,
gaming operators in Nevada appear to be much more aware of, and to implement, socially responsible activities than do many
operators in NSW. Regardless of the current situation, it could be argued that organisations that have their genesis in criminal
associations, such as the gambling industry, have a substantially more difficult time in terms of gaining legitimacy in the eyes of
its stakeholders, than do organisations without such illegal connections.
158
Figure 1: Conceptual Model

In spite of identified differences between the Nevada and New South Wales jurisdictions, the conceptual model (Figure 1) can
be applied to both. The main issues, which were then developed into the nodes that collectively form the conceptual model,
were gleaned from interviews, observations and the literature from both jurisdictions. Although the nodes/issues apply to both
markets and possibly to other jurisdictions, it is postulated that the degree to which they are an important influence varies from
market to market.
DISCUSSION
Using NVivo to facilitate organisation of the data has been extremely beneficial in this study. Patterns and themes were more
easily identified and different categories and nodes were developed as part of the process of analysing the data. Memo links
proved a valuable aid in recording insights gained from the data. To illustrate, the following excerpt from the CSR ethical
node (based on Carrolls (1991) four components of the CSR Pyramid, namely economic, legal, ethical and
discretionary/philanthropic see Figure 1) notes under the Memo Links feature is provided:
1) Hotels focus a lot on being popular with the NSW Government. They throw lots of money at the Government (political
donations).
This statement indicates what could be considered an unethical approach. Political donations are very much driven by
'self-interest'. This perhaps satisfies the 'economic' component of CSR (see Figure 1) in the sense that pubs (and
clubs), through political donations and lobbying, are seeking to 'protect their turf' - i.e. profits. Given that political
donations and political lobbying are not illegal, the 'legal' component of CSR (see Figure 1) is also met. But it would
appear that, in spite of both components being met, these actions (political donations and lobbying) are a long way
from being ethical.
159
Another memo excerpt that describes the researchers impression of one of the luxury casinos on the Las Vegas Strip:
Wynn had just been opened a few weeks prior to this interview. Its decor is sumptuous - top label retail shops, a
number of 5 star restaurants, fine art throughout the casino, impressive gardens and a small lake, and extravagant yet
tasteful decor. The gaming and other staff wore 'tasteful' uniforms, with none of the short dresses, low necklines and
high heels associated with many of the other casinos. Wynn also has a helipad and separate entrances for its
exclusive bedroom suites in order to offer discretion and anonymity for those guests so requiring it. It is the latest
casino developed by Steve Wynn. His other casino, Bellagio, is also opulent.
This memo extract illustrates the Inducement component of our conceptual model. Patrons may be enticed to stay
and gamble longer in premises that: (i) have alluring staff, (ii) offer complimentary beverages and/or (iii) have
luxurious surroundings
Electronic storage of the interview transcripts allows ready access to anecdotal statements which provide empirical support for
theoretical emergence and conceptualisation. For example, a number of respondents, in relating to the NSW context,
expressed their strong opinion that EGMs should only be allowed in registered clubs, not pubs or bars. A probable explanation
for this is that, ostensibly at least, NSW Registered Clubs operate on a community, not-for-profit mandate, whereas many bars
in NSW are privately owned, with much media reporting of publicans being made overnight millionaires as a result of the legal
introduction of EGMs into pubs in 1997.
POSSIBLE LIMITATIONS AND BIASES

Many quantitative methods in marketing adopt convenience sampling. Authors such as Patton (2002) argue that, unlike
qualitative methods such as case study research which are purposeful, strategic and can yield crucial information about critical
cases., [c]onvenience sampling is neither purposeful nor strategic (p. 242). It is recognised however that [q]ualitative inquiry
is rife with ambiguities (ibid, p. 242) and one of the challenges for qualitative researchers to is to have a high degree of
tolerance with this aspect. Whilst it is acknowledged that triangulation ideally uses a combination of qualitative and quantitative
data, the interview data for our study was supplemented by observational data, thus satisfying one form of triangulation. It is
considered highly unlikely that one of the limitations of observational data, being that of the observer affecting the observed
persons behaviour, occurred due to the fact that the researcher did not intrude into peoples space. A further limitation cannot
be overlooked however, in that the selective perception of the observer may distort the data (ibid, p. 306). In order to minimise
this limitation, interview data were also examined by the other researcher. Patton (2002) lists a number of [i]nterview data
limitations [which] include possibly distorted responses due to personal bias, anger, anxiety, politics, and simple lack of
awareness since interviews can be greatly affected by the emotional state of the interviewee at the time of the interview.
Interview data are also subject to recall error, reactivity of the interviewee to the interviewer, and self-serving responses (p.
306). Two important factors serve to minimise these limitations, in that the interviewer used the same list of nine topics for each
interviewee and, as an outsider, was not aware of any organisational politics at play. Furthermore, the researcher can
emphatically emphasise that no anger or anxiety was present before, during or after the interviews. Recall error was
minimised through the use of detailed and rigorous note-taking. Further, the researcher does not consider any biases existed
prior to, or during the interviews, in relation to a preference for a pro or anti gambling stance.
CONCLUSION
This paper has developed an empirical exploration of the ethical issues of EGMs in two ways. Firstly, we have developed a
grounded theoretical model which addresses the concerns of gambling operators and other stakeholders such as the
government, media, NGOs and community groups with regard to the ethical and societal issues surrounding electronic
gambling. Legitimacy theory relates to the fact that organisations affect and are in turn affected by, the societies within which
they operate, whereby a social contract is developed. This social contract is largely non-controversial when the values of the
organisation are aligned with the values of society. This would appear not to be the case with gaming operators and the
societies within they operate, perhaps particularly so in NSW. Further, we have postulated that industries which have their
genesis in organised crime have a substantially more difficult time gaining legitimacy in the eyes of their stakeholders.
Secondly, and most importantly, we provide insight into the use of NVivo for analysing social and societal marketing. It is hoped
that this paper may lead researchers who are involved in this field of research to adopt similar practices with computer assisted
analysis.
160
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162
T. P. Dence
INTRODUCING EULERS CONSTANT INTO THE CALCULUS CLASSROOM
Thomas P. Dence
Ashland University, USA
ABSTRACT
By the time students have finished a year of the calculus, they are well familiar with the famous constants of and e, but
knowledge of Eulers constant is practically at a bare minimum. This is a shame since occurs in so many interesting
places in mathematics. This article will demonstrate about half a dozen such examples, requiring nothing more than an
introductory calculus background.
Keywords: Eulers
Constant, Riemann Zeta Function, Logarithmic Integral, Tau
Function, Primes
INTRODUCING EULERS CONSTANT INTO THE CALCULUS CLASSROOM

It is not at all uncommon for students in the first year of calculus to encounter the infamous mathematical constant named after
the great Swiss mathematician Leonhard Euler, denoted by the Greek letter gamma, , and defined by the limit
n 1
lim ln(n).
n
k 1 k
This constant, approximately equal to 0.5772156, though not nearly as popular as its big brothers and e, or even the golden
ratio = (1 5 ) / 2 , nevertheless deserves special recognition because it does play a prominent role in much of
mathematics.
Its interesting to note that high school students of a generation ago, say in the 1950s and 60s, carried slide rules to
mathematics
class (this was the period just before pocket calculators hit the scene), and on many of the top-ranked slide rules
(made by the Post Company) special markings were etched in the slide rules to indicate the presence of a special
mathematical constant. In fact, only two markings were usually present, one for and one for .
One of the areas, and there are many, of mathematics where Eulers constant makes its appearance is in the distribution of
primes. The primes, 2, 3, 5, 7, 11, 13, .., of which there are infinitely many, are distributed so irregularly among the sequence of
natural numbers that their study has fascinated man for over a thousand
years.
Let me just briefly mention three situations
where Eulers constant makes an appearance, followed then by several other interesting applications appropriate for the
calculus classroom.
1) Several hundred years ago a major problem was to try and find a formula that would yield the count of how many primes
were less than any specific given number x, denoted by ( x) . One such formula, denoted by Li(x), was the
logarithmic integral Li(x) =
x
2
1
du . This expression, produced by the great German Karl Gauss, was quite
ln( u)
accurate but was still not perfect in counting the correct

number of primes. We note, for example, that Li(10,000,000)
= 664,918 while (10,000,000) 664,579 . As it turns out, Eulers constant is related to Li(x) by the
complicated expression:
Li(x) = ln(ln( x))
(ln x) n
n n! .
n1
163
2) The most famous problem in the mathematics world today (2009) is to determine the zeros of the function known as the
zeta function (s), where this complex-valued function is defined by the series (s)
. To date, millions of the
n1
zeros have already been found, but more may still exist. Solving this problem will give one instant fame of the highest
caliber! Eulers constant is related to the zeta function by the equation:
(n) 1
.
n
n 2
3) One of the standard functions in elementary number theory is the tau function, denoted (n) , which counts how
many positive divisors a given natural number n has. For instance, (20) = 6 because 20 has 6 divisors, namely 1, 2,
4, 5, 10, 20. If we then examine all the natural numbers k from 1 to n, and compute (k ) for each one, and then sum
n
them up,
Imation improves as n increases) by

(k ) , we get a value that is closely approximated (and the approx-
k 1
the expression n[ln(n) 2 1] . Equivalently, dividing both sides by n,

to give an average, yields:
1 n
(k ) ln(n) 2 1.
n k 1
In particular, if n = 2500, then
1 2500
(k ) 7.9840 and ln(2500) 2 1 7.9783. Therefore we can say that
2500 k 1
from 1 to 2500 has about 8 positive divisors. Its important for calculus students to really understand the concept
each integer
of limit, since this is essentially the foundation upon which calculus is founded. In first semester calculus, students are always
sin( x)
1 inasmuch as this is crucial in establishing the derivative of the sine function. The
x
f ( x h) f ( x)
derivative itself is a limiting value of a difference quotient, lim
f ( x) . The definite integral likewise is
h0
h
exposed to the limit
lim
x 0
defined via a limit, namely the limiting value of a Riemann sum. So it should not require too much of a step on the students
part to get
a good grasp on the limiting value as defined by Eulers constant.
books, I suspect it is in reference to either of the following:

When Eulers constant is mentioned in the calculus
1) it serves as a way to approximate partial sums of the harmonic series, and
2) it demonstrates that the difference of two divergent sequences can converge.
To demonstrate (1), if we wanted to sum 11/ 2 1/ 3
2.92896824, or by the rearrangement:
10
k
k 1
1/10, we could simply sum the ten terms and get
ln(10)
we could get the approximate ln(10)+0.5772156 = 2.879800693. Clearly the former is more accurate, and it didnt
require too much time. But with a larger value of n, say n = 500, to sum the 500 terms by hand is too tedious, and a
calculator
SUM feature would be more suited, yielding the value sum(seq(1/N, N, 1, 500)) = 6.79282343, while the
rearrangement involving Eulers constant gives a good close value of:
500
ln(500) 6.791823698 .
k 1
Even larger values of n, say n = 5,000,000 would prove too distasteful for the calculator, but the rearrangement would give
ln(5,000,000) + = 16.00216407.
164
T. P. Dence
Typically not much else having to do with follows in calculus texts because most applications using gamma involve higher
mathematics, though many references are available [4]. There are, however, some cute applications involving the harmonic
series, and hence gamma, that would pique students interests, namely the stacking of dominoes for infinite overhang [1] and
the worm on a rubber rope problem [3]. Let me first show you about the rubber rope problem, then Ill give you a second
example that involves integral calculus,

and a third example that involves infinite series.
We place Willy the Worm on the left end of a rubber rope that is initially 1 yard long. The left end of the rope is attached to a
wall, while the right end hangs freely. Now Willy can crawl at the rate of 1 inch per second, and after each second he pauses
momentarily (an infinitesimal amount of time) to catch his breath, but while so doing the rope is stretched an additional yard in
length. The question is, does Willy ever reach the other end of the rope, and if so, when? The vast majority of the time Ive
given this problem to students they have reacted the same way, saying No way can Willy reach the other end cause the rope
keeps getting longer than Willy can crawl. Casting intuition aside, lets look at the mathematics of the movements of Willy.
Let L(t) denote the distance in inches Willy is from the left end of the rope after t seconds, when he just starts his rest break,
and before the rope is stretched an additional yard, and let LEN(t) denote the length of the rope in inches after t seconds
when Willy just starts his rest break. The initial values of these functions are L(1)=1, LEN(1)=36. After the rope is
stretched, its important to note that Willy is in the same relative position on the rope (e.g., a third of the way, or 1/36th of the
way) as before the stretch. This means, that at time t, and after his rest break when the rope is stretched an additional yard, he
is now x inches from the left end, where we have the proportion:
L(t )
x
LEN(t ) LEN(t ) 36
and consequently:
L(t + 1)= x + 1 =
L(t )[LEN(t ) 36]

1.
LEN(t )
Some subsequent values of L(t) are L(2) = 3, L(3) = 5.5 = 3 11/ 2 1/ 3 , and in general:
L(t) = t
11/ 2 1/ 3
1/ t .
Thus, Willy will reach the other end of the rope if

L(t) equals the length of the rope, 36t, for some t. But this implies
t
, which indeed happens when ln(t) +

1/ k 36
is approximately 36, or t = e 360.5772156. The surprising conclusion is
k 1
that Willy does make it to the other end of the rope, but he is awfully old when he gets there. Hopefully one can see that the
length of the rope, and its rate of increase (as long as they are constant) do not affect the outcome of whether Willy reaches
the other end, just how long it will take.

As for the application involving integral calculus, we note that the graphing calculator has become a favorite aid, and an
important educational tool, in the teaching of calculus. The calculator comes equipped with many standard built in functions,
such as sin(x), ln(x), 1/x, and even fpart(x). This latter function, known as the fractional part of x, returns the fractional
part of any decimal. Hence, fpart(2.73) = 0.73, and fpart(2) = 0. Its graph, for positive x, is pictured in Figure 1(a). It
has become fairly standard to denote this function by using braces, so now the notation would become fpart(x) = {x}. We
quickly note that {x} can be alternately defined for x 0 by {x} = x x, where this latter expression is the floor function,
or also known as the greatest integer function, of x, and this formulation will prove significant in what soon follows.
The interesting calculus problem that now presents itself [4] is to evaluate the area between {1/x} and the x-axis (see Fig.
1
1(b)); that is, to compute dx .
0
x
1
165
(a) Graph of y = {x}, x 0

Figure 1
(b) Graph of y = {1/x}, 0 < x 1
We note that the graph in (b) is highly oscillatory and possesses many points of non-differentiability. But we can call on the
calculator to numerically estimate the desired area. With the TI-83 calculator, using command (7) under the CALC menu, and
integrating from 0 to 1, we obtain the decimal value 0.42810655. On the other hand, using fnInt from the MATH menu returns
the value 0.4229680952. This latter computation took considerably longer than the former, clearly implying the use of a
different algorithm. To compute the exact value of the integral, we proceed as follows.
The substitution u = 1/x yields the following:
dx

x
1
u
du
u2
u
du
=
1
u2
k 1 u u
du
=
k
u2
k 1
k 11
k
= 2 du
k
u u
k 1
=
= ln u
k 1
= lim
Consequently
dx
x
1
k 1
u k
ln(k 1) k 1 ln k 1
k 1
n 1
= lim ln(n 1)
n
k2
= 1 - .
is approximately 1 0.5772156 = 0.4227844. Gamma thus occurs in the solution to an
integral that is not beyond

the comprehension of second year calculus students, or to high school Advanced Placement
students quite a nice treat!
October, 2008, I had occasion to direct a workshop for high school Advanced Placement Calculus teachers, and I
During
presented this discussion and derivation of the area under y = {x}, resulting in the appearance of Eulers constant. The
teachers were asked to express their opinions of how they thought this would go over in their class. The general consensus
was that it would probably not be suitable for the AB Calculus classes, but much more appropriate for the BC classes since
they spend more time with series. They thought that it would be something to challenge the brighter, more motivated students,
and that it could serve as an excellent choice for a team project. One of the teachers also commented on the benefit of talking
about the greatest integer function, which is something they rarely do. Others mentioned the benefit of introducing some
166
T. P. Dence
mathematics history into class discussion, and anything having to do with Euler certainly does that. As Pierre Simon de
Laplace once said, Read Euler he is our master in everything.
The third calculus application where gamma appears is with infinite series, and hence also appropriate for Advanced
Placement Calculus students. Practically every calculus text in existence uses the example
divergence by means of the Integral Test, followed shortly thereafter by the series
(1)
k 1
k 1
ln k
to illustrate series
k
k 1
ln k
to illustrate convergence
k
by means of the Alternating Series Test. But what the series converges to is never mentioned!
To this end, for each m N, let S2 m be the 2m-th partial sum, which we immediately rewrite as a difference of two
suggestive finite series:
2m
ln k
S2 m = (1) k 1
k
k 1
2m
k 1
m
ln k
ln(2k )
2
.
k
2k
k 1
The strategy next is to rewrite ln(2k) as the binomial ln 2 + ln k (and similarly for ln(2m)), and to add and subtract some
judiciously chosen terms. We obtain:
m
2m ln k [ln 2m]2 [ln 2 ln m]2
1 m ln k [ln m]2 [ln m]2
S2 m =
- (ln 2) -
k k 1 k
2
2
2
2
k 1 k
k 1
m 1
(ln 2) 2 2m ln k [ln 2m]2 m ln k (ln m) 2

=
(1)

-
- (ln 2) ln m.
2
k
2
k
2
k
k
1
k
1
k
1
ln
k
k 1
Although (1)
converges only conditionally, each partial sum S2 m , as given by the formula in eq. (1), is a
k
k 1
member of the sequence

of partial sums of the series
with no rearrangements
of any of the terms. Accordingly, the sum of the
series is equal to the limit of S2 m as m . The final result is:
2
(ln
2)
ln
k
(1)k 1 k = 2 1 1 0 (ln 2)
k 1
(ln 2) 2
0 (ln 2)
=
2
0.159869 ,
where 0 , 1 are the first two members of a sequence n
N
[ln k]n [ln N ]n 1
n lim
N
k 1 k n 1
n 0
of constants defined by:
and these constants are referred to as generalized Euler constants. We note that 0 , so we now have the result [2]
(1)
k 1
k 1
(ln 2) 2
ln k
(ln 2) .
=
k
2
It is hoped that these few examples should spark students interest in this truly fascinating mathematical constant, which has
many other colorful appearances to make.
167
REFERENCES
[1]
[2]
[3]
[4]
Dan Bonar and Michael Khoury, Real Infinite Series, MAA (Classroom Resource Materials), (2006).
O. Furdui, J. Sumner and A. Kadic-Galeb, Problem No. 873: Stieltjes constants, Coll. Math. J., 40 (2009) 136-137.
Martin Gardner, Time Travels and other Mathematical Bewilderments, W. H. Freeman & Co., (1988), p. 111.
Julian Havil, Gamma: Exploring Eulers Constant, Princeton University Press (2003), p. 109.
168
R. Geertsen and J. Thompson
HEALTH BEHAVIOR, MEDICAL EXPERIENCE AND USE OF

ALTERNATIVE MEDICINE
Reed Geertsen and Jobecka Thompson

Utah State University, USA
ABSTRACT
Alternative medicine is now used by more than one-third of Americans on a yearly basis. This has prompted many medical
schools and nursing programs to include courses on complementary and alternative medicine (CAM) in their curriculum. The
present research was undertaken to first determine if residents of Northern Utah were high or low users of different types of
alternative medicine. Second, we wanted to find out if selected types of health behavior and medical experience promoted
alternative medicine use. Third, we were interested in determining whether Andersens predisposing and/or enabling factors
inhibit or propel individuals toward this type of use. Finally, we wanted to know if adults were using alternative treatments
instead of, or in addition to conventional medicine. Some 466 adults representing 70% of the randomly selected residents who
received multiple mailing of a questionnaire participated in the study. We found that 31.3% of the adults between the ages of
21-75 had used alternative medicine during the year. Health behaviors and medical experience were found to have significant
effects on alternative medicine use; however, most of Andersons predisposing and enabling factors had no effect on its use.
No significant differences were detected between Mormons and non-Mormons in alternative medicine use. Of the 146 adults
who had used alternative medicine during the year, 132 or 90.4 % had also seen a medical doctor (M.D.) one or more times
during the same period of time.
Keywords: CAM, Utilization, Holistic, Organic, Dissatisfaction
INTRODUCTION
Health behavior refers to activities and practices that individuals undertake to maintain or enhance their health or to prevent or
reduce future health problems. It includes a wide variety of behaviors, such as those that help a person avoid obesity, expand
ones knowledge about health, and select foods to promote good nutrition (Cockerham, 2010). In contrast, medical experiences
are derived from actual health problems and past use of medical services. They include chronic health problems, past visits to
doctors, and satisfactions or dissatisfactions with these visits. Alternative medicine refers to treatments that are not generally
practiced by medical doctors. It is a broad field made up of many different types of practitioners and remedies whose use by
patients varies in different populations and cultural groups (Kiefer, Pitluk, and Klunk, 2009). Despite a lack of scientific
verification, these treatments and remedies are gaining wider acceptance by the general public. In 2007, over 38 million
American adults made more than 354 million visits to complementary and alternative medicine (CAM) practitioners. The
majority of these visits were for manipulative and body-based therapies. During this same year, about 12 billion dollars were
spent on practitioners and another 22 billion were spent on CAM products (Nahin, at al., 2009). This paper reports on research
designed to more clearly identify the health behaviors, medical experiences, and other characteristics of persons who are using
these types of treatments in a unique, semi-rural health district in Utah.
PAST RESEARCH
Sirois and Purc-Stephenson (2009) emphasize the importance of identifying the factors that predispose individuals to become
frequent consumers of complementary and alternative medicine (CAM). They found that openness and agreeableness were
correlated with proactive health motivations and all three were correlated with CAM use. Astin (1998) identifies three possible
reasons for why someone might choose alternative medicine: (1) a holistic outlook wherein alternative medicine is viewed as
being more compatible with personal and/or religious beliefs; (2) patient dissatisfaction with conventional medicine; and (3)
patient interest in exercising more control over health care decisions. These explanations describe separate pathways that an
individual might follow in making healthcare decisions. One pathway would be motivated by an ideological shift in how one
thinks about health and illness. Here the individual has become increasingly concerned about their health, wants to preserve it,
and is looking for broader-based treatments. A second pathway would reflect dissatisfaction with, and abandonment of
allopathic health care services. Because of bad experiences, the individual may abandon conventional medical treatments and
169
only use alternative medicine. The final pathway would view alternative medicine as complementary medicine. Taking
advantage of several choices as a consumer, the individual may want to use a variety of treatments. In this instance the
individual uses both allopathic medicine and alternative medicine. Although intriguing and insightful, these possibilities have not
been fully examined using empirical data.
According to Deierlein (1994) gaining control of ones body and understanding the power of ones self gives individuals a desire
for a more comprehensive health care system. Traditionally, when the sick sought medical care, they wanted the doctor to heal
them. But an increasing number of people want to take charge of their own health, and alternative healers typically expect their
patient to do a lot for themselves. As a result, health conscious individuals might engage in a wider variety of health behaviors
that are not reinforced by physicians and other health professionals, and therefore may find alternative medicine to be more
compatible with their interests. Three possible health behaviors were singled out for investigation that might propel individuals
toward alternative medicine. These include reading calorie labels, watching health programs, and buying organic foods. We
were unable to find any research that had examined the effects of these health behaviors on use of alternative medicine.
Use of organic foods has exploded in recent years. The market for these products has been increasing by roughly 20 percent a
year since 1990 (Jinghan, Zepeda, & Gould, 2007). Even though studies show few nutritional differences between organic and
conventional foods, many people perceive that they are superior for human health due to pesticides use on non-organic foods
(Dangour et al., 2009; Magnusson, et al., 2003). Watching television has been linked to obesity and inactivity, but no research
has focused on the effects of health programs on people who frequently watch them (Meyer et al., 2008). The explosion of fast
foods has made calorie counting increasingly important in the preservation of health, and the key problem appears to be
convenience rather than cost (Winterfeld, 2005). We were curious about the possible impact of these three health behaviors on
alternative medicine use?
One of the best known models of help-seeking behavior is Andersons model of health care utilization. According to Andersen,
health care utilization is shaped by three sets of factors. First are what he calls predisposing factors. These include gender,
education, age, and religion. Second are enabling factors such as residence (urban or rural), income, and satisfaction with
medical services. Need is the final factor and is indicated by the presence of chronic conditions. We wanted to determine if the
variables that influence the use of traditional health services have the same effect, if any, on the use of alternative medicine
(Aday & Awe, 1997).
Consistent with some of Andersens findings on utilization of conventional health services, Factor-Litvak (2001) and Upchurch
(2005) report that women are more likely to use alternative medicine than men. Astin (1998) and Stein (2004) both claim that
users of alternative medicine tend to be better educated. Astin believes that education may increase the exposure one has to
various forms of non-traditional health care. The highly educated are probably more likely to research their illness, find more
alternatives, and be more inclined to question the authority of a conventional practitioner. Tindle (2005) reports that individuals
with a family income above $60,000 are more likely to use alternative medicine.
Several investigators report a connection between age and medical use. Tindle (2005), Mugge (1984), Hartvigsen (2002), and
Barnes (2004) all found that individuals over forty are more likely to use alternative medicine. Miller (1997) was one of the first
to report a connection between multiple chronic conditions and use of alternative medicine. Other research shows that
individuals with three or more chronic illnesses are much more likely use alternative medicine (Al-Windi, 2004; Hartvigsen,
2002). In addition, Wells and colleagues (2007) found that women with more symptoms report higher use.
TYPES OF USE IN DIFFERENT POPULATIONS

National polls of alternative medicine use reveal significant variations over time. A 1997 CBS national poll revealed that only
33% of the United States population had ever used alternative medicine . A 1999 Los Angeles Times national poll revealed
similar results on the proportion of the population (36%) who had ever used these treatments; however, this poll distinguished
between chiropractic, herbal medicine, acupuncture/acupressure, and other types. The percentages were 27%, 25%, 5%, and
10% respectively. This shows that several respondents had used more than one type of alternative medicine. A national poll
conducted in 2002 began to show a new pattern of use. In this poll 35% of the population reported using some form of
alternative medicine during the past year. About 7% had used chiropractic and 18% had used herbal medicine. More recent
polls show similar patterns of yearly use (Roper, online polls)
One important gap in the literature is the lack of representative samples showing consumption patterns in different regions and
subcultures of the country (Adams, et al., 2009). Wells and colleagues (2007) have found significant regional variations in CAM
use. In their research women who lived on the West Coast were found to have the highest levels of CAM use. Bormann and
170
colleagues (2009) report extremely high alternative medicine use among HIV-infected men in California and Florida. Some 69%
of HIV-infected men in Southern California and Northern Florida were CAM users, and the frequent users were more likely to
exhibit health-promoting behaviors.
Northern Utah is a unique region both culturally and geographically. We thought this population might shed additional light on
variations in alternative medicine use. This part of the state is predominately Mormon, a unique religious group that requires its
members to abstain from coffee, tea, tobacco and alcohol. Since the Mormon Church once owned many of the allopathic
hospitals in the state, conventional medical practice is firmly entrenched in the Mormon culture (Geertsen, 1997). Furthermore,
this area is semi-rural with more than 60% of the population residing in communities of less than 20,000 population. Roughly
one-third of the permanent adult residents are college graduates and approximately 60% are over 40 year of age. We wanted
to see if the Mormon religions emphasis on good health practices might override its traditional emphasis on using conventional
medicine.
Based on the foregoing review of the literature, answers to four questions were sought in the present research. First, we
wanted to know if the residents of Northern Utah were high or low users of different types of alternative medicine. Second, we
wanted to find out if selected types of health behavior and medical experience promoted alternative medicine use. Third, we
were interested in determining whether Andersens predisposing and/or enabling factors inhibit or propel individuals toward this
type of use. Finally, we wanted to know if adults were using alternative treatments instead of, or in addition to conventional
medicine. We felt that answers to the last question might have special relevance for both current and future health
professionals, particularly those in this region of the country.
METHODS
Data Collection and Sample
A questionnaire was mailed to a random sample of adults living in Northern Utah (Cache and Box Elder counties). The sample
was generated from a list of names and addresses of persons between the ages of 21 and 75 with driver licenses. This
information was obtained from the Utah Division of Motor Vehicles. The first mailing was followed up with subsequent mailings
of reminder cards and additional copies of the survey. A final mailing was sent by certified mail. We followed the procedures
established by Dillman (2000) to insure a high completion rate. The survey achieved a 70.3 percent response from the
randomly selected subjects which yielded 466 completed questionnaires. The personal identifying information that was used for
sending subsequent mailings to non-respondents (i.e. numbers on questionnaires corresponding with names and addresses)
was destroyed after data collection to protect the privacy rights of respondents.
Measurement of Variables
We used standard questionnaire items to measure gender, religion, residence, age, education, and income. To measure use of
alternative medicine, respondents were asked if they had used chiropractic, herbal medicine, acupuncture or acupressure and
any other type of alternative medicine in the past year. These were defined in the survey as treatments used in addition to, or
instead of conventional medical remedies offered by a medical doctor (MD). To enable odds ratio calculations, responses were
categorized as having used and not having used alternative medicine in the past year.
Concern for health was measured
by the three separate questions using three response categories (frequently, sometimes, and never) for each question. First,
respondents were asked how often, if ever, they (1) looked for calories on food labels, (2) watched or listened to programs on
health, and (3) bought certified organic foods.
Respondents were asked During the last 12 months, about how many times did you see a medical doctor (M.D.) about your
health. Responses were collapsed into none, one to three, and four or more. To assess satisfaction, they were asked How
satisfied are you with the overall quality of the health care services in your area? Possible responses were very satisfied,
somewhat satisfied, or somewhat /very dissatisfied.
Health conditions were assessed from yes or no responses to the following conditions: high blood pressure, heart trouble,
stroke, asthma or chronic bronchitis, arthritis or rheumatism, diabetes, cancer other than skin, stomach or gallbladder or liver
trouble, depression, and other conditions that they specified. Responses were collapsed into none, one or two, and three or
more chronic conditions.
171
Statistical Procedures
To assess the effects of social characteristics, health behaviors, and health experiences on the use of alternative medicine, we
divided the dependent variable into two categories. The resulting dichotomous variable distinguished those who had used any
type of alternative medicine in the past year from those who had not used this type of remedy (0-1). We used this dependent
variable for calculating odds ratios and adjusted odds ratios for categories on each of the other variables.
As is commonly done with logistic regression, odds ratios were calculated by comparing responses to a reference category for
each variable. Reference categories were selected to reflect expected outcomes based on the research of others cited in the
literature review as well as our own expectations on health behaviors. In other words, we used the lowest expected use of
alternative medicine as the reference category for each independent variable. For example, very satisfied with health services
was used as the reference category since those dissatisfied with the services in their area were expected to be the most
prevalent users of alternative medicine. Based on this coding strategy, all odds ratios exceeding a value of one would indicate
how many times more likely those falling in the other categories were to report using alternative medicine during the past year.
FINDINGS
Some 31.3 percent of the 466 respondents in this study reported using alternative medicine during the past year. Chiropractic
was the most common type of alternative medicine used with 19.5 percent of respondents indicating they have used this during
the year. Herbal medicines were used by 18.7 percent, while only 4.3 percent reported using acupuncture or acupressure
treatments. Some 6.9 percent reported using some other type of alternative medicine.
Of the twelve independent variables examined in this study, five were found to have no statistical effect on use of alternative
medicine. Three out of four of Andersens predisposing variables had no effect on the target variable. There was virtually no
difference between persons over 40 (31.5%) and persons 40 and under (31.1%) in alternative medicine use. Fewer college
graduates (26.8%) reported this type of use than did persons with some college (34.7%) or high school and/or less education
(32.1%). Alternative medicine use was somewhat more common among non-Mormons (36.1%) than Mormons (30.5%), but the
differences were not significant and may have been due to chance.
Two out of three of Andersens enabling factors had no significant effect on the dependent variable. People residing in larger
communities defined as 50,000 and above were no more likely to use alternative medicine (30.5%) than those residing in
smaller rural communities (31.8%). There were no meaningful differences between persons with incomes above $60,000 a
year (30.3%) and those with incomes below $20,000 a year (28.0%).
The seven variables that had significant statistical effects on use of alternative medicine are presented in Table 1. Gender was
the only demographic enabling factor to have a statistical effect on the dependent variable. As indicated by the percentages
and odds ratios in the table, women were much more likely than men to have used alternative medicine during the previous
year. All three health concern variables were found to predispose respondents to use alternative medicine. Persons who
frequently buy organic foods were more than six times more likely to use these services than those who never buy this type of
food. These differences remained strong when the effects of the other six variables in the table were adjusted using logistic
regression. Persons who frequently watched health programs were almost three times more likely to use alternative remedies
and persons who read calorie labels on foods were nearly two times more likely to do so than persons who never engaged in
these health concern practices.
Of the three medically-related factors, chronic conditions had the weakest though significant statistical effect on alternative
medicine use; and frequent doctor visits during the year had the greatest effect. Persons with four or more doctor visits during
the year were more than two and half times more likely to use alternative medicine than persons with no doctor visits during the
year. Persons who were dissatisfied with health services in their area were two times more likely than the very satisfied to use
alternative medicine.
The adjusted odds ratios in Table 1 show that buying organic foods has the strongest independent effect on alternative
medicine use, followed by dissatisfaction with health services, frequent doctor visits, and gender when the effects of other
variables are eliminated through logistic regression.
To determine if users of alternative medicine were using these treatments instead of, or in addition to health care received from
a medical doctor, the 146 respondents who used this type of medicine were examined with respect to their doctor visits during
172
the year. Some 132 or 90.4% of the 146 adults who had used alternative medicine during the year had also seen a medical
doctor (M.D.) one or more times during the same period of time.
DISCUSSION
Uses of alternative medicine in Northern Utah were found to be fairly similar to national figures. According to national
estimates, alternative medicine is used by one-third of the United States population (Kendall, 2005; Nahin, 2009). Some 31.3
percent of Northern Utahans are engaged in similar practices. Likewise, chiropractic and herbal medicine are the most
prevalent types of use in both Utah and the nation. The lack of statistical difference between Mormons and non-Mormons in the
present study suggests that our study findings may be applicable to a wider population than was originally anticipated.
The significant effect of all three health behaviors on alternative medicine suggests that users of this type of medicine tend to
be more proactive in protecting and promoting their health. This lends some credence to the supposition of Deierlein (1994)
and Astin (1998) that alternative medicine appeals to persons who have a more holistic view of health promotion and who want
to play a more active role in their health. Reading labels for calories and buying organic foods indicates a concern for nutrition.
Organic foods typically mean consumption of more fruits and vegetables which also tend to be much lower in calories. Persons
who are concerned about eating right are likely to experience frustration when visiting physicians who receive little training and
have limited knowledge of nutrition. Only 14% of resident doctors in a recent U.S. survey reported confidence in providing
counseling to patients about nutrition. General practitioners also report a lack of knowledge about proper diet to insure good
nutrition (Leslie & Thomas, 2009). This has been a deficiency in medical training for over three decades. A National Committee
on Nutrition in Medical Education (Cousins, 1989) issued a report in the 1980s calling for substantial increases in nutritional
education, and yet most doctors today still feel inadequate to give this type of advice to patients. In sharp contrast, many
alternative practitioners emphasize nutrition in their approach to healing.
The medical experience variables underscore the importance of medical needs as indicated by multiple chronic conditions and
frequent doctor visits during the year. The significant effect of gender on AM use may also be a reflection of medical need
rather than gender per se. Even though women live longer than men, they do experience far more acute illness and disabilities
than men. Infectious, digestive, and respiratory conditions are much more frequently reported by women than men. There is
growing evidence than women are more sensitive to their bodies and thereby notice more disturbances and symptoms of
possible illness (National Center for Health Statistics, 2007; Cockerham, 2010). These in turn may account for the higher
tendency of women to use alternative medicine.
Dissatisfaction with health services may also reflect different expectations between doctors and their patients who also use
alternative medicine. Marcuccio and associates (2003) studied 204 women with cardiovascular disease. More than half were
dissatisfied with their care, and most attributed this to poor communication with doctors. Williams (1998) observed a similar
disconnect between nurses and patients. While nurses viewed competent nursing as technically competent care, patients
defined quality care as good interpersonal communications. Alternative practitioners place much more emphasis on
communication and good interpersonal relations with patients. Most of the physicians in one study felt that patients turn to
alternative treatments when they become dissatisfied with allopathic care (Giveon et al., 2003). This may be true, but according
to our study, over 90% of the patients who use alternative medicine are still making visits to medical doctors during the same
year they are using these treatments.
Andersens predisposing and enabling factors, while influential in the seeking of conventional medical care, have little effect on
the seeking of alternative medical care. In this population, age, education, and religion reveal no differences in alternative
medicine use. Likewise, rural-urban residence and income reveal no differences. Lower cost and easier access may account
for the inability of income and residence to predict AM use. A lack of difference between age groups and education levels
suggests that a general diffusion and acceptance of these treatments may be taking place in Northern Utah, but without
comparative measures from earlier points in time it is difficult to determine. Although Mormons were found to be somewhat less
likely to use alternative medicine than non-Mormons, the differences were too small to achieve statistical significance. It
appears that historical Mormon commitments to scientific medicine may be slightly biased in favor of conventional medicine
given the fact that the Mormon emphasis on certain health practices (no smoking, no drinking, no coffee) has not resulted in a
higher proportion of members using alternative medicine than elsewhere in the country.
The finding of complementary uses of conventional and alternative medicine has the most important implications for the field of
medicine. One of the four questions we wanted to answer in this study was Are adults using alternative treatments instead of,
or in addition to allopathic medicine? Alternative medicine, in its extreme, refers to the use of unconventional medical
treatments instead of other more conventional means. In sharp contrast, complementary medicine refers to the use of
173
unconventional types of medicine in addition to, or along with other more conventional, allopathic medical treatments. Our data
show that the vast majority of the adult residents in Northern Utah, who use this type of medical treatment, use it as a
complementary form of medical care. Physicians must become more aware of what their patients are doing in addition to their
recommended treatments. And yet, Giveon and associates (2003) research on physician perceptions of patient=s use of CAM
reveals gross underestimates of its use. Most of the physicians estimated that only 15% of their patients used CAM and said
only 10% of their patients reported doing so. Other research shows that over 60% of the individuals who use alternative
medicine do not disclose this to their physician (Kendall, 2005). The main reason patients give for not discussing this with their
general practitioner is fear that their doctors will disapprove. According to Moss (2004) seven out of ten patients would discuss
CAM use with their primary care physicians if they felt more comfortable doing so. Based on research at the University of
Kentucky, most medical students and residents have favorable attitudes toward CAM, but most don=t feel qualified to counsel
patients about these matters (Hoellein Lineberry, and Kifer, 2008).
Given the reluctance of patients and doctors to discuss these types of treatment, a number of medical and nursing schools are
beginning to teach courses on CAM so future health professionals can discuss these topics with patients (Lee, et al., 2007).
However, this has not been easy. Programs that have tried incorporating CAM into their curriculum have met with resistance
from faculty who are committed to evidence-based instruction (Sierpina et al., 2007). Physician who have tried to be more
holistic in their practices have also faced challenges because these services are not covered by insurance plans (Golddman,
2008). Nevertheless, an increasing number of medical and nursing schools have come to recognize the importance of
familiarizing both undergraduate and graduate students with complementary and alternative medicine (Smith, 2009; Sierpina et
al., 2007).
Educating medical students and nurses about CAM is important because there are risks associated with some combinations of
alternative medicine and allopathic medicine. In a poll of 1,000 people, four out of ten were unaware of risks associated with
mixing CAM and physician prescribed drugs (Moss, 2004). Using ginkgo with blood thinners tends to counteract the thinners
effect and this can cause clotting problems. Likewise, antidepressants prescriptions can mix badly with St. Johns Wort (Lalley,
2004). The Food and Drug Administration currently regulates herbal supplements as foods, not drugs. As a result, the FDA
maintains a lower standard for safety and effectiveness for herbal medicines. With the dangers of mixing some alternative
medicine with allopathic medicine, patients and practitioners should be more proactive in understanding each others
perceptions of health care. Since CAM may interact negatively with some treatments; patients need to feel comfortable
discussing this with their physicians.
More research is needed to address some important limitations in our research. We recognize that quantitative, cross-sectional
data does not allow adequate testing of causal inferences. A mail survey collected at one point in time makes it difficult to
determine if the health behaviors examined existed prior to visiting an alternative practitioner or developed after having done
so. This would require a focused follow-up interview with study participants to reconstruct time sequences, but limited funds
made this impossible. However, even if health behaviors for some study subjects were the effects rather than the causes of
alternative medicine, the statistical associations would still point to the probable existence of a holistic orientation toward health
among those types of help-seekers. In addition, dissatisfaction with health services might also be a consequence rather than a
cause of visiting an alternative practitioner. For example, a person may have decided to try an alternative medicine practitioner
because a friend recommended this option and subsequently found that the encounter was more pleasant than previous visits
to a medical doctor. In this instance, the dissatisfaction could be the result of comparisons made after the fact. Additional
research is needed to sort out these possibilities. A final limitation in any self-reported survey is the possibility of a social
desirability bias. For example, there is always the possibility that some individuals might report higher frequencies on health
behaviors they feel are socially desirable. We do not believe that social desirability was a problem in our study because the
types of health behaviors examined do not have strong social approval connotations. There is also a chance that respondents
might have underreported alternative medicine use given the Mormon bias toward scientific medicine; however, our study
results showing similar levels of use in Utah and the Nation suggests that this too is not a serious problem.
Much more research is needed on CAM use in different populations and cultural groups both at home and abroad. Recent
research in Australia (OConnor & White, 2009) and Malaysia (Hasan et al., 2009) reflect a global interest in this topic. Growing
interest and awareness in alternative and complementary medicine in the United States is sure to put increasing pressure on
health professionals and the schools that train them to become more holistic and nutritionally competent in their approach to
medical practice.
174
Table 1: Odds ratios and logistic regression showing effects of variables on use of alternative medicine
Has Used Alternative Medicine in Past Year
Variables
Number
Odds Ratios
Female
(N = 263)
38.1
Male
(N = 203)
22.7
Frequently
(N = 131)
Sometimes
(N = 186)
Never
(N = 149)
25.5
Frequently
(N = 53)
Sometimes
Never
Adjusted Odds Ratios
Gender
2.094 ***
1.693 *
40.5
1.985 **
1.464
29.6
1.226
1.007
47.2
2.818 ***
1.424
(N = 280)
31.8
1.471
1.004
(N = 133)
24.1
Frequently
(N = 16)
68.8
5.693 ***
4.905 **
Sometimes
(N = 102)
37.3
1.536 *
1.363
Never
(N = 348)
27.9
(N = 57)
40.4
1.587 *
0.974
One or Two
(N = 225)
30.2
1.016
0.906
None
(N = 184)
29.9
(N = 58)
41.4
2.032 *
2.399 **
Somewhat Sat.
(N = 249)
32.5
1.388
1.584 *
Very Satisfied
(N = 159)
25.8
Four or More
(N = 132)
37.9
2.744 **
2.233 *
One to Three
(N = 257)
31.9
2.109 *
1.748 *
(N = 77)
18.2
HEALTH BEHAVIORS
Read Calorie Labels
Watch Health Programs
Buy Organic Foods
MEDICAL EXPERIENCES
Chronic Conditions
Three or More
Satisfaction With Services

