The International Journal of Management and Business

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The International Journal of Management and Business About IJMB The International Journal of Management and Business provides a platform for professionals, practitioners, academics, educators and researchers in the various fields of management and business to disseminate and share the latest research, knowledge and experiences worldwide. Contributions for publications are welcomed and should be sent to the Editor of IJMB to [email protected]. The Guidelines for Preparing Manuscripts are available on the IAMB web site at http://www.iamb.net/IJMB/msguide_IJMB.html. Only manuscripts that adhere to the Guidelines will be considered for publications © 2012 by Gilron Group, LLC and the International Academy of Management and Business, IAMB. All rights reserved. No part of this Journal publication may be reproduced in any form without the written permission from the Gilron Group, LLC and IAMB, the International Academy of management and Business. The content of all manuscripts, views and opinions published in IJMB are the responsibilities of the authors and do not necessarily reflect the opinions, views or the policies of IAMB or IJMB. Researchers and authors assume responsibility for the accuracy of data and facts published in the IJMB.

mailto:[email protected]�

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The International Journal of Management and Business

Editorial Board Chief Editor:

Meir Russ, Ph.D. Professor of Management Frederick E. Baer Professor in Business Austin E. Cofrin School of Business University of Wisconsin-Green Bay Green Bay, WI (USA) Email: [email protected]

IJMB c/o IAMB Office P.O. Box 8040 Silver Spring, MD, 20907 (USA) Email: [email protected]

Associate Editors

Francis Blasco, Ph.D. Titular Professor Associate Dean of the Business School Complutense University Madrid (Spain). Email: [email protected]

J. Michael (Mike) Geringer, Ph.D.

O'Bleness Professor of International Strategy Director, Center for International Business Education and Development College of Business Ohio University Athens, Ohio (USA) Email: [email protected]

Shmuel Batzri, Ph.D.

IAMB Office P.O. Box 8040 Silver Spring, Maryland (USA)

Marc Eulerich, Ph.D. Assistant Professor Mercator School of Management University Duisburg-Essen 47057 Duisburg (Germany). Email: [email protected]

Zu’bi Al-Zu’bi, Ph.D., FHEA Assistant Dean Chairman, Business Management Dept. University of Jordan, Faculty of Business Aman (Jordan). Email: [email protected], Email: [email protected]

Jan Schaaper, Ph.D. Professor in International Management Ph.D. in Economics HDR in Management Science BEM Bordeaux Management School Talence Cedex (France). Email: [email protected]









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Editorial Board Members

Gregory R. Berry, Ph.D. Professor of Management School of Business Central Connecticut State University New Britain, CT, 06050 (USA) Email: [email protected]

John Brinkman, Ph.D. Dean of Business & Computer Sciences Liverpool Hope University Liverpool, L16 9JD (England) Email: [email protected]

Ayse B. Collins, Ph.D.

Associate Professor School of Applied Technology & Management Bilkent University Ankara, 06100 (Turkey) Email: [email protected]

Rajnish Kumar Misra, Ph.D.

Associate Professor, Department of Management IBAT School of Management KIIT Deemed University Bhubaneswar, Orissa (India) Email: [email protected]

Victor Molero, Ph.D.

Professor Escuela Universitaria de Estudios Empresariales Universidad Complutense de Madrid Avda. Filipinas, 28003 Madrid (Spain) Email: [email protected]

Budi W. Soetjipto, D.B.A. Associate Professor in Management Managing Director, The Management Institute Faculty of Economics, University of Indonesia Jakarta (Indonesia) Email: [email protected]

Wei Song, Ph.D.

Assistant Professor Department of Management Thompson Rivers University Kamloops, BC (Canada) Email: [email protected]

Pedro Soto-Acosta, Ph.D. Associate Professor Department of Management and Finance University of Murcia, Espinardo Campus Murcia, Spain Email: [email protected]

James Jian-Min Sun, Ph.D Professor and Fulbright Scholar Deputy Director, Center for Leadership Studies Chair, Department of Psychology Renmin University of China Beijing, China Email: [email protected]










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The International Journal of Management and Business

Table of Content

F R OM T H E E DI T OR 6

A COMPARISON OF THE MULTIDIMENSIONAL WORK ETHIC PROFILE ACROSS TWO COUNTRIES

AGATA CHUDZICKA-CZUPALA, IRINA COZMA, DAMIAN GRABOWSKI, AND DAVID J. WOEHR ....... 14

ENGLISH ABSTRACT ................................................................................................... 26 FRENCH ABSTRACT .................................................................................................... 27 GERMAN ABSTRACT ................................................................................................... 28 SPANISH ABSTRACT ................................................................................................... 29 ARABIC ABSTRACT .................................................................................................... 30 ITALIAN ABSTRACT .................................................................................................... 31 CHINESE ABSTRACT ................................................................................................... 32 POLISH ABSTRACT...................................................................................................... 33

COMPARATIVE ANALYSIS OF RISK MANAGEMENT AND RISK DISCLOSURE IN THE BANKING SECTOR: ITALIAN VS. WORLD PRACTICES

S. PUCCI, M. TUTINO, AND E. MARULLI ............................................................................................... 34

ENGLISH ABSTRACT ................................................................................................... 47 FRENCH ABSTRACT .................................................................................................... 48 GERMAN ABSTRACT ................................................................................................... 49 SPANISH ABSTRACT ................................................................................................... 50 ARABIC ABSTRACT .................................................................................................... 51 ITALIAN ABSTRACT .................................................................................................... 52 CHINESE ABSTRACT ................................................................................................... 53

INTERNATIONAL NEW VENTURE STRATEGIES IN TIMES OF CRISIS EMPIRICAL EVIDENCE FROM SERVICE INDUSTRIES

MARIO GLOWIK AND SŁAWOMIR SMYCZEK ......................................................................................... 54

ENGLISH ABSTRACT ................................................................................................... 65 FRENCH ABSTRACT .................................................................................................... 66 GERMAN ABSTRACT ................................................................................................... 67 SPANISH ABSTRACT ................................................................................................... 68 ARABIC ABSTRACT .................................................................................................... 69

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ITALIAN ABSTRACT .................................................................................................... 70 CHINESE ABSTRACT ................................................................................................... 71 POLISH ABSTRACT...................................................................................................... 72

NEUROSCIENCE REVEALS THE WHOLE-BRAIN STATE AND ITS APPLICATIONS FOR INTERNATIONAL BUSINESS AND SUSTAINABLE SUCCESS

JEFFREY L. FANNIN, PH.D. AND ROBERT M. WILLIAMS, M.A. ............................................................ 73

ENGLISH ABSTRACT ................................................................................................... 96 FRENCH ABSTRACT .................................................................................................... 97 GERMAN ABSTRACT ................................................................................................... 98 SPANISH ABSTRACT ................................................................................................... 99 ARABIC ABSTRACT .................................................................................................. 100 ITALIAN ABSTRACT .................................................................................................. 101 CHINESE ABSTRACT ................................................................................................. 102

NARRATING A STORY OF BUENOS AIRES’ FÁBRICAS RECUPERADAS

KATARZYNA KOSMALA, PHD AND DR. MIGUEL IMAS ...................................................................... 103

ENGLISH ABSTRACT ................................................................................................. 115 FRENCH ABSTRACT .................................................................................................. 116 GERMAN ABSTRACT ................................................................................................. 117 SPANISH ABSTRACT ................................................................................................. 118 ARABIC ABSTRACT .................................................................................................. 119 ITALIAN ABSTRACT .................................................................................................. 120 CHINESE ABSTRACT ................................................................................................. 121

TOWARDS A NEW MODEL OF WEALTH CREATION: SHAREHOLDERS AND STAKEHOLDERS

CHARLES HAMPDEN-TURNER AND RAYMOND FERRIS ABELIN ......................................................... 122


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RESEARCH AND PUBLICATION STRATEGIES FOR INTERNATIONAL SCHOLARS IN A GLOBALIZING WORLD

WILLIAM R. PENDERGAST ................................................................................................................. 141


I NDE X 156

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From the editor Introduction It is with great pleasure that I welcome all of you to the fourth issue (Vol. 3, No. 1) of The International Journal of Management and Business (IJMB). In this editorial I will reflect on the addition of new type of article to the journal, provide a reminder of our request for proposal for special issues and their guest editors, reflect on the near future of IJMB, present IAMB future conferences and introduce the first issue of our 3rdvolume. Additions to the journal Since its inception, the IAMB published one type of articles only, the research papers. We always thought that this is the correct approach to start a new academic journal, but we always wanted to broaden the opportunities for our authors by providing additional options for publications. In the last issue (Vol. 2, No. 2) we introduced a case study. We are glad that in the present issue for the first time we have two stimulating feature articles (introduced below), introducing this new platform for our authors. The feature articles are peer reviewed and went through a similar review process as our research papers. We will have more of such articles in the future. We also hope to introduce additional options, as book reviews and opinions in future issues, and we invite our readership to consider such options as well when considering submissions to IJMB. Once again, it is a real pleasure for this editor to thank his team without whom this (and previous) issue would not have the qualities and the scope of subjects covered. I want to thank my Associate Editors: J. Michael Geringer, Maria Francisca Blasco Lopez, Marc Eulerich, Jan Schaaper, Zu'bi Al-Zu'bi, JamesJian-Min Sun, and Shmuel Batzri; and a large team of reviewers and the Editorial Board Members for their ongoing participation and contribution to the journal. I also want to take this opportunity to thank Shmuel Batzri, Ph.D., the founder and the organizer of IAMB, for his continuous and unwavering support and Kelly Anklam for her continuing assistance in editing the papers. I also wish to thank the Frederick E. Baer Professorship in Business at UWGB for partial financial support. Request for proposal for special issues and their guest editors Once more we want to announce a request for proposal for special issues and their guest editors. We are looking for subject matters that will strengthen the in-depth knowledge exchange between disciplines and between international academic communities by providing high-quality and novel contributions organized by renowned experts in the area and have the potential to attract articles of the highest quality. The subject matters could be similar to those covered by the journal and are broadly defined as management and business issues that are of interest to an international

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academic and practitioner audience. The following subjects serve as broadly defined areas of interest: • Organizational Studies • International Business • Strategic Management • Marketing Management • Technology & Innovation Management • Human Resource Management • Education & Training • Management of Social Issues • Management Studies • Research Methods • Auditing & Control • Finance & Accounting • Corporate Governance • Not-for-profit Management The only requirement regarding content is that articles must include implications for an international audience. For some subjects this will be a natural inclusion. For the others, the authors are expected to add and elaborate on such implications. In either case, the relevance and the importance of the conclusions and implications should be apparent to non-specialists. For more information about the request for proposal for special issues and their guest editors See pp. 8-9, in Vol. 2, No. 1, available at http://www.iamb.net/IJMB/journal/IJMB_Vol_2_1.pdf The near future for the IJMB We are currently on a trajectory to annually publish two issues of the journal. Special issues will be published in coordination with their editors.

The Journal continues to expect submissions for publications from the participants in IAMB conferences, as well as from other high quality scholars in the global academic and practitioners’ communities. We encourage submission of traditional research (empirical and theoretical) papers as well as feature articles, case studies, research notes, book reviews, opinion papers and spotlight on practice papers. We continuously strive to improve the quality of the papers published in IJMB and we audaciously benchmark ourselves against the best. As such, prospective authors may want to consult, based on their choice of subject and method the following resources (including the last paper in this issue) to increase the probability of the acceptance of their papers and to minimize the time and revisions needed to prepare their papers for publications.

Fulmer, I. S. 2012.Editor's comments: The craft of writing theory articles—variety and similarity. Academy of Management Review, 37: 327–331.

http://www.iamb.net/IJMB/journal/IJMB_Vol_2_1.pdf�

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Suddaby, R. 2010. Editor’s comments: Construct clarity in theories of management and organization. Academy of Management Review, 35: 346–357. A seven part series of articles in the Academy of Management Journal, titled “Publishing in AMJ” starting in June 2011 and concluding in June 2012.

To support our vision, we are including abstracts in multiple languages. This is also the place to thank whole heartily our translators for their excellent work, and to express interest in inclusion of additional languages that are presently missing from our journal. Specifically, we are still looking for translators of abstracts to Japanese, Russian and Korean. Serious consideration will be given to additional languages if proposed. If additional information is needed, you are encouraged to contact the editor. Future conferences We currently have conferences scheduled for San Antonio, TX – January 21-23, 2013; and Lisbon, Portugal - April 17-19, 2013.More updated information can be found on the IAMB main page website at www.iamb.net. This issue of IJMB We are extremely proud to include in the first issue of the third volume seven outstanding papers written by highly esteemed colleagues, one of which, Agata Chudzicka-Czupała et al., won the Best Applied Paper Award for the IAMB conference in Warsaw 2012. A few of the papers went through three reviews over a four months period, while others went through eight reviews over ten months. The acceptance rate as of today is18.6%.All the papers in this issue were peer reviewed. The first paper written by Agata Chudzicka-Czupała, Irina Cozma, Damian Grabowski and David J. Woehr, entitled “A Comparison of the Multidimensional Work Ethic Profile across Two Countries” [from Poland and USA]; is the winner of the Best Applied Manuscript Award. The paper represents an extension of earlier research studying the measurement equivalence of the Multidimensional Work Ethic Profile (MWEP; Miller, Woehr, & Hudspeth, 2002) across diverse groups and languages. As hitherto, research has documented the measurement equivalence of the MWEP between its English, Spanish, and Korean language versions, as well as between male and female respondents and across generational cohorts. This paper extends this research by describing the development of a Polish language version of the MWEP as well as examining the equivalence of the MWEP across U.S. and Polish respondents. The paper is a worthy example of the rigor needed when conducting an international comparison study of a multidimensional construct and should provide a benchmark for future research in cross cultural studies.

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The second paper written by S. Pucci, M. Tutino and E. Marulli entitled “Comparative Analysis of Risk Management and Risk Disclosure in the Banking Sector: Italian vs. World Practices” [from Italy]; evaluates the theoretical approaches and the practical solutions adopted by banks to manage business risks. The paper also looks at the disclosure to stakeholders of different qualitative and quantitative elements referring to this aspect and is deem to be necessary to evaluate the company profile. The paper examines the 2010 Consolidated Annual Reports of a sample of 25 Italian and worldwide listed banks on two main topics: (i) the quality of disclosure on Internal Organization Process Risk in terms of correspondence to the international best practice framework as stated in CoSo reports, (ii) the instruments adopted in the Risk Management Process to assess corporate exposure to market risk, focusing on Interest Rate risk, Price risk and Currency risk. Based on the sample analysis the authors conclude that a level of standardization of information for risk exposure and evaluation across countries exists and it is reasonably high. Still, some differences exist in terms of specific operational process parameters and assumptions adopted in each risk management model and in frequency of monitoring. The paper offers an important addition to the financial industry risk’s literature in light of the globalization of the financial markets and the growing risk caused by the financial sector to the global economy. The third paper written by Mario Glowik and Sławomir Smyczek, entitled “International New Venture Strategies in Times of Crisis: Empirical Evidence from Service Industries” [from Germany and Poland]; describes the relevance of valuable resource assets for the successful SME (small- and medium-sized enterprise) within the service sector while facing the global economic crisis. The emergence of knowledge and service industries is driving the rapid internationalization of SMEs. This changing pattern of internationalization, especially of the young SMEs, has been deliberated in the academic literature within the framework of ‘international new venture’ (INV) construct (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005). INV theory asserts that rapid internationalization of the firm is initiated by a new and unique business idea. INVs sustain a variety of network relationships developed by the founding entrepreneur, which allow the SME to compensate for resource disadvantages. Still, there is a research gap regarding how the INV firms operate their businesses in times of worldwide economic crisis. This paper presents research results concerning the successful strategies of utilizing the industry network relationships for five firms operating in the service industry. The paper is an important first step in studying the business and marketing strategies of SMEs in the service sector at times that are testing to all companies and provides an acutely needed addition to the marketing literature in the service sector. The fourth paper written by Jeffrey L. Fannin and Robert M. Williams, entitled “Neuroscience Reveals the Whole-Brain State and Its Applications for International Business and Sustainable Success” [from USA]; discusses the fascinating aspects of the recent development in neuroscience and their applicability to management and leadership. The authors discuss number of studies in neuroscience of consciousness that provide some insight into the interrelatedness of subconscious belief patterns with behavior and that affect decisions made by business leaders, and indirectly affect their overall performance in business. This paper presents research that associate the

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mind/brain interface, displaying empirical evidence of what the authors describe as the Whole-Brain State (a bi-lateral, symmetrical brain wave pattern) and how it causes sustainable success and some potential implications it has on international business. The authors focus on research that has the potential to change the subconscious beliefs of an individual (PER-K®) and suggest aligning that with the Principles of Nature. The paper provides for an in depth discussion in one of the most intriguing scientific developments of the 21st century, the study of the brain, and describes one specific application to the area of study of leadership, that might have significant impact on individuals and organizations in the near future. The fifth paper written by Katarzyna Kosmala and Miguel Imas, entitled “Narrating a Story of Buenos Aires’ Fábricas Recuperadas” [from UK]; The paper presents the story of socio-economic change and struggle for survival of Argentina’s Fábricas Recuperadas and uses the story as the grounds to propose a methodological reflection on the process of representing organizations through narration as dialogical storytelling. Fábricas Recuperadasis a general term that refers to discarded bankrupt businesses in Argentina. The authors describe their insight from ethnographic research in Buenos Aires-based Fábricas Recuperadas, illuminating the self-construction processes of workers’ identities in the milieu of a crisis, along with the descriptions of salvaging their newly defined workplace. While repossessing the discarded businesses, workers promoted alternative organizing practices such as the flattening of organizational hierarchy structures and the elimination of operational management. The story is an attempt to re-territorialize the crisis experience by restructuring the narrative told by bringing local perspective into the text, using Deleuze and Guattari’s idiom (1972, 1980). Such a perspective allows for a reverse of the ontological control of representing reality, by entwining the local meanings of experience while using Bakhtin’s (1999) dialogical approach to define the process of narration and subsequently, construction processes of organizational narratives. Methodological discernments emerge which pertain to narrating interpretive research in relation to different cultural and language-based contexts. This paper is strongly recommending to researches, students of and practitioners in international business and cross-cultural topics to listen in more than one way to local voices so an open dialogical space be created in which a new sense-making could potentially emerge, resulting from a collaborative process with multiple openings and meanings. The six paper written by Charles Hampden-Turner and Raymond Ferris Abelin, entitled “Towards a New Model of Wealth Creation: Shareholders and Stakeholders ” [from UK and USA]; is a feature article discussing two distinct approaches to a capitalist model of free enterprise, the Shareholder and the Stakeholder models. According to the authors, in the Shareholder Model the prime purpose of the economy is to enrich individual shareholders. All other activities like satisfying customers, developing employees and rendering the company more innovative are means to the end of profit maximization of the shareholders. In the Stakeholder Model the stakeholders (e.g., employees, customers, shareholders, the community, the environment, etc.) are all believed to have a stake in the output of the business. Those outcomes should benefit one way or another, the entire gamut of stakeholders. The authors’ claim that the second model lead to faster economic development and better all-round outcomes for the

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stakeholders and society at large, using the Catch-up Capitalism as an example. The paper provides for a critically needed discussion of economic and business models in light of the economic slowdown in the developed economies, especially in the case of the European Union economies. The last and seventh feature paper, written by William R. Pendergast, entitled “Research and Publication Strategies for International Scholars in a Globalizing World” [from USA] provides for an impactful guide for academic scholars in need of increasing their success rate of submissions to academic journals. Scholars in emerging economies experience growing institutional pressures to accelerate their output of research and publication in leading academic journals. Such pressures arise from global and local dynamics that affect academic educational institutions in their competition for international prestige and reputation. At the same time, scholars face admission obstacles to publication in leading academic journals that are sturdily fastened within a predominantly Anglo-American paradigm that includes language, research topics, and methodology. The author examines the varieties of scholarship (discovery, teaching and application); the life-cycle of faculty publication (audience, outlets and topics); the variety of channels for publication; strategies for selecting a target publication (qualifying the buyer) with respect to audience, topics, methodology and ranking; crafting an article format; and proposes strategies for success through collaboration. The paper is based on a presentation made at the IAMB conference, resulting from requests from our participants and will provide them and numerous other scholars with an invaluable advice. I hope you will agree that our journal is a valuable academic resource, and you will consider submitting a paper to the journal, reference appropriate papers in your own work, as well as promote it among your colleagues. I’m looking forward to an exciting future and I hope to hear from you if you have comments or questions. Meir Russ

A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Agata Chudzicka-Czupałaa, Irina Cozmab, Damian Grabowskic, and David J. Woehrd

aDepartment of Psychology, University of Silesia, Poland

e-mail: [email protected] bDepartment of Management, University of Tennessee, USA

e-mail: [email protected] cDepartment of Psychology, University of Silesia, Poland

e-mail: [email protected] dDepartment of Management, University of North Carolina at Charlotte, USA

e-mail: [email protected]

Abstract

The present study represents an extension of previous research examining the measurement equivalence of the Multidimensional Work Ethic Profile (MWEP; Miller, Woehr, & Hudspeth, 2002) across groups. To date, research has supported the measurement equivalence of the MWEP between its English, Spanish, and Korean language versions (Woehr et al., 2007), between male and female respondents (Meriac et al., 2009), and across generational cohorts (Meriac et al., 2010). The present study extends this research by reporting the development of a Polish language version of the MWEP as well as through an examination of the equivalence of the MWEP across U.S. and Polish respondents.

Keywords: work ethics, measurement equivalence, Poland, Multidimensional Work Ethic Profile (MWEP)

Introduction

Work ethic is a hot topic in the context of today’s organizations. Companies have invested time and money to increase awareness around this topic but unethical behaviour in business is still widespread. This is the case mainly because companies see decisions only as purely business decisions and not as ethical decisions too (HBR, 2011). Therefore we believe that more solid research is needed to understand the subtleties of work ethic behaviour.

Modern formulations of the work ethic construct stem from the work of Max Weber. In 1904 and 1905 Weber wrote the now classic two-part essay entitled “The Protestant Ethic and the Spirit of Capitalism”. In this essay Weber advanced the thesis that the introduction and rapid expansion of capitalism and the resulting industrialization in Western Europe and North America was in part the result of the Puritan value of asceticism and the belief in a calling from God (Byrne, 1990; Furnham, 1990a; Green, 1968; Lehmann, 1993; Maccoby, 1983; Nord, Brief, Atieh, & Doherty, 1988). It was the application of these values that Weber believed led to the ‘work ethic’ – the complete and relentless devotion to one’s economic role on earth (Lessnoff, 1994).





The International Journal of Management and Business, Vol. 3 Issue 1, August 2012

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Owing to the fact the cultures of the east and the west clash in Poland, as well as the fact it is a post-communist country (although capitalistic patterns are not entirely unfamiliar), Poland may be recognized as a culturally specific country. The Polish language version of the MWEP was developed and evaluated relative to the original English version. The equivalence of the tool was verified for all the dimensions of the work ethic construct.

Recent literature has suggested that one of the primary factors limiting the work ethic research is the lack of common conceptualizations and measurement systems for the work ethic construct. In an attempt to address this limitation, Miller, Woehr, and Hudspeth (2002) developed the Multidimensional Work Ethic Profile (MWEP). The MWEP is a multidimensional inventory assessing conceptually and empirically distinct components of work ethic. Our goal in the present study is to extend the work of Miller et al. (2002) by further examining the construct validity of the MWEP. Specifically, we: a) report on the development of a Polish language version of the MWEP; b) provide an assessment of the degree of measurement equivalence between the original English and the new Polish language versions with a multinational sample; and, c) explore potential substantive differences with respect to work ethic as measured with the MWEP between Polish and U.S. samples.

The Multidimensional Work Ethic Profile

Miller et al. (2002) present a historical and conceptual review of the work ethic construct. Drawing on the large body of literature stemming from Weber’s original work, they posit that work ethic is not a single unitary construct but a constellation of attitudes and beliefs pertaining to work behaviour. They suggest that the work ethic construct: (a) is multidimensional; (b) pertains to work and work-related activity in general, not specifically to any particular job (yet may generalize to domains other than work - school, hobbies, etc.); (c) is learned; (d) refers to attitudes and beliefs (not necessarily behaviour); (e) is a motivational construct reflected in behaviour; and (e) is secular, not necessarily tied to any one set of religious beliefs. Based on previous literature as well as original empirical research, Miller et al. (2002) identify seven components or dimensions that they argue comprise the work ethic construct. The dimensions posited are centrality of work, self-reliance, hard work, leisure, morality/ethics, delay of gratification, and wasted time.

Miller et al. (2002) also argue that previous measures of work ethic have been deficient to the extent that they did not sufficiently assess and/or differentiate among the various facets of work ethic. Consequently, they developed and provided initial support for a multidimensional work ethic inventory - the Multidimensional Work Ethic Profile (MWEP). The MWEP purports to measure seven conceptually and empirically distinct (i.e., divergent) facets of work ethic. While, Miller et al. provide a great deal of evidence pertaining to the psychometric evaluation of the MWEP, they provide little or no evidence with respect to the appropriateness of the MWEP as a measurement tool across cultures (i.e., cross-cultural measurement invariance). This question of measurement invariance is a particularly critical one as several authors (Furnham, 1990b; Jones, 1997; Miller et al., 2002) have argued that previous measures of work ethic are inadequate both conceptually and psychometrically.

Assessing Measurement Equivalence/Invariance

Establishing the measurement equivalence/invariance (ME/I) of an instrument is a logical prerequisite to conducting any meaningful substantive cross-group and/or cross-cultural


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comparisons. This is especially true for complex constructs such as work and organizational values, and when the cultures or groups compared are quite different (e.g. language, predominant religion, economic growth, educational system, etc.). In a recent review and integration of the literature on measurement equivalence in organizational research, Vandenberg and Lance (2000) state: “violations of measurement equivalence assumptions are as threatening to substantive interpretations as is an inability to demonstrate reliability and validity” (p. 6). Specifically, a lack of equivalence between groups indicates that a measure is not functioning the same across the groups and any substantive interpretation of similarities or differences is suspect at best.

The importance of providing evidence for ME/I across countries should not be underestimated. Nevertheless, it appears to be a prevailing notion among cross-cultural researchers that the replicability of factorial structure across countries represents adequate evidence of ME/I (Paunonen & Ashton, 1998). Such evidence, however, is not sufficient. Although the factorial structure of a measuring instrument may yield a similar pattern when tested within each of two or more countries, such findings represent no guarantee that the instrument will operate equivalently across these countries (Byrne & Watkins, 2003). The results indicate that Polish MWEP was equivalent, and there are both substantive differences and similarities between the U.S. and Polish participants with respect to work ethic. These results should be considered preliminary, but they surely represent a step forward in the cross-cultural literature pertaining to work ethic.

When comparing measures, varying levels or degrees of measurement equivalence are possible (Cheung, 1999; Cheung & Rensvold, 1999). Conceptual equivalence refers to the extent to which individuals respond to a measurement instrument from a common conceptual frame of reference. That is, are the various items that comprise a measure seen as tapping the same construct(s) (i.e., configural invariance) and do the items relate to the construct(s) in the same way across groups (i.e., metric invariance). From a measurement perspective, configural invariance is reflected in the extent to which there is a common factor structure (i.e., items load on the same factors) across groups. Similarly, metric invariance is reflected in the extent to which items are interpreted similarly across groups (i.e., factor loadings for like items are the same across groups). Both configural and metric invariance have been identified as necessary conditions for measurement equivalence (Cheung, 1999; Steenkamp & Baumgartner, 1998; Vandenburg & Lance, 2000). That is, these tests provide a basis for ascertaining whether measures are conceptually equivalent across groups.

Although a number of approaches have been used to evaluate measurement equivalence (cf. Hui & Triandis, 1985; Vandenberg & Lance, 2000), there is general agreement that the multi-group confirmatory factor analytic (CFA) model (Jøreskog, 1971) provides the most powerful and versatile technique for testing cross-group measurement invariance. Based on their review, Vandenberg and Lance (2000) call for an increased application of measurement equivalence techniques before substantive comparisons are considered. Given the limitations of classical test theory approaches for assessing measurement equivalence, they also recommend the use of multi-group CFA techniques.

To test the ME/I of the MWEP we used a multi-group confirmatory factor analytic (MGCFA) application of AMOS 16.0 and tested two models representing configural and metric invariance. All models were operationalized as seven-factor models (corresponding to the seven MWEP dimensions) with the factors allowed to correlate and uncorrelated errors.


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Present Study

The present study represents an extension of previous research examining the measurement equivalence of the MWEP across groups. To date, research has supported the measurement equivalence of the MWEP between its English, Spanish, and Korean language versions (Woehr et al., 2007), between male and female respondents (Meriac et al., 2009) and across generational cohorts (Meriac et al., 2010). The present study extends this research by reporting the development of a Polish language version of the MWEP as well as through an examination of the equivalence of the MWEP across U.S. and Polish respondents.

Poland is a country which has experienced significant economic, cultural, and political changes during the last century. Biernacka (2009, p.183) states that “Foreigners who represent foreign capital and the corporation standards of professional engagement have been heard saying for two decades ’There is no work ethic in Poland!’ ” It is argued that this may be the case because Poland has not gone through a system of transformations typical of capitalistic economy. Development of capitalism was stopped in Poland by the 2nd World War and by communism or real socialism, when hard work and one's own initiative was of very little value. At the end of the 20th century Poland became a capitalist country again. Meanwhile, the western European countries had already become fully developed capitalist economies.

Yet such contentions are based on little if any empirical data. Thus, the development and evaluation of a Polish language version of the MWEP serves as an important step toward the empirical study of work values in Poland.

Participants

The U.S. sample consisted of 236 employees and 203 students. The employee sample was recruited from several private, non-military organizations. The mean age was 34.94 (SD = 9.73 years, range = 18 to 76). The student sample was recruited from a large Southeastern University, and the mean age was 22.07 (SD = 3.85 years, range = 20 to 56, with 95% of the sample below 27 years). No gender information was available for these samples. Participants voluntarily and anonymously completed the original English-language version of the 65-item MWEP.

The Polish sample consisted of 236 employees and of 298 students living in the Upper Silesia region, the most industrialized part of Poland. The Polish sample of employees consisted of 148 (63%) female and 88 (37%) male participants from different organizations in the Upper Silesia region. The mean age was 34.35 years (SD=10.80, range = 19 to 56). The Polish sample of students consisted of 123 (41%) female and 175 (59%) male participants from the University of Silesia and the Silesian University of Technology. The mean age was 20.90 years (SD=2.79, range = 18 to 31). Participants voluntarily and anonymously completed the Polish-language version of the 65-item MWEP. Measure

The MWEP (Miller et al., 2002) is a 65-item self-report scale that measures seven dimensions of work ethic. Self-reliance, morality/ethics, leisure, hard work, and centrality of work are each measured with 10 items and wasted time and delay of gratification with 8 and 7 items respectively. A five-point Likert scale was used ranging from “strongly disagree” (1) to “strongly agree” (5).


18

Translation The Polish translation of the MWEP followed the same procedure as the one used by

Woehr et al. (2007), namely the translation - back-translation process (Brislin, 1986). Three Polish native speakers with advanced English proficiency (an English translator and two university lecturers) have independently translated the questionnaire into Polish. They used simple language and terminology that would be understood by teenagers. As a result, two versions of the measure were made. In the next step a dozen or so psychology students, also with a good command of English, worked with the lecturers in two independent groups to compare the two versions and choose the best statements. In this way two primary Polish versions of the measure were made. The methods devised in this manner were back-translated into English by two experienced translators. Then the researchers together with the students compared the translation with the original, analyzed, corrected and chose the best-sounding statements. As the last step, ten undergraduate students matched the items based on their contents with the seven dimensions measured by the MWEP.

Data Analysis

To test ME/I of the MWEP across the four samples, we used a multi-group CFA (MGCFA) application of AMOS 16.0 and tested two models representing configural, and metric invariance. All models were operationalized as seven-factor models (corresponding to the seven MWEP dimensions) with the factors allowed to correlate and uncorrelated errors.

The global goodness-of-fit of the model was assessed via the root mean square error of approximation (RMSEA), and the comparative fit index (CFI), (Steenkampand & Baumgartner, 1998; Cheung & Rensvold, 2002). The RMSEA provides an overall test of model fit that compensates for the effect of model complexity. Browne and Cudeck (1993) suggested that an RMSEA value of .05 or less indicates a close fit and that values up to .08 represent reasonable errors of approximation in a population. In addition, CFI is an incremental (comparative) measure of fit providing an indication of fit relative to a null model, ranging from 0 to 1, with higher values indicating better fit and values of .90 or greater typically interpreted as indicating acceptable levels of fit. More important, Cheung and Rensvold demonstrated that when testing across two groups, a change in the value of CFI smaller than or equal to .01 indicates that the null hypothesis of invariance should not be rejected (i.e., measurement equivalence).

Given the relatively small sample sizes for each of the groups, the large number of scale items, and the difficulties inherent in factor analyzing categorical item-level data (for detailed discussions of these problems, see Bernstein & Teng, 1989; Nunnally & Bernstein, 1994), we did not analyze item-level responses. Rather, we constructed three “item parcels” (composites based on subsets of items) to serve as manifest indicators for each of the seven work-ethic factors. The rationale for this approach was to avoid the difficulties associated with categorical item level data and to achieve a higher level of reliability for each of the scores on which the confirmatory factor analyses were based than would be realized from responses on each of the 65 individual items. The literature provides support for this approach and suggests that the use of composite-level indicators leads to far more interpretable and meaningful results than an analytic approach based on large numbers of individual items (e.g., Gibbons & Hocevar, 1998; Landis, Beal, & Tesluk, 2000; Paik & Michael, 1999, Woehr et al., 2007). In the present study, we formed the item parcels by summing 2 to 4 randomly selected items from each of the dimension scales. Specifically, for each scale containing 10 items, three parcels were formed as one set of 4 items and two sets of 3 items. If the scale contained 8 items, three parcels were formed as two sets of 3


19

items and one set of 2 items. If the scale contained 7 items, three parcels were formed as one set of 3 items and two sets of 2 items. Although the set of items comprising each of the indicators was randomly selected within dimensions, the same sets of items were used to form indicators across samples. Previous research has demonstrated that this random approach to parceling items is appropriate to the extent that all items are equivalent measures of the focal construct (Landis et al., 2000). Miller et al. (2002) provided evidence supporting the unidimensionality of each of the MWEP dimensions as well as the equivalence of items corresponding to each dimension. Thus, this random-item-parceling approach is appropriate with respect to the MWEP items.

Results

Before proceeding to interpret the MGCFA results, we checked the normality of the data.

