IJIBM Vol6No4 Nov2014
IJIBM Vol6No4 Nov2014
IJIBM Vol6No4 Nov2014
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International Journal of Information, Business and Management
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International Journal of Information, Business and Management, Vol. 6, No.4, 2014
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International Journal of Information, Business and Management, Vol. 6, No.4, 2014
Age 41-50 29 28 22 17 8 11
Average 24.66 20.33 18.66 15 16.33 28
Appendix C: SAP Enterprise Resource Planning
Hersheys implemented SAP in 1999 at a cost of $112 million. Over view of software capacities
are:
Naxtor Stock Inventory Tracking Software
This software works in complement to ERP, the tracking system software follows the physical
merchandise. It provides the basic functions for warehouse operations, including physical inventory,
shipping, receiving, and picking, as well as management features such as queries reporting and
barcode labelling. It retrieves and stores information in the centralised database as the server; cuts
the risk of data synchronization errors and provides accurate inventory information. Warehouse staff
can find items quickly and easily.
Appendix D: Transportation delay
No major delay in bringing raw materials to the manufacturer. With the exception of cacao, first
point of transportation that suffers from natural pressures on resource.
International Journal of Information, Business and Management, Vol. 6, No.4, 2014
Lead time not only causes delay in delivery but also creates a stress inside the company
Top part: lead time transportation to customer
Bottom part: Negative influence on workforce & customer
Appendix E: Ordering times formulae
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85
Ordering service perform well. At the exception of waiting for be serve
6 hour arrival, 7.5 hour serve
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References:
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Journal of Physical Distribution and Logistics Management, 24(10), 20-32.
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Scott, C., & R, W. (1991). new strategic tools for supply chain management. international journal of physical
distribution & logistics management, 21(1), 23-33.
Shapiro, F. J. (2001). Modelling The Supply Chain. California: Duxbury Press.
Yu, Z., & Yan, H. (2001). Benefits of Information Sharing With Supply Chain Partnerships. Industrial Management &
Data Systems, 101, 114-119.
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PERFORMANCE MEASUREMENT AND MANAGEMENT
SYSTEM INTER COMPANY CASE STUDY APPROACH -
TAMILNADU , INDIA
S.Venkatesh , Research Scholar , BHARATH University , Chennai , INDIA
( Research Supervisor Dr.S.Ramachandran , Director- BHARATH School of Business ,
BHARATH University , Chennai , INDIA )
ABSTRACT
The field of performance measurement and management (PMM) is well filled with frameworks, models and guidelines
addressing what to measure and how to design a performance measurement system (PMS). However, what has been
less examined so far is how to ensure that PM evolve in tandem with their environments. Further, the few approaches
available today are prescriptive and outlines how or what practitioners should do in order to manage change in their PM.
Thus, a gap exists in understanding how organisations manage change in their PM in practice. Thus, the purpose of this
paper is to outline and compare the approaches of three case companies for managing PM change. In order to fulfil the
purpose of the paper, the data presented has been collected through the deployment of case studies. The choice of case
studies as means for data collection stems from the possibility of an in-depth and holistic examination of the formulated
phenomenon. All three case companies belong to the same company-group that operates within the transportation
industry. The industrial footprint of the company is global with operations and sales spread out over the world. The
findings suggest that all three companies have processes in place for managing change in PM. However, the approaches
differ in design and context. Furthermore, employee involvement seemed to be the biggest challenge for all three
companies.This paper makes a contribution both through describing how three companies manage PM change and
through elaborating on the underlying factors affecting functionality.
Keywords: Performance measurement, Performance measurement systems, Performance
management
1 INTRODUCTION
Performance measures (PM) are used in organisations for a wide array of reasons: to gauge
performance (Slack et al., 2004), direct behaviour and improve motivation (Spitzer, 2007),
continuously improve processes (Cross and Lynch, 1992), enhance productivity (Bernolak, 1997),
identify areas of attention, improve communication, increase accountability (Waggoner et al., 1999),
implement strategy (Kaplan and Norton, 2001), support goal achievement (Tapinos et al., 2005) and
provide information on strategy implementation (Neely, 1999). Regardless of the reason to why PM
are deployed, it is widely recognised in the literature that PM need to be aligned with the strategic
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priorities, as well as the internal and external environments of the organisation (Neely et al., 1996;
Bourne et al., 2000; Bititci et al., 2001; McAdam and Bailie, 2002; Hass et al., 2005; Lima et al.,
2009). However, as these strategies and business environments are dynamic in nature (Simons,
1995), organisations need to ensure that they are capable of managing change in their PM (Bititci et
al., 2000; Kennerley et al., 2003). Sticking to your PM for too long has been described by
Likierman (2009) as one of the five traps of performance measurement.
The field of performance measurement and management (PMM) is well filled with frameworks,
models and guidelines addressing what to measure and how to design a performance measurement
system (PMS) (Paranjape et al., 2006), most notably the Balanced Scorecard (Kaplan and Norton,
1992). However, what has been less examined so far, is how to ensure that PM evolve in tandem
with their environments (Kennerley and Neely 2003). Barrows and Neely (2012) argue that
contemporary methods do not adequately address the challenges associated with managing
performance in an increasingly turbulent business environment. Further, the few approaches
available today are prescriptive and outlines how or what practitioners should do in order to manage
change in their PM. None of the approaches take a descriptive stance and outlines how
organisations take on the challenge today. Thus, a gap exists in understanding how organisations
manage change in their PM in practice (Bourne, 2008). This gap is further amplified by the fact that
only a few organisations have procedures in place to manage the change of their PM (Neely, 1999;
Bititci et al., 2002).
With this background in mind, the purpose of this paper is to outline and compare the approaches of
three case companies for managing PM change. The motive for the paper is to bridge the
knowledge gap, by contributing to the understanding of how PM change is managed in practice and
assist in the development of adequate theoretical models by shedding light on the problems
encountered in practice. The paper is divided into six sections. The following section presents the
theoretical background. The third section outlines the methodological approach and presents the
case studies. This is followed by a presentation of the empirical findings. The succeeding section
then contrasts the empirical and theoretical findings through a cross-case analysis. The sixth section
summarises the findings and discusses the necessities of a future research agenda, highlights the
contributions and underlines the limitations of the conducted research.
2 THEORETICAL BACKGROUND
Even though change in PM, in contrast to design of PM, remains an under-researched area, several
academics have addressed the topic over the last decade. The progress made so far is presented in
this section.
Neely et al. (2002b) argue that a process needs to be in place in order to ensure that temporary PM
are abolished and indispensable PM are fine-tuned continuously. For this purpose, an audit with 10
questions is provided within their Performance Prism framework. Kennerley and Neely (2002; 2003)
list a process that that reviews, modifies and deploys PM as one of four critical factors in their
framework for keeping PMS up to date. Neely et al. (2002a) argue that PMS are often allowed to
expand to the extent that they become unmanageable and thus a PM review process needs to be in
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place. It is underlined that the understanding of the process evolves over time. Medori and Steeple
(2000) concurs and lists periodic maintenance as the last step in their framework for auditing and
enhancing PMS. They argue that a periodical PMS review is required as PM relevant at one
particular moment in time may become redundant at another point. Meekings (2005) has developed
a set of requirements for a functional review process, including a defined structure, connection
throughout the organisation, deliver value and PM change management. Kaplan and Norton (2005;
2008) argue that two parameters are needed for managing PM change, a clearly defined and
recurring process, and the establishment of an entity responsible for its management and success.
Bourne et al. (2000) support and develop earlier findings by arguing that four processes need to be
in place to review targets of current measures, review current measures, develop new measures and
to challenge the strategy. Bititci et al. (2000) highlights in their dynamics PMS model that a PM
review mechanism is needed which uses the performance information provided by the internal and
external monitors. Further, a deployment system is also required in order to revise objectives and
priorities to business units, processes, and activities using performance measures are required.
Besides the review process, the role of organisational culture is emphasised in the literature.
Waggoner et al. (1999) underline the impact that organisational culture can have on PMS evolution.
They argue that a culture, which discourages risk taking and innovation, can block steps that are
essential for successfully changing a
PMS. Kennerley and Neely (2002; 2003) concur and underline the need of a culture within the
organisation that ensures that the value of measurement, and the importance of maintaining relevant
and appropriate PM are appreciated (Table 1). Salloum and Wiktorsson (2011) argue that in order to
realise a dynamic PMS, a culture is needed that encourages organisational involvement, openness,
information sharing, and resource availability. Farris et al. (2011) identified two critical factors for a
supportive organisational culture in their investigation of the PM review process: employee
empowerment (including focus on teamwork, ownership of problems, participation and
entrepreneurship) and a focus on continuous improvement.
Table 1: Barriers and enablers for culture (Kennerley et al., 2003
S.No Cultural Barriers to Measures
Evolution
Cultural Enablers of Measures Evolution
1 Management inertia towards measures
due to other priorities
Senior management sponsorship
2 Ad hoc approach to measuremen Consistent communication of multidimensional
performance to staff
3 Measures not aligned to strateg Open and honest application of measures
4 Actions not aligned to measure No blame / No game environment
5 Lack of management concern for
non-investor stakeholders
Integration and alignment of reward systems
Further, the role of management is another factor that is recurring in the literature. Waggoner et al.
(1999) highlight the impact and importance of management from several perspectives; top-level
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support, internal influence, process, and transformational issues. Spitzer (2007) concurs and
underlines that PM change has to be driven by the leader, from the top of the organisation.
Kennerley and Neely (2002; 2003) argue that management commitment and training are two factors
needed in order to facilitate PMS evolution. Further, Kennerley et al. (2003) highlight the risk of
management inertia towards PM as a barrier for evolution. In an empirical study conducted at a
large manufacturing unit, it was concluded that management commitment, style, competence, and
politics are factors that have a high impact on the dynamic abilities of a PMS (Salloum and
Wiktorsson, 2011). Kennerley and Neely (2002; 2003) further stress the availability of flexible
information technology to enable the collection, analysis and reporting of appropriate data as crucial
for the evolution of a PMS (Table 2). Wettstein and Kueng (2002) argue that IT capabilities are
pivotal for initiating and accelerating PMS change. They argue that IT consistently offers new
opportunities to automate processes, enhance communication, and develop data analysis sequences.
In the integrated model forwarded by Bititci et al. (2000), the required capabilities for dynamic
PMS are divided into two categories, framework capabilities and IT platform capabilities. For the
IT platform, four requirements were identified:
1. Able to provide an executive information system.
2. Capable of accommodating and incorporating all the elements of the framework.
3. Integrated within the existing business systems.
4. Capable of handling simple rules, such as alarms and warning signals, to facilitate
performance management.
Table 2: Barriers and enablers for systems (Kennerley et al., 2003
S.No System Barriers to Measures Evolution System Enablers to Measures Evolution
1 Inflexible legacy system Investment in IT hardware and software
2 Poorly or partially implemented ERP
system
Data mining / warehousing capability
3 Difficult to tailor off-the-shelf
performance reporting software
Readily customisable information systems
4 Poor use of graphical representation Internal systems development and adaptation
capability
2.1 Synthesising the theoretical background
The advancements within the PMM field regarding PM change can be perceived through two
perspectives, structural and behavioural. The structural perspective stresses the need for processes,
mechanisms and procedures for managing PM change. Furthermore, within the structural
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perspective, emphasis is put on the capabilities and flexibility of the IT-systems. The need to have a
process/mechanism/procedure in place for continuously reviewing and changing PM is a feature
that the researchers in general highlight as important.
However, how the process/mechanism ought to be designed and function is not agreed upon. The
previous research ranges from only mentioning the need for a review process (Medori and Steeple,
2000) to literature studies (Waggoner et al., 1999) and models for how manage PM change (Bititci
et al., 2000). Some frameworks (Neely et al., 2002a; Bourne et al., 2000) elaborate on the
responsibilities of such a process but provide little direction on how it might take shape in practice.
Others (Kennerley and Neely, 2002; Neely et al, 2002a) debate and argue more on the design by
outlining important factors to consider, questionnaires to deploy, and management tools to
implement. From a behavioural perspective, the role of senior management, culture and employee
involvement/empowerment are all underlined as important factors (Waggoner et al., 1999;
Kennerley and Neely, 2002; Kennerley and Neely, 2003; Salloum and Wiktorsson, 2011; Farris et
al., 2011).
Previous research generally neglects the context that PM operates in and research within
manufacturing organisations is missing. PM are deployed across organisations, from executive
management teams to shop-floor teams. The further down in the organisation you look, the more
PM you will find in need of review. Hence, any functional review process to work in practice needs
to take a wide perspective and incorporate the whole organisation. The approaches presented in the
theoretical background appear to take a managerial rather than an organisational perspective to the
review of PM. Moreover, PM works in open production systems, heavily influenced by their
temporal, cultural, and social contexts. In practice, PM are surrounded by a considerable amount of
contingency (Tangen, 2005).
Thus, the final applicability and functionality can depend upon a number of factors beyond the
actual review process. In regards to the purpose of this paper the theoretical foundation is limited.
None of the previous publications neither illustrate how PM change is managed in practice nor
takes an organisation-wide perspective. Hence, no research has been found that can be contrasted
with the empirics presented in this paper. Instead, the empirics will be put in juxtaposition to the
characteristics and advocacies of the theoretical background and discussed from the basis of
commonalities and divergences.
3 METHOD
In order to fulfil the purpose of the paper, the data presented has been collected through the
deployment of case studies (Table 3). The choice of case studies as means for data collection stems
from the possibility of an in-depth and holistic examination of the formulated phenomenon
(Merriam, 1994; Bell, 1999). The unit of analysis (Yin, 1994) in all three cases has been the way of
working for managing change in PM. Three factors have guided the selection of case companies;
the existing procedures for handling PM change at each case company, the knowledge about the
company practices that the researcher could obtain before the case execution and the possibility to
get unrestricted access to interviewees and databases.
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The theoretical findings presented in Section 2 played several important roles in the research. It has
helped to develop sharper and more profound objectives and questions in line with the arguments
by Yin (1994). Further, it has also served as an initial guide to the case study design and data
collection and as a part of the iterative process of data collection and analysis (Eisenhardt, 1989).
The interview questionnaires used within the interview studies have been based on the literature
presented in the theoretical background. The interview questionnaires consisted of three parts. The
initial part focused on the design and features of the deployed PMS. The second part revolved
around how the case company managed PM change whilst the concluding part focused on the
factors and mechanisms that, in the perception of the interviewee, affected the management of PM
change. Each case study was analysed in isolation through of data reduction, theme clustering and
pattern-matching (Miles and Huberman, 1994; Yin, 1994; Merriam 1994) before the cross-case
analysis. The cross-case analysis was executed in line with what is advocated by Eisenhardt (1989)
(Table 3).
Validity and reliability are highlighted by Yin (1994) as important research quality factors to
consider. In order to ensure validity, the research conducted has been structured in a logical flow
with problem statement, current state of the art and empirical investigations. The end-result
describes how the studied phenomenon acts in real organisational settings. Further, representative
case companies and triangulation between data collection components have been after sought (Table
3). Considerations in regards to the validity and reliability have to be made in the case study design
phase as it deals to a great extent with the choice of case studies/companies. By collecting data from
several companies the risk of conducting research in an exceptional and non-generalisable context
is mitigated. Further, Yin (1994), argues that the concept of analytical generalisation is useful for
establishing validity. Analytical generalisation dictates that the concluding research findings ought
to be juxtaposed against the existing base of theory. The comparison will underline the gap between
the research findings and the existing theory and highlight, depending on the extent of the gap, if
more research is needed. Throughout this paper, the theoretical findings have been compared to
their empirical dittos.
Table 3: Deployed case study methodology
Case Company 1 CC1
Case Company 2 CC2
Case Company 3 CC3
Employee Size 800 1000 1100
Geographical Location Chennai Coimbatore Madurai
Business Area Heavy automotives
Complex components
Heavy Machines
Number of Interviews 20 interviews (from five
organisational levels)
19 interviews (from five
organisational levels)
21 Interviews (from six
organisational levels)
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Interviewees Site manager, production
manager, finance manager,
production engineering
manager, logistics manager &
quality manager. Six first-line
managers. Six team leaders and
two assemblers.
Overall production manager, 2
production function managers, 4
second-line managers, 6 first-line
managers, 3 team-leaders, 3
assemblers
Site manager, production
manager, quality manager,
logistics manager, finance
manager, HR manager,
financial controller, logistics
engineer, HR-partner, 6
first-line managers, 2
second-line managers, 2
team-leaders, 2 operators.
Interview Durations 7-51 minutes per interview
4-58 minutes per interview
5-48 minutes per interview
Interview Material Transcribed and validated by
interviewees
Transcribed and validated by
interviewees
Transcribed and validated
by interviewees
Within case data analysis
Data reduction, clustering,
pattern-matching
Data reduction, clustering,
pattern-matching
Data reduction, clustering,
pattern-matching
Validity Triangulation, representative
case study, analytical
generalisation
Triangulation, representative case
study, analytical generalisation
Triangulation, representative
case study, analytical
generalisation
Reliability Choice of case study/company,
establishment of a case study
database
Choice of case study/company,
establishment of a case study
database
Choice of case
study/company,
establishment of a case
study database
4 FINDINGS
Table 4 gives an overall outline of the findings made in each case study. The findings suggest that
all three companies have approaches in place for managing change in PM. However, the approaches
differ in design, execution and context. Each approach is presented in the sections below from two
aspects, structural and behavioural. The structural aspect focuses on how the case companies report
that they ought and want to work with PM change. The behavioural aspect focuses in contrast on
how the intended ways of working have unfolded. The distinction between the structural and
behavioural sides provides a useful contrast of how the case companies want to work vis--vis how
they actually work.
Table 4: Findings per case company summarized
CC1 CC2 CC3
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Type of approach
One process with two loops
(deployment and
agreement/feedback)
Two processes: business plan
(BP) and operational
development (OD)
Unstructured meetings
Ownership and facilitation
of approach
Site manager owns the
process. Facilitated by the
production system exper
CEO owns both processes.
The OD process is facilitated
by internal consultants
No owner & no facilitator
Frequency of approach
execution
Twice a year: June &
December. No alterations in
between
BP: Yearly (autumn). OD:
Every 6 months. No
alterations in between
Yearly (each autumn).
Alterations in between
depending on function.
Time to execute the
approach
Defined and documented
approach
2-3 weeks
Defined and documented
BP: 1-5 months. OD: 1-3
weeks
BP: defined and vaguely
documented OD: defined and
documented
Uncertain. Around 3-4
months
Not defined nor documented
Factors affecting
decision-making
Current performance,
requirements from above,
organisational politics,
business environment,
appropriateness of current
PM
BP: Review of strategy,
current performance, internal
and external environments.
OD: Strategic dialogue, one
mutual focus
Requirements from HQ,
strategic targets, current
performance, market demand,
appropriateness of current
PM
Organisational involvement
Down to first-line managers
BP: Employee involvement
fragmented. OD: all
employees involved
Organisational involvement
limited and fragmented
Top-management support
Supportive according to
interviews
Supportive for both according
to interviews, OD reduced
due to prioritisation
Supportive according to
interviews
IT-infrastructure
IT-systems fragmented after
function and inflexible. High
level of manual impositions
through Excel
IT-systems limited and
inflexible to extraction of
data. Data quality doubted at
some organisational levels.
Newly implemented and
integrated IT-system.
Problems with extracting data
and developing competence.
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Level of beneficial culture
Hierarchical culture, hard to
get wide involvement
Blame-game culture,
characterised by reactivity
Reporting-culture, measures
decided from above
4.1 Case company 1 The single process approach
4.1.1 Structural aspect
Management system documentation and management interview results revealed that CC1 deployed
a process labelled the KPI review. Interview responses from managers across the organisation
exhibited that the process was based on a set of meetings initiated and closed by the
top-management team. The inputs to the first meeting of the process are outlined in Table 4. Once
the top-management finished their review meeting, the function management did the same exercise
with the above hierarchys (top-management) output as input. This interlinked chain of meetings
was meant to continue down to the production teams in order to create alignment in the goal and
PM review. Once all the review meetings have been executed a set of meetings referred to by the
top-management interviewees as the agreement/feedback meetings were initiated. The purpose of
these meetings was to foster consensus of the goals and PM for the coming year and was held
between members of two hierarchical levels. The KPI review was accomplished once the
top-management team held the last agreement/feedback meeting. The top-management team has the
power to either accept the proposed PM or ask for refinements. However, during the interviews
these managers underlined that even though the general manager was the owner of the process the
local production system expert facilitated it. The role played by the expert was hailed by several
management interviewees. One first-line manager explained that the expert was instrumental to him
in getting the work done. Moreover, the interview results strongly advise that the review process
was an established way of working at CC1 as 16 of the 20 interviewees acknowledged it. It is
notably however that the four employees not recognising it came from the lower levels of the
organisation. In order to enhance the communication and promote the use of PM, a payback tracker
was publicly accessible at the intranet. The tracker communicated the financial effects of the PM to
the organisation. Moreover, all PM were
connected throughout the hierarchical levels of the organisation through the use of publicly
available KPI-trees (Figure 1). The general manager explained: And then we do have these
KPI-trees that show how everything is related throughout the organisation I think that they [the
KPI-trees] can play an important role in explaining that yes it [the measures] matters.
Figure 1: Example of one measurement tree for the cost, delivery and quality PM at a
department.
4.1.2 Behavioural aspect
Even though interview results, especially from the top-management team, made it explicit that the
intention was to involve everyone, the process was never deployed on a team level in production.