Dissatisfied
Doctor Visits
None
Logistic Regression Summaries
-2 Log = 538.8 ***
Nagel R = .117
*p < .05 ** p < .01 ** * p < .001
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The Use of Interactive Technology for Health Promotion by Caretakers of Preschool Children with Upper Respiratory Infections
THE USE OF INTERACTIVE TECHNOLOGY FOR HEALTH PROMOTION

BY CARETAKERS OF PRESCHOOL CHILDREN WITH UPPER
RESPIRATORY INFECTIONS
Sue-Jen Lin14
I-Shou University, Taiwan
SUMMARY
Given the increasing emphasis worldwide on health promotion and health programs to improve health and reduce diseases,
and the financial burden on health care resources in Taiwan, the purposes of this study are to campaign self health-care
management for minor/chronic illness and effectively increase the publics awareness in the proper use of medical resources.
Upper Respiratory Infections (URI), or common cold, are minor, self-limiting, and have very low morbidity rate, yet it is the
most common reason for clinical visits. It is also the number one disease that incurs the highest medical cost on Taiwans
health care resources. In Taiwan, the number of visits to Western medicine clinics for URI was 67 million in 2006, which
accounted for 26% of the total visits. For the same year, the annual cost of URI treatments totaled 22 billion, which accounted
for 12% of the total medical cost. People in Taiwan averaged 3.46 episodes of URI each year, spending over $1000 dollars for
each physician visit. Preschool children reported the highest physician visit rate, with half of their total visits due to URI-related
diseases. With well-developed health promoting programs to promote health, reduce disease risks and manage minor
illnesses, it may well increase the publics awareness on self health-care management and decrease the healthcare costs. This
study targeted its focus on the caretakers of preschool children with a high frequency of clinical visits due to common colds. In
considering the age range of this group, 25 34, and their high inclinations of Internet web browsing, the study designed and
developed an interactive health communication campaign website with multimodality using the PRECEDE model. With the
PROCEED model, the effectiveness of this interactive health communication campaign website was evaluated in terms of
experimental, survey and observation methods. The findings of this study serve a basis for establishing and evaluating longterm, effective, Internet-based health promotion campaigns that promote self health-care management for minor, chronic
illnesses. This study was completed in three stages: pre-campaign stage, message development stage, and post-campaign
evaluation stage. The pre-campaign stage consisted mainly with expert interviews and focus groups. Based on the PRECEDE
model, surveys were conducted on doctors, nurses, pharmacists, hospital administrators, daycare personnel, and parents of
preschool children to offer their insights on social diagnosis, epidemiological diagnosis, behavioral and environmental
diagnosis, educational and organizational diagnosis, and administrative and policy diagnosis on issues related to URI.
The results of these diagnoses from different sectors serve as the guiding principles for designing and developing the Internetbased Interactive Health Communication (IHC) campaign during the message development stage. The effectiveness of the IHC
campaign was then evaluated in the post-campaign evaluation stage. Using convenience sampling, this study chose 3 largesized daycare centers with similar characteristics and asked the parents of preschoolers at these schools as participants.
Parents were randomly assigned to 3 conditions: 2 experimental groups and 1 control group. Participants in the first
experimental group (n=100) were asked to logon and browse the Internet website. Parents in the second experimental group
(n=100) received pamphlets with URI information, while those in the control group (n=100) were not asked to browse the
website, nor did they receive any pamphlets. Survey data were obtained after the experiments and analyzed to determine the
effectiveness of the IHC campaign. Participants in the experimental groups who browsed the interactive website and
participants who received pamphlets with URI information performed significantly better than those who did not browse the
website nor receive any pamphlets. But no significant difference was found in terms of numbers of visits to doctors among
these three groups, which might due to participants fear of Avian influenza. Moreover, between the experimental groups that
had website access and that received pamphlets, no significant difference was found in terms of performance in URI-related
care, knowledge, attitude, and number of doctor visits due to the fact that participants in the first experimental group did not
access the website information regularly to produce the expected effects.
Keywords: Upper Respiratory Infections, Health Promotion, Health Communication, Health Education, Interactive
Technology, PRECEDE-PROCEED Model
14
Sue-Jen Lin is an assistant professor at the Department of Mass Communication in I-Shou University in Taiwan.
178
S.-J. Lin
INTRODUCTION
The fundamental purpose of social health insurance plan is to provide medical resources for those who are in critical needs of
it. Since its inception in 1995, Bureau of National Health Insurance in Taiwan has been striving to maintain a balance between
sharing resources and risks, and most importantly, utilizing the limited medical resources efficiently to ensure quality and
reduce unnecessary wastes.
Upper Respiratory Infections (URI), or common cold, are minor, self-limiting, and have very low morbidity rate, yet it is the
most common reason for doctor visits. It is also the number one disease that incurs the highest medical cost on Taiwans
health care resources (Huang & Hsu, 2001). In Taiwan, the number of visits to Western medicine clinics for URI was 67
millions in 2006, which accounted for 26% of the total visits. For the same year, the annual cost of URI treatments totaled 22
billion, which accounted for 12% of the total medical cost. People in Taiwan averaged 3.46 episodes of URI each year,
spending over $1000 dollars for each physician visit. Preschool children reported the highest physician visit rate, with half of
their total visits due to URI-related diseases (Department of Health, Taiwan, 2006).
With well-developed public health and health promoting programs to promote health, reduce disease risk and manage both
chronic and minor illness, it may well increase the publics awareness on self health-care management and decrease the
healthcare costs. This study targeted its focus on the caretakers of preschool children with a high frequency of clinical visits
due to common colds.
LITERATURE REVIEW
URI is the most common illness in children (Chen & Fang, 1994), accounting for one-third to one-fifth of total outpatient clinic
visits (averaged episodes per year for adults: 1 3 times, for children: 3 7 times) (Liu & Tseng, 1992). According to National
Health Insurance Bureau, for the year 2000, 2001, and 2002, annual healthcare costs incurred due to URI totaled 24, 25, (Lin &
Ting, 2003) and 22 billions of NT dollars (DOH, 2002), respectively. In these three years, the average cost for each physician
visit per person was 1,092, 1,119 (Lin & Ting, 2003) and 1,101 NT dollars (DOH, 2002)
As many researchers have reported, prescriptions for common colds may relieve cold symptoms but there is still no cure
(Braun & Fowles, 2000; Virtanen, 1983). According to medical literatures in U.S. and Canada, common misconceptions of URI
and its treatments are the causes of unnecessary physician visits (Friedman, Lee, Kleinman, & Finkelstein, 2003; Vinson &
Lutz, 1993; Bergman, 2002; Verbrugge & Ascione, 1987).
In reaction to these research reports, health authorities in both U.S. and Canada had taken some measures to campaign self
healthcare management to reduce the number of physician visits due to common cold, and had generated completely different
outcomes. In the 1980s, pamphlets with URI information, a free thermometer and toll-free Q&A telephone numbers were
distributed in the United States, and these efforts reduced 44% of doctor visits related to URI (Roberts, Imrey, Turner,
Hosokawa, & Alster, 1983). The same efforts were also taken in the province of Ontario, Canada in 1994, where propaganda
and self-care pamphlets such as Outpatient Visits Exhaust Medical Resources, No Doctor for Common Colds, and Doctors
Cannot Cure Colds, were promoted to the public. However the number of outpatient visits due to URI did not alter much
despite the efforts (Ikegami & Campbell, 1995).
It could be argued that patients seek medical attention for other reasons, such as misconception, lack of information on the
disease, and social support or comfort. Moreover, children who attend preschool have a higher rate in doctor visits than those
who stay home because parents were led to believe that preschools would want them to seek medical attention with any signs
of cold symptoms (The National Institute of Child Health and Human Development Early Child Care Research Network, 2003;
Silverstein, Sales, & Koepsell, 2003). Hence personal, cultural, social, medical, and economical factors must be considered in
the planning and implementation of any health promoting programs.
HEALTH PROMOTION BY MEANS OF INTERACTIVE TECHNOLOGY

In comparison to frequently used propaganda media (such as posters, flyers, pamphlets, videos, and CDs), Internet interactive
technology is able to provide personalized messages to each user. Each user is able to obtain personalized information
through the Internet, seek supports, and interact with medical experts (Skinner & Kreuter, 1997). Furthermore, these Internet
activities can take place within the privacy of own homes (Lu, 2003). It is evident, as reported by many studies, that
interactivity and multimodality are the keys to the success of health promotion campaign via Internet (Lieberman, 1997;
Jimison, 1997, Brennan & Fink, 1997; Gustafson et al., 2001).
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Interactive technology could be defined as a type of online communication for which users may freely obtain information in the
format they prefer, and in the same time, interact with the messages (Street & Rimal, 1997). By allowing users to control or
alter message contents (e.g. posting articles on website bulletin boards), or to respond instantly on messages, messages
received on users end are much more receptive than those from conventional media. Moreover, the multimodality of
interactive technology means different communication modes such as texts, images, photos, music, and animation can all
integrate on a single platform. Together with other functions like e-mail, chat room, and online medical database, users are
given a wide range of choices to receive information from the Internet, connect with others, even make decisions related to
health behaviors (Street & Rimal, 1997).
However, interactive technology has yet to be commonly adopted in the promotion of health issues, mainly due to the fact that
interactive systems are not easily applicable in this field. Researchers are not only required to conduct extensive studies on
communication and transmission methods, they also need to have extensive knowledge in the behaviors that are to be
changed with a particular health issue, personal characteristics of the users, theories in behavioral changes, the understanding
of interactive technology, and how to collect user data from the Internet (Skinner & Kreuter, 1997). Experts in the above fields,
be in health promotion or in interactive technology, must collaborate to find the most effective communication channel to reach
out to target users (Slater, 1995).This study targeted its focus on the caretakers of preschool children with a high frequency of
clinical visits due to common colds. In considering the age range of this group, 25 34, and their high inclinations of Internet
web browsing, the study engaged support from a lecturer and a research assistant who are experts in health and hospital care
administration and website design, respectively, to assist in the designing and developing of an interactive health
communication campaign website with multimodality.
HEALTH PROMOTION AND PRECEDE-PROCEED MODEL

The National Cancer Institute and the Centers for Disease Control and Prevention define health communication as the use of
communication strategies to inform and influence individual and community decisions that enhance health (U.S. Department of
Health and Human Services, 2004). Hence, many researchers have developed much of their studies in applying
communication strategies to design series of health education campaigns to influence the understanding, attitude, and
behavior of the general public towards certain health issues.
From these literatures, we can further understand that to communicate effectively, many factors must be considered. By which
communication channel should the message be transmitted is affected by the target audience's
preference in media use. Factors such as the cultural background, social population variance, and the demographic
circumstances of the target audience would greatly affect the design of the intended message. (McGuire, 2001; Green, Gottlieb
& Parcel, 1991). To attain expected results from a health promotion program, the founders of PRECEDE-PROCEED Model,
Green and Kreuter took in considerations of Health Belief Model (Green & Kreuter, 1993; Victor & Rosenstock, 1997), Social
Learning Theory (Bandura, 1977), Theory of Reasoned Action (Fishbein & Ajzen, 1975) , Stages of Change Theory (Maibach &
Cotton, 1996), and Stages of Change Theory (Maibach & Cotton, 1996) in designing a conceptual model to systematically
develop and evaluate health promotion programs.
The PRECEDEPROCEED model is consisted of two parts: PRECEDE and PROCEED. PRECEDE is the acronym for
Predisposing, Reinforcing and Enabling Constructs in Educational/Environmental Diagnosis and Evaluation, with a purpose to
find the predisposing, reinforcing and enabling factors that could affect health behaviors during educational/environmental
diagnosis and evaluation. The design of the proposed Internet-based interactive health communication campaign was based
on the guidelines of PRECEDE model.
PROCEED is the acronym for Policy, Regulatory, and Organizational Constructs in Educational and Environmental
Development, which was employed to evaluate the effectiveness of this interactive health communication campaign website.
The PRECEDEPROCEED model has a total of nine steps (Step 15 for PRECEDE, and 69 for PROCEED) as shown in
Figure. 1, with each step defining the necessary scope involved in the process of implementing the interactive health
communication campaign.
Step 1: Social diagnosis

First identify those people who are involved with the health issue at hand and assess their points of view to locate the problems
faced with this particular health issue. Problems are prioritized based on the measurement of quality of life through social
index.
180
S.-J. Lin
Step 2Epidemiological diagnosis

Identify the problem that affects the quality of life, particularly on the reasons for its overall effect on the individual, community,
or society level, and possible solutions.
Step 3: Behavioral and environmental diagnosis

Behavioral and environmental diagnoses are performed for the problem identified in Step 2. Behavior is a controllable factor on
individuals, while environment is an uncontrollable external factor. Beliefs, attitudes, values, and social environment that may
assist in the implementation of the ideal behavioral model are diagnosed to help the target audience to accept the said model.
Step 4: Educational and organizational diagnosis

Determine the factors that may inflict behavioral changes for the identified problem. The order in which these factors are
addressed in the interactive health campaign is based on the level of influence each factor has on the problem. The factors are
categorized as follows:
1. Predisposing factors: Refers to factors that address reasons or motives to promote or hinder the implementation of the
ideal behavioral model, including knowledge, attitude, values, and beliefs. The misconception of cold medicine (to
relieve and cure cold symptoms) is an example of predisposing factor that hinders self health-care management.
2. Enabling factors: Refers to factors that promote or hinder the implementation of the ideal behavioral model, including
techniques and convenience of medical treatments. Lack of knowledge and techniques are examples of enabling factors
that hinder self health-care for common cold.
3. Reinforcing factors: Refers to factors that can encourage or disrupt the implementation of the ideal behavioral model,
such as positive or negative feedbacks from significant others. Opinions from family members, colleagues, or medical
staff are all reinforcing factors.
Step 5: Administrative and policy diagnosis

In this step, organizational policies, available resources and time restraints are identified to determine an effective approach to
promote positive behaviors among the targeted group.
As Green & Kreuter (1993) and Kindree, Ashbury, Goel, Levy, Lipskie, & Futcher (1997) suggested, the best method to
evaluate Step 1 to 5 is by taking the qualitative approach (e.g. seminars, focus groups, in-depth reviews). People who are
involved with the health issue at hand gather to discuss their points of view.
Step 6: Implementation of the program

The evaluations performed from Step 1 to 5 are used as the basis to design and develop an IHC campaign that is appropriate
for the targeted audience.
Step 7: Process evaluation

The process of IHC campaign is evaluated base on the PRECEDE principles and changed accordingly based on the inputs of
participants.
Step 8: Impact evaluation

The IHC campaign is evaluated to determine if the short-term goals of the campaign have been achieved effectively.
Predisposing, enabling, and reinforcing factors are also evaluated and modified accordingly to boost the performance of the
ideal behavioral model.
Step 9: Outcome evaluation

The IHC campaign is evaluated to determine if the overall goals of the campaign have been achieved and if the quality of life
has improved due to changes made to behaviors.
Since the 1970s, PRECEDE- PROCEED Model has been successfully applied on many health promotion issues such as the
control of transmitting diseases (Adyanju, 1987-88); the determination of peoples understanding, attitude, and behavior
181
towards AIDS (Alteneder, Price, Telljohann, Didion, & Locher, 1992); the promotion of balanced diet and moderate exercise
(Green, Wang, & Ephross, 1974; National Cancer Institute, 2001; Parcel, Simons-Morton, & OHara, 1989); the promotion of
healthy living style (Chiu, Huang, Koh, Chiu, Huang, 1998); the prevention of teenage smoking (Secker-Wallker, Worden,
Holland, Flynn, & Destsky, 1997); the factors influencing women in receiving pap-smear examinations (Chien & Chi, 1995);
violent behaviors and communication skills (Wu, 1999); the survey of senior citizens towards health check-ups (Chiu, Wu,
Wang, & Lee, 1999); disease and prevention ( Green, Wilson, & Bauer, 1980); and workplace health and safety
(Brosseau, Parker, Lazovich, Milton, & Dugan, 2002).
In this study, an IHC campaign was designed and developed based on the PRECEDE guidelines of the PRECEDE-PROCEED
model. With the PROCEED model, the effectiveness of this interactive health communication campaign website was evaluated
by the use of experimental, survey and observation methods.
The PRECEDE-PROCEED model (Figure 1) was applied in designing an IHC campaign program that promotes self healthcare management for upper respiratory infections and other minor, chronic illnesses. The findings of this study will serve a
basis for establishing and evaluating long-term, effective, Internet-based health promotion campaigns. By directing and
maintaining the focus on factors such as behaviors and environment, the PRECEDE-PROCEED model provides a basis for
implementations and evaluations. In our study, the PRECEDE model first defined the causes of high physician visits for URI
patients. Once program goals were defined, the PROCEED model was applied in the implementation of the health promotion
program, followed by the evaluation of the programs effectiveness. With the success of the proposed Internet-based,
interactive health promotion campaign in reducing the number of outpatients visits due to URI, other heath promotion programs
may be implemented to establish the concept of self health-management for minor, chronic illnesses.
Figure 1: PRECEDE-PROCEED Model
PRECEDE
----------------------------------------------------------------------------------------Step 5
Step 4
Step 3
Step 2
Administrative and
Educational and
Behavioral and
Epidemiological
Policy Diagnosis
Organizational
Environmental
Diagnosis
Diagnosis
Diagnosis
Health
Promotion
Predisposing
factors
Reinforcing factors
Health Education
Behavior and
lifestyle
Health status
Regulations,
Organization
Structure
Step 1
Social Diagnosis
Enabling factors
Step 6
Implementation
Quality of life
Environment
Step 7
Step 8
Process Evaluation Impact Evaluation
----------------------------------------------------------------------------------------PROCEED
182
Step 9
Outcome Evaluation
S.-J. Lin
METHOD
Procedures
This research was completed in three stages: pre-campaign stage, message development stage, and post-campaign
evaluation stage. Each of the three stages was conducted differently based on the nine steps of PRECEDE- PROCEED model,
in combination with multiple theories such as health belief, social learning, diffusion of innovation, consumer information
processing, organizational changes, logical behavior, and stages of changes.
(1) Pre-campaign stage

Based on literature reviews, instruments and protocols necessary for expert interviews and focus group discussions were
created. In accordance to Step 1-5 of PRECEDE- PROCEED model, surveys were then conducted to have medical experts,
daycare personnel, and parents of preschool children offer their insights in providing social diagnosis, epidemiological
diagnosis, behavioral and environmental diagnosis, educational and organizational diagnosis, and administrative and policy
diagnosis on issues related to upper respiratory infections. These diagnoses could be used as the basis in determining the
campaign themes, understanding the traits of the target audience, and designing effective health promotion programs.
(2) Message development stage

The results of diagnoses from the pre-campaign stage served as the guiding principles for designing and developing the
proposed Internet-based IHC campaign in the message development stage. Before the website was officially launched, a
usability test was conducted on the focus groups to see if adjustments on the design of the site were necessary.
(3) Post-campaign stage

The effectiveness of the proposed IHC campaign was evaluated in the post-campaign stage. Using convenience sampling, this
study used three large-sized daycare centers with similar characteristics and asked the parents of preschoolers at these
schools as participants. Parents were randomly assigned to 3 conditions: 2 experimental groups and 1 control group.
Participants in the first experimental group (n=100) were asked to logon and browse the IHC website. Parents in the second
experimental group (n=100) received pamphlets with URI information, while those in the control group (n=100) were not asked
to browse the website, nor did they receive any pamphlets. Survey data were collected from participants after the experiments.
The effectiveness of the IHC campaign was then determined based on the responses of the performance in URI related care,
knowledge, attitude and the frequency of physician visits of these parents, using analyses such as descriptive statistics, Ttests, ANOVA, and correlation analysis.
RESULTS
With expert interviews and focus groups, surveys were conducted on medical staff, daycare personnel, and parents of
preschool children to offer their insights on issues related to upper respiratory infections in terms of social diagnosis,
epidemiological diagnosis, behavioral and environmental diagnosis, educational and organizational diagnosis, and
administrative and policy diagnosis. Results obtained from Step 1-5 of the PRECEDE- PROCEED model in terms of theory
reference, method, research level, structure, variables, target and data resource were tabulated on Table 1 and Table 2.
183
Table 1: PRECEDE Model

PRECEDE
To find the predisposing, reinforcing, and enabling factors that could affect health behaviors during educational/environmental diagnosis and
evaluation, and use them as the guidelines in the design of the proposed interactive health communication campaign.
Theory
Method
Step 1
Social diagnosis
Level
-Expert interview Community

-Focus group
(qualitative
approach)
Step 2
Epidemiological
diagnosis
Structure
Demographics
Health
knowledge,
attitude,
behavior
Variable
Target
Age, sex, education level, occupation, Medical staff,

family type, income, social status
daycare
center
Knowledge, attitude and self health personnel,
management for the prevention and
parents of
caring of URI related illnesses; usage
preschool
of healthcare resources
children

-Focus group
(qualitative
approach)
Data Source
Live sound
recording and notes
taken from target
audience, followed
by data analysis
Same as
above
Same as above
Step 3
Behavioral and
environmental
diagnosis
- Stages of change
- Social learning theory

Lifestyle
-Focus group
Interpersonal
(qualitative
Individual
approach)
Habits from:
Eating, Exercising, and
Sleeping
Same as
above
Same as above
Step 4
Educational and
organizational
diagnosis
-Stages of change
- Health belief model
-Social learning theory
-Diffusion of innovation
-Consumer information
processing theory
- Organizational change
theory

-Focus group
Interpersonal
(qualitative
Individual
approach)
Predisposing
constraints
Knowledge and attitude towards URI

illness
Same as
above
Same as above
Reinforcing
constraints
Social support; self-awareness
Enabling
constraints
Supply of medical resources; skills in

URI prevention and self health management; proximity of medical
service
Step 5
Administrative
and policy
diagnosis
Same as above
-Diffusion of innovation -Expert interview Community

- Organizational change -Focus group
(qualitative
approach)
Same as above
Same as
above
Same as above
Table 2: PROCEED Model

PROCEED
Theory
Step 6
Persuasive
Implementation health
message
framework
Method
Level
-Observation method
Community
(qualitative approach)
Interpersonal
-Focus group (qualitative Individual
approach)
Step 7
Process
Evaluation
Communication -Survey questionnaires Community

persuasion
(pretest)
Interpersonal
matrix
-Experimental method
Individual
(qualitative approach), Observational method
(qualitative approach), Survey method
Step 8
Impact
evaluation
Experimental method
Structure
1. Attitude
2. Knowledge for
the promotion
campaign
Community Predisposing
Interpersonal factors
Individual
Reinforcing
factors
Variation
Target/
Participants
Data Source
Research staff/ media

production crew,
parents of preschool
children
1. Observations recorded
by research analysts
2. Survey on the attitude
and knowledge of the
promotion campaign
Parents of preschool
children
Survey
Knowledge and attitude Parents of preschool

toward URI illness
children
Survey
1. Degree of like
2. Degree of
understanding and
remembering the
content
Social support; selfawareness
Enabling factors Supply of medical

resources; skills in URI
prevention and self
health -management;
proximity of medical
service
Step 9
Outcome
evaluation
-Health belief
model
- Social
learning theory
-Diffusion of
innovation
Survey questionnaires
(post-test) to analyze:
1.decriptive statistics
2.t-test
Community Quality of life

Interpersonal
Individual
184
performance in URI
Parents of preschool
related care,
children
knowledge, attitude and
the frequency of
physician visits
Survey
S.-J. Lin
In following the suggestions based on Table 1 and 2, the Internet-based IHC campaign website was created and pamphlets
with URI information were distributed during the influenza season of November 2006 to February 2007. The daycare center
with parents in the first experimental group was asked to update their IHC campaign website once a week. Parents were
reminded on weekly basis to browse the website for updated information related to URI prevention and treatments. The
daycare center with parents in the second experimental group that received pamphlets was asked to distribute pamphlets with
updated URI information every Friday for a total of 16 publications. Parents in the control group did not browse the website nor
received any information pertaining to URI from the research team. Survey questionnaires were filled out by all of the
participants in the three conditions at the end of the experiment in February 2007. The purpose of the surveys was to have a
better understanding of the participants in terms of performance in URI related care, knowledge, attitude and the frequency of
physician visits.
Among 300 participants, 66.3% (n=199) were females and 33.7% (n=101) were males. 25.3% (n=76) received high school
education, 47.0% (n=141) were college graduates, and 27.6% (n=83) received post-college education. 6.7% (n=20) were under
20 year- old, 26% (n=78) were 21-30 year-old, 31.7% (n=95) were 31-40 year-old, 19.0% (n=57) aged between 41-45, and
16.7% (n=50) were older than 45. No significant demographic differences were found among three conditions.
The results indicated that parents in the experimental groups who browsed the interactive website and parents who received
pamphlets with URI information performed significantly better than those who did not browse the website nor receive any
pamphlets, in terms of performance in URI related care(experimental groups, Mean=3.78; control group, Mean=2.77; df=293,
p<.000), knowledge(experimental groups, Mean=3.38; control group, Mean=2.60; df=298, p<.000), and attitude(experimental
groups, M=3.02; control group, Mean=2.31; df=298, p<.000). However, no significant difference was found in terms of the
frequency of physician visits between these two conditions(experimental group, M=2.65; control group, Mean=2.71; df=298,
p=.665).
Table 3:
Means, degree of freedom, and p-value of URI related care performance, knowledge, attitudes, and the frequency
of physician visits between experimental and control conditions
Dependent variables
URI related care
performance
Experimental groups
(website and pamphlet)
MEAN
3.78
df
.000***
MEAN
3.38
df
.000***
MEAN
3.02
df
2.31
298
p-value
Number of physician visits
2.60
298
p-value
URI Attitudes
2.77
293
p-value
URI Knowledge
Control group (no intervention

received)
.000***
MEAN
2.65
2.71
df
298
p-value
.665
***Significant at the 0.001 level