First we performed the analysis for the multivariate outliers using Mahalanobis distance (1936) on the U.S. and Poland samples. According to Byrne (2010), a case is considered an outlier if its Mahalanobis distance is well separated from other Mahalanobis distances. Based on this rule, we identified and deleted six outliers in the U.S. dataset and four outliers in the Poland dataset. The deleted cases were places at a considerable distance ahead of the others. Further, the skewness and kurtosis analysis indicated that the Morality dimension did not behave normally (above +/- 2) in both the U.S. and Poland samples. Also Mardia's coefficient (1972) for multivariate kurtosis exceeded critical standards.

This preliminary analysis indicates that there is a problem with the Morality dimension. The following analysis will take this information into account.

We ran five MGCFA (Table 1): 1) U.S. and Poland sample; 2) U.S. and Poland student samples; 3) U.S. and Poland employee samples; 4) Poland student and employee samples; and 5) U.S. student and employee samples.

The first model looked at the ME/I across the overall U.S. and Poland samples. According to the indices (CFI= .94, RMSEA = .044) all loadings of the latent variables were statistically significant across countries and exhibited a similar pattern of loadings. Therefore configural equivalence was reached. This allowed us to check the next levels of equivalence. The indices of metric invariance indicated good fit (CFI = .93, RMSEA = .046). Furthermore, comparison of nested models, Model 1 (configural invariance) and Model 2 (metric invariance), revealed a ΔCFI = .01, which corresponds with the Cheung and Rensvold (2002) recommendations. Equivalence at configural and metric levels allows us to say that the MWEP measure reached the baseline for further cross-country comparisons.

The second set of analyses broke down the samples by student vs. employee inside the same country. In the case of the Poland student vs. Poland employee samples, both configural and metric equivalence were reached (configural - CFI= .91, RMSEA = .053; metric - CFI= .90, RMSEA = .053; ΔCFI: .01). The same results were found regarding the U.S. student vs. employee samples (configural - CFI= .94, RMSEA = .046; metric - CFI= .93, RMSEA = .047; ΔCFI: .01).


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Table 1. ME/I tests for MWEP

df χ2* Δχ2a RMSEA CFI ΔCFIa NCI ΔNCI Gamma Hat

ΔGamma Hat

Poland and U.S. Configural invariance 336 967.33 --- .044 .94 --- .72 --- .994 --- Metric invariance 350 1049.68 82.35 .046 .93 .01 .70 .03 .990 .004

Poland student and employee

Configural invariance 336 832.19 --- .053 .91 --- .63 --- .980 --- Metric invariance 350 862.04 29.85 .053 .90 .01 .62 .01 .973 .007

U.S. student and employee

Configural invariance 336 642.21 --- .046 .94 --- .71 --- .985 --- Metric invariance 350 693.31 51.10 .047 .93 .01 .68 .03 .978 .007

Poland and U.S. student

Configural invariance 336 555.44 --- .036 .96 --- 0.80 --- .996 --- Metric invariance 350 621.57 66.13 .040 .95 .01 0.76 .04 .993 .003

Poland and U.S. employee

1 Configural invariance 336 918.89 --- .061 .89 --- .54 --- .989 --- Metric invariance 350 985.12 66.23 .062 .88 .01 .51 .03 .982 .006



4 Configural invariance 234 565.49 --- .055 .93 --- .70 --- .994 --- Metric invariance 246 639.75 74.26 .059 .92 .01 .66 .04 .989 .005 Legend: χ2 = chi-square; RMSEA = root mean square error of approximation; CFI = comparative fit index, NCI = non-centrality index,* p =. 000, a. Difference for each model is relative to the previous one, 1 - full model, 2 - errors correlated, 3 – without Morality dimension, 4 – without Morality dimension and errors correlated.

The third set of analyses looked at the student vs. employee samples across countries. For the U.S. student vs. Poland student samples, both configural and metric equivalence were reached (configural - CFI= .96, RMSEA = .036; metric - CFI= .95, RMSEA = .040; ΔCFI: .01). However in the case of U.S. employee vs. Poland employee samples neither configural nor metric equivalence was reached (configural - CFI= .89, RMSEA = .061; metric - CFI= .88, RMSEA = .062; ΔCFI: .01).

Post-hoc analysis

The above analyses indicate that the ME/I was not reached for the U.S. employee vs. Poland employee samples. When full ME/I is not achieved, one solution might be to use the


21

modification indices (M.I.) and allow for some error terms to correlate. However in our case, after correlating two error terms pairs (e5 - e10 and e10 - e14) the overall fit did not improve.

Another strategy is to eliminate from the measure the dimension that is problematic and attempt to reach partial ME/I. Due to the fact the Morality dimension showed lack of normality, we reran the analysis without this dimension. In this scenario the ME/I between the U.S. employee vs. Poland employee samples reached both configural and metric equivalence (configural - CFI= .91, RMSEA = .060; metric - CFI= .90, RMSEA = .062; ΔCFI: .01). As a follow-up step, using the modification indices (M.I.), we allowed for some error terms to correlate (e12 = e16, e10 - e14, e14 - e15) and the model slightly improved (configural - CFI= .93, RMSEA = .055; metric - CFI= .92, RMSEA = .059; ΔCFI: .01). This set of analyses, excluding the Morality dimension, did improve the overall fit and helped reach configural and metric equivalence for the U.S. employee vs. Poland employee samples.

At this point, the results suggest that the full MWEP measure was conceptually equivalent across four of the five groups analyzed, and in the case of employee samples the ME/I was reached after eliminating one dimension (Morality). With this difference in mind, we next examined the potential differences across groups with respect to the actual scores on each dimension.

First, the internal consistency reliability estimates for each of the seven MWEP dimension scores are presented in Table 2. Examination of the estimates indicated that reliabilities were generally acceptable for all scale scores across samples (i.e., range .67 to .90). More specifically, all but two of the reliabilities were higher than the value of .70 often cited as indicative of a reasonable level of reliability (Nunnally & Bernstein, 1994). The remaining two reliability estimates were not significantly different from .70 (Delay of Gratification was.69 and .67 in the overall Poland sample and the Poland employee sample).

Table 2. Coefficient a reliability by sample

Dimensions

Poland N = 534

U.S.

N = 439

Poland Employee N = 236

Poland Student N = 298

U.S. Employee N = 236

U.S. Student N = 203

Self-Reliance .84 .86 .82 .85 .85 .86 Morality/Ethics .79 .77 .74 .79 .80 .79 Leisure .89 .88 .87 .90 .88 .86 Hard Work .84 .87 .87 .77 .88 .85 Centrality of Work .81 .81 .78 .83 .79 .83 Wasted Time .73 .77 .72 .72 .76 .77 Delay of Gratification .69 .80 .67 .73 .81 .78 Legend: a=Cronbach reliability coefficient, N=number of participants.

Second, given the demonstrated level of measurement equivalence between the English,

and Polish versions of the MWEP, we next examined potential differences across groups with respect to the actual scores on the dimension subscales. Mean scores by sample for each of the MWEP dimensions and each pair of samples are presented in Table 3. In the case of the overall U.S. vs. Poland sample only one dimension was not statistically significant (i.e., Self-Reliance). Regarding the sub-samples, the most similar were the U.S. student vs. U.S. employee samples (with three not significant dimensions: Hard Work, Centrality of Work, Delay of Gratification), and the U.S. students and Poland students (with two not significant dimensions: Self-reliance, Delay of Gratification). The Polish student vs. Polish employee sample had one not significant


22

dimension (i.e., Morality), and this also was the case for the U.S. employee vs. Poland employee samples (i.e., Self-reliance).

Discussion

In summary, our results suggest that the newly developed Polish language versions of the

MWEP demonstrate measurement equivalence with the original English version. Specifically, a seven-factor measurement model corresponding to the seven MWEP dimensions with three manifest indicators (based on three summed-item composites) and factor pattern coefficients constrained to be equal across groups, provided a good representation of the MWEP data across four of the five pairs of samples. In addition, scale score reliability estimates were generally high and consistent across versions. Finally, we found several statistically non-significant differences on the work ethic dimensions across samples, which match in a certain extent the findings of Woehr et al. (2007). For example, in Woehr et al. (2007) Hard Work and Delay of Gratification indicate no statistically significant differences across U.S., Mexican, and Korean samples. In our research Delay of Gratification was not statically significant for the U.S. vs. Poland student samples and U.S. students vs. U.S. employee samples. Moreover Hard Work was not significant between the U.S. student and U.S. employee samples. But there are also differences, the main one being that in the present research Self Reliance was the dimension that indicate no statically significant difference across the overall U.S. and Polish samples (and also for the U.S. students vs. Poland students, and U.S. vs. Poland employees).

The samples that showed more similarities were the two U.S. samples (students and employees) and the two student samples (U.S. and Poland). Probably the most different samples were the U.S. employees vs. Poland employees. In this case the full ME/I was not reached, but just partial ME/I, with the Morality dimension dropped out.

The present study compared two cultures, the U.S. and the Polish, and we highlighted both similarities and difference between them. Future research should extend the range of the countries and cultures and take a deeper look into what is similar and what is different between them. A step in this direction was made by Zhang, Liu and Liu (2012) who found a significant interaction effect between a similar work ethic scale as the MWEP (the Protestant Work Ethic scale– PWE) and Confucian Dynamism scale in a Chinese setting. The findings appeared to support the notion that these two work ethics are not culturally specific. Also although Weber emphasizes hard work as one of Protestant Work Ethic’s distinctive characteristics, Islam’s view on work ethic is not much different than Protestant and Catholic views. Zulfikar (2012) examined the work ethic characteristics of Protestant, Catholic, and Muslim workers who are living in the U.S. to find similarities and differences among these people in terms of business ethics. One interesting result of their study was that the Turkish Muslim population of the U.S. workforce contributes more positively to the U.S. business ethics values than the other groups surveyed.

Our goal in the present study was to extend the work of Miller et al. (2002) and Woehr et al. (2007) by developing and evaluating a new version of Miller et al.’s measure of work ethic. In addition, we applied a detailed CFA approach to the assessment of the ME/I of the measure of work ethic across Polish and U.S. samples. The importance of providing evidence for ME/I across countries should not be underestimated. Nevertheless, it appears to be a prevailing notion among cross-cultural researchers that the replicability of factorial structure across countries represents adequate evidence of ME/I (Paunonen & Ashton, 1998). Such evidence, however, is


23

not sufficient. Although the factorial structure of a measuring instrument may yield a similar pattern when tested within each of two or more countries, such findings represent no guarantee that the instrument will operate equivalently across these countries (Byrne & Watkins, 2003). Our results indicate that Polish MWEP was equivalent, and there are both substantive differences and similarities between the U.S. and Polish participants with respect to work ethic. These results should be considered preliminary, but they surely represent a step forward in the cross-cultural literature pertaining to work ethic. Table 3. Means and Standard Deviations for MWEP Scales – U.S. vs. Poland

U.S. (N= 439)

Poland

(N= 534)

U.S. student

(N= 203)

U.S. employee (N= 236)

Poland student

(N= 298)

Poland employee (N= 236)

Mean SD Mean SD Mean SD Mean SD Mean SD Mean SD Self-Reliance 3.48A .65 3.48A .60 3.35A .61 3.60B .67 3.41A .62 3.58B .57 Morality / Ethics 4.43A .45 4.25B .53 4.36A .43 4.48B .48 4.23A .53 4.30A .48 Leisure 3.14A .66 3.36B .67 3.30A .57 3.00B .71 3.42A .67 3.29B .64 Hard Work 3.86A .60 3.33B .58 3.85A .55 3.87A .66 3.43A .50 3.22B .64 Centrality of Work 3.73A .57 3.31B .60 3.69A .56 3.77A .58 3.27A .62 3.37B .56 Wasted Time 3.72A .57 3.46B .58 3.59A .57 3.82B .57 3.36A .58 3.60B .55 Delay of Gratification 3.50A .67 3.39B .63 3.51A .64 3.50A .71 3.46A .64 3.31B .62

U.S. student (N=203)

Poland student (N=298)

U.S. employee (N=236)

Poland employee (N=236)

Mean SD Mean SD Mean SD Mean SD Self-Reliance 3.35A .61 3.41A .62 3.60A .67 3.58A .57 Morality / Ethics 4.36A .43 4.23B .53 - - - - Leisure 3.30A .57 3.42B .67 3.00A .71 3.29B .64 Hard Work 3.85A .55 3.43B .50 3.87A .66 3.22B .64 Centrality of Work 3.69A .56 3.27B .62 3.77A .58 3.37B .56 Wasted Time 3.59A .57 3.36B .58 3.82A .57 3.60B .55 Delay of Gratification 3.51A .64 3.46A .64 3.50A .71 3.31B .62 Legend: Means within the same row with different superscripts are significantly different (p < .01).

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Acknowledgments

We thank the editor Meir Russ and the anonymous reviewers for their insightful feedback, and Grey Eminence and Shmuel Batzri for everything.


26

A Comparison of the Multidimensional Work Ethic Profile across Two Countries


acDepartment of Psychology, University of Silesia, Poland

bDepartment of Management, University of Tennessee, USA dDepartment of Management, University of North Carolina at Charlotte, USA

[email protected], b [email protected], c [email protected], d [email protected]

Abstract

The present study represents an extension of previous research examining the measurement equivalence of the Multidimensional Work Ethic Profile (MWEP; Miller, Woehr, & Hudspeth, 2002) across groups. To date, research has supported the measurement equivalence of the MWEP between its English, Spanish, and Korean language versions (Woehr et al., 2007), between male and female respondents (Meriac et al., 2009), and across generational cohorts (Meriac et al., 2010). The present study extends this research by reporting the development of a Polish language version of the MWEP as well as through an examination of the equivalence of the MWEP across U.S. and Polish respondents.

Keywords: work ethics, measurement equivalence, Poland, Multidimensional Work Ethic Profile (MWEP)






27

French version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Une comparaison du profil éthique du travail multidimensionnel dans deux pays





Résumé La présente étude constitue un prolongement de recherches antérieures, examinant équivalence de la mesure du profil éthique du travail multidimensionnel (Miller, Woehr, et Hudspeth, 2002) entre groupes. À ce jour, la recherche a pris en charge la mesure de l'équivalence de la mesure du profil éthique du travail, entre ses versions en anglais, en espagnol et en coréen (Woehr et al., 2007), entre les répondants masculins et féminins (Meriac et al., 2009), et les cohortes générationnelles (Meriac et al., 2010). La présente étude étend cette recherche à une version en langue polonaise la mesure du profil éthique du travail multidimensionnel ainsi qu'à un examen de son équivalence comparant des répondants américains et polonais.

Mots-clés: éthique du travail, mesure d'équivalence, Pologne, profil éthique du travail multidimensionnel (MWEP)

*. Translated by: Johannes Schaaper, Senior professor in International Management, BEM Bordeaux Management School






28

German version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Vergleich des multidimensionalen Arbeitsethikprofils (MWEP) zwischen zwei

Ländern




[email protected], b [email protected], c d

[email protected], [email protected]

Zusammenfassung

Die vorliegende Untersuchung erweitert existierende Untersuchungen zur Messäquivalenz des multidimensionalen Arbeitsethikprofils (Multidimensional Work Ethik Profile, MWEP; Miller, Woehr & Hudspeth, 2002) zwischen unterschiedlichen Gruppen. Bis heute zeigt die Forschung eine Messäquivalenz zwischen englischen, spanischen und koreanischen Sprachversionen (Woehr et al., 2007), zwischen männlichen und weiblichen Teilnehmern (Meriac et al., 2009) und zwischen Generationen (Meriac et al., 2010). Die vorliegende Studie erweitert diese Forschung durch eine polnisch-sprachige MWEP-Version und zudem durch die Untersuchung der Äquivalenz der MWEP zwischen polnischen und U.S-amerikanischen Versuchsteilnehmern.

Keywords: Arbeitsethik, Polen, multidimensionale Arbeitsethikprofile, Messäquivalenz

*. Translated by: Prof. Dr. Marc Eulerich, University Duisburg-Essen, Chair for Internal auditing and Corporate Governance, [email protected]







29

Spanish version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Comparación del Perfil Multidimensional de la Ética en el Trabajo entre Dos Países





Resumen El presente trabajo representa una extensión de las investigaciones previas y examina la

equivalencia de la medida del Perfil Multidimensional de Ética en el trabajo (MWEP) (Miller, Woehr, y Hudspeth, 2002) entre grupos.

Hasta la fecha, la investigación ha apoyado la equivalencia de la medida del Perfil Multidimensional de Ética en el trabajo (MWEP) entre sus versiones en inglés, español y coreano (Woehr et al., 2007), entre hombres y mujeres (Meriac et al., 2009), y entre generaciones (Meriac et al., 2010). El presente estudio extiende la investigación al presentar el desarrollo de una versión en polaco de la MWEP, y un examen de la equivalencia de la MWEP entre los encuestados estadounidenses y polacos.

Palabras clave: ética del trabajo, equivalencia en la medición, Polonia, Perfil

Multidimensional de Ética en el trabajo (MWEP)

*. Translated by: María Avello. Universidad Complutense de Madrid. [email protected]







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Arabic version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries\

أخلاقيات العمل متعدد الابعاد بين دولتين لملفدراسة مقارنة




[email protected], U

b [email protected] U, c [email protected], U

d [email protected]

ملخص

أخلاقيات ملفمتدادا للدراسات و الأبحاث السابقة التي درست مدى تكافئ و تساوي مقياس اتعد هذه الدراسة ،لغاية الوقت الحالي .)MWEP; Miller, Woehr, & Hudspeth, 2002(. العمل متعدد الابعاد بين المجموعات

و الكورية ، الاسبانية ، بحاث تكافئ مقايس لأخلاقيات العمل في اصدارات اللغة الانجليزيةدعمت الا)Woehr et al., 2007( ، بين الذكور و الاناث)Meriac et al., 2009( الأجيال و بين)Meriac et al., 2010(.

أخلاقيات ملفلتكافئ صفات مقياس البولنديةهذه الدراسات من خلال تطوير النسخة تكمل الدراسة الحالية .الى دراسة تكافئ و تساوي المقياس بين الولايات المتحدة الأميركية و بولندا بالاضافة العمل متعدد الابعاد

.أخلاقيات العمل متعدد الابعاد ملف ، بولندا ، مقياس التكافئ ، أخلاقيات العمل: الكلمات الدالة

*. Translated by: Zu’bi M.F.Al-Zu’bi, Ph.D, FHEA, University of Jordan, [email protected]







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Italian version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Una comparazione del profilo di etica lavorativa fra due Paesi





Abstract

Questo studio rappresenta una estensione di una precedente ricerca che esaminava l’equivalenza del Profilo Multidimensionale di Etica Lavorativa (MWEP; Miller, Woehr, & Hudspeth, 2002) fra gruppi. Fino ad oggi, la ricerca si è concentrata sulla misurazione di equivalenza del MWEP fra le versioni linguistiche Inglese, Spanola e Coreana (Woehr et al., 2007), e attraverso gruppi generazionali (Meriac et al., 2010). Il presente studio estende questa ricerca evidenziando gli sviluppi riguardanti la versione in lingua Polacca del MWEP, così come attraverso l’esame dell’equivalenza del MWEP tra Statunitensi e Polacchi coinvolti.

Keywords: etica del lavoro, misurazione di equivalenza, Polonia, Profilo Multidimensionale di Etica Lavorativa (MWEP)

*. Translated by: Riccardo Paterni, co-founder Synergy Pathways, [email protected]







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Chinese version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

多维工作伦理剖面图：两个国家的比较





摘要

本研究推进了关于多维工作伦理剖面图（MWEP; Miller, Woehr, & Hudspeth, 2002）在不同群体间测量等值性的研究。到目前为止，已有的研究支持了MWEP在英语、西班牙语和韩语版本间的测量等值性（ Woehr et al., 2007）、在不同性别间的测量等值性（ Meriac et al., 2009），以及代际间的测量等值性（ Meriac et al., 2010）。本研究开发了MWEP的波兰语版本，并检验了MWEP在美国和波兰研究对象之间的等值性，从而拓展了该方面的研究。

关键词: 工作伦理；测量等价性；波兰；工作伦理剖面图（MWEP）

*. Translated by: Jian-Min Sun & Wei Si, Renmin University of China, [email protected]







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Polish version* A Comparison of the Multidimensional Work Ethic Profile across Two Countries

Porównanie amerykańskiej i polskiej wersji Wielowymiarowego Profilu Etyki Pracy





Abstract

Prezentowane badania stanowią kontynuację badań porównawczych prowadzonych w różnych populacjach nad równoważnością kulturową Wielowymiarowego Profilu Etyki Pracy (Multidimensional Work Ethic Profile, MWEP; Miller, Woehr, & Hudspeth, 2002), narzędzia służącego do pomiaru etyki pracy. Dotychczasowe badania wykazały równoważność angielskiej, hiszpańskiej i koreańskiej wersji metody (Woehr et al., 2007). Na równoważność wskazują także porównania między wynikami badanych grup kobiet i mężczyzn (Meriac et al., 2009) oraz wynikami osób w różnych przedziałach wiekowych (Meriac et al., 2010). W artykule omówiono wyniki badania, które stanowi pogłębienie wcześniejszych dociekań empirycznych dodatkowo o polską wersję językową Wielowymiarowego Profilu Etyki Pracy (MWEP). Przedstawiono tu porównanie równoważności amerykańskiej i polskiej wersji MWEP.

Kewords: etyka pracy, pomiar równoważności, Polska, Wielowymiarowy Profil Etyki Pracy

*. Translated by: Agata Chudzicka-Czupała, University of Silesia in Katowice, Poland, [email protected]








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Comparative Analysis of Risk Management and Risk Disclosure in the Banking Sector

Italian vs. World Practices

S. Puccia, M. Tutinob*, E. Marullic

Roma Tre University, Department of Management and Law, Roma, Italy [email protected] - [email protected] - [email protected]

Abstract

The paper – that is a part of a bigger project - is based on the assumption of an important relationship between risk management principles and procedures, corporate governance and accounting. Its aim is to evaluate what are, at this stage, the theoretical approaches and the practical solutions adopted by the companies to manage the risks and to disclosure to stakeholders qualitative and quantitative elements referring to this aspect and necessary to evaluate the company profile. The paper examines the 2010 Consolidated Annual Reports of a sample of 25 Italian and worldwide listed banks on two main topics: (i) the quality of disclosure on Internal Organization Process Risk in terms of correspondence to the international best practice framework as stated in CoSo reports, (ii) the instruments adopted in the Risk Management Process to assess corporate exposure to market risk, focusing on Interest Rate risk, Price risk and Currency risk1

.

Keywords: IFRS 7, Risk Disclosure, Risk Management, ERM, Banks

Introduction

Since 2005, over 7,000 listed firms in the European Union and many more around the world are required to adopt International Financial Reporting Standards (IFRS). The introduction of a uniform accounting regime is expected to ensure greater comparability and transparency of financial reporting around the world. However, recent research has questioned the quality of financial statements prepared under IFRS standards, particularly in the presence of weak enforcement mechanisms and adverse reporting incentives (Ball et al., 2003).

In this context, the relation between risk management, corporate governance and accounting risk disclosure has significantly grown, especially in the banking system (Bhimani, 2009; Power, 2009; Harney, 2010). This importance was recently highlighted by the financial crisis in 2008 that has shown the “weakness” of some corporate governance and risk management principles and of some accounting standards (OECD, 2009).

The relationship between accounting, corporate governance and risk management principles is the subject of this paper. In particular, the paper examines the level of compliance of risk management disclosure policies - so that, risk exposure, risk evaluation and risks hedging

1 S. Pucci (par. 3, 6); M. Tutino (par. 2, 4.1, 4.2, 4.3.), E. Marulli (par. 1), all authors: par. 5


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policies – adopted by a sample of listed companies to IFRS 7 issued in 2007 in order to assess if accounting principles requirements are considered and transparently reflected in the Notes of Annual Report and related disclosure (i.e., risk reports). In particular, the research is focused on disclosure for market risks exposure and risk management process in terms of objectives, policies and internal organization.

After a brief review of the literature and a short discussion of the theoretical approach, the study analyzes the banking sector data, comparing a sample of Italian listed banks with a sample of the largest world banks. The analysis follows two-step logic. The first step includes a selection of more representative Italian listed banks and provides analysis on the following aspects: (i) details on internal organizational structure in order to manage market risk exposure, as defined by each bank in its annual accounts; (ii) information about policies and tools adopted to assess and manage market risk exposure, considering compliance with specific requirements stated in IAS/IFRS principles. In the second step additional banks considered representative of the best practices in organizational processes and tools used in market risk and compliance to disclosure requirements were selected from among the world’s twenty-five largest banks. Nationality was varied as much as possible. The analysis has been extended to answer to following research questions:

- Are accounting and non-accounting standards requirements (IAS/IFRS, SFAS, CoSo Report discussed and other accounting practices) sufficiently standardized and homogeneous in the banking sector to permit a good level of knowledge of structures, objectives and policies adapted to manage risk?

- Can the risk management process - in terms of functions of the internal organization involved, specific instruments adopted and parameters used in calculating risk exposure and evaluation - be considered "globalized"?

- How much do both previous items impact management and policies adopted by banks referring to market risk?

Literature Review

Many academic contributions have recently focused on the relation between risk management, finance, corporate governance and accounting and on their techniques. In particular, some papers have analyzed, from a theoretical point of view, the relation between accounting and finance (Pope, 2010) and accounting and risk management (Bhimani, 2009, Power, 2009; Harney, 2010); some authors have estimated, from a quantitative point of view, the relation between accounting and the measurement of risks (Carey, 1995; Anderson and Fraser, 2000; Agusman, Monroe, Gasbarro, and Zumwalt, 2008; Behr, Schmidt and Xie, 2010); while others have examined the link between incentives for risk reporting and discretionary disclosure (Dobler, 2008). Risk management is also connected to the theme of sustainability (Krysiac, 2009). In recent years, the relationship between risk management, corporate governance and accounting has also been analyzed by local and international supervisory authorities, by international bodies and by groups of experts who try to find the “best” framework in which to define risk management objectives and policies and their reporting in internal documents and in financial statements. Important points of reference are the OECD Principles of Corporate Governance (2004), Enterprise Risk Management Principles defined by CoSo (2004) and subsequent guides such as Developing Key Risk Indicators to Strengthen Risk Management (2010), the AIRMIC papers (2008, 2010) and some IASB and FASB accounting principles in which information about risk evaluation and solutions are required.


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Risk management Function, Policies and Disclosure Rules

As AIRMIC affirms in its 2010 Report “the risk architecture needs to be clearly defined, regardless of the risk maturity or expectations that the company has for risk management. The nature of the risk architecture should be relevant to the risk profile of the company” (AIRMIC, 2010, p. 2). As it has been previously underlined, the companies have a lot of theoretical and empirical solutions to define the risk architecture and the choice applied has a great influence on the way in which the risk is assessed, managed and reported. This is an internal choice of the company that is related to the size, the internal organization model, the market in which the company acts and the environment (laws, accounting standards, products, clients, competitors, etc.).

The disclosure of risk management exposures, strategies, policies and the effects that the choices made produce on the “profile” of the company impacts all stakeholders and may have an important role in the company evaluation by market investors. Because of this, both IASB, FASB and other standard setters and supervisory authorities have shown a great interest in disclosure requirements regarding risk management. The requirements are often qualitative and quantitative and, combining both information perspectives, it would be possible to have a clear knowledge of the risk management approach followed by the companies (Managerial Risk) and of the effects on the present and future cash flows (Organizational Risk). As an example of the qualitative information required, par. 33 of IFRS 7 states that “for each type of risk arising from financial instruments, an entity shall disclose:

(a) The exposure to risks and how they arise; (b) Its objectives, policies and processes for managing the risks and the methods used to

measure the risk; and (c) Any changes in (a) or (b) from the previous period”.

Research Methodology and Data

For the purposes of the research, a sample of banks adopting different accounting principles has been observed. The next paragraphs provide the frameworks used to deal with research questions previously stated, the methodology adopted in the analysis, the sample observed, and main data recorded and organised in tables.

In order to underline differences in practices adopted, cross-sectional analysis has been conducted for a comparison. Companies’ Risk Reports, included in their Annual Reports, have been analysed. The analysis has been focused on 2010 Consolidated Annual Reports and 2011 Quarterly Reports of a wide sample of Italian and World listed banks. Sections below provide focus and objectives of research, with evidence of main research questions, methodology adopted and the sample of research.

Focus of research

The main objective of the paper is to measure the degree and the completeness of risk disclosure using IFRS 7 as a proxy for best practices. We provide analysis of the information released in Annual Reports distinguishing risk management approaches adopted by a single bank, the deepness of disclosure provided on risk management processes, and the size and position of risk disclosure in the annual reports in order to evaluate the degree of transparency of the disclosure provided by the full sample. That being stated, the topics of analysis paper can be summarized as follows:


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- The quality of disclosure on internal organization process risk in terms of correspondence to the international best practice framework as stated in the CoSo report,

- The instruments adopted in the risk management process as stated in IFRS 7 in order to control for corporate exposure to market risk, focusing on interest rate risk, price risk and currency risk,

- The impact of previous items on management and policies adopted by banks referring to market risk. The Committee of Sponsoring Organizations of the Treadway Commission's (CoSo)

“Enterprise Risk Management (ERM) –Integrated Framework” is a model for reviewing and assessing the quality of internal control systems and risk management processes. According to CoSo, the ERM framework facilitates three main classes of objectives:

- Operations objectives: efficient and effective operations; - Financial reporting objectives: reliable financial and non-financial reporting; and - Compliance objectives: compliance with internal procedures and external laws and

regulations.

The following figure (Figure 1) summarizes the CoSo framework.

Figure 1 – Updated CoSo Cube, Dec. 2011

CoSo (2011), Draft Update to Internal Control - Integrated Framework, available on http://www.coso.org/documents

IFRS asks for disclosure of a wide range of “risks arising from financial instruments”. The following figure (Figure 2) shows the risk disclosure framework as stated in IFRS 7 referring to market risk:


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Figure 2 – IFRS 7, Risk Framework

Redaelli L. (2007), La prima applicazione del principio contabile IFRS 7, PWC Conference Proceedings, Milano, 29 November. Main research questions

The main research questions, as stated in paragraph 1, are the following:

- Are accounting and non-accounting standards requirements (IAS/IFRS, SFAS, CoSo Report discussed and other accounting practices) sufficiently standardized and homogeneous in the banking sector to permit a good level of knowledge of structures, objectives and policies adopted to manage risk?

- Can the risk management process - in terms of functions of the internal organization involved, specific instruments adopted and parameters used in calculating risk exposure and evaluation - be considered "globalized"?

- How much do both previous items impact management and policies adopted by banks referring to market risk?

Methodology and sample

A content analysis methodology has been adopted in this research. This is a transparent and flexible method that can also be used for both qualitative and quantitative studies and allows comparative analysis between samples. In particular, this paper analyzes the content of consolidated annual financial reports adopting a replication logic (Eisenhardt, 1989), which allows each “analytic unit” observed to be considered as a “new experiment” useful to extend emerging theory (Yin, 1984).

We have used data from 2010 Consolidated Annual Reports and 2011 Quarterly Reports from a sample of 25 listed banks. We selected banks from the Italian market (17) and foreign markets (8) to compare disclosure. The sample banks were selected taking into account two main parameters.

First, the substantial absence of relevant control between companies in terms of level of autonomy in the governance process. Even if some banks included in the sample are linked with crossing participation in share capital, each bank can be considered as a single market player relative to the others.

Second, we selected a sample of banks with a wide range of financial services. All but two were involved primarily in the core business of financial intermediation, such as lending activity to public and private sectors. Two banks (Mediobanca and Banca Finnat) were included


39

because of their growing presence in the specific operating area and their “political weight” in the Italian banking sector. Nevertheless, most of the Total Assets of banks included in the sample is invested in lending activity. For the World sample we chose 8 top listed banks included in the FT Global 500 list, released in March 2011, considering 8 different countries.

The following table provides the whole sample investigated, ranked by Total Assets as of 31 March 2011, as stated in FT Global 500. Because of size, some Italian banks were not included in the list mentioned. The value of total assets expressed in dollars has been calculated using the Euro/US Dollar exchange rate at a specific date multiplied by the value released in reports by each company. The sample observed is reported in the following table (Table 1).

Table 1 – Banks Total Assets (Value in US$ Million and % on full sample)

In order to better evaluate the results obtained, the following elements must be considered: - Different accounting rules between countries – distinguishing EU countries, the U.S.A., China, Japan

- which can lead to different levels and quality of information provided on specific aspects;

Country Bank Total Asset (31 March 2011)

Total Asset (in %)

FRA BNP Paribas 2.662.542 15.71% UK HSBC 2.459.130 14.51% JAP Mitsubishi UFG Financial 2.177.027 12.84% USA JP Morgan Chase 2.117.605 12.49% CHI ICBC 2.042.094 12.05% SWI UBS 1.400.109 8.26% ITA Unicredit 1.244.296 7.34% ITA Banca Intesa-San paolo 881.384 5.20% BRA Banco Brasil 488.791 2.88% ITA Banca Monte dei Paschi 329.781 1.95% RUS Sberbank 282.191 1.66% ITA Banco Popolare 193.371 1.14% ITA Unione di Banche Italiane 188.581 1.11% ITA Mediobanca 87.118 0.51% ITA Banca Popolare dell'Emilia Romagna 84.208 0.50% ITA Banca Popolare di Milano 78.931 0.47% ITA Cassa di Risparmio di Genova 57.436 0.34% ITA Credito Emiliano 40.700 0.24% ITA Credito Valtellinese 38.741 0.23% ITA Banca Popolare di Sondrio 37.793 0.22% ITA Banco di Sardegna 19.655 0.12% ITA Banca Popolare dell'Etruria e del Lazio 15.314 0.09% ITA Credito Artigiano 13.303 0.08% ITA Banco Desio e della Brianza 11.719 0.07% ITA Banca Finnat 686 0.00%

16.952.506 100.00%


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- Supervisory rules are not considered in the analysis at this stage, however different choices of supervisory authorities may have relevant effects on the level and quality provided in financial statements relating to market risk information;

- Principles established by the CoSo guide and ERM model principles, although they do not constitute the only model of risk management, are considered representative of best practices and are therefore an important reference for the paper;

- Absence of a standardized form for Notes of Annual Consolidated Reports and, consequently, the non-uniformity of the information provided by the whole sample.

Methodology and sample

The main results of the research at this stage may be summarized as follows. As it has been underlined, a lot of approaches are possible from a theoretical point of view because a lot of them are described in the literature. The first question refers to the risk management model practically adopted by the companies in the sample. The “name” of the models, that the companies shown in the Notes, are the following:

Table 2 – Disclosure on Risk Management Theoretical Models

Percentages in the table have been calculated breaking up the number of observations, each indicating the adoption of a particular model as reported in the Annual Report, to the number of the Italian sample (column Italy) and World sample (column World). For instance, the percentage of Italian banks adopting an Integrated model for the risk management process, that is 11.80%, is obtained dividing the number of Italian banks that disclose on adopting that specific model (number of observations: 2) to the full sample of Italian banks (number of observations: 17).