One team-leader elaborated when asked how he though his team felt about working with PM: I do
International Journal of Information, Business and Management
not think they carepainting is pretty much all that they are interested in thathow can I say
ittheir main goal is the paint and to keep painting. So that is pretty much al
about
The interviewees for the top-management team were united in their view that they had not reached
out fully and had a contribution to make in order to engage the whole organisation. The general
manager explained that an attempt had been ma
others things came up that needed to be dealt with. The general manager described the attempt as
half-hearted. However, all six top-
was important and supported it. One of the managers argued that the attempt failed due to the lack
of management understanding regarding how to make the organisation to want to get involved. The
consequences of not involving the masses in the KPI review were believed
best expressed by the production engineering manager who argued that the involvement of the
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not think they carepainting is pretty much all that they are interested in thathow can I say
ittheir main goal is the paint and to keep painting. So that is pretty much all that they are
management team were united in their view that they had not reached
out fully and had a contribution to make in order to engage the whole organisation. The general
manager explained that an attempt had been made to involve the teams but it was deferred as many
others things came up that needed to be dealt with. The general manager described the attempt as
-management interviewees still believed that the KPI review
nt and supported it. One of the managers argued that the attempt failed due to the lack
of management understanding regarding how to make the organisation to want to get involved. The
consequences of not involving the masses in the KPI review were believed to be negative and were
best expressed by the production engineering manager who argued that the involvement of the
not think they carepainting is pretty much all that they are interested in thathow can I say
l that they are worried
management team were united in their view that they had not reached
out fully and had a contribution to make in order to engage the whole organisation. The general
de to involve the teams but it was deferred as many
others things came up that needed to be dealt with. The general manager described the attempt as
management interviewees still believed that the KPI review
nt and supported it. One of the managers argued that the attempt failed due to the lack
of management understanding regarding how to make the organisation to want to get involved. The
to be negative and were
best expressed by the production engineering manager who argued that the involvement of the
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teams was crucial for the ability of the whole organisation to get something worthwhile out of the
PM. Further, another contributing factor to the lack of involvement was the culture of the
organisation. The production manager argued: Here at this plant, to engage your employees equals
to inform them and nothing else. No dialogue or feedback exists. You must always control that
things are getting done. This is fundamentally wrong and in order to redeem this we must change
the culturethis journey starts with us, the top-management team.
When asked about the culture and its impact on the PM, several managers highlighted the negative
behavioural effect that the PM ownership structure had. The quality manager argued that the
ownership needed to be driven down beyond the team-leaders in order to trigger involvement.
Those thoughts got support by recently promoted team-leaders that expressed that their acquired
PM responsibilities made them get involved. Further, the organisation did not offer any PM training
to the production teams. This education was given once an operator/assembler became a
team-leader. The team-leaders highlighted that the education was important for their understanding
of the PM. Moreover, direct observations and interview results indicate that that CC1 had problems
with their inflexible and disintegrated IT-systems. All five top-management interviewees underlined
that the IT-system was inflexible in regards to what they wanted to measure. High levels of manual
impositions for collecting and compiling data encroached on the time for analysis, limited the
measurement scope and amplified the risk for human errors. The general manager explained that it
sometimes felt like a project to just start measuring a new PM.
4.2 Case company 2 The dual process approach
PM process documentation and interview responses exhibit that CC2 deployed two processes for
managing PM change. The first process, labelled at CC2 as the business plan and goal steering
process (BP&GS) adopted a top-down approach and was confined to all the main strategic and
operational PM. In converse, the second process, named the operational development process (OD)
was designed as a bottom-up approach with focus on a single strategic goal.
4.2.1 Structural aspect
Analysis of management system guidelines and interview responses from across CC2 revealed that
the first review process adopted a top-down approach and consisted of two loops, a business
planning (BP) loop and a goal steering (GS) loop (Figure 2). According to management
interviewees and documentation obtained from the intranet, the purpose of the BP loop was to
ensure that the strategy of the organisation had been reviewed whilst the GS loop aligned the PM
scorecards across the organisation with the reviewed strategy. Once the top-management team had
finished their BP loop and updated the strategic material and main PM, the objectives and PM of the
organisation were reviewed through the GS loop. The BP loop was thus the first process step and
was confined, participation wise, to the top-management. Process material and interview responses
exhibit that the GS loop was executed in a chronological fashion with output of higher hierarchical
levels serving as input for the lower dittos. Moreover, the output was meant to become more
specific and detailed the further down the GS loop was drilled (Figure 2). At, first-line management
level specific actions were meant to be assigned to the PM and goals through the development of
local business plans. The GS loop was concluded once the lowest levels of CC1 had reviewed and
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updated their PM and goals for the coming year.
Figure 2: The OD process. The process steps are highligh
spheres.
4.2.2 Behavioural aspect
It was underlined by several interviewees that the BP&GS process did not work as intended, some
first-line managers admitted that this was the first time in several years that they got any input
their managers. Others acknowledged that they received their input only after they had finished
reviewing their PM and assignment of actions. The first
it to be problematic that the upper management absorbed
for them. One of top-managers acknowledged the problem: The further down you come the
organisation the less time they have and I think that is generally speakingwe need to get better
here that thing is clearconsidering the vast change in activities that this work [the GS loop]
creates I do believe that we are putting down too little resources and time
First-line management interviewees established that they did not have a coherent way of engaging
their production teams in the GS loop. These arguments were strengthened by the non
process documentation. A couple of first
operators for an afternoon in order to together create the business plan. In conve
argued that they had no possibility to engage their production teams in the process due to the impact
on production output. One first-line manager explained why he could not engage his production
teams: the thought is that we should i
been possible to involve the teams because we have shift teams that work on different hours...we
cannot involve everyone because that would require paying overtime and supplementary
allowances
The consequence of not being involved was highlighted by one of the team
becomes a number, the culture here is that it is really cool to measure stuff, but then nothing is
really done. You measure and pile it up and then they go bother! Lets
many union workers [the blue collars] are interested in it [the performance measures].
Questions about the culture and the support that it lends to the PMS generate diversified answers.
According to the top-management a culture
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and goals for the coming year.
: The OD process. The process steps are highlighted in rectangles and the outputs in
It was underlined by several interviewees that the BP&GS process did not work as intended, some
line managers admitted that this was the first time in several years that they got any input
their managers. Others acknowledged that they received their input only after they had finished
reviewing their PM and assignment of actions. The first-line managers that received input perceived
it to be problematic that the upper management absorbed much time and thus reduced the time left
managers acknowledged the problem: The further down you come the
organisation the less time they have and I think that is generally speakingwe need to get better
idering the vast change in activities that this work [the GS loop]
creates I do believe that we are putting down too little resources and time
line management interviewees established that they did not have a coherent way of engaging
on teams in the GS loop. These arguments were strengthened by the non
process documentation. A couple of first-line managers described how they gathered all the
operators for an afternoon in order to together create the business plan. In converse, other managers
argued that they had no possibility to engage their production teams in the process due to the impact
line manager explained why he could not engage his production
teams: the thought is that we should involve our teams, we have not done that yetit has not
been possible to involve the teams because we have shift teams that work on different hours...we
cannot involve everyone because that would require paying overtime and supplementary
nsequence of not being involved was highlighted by one of the team-leaders: It only
becomes a number, the culture here is that it is really cool to measure stuff, but then nothing is
really done. You measure and pile it up and then they go bother! Lets measure this instead. Not
many union workers [the blue collars] are interested in it [the performance measures].
Questions about the culture and the support that it lends to the PMS generate diversified answers.
management a culture existed in which people did not question, challenge or
ted in rectangles and the outputs in
It was underlined by several interviewees that the BP&GS process did not work as intended, some
line managers admitted that this was the first time in several years that they got any input from
their managers. Others acknowledged that they received their input only after they had finished
line managers that received input perceived
much time and thus reduced the time left
managers acknowledged the problem: The further down you come the
organisation the less time they have and I think that is generally speakingwe need to get better
idering the vast change in activities that this work [the GS loop]
line management interviewees established that they did not have a coherent way of engaging
on teams in the GS loop. These arguments were strengthened by the non-existence of
line managers described how they gathered all the
rse, other managers
argued that they had no possibility to engage their production teams in the process due to the impact
line manager explained why he could not engage his production
nvolve our teams, we have not done that yetit has not
been possible to involve the teams because we have shift teams that work on different hours...we
cannot involve everyone because that would require paying overtime and supplementary
leaders: It only
becomes a number, the culture here is that it is really cool to measure stuff, but then nothing is
measure this instead. Not
many union workers [the blue collars] are interested in it [the performance measures].
Questions about the culture and the support that it lends to the PMS generate diversified answers.
existed in which people did not question, challenge or
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improve the operations. It was a culture characterised by reactivity, something needs to be
dysfunctional in order to trigger an action. In contrast, one blue collar respondent argued: we on
the shop floor are not interested in measuring anything. We know that they [the PM] are flavours of
the month. We have so much fact that it is ridiculous but no actions are taken.
Top-management interview responses revealed that the top-management team supported the
BS&GP process. However, the support of the OD process was not as established as it had been
severely reduced in scope. CC2 was undergoing a transformation of the production system from
functional to lean and the general manager argued that the resources were not sufficient for both.
The OD process was still active in some parts of the organisation, however, the decrease in
utilisation had a distinct effect on the cost savings made from, from 4, 1 to 1, 9 MUSD. Moreover,
the functionality of the IT-systems was emphasised by interviewees across the organisation.
Interviewees from the higher organisational levels acknowledged that the IT-systems had limitations,
were inflexible in regards to data extraction and that the data quality was not always fully reliable.
The production manager shared an example: a typical and good example of this is when the
hours logged in the system are suspiciously lowafter asking around you get the answer that the
central finance department made a small definition error in the system...
4.3 Case company 3 The unstructured meeting approach
4.3.1 Structural aspect
The accounts on how the review was executed differed widely across CC3. Further, no
documentation was identified nor acknowledged by the interviewees. However, several
top-management interviewees acknowledged that the approach started with a top-management
meeting in which the PM and objectives were reviewed. In the review several factors would guide
the decision-making (Table 4) but it was emphasised by several interviewees (general manager,
finance manager, production manager) that much of the changes were dictated by the company HQ.
According to the general manager it was not unconventional that CC3 were simply handed new PM
and goal levels without space for questioning. Interview responses from top-management members
underlined that the execution of the review meeting would differ from year to year. The
unstructured characteristic of the process was acknowledged as burdensome by the general manager:
We need to make it [the review process] distinct we are in a phase in which we need to type out
the process I can admit that it does not work well today I addressed all the leaders [managers]
with the factory measures and goals just before Decemberthey were however not finished until
March. But that is too late, it is not functional.
Interview responses by functional managers revealed that after the top-management had decided on
their PM it was their responsibility to take the review to the next hierarchical level. It was
underlined in interviews with top and second-line managers that the involvement of the organisation
in the review was something that was often repeated as important. However, it was at the same time
acknowledged as the most challenging part to do according to the production manager: Involving
everyone is the most difficult thing to do when working with KPIs. You really want to get everyone
to feel that they can contributein my world, if PM are generated by the factory management
[top-management] then it needs to be taken down to the local departments...bad PM will lead to bad
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behaviour, no one will care because no one will be able to exert influence over them [the PM].
When asked about the autonomy to select PM in the lower levels of the organisation the general
manager explained: SQD [Safety, Quality, Delivery], these are the measures that should be on the
shop floor level and that is enough...this is simple and contributes to the whole. SQD first we
need to get our review process functioning and then we can look into how to give autonomy to the
teams.
4.3.2 Behavioural aspect
Interview accounts from functional managers underline that no formal requirements on how to push
the PM review to the next organisational level existed. Interview responses from the finance
manager and one controller revealed that the finance function discussed and decided on the PM at a
department meeting. The controller explained that this was a satisfactory way of working as the
department only consisted of four members. In contrast, the logistics department had a PM review
day with the whole function. The logistics manager explained why he wanted his function to work
in this manner: I do not do this, it is the function because they are the ones that will be working
with this in there group. We do this in order to create the environment that makes them feel that
this is my way, this is what we should do in our group.
The logistic functions procedure was positively perceived by interviewees across the organisation
and was referred to as a good standard by a second-line production manager. The production
function, which was the most employee heavy function, deployed a contrasting procedure according
to interviewees from within the function. The second-line managers would receive the PM and goal
levels to be deployed with suggestions of how to cascade them down further to first-line managers,
team-leaders and production-teams by their superior. Accounts from team-leaders further
strengthened this notion as they were simply handed their new PM from their managers. These
accounts were strengthened by the production manager: I believe that we use a
commando-structure here, we do not really have that anchoring or cascading of the measures.
Questions regarding how well the IT-system facilitated change in PM generated different responses.
Two (HR top-manager & production second-line manager) out of the 21 interviewees were positive
about the IT-system. However, the majority of the respondents felt that the IT-system inhibited their
ability to measure. Several interviewees blamed the new IT-system and argued that the structures of
queries that were built around the old system had now vanished without anything replacements.
Some interviewees however believed that with time, the new IT-system would become more
flexible and better than the old system. Other argued that once the competence of how to handle the
new IT-system increased the possibilities would surpass the old systems. The interviewees
perception of the culture at CC3 was diversified. On one side of the extreme the finance manager
felt that the organisation had a large quantity of PM that no one really cared about. In contrast, the
HR manager argued that the leadership at the site was very ambitious about the PM and that they
understood the need to have good measures over time. The answers were diversified throughout the
organisation regardless of hierarchical belonging. However, several responses were consistent in
regards to the reporting and control characteristics of the culture.
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5 CROSS-CASE ANALYSIS
5.1 Structural aspect
From a structural perspective, all three approaches revolved around the notion of top-down
execution with strategy as a starting point. The top-down feature seems to be in place in order to
create PM alignment across the organisation. Both the CC1 and CC2 approaches had this feature
explicitly designed through the chain of execution. Even though CC3 lacks an explicit approach, the
chain of execution is evident in how they managed PM change. The OD process (CC2) facilitated
the alignment directly between the teams and strategic focus. Further, the input to the
decision-making is similar across the case companies (Table 4). This validates the established belief
that PM and strategy need to achieve alignment. Further, the approaches were executed
annually/semi-annually and were thus seen as recurring activities as argued by Neely et al. (2002b),
and Medori and Steeple (2000). Further, the liberty to develop PM is another common feature. CC1
and CC2 allowed their employees to develop PM if they supported the overriding organisational
direction. PM autonomy seemed to be perceived as an important function for gaining the
involvement. It seems that the underlying notion was that PM autonomy would amplify
involvement that in turn would drive performance. Involvement of employees is underlined by
Spitzer (2007) as pivotal factor.
Further, the possible relationship between the level of documentation/facilitation and the execution
time needs to be highlighted. The approaches with facilitators and documentation were executed
between 1-3 weeks whilst the dittos without took between 1-5 months to execute. These findings
strengthen the calls for ownership of the PM change process (Kaplan and Norton, 2005; 2008) and a
structured and defined approach (Meekings, 2005). Thus, if adequate resources are dedicated from
the start the conditions for involving the organisation are plausibly greater. Furthermore, such a
proactive stance will lead, in the long-run, to a process that requires fewer resources to execute
(Neely et al., 2002a). Moreover, several researchers underlined the need of adequate IT-capabilities
(Bititci et al., 2000; Wettstein and Kueng, 2002; Kennerley et al., 2003). The IT-system was
highlighted across the case studies as an influencing factor. The challenge highlighted was not being
able to measure due to inflexibility. Further, fragmented IT-systems had consequences beyond
inflexibility such as time for data extraction, compilation and human errors. Further, another aspect
is the structure built around a given IT-system. CC3 replaced an old fragmented system with a new
and integrated ditto that would enhance flexibility. However, with both competence and supporting
structures erased the new system was perceived as less flexible and more problematic.
5.1 Behavioural aspect
Even though the role of employee involvement was underlined as sought-after and important, all
three companies had problems in making it a reality. Several plausible explanations exist based on
the empirical evidence. The rigid and hierarchical chain of execution might make more damage
than good. It became evident at CC2 that the chain of execution can become a problem if not
accompanied with the appropriate level of resources. The managers at the lowest levels did not get
their input in time and were not cleared resources to try to involve their production teams. The OD
approach deviated from the hierarchical execution and allowed each team to develop goals and PM
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in support of the strategic focus without any intermediaries. The OD approach of structuring the
review process required less time to execute while including the whole organisation. Moreover, in
relation to the chain of execution, size matters. At CC3, the finance function had no problems
involving the employees. The employee-wise larger logistics function could involve most of its
employees but had to work around the production planning. In contrast, the function with the
highest number of employees (production), simply deployed the changes brought to them. Thus, a
negative correlation seems to exist between the department size and the level of involvement. An
increase in size equals an increase in needed resources, mainly time and additional labour costs.
However, as illustrated at CC3, if resources are not made available the involvement will be
suffocated. The need to give sufficient resources is highlighted by Spitzer (2007). Further, the
challenge of employee involvement is further amplified by the lack of top-management
understanding. As illustrated in CC2, little time was given to the lower levels. Instead, the higher
management levels consumed the larger portion of the time available leaving the organisation, at
best, with time constraints. As gatekeepers of organisational resources, top-management plays an
important role in establishing a functional review approach. Several of the major hurdles identified
regarding the involvement have their roots in management action and decision-making. The
top-management needs firstly to understand the requirements of executing a PM review approach
characterised by a chain of execution and secondly to make the required resources available.
However, there are other aspects of the challenges of involvement that are evident in the empirical
data. The situation at CC1 illustrates that ownership and education can be two barriers of employee
involvement. Once these two were given to promoted individuals they got involved. These two
factors built a barrier at a CC1 which had; a defined and documented process, designated facilitators,
visual aids and no resource complains (Spitzer, 2007). Thus, even though CC1 had, in contrast to
the other case companies, better conditions, it was restrained by a lacklustre employee attitude
towards involvement that was only dispersed through education and ownership. Top-management
support is highlighted (Kennerley et al., 2003) as a factor affecting the ability to manage change in
PM. The empirical data underline that respective top-management team is committed to respective
review approach. However, if the commitment would be juxtaposed to the actions of respective
top-management team a different picture would emerge. CC2 confined the OD process regardless of
the considerable cost savings. Moreover, none of the CC2 and CC3 top-management teams did
provide enough resources for execution. Top-managements actions at CC1 seem to be more in line
with their claim of commitment. Even though their attempt to involve the organisation was
postponed, their process had both a facilitator and solid structure. Moreover, Kennerley et al. (2003)
underline the need of a beneficial measurement culture. Judging by both interview responses and
how each approach was executed, there is evidence that none of the organisations had PM
beneficial cultures in place. Even though the cultures shared this commonality, they seemed to
differ in characteristics. At CC1, the hierarchical rigidness made it challenging to involve the
employees and discussion was synonymous with informing. At CC2, the top-management teams
and employees perceived each other to be reactive with neither willing to act on the PM. At CC3,
the limitations in autonomy and liberty of action reduced PM to a reporting vehicle to be decided
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upon by superiors.
6 CONCLUSIONS, FUTURE RESEARCH, CONTRIBUTION AND LIMITATIONS
Even though the case companies had different approaches in place to manage change in PM, they
shared several commonalities. Commonalities were shared in the way of execution, process input
and challenges in IT and culture. Furthermore, employee involvement seemed to be the biggest
challenge for all three companies. From the empirics and conclusions presented in this paper,
several interesting areas have emerged suitable for the future research agenda:
1. More descriptive case studies are needed that sheds further light on how PM change is
managed in practice. Even though this paper has helped to bridge the knowledge gap, more
research is needed.
2. How to gain organisational involvement is pivotal. This paper has elaborated over the causes
but more research is needed that specifically focuses on the involvement of the employees.
3. The relationship between involving employees and driving performance ought to be
investigated. As illustrated, involving the masses from an organisation of considerable size
requires resources. If the involvement does not impact on the performance it would be
counterproductive to have it in a review approach.
However, the findings put forward in this paper are limited as they are confined to three companies
from the same company-group. More studies, both from within and outside the company-group, are
needed in order to establish a solid base of empirical data for generalisation. Further, the theoretical
background presented in this paper is confined to the field of PMM. Even though there are
limitations to the research put forward in this paper, it helps to bridge the gap of knowledge
regarding how PM change in managed in practice. This paper makes a contribution both through
describing how three companies manage PM change and through elaborating on the underlying
factors affecting functionality. Furthermore, the paper also provides insights for practitioners
regarding the challenges faced by manufacturing units in managing change in PM. As the
challenges seem to be similar across the case companies one implication could be to increase the
cooperation and benchmarking across company-groups in order to capitalise on best practices and
proven solutions.
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Viability of Mt. Maculot View Resort in the Philippines Using
Thompsons Business Model
EDENEL L. ENRIQUEZ, MBA
edenelenriquez@yahoo.com
Master in Business Administration, Graduate School, Lyceum of the Philippines University
Batangas City, PHILIPPINES
ABSTRACT
Mt. Maculot View Resort is one of the first resorts to operate in Cuenca Batangas, Philippines. This study
aimed to determine the Viability of Mt. Maculot View Resort using Thompsons Business Model.
Specifically it aimed to: assess the viability of Mt. Maculot View Resort as perceived by the customers and
the managers on the dimensions of market, technical, and business model; to assess the viability of Mt.
Maculot View Resort as perceived by manager and customer on the dimensions of Management, Economic
and Financial and Exit Strategy; to test the difference between the customers and managers perceived
viability of Mt. Maculot View Resort on the dimensions of market, technical and business model; to identify
the problems encountered by Mt. Maculot View Resort as perceived by the two groups of respondents; and
to propose strategic marketing innovations that could enhance the prospects and sustainability for an
emerging market of resort in Cuenca Batangas. This study used the descriptive method of research which is
very suited to the present study to provide the description of the perceived viability of Mt. Maculot View
Resort.