Furthermore, between the first experimental group that had website access and the second experimental group that received
pamphlets, no significant differences were found in terms of performance in URI-related care(website access, Mean=3.61;
pamphlet, Mean=3.60, df=198, p=.940), knowledge(website access, Mean=3.89; pamphlet, Mean=3.67, df=193, p=.090),
attitude(website access, Mean=3.49; pamphlet, Mean=3.28, df=198, p=.148), and number of doctor visits (website access,
Mean=2.62; pamphlet, Mean=2.68, df=198, p=.719).
185
Table 4:
Means, degrees of freedom, and p-values of URI related care performance, knowledge, attitudes, and the
frequency of physician visits between two experimental conditions
Dependent variables
URI related care
performance
URI Knowledge
URI Attitudes
Number of physician visits
Website Access Group

MEAN
Pamphlet Group
3.61
3.60
df
198
p-value
.940
MEAN
3.89
3.67
df
198
p-value
.090
MEAN
3.49
3.28
df
198
p-value
.148
MEAN
2.62
2.68
df
198
p-value
.719
***Significant at the 0.001 level

DISCUSSION
The present investigation sought to compare the effectiveness of an interactive health communication campaign website with
that of traditional health promotion campaign (pamphlets received) and no intervention. The finding that participants assigned
to both experimental conditions (website and pamphlet) reported higher performance scores in URI related care, had better
URI knowledge and URI care attitudes than participants received no intervention suggests that health communication
campaigns are effective in terms of changing peoples knowledge and attitudes. However, although participants in experimental
conditions had fewer physician visits than those in control condition, the difference was not statistically significant. This
research was conducted during the prevalence of Avian Influenza in Taiwan, so this no difference in changing participants
behavior could be attributed to the fear of Avian Influenza. The fear of Avian Influenza might activate participants in the
experimental conditions to look for medical care when they had symptoms of common cold, regardless the fact that they had
better understanding and attitudes about URI than people in the control group.
This study did not find support for interactivity on an individuals knowledge, attitude and behaviors toward URI care.
Participants in high interactive experimental condition (website condition) did not have a higher URI related care performance
score, nor do they have better understanding/attitudes or fewer physician visits than those in less interactive condition
(pamphlet condition). Re-examining the log files of the website usage carefully, we found that parents in the experimental
group did not access the website information regularly as they were instructed to do. The failure of finding the attitudinal and
behavioral differences in the two experimental conditions might due to the fact that participants in the interactive experimental
condition did not browse the website frequently enough to produce the expected effects.
LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH

The most perplexing finding of this research is the failure to find URI-related changes in the two experimental conditions.
Although the use of IHC campaign as the stimuli for this research to create a more interactive health promotion environment
strictly followed the guidelines of PRECEDE-PROCEED Model, problems inevitably arise when participants in the interactive
website condition might not receive the same amount of information as those in pamphlet-receiving condition. Carefully reexamining the browsing behaviors of those in the first experimental condition, we found that only 59% of the participants
browse the site on a weekly basis and the average browsing time was less than 3 minutes for the 100 participants in the
website access condition. Compared with participants in the second experimental condition who received 16 issues of URIrelated pamphlets, participants who accessed website might not receive the same amount of information as parents in
pamphlets-only condition. Thus, it is quite probable that the failure of finding the attitudinal and behavioral differences for
people in the two experimental conditions was due to the quantity of URI information received offset the effect of the
interactivity provided by the website, not interactivity per se fail to produce the expected effects. Given the campaign
characteristics of this research, it was hard to strictly control the quantity of information between the two experimental
186
S.-J. Lin
conditions. Future research could employ strict experimental control method that does not confound the effects of interactivity
and the amount of information received.
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L. Geng and Q. Yao
INFLUENCING FACTORS FOR PURCHASING DECISIONS OF ORGANIC

FOOD PRODUCTS
Lifeng Geng and Qingshuang Yao

Lakehead University, Canada and Thermo Fisher Scientific, Canada
ABSTRACT
As consumers concerns grow over the health, nutritional, and environmental consequences of the food they eat, organic food
products have become increasingly popular in recent years. This study aimed to gain insights into the effects of consumers
demographic, socio-economic, and psychological factors on their organic food consumption behavior. Regression results
suggest that organic food products environmental and nutritional benefits, as perceived by the consumers, are the major
factors behind consumers purchase decisions in terms of both the frequency and the amount of money they spend on organic
food products.
Keywords: Organic Food, Consumer Behavior
INTRODUCTION
Organic food products, by definition, are foods produced without the use of fertilizers, pesticides, or other chemical ingredients.
They are regarded as green and healthy food. As consumers are getting more concerned about the foods health,
environmental, and nutritional benefits, organic food products have become increasingly popular in recent years (Gil, 2000). In
2003, the total worldwide sales of organic food products reached $25 billion (Nair, 2005). In North America, the growth of the
organic food industry is estimated at over 20% per year, compared to a 1% growth for overall retail food sales (Martin, 2003).
Canada imports over 85% of its organic food products: 40-50% of the organic food products are fresh fruits and vegetables; the
rest are dairy, meat, processed products, beverages, and convenience food. In Canada, organic food products become
increasingly available to a broader range of consumers. Along with this, federal regulations also start to emerge which intents
to provide a uniform standard for how organic food can be grown, processed and marketed, and how the organic labels can be
applied (Zepeda et al, 2004). Despite these developments, the market for organic food products in Canada is not well
developed, compared to the fast growing market for organic food products in the United States and European countries.
Indeed, organic food retail sales in Canada are about $1 billion compared to $12 billion in the United States (Martin, 2003).
Over the past decades, various studies on consumer attitudes and behavior towards organic food have been conducted.
Nevertheless, most studies have been conducted in the UK, United States, Germany, Denmark and Sweden. It is under this
context that we think that basic consumer behavior studies need to be undertaken for the development of Canadian organic
food market. Such studies are necessary since they will provide both practitioners and academics with better understanding of
the consumers organic food purchasing behavior, and will help practitioners develop effective marketing programs for organic
food products. The main objective of this paper is to explore the influencing factors that affect Canadian consumers purchasing
decisions regarding organic food products. In the following section, we will conduct a literature review. Next we will elaborate
on the research methodology and data collection method. In the third section, we will analyze the data collected. Finally, we will
discuss the results of analysis and future avenues of research will be suggested.
LITERATURE REVIEW
According to economic theory, the purchase of organic food products will be affected by their price. It is the perception of
buyers of both organic and conventional food products that organic food products are more expensive (Makatoani, 2001).
Verdurme (2002) noted that price was the primary reason for keeping consumers away from buying organic food products.
Batte et al. (2003) found that nearly 82 percent of the respondents in his survey cited high prices as their main reason for not
buying organic food. A number of other studies have found similar results (Fotopoulos, 2002; Hill, 2002; Pearson, 2001; Van
tine, 2003).
189
In addition to the price factors, previous studies have revealed that consumer attitudes and behavior towards organic foods are
affected by a number of psychological, demographic, and socio-economic variables.
Psychological Variables
Psychological variables are variables that characterize an individuals beliefs and concerns. Three psychological variables have
been identified as factors that affect the consumers purchase of organic food products.
1. The Consumers Health Concern.

Over the last two decades, food consumption has clearly been influenced by the "healthy" trend (Mike J, 1993). Consumers are
increasingly concerned with their health and the potential negative impact pesticides have on their health. In Jacquess (1997)
study, 97.3% of the respondents claimed that the foods impact on their health is very important to them. In UK, some studies
indicated that people purchase organic food because they tried to avoid foods that are sprayed with pesticides (Makatoani,
2002). Both Fotopoulos (2002) and Verdurme (2002) found that health is the most important factor that encourages consumers
to buy organic food and some consumers are willing to pay a premium price for organic products.
2. Nutritional Concern
The foods nutritional benefit is one of the main driving forces for the consumers purchase of organic food products (Verdurme,
2002; Batte et al., 2003). Verdurme (2002) found that almost all organic food buyers cited organic products as more
nutritional than conventional products. In Batte et al.s (2003) study, 51 percent of the respondents ranked nutrition as the
most important reason for their purchase of organic food.
3. Environmental Concern
Environmental concern is another important factor affecting the consumers purchase of organic products (Bridget, 1995).
Rowland (2002) reported that customers believe that organic food products are better for the environment than conventional
products. Makatoanis (2001) study indicates that compared to non-buyers of organic food, buyers of organic food are more
concerned about the environment. In Verdurmes (2002) study, environmental concern was ranked as the third reason behind
consumers decision to buy organic food products.
Demographic Variables
1. Age
Previous studies have generated mixed results about the relationship between age and the consumers purchase of organic
food products. For example, Straughan (1999) found that age is negatively related to the purchase of green products.
Fotopoulos (2002) reported that younger consumers are more willing to pay a premium price for reductions in pesticide
exposure than older consumers. Jacques (1997) found that the consumers attitude towards light food was positively related
to their age. Nevertheless, Batte et al. (2003) suggested that consumers who were older than 55 were more likely to pay a
premium price for organic cereal.
2. Gender
Studies on the relationship between gender and the consumers purchase of organic food products have also generated mixed
results. Soler (2002) suggested that women knew more about organic product and were willing to pay more for organic
products. He argued that women tend to be the primary food purchasers for the household and may be more concerned about
the quality and nutritional benefits of organic food products. Straughan (1999) reported that buyers of organic food are more
likely to be women. Fotopoulos (2002) found that 76.6% of organic food purchasers are women, who typically regard
themselves as green/ethical consumers. In Lis (1997) study, it is revealed that compared to females, the males tend to
consume more organic food products in Hong Kong. Other researcher found no gender effects. For instance, Sandalidou
(2002) found that gender does not seem to affect customers preferences for organic food. In fact, both men and women in his
study are satisfied almost to the same degree with organic food products.
3. Education
Education has been found to be a key factor that affects the consumers purchase of organic food. Fotopoulos (2002) found
that 30% of organic food consumers have a university degree. Batte et al. (2003) found that consumers with some post
secondary education are more likely to purchase organic cereal than consumers with lower levels of education. Hill (2002)
suggested that consumers tend to feel incapable of making a good choice in purchasing organic food, unless they are
educated about the benefits of eating organic food. However, Soler (2002) reported a negative relationship between the level of
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L. Geng and Q. Yao
education and the purchase of organic food products when organic food products are more expensive (i.e. as the level of
education rises among consumers, their purchases of organic product go down).
4. Marital Status
Fotopoulos (2002) reported that married consumers are more likely to buy organic food products than single consumers.
Socio-Economic Variables
1. Income
Organic food often costs more than conventional food. It is natural to expect that consumers with higher income would be more
likely to purchase organic food. Fotopoulos (2002) found that household income significantly affect the consumers willingness
to pay for organic food. In Batte et al.s (2003) study, it was revealed that shoppers with household income greater than
$75,000 were more likely to buy organic food products. Li (1997) reported that high-income earners purchase more organic
food products than low-income earners. However, Straughan (1999) did not find any significant relationship between income
and organic food consumption.
2. Household Size
Soler (2002) found that households with 2-4 people tend to have a higher willingness to pay for organic food. Households
without children were also found to be more likely to purchase organic food than those with children (79% versus 21%).
RESEARCH METHODOLOGY
The study was conducted in a mid-sized Canadian city. The sample was chosen randomly from patrons to 4 chain grocery
stores. The data was collected with close ended questionnaire using a face-to-face method.
The questionnaire is divided into five sections. The first section aims at collecting the respondents psychological profiles. They
were asked to rate the organic food products health, environmental, and nutritional benefits on a 1-7 Likert scale. The second
section collects data on the respondents purchasing behavior on organic food products. Their purchasing behavior are
measured by two variables: the frequency they purchase, and the amount of money they spend on organic food products per
month, which are both measured on a 1-7 Likert scale. The third section measured organic food products expensiveness
perceived by the respondents. The respondents were asked to rate their answer on a 1-7 Likert scale. The fourth section
collected information on the respondents demographic characteristics. The respondents marital status was measured on a 5
categorical scale. Gender was measured with a binary scale. Age was measured with a 3 point scale and education was
measured with a 4 point scale. Finally, in the last section, the respondents were asked to provide their household size and
income, which were measured by a ratio, and 4 point scale respectively.
For this study, a total of 240 grocery chain store patrons have been contacted and invited to participate in the survey on a
voluntary basis. Among them, 151 participated and filled out the questionnaires, with a response rate of 63 percent.
DATA ANALYSIS
Descriptive Statistics
Among the 151 respondents who filled the questionnaires, 51.7 per cent are female, 48.3 per cent are male. 33 respondents
(21.9%) hold high school or lower diplomas, 52 respondents (34.4%) hold college diplomas, 47 respondents (31.1%) hold
bachelor degrees; and 18 respondents (11.9%) hold master degrees or PhDs. As regards to household income, 30 individuals
(19.9%) had an annual income of less than $40,000 Canadian dollars; 60 (39.7%) earned between $40,000 and $60,000
dollars; 36 (23.8%) was between $60,000 and $80,000 dollars; and 22 (6.1%) made more than $80,000 dollars. For household
size, 16 individuals (10.6%) live alone; 39 (25.5%) had 2 family members; the percentage of families with 3 members is 26.5%;
the percentage of families with 4 members is 21.9%; approximately 3.3% had 6 or more members. Among the respondents, 49
(32.5%) are under 35 years old; 77 (51%) are between 35 to 60; and 25 (16.6%) are older than 60. 98 (64.6%) of the
respondents were married; 26 (17.2%) are single; 18 (11.9%) were divorced; and 9 (6%) were separated. The distribution in
terms of marital status is unbalanced and a visual inspection of the data indicated that there is no significant difference among
respondents who are single, divorced, or separated. Therefore, the respondents marital status was recoded into two
categories: married, single and others. For the 151 respondents, 87 (57.6%) have purchased organic food in the past six
months and 64 (42.4%) didnt. For those who have purchased organic food products in the past six months, 32 (21.2%)
consume once per month; 29 (19.2%) consume twice per month; 5 (3.3%) consume three time per month; and 20 consume
191
more than 3 times per month. The money they spend on organic food products also varies. 6 (4%) of the buyers normally
spend $1-$20 on organic food per month; 14 (9.3%) spend between $20 and $40 per month; 26 (17.2%) spend $40-$60 per
month; 17 (11.3%) of them spend between $60 and $80 dollars per month; 14 (9.3%) spend between $80 and $100; and only
10 (6.6%) spend more than 100 dollars.
Regression Analysis
In order to conduct the regression analysis, 3 dummy variables were created for respondents age. A1 would be 1 if a
respondent is under 35, and 0 otherwise. A2 would be 1 if a respondent is between 35 and 60, and 0 otherwise. A3 would be 1
if a respondent is older than 60, and 0 otherwise.
4 dummy variables were created for the highest level of education the respondent received. Edu1 would be 1 if a respondent
received a high school or lower diploma, and 0 otherwise. Edu2 would be 1 if a respondent received a college diploma, and 0
otherwise. Edu3 would be 1 if a respondent received a bachelor degree, and 0 otherwise. Edu4 would be 1 if a respondent
received a Master or PhD degree, and 0 otherwise.
4 dummy variables were created for the respondents annual household income. Inc1 would be 1 if a respondents annual
household income is below $40,000, and 0 otherwise. Inc2 would be 1 if a respondents annual household income is between
$40,000 and $60,000, and 0 otherwise. Inc3 would be 1 if a respondents annual household income is between $60,000 and
$80,000, and 0 otherwise. Inc4 would be 1 if a respondents annual household income is above $80,000, and 0 otherwise.
In addition, 2 dummy variables were created for the respondents gender. G1 would be 1 if a respondent is male, and 0
otherwise. G2 would be 1 if a respondent is female, and 0 otherwise. 2 dummy variables were created for the respondents
marriage status. M1 would be 1 if the respondent is married, and 0 otherwise. M2 would be 1 if the respondent is single,
separated, divorced, or other, and 0 if the respondent is married.
The regression analysis was conducted in three steps: first, the perceived expensiveness of organic food products alone was
entered to examine its influence on the frequency the respondents purchase organic food products and the amount of money
they spend on organic food products per month. Second, the demographic and social economic variables were entered into the
regression equations. Finally, the Psychological variables were entered to test the effects of the perceived health,
environmental, and nutritional benefits of organic food products on the consumers purchasing behavior.
Table 1: Regression Results (perceived expensiveness entered)
Frequency:
Std. Error
Constant
3.761
.450
Expensiveness
-.285
.082
Standardized
Coefficient
-.276
F Statistics
11.997
R Square
.076
Sig.
8.361
.000
-3.464
.001
.001

Amount:
Std. Error
Constant
6.036
.652
Expensiveness
-.560
.119
Standardized
Coefficient
-.361
F Statistics
21.970
R Square
.130
Sig.
9.262
.000
-4.687
.000
.000
Table 1 and Table 2 present regression results when the respondents perception of expensiveness was entered in the
regression equations for the frequency and the amount the respondents purchase organic food products. As we can see from
these tables, the respondents perception of expensiveness has significant and negative impacts on both the frequency and the
amount of the respondents purchase of organic food products. Both models are significant with F statistics of 11.997, and
21.970, which are significant at .001 and .000 respectively.
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L. Geng and Q. Yao

Frequency:
Std. Error
Constant
1.583
.669
Expensiveness
-.168
.085
A2
.141
A3
Standardized
Coefficient
Sig.
2.365
.019
-.162
-1.983
.049
.255
.051
.554
.581
.737
.334
.200
2.208
.029
Edu2
.614
.301
.209
2.038
.044
Edu3
.152
.262
.051
.580
.563
Edu4
.747
.390
.173
1.919
.057
Inc2
.441
.295
.156
1.496
.137
Inc3
.772
.324
.240
2.381
.019
Inc4
1.251
.381
.323
3.282
.001
G2
.347
.219
.125
1.586
.115
M2
-.023
.247
-.008
-.092
.927
Household Size
.028
.092
.027
.308
.758
F Statistics
3.475
R Square
.237
.000
Table 3 presents regression results when the respondents demographic and socio-economic characteristics are entered in the
regression equation for frequency. As we can see from this table, the models overall goodness of fit has been significantly
improved with an F statistic of 3.475 (significant at .000 levels) and an increased R square of .237.
The respondents perception of expensiveness has a standardized regression coefficient of -0.162, which is significant at .05
levels. For the dummies of respondents ages, A2 has an insignificant regression coefficient and A3s standardized regression
coefficient is 0.2. Its t value is 2.208 and is significant at .02. The regression coefficients of these two dummies indicate that
there is no significant difference between respondents who are under 35 and those who are from 35 to 60 in terms of their
frequency of purchasing organic food products. However, compared to respondents who are under 35 years old, respondents
who are over 60 years tend to purchase more organic food products.
For the dummies of education, Edu3 has an insignificant regression coefficient. Edu2s standardized regression coefficient is
0.209. Its t value is 2.308 and is significant at .04. Edu4s standardized regression coefficient is 0.173. Its t value is 1.919 and
is significant at .05. These regression coefficients imply that a U-shaped relationship between the respondents level of
education and the frequency they purchase organic food products might exist. It seems that for respondents who received
college diplomas, and those who received Master or PhD degrees, they tend to purchase organic food products more often
than those with high school or lower diplomas; but, there is no significant difference between respondents who received
Bachelor degrees and those with high school or lower diplomas.
For the dummies of household income, Inc2 has an insignificant regression coefficient. Inc3s standardized regression
coefficient is 0.240. Its t value is 2.381 and is significant at .02. Inc4s standardized regression coefficient is 0.323. Its t value is
3.282 and is significant at .001. These regression coefficients suggest that there is a significant and positive relationship
between the respondents household income and the frequency they purchase organic food products.
Finally, the regression coefficients for household size, and the dummies of respondents gender and marriage status are
insignificant. This implies that the respondents gender, marriage status, and household size do not affect how often the
respondents buy organic food products.
193

Amount:
Std. Error
Constant
2.666
.940
Expensiveness
-.357
.119
A2
.205
A3
Standardized
Coefficient
Sig.
2.836
.005
-.229
-2.995
.003
.358
.049
.573
.568
1.070
.469
.194
2.281
.024
Edu2
.854
.423
.194
2.020
.045
Edu3
-.087
.369
-.020
-.236
.814
Edu4
.620
.547
.095
1.132
.260
Inc2
.857
.414
.202
2.073
.040
Inc3
.954
.455
.198
2.094
.038
Inc4
2.643
.535
.454
4.938
.000
G2
.367
.307
.088
1.195
.234
M2
-.265
.348
-.060
-.762
.447
Household Size
.133
.129
.083
1.031
.304
F Statistics
5.563
R Square
.333
.000
Table 4 presents regression results when the respondents demographic and socio-economic characteristics are entered in the
regression equation for the amount of money the respondents spend on organic food products. Overall, the regression results
are similar to those of the frequency. As we can see from this table, the models overall goodness of fit has been significantly
improved with an F statistic of 5.563 (significant at .000 levels) and an increased R square of .333.
levels. For the dummies of ages, A2 has an insignificant regression coefficient and A3s standardized regression coefficient is
0.194. Its t value is 2.281 and is significant at .02. The regression coefficients of these two dummies indicate that there is no
significant difference between respondents that are under 35 and those who are from 35 to 60 years old in terms of the amount
of money they spend on organic food products. However, compared to those who are under 35 years old, respondents who are
over 60 years tend to spend more money on organic food products.
For the dummies of education, both Edu3 and Edu4 have insignificant regression coefficients. Edu2s standardized regression
coefficient is 0.194. Its t value is 2.020 and is significant at .05. These regression coefficients imply that an inverted U
relationship between respondents level of education and the amount of money they spend on organic food products might
exist. It seems that for respondents who received college diplomas, they tend to spend more money on organic food products
than those with high school or lower diplomas. However, this is not the case for those received Bachelor, Master, or PHD
degrees.
For the dummies of household income, Inc2 has a standardized regression coefficient of .202. Its t value is 2.073, which is
significant at .04 levels. Inc3s standardized regression coefficient is 0.198. Its t value is 2.094 and is significant at .04 levels.
Inc4s standardized regression coefficient is 0.454. Its t value is 4.938 and is significant at .000 levels. These regression
coefficients suggest that there is a consistent significant positive relationship between the respondents household income and
the amount of money they spend on organic food products.
Finally, the regression coefficients for household size and the dummies of respondents gender and marriage status are
insignificant. This implies that the respondents gender, marriage status, and household size do not affect the amount of money
the respondents spend on organic food products.
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L. Geng and Q. Yao

Frequency:
Std. Error
Constant
-.525
.497
Expensiveness
-.042
.061
A2
.134
A3
Standardized
Coefficient
Sig.
-1.057
.293
-.040
-.682
.496
.178
.048
.755
.452
.324
.234
.088
1.348
.169
Edu2
.279
.210
.095
1.327
.187
Edu3
.209
.187
.071
1.118
.266
Edu4
.461
.272
.107
1.697
.092
Inc2
-.135
.210
-.048
-.644
.521
Inc3
.229
.229
.071
1.000
.319
Inc4
-.366
.296
-.094
-1.239
.218
G2
.122
.153
.044
.796
.428
M2
.108
.173
.037
.627
.532
Household Size
-.047
.064
-.044
-.727
.469
Health Benefit
.105
.067
.121
1.558
.122
Env. Benefit
.364
.070
.504
5.225
.000
Nut. Benefit
.190
.074
.223
2.564
.011
F Statistics
15.730
R Square
.643
.000
Table 5 presents regression results when the perceived organic food products health, environmental, and nutritional benefits
are entered in the regression equation for frequency. As we can see from this table, the models overall goodness of fit has
been significantly improved with an F statistic of 15.730 (significant at .000 levels) and an increased R square of .643.
The standardized regression coefficient for perceived environmental benefit is .504. The corresponding t value is 5.225, which
is significant at .000 levels. The standardized regression coefficient for perceived nutritional benefit is .223. The t value is
2.564, which is significant at .01. These regression coefficients suggest that there are significant and positive relationships
between the frequency of the respondents buying organic food products and the respondents perception of organic food
products environmental and nutritional benefits. However, the regression coefficient for perceived health benefit is insignificant,
which suggests that the frequency the respondents buy organic food products is not affected by their perception of organic food
products health benefit.
In addition, the previous significant regression coefficients for A3, Inc3, Inc4, Edu2, Edu4, and the perceived expensiveness
became insignificant.
195

Amount:
Std. Error
Constant
-.899
.489
Expensiveness
-.153
.060
A2
.203
A3
Standardized
Coefficient
Sig.
-1.839
.068
-.098
-2.528
.013
.175
.049
1.159
.249
.378
.230
.068
1.642
.103
Edu2
.295
.207
.067
1.426
.156
Edu3
-.011
.184
-.002
-.058
.954
Edu4
.119
.268
.018
.445
.657
Inc2
-.102
.207
-.024
-.495
.621
Inc3
.045
.225
.009
.198
.844
Inc4
-.078
.291
-.013
-.270
.799
G2
-.007
.151
-.002
-.049
.961
M2
-.028
.170
-.006
-.166
.868
Household Size
.004
.063
.002
.061
.952
Health Benefit
.220
.066
.170
3.334
.001
Env. Benefit
.603
.069
.556
8.787
.000
Nut. Benefit
.295
.073
.231
4.047
.000
F Statistics
48.165
R Square
.847
.000
Table 6 presents regression results when the perceived organic food products health, environmental, and nutritional benefits
are entered in the regression equation for the amount. As we can see from this table, the models overall goodness of fit has
been significantly improved with an F statistic of 48.165 (significant at .000 levels) and an increased R square of .847.
levels. This suggests that the more expensive the respondents perceive that the organic food products are, the less likely they
will spend on these products.
The standardized regression coefficient for perceived health benefit is .170. The corresponding t value is 3.334, which is
significant at .001 levels. The standardized regression coefficient for perceived environmental benefit is .556. The
corresponding t value is 8.787, which is significant at .000 levels. The standardized regression coefficient for perceived
nutritional benefit is .231. The t value is 4.047, which is significant at .000 levels. These regression coefficients suggest that
there are significant and positive relationships between the amount of money the respondents spend on organic food products
and their perception of organic food products health, environmental, and nutritional benefits.
In addition, the previous significant regression coefficients for A3, Inc2, Inc3, Inc4, and Edu2 became insignificant.
CONCLUSIONS AND DISCUSSIONS

This study tried to identify the key factors that affect Canadian consumers purchase of organic food products. We conducted
regression analysis for both the frequency the consumers purchase and the amount of money they spend on organic food
products with a number of demographic, socio-economic, and psychological variables. Overall, in all of the three steps of
regression analyses, the model on the amount have generated much better goodness of fit than the model on frequency, as
evidenced by the models R square.
Results from these analyses consistently support the notion that the perceived environmental and nutritional benefits of organic
food are the two most important factors that stimulate the consumers purchase of organic food products. Consumers
perception of the organic food products expensiveness and health benefit, on the other hand, have generated mixed results.
While the regression analysis on the amount found the influence of consumers perceptions of organic food products
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L. Geng and Q. Yao
expensiveness and health benefit to be significant, the regression analysis on the frequency found these two factors
insignificant.
In contrary to previous studies findings, our analyses found that the consumers gender, marital status, and household size do
not have any significant impacts on both the frequency they purchase and the amount of money they spend on organic food
products.
Inconsistent results can also be found in the stage two and stage three analyses for both dependent variables. While the
regression coefficients for the dummies of age, education, and income were significant in the second stage, they became
insignificant when the consumers perception of health, environmental, and nutritional benefits were entered in the third stage
of regression analysis. The standardized regression coefficient for the consumers perception of expensiveness became
insignificant in the case of frequency, and has reduced impact in the case of amount in the third stage of regression analysis.
Visual inspection of the relationships among these variables revealed some interesting results. For instance, there are strong,
positive relationships among the consumers household income and the perceived health, environmental, and nutritional
benefits. There is not much differences between consumers who are under 35 years old and those from 35 to 60 years old.
However, consumers who are more than 60 years old tend to found much more health, environmental, and nutritional benefits
in organic food products. For education, contrary to common sense, it is the consumers with college diplomas who will put
much higher value on organic food products environmental and nutritional benefits than those with Master or PhD degrees.
Strong relationships can also be observed among the perceived expensiveness and the perceived health, environmental, and
nutritional benefits. It might suggest that when the consumers see more health, environmental, and nutritional benefit in organic
food products, they tend to perceive organic food products as less expensive.
These interesting observations will lead to two potential avenues for future research. First, the strong relationships among
these independent variables might cause multi co-linearity problems and could be the reason behind the depressed volume
and insignificance for the influence of age, income, education, and the perceived expensiveness. Second, the relationships
among the perceived health, environmental, nutritional benefits and age, income, education, as well as the perceived
expensiveness might provide clue for a possible path relationship. In other words, the perceived health, environmental, and
nutritional benefits might serve as intermediary variables through which the consumers age, income, education, and the
perceived expensiveness will affect the frequency they purchase and the amount they spend on organic food products.
In order to remove the influence of multi co-linearity, a factors analysis is necessary to be conducted. The factors generated
from this analysis will be entered into the regression analysis as the independent variables. For the path relationship, a
structural equation modelling need to be conducted to test the direct and indirect effects of consumers age, income, education,
and their perceived expensiveness on the frequency they purchase and the amount of money they spend on organic food
products.
REFERENCES
Batte, M. T., Beaverson, J., & Hooker N. (2003). Organic food labels: A customer intercept survey of central Ohio food
shoppers. Retrieved Feb 19, 2005, from http://aede.osu.edu/resources/docs/pdf/DL17AFRV-ZRD8-OWNKR8ETVPJMEKVM6E64.pdf.
Bridget, M., & Antonis C, S. (1995). The impact of green product lines on the environment: does what they know affect how
they feel? Marketing Intelligence & Planning, 113(4), 16-24.
Chinnici, G, DAmico, M & Pecorino, B. (2002). A multivariate analysis on the consumers of organic product. British Food
Journal, 104(3-5), 187-199.
Fotopoulos, C., & Krystallis, A. (2002). Purchasing motives and profile of Greek organic consumer: a countrywide survey.
British Food Journal, 104(8/9), 730-764.
Gil, J., Gracia, A., & Sanchez M. (2000). Market segmentation and willing to pay for organic products in Spain. International
Food and Agribusiness, 3, 207-226.
Hill, H., & Lynchehaun, F. (2002). Organic milk: attitudes and consumption patterns. British Food Journal, 104(7), 526-542.
Jacques, V. (1997). Consumer behavior towards light products in Belgium. British Food Journal, 199(3), 105-122.
Li, L. (1997). Effect of collectivist orientation and ecological attitude on actual environmental commitment: the moderating role
of consumer demographics and product involvement. Journal of International Consumer Marketing, 9(4), 31-54.
Makatouni, A. (2001, April). What motivates consumers to by organic food in the UK? Retrieved Feb 16, 2005, from
http://www.organic-research.com /Pdfs/ Research /901931000.htm
Makatouni, A. (2002). What motivates consumers to buy organic food in UK? British Food Journal, 104(3-5), 345-352.
197
Martin, H. (2003). Is it certified organic?