It must be noted that some “name” adopted to indicate a specific risk management model disclosed in Annual Report, and presented in the table above, may hide the same substance. For instance, analyzing the Notes to Financial Statements, it is frequently that, even if a specific name of risk management model adopted in the company is disclosed, the conceptual building blocks of each model is not clearly describe. So that, disclosure on model adopted rather than another one to manage risk exposure can be very similar even in presence of qualitative different model.

Nevertheless, further aggregations are not allowed considering information reported in risk disclosure provided.

Table 2 above highlights the important differences between Italian and international practices in reporting. In terms of completeness of information, Italian sample practices are still far from standards adopted in the international context.

Italy WorldIntegrated Model 11.80% 12.50%Holistic Mode l 0.00% 12.50%Risk Appetite Model 11.80% 37.50%Dualistic Mode l 5.90% 0.00%Risk Tolerance Model 5.90% 0.00%Not disclosed 64.60% 37.50%

Total 100.00% 100.00%


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Two main results can be underlined: (i) roughly 35% of Italian banks disclose useful information to understand risk management model adopted in 2010; (ii) just two model, Integrated Model and Risk Appetite Model, appear quite widespread, common and applied (both recording a 11.80% of application), while others models - such as Holistic Model, Dualistic Model and Risk Tolerance Model - seem not to be considered much (0.00% for the former one, 5.90% for latter models both).

Observing World sample, results are quite different: the Integrated Model has been reported with same frequency as in the Italian bank sample (12.50% versus 11.80%). Nevertheless, the model most adopted worldwide in banks is the Risk Appetite Framework (observed with a frequency of 37.50%), followed by the Holistic Model (in 12.50% of cases), never reported in the Italian sample.

Considering the corporate function as described in the financial statements examined, the following exhibit (Table 3) shows the main results.

Table 3 - Disclosure on Corporate functions participating in Risk Management process

It is noteworthy that most Italian banks broadly describe the structures involved in managing risk exposure and the key objectives, even if they don’t sufficiently disclose the theoretical model adopted (as shown in Table 2).

The relationships between corporate functions such as Legal & Compliance, Internal Audit and Risk Management, defined in most cases by the managing body, must be carefully analyzed to avoid overlap and to ensure the independence of each function.

It should be noted that the subdivision of the areas of competence of each function, although always feasible in theory, can be much less feasible in practice and could give rise to overlapping of duties and checks. If this were to occur, the overall set out controls, rather than making the company more aware at the time of their strategic and business decisions, would lead to an excess of information which would not facilitate the decision-making process, and also create a more costly overall system that would not be fully effective and efficient. Therefore, it seems to be necessary to manage possible areas of overlap, as well as collaboration between the various functions, while continuing to ensure their mutual independence. Such collaboration is necessary to prevent matters subject to controls by more than one person - each having own target, own information and own control - giving rise to partial results for each function to be assembled by the managing body.

Italy WorldYes Yes

Strategic Planning 100.00% 100.00%Consultative 70.60% 87.50%Reporting and Monitoring 88.20% 75.00%Asset Liability Management 35.30% 37.50%Internal Audit 47.10% 62.50%Legal & Compliance 35.30% 50.00%Anti-Money Laundering 5.90% 0.00%Treasury & Capital Manag. 11.80% 12.50%


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The following tables examine the model in which risk management strategies and policies are defined. It can be easily seen from Table 4 that in the sample analyzed, the strategic guidelines relating to risk management are generally defined by the Board of Directors.

Table 4 - Disclosure on Strategic Function Assignment to Board of Directors

Looking at the Italian banks sample, the definition of guidelines for the Risk Management process is a Strategic Function assigned to the Board of Directors of the Holding company (88.20%); this solution provides groups with strategic lines referring to the same kinds of risks. Considering the World sample, this percentage is much lower (75.00%) showing a more decentralized assignment of this particular strategic function in the organizational structure.

Evidences in Table 4 have to be read pair wise with Table 5. Italian banks’ organizational structures are highly centralized in 58.80% of the cases observed and have a low centralization in 23.50%. It’s interesting to note that 17.70% of banks observed do not disclose their level of centralization of the risk management process. The World banks sample shows a situation completely reversed: the parent company tends to decentralize the strategic role, giving powers to the Boards of Subsidiaries belonging to the group (62.50%).

Table 5 - Disclosure on Level of Centralization of Risk Management Process

As shown in Table 6, the Monitoring and Reporting Function for the measurement and

control of market risk exposure for Italian banks is performed by two different internal structures, each one related to a specific area of governance process: Risk Management Area, in charge of periodical measurements of risk indicators and control limits set by steering committees, and Accounting Area, responsible for preparing the Annual Report. Considering the World sample, the Accounting Area seems not to be involved in the monitoring and reporting function (0.00%), while the Risk Management Area is hardily supportive in the measurement activity and risk control (75.00%).

Italy WorldHolding 88.20% 75.00%Subsidiaries 11.80% 25.00%

Total 100.00% 100.00%

Italy WorldHigh 58.80% 12.50%Low 23.50% 62.50%Not disclosed 17.70% 25.00%

Total 100.00% 100.00%


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Table 6 – Disclosure on Monitoring and Reporting Function

Specific strategies and policies adopted in order to manage and report for market risks are not always identified. Evidence underlines that the level of qualitative information varies depending on risk type: more information is provided regarding price risk, limited data is provided regarding currency risk. Since all banks adopt the Var Model for risk exposure evaluation, information on specific parameters adopted is often given, as shown in Table 7.

Table 7- Disclosure on VaR Model Parameters

Banks seems to be quite aligned in regard to parameters adopted for calculating risk

exposure. This is particularly evident looking at the percentage of Confidence Interval adopted provided for VaR Information, showing a percentage close to 90% for Italian sample banks and 100% for world sample banks.

Greater differences can be found looking at Monitoring Frequency. It is more concentrated on a daily basis for the Italian sample than the world sample. Similar results are shown related to percentage of banks not disclosing on this particular topic, both samples are close to 25%.

Conclusion and future research

The following conclusions emerge from the analysis of the full sample: - Theoretical approaches adopted in risk management: it is interesting to note that different

approaches to risk management are used: a Traditional ERM, a Holistic Approach and an Integrated Approach.

- Level of disclosure on management process: when the management process is built on more than one level - from the definition of the firm’s overall Risk Appetite Framework (Upper Level) to the definition of risk appetite for a single business line, to the accountability of all officers in managing risks within the scope of their assigned responsibilities (Lower Level) – it is also well disclosured in the Annual Report; in terms

Italy WorldRisk Management Area 88.20% 75.00%Accounting Area 11.00% 0.00%

Total 99.20% 75.00%

Italy World

VaR InformationConfidence Interval 88.20% 100.00%Holding Period 87.50% 87.50%

Monitoring frequencyDaily 70.60% 62.50%Monthly 5.90% 12.50%

Not disclosed 23.50% 25.00%


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of autonomy in risk management of single subsidiaries, some cases show delegated power to a local CFO (Chief Financial Officer) exists for each subsidiary.

- Presence and “position” of risk disclosure in the Annual Report: a risk disclosure is always present. Nevertheless, it can be presented as an integrated part of the Notes, or as a part of the Board Report or as a separate and autonomous document. This difference is not relevant if all public documents are publicly certified; it can be considered relevant if only a portion of these documents are certified. It is also important to distinguish between voluntary and mandatory disclosure. In some cases these aspects are very clear: each paragraph states whether the content is revised or not, or if it is compulsory or not.

- Form of the risk report and structure of information disclosed: form and type of structure adopted to disclose information on risk profile varies significantly, therefore it is not easy to compare the level of disclosure;

- Transparency level of qualitative and quantitative disclosure: in most cases the qualitative information can be easily found, presenting a wording clear and understandable; alternatively, from stakeholders perspective, quantitative information is often too technical, releasing information affected by low transparency about financial risk exposure.

- Impact of supervisory rules and accordance with Basel Pillar 2: in some cases the impact of supervisory rules seems to be highly important. It is noteworthy that in some banks Basel Pillar 2 prescriptions are applied, even if not compulsory.

In summary, from the sample analysis it is possible to affirm that a level of globalization and standardization of information for risk exposure and evaluation exists and it is quite high.

Risk disclosure is always present in financial statements even if the form for presentation to stakeholders and the depth of information may vary significantly among banks. In general, disclosure related to decisional structures, objectives and policies adopted to manage the risk exists, even if information disclosed seems to be sometimes too technical and too difficult to be widely understood: identifying specific implications of policies and strategies adopted by each company is often not easy because a lack of consequences of main assumptions exists.

Some considerations emerge comparing sub-sample, “Italian banks” versus “World banks”:

- In general, no relevant differences exist in the corporate functions participating in Risk Management processes, except for the role of specific internal organization functions - as Internal Audit and Consultative and Legal Staff - in the sub-sample “World banks” this seems to be more relevant than in the sub-sample “Italian banks”.

- The degree of centralization of Risk Management processes in the banking sectorseems to be higher in Italy than in the rest of the world. A possible reason may be the low number of big banks in Italy, so that decisions on main objectives and specific strategies are made by the Board of Directors.

- From an operating point of view, some differences exist in terms of specific parameters and assumptions adopted in each risk management model and also in frequency of monitoring. VaR details and related confidence intervals are presented in 100% of the sub-sample “World banks” versus a lower percentage of 88% in the sub-sample “Italian banks”. In contrast, frequency of monitoring activity is higher in Italy.

In summary, even if IFRS 7 generally improved risk disclosure in the banking sector, the results of the research at this stage do not show clear evidence of a superior level of disclosure


45

compared with other accounting principles applied, so that US-GAAP or Local GAAP. It is possible to affirm that a high level of standardization exists, both considering the principles and objectives inspiring accounting principles on risk disclosure and instruments adopted to manage risk exposure, and that it is going to improve over time. At the same time, a low level of standardization is evident if internal processes and functions involved in risk management are considered.

Taking into consideration initial results achieved in this research, future issues should be addressed by:

- Defining a more synthetic and structured disclosure framework to provide in Annual Reports, useful for both investors and stakeholders, and avoiding excess of information.

- Defining a set of disclosure rules that permits release of more in depth information on internal organizational functions in terms of specific duties, responsibilities and competences related to risk management process.

- Observing whether a convergence over time toward some specific models for the quantification of risk exposure exists, in particular for information on assumptions and parameters underlying the models adopted, which are too often not sufficiently clear.

- Providing a deeper and comparative analysis of specific rules issued by the Supervisory Authorities of each country on organizational structures to improve internal processes for risk management.

References

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AIRMIC (2008), Research into benefits of enterprise risk management, June, available on www.airmic.com

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Ball, R., Ashok R., & Wu, J.S. (2003), Incentives versus standards: Properties of accounting income in four East Asian countries and implications for acceptance of IAS, Journal of Accounting & Economics, Vol. 36, pp. 235-270.

Behr, P., Schmidt, R.H., & Xie, R. (2010), Market structure, capital regulation and bank risk taking, Journal of Financial Services Research, Vol.37, pp. 131 – 158.

Bhimani, A. (2009), Risk management, corporate governance and management accounting: Emerging interdependencies, Management Accounting Research, Vol. 20, pp. 2 - 5.

Carey, M. (1995), Partial market value accounting, bank capital volatility and bank risk, Journal of Banking and Finance, Vol.19, pp. 607 – 622.

CoSo - Commission of Sponsoring Organizations of the Treadway Commission (2004), Enterprise Risk Management – Integrated Framework, September, available on www.coso.org

http://www.coso.org/�


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CoSo - Commission of Sponsoring Organizations of the Treadway Commission (2010), Developing key risk indicators to strengthen risk management, December, available on www.coso.org

CoSo - Commission of Sponsoring Organizations of the Treadway Commission (2011), CoSo Releases Internal Control - Integrated Framework, December 19th, available on www.coso.org

Daske, H. & Gebhardt, G. (2006), International financial reporting standards and experts' perceptions of disclosure quality, Abacus, Vol. 42 (3-4), pp. 461-498.

Dobler, M. (2008), Incentives for risk reporting – A discretionary disclosure and cheap talk approach, The Journal of International Accounting, Vol. 43, pp. 184 – 206.

Eisenhardt, K.M. (1989), Building theories from case study research, The Academy of Management Review, Vol. 14, No. 4, pp. 532-550.

FT Global 500, Ranking at March 2011, available on www.ft.com Harney, S. (2010), Accounting risk and revolution, Critical Perspective on Accounting, Vol. 21,

pp. 14 - 17. Krysiak, F.H. (2009), Risk Management as a tool for sustainability, Journal of Business and

Ethics, Vol. 85, pp. 483 – 492. OECD - Organization for Economic Co-operation and Development (2004), Principle of

Corporate Governance, available on www.oecd.org Pope, P.F. (2010), Bridging the gap between accounting and finance, The British accounting

Review, Vol. 42, pp. 88 102. Power, M. (2009), The risk management of nothing, Accounting, Organizations and Society,

Vol. 34, pp. 849 855. Redaelli, L. (2007), La prima applicazione del principio contabile IFRS 7, PWC Conference

Proceedings, Milano, November 29th. Yin, R. (1984), Case study research: Design and methods, Sage Publishing, Beverly Hills (CA),

United States.

http://www.coso.org/�


47

Comparative Analysis of Risk Management and Risk Disclosure in the Banking Sector

Italian vs. World Practices


Roma Tre University, Department of Management and Law, Roma, Italy [email protected] - [email protected] - [email protected]

Abstract

The paper – that is a part of a bigger project - is based on the assumption of an important relationship between risk management principles and procedures, corporate governance and accounting. Its aim is to evaluate what are, at this stage, the theoretical approaches and the practical solutions adopted by the companies to manage the risks and to disclosure to stakeholders qualitative and quantitative elements referring to this aspect and necessary to evaluate the company profile. The paper examines the 2010 Consolidated Annual Reports of a sample of 25 Italian and worldwide listed banks on two main topics: (i) the quality of disclosure on Internal Organization Process Risk in terms of correspondence to the international best practice framework as stated in CoSo reports, (ii) the instruments adopted in the Risk Management Process to assess corporate exposure to market risk, focusing on Interest Rate risk, Price risk and Currency risk.

Keywords: IFRS 7, Risk Disclosure, Risk Management, ERM, Banks


48

French version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking

Sector: Italian vs. World Practices

Analyse comparative de la gestion et de la divulgation des risques dans le secteur bancaire:

Pratiques italiennes versus Mondiales


Roma TreUniversity, Department of Management and Law, Roma, Italy [email protected] - [email protected] [email protected]

Résumé

Cette contribution - qui fait partie d'un projet plus large- est basée sur l'hypothèse qu'il existe une relation importante entre les principes et des procédures de la gestion des risques, la gouvernance d'entreprise et la comptabilité. Son objectif consiste à évaluer, à ce stade, les approches théoriques et les solutions pratiques adoptées par les entreprises pour gérer les risques ainsi que pour communiquer des données qualitatives et quantitatives aux parties prenantes, faisant référence à cet aspect et nécessaires pour évaluer le profil de la société. La contribution examine les rapports annuels consolidés de 2010, d'un échantillon de 25 banques italiennes et mondiales cotées en bourse, sur deux sujets principaux: (i) la qualité de l'information sur les Internal Organization Process Risk, correspondant au cadre des meilleures pratiques internationales comme indiquées dans les rapports du COSO, (ii) les instruments adoptés dans le processus de gestion des risques pour évaluer l'exposition des entreprises aux risques de marché, en se concentrant sur le risque de taux d'intérêt, le risque de prix et le risque de change.

Mots-clés: IFRS 7, Informations sur les risques, communication des risques, gestion des

risques, banques

*. Translated by: Johannes Schaaper, Senior professor in International Management, BEM Bordeaux Management School





49

German version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking


Eine vergleichende Analyse des Risikomanagements und der

Risikoberichterstattung im Bankensektor – Italienische versus weltweite Praktiken



Zusammenfassung

Diese Studie – als Teil eines größeren Projektes – basiert auf der Annahme einer engen Verbindung von Grundsätzen und Prozessen des Risikomanagements mit der Corporate Governance und der Rechnungslegung. Es zielt auf die Evaluation der theoretischen Ansätze und der praktischen Lösungen ab, die Unternehmen gewählt haben, um Risiken zu steuern und diese durch qualitative und quantitative Elemente an die Anteilseigner zu kommunizieren und notwendigerweise zu bewerten. Die Studie betrachtet hierzu die konsolidierten Jahresabschlüsse aus dem Geschäftsjahr 2010 von 25 italienischen und weltweit gelisteten Banken aus zwei Dimensionen: (i) Die Qualität der Berichterstattung zum Internal Organization Process Risk im Sinne des internationalen Best Practice-Framework COSO, (ii) Die genutzten Instrumente des Risk Management Process zur Beurteilung der Risikoberichterstattung, vor dem Hintergrund des Zinsrisikos, des Preisrisikos und des Währungsrisikos.

Keywords: IFRS 7; Risikoberichterstattung, Risikomanagement, Enterprise Risk Management, Banken







50

Spanish version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking

Sector Italian vs. World Practices

Análisis Comparativo de la Gestión y de la Divulgación del Riesgo en el Sector Bancario

Prácticas Italianas vs. Mundiales



Resumen

Este artículo – que es parte de un proyecto mayor – está basado en la asunción de la existencia de una fuerte relación entre los principios y procedimientos de la gestión del riesgo, el gobierno corporativo y la contabilidad. Su objetivo es evaluar cuáles son, en este momento, las aproximaciones teóricas y las soluciones prácticas adoptadas por las compañías para gestionar los riesgos y divulgar a los stakeholders los elementos cualitativos y cuantitativos referentes a este aspecto que son necesarios para evaluar el perfil de la compañía. Este artículo examina los balances anuales consolidados del año 2010 de 25 bancos Italianos y mundiales que cotizan en bolsa desde dos perspectivas distintas: (i) la calidad de la divulgación de los Procesos Internos sobre Riesgos en función de su correspondencia con el marco de buenas prácticas internacionales como se establece en los informes CoSo. (ii) Los instrumentos adoptados en el Proceso de Dirección de Riesgos para valorar la exposición corporativa al riesgo del mercado, concentrándose en el riesgo del Tipo de Interés, el riesgo en materia de Precios y el riesgo del Tipo de Cambio.

Palabras Clave: IFRS 7, Divulgación del Riesgo, Gestión del Riesgo, ERM, Bancos

* Translated by: María Avello. Universidad Complutense de Madrid. [email protected]






51

Arabic version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking


تحليل مقارنة لادارة و كشف المخاطر في قطاع البنوك الممارسات الايطالية مقابل العالمية


Roma TreUniversity, Department of Management and Law, Roma, Italy

[email protected] U - b [email protected] c [email protected] U

ملخص

مبنية على افتراض أهمية العلاقة بين مبادئ ادارة المخاطر -التي تعد جزء من مشروع كبير -هذه الدراسةهدفها هو تقييم الوضع الحالي و الطرق النظرية و الحلول . حوكمة الشركات و المحاسبة, و الاجراءات

و النوعية المتعلقة بهذا البعد العملية المتبناة من قبل الشركات لادارة المخاطر و كشف العناصر الكمية . بالاضافة الى تقييم وضع الشركة

بنك في ايطاليا و العالم في 25من خلال أخذ عينة مكونة من , 2010تدرس الورقة التقرير السنوي لعام أثر جودة الاعلان عن الخطر في العملية الداخلية من حيث مدى اتباعها ) 1: لبحث موضوعين أساسين

الأدوات المستخدمة في ) 2). لجنة المنظمات الراعية( كوسوضل الممارسات العالمية حسب تقرير لنموذج أفالتركيز على الخطر المتعلق بسعر , عملية ادارة المخاطر لتقديم مدى تعرض الشركات لمخاطر السوق

الأسعار و العملة, الفائدة

، ادارة المخاطر، اعلان الخطر، IFRS7يةالمعايير الدولية لإعداد التقارير المال: الكلمات الدالة ، البنوكERM ادارة المخاطر للمؤسسات

* Translated by: Zu’bi M.F.Al-Zu’bi, Ph.D, FHEA, University of Jordan, [email protected]






52

Italian version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking


L’informativa sulle modalità di gestione del rischio nel bilancio. Un’analisi comparativa tra mercato italiano e contesto internazionale nel

settore bancario


Roma Tre University, Department of Management and Law, Roma, Italy Email: [email protected] - [email protected] - [email protected]

Abstract

Il presente lavoro prende le mosse dall’ipotesi dalla, ormai necessaria, esistenza una relazione tra princìpi e modelli per la governance dell’attività di risk management ed informativa contabile presente nei bilanci annuali. In questa prospettiva, l’obiettivo del lavoro è verificare quali fra i modelli teorici possibili per il risk management siano in concreto stati applicati da parte di un campione di aziende bancarie per la gestione dell’esposizione al rischio nell’ambito del governo d’impresa e se le informazioni su di essi fornite nei conti di fine esercizio rispondano al fabbisogno informativo degli stakeholders per la valutazione del profilo di rischio dell’azienda o se i dati riportati consentano solo il rispetto formale dei principi contabili attualmente esistenti in materia di disclosure del rischio (soprattutto finanziario) ma non forniscano una informativa davvero rilevante per il processo decisionale.

Prendendo le mosse dall’esame dei principali documenti informativi esterni per l’esercizio 2010, quali i bilanci consolidati e i documenti ad esso allegati presentati da un campione di banche (che, per loro natura, operano con i rischi finanziari), l’analisi osserva le strategie organizzative di un campione di 25 aziende bancarie quotate, italiane (17) e internazionali (8), focalizzando l’attenzione su due aspetti principali: (i) la corrispondenza dei processi interni adottati in relazione alle best practices internazionali riconducibili al set di principi e procedure indicate nel CoSo Report per la gestione dell’esposizione al rischio, (ii) gli strumenti utilizzati per la valutazione ed il controllo del grado di esposizione ai principali rischi di mercato, quali i rischi di tasso d’interesse, di prezzo e di valuta.

Keywords: IFRS 7, Risk Disclosure, Risk Management, ERM, Banche

*. Translated by: Tutino M., Roma Tre University, Department of Management and Law, Roma, Italy, [email protected]






53

Chinese version* Comparative Analysis of Risk Management and Risk Disclosure in the Banking


对银行业风险管理与风险披露的比较研究：意大利与全球实践的比较



摘要

风险管理的原则和过程、公司治理、会计这三者间有着重要关系，本文——一个大型项目的一部分——就是以这一假设前提为基础的。本文旨在评估，在当前阶段，公司在管理风险，以及向利益相关者披露有关风险和其他评估公司状况所必需的质化和量化信息时所采用的理论路径和实践方案。本文从两个方面考察了25家意大利和全球上市银行的2010年合并年度报告：（1）根据全美反舞弊财务报告委员会发起组织（简称COSO委员会）报告中的全球最佳实践框架，考察内部组织流程风险的披露质量；（2）考察在风险管理流程中，用以评价公司所面临的市场风险，尤其是利率风险、价格风险和货币风险的工具2

。

关键词: 国际财务报告准则（IFRS） 7；风险披露；风险管理；企业风险管理（ERM）、银行

*. Translated by: Jian-Min Sun, Renmin University of China, [email protected]

2 S. Pucci （第3部分、第5部分） ; M. Tutino （第2部分、4.1、4.2、4.3） , E. Marulli （第一部分） , 所有作者： 4.4






54

International New Venture Strategies in Times of Crisis

Empirical Evidence from Service Industries

Mario Glowika and Sławomir Smyczekb

aDepartment of International Management, University of Economics, 40-226 Katowice, Poland, [email protected]

aDepartment of Marketing, Technical University of Applied Sciences, 15745 Wildau,

Brandenburg, Germany, [email protected]

bDepartment of Consumption Research, University of Economics, 40-287 Katowice, Poland, [email protected]

Abstract

The emergence of knowledge and service industries has led to the phenomenon of rapid internationalization of small- and medium-sized firms (Young et al., 2003; Zahra, 2005). The changing pattern of internationalization, especially of young firms, has been discussed in the literature within the framework of ‘international new venture’ (INV) terminology (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005).INV theories claim that rapid internationalization of the firm is initiated by a new and unique business idea. INVs maintain a range of network relationships developed by the entrepreneur, which allow them to compensate for resource disadvantages. While the INV phenomenon is discussed in recent years in light of promising globalized trade patterns and developing technologies (Autio, 2005), little research has investigated how INV firms operate their businesses in times of worldwide economic difficulties. This paper overcomes the current research limitations and presents research results concerning the strategies of five firms operating in the service industry.

Key Words: International new ventures, service industries, economic crisis

Introduction

International new venture (INV) concepts have stimulated the interest of various scholars

from different scientific backgrounds around the world (e.g., Gabrielsson & Gabrielsson, 2011; Hashai & Almor, 2004). Research from such diversified fields as business, management, organization, and social studies attempted to complement the new concepts of internationalization. The complex and dynamic nature of the INV approach reflects the current environments of liberalized worldwide markets. In contrast to traditional internationalization theories (Johanson & Vahlne, 1977), INV concepts claim that internationalization is initiated very soon after the firm’s founding. The firm is established with a new and unique business idea, difficult for others to imitate; and internationalization is often fostered by the firm’s founding





55

and/or operating entrepreneur (McDougall & Oviatt, 2003; Zuchella & Scabini, 2007). Entrepreneurs, because of their global vision, are described as proactive, innovative, and often risk-seeking people who drive their firm towards international business operations (Lopez et al., 2009). The phenomenon of INV has been widely discussed in the literature against the background of improved globalized trade patterns (McGrath, 2002; Rialp-Criado et al., 2002; Samiee, 2006), while INV business strategies during challenging economic times have not yet been studied to a sufficient extent. Furthermore, Rialp-Criado et al. (2002) claim that the research on INV issues usually focuses on the high technology sector, and research findings do not deal with other fields, such as traditional industries or the service sector. This paper attempts to fill these research gaps. Using a multiple case study approach, the major research aim is to analyze how INVs in the service sector operate their international business in times of worldwide economic crisis.

Literature review

Despite numerous contributions to the literature in recent decades, the term INV is still

lacking a precise definition; existing definitions are tautological (Lopez et al., 2009). Considering a few representative authors, Rialp-Criado et al. (2002) use a variety of names, such as INV, born global, and instant international. These terms deal with the same phenomenon and increase the confusion and complexity of the concept. Another drawback is variation in the definitions regarding the time span between the establishment of an INV and its first international sales. Also varying is how much the foreign sales should be contributing to the total sales. Knight and Cavusgil (1996) define born global firms as firms that reach an export sales level of at least 25 percent within the first three years. However, Oviatt and McDougall (1997) define a period of six years as a standard time span, whereas Rennie (1993) claims a period of only two years with 75 percent of revenues coming from exports. When it comes to smaller global firms, the OECD 1997 report, contends that a ‘fully globalized small- and medium-sized enterprise (SME)’ sources the majority of its inputs from abroad, trades a large majority of its outputs across borders, has multiple establishments in all major international regions, and markets its products in all major international regions (Dimitratos et al., 2011).

In this paper, an INV is defined as a firm that starts its international business within three years of establishment, maintains contractual business relations (e.g., export, license, factoring) with foreign partners located in at least three countries, and achieves foreign sales of more than 25 percent of the total INV sales volume within the first three years after the firm’s foundation. Multiple establishments in all major regions (which is part of the OECD definition of an INV) is not appropriate because, from our perspective, this instead serves as one of the criteria that defines a multinational company (MNC) rather than an INV. An INV, particularly at the beginning stage of its business, is confronted with resource drawbacks; thus it typically does not have the necessary resources to make foreign direct investments around the world. From here, the theoretical INV discussion is expanded to include the resource based view (RBV) and the international network approach (INA). The INV discussions in the 1990s had their theoretical origin both in the RBV and the INA (Axelsson & Easton, 1992). The RBV claims that competitive advantages are particularly derived from the firm’s ‘inner resources’, i.e., financial, managerial, organizational, technological, and so on (Penrose, 1995; Wernerfelt, 1984). According to Barney (1991), a firm’s resources should be valuable, rare, and difficult for competitors to imitate in order to gain a sustained competitive advantage. Here we find the


56

connection between the RBV and the INV model. According to Oviatt and McDougall (1994; 2005) an INV usually has fewer conventional resource assets. A unique idea, on the other hand, compensates for this disadvantage. This goes hand in hand with proactive opportunity seeking of the firms’ founding entrepreneur for this unique idea (Mathews & Zander, 2007). The INV’s entrepreneur actively develops the process from idea generation to the implementation of concrete business concepts in the global markets. Knowledge intensive, difficult to codify, and, therefore, valuable resources remain rare, directly by means of protections, such as patents and license agreements, and indirectly through the development of personal relationships in industry networks. In comparison to mature organizations, INVs focus on less costly (hierarchical) governance mechanisms (Kogut & Zander, 1993). The non-hierarchical, rather personal atmosphere supports the development of relationships within networks of foreign firms, which provide foreign location advantages.

To further elaborate on the theoretical connections of the INV, the RBV is associated with the INA, which holds that a firm acquires competitive advantage not simply as a function of its industrial location, such as its position in the value chain within a certain industry, but also from its relationship to other firms since all of them are embedded in an industry cluster (Johanson & Mattsson, 1992; Johanson & Vahlne, 2011). Successful INVs have the capability to absorb and integrate valuable external resources, such as knowledge about foreign markets, through relationships (Fahy, 2002; Mathews, 2002). Because of a lack of previous or fixed routines in entering foreign markets, INVs combine their own resource disadvantages with the potential of other partners through network relationship activities (Sharma & Blomstermo, 2003). In light of the discussion above, we expect that knowledge-based resources fostered by an entrepreneur embedded in networks provide valuable assets for an INV, not only in general, but particularly in times of economic crisis.

Procedures for data collection

Birkinshaw et al. (2011) recommended that qualitative research follow a four step

approach that contains decisions regarding (1) the research topic, which should be new or under-researched; (2) research methodology; (3) data and transparency of methods; and (4) a theory that properly serves the research aim.

(1) Research topic We believe that the INV topic is discussed in the literature mainly in light of positive outcomes of worldwide liberalized trade and capital patterns (Dimitratos et al., 2011; Zahra, 2005). The INV literature lacks a discussion against the background of difficult economic times; this paper aims to explore and describe insights regarding INV strategies in times of crisis. (2) Methodology Because little research has been done on this topic, survey variables that deliver statistically robust indices are not adequately available at present (Creswell, 2009; Mahoney & Goertz, 2006). The exploratory character of the research suggests a multiple in-depth case study method, which provides more representative evidence than a case study of a single firm (Eisenhardt, 1989; Eisenhardt & Graebner, 2007). In the research, the ‘pattern matching’ and ‘replication logic’ methodology is utilized in order to systematize major research outcomes that help to


57

explain how the INV firms selected for this research develop their strategies in the service industry in times of worldwide economic crisis (Piekkari et al., 2009; Yin, 2009). (3) Data and transparency of methods The data sourcing process for multiple firm case studies follows the principles of criterion sampling. Criterion sampling involves the selection of cases that meet a set of a priori criteria important to the research (Dimitratos et al., 2011). In this project, the investigated firms had to (1) operate in the service industry, (2) have started their international business within three years after inception, (3) maintain contractual business relations with foreign partners located in at least three countries, and (4) have recorded a foreign business ratio of a minimum of 25 percent of the total business volume. Service includes those industries and companies typically classified within the service sector, whose core product is a service. Firms are considered to be pure service companies when doing business, for example, in industries such as trading, education, product design, and engineering (Wilson et al., 2008).

In 2010, contact details for service firms that indicated interest in participating in the study were provided by the local chambers of commerce in Berlin and Brandenburg, Germany. In the second step, 143 firms were contacted and 101 expressed interest in the project. Finally, only twenty firms met the INV criteria for this research. Among them, fifteen firms operate in manufacturing industries. Five firms doing international business in the service sector remained and were selected for the case study. The sample of five firms located in the Berlin-Brandenburg region in Germany seems relatively small but reasonable considering the selection standards (e.g., the firm is engaged in service business and internationalized within three years) and the fact that the research topic (INV strategies in times of crisis) is relatively new and under researched so far. Eisenhardt (1989) recommended at least four cases for multiple case study research. Thus the sample meets that recommendation.

First, secondary material such as each company’s history, business fields, and so on were collected and evaluated. In the second step, personal interviews with representatives of each firm were prepared and face-to-face meetings were scheduled. We designed semi-structured interviews that would allow time for storytelling by interviewees, as well as responses to specific questions, for example concerning the outcomes of the worldwide financial and economic crisis (Gerring, 2007). Interviewee answers on closed questions are recorded in a seven-point, Likert-type scale ranging from -3 (e.g., financial crisis has absolutely no impact on our business) to +3 (e.g., economic crisis has a very strong impact on our business) (Peterson, 2004). To obtain the most representative picture, we interviewed ‘rank-and-file’ employees, such as marketing and operating sales staff in the organization, and not just the founding entrepreneurs and executive managers (De Geer et al., 2004). All-in-all, nine interviews in five firms operating in the service sector were conducted during the first half of 2011. In four firms, two interviewees each were consulted. In one firm, due to its very small company size, one interview was procured with the founding entrepreneur who simultaneously represents the operating, marketing and sales management. Each of the nine face-to-face interviews lasted between one and one and a half hour.

(4) Theory and research aim Replication logic procedures assume a fundamental theoretical framework for research (Yin, 2009). The RBV and the INA are selected for this study since we believe they serve well as a theoretical framework for approaching the research target. The major research aim of this paper


58

is to describe valuable resource assets, and in connection with these resources, the importance of the industry network relationships of INVs in the context of a worldwide economic crisis. Moreover, the paper targets to identify INV strategies in times of economic crisis.