The study revealed that both customers and managers of Mt. Maculot View Resort have the agreed viability
on the areas of market, technical and business model. Managers of Mt. Maculot View Resort have the agreed
viability on the areas of exit strategy, management, economic and financial. On the other hand, the
assessment of the customers and managers varies on the technical viability.
The perceived problems encountered by customers and managers are inadequate promotion and limited
parking space. Finally, using Thompsons Dimension of Business Viability Model, the propose action plan
was formulated.
Keywords: Viability, Mt. Maculot, Resort, Philippines, Thompsons Business Model
1. INTRODUCTION
Resorts serve as the primary provider of the guests experience, often provides services for business and
meetings and are characteristically located in vacation-oriented settings. Resorts in the Philippines help in the
attainment and acceleration of the social and economic growth of the country. With the increasing demand of
the market, it opens opportunities for entrepreneurs to stimulate and eventually venture to this kind of
business. It continues to grow and expands to meet the standards of the consumers.
For an emerging market that is Cuenca Philippines, it is vital to assess whether it is viability of such business
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in a specific place, so as to make sound decisions in the allotment of investments. One tool that most
investors rely upon is a business feasibility study which specifically discusses the various dimensions of
business viability. (Borbon, 2010)
The researcher, being a resident of Cuenca Batangas, would like to determine the viability of Mt. Maculot
View Resort using Thompsons Business Model. This study sought to find out if Mt. Maculot View Resort
has the capacity to survive and progress as an emerging market in Cuenca for the years to come and will be
using the Thompsons (2005) Business Model to assess its viability. It is very beneficial for those
entrepreneurs who would like to venture to this kind of business and resort industry practitioners to improve
its services to ensure quality and gain customer retention and satisfaction. This study will also help to the
tourism development of Cuenca Batangas to attract more investors and tourists.
2. OBJECTIVES OF THE STUDY
This study aimed to determine the Viability of Mt. Maculot View Resort using Thompsons Business Model.
Specifically it aimed to: assess the viability of Mt. Maculot View Resort as perceived by customer and
manager on the dimensions of market, technical, and business model; to assess the viability of Mt. Maculot
View Resort as perceived by manager and customer on the dimensions of Management, Economic and
Financial and Exit Strategy; to test the difference between the customers and managers perceived viability of
Mt. Maculot View Resort on the dimensions of market, technical and business model; to identify the
problems encountered by Mt. Maculot View Resort as perceived by the two groups of respondents; and to
propose strategic marketing innovations that could enhance the prospects and sustainability for an emerging
market of resort in Cuenca Batangas.
3. REVIEW OF LITERATURE
Resort as a tourism establishment has existed since ancient times. People have always visit places for
recreation, relaxation and entertainment. With the leisure time and higher wages, most people now take at
least one vacation away from home each year. It is usually in a resort with added attraction on the premises
that can make it very enjoyable, self contained vacation experience. Since patrons of the hotel and resorts are
generally in reach of leisure pursuits, the location of the resort relies less on the convenience but more
environmental, climatic and recreational attributes. (Rodriguez, 2006) In addition, resort as defined by Ernst
and Young (2003) cited in the book of Murphy (2008) is a tourist accommodation catering primarily to
leisure travelers, providing a range of recreational facilities and differentiated by experiential qualities in the
context of a particular regional destination. The Philippines is one of the most amazing and fascinating
tourist destinations due to its varied charms which enthralls tourist from all over the world. It offers a wide
array of entertainment to cast a spell on its visitors with its beautiful scenic islands, exotic beaches, amazing
volcanoes, world-class diving spots and unique wildlife and many other attractions.
In the recent survey conducted by the Tourism government in 2012, tourist arrivals to the Philippines reached
record high of 4.3 million. With this improvement to the tourism industry, it opens opportunities and more
investments are needed to sustain its growth.
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The Department of Tourism is the primary government sector in the Philippines charged with the
responsibility to promote, encourage and develop tourism as a major socio-economic activity to generate
foreign currency and employment and to spread the benefits of tourism to both private and public sectors.
(http://www.lawphil.net/administ/dot/dot.html/February 2013)
Resort as defined by the Department of Tourism, is any place with pleasant environment and atmosphere
conducive to comfort, healthful relaxation and rest, offering food, sleeping accommodation, and recreational
facilities to the public for a fee/ remuneration.
Mt. Maculot View Resort is a resort at foot of Mt. Maculot located at Brgy. Pinagkaisahan, Cuenca Batangas.
It provides an intimate resort experience with the environmental benefits and splendid view of Mt. Maculot
and Grotto. (www.mtmaculotviewresort.com/February, 2013)
Just like any other things, Mt. Maculot View Resort started very small. As a matter of fact, this resort was
originally planned to be a rest house. It was just a place to go during vacations, just the venue for small
parties and gatherings and just a nice place wherein the family gets together, escapes the stressful life from
the city and appreciates the wonderful nature around. The owner, decided to open the property to the public.
From two swimming pools and few cottages, now Mt. Maculot View Resort has now room accommodations,
cottages, pavilion for functions, large swimming pools, Jacuzzi, and activity tower for persons who love
outdoor activities. (www.mtmaculot.multiply.com/February 2013)
Mt. Maculot View Resort is categorized as a sole proprietorship. It is classified as a mountain resort as it is
situated in Mt. Maculot. The initial investment to operate the resort is about Php 30 million. It is in its 4 years
of operation with 10 employees. As of the moment, the management is still on process with its accreditation.
The present study used the Thompsons (2005), Dimension of Business Viability to determine the viability of
the Mt. Maculot View Resort. The Dimensions of Business Viability Model is a generic framework that
assists the entrepreneur in identifying individual tasks (decisions) in validating the Business Concept. It also
aligns the findings with functional processes of an enterprise which an audience can easily understand and it
serves as decision weighing model that provides a benchmark for measuring the Business Concepts Viability.
(Thompson, 2005)
The Business Model has the market viability, technical viability, business model viability, management
viability economic and financial model viability and exit strategy viability. The assessment of the Business
Model will help the entrepreneurs engage in the resort industry to determine if the business will succeed and
will also help to deliver the entrepreneurial objectives such as creating wealth. Thompson (2005) cited that
determining business viability is largely a subjective process and will vary for each business venture under
consideration.
Market Viability includes the components of market component (e.g. size, sustainability, potential market,
target market, potential value), competitors, similar products, pricing, packaging, distribution to markets and
promotion/advertising. (Thompson, 2005)
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In determining the market viability of a product or service, the following steps must be followed: First,
compare your offer to a 3-legged stool, which cannot support weight unless all three legs are equal in length
and spacing. One leg is the offer itself, which includes price and demand. A top quality offer at a competitive
price is still a low fail if the other legs are not balanced. The second leg is the customer list. If you dont
know who want your product or service, then you have nothing. The third leg is the process, language, and
messaging used to convey the value of the offer to the list. Second, determine the mass appeal of your
product or service. If only a very select few can benefit from it, then your offer may be too limited to
generate enough revenue to justify the investment of taking it into the market place. Identifying a specific
demographic target is a strategic necessity, but there is a certain volume required to break even and much
larger volume required for long-term profitability. Third, measure the uniqueness of your offer against all
competitors or whoever shares your market niche. The more unique your offer is the more likely it will gain
share against your competitors. Fourth, assess the exclusivity of your offer. If your potential customers can
get your product or service somewhere else, then you will be forced to find another factor to differentiate
your offer from the competition. If your offer cannot be found anywhere else, your business will benefit
invariably. Lastly, test the perceived value of your offer. In order to be successful in business, you must be
able to sell your product or service at a price point that is commensurate with what people are willing and
able to pay. Ironically, you can under price an offer as well as overprice it.
The American Marketing Association defines marketing as follows: Marketing is the activity, set of
institutions, and processes for creating, communicating, delivering and exchanging offerings that
have value for customers, clients, partners and society at large. (Middleton et al. 2009)
The structure of todays industry, in the study of Celis (2008) was in part an outcome of the relation
between the operators and their markets. Marketing and sales activities reflected the structure of
the market, which in turn affected the manner in which such activities take place. Marketing
strategies must be properly employed by the tourist attraction operators to reach the market and at
the same time create awareness on the existence of the business. Every tourist destination
business uses different marketing practices that will catch the attention of prospective clients. The
use of varied effective marketing and sales strategies assists in achieving the success of the tourist
attraction business. They have to adapt these marketing practices and strategies to capture a larger
market potential. They should not just depend on arrivals because the trend may change due to
some factors beyond the control of business owners depending on how the industry in the region
would appraise the situation.
Resorts needs to focus first on changing demand profiles for them to know how they can relay the message
to relevant interest groups. It will cater the need for resorts to responds to the ever changing market
conditions by emphasizing the importance of monitoring global demand trends and matching supply
circumstances with the resorts can and wishes to meet (Murphy, 2008).
Technical viability will cover capacity, availability and quality of resources, inclusive of raw materials, labor
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and professional expertise, supply chain implications, manufacturing process and ability to apply IP
(Thompson, 2005). Also, Morgan (2009) as cited in Borbons study, defined technical viability as the
uniqueness and features of products and services and intellectual properly positions. Business model viability
entails uniqueness of model in terms of competitive advantage, ability of competitor to duplicate, ability of
competitor to duplicate, ability to create value through priority knowledge and process, ability to create
wealth and ability to duplicate and delegate (i.e. documentation of tacit and explicit knowledge) (Thompson,
2005).
Business model is defined as a description of the operations of a business including the components of the
business, the functions of the business, and the revenues and expenses that the business generates. A business
model describes the rationale of how an organization creates, delivers, and captures value-economic, social
or other forms of value. The process of business model design is part of business strategy. In theory and
practice the business model design is part of business strategy. In theory and practice the term business
model is used for a broad range of informal and formal descriptions to represent core aspects of a business
including purpose, offerings, strategies, infrastructure, organizational processes and policies (Borbon, 2010).
Management model viability includes application of knowledge and skills, training, employee management
and recruitment, management of intellectual property, management of risk, ability to delegate to staff,
suitable organizational structure, suitability of management and protocols, and ability to measure business
process (Thompson, 2005).
Resorts are view as businesses which are attempting to be comprehensive long term sustainable operations
and have the following objectives: Making a profit, which is the economic rationale of most businesses.
Without it all other objectives will fail in the long run. Developing an attractive and competitive product to
attract customers in an increasingly competitive environment the resort must offer a core attraction that is
desirable and located in an attractive selling. Developing an attentive and skilled workforce which resorts are
needed to offer high quality service to build and that requires skillful management and staff. Becoming a
sustainable operation, given the long term nature of resort development and the symbiosis between its
business success with the health of surrounding environments and communities, sustainable development
becomes a fundamental principle for resort businesses. (Murphy, 2008)
Economic and financial viability will cover start up costs, working capital, operating costs, raw material
costs, overall return on investment, overall profitability, breakeven point, sustainability of market versus
projected revenue and ability to generate economic value (Thompson, 2005). Economic viability is
characterized by long-term sustainability (profitable over the long term) and short term feasibility (sufficient
cash flows to meet short term obligations). Projects/ventures can be either public/community type projects of
private enterprise ventures. Four financial measures are particularly useful when examining the viability of a
project: Net Income, Cash Flow, Required Operating Loan and Ending Cash Balance (Borbon, 2010).
Marketing is said to be the lifeblood of any company, corporation or firm. Virtually every organization with a
surplus of anything engages in marketing activities to identify, communicate and negotiate with potential
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exchange partners. The importance of marketing in a companys ongoing success can be better understood
and appreciated when one considers the activities it embraces. Effective implementation of the sales plan
requires that the individual salespeople have the aptitude, skills, knowledge, and motivation to do their jobs
effectively. Thus, effective marketing entails salesmanship on the part of the representative who must have
the ability to influence or persuade customers to buy a certain product or service and to certain extent.
Marketing practices includes sales promotion, advertising, personal selling and public relations (Rodriguez,
2006).
Riley (2007) has noted that resorts will need to promote a holistic experience, maintain marketing
consistency, understand guests, examine website efficiency, increase online marketing, maintain previous
guests, and create strong industry relationships to be successful.The Hospitality Sales and Marketing
Association International (HSMAI) has also examined current Internet marketing trends within resorts and
have identified the need for resorts to plan for the future, establish infrastructure, build traffic, integrate
offline and online resources, using third party intermediaries, measure overall success, and maintain
vigilance in analyzing trends (Green, 2006).
Another area of interest has been the growing importance of the Internet in marketing (Simon, 2005).
Specific emphasis has been placed on the growing role that the resorts website plays (Atkinson, 2005) an
emphasis that has become magnified as traditional marketing activities become supplemented, and possibly
replaced, by internet-based marketing approaches. Specific attributes and website features that contribute to
website effectiveness has also been investigated (Baloglu & Pekcan, 2006; Perdue, 2001). Beyond
web-marketing and its impact on guests, there has also been interest in exploring the methods and
capabilities used to collect guest information at resorts (Khanna, 2005). Applying technology for this use is
welcomed as data collection is important in understanding guests and the changing guest market (Baumann,
2005). Furthermore, interest in using the Internet to obtain guest feedback and to employ this feedback to
help guide and improve resort operations (Higgins, 2005), has also been investigated.
4. METHOD
4.1 Research Design
The descriptive design method of research was used utilizing a survey questionnaire for the respondents.
Descriptive method of research are valuable in finding facts that may form the basis for scientific judgments,
the reason for being that it provides the essential knowledge about the nature of objects, persons and events
which is very suited to the present study to provide a description of r perceived viability of Mt. Maculot
View Resort. This research design was chosen because it can provide essential knowledge about the concepts
being used in this study as well as its relationship with each other.
4.2 Participants
The participants of the study were grouped into two categories: the personnel/management of Mt. Maculot
View Resort which is composed of ten members; and its external customers. The representatives of the
external customers is based on the initial interview conducted, in which the range of tourists is from 150-300,
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that includes customers in the peak season. The researcher arrived to the 50% of the total customers which is
100 to be the respondents.
4.3 Instrument
The researcher adopted the Thompsons Business Model. The said instrument was modified and validated so
as to determine its reliability. This was used to gather data needed for the study on the viability of Mt.
Maculot View Resort. The questionnaire was designed for two groups of respondents: Managers and the
customers. Part I is a survey about the items included in Thompsons (2005) Dimension of Business Viability
such as market, technical and business model to be answered by the management and customers. Part II is a
survey for the managers about the Thompsons (2005) Dimensions of Business Viability in terms of
management, economic and financial and exit strategy. Part III enumerated the common problems
encountered in Mt. Maculot View Resort as formulated through informal interview and from literature
review pertaining to problems encountered in resorts.
The three parts of questionnaire were answered by the respondents by checking the appropriate boxes that
corresponds to their responses using the scale below of 1-4 and with verbal interpretation of Strongly Agree
(4), Agree (3), Disagree (2), and Never (1). The researcher personally distributed the questionnaire and
retrieval will be done after two days.
4.4 Procedure
The following steps were undertaken in gathering the data to answer the questions in the study. An initial
informal interview to the owner of the resort was conducted to gain reliable and related information
pertaining to the study. A letter of request to conduct the study, together with the three-part questionnaires
was sent to the owner and staff of Mt. Maculot View Resort as well as to its customers.
To measure the concept relevant in the study, the researcher adopted the Thompsons Business Model. The
said instrument was modified and validated so as to determine its reliability. This will be used to gather data
needed for the study on the viability of Mt. Maculot View Resort.
4.5 Data Analysis
All data gathered were tallied and interpreted using different statistical tools. Weighted mean and
independent sample t-test to further analyze the results using 0.05 alpha level. The data was also supported
using PASW version 18.
5. RESULTS AND DISCUSSION
Table 1presents the viability of Mt. Maculot View Resort on market dimension. It was observed that the
over-all assessment was Agree with a composite mean of 3.31 and 3.20 as viewed by managers and
customers respectively. As to the evaluation of the managers, the resort helps promote Cuenca as a tourist
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destination and assure of the security of their customers were the most observed market viability with mean
value of 3.70. This only shows that having a resort helps to promote Cuenca as a tourist destination.
Table 1. Viability of Mt. Maculot View Resort on Market Dimension
Managers Customers
Market Viability WM VI Rank WM VI Rank
1. The size of the potential and target market of our
resort is huge
3.20 A 8 3.12 A 6
2. The target market of our resort business will
continue to grow in time.
3.30 A 6.5 3.12 A 6
3. The products and services offered by our resort
business is different from the products offered by the
competitors.
3.30 A 6.5 3.47 A 1.5
4. The products and services are packaged in a way
that could be attractive to prospect clients.
3.50 SA 5 3.21 A 4
5. Our resort adds popularity and good image to
Cuenca.
3.60 SA 3.5 3.09 A 8
6. Our resort creates good community relationship
with the residents.
3.60 SA 3.5 2.84 A 10
7. We see to it that our resort is promoted in
TV/Radio/Newspapers/Tarpaulins/Brochures for its
good and services.
3.10 A 9 3.05 A 9
8. The location of our resort is accessible to
different types of transportation.
2.10 D 10 3.46 A 3
9. We assure our customers of their security while
under our care.
3.70 SA 1.5 3.12 A 6
10. Our Resort helps promote Cuenca as a tourist
destination.
3.70 SA 1.5 3.47 A 1.5
Composite Mean 3.31 A 3.20 A
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
As an observation, tourists are encouraged to visit the province and the presence of the resort adds in its
reason of why tourists should visit Cuenca. The resort is highly equipped with security features to provide
maximum security to its customers. This will assure them that they are highly secured during their stay in the
resort.
It was followed by the resort adds popularity and good image to Cuenca (3.60), creates good community
relationship with the residents (3.60) and the products and services are packaged in a way that could be
attractive to prospect clients (3.50), all were interpreted Strongly Agree. One important factor to measure
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the market viability is to measure the uniqueness of the offer against all competitors as it likely to gain shares
in the marketplace. (Borbon, 2010) Creating good public relations, as discussed in the study of Festijo (2010),
is vital in every operator and provides positive support to sales and promotion. The least among the market
viability was the location is accessible to different types of transportation with a weighted mean of 2.10
and interpreted as disagree.
On the other hand, customers assessed market viability as agree only and products and services offered by
our resort business is different from the products offered by the competitors and the resort helps promote
Cuenca as a tourist destination ranked first with mean value of 3.47. One of the reasons in determining the
market viability of a business is the assessment of the exclusivity of the products that are offering. (Borbon,
2010) Looking for factors that differentiate a product among the others makes the business more profitable
while the resort creates good community relationship with the residents got the lowest rank.
Table 2. Viability of Mt. Maculot View Resort on Technical Dimension
Managers Customers
Technical Viability WM VI Rank WM VI Rank
1. Our Resort has the capacity to supply the demand
of the total market.
3.20 A 8 2.61 A 9.5
2. There are available resources in our area. 3.30 A 6.5 2.79 A 7.5
3. Our company has high level of labor and
professional expertise.
3.30 A 6.5 2.93 A 2
4. Service is our business 3.50 SA 5 2.93 A 2
5. Goods and services that our place is known for
are available for business.
3.60 SA 3.5 2.90 A 4
6. Our Resort is known for quality services. 3.60 SA 3.5 2.87 A 5
7. Our services and goods can speak well of our
Resort.
3.10 A 9 2.61 A 9.5
8. Our resort business provides employment for
residents
2.10 D 10 2.79 A 7.5
9. There are available technologies that can make our
tasks more convenient
3.70 SA 1.5 2.93 A 2
10. The process of providing our service is not
complicated.
3.70 SA 1.5 2.82 A 6
Composite Mean 3.31 A 2.61 A
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
Table 2 presents the viability of Mt. Maculot Resort on technical dimension. It was observed that the over-all
assessment was agree with composite mean of 3.31 and 2.61 respectively. As to the evaluation of
managers, there are available technologies that can make the staffs tasks more convenient and the process of
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providing our service is not complicated were the most observed technical viability with mean value of
3.70,both rated as strongly agree.
Based on the interview conducted, the management of Mt. Maculot View Resort strongly agrees that the
resort has available technologies in order to deliver the services in most convenient way. Mt. Maculot View
Resort updated annually their website where customers can easily look for packages that suits for them and
can book their reservations without any hassle. The resort also upgraded their facilities and technologies to
give excellent services to the customers. In connection with this, being a leader in the resort industry in East
Malaysia constantly provide the best services and facilities in order to retain a loyal customer base. With the
extensive and high technologies available, it caters the needs of the customers, demonstrated good technical
knowledge and a complete solution that met and exceeded their requirements (Nexus Resort Karambunai,
2009).
The least among the technical viability as assessed by the managers is our resort business provides
employment for residents with a weighted mean of 2.10 and interpreted as disagree.
On the other side, the evaluation of the customer, the company has high level of labour and professional
expertise, service is our business and there are available technologies that can make our tasks more
convenient were the most observed technical viability interpreted as agree and got a weighted mean of
2.93. While the business has the capacity to supply the demand of the total market and our services and
goods can speak well of our business got the lowest with 2.61 and interpreted as agree.
The quality of services and how it delivers to the customers are well managed in Mt. Maculot View Resort.
Both management and the customers agreed that there are available technologies that can make the tasks
more convenient is well observed. Based on the customers feedback, they can easily access to all their needs
and they are well attended when it comes to services of the resort.
As seen in Table 3, the over-all assessment of the respondents in the viability of business dimension has a
composite mean of 3.26 and 3.01 respectively and interpreted as agree.