Retrieved Feb. 17, 2005, from Agriculture and Food Web site
http://www.gov.on.ca/OMAFRA/english/crops/ field /news /croptalk/2003/ct0603a4.htm.
Mike J, B. (1993). Healthy and light foods: understanding the consumer. British Food Journal, 199(3), 3-20.
Nair, G. (2005). N. America, Europe leads in organic food production. Retrieved Feb. 17, 2005, from Business Line Web
site:http://www.thehindu businessline.com /2005/02/09/storie s/2005020orcom01.htm.pdf.
Pearson, D. (2001). How to increase organic food sales: result from research based on market segmentation and product
attitudes. Agribusiness Review, 9(8), 23-34.
Roddy, G, Cowan, C & Hutchinson, G. (1996). Consumer attitudes and behavior to organic food in Ireland. Journal of
International Consumer Marketing. 9(2), 41-63.
Rowlands, I. H., Parker, P., & Scott P. (2002). Consumer perceptions of "green power". The Journal of Consumer Marketing,
127(2), 112-130.
Sandalidou, E., & Baourakis, G. (2002). Customers' perspectives on the quality of organic olive oil in Greece. British Food
Journal, 104(3-5), 391-406.
Soler, F., & Gil, J. M. (2002). Consumers' acceptability of organic food in Spain. British Food Journal, 104(8/9), 670-687.
Storstad, O., & Bjorkhaug, H. (2003). Foundations of production and consumption of organic food in Norway: common attitude
among farmers and consumers. Agriculture and Human Values, 20(2), 151-163.
Straughan, R. D., & Roberts, J. A. (1999). Environmental segmentation alternatives: a look at green consumer behavior in the
new millennium. The Journal of Consumer Marketing, 16(6), 558-564.
Vantine, M., & Verlinden, S. (2003, Nov). Organic Marketing and Certification. Retrieved Feb 20, 2005, from
http://www.wvu.edu/~agexte n/farmman2 /Organic/mrktg.
Verdurme, A., Gellynck, X., & Viaene J. (2002). Are organic food consumers opposed to GM food consumers? British Food
Journal, 104(8/9), 610-623.
Vindigni, G., Janssen, M. A., & Jager W. (2002). Organic food consumption. British Food Journal, 104(7), 624-642.
Zepeda, L., Chang, H., & Leviten-Reid c. (2004, May 11). Organic food demand: a focus group study, involving Caucasian and
African American shoppers. Retrieved Feb 14, 2005, from http://www.wisc.edu/wage/pubs/articles /zepeda -chang -levitten
organic.pdf.
198
D. Radulovic and D. Radovanovic
ARE COGNITIVE ABILITIES OF CRIMINAL PSYCHOPATHS LOWER THAN

ABILITIES OF NON-CRIMINAL, NORMAL POPULATION?
Danka Radulovic and Dobrivoje Radovanovic

ABSTRACT
In this investigation analysis have been performed with respect to the efficiency of perceptive, serial and parallel processor in
one sample of 147 serious criminals, which had been diagnosed by one taxonomy algorithm as psychopaths, and normal, noncriminal population. Important and significant differences have been found which have shown that psychopath criminals have
significantly lower efficiency with all three cognitive processors, particularly processors for perceptive identification, analysis
and synthesis and processors for simultaneous processing of a number of information flows.
Keywords: Cognitive Abilities, Criminal Psychopaths, Normal.
PROBLEM
According to findings reached by certain number of authors, psychopaths, or at least primary psychopaths are outstandingly
intelligent persons with particularly well-expressed verbal abilities (Cleckey, 1976; Hare 1970; Bartol, 1995). Since those
findings are contrary to the results obtained through some other researches, those results have been tested on the basis of
results obtained in one large and representative sample of examinees, which were tested through a very large set of
intelligence tests, and through one many times tested set of psychopath disorders tests (Momirovi i Hoek, 1998). In one
representative sample of 647 male examinees between 19 and 27 years of age, analysis have been made with respect to
relation between intelligence and psychopathy on the basis of results obtained in 25 tests for assessment of efficiency of
perceptive, serial and parallel processor and four tests of psychopathy. Significant canonic correlation has been found (0.57),
which could be attributed to disorders in functions of central, perceptive, parallel and particularly serial processor among
examinees with psychopathic personality. However, those results have been obtained in one sample from clinically and
criminologically normal population, not in the sample of psychopaths identified among perpetrators, so that they only show that
there are relations between psychopathic characteristics of a personality and disorders in cognitive functions, but they do not
prove directly that criminal psychopaths are really of lower cognitive abilities compared to non-criminal, normal population.
Since psychopaths make significant part of criminal population, and since findings about outstanding, or at least higher than
average, intelligence of psychopaths have often been derived on the basis of examination or observations of psychopaths
which had been pronounced some institutional sanction for committed crime, it is of doubtless criminological and criminal-legal
significance to determine what is actual intelligence of a criminals with psychopathic personality. This was done in this paper in
relatively easy manner.
METHOD
Large random sample composed of male criminals between 21 and 55 years of age has been classified through moving clouds
method (Diday, 1971) into two taxons on the basis of main components of Likerts scales from tests made for assessment of
psychopathic characteristics of a person. Titles of those tests, their authors, measurement subjects, standardized difference
between arithmetic mean of psychopath taxon and arithmetic mean of other criminals (z), intensity of such difference assessed
through Fishers inter-group correlation coefficient (), and significance of such difference (p) are listed in Table 1.
In such manner, a group of 147 criminals has been identified with particularly psychopathic characteristics. Position of that
groups centroid in space of variables doubtlessly shows that, according to classification system DSM-IV (APA,1994), these are
the criminals who belong to nosological category 301.7 (Antisocial Personality Disorder), which is closest to classical idea of
psychopathy. Table 2 contains criminal acts for which those criminals had been sentenced and number and percentage of
psychopaths who had committed those acts.
199
Table 1:
Distance between Psychopath Taxon and Other Criminals in Tests of Psychopathic Characteristics of Personalities
Test
Author
Measurement subject
SIGMA4
Bosnar, Prot, Momirovi
Basic aggressiveness
1.14
.57
.00
DELTA4
Dissociation of conative function
1.27
.64
.00
ETA2
Disintegration of conative function
1.22
.61
.00
SIGMA1
Radovanovi et al.
Psychopath aggressiveness
1.43
.72
.00
SIGMA2
Momirovi et al.
Anal aggressiveness
1.00
.50
.00
SIGMA3
Wolf et al.
Oral aggressiveness
1.41
.70
.00
MAK
Radovi
Machiavellism
1.30
.65
.00
SKN
Radovi
Acceptance of subculture of violence
1.33
.67
.00
HIP
Radovi
Hyper individualism
1.39
.69
.00
HED
Radovi
Hedonism
1.24
.62
.00
MACH
Radovi
Pseudomasculinity
1.27
.63
.00
Table 2:
Criminal Acts and Number of Psychopaths who Committed those Acts
Act
Murder
40
27.2
Serious theft, mugging or burglary
82
55.8
Serious act of transport endangerment
2.7
Rape
11
7.5
Other acts
10
6.8
These examinees were tested under the same conditions as all others through KOG 3 set, which operationalized reduced
version of cybernetic model of cognitive functions (Wolf, et al, 1992).
Titles of the tests, their authors, measurement subjects and reliability coefficients are listed in table 3.
Table 3:
Titles, Authors, Measurement Subjects and Reliability of Cognitive Tests
Test
Author
Measurement subject
Reliability
IT1
ALPHA4
S1
Dvorak
Wells
Reuchlin and Valin
Efficiency of perceptive processor

Efficiency of serial processor
Efficiency of parallel processor procesora
.91
.94
.92
Differences between cognitive abilities among criminal psychopaths and normal, non-criminal population have been determined
through simple t-test, where arithmetic means in these test, obtained in a sample of 52000 examinees, were treated as
population values. Those pieces of information have been taken from instruction Manual for KOG 3 set application.
RESULTS AND DISCUSSION

Main results of implemented analysis are given in table 4. In the table arithmetic means are marked with while standard
deviations are marked with . Parameters of normal population are supplemented with subscript N, while parameters of criminal
psychopaths are supplemented with subscript P. Standardized difference between arithmetic means are marked with z, t stands
for Gosset t-test value, and p stands for significance of that difference.
Table 4:
Test
IT1
ALPHA4
S1
Arithmetic Means, Standardized Deviations, Standardized Differences and T-Tests Significance of Differences
Between Arithmetic Means in Cognitive Tests Applied to Normal Population and Criminal Population Psychopaths.
N
20.70
25.71
18.03
15.18 7.81
22.69 9.24
13.56 7.18
9.01
12.19
8.68
-0.71 0.33 0.62
7.43
3.00
6.25
.00
.00
.00
200
Intensity of differences has been also assessed in a simple approximation of Fishers inter-group correlation coefficient. The
results are given in table 5, where stands for inter-population correlation coefficient, and 2 stands for that coefficient square,
i.e. a part of variance of each variable which may be attributed to differences between normal population and criminal
population psychopaths.
Table 5:
Inter-Population Determination Coefficients and Inter-Population Correlation Coefficient between Normal Population
and Criminal Population Psychopaths
Test
IT1
.28
.52
ALPHA4
.06
.24
S1
.21
.46
lts clearly show that it is not correct that psychopaths that commit criminal act are usually of normal intelligence level, and it is
even less correct that those psychopaths are mainly of an outstanding intelligence level. As certain analysis applied to one
sample of non-criminal population (Momirovi and Hosek, 1998) have shown, intelligence of psychopathic personalities are
significantly below average levels, and these results show the same for the intelligence of those psychopaths who committed
certain criminal act; their average IQ is 92.This result is in accordance with findings of Hirschi and Hinderlang (1997). What is also
important from criminological, and which also may be important from criminal law point of view, is that criminals psychopaths
most commonly have damaged functions of reception, recognition and organization of information, and functions of simultaneous
processing of a number of information flows, i.e. functions which are under great influence of genetic factors, and that relatively
lowest damages are noticed in functions of sequential processing of symbolically encoded information, i.e. function which is under
great influence of exogenic factors.
This fact is of particular significance when it is known that Holzinger coefficients for the efficiency of perceptive and parallel
processor of 0.80 size, and in some areas even higher (Jensen, 1991; Eysenck, 1967; 1991), and that coefficients of
congenital properties are not significantly lower as well for the efficiency of serial processor, and when we bare in mind a range
of undisputed proofs about significant impact of genetic factors to psychopathy, and to the intensity, even to the type of criminal
behavior (Eysenck,1977).
Some other data, important for the interpretation, but also probably for the application of obtained results, are given in table 6.
This table contains 95 percent intervals of reliability for arithmetic means in cognitive tests in population of psychopathic
criminals, and 95 percent intervals of reliability for variances of those tests in that population. In order to enable easier
comparison intervals of reliability of arithmetic means and variances of criminal population are supplemented with arithmetic
means and variances of normal, non-criminal population.
Table 6:
Test
IT1
ALPHA4
S1
Intervals of Reliability of Arithmetic Means and Variances in Cognitive Tests in Population of Criminals
Psychopaths and Arithmetic Mean and Variance of Those Tests in Normal Population
d
13.71
20.71
12.14
16.65
24.68
14.97
20.70
25.71
18.03
2
d
q 2
oa
N2
ON
65.34
119.68
60.59
103.55
189.65
96.02
61.00
85.37
60.84
It is obvious that arithmetic means in normal population lay above reliability interval in which arithmetic means in population of
psychopath criminals lay, so it is doubtless that those criminals are inferior in all three cognitive factors. However, variances in
normal population lay below reliability intervals in which variances in population of psychopath criminals lay, so it is also
doubtless that psychopath criminals are pretty more heterogeneous group according to their cognitive functions compared to
normal, non-criminal population.
These results, of course, are not in accordance with prejudices from psychiatrists, psychologists and criminologists, but they
are in good accordance with results of so far empiric researches on intellectual abilities among criminals. Overview of these
researches may be found in Radovanovi, et al.(1995), who themselves found that criminals in general, not only criminals
psychopaths, are more inferior in cognitive terms than normal population, especially when we talk about intellectual abilities
which depend on efficiency of perceptive and parallel processor. Great deal of prejudices related to psychopaths intellectual
201
level is based on the prejudice that there is no relation between intellectual abilities and characteristics of a person despite the
fact that, as these authors themselves note, there are not only non-zero factors but also significant correlations between
cognitive and conative factors (Eysenck,1993). The reasons for such a standpoint as mentioned by Eysenck, are strange,
irrational and therefore impossible to be checked. However, large number of analyses (overview of the results obtained in
psychometric analysis may be found in Vucinic et al. (1992), while overview of the results obtained in the analysis on
neurophysiologic characteristics of psychopaths which clearly show breakdowns in their cerebral functions ( Bartol,2002,
Radulovic,1998), showed such high correlation between cognitive and conative factors, including conative factors which are
characteristic for both psychopaths and criminals, so it is very likely that psychopath type of disorder in conative functions is
related to disorders in cognitive functioning (Momirovic, et al,1986).
The question is how it is possible that, despite results achieved earlier researches which do not differ significantly from the
results achieved in this analysis,it is usually deemed that psychopaths have higher efficiency of all three cognitive processors.
The answer is in the structure of parameter given in tables 4, 5 and 6. We could see that psychopaths have relatively better
results on verbal test and that dispersions of results of psychopaths in all of applied tests is much higher than it is in normal,
non-criminal population.
Since verbal abilities are of greatest influence to subjective assessment or assessment supported by unreliable intelligence
tests, and since among criminals with psychopath personality there are those with very high intelligence, both of these factors
are convergently produced one sort of hallo effect, which is further more supported with uncritical generalization of results
achieved in individual cases, not the results of original, correct researches.
Facts are however, in contrast with widely accepted standpoints: criminals psychopaths particularly are as a group with
significantly lower cognitive abilities, regardless the fact that some of them may have average, even superior intelligence. If this
fact is supplemented with a fact that among psychopaths and criminals in general,those with increased degree of cortical
inhibition prevail, which means that they are less able to learn from experience, especially from negative experience (Eysenck,
1976; Eysenck and Eysenck,1976; Eysenck, Gudjonsson, 1990), it is clear that this cannot be a finding which could be neutral
not only from criminological, but also from criminal-law and penology standpoint. This of course is not stated because criminals
psychopaths would be deemed less mentally competent due to convergent cognitive and conative disorders, but because
their mental set makes them pretty resistant to usual sorts of penal treatment. Anyhow, the sample of criminals psychopaths
which was used for this analysis contained 66% of mainly multiple relapse cases, almost twice more than in the remaining
sample of criminals which did not show expressive psychopath symptoms.
Although results obtained in this research are in accordance with the findings of Hirschi and Hindelang (1977) they still should
be checked in samples in other cultural sets, as well as in samples of female population with the application of other
instruments for measurement of cognitive abilities in order to increase their generalizability.
REFERENCE
American Psychiatric Association (1994): Diagnostic and statistica! manual of mental disorders.
Washington, DC: American Psychiatric Association.
Bartol, C. (2002), Criminal behavior: A psychosocial Approach, New Jersey, Prentice Hall, pp. 90-119.
Diday, E. (1971): La methode des nuages dynamique. Revue de statistique appliquee, 19, 2: 19-34.
Eysenck, H. J. (1967): The biological basis of personality. Springfield: Thomas.
Eysenck, H. J. (1976): The biology of morality. In T. Lickona, Moral development and behavior.
New York: Holt, Rinehart and Winston.
Eysenck, H. J.; Eysenck, S. B. G. (1976): Psychoticism as a dimension of personality. London: Hodder and Stoughton.
Eysenck, H.J.(1977) Crime and personality. Routledge and Kegan, London.
Eysenck, H. J.; Gudjonsson, G. (1990): The causes and cures of criminality. New York: Plenum Press.
Eysenck, H. J. (1991): Is the notion of intelligence usefull or useless? Psychology, 24, 3-4: 195-210.
Eysenck, H. J. (1993): The relationships between IQ and personality. In G. L. Van Heck, P. Boneiuto, I. J. Deary and W. Nowack,
Personality psychology in Europe, 4, 159-180. Tilburg: Tilburg University Press.
Hare, R. (1970): Psychopathy: Theory and research. New York: Wiley.
Hirschi, T. and Hindelang, M. J. (1977), Intelligence and delinquency: A revisionist review, American Sociological Review, 42, 571-587.
Jensen, A. (1991): Spirman's G- factor: relations between psychometric and biology. Psychology, 24, 3-4: pp. 167-193.
Momirovi, K.; Ignjatovi, I.; ipka, P. (1986): Canonical relations between intellectual and personality domains. Review of psychology,
16, 1-2: pp.21-32.
Momirovi, K.; Hoek, A. (1998): Intelligence and psychopathy. Jougoslov review of criminology and criminal law, 36, 3: pp.49-58.
202
Radovanovi, D.; Radulovi, D.; Momirovi, K.; Hrnjica, S. (1995): Cognitive and conative characteristics of criminals.In D.
Radovanovi, Psychology of crime, 1, Belgrade: Institute of Criminological and Sociological Research, Center of applied
psychology, pp.75-86
Radulovi, D. (1998): Behavior and neurophysiology features of psychopath offenders. Jugoslav review of criminology and criminal law,
36, 2: pp.125-145.
Vuini, B.; Popovi, B. V.; Momirovi, K. (1992): In addition to knowledge of relation between intellectual abilities and personality
features. Review of Institute of Criminological and Sociological Research, 21, 1-2: pp.178-200.
Wolf, B.; Momirovi, K.; Damonja, Z. (1992): KOG 3: Cybernetic battery of conative tests. Belgrade, Center of applied psychology.
203
TEACHING BING MAPS IN A COLLEGE WEB PROGRAMMING COURSE
Penn Wu and Phillip Chang

Cypress College, USA and Aramis Technology LLC, USA
ABSTRACT
Embedding a dynamic map on a web page to facilitate the search of business operation location has become a common
practice to companies with e-business web sites. Web developers need the skill to use software development kits (SDKs), such
as Microsofts Bing Maps, to create web applications that enable viewers to map business locations. Yet, this is not a topic
taught in traditional web programming courses.
This workshop will share idea and experience on teaching this new topic using Microsofts Bing Maps in a college web
programming course, how the authors design the educational materials, and how this topic applies to the design of ebusiness/e-commerce web sites.
Keywords: Online Mapping Services, Embedded Online Map, Web Programming, Web Programming Course,
INTRODUCTION
Many commercial web sites, such as those used by hotels, have embedded draggable maps that help viewers find the
direction to the business operation locations. To embed such mapping service in a web page requires developer the knowledge
of JavaScript, Cascade Style Sheet, and preferably AJAX as well the use of service-specific software development kits (SDKs).
Consequently, there is a need for a college-level web programming course to teach students how to embed a simple map, a
set of driving directions, and/or a local search onto web pages.
Microsofts Bing Maps (formerly Virtual Earth) is an online mapping service that enables users to search, discover, explore,
plan, and share information about specific locations. To embed Bing Maps on a web site, developers need to use the AJAX
Map Control SDK.
There are several online mapping service providers, including Google Maps, Yahoo Maps, and Mapquest in addition to
Microsofts Bing Maps. While the Google Maps API enables developers to create new applications and mash-ups, Microsoft is
on its roadmap to integrate Bing Maps with the .NET Framework.
The authors choose Bing Maps for its possible expandability. Since developers can create .NET application with the supports
of Bing Maps ASP.NET Control, instructors can enjoy the flexibility to teach this topic in an advanced ASP.NET web
programming course. It is also possible to develop .NET desktop applications to use the Bing Maps services using Windows
Presentation Foundation (WPF) and Visual C#. However, this is not a topic for a web programming course.
Many college web programming courses mainly teach the basic skills of web site construction, web content development,
and/or web site management. Others focus on web-enabled business applications. Adding this topic can make these courses
more practical. Students can immediately apply the up-to-date techniques to any web development project, for both
commercial and private use.
Instructors teaching Bing Maps programming need to explain the terms of use to students. Unlike Google Maps API, which is
available as an open source products, Bing Maps is free for education and non-profit organizations. To use Bing Maps in a web
site that exceeds this limit, developers should review the terms of use, which is available for view at
http://www.microsoft.com/maps/product/terms.html.
204
P. Wu and P. Chang
LEARNING OBJECTIVES
In this workshop, the authors will discuss benefits of teach Bing Maps in a college web programming course, how to prepare
lecture and lab handouts as well as coding assignments, and the scope of course contents. If on-site computer lab is available,
the authors plan to provide the following hands-on learning activities:
display a map using JavaScript

display an embedded map
control the map
use routes and directions
work with birds eye images
display 3D maps (optional)
The authors will also discuss how to find the latitude and longitude of a particular place on the globe. The learning activities
require heavy user involvements and are designed to be result-oriented.
PROPOSED WORKSHOP LENGTH

The authors have prepared two sets of materials: one for on-site lecture, the other for hands-on learning activities. There are
three delivery modes available to accommodate the conference schedule: normal, accelerated, and presentation-based. Table
1 illustrates their difference in length.
Table 1: Proposed length
Sections
Normal
Accelerated
Presentation-based
Lecture
2 hours
1 hour
30 minutes
Hands-on learning activities
2 hours
1 hour
30 minutes
The lecture will begin with a demonstration of how Bing Maps is embedded in a school site, continue with an introduction to
Bing Maps AJAX Control SDK as well as basic programming techniques, and end with demonstrations of sample codes. The
proposed length of lecture is two hours, but it may be condensed to one hour. Visual aids, such as PowerPoint slides and preconstructed web sites, will help visualize the concepts and user interactions.
If on-site computer lab is available, participants will explore hands-on learning activities to assemble and test web pages with
embedded Bing Maps services. The learning objectives are available in the previous section.
REQUIRED EQUIPMENT
Equipment needed for the on-site presentation is simply an overhead projector (preferably color projector) that can be
connected to the authors laptop computer through a regular VGA connector.
If on-site computer lab is available, the hands-on activities require the following on the client computer:
Microsoft Windows XP Service Pack 2, Microsoft Windows Server 2003, or Microsoft Windows Vista
Microsoft Internet Explorer 6, 7 or 8, including 64-bit versions, or Mozilla Firefox 2.0 or 3.0.
Microsoft .NET Framework version 2.0
250 MB or more of hard disk space
a 2.8 GHz or faster processor
1GB of system memory
Optionally, a software, called Bing Maps 3D, requires the following on the client computer because of its complexity and
graphics-intensive nature. However, the discussion of Bing Maps 3D maps can be the instructors code demonstration if the
followings are not available:
a 256MB video card that supports Microsoft DirectX 9, with 3D hardware acceleration enabled
a high-speed or broadband Internet connection
205
COST
Except for the above equipment list and the authors laptop computer, there is no additional cost. The authors will make
sufficient copies of handouts at their cost. Bing Maps is free for education purpose, so no licensing is needed for this
presentation.
REFERENCE
Bing Maps AJAX Control SDK. (2009). Retrieved November 19, 2009, from MSDN website: http://msdn.microsoft.com/enus/library/bb429619.aspx
206
R. Gomez
USING TECHNOLOGY IN LARGE STATISTICS CLASSES
Ramon Gomez
Florida International University, USA
ABSTRACT
This paper consists of a preliminary report on the daily use of PowerPoint presentations and statistical software (SPSS) for
teaching introductory statistics courses at college. It summarizes the present authors experience with a large class of 200
students at Florida International University. The benefits of this technology integration are discussed, including statistical
comparisons to the more traditional teaching approach, characterized by a low level use of technology resources.
Statistics is often a difficult subject for many undergraduates taking introductory courses at college. This problem is currently
compounded with the frequent use of large classes for this type of courses. Although the previous two decades have seen an
extraordinary level of activity focused on how students learn statistics and how teachers can be more effective, todays
challenges are far greater than before. The emphasis in teaching introductory statistics courses has shifted from computations
to a deeper discussion of statistical concepts and thinking, as well as their connection to the real world.
The appropriate use of technology can make teaching of statistics more effective as it improves the quality of instruction,
encourages students active learning, and provides them with psychological incentives. Use of the Web resources is quite
common nowadays for statistics courses at college level. The two technology additions discussed in this study are the
PowerPoint presentations for lectures and SPSS for data computations, graphs and analyses.
PowerPoint has permeated all aspects of college teaching as a presentation technology resource. This success has been
associated with the appropriate use of text, images and graphics. The PowerPoint presentations for this introductory statistics
course were created by the present author and included: (a) text; (b) tables, figures and graphs; and (c) SPSS output. A course
pack with the PowerPoint slides was available at the beginning of the course and students were required to bring it to class
every day. SPSS has been also identified as a tool that enhances the students learning experience by allowing them to
engage the statistical contents actively and analytically. The SPSS computer output was incorporated to the lectures via
PowerPoint and used during the discussion of numerous examples and exercises with real data.
The use of Power Point where text was presented in conjunction with graphs and other pictorial representations helped
students that have a learning style different from the aural and print-oriented ones. The use of SPSS results for data
computations and analyses provided more time for class discussions by reducing long and tedious calculations. This
technology integration promoted overall active learning as students engagement increased and, consequently, their
understanding of statistics improved.
The discussion suggests that the integration of PowerPoint and SPSS into other traditional resources provided a more effective
teaching-learning model for large classes of introductory statistics courses at college level as it improved the quality of
instruction and fit the needs of this type of challenging classes.
Keywords: PowerPoint, SPSS, Statistics Education
INTRODUCTION
Statistics is often a difficult subject for many undergraduates taking introductory courses at college. Cobb (2005) considered
that although the previous twenty five years had seen an extraordinary level of activity focused on how students learn statistics
and how teachers can be more effective, todays challenges of motivation and exposition are far greater than before. Thus,
statistics education can still be viewed as a dynamic discipline when compared to other areas of study (Garfield & Ben-Zvi,
2007). The emphasis while teaching introductory (non-calculus) statistics courses has shifted from computations to a deeper
discussion of statistical concepts and thinking, as well as their connection to the real world (De Veaux & Velleman, 2008).
A committee created by the American Statistical Association (ASA) produced the Guidelines for Assessment and Instruction in
Statistics Education (ASA, 2005) that recommended the use of technology for introductory statistics courses at college level.
The appropriate use of technology can make college teaching of statistics more effective as it improves the quality of
instruction, encourages students active learning, and provides them with psychological incentives (Garfield, 1995; Higazi,
207
2002). Instructors of large classes often use a standard lecture format; however, active learning techniques have been
recommended in order to improve students understanding (Magel, 1998).
PowerPoint has permeated all aspects of college teaching as a presentation technology resource. Students are more likely to
attend classes taught via PowerPoint than traditional lectures (Hulsizer & Woolf, 2009). This success has been associated with
the appropriate use of text, images and graphics. Handouts or course packs with the PowerPoint slides, distributed prior to
lectures have been recommended to encourage active learning. Hulsizer & Woolf (2009) also report that a majority of
published research examining the utility and effectiveness of statistical software programs have focused on SPSS. Karp
(1995) considered that the use of SPSS provides students with a tool that enhances their learning experience by allowing them
to engage the statistical contents actively and analytically.
The use of PowerPoint and statistical software has been previously described by Lock (2005) as a facilitator of learning
statistics for an introductory course at a Liberal Arts college. Gomez (2009) also reported the successful integration of
PowerPoint and SPSS in an introductory biostatistics course for a small group (n = 18) of selected science majors who had
daily access to a desktop personal computer. Students learned more quickly and effectively with this technology integration
while using real data.
This paper consists of a preliminary report on the daily use of PowerPoint presentations and statistical software (SPSS) when
teaching an introductory statistics course for a large class at college level. It summarizes the present authors experience with a
large class of 200 students at Florida International University. The benefits of this technology integration are discussed here
including statistical comparisons to the more traditional teaching approach, characterized by a low level use of technology
resources.
METHOD
Course Design
The course used for this study was Introduction to Statistics I (STA-2122) offered at Florida International University during the
fall of 2009 with an enrollment of 200 students and the present author as the designated instructor. The course serves a variety
of college majors, mainly psychology and sciences scholars, and covers three logical units: descriptive statistics, probability,
and inferential statistics on a single sample. The textbook is Statistics by McClave and Sincich, 11th edition.
Use of the Web resources is quite common nowadays when teaching statistics courses at college level. Materials posted on
the instructors website provided valuable information to the students enrolled in this course. The following list describes the
online contents: (a) course description and objectives, (b) syllabus, (c) recommended text exercises, (d) supplementary
exercises, and (e) vocabulary. Supplementary exercises were comprehensive in nature and developed by the instructor. These
exercises were meant to integrate different topics from the same chapter. The vocabulary file, organized by chapter, included a
complete list of definitions and concepts.
The PowerPoint presentations developed by the instructor for this introductory statistics course, included: (a) text in the way of
definitions, concepts, formulas, examples and exercises; (b) tables, figures, and graphs; and (c) SPSS output . Use of
burdening slides was avoided. These presentations were structured with the goal of maximizing the students engagement and
active learning in class. A course pack with the PowerPoint slides was available at the university bookstore since the beginning
of the fall 2009 facilitating the students participation in class discussions. The statistical software (SPSS) was applied to a
variety of statistical topics like frequency graphs, box plots, sampling distributions, and confidence intervals. The SPSS
computer output was incorporated to the lectures via PowerPoint and used during the discussion of numerous examples and
exercises with real data.
Course Organization and Assessment

This large class course met two times per week, 75 minutes each. The class was offered in a standard auditorium with a
capacity for 300 people. A computer connected projector and a big screen were used for the PowerPoint presentations. A dry
erase board was also available as a supplement for class discussions. Students were required to bring the text book to class
as well as the course pack with the PowerPoint slides. Hence, limited notes were needed during classes, allowing students to
focus on the discussion of statistical concepts, exercise solutions, and SPSS output. As a result a more interactive type of
lecture was generated in comparison to the traditional approach.
208
R. Gomez
Student evaluations consisted of two midterms, three take-home assignments and a cumulative final exam. All exams were
designed using the multiple choice format. Take-home assignments were planned with the purpose of promoting cooperative
learning and sense of community, while helping students to prepare for the midterms and final exam. They included the
solution of designated problems from the online supplementary exercises file and the presentation of a written report. Students
were asked during the first week of classes to integrate teams of 4-5 members responsible for take-home assignments with
each team selecting a coordinator among members.
Expectations for the students performance were clearly stated since the beginning of the course. A detailed list of objectives,
chapter by chapter, was available in the instructors website. Also, specific objectives for each evaluation activity were
described during class time. Even though office hours were scheduled four times a week, the most common way of
communication between the students and instructor was identified as the e-mail system.
A Teaching Assistant, Anddie Zhu, was a very useful resource in many aspects. She attended all lectures and provided
feedback from her prospective. Anddie helped with the refinement of test drafts prepared by the instructor and participated in
the grading process of take-home assignments, following the established guidelines. She also actively assisted the Instructor to
proctor the exams.
RESULTS
To assess the effectiveness of the technology additions considered here (PowerPoint and SPSS) the students performance in
the large class was compared to students taking the same course taught with a traditional approach in regular classes (50-60
students). The tables below show data about relevant indicators of the students performance for regular classes with the
traditional approach, characterized by a low use of technology, and the large class participating in this study. The indicators
used for this comparison were the percentage rate of dropped and passing students. Table 1 shows data from the last three
times the Introduction to Statistics I course was taught by the present author in regular classes with the traditional approach.
Table 2 shows combined data from these three classes and from the large class (results up to the midterm test 2) where the
two technology additions were integrated.
Table 1: Introduction to Statistics I (traditional)
Term
Enrolled
DR
% DR
Passing Number
Gross % Pass
Non-DR % Pass
Fall 2007
56
10.7%
33
58.9%
66.0%
Spring 2008
56
8.9%
32
57.1%
62.7%
Spring 2009
57
7.0%
25
43.9%
47.2%
Table 2:
Traditional vs. Large with Technology

Method
Enrolled
DR
% DR
Passing Number
Gross % Pass
Non-DR % Pass
Traditional
(combined)
169
15
8.9%
90
53.3%
58.4%
Large with Technology

(after Test 2)
200
2.5%
147
73.5%
75.4%
DISCUSSION AND CONCLUSIONS

A descriptive analysis of table 2 indicates that the cumulative passing rate (after test 2) for the large class with technology
resources was about 20 points of percentage higher than the final results of the combined regular classes taught by the same
instructor in recent years. The rate of dropped students was lower for the large class with a median score very close to 80% of
the total, result higher than the typical standing for regular classes. What elements can be associated with this improvement?
Understanding the limitations of this comparison, the tables still provide useful information about the effect of integrating
PowerPoint and SPSS in introductory statistics courses for large classes.
The use of Power Point where text was presented in conjunction with graphs and other pictorial representations helped
students that have a learning style different from the aural and print-oriented ones. The course pack with PowerPoint slides not
only helped students attending the lecture to focus on class discussions but also assisted students that were not able to attend
any specific lecture. The use of SPSS results for data computations and analyses provided more time for class discussions by
209
reducing long and tedious calculations. This technology integration promoted overall active learning as students engagement
increased and, consequently their understanding of statistics improved.
This discussion suggests that the integration of PowerPoint and SPSS into other traditional resources provided a more
effective teaching-learning model for large classes of introductory statistics courses at college level as it improved the quality of
instruction and fit the needs of this type of challenging classes.
REFERENCES
American Statistical Association. (2005). Guidelines for assessment and instruction in statistics education (GAISE): College
Report. www.amstat.org/education/gaise.
Cobb G. W. (2005). Foreword. Innovations in teaching statistics, MAA Notes #65.
De Veaux, R. D. & Vellerman, P. F. (2008). Math is music; Statistics is literature. Amstat News, 378, 54-58
Garfield, J.B. (1995). How students learn statistics. International Statistics Review, 63, 25-34.
Garfield, J.B. & Ben-Zvi D. (2007). How students learn statistics revisited. International Statistics Review, 75, 372-376.
Gomez, R. (2009). Integrating technology in a statistics course for a special program at Florida International University.
ICTCM-2009 Proceedings.
Higazi, S. M. (2002). Teaching statistics using technology. ICOTS6 Proceedings.
Hulsizer, M. C. & Woolf, L. M. (2009). A guide to teaching statistics. Malden, MA: Wiley-Blackwell.
Karp, D. R. (1995). Using SPSS for Windows to enhance, not overwhelm, course content. Teaching Sociology, 23, 234-240.
Lock, R. (2005). Teaching a technology-enhanced course in a liberal arts environment. Innovations in teaching statistics,
MAA Notes #65, 31-38.
Magel, R. C. (1998). Using cooperative learning in a large introductory statistics class. Journal of Statistics, V.6, N.3
McClave, J. T. & Sincich, T. (2009). Statistics, 11th edition. Upper Saddle River, NJ: Prentice Hall.
210
W. Jung, D. Lee, K. Shin, J. Jung, J. Kim and Y. Park
A STUDY ON DEVELOPMENT AND ECONOMIC ANALYSIS OF RECOVERABLE

FOLDING MULTISTAGE PLASTIC BOX EMBEDDING RFID CHIP
Wookyung Jung*, Dongpo Lee*, Kyungwook Shin*, Jongyun Jung*,

Jiekwan Kim* and Youngjin Park**
Changwon National University*, Korea and Inpack Global Inc. **, Korea
ABSTRACT
In this paper, we present the developing process of recoverable folding plastic packing box for exportable cargo. Including
exportable cargo, carriage of goods always have several problems in boxing such as robustness, weight, safety, cost.. To solve
such problems we have developed the recoverable folding plastic box and we introduce the patent strategy, designing process
and 3D model which has sliding hinge and economic analysis for adaptation of developed plastic packing box using 3D
simulation package software.
Keywords: Plastic Multistage Folding Box, Exportable Cargo, 3D Simulation, Economic Analysis
1. BACKGROUND AND CONCEPT
211
A Study on Development and Economic Analysis of Recoverable Folding Multistage Plastic Box Embedding RFID Chip
2. SETUP THE PATENT STRATEGY
Result: We can find out the niche technology between RFID(G05) and Plastic Box(B65) by correlation analysis.
212
W. Jung, D. Lee, K. Shin, J. Jung, J. Kim and Y. Park
3. DESIGNING THE MULTISTAGE FOLDING PLASTIC BOX EMBEDDED RFID
Design Point:
- The box can be applied to cargo packing immediately.
- Pallet size should be determined to consider it being loaded to cart(wagon)
Design Characteristic :
- Remove the interference between inside and outside using hinge
- To increase the pressure intensity and costs down using cross stripes and
honeycomb - Coupling the partition by home and clip type coupler
Merit:
- Multistage Type Various size of goods can be packed
- Folding Type Saving the recover cost(50%off) and handiness
- RFID chip cargo contents monitoring and recovery control
213
A Study on Development and Economic Analysis of Recoverable Folding Multistage Plastic Box Embedding RFID Chip
4. ECONOMIC ANALYSIS OF DEVELOPED RECOVERABLE BOX

Simulation Condition :
- Ship Transportation Time : 6 Mon/oneway
- Stay time in oversea factory : 1 Mon Box recovery rate : 90%
Cost/1ea
#of
Box/Cont
Amount of export
Cycle(sec)
Wood
$40.7
24
2.5+weibull(12.1,1.5,1
)
Plastic
$136
32
2.5+erlang_k(4,2,1)
tria(21600,
302400,
496800)
Break
Even
554days
Stabilization
748days
Purchased
Boxes
20,000
ea
CORRESPONDING AUTHOR
Jiekwan Kim (+82-01-3363-4420), Dept. of Industrial Systems Eng. Changwon National University, sarim-dong 9, Changwon
City, Korea
ACKNOWLEDGEMENT
This research was financially supported by the Ministry of Commerce, Industry and Energy (MOCIE) and Korea Industrial
Technology Foundation (KOTEF) through the Human Resource Training Project for Regional Innovation
214
S.-I. Chiu, T.-S. Wu and H.-Y. Hu
RELATIONS AMONG RECREATION ACTIVITY AND PHYSICAL FITNESS OF

TAIWAN ADOLESCENTS
Shao-I Chiu1, Tung-Shen Wu2 and Hsiu-Yuan Hu3

Taipei College of Maritime Technology1, 3 and Hsiuping Institute of Technology2, Taiwan (R. O. C.)
ABSTRACT
This study explored relations among leisure activities and physical fitness in a representative sample of 574 junior high school
students in three countries in Taiwan. Based on leisure activity scale and physical fitness measure data, we analyze the
relations among various with t-test, one-way Anova, and Pearson relation. The research results were summarized as follows:
Junior high school students of different background variables take part in entertainment activities most often. Boy students of
different grades show significant differences in flexibility. Girl students of different grades show significant differences in fitness.
Keywords: Recreation Activity, Physical Fitness, Adolescent
INTRODUCTION
Adolescent' recreation activity is influenced by a lot of factors, such as culture background, friendship and interdynamic of the
family. Hutchinson, Baldwin, and Oh (2006) pointed out that positive recreation experience can promote the body and mind to
develop, can remove pressure and reduce appearance of deviant behavior. So, how to build up correct recreation ideas and
attitudes is one of the important education topics at present.
The Child Welfare League Foundation of Taiwan (2005) announced that the average child spends more than 17 hours to watch
TV programs and that more than 12% of children spend over 5 hours watching TV programs each day. Indeed, many research
studies have found that more and more adolescents are addicted to internet activities, online games and TV games (,2009).
There are many kinds of recreation activity, based on the different research fields and industries. The classification of
recreation activity included subjective classification, factor analytic approach and multi- yardstick law of commenting etc. For
subjective classification, according to Lins research (2005) sums up to physical stamina, knowledge, amusement, skill gentle
and service. The target of research guides this research classification which adopts from Lins research for adolescent, divided
that physical stamina activity, intellectual activity, recreational activity, skill getting gentle activity and service activity into
recreation activity of adolescent.
The main purpose of the study was to understand the current situation of recreation activity and physical fitness. Secondly, to
explore different recreation activity and physical fitness of adolescents from diverse personal backgrounds. Finally, did the
individual physical fitness affect the recreation activity aspiration?
MATERIALS AND METHODS

Framework
The study mainly deals with the adolescents recreation activity and physical fitness, as well as the relationship of influential
variables of recreation activity and their interaction with physical fitness. The framework of the study is shown in Fig. 1:
Recreation activity
Physical fitness
Physical stamina activity

Intellectual activity
Recreational activity
Skill getting gentle activity
Service activity
BMI
Flexibility
Power
Muscular fitness
Aerobic fitness
Personal background
Sex
School level
Social economic level
Figure 1: Research Framework

215
Relations among Recreation Activity and Physical Fitness of Taiwan Adolescents
From Fig. 1, the influence of main background variables of this study to adolescents recreation activity can be seen, as well as
the difference in physical fitness. It also discusses the relativity of recreation activity and physical fitness.
Object
The samples of the pre-investigation are 105 students from Taipei area. The samples of the formal investigation were students
from three secondary schools and one vocational school in Taipei County and were selected randomly. Total 638
questionnaires were taken back, among which 574 were valid (94.8%). Among all the samples, female students accounted for
48.40% (n=278) and male students accounted for 51.60% (n=296).
Data processing and analysis

After the questionnaire was recollected, encode the data with SPSS12.00 and input them into computer. Besides descriptive
data analysis, the study also conducted independent sample t examination, variance analysis and statistical analysis by
Pearson product-moment correlation and multiple regression analysis methods.
Evaluation Tools
The study uses questionnaire investigation as the main data collection method. The measurement tools include:
Basic data questionnaire: The basic data questionnaire includes basic personal data and social economic position (social
economic level). Basic personal data includes sex (male, female), grade (Senior 1, Senior 2 and Senior 3), and other basic
information. Social economic position of family includes parents educational background and code of career type, which will be
used to evaluate familys social position.
Recreation activity questionnaire: The study referred to Lins paper and worked out a recreation activity Behavior
Questionnaire, including 43 questions with 5 answers for each question (Perfectly fitsAbsolutely not). The questionnaire
mainly focused on the most frequent recreation activity to get the Cronbachs of 0.87. After factor analysis of the preinvestigation materials, a total of five factors were concluded. Namely, they were physiological activity, intellectual activity,
entertainment activity, artistic activity and service activity. The higher the score in the recreation activity Behavior Questionnaire
the more passive the recreation activity attitude and cognition.
Physical fitness examination: The examination included body mass index, flexibility, muscle power, muscular endurance and
strength, cardio respiratory tolerance.