Discussion

In order to utilize replication logic in multiple case studies, each case must be carefully selected so that it either (a) predicts similar results or (b) predicts contrasting results for reasons that can be anticipated (Yin, 2009). In this study, only INV firms are investigated that are engaged in the service industry and are located in the Berlin-Brandenburg region in Germany. Moreover, in order to secure the most applicable replication logic standards, only firms that fall into the category of small- and medium-sized companies, according to the selection criteria ‘number of employees’ and ‘turnover’, are considered for this research (European Commission, 2006). Thus, according to Yin (2009), this study is designed to predict similar results. Table 1 displays an overview of the firms selected for the study. Table 1. Classification of firms selected for multiple case study ________________________________________________________________ Firm case Service industry Turnover in € Employees International Foreign million (2010) (2010) business start markets _________________________________________________________________ A Trading < 2 < 10 1≤ 3 years 3

_____________________________________________________________________________

B Training 2 ≤ 10 10-50 < 1 year 100

____________________________________________________________________________

C Product Design 2 ≤ 10 10-50 < 1 year 26

_____________________________________________________________________________

D Engineering 10 ≤ 50 51-250 <1 year 15

_____________________________________________________________________________

E Engineering < 2 < 10 < 1 year 12

_____________________________________________________________________________

The sample indicates that four out of five firms started their international business within one year, and one firm within three years after the firm’s foundation. The entire sample has its origin in the service industry; two firms are engaged in engineering, one firm provides training and coaching service, one is a trading firm, and one provides product design service. According to the sample median, fifteen foreign markets are served.

Research outcomes indicate that, in general, the economic crisis has only a moderate impact on the international business of the five INV firms studied. Nevertheless, the standard deviation is relatively large, which provides evidence that firm interviewees evaluate the impact of the financial crisis on their firm’s international business quite differently (median 5.00, SD 1.517). A more homogeneous view concerns the entrepreneur’s role in driving the international business. The sample outcomes indicate that the founding entrepreneur, her/his global vision, and her/his international experience play a very important role in times of crisis (median 6.00/


59

SD 0.548). Our research results verify previous studies that highlight the proactive behavior of the leading entrepreneur who promotes international business (Young et al., 2003; Zahra et al., 2005). Table 2 provides the summary of research outcomes concerning the impact of the financial crisis on the firm’s business, the role of the entrepreneur, and the evaluation of strategy performance.

Table 2. Impact of economic crisis, the influence of founding entrepreneur, and strategy performance ________________________________________________________________________________

Interview Question Sample Median * SD** Min Max (n=5 cases) ________________________________________________________________________________

What is the impact of the economic crisis on the firm’s international business? 5.00 1.517 2 6 ________________________________________________________________________________

Does the founding entrepreneur drive the firm’s international business? 6.00 0.548 6 7 ________________________________________________________________________________

How do you evaluate the performance of the firm’s international strategies in times of crisis? 5.00 0.894 5 7 ________________________________________________________________________________

* Based on an ordinal, seven-point Likert-scale; ** SD=Standard deviation

We call ‘impact of economic crisis’ as subject A, ‘role of founding entrepreneur’ as subject B, and ‘performance of international strategies’ as subject C. In a next step, the sample medians above, concerning subject A, B, and C, are verified in light of interviewee responses.

Concerning subject A, interview questions designed in an ‘open style’ delivered, among others, the following comments. [Sales Manager, Firm B]

The impact of the economic crisis is rather positive for us, so far, because many firms need to save costs. So they try to increase their efficiency, for example in product development. Here we take advantage of our services through our specific software development expertise. I think the time factor (time to market response) becomes more and more important for each firm.

[Sales Manager, Firm A] Cost pressures lead to declining margins. As a specialized trading company, we have some valuable information in order to procure materials for our customers at reasonable costs, time, and quality. Our customers appreciate this knowledge, especially in turbulent times. In contrast to the experience of several large multinationals, the economic crisis seems to

provide more opportunities than risks for innovative and small-sized INVs according to the sample.

Regarding the role of the founding entrepreneur (subject B) as a driving force in international business in challenging times, interviewees responded as follows.

[Engineer, Firm D] Our CEO has extensive international experience, and he is very active internationally. I think we benefit enormously from his accelerating internationalization activities. In particular, we see the ongoing exchange of research know-how with our partners as very beneficial to us.


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[Product Designer, Firm C] Our founder is actively engaged in foreign business. Trustworthy partners who are integrated into their own strong networks are very important for our business success, particularly in times of crisis.

[Founding Entrepreneur, Firm E] The key to being able to survive in difficult times is trustworthy and reliable partners.

These comments reflect the crucial need for a proactive, opportunity-seeking entrepreneur to lead the young firm. The proactive entrepreneur drives the firm to seek upcoming opportunities instead of traditional business concepts, regardless of whether the firm operates in promising or difficult economic times. The entrepreneur’s international experience combined with highly specialized industry expertise and stable relationships with trustworthy partners provide favorable resource assets for the INV. Concerning INV strategies in times of crisis (subject C) the interviewees reviewed their firm’s international strategy performance as quoted below.

[Sales Staff, Firm B] In order to save time, our customers increasingly transfer product development activities to us because they know we are experts in that specific niche.

[Sales Manager, Firm A] It is not desirable to serve too many markets at once. It is better to concentrate on a few, but promising, countries. It is more important to focus on a particular market niche in order not to lose track. Under these circumstances, we can maintain much better personal relationships, which are very important in times of crisis.

[Founding Entrepreneur, Firm D] Our company, since its founding, has had an international focus. Our specific test equipment is very expensive. Customers use our services because they rely on our highly specialized industry expertise. They also save the cost of test instruments, which is a strong argument for our customers because they need to procure such tests only every few years.

Key ideas from the interviewees above emphasize the importance of industry expertise and highly specialized know-how, which provides faster market response and efficient cost structures for their customers. Consequently, successful INVs concentrate on niche markets and their differentiation strategies are built on specific engineering and market research knowledge which is valuable, rare and difficult to imitate for others in the global markets (Barney, 1991).Niche markets provide better prerequisites for higher efficiency because of customer word-of-mouth communication than resource intensive marketing strategies in mass markets. Network relationships obviously can be better fostered in relatively small market niches than in complex mass markets with highly standardized products. Service driven, sophisticated industry expertise in niche markets with narrowly knit relationship patterns provides effective protection mechanisms against economic downturns.

Academic and managerial implications

As explained in the ‘data and transparency of methods’ section above, out of 143 firms

which we have contacted, only five service firms doing international business met the INV criteria as defined for this study. In general, we can state that these five firms, which participated in this research project, evaluate the current economic crisis rather as an opportunity than as a risk for their business. Within the course of study we obviously selected successful INVs which was not our intention and not defined as a sampling criterion. Thus, our research outcomes


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deliver evidence concerning successful service industry performers doing international business but does not provide information about less successful INV service firms.

Considering this bias, the outcomes of multiple-case research provide implications for both academic literature on INVs and pragmatic business executives. First, our study of successful INV firms doing business in the service industry indicates the crucial role of an opportunity-seeking entrepreneur with international experience who fosters and maintains international network relationships (Dimitratos et al., 2011). Second, the study contributes to the network concept, which emphasizes the value of trustworthy relationships, particularly in niche markets, in order to gain competitive advantage (Sharma & Blomstermo, 2003). Interviewees emphasized that intense dyadic relationship engagements provide stable and reliable sales channels, which are of vital importance for competitive survival, in challenging economic times. Highly specified services are based on intensive market research in order to explore promising market niches. Profound market knowledge, ideally combined with outstanding technological industry expertise, provides valuable resource assets for an INV. Therefore, the implementation of differentiation strategies (Porter, 2004) in selected niche markets, rather than serving mass markets is of vital importance for INVs. Differentiation is developed mainly through access to specific knowledge (e.g., development of highly specified technological expertise). Niche markets provide better prerequisites for customer mouth-to-mouth communication than volume markets which allow less financial resource allocation for advertisement.

As a result of our research outcomes we claim that an economic crisis should be seen as an opportunity for young and innovative firms because entrenched market structures, often controlled by market incumbents, tend to change in turbulent times. In difficult economic times, firms seek to increase their efficiency, particularly through outsourcing product tests, procurement activities, product engineering, and product design developments, as well as by educating their employees. This provides various opportunities for new and promising service business fields to be filled by young, flexible, and innovative firms, which serve as specialists in their niche markets.

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International New Venture Strategies in Times of Crisis

Empirical Evidence from Service Industries


aDepartment of International Management, University of Economics, 40-226 Katowice, Poland, [email protected]

aDepartment of Marketing, Technical University of Applied Sciences, 15745 Wildau,

Brandenburg, Germany, [email protected]

bDepartment of Consumption Research, University of Economics, 40-287 Katowice, Poland, [email protected]

Abstract

The emergence of knowledge and service industries has led to the phenomenon of rapid internationalization of small- and medium-sized firms (Young et al., 2003; Zahra, 2005). The changing pattern of internationalization, especially of young firms, has been discussed in the literature within the framework of‘international new venture’ (INV) terminology (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005). INV theories claim that rapid internationalization of the firm is initiated by a new and unique business idea. INVs maintain a range of network relationships developed by the entrepreneur, which allow them to compensate for resource disadvantages. While the INV phenomenon is discussed in recent years in light of promising globalized trade patterns and developing technologies (Autio, 2005), little research has investigated how INV firms operate their businesses in times of worldwide economic difficulties. This paper overcomes the current research limitations and presents research results concerning the strategies of five firms operating in the service industry. Key Words: International new ventures, service industries, economic crisis





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French version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

Stratégies des nouvelles entreprises internationales en temps de crise: Données

empiriques provenant des industries de service


aDepartment of International Management,

bDepartment of Consumption Research, [email protected]

University of Economics, 40-287 Katowice, Poland, [email protected]

aDepartment of Marketing, Technical University of Applied Sciences, 15745 Wildau, Brandenburg, Germany, [email protected]

Résumé

L'émergence des industries du savoir et de service a conduit au phénomène d'une internationalisation rapide des petites et moyennes entreprises dans ce secteur (Young et al, 2003; Zahra, 2005). Le changement du modèle d'internationalisation, en particulier des jeunes entreprises, a été discuté dans la littérature, dans le cadre de la terminologie « nouvelle entreprise internationale » (Chetty & Blankenburg Holm, 2000; Jones et Coviello, 2005). Ces théories avancent que l'internationalisation rapide des entreprises est initiée par une idée nouvelle et unique. Les « nouvelles entreprises internationales » maintiennent un ensemble de relations de réseau, qui sont développées par l'entrepreneur, ce qui leur permet de compenser les désavantages de ressources. Bien que le phénomène des « nouvelles entreprises internationales » ait été discuté ces dernières années, notamment à la lumière de la structure d'échanges commerciaux mondialisés et du développement de technologies nouvelles (Autio, 2005), peu de recherches ont étudié la façon dont les « nouvelles entreprises internationales » exercent leurs activités en période de difficultés économiques mondiales. Cette contribution permet de dépasser les limites des recherches actuelles et présente les résultats d'une recherche sur les stratégies de cinq entreprises opérant dans le secteur des services.

Mots-clés: les nouvelles entreprises internationales, industries de service, crise économique

* Translated by: Johannes Schaaper, Senior professor in International Management, BEM Bordeaux Management School





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German version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

Internationale New Venture-Strategien in Krisenzeiten – Eine empirische Untersuchung

für die Serviceindustrie






Zusammenfassung

Das Aufkommen der Wissens- und Serviceindustrie hat zu dem Phänomen geführt, dass KMU vermehrt zügig internationalisieren (Young et al. 2003, Zahra, 2005). Die unterschiedlichen Muster der Internationalisierung, insbesondere bei jungen Unternehmen, werden in der Literatur im Rahmenwerk der „International new ventures“-Terminologie (INV) diskutiert (Chetty&Blankenburg Holm, 2000; Jones &Coviello, 2005). INV-Theorienzeigen, dass die Internationalisierung von Unternehmen häufig durch eine neue und innovative Geschäftsidee initiiert werden. INV agieren in unterschiedlichen Netzwerken, die durch den Gründer bzw. Inhaber aufgebaut wurden und kompensieren eventuelle Ressourcennachteile. Während das INW-Phänomen in den vergangenen Jahren vor dem Hintergrund aussichtsreicher Ansatzoptionen und entwickelter Technologien betrachtet wurde (Autio, 2005), haben nur wenige Studien das Verhalten von INVs in wirtschaftlichen Krisenzeiten untersucht. Die vorliegende Untersuchung erweitert die Limitierungen bestehender Studien und stellt Ergebnisse vor, die die Strategie von fünf Unternehmen aus der Serviceindustrie repräsentieren.

Keywords: Internationale New Ventures, Serviceindustrie, Wirtschaftskrise







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Spanish version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

Estrategias de las Nuevas Empresas Internacionales en Tiempos de Crisis

Evidencia Empírica Del Sector Servicios






Resumen

El surgimiento de las industrias del conocimiento y de servicios ha dado lugar al fenómeno de la rápida internacionalización de pequeñas y medianas empresas (Young et al., 2003; Zahra, 2005).

El cambio en el patrón de internacionalización, especialmente de empresas jóvenes, se ha discutido en la literatura en el marco de las ‘Nuevas Empresas Internacionales” (international new venture o INV) (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005).

Las teorías INV propugnan que la rápida internacionalización de la empresa se inicia con una idea de negocio nueva y única.Las nuevas empresas internacionales mantienen una red de relaciones desarrolladas por el emprendedor que les permiten compensar sus desventajas de recursos. Si bien el fenómeno de las nuevas empresas internacionales ha sido discutido en los últimos años a la luz de prometedores modelos de comercio globalizado y tecnologías en desarrollo (Autio,2005), pocos estudios han investigado cómo las nuevas empresas internacionales operan sus negociones en tiempos de dificultades económicas mundiales.

Este trabajo supera las actuales limitaciones de investigación en este terreno y presenta resultados sobre las estrategias de cinco empresas que operan en la industria de servicios

Palabras Clave: Nuevas Empresas Internacionales, Sector Servicios, Crisis Económica







69

Arabic version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

الاستراتيجيات الدولية للمشاريع الجديدة في أوقات الأزماتقطاع الخدماتمن أدلة تجريبية


aDepartment of International Management, [email protected]

bDepartment of Consumption Research, U [email protected] University of Economics, 40-287 Katowice, Poland,


ملخص

Young et(. أدى استحداث قطاع المعرفة والخدمات الى سعي الشركات الصغيرة و المتوسطة الى الدوليةal., 2003 Zahra, 2005( نوقش في الأدب المتعلق ب , التغير في الأنماط الدولية خصوصا للشركات الصغيرة

. )INV) (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005(" المشاريع الدولية الحديثة" تتيح .تقوم الشركات على مبدأ الأعمال الجديدة و الفريدة من نوعها, حسب نظريات المشاريع الدولية

التي تمكنهم من تعويض , المشاريع الدولية الحديثة المحافظة على شبكات العلاقات المقامة بين الريادينة و دراسة ظاهرة المشاريع الدولية الحديثة في السنوات الأخيرة بالرغم من مناقش. السلبيات المتعلقة بالموارد

هناك القليل من الأبحاث ناقشت . )Autio, 2005(. على ضوء أنماط التجارة العالمية و تطوير التكنولوجيا . كيفية ادارة و تشغيل المشاريع الدولية الحديثة في الأوقات الاقتصادية الصعبة

وز محددات الأبحاث الاخرى و عرض النتائج البحثية المتعلقة باستراتيجيات تسعى هذه الدراسة الى تجا .الشركات الخمسة العاملة في قطاع الخدمات

.المشاريع الدولية الحديثة، الصناعات الخدمية، الأزمات الاقتصادية :الكلمات الدالة







70

Italian version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

Strategie di imprese emergenti come Nuova Imprenditoria internazionale in tempi di crisi.

Dati e informazioni empiriche dall’industria dei servizi


aDepartment of International Management, bDepartment of Consumption Research,

[email protected]



Abstract

L’emergere di un’industria del sapere e dei servizi ha sviluppato il fenomeno della rapida internazionalizzazione di piccole e medie aziende (Young et al., 2003; Zahra, 2005). Uno nuovo schema di internazionalizzazione, specialmente per giovani imprese, è stato discusso nella letteratura di settore nel contesto della nuova imprenditoria internazionale con la terminologia INV (Chetty&Blankenburg Holm, 2000; Jones &Coviello, 2005). Le teorie dell’INV affermano che la rapida internazionalizzazione di imprese ha generato nuove idee imprenditoriali. INV hanno un network di relazioni dell’imprenditore che compensa lo svantaggio nella disponibilità di risorse. Nel mentro che il fenomeno INV è stato discusso nel corso degli ultimi anni alla luce di trend positivi di globalizzazione e di sviluppo di tecnologie (Autio, 2005), è stata fatta poca ricerca su come agiscano le imprese INV in periodi crisi econmica globale. Questo studio va oltre le attuali limitazioni della ricerca sul tema e presenta le strategie di cinque imprese che operano nel settore dei servizi.

Keywords: Nuova Imprenditoria Internazionale, industria dei servizi, crisi economica







71

Chinese version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

危机时期的国际新创企业战略：服务业的实证证据






摘要

知识与服务行业的逐步发展使中小企业迅速走向国际化（ Young et al., 2003; Zahra, 2005）。属于“国际新际企际（INV）”研究框架下的文献际际了际于际化之中的国际化模式，尤其是年际企际的国际化模式（Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005）。有关国际新创企业的理论指出，新颖而独特的商业理念会促使企业快速国际化。国际新创企业会维系创业者开发的一系列关系网，这能弥补它们在资源上的劣势。近年来，有学者从前景广阔的全球化贸易模式和技术开发的视角对国际新创企业进行了讨论（Autio, 2005），然而，几乎没有研究关注国际新创企业如何在全球经济困境中运营。本文报告了关于五家服务业企业战略的研究结果，克服了已有研究的局限。

关键词: 国际新创企业；服务业；经济危机

*. Translated by: Jian-Min Sun & Wei Si, Renmin University of China, [email protected]






72

Polish version* International New Venture Strategies in Times of Crisis: Empirical Evidence from

Service Industries

Strategie International New Venture w okresie krysu.

Wyniki badań w sektorze usług

Mario Glowik a and Sławomir Smyczek b

a Department of International Management, University of Economics in Katowice,

Poland, [email protected] a Department of Marketing, Technical University of Applied Sciences, 15745 Wildau,

Brandenburg, Germany, [email protected] b Department of Consumption Research, University of Economics,

40-287 Katowice, Poland, [email protected]

Abstrakt

Połączenie wiedzy i sektora usług doprowadziło do szybkiej internacjonalizacji małych i średnich przedsiębiorstw (Young et al, 2003;. Zahra, 2005). Zmiana sposobów internacjonalizacji, zwłaszcza firm krótko działających na rynku, prezentowane są w literaturze przedmiotu w ramach "International new ventures " (INV) (Chetty & Blankenburg Holm, 2000; Jones & Coviello, 2005). W teorii INV twierdzi się, że szybkie umiędzynarodowienie firmy jest inicjowane przez nowy i niepowtarzalny pomysł na biznes. W INV zakłada się, że szerokie relacje sieciowe stworzone przez przedsiębiorstwa pozwalają im zrekompensować braki w zasobach. Obecnie zjawisko INV jest szeroko prezentowane w literaturze, w szczególności z zakresu globalizacji handlu i rozwoju technologii (Autio, 2005). Jednak niewiele miejsca poświęca się problemowi jak firmy INV prowadzą swoją działalność w czasach globalnego kryzysu gospodarczego. Opracowanie to przedstawia wyniki badań bezpośrednich dotyczących strategii umiędzynarodowienia pięciu firm działających w sektorze usług.

Słowa kluczowe: International new ventures, sektor usług, kryzys gospodarczy

*. Translated by: Slawomir Smyczek, University of Economics in Katowice, [email protected]




73

Neuroscience Reveals the Whole-Brain State and Its Applications for International Business

and Sustainable Success

Jeffrey L. Fannin, a and Robert M. Williams,b

a Center for Cognitive Enhancement, Glendale, AZ 85308 [email protected]

b The Myrddin Corporation, Crestone, CO 81131-0548 [email protected]

Abstract

At first glance, neuroscience and business may seem an odd juxtaposition. However, the neuroscience of consciousness provides some understanding of the interrelatedness of subconscious belief patterns that drive behaviour and affect optimal decisions by business leaders, as well as overall performance in business. Our thoughts and beliefs, i.e. our mindsets, drive our actions and create the results we are getting. This paper presents research that clearly links the mind/brain interface, presenting empirical evidence of what the authors identify as the Whole-Brain State (a bi-lateral, symmetrical brain wave pattern) and why it is fundamental to achieving sustainable success and the implications it has on international business. This paper will offer insights into one of the most important issues addressed in this writing; that is, the misalignment of the principles of business with the Principles of Nature, resulting in potentially catastrophic consequences for the economy, the ecology, individuals, businesses, and the planet [1]. This research also identifies and explores the process of changing subconscious beliefs.

Keywords: EEG, subconscious, leadership, business, nature, principles, beliefs

The authors of this paper offer a word of warning, that the level of scientific depth presented here may be more information than some readers care to navigate. If the waters of the science get too deep, feel free to float gently to the Summary at the end of the paper, which will provide sufficient understanding regarding our conclusions, without having to paddle your way through the scientific details.

Introduction

Our research gathered and documented one hundred twenty-five (125) cases, over 12 months in three different locations, utilizing different EEG technicians, using two different types of EEG equipment; the result of this investigation produced a p-value of <=0.010.

To better understand the scientific significance of this report, knowledge of the relevance of p-value will help to put this research into perspective. In statistical significance testing, the p-value is the probability of obtaining a test statistic at least as extreme as the one that was actually observed. When the result falls at 0.05 or 0.01, it is said to be statistically significant. In the case



http://en.wikipedia.org/wiki/Test_statistic�


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of the Fannin-Williams research, a very high degree of statistical significance occurred: <=0.010. This indicates that the relationship between the two phenomena explored in the research is highly significant with less than a 1% possibility of being related to chance.

The authors of this paper offer a point of view based on new research in biology and human consciousness. For example, the emerging field of epigenetics is fast replacing the older concept of genetics. It is apparent from the failure of the genome project that genes do not possess self-emergent properties that cause the genes to express potentialities originating in the brain. Instead, it is the epigenetic signals (signals above the genes) that trigger such events [2]. Analogously, the authors are suggesting that activity in the brain is largely triggered by epigenetic signals (signals outside of the brain, e.g. mind/consciousness field), creating subsequent biochemical and physiological responses. The essence of this new hypothesis is incorporated in this paper, and constitutes what the authors call the mind/brain interface.

We suggest that the data from our own studies and the research of others show that it is our thoughts and beliefs that drive our actions and create the outcomes we get. By changing our conscious thoughts and subconscious beliefs, we facilitate changes in our behaviours and consequently in the results we experience.

Some conventional thinking would suggest that changing brainwave patterns that affect subconscious processing is a lengthy process and occurs slowly over time. This paper offers data that suggest that the brain has the ability to reorganize brainwave energy, creating the Whole-Brain State, and thus allow for more optimal performance of subconscious belief patterns. This phenomenon has great importance to the principles of international business, leadership and creating sustainable success. The research further suggests that the process is not lengthy, nor complex.

Once the possibility and practicality of changing our subconscious beliefs is established, it becomes clear that we are no longer trapped by the automatic mindsets of our past experiences, which often drive self-limiting and self-defeating behaviour. Instead, we are free to change our perceptions and beliefs in order to create new mindsets and behaviour that will generate new results in our business and personal lives. Freed from the limitations of past “programming,” we are able to move to a higher order of consideration of what is worth changing, in order to create sustainable success, both personally and professionally.

As we become more educated about the difference between the conscious and subconscious minds, with emphasis on the subconscious, we realize the importance of recent research that reveals that at least 95% of our thoughts and behaviour originate at the subconscious level of the mind [3].

The authors of this paper crossed paths in January of 2010, bringing together a mutual interest in human performance and a shared scientific curiosity about human consciousness. The opportunity to scientifically test the authors’ hypothesis in a controlled environment, utilizing a subconscious belief change process already available worldwide, presented itself when the neuroscientific technology was available to do so. Both authors were surprised, as well as pleased and encouraged with the results, and what those results may mean for the collaboration of neuroscience and business, now and in the future. As a society we are facing many difficult challenges in the world today, e.g. political, ecological, social, and economic. The authors believe that, used properly, this collaboration between business and neuroscience can help individuals develop creatively different solutions to many of these challenges.

The current nature of business on a global scale, demonstrates the unprecedented challenges and undesirable consequences that many companies face, bringing into question the


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very survival of current business principles and practices, as well as the belief systems that drive them. Regrettably, fear and avarice are too often primary driving forces in business, and if unaddressed, will virtually ensure the destruction of our global economy. Ignorance of the complexity and interdependency of our environment virtually ensures the destruction of our global ecology. Both are potentially lethal to our entire civilization. The basic solution to this problem was succinctly stated by business leader, Peter Senge [4] when he said, “It’s not about doing what we are doing more efficiently. It’s about doing something different.”

"Humans now dominate Earth, changing it in ways that threaten its ability to sustain us and other species,"[5, p. 740]. It seems that for decades, business practices from around the world have brought us to this critical point in history. We stand on the brink of an unsustainable future, desperately hoping that things will get better. If we are to avoid this unstable and destructive future, we must heed the words of business visionaries such as Peter Senge when he says, …we must do something different. This paper and the research associated with this writing offer the argument that, in the main, business principles and practices are misaligned with those needed to create sustainable success, and only a significantly visionary realignment will create something different.

The kind of research in this writing might well be important and useful in providing a greater understanding of how to implement processes oriented toward integrating thought and behaviour patterns applied to leadership and management, as well as the fundamental structure of business principles and practices.

Our very existence, as well as the existence of this planet, is made possible and sustained by the underlying intelligent design of nature’s principles. Nature has millions of years of experience in creating sustainable success. In fact, nature may be the best “business consultant” any business could ever have, if only we are willing to follow her principles. Humanity’s presence here is testimony to the wisdom and practical application of those principles. Some of the most salient Principles of Nature include adaptability, resiliency, harmony, balance, collaboration, growth management, diversity, and more [1]. These principles are applicable to business and our personal lives, although sadly they are frequently lacking in both.

This paper presents research that clearly links the mind/brain interface, presenting empirical evidence of what is identified by the authors as the Whole-Brain State (a bi-lateral, symmetrical brain wave pattern). It also provides insight into how subconscious belief patterns affect our behaviour and control the outcome of such behaviour in our life. Subconscious belief patterns circumscribe our perception and drive our behaviours. By knowing how to change perception at the subconscious level of the mind, we can transform subconscious belief patterns. Brainwave energy can now be depicted in a manner that scientifically shows the creation of the Whole-Brain State. Practical applications of changing subconscious belief patterns, using the processes presented in this paper, have existed for over two decades; today we can measure them and graphically demonstrate their efficacy, leading to further understanding and utilization of this important aspect of human existence, in virtually all walks of life.

Default Network of the Brain

In recent years, a series of papers presented insights derived from QEEG (quantitative electroencephalogram) investigations, into the operation of a more efficient default network in effective vs. less effective leaders.

The understanding and acceptance of the existence of the brain’s default network has helped us better understand that there are regions of the brain characterized by decreased neural


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activity during goal-oriented tasks. We have come to know the relationship of these regions as a ‘‘default mode’’ of brain function. Studies suggest that the brain’s default mode supports self-referential mental activity. To quote Marcus E. Raichle, whose research group in 2001 first identified the default mode network “When healthy people engage in a very focused activity, they in a sense, lose themselves. If you really are engaged in something, you kind of forget yourself, and that loss of self corresponds to the deactivation we observe in brain scans of the default network” [6, p. 1944].

In a follow up fMRI study, Raichle and colleagues identified a group of individuals whose brain images indicated that they were unable to "lose themselves" in work, music, exercise or other activities that enable most healthy people to get "outside" of themselves, and interestingly, it turned out that these were highly stressed, depressed individuals, people whose emotions and thinking maladaptively colored their response to their environment, the task at hand, or the people around them as denoted by Sheline [7]. So, perhaps Raichle’s results give us a hint regarding the significance of the more efficient default mode network in the QEEG leadership study. Simply put, the ability to maintain effective relationships with others begins with a healthy relationship with self; with a healthy relationship to thoughts, beliefs and emotions, which subconsciously influence our own behaviour and judgment, see Figure 1.

Figure 1: Default mode network illustrated in blue. Note high degree of overlap with additional colored regions reflecting maladaptive sustained activation during task in depressed individuals. Free via Open Access: OA. [8]

The literature related to the default network indicates brain activity that offers an awareness of the autobiographical self, stimulus independent thought, mentalizing, and most recently self-projection. Damien Fair explains that these regions integrate into a cohesive, interconnected network [9].


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Fair and his group of researchers consider the default network as a functionally interconnected default system that is required for internally directed mental activity. They explain that it stands to reason that the default system should demonstrate a mature, or near mature, pattern of functional connectivity at a time in development when internally directed mental activity is demonstrable [9]. We would contend that the research they present regarding the autobiographical self, stimulus independent thought, mentalizing, and self-projection is another way of describing subconscious beliefs, and their potential impact on a leader’s way of relating to others.

Emotional Engagement and Subconscious Thought

Dr. Fannin’s involvement in the investigation of neuroscience and business began in 2001as a member of a research team at Arizona State University. Their work included research related to neuroscience and leadership done at the United States Military Academy at West Point. This research established an undeniable connection between neuroscience and business. This work yielded evidence that successful leaders, whether military or civilian, used their brains differently than less effective leaders, and was featured in a September 20, 2007 article (This Is Your Brain on the Job) that appeared in the Wall Street Journal. Many other articles followed, appearing in national and international publications. Previous work by the Arizona State University group also included insights into the crucial role which engagement of right hemisphere empathetic networks plays in effective leadership. In a subsequent study involving 46 senior leaders, those who scored highest for their charismatic, visionary and socialized communication style demonstrated increased engagement of right frontal networks, suggesting a capacity to engage empathically in motivating their workgroup [10]. The authors of this paper offer new research and insights, along with an effective applied leadership process called PER-K®, to change subconscious beliefs.

This most recent work assists us in understanding the internal mechanisms that enable some people to be effective leaders and lends further support to the idea that neuroscience will help us to know how some people can form effective leadership relationships, and why some people can sustain their effectiveness, while others cannot.

Figures 2&3 adapted from Emotional Intelligence: Toward Clarification of a Concept. [13]

Figure 2: Anterior Cingulate Cortex Figure 3: Amygdala


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The basis for understanding why we feel a particular way is centered in the relationship between the anterior cingulate cortex (ACC), see Figure 2, and the amygdala, see Figure 3 [11]. The amygdala, usually thought of as a fear detector, also detects all other emotions. It lights up to fear because it processes emotions in order of their significance. So when fear is the most significant emotion in the brain, the amygdala will light up [12]. When fear is the most dominant emotion in your thinking, it taxes the subconscious mind, which does most of the fast processing of information.

For example, if an entrepreneur who left a secure job to pursue her dreams started to read statistics about how unlikely it was to be a successful entrepreneur, the amygdala would have been activated, making her more anxious. As a result, her subconscious fears would be spinning even when she was thinking about other things. Scientific experiments found that when fearful facial expressions were shown so that people did not consciously know they had seen them, the amygdala was still activated [14, 15, 16].

Figures 4&5 adapted from Emotional Intelligence: Toward Clarification of a Concept. [17]

The amygdala is connected to multiple brain regions. One of those regions is the frontal

lobe, where many important (business) decisions are processed. If the amygdala, see Figure 5, is activated, the activation affects various regions in the frontal lobe, particularly the prefrontal cortex (PFC), see Figure 4, and thereafter affects decision-making, as well as emotional centers. We can recognize that we are vulnerable to fear and anxiety in such a way that it compromises our own abilities to attend to relevant content. The impact of this is that it consumes our thinking resources. We should also understand that the amygdala is the emotional relevance detector rather than just a fear detector. The amygdala-PFC connection is important because a part of it acts as short-term memory and another part as the “accountant” in the brain calculating the risks and benefits of our thinking. Subconscious threats over activate the amygdala and lead to a decline in thinking and productivity when we focus on negative statements such as:

• “How am I ever going to sustain my profit margins? What if I lose everything?” • “My business is going to fail under the current economic down turn.” • “The government is not supportive of small business so the odds for success are stacked

against me.” • “What if I get laid off?”

Figure 4: Prefrontal Cortex (PFC) Figure 5: Amygdala


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• “I’m not smart enough to be successful.”

These kinds of self-defeating thought patterns can create what could be identified as an amygdala hijacking. The amygdala kicks into action in preparation for “fight or flight,” creating unacceptable levels of anxiety and fear at a subconscious level that negatively impact our behaviour and productivity. This subconscious patterning becomes part of the default network and will focus on looking out for danger. The authors of this paper contend that entering into what we call the Whole-Brain State will move the brain out of the negative default mode and allow access to more resourceful thinking processes.

Worry is another component related to normal brain function. It is the brain’s response to fear. It is thought of as a response of the brain to block out negative emotions that reside in the subconscious [18]. Some neuroscientists have suggested that worry is a strategy of cognitive avoidance in which internal verbalization acts to suppress threatening emotional imagery. It is believed that worry leads to missing important negative information such as risk that may be relevant to making optimal decisions. This information is mostly subconscious. Worry disrupts the “brain-bridge” (corpus callosum), see Figure 6, and slows the transfer time from the left to the right hemisphere, taking additional time for processing without creating a solution to the problem [18]. Leaders or managers who are constantly worried often see this worry as an attempt to find a solution, but may in fact be stuck in worry, which usually keeps productivity to a minimum. The Whole-Brain State increases communication between the left and right hemispheres of the brain, and speeds up the transfer of information across the corpus callosum, thereby diminishing the capacity to worry.

Figure 6: adapted from Emotional Intelligence: Toward Clarification of a Concept. [19]

Interhemispheric Activity

The authors of this paper present research that suggests that the Whole-Brain State allows access to the inter-hemispheric activity connecting to more efficient brain function. Interhemispheric activity is regulated by the corpus callosum which controls the speed of emotional information from the left to right hemisphere. Worry is a process that can be disruptive to the efficiency of that processing.

Further, we would have you understand the Whole-Brain State (a bi-lateral, symmetrical brain wave pattern) allows access to positive mood and cognitive openness and allows for more efficient processing of the “brain-bridge,” i.e., the corpus callosum [20].


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Boyatzis’ research claims that negative emotions are stronger than positive emotions. He says that the contagion of negative emotion would ignite a stronger neural sequence than positive emotions. This may serve evolutionary functions but, paradoxically, it may limit learning. As a consequence, arousal of strong negative emotions stimulates the Sympathetic Nervous System (SNS), which inhibits access to existing neural circuits and invokes cognitive, emotional, and perceptual impairment [21, 22, 23].

The benefits of a leadership style arousing positive emotions over negative (P/N) ones, have been demonstrated by Fredrickson and Losada and others [24]. They found that a powerful indicator of what is possible for a system is the positivity/negativity ratio of feedback; that is, how many instances of positive vs. negative feedback we can observe in a human interaction process, such as a team meeting or in a couple's conversation. P/N is measured by counting the instances of positive feedback (e.g. "that is a good idea";) vs. negative feedback (e.g. "this is not what I expected; I am disappointed"). Marcial Losada found that high performance teams have a P/N ratio of 5.6; medium performance teams have a P/N of 1.9 and low performance teams have a P/N of 0.36 (there is more negativity than positivity). These ratios determine the level of connectivity that a team or workgroup can reach according to Losada [25]. They developed an empirical model demonstrating that the ability of a leader to project a positive emotional tone directly corresponds to the flexibility and creativity of these teams.