Table 3. Viability of Mt. Maculot View Resort on Business Dimension
Managers Customers
Business Viability WM VI Rank WM VI Rank
1. Our business has a unique purpose, offerings,
strategies, infrastructure, organizational structures
3.30 A 4.5 2.89 A 9
2. Our business model is unique from our
competitors
3.30 A 4.5 2.98 A 6
3. Our company has a clear knowledge of what
the customer wants and needs.
3.30 A 4.5 3.02 A 3
4. We can consider our business model as our 3.00 A 10 2.89 A 9
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competitive advantage.
5. Our competitors cannot easily duplicate the
business model that your company possesses.
3.20 A 8.5 2.98 A 6
6. Our business model has the ability to create
value through priority knowledge and process.
3.40 A 1 3.02 A 3
7. Our business model has the ability to create
wealth.
3.30 A 4.5 2.89 A 9
8. Our business model has the ability to duplicate
and delegate as in the documentation of tacit and
explicit knowledge.
3.20 A 8.5 2.98 A 6
9. Our business model is constructed in a way that
it will minimize costs.
3.30 A 4.5 3.02 A 3
10. Our company views designing business
model as an important part of business strategy.
3.30 A 4.5 3.46 A 1
Composite Mean 3.26 A 3.01 A
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
Among the items that are enumerated, our business model has the ability to create value through priority
knowledge and process (3.40) got the highest followed by our business has a unique purpose, offerings,
strategies, infrastructure and organizational structures and our business model has the ability to create
wealth both got 3.30. While we can consider the business model as the competitive advantage (3.00)
got the lowest and interpreted as agree.
Based on the findings, Mt. Maculot View Resort knows how to position and create image value based on the
services and facilities it offered. It established well its unique selling proposition to the market. The
amenities it offered to the market has something to do with it. Recently, it opened its outdoor activities such
as zip line, rock climbing, and hanging bridge making it the first resort in Cuenca to offer this kind of
amenities. It is also the only resort that can be located at the foot of Mt. Maculot. These factors generate
income for the resort.
In customers assessment, our business has a unique purpose, offerings, strategies, infrastructure, and
organizational structures, we can consider our business model as our competitive advantage and our
business model has the ability to create wealth got the lowest with 2.89. The results showed the
reciprocal perception of the managers and the customers of Mt. Maculot View Resort. Managers, of course
knows very well the in and out of the business compared to the customers. Mt. Maculot has been in its four
years of operation, considering that the business model of the resort got the lowest from the perception of the
customers because they might compare Mt. Maculot View Resort among the other resorts that has been in the
industry for a long time.
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Business model viability as defined by Thompson (2005), entails uniqueness of model in terms of
competitive advantage, ability of competitor to duplicate, ability to create value through priority knowledge
and process, ability to create wealth and ability to duplicate and delegate. It is a description of the operations
of a business including the components of the business, the functions of the business, and the revenues and
expenses that the business generates. It describes the rationale of how an organization creates delivers, and
capture value-economic, social or other forms of value. Business model design process is a part of business
strategy and it is used for theory and practice as a broad range of informal and formal descriptions to
represent core aspects of a business, including offerings, strategies, infrastructure, and organizational
structures, trading practices and operational processes and policies.
Table 4. Viability of Mt. Maculot View Resort on Management Model Dimension
Management Model Viability WM VI Rank
1. There is a high need for the application of knowledge and skills. 2.90 Agree 7.5
2. Employees are given sufficient trainings. 3.00 Agree 4
3. Our company has a systematic way of managing and recruiting employees. 2.80 Agree 9.5
4. Intellectual property is efficiently managed. 3.10 Agree 1
5. Our company is able to manage potential risks. 3.00 Agree 4
6. There is a capability to delegate tasks to staff. 3.00 Agree 4
7. Our company has a suitable organizational structure. 2.90 Agree 7.5
8. There is the presence of suitable management and quality protocols. 3.00 Agree 4
9. Business process is highly measurable. 2.80 Agree 9.5
10. Our company has an effective management model. 3.00 Agree 4
Composite Mean 2.95 Agree
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
The managers agree on the viability of management dimension of their resort as revealed by the composite
mean of 2.95. Among the items mentioned, Intellectual property is efficiently managed got the highest
mean of 3.10 and ranked first. The resort has a systematic way of managing and recruiting employees
(2.80) and business process is highly measurable (2.80) were considered the least.
Management model viability includes application of knowledge and skills, training, employee management
and recruitment, management of intellectual property, management of risk, ability to delegate to staff,
suitable organizational structure, suitability of management and protocols and ability to measure business
process (Thompson, 2005).
Intellectual property as defined is a legal concept which refers to creations of the mind for which exclusive
rights are recognized. Mt. Maculot View Resort efficiently managed this area. The owner of the resort
followed all the legal procedures in using the Mt. Maculot as the business name. It also follows all the
guidelines set by the Department of Tourism in operating the resort. As of the moment, the accreditation
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documents of the resort are still on process.
The management of Mt. Maculot View Resort continues to develop an attentive and skilled workforce which
resorts are needed to offer high quality service. With its four years in the industry, the business process is
highly measurable to have a sustainable operation and it is maintained by the management. It also conducts
seminars and trainings for the staff for training and development.
The over-all assessment of the management on the dimension of economic and financial was 2.53 and
interpreted as agree. Among the items enumerated, this type of business is financially risky got the
highest with 3.90 and verbally interpreted as agree. It was followed by the company has sufficient
working capital (3.60) and our business has high ability to generate economic value (3.00) and interpreted
as agree.
Our business needs minimum level of sales in order to make a profit (2.00) and our business needs very
minimal operating costs (1.70) and interpreted as disagree; our business has a quick return of investment
(1.40) got the lowest and interpreted as strongly disagree.
Table 5. Viability of Mt. Maculot View Resort on Economic and Financial Dimension
Economic and Financial Viability WM VI Rank
1. Our business needs minimum start up costs. 2.30 Disagree 6
2. Our company has sufficient working capital. 3.60 Strongly Agree 2
3. Our business needs very minimal operating costs. 1.70 Disagree 9
4. There is a low material cost. 2.30 Disagree 6
5. Our business has a quick return of investment. 1.40 Strongly Disagree 10
6. This type of business is highly profitable. 2.30 Disagree 6
7. Our business needs minimum level of sales in order to make a
profit.
2.00 Disagree 8
8. The market is highly sustainable. 2.80 Agree 4
9. Our business has high ability to generate economic value. 3.00 Agree 3
10. This type of business is financially risky. 3.90 Strongly Agree 1
Composite Mean 2.53 Agree
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
Economic and financial viability will cover start up costs, working capital, operating costs, raw material
costs, overall return of investment, overall profitability, breakeven point, sustainability of market versus
projected revenue and ability to generate economic value (Thompson, 2005). Economic viability is
characterized by long-term sustainability (profitable over long term) and short-term feasibility (sufficient
cash flows to meet short-term obligations). Projects/ventures can be either public/community type projects or
private enterprise ventures. There are four financial measures that are particularly useful when examining the
viability of a project: Net Income, Cash Flow, Required Operating Loan and Ending Cash Balance.
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Findings showed that operating a resort is financially risky and it requires sufficient working capital. This
type of business requires a huge amount of capital and doesnt have a quick return of investment. According
to the owner of Mt. Maculot View Resort, the start -up capital of operation range from Php 20-30 million. As
of the moment, the return of investment of the resort has not yet been recovered. The resort spends large
amount in the maintenance of the facilities. During summer, the resort is at its peak and it generates above
sales. But during the off season, the sales of the resort decrease. Aside from the resort itself as the primary
source of profit, Mt. Maculot View Resort holds promotional events and offers its facilities to be the venue
for debuts, weddings, reunions, and team building activities to generate income for the resort.
With the continuous improvement and maintenance of Mt. Maculot View Resort and its unique selling
proposition, the market is hiighly sustainable and it has high ability to generate economic value for
sustainability in the long run.
In the table presented, the over-all assessment of the managers when it comes to exit strategy got a composite
mean of 2.75 with verbal interpretation of agree. With all the statements mentioned, our company has
devised ways of recouping the capital they have invested in case the business decline, transition of
ownership of the company is easy and our business has the ability to create wealth from its exit strategy
(3.00) got the highest and has a verbal interpretation of agree.
The least among the statements are our business has the ability to define its exit strategy, has the ability to
relate its exit strategy to industry model, has the ability to identify potential buyers and/or strategies, has
the ability to create capital assets and has the ability to schedule exit strategy which got 2.60 with verbal
interpretation of agree.
Table 6. Viability of Mt. Maculot View Resort on Exit Strategy Dimension
Exit Strategy Viability WM VI Rank
1. Our company has devised ways of recouping the capital they have
invested in case the business decline.
3.00 Agree 2
2. Transition of ownership of our company is easy. 3.00 Agree 2
3. Our business has the ability to create wealth from its exit strategy. 3.00 Agree 2
4. The sale of equity to someone else can be immediately conducted. 2.80 Agree 4
5. Our company has already planned for an exit strategy even before the
start of the business.
2.70 Agree 5
6. Our company has the ability to define its exit strategy 2.60 Agree 8
7. Our business has the ability to relate its exit strategy to industry model. 2.60 Agree 8
8. Our company has the ability to identify potential buyers and/or
strategies.
2.60 Agree 8
9. Our business has the ability to create capital assets. 2.60 Agree 8
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10. Our company has the ability to schedule exit strategy. 2.60 Agree 8
Composite Mean 2.75 Agree
Legend: 3.50 4.00 Strongly Agree; 2.50 3.49 = Agree; 1.50 2.49 = Disagree; 1.00 1.49 = Strongly
Disagree
Exit strategy may contain ability to create wealth from exit strategy, ability to relate exit strategy to industry
model, ability to identify potential buyers and/or strategies, ability to create capital assets and ability to
schedule exit strategy (Thompson, 2005). It is important to plan how to exit your business as Important on
how the business start. The goal is to maximize the value of the company before converting it to cash and to
minimize the amount of time consumed. Getting out of the business is a process and very crucial and it takes
time to complete it. The process may directly affect the complexity of the business and there are several
circumstances underlying in this decision.
Resort has been the emerging trend in Cuenca nowadays. Mt. Maculot View Resort has lot of competitors in
the area. With its four years in the operation, results showed that the company is still on the process of
planning about its exit strategies. The management still focuses for the continuous improvement of the resort.
Based on the interview conducted to the owner, they have potential buyers in case they decided to quit from
the business. They have ways on how to recoup the investment and create capital assets and wealth from the
resort.
Table 7. Difference of Reponses on the Assessment on the Viability ( = 0.05)
Dimensions: t
c
p-value Interpretation
Market Viability 1.049 0.296 Not Significant
Technical Viability 3.445 0.001 Significant
Business Viability 1.802 0.074 Not Significant
Legend: Significant at p-value < 0.05; HS = Highly Significant; S = Significant; NS = Not Significant
The computed t-value of technical viability (3.445) was greater than the critical value of 1.982 at 0.05 level
of significance and the resulted p-value is less than the alpha level, thus the null hypothesis of no significant
difference on the assessment on the viability of Mt. Maculot View Resort in terms of technical viability is
rejected. In reference to the above results, market viability got a composite men of 3.31 in the assessment
of managers and 3.20 in the customers. Technical Viability on the other hand, got 3.31 and 2.61 from the
managers and customers respectively. In terms of business viability, it got 3.26 and 3.01 from the managers
and customers respectively.
This shows that the two groups of respondents have different assessment on the technical viability. Other
variables such as market viability and business viability do not differ when assessed by the managers and
customers. Managers of Mt. Maculot View Resort know very well the processes in the technical aspects
because they are the one who manage the in and out of the business. They can assess how the services and
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products deliver to the customers efficiently. On the other hand, customers of the resort are not fully aware of
this process.
Based on the table, the assessment of management to the problems encountered in Mt. Maculot View Resort
resulted to inadequate promotion and limited parking space got the highest frequency of 10. While the
cleanliness and sanitation of the surroundings and untrained personnel staff got the lowest frequency of 1. On
the customers assessment, limited parking space got the highest with frequency of 83 followed by exceeding
number of guests (53) while financial losses of resort (15) and rooms are not well ventilated (4) got the
lowest respectively.
Table 8. Problems Encountered by Mt. Maculot Resort as Perceived by the Management and
Customers
Management Customers
Problems Encountered f % F %
1. Exceeding number of guests 2 20.00 53 53.00
2. Lack of first aid - - 23 23.00
3. Cleanliness and sanitation of surroundings 1 10.00 31 31.00
4. Malfunctioning of equipment and facilities 3 30.00 20 20.00
5. High cost of commodities - - 46 46.00
6. Inadequate promotion 10 100.00 34 34.00
7. Insufficient number of lifeguards 39 39.00
8. Limited parking space 10 100.00 83 83.00
9. Rooms are not well ventilated 4 4.00
10. Untrained personnel staff 1 10.00 35 35.00
11. Security problems - - 19 19.00
12. Financial losses of resort 15 15.00
13. Management 4 40.00 - -
14. Organizational Structure - - - -
*multiple responses
Results shown that the management and the customers assessment of the problems encountered in Mt.
Maculot View Resort is the same with limited parking space as the highest. On the observation,
transportation vehicles are getting a hard time in getting into the resort with a narrow road available and
limited parking space available in the area. According to the owner, the maximum capacity of the parking
space is good for 20 vehicles only that mean that succeeding vehicles will not be accommodated. Also,
inadequate promotion is also identified as a problem. Customers are not fully aware of the promotional
strategies of the Mt. Maculot View Resort. Only few tarpaulins are available outside Cuenca. It is not highly
visible compared to the other resorts.
Table 9. Proposed Plan of Action
Key Result Areas Objectives Strategies Persons Involved
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Market To intensify and leverage
the marketing practices of
Mt. Maculot View Resort to
attract more customers and
promote Cuenca as a tourist
destination
2de7,ate
advertisements on tv-
radio and print
online mar%eting to
boost its promotional
campaign
initiate event
promotional
activities
Management
Marketing Staff
Customers
Technical To enhance the services and
facilities offered by Mt.
Maculot View Resort to its
customers
Create a c,stomer
service feedbac%
+rovide employment
opport,nities for
residents in C,enca
Management
Customer
Business Model To describe the operations
of the business that will
highlight its core aspects
Cond,ct a strategic
planning process
Management
Management Model
To evaluate the
managements skills and
knowledge towards
business process
Cond,ct seminars
and trainings to its
employees
have a 5) degree
eval,ation for their
job performances
Management
Human Resource Staff
Economic and
Financial
To assess the economic and
financial capacity of Mt.
Maculot View Resort if it
can sustain in the long run
3.amine reg,larly its
financial meas,res
generate economic
val,e of the resort
Management
Financial Staff
Exit Strategy To be able to prepare a
future plan on how to exit
in the business and
maximizing the value of the
company
+repare an e.it
strategy plans
Implement the
proposed action plan
Management
6. CONCLUSION
Both customers and managers of Mt. Maculot View Resort have the agreed viability on the areas of market,
technical and business model. Managers of Mt. Maculot View Resort have theagreed viability on the
areas of exit strategy, management, economic and financial. The assessment of the customers and managers
varies on the technical viability. The perceived problems encountered by customers and managers are
inadequate promotion and limited parking space. Using Thompsons Dimension of Business Viability Model,
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the propose action plan was formulated.
7. RECOMMENDATION
Mt. Maculot View Resort may enhance and continue to improve its services and facilities to stay competitive
and sustain the business in the long run. Mt. Maculot View Resort may develop economic opportunities and
strategic management plans and maximizing financial resources to enhance viability. Mt. Maculot View
Resort may create a customer service feedback. The management of Mt. Maculot View Resort may conduct
ocular inspection on nearby vacant places where they can extend the resorts parking space and event
promotional activities may be initiated. The propose plan of action maybe discussed among manager for
implementation. The future researchers may conduct another study on other industries or businesses using
Thompsons Dimension of Business Viability.
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THE EFFECTS OF CHARACTERISTICS OF ELECTRONIC
DOCUMENT MANAGEMENT SYSTEMS ON THEIR
ACCEPTANCE: AN EMPIRICAL STUDY IN JORDAN
Haitham H. AlShibly, Ph.D
Amman University College for Financial and Administrative Sciences, Al Balqa Applied
University, Jordan,
Email:halshibly@gmail.com
Biographical notes: Haitham H. Al Shibly, Ph.D. is the Dean, Amman University College for Financial and
Administrative Sciences, Al Balqa Applied University- Jordan. He is also Associate Professor of Information Systems
at the School of Management of the BAU. He obtained his Information Systems Doctorate degree in Web-based
Electronic Commerce Systems Evaluation from the School of Information Technology of the University of Newcastle,
Australia in 2007. His research interests include issues related to Information Systems success, Information Systems
adoption and acceptance. He has published research papers at national and international journals, conference
proceedings as well as chapters of books.
Abstract
This study developed an EDMS Acceptance Model using the constructs of the Technology Acceptance
Model (TAM). The model consists of system characteristics (Information and System quality), Perceived
Usefulness, Perceived Ease of Use, and acceptance, that author posits will have an effect on EDMS
acceptance in the context of Jordan.
The finding showed that system characteristics are the most significant determinant affecting acceptance of
EDMS. Moreover, an empirically test had verified the direct effects of system characteristics to the perceived
usefulness and perceived ease of use. These findings partially refine the TAM encompassing the direct effect
between external variable and acceptance. The results showed that both Perceived ease of use and perceived
usefulness have positive effect on EDMS acceptance, suggesting that the TAM could also extend into the
EDMS.
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.
Keywords: EDMS, TAM, information quality, system quality, ease of use, usefulness, Delone and Mclean
success model.
1 Introduction
Many, if not all government agencies worldwide, are now developing and implementing information technology to
a) deliver better services to citizens and businesses, and b) to support the modernisation of government (Jones, 2012).
Based on the progression of information technology development, Electronic Document Management Systems (EDMS)
is emerging for organizations to help create fundamental improvement in the efficiency, convenience and quality of
service (Hung et al, 2009).
Documents are the stored memory for the organisation and the way business is done, its groups and its individuals, as
well as being the primary mechanism for conducting business and the central to its functioning, EDMS promises to
advance the management of information, thereby improving the levels of support and productivity for managers,
speeding up communications, increasing the productivity of business processes, and improving the workflow of
information, Accordingly, EDMS is an important element in establishing a virtual workplace environment and
transforming the capabilities of a modern organisation and its workforce(Jones, 2012).
As the same with any other information systems (IS), the success of EDMS is dependent on the extent to which such a
system is used and eventually adapted by potential users, if users are not willing to accept the IS, it will not bring full
benefits to the organization (Davis and Venkatesh, 2000). However, there is relatively little research on developing
models enables an understanding of factors that have influenced EDMS acceptance. Hence, there is a heightened need
in IS research to understand the factors that impact an individuals decision to use such systems. The primary purpose
of this research is to analyse and extend knowledge regarding influential factors that affect users to accept EDMS and to
develop a model that can be used to analyse user acceptance in the context of developing economy such as Jordan.
In theoretical aspects, the technology acceptance model (TAM) explains and predicts users' acceptance of new
technology. However, it can be argued that basic constructs of TAM, perceived usefulness and perceived ease of use,
may not fully determine users acceptance of EDMS, which therefore brings in the need to search for additional factors
that may better predict and enhance the user acceptance of EDMS. Moreover; that has not been explored well in TAM
research is the role of system characteristics as external variables. To the best of our knowledge, no such empirical
study has been conducted on EDMS acceptance. Thus, the current study aims to explore the effects of EDMS
characteristics on their acceptance. Furthermore, this research anticipates contributing to the literature on EDMS; a
model of factors that influence users acceptance of EDMS.
2 Electronic Document Management Systems: the concept and the basic components
Document management is the systematic control of document through the entire life cycle(Spargue, 1995,
32),this covers, document producing, storing, organizing, transferring and distribution, searching and finding,
updating and deletion for particular organizational purpose (Yljski, 2003).
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Traditional document management at an enterprise was based on paper document management. The
documents were grouped into groups or ordered name based and stored in binders. The binders were
archived to trays orfile cabinets. Documents were copied or borrowed from trays to personal use (Sutton
(1996), p.8). Distributions of all kinds of documents were handled in a paper form with help of post services
and faxes.these traditional document management practices have been fallen into poor condition and
disrepute because of the volume of transactions generated in the course of business, the lack of definitive
document-centred process model and difficulty of storing electronic records in a system designed for paper
(Sutton 1996, 8). These factors have created needs to develop more efficient document management methods
and systems, which can rise to the challenges of these days (Hjelt and Bjrk, 2007).
Now, instead of manual file cabinets, EDMS promises to advance the management of information, thereby
improving the levels of support and productivity for managers. EDMs is the application of technology to
save paper, speed up communications, and increase the productivity of business processes(Sprague, 1995)
and to manage and improve the workflow of information (Sommervile and Craig, 2006), EDMS enable
organizations to manage documents throughout the lifecycle, from creation to destruction (Jones, 2012).
Sutton and Lemay (1999) define an EDMS as an information system of overseeing an enterprises official
business transactions, decision-makingrecords, retrieving either abstracts or entire documents, and transitory
documents of importance. The repository for an EDMS containsrepresentations of an object loosely termed a
document. The medium of a business transaction (electronic, photographic, audio, or paper) is irrelevant.
Typical EDMS involves not only a software system for managing the documents and a database for
managing the metadata of the documents, but also includes other technologies such as document imaging,
document retrieval, reporting, character recognition, document management, workflow, form processing,
content management, digital signature management, and storing and archiving technologies. Other key
EDMS technologies are workflow, business process management and collaboration (Yljski, 2003).