Results
The research results were summarized as the follows:
Adolescents of different background variables take part in entertainment activities most often. Male adolescent of different
grades show significant differences in flexibility. Female adolescent of different grades show significant differences in fitness.
Physiological activities positively correlated with fitness. Cognitive dimension positively correlates with flexibility, power and
aerobic fitness. Affective and behavioral dimension positively correlated with power, muscular fitness and aerobic fitness.
Discussion
There were significant differences between physiological, intellectual, and artistic activities by sex. Female and male
adolescents have higher scores in entertainment activity such as internet, watching TV programs and movies. Male
adolescents got lower score performance in artistic activity, such as playing musical instruments, dancing, and appreciating
music; however female adolescent in service activity have lower performance, such as housekeeping, volunteering, and
community service. Male adolescent have better performance in physiological activity than female adolescent. On the other
hand, female adolescent have better performance in intellectual and artistic activity than male adolescent. Based on the
research results, the suggestions are as follows:
First, to excite the motivation of leisure and train the recreation interest, the adolescent should have correct recreation
cognition. Provide a range of recreational activities in order to promote recreation motivation and avoid experiences that hinder
recreational activity. Secondly, promote the learning of the essential skills by engaging in activities the adolescent is interested
216
S.-I. Chiu, T.-S. Wu and H.-Y. Hu
in. For example, some leisure activities such as camping, rock-climbing, music, sport, etc., require the participant to learn the
skill in order to participate in the activity. Since adolescents regard watching TV as their main recreation activities, it is worth
educator's giving great attention to time management to ensure adolescents allocate time for recreation away from the TV and
internet. Thirdly, to train the Social Skills. Samdahl & Jekubovich (1997) pointed out that a lot of experimenters expressed and
engaged in the recreation activity, will hope to go on a tour with some partner with a common goal together. They should
choose a partner agreeing with it in doing the test amount of the recreation activity. We also discover it is relevant that the
pairing of social skill and recreation activity increase the chance of ongoing activity. So, through the studying and training of
social skills, individuals can overcome the inferiority complex. The issue which the society must address, is to set up social
networks in order to make more friends participate in the recreation activity together. With the expansion of every activity
experience, individuals can finish the tasks of various kinds of roles.
Finally, Management of the recreation activity. The research discovered that the recreation activity of the adolescent is
hindered by factors such as money and time. As regards the time factor, educators should strengthen the time management
ability of children which is a skill that can translate into adolescent skills. In addition, children should be encouraged to try one's
best to have private time. This kind of private and quiet time is scarce and will likely not happen voluntarily however, it can be
created. Use of the money, the adolescent requires the independence and the initiative, there is less money used, but engaged
in lying fallow not needing high consumption in activity, also some move about not to cost money, the end depends on personal
demand. So, the recreation activity depends on individual's kindhearted planning ability to life, could make the activity under the
minimum hindrance factor, get the greatest recreation.
REFERENCE
Brooks, F. & Magnusson, J. (2007). Physical activity as leisure: The meaning of physical activity for the health and well-being
of adolescent woman. Helath Care for Women International, 28, 69-87.
Hutchinson, S. L., Baldwin, C. K., & Oh, S. S. (2006). Adolescent coping: Exploring Adolescents leisure-based responses to
stress. Leisure Science, 28(2), 115-131.
Shakib, S. & Dunbar, M. D. (2004). How high school athletes talk about matemal and parental sportingexperiences.
International Review for the Sociology of Sport, 39, 275-299.
Shannon, C. S. (2006). Parents messages about the role of extracurricular and unstructural leisure activities: Adolescents
perception. Journal of Leisure Research, 38(3), 398-420.
217
Project UpReach: A New Way for Health Care Delivery to the Developing World
PROJECT UPREACH: A NEW WAY FOR HEALTH CARE DELIVERY TO THE

DEVELOPING WORLD
Richard L. Douglass
Eastern Michigan University, USA and Ashesi University, Ghana
ABSTRACT
Project UpReach is the culmination of eight years of field research in Ghana, West Africa and continuous analyses of the
health care challenges of that developing nation. These challenges include persistently endemic diseases, high rates of
preventable mortality, and resultant slow economic development. Since 2007 the conceptual framework, strategic significance,
technical feasibility, and models for sustainability of Project UpReach have been in development with academic and technical
partners in Ghana and elsewhere, in Asia, Central America and Native American sites in New Mexico and Arizona
The Project UpReach strategy is to substantially improve health care access and availability with an emphasis on primary
medical care, integration of newly available diagnostic and information transmission technologies, mobile delivery systems,
fidelity of care with a very specific scope of practice to underserved and remote populations, and establishing global diagnostic
and clinical consultation partnerships with medical education and biomedical research. The goal including a substantial
reduction in excessive levels of infant mortality and maternal mortality, increased progress toward the eradication of specific
medical conditions and preventable diseases, and to deliver care to populations where there has previously been inadequate
medical coverage. One target population that has been largely un-served throughout the developing world includes the aging
who are essential to economic development in poor nations. These efforts are expected to lead to public health stability in rural
areas where new resources are under development and to stabilize the availability of a labor force.
Technologies that are currently available would link patients to medical resources and consultation; such teams could be
located anywhere with contemporary communication technologies. Field teams would deliver the majority of direct patient care
and associated services, including health education. The field teams would also facilitate triage and referral.
Project UpReach is designed to develop a predictable and available primary care services system to rural remote populations
where the current health system infrastructures are desperately inadequate.The strategy is unlike any previous design
incorporating elements of telemedicine, mobile medical and public health teams using high technologies because it
incorporates a business plan that would, we believe, become sustainable and independent of charitable or governmental
subsidies after an initial start-up period of 5-7 years. The sustainability model rests on the harvesting of data for the benefit of
global interests in medical and biomedical research and teaching. This sustainability component would include a for-profit
organization affiliated with the host institutions that would provide ongoing support for the medical delivery system, per se, as
well as being a source of support for other institutional missions. In particular the harvested clinical data from previously
undocumented populations would stimulate important research and development work that would have long-range benefits to
large and previously underserved populations in the developing world.
Keywords: Innovative Health Care Delivery, Telemedicine, Rural and Isolated Population Primary Medical Care, Sustainable
Health Care to Underserved Populations, Applied Information Technologies, Global Health.
218
A. H. King
PROMOTING A CULTURE OF SAFETY IN THE VULNERABLE

DIABETES POPULATIONS
Anita H. King
University of South Alabama, USA
INTRODUCTION
News of medical errors with serious to fatal outcomes has splashed covers of newspapers and magazines across the United
States.The public is demanding safe, quality care and healthcare professionals are being vigilant as to processes and systems
of the delivery of care.Diabetes educators can be leaders in providing strategies for safe diabetes management, especially to
the vulnerable populations who pose an increased risk for safety.The speaker will discuss the Joint Commission patient safety
goals that are pertinent to the diabetes educator, an assessment of the client for safety risks, and steps toward overcoming
barriers to safe delivery of diabetes education.
OBJECTIVES
At the end of this session, the participant will be able to:
Identify Joint Commission Patient Safety Goals that pertain to the diabetes educator.
Outline as least 3 barriers of vulnerable populations in safe diabetes management.
Discuss documented examples of errors in diabetes care.
List at least 4 strategies for providing diabetes education to vulnerable populations that promote safe care.
Keywords: Vulnerable Populations, Diabetes Management, Joint Commission Resources, Safe Healthcare Delivery
ABOUT THE AUTHOR

Dr.Anita H. King, DNP, FNP-BC, CDE, FAADE is a certified family nurse practitioner, certified diabetes educator, and a
Fellow with the American Association of Diabetes Educators. She has been a Clinical Assistant Professor in the College of
Nursing at the University of South Alabama, Mobile, Alabama since 2002.Dr. King serves as a committee member of the
University of South Alabama Faculty Senate, the Undergraduate Curriculum Committee, and is Chairperson of the Ad Hoc
Patient Safety/Quality Committee and the Gerontology Committee.
Dr. King is also an Associate Editor of the International Journal of Social Health Information Management and is on the editorial
board of Intellectbase International Consortium.
Dr. King volunteers as a nurse practitioner/diabetes educator at La Clinica de Baldwin, Foley, Alabama and works with the
Hispanic migrant population with diabetes.She is a member of the Alianza Migrant Clinicians Network. She has served on the
Alabama Diabetes Advisory Committee and the Alabama Obesity Task Force.
219
EDUCATION &
SOCIAL ADMINISTRATION
SECTION 3
C. J. Brown and L. J. Hansen-Brown
BUILDING A VIRTUAL LEARNING COMMUNITY TO ENGAGE

ONLINE STUDENTS: A MODEL FOR INSTRUCTORS
- REPORT OF PHASE I OF AN ONGOING STUDY
Christopher J. Brown and Laura J. Hansen-Brown
University of North Florida, USA and Webster University, USA
ABSTRACT
The purpose of this paper is to identify the different terms and identify the relationship of the terms to teaching practices for
building a community in an educational environment. The terms that will be addressed in this paper are: Learning Community,
Communities of Practice, Collaborative Learning, Cooperative Learning, Team Learning, and Active Learning. The research
suggests that the term "active learning" is hierarchical and implies a group of different techniques as discussed below. The
paper organizes these terms and discusses how they fit into the authors' preliminary model development regarding building a
virtual online community.
Review of the research indicates that Learning Community, Communities of Inquiry, and Communities of Practice are more
generalized places for learning; where instructors, students, and outside members can interact and communicate. These can
represent a physical on-ground space or a virtual online space. In either instance, the community represents a
manifestation of shared interest or practice. These created spaces enable more efficient active learning to take place and
encourage deeper emotional linkages to the space, facilitators/moderators, peers, and other participants. In fact, the authors
believe that Communities of Inquiry or Communities of Practice are each a type of Learning Community. Figure 1 presents the
authors' opinion of a practical hierarchy for these terms and concepts
A Learning Community is a complicated entity which should include considerations of technology, emotional attachment,
collaboration/cooperation, and best practices for active learning. Although a virtual community is not a physical space, it has
many of the same needs, requirements, and overall benefits. For education, the virtual community has to be geared towards
effective learning. The final section of the paper outlines the next steps in the research process and ongoing development of a
hands-on model for faculty.
Keywords: Virtual Community, Online Community, Active Learning, Collaborative Learning, Cooperative Learning,
Communities of Practice
INTRODUCTION
Over the last few years, there has been tremendous growth in online educational programs and communities (Ke and Hoadley,
2009). Along with the growth of online education communities has been extensive research on many different facets of this
trend. One area of interest involves tools and techniques for engaging the online learner. This is particularly important in a
class where a majority of students are working professionals with limited time for school work and high expectations for gaining
knowledge that can be directly applied to students' professional environments.
Research indicates higher student interest and engagement when active learning is emphasized using information technology
(Khan, 2009). Ideas regarding the social view of learning have progressed in recent years as technology, the Internet and
related technologies have "powered a paradigmatic shift to collaborative pedagogy in distance education" (Ke and CarrChellman, 2006). Further, deeper student engagement is enabled by successfully creating an online learning community as
part of the course and not just relegating the information technology to be a repository of information. There are a wide variety
of tools and techniques available to assist instructors in building a successful virtual learning community.
Ongoing research focused upon building a successful virtual learning community identified a need for a simplified model
summarizing the most relevant teaching strategies and techniques, which can be applied across different areas of study or
majors. The model is intended to provide a "hands-on" virtual learning community tool that can be used both for training and
as a reference by instructors on practical techniques. However, in the course of conducting research on building a virtual
community, the authors discovered a plethora of literature and a wide variety of similar terminology, all of which have the
intention of providing the building blocks for creating "community" in an educational environment. Thus, the authors determined
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Building a Virtual Learning Community to Engage Online Students: A Model for Instructors - Report of Phase I of an Ongoing Study
that the first step in developing the model is to conduct a review of the literature, define the different terms, and collate the
similarities among the various concepts.
The purpose of this paper is to identify the different terms and identify the relationship of the terms to teaching practices for
building a community in an educational environment. The terms that will be addressed in this paper are: Learning Community,
Communities of Practice, Collaborative Learning, Cooperative Learning, Team Learning, and Active Learning. The research
suggests that the term "active learning" is hierarchical and implies a group of different techniques as discussed below. Finally,
the paper organizes these terms and discusses how they fit into the authors' preliminary model development regarding building
a virtual online community.
EFFECTIVE LEARNERS
A discussion on building a community of learners may begin with a definition of "effective learners." "Effective learners are
those who can cope with complexity, contradictions, and large quantities of information, who seek out various sources of
knowledge, and who can create and sustain learning communities and networks" (Brindley, et al. 2009). Faculty may strive to
find ways to engage effective learning in the classroom. Increased attention to student engagement and active learning
strategies have become particularly relevant in today's classroom environments (Williams and Chin, 2009). Williams and Chin
also note that "these approaches are also considered to be meaningful when teaching "net generation" students who have
different styles and expectations." The Net generation (also know as the echo boom, Generation Y, or millennials) are now
"lapping" their parents on the "information track" (Wagner et al., 2009). The net generation learning expectations are greater
than their historical peers.
Faculty may also have learners with disabilities. According to the National Center for Education Statistics, in 2004, 11.3 percent
of undergraduates reported some type of disability (Chodock and Dolinger, 2009). Furthermore, Chodock and Dolinger report
that the Learning Disabilities Association of America (LDA) defines a learning disability as a neurological condition that
interferes with a person's ability to store, process, or produce information. Therefore, it is essential that learners of all types
and function be integrated into the online course. A powerful way to accomplish that is through development of a learning
community.
The preliminary research phase of this ongoing project clearly identified a jumble of jargon, terminology, and explanations
regarding a "community". The authors set out to further explore what a community is defined as and what learning modes
contribute to it.
LEARNING COMMUNITY AND COMMUNITIES OF PRACTICE

In a learning community, learners collaborate as they work toward common educational goals such as a solution to a problem.
Effective learners are actively involved in the process by participating in discussions, generating new questions and
exchanging opinions with their peers and the instructor. This approach leads to development of critical thinking skills (Brindley,
et al. 2009). Hodder (2009) reports that particular place settings can aid in building learning communities; this is especially
effective in programs that are residential in nature, which facilitates the development of a "community of scholars" in which
undergraduates can interact not just with their peers but also with graduate students, research assistants, postdoctoral fellows,
and resident and visiting faculty. Leather and Duarte-Marinho (2009) discuss how the design of a physical building or teaching
spaces can unleash learning. They note "the design team must think about how technology will be used to encourage
academic collaboration between faculty and student, a classroom on campus and a classroom in another location, student and
student, and faculty on and off campus."
Rhoulac Smith et al. (2008) discuss the faculty learning community project at Howard University. This project involved a
diverse group of men and women, tenured, tenure-track, and future faculty across science, technology, engineering and
mathematics (STEM) disciplines. The purpose of the group was to engage in the scholarship of teaching and learning by
learning about teaching, reflecting on their practice, and demonstrating competence or knowledge of effective teaching.
Learning community activities included interdisciplinary seminars, linked courses, teaching experiments, and biweekly
meetings. Learning community pedagogy promotes deep and meaningful learning (Martin et al., 2008).
Grandzol and Grandzol (2005), discussing AACSB standards for accreditation of business schools at the time of publication,
note that the organization included focus on development of a learning community. The AACSB standards stated that such a
community "is established when constituent groups have opportunities to learn from each other, in an environment that
supports free expression and learning."
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Grandzol and Grandzol (2005), citing Garrison (2003), list 3 elements of a community of inquiry, which appear to be consistent
with the concept of learning community:
1. Cognitive Presence critical reflection and discourse;
2. Social Presence students feel a personal and emotional connection to the subject matter, professor and their
peers; and,
3. Teaching Presence professor's actions in creating and facilitating the learning community.
Wang (2007) reviewed the benefits of learning communities and noted in the community-of-learners, students take on the role
of collaborative community members. They work toward their common goal to complete the task. In achieving this goal, they
will listen to others and engage in brainstorming and discussion in order to find the best solution to the question or to complete
the task. Students are provided with opportunities to express themselves and take initiatives. Teachers are guides who can
intervene.
Akkerman et al. (2008) discusses the development of "communities of practice". According to Akkerman, the concept originally
refers to collaborative practices that emerge naturally and educational and human resource development practitioners are
increasingly searching for ways to create these practices intentionally in order to stimulate learning and professional
development in specific fields. Such professional communities are designed to share professional information, lessons learned,
and expertise. The conception of learning as a collective process involving ongoing exchange of knowledge among
participants has become well-accepted (Ke and Hoadley, 2009). For example, Engineering education increasingly incorporates
pedagogies that promote guided, inquiry-based, active learning within authentic "communities of practice" (Donath et al., 2005).
According to Donath, such pedagogies apply observations made about workplace interaction: that knowledge is distributed
across social and physical networks.
The author has direct experience with an engineering community of practice while working for the U.S. Army Corps of
Engineers. This particular community was not well connected and mostly operated in more limited "stove pipes" where
members in different engineering sub-disciplines communicated with each other via email and sometimes through discussion
boards; however, the emotional attachment to the community was limited. In order to establish a more cohesive community of
practice, Akkerman et al. (2008) suggests the group ask questions such as "How are we relevant to one another?" and "Who
are we and where are we going?" with answers developed by the group itself. These questions relate to the development of
meaningful activity (domain) and of shared activity (community). Following this, any coordinative system, any practice, should
be subordinated to the motives of the group.
COLLABORATIVE, COOPERATIVE AND TEAM LEARNING

Prince (2004) defines and differentiates collaborative and cooperative learning. "Collaborative learning can be defined as a
structured form of group work where students pursue common goals while being assessed individually." Collaborative learning
can take place in different settings, including through discussion among students as a class or within smaller groups (Brindley
et al., 2009). According to Brindley, some of the pedagogical benefits of collaborative learning include:
Development of critical thinking skills;

Co-creation of knowledge and meaning;
Reflection; and,
Transformative learning (Palloff & Pratt, 2005).
Wang (2007) found that collaborative learning, as outlined in a literature review, is an effective means of increasing student
achievement and cognitive development. Collaborative learning strategies provide students with opportunities to learn and
practice collaboration (Sandahl, 2009). While the Internet makes it possible to make lectures available to millions of students, it
is more intelligently used to support learning communities socially forged via in-class environments to engage students in
collaborative knowledge building (Reil and Sparks, 2009).
Cooperative learning appears to have a similar definition, but it is not the same. The key element in cooperative learning is a
focus on encouraging cooperation among students rather than competition (Prince, 2004). Despite the apparent distinction in
the definitions of the terms, various authors have used the terms interchangeably. The concept of learning from peers,
colleagues, and team members is supported by multiple studies. Ellis and Fonts (1997) stated, "cooperative learning is one of
the biggest, if not the biggest, educational innovations of our time." Ellis and Fouts continued by stating, "cooperative learning
takes on many different forms in classrooms, but they all involve students working in groups or teams to achieve certain
223
educational goals." McKeachie (2002) agrees that cooperative learning methods increase student participation, interaction,
and improve social skills training. Prince (2004) found broad but uneven support for collaborative, cooperative and problembased learning as part of his overall review of active learning techniques. Yamarik (2007) found through multivariate
regression analysis that students taught by cooperative learning in small groups achieved greater academic performance in the
form of higher exam scores.
Both collaborative and cooperative learning appear to be similar to discussions of team-based learning. Beatty et al. (2009)
reviewed the benefits of team-based learning in a pathophysiology and therapeutics sequence of courses. Beatty found that
team-based learning was an effective teaching methodology. In this instance, team-based learning was defined by small
groups of junior practitioners working with and being mentored by more senior instructors. The participants learned from their
peers and this learning was re-inforced by the course design. The value of team-based learning cannot be denied (Islam et al.,
2009). Islam concluded that new product development can be successful in the high-tech semiconductor industry given an
emphasis on team learning. Quitadamo et al. (2009) discuss the benefits of peer-led team learning. They found a small but
positive impact on critical thinking gains in some science courses, and improvements in grade performance and retention in
science and math courses, particularly for females.
Frequently, researchers and the literature co-mingle all of these terms within the same paper. In the past twenty years
engineering educators have implemented several means of better engaging their undergraduate students, including active and
cooperative learning, learning communities, service learning, cooperative education, inquiry and problem-based learning, and
team projects (Smith et al., 2005). Traditional engineering instruction has been deductive, beginning with theories and
progressing to the applications of those theories (Prince et al., 2006). Prince notes that "alternative teaching approaches are
more inductivetopics are introduced by presenting specific observations, case studies or problems, and theories are taught
or the students are helped to discover them only after the need to know them has been established." Prince et el. (2006)
reviewed several of the most commonly used inductive teaching methods, including inquiry learning, problem-based learning,
project-based learning, case-based teaching, discovery learning, and just-in-time teaching (Prince et al., 2006).
ACTIVE LEARNING
Active learning was studied by early childhood curriculum designers at the High Scope Educational Research Foundation who
distilled active learning into five components - materials, manipulation, choice, language and support (Buckleiter, 2009).
Translating this notion to the adult learner is thought to equate to the following:
Materials = Course materials;

Manipulation = Participate in hands-on, real world experiences;
Choice = More than one engagement tool or mode;
Language = Language that can be understood by the students minus confusing jargon and lingo; and,
Support = Well-designed and supported learning environment.
In "Does Active Learning Work? A Review of the Research", author Michael Prince (2004) presents the results of a study which
examines the effectiveness of active learning, defines several forms and breaks each method down into its key elements.
Prince's findings are consistent with those of the authors; many different terms are used throughout the literature, and the
resulting confusion often means that "faculty regard active learning as another in a long line of educational fads."
The Prince study (2004) outlines the types of active learning, including breaking down each category into its key elements, in
an attempt to differentiate the different approaches. Prince defines active learning as "any instructional method that engages
students in the learning process." Active learning requires students to participate in the learning process and to think about
their actions as they relate to the knowledge that is being discussed.
Prince (2004) includes discussion of collaborative learning and cooperative learning as part of the analysis of types of active
learning. Prince's definition of active learning also includes discussion of "problem-based learning", which is defined as "an
instructional method where relevant problems are introduced at the beginning of the instruction cycle and used to provide the
context and motivation for learning that follows" (Prince, 2004).
Multiple authors have experimented with this learning approach. Reidy (2009) used the problem based learning approach in a
political economy course. Students were required to take case studies from Southern Africa and address five generative topics
on poverty and poverty reduction strategies, presented in question format. The questions drive the learning process. The
learning is self-directed and paced by the students themselves.
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RELATIONSHIP OF TERMS
After reviewing the different types of learning, it appears that all of the research has a common goal, which is helping faculty to
further engage students in the learning process. The literature includes a number of common elements, all of which can be
used by faculty to provide the building blocks for a community that fosters learning among students.
From a hierarchical standpoint, the research indicates that active learning should be designated as a category of learning
techniques. Collaborative Learning, Cooperative Learning, Team Learning, and Problem-Based Learning are all types of
active learning or techniques to implement active learning. There are many other techniques to enable active learning
including role-play, simulations, games, and "learning by doing". Although these have not been discussed in this paper, they
certainly should be considered for inclusion in future research regarding building an online virtual educational community.
Review of the research indicates that Learning Community, Communities of Inquiry, and Communities of Practice are more
generalized places for learning; where instructors, students, and outside members can interact and communicate. These can
represent a physical on-ground space or a virtual online space. In either instance, the community represents a
manifestation of shared interest or practice. These created spaces enable more efficient active learning to take place and
encourage deeper emotional linkages to the space, facilitators/moderators, peers, and other participants. In fact, the authors
believe that Communities of Inquiry or Communities of Practice are each a type of Learning Community. Figure 1 presents the
authors' opinion of a practical hierarchy for these terms and concepts.
Figure 1: Learning Community and Active Learning Hierarchy.

The original purpose of this research effort was to explore the construction of an online virtual learning community through the
development of a framework model. This effort is still underway and will be reported in the future. For the remainder of this
paper, the authors present some discussions and research related to the "virtual community". This information will be
synthesized further in future studies.
VIRTUAL COMMUNITY
The term virtual learning community is relatively new and may be one type of general virtual community. There appears to be
limited research on the subject and what research exists covers a wide array of interpretations ranging from a basic online
community, to an actual virtual community using virtual persons or avatars (e.g., Second Life), to new developments in virtual
technology which permit simulations of real places virtually. Noor (2009) opines that virtual has come to describe something
that possesses essence and effect without possessing form, something not quite physical, but with a measurable impact on the
real.
How does one define a virtual learning community? A virtual learning community is a technology-based community where
learners work together to "exploit or explore knowledge" (Chen, et al.). Today, Web 2.0 applications such as Facebook and
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MySpace are used ubiquitously in the general population, and Virtual Worlds are becoming increasingly popular in business,
for example via simulations in Second Life (Dreher et al., 2009). Dreher also notes that the capacity of Virtual Worlds is
underutilized in educational contexts.
Virtual communities are already being used in industry and in organizations around the globe. Curran et al. (2009) discusses
the development and maintenance of a virtual town with a virtual hospital. The virtual hospital is used to train nurses and by
deploying a virtual community of patients, it enhanced students' learning experience. Leimeister et al. (2008) also discuss a
virtual medical community. Leimeister found that important determinants for the formation of virtual relationships within virtual
communities for patients are general internet usage intensity. Further, they reported that "emotional support and information
exchange delivered through these virtual relationships may help patients to better cope with their illness." With technology and
computer power advancing rapidly, it should be possible to introduce actual virtual reality experiences into an online
community. Today, the widespread availability of powerful processors and of broadband Internet connections has introduced
large numbers of people to virtual worlds animated in 3-D and delivering advantages of communication and idea exchange not
possible in the real world (Noor, 2009).
CONCLUSION AND FUTURE RESEARCH

A Learning Community is a complicated entity which should include considerations of technology, emotional attachment,
collaboration/cooperation, and best practices for active learning. Although a virtual community is not a physical space, it has
many of the same needs, requirements, and overall benefits. For education, the virtual community has to be geared towards
effective learning. As noted by Henze (2009) "learning is clearly not a spectator sport or simply downloaded from one mind to
the next. It becomes an active process of communicating, discovering, organizing, and conceptualizing."
The development of a framework model for building a virtual community for online students is a laudable goal and will be useful
when completed. The research team is continuing to work on the task and will continue to report on the subject. The product
or outcome of the project will be development of a new model which summarizes best teaching strategies for building a virtual
learning community which effectively engages the online learner. Consideration will be given to pedagogical improvements to
course design as well as maximizing the use of successful active learning techniques. The outcome will also include
identification of areas for further research.
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USER MODEL FOR A VIRTUAL LEARNING ENVIRONMENT
Sonal Chawla and R. K. Singla

Panjab Univeristy, India
ABSTRACT
The purpose of this paper is threefold. Firstly, to define the purpose of the Virtual Learning Environment and its relation to
Learning Management Systems. Secondly, to identify the key elements of a Virtual Learning environment and finally to design
a user model for developing a Virtual Learning Environment
1.0 INTRODUCTION
Learning is a cognitive activity that differs from student to student. Universities have been providing directed and independent
study to the students. Since then the learning technologies have advanced tremendously and offer many strategic features to
improve the functionality and learning. Utilizing ICT, such as the Internet and related technologies, according to French [1] has
the potential to affect radical change, not just for the design and delivery of online courses, but also in the way that
conventional institutions are structured.
The virtual university as a virtual community is one step on the way to future e-learning environments. The Virtual University
has a number of advantages over both formal lectures and conventional open learning materials, such as interactivity,
adaptation, simulation, demonstration and integration.
According to Cornford [3], the virtual university (VU) is a university without walls which is seen as an institution that has torn
itself free from the geographical confines of the campus, using the new communications technologies to connect learners,
potential learners, teachers, researchers, alumni, employers, research funders and administrators in a flexible ever-changing
network organization. Whittington [4] defined the virtual university as anything that delivers higher education to students via
the World Wide Web. He further stated that this encompasses new but fully-fledged degree awarding institutions offering
distance education initiatives within existing traditional institutions. Davies [5] pointed out that a virtual university must be a real
university offering learning opportunities otherwise denied. It must be, above all, a network for life-long learning that meets the
new learning needs of a new century.
Today Internet-based technology can be seen as a major driving force in a technological sense for this paradigm shift. This
presents higher education institutions with one of four options: firstly, no substantial changes to the university in general;
secondly, a reengineering of the major processes of the university with the retention of the existing overall design; thirdly, the
reinvention of the university organizational model; and fourthly, the elimination of the university due to obsolescence [2].
This leads to the most basic question of how the curriculum be developed and content be created in the digital world for most
effective teaching and learning? How should the concept of reusability and interoperability of course material be introduced so
that the students can get the flexibility of anywhere, anytime learning? This gives rise to the concept of digital entities called
Learning Objects which can be stored in the repository and can be used and reused as many times as necessary. Now this
concept of Learning objects can be utilized to build an adaptive user model for the Virtual University Learning Environment.
The Virtual Learning Environment (VLE) is an integrated university environment where it is possible for a course designer to
present to students, through a single, consistent, and intuitive interface, all the components required for a course of education
or trainings. The objective of VLE is to make education available to vast population [6, 7]. The VLE has tools for administrators,
faculty and students for performing their duties. VLE supports the goals of a virtual university. The VLE implements specific
modules for routine administrative functions of a university environment. It implements all the functions for a student to take the
course over the VLE. The VLE allows students to view lectures and access the study material for every topic of the course. To
overcome the shortcomings of the regular class room environment and the distance learning method, it was perceived that the
existing Internet and multimedia tools can be used to build a new educational environment called the Virtual Learning
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S. Chawla and R. K. Singla
Environment (VLE) in which the students and teachers do not have to meet at the same time (schedule) or in a specified
classroom (location). However, the students can retrieve the course contents (lectures plus study material) at their own
convenience and interact with the professors according to their needs (personally and electronically).
The overall objectives of the virtual learning environment are as follows:
1. Provide a learning environment for students so that they can take the courses without the time and location constraints
of a traditional teaching environment.
2. Allow students with special needs and restrictions to participate in the courses offered through this learning environment.
3. Provide geographically widespread access to various courses offered through this learning environment.
4. Provide a flexible and cost-effective learning environment for the students through the Internet.
5. Develop a learning environment where students can learn the material at their own pace and provide universities with an
environment in which they can improve their enrollment by involving many more students in the learning process [6].
6. Provide a course repository for many universities that do not have the expertise to offer a large number of provider
university elective and special courses by signing an agreement with the VLE.
Aoki and Pogroszewski [8] aimed to present a Virtual University Reference Model (VURM) that can be used by colleges and
universities as a framework or guideline when they plan to utilize Internet-based technology to deliver instruction and support
services or to create a new virtual university project. This can be achieved through identifying its necessary elements and the
mechanisms for offering online distance education courses or programmes. The model consists of four major components:
administrative services
student services
resource services
faculty services.
The second outer ring in the model shows the types of services a student receives from each of the four noted component
areas. The inner three rings represent (from the innermost): 1) the student and his or her relationship to each of these four
areas; 2) transmission systems with which the services can be accessed by students; and 3) applications and tools to be used
in offering the service elements in the outer ring. It is important to note that in this model students are the center of the model
and all the service components and elements are depicted in relation to the students
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2.0 MODEL OF THE VIRTUAL UNIVERSITY LEARNING ENVIRONMENT.