Some researchers are beginning to hypothesize that this positive or negative impact of leadership style on workgroup creativity actually has a neural component.

They argue that the sustainability of leadership effectiveness is a direct function of a person’s ability to adapt and activate neural plasticity. Neural plasticity is the ability to adapt to new situations and environments. The Sympathetic Nervous System (SNS) and Parasympathetic Nervous System (PNS) are both needed for human functioning. They each have an impact on neural plasticity. Arousal affects the growth of the size and shape of our brain. Neurogenesis allows the human to build new neurons. The endocrines aroused in the PNS allow the immune system to function at its best to help preserve existing tissue [26].

Boyatzis explains that a contagion of positive emotions seems to arouse the PNS, which stimulates adult neurogenesis (i.e., growth of new neurons), a sense of well-being, better immune system functioning, and cognitive, emotional, and perceptual openness [27, 28, 29]. By contrast, there are suggestions in neuroscience literature that anxiety-inducing, or negativity based leaders may not only undermine morale but may actually impede the workgroup’s capacity for new learning and creative growth at a neural level. Elizabeth Gould a Princeton University psychology professor has demonstrated, in rats and primates, the detrimental effects of chronic stress on “neurogenesis” or the brain’s capacity to create new neuronal connections [30].

In Dr. Bruce H. Lipton’s bestseller, The Biology of Belief, he says, “Our positive and negative beliefs not only impact our health, but also every aspect of our life.” He goes on to say, “Your beliefs act like filters on a camera, changing how you see the world. And, your biology adapts to those beliefs” [31, p. 143].

The optimal state of consciousness is to have the qualities and attributes of both hemispheres of the brain operating simultaneously, in order to have the full response potential of the mind/brain system available to us, as well as creating a “user-friendly” state of consciousness for changing subconscious beliefs. We refer to this as the Whole-Brain State. This state of being can beneficially influence an individual’s own state of consciousness, and consequently his or her own performance. This positive influence extends to other individuals, as well.


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Our research differs significantly from earlier work by Herrmann in his book, The Whole Brain Business Book [32]. In that book, he proposed the Herrmann Brain Dominance Instrument, presenting more than 30 discreet applications of what he referred to as Whole Brain Technology. His work proposed that by simply working with these discreet phrases in business it would “solve problems and improve business results.” The most significant difference from our research to Herrmann is that he suggests that conscious processing is all that is necessary to achieve a different result. Our research points out that thinking, emotions, and behaviour are directed by our subconscious belief patterns. If all that was required to create sustainable change and success was to attend a seminar, read a book, listen to a lecture…in short doing something conscious, many of us would have achieved sustainable success long ago.

Another piece of literature from 1997 by Leonard and Straus [33], Putting Your Company’s Whole Brain to Work, presents ideas such as, conflict should take place constructively among people who do not initially understand one another. Leonard and Straus contend that all ideas pass through similar cognitive screens, and only familiar ones survive. Our research has its basis in the subconscious patterns, that our perceptions and filters are based in the subconscious beliefs that guide our behaviour. We would also offer the understanding that having the right kind of subconscious beliefs is the fundamental difference for people to understand one another. We contend that the Principles of Nature discussed earlier, are the basic elements that constitute the connection between individuals, their behaviour, their perceptions of themselves, their work and the world. Just being consciously aware is only that, being consciously aware and that alone makes it more complex to not only affect change but also to create sustainable success. Leonard and Straus contend that cognitive preferences reveal themselves in “work styles” and “decision-making” activities. Our research would have us understand that both work styles and decision-making activities are not a function of cognitive preferences but rather of the core principles that one subscribes to as part of their subconscious belief systems.

Another premise, presented by Leonard and Straus, is a concept that is widely accepted in neuroscience and psychology. They affirm a “cognitive distinction” between left-brained and right-brained ways of thinking. Further, they offer that an analytical and sequential approach to problem framing differs from an intuitive, value-based, and nonlinear one (right-brained thinking). We support that idea, but our research presents updated information that offers new understanding that a Whole-Brain State is not only desirable, but also essential to achieve synergy and harmony within the individual, work group and company to achieve sustainable success. Further, quantum physics would have us understand that the Whole-Brain State is necessary when interacting with others.

A study reported in 1988 in the International Journal of Neuroscience, by researchers at the Universidad Nacional Autónoma de México, suggest that synchronized brain states significantly influence nonverbal communication. The study was done with thirteen paired subjects. The subjects were tested in a darkened and soundproof Faraday cage (a lead-lined screened chamber that filters out all outside electromagnetic activity). Each pair of subjects was instructed to close their eyes and try to “communicate” by becoming aware of the other’s presence and to signal the experimenter when they felt it had occurred. The brainwave states of the subjects were monitored during this process. Experimenters reported that during the sessions an increase in similarity of EEG (brainwave) patterns between the pairs of communicators developed. Furthermore, the experimenters noticed, “The subject with the highest concordance (hemispheric integration) was the one who most influenced the session” [34, p. 1]. In other


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words, the EEG patterns of the individual with less synchrony between the brain hemispheres would come to resemble the EEG pattern of the person whose two sides more closely resembled each other [34].

Thalamocortical Gamma-Band Resonant Columns

In recent years, studies have shown that coherent electrical activity in the cortex is relevant to the function of resonance when considering its relationship to cognitive thought [35]. In 1993, Singer proposed that coherent events occur at the cortical level, and such cortical events are the primary binding substrate [36]. Other experimental results illustrate that the binding event must not be cortical but rather thalamocortical [37]. The use of magnetoencephalography (MEG) in humans and extracellular and intracellular recordings in cats in vivo, indicate that such activity is supported by resonance between thalamic and cortical structures at gamma-band frequencies (i.e. with frequencies between 20 and 50 Hz), and are often centered close to 40 Hz [38]. The results of this study favoured the hypothesis that cognitive events depend on activity involving thalamocortical resonant columns. These neuronal mechanisms are responsible for high-frequency thalamic oscillations that support the synchronization of thalamocortical structures and its relationship to coherence.

In physics, coherence is a property of waves that enables stationary (i.e. temporally and spatially constant) interference. When interfering, two waves can add together to create a wave of greater amplitude than either one (constructive interference), see Figure 7, or subtract from each other to create a wave of lesser amplitude than either one (destructive interference), see Figure 8, depending on their relative phase. Two waves are said to be coherent if they have a constant relative phase. The degree of coherence is measured by the interference visibility, a measure of how perfectly the waves can cancel due to destructive interference. Cancellation is virtual or local since a wave cannot have negative energy.

Figure 7. Constructive Interference [39]

Constructive Interference as seen in Figure 7, for example, would be like two sets of ripples moving across the surface of water toward each other. Both wave A and B are moving


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toward each other with their ripples in phase, in this case both waves are leading with their negative amplitude. Their cycle patterns are aligned. The waves merge together at the interface where two ripples meet. As a consequence of this merger, the waves are drawn with one above the other as seen in middle depiction “B.” The amplitude of A is +1, the amplitude of B is also +1. Add the two together, and the resulting amplitude of the composite wave, seen in depiction “C” is +2. Likewise, where A is -1 so is B, together the total amplitude will be -2. The resulting higher amplitude composite is seen in depiction “C.”

Figure 8. Destructive Interference [40]

In Destructive Interference, as seen in Figure 8, for example, the ripples derived from the first pebble, labeled as wave A in depiction B, are moving from left to right. Wave B in depiction B, moving right to left, represents the ripples from a second pebble dropped shortly after the first. Since the pebbles did not enter the water at the same time, the waves will not be aligned when they merge at the interface, they will be “out of phase.” Wave A is leading with a negative amplitude and Wave B is leading with a positive amplitude. Where they meet, the waves are a mirror image of each other, the high amplitude (+1) of one wave is aligned with the low amplitude (-1) of the other, and vice versa. As shown in depiction C, the amplitude values of each wave cancel each other out, so that the composite wave having zero (0) amplitude is no wave at all [40]. The significance of understanding the relationship between constructive and destructive interference patterns is that the ability establishes a sense of harmony and connectedness between individuals, verbally and non-verbally.

Oscillatory Properties of Thalamic Cells

Nearly twenty years ago it was suggested that there is an intrinsic neuronal element with the oscillatory or resonant properties related to a neuronal network that facilitates coherence between interconnected elements. Llinas explains that the intrinsic electrical properties of thalamic neurons support high-frequency (20-50 Hz) sub-threshold oscillations when thalamic


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neurons are depolarized beyond -45mV [41]. Previous studies in vivo describe oscillations in both relay and reticular thalamic neurons [42]. In their work, the relationship between electrophysiological properties was not fully understood. Understanding the basis of the dendrite conductance is a key issue for fast oscillation in thalamocortical cells. They depend on the activation of voltage-dependent calcium conductance [43]. This demonstrates that neurons exhibit active membrane oscillations and are part of the intrinsic oscillation properties of the thalamic cells [44]. These findings are in accordance with previous work reporting that thalamic cells display highly rhythmic activity in the gamma range of frequencies [45].

Active dendritic oscillations are functionally significant, in that they return input from the cortex (cognitive thinking) to thalamic neurons providing a unique opportunity for resonance between intrinsic dendritic oscillation and rhythmic synaptic inputs [46]. We can conclude from this that coherence of fast rhythms in thalamocortical loops might depend on the patterns of synaptic inputs and on the responsive state of the neurons.

When considering the neuronal circuit oscillating in the Gamma band (40-60 Hz), the neurons in specific thalamic nuclei establish cortical resonance by direct activation of pyramidal cells and feed forward inhibition through the activation of 40 Hz inhibitory interneurons in layer IV. These oscillations re-enter the thalamus via layer VI pyramidal cell axon collaterals, producing thalamic feedback inhibition via the reticular nucleus [47]. In layer V, pyramidal cells return oscillations to the interthalaminar nuclei in the gamma-band and are capable of recursive activation [48]. It is understood that neither of these two circuits alone can generate cognition. This would offer the notion that there is a specific organization of the thalamocortical system that when it receives special input activity, resonation occurs. After optimal activation occurs in the thalamocortical loop, then oscillation in the gamma-band is easily recognized over the cortex by its oscillation characteristics, thereby, causing the sites to peak and become a cognitive component that is capable of optimal activity. Therefore, for optimal brain performance to occur it requires both oscillation (vibrational information received from the field) and resonation (activation of neuronal structures within the brain). Together, awareness is heightened, we are more in harmony with those around us and we are more intuitive with a better sense of the things to which we should pay attention.

The body of work preceding the study presented here suggests that there are several different rhythmic and oscillatory functions that travel between the thalamus and the cortex. They function on the basis of temporal coherence and the simultaneity of neuronal firing. In turn, the neuronal firing is based on the passive and active dendritic conduction, and would provide a mechanism for global binding. The impact of this is directly related to productivity and optimal brain processing. If there are areas of the brain that lack efficient resonation, the result can be loss of focus, concentration and inability to make good judgments. Such a system would provide the content that relates to the external world, and the non-specific system would give rise to a context that is more concerned with alertness. Together they would generate a single cognitive experience that is recorded for future reference and contributes to the catalog of subconscious beliefs that guide our behaviour in the future [49].

The Issue of Zero Phase Locking

E. Roy John presents information related to zero phase locking of coherent neural activity during perception and memory that is of great significance to understanding the brain’s ability to provide for optimal performance, and what we would characterize as the Whole-Brain State [50]. What is especially unique and important is the finding of five spatial principal components


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(SPCs) capable of accounting for 90% of the variance of scalp voltage patterns that reflect coherent activation of large ensembles of neurons. The fact that the SPCs were similar during different cognitive tasks, and in different subjects, suggests fundamental subsets of organized neural resources that are common to all people performing these tasks. This suggests further that these SPCs reflect a binding process that brings together spatially distributed fragments of the past to evaluate and experience the immediate present in a brain state [51]. This would suggest that for most people, given they have a healthy brain that resonates as described the common processing of information will be similar from individual to individual.

Oschman says, atoms are measured by their vibration, while in constant motion. They create wave patterns similar to the expanding ripples from pebbles thrown into a pool of water. Each atom is unique because the distribution of its negative and positive charges coupled with its spin rate, generates a specific frequency pattern [52]. Bruce Lipton adds an important point to the phase locking issue with consideration of destructive and constructive interference patterns. He explains that the behaviour of energy waves is important in biomedicine because vibrational frequencies can alter the physical and chemical properties of an atom [53]. An example of destructive interference would be when a pebble is dropped into water and the waves are moving outward to the right. Shortly after the first pebble is dropped, a second pebble is dropped. Since the pebbles do not hit the water at the same time, the waves will not be aligned; they will be out-of-phase. Constructive interference would be similar except that when the second pebble hits the water, the ripples moving outward are in-phase and come together to create higher amplitude of the composite wave. Lipton explains that when you want to enhance, rather than stop atoms, you find a vibration that creates harmonic resonance.

Those vibrations can be of electromagnetic or acoustic origin. Lipton explains that when a skilled vocalist like Ella Fitzgerald maintains a note that is harmonically resonant with the atoms of a crystal goblet, the goblet’s atoms absorb her sound waves. Constructive interference explains that, when added energy of resonant sound waves causes the goblet’s atoms to vibrate fast enough to break free from the bonds that hold them together, the goblet actually explodes.

Medically, doctors use constructive interference to treat kidney stones. Kidney stones are crystals whose atoms vibrate at a specific frequency. Doctors non-invasively focus a harmonic frequency on the kidney stone. Constructive interference results when the focused energy waves interact in the kidney stone. Like the atoms in the crystal goblet example, the atoms of the kidney stones vibrate so quickly that the stones explode and dissolve. Harmonic resonance influences the function of the body as well as the brain and our ability to connect with each other as human beings [54].

The Zero-Point Field and Entanglement

For centuries, the Newtonian perspective that the universe was mechanistic and things work in a comfortable and predictable manner has long been replaced by quantum theories. We understood that subatomic particles were not solid little objects like billiard balls; Einstein taught us that they are vibrating packets of energy that sometimes act like a particle and sometimes act like a wave. Heisenberg presented the notion that quantum particles are omnipresent. Quantum physicists discovered a strange property in the subatomic world called nonlocality to describe the properties of what we now call quantum entanglement. This refers to a quantum entity such as an individual electron influencing another quantum particle instantaneously, over any distance, despite there being no exchange of force or energy [55]. It also suggested that quantum particles,


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once in contact, retain a connection even when separated, so that the actions of one will always influence the other, no matter how far they are separated [56].

Pribram presented ideas that the mind and consciousness are not just local events. Rather, they exist as part of a constantly changing fundamental field that he termed the biofield [57]. Noted physicist David Bohm based his analysis of the nonlocal field on empirical evidence of quantum theory [58]. Pribram agreed with Bohm’s idea that there is an implicate order to the universe that pertains to all matter. As it pertains to brainwave activity he proposed that there are holonomic overlapping patches of holographic structures in the cortical surface layers of the brain, which would transform inputs from perception and thoughts into slow electrical potentials presented in EEG brain wave patterns. Bohm also suggested that several different types of fields, each operating at many spatial and temporal frequencies, might well be involved. He said that the characteristics of the particular type of oscillation would partially determine the range and resolution of the potential information transfer; this has yet to be understood. Quantum fields do not diminish as quickly over distance as electromagnetic fields do in the brain [59]. The implication of this principle of quantum physics suggests that vibrational oscillation from the “field” affects the transfer of information, even in the brain.

Introduction to Quantum Effectiveness

Various correlations exist between their subsystems and the distinguishing quality of different quantum states. This is then applied to analyzing quantum information processing. While quantum correlations, or entanglement, are clearly of paramount importance for efficient pure state manipulations, mixed states present a much richer arena and reveal a more subtle interplay between correlations and how to distinguish between them. The current work explores a number of issues related to identifying the important ingredients needed for quantum information processing.

We do not generally understand why events we observe around us are correlated in the first place. Correlations themselves are very simply quantified within the framework of Shannon’s information theory [60]. Suppose we repeatedly perform measurements on a given system, at different instants of time. Let us record the outcomes of our observations as a sequence. Different sequences of outcomes will naturally have different probabilities associated with them.

Correlations now mean that this probability will most generally not be expressible as a product of probabilities of subsequences. Shannon introduced the notion of mutual information in order to quantify how correlated different observations are. For simplicity, if we divide measurements into two groups, A and B, each of them having a well-defined probability distribution, as well as a joint probability distribution, then the mutual information between A and B is defined. This is the well-known Shannon entropy model. There is a certain degree of subtlety in trying to extend Shannon’s mutual information to more than two different sets of outcomes. The concept of mutual information is so general that it can easily be extended to quantum systems. However, in quantum mechanics, we must discriminate between different forms of correlations, a distinction that has no counterpart in classical information theory.

First of all there is entanglement. Given a bipartite quantum state (where there are two separate entities with substrates), entanglement by the states of the form are known as separable, or disentangled. Entanglement is then most easily quantified by calculating how different this state is to any separable state [61]. This will simply mean that there is a state for system A and a separate state for system B, Shannon says, the more correlated A and B, the more we can learn


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about one of them by measuring the other. Suppose we make measurements on A. For each measurement there is an outcome occurring with probability. We can also define this quantity by swapping the roles of A and B. It is true that separate states contain correlations over and above just the classical ones. The discrepancy between the two is known as the quantum discord. We will call discord the correlations over and above classical brain states, but excluding entanglement [62]. The general picture is this, quantum mutual information in any quantum state, A or B, can be written as a numeric value of entanglement in the state as measured by the relative entropy of entanglement [63] to make it on an equal footing with other entropic measures of correlations. Physically this means that the quantum mutual information measures total correlation in a quantum state.

We might ask, what feature of quantum mechanics makes quantum information processing more efficient than classical resonation? It has been said that quantum entanglement is clearly that feature. The answer seems obvious in the case of pure states. If there is no entanglement during the evolution of pure states, then that evolution can efficiently be simulated by classical systems [64]. But, we should remember that according to our above discussion, pure states contain the same number of classical correlations as entanglement. Therefore, we might well say that it is classical correlations of resonance, in pure brain states, that are responsible for the speed-up. And that, the oscillations from entanglement create the quantum effectiveness, which leads to the unified Whole-Brain State, which in turn can now operate with complete balance and efficiency in all areas, adding to a heightened level of consciousness and cognitive ability.

These conclusions in the study cited, support the proposition that our thoughts, even nonverbally expressed, can influence others. In fact, the more whole-brained we become, the more we influence others toward that state of being as well. This is an important consideration for effective leadership.

Subconscious Belief Patterns

US News & World Report presented a special issue February 28, 2005, entitled, The Secret Mind, featuring a paper, How Your Unconscious Really Shapes Your Decisions. The posit of the paper revealed, “According to cognitive neuroscientists, we are only conscious of 5 percent of our cognitive activity, so most of our decisions, actions, emotions and behaviour depends on 95 percent of our brain activity that goes beyond our conscious awareness” [65, pp. 53-61]. The subconscious mind controls and influences of all involuntary processes and functions including thoughts, beliefs, emotions, memories, skills, instincts, and behaviours of which we are not consciously aware. They are generated by the subconscious mind, while the effects occur in the brain and body. Many of the processes and functions of the subconscious mind involve implicit memories. Implicit memories drive much of our subconscious abilities such as habits, skills, behaviours, reflexes, conditioned responses and emotional reactions, which we automatically demonstrate or engage in without much or any conscious awareness or thinking. If we want to change any of these subconscious implicit memories, like a recurrent automatic emotional reaction to a situation, a self-limiting or potentially self-destructive belief, or perhaps a negative attitude towards someone or something that limits our capacity to interact constructively, we must interface with the subconscious mind. Often we try to use conscious processes such as visualization, will power, and positive thinking to create the desired changes. Experience, all too often, demonstrates that these processes, when used alone, have a limited effect on creating lasting change. Using our “mind over matter” conscious adaptability is a


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process that generally works only in the conscious realm. We have to enter the realm of the subconscious mind to create lasting changes.

Further explanation of the significance of subconscious belief patterns suggests that our beliefs, usually subconscious, are the cumulative effect of life-long “programming.” As a result of past conditioning, we sometimes think and behave in self-defeating ways. Conscious thoughts can be readily changed, by simply receiving information: reading an insightful book, having a compelling conversation, seeing the unarguable results of scientific research, etc. However, if conscious information were all that was needed to lead satisfying and successful lives, most of us would already be doing that. Unless changes are made at the subconscious level, repeating undesired reactions and behaviours will likely continue. Subconscious beliefs have far reaching consequences, both positive and negative, in every aspect of life. They affect our moods, relationships, job performance, self-esteem, and even physical health. Our contention is that it is imperative to know how to change self-limiting beliefs into self-enhancing beliefs that support our goals and aspirations.

QEEG and the Whole-Brain State

The research design for this study followed rigorous protocol procedures. Baseline of EEG data was established for each case. Using EEG caps calibrated by Electro-Cap International, the standard procedure was to inject each of the 10-20 international systems for electrode placement with standard electro-gel making contact with the scalp and the electrode. Ensuring that the dc-offset voltages were within acceptable range, three (3) baseline readings of five (5) minutes each were recorded; five minutes eyes open, five minutes eyes closed and five minutes with the brain on task (silently reading a magazine).

A Certified PER-K® Facilitator used standard PER-K® processes. PER-K® is the trade name used for the application of these processes in the business arena. The PER-K® processes are identical to the personal growth version known in the market place as PSYCH-K®. This is a process for subconscious belief change to achieve the Whole-Brain State. Following the intervention of the PER-K® change process (aka a balance), a post-intervention EEG was recorded in the same manner as the EEG baseline stated above. The balance took approximately 10 minutes to complete. Statistical analysis was performed by NeuroStat, a function of the NeuroGuide program from Applied Neuroscience. NeuroStat allows for individual independent t-tests to be performed. The following is an example from the base of 125 cases examined for the Whole-Brain State.

The independent t-test compares condition A to condition B and shows if there are differences in the dominant brain function (consider the discussion of Shannon’s method). The legend is the same in all of the depictions shown in the illustration. The RED represents the dominant brainwave pattern prior to the facilitation of the PER-K® balance. The BLUE represents the dominant brainwave pattern after the balance had been facilitated. The thickness of the line, indicates level of p-value, see legend below in Figure 9.

The Whole-Brain State, as seen in Figure 9, is considered to be the combination of RED: condition A, dominance prior to balance process, and BLUE: condition B, dominance after the balance process was facilitated.


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Figure 9: The Whole-Brain State Created Through NeuroGuide Software

from Applied Neuroscience [66]

The person depicted by the independent t-test above, experienced profound changes. This woman had been an office manager for over ten years. Her dominant pattern before the PER-K® balance was facilitated, (seen in RED), is left hemispheric. Very logic oriented, her management style was “my way or the highway.” Her approach was demanding and she expected others to do exactly as she commanded. Most of the people that worked for her did as she asked out of fear of reprisal from her or at times, experienced her uncontrollable anger. After the PER-K® balance, the dominant pattern, seen in BLUE, represents access to the emotional/right side of her brain, augmenting the qualities and attributes of her left hemisphere. The result was that her consideration of others was noticeably better, and her interpersonal relationships at home and at the office improved substantially. Her leadership abilities began to flourish and she became well liked. In addition, the office ran smoother, with greater efficiency and productivity. Her shift toward a Whole-Brain State created a new attitude toward others, fostering a more congenial work environment. The overall shift in the attitude of her employees toward her was supportive, resulting in a more positive feeling about the work place.

It is not possible to provide a comprehensive treatment of this subject or the numerous changes that each individual experienced in this research data. However, the volume of data collected, and the unique properties it represents afford us the opportunity to evaluate and continue to understand what the data means, as well as provide intriguing hints as to the nature of its potential. The most significant information that surfaced from this research is that 98% of the cases measured presented statistically significant correlations, which demonstrated the difference between baseline measures and the presence of the Whole-Brain State after the intervention occurred.


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Summary

Subconscious belief patterns circumscribe our perception and drive our behaviours. We now know how changing perception at the subconscious level of the mind can transform a subconscious belief pattern. Further, this transformation in brainwave energy can now be depicted in the form of the Whole-Brain State. Continued research in this area will assist in recognizing and adopting applications that will be beneficial with significant implications for international business, academics, personal health, professional performance, and virtually every area of human life. Practical applications of changing subconscious belief patterns, utilizing PER-K® belief change processes, have existed for over two decades; today we can measure them and graphically demonstrate their efficacy, lending to further understanding and utilization of this important aspect of human existence.

Aligning the principles of business with the Principles of Nature, in order to achieve sustainable success, and effect significant thought patterns and behavioural changes in individuals who make decisions that determine the fate our world, are critical to creating a sustainable future for ourselves, and for generations to come. These principles, when anthropomorphized from nature, are applicable in business, and can be internalized at the subconscious level of the mind, using PER-K® belief change processes.

By better understanding the mechanisms of changing subconscious beliefs, we may well be able to ameliorate or even avoid the otherwise probable economic, ecological, and cultural maelstrom we are facing now, and in the future. Our subconscious beliefs may be the single most important factor contributing to the ethical crisis we are facing on a global scale. A commonly heard statement in the business world is, “Don’t take it personally, it’s just business.” The authors of this paper suggest a very different perspective. We must take it personally because

Welcome to the Evolution of Business

it is business! Often this statement is used as a warning to others that ethics, morality, and human decency are about to be suspended in making a decision or participating in an interaction. Business decisions impact and change our world every day. By aligning the principles of business with the Principles of Nature, we can foster a world where ethics, morality, and human decency create sustainable success as an everyday reality, rather than an obscure, idealistic goal. It’s time that business, like any species in Nature, if it wishes to survive, must evolve and adapt, or suffer the very real possibility of extinction. Businesses are continuing to fail at alarming rates. The solutions to our problems are carefully hidden in plain sight. They are the Principles of Nature. It's up to us to take the necessary steps to learn Nature's secrets and solve our problems. We have all that we need. The choice is up to us.

The following eleven Principles of Nature are derived from studies in the life sciences, common sense, and direct observations of Nature. It is mostly self-evident that while each of these Principles can easily be recognized as necessary to the successful operation of Nature, they are equally relevant to the successful operation of international business. Both have the capacity to create sustainable success, whether we are talking about an ecosystem, including millions of species of plants, animals, and weather systems, or an ecosystem of businesses, containing, millions of products, services, and people. In the PER-K ®, and The Nature Consultancy training programs, (designed for leaders in the private and public sectors) these Principles are explored in detail, and the meaning of each Principle is formatted so that it can be easily and quickly internalized by the subconscious mind, vis-à-vis the Whole-Brain State, by utilizing the PER-


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K® high-speed mindset change processes. The net result is that when businesses operate from this new level of awareness, the capacity for creating sustainable success can become a realistic, attainable goal, rather than just wishful thinking. The authors believe that the alignment of the prevailing principles of business with the principles of nature, shown below, represents a kind of evolutionary leap for business. The business climate today is facing the formidable challenges of a fragile economy and ecology.

The Principles of Nature

1. Harmony 7. Balance 2. Adaptation 8. Ecology 3. Diversity 9. Timing 4. Collaboration 10. Effective use of Resources 5. Cause and Effect 11. Growth Management 6. Resiliency

These core principles of nature provide us with important lessons about sustainable success. While short-term success may sometimes be achieved by ignoring some, or all, of these principles, the long-term downside is indeed costly, both financially and ecologically [67].

Our concern that business practices, as well as human civilization in general, are continuing down a path of misalignment with the Principles of Nature, speaks to a sense of urgency in making rapid changes in our business practices and mindsets. If we are to make a significant difference in the way we conduct business, as well as our personal lives, we must start refining and applying our knowledge about how the human mind/brain interface operates regarding subconscious belief systems, as well as how those belief systems affect the global field of consciousness, via quantum entanglement. As Nobel Physicist Erwin Shrodinger puts it, “The total number of minds in the Universe is One” [68]. It’s time to evolve business beyond the outdated Darwinian model of survival of the fittest to a new model of collaboration and interconnectedness.

It’s time for neuroscience and Nature to take the lead in the evolution of business by doing something different!

For more information about aligning your business with the Principles of Nature, visit The PER-K Centre for Sustainable Success at www.per-k.com or contact the authors if you have questions regarding this paper. You can download other articles related to this topic at www.enhanceyourbrain.com

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Neuroscience Reveals the Whole-Brain State and its Applications for International Business

and Sustainable Success

Jeffrey L. Fannin a and Robert M. Williams b

a Center for Cognitive Enhancement, Glendale, AZ 85308, [email protected]

bThe Myrddin Corporation, Crestone, CO 81131-0548, [email protected]

Abstract

At first glance, neuroscience and business may seem an odd juxtaposition. However, the neuroscience of consciousness provides some understanding of the interrelatedness of subconscious belief patterns that drive behavior and affect optimal decisions by business leaders, as well as overall performance in business. Our thoughts and beliefs, i.e. our mindsets, drive our actions and create the results we are getting. This paper presents research that clearly links the mind/brain interface, presenting empirical evidence of what the authors identify as the Whole-Brain State (a bi-lateral, symmetrical brain wave pattern) and why it is fundamental to achieving sustainable success and the implications it has on international business. This paper will offer insights in tune of the most important issues addressed in this writing; that is, the misalignment of the principles of business with the Principles of Nature, resulting in potentially catastrophic consequences for the economy, the ecology, individuals, businesses, and the planet. This research also identifies and explores the process of changing subconscious beliefs.

Key Words: EEG, subconscious, leadership, business, nature, principles, beliefs




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French version* Neuroscience Reveals the Whole-Brain State and its Applications for International

Business and Sustainable Success

La neuroscience révèle l'état complet du cerveau et les applications pour le commerce

international et la réussite durable


aCenter for Cognitive Enhancement, Glendale, AZ 85308, [email protected]


Résumé

À première vue, les neurosciences et les affaires peuvent sembler une juxtaposition étrange. Cependant, la neuroscience de la conscience permet une certaine compréhension de l'interdépendance des modèles de croyances subconscientes qui conduit le comportement et influe sur les décisions prises par les chefs d'entreprise, ainsi que sur la performance globale des affaires. Nos pensées et croyances, c'est-à-dire notre mentalité, guident nos actions et sont à l'origine des résultats que nous obtenons. Cet article présente une recherche qui lie clairement l'interface esprit/cerveau, en présentant des preuves empiriques de ce que des auteurs identifient comme "l'état complet du cerveau" (un modèle bilatéral et symétrique des ondes cérébrales) et qui explique pourquoi il est fondamental à la réussite durable ainsi que les conséquences qu'elle a sur les affaires internationales. Le présent document donne un aperçu d'une des questions les plus importantes abordées dans cet écrit, à savoir le non-alignement des principes de l'entreprise avec les principes de la nature, ayant des conséquences potentiellement catastrophiques pour l'économie, l'écologie, les individus, les entreprises et la planète. Aussi, cette recherche identifie et explore le processus du changement des croyances inconscientes.

Mots-clés: EEG, sub-conscience, le leadership, les entreprises, la nature, les principes, les croyances





98

German version* Neuroscience Reveals the Whole-Brain State and its Applications for International


Neurowissenschaft enthüllt den Whole-brainZustand und ihre Anwendung im

International Business und nachhaltigen Erfolg



b TheMyrddin Corporation, Crestone, CO 81131-0548, [email protected]

Zusammenfassung

Auf den ersten Blick scheinen Neurowissenschaft und Business ein merkwürdiges Nebeneinander zu sein. Allerdings bietet die Neurowissenschaft des Bewusstseins Erkenntnis über die Wechselbeziehung von unterbewussten Glaubensmustern, die Verhalten steuern und Einfluss auf optimale Entscheidungen von Führungskräften, aber auch auf die gesamte Performance eines Unternehmens nehmen. Unsere Gedanken und Vorstellungen, unsere Denkweisen, steuern unsere Handlungen und erzeugen Ergebnisse, die wir bekommen. Diese Arbeit stellt die Forschung vor, die die Verstand/Gehirn Schnittstelle eindeutig miteinander verbindet und präsentiert empirischen Nachweis auf das, was der Autor als Whole-Brain Zustand (ein bi-laterales, symmetrisches Gehirnwellenmuster) identifiziert. Weiter beleuchtet diese Arbeit warum es fundamental wichtig ist nachhaltigen Erfolg zu generieren und deren Auswirkungen auf das internationale Business. Diese Arbeit gibt Einblicke in eine der wichtigsten Themen, die hier adressiert werden; also die Fehlausrichtung von Unternehmensprinzipien mit den Prinzipien der Natur, die in potenzielle katastrofische Konsequenzen für die Wirtschaft, die Ökologie, Individuen, Unternehmen und den Planten [1] resultieren. Diese Forschung identifiziert und untersucht ebenfalls den Prozess wandelnder unterbewusster Vorstellungen.

Stichwörter:EEG, Unterbewusstsein, Führung, Unternehmen, Natur, Prinzipien, Vorstellungen

*. Translated by: Prof. Dr. Marc Eulerich, University Duisburg-Essen, [email protected]





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Spanish version* Neuroscience Reveals the Whole-Brain State and its Applications for International


Revelaciones de la Neurociencia sobre el Estado Global del Cerebro y sus aplicaciones en el

Comercio Internacional y el Éxito Sostenible



b The Myrddin Corporation, Crestone, CO 81131-0548, [email protected]

Abstract

A primera vista, los mundos de la neurociencia y de la empresa podrían parecer una extraña yuxtaposición. Sin embargo, la neurociencia de la conciencia proporciona una cierta comprensión de la interrelación de los patrones de creencias subconscientes que impulsan el comportamiento y afectan decisiones óptimas de los líderes empresariales, así como el desempeño general de la empresa. Nuestros pensamientos y creencias, por ejemplo, nuestros modos de pensar, conducen nuestras acciones y crean los resultados que estamos obteniendo. En este trabajo se presenta una investigación que vincula claramente la interfaz mente/cerebro, la presentación de evidencia empírica de lo que los autores identifican como el Estado Global del Cerebro (un patrón bi-lateral y simétrico de las ondas cerebrales) y por qué es fundamental para lograr el éxito sostenible y las implicaciones que tiene en los negocios internacionales. En este documento se ofrecen ideas sobre uno de los temas más importantes que se abordan en este escrito, es decir, la falta de alineación de los principios de negocio con los principios de la naturaleza, con consecuencias potencialmente catastróficas para la economía, la ecología, los individuos, las empresas y el planeta [1]. Esta investigación también identifica y analiza el proceso de cambiar las creencias subconscientes.