Documents used within EDMS are not limited to just alphanumeric items. The documents referred to in
EDMS can contain anything classified as information or as data (e.g. audio, video, images/drawings etc)
(Hjelt and Bjrk, 2007) . EDMS allows documents to be modified and to exist in different versions; it may
allow documents to be deleted by their owners; may include some retention controls; may include a
document storage structure, which may be under control of users. It is intended primarily to support
day-today use of documents for ongoing business. It has some key features such as check in/check out and
locking, version control; roll back, audit trail, annotation and stamps and summarisation.
Both Adams (2008) and Grange and Scott, (2010) identify four processes that all EDMS have in common:
scanning, indexing, storage and access. Some examples of applications of EDMS are electronic scanning and
processing of cheques, production of manuals for consumer goods, support for compliance with external
regulatory bodies.
Basic EDMS provide a single hierarchical folder structure, where each document is stored under a single
distinct folder (much like files and folders in the Windows operating system) (Zantout and Marir, 1999).
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More advanced systems support dynamic, multidimensional hierarchies, where one single document can be
found through several different hierarchical paths (Yljski, 2003; Hung et al, 2009; Grange and Scott,
2010), additionally, EDM tools usually provide means of handling accesscontrol, making it possible to
regulate access to documents or folders on a per-user orper-group basis.Most common the user interface for
document management applications is workstations client software. Nowadays also web-browser based user
interfaces are becoming more common. Other possible user interfaces are; direct interface to application
program and windows explorer based use (Grange and Scott, 2010).
3 The Theoretical Foundations of EDMS acceptance Model
The successful implementation of EDMS is dependent on the extent to which such a system is used and
eventually adapted by potential users (Venkatesh and Davis, 2000). IS implementation is not likely to be
considered successful if users are unmotivated to use that type of technology (Venkatesh et al, 2003). If users
are not willing to accept the IS, it will not bring full benefits to the organization (Venkatesh and Davis, 2000).
The more accepting of a new IS the users are, the more willing they are to make changes in their practices
and use their time and effort to actually start using the new IS (Venkatesh et al, 2003).
To predict, explain and increase user acceptance, organizations need to better understand why people accept
or reject IS (Davis, 1993). In this regard, researchers have developed and used various models to understand
acceptance of users of IS. Among the different models proposed the TAM (Davis et al, 1989), adapted from
the Theory of Reasoned Action (TRA) (Venkatesh and Davis, 2000), and appears to be the most widely
accepted among the IS researchers (Venkatesh et al. 2003; Wixom and Todd, 2005).
The primary goal of TAM is to predict IS acceptance and diagnose design problems before user have
experience with the new system. The TAM is based on principles derived from psychology, which attempts
to understand and measure the behaviour-relevant components of attitudes and makes possible the
understanding of how external stimuli can influence the beliefs, attitudes and behaviour of the individual
towards such a thing as technology (Davis, (1993), p. 476).
TAM suggests that when user encounter new IS technologies the two main factors influences how and when
they will use the system. These two main constructs of TAM are perceived usefulness (PU) and perceived
ease of use (PEOU). Perceived usefulness is defined as the degree to which person believes that using a
particular system would enhance his or her job performance (Davis, (1989), p.330). Perceived ease of use is
defined as the degree to which a person believes that using a particular system would be free from efforts
(Davis, 1989). TAM proposes that two particular constructs, that are of primary significance for IS
acceptance, perceived usefulness (PU) and perceived ease of use (PEOU) affect users attitude towards
using the information system. Attitude directly relates to users intention, which will in turn determine usage
of the system.
TAM has much strength; including its specific focus on IS usage, the validity and reliability of instruments,
and its parsimony (Venkatesh et al. 2003), thus, The TAM can provide such important insights into the
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development of decision making with regard to technology acceptance and rejection. It is pertinent therefore
to consider how this model can be used for understanding EDMS acceptance.
While basic constructs of TAM, PU and PEOU, have been considered primary determinants of individuals
acceptance and use of technology. IS researchers have investigated and replicated these two constructs and
agreed that they are valid in predicting users acceptance of various IS (Venkatesh et al 2003). However, few
of TAM studies have investigated the impact of system characteristics as antecedents to ease of use or
perceived usefulness (Wixom and Todd, 2005). In their integration of the technology acceptance literature,
Venkatesh et al. (2003) stress the need to extend this literature by explicitly considering system and
information characteristics and the way in which they might influence the core beliefs in TAM, and might
indirectly shape system usage. Recent studies that have used TAM as a theoretical framework have
suggested to exclude attitude construct from the TAM model since it does not mediate fully the effect of
perceived usefulness and perceived ease of use on behavioral intention as originally anticipated (Venkatesh
et al, 2003).
Recently, Wixom and Todd (2005) developed an integrated model based on technology acceptance and user
satisfaction literature. The model was tested using a sample of 465 users from seven different organizations
regarding their use of data warehousing software. Findings showed that information and system
characteristics explained 75% variance for system and information quality. They found that there was
significant affect of information and system quality on PU and PEOU. Moreover, they suggested
investigating the effects of the IT artifacts itself as an antecedent to ease of use and usefulness, and other
related factors.
According to Wixom and Todd (2005), TAM provides limited guidance about how to influence usage
through design and implementation. They further elaborated that as PU and PEOU are abstract concepts and
provide general information to the designers. Therefore designers are unable to receive actionable feedback
about the important aspects of the IS artifacts itself. They identified information and system quality
significant constructs which can affect IS usage. Furthermore, Davis (1989) himself noted that future
technology acceptance research needs to address how variables affect usefulness, ease of use, and user
acceptance.
It can be argued that basic constructs of TAM, perceived usefulness and perceived ease of use, may not fully
determine users acceptance of EDMS, which therefore brings in the need to search for additional factors that
may better predict and enhance the user acceptance of EDMS. Moreover; that has not been explored well in
TAM research is the role of system characteristics as external variables. Davis et al. (1989) did not include
other factors explicitly into the TAM model that are expected to impact intentions and usage through PU and
PEOU. These external variables could be system characteristics, organizational structure, training, and the
like (Davis et al., 1989). According to Davis (1989), external stimuli influence a persons attitude toward
behavior indirectly by influencing his/her salient beliefs about the consequences of performing the behavior.
Since system characteristics are external stimuli, they should influence beliefs (PU and PEOU) about using a
system.
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However; most of these empirical studies using TAM were conducted in developed countries and in
industrialized world. Moreover; the best of our knowledge, very few studies related to EDMS technologies
were carried out to test the applicability of the model outside these regions (Hung et al., 2009), and no such
empirical study has been conducted on intergovernmental services' EDMS in the context of Jordan.
Hung et al., (2009) conducted an empirical study on investigates the effect of a set of antecedent factors on
the intention to accept intergovernmental services' EDMS in the context of e-Government in Taiwan. Young
et al. (2011) study the acceptance of an electronic data management system at a tertiary care institution in
Canada, Therefore, it would be erroneous to assume that IS acceptance theories and models predict equally
well in other cultural settings, especially in developing countries. The robustness of the models may vary
across different cultures and thus need to be empirically tested.
4 Research model and hypotheses
The proposed research model is presented in Figure (1). The incorporation of quality into the acceptance
model must describe the dependency of user acceptance on system quality and information quality.
According to Wixom and Todd (2005), TAM provides limited guidance about how to influence usage
through design and implementation. They further elaborated that as PU and PEOU are abstract concepts and
provide general information to the designers. Therefore designers are unable to receive actionable feedback
about the important aspects of the IS artefacts itself. They identified information and system quality
significant constructs, which can affect IS usage.
Based on the literature review a model of factors that influence users acceptance of EDMS has been
proposed. The model consists of system characteristics (Information and System quality), Perceived
Usefulness, Perceived Ease of Use, and acceptance, that author posits will have an effect on EDMS
acceptance in the context of Jordan.
Perceived System Quality
System quality is a measure of an IS from the technical and design perspectives (DeLone and McLean, 2003).
Thus, perceived system quality can be defined as the users evaluation of an IS from the technical and design
perspectives.
The role of perceived system quality in the IS acceptance and success literature has been investigated
extensively (DeLone and McLean, 2003). According to the IS success model, system quality is a critical
success factor that influences user satisfaction and the intention to use (DeLone and McLean, 2003). Petter
and McLean (2009) performed a meta-analysis of studies that have used the IS success model to investigate
the strengths of different relationships in the model. They found perceived system quality-intention to use
relationships were strong. System quality has also been studied with regard to individuals IS acceptance
research. According to TAM, system quality can be viewed as an external variable that affects behavioral
beliefs (Davis, 1989).
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Davis (1989) did not include system characteristics into TAM model, but he suggested including judicious
system characteristics. According to DeLone and McLean (1992) technology characteristics singularly or
jointly affect subsequent use and user satisfaction. Hence, it is assumed that system quality directly or
indirectly through PU and PEOU, positively effects user acceptance of EDMS. Thus, this study postulates
the following hypotheses:
H1a. Perceived System quality will have positive effect on perceived ease of use of the EDMS.
H1b. Perceived System quality will have positive effect on perceived usefulness of the EDMS.
H1c. S Perceived ystem quality will have positive effect on user acceptance of the EDMS.
Perceived Information Quality
Information quality refers to the information characteristics of IS, which include accuracy, precision,
currency, reliability, completeness, conciseness, relevance, understandability, meaningfulness, timeliness,
comparability, and format (DeLone and McLean, 1992). As one of the IS, information quality of EDMS also
represents to the contents provided by system. Information quality represents a users reaction to the
characteristics of output information versus the users information requirements. It is beliefs about the
favourable or unfavourable characteristics of the information that the EDMS produces and delivers.
DeLone and McLean (1992) reviewed the IS literature and various empirical studies, and then combine
individual measure into IS success categories to create a comprehensive measurement instrument. The
information quality, which suggested directly affect the use of IS, is one of the most important factors
driving the information systems success.
Previous studies used information quality to measure IS success (Iivari, 2005), measuring e-commerce
success (DeLone and McLean, 2004), and e-shopping acceptance (Shih, 2003). Therefore, based on
theoretical and empirical support from IS literature, it is assumed that information quality positively affects
PU, PEOU, and user acceptance of EDMS, this study leads to the following hypotheses:
H2a. Perceived Information quality will have positive effect on perceived ease of use of the EDMS.
H2b. Perceived Information quality will have positive effect on perceived usefulness of the EDMS.
H2c. Perceived Information quality will have positive effect on user acceptance of the EDMS.
Perceived Usefulness
Perceived usefulness been defined as a persons subjective perception of the effortlessness of a computer
system, which affects their perceived usefulness thus having an indirect effect on users technology
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acceptance. It is defined as the degree to which a person believes that using a particular technology will
enhance his or her job performance (Davis, 1989).
People tend to use or not to use a system application to the extent they believe it will help them perform their
job better (Davis, et al., 1989). Usefulness can also be defined as the prospective adopters subjective
probability that applying the new technology from foreign sources will be beneficial to his personal and/or
the adopting companys well being (Venkatesh et al, 2003). Or that using the technology would improve the
way a user could complete a given task.
PU explains the users perception to the extent that the technology will improve the users workplace
performance Davis, et al., (1989). This means that the user has a perception of how useful the technology is
in performing his job tasks. This includes decreasing the time for doing the job, more efficiency and
accuracy. Several researchers provide evidence of significant effect of PU on IS acceptance and usage (Davis,
1989; Venkatesh et al, 2003; Wang et al., 2003). Hence, EDMS that users think are useful are more likely to
be accepted by the users. Therefore, this study proposes the following hypothesis:
H3. Perceived usefulness will have positive effect on user acceptance of the EDMS.
Perceived Ease of Use
Perceived ease of use (PEOU) is defined as the degree to which a person believes that using a particular
system would be free from physical and mental effort (Davis, 1991). It has also been defined as a users
subjective perception of the ability of a computer to increase job performance when completing a task.
This follows from the definition of the word ease: freedom from difficulty or great effort. Effort is a
finite resource that a person may allocate to the various activities for which he or she is responsible (Davis,
et al., 1989). All else held constant, an application perceived to be easier to use than another is more likely
to be more accepted by users. PEOU explains the users perception of the amount of effort required to utilize
the system or extent to which a user believes that using a particular technology will be effortless (Davis, et
al., 1989).
PEOU has been established from previous research to be an important factor influencing user acceptance and
usage behavior of information technologies. Venkatesh, (2000), reported, PEOU describes the individuals
perception of how easy the innovation is to learn and to use. Given that some fraction of a users total job
content is devoted to physically using the system per se, if the user becomes more productive in that fraction
of his or her job via greater ease of use, then he or she should become more productive overall. Users believe
that a given application may be successful, but they may, at the same time, believe that the technology is too
hard to use and that the performance benefits of usage are outweighed by the effort of application (Venkatesh
et al, 2003).
PEOU is posited to have a direct impact on perceived usefulness. It is thought that the easier it is to use a
technology, the greater the expected benefits from the technology with regard to performance enhancements.
While perceived usefulness has emerged as a consistently important attitude formation, studies have found
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out that perceived ease of use has been inconsistent and of less significance. The literature suggests that a
plausible explanation could be the continued prolonged users exposure to technology leading to their
familiarity, and hence the ease in using the system. Therefore, users could have interpreted the perceived
ease of use as insignificant while determining their intention to use a technology.
According to Davis, there exists a direct effect of PEOU on perceived usefulness. In other words, between
two systems offering identical functionality, a user should find the one that is easier to use more useful.
Davis, (1993) states that because some of the users job content includes use of a computer per se, if a user
becomes more productive via ease of use enhancements, then he or she should become more productive
overall. Perceived usefulness is not hypothesized to have an impact on perceived ease of use. TAM posits
that PEOU is important factor that effect IS acceptance, either directly or indirectly through perceived
usefulness (Davis et al., 1989). Venkatesh and Davis (2000) found that PEOU have positive direct effect on
user acceptance of IS. Thus, if EDMS are easy to use they are more likely to be accepted by the intended
users. Thus, this study postulates the following hypotheses:
H4a. Perceived ease of use will have positive effect on perceived usefulness of the EDMS.
H4b. Perceived ease of use will have positive effect on user acceptance of the EDMS.
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Figure (1): EDMS Acceptance Model
5 Research Methodology
5.1 instrument construction
The study used a self-administered questionnaire to measure the study variables. The questionnaires were
pre-tested and distributed to members of the postgraduate students and academics who are in the information
systems area of specialization. The respondents were asked to critically evaluate the questionnaire with
regards to its objective, contents, clarity and ease of completion, and they also assist in translation and
validating the Arabic version of the survey which distributed to EDMS users. After the pre-testing stage, a
modified questionnaire was developed for the purpose of conducting a pilot study. The questionnaires were
also translated to Arabic to cater for EDMS staff.
The final questionnaire was used to obtained data across five dimensions consisting of: 1) Perceived System
Quality; 2) Perceived information quality; 3) EDMS Perceived Ease of Use; 4) EDMS Perceived Usefulness;
and 5) Acceptance of EDMS. Each dimension was a construct related to the independent and dependent
Perceived System
Quality
EDMS Perceived
Ease of Use
EDMS Perceived
Usefulness
Perceived
InformationQuality
EDMS
Acceptance
H1a
H2a
H1b
H2b
H4a
H4b
H3
H1c
H2c
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variables of the study. The structure of the questionnaire consisted of six sections. The first section obtained
demographic information about the respondents.
The second section consisted of 14 questions obtaining data in the dimension of EDMS system and
information characteristics, which is a construct involving System Quality and information quality of EDMS.
The 14 questions were adopted fromWixom and Todd (2005) and Rai, et al. (2002) Questions 1, 2, 3, 4, 5,
8, 10, 11, and 14 were slightly modified to meet the investigation goal, while the rest of the questions were
left alone.
The third section consisted of 14 questions obtaining data in the dimensions of Perceived Ease of Use;
Perceived Usefulness; and Acceptance of EDMS. The 14 questions were adopted from Davis (1989), the
questions were slightly modified to meet the investigation goal, the questions were to elicit the perceptions of
individuals of the usefulness and the ease of use influencing the adoption of the technology. (Appendix1).
The questionnaire was designed using a 5-point Likert scale. The Likert scale asks respondents to rate their
level of agreement with statements ranging from strongly disagree to strongly agree. Through the use of the
Likert scale, the respondent is provided with a clear foundation for expressing opinion without the
interference or interpretation of the researcher. Moreover; The Likert scale was selected for the survey
instrument because it is commonly used in social research, and provides data in a form similar to an interval
scale (Punch, 2005).
5.2 Population and sample
The sample for this study consisted of EDMS users in the Amman court of First Instance, Jordan ministry of
justice.a sampling frame was created with the assistance of Jordan ministry of justice. The ministry deploys
Electronic Document Archiving as a standard technology and business component of the Jordanian Court
System. The system is a custom Arabic-language case management system named as MIZAN and automated
all 74 courts throughout Jordan, representing 100% of the national case load, including 44 conciliation courts,
19 first instance courts, 5 appeals courts, 3 special high courts in Amman, and 3 juvenile courts. The system
was first implemented at the Amman court of First Instance. To ensure that the beliefs measured were based
on direct EDMS behavior experiences, only responses from those who had previously used EDMS were
included. The total number of participants was 200.
The questionnaires were distributed to the 200 EDMS users. A covering letter explaining the purpose of this
study was attached together, assuring them of the confidentiality of their responses and instructing them to
complete the questions, seal and return the completed questionnaires using the attached envelope. Out of the
200 questionnaires distributed, 150 usable questionnaires were returned, yielding a response rate of 75
percent, which is considered acceptable. There were 78 male and 72 female respondents. The age range of
the sample was from ages 25 to 45 yearswith a mean of age 33 years.
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The completed sample was composed of well-educated individuals, Out of 150 respondents, 144 (over 96
percent) had achieved at least a high school qualification. The majority of respondents hold community
college degree with percentage 52.8% out of total respondents, and 34% out of total respondents hold
bachelor degree.The respondents were mostly experienced information systems users, Approximately 90%
of the participants had more than 5 years experience in using computers, and 40% of respondents spend
approximately more than 80% up to 100% of their daily work using EDMS.
6 Results and discussion
6.1 Instrument Reliability
The reliability for the instrument was established using Cronbach's alpha, which is a measure of the internal
consistency of the instrument. Cronbach's alpha estimates the true score variance captured by the items in the
scale by comparing the sum of the item variance with the variance of the sum of the scale (Hair et al., 2006).).
A Cronbach's alpha result of 0.70 or higher is generally considered to show adequate reliability for
instruments used to gather psychometric data (Punch, 2005). The analysis of the data with Cronbach's alpha
indicated that the instrument was reliable for each of the five scales EDMSSystem Quality, EDMS
information quality, perceived ease of use, perceived HRIS usefulness, and Prediction of Acceptance. Table
1 shows Cronbach's alpha for the instrument scales.
The reliability coefficient (alpha) of the independent variables was as follows: perceived system quality (80
percent); perceived information quality (70 percent); ease of use (72 percent), usefulness (83 percent), and
EDMS Acceptance (74 percent). The reliability coefficients of all the five variables were above 0.70, which
concurs with the suggestion made by Hair et al., (2006).
As for reliability and internal consistency of measurement scales, Cronbachs Alpha () measure was used.
The Cronbachs Alpha of all scales included in this study ranged between 0.83 and 0.92; which indicate good
reliabilities of the scales (Hair et al., 2006). Hence, both content validity and reliability are satisfactorily met.
6.2 instrument validity
The validity of the scale was assessed using exploratory factor analysis, which is used to verify the number
of underlying dimensions in the instrument and the pattern of item-factor relationships (Punch, 2005). The
exploratory factor analysis determined whether the questions in the instrument loaded on the same factor in
the relevant dimensions, and assessed whether items should be eliminated from the scale because they
obtained data or loaded in more than one factor. The exploratory factor analysis was based on the general
linear model (GLM) assumptions of linear relationships among interval data, low multicollinearity, and
normalcy in the multivariate distribution to support testing of statistical significance. The exploratory factor
analysis approach is suitable when the objective is to demonstrate the dimensionality of a measurement scale
that responds to clearly separate constructs (Hair et al., 2006).
Table I. Factor analysis and scale reliabilities
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Measure Items Factor
loading
KMO
Test
Eigenvalue Variance
explained
(%)
Number of
Extracted
Component
Sig Reliability
Perceived System Quality
6 0.64-0.80 0.708 2.427 70.015 1 .000 0.75
Perceived information
quality
7 0.65-0.74 0.579 1.403 46.772 1 .000 0.71
EDMS Perceived ease of use 4 0.54-0.80
0.609 2.337 58.446 1 .000 0.72
EDMS Perceived usefulness 7 0.52-0.78
0.632 1.7121 43.02 1 .000 0.83
EDMS Acceptance 3 0.63-0.77
0.501 1.405 69.39 1 .000 0.79
The Kaiser-Myer-Oklin (KMO) test of sample adequacy was also used, with a threshold for acceptance of
the validity of the instrument set at 0.5. The KMO test examines the magnitude of the observed correlation
coefficients compared to the partial correlation coefficients to determine whether factor analysis is an
adequate test of reliability. Bartlett's test of Sphericity was used to ensure that the factor analysis was
statistically significant. Bartlett's test determines the sums of the products and cross-products in the
correlation matrix to ensure that the variables do not exhibit multicollinearity. The factor analysis also
examined the total amount of variance explained by the individual items in each dimensional scale using
eigenvalues, which represent the amount of variance in all items in the scale that can be explained by the
principle component of the factor (Hair et al., 2006).