Now in order to formulate a framework for the working of Virtual Laerning Environment, the need is to examine rapid low cost
production of new course ware that can be combined in multiple ways .The answer to this lies in the so-called Learning
Objects. Learning Objects is defined as any entity, digital or non-digital that can be used, reused or referenced during
technology supported learning. [9]
To utilize the benefits of Learning Objects in the form of reusability, inteactivity and interoperability the research suggests the
use of course authoring tools. In order to maintain the database of Learning Objects so that sequencing and navigation
becomes simpler later on Content Authoring Tool comes into picture. These tools tap the potential of instructional designers
and the subject matter experts to create content in the form of learning objects that can be used anywhere and anytime. They
create material using Intercative Flash content, PowerPoint etc to easily store, retrieve and redistribute the content .This
content Authoring tool has been identified as (from research paper by Chawla, Sonal, Singla, R.K. titled Tool identification for
Learning Object Creation which appears in the IJCSIS International Journal of Computer Science and Information Systems
October2009 issue) Xerte from where the content can be packaged and exported in the LMS. For the design of this framework
the LMS suggested is Moodle and the Content Authoring tool is XERTE. The installation of Moodle requires Apache;PHP, MY
SQL so all in all XAMPP environment was found suitable as XAMPP is a free and open source cross-platform web server
package, consisting mainly of the Apache HTTP Server, MySQL database, and interpreters for scripts written in the PHP and
Perl programming languages. The objective of the LMS is to simplify the administration of learning within an organization.It
helps to keep track of learners progress in the course by online discussions with the mentor on a topic or lesson.Assigning
grades and assessing the learners performance is also the task of LMS.
EndUser/ Students/ Faculty
Build courses
Assemble
Publish
CMS
As shown in the above figure, Learning objects are created through the process of building, assembling and publishing learning
content. The subject matter expert is responsible for ensuring that the content is an appropriate altenative to the lecture content
delivered in the traditional course i.e. to say that it has some innovative exercises, activities and examinations needed to
reinforce the new learning methodology. The content created in Authoring tool (here XERTE) must ensure pedagogical match
among the course objective contents, exercises, examinations etc. It can enhance the quality of the course material by working
in unison with graphical designers and web developers. Visual designs for electronic courses which include the creation of
generic and customized templates, navigational icons or images to aid the recognition of location within a non-linear
presentation to enhance the learning content. The Web Developers show the faculty the example of online materials and
describe how their courses can be produced using consistent organizational template that can provide students with the
knowledge of the learning objective , content, assignments, evaluation information resources, links, list of requirements and
FAQs.So the process of content creation shall involve two activities Acquisition and Structuring. Acquisition would be to acquire
appropriate learning material from each individual subject matter expert.[11].
230
S. Chawla and R. K. Singla
Structuring would involve putting the course material in sequential order so that students can understand the concept easily
.This would also involve calling the subject matter expert to review the units aiming to uphold or boost the qulity and
consistency of the course [10].
The database is maintained in MYSQL so that a huge repository of learning objects can be developed and sequencing,
navigation and retrieval of Learning Objects is no longer a tedious task. The Learning Objects therefore, should be developed
on two levels: first, the chapter level and second the topic level.The topic level is fomed with the learning objective,explanatory
notes ,examples,end oftopic exercises etc and is called an ASSET.
These assets when combined contain an aggregation of topics and some chapter exrecises are called SCOs. Each Learning
Object is provided with a meta data tag which is data about data and assists in retrieval of Learning Objects.
3.0 CONCLUSIONS
The research proposes a three layer model for the Virtual University Learning Environment.
1. Organizational Layer comprising of Structure, Copyright and Quality Assurance.The structure can further be classified
under three categories: Virtual Front ends for single existing institutions, collaborative ventures involving genuine
collaboration between existing universities and entirely new institutions created for the delivery of online education.
2. Infrastructure Layer comprising of virtual Campus-look and feel,Registration and Payments,Student Support
services,Assessment mechanisms,Discussion mechanisms,Content Delivery systems and Student tracking systems.
3. Content Layer comprising Learning environments, Formative assessments, Summative assessments. Etc.
This research involves the elaboration of this Content Layer.
EndUser/ Students/
Faculty
LEARNING
ADMINISTRATION
(using MOODLE LMS)
Content Creation
Using XERTE
XAMPP
231
It explains how the model for the virtual learning environment can be created which provides interactive learning to the students
and assists the faculty to develop and share their resources for optimum utilization.This model opens a new world of easily
accessible and individual learning modules which can be delivered over networks of small,reusable components from multiple
sources.
REFERENCES
[1]. French, Deanie. Preparing for Internetbased Learning. In: French, Deanie & Hale, Charles & Johnson, Charles & Farr,
Geraldeds. Internet based learning: an introduction and framework for higher education and business, 1999, p. 9.
[2] X5. Wind, J. The Virtual University. University of Pennsylvania SEI Centre for Advanced Studies in Management, 1996,
pp. 11-12.
[3] X10. Goddard, John & James Cornford. Space, Place and the Virtual University: The Virtual University is the University
made concrete. <http://www.ncl.ac.uk/curds/vuniv/JCLA.pdf .
[4] X11. Whittington, David. Evaluating three years use of a virtual university. Journal of Quality Assurance in Education,
2000, 8 (1), pp. 48-52.
[5] X12. Davies, David. The virtual university: a learning university, Journal of Workplace Learning, 1998, 10(4).
http://www.emeraldlibrary.com/brev/08610da1.htm.
[6] Anup Kumar, J. P. Wong, H. R. Parsaei, H. R. Leep, A Remote Education Paradigm with Temporal and Spatial
Flexibility, ASEE Annual Conference, Washington D.C, 1996.
[7] Raj. Pakala,Virtual Learning Environment, M.S. Thesis, University of Louisville, 1997
[8] X22. Aoki, Kumiko & Donna Pogroszewski.Virtual University Reference Model: A Guide to Delivering Education and
Support Service to the Distance Learner. Online Journal of Distance Learning Administration, 1998,
http://www.westga.edu/~distance/aoki13.html
[9] Wiley,D.A.2000. Connecting Learning Objects to Learning Design Theory :A Definition, a metaphor and a Taxonomy
In:D.A.(ed.)The Instructional Use of Learning Objects. http://reusability.org/read/chapters/wiley.doc
[10] Christine,H., F. Morten, S. Samuel, G. Sissel, Schar, Brigitta and Danuser, 2002 Learning Content
production:Acquisition,Structuring.Proceedingsof 4th International Confernece on New Educational Environments,Swiss
Federal Institute of Technology, ETH, CH-8092 Zurich. http://www.fjeld.ch/pub/nee.pdf
[11] Kerres, M., 2001. Multimedia and telemedia Lernumgebngen Konzeption and Entwicklung 2, Aufl, Oldenbourg Verlag
Berlin.
[12] Singh, P. P., S. Sandhir and Elearning, 2005.New Trends and innovations.Deep and Deep Publications (p) Ltd.,pp:104107. ISBN: 8176296953
232
D. E. Hansen
USING ONLINE TV AND ONLINE RADIO TO STUDY CULTURAL BIASES
David E. Hansen
Texas Southern University, USA
ABSTRACT
This article is presents a novel method for helping students to observe cultural differences and to assess their usefulness or
difficulty for doing business around the world. The idea proposed in this article is to bring students closer to the global village
by means of electronic communications from overseas available on the Internet. Following an introduction to the problem of
cultural bias and how this can create problems for corporations, three particular theories about the source of such biases can
be presented to students to help them identify and analyze biases. Using these theories as the basis for bias identification,
students can use the many electronic sources of information available to them via the Internet to explore cultural and business
differences. They can use the theories for analyzing and correcting potential problems or just report interesting differences that
could possibly become the basis for future business opportunities or threats. Several online websites containing access to
both online TV and radio are presented.
Keywords: Business and Education, Marketing, Pedagogy, Cultural Bias Evaluation,
USING ONLINE TV AND ONLINE RADIO TO STUDY CULTURAL BIASES

One of the problems for American students today is trying to understand the international and world business environment.
The United States is a country that has traditionally been dominated by one language, one religion, one educational system,
and one majority racial group. In addition, a traditional attitude of world superiority has led to a tacit demeaning of foreign
cultures, products, and ideas, although this is probably true in other countries as well. To a certain extent this may stifle
students desire to learn more about overseas business activities and opportunities. College business education has tried to
make students more culturally sensitive by arranging for study abroad encounters ranging from a week or so to an entire year
in a foreign country. However most international business training is going to occur in the classroom through cases and
examples presented in textbooks.
The purpose of this study is to present ideas on how to develop students appreciation for foreign cultures and foreign business
opportunities by making an attempt to bring the world closer to the students rather than bringing them closer to the world. In
this age of incredible advances in electronic communication this is increasingly a possibility, but it has yet been only slightly
realized in practice. In this paper we present background information that is typically introduced to students as the economic
motivation for the need to be involved in international business. This is not to say that situational opportunities for students to
see something of the global village do not exist in their everyday life. This may occur through contact with foreign students,
interesting international food, music, and movies, international clothing, news about international wars in which they or their
friends may be engaged, and of course international products such as cars, household items, everyday clothing, home
electronics items, and so forth. Interestingly, students are largely unaware of the areas in which American business is
dominant in global markets; this is something that students should be made aware of. Examples of this are aviation, jet
engines, computers and computer software, satellite and communications technology, sports and entertainment, to name a
few.
To help students in their quest to become more engaged in the global village, they need to learn about other countries so that
they can understand the needs of the people in those countries and the conditions for trade. This leads to four main subject
areas used to study in differences across countries: economic issues, trade issues, cultural issues, and legal-political issues.
In this paper we will focus mainly on cultural issues with the understanding that there are several very interesting topics in the
three other areas of study worth exploring due to their potential for generating interest in students. For example, issues such
as intellectual property theft (counterfeit DVDs, fake Gucci purses, etc.), bribery, and smuggling are always successful at
gaining students attention, especially when tied to the issue of how this currently infers with overseas profits, which account for
up to 70% of the total profit of many multi-national corporations (e.g., Disney). Another example is economic differences
233
Using Online TV and Online Radio to Study Cultural Biases
around the world and in particular the huge difference in the stage of economic development between post-industrial countries
such as the United States and lesser developed countries such as Malawi. An example that generates considerable interest in
students is how someone can live in a country where the average per capita income is only $500 a year and still own a cell
phone. Then there is the perennially interesting issue of NAFTA, what it means, and what the implications for jobs in the USA
are.
However, our main topic concerns the area of cultural differences. To get students started in this requires a few pieces of
information concerning different cultures and how we view them. The first important thing is to explain what a cultural universal
is. Cultural universals are things that every culture has and does. When often make the mistake of judging others cultural
universals by our own, when in fact they do them just as legitimately in their own eyes as we Americans do ours. Examples of
cultural universals are weddings, dating, family life, religion, language, food (breakfast, lunch, and dinner), clothing, music,
furniture, and homes. When we don't understand the differences it can make a laughable but expensive and sometimes hurtful
mistake.
The next step is to take some classic examples of business mistakes made overseas and show how they relate to cultural
differences that were misunderstood by the firm trying to do business in the host country. To do this we must talk about three
basic sources of error on the side of the firm. The first error is not understanding the difference between low and high context
cultures. The second is not understanding where a country stands on the Hofstede five dimensions, and the third is not
understanding how we fall into the trap of the self reference criterion.
The United States is a low context culture, which means we typically base our business agreements on written, legally binding
contracts with explicit language concerning the details of the contract. The aim is to replace personal trust with the mechanism
of rule of law. In a high context culture people try to look for signs of trustworthiness and credibility in the character,
mannerisms, and habits of the person with whom they are trying to deal. Regarding the Hofstede five dimensions, masculinity,
individualism, power distance, uncertainty avoidance and long-term perspective, each potential host country must be analyzed
individually. Fortunately almost all countries Hofstede dimensions can be found on the Internet. Finally, the use of a self
reference criterion occurs when a decision-maker looks at a problem from his or her own point of view rather than from the
point of view of the overseas culture that it exhibits the problem. For example, I may go to a country and see prices to be very
high and yet not understand that the salaries are also very high so that the net difference in standard of living between my
country and the host country may be trivial, and presenting products at a lower cost may either not be possible or the products
may be regarded as inferior.
With these tools in place students should be presented with some of the more famous international business errors and
analyze them to see which category of error each falls into, as well as devising a bias free solution to the situation. Here's a list
of classic errors commonly used to illustrate issues concerned with cultural differences.
1.
2.
3.
4.
5.
6.
7.
8.
Starbucks and coffee in Asia

Wal-Mart and value sizes in Hong Kong
Dow chemical and fertilizer in the Philippines
Procter & Gamble and Tide advertisements in Saudi Arabia
Americans and negotiation in Japan
Introducing the Matador (car) in Puerto Rico
No wine for lunch at Disney World, Paris
Baby food with babies on the labelwhats in the jar?
So far this may sound like a typical classroom approach. What happens next is where the innovation comes in. The idea is to
try to have students find cultural universals or unusual, but common business practices in a host country, and then have the
students compare what they find to the equivalent form in the United States (or their home country). The way this is currently
done is by performing an Internet search using publically available information resources. However, in order to get students to
move closer to the global village, instead of exclusively using Internet search for relevant articles, they should be encouraged
to use online TV or online radio transmissions from their host country. Even if they do not speak one of the languages of the
host country, many countries around the world use English as one of their broadcasting languages in order to provide an
English speech outlet for international listeners. English-only students will still be able to join the world by simply turning on
their computer. Table 1 contains a list of sites for radio and TV, some of which contain links to stations in more than 100
countries.
234
D. E. Hansen
Table 1: Online TV and Online Radio Websites

1.
2.
3.
4.
5.
Brasilian Radio live online (RadioGlobo)

http://globoradio.globo.com/
Japanese TV live online
http://xorsyst.com/japan/watch-japanese-tv-online
English premier league soccer
http://www.sportizo.com
The following site contains a comprehensive list of TV stations worldwide
http://wwitv.com/portal.htm?http://wwitv.com/television/index.html?http://wwitv.com/tv_channels/7984.htm
The following site contains a comprehensive list of radio stations worldwide
www.live-radio.net/info.shtml
Using the examples that they gather with this new approach, they should analyze them with the three methods described
above using the method that is most relevant for identifying and remediating the bias. Examples in class will help show
students how to get started. For example, using something such as English online TV, students will easily be able to
understand what is going on, yet should be able to see differences in cultural universals such as differences in advertising,
differences in products, and so forth. Trying the online radio stations located in different potential host countries would also
provide students with an understanding that some types of music is common in all cultures, but that some music is local.
In conclusion, the idea proposed in this study is basically to bring students into the global village electronically via internet
based radio and TV stations. Once an introduction to the problem of cultural bias is introduced, and how this can create
problems for corporations, three theories about the source of the biases can be presented. With this as the basis for problem
identification, students can use the many electronic sources of information available to them to explore cultural and business
differences. They can use the tools presented in the course to analyze potential problems or just report interesting differences
that could possibly become the basis for future business. This study is presents only one way of looking at the issue of cultural
differences and their usefulness or difficulty in doing business around the world, but is it a way that will enable students to
experience overseas cultures first hand without leaving their homes or their classrooms.
REFERENCES
Cateora, Phillip R. and John L. Graham (2007). International Marketing. 13th Edition. Boston: McGraw-Hill Irwin Publications.
Hall, Edward (1959). The Silent Language. New York: Doubleday.
Hofstede, Geert (2001). Cultures Consequences. 2nd Edition. Thousand Oaks, CA: Sage Publications.
Keegan, Walter, and John Greene (2008). Global Marketing. 5th Edition. New York: Prentice Hall.
235
LOCAL FOOD UTILIZATION: A WINNER FOR THE ENVIRONMENT

AND THE RESTAURANT
Carl Pfaffenberg1, Jeffrey Campbell2 and Carol Costello3

Stephen F. Austin State University1 and University of Tennessee2, 3, USA
ABSTRACT
The overall purpose of this research was to determine if utilizing locally-produced foods in some of the specialty restaurants in
casinos would create a competitive advantage. A survey was designed to determine the practices and attitudes of individuals
that visit casinos with regard to the purchase and utilization of locally-produced foods. Questions that were focused on
supporting food service establishments that use locally produced foods, questions about individuals demographics and gaming
characteristics were included. A mailing list was furnished by Southern Gaming and Destinations magazine and the editor
agreed to mail out 3,000 letters to a random sample. Fifty percent of the respondents visited a casino at least 7 times per year
with the second largest group visiting 3-4 times per year (19.8%). Thirty-six percent of respondents put at risk more than $500
for each casino visit and 19.2% put between $100 - $200 at risk. Individuals ranked the chance to win as the most important
component that contributes to their enjoyment for a casino type experience. Service and food and beverage also were ranked
as important to the gaming experience. Two thirds of the respondents (66.3%) indicated that they would be willing to pay more
for locally grown foods. The majority of respondents indicated that they would be willing to pay an additional 10% for locally
grown foods. Seventy four percent of respondents indicated that they would frequent a restaurant that served locally grown
vegetables and 70.1% indicated the same response for fruits. Many individuals (64.2%) did agree that they prefer knowing
where their food is grown and 87.3% agreed that they expect locally grown food to be of higher quality. Results from this study
indicate that individuals that visit casinos will purchase locally grown foods when eating out in restaurants.
Keywords: Locally Produced Foods, Gaming, Restaurants
LITERATURE REVIEW
Increasing concern for the environment has resulted in a recent interest in sustainability, the Green movement, and ways in
which the two can be incorporated to appeal to consumers. One strategy in particular, which seems to have developed not only
a relatively large following but also a great deal of academic interest, is the move toward locally-grown food products. Often
viewed as a way to support local communities (Burchardi, Schroder, & Thiele, 2005; Darby, Batte, Ernst, & Roe, 2006) as well
as increase food-related sustainability (Darby, et al., 2006; Robinson, & Smith, 2002), the use of locally-grown foods also has
some interesting implications in terms of rousing consumer interest.
Though multiple studies have indicated consumer preference toward locally grown food products, and even a willingness to
pay a premium for such products (Brown, 2003; Burchardi, et al., 2005; Darby, et al., 2006; Patterson, Olofsson, Richards, &
Sass, 1999; Robinson & Smith, 2002), the particular meaning of locally grown seems to hold less sensitivity to the consumer
than the concept itself. Darby, et al. (2006) found that freshness, support for local businesses, and taste were the highest
ranking reasons for which the surveyed consumers chose to buy locally grown foods and that consumers overall were willing to
pay more for locally produced foods than those produced elsewhere. These researchers reported that there was no significant
differences in consumers willingness to pay for products labeled as grown nearby versus grown in Ohio (the location of the
study), indicating that state-grown is judged as equivalent to locally grown. Furthermore, a Colorado study determined that
within the context of sustainability and consumer preference toward environmentally conscious food choices, consumers
showed a greater willingness to pay for products that were grown within their own state than either equivalent organic or
equivalent GMO-free products (Loureiro & Hine, 2002). A further willingness to pay study lead to Browns (2003) findings in
consumer segmentation which indicated that households that had an annual income of $50,000 or greater or held a graduate
or professional degree were most willing to pay a higher price for locally produced food.
With many locally grown studies focusing on local residents purchasing within their own place of origin, the findings of
Patterson, Burkink, Lipsey, Lipsey, Roth, and Martin (2003) gain significance in broadening the understanding of consumers
reaction to locally produced food. Patterson, et al. (2003) found that tourists to Arizona valued locally produced items in their
236
C. Pfaffenberg, J. Campbell and C. Costello
menu options at restaurants at their destination location resulting in willingness to pay increased premiums for locally grown
menu items. The authors stated that tourists are likely to be less price-sensitive and more willing to spend additional
increments of income on gifts and restaurant foods. Purchasing state-branded products also might enhance their overall travel
experience, a sentiment which extends to the food they consume in their destination (p. 526).
It appears that we depend increasingly on long-distance food. Encouraged by food processing innovations, relatively cheap oil,
and subsidies, since 1961 the value of global trade in food has tripled and the tonnage of food shipped between nations has
grown fourfold, while population has only doubled. In the United States, food typically travels between 1,500 and 2,500 miles
from farm to plate, which is as much as 25% farther than in 1980 (Halweil, 2002). A byproduct of this globalization, however, is
the amount of mergers and consolidation that have taken place within the supply chain between producers and retailers. Lyson
(2007) states that within the U.S., the ten largest multinational corporations control almost 60 percent of the food and
beverages sold. This provides little area for the small or local farmers in which to operate effectively and compete. Thus,
points of differentiation and new distribution channels become even more important for the local farmers trying to stay in
business.
While this long distance food system offers unparalleled choice, it often runs over local cuisines, varieties, and agriculture,
while consuming staggering amounts of fuel, generating greenhouse gases, eroding the pleasures of face-to-face interactions
around food, and potentially, compromising food security. Fortunately, the long-distance food habit is beginning to weaken
under the influence of a young, but surging, local foods movement. From peanut butter makers in Zimbabwe to pork producers
in Germany and rooftop gardeners in Vancouver, entrepreneurial farmers, start-up food businesses, restaurants, supermarkets,
and concerned consumers are propelling a revolution that can help restore rural areas, enrich nations, and return fresh,
delicious and wholesome food to cities (Halweil, 2002).
Many in the meeting planning industry think conference facilities should lead the green practice, and that planners and caterers
should support those facilities environmentally friendly practices through their patronage. The Keystone Conference Center,
the largest conference center in the Colorado Rocky Mountains, has made a commitment to the environment by introducing
clean energy technology. The center is powered by 100 percent renewable wind energy and boasts an energy-efficient lighting
system, a composting program that reuses more than 12 tons of kitchen waste per year, and recycling efforts that diverted
more than 127 tons of material in 2006. Keystone serves fresh organic and sustainable produce to its guests, and carryout
meals at the center are served in reusable mesh bags to eliminate waste from cardboard and paper (Abbott, 2009).
The restaurant industry seems to be responding to the perceived demand for local foods. The Dallas Fairmont Hotel has built a
2,000 square foot garden on its pool and terrace level. According to the Executive Chef J.W. Foster, the garden is cost
efficient, however that was not his motivation. I wanted the cooks working here to experience and understand the produce
rather than just pulling it out of the fridge or off a truck (Ruggless, 2008). Restaurants in The Gaylord Texan Resort in
Grapevine, Texas have taken the use of local foods to a new level. Within their farm-to-market program, they now are able to
move past buying local ingredients to match the menu items and actively seek local items first before building their menu
offerings. This allows a step of creativity and uniqueness in offering local foods and utilizes those food items in peak season,
ensuring high quality and freshness (Ruggless, 2008). While fine dining and upscale restaurants can have more flexibility in
their food sourcing options, regional or chain restaurants also see the benefits of local sourcing. Clydes Restaurant Group out
of Washington, D.C. was an early pioneer in the use of local farmers in the late 1980s. They continue to utilize them as a
preferred source of supply, noting that updated supply chain efforts and established partnerships with produce distributors have
allowed a transition to a more established program. Other restaurant chains such as Elmers Restaurants in Portland, Oregon
have used this distribution channel as a way to reposition their product offering choices in a more family style atmosphere
(Tanyeri, 2008).
Parasole Restaurant Holdings of Minneapolis just opened Mannys Steakhouse, an upscale operation at the new W hotel in
September of 2008. According to Kip Clayton, the Vice President of Business Development, We have a lot of younger guests
who are pretty health-conscious. When it makes sense financially and otherwise, we offer freshness of local products as well
as the savings on energy used to transport the product (Ruggless, 2008). The hotel industry also has made some progress on
providing a look into customer preferences related to a green effort. The J.D. Power and Associates 2007 North America
Hotel Guest Satisfaction Survey indicates that nearly 75% of all hotel guests are willing to participate in their hotels
environmentally friendly programs (Butler, 2008).
Individuals that visit casinos are exposed to some of the highest quality restaurants in the US. Many restaurants at these
locations represent the most famous chefs and the newest trends. Though little research has been done to specifically draw a
connection between casino visitors and their perception of and willingness to pay for locally-grown foods, one research study
237
indicated that the heavy spenders in a casino destination also are those most likely to hold a higher interest in the destination
community as a whole, are more likely to seek out information about that community than either light or medium spenders, and
also spend more money than either of the other groups on such goods and services as lodging, food and beverages both
inside and outside the casino, and gifts and souvenirs(Moufakkir, Singh, Moufakkir-van der Woud, & Holecek, 2004). These
same heavy spenders were more likely to visit as a group rather than individually, stayed in the destination area for longer
periods of time, were more likely to use overnight accommodations at hotels or motels, were more likely to visit multiple
casinos, and were relatively more affluent than their counterparts.
In addition, the Harrahs 2006 Profile of the American Gambler (Harrahs, 2006) reported that 21% gamblers versus 12% of
non-gamblers like to be the first to try new restaurants. Also reported was that 25% of gamblers versus 16% of non-gamblers
would try trendy new food and beverage. These data offer potential to incorporate trendy, locally grown foods into a menu.
This information, combined with the aggregate scholarly literature concerning the locally grown movement, indicates a need to
discover how this movement could impact the casino-goer and the restaurant industry. Whether they go green for altruistic or
financial motives, its undeniable that companies can benefit from letting their new shade be known. Greening demonstrates
corporate responsibility, opens up niche markets and presents growing opportunities for marketing (Abbott, 2009).
PURPOSE
The overall purpose of this research was to determine if utilizing locally-produced foods in some of the specialty restaurants in
casinos would create a competitive advantage. Many casinos currently are recycling and incorporating Green strategies in
their rooms division in response to customer interest in supporting these practices but little has been reported on utilizing
locally-produced foods. Will casino customers choose properties that support the local communities and decrease the carbon
footprint in this manner? Which type of casino customer will support these practices? The specific objective of this research
was:
To determine the practices and attitudes of individuals that visit casinos with regard to the purchase and utilization of
locally produced foods.
METHODOLOGY
A survey was designed to assess the practices and attitudes of individuals who visit casino properties at least one time in the
last year. In addition to questions that were focused on supporting food service establishments that use locally produced foods,
questions about individuals demographics and gaming characteristics were included. The survey contained items from
previously used surveys (Pirog, 2004; Chase, 2007) and incorporated information about locally produced foods and sustainable
agriculture.
Questions incorporated into the survey included what is considered locally grown and how likely was the individual to purchase
a variety of locally grown items. In addition, questions related to what factors are important when purchasing food in a
restaurant were designed with regards to usage of local foods. Demographic questions included age, work status, household
income, and education. Questions related to gaming experiences included how often the respondent visits a casino per year,
amount spent, limit established, and ranking of items that contribute to the casino experience. The survey was pilot-tested with
individuals who had visited casinos at least two times per year in the last two years. Suggestions related to clarity and
specificity were incorporated into the final survey.
A mailing list was furnished by Southern Gaming and Destinations magazine. The editor agreed to mail out 3,000 letters to a
random sample and included encouragement for their subscribers to respond. Individuals on the mailing list were sent a letter
explaining the project, human subjects information, and the URL to access the online survey. An incentive was offered of
twenty $25 gift cards to encourage participation.
Respondents were directed to the URL site that contained the survey and the informed consent information. The survey was
posted with MRInterview software and data was saved into a SPSS data file. Data were analyzed with the use of SPSS
statistics 16. Descriptive statistics and frequencies were calculated for each variable. Means were calculated for the ranked
items
An exploratory factor analysis was performed for the 8 items that related to purchasing food in a restaurant. Three factors with
eigenvalues greater than 1.0 were generated. Bartletts test of sphericity was significant (p<0.001) and the Kaiser-Meyer-Olkin
238
measure of sampling adequacy (0.72) confirmed that factor analysis was appropriate. Next, principal component analysis was
performed which explained 74.6% of the variance. All items had factor loadings greater than 0.60.
A two-step clustering process was used to segment the individuals into clusters based on gaming characteristics. A hierarchical
cluster analysis was use to indentify the appropriate numbers of clusters by Wards method and a K-means cluster analysis
was used to provide information on cluster membership. Items included how often casinos are visited each year, how much is
put at risk on each visit, duration of trips, and if a gaming limit is established.

The number of respondents to the survey was 271 with only 210 fully completing all the items (response rate of 7.00%).
Personal communication with the editor of Southern Gaming and Destinations magazine indicated that normally 3-5% respond
to survey requests.
The majority of the respondents were male (58.7%) who were married (68.5%), and white (91.8%). According to the AGA
Survey of Casino Entertainment (2008), a larger percentage of males visit casinos than females (31% versus 25%).
Approximately 46% of the sample had at least a Bachelors degree which matches the US Census Data and Harrahs 2006
Profile of the American Gambler (Harrahs, 2006).
Age was distributed over three main segments with 19.7% in the 41-50 range, 39.0% being 51-64 years of age, and 31.5%
being 65 years of age or older. Harrahs (2006) survey indicated that the average age of the US gambler was 46 years of age
and US Census Data report the average age in the United States is 45 years of age. The current sample appeared to be older
which also was reflected in 40.1% being retired and only 45.6% working full time. Additionally, for the majority of respondents,
59.9% had household income at $75,000 or below. Only 19.8% of the sample had a household income of over $100,000.
Fifty percent of the respondents visited a casino at least 7 times per year with the second largest group visiting 3-4 times per
year (19.8%). Harrahs (2006) reported that the average gambler makes 6.1 trips per year to visit a casino. Most individuals
spent 1-3 days (54.3%) at the casino with 27.4% spending less than one day at the casino. The largest percentage of
respondents (36.4%) put at risk more than $500 for each casino visit and 17.2% put between $100 - $200 at risk. For the
current sample, only 12.6% put at risk less than $100 which according to the AGA Survey of Casino Entertainment (2008), 50%
of gamblers put at risk less than $100 and only 8% of gamblers put $300 or more at risk. The respondents in this study
indicated that it put more at risk than the average gambler.
When individuals were asked if they establish a limit to spend on gaming prior to entering the casino, 70.7% indicated that they
do with 21.2% responding sometimes. Similarly, according to the AGA Survey of Casino Entertainment (2008) 84% of
gamblers always set a limit and 11% usually or sometimes set a gaming limit. When asked if they establish a limit on food and
beverage, only 15.0% indicated that they do with 14.0% indicating sometimes. It appears that there may be potential for
effective marketing of food and beverage to increase sales as individuals have not set limits on what they will spend in this area
of their gaming experience.
Individuals were asked to rank casino items they feel most important to their enjoyment at a casino. Table 1 depicts the mean
rankings for each item.
Table 1: Mean Rankings for Casino Items that Contribute to Enjoyment, n=210
Casino component
Mean
Service
3.08
Food and Beverage
3.51
Overnight rooms
3.79
Security
4.06
Non-gaming entertainment
5.67
Chance to win
2.23
Location/Advertising/ Image
4.83
1=most important, 7=least important
239
Individuals ranked the chance to win as the most important component that contributes to their enjoyment for a casino type
experience. Chance to win and service have been previously verified as ranking highly in the casino guest enjoyment.
(Pfaffenberg & Costello, 2001). Service and food and beverage also were ranked as important to the gaming experience. It was
reported in the 2008 AGA Survey of Casino Entertainment that in the past year, 72% ate in the fine dining restaurant in a
casino. Since food and beverage was ranked third in importance, it indicated a potential area of differentiation for casinos that
could contribute to the overall enjoyment. It appeared that advertising/image and non-gaming entertainment were not deemed
as important by the respondents as the other factors.
The second part of the survey focused on locally grown or locally produced foods (baked goods, jellies/jams, meat, etc.). There
is discrepancy in what is considered locally grown which has been reflected previously in the literature (Schmit, 2008; Zepeda
& Li, 2006; Wilkins, J.L., Bowdish, E., & Sobal, J., 2002). Thirty-two percent of the respondents consider locally grown as
grown within 25 miles of the purchase point, 25.9% as grown 100 miles or less from the purchase point, 37.1.5% as grown
within your state, and 4.9% as grown in the United States. Since there are no regulations in place or definition of locally
grown, most consumers are left to decide for themselves what is considered locally grown.
Individuals were asked about where they would most likely purchase locally grown foods. The majority of individuals (92.1%)
would purchase locally grown foods at a farmers market with less indicating they would do so at a grocery store (80.3%). Fiftyone percent of individuals indicated that they would most likely purchase in a supercenter/warehouse club and 40.6% would be
most likely to purchase in a restaurant. Only 4.2% of individuals indicated that they do not consider where food is produced.
Farmers markets have become prevalent in many areas of the country and more individuals are visiting them for the fresh
produce and supporting their community. Local food purchasing has become more prevalent with additional shopping
channels. The continued development of farmers markets across the Unites States supports this cultural movement,
particularly in the past decade. Numbers of established markets continue to climb, with estimated totals in 2008 reaching 4,685
markets, an increase of 6.8% over the 2006 numbers and 94% over the ten year period (USDA AMS, 2008).
Two thirds of the respondents (66.4%) indicated that they would be willing to pay more for locally grown foods. Table 2
contains the information from the 143 individuals that indicated yes when asked and what is the maximum additional cost
percentage above normal food prices would you be willing to pay.
Table 2: Additional Cost Percentage Willing to Pay for Locally Grown Food, n=143.
Additional cost percentage
Response percentage
5%
21.7%
10%
51.7%
15%
13.3%
20%
11.9%
25%
1.4%
The majority of respondents indicated that they would be willing to pay an additional 10% for locally grown foods. In addition,
many individuals (26.6%) would be willing to pay even more to obtain the locally grown products. It appears that the individuals
in this study parallel the findings of Darby, et.al, 2006 and Brown, 2003 for the willingness to pay more.
Individuals were asked to indicate how well they agreed with the statements in Table 3. Not many individuals considered the
distance food travels as part of their buying decision. Many individuals (67.1%) did agree that they prefer knowing where their
food is grown and 87.8% agreed that they expect locally grown food to be of higher quality and that they would drive farther to
purchase food of higher quality (63.1%). In addition, 74.3% of individuals agreed that convenient location is the most important
factor in purchasing locally grown food. It appears that the intentions to purchase locally grown food are present but unless the
foods are located in a convenient location, purchases may not occur.
Approximately 45% of the respondents would order locally grown foods in a restaurant as a way to give back to the community.
In past research, this factor has been considered in the decision to purchase local foods (Burchardi, et al., 2005; Darby, et al.,
2006).
240
Table 3:
Percentage of Individuals for Each Statement, n=210