Keywords: EGG, subconsciente, liderazgo, negocios, naturaleza, principios, creencias.

*. Translated by: Francis Blasco. Complutense University. [email protected]





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Arabic version* Neuroscience Reveals the Whole-Brain State and its Applications for International


علم الأعصاب يكشف حالة الدماغ بشكل متكامل و تطبيقات ذلك في مجال الأعمال الدولية والنجاح المستدام



b The Myrddin Corporation, Crestone, CO 81131-0548, [email protected]

ملخص

ومع ذلك، فإن علم الأعصاب . للوهلة الأولى، قد يبدو علم الأعصاب والأعمال كعلمين يصعب تجاورهما لحالة الوعي يقدم بعض الفهم للترابط بين أنماط السلوك اللاواعي التي تحفز السلوك وتؤثر على القرارات

أفكارنا ومعتقداتنا، أي طريقة . العام في مجال الأعمال التجاريةالمذلة لرجال الأعمال، فضلا عن الأداء تعرض هذه الورقة البحثية التي تربط بشكل واضح . تفكيرنا، توجه أعمالنا وتؤدي إلى النتائج التي نتلقاها

ماغ موجة د(الدماغ، وتقدم الأدلة التجريبية على ما يصفه المؤلفين بحالة الدماغ المتكاملة / واجهة العقل هذه . و لم لذلك من أهمية لتحقيق النجاح المستدام و آثار ذلك على الأعمال التجارية الدولية) ثنائية متناظرة

الورقة سوف تقدم نظرة ثاقبة إلى واحدة من أهم القضايا التي يتناولها هذا التقرير،ألا و هي، سوء موالفة ية على الاقتصاد، والبيئة، والأفراد، والشركات، و مبادئ التجارة مع مبادئ الطبيعة، و عواقب ذلك الكارث

.هذا البحث يحدد أيضا ويستكشف عملية تغيير المعتقدات اللاواعية]. 1[الكوكب

، اللاوعي، والقيادة، والأعمال التجارية، والطبيعة، والمبادئ والمعتقدات) الرسم الكهربائي للدماغ( EEG: الكلمات الدالة * Translated by: Zu’bi M.F.Al-Zu’bi, Ph.D, FHEA, University of Jordan, [email protected]





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Italian version* Neuroscience Reveals the Whole-Brain State and its Applications for International


La neuroscienza rivela lo stato integrato del cervello e le sue applicazioni riguardanti il

business internazionale e il successo sostenibile




Abstarct

A prima vista, la neuroscienza e il business possono sembrare una giustapposizone. Ad ogni modo la neuroscienza della consapevolezza fornisce degli spunti di comprensione fra gli impulsi del subconscio che guidano il comportamento e hanno un impatto sulle decisioni ottimali prese da leader nel business e anche nelle prestazioni nel business in genere. I nostri pensieri e le nostre convinzioni, (il nostro modo di pensare) guidano le nostre azioni e creano i risultati che stiamo avendo. Questo articolo presenta della ricerca che lega chiaramente l’interfaccia fra la mente ed il cervello e presenta evidenze empiriche di ciò che gli autori identificano come lo stato integr ato del cer vello (un percorso di onda celebrale bilaterale e simmetrica), perché questa è fondamentale per raggiungere il successo sostenibile e quali sono le sue implicazioni nel contesto del business internazionale. Questo articolo presenterà spunti su un dei temi più importanti trattati in questo scritto, la mancanza di allineamento fra i principi del business e i Principi della Natura, che risulta in potenziali conseguenze catastrofiche per l’economia, l’ecologia, le persone, il business ed il pianeta (1). Questa ricerca identifica ed esplora anche il processo di cambiamento delle convinzioni del subconscio.

Par ole chiave: EEG, subconscio, leadership, business, natura, principi, convinzioni

*. Translated by: Riccardo Paterni Co-founder Synergy Pathways - [email protected]





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Chinese version* Neuroscience Reveals the Whole-Brain State and its Applications for International


神经科学揭示全脑状态及其在国际商务和持

续成功中的应用



b TheMyrddin Corporation, Crestone, CO 81131-0548, [email protected]

摘要

初看之下，将 “神际科学”和“商际”相提并际际得有点奇怪。然而，关于意际的神际科学有助于我际理解在商业活动中，潜意识信念模式如何驱动行为、影响企业领导作出最优决策乃至影响企业整体绩效的内部机制。我们的思想和信念，例如我们的思维方式，驱动我们的行为，也为我们创造结果。本文介绍的研究，清晰地展现了心脑的联系，为我们提出的 “全脑状态”（两侧对称的脑电模型）和它作为可持续成功的基本条件以及对国际商务可能的影响提供了实证依据。本文对一个重要问题提出了真知灼见，即如果商业活动与自然法则背道而驰，可能会给经济、生态、个人、企业和地球带来灾难性后果。本文也确认和探讨了潜意识信念的改变过程。

关键词: 脑电图，潜意识，领导力，商业，自然法则，信念

*. Translated by: Dandan Zhao & Jian-Min Sun, Renmin University of China,[email protected]





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Narrating a Story of Buenos Aires’ FábricasRecuperadas

aKatarzyna Kosmala and bMiguel Imas

aFaculty of Business and Creative Industries University of the West of Scotland, UK

Email: [email protected]

bFaculty of Business and Law Kingston University, UK


The practice seems to yield at least this hard lesson: a story is not a story until it is told; it is not told until it is heard, it changes – and becomes open to the beauties and frailties of more change; or a story is not a story until it changes.

Della Pollock1

Abstract

This paper offers methodological reflection on the process of representing organizations through narration as dialogical storytelling. This is illustrated here as a tale of socio-economic change and struggle for survival in Argentina’s Fábricas Recuperadas.

Fábricas Recuperadas is an umbrella term that refers to abandoned bankrupt businesses in Argentina. These businesses were initially recovered, at the time of the financial crisis in 2001, by workers themselves. By reclaiming the abandoned businesses, workers promoted alternative organizing practices such as the elimination of operational management and the flattening of organisational hierarchy structures. This paper draws on insight from ethnographic research in Buenos Aires-based Fábricas Recuperadas, revealing the self-construction processes of workers’ identities in the context of crisis, alongside the accounts of reclaiming their workplaces. Methodological insights emerge with regard to narrating interpretive research in relation to other cultural and language-based contexts.

The story is an attempt to re-territorialise the crisis experience, drawing on Deleuze and Guattari’s term (1972, 1980), that is, an attempt at restructuring a narrative by bringing local perspective into the text.

Keywords: Fábricas Recuperadas, narrative method, organization storytelling

_______________________ 1Pollock, D. (2006). Performance Trouble. In D.S. Madison & J. Hamera (Eds), The Sage Book of Performance Studies (p. 93). Thousand Oaks, CA: Sage.




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Introduction

The economic debacle of 2001 in Argentina that materialised in the long-term crisis has been represented through macro-economic lenses and political discourses, driven by foreign interest and a grand narrative of market rationale. Such representation reflects the ‘global’ business sense and dominant corporate strategies that have not addressed the crisis experience from more local perspectives. As a consequence, the processes of constructing meanings about organizational change and working lives in Fábricas Recuperadas emerge out of epistemology that so far has prioritised (and legitimised) the supremacy of the market under the socio-political model of Western rational organisation.

The paper challenges representations based on assumptions of making sense of current political and economic equivocal ties in the Western academy with the recent economic crisis of Argentina, by emphasizing a need for hybrid tonality and re-territorialisation of the peripheral in constructing narratives about organizations. Re-territorialisation refers to sense-making processes which are initiated by people within a particular location (such as an organisation), simultaneously producing and reproducing its micro-culture. We also refer to the notion of re-territorialisation of the crisis experience as an outcome of our methodological reflection. Drawing on Deleuze and Guattari’s term, introduced in their philosophical project Capitalism and Schizophrenia (1972; 1980), we advocate the need to restructure the narrative by bringing local perspective into the text. We argue that the intersecting of local voices can potentially reverse the ontological control of representing, by weaving a tapestry of meanings about the crisis experiences and making explicit what is unheard, suppressed or silenced. Furthermore, we argue that such an approach facilitates methodological reflections on how we, academics, can narrate and represent, through research, the lives of others; negotiating in this process our own positions and sensibilities associated with our professional roles, positions and localities.

The paper offers methodological reflection on positioning of narratives through interpretive research. This paper posits the process of narrating as a dialogical storytelling, illustrated here as a tale of organizational change and socio-economic survival in Fábricas Recuperadas. In particular, we attempt to advance Bakhtin’s (1999) dialogical approach to problematise the process of narration and subsequently, construction processes of organizational narratives. We also reflect on possibilities of repositioning the notion of storytelling in organizations more generally; such repositioning reflects methodological hybridisation based on a possible inclusion of poetic methods (Shotter,1992; Cunliffe, 2002), dialogism (Bakhtin, 1986) and ‘story fabric’ (Boje 2005; 2008). Such repositioning can result in a representation of reality that evokes openness towards the alternative framing of organizational lives. The story of Fábricas Recuperadas is an illustrative attempt towards such repositioning. In the narrative, the examples of actual experiences of crisis can be heard through a hybrid tonality, as a result of blurring what can be perceived as a more ‘global’ sense of knowledge construction with local accounts, weaving a living story.

Dialogical turn in narrating stories At the beginning there was a word. When we have words, we need to find ways to weave

them together into good stories. Good stories are memorable stories, including good organizational stories. Good stories evoke emotion and fantasy, potentially seen as powerful devices in the management of meaning and the diffusion of organizational knowledge that so far privileged Western rational organization. Management studies discourse represents a set of Western-dominant academic theories that appear to be produced within the context of socially


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legitimised public institutions which are themselves effects of primary organising processes of a particular dominant narrative; a socially ‘organised’ body of knowledge claims (Weiskopf and Willmott, 1997), and a certain repertoire of words. Henceforth, once we accept to follow any of the models in management theory that circulate in the globalised world, we risk simply projecting the discourses generated within the legitimate institutions onto those we observe and analyse (Chia, 1994).

A process of narrating in such context becomes an act upon those we observe, a reductive process, defining action and behaviour in terms of the particular organisational model selected. Chia (1995) suggests that we can achieve more by understanding these theoretical postures as ontological gestures, in a bringing forth of reality to the exclusion of other possible voices. It is the act of deconstructing organisational discourses that opens up the space of narrative research to render a story more dialogic. Precisely, we argue that such realisation requires a commitment of the researcher, a commitment of making sense of other possible realities, of making our stories - their stories. A story can emerge out of a discursive device that generates and sustains meanings and produces texts, can become a living story composed of here-and-now narratives, as well as emerge out of ante-narratives. Despite the fact that living stories can be told in and about organizations, and despite that these stories may appear as not fitting into the officially prescribed organizational narrative (Boje, 2008), they appear important in disseminating emergent knowledge that challenges dominant established discourse of organizational forms. These living stories that do not fit, form a part of a web of so-called unfolding relationships. We follow on Boje’s (2003) insistence that most organizational stories are co-created by many participants and are based on multiple meanings. We argue that for such stories to unfold, commitment is paramount in sense-making of the narrating process. How can we narrate the story that emerges out of commitment of making sense of other possible realities?

It is here that a Bakhtinian reading of dialogism can contribute to advancing a common sense understanding on how commitment of making sense of other possible realities can be created, or to be more specific, co-created. Russian formalist Mikhail Bakhtin argued that we constitute ourselves in dialogical relationships with others (Bakhtin, 1986; Todorov, 1984), potentially aspiring to an open-ended dialogue (Gardiner, 1992). Words, as Bakhtin (1986) argued, are at the centre of our experiences and existence. We need words for a story to emerge. Words are uttered expressions of meanings in a continuous chain of ceaseless dialogues, feeding their content from our reservoir of behaviours and ideologies (Gardiner, 1992; Dentith, 1996). We envisage narrating as a process that emerges from dialogical instances, shaped in a participative dialogue. It is a process that reflects different ideological forces at work, emerging in spaces between the official and unofficial languages.

Researching organizations and narrating organizational lives is equally part of the never-ending dialogical instance between researchers and organisational actors, and between researchers, who ultimately recreate in their discourses the voices of the organisations and its members. A dialogical sense-making incorporates both a commitment to listening and being heard as well as interpretations that emerge in a dialogue. In other words, the research requires a commitment, contributing to a reflexive understanding of the social world (of the organisational world) and of one’s location within it, encouraging to transcend the perceived threat of otherness, the perceived threat of moving beyond the boundaries of the established and the establishment (including the academy).

As researchers we need to recognise being situated and mediated through the operation of dense and conflicting networks of discourses, cultural and social practices, and institutional


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structures, bound up in the intricate phenomenology of the self-other relationship (Gardiner, 1992). Recognition of such a position opens up a space where commitment and interpretation for making sense of organizations’ stories becomes dialogic. We can recognise from such a place that something denoted as an organisation exists through these dense networks of discourses, of cultural and social practices reflected in the relationships of individual members, at the different levels. Henceforth, this process, by its very nature, does not reflect singular events, being fundamentally historical, continuous and mobile, which is why, following Bakhtinian thought, it can be envisaged as always unfinished, and decentred. Communication in the research process thus can be conceptualised as a co-creation process of commune with others. In the case of Fábricas Recuperadas, a tale unfolds as a co-authored text with the workers; the self-appointed agents of change.

Methodological reflections on narrating interpretive research: Heteroglossia

Meanings and their significance emerge in the dialogical instance, whereby meaning does not depend on one or the other participant in the dialogue but in what is created in-between. It is a shared territory. It is here in this space formed by the two or more participants where dialogue can be pursued at deeper levels (Clark & Holquist, 1984). This means not only that meaning needs to be shared but also the degree in which multiplicity and struggle that characterise this process of negotiation can emerge. Equally, the stratification, diversity and randomness of what Bakhtin (1981; 1986) denominates as heteroglossia2 can be perceived not only as a static invariant in the life of discourses, but also as what ensures its dynamism. Heteroglossia, introduced by Bakhtin, makes reference to simultaneous differences that exist in dialogue. In the context of methodology, it is the situation of a subject surrounded by the myriad responses he or she might make at any particular point, each of which must be framed in a specific discourse selected from the teeming alternatives available. It is a way of conceiving the world as made up of a rolling mass of languages, each of which has its own distinct formal markers for narrating and representing. These features are never purely formal, for each has associated with it a set of distinctive values and presuppositions (Holquist, 1997). Thus, heteroglossia governs the operation of meanings.

Embracing the heteroglotic dynamism of narrating, we illustrate the story of Fábricas Recuperadas, recovered enterprises based in Buenos Aires, using as a point of departure, ideas by Bakhtin (1981; 1986; 1999) and Boje’s adoption of Bakhtin (2005; 2008) to engage with organisation discourse and sense-making. We have mentioned that the dynamic forces that constitute organisations are a reflection of heteroglossia. These forces are produced by socio-ideological and historical forces (Dentith, 1996) and the cultural context. This, in turn, refers to the organisational discourses and activities retained by collective memory with political and moral-end objectives (Bakhtin, 1986). For instance, at any given moment of an organisation’s historical existence, organisational discourses represent the co-existence of socio-ideological contradictions of the past, different socio-ideological groups in the present, and different tendencies, all of which intersect in a variety of ways forming new typifying discourses (Bakhtin, 1981:291).

_______________________ 2Heteroglossia is defined by Bakhtin as simultaneous differences (i.e., several/diverse voices) that are found in dialogue, each associated with a set of distinctive values and presuppositions that govern the operation of meaning

(Holquist, 1997).


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Together, the forces of heteroglossia and organisational ideology provide the conditions in which dialogue and so called ‘story-sation’, or in other words, the ways in which a particular story unfolds, are fought and constituted. In this dense and conflicting network of discourses for a denominated organisation it is essentially possible to distinguish two organisational forces actively at work: centripetal and centrifugal forces (Clark & Holquist, 1984; Gardiner, 1992; Dentith, 1996; Burkitt, 1998). On the one hand, centripetal forces (established ideology or official language) reflect the socio-political project of centralisation or hegemony (Dentith, 1996). For example, when Donalson and Lorsch (1983) point out that ideology helps to simplify and schematise the system of managerial practice, the system of norms and regulation that defines managers’ competence, managers’ corporate risk, and managers’ decisions (p. 99), they are reflecting on the ‘official’ or ‘established’ social structural arrangements of the organisation. These are, in effect, the powerful bureaucratic hierarchical forces that are established not only in organisations but also in the market, which suggests that the correct way to proceed is by explicitly codifying the language and practice of individuals and recreating such sense though narration. These are the forces of centralisation and unification; of control and power in organisations. On the other hand, centrifugal forces (behavioural/unofficial ideology) perform their uninterrupted opposite work of decentralisation and dis-unification (Clark & Holquist, 1984; Dentith, 1996) in organisations. These are the everyday language and practices that reflect people’s own form of representing culture, the local way of expressing, in which discourses are as much as possible free from the established repression (Burkitt, 1998: 172). Centrifugal forces manifest themselves as heteroglossia, and, reveal the gaps that exist within the official codes, the norms, the hierarchies of an organisation. This process is helping us as researchers to reveal that the relation of representation can be reconstituted as a relation of participation, or at the very least that the specular basis of representation can be transformed into one which implies an involvement with representation, its objects and its recipients.

Research Design: Contextualising the Storytelling of Buenos Aires’ Fábricas Recuperadas

This paper posits the study of Fábricas Recuperadas as a dialogical heteroglossia (Bakhtin, 1986) that reflects the living story process of organising (Boje, 2003; 2008). In the process of narrating, we acknowledge that the semantic space that exists in the activity of authoring an organisation is not a deconstructionist approach but an approach that we refer to as ‘in-between’, that is, relaying on spaces where we found the representations for the Fábricas Recuperadas’ story unfolding.

Boje described a living story as a space of ‘in-between’, between narratives and ante-narratives which encompasses many modes of expression as well as different trajectories or directions for a story to unfold. Living stories are part of a collective tale that coalescences to give coherence to the fragmentation, invisibility and interweaving that reflect an unfolding construction of reality of individuals (Boje, 2003). The disruption of the coherent storyline lived in Argentina during the crisis and the emergence of different ante-stories to explain what was taking place ex ante make this method the most appropriate to explore the issue associated with the organizational processes of change in local recovered enterprises. Heteroglossia results in the plurality in the continuous transformation of organisational dialogues. The paper builds on the example of living stories of Fábricas Recuperadas collected from ethnographic work and interviews conducted in Argentina during the time of the crisis and after, and more specifically over the years 2004 to 2006.


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Boje (2005) emphasises that in the fabric of stories at least four dimensions can be appreciated. The first dimension is associated with the simultaneity of stories, taking place in different geographical locations, spaces and temporalities. The second dimension, of the story’s fabric and raised by Boje, is the fragmentation of tales. People do not tell full blown and well-rehearsed tales. They always leave room for imaginations, and gaps in their stories for the audiences. We only read part of something and not the full account. Only in journalism and when we narrate our research do we try to contrive this impression of fullness. Trajectory is the third dimension in the story’s fabric, raised by Boje. Trajectory refers to the emergence of coherence in narrative, not as a single tale but as part of a collective ante-narrative as he argues that it can pick up meaning across different temporalities and fragments of texts (Boje, 2005). Finally, morphing of living story-elements makes the fourth dimension (this includes choice of incidents, characterisations, implications). This morphing takes place as a part of the ‘re-historisation’ process and happens in order to highlight alternative values, persons or episodes. This makes the process of living story transformative to a context or indeed what transforms the context itself.

One of the authors conducted the series of interviews and was involved in participant observation in Buenos Aires, Argentina during a period of six months, following the crisis, in the years between 2004 and 2006. Together, we conducted a visual ethnography based on a visit to Buenos Aires’ Fábricas in 2010. All the interviews were conducted in Spanish (one of us is native speaker), and subsequently, the interviews’ extracts selected for the use in the story were translated from Spanish into English. Fifteen interviews were conducted with people who work at Fábricas; at the working sites in Buenos Aires’ locations, and the majority, in the small office at one of the factory premises. The interviews were recorded. They took approximately one and one half hours. Equally, documents, media coverage and books published in Argentina on Fábricas Recuperadas were collected in order to supplement the localised interviews with other narratives produced nationally. Contextual data helped to re-emphasise the importance of a dialogue for narrating the story and a strategy of heteroglossia in the adopted research design.

The selection of workers as the interview participants was made simply on the basis of location and opportunities that arose at the time, local knowledge and local contacts. Also, the interviewees subsequently suggested and introduced other people within the network and who were part of the Fábricas Recuperadas movement. The focus of the interviews was not to form a grand discourse on Fábricas, therefore measures of validity and reliability were rejected as part of the construct of this research. Instead, the focus was on an authoring process that accepts the fragments, silences, unexpected comments and individual ante-narrative of what, in a dialogical sense, was unfolding as stories of workers’ experiences of reclaiming their organisations.

The way the material was weaved together was based on narrative analysis. In other words, we focused on the individual stories constructed in order to make sense of what was happening to the workers. We also looked at the historical, cultural and social dimensions embedded in their narratives. In the analysis, we considered the ways in which (socially) constructed understandings of the situation were approached, i.e., the economic crisis as a springboard for action to reclaim the factory and re-construct the process of organisation and management in an entirely different way. We examined in what ways individuals narrated their experiences as fragmented texts and whether the analysis showed any collective understanding of their situation. We looked at the chronological aspect of the tale and also reviewed the use of metaphoric language in terms of plotting a tale. Plotting and morphing were main tropes adopted in the process of authoring the stories.


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In the next section of the paper we look at examples of the multi-layered fabric of the story that emerged in Argentina during the crisis. It is the interweaving of what, following Bakhtin (1981; 1986), can be represented as the interplay between centripetal and centrifugal forces, shaping and re-shaping the story fabric of these organisations and disputing the given sense-making of how things should be done and told, or how organizations should run and be managed.

Living Fabrics of Buenos Aires’ Fábricas Recuperadas

Occupy, resist, produce The morphing of Fábricas Recuperadas is associated with the collective experiences

lived in Argentina during the economic crisis that started to unfold in the local urban communities at the beginning of the new millennium. Argentina, like most economies in the region due, to its foreign debt, was pushed to adopt drastic economic reforms that indebted the country further (Imas, 2010). During the crisis, citizens were not allowed to access their money in banks and large numbers of businesses were declared bankrupt. This prompted the emergence of different narratives to account for a crisis. More fragmented trajectories of individual tales of recovered enterprises made possible the co-authoring of simultaneous narratives that sprang up all over Argentina. The proliferation of these recoveries has led to the formation of a recovered factory movement. Organisationally, this network now includes two major federations of recovered factories, the larger Movimiento Nacional de Empresas Recuperadas (National Movement of Recovered Businesses) more the leftist organization, and the smaller, Movimiento Nacional de Fábricas Recuperadas (National Movement of Recovered Factories) more on the right of the political spectrum. During the peak of the crisis, some labour unions as well as unemployed protesters, known as piqueteros, and a range of political groups, provided support for these Fábricas Recuperadas take-overs.

In the midst of the socio-economic crisis that reached its peak in 2001 and continued to unfold, thousands of Argentinean workers started to turn around the problem of unemployment by taking over the processes of transition and the means of production into their own hands. This process is referred to as ‘recovering’ as it implies keeping the businesses running and keeping workers employed by provision of paid jobs, emphasising work commitment. These recovered factories represent different approaches to running organizations with a flat structure and ‘the workers control’ at the centre. In terms of legal and administrative processes, the most common arrangement was help that was offered from local authorities for a so-called phased transfer. In the phased transfer, the use of the buildings to carry out the work was agreed to for temporary period in the form of a so-called ‘comodato’, based on a contract in which the city council agreed to cede the factory premises free of charge to workers’ co-operative, as a form of a loan. Over the first few years, it was the local government that paid the rent on the premises and met the outstanding debts to the owner. After the initial period, workers were given the option to buy out the business. Yet the harsh realities of the takeover with the unpaid bills resulted in factories having no electricity, running water, or money to acquire raw materials for production of spare parts. Such a disruption to the working life had a major impact on employees’ security and paid employment. As a living story unfolded, the legitimate discourse that has become a part of a coherent narrative imposed a sense of perdition and despair among individuals who were not only losing their income but had no access to their money.


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“When in 2002 the bankruptcy of the firm was on cards and the owners tried to remove the machinery and equipment, this incident prompted all workers to take some action and occupied the factory” (Marki, employee).

At the outset of the crisis in 2001, 1,800 organisations were declared bankrupt and were abandoned by their owners. Of those, only 180 began a different tale of reclaiming and morphing into more complete and different forms from what the organisation originally was. Fábricas Recuperadas had a connection to the Western idea of legitimacy that is given by ownership. Yet, uncertainty was supplanted by the industrialist assumption of working for the management or patron. Workers started to find a common trajectory for constructing a story of continuation, something they felt was lost. Equally, their interpretation of the official events reframed the understanding of what a ‘bankrupt’ business meant before the law. A co-emerging of a new story of legitimacy was told by framing a right to work there and a right to protect income. At the same time, the workers violated the legal rights of the owners to close down the premises.

“In 2002, we occupied the factory to prevent the owners and management from removing the assets and the tools of the factory. This was in the middle of the bankruptcy process. The management put an order of eviction months earlier. With the help of our neighbours we managed to resist for months the police who demanded us to leave as we were told we were occupying a private property”(Marki, employee).

In one case, eight members of the factory occupied the premises in order to preserve their right to work. It was a challenging time, and included confrontations with the police force that came to evict the workers.

“The night they came to evict us, we were printing a book that was going to go out in the next days. We performed a mini assembly and decided to continue with our work. A neighbour helped us to trick the police by taking all the printing books through a hole in the wall and then through his house, which was located next to the factory. In this way we managed to survive the police harassment and uncertainty of losing our jobs and only income” (Marki, employee).

Workers in Fábricas Recuperadas found themselves in-between the stories. In between those stories that were no longer valid and those stories being born; altered meanings of the crisis experience contested and rearranged the story main fabric that has governed and validated a dominant discourse and general understandings of the economic situation in Argentina. Equally, a sense of in-betweeness facilitated a change of the systemic trajectory and the way the factory was conceived before the crisis, converting it into something different for employees themselves and the community, into a co-operative. It is here where the new stories have been re-authored by simultaneous differences of representing a life condition under a threat.

“The Argentine crisis generated a rupture between what is considered legitimate and legal within a democratic society. It made possible the violation of private property such as in the case of occupying a factory with the support of our people. The capitalist model claims that legitimacy and legality are both the same. The crisis demonstrated that this was not the case. People questioned the system, government, police and media. An occupation was perceived to be legitimate; to imagine that they were to close down so many businesses, knowing that there was already a high level of unemployment was shocking for us” (Marki, employee).

This way of narrating is indeed not the meta narrative-driven. Depending on the ways one can conceptualise the living stories that unfold during so-called the process of ‘ante-storysation’,


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that is, as ante-story making, we can posit narrating processes as a consequence of a Bakhtinian sense-making, whereby not retrospectively but in the moment, in situ, multiple realities are contested and reproduced. As a result of such process, the unfolding accounts of multiple realities are interwoven in the construction of the now. For instance, understandings of what the concept of closure meant were associated with ‘something that is working, selling and functioning; where all the employees are working and it is about to close’. Work has been carried out on the premises, despite the repeated orders to vacate the site. During that time, a reorganisation of the structure was taking place; a transformation into a different model of managing and organising based on participative decision-making. The factory has opened its doors to the community and it was the community that eventually declared the factory theirs:

“We decided that the factory should have a ‘social’ meaning. Therefore, we founded a cultural centre with activities of all kind in which volunteers and local neighbours participate” (Marki, employee).

Everyone in the factory became a participant in decision making; creating a polysemous reading of the factory’s activities and practices. Everyone also was made a partner, with a accountable voice at the assembly.

“When we had a problem we helped each other. For example, when once one of our mates broke his leg and could not work for months, we all supported him, maintaining his salary and position” (Marki, employee).

The factory downsized over the years to thirteen employees. The process of professionalization also took place once the enterprise lost its management. “We had jobs but salaries were low and we were trying to ‘dignify’ work; we could have union recognition. Work consciousness as a social good emerges from the crisis” (Marki, employee).

The most difficult part of dealing with the subjectivities of managing daily operations without the formal management structure was the notion of a discipline. The employees explained that they did not have a manager or anyone to decide on their behalf with regard to the work schedules or particular working conditions they wanted to implement.

“What came out of this process was the total level of participation. People did not want to accept that a director or union directive could make decisions on their behalf. It was our right, a right that individuals have to consult each other; it is an acquired value” (Marki, employee).

On the factory premises, the equipment dated from the 1950s and 1970s, although old and unreliable, was perceived as one of the key signifiers for narrating the success. The ownership of premises was emphasised as shared, based on participation in labour process and claimed shared values, traditions and beliefs.

“Working together, sharing and enjoying our presence are central to the way we are now organised. Our problems are associated with the economic growth. As we produce enough to keep going, we are still unable to offer more jobs to unemployed workers. This affects our morale“(Marki, employee).

The coherent narrative of globalised capitalist success, dependent upon the efficient management structure was shattered in the tale of Fábricas Recuperadas. The illegal and illegitimate occupation of the premises, defined within legal discursive sense collapsed. It is


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what Boje described as a dead narrative. The workers, and their communities interrupted and deconstructed this meta-narrative of crisis in order to co-create their own one.

“Public rationality is understood as intelligence, power and efficiency. In contrast, the rationality of domestic life is sustained by women and family. My wife came to support us here. Not only that, whole families came here to support us when we needed them” (Marki, employee).

More fragmented and loose narratives unfold around the themes of the community, its livelihood and continuity. These maintain a sense of trajectory, not of unifying one voice, but of separate voices in the understanding of the now. It was the involved and committed narration process of co-dependence that constructed the context. Indeed, we argue that it is the polyphony itself that can be appreciated in these dialogical discursive readings and authoring of the Fábricas’ tales.

“It is a direct democracy. People talk about a participative democracy. They do so often. But it is a different thing to participate than to decide. It is very important that we develop a different kind of society whereby instances of direct democracy throughout what we experience with leaders, standards, ideological positions, ideas of different kinds and so on, do not become in the traditional sense, framed”(Marki, employee).

It is a re-writing a history for a particular group in the crisis context that has suffered and continues to struggle:

“We are historical subjects. We stop being inactive which is what voting and elections offered us; what the system offered us. We stop being marginal, unemployed, excluded, to become historical subjects, participant subjects. Authors of our own lives” (FRs, employee).

Discussion and conclusions

The story of Fábricas Recuperadas illustrates a strategy for narrating interpretive research that emerges from a heteroglossic perspective, pointing out how dominant discourse as a framing force for a story to unfold, can be altered.

“I believe that being able to communicate and share your ideas is central not for constructing a hegemonic or unified movement, but rather for constructing diversity, and this is what matters most” (FRs, employee).

We have argued that in researching organisational lives, we can only describe the complex, infinitely rich chain of organisational participative discursive acts that take place. We can only describe these discursive acts through the subsequent dialogical transformation that takes place in our own understanding it through the research process. This, in turn, allows us to account for the heteroglotic character of organising narrative, for the polyphony of voices, the multiplicity of discourses that populate the chain of dialogical – organisational – relations by different agents [authors] as illustrated in the tale of Fábricas Recuperadas. It is precisely this polyphonic dynamism that governs organisational existence. In our view this challenges the still prevalent research paradigm based on dominant management ideology which seeks to represent an organisation as a unified, completed and finalised process. What is assumed as the hegemony of strict accountability between hierarchical levels of control in the organisation design (representing organisations as centralised and unified processes) is here challenged through meaning making. That is, we suggest that the continuous negotiation for meanings between the


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various organisational voices (organisational members and their representations) in the transformation of organisational interpretations, always depended on emergent circumstances.

We have proposed narrating as an open dialogical space upon which sense-making emerges, based on a collaborative process with multiple openings and meanings. The dialogical space of narrating of Fábricas Recuperadas has been constructed through interweaving of voices. Narrating became here an ensemble of ideas, discourses and narrated actions, a process of co-creation. In a sense, living story of Fábricas Recuperadas is based on a complex co-construction that grows without clear scripts, rules or models but comes out of the people themselves. It is the importance of co-creating when narrating accounts of others that transpires from this research. We argued that in a situation such as the one lived in Argentina, people primarily construct a flow of living stories that are created in-between, in that contested space between two or more authors. In this complex and dynamic transaction of meaning-making, ante-narratives and narratives come together to morph into new forms of narration that give life to newer stories. Such a process breaks with hegemonic sense-making and allows for dialogical instances to shape and re-shape the constitution of local meaning into a new form of organisational narrative. We conclude that dialogism in the research process, perceived as the interplay of emotive-ethic forces, can result in an approach to narrating that embraces commitment, and we argue, facilitates openness in research, a space for accepting, being heard, evoking, and being listened to.

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Narrating a Story of Buenos Aires’ FábricasRecuperadas

aKatarzyna Kosmala and bMiguel Imas

aFaculty of Business and Creative Industries University of the West of Scotland, UK


bFaculty of Business and Law Kingston University, UK


Abstract

This paper offers methodological reflection on the process of representing organizations through narration as dialogical storytelling. This is illustrated here as a tale of socio-economic change and struggle for survival in Argentina’s FábricasRecuperadas.

FábricasRecuperadasis an umbrella term that refers to abandoned bankrupt businesses in Argentina. These businesses were initially recovered, at the time of the financial crisis in 2001, by workers themselves. By reclaiming the abandoned businesses, workers promoted alternative organizing practices such as the elimination of operational management and the flattening of organisational hierarchy structures. This paper draws on insight from ethnographic research in Buenos Aires-based FábricasRecuperadas, revealing the self-construction processes of workers’ identities in the context of crisis, alongside the accounts of reclaiming their workplaces. Methodological insights emerge with regard to narrating interpretive research in relation to other cultural and language-based contexts.

The story is an attempt to re-territorialise the crisis experience, drawing on Deleuze and Guattari’s term (1972, 1980), that is, an attempt atrestructuring a narrative by bringing local perspective into the text.