7 Hypotheses Testing
In order to understand what factors will influence users acceptance of the EDMS; this study use regression
analysis to discuss it,in this study 4 regression models were built to form a path analysis:
The first multiple regressions: The independent variables are System quality and information quality. The
dependent variable is Ease of Use.
The second multiple regressions: The independent variables are System quality and information quality. The
dependent variable is perceived usefulness.
The third multiple regressions: The independent variable is perceived ease of use. The dependent variable is
ease of usefulness.
The fourth multiple regression: The independent variables are system quality, information quality, perceived
ease of use, and perceived usefulness The dependent variable is Acceptance.
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The multiple regression results for the path associated with the variables were presented in Table 2. For
testing H1a and H2a, a regression analysis was conducted to check the effects of System quality and
Information quality on perceived Ease of Use. The results presented that perceived System quality and
Information quality both were predictor variables (p < .05, adjusted R
2
=0.650). The standardized Beta values
for System quality is 0.420, and for Information quality is 0.443 indicating that Information quality has more
impact than System quality.
For examining H1b and H2b, a regression analysis was performed to check the effects of System quality and
Information quality on usefulness. The results indicated System quality and Information quality both were
predictor variables (p < .05, adjusted R
2
=0.598).
Table 2: Regression results for predicted path relationships
Result P Adjusted R
2
B Independent variables Dependent variable Hypothesis
Accept 0.000 0.650 0.420 Perceived System
Quality
EDMS Perceived
Ease of Use
H1a
Accept 0.000 0.443 Perceived Information
quality
H2a
Accept 0.000 0.598 0.285 Perceived System
Quality
EDMS Perceived
Usefulness
H1b
Accept 0.000 0.545 Perceived Information
quality
H2b
Accept 0.000 0.391 0. 1 2 8 EDMS Perceived Ease
of Use
EDMS Perceived
Usefulness
H4a
Accept 0.000 0.638 0.317 Perceived System
Quality
EDMS Acceptance
H1c
Accept 0.001 0.427 Perceived Information
quality
H2c
Accept 0.002 0.330 EDMS Perceived
Usefulness
H3
Accept 0.000 0.204 EDMS Perceived Ease
of Use
H4b
The standardized Beta values for System quality is 0.285, and for Information quality is 0.545 indicating that
Information quality has more impact than System quality. For testing H4a, a regression analysis was
conducted to check the effects of ease of use on usefulness. The results showed ease of use was predictor
variables (p < .05, adjusted R
2
=0.391).
In order to identify the most important independent variable that explains the acceptance of EDMS variable
and to test hypothesis H1c, H2c, H3, and H4b, a multiple regression analysis was carried out.
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The regression analysis shows that 64 percent of the variance in acceptance of EDMS is explained by the
four factors (system quality, information quality, ease of use, and usefulness). The regression model is
significant in explaining acceptance (p < .05). The standardized Beta values for system quality (0.317), for
information quality (0.427), for usefulness (0.330), and for Ease of Use (0.204) also indicate that Information
quality has more impact than system quality, perceived usefulness or Ease of Use. Overall the results
indicate support for the hypothesis H1c, H2c, H3, and H4b. Thus the findings of the regression models are
illustrated in Exhibit 1
Exhibit 1 Empirical research model.
8 Discussions, Conclusion, and Implication for Further Research
This study was designed to break new ground and explore the determinants that influence the user
acceptance of EDMS. This research tested the thesis that that EDMS acceptance is a joint function of system
and information characteristics, usefulness, and Ease of Use. Earlier studies have not framed the user
acceptance determinants based on the four dimensions collectively. Hence, our study has established the
significance of examining the user acceptance by framing determinants according to the relevant quality
dimensions in a collective manner and thus, ensuring that the user acceptance can be better explained in such
context as the EDMS.
Perceived System
Quality
EDMS Perceived Ease
of Use
EDMS Perceived
Usefulness
Perceived Information
quality
EDMS Acceptance
0.420
0.443
0.285
0.545
0.218
0.330
0.207
0.317
0.427
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The finding showed that Perceived information quality is the most significant determinant affecting
acceptance of EDMS. The result of this study suggests the extent to which an EDMS provide sufficient,
comprehensive, clear, accurate, and up-to-date information play an important role in influencing EDMS
acceptance. There were no past studies which link information quality with EDMS acceptance. Nevertheless,
Delone and Mclean (2003) put forward information quality as a major dimension for evaluating the success
of IS. Our research adds to the literatures by identifying that level of EDMS information quality is
significantly associated with users' acceptance in the EDMS context. It suggests users may be influenced by
the extent to which information quality can be assumed; the extent to which the information is accurate or
correct; and the extent to which the information is at the right level to meet user needs. Most importantly, the
output of the EDMS should be presented in a useful format.
The finding showed that system quality is significantly related to EDMS acceptance. Researchers in the area
of conventional IS are generally regard system quality to be a highly important characteristics of all
interactive computer systems (Rai et al, 2002), independent of the specific application the system was
designed to support. In turn, the finding of this research suggests that the greater the perceived system
quality of an EDMS, the higher is the EDMS acceptance, agreeing with the literature noted above. However,
there were no past studies about the impact of system quality of EDMS on user acceptance. Therefore, this
research contributes to some extent to the current knowledge about the impact of system quality on user
acceptance.
Moreover, an empirically test had verified the direct effects of perceived information and system quality to
the perceived usefulness and perceived ease of use. These findings partially refine the TAM encompassing
the direct effect between external variable and acceptance. And then, the users perceptions in the
information quality of information systems plays the role as a core driving force and external variable to the
acceptance of users while facing to new technologies. Finally, the indirect relations by ways of perceived
usefulness and perceived ease of use between the perceived information qualities, which proposed in this
study, had partially refined the DeLone and McLean Information Success Model.
The results showed that Perceived ease of use have positive effect on perceived usefulness of the EDMS.This
meant that the more users perceive the system to be easy to use, the more they will see it as useful and vice
versa.
This finding is consistent with previous scholars like Davis, et al., (1989), who revealed that firms which
have strong and favorable perception of the usefulness of the systems, use more of them than those with
weak or unfavourable perception of the usefulness systems. Furthermore, technologies perceived to be easy
to use all things being equal, are deemed as useful, as suggested by the direct relationship existing between
perceived ease of use and perceived usefulness.
TAM treats perceived usefulness and perceived ease of use as two distinct antecedents towards the use of
technology due to their positive correlation. However, findings from the first two applications of TAM
showed that perceived usefulness was a significantly stronger factor than perceived ease of use .Our results
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suggest that in contexts where effective task execution substantially depends on the system such as the case
with EDMS, beliefs about the system usefulness are more dominant in shaping user acceptance than beliefs
about Ease of Use.Another interpretation is that difficulty in using systems is becoming less of a concern as
they are increasingly user-friendly. In addition, since systems are more common and standardized nowadays,
the users have become increasingly competent in using them. Accordingly, in the planning and development
of EDMS systems, software developers should pay attention to practical functions and extend key features
that are frequently required. As such, perceived usefulness has a significant effect on EDMS acceptance,
suggesting that the TAM could also extend into the EDMS.
A competing model that strengthens the theoretical and empirical foundations has been developed. Our study
has been carried out in an eastern setting unlike earlier studies and this makes research in the area of
technology user acceptance more comprehensive.
Finally, this study suffers from a number of limitations. First, this study merely developed and validated an
EDMS acceptance model using user perspective as the level of analysis. Future research may develop EDMS
acceptance models using other stakeholders and levels of analysis.
Second, the use of self-report scales to measure study variables suggests the possibility of a common method
bias for some of the results. Future research should employ both objective and subjective measures, and
examine the correspondence (or lack thereof) between them. Despite these limitations, the present study
provides valuable insights into the study of EDMS acceptance.
While the findings reported in this study go some way to resolving the research problem outlined, much
remains unresolved. Accordingly, four broad areas are suggested for future research direction. These
research directions are (1) expansion of EDMS acceptance model, including new antecedents; (2) further
exploration of hypothesised relationships, including new methods of investigation; (3) validating the findings
in specific settings. For example, a cross cultural study could also be conducted to identify differences in
EDMS acceptance due to cultural effects; (4) development and application of the instrument as a tool for
practitioners.
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Appendix 1: Instruments
Perceived System Quality:
EDMS allows information to be readily accessible to you.
EDMS makes information very accessible.
EDMS is easy to use at the first time I access.
EDMS can flexibly adjust to new work demands.
EDMS returns answers to my requests quickly.
EDMS is versatile in addressing needs as they arise.
Perceived Information Quality:
EDMS provides sufficient information
Information content provided by EDMS meet my needs
EDMS outputs is presented in a useful format
EDMS provides reports that seem to be just about exactly what I need
EDMS produces comprehensive information.
EDMS provides up-to-date information
EDMS information clear
EDMS information accurate
EDMS Perceived Ease of Use:
Learning to operate EDMS is easy for me
I find it easy to get EDMS to do what I want it to do
It is easy for me to become skillful at using EDMS
I find EDMS easy to use
EDMS Perceived Usefulness:
Using EDMS enables me to accomplish job's tasks more quickly
Using EDMS enables to perform work's requirements more quickly
Using EDMS improves my job performance.
Using EDMS in job increases my productivity.
Using EDMS enhances my effectiveness in the job.
Using EDMS makes it easier to do my job.
Using EDMS improves my ability to make good decisions.
EDMS Acceptance:
I like the idea of using EDMS
I have a generally favorable attitude toward using EDMS
I believe it is (would be) a good idea to use EDMS
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Factors Affecting The Eligibility of The Customer In The Payment Of
Debt In Commercial Banks In Aqaba
Dr. firas muhammad A. AL-Gh AL-Rawashdi,
Associate Prof., Dean of faculty of management and finance, The University of Jordan/Aqaba
Abstract
This study aims to identify how financial, accounting, Economic, and Marketing factors, affecting the eligibility
of the client bank and its ability to repay loans.
The study found that there was no significant effect between (economic, marketing indicators) and
determining the eligibility of the client and its ability to repay loans. But there is effects of financial indicators.
The most important recommendations of the study is to take into consideration the factors effecting the
eligibility of the client and its ability to repay loans as economic feasibility of the project funded, borrower
reputation, market share of the client, specialized training for credit employees.
Key works: (financial, economic, marketing indicators), banking customer, bank loans, eligibility of the client,
bad debt, commercial banks in Aqaba.
Introduction:
The first forms of banking in the commercial banks were accepting deposits and save it with
bankers, and payment for preserving them, initially depositors were not given any right to
benefit as interest , but with the passage of time the bankers observed that a large
proportion of this money stacked and do not use from their owners, so thought the bankers
running the amounts inert by lend part of it with a guarantees against it and payment of
commission or interest , therefore the bankers have developed their work from the stage of
accepting deposits only to lending these deposits, and after the applicant pay a commission
for deposit his funds became receiving interest on his deposits, Banking business has
developed from accepting deposits in the beginning to practice lending and credit, to
become a cornerstone of modern banking is accepting deposits and savings on the one
hand and providing of credit facilities and banking services on the other
hand.(Hashad,2004)
The commercial banks play an important central role, they represent a point of
contact between individuals and the growth and prosperity of any country, and took their
role to rise, especially in the recent period which has seen increased steadily in the
movement of economic activity, it is worth mentioning that the support of the commercial
banks to the national economy forms the backbone of the economy of any country, in
addition to other resources in the state, and contributes to the economic development of
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countries and thus provides a solid base for the national economy. (Salman, 2003)
Personal and productive loans have positive and negative role for borrowers as well as
state because they contribute in develop the national economy, but they are facing some
positive factors that is repayments the loan on time and negative factors that is inability of
the client to repay the loans. The reasons for non-payment of loans returns to the
economic factors as to engage in non productive projects, low wages, rising prices,
increasing the volume of consumer spending, but the social factors return to high
expenses and the change in consumption pattern of the borrower which lead to inability to
repay loans (Alcardosa, , 2008). It may be reasons for inability to repay loans due to the
financial situation weak of the borrower, as weakness of marketing and administrative of
his project, or because of borrower use of the loan for purposes other than that given for it.
The defect may lie sometimes by the lender himself because of his assessment of the
feasibility study, or for failure to obtain adequate guarantees to cover the risk of the loan
and the presence of weakness in the Credit Analysis of the status of the client and allow
him to use the total amount of loan at once without follow-up phases of the uses of loans
financed by the Bank.
Commercial banks in Jordan are about 13 banks, all of them have branches in
Aqaba, including eight banks with branches outside the Kingdom, and there are nine non-
Jordanian commercial banks, the Islamic banks reached to three banks, and public sector
banks reached to three banks too (central bank,2010). the bad debts recorded at licensed
banks in the Kingdom during the first half of 2011, up a slight increase of 110 million JD, an
increase slightly by about 2.0%, compared with levels recorded at the end of last year,
2010, and the bad debts reached by the end of June, about 1270 million JD, compared to
about 1160 million by the end of the year 2010, thus recording a growth of 2.8% of the total
volume of bank credit facilities granted by licensed banks operating in the Kingdom until
the end of the same period, compared to 8% by the end of the comparative period last
year.
According to the official data of the Central Bank of Jordan that the outstanding
volume of credit facilities granted by banks operating in the Kingdom rose from 14,451
million JD by the end of last year 2010 to about 15,569 million JD by the end of the first
half of 2011 and the facilities granted by banks increased by 7.7 % and an increase of
about 1118 million JD, compared with levels recorded last year by the end of 2010. (Al-Rai
newspaper Jordan, Saturday, 12 November 2011)
The commercial banks grants the credit facilities after consciously targeted studying
of the customer financial situation, and after making sure of his ability to repay the loan on
time with its interest, expenses and commissions, taking into account the borrower and the
factors affecting eligibility and ability to repay the loan.
Finally, assure that the situation where credit decisions are made is a state of risk,
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the credit decision maker's in the bank can not predict the outcome of his decision at full
resolution, but the credit decision maker's can analyze the risks associated with credit
operations to reach a specific objective probabilities estimated for the decision will be
taken, the sound decision is a decision that the administration feels that the revenue achieved is
equal to or greater than the degree of risk that surround it. (Www.google.com, Credit Analysis,
2001)
Therefore, this study was to shed light on the factors that affect the eligibility of the
client and the ability to repay the loan.
Importance of the study:
The importance of this study confirm that the granting of loans has risks that must be
studied, and bad debts have a negative impact on banks, so the importance of this study is
to know the indicators used by the commercial banks in Jordan and that determine the
eligibility of the client and the ability to repay its obligations. These indicators are a
financial, marketing, economic indicators
Loan provide credit facilities for both companies and individuals, so the banks
established special credit facilities and loans sections, credit and lending money is the
most important and dangerous jobs of the commercial banks because the money granted
by the bank it's a depositors' money.
In addition, there are also factors that are interrelated and integrated influential in the
decision-making credit at banks such as customer-specific factors, bank specific factors,
credit facility factors, and legislation issued by the Central Bank.
Also the size of credit facilities affects the general economic situation, so
exaggerated the size of credit can lead to harmful effects of inflation, and deflation in the
granting of credit can lead to difficult projects to continue its activity, so credit must be
balanced to increase the rates of economic development is required.
Objectives o t!e st"#y:
This st,dy aims to identify the follo0ing86
* 6 financial and acco,nting factors affecting the eligibility of the client ban% and its ability to
repay loans.
! 6 3conomic factors affecting the eligibility of the client ban% and its ability to repay loans.
6 9ar%eting factors affecting the eligibility of the client ban% and its ability to repay loans.
4 : The study should reach to concl,sions and recommendations to face the challenge of the
problem of non6payment of loans by c,stomers
Problem of the study:
the problem of the study Highlights he Jordanian t commercial banks which face difficulty
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in assessing the eligibility of existing customers who wish to borrow, and the lack of trust
between the bank and the client for the lack of financial guarantees to facilitate the
financial transactions, in addition to the need for people to get loans urgently to
supplement their needs especially basic ones, there is also an urgent need for people to
deal with loans and credit facilities and resort to them with the need for a discount
Therefore, this study was to answer the following questions:
1 - Are the financial and accounting factors affecting the capacity and the ability of the
customer to repay the bank loans?
2 - Are the marketing factors affecting the eligibility of client's ability to repay the bank loans?
3 - Do economic factors affect the eligibility of the client's ability to repay the bank loans?
Hypotheses of the study:
To achieve the objectives of the study and solve the problem of the study the following
hypotheses: was formulated
The first hypothesis:
There is no significant statistical effect bet0een indicators of financial, accounting and
ban%ing client to determine eligibility and ability to repay loans.
The second hypothesis:
There is no significant statistical effect bet0een indicators of mar%eting and determining
the eligibility of the client ban% and its ability to repay loans.
The third hypothesis:
There is no significant statistical effect between economic indicators and determining
the eligibility of the client bank and its ability to repay loans.
The fourth hypothesis:
There is no significant statistical effect between financial indicators and accounting,
marketing and economic determining the eligibility of the client bank and its ability to
repay loans due to the demographic variables.
Variables o t!e st"#y: -
The indicators of financial, accounting and mar%eting indicators and economic indicators-
combined as independent variables, the dependent variable is the client;s eligibility and ability to
repay loans
Previous studies: -
* 6The study of (Tarawneh, 2000) entitled of: "Credit Analysis and its impact in determining
the eligibility of the client and the ability to repay loans":
This st,dy aims to identify the indicators and criteria ,sed by the commercial ban%s of Jordan in
its analysis of credit, and the res,lts sho0ed that the management of loans in commercial ban%s
of Jordan act,ally ,sed a set of indicators eval,ation of financial, accounting, mar%eting,
economic, and vary the relative importance of the ,se of these indicators in the credit analysis
process
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the statistical analysis showed that there is a positive and statistically significant bet0een the
eval,ation indicators and the eligibility of the client ban% and its ability to repay loans.
the st,dy recommended by the need for a ,niform eval,ation indicators and typically contained
in the credit policies of commercial ban%s of Jordan; so that they ,se in the process of credit
analysis before ma%ing decisions to grant credit facilities.
2 - The study of (Abu Jabara, 1994) entitled: "The bad debt and how to deal with it."
Bad debts are those debts that exceed the possible of non-payment of 1%. The study
found that the reasons for the emergence of bad debts due to a lack of credit studies
conducted by the lending banks, and the lack of analysis of credit risk objectively, and a
lack of follow-up banks to customers borrowers, and the errors committed by customers
borrowers. The study showed that it can reduce bad debts by helping the client to correct
the situation of his struggling project ,and Agreement with the client to an amicable
settlement without resorting to the judiciary.
3 The study of (Al najar, 2000) entitled: "The problems of bank loans":
He pointed out that the problems of bank loans due to reasons of debtors himself, for not
using the loan efficiently or the borrower escape outside the country without payment the
outstanding loans. He added that there are reasons stemming from the bank lender such
as substantially diminished in the study credit, and the occurrence of errors in estimating
the guarantees provided for the facilities, or abuses by the staff of the Bank's credit policy.
Also the researcher found that there are reasons beyond the control of the bank and
borrower, such as unexpected circumstances which has a negative impact on Bank-
financed projects.
4 The study of (Machuir, 1998) entitled: "The behavior of the bank depends upon
borrowers balances with banks" upon borrowers balances with banks"
The most important findings of the study that customers with high risk in their business are
required to pay high expenses for granting loans from the banks, The results also showed
that the projects of high-risk clients provide high guarantees for banks.
5 The study of (Aqel, 1995) entitled: "The fundamentals of credit":
The study confirmed that the control on loans and the good management is essential to
maintain the credit quality and continuity in the success of the lending operations. The
most important controls on loans: to ensure the integrity of the legal documentation, and
ensure the client commitment of requirements contract, and to ensure payment on the
dates agreed upon, and control of guarantees and to ensure their validity and the
continued adequacy to cover the risks, and ensure compliance with the instructions,
powers and policies. However, this researcher did not address the problems of loans
stemming from the circumstances surrounding borrowers.
6- The Study of (Haddad, 2005) examined the obstacles faces the credit facilities in
commercial banks in Jordan, the study found that there is a significant relationship
between the faltering credit in commercial banks of Jordan, and all of the credit policy
practiced in Jordan, and external factors surrounding the bank, and central bank policy ,
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And the factors effecting the credit facilities employees, The study recommended that it is
necessary to give the credit facilities staff some independence for making the credit
decision, As well as the necessity to analyze the budgets submitted by the client.
7 - The study of (Lutfi, 2002) entitled the information used by officials of lending . the study
showed that officials of lending in banks are paying importance to the following: Financial
statements of the Borrower, and studies relations sector, which borrower employs with,
and information through a personal interview to the borrower , and field visits by the credit
employee to the borrower, and the closing accounts of companies.
The most important recommendations of the study are: the need to develop reports of
auditors to be more comprehensive, as well as the need to increase awareness of the
credit officers of the information to be more disclosed according to the national and
international accounting standards .
8 the study (mala and thaher, 1999) entitled the determinants of the decision to grant
direct credit facilities in Jordanian banks, The aim of this study was to investigate the
dependence of Jordanian banks on the standards objective in making credit decision.
The study showed the most important factors affecting the decision to grant banking
facilities: the financial situation of the client, and the nature of the activity practiced by the
borrower, and the size of its activity, the type of collateral, and market share of the
borrower. The study cited the most important ratios and financial indicators and non-
financial the study has focused on the volume of sales as an indicator of the
competitiveness of the client as well as his reputation and his behavior in banking dealings
and the extent of its commitment to pay its debts.
The study showed that the most important groups of criteria used and arranged as follows:
the legislative, legal, hazards, economic, marketing, commercial, financial and
administrative criteria , respectively.