Strongly
Disagree
Disagree
Neither
Agree
Strongly
Agree
I consider the distance food has traveled as

part of my buying decision
6.5
20.0
38.1
27.4
7.9
I prefer knowing where my food has been

shipped from or grown
2.4
9.0
21.4
45.7
21.4
Convenient location is the most important factor

in purchasing locally grown food
0.5
7.5
17.8
60.3
14.0
I expect locally grown foods to be of higher

quality (fresher/more nutritious)
0.0
0.9
11.3
53.1
34.7
I would drive further to purchase food I consider

to be of higher quality
0.9
12.1
23.8
50.0
13.1
When I eat at a restaurant, I would order locally

grown food to give back to the community
5.1
12.6
37.4
33.2
11.7
When I eat at a restaurant, I will try new menu

items when offered
1.4
8.5
23.0
50.7
16.4
Individuals were asked to identify factors that were important to them about purchasing food in a restaurant. The entire sample
(100%) indicated product taste was important or very important when purchasing food. In addition, 95.8% thought product
quality was important or very important. Most individuals that purchase food in restaurants expect these factors as necessities
rather than options.
The cost of the product in a restaurant was important or very important to 79% of the respondents. Surprisingly, 71.4% of the
individuals stated that it was important or very important that the food product is nutritious and healthy. The ages of the
respondents were older which may explain the importance of consuming nutritious foods for health reasons. Approximately
42% of the respondents indicated that it was important or very important that the food product in the restaurant be locally
grown. As previously discussed, individuals have different ideas as to what was considered locally grown but it is encouraging
that over one-third of the respondents indicated that factor was important in their decision to purchase food in a restaurant.
Participants were asked if they would frequent a restaurant that served various locally grown or locally produced foods.
Seventy-five percent of respondents indicated that they would frequent a restaurant that served locally grown vegetables and
72.1% indicated the same response for fruits. Individuals are most familiar with locally grown fruits and vegetables due to local
farmers markets or grocery stores that have incorporated these items into their selections. Country of origin labeling, now
required in grocery stores, has pressured some retailers to stock more local fruits and vegetables.
Individuals also indicated that they would frequent a restaurant that served local baked goods, wine, or beer (65.9%). There
was slightly less agreement with purchasing local meat or dairy products (63.2% and 56.0%, respectively). Respondents may
be less familiar with those products that are produced locally.
These 8 items concerned with purchasing in a restaurant were used for the factor analysis. Table 4 presents the result of that
analysis. The three factors generated were labeled 1) Local foods, 2) Food quality, and 3) Food cost.
241
Table 4:
Factor Analysis of Factors Important When Purchasing Food in a Restaurant
Importance of restaurant items
Factor loading
% Variance explained
Local foods
41.77
Product is locally grown
0.861
Product is made by local producer
0.854
Know methods used in growing
0.833
Personally know who made food
0.753
Product is nutritious/healthy
0.656
Food quality
19.01
Product taste
0.840
Product quality
0.823
Food cost
14.01
Products cost
0.890
Respondents used a 5 point scale with 1=not at all important; 5=very important
The first factor, local foods, consisted of 5 items that related to where the food in the restaurant is grown, who produces the
food and by what methods, and that the food product is considered healthy. The second factor, food quality, related to the
quality factors we expect when we eat out in a restaurant. The last item, products cost, loaded individually as it was the only
item related to cost of the food.
Cluster analysis generated 4 clusters from the items of how often a casino is visited each year, how much is put at risk on each
visit, duration of trips, and if a gaming limit is established. The Smart High Rollers were individuals that put the most money at
risk (over $500 per visit) but always set a gaming limit. These individuals also took frequent trips to casinos. The Gaming
Enthusiasts were individuals that took the most trips to visit a casino each year (9 or more), never set a gaming limit, and put
relatively higher amounts of money at risk. The Day Tripper took many trips to casinos each year, but in almost every case,
trips were for less than one day. In addition, these individuals usually put lower amounts of money at risk. The Accidental
Gambler took short trips (1-3 days), usually fewer trips than the sample, and often established a gaming limit.
Analysis of variance was performed to determine if differences existed among the clusters and the importance they placed on
the factors generated for purchasing food in a restaurant (Table 5). There was a significant difference between the Smart High
Rollers and the Day Trippers for the importance of local foods in restaurants. The Smart High Rollers scored local foods in
restaurants more important than the Day Trippers. There were not significant differences among the other clusters and this
factor. Since the Smart High Rollers appeared to frequent casinos and put at risk the highest amount of money, this group may
offer a potential market for restaurants to utilize local foods. The Day Trippers may not consume as many meals in the casino
setting and marketing to this group may not be the best choice.
Table 5:
Factor Means for Each Gaming Cluster
Cluster
Local foods
Food quality
Food cost
Smart High Roller (n=57)
3.33a
4.73a
3.89a
Gaming Enthusiast (n=32)
3.14ab
4.78a
4.03a
Day Tripper (n=55)
2.88b
4.63a
4.00a
Accidental Gambler (n=62)
3.23ab
4.80a
4.21a
Respondents utilized a 5 point importance scale; 1=not at all important, 5=very important.
ab Means with different superscripts differ within columns at p<0.05.
There were no significant differences in the importance factors of food quality and food cost among the different clusters. As
previously mentioned, most individuals consider food quality to be an essential component of eating out rather than a choice.
Food cost also did not vary among clusters which could reflect that only 15.0% of this sample set a limit on food and beverage
prior to entering the casino.
242
CONCLUSIONS
Results from this study indicate that individuals that visit casinos will purchase locally grown foods when eating out in
restaurants and are willing to pay more for these foods. Individuals expect locally grown foods to be healthier which is of
interest to many individuals. Incorporating local ingredients and foods into a restaurants menu will meet this interest and
potentially increase restaurant sales.
It is apparent that individuals have different perceptions of what they consider locally grown. If definitions were in place for
locally grown or locally produced products, more producers would be able to use this factor in marketing and promotion of their
products. Product quality, product taste, and products nutritional content were important factors when considering purchasing
food in a restaurant. Fruits and vegetables have these characteristics and individuals indicated that they would frequent a
restaurant that served locally grown fruits and vegetables. It appears that there is potential for casino restaurants to incorporate
locally grown and produced foods into their menus. In most gaming locations there are many casino properties within walking
distance and visitors must choose where they want to stay and gamble. Offering menu items that include locally grown foods
may provide a competitive edge for some restaurant properties.
While a number of benefits can be achieved for both consumer and producer by utilizing these farmers markets, including
availability and freshness to consumers and additional revenue streams for producers (Brown & Miller, 2008; Tropp, 2008),
they arent without drawbacks. Often times the revenue generated doesnt adequately justify participation by producers (Tropp,
2008). Another complication for these markets is the continued demand for local in other channels, where it is estimated that by
2011 total demand for local foods could reach $7 billion (Packaged Facts, 2007). Competition remains strong for the local
foods by consumers even in a weak economy, and channels such as restaurants, drug stores, food services, specialty
markets, and grocery stores are trying to capitalize on this growth opportunity (Packaged Facts, 2007). Casino restaurants that
incorporate local foods into their menus may offer potential options that gamblers are looking forward to and may give them a
winning edge.
FUTURE RESEARCH DIRECTION

The availability of locally produced foods across a number of different channels for todays consumers provides an opportunity
for further research. While this particular study was focused on casino patrons and their practices and attitudes towards
purchasing and utilization of locally produced foods, future research should include a review of how place of consumption can
alter or enhance a persons decision to buy local foods. For example, are there factors within the restaurants or shopping
channels themselves that would help to motivate a patrons desire for local foods? How does restaurant Servicescape (Bitner,
1992), or the influence of the surroundings in which people consume, positively influence both the choice of locally grown foods
or the level of satisfaction that is received from this choice?
Understanding not only the individual motives to purchase local but also the factors which support the choice provides an
interesting perspective for researchers to explore.
Researchers also may consider the willingness to pay factor for local foods under a number of differing conditions. Darby et
al. (2006) suggested a price premium for locally grown strawberries between 21% to 39%. Our findings for a restaurant setting
support a figure closer to 10%. Would consumers be willing to pay more if the chef came out during the dinner to explain what
types of local foods were used and how they were grown? Would restaurant patrons prefer to have information provided,
explaining in more detail the use of local foods and where the items had come from? Answering these questions would help in
the effort to continue the growth of local food research as the trend of green and sustainable consumption continues to
spread throughout the Unites States and the rest of the world.
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Abbott, J. L. (2009, January). Meeting Green, http://www.meetingtraveler.com/article/Meeting-Planners/Meeting-Green, 16-19.
Accessed on February 19, 2009.
American Gaming Association (AGA). (2008). State of the States: The AGA Survey of Casino Entertainment, 10th ed.
http://www.americangaming.org
Bitner, M.J. (1992). Servicescapes: The Impact of Physical Surroundings on Customers and Employees, Journal of Marketing,
56(2), 57-71.
Brown, Cheryl (2003). Consumers' preferences for locally produced food: A study in southeast Missouri, American Journal of
Alternative Agriculture: 18, 213-224.
243
Brown, C., & Miller, S. (2008). The Impacts of Local Markets: A Review of Research on Farmers Markets and Community
Supported Agriculture (CSA). American Journal of Agricultural Economics, 90(5), 1296-1302.
Butler, J. (2008). The Compelling Hard Case for Green Hotel Development. Cornell Hospitality Quarterly: 49, 234-244.
Burchardi, H., Schroder, C., & Thiele, H. D. (2005). Willingness-to-pay for food of their own region: Empirical estimates from
hypothetical and incentive compatible settings. Selected Paper Prepared for Presentation at the American Agricultural
Economics Association Annual Meeting, Providence, Rhode Island, July 24-27.
Chase, C. (2007). Northeast Iowa Local Food Survey Summary Report. Prepared Report by Iowa State University Extension
Office for Northeast Iowa Food & Farm Coalition. Accessed August 11, 2009 from:
http://www.leopold.iastate.edu/research/marketing_files/NEIowa_0707.pdf.
Darby, K., Batte, M. T., Ernst, S., & Roe, B. (2006). Willingness to pay for locally produced foods: A customer intercept study of
direct market and grocery store shoppers. Selected Paper Prepared for Presentation at the American Agricultural
Economics Association Annual Meeting, Long Beach, California, July 23-26.
Harrahs
Entertainment.
(2006).
Profile
of
the
American
Casino
Gambler.
http://www.harrahs.com/images/PDFs/Profile_Survey_2006.pdf.
Halweil, B., (2002). Home Grown: The Case for Local Food in a Global Market, Worldwatch Paper #163, ISBN 1-878071-66-1.
Loureiro, M. L., & Hine, S. (2002) Discovering niche markets: A comparison of consumer willingness to pay for local (Colorado
grown), organic, and GMO-free products. Journal of Agricultural and Applied Economics, 34(3), p. 477-487.
Lyson, T. (2007). Civic Agriculture and the North American Food System. In C.C. Hinrichs and T. Lyson (Eds), Remaking the
North American Food System (pp. 19-32). Lincoln: University of Nebraska Press.
Moufakkir, O., Singh, A. J., Moufakkir-van der Woud, A., & Holecek, D. F. (2004). Impact of light, medium and heavy spenders
on casino destinations: Segmenting gaming visitors based on amount of non-gaming expenditures. UNLV Gaming
Research & Review Journal, 8(1), p. 59-71.
Packaged Facts. (2007). Locally Grown Foods Niche Cooks Up at $5 Billion as America Chows Down on Fresh! New York,
June 20, 2007. Accessed September 23, 2009 from: http://www.packagedfacts.com/about/release.asp?id=918.
Patterson, P. M., Burkink, T. J., Lipsey, R. S., Lipsey, J., Roth, R. W., & Martin, M. K. (2003). Targeting tourists with state
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Patterson, P. M., Olofsson, H., Richards, T. J., & Sass, S. (1999). An empirical analysis of state agricultural product
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Pirog, R. (2004). Ecolabel Value Assessment Phase II: Consumer Perceptions of Local Foods. Research Report Prepared by
the Leopold Center for Sustainable Agriculture and the Iowa State University Business Analysis Laboratory. Accessed
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Robinson, R., & Smith, C. (2002). Psychosocial and demographic variables associated with consumer intention to purchase
sustainably produced foods as defined by the midwest food alliance. Journal of Nutrition Education and Behavior, 34(6), p.
316-325.
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Schmit, J. (2008, Oct 31). Locally grown food sounds great, but what does it mean? Retrieved on April 10, 2009 from:
http://www.usatoday.com/money/economy/2008-10-27-local-grown-farms-produce_N.htm
Tanyeri, D. (2008). LOCAL ON A LARGE SCALE. Restaurant Business, 107(5), 13-14.
Tropp, D. (2008). The Growing Role of Local Food Markets: Discussion. American Journal of Agricultural Economics, 90(5),
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Community. Ecology of Food and Nutrition, 41(4), 415-439.
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244
L. Weinstein and C. Jackson
COLLEGE STUDENT ANTI-SEMITISM AND ANTI-ISRAELI SENTIMENT
Lawrence Weinstein and Carl Jackson

Cameron University, USA
ABSTRACT
Anti-Semitism has been investigated since 1933 (Katz & Braly). College students have relatively consistently stereotyped
Jewish people through 1969. Currently in 2009, 32 countries have reported anti-Semitic acts. Rather than openly expressing
hostility toward Jewish people, it is more politically acceptable to express such anger to Jews by being anti-Israeli. AntiSemitism and anti-Israeli attitudes in college students were significantly correlated both in a large university on the east coast
with ethnically diverse students and in a smaller university in the southwest with mostly Caucasian students.
INTRODUCTION
College students negative stereotypes of Jewish people historically have been examined over thirty-six years from 1933
1969. A foundation study by Katz and Braly (1933) demonstrated that Jews are perceived by Princeton University college
students as shrewd mercenary and grasping. In 1951 Gilbert found that Princeton students viewed Jews as shrewd and
mercenary and in 1969 Karlins, Coffman, and Walters demonstrated that Princeton students saw Jews as shrewd and
materialistic. Dunbar (1995) demonstrated that anti-Semitism existed in a group of UCLA white students but not in Asian
students.
In 2007 there were documented anti-Semitic acts in 17 countries (Simon & Schaler, 2007). In 2009 there are such acts in 32
countries (Simon & Schaler, 2009). In 2009 the London conference on anti-Semitism reported that anti-Semitism is at record
levels since World War Two. In January 2009, two hundred and fifty anti-Semitic acts occurred in the world (Simon & Schaler,
2009).
However, anti-Semitism is not always on the surface. Overt racism and negative prejudice against minority groups is often
below the surface, hidden from societal punishment (McConahay, 1986). Except for overt extremist hate groups, most people
do not publically advocate the harming of Jews. Another way to express ones hatred of Jews, a way less evident, might be
dislike of Israel. Not to say that 100% of anti-Israeli sentiment is motivated by a hatred of Jews, but it is to state that some antiIsraeli attitudes might be seen as motivated by hostility toward Jews. Cohen, Jussim, Harber, and Bhasin (2009) found that pro
Israeli sentiment and anti-Semitic attitudes were negatively correlated in a group of ethnically diverse Rutgers University social
psychology students. The current study uses a midsized university population of general psychology students who are almost
all Caucasian in an attempt to extend the generality of Cohen, et al.s findings and determine the reliability of their findings.
METHOD
Participants
There were sixty-eight undergraduate students drawn from the student body of a southwestern university of 6,000 students.
The age of the participants ranged from 17 to 42. There were 19% males (n=13) and 81% females (n=55) in the study. The
ethnicity of the sample consisted of 1% Asian (n=1), 8% Black (n=5), 2% Hispanic (n=1), 5% Native-American (n=4), and 84%
White (n=57). There were 77% freshman (n=52), 10% sophomore (n=7), 1% junior (n=1), 11% senior (n=8).
Compensation to these participants was provided in the form of extra credit to be applied to the final course grade in General
(Introduction to) Psychology, the course they were enrolled in.
Measures
The revised Levinson and Sanford (1944) scale (Jones-Wiley, Rotori, Lee, & Ho, 2007) was used to assess the participants
level of prejudice toward Jewish people by self-report. The revised L-S uses a 5-point Likert scale where the total of responses
245
College Student Anti-Semitism and Anti-Israeli Sentiment
are added yielding a score that when high indicates a smaller level of anti-Semitism and when low indicates a higher level of
anti-Semitism. The attitudes toward Israel scale (Cohen, et al., 2009) consists of 11 questions each rated 1 to 5. Higher scores
indicate a liking for Israel.
Procedure
All participants were given the anti-Semitism scale followed by the anti-Israeli scale. Participants completed the two scales as a
group in a room with the experimenter and no one else.
RESULTS
The Pearson r was r (66)=+.38, P<.05. The coefficient of determination was .14. So, 14% of the total variance in anti-Semitism
is predicted from anti-Israeli scores. According to Cohen (1988) this 14% is a large effect (r2). Haase, Waechter, & Solomon
(1982) showed that the median effect size (r2) of 11,044 tests of statistical significance reported in the Journal of Counseling
Psychology from 1970 to 1979 was .083, consistent with the notion that 14% is a rather large effect.
DISCUSSION
The question is whether people with extremely negative views of Israel have that view because they are anti-Semitic. The
current research clearly points to the fact that extreme negative attitudes toward Israel are held by people who are also very
anti-Semitic. Hence, the anti-Israel attitudes are probably not founded upon a dislike of Israels perceived favoritism toward its
Jewish citizens, the Israeli Defense Force intentionally attacking Palestinian civilians or a dislike of Israels political stance but
rather a dislike of Jewish people.
These data extend the generality of the findings of Cohen, Jussim, Harber, and Bhasin (2009) who found a significant
correlation between anti-Semitism and anti-Israeli attitudes. They used 151 participants, 50% of who were Caucasian and the
current study used 84% Caucasian people. Also, the current study used almost exclusively freshmen (75%) where Cohen, et
al. (2009) did not draw students from Introductory Psychology but Social Psychology, a course where students were already
exposed to a full Introductory Psychology course with a discussion of prejudice already completed. These data were collected
from a university almost half the size of Cohen et als (2009) university (6,000 vs 11,000) in an entirely different part of the
country (east coast vs. southwest).
These current data extend the generality of Cohen, et al.s findings to people with a more homogeneous ethnic make-up who
were all not knowledgeable about the entire contents of an Introductory Psychology course, who were not attending a
university on the east coast and who were at a much smaller university than the one Cohen, et al. used. That is, the notion that
anti-Israeli sentiment is associated with anti-Semitic sentiment is a robust, reliable association on the east coast and in the
southwestern USA.
Finally, the current data agree with Kaplan (2006) who found that when using 500 citizens in each of 10 European countries,
anti-Israeli attitudes were positively associated with anti-Semitic attitudes. Further research should look at anti-Semitism and
anti-Israeli sentiments as a function of ethnicity.
REFERENCES
Cohen, F., Jussim, L., Harber, K. D., & Bhasin, G. (2009). Modern anti-Semitism and anti-Israeli attitudes. Journal of
Personality and Social Psychology, 97 (2), 290-306.
Cohen J. (1988). Statistical power analysis for the behavioral sciences, 2nd ed., (pp. 24-26). New Jersey: Erlbaum.
Dunbar, E. (1995). The prejudiced personality, racism, and anti-Semitism: The PR scale forty years later. Journal of Personality
Assessment, 65 (2), 270-277.
Gilbert, G. M. (1951). Stereotype persistence and change among college students. Journal of Abnormal and Social
Psychology, 46, 245-254.
Haase, R. F., Waechter, D. M., & Solomon, G. S. (1982). How significant is a significant difference? Average effect size of
research in counseling psychology. Journal of Counseling Psychology, 27, 58-65.
Kaplan, E. H. (2006). Anti-Israeli sentiment predicts anti-Semitism in Europe.
Karlins, M, Coffman, T. L., & Walters, G. (1969).on the fading of social stereotypes: Studies in three generations of college
students. Journal of Personality and Social Psychology, 13, 1-16
Katz, D. & Braly, K. W. (1933). Racial stereotypes of 100 college students. Journal of Abnormal and Social Psychology, 28,
280-290.
246
L. Weinstein and C. Jackson
Levinson, D. J. & Sanford, R. N. (1944). A scale for the measurement of anti-Semitism. Journal of Psychology: Interdisciplinary
and Applied, 17, 339-370.
McConahay, J. B. (1986). Modern racism, ambivalence, and the Modern Racism Scale. In J. F. Dovidio & S. L. Gaertner
(Eds.), Prejudice, discrimination and racism (pp. 91-125). San Diego, CA: Academic Press.
Simon, R. J. & Schaler, A. (2007). Anti-Semitism the world over in the twenty-first century. 26.3, 152-182.
Simon, R. J. & Schaler, A. (2009). Recent Anti-Semitism. Unpublished manuscript.
AUTHOR NOTE
Communication regarding this article should be addressed to:
Dr. Lawrence Weinstein
Chair
Department of Psychology
Cameron University
Lawton, OK 73505
247
The Proposed University of North Florida Environmental Hydrology Living Laboratory An Ideal Framework for Active Learning
THE PROPOSED UNIVERSITY OF NORTH FLORIDA ENVIRONMENTAL

HYDROLOGY LIVING LABORATORY
AN IDEAL FRAMEWORK FOR ACTIVE LEARNING
Christopher J. Brown and Alan Harris
ABSTRACT
Recently, the University of North Florida (UNF) developed a comprehensive project proposal for the National Science
Foundation designed to both further technical research in hydrology and wireless communications as well as directly involve
teachers in the overall research program. The plan calls for a multidisciplinary university faculty/local high school educator
research team to develop an environmental hydrology Living Laboratory of instrumentation on the campus of UNF. The
objective of the team will be to develop a hydrologic observatory to improve water budget development methodology from
discrete networks and for designing an improved wireless sensor network to distribute the hydrologic data more efficiently
through a web-based interface. The Living Laboratory will also serve as the ideal framework for actively involving regional high
school teachers and their students in cutting edge engineering research programs. The research test bed will permit
exploration of various water budget development methodologies and data communication technologies on a manageable scale.
The campus test bed, located in an ecologically diverse nature preserve surrounding UNF, will represent a microcosm of the
existing Northeast Florida region. Using a train the trainer concept, ten teachers from six high schools from a tri-county area
in northeast Florida will be recruited to participate in the Living Laboratory research project in partnership with UNF located in
Jacksonville, FL. Teachers will spend up to eight weeks (including summer sessions and Fall/Spring follow up) with UNF
faculty over a three year period working on the optimal network design, collection/interpretation of data, and dissemination of
recommendations to improve the existing regional data network. The program has been designed to maximize active learning
of the ten high school teachers and their respective students through participation in actual field experiences and in a real
research setting. In order to maximize teacher and student engagement, research will be shared using webcasts broadcast
from the UNF distance learning studio as well as through publication of articles in refereed journals and at professional
conferences/symposia. Teachers will be recruited from schools with existing collaborative relationships with the UNF School of
Engineering, which will result in a diverse pool of participants. If the program is fully funded by the National Science Foundation
as part of the Research Experiences for Teachers program, successful implementation of the environmental hydrology Living
Laboratory will result in an enhanced relationship between area high schools and UNF as well as transformed teachers and
students. This paper discusses the birth and development of the Living Laboratory, research and literature concerning active
learning, how active learning is incorporated into the Living Laboratory, and the Living Laboratory technical focus and project
plan of study.
Keywords: RET, Active Learning, Hydrologic Observatory, Living Laboratory, Teaching
INTRODUCTION
The National Science Foundation Research Experiences for Teachers (RET) program endeavors to involve K through 12
teachers directly in actual engineering research at a sponsor university. Recently, the University of North Florida (UNF)
developed a research proposal for the program focused upon the expansion and development of a hydrologic observatory on
UNF campus. The UNF team designed the RET project to incorporate an active learning approach with the candidate
teachers and their students along with UNF undergraduate and graduate students.
The hydrologic observatory or Living Laboratory will become the focal point for research projects exploring development of
improved water budgets from hydrologic observatory data and data collection through wireless sensor networking technology.
These two research areas are targeted due to their important linkage to the overall data collection network quality and use. In
addition, the research program has been developed to provide an interdisciplinary approach covering all Science, Technology,
Engineering, and Mathematics (STEM) areas. The project will study hydrology (Science), digital communication technology
(Technology), engineering methodologies (Engineering), and hydrologic statistics (Mathematics). The primary objectives of the
Living Laboratory RET Site are as follows:
248
C. J. Brown and A. Harris
1. Establish a hydrologic observatory or living laboratory on UNF campus, by building on the existing environmental
wireless sensor network present on campus.
2. Conduct research directly tied to the Living Laboratory.
a. Use the Living Laboratory in combination with high-resolution datasets to develop improved water budget
development methodology.
b. Use the Living Laboratory to develop improved wireless sensor networking technology for hydrologic instruments.
3. Publish and disseminate research results to the Northeast Florida region and beyond at conferences, research
symposia, and in refereed journals.
4. Involve up to ten area high school teachers directly in research projects 2a and 2b above.
5. Involve another ten area high school teachers in-directly in the research program through the train the trainer approach
and planned outreach.
6. Incorporate the Living Laboratory data, site-specific hydrologic instruments (to be located at each high school), and
research projects into STEM curricula for six collaborative partnership high schools.
7. Expose up to 1,000 students (over several years) to the enhanced STEM curricula.
8. Expand existing collaborative relationships between UNF and the six partnership high schools.
9. Leverage the Living Laboratory itself and key research findings into the broader Northeast Florida water resources
community through engagement with stakeholders responsible for the development of new groundwater numerical
models (used for water supply planning) for the entire Northeast Florida region.
10. Conduct outreach to regional stakeholders to determine where the Living Laboratory can be used to further other
ongoing research projects.
The RET team will consist of UNF researchers, UNF students, and ten high school teachers recruited from six assorted
Northeast Florida high schools. Teachers will be recruited from schools with existing collaborative relationships with the UNF
School of Engineering, which will result in a diverse pool of participants. This diverse group of high schools will include Nease
and Creekside (St. Johns County), Orange Park and Oakleaf (Clay County), Robert E. Lee (Duval County) and Florida School
for the Deaf and the Blind (St. Johns County). All of these schools place an added emphasis on teaching science, engineering,
technology and math (STEM). In fact four of the six schools actually house existing engineering or technology academies
within the general education program. The student body of these schools offers a broad range of ethnic, social, and gender
diversity. The diversity of the overall project team will be a particular strength of the project. However, the diversity of the team
also means that members may have different learning modalities such that multiple active learning techniques and best
practices need to be incorporated into the Living Laboratory project in order to maximize the engagement of the team
members.
ACTIVE LEARNING CONSIDERATIONS IN THE LIVING LABORATORY DESIGN

Prince (2004) completed a comprehensive literature search regarding active learning and provided a useful evaluation of the
overall benefits of active learning. Prince (2004) defines active learning as any instructional method that engages students in
the learning process. Prince (2004) also notes that active learning requires students to complete meaningful learning activities
and to be actively involved in the classroom. This is different from traditional classroom experiences where students passively
receive instruction via lectures or demonstrations. In reviewing the recent literature on active learning, the UNF research team
grouped various active learning techniques into different bins as it relates to the Living Laboratory project. The objective of the
exercise was to incorporate best active learning practices into the Living Laboratory project design and implementation. Each
bin represented a higher order group hierarchy. From the literature, four primary active learning bins were developed and
include:
Learning Environment Design;

Incorporation of Practical Skills and Activities;
Teaming/Collaborative Learning;
Games, Simulation, and Role Play;
The learning environment design can greatly affect the engagement and learning of the students and instructors. When
provided with an opportunity to design a teaching space to maximize student active learning, one might ask that the space
have 1) a state-of-the-art language laboratory that is used for both synchronous and asynchronous learning and reinforcement
and allows users to connect with other institutions worldwide, visually as well as audibly; 2) satellite transmissions broadcasting
national and international programming to TV monitors in the building's caf (or some other venue, or throughout the building);
and 3) active learning spaces throughout that will encourage both planned and spontaneous scholarly events (Leather and
Duarte-Marinho, 2009). In addition, the technology now available to enhance active learning is stunning and ranges from audio
249
to video to complex simulation tools. This technology can be a powerful enabler if used correctly since students view
technology as an important support for learning (Swenson and Redmond, 2009). This is especially important for the next
generation or Generation Y with its 24-hour connections to technology and information (Williams and Chin, 2009).
The incorporation of technology into the teaching space is paramount and in order to use information technology effectively, the
teaching space should have access to multi-media applications (Schilling, 2009; Schrand, 2009); Web 2.0 features like blogs,
wikis, and social networking (Williams and Chin, 2009; Higdon and Topaz, 2009; Kennelly, 2009); and wireless connectivity
(Barak et al., 2006). The importance of the various teaching space elements cannot be understated and was carefully
considered in the planning of the Living Laboratory. The Living Laboratory will be centered at Building # 50, Science and
Engineering Building, on UNF campus. Here, dedicated laboratory and teaching space will be provided to the RET teachers,
undergraduate students, and graduate students that are all important contributors to the project. The teaching space will have
wireless Internet access and computers capable of supporting multi-media applications. The Living Laboratory will also
leverage the existing UNF Distance Learning Studio to webcast meetings and record team interactions with stakeholders.
Lastly, an online project workspace will be created to permit the RET team to use of BlackboardTM, an online learning user
interface. The Blackboard interface allows instructors to setup blogs, wikis, limited social networks, and personal journals.
Gulwadi (2009) provides an in-depth discussion of the benefits and use of reflective journaling.
A key element and benefit to the Living Laboratory is the experiential learning components of the program. The Living
Laboratory will emphasize real world engineering research experiences and practical skill development. This concept is
consistent with the literature which generally is very supportive of incorporating real-world experiences into engineering
education. Day-Lewis et al. (2006) discuss the development of an on-campus experimental wellfield for geophysical field
exercises. This unique on-campus resource permits the efficient integration of physics, mathematics, and chemistry skills while
keeping students more engaged and motivated. Hubball and West (2009) discuss the overall benefits of outdoor educational
experiences in science education. Nabors et al. (2009) recommend the inclusion of field trips into education. Rettig and Smith
(2009) discuss inclusion of research-level experiments in ecology labs; such innovations were found to be beneficial but they
cautioned potential users to understand the required additional course preparation and planning logistics involved. Hodder
(2009) studied the real-world benefits from students working in biological field stations or marine labs. Hodder noted that such
experiential-based infrastructure facilitates the development of a community of scholars in which undergraduates can interact
not just with their peers but also with graduate students, research assistants, postdoctoral fellows, and resident and visiting
faculty.
The Living Laboratory includes elements of each of these real world activities. Similar to the on-campus experimental wellfield,
the Living Laboratory will be an integrated field hydrologic instrumentation cluster where RET teachers and students can obtain
hands-on experience with various instrument types. The Living Laboratory is also designed to allow RET teachers and students
to work outdoors and gain a better appreciation of the unique natural setting the project resides in. In order to enhance the
hands-on learning environment for the selected teachers and their students that is evident at biological field stations, at least
one hydrologic instrument will be installed at each participating RET high school. This will permit teachers and students to have
a physical manifestation of the Living Laboratory locally in addition to remote instruments on UNF campus. Additionally,
learning by doing (De La Hoz Casas and De Blas Del Hoyo, 2009) is a powerful tool to promote learning for both the RET
teachers and their students. Lastly, the Living Laboratory program will incorporate field trips by high school students led by
RET teachers. The RET teachers and UNF research team will demonstrate the Living Laboratory to up to 1,000 high school
students over 3 years. The team believes that this project element will further engage high school students in STEM subjects.
Hodder (2009) also indicates that students are responding to field learning opportunities: more than half of the field stations or
marine labs that responded to an informal survey indicated an increase in their undergraduate enrollment in the past 10 years.
The RET team assumes similar benefits will be gained through development and operation of the Living Laboratory.
Much of the literature on active learning centered upon the use of collaborative or group learning to further active learning of
students. The terminology used by the various researchers includes collaborative, team-oriented, learning community,
cooperative learning, and creating communities of practice. In the end, all of these share many similarities and were grouped
together by the RET team into the third bin. Beatty et al. (2009) reviewed the benefits of team-based learning in a
pathophysiology and therapeutics sequence of courses. Beatty found that team-based learning was an effective teaching
methodology. Feedback to Beatty from students showed that approximately 91% of students felt team-based learning improved
understanding of course materials and 93% of students felt teamwork should continue in workshops. Kruszewski et al. (2009)
showed that collaborative teaching was effective in translating clinical skills into practice for nurses. Nursing instructors in two
courses shared responsibility for teaching basic concepts in a clinical setting in partnership with clinical nurses. Kruszewski
notes that this approach resulted in a high degree of satisfaction for students, instructors, and nursing staff in clinical agencies.
Yamarik (2007) recommends cooperative learning in small groups to improve student academic performance. Both Rhoulac250
Smith et al. (2008) and Hodder (2009) endorse creation of learning communities to improve student interaction with peers,
outside experts, and instructors. Learning community pedagogy promotes deep and meaningful learning (Martin et al., 2008).
The Living Laboratory will incorporate multiple elements of this bin. First, the RET team has been designed to grow into a
community of practice involving UNF researchers, UNF senior mentors, UNF students, RET teachers, and high school
students. The research team for the RET project has been specifically selected to build upon existing strengths of the principal
investigators and senior personnel. The team includes technical expertise in wireless communications, water resources,
hydrologic instrumentation, geographic information systems, web-based interfaces, optimization, and climatology. This
extended learning community includes engineering researchers, STEM education specialists, disability outreach specialists,
and web/Internet outreach experts. The RET project organization includes the principal investigators, senior advisors/mentors,
UNF support personnel, and the participating partner schools. The overall organizational chart is provided in Figure 1.
Figure 1: The UNF Living Laboratory RET Project Team.