Key words: FábricasRecuperadas, narrative method, organization storytelling




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French version* Narrating a Story of Buenos Aires’ FábricasRecuperadas

Raconter une histoire de Buenos Aires Fábricas Recuperadas

1Katarzyna Kosmala and 2Miguel Imas

1Faculty of Business and Creative Industries, University of the West of Scotland,

United Kingdom. [email protected]

2Faculty of Business and Law, Kingston University United Kingdom, [email protected]

Résumé

Cet article propose une réflexion méthodologique sur le processus de représentation des organisations à travers la narration comme une histoire dialogique. Ceci est illustré par une histoire de changement socio-économique et la lutte pour la survie dans le Fábricas Recuperadas argentin. Fábricas Recuperadas est un terme générique qui fait référence à l'abandon des entreprises en faillite en Argentine. Au moment de la crise financière en 2001, ces entreprises ont d'abord été récupérées par les travailleurs eux-mêmes. En récupérant les entreprises abandonnées, les travailleurs ont promu de nouvelles pratiques d'organisation, telles que l'élimination de la gestion opérationnelle et l'aplatissement des structures hiérarchiques dans l'organisation. Cet article s'appuie sur des résultats d'une recherche ethnographique dans un Fábricas Recuperadas à Buenos Aires, révélant les processus d'auto-construction d'identités des travailleurs dans un contexte de crise, alors qu'ils réclament la récupération de leurs lieux de travail. Des résultats méthodologiques émergent lors du processus de recherche interprétative par rapport à d'autres contextes culturels et fondés sur la langue. L'histoire est une tentative de re-territorialiser l'expérience de la crise, en s'appuyant sur la terminologie de Deleuze et Guattari (1972, 1980), qui est une tentative de restructuration d'un récit en apportant une perspective locale dans le texte.

Mots-clés: Fábricas Recuperadas, méthode narrative, raconter des histoires, organisation





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German version* Narrating a Story of Buenos Aires’ Fábricas Recuperadas

Eine Geschichte überdie Fábricas Recuperadas von Buenos Aires


1Faculty of Business and Creative Industries,University of the West of Scotland,

United [email protected]


Zusammenfassung

Diese Arbeit liefert eine methodische Reflektion aufden Prozess, Organisationen durch dialogisches Geschichtenerzählen zu repräsentieren. Dies wird hier anhand einer Geschichte über den sozioökonomischen Wandel und den Kampf ums Überleben in den argentinischen FábricasRecuperadas verdeutlicht.

FábricasRecuperadas ist ein Sammelbegriff, der sich auf verlassene bankrotte Unternehmen in Argentinien bezieht. Diese Unternehmen wurden anfangs, während der Finanzkrise in 2001, von den Arbeitern selber wiederhergestellt. Durch das Wiederverwenden der verlassenen Unternehmen förderten die Arbeiter alternative Organisationspraktiken wie beispielsweise flache hierarchische Strukturen oder die Eliminierung der operativen Führung. Diese Arbeit zieht einen Blick auf die ethnographische Forschung der FábricasRecuperadas von Buenos Aires und zeigt den Selbstkonstruktionsprozess der Arbeiter im Kontext der Krise und die Rückforderung ihrer Arbeitsplätze. Methodologische Einblicke entstehen im Hinblick auf den interpretativen Erzählungsprozess im Verhältnis zu anderen kulturellen und sprachlichen Zusammenhängen.

Die Geschichte ist ein Versuch der Re-Territorialisierung der Krisenerfahrung, basierend auf Deleuzes und Guattari’s Begriff (1972, 1980), der den Versuch der Restrukturierung einer Erzählung durch den Einbezug lokaler Perspektiven in den Text beschreibt.

Stichwörter: Fábricas Recuperadas, Narrative Methode, Organization Storytelling

*. Translated by: Prof. Dr. Marc Eulerich, University Duisburg-Essen, [email protected]





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Spanish version* Narrating a Story of Buenos Aires’ FábricasRecuperadas

Narrando una historia sobre las Fábricas Recuperadas de Buenos Aires





Resumen

Este trabajo ofrece una reflexión metodológica sobre el proceso de representación de las organizaciones a través de un tipo de narración: la narración dialógica. Se muestra una historia narrada de cambio socio-económico y de la lucha por la supervivencia en las Fábricas Recuperadas de Argentina.

Las Fábricas Recuperadas es un término general que se refiere a empresas quebradas y abandonadas en Argentina. Estas empresas fueron recuperadas inicialmente, en el momento de la crisis financiera en 2001, por los propios trabajadores. Al reclamar los negocios abandonados, los trabajadores promovieron prácticas alternativas de organización, tales como la eliminación de la gestión operativa y el aplanamiento de las estructuras de la jerarquía de la organización. Este artículo se basa en una visión de la investigación etnográfica de las Fábricas Recuperadas con sede en Buenos Aires, revelando los procesos de autoconstrucción de las identidades de los trabajadores en el contexto de la crisis, junto con las cuentas de la recuperación de sus lugares de trabajo. Surgen cuestiones metodológicas en relación con el proceso de narrar la investigación interpretativa en relación con otros contextos culturales y de lenguaje.

La historia es un intento de volver a darle un contexto territorial a la experiencia de la crisis, a partir del plazo de Deleuze y Guattari (1972, 1980), es decir, un intento de reestructuración de una narrativa trayendo la perspectiva local en el texto.

Palabras Clave: Fábricas recuperadas, el método narrativo, narrativa organización.

*. Translated by: Francis Blasco. Complutense University. [email protected]



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Arabic version* Narrating a Story of Buenos Aires’ FábricasRecuperadas

المصانع المتعافية :من بوينس ايريس قصة رواية


1Faculty of Business and Creative Industries, University of the West of Scotland, United Kingdom. [email protected] U

2Faculty of Business and Law, Kingston University

United Kingdom, [email protected]

ملخص

تقدم هذه الورقة تفكيراً متعمقاً في منهجية تمثيل المنظمات بإستخدام السرد المبني على رواية القصص ويتضح هذا هنا من قصة التغير الاجتماعي الاقتصادي والصراع من أجل البقاء في المصانع . الحوارية

.Fábricas Recuperadasis بالمتعافية المصطلح تعارفها في الأرجنتين

Fábricas Recuperadasisفي البداية تم . مصطلح جامع يشير إلى الشركات المفلسة المهجورة في الأرجنتينهذا الاسترداد شجع . ، من قبل العمال أنفسهم2001انتشال هذه الشركات، في وقت الأزمة المالية في عام

هذه . القضاء على إدارة العمليات وتسوية الهياكل الهرمية التنظيميةالعمال على تنظيم ممارسات بديلة مثل القائمة في بوينس آيرس، Fábricas Recuperadasis الورقة تعتمد على بصيرة من البحوث الإثنوغرافية في

تتكشف من خلالها عمليات البناء الذاتي لهويات العمال في سياق الأزمة إلى جانب حسابات استرداد أماكن . و تظهر رؤى منهجية فيما يتعلق بعملية سرد البحوث التفسيرية في سياقات ثقافية و لغوية. ملهمع

في محاولة Deleuze and Guattari’s (1972, 1980) القصة هي محاولة لإعادة تجربة الأزمة، بالاعتماد على .إعادة هيكلة السرد من خلال جلب منظور محلي للنص

، طريقة السرد، رواية القصص المنظمية) المصانع المتعافية( Fábricas Recuperadas: الكلمات الدالة






120

Italian version* Narrating a Story of Buenos Aires’ Fábricas Recuperadas

Narrando una storia delle F abbriche Recuperate di Buenos Aires





Abstarct

Questo articolo presenta una riflessione metodologica al processo di rappresentare organizzazioni con il metodo di racconto narrativo dialogico. Questo è illustrato in un racconto di cambiamento e lotta socio-economica riguardante la sopravvivenza delle F abbriche Recuperate in Argentina.

Le F abbriche Recuperate è un termine di integrazione che si riferisce ad aziende fallite e abbandonate in Argentina. Queste aziende inizialmente erano state prese in gestione dai lavoratori stessi al tempo della crisi finanziaria del 2001. Con la volontà di gestire queste aziende abbandonate, i lavoratori promuovevano pratiche organizzative alternative come l’eliminazione del management operativo e l’appiattimento della struttura gerarchica. Questo articolo trae spunto dalla ricerca etnografica delle F abbriche Recuperate di Buenos Aires mettendo in evidenza il processo di auto costruzione di identità da parte dei lavoratori, in un contesto di crisi, e al tempo stesso narrando i racconti del processo di riconquista dei loro posti di lavoro. Ne emergono anche spunti di metodo riguardanti il processo di narrare ricerca interpretativa rapportata a contesti basati su cultura e lingua.

Questa storia rappresenta un tentativo di ri-territorializzare l’esperienza di crisi, traendo spunto dalla terminologia di Deleuze e Guttari (1972, 1980) che rappresenta un tentativo di ristrutturazione narrativa portando una prospettiva locale nel testo.

Keywords: fabbriche recuperate, metodo narrativo, narrazione nelle aziende

*. Translated by: Riccardo Paterni co-founder Synergy Pathways - [email protected]





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Chinese version* Narrating a Story of Buenos Aires’ FábricasRecuperadas

叙述布宜诺斯艾利斯废弃企业的故事


1Faculty of Business and Creative Industries,University of the West of Scotland, United [email protected]

2Faculty of Business and Law, Kingston University

United Kingdom, [email protected]

摘要

本文以对话讲故事的方式对组织管理过程进行了方法论反思。在此，以阿根廷废弃企业的社会经济变革和拼搏求生的例子作为例证。

“废弃企业 ”是对阿根廷废弃的破产企业的总称。在2001年经济危机中，这些企业因其员工的努力而开始复苏。为挽救这些废弃的企业，这些员工进行了非常规的组织实践，例如撤销业务领导职位、精简组织结构等。本文从人种学的角度研究了阿根廷废弃企业，员工挽救公司的行动揭示了危机情境下员工认同感的自我建造过程。通过叙述解释性研究与其他文化和语言背景的关系，方法论的洞察力就凸显出来了。

用Deleuze和Guattari的话来讲，这个故事试图对危机经历进行重新划分，也即试图把地方视角带入情境中来重塑故事。

关键词: 废弃企业叙述方法讲故事

*. Translated by : Dan-Dan Zhao & Ye-Jun Zhang, Renmin University of China, [email protected]





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Towards a New Model of Wealth Creation: Shareholders and Stakeholders

Charles Hampden-Turner and Raymond Ferris Abelin

Institute for Manufacturing, Cambridge University

[email protected]

Abstract

There are currently two distinct approaches to a capitalist model of free enterprise. The first is the Shareholder Model. In this approach the prime purpose of the economy is to enrich individual shareholders. All other activities like satisfying customers, developing employees and rendering the company more innovative are means to the end of profit maximization. In the Stakeholder Model the several stakeholders, employees, customers, shareholders, the community, the supply chain, banks, the government and the environment are all believed to have a stake in the output of the business and the outcome of its policies. Such policies should benefit the entire range of stakeholders. This article argues that the second model leads to faster economic development and better all-round outcomes for the stakeholders.

Historically the shareholder model came first. Pioneer Capitalism is more risky and more individualistic than Catch-up Capitalism, which is more community oriented. The latter generally follows the path of the first and because many of the shareholders are foreigners and pioneers, it seeks to benefit its own employees, workers, suppliers and customers who are those in pursuit of individual and often competing interests. Keywords: Shareholders vs. Stakeholders, Catch-up Capitalism, Individualism-Communitarianism, Anglo-Saxon Model, Asian Model, direction vs. indirection

The pioneer capitalists take higher risks and cut through the elephant grass to build a new economy. The Catch-up capitalists drive down the roads created by the pioneers. Because Western capital was at one time the only available resource, countries catching up have tried to replace this with domestic savings and regard shareholders as less central.



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Introduction: Two Rival Models

The recent financial crisis has sent shockwaves through the academic community, at least among those of us who are fully awake. Two models of free enterprise are vying for supremacy and the collapse of major parts of the financial sector have set back the paradigm that was once dominant, boosting its rival, so that there is now a serious contender. These two models are the Anglo-Saxon Model of free enterprise and the largely Asian and mid-European stakeholder model. The Anglo-Saxon Model is especially strong in the UK and USA, the two nations pioneering the industrial revolution and using the English language to promulgate their views on a global scale. Australia, Canada and New Zealand are also disciples of this view. The major discipline involved is economics, urging the views of Adam Smith, Milton Friedman (1962) and the Chicago School and implemented up to the recent financial crisis by Alan Greenspan. The model’s current rate of economic development is very slow. These nations have generally suffered much more from the financial crisis.

The alternative view is the Asian Stakeholder Model, which is popular among those nations fast-following Britain and the USA. This approach was at first typified by Germany, France and Scandinavia in the 20th century. These used industrial banking to chase the leaders and succeeded in closing the gap in most instances. Today the prime practitioners of the Stakeholder Model are Japan, South Korea, Taiwan, Singapore, Hong Kong and more recently, the PRC. This model conceives of wealth creation as an alliance of stakeholders: employees, customers, network partners, shareholders and banks, the government, the community and the natural environment. Its potential discipline is organizational studies and human behaviour in organizations, since this discipline deals with relations between various national constituencies. Its rate of economic development, on average, is much faster and these nations rebounded much better from the crash of 2008. The two models contrast as follows: Anglo-Saxon Shareholder Model Asian Stakeholder Model 1. What profits shareholders must be good or customers would not buy it.

What is good must be made to pay by the concerted efforts of stakeholders

2. Benefitting employees, customers and suppliers is the means to shareholder enrichment. The company is owned by its shareholders who are entitled to benefits.

Stakeholders are not automatically benefitted when shareholders gain. The parties must negotiate and share gains, and do ever more to support each other.

3. The purpose of business is the private enrichment of individuals.

The purpose of business is to see that a whole community learns and improves.

4. Industry is a means to profiting. This is the ultimate end, the bottom line.

Industry is meaningful in its own right and profits keep it going and growing.

5. The whole idea is to make money, which banks do very well by lending out and directly leveraging

The whole idea is to create wealth, which involves benefiting customers and reaping rewards indirectly.


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6. Shareholders come first. The money they invest makes everything else possible and all other participants must reward them.

Shareholders come last. First managers must motivate employees. Employees must satisfy customers. Customers generate revenue and only then do shareholders benefit.

7. New businesses are mainly started by venture capitalists.

New businesses are mainly started by extended family savings.

8. Innovation is the work of redoubtable, fearless individuals who defy collective opinion.

Innovation is the work cohesive, enterprising communities who build networks of mutual trust.

9. Manufacturing is better outsourced to cheaper locations so that shareholders benefit from this.

Manufacturing is the heart and integrity of the stakeholder enterprise and the only hope for our poorer citizens.

10. Governments should intervene as little as possible. They only distort the operations of the free market. Weapons and space exploration are exceptions.

Only governments can look far enough ahead to save the planet by sustainable energy and preserve the environment. Military spending can become excessive.

11. The main hope for poor countries (e.g. Africa) is to allow American shareholders to own most of their infrastructure and raw materials.

The main hope for poor countries (e.g. Africa) is to let the Chinese build their infrastructure in exchange for access to their raw materials.

(China spends more in Africa then the entire European Union)

There is growing evidence that the stakeholder model is producing far better results for its advocates. We believe that this is a signal for those specializing in subjects like Human Behaviour and Organizations to rise to the challenge and support this model, providing an alternative approach to economics. As Chang (2011) has pointed out, economic development is inversely proportionate to the number of economists in a particular nation! The reasons for fast growth lie outside economic “science”. Let us consider the points made in the boxes above one by one.

The Literature Review

We will now go through points 1-11 and survey the relevant literature.

1. What makes money for shareholders must be good vs. what is good must be made to pay by the concerted efforts of stakeholders.

Fons Trompenaars (1992) and Trompenaars and Hampden-Turner (1997) refer to this as

a “Specificity bias”. There are specific thinkers in the USA and the UK and diffuse thinkers, most pronounced in East Asia. Most Chinese regard wealth creation as the result of relationships


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and connections, to be “wealthy” is to be “well connected”. Guanxi means not just relationships between people but between ideas, concepts, bodies of knowledge and between Yin and Yang in Taoist philosophy. See Haihua Zhang (2008) and Ming-Jer Chen (2001). The Chinese see the connections between stakeholders and their ideal is harmony between these stakeholders as befits the Middle Kingdom.

At bottom left we admire Kentucky Fried Chicken and Ronald McDonald because these make money and the Chinese seem content to let us dunk donuts while they strive to make solar energy a profitable business, which so far it is not.

2. Employees, customers and the community are the means of shareholder enrichment.

The shareholder model makes employees, customers and the community into mere means to the enrichment of equity owners. It is fine to serve customers and to train, educate and develop employees but the reason for doing these things is to make shareholders wealthier. If the shareholder is not made wealthy by such activities these should cease. If declaring employees redundant, outsourcing manufacturing, reducing assets and/or reducing costs does more to increase the share price, then this should be substituted for growing the workforce or learning new skills.

One result of this policy is to make shareholders richer and employees poorer. Robert B. Reich (2011) has shown that the top 1% of wealthy individuals in the USA now own 24.8% of total income, mostly in the form of shares or bonds. Only once before in America has inequality been so marked, in 1929 on the eve of the Great Depression when it stood fractionally higher! John Maynard Keynes (1938) highlighted the problem. If a person of poor or medium income earns more, this will immediately re-enter the economy in the form of new purchases, but give this money to the very rich and they will either save it or use it for speculative purposes.


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Moreover giving so much to the very top earners deprives the middle class upon whose industry as stake holders the entire economy depends.

One consequence of putting shareholders alone at the apex of the system is that these manipulate employees with “carrots” who then manipulate customers.

3. The purpose of industry is the private enrichment of individuals.

We handicap our own economic growth if we measure only what has been taken out of industry and not what we have put in. What is given to shareholders must be subtracted from the rewards to employees and it is they who do the producing and innovating, if indeed any of this is to occur. Shareholders can be described as people who do not share! Fons Trompneaars (2008). They may not know in what companies their money is invested, may keep it there for a matter of hours only and buy other shares to make short-term gains. Like absentee land-lords they are separated often by great distances from what they own. Culture shocks like a hostile take-over or mass lay-offs that cause share prices to jump may bring other stakeholders only grief and disruption.

There are many ways of boosting the share price which may do other stakeholders no good or actual harm. Buying back your own shares will cause a temporary blip, enabling holders of share options to cash in but does nothing for the prospects of other stakeholders. It is extremely unlikely that fewer workers will do a better job. In the meantime the salary costs saved find their way into shareholders pockets. If you buy a company you can order it to borrow heavily and give the proceeds to shareholders. Even if that company eventually succumbs beneath its load of debt, the temporary boost in dividends has raised the share price with the consequences to come much later, before which the shares are unloaded. Increasingly the relationship between shareholders and their “agents” has become adversarial.


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Since the Reagan-Thatcher revolution in the early 80’s shareholders have increasingly formed adversary relations with customers, employees and the environment.

There is increasing evidence that we learn as knowledge communities how to produce and innovate better (Peter Senge, 1989) and build core competence (Gary Hamel, 1989). Yet shareholders are in no sense a community, nor do they have shared knowledge of the businesses in which their funds are invested, nor is their interest long-term save on a very few occasions. The life-spans of corporations are less than the life-spans of individuals, a fact that reveals our priorities. Lehman Brothers is dead but Dick Fuld, architect of the disaster, is very rich indeed (John Gray, 2010).

4. Industry is a means of profiting. The ultimate end is the bottom line.

The problem with this doctrine is that the very word “end” suggests we then stop, having reached our goal, but creating wealth is a never ending process. Profits need to be ploughed back so that industry expands. Too much emphasis on harvesting gains will slow growth down. There is also the problem of morale. Do we seriously expect workers and managers to rejoice over making money for people they do not know and have mostly never met? Do you embrace you spouse on your homecoming and happily announce that you made even more money for shareholders today? Is it not truer to say that industry is Heart Work as Chan Chin Bok (2002) put it, that much of our work is its own reward shared with customers and community?

One problem with valuing profitability above all else is that our competitors will give this to us while taking the rest of the pie for themselves. Thus Clayton Christiansen (2009) explains how Flextronics, a humble Singapore sub-contractor, got the best of Compact, the one-time Texan computer-maker. They had long made the circuit boards for Compact but then were asked to make the motherboards as well. They could do this for 20% less which would boost Compacts profits, so Compact agreed. The same logic led Compact to give them first assembly, then logistics and supply chain management and finally the design of the computer itself. All these tasks were handed over and after every deal Compact’s profits climbed, especially their asset-profit ratio since they had given away most of their assets! There was only one problem.


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Flextronics had captured most of their core competence and held all the aces. Compact was later sold to Hewlett Packard.

5. Making money by direction and by leveraging or indirectly via others.

You can make money directly by lending and leveraging, a favourite tactic of banks and finance houses, or you can make money by indirection, by first doing something for the customer and allowing him or her to repay you. Stake holders make money by supplying each other and paying for this later. Bankers tend to make money by direct manipulation of the market. By far the most common way of doing this is by leverage, that is by lending out multiples of what you have yourself borrowed. If you forbid your clients to leverage more than four to six times, while leveraging your own funds thirty times then this considerable difference is pure profit provided the price of assets keeps climbing. Unfortunately this is not genuine wealth creation. It is not even a lever for creating wealth as the metaphor implies. It is rather a “magnifying glass” that increases profits and losses, and tips us over the precipice when asset prices fall. This is what happened in the latest crash (Paul Mason, 2009).

As we rely more and more on science for our innovation, our ways of profiting become ever more indirect. You first need a Ph.D. and after perhaps twelve years you discover a commercial application for this knowledge. Increasingly there is a long march to the leading edge of the hard sciences and we must think of knowledge years ahead of thinking about profits. Our shareholder-dominated industry finds this very difficult. They want their money now and switch their allegiance to whoever provides it.

6. Shareholders come first, or is it last? Their money makes all else possible.

Creating wealth through advancing science is ever more indirect since we have to master the knowledge first. Those after a “fast buck” are very ill suited to this quest


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The view is that shareholders put up the money which makes everything else possible. Since they started the process it rightfully belongs to them forever. The word “organization” is from organon meaning “instrument”. The organization is the shareholders instrument for making money and they can use it as they wish. If they use it rationally and wisely it will serve them well and generate a stream of profits. They provide the money and the rest of us pledge our working lives, a bargain which on reflection, is somewhat uneven. See Thomas Frank (2001). But is this view correct? Most businesses become publicly held corporations only after they have succeeded and made an Initial Public Offering which shareholders take up. They actually start with no money at all, just an idea. The would-be supplier approaches a potential customer and if a deal is struck the company is born. Arguably it is stakeholders who start the whole process going, suppliers, employees and customers. One extremely successful US company, which has been very good to its shareholders over seventy or more years is Johnson and Johnson (J&J), originally a family-owned company. The company’s credo, originating in 1942 is “Shareholders come last.” See Collins and Porras (1994). This does not mean shareholders are least important. It means shareholders come last in time. First managers must motivate employees. Second employees must serve customers. Third customers must buy more from this supplier and only then will a surplus be generated from which shareholders can be paid. The irony is that J&J has treated its shareholders better than almost any other US company over the years and that, sharing your gains with other stakeholders is in the interests of shareholders themselves.

Inspiring employees and serving customers need to come first so there is money to pay shareholders their due. The latter come last in time, not in importance.

Another irony is that Americans have long known that looking after customers by having highly motivated employees is the path to wealth creation. Heskett, Sasser and Schlesinger (2003) cited dozens of profitable companies in The Value Profit Chain. In nearly all cases the customer-served-by-passionate-employees was the focus of their strategies. More recently Sisodia(2012), the founder of a movement called “Conscious Capitalism” has demonstrated that


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“firms of endearment” as he calls them, relating to all stakeholders, vastly out-perform even the better conventional companies. He recently reported the results below.

ROI ROI ROI S&P 500 Good to Great Firms of Companies Companies Endearment 3-year time- 38% 75% 73% horizon ( % profit) 5-year horizon 13% 77% 128% 10-year horizon 122% 331% 1,026%

These results amaze, especially when we consider that Good to Great companies selected by Collins (2002) were chosen in large part because they were profitable, while the Endearment companies were chosen because they cared. Popular approaches to organizational development, like the Balanced Scorecard of Kaplan and Norton (1992), appear to take the presence of stakeholders for granted and to regard a balance between these as desirable. They generally avoid discussing the politics involved in giving the financial perspective a dominant role. They do point out that the shareholder view faces backward in time to what has been accumulated up to this time. This does suggest that grabbing the lion’s share for shareholders is suboptimal.

Finally, Anderson (2009), the $4 billion maker of carpet tiles, pledged that his carpets would make zero impact on the environment by 2020. His company is already 75% of the way to his goal, finding that this higher purpose transformed the morale of customers and workforce alike.

7. New businesses are mostly started by venture capitalists.

The popular notion that venture capitalists start new businesses is only true in a minority of cases. By far the most common form of new business is family firms started in networked communities who undertake to buy from each other. The GEM studies produced by Babson College and the London Business School show that the most common reason for new business start-ups is necessity, the need to survive. The self-fulfilment of the individual is secondary although not unimportant, especially in the West. Several scholars are now making the case that even innovation, or Open Innovation as they call it, is the work of networked supply chains. See Henry Chesborough (2010). Wealth is generated by whole systems not so much by individual firms.

8. Innovation is the work of redoubtable, fearless individuals.

The shareholder model insists that a company exists because of the fearless individual

who started it all. In the beginning he or she owns the company and is joined by other shareholders. The so called community plays a minor role. If we undermine the sovereignty of the founding individual we will lose the whole plot. The drive comes from the individual owner.

But how true is this? We know from Everett Hagen (1967) that 50% of all entrepreneurs in Britain’s industrial revolution came from Nonconformist sects. David K Hurst (1995) points out that English Quakers out-performed the populations as a whole forty times over in wealth


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creation. In the Philippines at this time a 3% Chinese population owns 70% of that nation’s wealth with similar proportions elsewhere in South East Asia. The capacity of certain immigrant communities to create wealth is legendary. After Singaporean Chinese were expelled from the Malaysian Federation their new nation grew four to five times faster than Malaysia, where a 31% Chinese population controls 71% of the wealth (Ming-Jer Chen. 2001). All of this suggests that wealth is created by communities and their norms which favour enterprise. In short, stakeholders do it together.

9. Manufacturing is better outsourced to cheaper locations, so that shareholders benefit.

One of the most serious consequences of placing shareholders ahead of all other

stakeholders is the habit of outsourcing much of our manufacturing to work forces abroad. If we wanted these to prosper and overtake us no better strategy could be devised! Gary Pisano and Willy C Shih (2009) have tracked the decline in the US balance of payments in High Tech from $27.8 billion in surplus in 2000 to $53.8 billion in deficit by 2008. Since then it has deteriorated further. They trace the decline of the US industrial commons, the pool of community-based skills within America in the vicinity of its major companies, in other words stakeholders.

When you outsource say, battery technology to China for making electric cars, you thereby sacrifice the whole industry, because the performance of the battery is the key to the success of the car and countries that have a skill-pool able to fit better batteries into improving vehicles gain competitive advantage. Innovation often comes from rearranging thousands of incoming components and manufacturing is the hub of this convergence. Certain key components, especially in electronics can give rise to successive industries. They are its building blocks. Outsource these and you have given way the very context of innovation itself. The American tax-base needs the salaries that were once paid to managers and workers.

10. Governments should intervene as little as possible, leaving it to free markets.

One of several stakeholders is the government and those who advocate shareholder

sovereignty also advise that the government stay out. The problem with this view is that the USA has always prospered most at times when the government most interfered. The Great Prosperity lasted from 1947 to 1975 and this coincided with massive government expenditures. The Cold War gave the USA the largest command economy ever known, while space took up as much as 4% of total GNP. Federal spending on education doubled in the years after Sputnik. Money was shovelled at social problems to prove that our society was superior to the Soviet Union and cost-plus contracts were a substantial boost to innovation (Reich, 2011).

It was when the Cold War ended and government contracts were cut back that the problems were exacerbated. Similarly the Great Depression was ended by preparations for World War II. Americans have always been prepared to spend on defense but not on new threats to the planet, like global warming, food and water shortages and the urgent need for renewable energy. That China has seized a 75% world share of solar energy technology and Germany is moving out of nuclear energy shows us that governments are taking bold leads in this area, where shareholders see only costs to be avoided (Paul Mason, 2009). Can we leave the fate of the planet to shareholders?


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11. The main hope for poor countries is to allow American shareholders to own most of their national assets and infrastructure.

Nations have severe difficulties with economic growth unless it is home-grown, arising

from the enterprise of its own people. One reason that so many economies followed the Soviet path to economic development, despite repeated failures, was that this at least empowered the nation state by making its government responsible. A reason for the prosperity of first Japan, then the Pacific Rim and then China was their very high domestic savings rates. Capital could be supplied by their own people to make their domestic industries strong. They were prepared to accept the market under those circumstances. Countries without substantial savings faced the problem of becoming dependent on foreign shareholders, largely American.

It is no coincidence that “catch-up economies” (see Charles Hampden-~Turner and Fons Trompenaars, 2000) are virtually all stakeholder economies. There is some inward investment but this is a small proportion of the total. Nations need to take responsibility for their own growth and governments lead in this in process, acting as “coaches” in addition to being “referees.” See Bruce R Scott and George C. Lodge (1985). The “coach” as in football is often popular, but the “referee” is rarely so, making it difficult for Western governments to lead, save in national emergencies. The example of China’s policy towards Africa where it exchanges infrastructure development for access to raw materials is an interesting outcome of the stakeholder approach.

Discussion and Conclusion

There is mounting evidence that the traditional shareholder model of capitalism is being challenged and is giving way to various associations of stakeholders. Despite their relative benefits being hard to assess the stakeholder model distributes gains more widely than the shareholder model and recognizes that all parties need to work together for economic development to occur. That what shareholders gain trickles down to others is not established and is doubted. No party to an enterprise should be treated as a mere means to enrichment. Rather than industry being activity leading to profit, it may make more sense to see profits as something to be bestowed on industry and on industrious people. Industry is an end in itself.

Genuine wealth is created by indirection, by first benefitting another stakeholder who repays you. Shareholders come last in the sense that stakeholder activity must precede a division of spoils. There is mounting evidence that innovative enterprise is a group activity, a form of improved relationships among stakeholders in networks using shared knowledge as their medium. Manufacturing is the integrity of this network and we outsource at our peril. Governments are needed to regulate and lead associations of stakeholders and give these a democratic direction. World environmental crises necessitate such leadership. Poor countries are unlikely to develop economically unless their growth is spurred by their own cultures and unless they own their own destinies.

References

Anderson, Ray C. Business Lessons from a Radical Industrialist New York: St. Martin’s Griffin, 2011

Chang, Ha-Joon 23 Things They don’t tell you about Capitalism London: Penguin 2011 Chen, Ming-Jer Inside Chinese Business, Boston: Harvard Business School Press 2001


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Chesbrough, Henry Open Innovation: The New Imperative for Creating and Profiting from Technology Boston: MA Harvard Business School Press, 2003

Christiansen, Clayton “Innovation and the fate of nations.” Interview for documentary film: Discovery Channel, Asia, 2011

Collins, Jim and Jerry Porras Built to Last London: Century 1994 Collins, Jim Good to Great New York: Random House, 2001 Frank, Thomas One Market Under God New York: Anchor, Doubleday, 2000 Friedman, Milton Capitalism and Freedom Chicago: Chicago Univ. Press 1962 Gray, John False Dawn London: Granta Books 2009 Hagen, Everett On the Theory of Social Change Homewood:Ill. Dorsey Press, 1962 Hampden-Turner, Charles Charting the Corporate Mind Oxford: Basil Blackwell 1994 Hampden Turner, Charles and Fons Trompenaars Building Cross Cultural Competence: Yale

University Press; 2000 Hurst, David K. Crisis and Renewal Boston: MA. Harvard Business School Press 1992 Kaplan R. S. and Norton D P “The Balanced Scorecard: Measures that drive performance”

Harvard Business Review Jan. 1992 Mason, Paul, Meltdown New York: Verso, 2009 Pisano, Gary and Willy C Shi “Restoring American Competiveness” Harvard Business Review

July-August, 2009 Reich, Robert B Aftershock New York: Vintage Books, 2011 Scott, Bruce R and George C Lodge eds. US Competitiveness in the World Economy Boston:

MA Harvard Business School Press 1985 Sisodia, R.S. Wolfe David B. and J N Sheth Firms of Endearment Philadelphia: Wharton School

Publishing, 2011 Trompenaars, Fons Riding the Whirlwind Oxford: Infinite Ideas Press, 2008 Zhang, Haihua Think Like the Chinese Sydney: Australia: Federation Press 2008 Charles Hampden-Turner has an MBA and a DBA from Harvard. He is retired after teaching at the Judge Business School at Cambridge for 19 years. Charles is currently a professor of management practice at London Metropolitan University and also supervises students at the Institute for Manufacturing at Cambridge. Raymond Ferris Abelin holds an MA from Harvard, MBA from Cambridge and Ph.D. from Colorado. He is the past Director of entrepreneurship and innovation education programs Nanyang Technological University in Singapore.


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Towards a New Model of Wealth Creation: Shareholders and Stakeholders



[email protected]

Abstract

There are currently two distinct approaches to a capitalist model of free enterprise. The first is the Shareholder Model. In this approach the prime purpose of the economy is to enrich individual shareholders. All other activities like satisfying customers, developing employees and rendering the company more innovative are means to the end of profit maximization. In the Stakeholder Model the several stakeholders, employees, customers, shareholders, the community, the supply chain, banks, the government and the environment are all believed to have a stake in the output of the business and the outcome of its policies. Such policies should benefit the entire range of stakeholders. This article argues that the second model leads to faster economic development and better all-round outcomes for the stakeholders.

Historically the shareholder model came first. Pioneer Capitalism is more risky and more individualistic than Catch-up Capitalism, which is more community oriented. The latter generally follows the path of the first and because many of the shareholders are foreigners and pioneers, it seeks to benefit its own employees, workers, suppliers and customers who are those in pursuit of individual and often competing interests.

Keywords: Shareholders vs. Stakeholders, Catch-up Capitalism, Individualism-Communitarianism, Anglo-Saxon Model, Asian Model, direction vs. indirection



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French version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

Vers un nouveau modèle de création de richesse: le modèle des actionnaires versus le modèle des

parties prenantes


Institute for Manufacturing, Cambridge University [email protected]

Résumé

Il existe actuellement deux approches distinctes du modèle capitaliste de la libre entreprise. Le premier est le modèle de l'actionnaire. Dans cette approche, le but principal de l'économie est d'enrichir les actionnaires individuels. Toutes les autres activités, comme la satisfaction des clients, le développement personnel et l'innovation sont des moyens en vue de la maximisation du profit. Dans le modèle des parties prenantes, plusieurs parties prenantes comme les employés, les clients, les actionnaires, la communauté, la chaîne d'approvisionnement, les banques, le gouvernement et l'environnement sont toutes considérées ayant des intérêts dans la production de l'entreprise et dans les résultats de sa politique. Ces politiques devraient bénéficier à l'ensemble des parties prenantes. Cet article soutient que le second modèle conduit à un développement économique plus rapide et de meilleurs résultats pour toutes les parties prenantes.