9-the study of (Abu Obaid,2003) non performing loan at Jordanian commercial Banks:
causes effects, and suggested solution, the study aims to define the factors which
contribute to the development and growth of the non performing loan problem from the
population study i.e. borrowers, lending bank, auditors, and central bank the most
important result of the study was that the non performing loan ratio to the total of loan and
credit facilities rose from (8.8%) at the end of 1992 to (22.2%)at the end of 2001.
Population of this study:
The study population was identified to include all commercial banks in Aqaba that is (17)
Bank, and consists of the managers of those banks as well as deputy managers and staff
of loan facilities department. Were distributed (85) questionnaire designed to achieve the
purposes of the study, the questionnaires had been distributed at four questionnaires of
each bank, and recovered (13) of them without filling, so the study analysis depend upon
(72) questionnaire.
Terms of study:
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1 - Commercial Banks in Aqaba: Banks are licensed to do business banking, which
includes providing banking services and to accept different types of deposits as (demand
deposit, saving deposit, and time deposit). (Ramadan, 2006)
2 - banking customer: an individual, institution or entity that deals with the bank, and often
this is dealt with directly and continuous, Those who benefit from the banking services .
3 - bank loans: are loans provided to clients from individuals or institutions, the debtor
undertakes to pay that money with interest, commissions and expenses at once or in
installments on specific dates. The debtor provides a guarantee against the loan to the
bank incase the client stopped payment without any losses. (Ramadan, 2006)
4 - financial and accounting indicators: These are factors that affect the eligibility of the
client and the ability to repay the loan, and a knowledge of client's ability to manage and
operate the assets in order to obtain profits, also helps to know the debt accumulated on it.
(Tarawneh, 2000)
5 - marketing indicators: These are factors that affect the client's ability to repay the loan,
which lead the bank to know the reputation of the customer and his credit activities and the
size of the market quota he has, and these indicators will help the bank to take appropriate
decision on the loan granted to the client. (Tarawneh, 2000
6 - Economic Indicators: These are factors that affect the client's ability to repay the loan,
as the size of the project, the technological challenges, as well as the availability of raw
materials necessary in the project. (Tarawneh, 2000)
7 - eligibility of the client: identify the rules that are based on the evaluation of the
customer ability of refund loan on time. This is one of the most important components of
the borrowing policy. (Goneim, 2000)
8 - bad debts: and known as non-credit facilities, which is below the level of credit facilities,
a doubtful debts credit facilities, and bad credit facilities (Sharef, 2004)
Practical framework for the study:
Statistical methods used and test hypotheses:
The study used certain statistical measures as mean, t test, Cronbach alpha test, and
standard deviation.
The hypothesis testing was the standard of rejected first three zero hypothesis, and to be arithmetic
mean is greater than 3, and even be moral must be the value of t greater than the value
spreadsheet, or that the level of significance seen less than 0.05, and the other
assumptions have been used t-test for sex differences, and was used variance test for the
rest of variables.
The hypothesis is rejected if the significance level was seen less than 0.05
The stability of the tool:
The study tested the stability of the tool by Cronbach's coefficient alpha test, and the table
No.(1) Shows the following:
1 - The value of alpha to the paragraphs of financial and accounting indicators was 0.70
2 - The value of alpha to the paragraphs of the marketing dimension indicators was 0.64
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3 - The value of alpha to the paragraphs of the economic indicators was 0.62
4 - The value of alpha for all combined paragraphs was 0.79
All of these values greater than 0.60, so there is stability in the study tool.
Table (1): Cronbach's alpha test results:
Value of alpha Indicators
0.70 Indicators of financial and accounting
0.64 Marketing indicators
0.62 Economic indicators
0.79 Total
Description of demographic and personal factors of the study population:
Table (2): shows the frequencies and percentages for all the demographic variables:
Percentage%
Frequency First: Gender
69.4 50 Male
30.6 22 Female
Second: The Age
33.3 24 Equal to or less than 30
40.3 29 From 31-40
22.2 16 From 41-50
4.2 3 Equal to or greater than 51
Third: Qualification
--- --- Secondary
15.3 11 Diploma
83.3 60 Bachelor
1.4 1 Master
--- --- Doctorate
Fourth: The Current
Position
20.8 15 Branch Manager
16.7 12 Deputy Director
16.7 12 Head of Facilities department
45.8 33 facilities Staff
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Fifth: Monthly salary
11.1 8 Equal to or less than 350
38.9 28 From 350 to 500
23.6 17 From 501-650
26.4 19 More than 651
Sixth: The Experience
40.3 29 From 1-5
23.6 17 From 6-10
22.2 16 From 11-15
13.9 10 Equal to or greater than 16
Analysis of results and test hypotheses:
The first hypothesis:
No significant effect between indicators of financial, accounting and banking client to
determine eligibility and ability to repay loans.
Given in Table (3), we find that the arithmetic mean for each separate paragraph has
reached more than 3.00 and significance levels of viewing each of them was less than 0.05,
that is, all these paragraphs are statistically significant.
But the paragraphs combined reached to 3.62 which is the arithmetic mean is greater
than 3.00, and the significance level was 0.00, and this indicates that there is a statistically
significant effect between indicators of financial, accounting and banking client to determine
eligibility and ability to repay loans
Table (3): shows the arithmetic mean, standard deviation, t value and the significance level
for variable indicators of financial and accounting:
the
significance
level the
viewer
t value Standard
deviatio
n
The
arithmeti
c mean
Paragraphs
0.00 3.223 4.71718 3.72
1 - Uses the turnover of assets, "net
sales / total assets" to see the entity's
ability to run the assets in order to obtain
profits.
0.00 24.226 0.40171 3.51
2 - Debtors turnover ratio measures the
Company's ability to collect its debts.
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The second hypothesis:
No significant effect between indicators of marketing and determining the eligibility of the
client and its ability to repay loans.
As shown in Table (4) is clear that the arithmetic mean of all the paragraphs less than 3.00,
i.e., not statistically significant. And unacceptable.
0.00 18.130 0.48752 3.54
3 - Uses the commodity stocks turnover
ratio to measure the efficiency of the
borrowing activity in marketing of its
stock.
0.00 14.279 0.68505 3.77
4 - Result in turnover of current assets
"Net Sales / Total current assets" as an
investment in the most important
revenue generating entity which is
sales.
0.00 14.728 0.66417 3.41
5 - Measure the ratio of net profit to
sales in the contribution of the sales
profits.
0.00 13.806 0.68290 3.61
6 - uses the return on equity "Net
operating profit / net assets, working" to
see the company's ability to achieve
profits, which are the most important
factors of the bank guarantee.
0.00 2.729 1.25215 3.68
7 - Do not use force or resource "Net
operating profit / net public assets" to
see the company's ability to achieve
profits, which are the most important
factors of the bank guarantee.
0.00 10.841 0.80443 3.85
8 - Use the proportion of long-term debt
to total assets "total long-term debt /
total assets" to see the company's ability
to pay in the long term, banks granted
loans whenever this percentage was
low.
0.00 11.013 0.75978 3.49
9 - Use the ratio of debt to total equity
"total debt / total equity" to measure the
volume of coverage provided by the
equity of borrowers.
0.00 15.199 0.60645 3.62 Total
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The arithmetic mean of all the paragraphs together amounted to 2.56, which is less than
3.00, i.e., that there was no significant effect between indicators of marketing and
determining the eligibility of the client and its ability to repay loans.
Table (4): shows the arithmetic mean, standard deviation, t value and the significance level
for variable indicators of marketing:
The
significance
level the
viewer
t value Standard
deviation
The
arithmetic
mean
Paragraphs
0.08 1.023 - 1.23263 2.89
10 - taken into account the
customer credit reputable in
making the decision to grant
loans in the case of availability
of sufficient guarantees
0.00 11.960 - 1.04804 2.55
11 - the size of the market
share of the client is not
considered an important factor
in the decision to grant the
loan.
0.01 9.445 - 78610.0 2.74
12 - the diversity of the
customer activities has an a
positive impact on the decision
of granting the loan
0.00 14.038 - 73038.0 2.12
13 - Study of the client's credit
history is an important factor in
the decision of granting the
loan
0.00 13.388 - 58538.0 2.56 Total
The third hypothesis:
No significant effect between economic indicators and determining the eligibility of the client
bank and its ability to repay loans.
As shown in Table (5) is clear that the arithmetic mean of all the paragraphs less than 3.00,
i.e., not statistically significant. And unacceptable.
The arithmetic mean of all the paragraphs together amounted to 2.72, which is less than
3.00, i.e., that there was no significant effect between economic indicators and determining
the eligibility of the client and its ability to repay loans.
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Table (5): shows the arithmetic mean, standard deviation, t value and the significance level
for economic indicators variable:
The
significance
level the
viewer
t value Standard
deviation
The
arithmetic
mean
Paragraphs
0.00 -2.20 0.63 2.89
14 - Reduce the size of projects
related to the nature of the work of
the organization negatively affect
ability of the borrower to repay the
client's commitment.
0.00 -7.45 0.73 2.55
15 - The technological challenges
in the working methods one of the
main factors taken into account in
the decision to grant the loan
0.00 -6.55 0.77 2.74
16 - Availability of raw materials
essential to the productive
process and the availability of the
stock of materials is a key factor
affecting the decision to grant
loans.
0.00 -9.09 0.45 2.72
Total
The fourth hypothesis:
No significant effect between financial, accounting, marketing and economic indicators
determining the eligibility of the client and its ability to repay loans due to demographic
variables(Gender, Age, academic qualification, Position, Monthly Salary and Work
Experience)
A - Gender variable :
No significant effect of the financial, accounting, marketing and economic indicators
determining the eligibility of the client and the ability to repay loans due to the Gender
variable.
Of Table (6): shows that the levels of significance for each of the indicators of financial,
accounting, marketing and economic more than 0.05 meaning that it is not statistically
significant because there is no any differences between the responses of both males and
females in relation to the three dimensions.
Hypothesis test result shows that there is no significant effect on the impact of financial,
accounting, marketing and economic indicators determining the eligibility of the client bank
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and its ability to repay loans due to the Gender variable.
Table (6): the arithmetic mean of the Gender variable Answers , and levels of significance
of the differences seen between these answers using the test of Independent Samples test:
The level of the
viewer of the
differences
The arithmetic
mean for
females
The
arithmetic
mean for
males
Dimension
0.67 3.68 3.59
financial and accounting
Indicators
0.40 2.61 2.54
marketing Indicators
0.62 2.78 2.69
Economic indicators
B -The Age variable:
C -The variable of Qualification:
D- The Variable of Current Position:
E-The variable of monthly salary
F- The variable of practical experience
No significant effect of the financial accounting, marketing and economic indicators
determining the eligibility of the client and the ability to repay loans due to the age,
Qualification, Current Position, monthly salary, practical experience variables
we observe from Table (7) that the values of significance levels seen for all dimensions of
the following demographic variables(Age, academic qualification, Position, Monthly Salary
and Work Experience) were greater than 0.05, meaning that there is no difference of
significance in the sample answers due to the variable mentioned.
It means that the respondents of all following demographic variables(Age, academic
qualification, Position, Monthly Salary and Work Experience) are agree on the impact of
financial, marketing economic indicators determining the eligibility of the client bank and its
ability to repay loans.
Hypothesis test result shows that there is no significant effect on the impact of financial,
accounting, marketing and economic indicators determining the eligibility of the client bank
and its ability to repay loans due to the following demographic variables(Age, academic
qualification, Position, Monthly Salary and Work Experience)
Table (7): shows the results of test Variance for the following demographic variables(Age,
academic qualification, Position, Monthly Salary and Work Experience):
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B -The Age variable:
Dimension The level of the viewer of the
differences
financial and accounting Indicators
0.08
marketing Indicators
0.11
Economic indicators 0.70
C -The variable of Qualification:
Dimension The level of the viewer of the
differences
financial and accounting Indicators
0.88
marketing Indicators
0.93
Economic indicators 0.47
D- The Variable of Current Position:
Dimension The level of the viewer of the
differences
financial and accounting Indicators
0.64
marketing Indicators
0.19
Economic indicators 0.54
E-The variable of monthly salary
Dimension The level of the viewer of the
differences
financial and accounting Indicators
0.56
marketing Indicators
0.090
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Economic indicators 0.07
F- The variable of practical
experience
Dimension The level of the viewer of the
differences
financial and accounting Indicators
0.44
marketing Indicators
0.32
Economic indicators 0.70
Recommendations of the study:
1. The decision of the bank's credit should be based on the economic feasibility of the
project funded and not rely on guarantees only as a credit decision.
2. Must taking into account the borrower reputation and his credit history.
3. Must be taken into consideration the market share of the client.
4. The bank management should take economic factors affecting the client into
consideration before granting the loan.
5. The positive and negative activities of the customer Must take into account before
granting loan.
6. The bank management Must give credit employees specialized training courses to
enable them to study and evaluate credit and follow-up.
7. The banks should apply effective regulations in the management of credit risk.
8. The management must give special incentives to the debt collection employee and
develop the officers collection skills in the commercial banks at Aqaba.
9. the degree of borrowers and guarantors must be effectively documented and
constantly update these adequacy.
10. Banks should give the loan to the borrower in installments commensurate with the
actual needs of the project.
11. The credit employee should work as a consultant to the borrower and give him
advice and not to work only as a service provider.
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12. The Administrations of banks must give enough freedom to the credit staff to take
decisions.
13. The bank auditor must show the size of banks' credit risk clearly and it is impact of
these risks to the overall situation of the bank and customers.
References:
1. Al-Tarawneh, Ibrahim (2000), "Credit Analysis and its impact in determining the
eligibility of the client and the ability to repay loans," (Journal of Social Sciences,
Volume 31 Number 4), Jordan.
2. Aqel, Mufleh (1995), "Basics of Credit," (Journal of the banks in Jordan, Vol 14, p
4-9).
3. Alcardosa, Adel (2008), The effect of personal loans on the defaulters to payment in
the UAE, Social Affairs, Issue 99, pp. (179-186)
4. Abu Jabara, Hani (1994), "bad debts and how to deal with it, Journal of the banks in
Jordan, No. 6, pp. 4076-4079, Amman, Jordan.
5. Abu Obeid, Jamal (2003) bad loans of commercial banks in Jordan: causes, effects
and possible solutions: an analytical study, Ph.D. thesis, Al-ahliyya Amman
University, Jordan.
6. Central Bank of Jordan, Annual Report 2010, Jordan.
7. Ghoneim, Ahmed (2000), "the facilities and the appropriations process and the
practical aspects", edition 1, Amman, Jordan.
8. Hashad, Nabil (2004), "Guide to Bazal 2", (Encyclopedia of Bazal, the first part, the
Union of Arab Banks, pp. 189-190), Beirut.
9. Haddad, Wassim (2005), The effect of bad debts in the Jordanian commercial banks,
Master Thesis, Yarmouk University, Jordan.
10. Jordanian Alrai Newspaper, Saturday 12 November 2011).
11. Lutfi, Munir Moosa (2002), the information used by officials of lending and credit in
commercial banks operating in Jordan, Journal of Studies, Management Science,
Issue 1, volume 29, University of Jordan, Amman, pp. 88-97.
12. Mala, Nagy and Thaher Ahmed, (1999), the determinants of the decision to grant
direct credit facilities in Jordanian banks: a field study, Journal of Studies,
Administrative Sciences, Issue 2, Volume 6, University of Jordan, Amman, pp.
239-259.
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13. Machauer, achim (1998), "bank behavior based on internal credit ratings of borrowers",
journal of banking and finance, vol. 22 (10-11), Pp. 1355-1383.
14. Najjar, Fred (2000), "credit management and bad bank lending," (Youth Care
Foundation, p 18-22), Cairo.
15. Ramadan, Ziad (2006), "Contemporary trends in the bank management, Wael for
publication, edition 3, Amman, Jordan.
16. Salman, Safa Hadi (2003), The commercial banks Investment of surplus cash ,
University of Qatar, Qatar.
17. Sharef ,Leila (2004) the importance of credit analysis in the process of granting
credit facilities to major customers and its relationship to the problem of bad debts in
the Jordanian commercial banks, Master Thesis, University of Yarmouk, Jordan.
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THE IMPACT OF SOCIAL AND EMOTIONAL INTELLIGENCE
ON EMPLOYEE MOTIVATION IN A MULTIGENERATIONAL
WORKPLACE
Caroline Ngonyo Njoroge
Centre of Post Graduates Studies, Limkokwing University of Creative Technology
Cyberjaya, Malaysia
carolyn87@hotmail.co.uk
Rashad Yazdanifard
Centre of Post Graduates Studies, Limkokwing University of Creative Technology
Cyberjaya, Malaysia
rashadyazdanifard@yahoo.com
ABSTRACT
In todays globally competitive corporate environment, effective employee motivation is essential to the
success of any organization. The classical perspective of management was essentially analytical and rational, and
employees emotions were not considered. Nonetheless, it is crucial for organizations to recognize that employee
motivation goes beyond the usual monetary reward systems for a multigenerational workforce. In motivating todays
human capital, organizations have to engage their minds and captivate their hearts, which can be achieved by
incorporating social and emotional intelligence. Social and emotional intelligence equip managers with skills to turn
challenges of generational differences into positives. These skills assist managers attend to individual employee needs
irrespective of their generation. Socially and emotionally intelligent managers enable their organizations to offer an
environment that motivates and develops employees despite the generational differences in the workplace. This study
discusses the implications of emotional and social intelligences by outlining how these skills can enable organization to
cultivate cultures that enhance employee motivation.
Keywords: Employee Motivation, Multigenerational Workplace, Social Intelligence, Emotional intelligence,
Generational Differences
1.0 Introduction
In the current global economy, companies are striving to survive in a highly competitive environment. An
organization may have managers endowed with a myriad of impressive technical skills and extensive educations. But,
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can they effectively relate to the employees and other managers? Can they motivate the employees to be productive?
Presently, employee retention challenges are common to managers regardless of the companys size, technology and
market focus (Manzoor, 2011). One outstanding challenge is the management of a workforce that has notable variations
in perspective and goals due to generational differences (Glass, 2007). These differences must be addressed in an effort
to recruit, retain and motivate the best talent in an organization.
A multigenerational workforce is essential to the growth of an organization. The benefits of working in a
multigenerational workplace surpass the challenges involved (Hughes, 2011). But the big question remains, how to keep
employees motivated in a multigenerational workplace. The answer to this question is as diverse as the workforce itself.
Organizations need to find ways to retain and make the most of their talent. Additionally, they need to find ways to meet
the challenges of a fast-evolving multigenerational workforce (Gladwell & Dorwart et al., 2010).
In todays globally competitive business environment, successful employee motivation in a multigenerational
workplace is still one of the biggest challenges to many organizations. Human capital has become an organizations
main asset; its success is dependent on the employee performance. Ability and motivation are joints functions used to
describe employee performance (Devadass, 2011). Employee motivation is an intricate and sophisticated subject;
considerable studies on employee motivation have been conducted, providing numerous models and theories on
motivation. These numerous literatures provide mechanisms that organizations can adapt to keep their multigenerational
workforce motivated. There is no exact formula to the exact mechanism of motivating employees as every
organization offers a unique workplace. Therefore, organizations must focus on employee motivation practices that
meet employees needs regardless of age. Managers need to be aware of a variety of employee motivational factors and
the changes in priorities of these factors over time.
The notion of emotional and social intelligence in management has been popularized by academia due to its
positive impact on employee performance (Goleman, 2006, Riggio & Reichard, 2008, Goleman & Boyatzis, 2008,
Albercht, 2009 and Emmerling & Boyatzis, 2012) . Hence, many companies are changing towards this notion. Part of
the answers to keeping a multigenerational workforce motivated lay in social intelligence principles since they give
organization tangible ways of managing and harnessing diversity. A socially intelligent workforce is able to work
harmoniously as a strong collective team. Moreover, it is able to develop relationships and business networks that will
promote the interests of the organizations over the long term. This ensures job security that is a vital motivation driver
across all generations. An emotionally intelligent workforce is passionate, motivated and inspired (Emmerling &
Boyatzis, 2012).
This study intends to give a general review of the concept of emotional and social intelligence as integral parts of
employee motivation in a multigenerational workplace. First, a general overview of the common mechanisms used by
organizations for employee motivation in a multigenerational workplace is given. Next, the key elements of emotional
and social intelligence as described in literature are outlined. Finally, a discussion on the implication of social and
emotional intelligence when used as skills in leadership is provided.
2.0 Multigenerational Workplace.
Majority of todays multigenerational workplaces are represented by four different generations of employees,
namely Traditionalist (Matures/Veterans), Baby Boomers, Generation X and Generation Y (Millennial) (Gladwell
&Dorwart et al., 2010). Multigenerational workplaces can bring out the best and worst of the organization and their
employees (Bennett& Pitt et al., 2012). Consequently, managers must understand the values and attitudes of each
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generation to effectively influence the different generations satisfaction in such a diverse workplace (Gladwell
&Dorwart et al., 2010). The positive impacts of a multigenerational workforce can lead to increased productivity among
the employees and ultimately a successful company.
A successful multigenerational workplace understands the dynamics and challenges of generational differences and
is able to design a workspace that empowers effective communication and transfer of knowledge across the generations
(Hughes, 2011). With decades of experience, the older generation conveys wisdom to the younger generation, who in
turn convey fresh ideas and technical skills. Nonetheless, challenges of communication and cooperation within the
generations are evident on a daily basis in a multigenerational workplace (Glass, 2007). Hughes (2011) further indicates
that despite the challenges of accommodating the needs of its multigenerational workforce, a company creates an
unprecedented opportunity in its overall business performance.