Second, the RET teachers will be broken up into smaller teams to accomplish project research tasks. The smaller teams
should lead to benefits in learning as outlined by Yamarik (2007). Lastly, the entire RET team will also collaborate with outside
stakeholders and non-partner high schools through webcasts and annual meetings. These collaborations will permit further
leveraging of RET research products and sharing of enhanced STEM curricula.
The Living Laboratory will also explore other techniques recommended to improve active learning. The last bin developed by
the RET team involves use of games, simulation or role-play. Although, it could be argued that the benefits derived from these
techniques differ, the RET team chose to lump them together as all variations on the same theme, namely gaming. Faulker and
Baggett (2005) discuss the merits of including simple learning or memory games (e.g. Jeopardy) in a course plan as well as
more complex role-playing simulations where instructors play the part of customers while students are vendors. Faulker and
Baggett found that games and role-play provided positive benefits such as stimulating student interest and motivation. Saxena
et al. (2009) used crossword puzzles as a technique to garner student interest and improve recall for quizzes and tests.
Several papers discuss the benefits of simulation and role-play in clinical environments such as pharmacy practice (Kiersma et
al., 2009); critical care nursing (Stefanski and Rossler, 2009); and basic nursing (Haidar, 2009). The Living Laboratory may
incorporate some of these techniques into the RET program such as games and role-play. These techniques need to fit into the
overall RET plan of study and will be reviewed after Year 1 of the program. They may also tie into the development of
enhanced STEM curricula.
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LIVING LABORATORY TECHNICAL FOCUS AND PLAN OF STUDY

Intellectual Focus of RET Project:
The RET project will focus upon the expansion and further development of an environmental hydrology Living Laboratory at the
UNF. The existing hydrologic instrumentation on the UNF campus will be greatly expanded for the Living Laboratory project.
The existing instrumentation layout is shown in Figure 2.
Figure 2: Existing Wireless Sensor Network and Instrumentation on the UNF campus.
The full development of the Living Laboratory will further critical research into the use of high-resolution datasets combined with
real-time or near real-time hydrologic instrumentation for input into distributed hydrologic models. The proposed RET project
will improve water budget methodology using the "hydrologic observatory" approach for collecting instrumentation data in
tightly-clustered, intensive monitoring networks. The merits of this scientific approach were discussed by Scanlan et al. (2004).
The UNF Living Laboratory would build upon this approach and improve upon it by combining the actual hydrologic observatory
data and instrumentation with published datasets of remotely sensed data (e.g., Nexrad, lidar, DEM, and landuse). In addition,
the UNF Living Laboratory will also seek to improve the transmission of hydrologic instrumentation data from the observatory
through research in improved wireless communication methods. Frequently, even at intensively monitored areas, data is lost
through failed instruments, poor or unreliable communication links, or corrupted data. Improvements in the reliability of hightech hydrologic instruments would also benefit the hydrologic observatory concept, helping to further the understanding of
natural Florida hydrologic water budgets in the study area.
The use and interpretation of remote sensing data from aerial photography, satellites, and terrestrial radar sites is relatively
new with the first research studies published in the late 1980s (Schultz, 1988). As satellite, radar, and other instrument
technology has improved, the potential for further integration of this data source has continually expanded. The various remote
sensing data useful in hydrologic studies include digital elevation maps (DEMs), Lidar surveys, landuse/landform
characterization mapping, and Next Generation Radar Data or Nexrad (Krajewski and Smith, 2002). Nexrad data provides a
powerful tool for developing improved hydrologic models (Smith et al., 2004) as well as improved understanding of overall
hydrologic water budgets (Dushmantha and Hyndman, 2006).
252
The use of high-resolution datasets such as Nexrad data permits the development of much more refined estimates of
precipitation, runoff, and groundwater recharge that have been successfully used as input data into surface water hydrologic
models (Newsha et al., 2004), flood studies (Curtis et al., 2007), and groundwater models (Mileham et al., 2008). The
incorporation of this data has resulted in more refined estimates of model water budgets and in some cases, more accurate
flood wave simulations. For instance, Mileham et al. (2008) noted that the use of corrected, gridded precipitation data resulted
in an underestimation of both recharge (by 10%) and runoff (by 64%). Both of these values are extremely significant and, if not
refined by the gridded data approach, would have resulted in poor estimates of area water availability. Unfortunately, the use of
gridded data such as Nexrad precipitation estimates can also result in errors. Andrassian et al. (2001) studied the effect of
imperfect rainfall knowledge on the results of watershed models. Villarini et al. (2008) have evaluated the merits of performing
both parametric and non-parametric approaches to estimating uncertainties with gridded data. Ideally, the best and most
accurate approach to developing better hydrologic model inputs is to use the gridded data in combination with a highlyinstrumented hydrologic observatory such as that proposed as part of the UNF Living Laboratory RET project. The combination
of these will provide an enhanced means of developing improved water budgets to be used in various regional hydrologic
models. Scanlon et al. (2004) makes a compelling case for this approach by noting that an integrated, multidisciplinary
approach to quantifying various components of the water cycle would provide valuable information to optimize management of
water resources in these systems to meet human and ecosystem needs.
As the Living Laboratory wireless sensor network expands, several interesting wireless networking research aspects. Research
areas in wireless sensor networking will include topics such as fault tolerance of the network infrastructure in order to ensure
consistent data reporting from the network. Fault tolerance has been widely investigated, as outlined in Hoblos et al. (2000).
Routing of data in wireless sensor networks will also be investigated using the Living Laboratory network. As outlined in
Iwanicki et al. (2009), the majority of routing research in sensor networks is performed using simulation methods. The Living
Laboratory wireless sensor network will allow for routing research simulations to be validated on a physical network.
Implementation of a successful wireless sensor network will require investigations into power consumption (Wang et. al., 2006).
Power consumption research will include a study into the use of solar devices to power the network nodes as well as studies
detailing the useful lifespan of solar implemented power sources. Wireless sensor network security algorithms will also be
tested on the Living Laboratory wireless sensor network.
The project plan of study includes the following elements or tasks:
Recruit teachers from six partner High Schools;

Develop teacher-researcher teams;
Team-building exercises;
Develop instrumentation mock-ups of hydrologic instrumentation;
Expand instrumentation network;
Evaluate existing hydrology data on campus and from available gridded datasets;
Test alternate communication pathways;
Identify optimal instrument locations;
Install new instruments;
Collect data;
Analyze data;
Synthesize new data with existing gridded information;
Develop reports and publications;
Develop enhanced STEM curricula;
Project assessment;
Project follow up;
Close out;
A number of these key tasks will directly incorporate active learning methodology and best practice bins as discussed above.
The Learning Environment Design will be considered during the location of optimal instruments and during network expansion.
Practical skills and experiential learning will be emphasized as part of developing instrumentation mock-ups, during instrument
installation, and during data collection. Teaming and collaborative learning will be woven into development of teacher-research
teams, during team-building exercises, and during data synthesis. Although games, simulation, and role-play are not currently
well defined, it is hoped that elements of each may play a role in development of enhanced STEM curricula.
253
DISCUSSION AND CONCLUSION

The research project is especially important to the Northeast Florida region. The overall population of Florida is expected to
double by the year 2060. These additional residents will place large strains upon water supply infrastructure in Northeast
Florida. It is expected that overall water demands in the Jacksonville, Florida area will increase by 40% by 2030. This projected
increase will result in a water supply shortage for the study area. This year, stakeholders in the region, started a long-term
effort to grapple with these potential water supply shortfalls. The initial tasks outlined for this effort include the development of
improved numerical models simulating both the surface water and groundwater hydrology. Both sets of models are constructed
and calibrated using hydrologic data. The groundwater model includes inputs of precipitation, evaporation, transpiration, and
recharge. The UNF Living Laboratory will collect high-resolution data to determine these model inputs with improved
confidence. The quality of the groundwater model(s) is directly dependent upon these various water budget inputs. Segregating
precipitation into different model input components is especially critical to developing sound model code water budgets.
Ultimately, the new models will provide the basis for multi-billion dollar water resources investments in the region. It is hoped
that the UNF Living Laboratory project will provide direct benefits to the regional model developers by providing improved input
data as well as improved methodologies for estimating various water budget components critical in model development.
In addition to the improvement in water budget model inputs the RET project will provide, it is expected that the research into
improved digital communication architecture will improve overall reliability of hydrologic instruments. Instrument data is
frequently lost due to failed instruments, failed communication links, lack of backup systems, and corrupted data. Obviously,
lost data provides no benefit to the region at all. Many instruments are also stand alone devices where data is self-reported to
a centralized data repository. This construct results in periods of missing data or delayed reporting, seriously weakening the
value of the overall network. The UNF RET team believes that improvements to the overall digital communication architecture
will have a real financial payback to the Northeast Florida community and the world at large. The further development of the
comprehensive observatory approach at the UNF Living Laboratory will provide substantial research benefits to the nation by
improving the methodology for the development of hydrologic water budgets as well as providing experiential-based
recommendations for improved digital communication architecture.
Lastly, and most importantly, the UNF Living Laboratory will also provide a unique learning experience to the RET team of high
school teachers. The RET teachers will directly participate in the research program and use the data and methodology in their
classrooms. The overall design and implementation of the RET project has and will focus upon the incorporation of active
learning concepts and techniques in order to maximize RET teacher and student engagement. In the end, this project will
positively impact up to 20 area high school teachers and more than one thousand high school students in Northeast Florida
who will learn about the project and actually use data and methodologies accrued during the project. The RET team of UNF
researchers and high school teachers will collaborate on the Living Laboratory project to improve existing school STEM
curricula as well as support necessary research for Florida.
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Stefanski R. and K. Rossler, (2009). Preparing the Novice Critical Care Nurse: A Community-Wide Collaboration Using the
Benefits of Simulation. The Journal of Continuing Education in Nursing. Thorofare: Oct 2009. Vol. 40, Iss. 10; pp. 443-452.
Swenson P.W. and P.A. Redmond, (2009). Online, Hybrid, and Blended Coursework and the Practice of TechnologyIntegrated Teaching and Learning within Teacher Education. Issues in Teacher Education. San Bernadino: Fall 2009.
Volume 18, Iss. 2; pp. 3-11.
Villarini G., Serinaldi F., Witold F. and W.F. Krajewski, (2008). Modeling radar-rainfall estimation uncertainties using parametric
and non-parametric approaches. Advances in Water Resources, Volume 31, Issue 12, December 2008, pp. 1674-1686.
Wang, Q., Hempstead, M., Yang, W. (2006). A Realistic Power Consumption Model for Wireless Sensor Network Devices. 3rd
Annual IEEE Communications Society Conference on Sensor and Ad Hoc Communications and Network. pp. 286-295.
Williams J. and S. Chin, (2009). Using Web 2.0 to Support the Active Learning Experience. Journal of Information Systems
Education. West Lafayette: Summer 2009. Volume 20, Iss. 2; pp. 165-175.
Yamarik S., (2007). Does Cooperative Learning Improve Student Learning Outcomes? Journal of Economic Education.
Washington: Summer 2007. Volume 38, Iss. 3; pp. 259-272.
256
M. Cherrie and J. K. Mintah
THE INFLUENCE OF MOTIVATION UPON DISCIPLINE IN HIGH SCHOOL

WATER POLO
Matt Cherrie and Joseph K. Mintah

ABSTRACT
Motivation means to move (Eccles & Wigfield, 2002; Weinberg & Gould, 2007), and is defined to include forces that initiate,
direct, and sustain human behavior (Iso-Aloha, 1999), and a learners willingness to make an extended commitment to engage
at a personal level in a new area of learning (Gee, 2003). Motivation affects anything that influences the fundamental
psychological needs for competence, autonomy, and relatedness (Deci & Ryan, 1985). This study investigated the influence of
motivation upon discipline in high school water polo. The MADPA (Motivation and Discipline Performance Assessment)
questionnaire was created to measure intrinsic motivation, extrinsic motivation and goal task orientation and four categories of
discipline. Alpha reliability coefficient for the MADPA was .70. Participants were (N = 169) varsity boys water polo players.
Results showed a highly statistical significant relationships between self-regulation, intrinsic motivation, extrinsic motivation,
goal task orientation, punishment, and performance, all p = .01. Similar highly statistical significant correlations were found
between fairness, intrinsic motivation, goal task orientation, and punishment. Fairness correlated significantly with
performance at p < .05. No statistical significant correlations were found between performance and intrinsic motivation and
extrinsic motivation, and between punishment and extrinsic motivation, p > .05. Implications for physical education and sports
are discussed.
Keywords: Motivation, Influence, Water Polo, Athletes
257
Paradigm Shift: Producing a Fashion Show with Deconstructionism
PARADIGM SHIFT: PRODUCING A FASHION SHOW WITH

DECONSTRUCTIONISM
Jasmin Hyunju Kwon

Middle Tennessee State University, USA
ABSTRACT
The Fashion show reinforces the fashion leadership of the designers and merchandisers. The Fashion promotion class
developed and produced the fashion show to meet the requirements for the course. Thirty-one apparel design and fashion
merchandising students who enrolled the course were divided into six committees which included: fundraising, wardrobe
selection, modeling, hair & makeup, staging & music, and publicity. A total of 107 garment submissions were received from
fashion students at all academic levels. In order to determine the final garment selections three screening processes were held
throughout the semester. After wardrobe committees first selection process, a second selection was held by all class
members. Forty-three garments were selected for the show. The last process included faculty judging the three winning
garments and the top three student designers were rewarded with a scholarship independently funded by the department.
Students displayed their creativity by exhibiting reconstructed designs from: magazines, coffee filters, playing cards, feathers,
vinyl records, and many other unconventional materials. Students produced exceptional designs and had strong motivation,
which helped to make the student/faculty relationship stronger.
The Fashion show turned out to be a great achievement, and resulted in exceptional press. The students worked sensibly
together and were credible for their work. Students also achieved a great deal of collaboration techniques and leadership skills
throughout their experience in the class. These skills can be further used in their career choices and to prepare professionals in
the fashion field.
Keywords: Fashion Show, Deconstructionism
PARADIGM SHIFT: PRODUCING A FASHION SHOW WITH DECONSTRUCTIONISM

The Fashion show reinforces the fashion leadership of the designers and merchandisers. The Fashion promotion class
developed and produced the first student design fashion show to reformat and reorganize the course. Thirty-one apparel
design and fashion merchandising students who enrolled the course were divided into six committees which included:
fundraising, wardrobe selection, modeling, hair & makeup, staging & music, and publicity.
The title of fashion show was Paradigm Shift; Beyond Haut-Couture. The title and theme were developed and created by
faculty at the end of the previous semester. This was done in order to give students ample time to work on their designs and
inspirations over the break. The theme of the fashion show was deconstructionism. According to Jacque Derrida,
deconstructionism is defined as, A philosophical theory of criticism that seeks to expose deep-seated contradictions in a work
by delving below its surface meaning (Derrida, 1978). Students had opportunities to challenge themselves and a chance to
think outside of the box and twist stereotypical ways of thinking about the design and production process as a whole. There
were three main categories following the theme, which were: repurposing, restructuring, and restyling. Repurposing is taking
unconventional materials to turn them into a couture garment such as recycling fabrics, everyday objects, and unexpected
items. Restructuring is changing the stereotype of typical construction methods, for example, androgynous (genderless and
gender neutral) feature, and unbalanced proportion of construction. Restyling is changing the configuration or the arrangement
of existing garments.
A total of 107 garment submissions were received from fashion students at all academic levels. In order to determine the final
garment selections three screening processes were held throughout the semester. After wardrobe committees first selection
process, a second selection was held by all class members. Forty-three garments were selected for the show. The last process
included faculty judging the three winning garments and the top three student designers were rewarded with a scholarship
independently funded by the department. Students displayed their creativity by exhibiting reconstructed designs from:
magazines, coffee filters, playing cards, feathers, vinyl records, and many other unconventional materials. Students produced
exceptional designs and had strong motivation, which helped to make the student/faculty relationship stronger.
258
J. H. Kwon
The fundraising committee worked diligently preparing a fashion yard sale, silent auction, and collected donations from various
businesses. These events helped to better publicize the fashion show and promote the program in a positive light. The local
educational channel filmed our show for broadcasting on Ch 9 television. Also, students received fashion show DVDs that gave
them a competitive advantage in future job searching. Local newspapers and university newspapers published articles about
our fashion show containing important information and pictures.
All proceeds donated to Pennies for Peace organization. Pennies for Peace is the non-profit organization to help educate
children about the world beyond their experience and show them that they can make a positive impact on a global scale, one
penny at a time. In order to make the students more aware of the cause they all watched a clip from Pennies for Peace to
better understand the organization. By donating to this organization students acquired a great deal of compassion for sharing
and learning social responsibility to help the community.
The Fashion show turned out to be a great achievement, and resulted in exceptional press. The students worked sensibly
together and were credible for their work. Students also achieved a great deal of collaboration techniques and leadership skills
throughout their experience in the class. These skills can be further used in their career choices and to prepare professionals in
the fashion field.
REFERENCES
Derrida, J. (1978). Of Grammatology. Trans. G. C. Spivak. Baltimore and London: John Hopkins University Press.
Pennies for Peace. (2009). Retrieved February 27, 2009, from http://www.penniesforpeace.org/home.html
259
The International Student Program and Australian Higher Education: Students as Catalysts for Change
THE INTERNATIONAL STUDENT PROGRAM AND AUSTRALIAN HIGHER

EDUCATION: STUDENTS AS CATALYSTS FOR CHANGE
Rachel Burke
University of Newcastle, Australia
ABSTRACT
Asian international students have been travelling to Australia to pursue tertiary studies since 1904 (Radford, Ongkili, &
Toyoizumi, 1984). Whilst an official policy for the admittance of scholars from Asia was introduced in 1937 (Radford et al.,
1984), it was not until 1950 that a formal program for overseas student entry was established (Koh, 1989). From this time,
international student numbers began to increase significantly, largely as a result of the Colombo Plan and the Australian
governments provision of educational scholarships as a means of aid to majority world countries (Koh, 1989). Under the
scheme, Asian international students studied at Australian universities and technical institutions in order to gain knowledge and
skills to assist economic development in their home country (Jupp, 1988). As a result of the governments sponsorship
program, Australia gained recognition within the Asian region as a study destination, and the number of privately financed
international students increased (Koh, 1989).
Importantly, those students who came to study during the years when the so-called White Australia Policy governed
immigration (1901 - 1973) (Depart. Immigration and Citizenship, 2007) were frequently the first contact with Asia for many
Anglo-Australians. This paper reports on research into Australia media representations of this contact between Australian and
Asian International students during this time. In particular, I will explore media representations of the International Student
group as a catalyst for broadening popular conceptions of non-European migration, increasing the multicultural nature of the
tertiary student population, and contributing weight to the push for cultural inclusivity in Australian government policy, including
the dismantling of the White Australia Policy. Parallels between media coverage of the International Student Program during
the 1950 1972 period and todays Program will also be drawn, with particular attention to the ongoing construction of students
as strengthening bilateral relations between Australia and its Asian neighbours.
260
S. Norman and J. K. Mintah
HIGH RISK SPORT ATHLETES PERCEPTIONS ABOUT AGGRESSION
Scott Norman1 and Joseph K. Mintah2

Citrus College1, USA and Azusa Pacific University2, USA
ABSTRACT
Sports play a huge role in American values, culture, and society. Lumpkin, Stoll, and Beller (1994) stated that in America,
capitalism rewards those who value material goods, success, and winning; thus, anyone who says winning is unimportant in
American society is unrealistic and nave. The above statement by Lumpkin, Stoll, and Beller is reflected in the win at all cost
mentality that is socially learned by athletes, and positively or negatively reinforced by coaches, parents, and peers. This
perspective of social learning determines how the athlete responds to aggression in sport (Bandura, Ross, & Ross, 1961,
1963). The purpose of this study was to explore community college high-risk sports athletes perceptions about the use of
aggression (hostile and instrumental) in sport.
High-risk sport athletes (N = 119) from a southern California Community College participated in this study. Included in this
sample were 48 football, 27 basketball, 24 water polo, and 20 soccer athletes. There were 85 male and 34 female athletes.
Participants responded to a demographic survey and a modified version of the Bredemeier Athletic Aggression Inventory-Short
(Bredemeier, 1975). Results of an Independent Sample t-test showed a statistical significant difference between females and
males in the use of hostile aggression t (117) = -3.51, p < .05. Male athletes in this study are more accepting in the use of
hostile aggression than the females. In addition, a One-way ANOVA showed a statistical significance difference between sports
and the athletes perception of hostile aggression F (3 115) = 5.72, p < .05. Football athletes are the most tolerant and
accepting in the use of hostile aggression compared to soccer, water polo, and basketball athletes. Each sport seems to accept
the use of instrumental aggression.
Keywords: High-Risk, Athletes, Perceptions, Hostile Aggression, Instrumental Aggression
INTRODUCTION
Humans have an inherent behavior to play. The desire to play serves as a catalyst for emphasis on physical fitness and
attitude toward sport (Estes & Mechikoff, 2006). Sports play a huge role in American values, culture, and society. Lumpkin,
Stoll, and Beller (1994) stated that in America, capitalism rewards those who value material goods, success, and winning; thus
anyone who says winning is unimportant in American society is unrealistic and nave. The above statement by Lumpkin, Stoll,
and Beller is reflected in the win at all cost mentality that is socially learned by athletes, and positively or negatively reinforced
by coaches, parents, and peers. This perspective of social learning determines how the athlete responds to aggression in sport
(Bandura, Ross & Ross, 1963). The focus of this study was to explore community college high-risk sports athletes perceptions
about the use of aggression (hostile and instrumental) in sport.
Definition and Types of Aggression

There is a lack of consensus about the definition of aggression (Stephens, 1998). Yet, most researchers agree that aggression
is any intentional physically or psychologically harmful behavior directed at harming another living organism (Archer & Coyne,
2005; Baron, 1977; Dugan, 2004; Keeler, 2007; Weinberg & Gould, 2007). In sport, aggression could be viewed as inherent
part of the game or that aggression destroys the dynamics of games (Coakley, 2007). Sport aggression could be hostile or
instrumental (Weinberg & Gould, 2007). Hostile aggression is a behavior involving violent actions that are motivated by anger
with the goal of harming another living being (Wann, Carlson, & Schrader, 1999; Weinberg & Gold, 2007). The reinforcement of
hostile aggression is to see the victim suffer pain (Thirer, 1993). An example of hostile aggression in the sport of baseball is a
pitcher who throws at a batters head to try to injure him. Instrumental aggression also has the intent to hurt or harm another
living being. The goal of instrumental aggression is to enable a team regain possession or win (Cox, 2000; Russell, 1993).
Swinging the elbow in basketball after rebounding is an example of instrumental aggression. The difference between
instrumental aggression and hostile aggression is the intent or goal of the aggressive act. Regardless of the type of aggression
used in sports, both hostile and instrumental aggression has the intent to hurt or harm. Because of the intent to hurt or harm,
261
athletes in competitive sport experience moral conflict in rationalizing the use of aggression in sport (Chow, Murray, & Feltz,
2009; Mintah, Huddleston, & Doody, 1999). Available literature indicate that competitive sports athletes in most cases would
use lower moral reasoning in sport specific situations compared to moral reasoning used in everyday life situation when
rationalizing the use of aggression (Bredemeier, 1994; Bredemeier, Shields, Cooper, & Weiss, 1987; Lumpkin, Stoll, & Beller,
1994). These moral justifications and cultural attitudes toward sports make the use of aggression in sports both contradictory
and confusing.
Theories of Aggression
Researchers have focused on four major theoriesinstinct, frustration-aggression, social learning, and moral reasoning--to
understand the probable cause of aggression and to explain the motivation behind aggression in sport (Anshel, 1994;
Stephens, 1998). Sigmund Freud (1925) Instinct or biological theories of aggression assume that aggressive behavior is an
innate, natural response in all individual and has evolved through a struggle for territorial survival (Lorenz, 1966; Stephens,
1998). According to instinct theorys position, aggression builds up naturally in human and requires release through
unacceptable or acceptable channels (Haqq, 2007; Lorenz, 1966). The position of instinct theory has been criticized in the past
until recently when some research evidence showed that aggressive tendencies might have a strong genetic component
(Anshel, 1994). Otherwise, empirical evidence has disproved this theory to be untrue (Dugan, 2004).
Frustration-Aggression hypothesis states that aggressive behavior is associated with the existence of frustration, and that
frustration leads to some form of aggression (Dollard et al., 1939). Berkowitz (1969, 1978, 1989) offered modification to the
possible connection between frustration and aggression that gave credibility to the Frustration-Aggression hypothesis. The
major modification was that frustrations are aversive events and generate aggressive inclinations that produce a negative
affect; this negative affect is when aggressive behavior is most inclined. Based on this theory, frustration heightens the
tendency to aggress. Frustration-Aggression hypothesis has some support (Anshel, 1994; Russell, 1993; Thirer, 1992).
In 1973, Albert Bandura provided support for the social learning theorys position on aggression. The Social Learning Theory
states that aggressive behavior is learned through observation and modeling, and reinforced through punishments and rewards
(Bandura, 1961, 1963; Leonard, 1988). According to social learning theory, aggression is a learned conduct that is under
stimulus, reinforcement, and cognitive control (Dugan, 2004). Moreover, with proper education, modeling, and reinforcement,
aggression could be reduced to the minimum. Thus, aggression is socially learned through positive or negative reinforcements
(Silva & Husman, 1995). Social learning theory has received the most empirical support in explaining aggressive behavior in
sport.
Moral Reasoning Theory proposes that one value of viewing aggression from a moral perspective is to clarify the distinction
between hostile, instrumental, and proactive aggression by identifying the intent of the athlete (Bredemeier, 1983). According to
this recent theoretical perspective, aggressive acts consider how athletes moral interpretations of the context and their level of
moral reasoning (Stephens, 1998) mediate athletes actions and goals.
History of Aggression
Historically, aggression is not a new phenomenon in sports. Some aggressive sports such as boxing or wrestling have been
traced back to many ancient civilizations. Coakley (2007) states, so-called blood sports were popular among the ancient
Greeks and throughout the Roman Empire (p.197). In Mesoamerica, cultures of the Mayas and Aztecs used aggression in
sports for religious and fertility rites. These cultures use human sacrifice as the core function to their ceremonial sports (Estes
& Mechikoff, 2006). The use of aggression in sports has been institutionalized through accepted sport strategies for success in
most contact sports (Coakley, 2007). Others view aggression in sports as reaffirmation of gender ideology that assumes the
natural superiority of men, or that aggression in sports is viewed as a way to maintain gender dominance in cultural norms
(Estes & Mechikoff, 2006).
Central Focus
Despite the divergent views on aggression, most studies in aggression have focused on college and professional athletes.
None, however, has focused on the community college athlete. Yet, most community college athletes use the two-year
eligibility window to prepare for college and professional sports careers. In this global economic uncertainty, students are
turning to community colleges to jump-start their academic careers; the student athlete is not an exception. Therefore, it is
important for aggression researchers to focus on the community college athlete especially their perspectives about the use of
aggression in sport. The purpose of this study was to explore community college high-risk sports athletes perceptions about
the use of aggression (hostile and instrumental) in sport. This research focus on answering the following questions: (1) Do
262
female and male high-risk sport athletes differ on their perceptions about the use of hostile and instrumental aggression? (2)
Do high-risk sport (football, basketball, water polo, and soccer) athletes differ about their perceptions on the use of hostile and
instrumental aggression? (3) Which type of aggression is perceived acceptable among high-risk sport athletes?
METHOD
The current exploratory study used a quantitative approach by administering a two-part questionnaire to participants. The goal
of the inquiry was to explore community college high-risk athletes perceptions in the areas of hostile and instrumental
aggression use in sport.
Participants
Participants were 119 athletes from four high-risk sports at a community college in the east San Gabriel Valley of southern
California. There were 48 football athletes, 27 basketball players, 24 water polo athletes, and 20 soccer players. The
participants consisted of 85 males and 34 females. The participants ages ranged from 17 to 32 years (M = 19.06, SD = 1.61).
Athletes in this study were in good standing and participated in the California Community College Athletic Association
(CCCAA).
Instrument
A two-part survey instrument was used to collect data in this study. The first part collected basic demographic information
about participants age, gender, sport played, number of years played in that sport, city and state of residence. The second
instrument used was a modified version of the Bredemeier Athletic Aggression Inventory-Short (BAAGI-S). The modified
BAAGI-S used in this study consisted of twenty-eight questions. Fourteen of the questions focused on hostile aggression and
fourteen on instrumental aggression. Questions 2, 3, 5, 6, 8, 9, 12, 14, 15, 16, 17, 21, 25, and 27 focused on hostile
aggression. Questions 1, 4, 7, 10, 11, 13, 18, 19, 20, 22, 23, 24, 26, and 28 focused on instrumental aggression. Participants
responded using a four point Likert scale format ranging from strongly agree (1) to strongly disagree (4). Higher scores indicate
lower levels of aggression. Questions 29 and 30 were deleted for the purpose of this study. BAAGI-S reliability data showed an
intraclass correlations of .62 to .93 for the instrumental aggression subscale and .73 to .95 for the hostile aggression subscale
(see Bredemeier, 1975; Stephens, 1998). The BAAGI-S is a reliable instrument.
Procedure
An Institutional Review Board (IRB) approved the research protocol. Verbal approval was received from the Dean of Physical
Education and the head coaches of all the sport teams surveyed. Participants were brought into a classroom based on the
sport in which they participate for data collection. Times of administering the surveys were pre-planned to accommodate for
facilities usage and not to interfere with coaches practice times and participants schedules. Each participant signed an inform
consent form prior to participation in the study. The participants listened to instructions on the purpose of the study. In addition,
they received instructions on how to turn in the survey after it was completed. The survey instrument was self-administered.
RESULTS
In order to investigate differences between female and male athletes perceptions in the acceptance and willingness to use
hostile and instrumental aggression, an Independent Sample t-test was calculated. Results from the Independent sample t-test
showed a statistical significant difference between females and males athletes in their acceptance for the use of hostile
aggression t (117) = -3.51, p < .05. The data showed that males has a lower mean score (M = 30.84, SD = 6.02)) compared to
females (M = 34.97, SD = 5.24). On a scale of strongly agree (1) and strongly disagree (4), a lower mean score indicates
athletes are more accepting of aggression and more willing to use aggression during sport or activity. Hence, male athletes in
this study are more accepting in the use of hostile aggression than females. No statistical significance difference was found
between females (M = 32.74, SD = 3.987) and males (M = 33.11, SD = 4.31) in their acceptance and use of instrumental
aggression.
Reviewing the data indicated that participants perceptions varied based on sport type when it comes to the acceptance and
use of hostile aggression. To investigate the variances between sport types and how athletes perceive the acceptance and use
of hostile and instrumental aggression, a One-way Analysis of Variance (ANOVA) was calculated. Sport type (football,
basketball, water polo, and soccer) was the factor with aggression (hostile and instrumental) as the dependent list. Results of
the ANOVA analysis showed a statistical significance difference between sports and the athletes perceptions of hostile
aggression, F (3 115) = 5.72, p < .05. Tukey Post-hoc data revealed that football athletes are the most tolerant and accepting
263
in the use of hostile aggression compared to basketball, soccer, and water polo athletes (see Table 1 for data). No statistical
significant difference was found among any of the sport and the use of instrumental aggression. Each sport seems to accept
the use of instrumental aggression.
Table 1: Means and Standard Deviations of Sport by Hostile and Instrumental Aggression
Football
Basketball
Water Polo
Soccer
29.79 *
31.67
34.08
35.35 *
SD
6.54
4.19
5.96
5.20
48
27
24
20
32.63
32.59
34.04
33.20
SD
4.42
4.09
4.63
3.29
48
27
24
20
Hostile Aggression
Instrumental Aggression
*P < .05
In summary, the results of this study indicate that sport type and gender are the two main variables that affect community
college high-risk sport athletes perceptions in the acceptance and use of hostile aggression. Athletes participation in a
particular sport affects how they perceive hostile aggression. Football athletes accept and use hostile aggression compared to
soccer, water polo, and basketball athletes. Male athletes are more likely to accept and use hostile aggression compared to
female athletes. Sport type and gender did not have any effect on how athletes perceive and accept the use of instrumental
aggression.
DISCUSSION
In this study, sport type and gender affect how athletes perceive the use of hostile and instrumental aggression. This finding is
similar to Mintah, Huddleston, and Doodys 1999 study which showed that contact sport athletes (football and wrestling) were
more accepting in the use of aggression in sport than the semi-contact (basketball and soccer) athletes. In addition, Keeler
(2007) study revealed that both sport type and gender affect perceptions in the acceptance and use of hostile aggression in
sport. Male and contact sport athletes demonstrated higher levels of aggression in sport compared to female and semi-contact
sport athletes (Warden, Grasso, & Luyben, 2009). A plausible explanation for the football athletes accepting hostile aggression
more so than soccer, water polo, and basketball athletes could be the cultural norms of football. In football, what is valued,
what is socially learned, and positively and negatively reinforced through sport norms are built on hostile aggression. There
exists brutality in football that is not in soccer, water polo, or basketball. Therefore, it is not surprising that football athletes in
this study are more accepting of hostile aggression compared to soccer, water polo, and basketball athletes. Football athletes
moral reasoning is more accepting of hostile aggression than any other sport athlete in this study.
Compared to hostile aggression, athletes sport type or gender does not affect their acceptance or use of instrumental
aggression in sport. Results of this study showed no statistical difference in either sport type or gender in instrumental
aggression scores. This indicates that regardless of sport type or gender, athletes accept instrumental aggression as part of
sport. This result is congruent to Keelers (2007) who found no difference in female and male athletes attitudes toward the use
of instrumental aggression. Interestingly, athletes accept and use instrumental aggression regardless of any variance; Sport
type, gender, age, or experience does not influence how athletes feel about instrumental aggression. Perhaps acts of
instrumental aggression are socially accepted norms of sport, and most athletes do not consider it an aggressive act.
CONCLUSION
In conclusion, all the athletes in this study perceive instrumental aggression as a universally accepted norm in sport, regardless
of sport type and gender. Athletes consider instrumental aggression an acceptable sport culture and not an act of aggression.
These athletes lack of variance in scores on instrumental aggression verifies conformity to sport values. As for significant
differences in hostile aggression, football athletes are somewhat desensitized towards instrumental aggression due to the
264
commonality of hostile aggression in their sport. The high risk and contact nature of football make it possible for the players to
use a lower moral reasoning than that of other sports such as soccer, water polo, and basketball.
Limitations and Future Considerations

Findings from this research collaborate with earlier studies on sport aggression. However, one should be cautious in applying
the result. Participants in this study were from one Community College in southern California. This sample is not a
representation of the entire Community College High Risk sport athletes. In addition, more research is needed to understand
fully community college athletes perceptions about aggression. Hence, this research finding should be limited to this sample.
Furthermore, the repetitive findings on hostile and instrumental aggression should lead to future considerations for studies on
aggression. The variances of sport type and gender affect attitudes on hostile aggression, but do not affect attitudes on
instrumental aggression. Why do athletes feel it is justifiable to accept aggression when related to goals or game outcome?
Yet, reject hostile aggression based on gender or sport type? Both hostile and instrumental aggression is wrong. The use of
aggression in competitive sport shows a very low level of morality that is decaying sport values. Any aggression robs sport of
its purity, it is baffling how sport values can accept instrumental aggression and reject hostile aggression. Any form of sport
aggression has the intent to hurt or harm another athlete, and it should not be accepted for any justification, at any time, in any
sport.
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