Historiquement, le modèle de l'actionnaire est venu en premier. Le capitalisme pionnier est plus risqué et plus individualiste que le capitalisme de rattrapage, qui est davantage orienté vers la communauté. Ce dernier suit généralement le chemin du premier, car beaucoup d'actionnaires sont des étrangers et des pionniers. Il cherche à tirer profit de ses propres employés, travailleurs, fournisseurs et clients, qui sont à la poursuite de leurs intérêts individuels et souvent contradictoires.

Mots-clés: Actionnaires versus parties prenantes, capitalisme de rattrapage, l'individualisme-communautarisme, modèle anglo-saxon, modèle asiatique, direction versus indirection




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German version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

Gegen ein neues Modell der Schaffung von Wohlstand: Shareholder und Stakeholder



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Zusammenfassung

Gegenwärtig existieren zwei unterschiedliche Ansätze zur kapitalistischen Ausrichtung eines frei agierenden Unternehmens. Der erste ist der Shareholder-Ansatz, welcher als übergeordnete Zielsetzung der Wirtschaft die Bereicherung der einzelnen Anteilseigner versteht. Alle übrigen Aktivitäten, wie die Befriedigung der Interessen von Kunden, der Entwicklung von Mitarbeitern und die innovative Ausrichtung des Unternehmens werden durch die Profitmaximierung limitiert. Im Stakeholder-Ansatz werden die Interessen der unterschiedlichen Anspruchsgruppen, wie Mitarbeiter, Kunden, Anteilseigner, die Öffentlichkeit, Lieferanten, Banken, die Regierung und die Umwelt berücksichtigt, so dass in ihrem Sinne das Unternehmen agieren soll und einen entsprechenden Output generieren. So eine Unternehmenspolitik soll allen Anspruchsgruppen einen Vorteil schaffen. Der vorliegende Beitrag vertritt die Ansicht, dass das zweite Modell zu einer schnelleren ökonomischen Entwicklung führt und insgesamt die Stakeholder besser stellt.

Historisch gesehen existiert jedoch der Shareholder-Ansatz länger. Der Pionier-Kapitalismus ist risikoreicher und individueller als der jüngere Kapitalismus, der eher an der Gemeinschaft orientiert ist. Der Letztere folgt allgemein dem Pfad des ersten Ansatzes, da zahlreiche Anteilseigner selber Fremde oder Pioniere sind.

Keywords: Shareholders vs. Stakeholders, Catch-up Kapitalismus, Individualismus-Kommunitarismus, angelsächsisches Modell, asiatisches Model, Orientierung vs. Orientierungslosigkeit





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Spanish version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

Hacia un Nuevo Modelo de Creación de Riqueza: Accionistas y Stakeholders



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Resumen

Actualmente hay dos enfoques distintos para un modelo capitalista de libre empresa. El primero es el Modelo Accionista. En este enfoque, el objetivo primordial de la economía es enriquecer a los accionistas individuales. Todo el resto de actividades como la satisfacción de los clientes, el desarrollo de los empleados y hacer que la empresa sea más innovadora, son medios para lograr el fin de la maximización del beneficio. En el modelo Stakeholder, todos ellos, empleados, clientes, accionistas, la comunidad, la cadena de suministro, los bancos, el gobierno y el medio ambiente se considera que tienen un interés en el rendimiento de la empresa y los resultados de sus políticas. Estas políticas deberían beneficiar a todos los Stakeholders. Este artículo sostiene que el segundo modelo conduce a un desarrollo económico más rápido y mejores resultados en general para los Stakeholders.

Históricamente, el modelo Accionistas se desarrolló primero. El Capitalismo Pionero es más arriesgado y más individualista que el Capitalismo seguidor, que está más orientado a la comunidad. Este último, por lo general sigue el camino del primero y, porque muchos de los accionistas son extranjeros y pioneros, busca beneficiar a sus propios empleados, trabajadores, proveedores y clientes, que son los que persiguen intereses individuales y, a menudo encontrados.

Palabras Clave: Accionistas vs. Stakeholders, Capitalismo de Alcance, Individualismo-Comunitarismo, Modelo Anglosajón, Modelo, Dirección vs. No Dirección.





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Arabic version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

المساهمين و أصحاب: نحو نموذج جديد لخلق الثروة المصالح



[email protected] U

ملخص

الأول و الأساسي هو نموذج المساهمين، يعد الهدف : يوجد نهجين مختلفين للنموذج الرأسمالي الحر، الأولالشركة كارضاء العملاء و تعد جميع الأنشطة التي تقوم بها. للاقتصاد في هذا النموذج هو اثراء المساهمين

: أما في نموذج أصحاب المصالح.تطوير الموظفين و جعل الشركة أكثر ابتكارا طرقا لتعظيم الارباحلتزويد و الامداد و البنوك و الحكومة و البيئة و غيرهم فالموظفين العملاء و المساهمين و المجتمع و سلسلة ا

من أصحاب المصالح جميعهم يتأثرون بمخرجات العمل و سياساته التي ينبغي أن ينتفع بها جميع أصحاب .المصالح

تاريخياً . تبين هذه الدراسة أن النموذج الثاني يطور الاقتصاد و يؤدي الى نتائج أفضل لكافة اصحاب المصالحى النموذج الاول في البداية، حيث يعد رواد الرأسمالية أكثر مخاطرة و فردية بالمقارنة مع الرأسمالية أت

اللاحقة الموجهه نحو المجتمع عموماً يتبع النموذج الثاني طريق الأول و لان العديد من المساهمين من خارج . للموظفين، العمال، المزودين، و العملاء الشركة و من الرواد فانه يسعى لمحاولة تلبية المصالح المتضاربة

-الرأسمالية اللاحقة، الفردية المجتمعية، النموذج الانجلو ,المساهمين مقابل أصحاب المصالح :الكلمات الدالة

.سكسوني، النموذج الاسيوي،الاتجاه مقابل المراوغة





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Italian version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

Verso un nuovo modello di creazione della ricchezza: azionisti e stakeholders



[email protected]

Abstract

Ad oggi sono presenti due approcci distinti al modello capitalistico di impresa moderna. Il primo è quello dell’azionista. Secondo questo approccio il primo scopo dell’economia è quello di arricchire gli azionisti. Tutte le altre attività come, la soddisfazione del cliente, lo sviluppo dei collaboratori e rendere l’azienda più innovativa, sono mezzi al massimizzare il profitto. Nel modello dello Stakeholder, i vari stakeholder, collaboratori, clienti, azionisti, la comunità, la catena di approvvigionamento, banche, governi e anche l’ambiente, tutti sono considerati come entità che hanno un interesse in ciò che genera l’azienda in termini di risultati e politiche di gestione. Queste politiche di gestione dovrebbero essere a beneficio di tutti gli stakeholder. Questo articolo presenta l’opinione che le politiche di gestione del secondo modello conducono a uno sviluppo economico complessivo più rapido e in generale a migliori risultati per gli stakeholder.

Storicamente il modello azionista veniva prima. Il Capitalismo Pioneristico è più rischioso e individualista del Capitalismo che semplicemente segue un trend, che è più orientato alla comunità. Quest’ultimo generalmente segue il cammino del primo perché molti hareholder.

Keywords: azionisti vs stakeholder, Capitalismo che Segue, Individualismo - Senso di comunione, Modello Anglosassone, Modello Asiatico, direzione vs assenza di direzione

*. Translated by: Riccardo Paterni, Co-Founder Synergy Pathways, [email protected]




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Chinese version* Towards a New Model of Wealth Creation: Shareholders and Stakeholders

走向财富财造的新模型：股财和利益相关者


Institute for Manufacturing, Cambridge University [email protected]

摘要

目前，对于资本主义私营企业的资本主义模型存在着两种不同的思路。第一种是股东模型。按照该思路，经济的基本目的是扩大个人股东的财富。满足顾客、开发员工、提高公司创新等其他一切活动，都是实现利润最大化这一最终目的的手段。而利益相关者模型则指出，企业的产出及企业政策的结果，会影响到员工、顾客、股东、社区、供应商、银行、政府、环境这几大利益相关者的利益。企业政策应该对这一系列的利益相关者有利。本文认为，第二种模型会使经济更快发展，也会为利益相关者带来更好的共赢结果。

从历史上看，股东模型更具优势。早期资本主义比后起资本主义更加冒险，更加个人主义，后者则具有更强的社区导向。一般而言，后发资本主义会追随早期资本主义的道路，而且，因为后发资本主义的许多股东都是外国人或早期资本主义的人，因此它们会致力于使自己的员工、工人、供应商和顾客获益，这些群体都追求自身的利益，，并且常常会有利益冲突。

关键词: 股东与利益相关者的比较；后发资本主义；个人主义—社群主义；盎格鲁-撒克逊模型；亚洲模型；直接与间接的比较

*Translated by: Wei Si & Jian-Min Sun, Renmin University of China, [email protected]




141

Research and Publication Strategies for International Scholars in a Globalizing

World

William R. Pendergast

Orfalea College of Business California Polytechnic State University San Luis Obispo, California 93407-0304 USA


Abstract

Scholars in emerging economies experience strong institutional pressures to accelerate their output of research and publication in leading academic journals. These pressures arise from global and local dynamics that affect educational institutions in their competition for international prestige and reputation. At the same time, scholars confront entry barriers to publication in leading academic journals that are solidly anchored within a prevailing Anglo-American paradigm that includes language, research topics, and methodology. This article examines: the importance of publication to scholars and institutions; the varieties of scholarship (discovery, teaching and application); the life-cycle of faculty publication (audience, outlets and topics); channels for publication; selecting a target publication (qualifying the buyer) with respect to audience, topics, methodology and ranking; crafting an article format; and strategies for success through collaboration.

Keywords: Research, Publication, Strategies, International Scholars

Introduction

International business (IB) scholarship in the post-WWII period has been dominated by an Anglo-American paradigm that includes language, research topics, and methodology. The English language is the dominant, if not exclusive, vehicle for publication in leading international business journals. The top entrants on “journal quality lists” (see below) are invariably English-language journals, and their editors and editorial boards hail predominantly from Anglo-American countries. Similarly, the top research topics in the field of international business reflect the concerns of scholars from Anglo-American countries, and those concerns themselves ethnocentrically reflect issues that arise from their national business systems. Peter Buckley [1], for example, identified three core topics in recent years that comprised “big research questions” in the field of international business: foreign direct investment, the multinational corporation, and globalization. These questions arose from concerns endemic to developed, western economies. In other regions, issues that preoccupy scholars may be quite different. The research methodologies that predominate in western journals also reflect concerns about scholarship and scientific credibility that arose within the American business school community from the 1950s onward. Scientific legitimization was an outgrowth of Gordon and



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Howell’s 1959 seminal report [2] asserting that existing management education was too vocational to meet the needs of American business.

In recent years, the forces of globalization have expanded the scope of international business research to include scholars with origins outside the Anglo-American consensus. Many of these scholars experience institutional pressures to publish their research in western journals. These institutional pressures arise from local political and economic dynamics such as the push within the Association of Southeast Asian Nations to harmonize their educational systems and encourage institutional collaboration [3]. Emerging nations now account for 64 percent of all business schools and they will probably generate most, if not all, of the increase in demand for business education in the coming decades [4]. Already, several elite Asian business schools have stepped forth and have achieved prestigious accreditation and seek to enroll western students [5]. Their ability to accomplish these goals depends heavily on the research and reputation of their faculty. It is consistent with this shift in the center of gravity of international business research that, since 2004, the best-attended annual conferences of the Academy of International Business, the premier association of IB scholars in the world, were in non-US venues: Beijing in 2006 with 1055 attendees and Milan in 2008 with 1201 attendees [6]. It is partly a result of these developments that western educational institutions themselves are making unprecedented forays into international operations [7].

The purpose of this paper is to suggest strategies for international scholars to increase their success in gaining access for their research in international publication venues. Over time, such access by international scholars to leading journals will have effects on those journals themselves in the composition of their editorial boards, the research they choose to publish, and the reigning methodologies. As guest editors Harry Barkema et al announced in a Call for Papers for a Special Research Forum in the Academy of Management Journal on “West Meets East: New Concepts and Theories:” “It’s time to go beyond Western settings to tap into the empirical phenomena of the East and its cultural, philosophical, and broader intellectual tradition…” [8]. There are encouraging signs of such change in governing boards of publications such as the Journal of International Business Studies (JIBS) [9], but the immediate challenge for international scholars is to publish their research in respected international venues. This paper addresses the importance of publication, the varieties of scholarship, the life-cycle of faculty publication, channels for publication, target journal selection, crafting an article format, and strategies for success.

Why Publish?

Scholars and the educational institutions that employ them have different but compatible reasons to support the publication of scholarly research. Universities exist to diffuse and expand the boundaries of knowledge through teaching and research. Institutions vary in the relative emphasis they place on these two facets of their mission. In the US, for example, the Carnegie Foundation classifies educational institutions into six categories according to common criteria including their research emphasis [10]. External accreditation requirements can also drive research, as does the need to attract students to ensure institutional survival.

For faculty, research is integral to the triad of professional activities that includes teaching, research and service. Research and publication can be essential for hiring, retention, promotion and tenure. It is certainly requisite for the peer recognition necessary for occupational mobility among institutions.


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Institutional and faculty interests converge when it comes to ensuring the resources needed to support faculty research. These include sufficient time for faculty research, access to online digital resources, and opportunities to network with professional peers. Institutional appreciation for the critical nature of these resources is especially essential in resource-scarce environments.

Varieties of Scholarship

The traditional view of scholarship centered on the discipline-based research of “discovery” that adds to the accumulation of knowledge or extends its boundaries. In 1990, Ernest Boyer published Scholarship Reconsidered: Priorities of the Professorate [11] and recommended that in addition to the traditional “scholarship of discovery,” scholars should be encouraged to engage in other forms of research that are appropriate to both the school’s mission and the needs of society, including the “scholarship of teaching” and the “scholarship of application.” These recommendations and other influences had a significant impact. In 1991 the Association to Advance Collegiate Schools of Business (AACSB) made major changes to its accreditation standards, including the wholesale elimination of the term “research” throughout the standards and its replacement by “intellectual contributions,” which were defined broadly to reflect Boyer’s tripartite proposal. The AACSB also broadened the range of acceptable outlets for intellectual contributions beyond traditional peer-reviewed journals. As a result of these developments, many academic associations extended their menu of acceptable topics and in some cases introduced additional publications with a specific orientation towards teaching or practice. The Academy of Management (AOM), for example, introduced a journal named Learning & Education as well as a practitioner-oriented publication called Perspectives. The Academy of International Business (AIB) added AIB Insights to its mainline research outlet, the Journal of International Business Studies (JIBS). These developments significantly extended the range of topics and outlets acceptable for publication as well as the total number of articles published each year. At the same time, it complicates the task of targeting an appropriate journal for submission of specific research.

Channels for Publication

Scholars may choose among numerous channels for publication, depending on their immediate needs and the type of research. This varies with each faculty member and the purposes of the research. In general, publication channels differ in their intended audience: academics, students, general public, or policy elites. For professional advancement, the “gold standard” is generally publication in peer-reviewed journals (PRJ) for which reviews are “double blind” (both authors and reviewers are unknown to each other). Other channels include textbooks, trade books, book chapters, conference proceedings, book reviews, cases with instructional materials, technical reports, and instructional software.

The Lifecycle of Faculty Publication

There are many seasons in a scholar’s life and, as the nature and needs of research change, choices about publication topics and venues evolve. There is a conventional lifecycle to publication by scholars working in academic environments. Young scholars in western environments face probationary periods during which publication in peer-reviewed journals of


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the highest quality is essential to gain promotion or tenure. Once this brass ring is secured, ongoing publication in such outlets may be necessary to secure continued institutional benefits (e.g. teaching release time, travel and research funds), but the maturing scholar’s focus of attention often shifts from an audience of academic peers to the broader general public (trade books), students (textbooks), or policy elites (technical reports, etc). These are all legitimate forms of research and publication, and each scholar must determine his or her most appropriate portfolio.

Selecting a Target Publication (Qualifying the Buyer)

To borrow a marketing metaphor, academic journals represent a “buyer” in a transaction with a “seller” (the scholar). In such a transaction, the scholar should “pre-qualify” the buyer to ensure the best fit for research and thereby maximize the chances for publication. This requires considerable effort in advance of submission, but in a process as time-intensive as publication, this preparation can save considerable time and grief.

Every journal has an editorial scope of interest with respect to the kinds of material it seeks to publish. Often, this reflects the journal’s audience of subscribers. In many cases, there also emerges a methodological bias that remains implicit but can be discerned by a casual review of articles published in several issues of the journal. The identity of members of the editorial review board can also suggest areas of content or methodological preferences. Practical considerations for authors include the normal time-to-publication for articles submitted. Every journal has a certain number of issues in each annual volume and publishes an average number of articles in each issue. Other important considerations include the journal’s instructions for authors, including word limits and style requirements.

The “quality” or ranking of a journal can be a major factor for faculty seeking to identify an appropriate journal. Journal quality remains an imprecise assessment and it therefore can assume inordinate importance that is unmatched by its own precision. Individual educational institutions often create internal lists for purposes of faculty evaluation. A common shorthand reference for qualifying a journal is its acceptance rate, which refers to the percentage of total submissions to the journal that are accepted for publication. Citation indexes like Google Scholar and the Social Science Citation Index (SSCI) rank journals based on the frequency with which their articles are cited in other “core journals.” A journal’s “impact factor” (IF) represents the number of citations in core journals divided by the total number of articles published in that journal. The impact factor is normally calculated for a given year based on data from the two previous years. There also exist independent, external “journal quality lists” that perform an aggregation function for these different approaches to measuring quality. Some commonly cited journal quality lists include: The Association of Business Schools (ABS) Academic Journal Quality Guide [12], Financial Times [13], University of Melbourne (Anne-Wil Harzing) [14], University of Queensland [15], Australian Business Deans Council (ABDC) [16], Australian Research Council (ARC) [17], ESSEC Business School [18], Centre National de la Recherche Scientifique [19], University of Texas Dallas [20].

Crafting the Article Format

Over time, most publications acquire a preferred format for articles and the chances for acceptance increase if an article is compatible in its structure with the conventional section headings, layout, and citation format found in the journal. A cursory perusal of a target journal’s


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published articles reveals this standard format. These will vary with each publication. Reviewers grow accustomed to the format of their journals and it creates unnecessary friction for an author to neglect their comfort level. An abstract precedes virtually all published articles and provides a capsule description of the contents, and the abstract is followed by a list of keywords that identify the main themes. An introduction and problem statement is the gateway to the article for readers. This gate will close unless readers are engaged by the statement of the significance and interest of the topic. A literature review then provides the context within which the paper fits--it identifies key theories and past research that situate the paper within the stream of prior scholarship. A description of methodology and data collection informs readers about the empirical and conceptual framework for the article. The presentation of results identifies principal outcomes and is often followed by a discussion of the implications of those outcomes. Finally, a section on limitations and future research both qualifies the implications and identifies pathways for further development. References in the journal’s preferred style come last.

A Strategy for Success

Much of the above discussion pertains to the strategic positioning of research and its adaptation to a chosen channel for publication. At a more elemental level, many international scholars face serious barriers to producing publishable research in the first place. These may be barriers of language, research methodology, or conceptual apparatus and professional perspective. Many international scholars are simply unable to produce a perfectly written manuscript that will be accepted for publication in a non-native language like English. They may also be unfamiliar with certain methodological approaches like case study writing, which has its own subtle conventions. A scholar’s lifetime experiences may be insufficient to trace in depth the policy implications of their research.

These are not new problems, but they are increasingly common with the globalization of research and publication in higher education. It is becoming critical, in the eyes of their institutions, for international scholars to establish themselves in respected academic journals. Earlier phases of this process have occurred, for example, in East and Central Europe during the transition to a market economy in the last decade of the twentieth century. In such cases, collaborative research with a western co-author served as at least a transitional step to successful publication. Significant success was registered during these years by numerous western scholars and institutions that engaged in institution-building throughout this region. The present author participated in two of these experiments, at the Czech Management Center in Celakovice and the Sarajevo Graduate School of Business in Bosnia. In both cases, western faculty partnered with local professors to produce case studies and theoretical research that led to an enviable record of publication in respected western journals and books.

This process represents a negotiated tradeoff of complementary skills by western and local scholars. Western academics possess the requisite linguistic skills, and usually have the conceptual and methodological mindset for publication in western venues. They often have contacts, networks and data sources that can facilitate the process. Local faculty, on the other hand, possess attributes that facilitate access to local sources of data and contacts that can be essential to gathering appropriate information for in situ research. In one such case, for example, the author collaborated with two Bosnian faculty on a project that resulted in publication of a book chapter on the internationalization of Bosnian small-and-medium sized enterprises (SMEs) [21]. In another case, the author collaborated with the general manager of Alcatel’s silicon wafer production plant in eastern Slovakia [22]. The western author brought English-language skills,


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familiarity with the literature on internationalization and export development, and contacts with western publishers and editors. The local partners were indispensable in gathering data from local companies and export development associations, and in massaging the data.

While such a strategy of collaborative research and publication can be very effective, it requires some self-promotion and marketing by each party. Making contacts is essential to developing the rapport that can eventuate in a research partnership. Institutions can be partners in stimulating and supporting such networks. Collaborations may not last forever, but they can provide a critical transition for international scholars to gain a foothold in the globalizing world of research and publication.

Summary and Conclusions

Globalization is a process with many facets. At one level, it involves the intensification of flows and transactions around the globe. At another level, this augmentation of international traffic leads to interconnectedness and network effects so that perturbations anywhere in the system have repercussions elsewhere. At still another level, these preceding changes bring the diffusion of skills, capabilities and resources and the rise of new geographic regions. These processes lead to the integration of new players into existing world regimes. Education is one such regime in which both institutions and individual scholars in emerging markets seek recognition and access to established centers of power. In doing so, they wish to advance their own interests, but at the same time it is in the interest of established parties to incorporate them effectively. If this occurs in a mindful and intentional way, it can lead to higher levels of performance by all.

References

1. Buckley, P. J. (2002). Is the international business research agenda running out of steam? Journal of International Business Studies, Vol. 33, Issue: 2, pp: 365-373.

2. Gordon, R. A. & Howell, J.E. (1959). Higher Education for Business. New York: Columbia University Press.

3. Gooch, L. (2011). Asean nations put education front and center, New York Times, October 30, 2011.

4. AACSB International (2011). Globalization of Management Education: Changing International Structures, Adaptive Strategies, and the Impact on Institutions, Tampa, Florida: Association to Advance Collegiate Schools of Business.

5. Korn, M. (2011). Asian schools reach out to the West, Wall Street Journal, November 3, 2011.

6. Hult, T. (2011). From the executive director,” AIB Newsletter, Vo. 17, Issue: 3, pp: 1-2. http://aib.msu.edu/publications/newsletter/aibnewsletter_v017n02.pdf (accessed July 29, 2011).

7. Barboza, D. (2011). Berkeley reveals plan for academic center in China. New York Times, November 16, 2011.

8. Barkema, H., Chen, X-P., George, G., Luo, Y., Tsui, A. (2011). Special research forum call for papers—West meets east: New concepts and theories. Academy of Management Journal, Vol. 54, Issue: 3, pp. 642.


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9. Harzing, A-W & Metz, I. (2011). Gender and geographic diversity in the editorial board of the Journal of International Business Studies, AIB Insights, Vol. 11, Issue: 3, pp: 3-7.

10. Carnegie Classification: http://classifications.carnegiefoundation.org/index.php. 11. Boyer, E. L. (1990). Scholarship Reconsidered: Priorities of the Professoriate. New York:

John Wiley & Sons. 12. ABS Academic Journal Quality Guide Version

4: http://www.associationofbusinessschools.org/node/1000257 13. Financial Times Top 45 Journals: http://library.mcmaster.ca/find/ft-research-rank-journals 14. Journal Quality List (Anne-Wil Harzing): http://www.harzing.com/jql.htm 15. University of Queensland Business School (UQBS) Journal

List: http://www.business.uq.edu.au/staff_journal_rankings 16. Australian Business Deans Council (ABDC) Journal Ratings

List: http://www.abdc.edu.au/3.43.0.0.1.0.htm 17. Australian Research Council (ARC) Ranked Journal

List: http://www.arc.gov.au/era/era_2010/archive/key_docs10.htm 18. ESSEC Ranking of Journals

(2011): http://www.essec.fr/fileadmin/user_upload/Rubrique_Professeurs_et_recherche/Recherche/revues-management-classification.pdf

19. Centre National de la Recherche Scientifique (CNRS) Journal Ranking in Economics and Management: http://www.gate.cnrs.fr/spip.php?article551

20. University of Texas Dallas Journal List: http://som.utdallas.edu/top100Ranking/journals.php

21. Pendergast, W.R., Sunje, A. & Pasic, M. (2008). The internationalization of SMEs in Bosnia and Herzegovina, in L. Dana (Ed). Handbook of Research on European Entrepreneurship. London: Edward Elgar, pp: 94-113.

22. Pendergast, W.R. & Kreft, K-P. (1995). Telecomms in the Tatras: Alcatel SEL TLH. Journal of East-West Business, Vol. 1, Issue: 3, pp: 1-16.

http://classifications.carnegiefoundation.org/index.php�

http://www.associationofbusinessschools.org/node/1000257�

http://library.mcmaster.ca/find/ft-research-rank-journals�

http://www.harzing.com/jql.htm�

http://www.business.uq.edu.au/staff_journal_rankings�

http://www.abdc.edu.au/3.43.0.0.1.0.htm�

http://www.arc.gov.au/era/era_2010/archive/key_docs10.htm�

http://www.essec.fr/fileadmin/user_upload/Rubrique_Professeurs_et_recherche/Recherche/revues-management-classification.pdf�

http://www.essec.fr/fileadmin/user_upload/Rubrique_Professeurs_et_recherche/Recherche/revues-management-classification.pdf�

http://www.gate.cnrs.fr/spip.php?article551�

http://som.utdallas.edu/top100Ranking/journals.php�


148

Research and Publication Strategies for International Scholars in a Globalizing

World




Abstract

Scholars in emerging economies experience strong institutional pressures to accelerate their output of research and publication in leading academic journals. These pressures arise from global and local dynamics that affect educational institutions in their competition for international prestige and reputation. At the same time, scholars confront entry barriers to publication in leading academic journals that are solidly anchored within a prevailing Anglo-American paradigm that includes language, research topics, and methodology. This article examines: the importance of publication to scholars and institutions; the varieties of scholarship (discovery, teaching and application); the life-cycle of faculty publication (audience, outlets and topics); channels for publication; selecting a target publication (qualifying the buyer) with respect to audience, topics, methodology and ranking; crafting an article format; and strategies for success through collaboration.

Keywords: Research, Publication, Strategies, International Scholars



149

French version* Research and Publication Strategies for International Scholars in a Globalizing

World

Stratégies de recherche et de publication pour des chercheurs internationaux dans un monde

globalisé



Email:

[email protected]

Résumé

Les chercheurs académiques dans des économies émergentes subissent de fortes

pressions institutionnelles pour accélérer leur production de recherche et de publication dans des revues spécialisées. Ces pressions résultent de dynamiques globales et locales, qui influent sur les établissements d'enseignement, dans leur compétition pour le prestige et la réputation internationale. En même temps, les chercheurs font face à des barrières à la publication dans des revues spécialisées, car celles-ci sont solidement ancrées dans un paradigme dominant anglo-américain, qui comprend la langue, les thèmes de recherche et la méthodologie. Cet article examine: l'importance de la publication pour les chercheurs et les institutions, les variétés de connaissances académiques (découverte, enseignement et application), le cycle de vie de publication de chercheurs (écoute, journaux et sujets), les canaux de publication, la sélection d'une publication cible par rapport à l'auditoire, les sujets, la méthodologie et le classement; élaboration d'un format article, et des stratégies de réussite grâce des collaborations.

Mots-clés: Recherche, publication, stratégies, chercheurs internationaux




150

German version* Research and Publication Strategies for International Scholars in a Globalizing

World

Forschungs- und Publikationsstrategien für internationale Forscher in einer globalisierten

Welt



Email:

[email protected]

Zusammenfassung

Forscher in Schwellenländern verspüren einen starken institutionellen Druck ihre

wissenschaftlichen Veröffentlichungen und ihre Forschung in internationalen Top-Journals zu voranzutreiben. Dieser Druck wächst aus einer globalen und lokalen Dynamik, die die Forschungseinrichtungen in einem Wettbewerb für internationale Reputation und Prestige bringen. Gleichzeitig sehen sich Forscher unterschiedlichen Eintrittsbarrieren in internationalen Top-Journals gegenüber, immer noch vornehmlich dem anglo-amerikanischem Forschungsparadigma verbunden sind, insbesondere was die Sprache, die Forschungsthemen und die Methodik angeht. Der vorliegende Beitrag untersucht die Wichtigkeit von Publikationen für Forscher und Institutionen; die Arten von Stipendien (Erkundung, Lehre und Anwendung); den Lebenszyklus von Publikationen einer Fakultät (Reichweite, Ausfluss, Themen); Publikationskanäle; die Auswahl der Zielpublikation (Ansprache des Abnehmers) mit Bezug zum Empfänger, Themen, Methoden und Rankings; die Fertigstellung eines Artikels und Strategien für eine erfolgreiche Zusammenarbeit.

Keywords: Forschung, Publikation, Strategien, internationale Forscher





151

Spanish version* Research and Publication Strategies for International Scholars in a Globalizing

World

Estrategias de Investigación y Publicación para Académicos Internacionales en un Mundo

Globalizado



Email:

[email protected]

Resumen

Los académicos de los países con economías emergentes experimentan fuertes presiones

institucionales para obtener aceleradamente resultados en forma de publicaciones en las principales revistas académicas. Estas presiones surgen de las dinámicas global y local que afectan a las instituciones educativas en su competencia por el prestigio y la reputación internacionales. Al mismo tiempo, los académicos se enfrentan a serias barreras de entrada para publicar en las principales revistas académicas que están sólidamente ancladas en un predominante paradigma angloamericano que incluye el lenguaje, los temas de investigación y la metodología.

En este artículo se analizan: la importancia de las publicaciones para los académicos, investigadores e instituciones; la variedad de tareas académicas (de descubrimiento, de enseñanza y de aplicación), el ciclo de vida de las publicaciones del profesorado (audiencia, producción y temas); los canales de publicación, la selección de la publicación de destino (clasificar al “comprador”), la audiencia a la que se dirigen, los temas, la metodología y ranking; la elaboración de un formato de artículo, y las estrategias para el éxito a través de la colaboración.

Palabras clave: Investigación, Publicación, Estrategias, Académicos Internacionales





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Arabic version* Research and Publication Strategies for International Scholars in a Globalizing

World

استراتيجيات البحث والنشر للباحثين الدوليين في عالم متعولم




ملخص يواجه الباحثون من بلدان العالم الثالث ضغوطا مؤسسية هائلة لتحسين مخرجات الأبحاث والنشر في كبرى

المؤسسات هذه الضغوط منبثقة عن المتغيرات العالمية و المحلية التي تؤثر على تنافسية . المجلات الأكاديميةفي الوقت ذاته هناك عوائق عديدة تواجه الباحثين للنشر في المجلات الأكاديمية الكبرى المتركزة . التعليمية

.الاميركان من حيث اللغة ومواضيع البحث و الطرق البحثية -على أصحاب الامتيازات الانجلوالاستكشاف و التعليم و (وللتنوع المعرفي هذه الدراسة تدرس أهمية النشر بالنسبة للباحثين و المؤسسات،

تصفية ( ، طرق النشر، إختيار الناشر )الجمهور، المخرجات، و المواضيع(، دورة حياة المنشورات ) التقدمبالاضافة الى الجمهور، المواضيع، الطرق و الترتيب، تصميم الدراسة، و استراتيجيات النجاح ) المشتركين

.من خلال التعاون

الأبحاث، المنشورات، الاستراتيجيات، الباحثين العالميين: ات الدالةالكلم





153

Italian version* Research and Publication Strategies for International Scholars in a Globalizing

World

Strategie di ricerca e pubblicazione per studiosi internazionali in un mondo che si globalizza


Orfalea College of Business California Polytechnic State University

San Luis Obispo, California 93407-0304 USA Email:

[email protected]

Abstract

Nelle economie emergenti gli studiosi sono sempre più sotto pressione istituzionale per

accelerare il ritmo delle loro pubblicazioni in riviste accademiche primarie a livello internazionale. Queste pressioni sono generate da dinamiche globale e locali che hanno un impatto sugli istituti educativi locali che vogliono affermare la loro reputazione e prestigio internazionale. Allo stesso tempo gli studiosi si confrontano con barriere nel pubblicare su riviste accademiche primarie perché sono solidamente ancorate su paradigmi Anglo-Americani formati dalla lingua, argomenti di ricerca e metodologia. Questo articolo esamina: l’importanza del pubblicare per studiosi e istituti educativi; varietà di studio; il ciclo di vita di una pubblicazione accademica (audience, distribuzione e argomenti); canali di comunicazione; selezione dell’audience di riferimento (qualificare il compratore) non solo come audience in se ma anche in termini di metodologia e ranking; generare il format di un articolo; strategie di successo tramite il collaborare.

Keywords: Ricerca, Pubblicazione, Strategie, Studiosi Internazionali





154

Chinese version* Research and Publication Strategies for International Scholars in a Globalizing

World

在全球化世界里国财学者的研究与财表策略




摘要

新兴经济体的学者正在经历加速他们的研究产出以及在国际顶级刊物上发表的强烈的制度性压力。这些压力来自于全球和地方的动力，这些动力会影响教育机构为国际威望和声誉的竞争。同时，学者们面临着顶级学术期刊发表的进入障碍，因为这些期刊几乎全部被盎格鲁-美国范式牢固地主宰，从语言、研究题目，到方法。本文分析了：发表对于学者和机构的重要性；学术的多样性（发现，教学，应用）；学者发表的生命周期（读者，出路，题目）；发表的渠道；选择发表的目标包括读者、题目、方法和排序。构造文章的格式；通过合作取胜的战略。

关键词：研究，发表，战略，国际学者

*. Translated by: Jian-Min Sun, Renmin University of China, [email protected]


155

Index

by authors

A Abelin, Raymond Ferris 122

C Chudzicka-Czupała, Agata 14 Cozma, Irina 14

F Fannin, Jeffrey L. 73

G Glowik, Mario 54 Grabowski, Damian 14

H Hampden-Turner, Charles 122

I Imas, Miguel 103

K Kosmala, Katarzyna 103

M Marulli, E. 34

P Pendergast, William R. 142 Pucci, S. 34

S Smyczek, Sławomir 54

T Tutino, M. 34

W Williams, Robert M. 73 Woehr, David J. 14

Documents

The International Journal of Management and Business