Different research literature show that employees from different generations require different management
strategies when it comes to recruiting, retaining and motivating employees (Glass, 2007, Hudges, 2011, Bennett & Pitt
et al., 2012). To effectively manage a motivated multigenerational workforce, managers must take to account the
diverse values and attitudes of each generation that may influence different generations drive in the workplace
(Gladwell & Dorwart et al., 2010). Understanding what makes each generations talent tick is critical to optimizing an
organizations culture.
Interestingly, most challenges within a multigenerational workplace are associated with the more traditional
differences of gender and ethnicity (Rathman, 2011). Management stereotypes believe that there are huge differences
among the generations in terms of employee motivating factors. Nonetheless, recent studies show that different
generations in the workplace have more in common than early literature shows. Compelling research has shown that
employees are motivated by equally similar things in the workplace (Wong & Gardiner et al., 2008).
3.0 Employee Motivation
The English dictionary defines motivation as the reason(s) one has for acting or behaving in a particular way.
Devadass (2011) describes Employee Motivation as a set of both environmental and intrapersonal forces that influence
an employees work related behavior. Hence, employee motivation can be seen to cuts across many disciplinary
boundaries such as psychology, human resource management, economics, sociology and organizational behavior.
In an effort to increase effectual job performance amongst employee, many organizations management struggle to
implement effective employee motivation policies (Guillen & Saris, 2009). Manzoor (2011) illustrates that motivating
employees to perform to the best of their ability even in strenuous circumstances has remained one of the most
challenging tasks faced by managers. In our rapidly changing workplaces, employee motivation remains a crucial
survival strategy for many organizations. When employees are motivated, they become responsive to the organizations
goals and objective and can efficiently direct their talent towards achieving them (Manzoor, 2011).
Early studies show that monetary rewards had a great influential value as a motivational technique. In management
science, Fredrick Taylor attributes money to have a supreme effect to maintain and motivate industrial workers towards
higher performance and greater productivity. Over time, organizations have used mostly extrinsic rewards (increased
pay, bonuses, promotion) as a management tool to encourage high employee performance as well as maintain high
employee motivation (Ali & Ahmed, 2009). Nohria and associates defined a new model of employee motivation. In this
model they argued that managers try to increase employee motivation by satisfying the four fundamental emotional
drives; that is the drive to acquire, the drive to bond, the drive to comprehend and the drive to defend (Nohria &
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Groysberg et al., 2008). Elsewhere, Rukhmani (2010) suggests that motivation is purely a leadership behavior that
comes from employees wanting to do what is right for the people and the organization. Further, theories of
transformational leadership infer managers and employees nurture one another to greater levels of motivation
(Rukhmani & Ramesh et al., 2010).
The presences of numerous theories, models and views on motivation continue to indicate that employee
motivation is an intricate and sophisticated subject. More so, in a multigenerational workplace where monetary rewards
have become less effective in keeping employees motivated. The younger generations of employees are driven by
advancements in their careers (Wong & Gardiner et al., 2008). Subsequently, recognition and empowerment are playing
an essential role in enhancing employee motivation in todays multigenerational workplace (Manzoor, 2011).
4.0 Social Intelligence
The psychologist Edward Thorndike was the first to explore the concept of social intelligence in 1920. He defined
social intelligence as the ability to think, understand, manage and act appropriately in social human relationships. It was
not until years later that Daniel Goleman and Karl Albrecht further explored and popularized this concept. According to
Goleman (2006), social intelligence is concerned with the best interests of others; hence it goes beyond sheer
self-interest. Social intelligence is basically understanding and getting along with people, above and beyond the skills to
interact and cooperate successfully with them (Albrecht, 2009). Hence, social intelligence can be defines as the ability
to interact effectively with others in any social situation (Crowne, 2009). Hopkins and Bilimoria (2008) imply that to be
considered socially intelligent one has to be adept at human relationships not just about them. Emmerling and Boyatzis
(2012) describe social intelligence competency as the ability to be aware of, understand and act on emotional
information about others that leads to effective performance.
Karl Albrecht (2009) elaborates the five major dimensions of social intelligence as situational radar, presence/
bearing, authenticity, clarity and empathy. Nonetheless, the consistent aspects of social intelligence among all
researches in this field include: knowledge of the social situations, accurate interpretation of the social situation and the
skills to behave appropriately in that social situation. Social intelligence requires skills that allow employees to get
along with one another (Riggio & Reichard, 2008). Karl Albrecht (2009) also terms people with low social intelligence
as toxic people. They make others feel angry, inadequate, frustrated and devalued through their toxic behaviors that
directly contribute to conflict, alienation and worse, animosity in the workplace (Wawra, 2009). On the other hand,
people with high social intelligence have a nourishing personality and presumably possess magnetic powers that
attract others to them (Albrecht, 2009).
Joseph and Lakshmi (2010) elaborate that an individuals social intelligence depends on a lifelong learning process.
Socially intelligent employees exhibit confidence in social situations, demonstrate a genuine interest in their fellow
workmates, are assertive and appropriate in expressing their feelings and emotions, are capable of adapting,
understanding and responding effectively, and show a great level of self-awareness (Joseph and Lakshmi, 2010).
5.0 Emotional Intelligence
Daniel Goleman is credited to popularizing the concept of emotional intelligence to the academia and general
public in 1995 through his book Emotional Intelligence: Why it can matter more than IQ. Emotional intelligence as
defined by Goleman (2006) is the ability to identify, understand, use and manage ones and others emotional states
effectively. This involves an intellectual process that leads to the use of those feelings to motivate, plan and achieve.
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Emotional intelligence can be used as a term that refers to the ability to recognize, manage and influence ones and
others emotions (Keating & Harper et al., 2013). Therefore, emotional intelligence can basically be described as an
interconnection between feelings and thinking; Chopra & Kanji (2010) put emotional intelligence in simple terms as an
individuals self-perceived skills of their emotional abilities.
There are four major clusters of emotional behaviors as outlined by Goleman and Boyatzis (2008); self-awareness,
self-management, social awareness and relationship management. Even so, Emmerling & Boyatzis (2012) felt that
emotional intelligence is best understood as a competency. They went further to describe emotional intelligence
competency as an individuals ability to perceive, understand and use their own emotional status leading to effective
performance. According to the trait-based model (Petridges & Pita et al., 2007) emotional intelligence can be used to
refer to an individuals perception of their own emotional abilities, and encompasses behavioral dispositions and
self-perceived emotional capabilities.
In the book, Goleman (1995) claimed that emotional intelligence could be a better success predictor of job
performance and leadership ability than IQ. These claim led to more academic studies and researches exploring the
concept in later years (Petrides & Pita et al., 2007, Antonakis & Ashkanasy et al, 2009, and OBoyle & Humphrey et al.,
2010). Further studies show that emotional intelligence plays an important role in the organization, direction and
motivation of human activity (Chopra & Kanji, 2010). Individuals who are emotionally intelligent exhibit better skills
in people-oriented services such as recruiting, sales, management and customer service (Antonakis & Ashkanasy et al.,
2009). Current studies suggest that emotional intelligence is highly significant in development of human potential,
teamwork, effective leadership, stress reduction, creativity and innovation (Chopra & Kanji, 2010).
6.0 Discussion
It is not new that workplaces have generational differences, but the magnitude of these differences is new and
poses unique challenges for organizations worldwide. Todays multigenerational workplaces require that organizations
understand and value diversity in order to benefit from it; after all, the need to feel important and respected cuts through
all generations. In the current era, employee needs are significantly changing and organizations are in a constant search
of motivation.
A review of common employee motivation mechanisms in the workplace reveals that organizations acknowledge
that employees from every generation need to feel engaged and integrated in a purpose-driven organization culture. In a
multigenerational workplace, a one-size-fits-all approach to employee motivation rarely produces the desired results
(Wong & Gardiner et al., 2008). Some of the common mechanisms that have led many organizations to maintain a
motivated workforce include provision of work-life balance, sharing of rewards, engaging employees with customized
rewards, offering benefits to everyone and building lasting relationships through open communication (Gladwell &
Dorwart et al., 2010). These mechanisms have been positive to some extent in establishing successful
employee-employer relationships. Despite the positives of these mechanisms, the continually changing workplace
demographics mean that managers still face the challenge of building exceptional workplace cultures where motivation
and innovation are employee-driven.
Emotional Intelligence has emerged as a measurable skill that managers can conveniently use in informing
successful recruitment, retention and motivation skills within an organization (Sharma, 2012). In a multigenerational
organization, employees see things differently depending on a generations mindset and individual perspective.
Emotional intelligence gives the multigenerational workforce the ability to recognize social cues and respond
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appropriately in a manner that makes evident their empathy of others perspectives (Emmerling & Boyatzis, 2012).
Managers with a high level of emotional intelligence can quickly determine their employees needs and respond to them
efficiently. Hence, emotional intelligence is a crucial factor in determining a managers work efficiency. Managers who
have developed a certain level of emotional intelligence are able to make time for their employees. This way they have
a great awareness of the teams needs. Further, it enables them to be able to provide their employees with regular
effective feedback that gives the employees an opportunity to improve their performance in the organization. Emotional
Intelligence is valuable to a multigenerational workplace in that it enhances employee productivity, job satisfaction and
leadership competency; in addition, it creates mutual employee-employer relationships which increase employees
commitment to an organization.
Social intelligence is quickly becoming a global requirement and a critical element of success for organizations.
The process of becoming more socially intelligent involves investigating what motivates, drives and influences people
(Sternberg, 2007). Managers who do not possess social intelligence lack social skills. They do not know how to
genuinely connect to people much less inspire, motivate and lead them effectively. On the other hand, socially
intelligent managers focus on people, motivating them to high levels of performance. These managers help their
employees develop to their highest potential. Moreover, they demonstrate the emotions and behaviors they wish their
employees to adapt. This aspect of social intelligence enables managers to effectively establish an exceptional
workplace culture that is inclusive and motivated yet diverse. A socially intelligent company is able to have a deeper
understanding of what motivates individuals and how better to utilize the diversity of a multigenerational workforce.
Social intelligence is useful in many ways: it helps in the creation of a sense of identity for the individual in addition to
emphasizing self-management and interpersonal skills; more importantly, it focuses on thinking and resultant behavior
within social contexts.
Companies that encompass both emotional and social intelligence as part of their culture can effectively use their
employees potential and have wonderful achievements. When both emotional and social intelligence are valued in a
multigenerational workplace where there is so much diversity, everyones ideas are respected, teamwork is enhanced
and toxic behaviors are controlled. Investing in a corporate culture that allows employees freedom and space is an
essence of what makes many organizations successful. Employees will feel empowered and engaged when they have a
choice. A workplace that provides its employees with personal choices will attract top talent employees no matter their
generational differences. Despite the generational differences, people are motivated by interesting work, new challenges
and increased responsibility, which are mostly intrinsic motivating factors over the commonly assumed extrinsic factors.
Employee motivation is dependent on an individuals way of perceiving things. Emotional intelligence and social
intelligence help co-existing generations in the workplace to understand and value each other despite their vast
differences in perspectives and goals. The two concepts help managers effectively accomplish their key role of
influencing how employees interact.
7.0 Conclusion
Companies continue to struggle with finding the most effective way to keep employees motivated in a
multigenerational workplace. People from different generations and different cultures are transforming office life. The
popular notion is that generational differences in the work place lead to differences in personality and motivation. Most
personality differences observed are better explained by age. Job security and immersion to work are among
motivational drivers that cut across all generations in the modern workplace. Hence, it is important for managers to
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acquire high level skills on social and emotional intelligence. These skills will assist them to attend to individual
differences irrespective of generations. Managers who value emotional and social intelligence find it easy to turn the
challenges of generational differences to positives.
Evidently, emotional and social intelligence have the potential to positively impact employees behaviors with
outcomes such as job satisfaction, positive work attitudes, self-efficacy, and leadership potential and change
management. When people with different backgrounds cooperate, creativity and innovation happens. The result from
this diversity in the workplace is that people learn how to communicate and generate ideas that usually creates
high-impact change with low economic and emotional risk and high economic and emotional gain. Given such diverse
behavioral outcomes social and emotional intelligence become key success factors for employee motivation in a
multigenerational workplace.
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Do firms care for the environment or they adopt environmental
management in order to benefit economically?
Fragouli Evangelia (University of Dundee)
Abstract
Since the dawn of the industrial age, the goals of economic growth and environmental quality have recurrently been at
odds (Florida and Davison, 2001). In the last 10 years, a radical change has come about in managements views on
pollution, the need for pollution reduction and better environmental management (Melnyk, Sroufe and Calantone, 2003).
Firms are becoming leaner and greener at the same time (Florida 1995; Atlas and Cline 1999 as cited in Florida and
Davison, 2001). These companies are motivated not only by altruistic concerns, but also by a bottom-line quest to
increase profits, productivity, and performance by reducing waste and emissions (Florida and Davison, 2001). This
paper provides an overview of the determinants of the adoption of environmental management systems and concludes
that EMS are effective management tools enabling firms to better anticipate and proactively address potential
environmental risks.
Key words: firms, environment, management
1 .Introduction
Environmental quality has many dimensions. Our lives are affected by the air we breathe, the water
we drink, the diversity of species with which we come into contact, and the beauty we observe in
nature (Grossman and Krueger, 1995). The productivity of our resources in producing goods and
services is influenced by climate, the nutrients in the soil, and rainfall (Grossman and Krueger,
1995).
There has been an increasing interest towards corporate activities aimed at reducing or eliminating
the waste created during the production, use and/or disposal of a firms products (Hahn and Stavins,
1991). Around the world, many companies are moving to adopt advanced environmental practices
that amplify both their environmental performance and their competitiveness (Florida and Davison,
2001). Environmental management takes place in a setting of perpetual change (Bonnicksen 1991
as cited in Selin and Chavez, 1995). Managers must adjust to a host of ecological, political,
economic, and social forces that affect how a resource will be managed (Selin and Chavez, 1995).
Even though some policy makers would claim that the singular objective of environmental
regulation is to protect environmental quality, the decision problem actually faced by policy makers
is more complex, involving tradeoffs among multiple objectives and real and frequently binding
constraints (Hahn and Stavins, 1991). Economic perspectives play important role in both the
selection of goals and the selection of means (Hahn and Stavins, 1991).
2. The contribution of the International Standard Organization ( ISO) 14001
The International Standard Organization (ISO) answered back to the calls to address the field of
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environmental law and pollution that were made at the occasion of the Rio Agreement (1993) and
the GATT Uruguay Round Ministerial Decision on Trade and the Environment
(1994) (Delmas, 2002). Therefore the ISO established the Strategic Advisory Group on the
Environment (SAGE) to determine whether an international environmental management standard
could promote a common approach to environmental management, enhance an organizations
ability to attain and measure improvements in environmental performance, and facilitate trade and
remove trade barriers (Tibor and Feldman, 1996 as mentioned in Delmas, 2002).In September of
1996, the ISO 14001 certification standards for environmental performance were adopted (Melnyk,
Sroufe and Calantone, 2003). The ISO 14001 was promoted as the standard that would replace the
numerous and often conflicting sets of criteria found in various countries (Melnyk, Sroufe and
Calantone, 2003). Instead of focusing on outcomes such as reduced pollution this standard focused
on the processes involved in the creation, management, and elimination of pollution (Melnyk,
Sroufe and Calantone, 2003).
It was actually a set of guidelines for developing systems and practices in six environmental sectors
(Delmas, 2002). The Series was divided into six sections, which included: ISO standards 14001 and
14004 (Environmental Management Systems); ISO standards 14010 to 14012 (Environmental
Auditing); ISO standards 14020 to 14025 (Environmental Labeling); ISO standard 14031
(Environmental Performance Evaluation); ISO standards 14040 to 14043 (Life Cycle Assessment);
ISO standard 14060 (Environmental Aspects in Product Standards) (Delmas, 2002).
ISO 14001 may be voluntary but not free (Delmas, 2002). It is recommended that firms will invest
in ISO 14001, if they perceive that the benefits of certification will outweigh its costs (Delmas,
2002). European companies benefited from a very favorable institutional environment towards ISO
14001(Delmas, 2002). European governments have encouraged the adoption of environmental
management standards by setting up a trusted certification system and providing technical
assistance to potential adopters (Delmas, 2002). On the contrary, U.S. firms faced an unfavorable
institutional environment with a lack of regulatory commitment to environmental management
standards. U.S. companies are fearful of the certification process which lays their performance open
to public scrutiny (Delmas, 2002).
In fact the ISO 14001 provides the basic framework for the establishment of an Environmental
Management System (EMS) that can be audited and certified (Delmas, 2002). The main reason
for the creation of ISO 14001 was that its worldwide acceptance should facilitate international trade
by harmonizing otherwise diffuse environmental management standards and by providing an
internationally accepted blueprint for sustainable development, pollution prevention, and
compliance assurance (Delmas, 2002). ISO 14001 is an example of harmonized procedural
standards where all nations should eventually adopt similar environmental management systems
and procedures (Delmas, 2002). Developing ISO 14001 as an international standard for EMS is a
clear consequence of globalization (Delmas, 2002).
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3. Environmental Management System (EMS)
3.1 Definition
But what exactly is an environmental management system (Melnyk, Sroufe and Calantone, 2003)?
EMS is one of the tools an organization can use to implement an environmental policy (Delmas,
2002). EMS illustrate an extension of the core principles of total quality programs to managing the
environment (Florida and Davison, 2001).In other words EMS can be described as the systematic
application of business management to environmental issues (Florida and Davison, 2001).In
particular it involves the formal system and database which integrates procedures and processes for
the training of personnel, monitoring, summarizing, and reporting of specialized environmental
performance information to internal and external stakeholders of the firm (Melnyk, Sroufe and
Calantone, 2003).Notably, it consists of a number of interrelated elements that function together to
help a company manage, measure, and improve the environmental aspects of its operations
(Welford, 1996 as mentioned in Delmas, 2002). The documentation of this environmental
information is primarily internally focused on design, pollution control and waste minimization,
training, reporting to top management, and the setting of goals (Melnyk, Sroufe and Calantone,
2003). An EMS is aiming to develop, implement, manage, coordinate and monitor corporate
environmental activities to achieve two goals: compliance and waste reduction (Sayre, 1996).
Compliance, for a firm, simply means reaching and maintaining the minimal legal and regulatory
standards for acceptable pollution levels for the purpose of avoiding sanctions. For instance, failure
to comply can result in increased costs (fines), in extreme situations, issuance of cease and desist
orders, and in increased external intervention in day-to-day operations (Melnyk, Sroufe and
Calantone, 2003). Apparently, waste reduction goes beyond compliance and focuses a firms
activities on the dramatic reduction of negative environmental impact (Melnyk, Sroufe and
Calantone, 2003). EMSs, actually, represent an organizational change within corporations and a
self-motivated effort at internalization of environmental concerns into the objectives of the firm
(Khanna and Anton, 2002).
3.2 First EMSs in Europe
The first EMSs implemented in the world The British BS 7750 and the European EMAS were
(Delmas, 2002). BS 7750 was the worlds first environmental standard, published in the U.K. in
March 1992 (Delmas, 2002). While British Standard Institute (BSI) began working on BS 7750, the
European Commission was setting up its proposal for an eco-audit scheme: the Environmental
Management and Audit Scheme (EMAS) (Delmas, 2002). EMAS was adopted by the Council of
Ministers on June 29, 1993 (Council Regulation 1836/93). Because of the fact that EMAS is a
regulation, rather than a directive, it immediately binds all EU Member States. Although the
European Commission originally intended to pursue mandatory participation, business lobbying
successfully prevented this. The EMAS regulation requires that the European Commission reviews
the progress of the EMAS no more than five years after adoption. The important difference between
EMAS and BS 7750 is that the later does not have the formers commitment to publish audit
findings regarding environmental performance, a disclosure with which companies are often
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uncomfortable. It has been suggested that BS 7750 would serve to introduce companies to the EMS
techniques, allowing them to cut their teeth on the less publicly scrutinized standards of BS 7750
before moving on to EMAS. The similarity between the two schemes should therefore encourage
companies to set up an environmental management system and assess their progress before taking
the key step to publication of performance (Gilbert, 1994 as mentioned in Delmas, 2002). Firms
with EMSs were granted some regulatory flexibility to EMSs certified companies (Delmas, 2002).
3.3 Overall benefits for firms as a result of adopting environmental management systems
The major question is: are they doing this in response to government regulation, to improve their
environmental performance, or to be more efficient and competitive (Florida and Davison, 2001)?
The data suggests that firms adopt EMS not only for regulatory or environmental reasons but also
for business benefits (Florida and Davison, 2001). The three top ranked factors among respondents
in a survey conducted by Florida and Davison in 2001 were business-driven: commitment to
environmental improvement, corporate goals and objectives, business performance, followed by
community relations, state regulations and federal regulations. Moreover some research has
analyzed specific factors external to the firm that go beyond regulatory compliance and drive the
adoption of environmental strategies such as competitive forces (Aragn- Correa, 1998; Christmann,
2000; Dean and Brown, 1995; Delmas, 2003; Hart, 1995; Nehrt, 1996, 1998; Russo and Fouts, 1997;
Sharma and Vredenburg, 1998 as mentioned in Delmas and Toffel, 2004), and pressure from
nongovernmental organizations (Lawrence and Morell, 1995 as cited in Delmas and Toffel, 2004).
In particular, the relationship between business performance and environmental improvement has
two dimensions (Florida, Atlas and Cline 1999 as mentioned in Florida and Davison, 2001). On the
one hand, organizations may adopt environmental innovations in order to reduce costs through
improved or more efficient production processes (Florida and Davison, 2001). On the other hand,
environmental improvement may also be a byproduct of changes developed to reduce other costs, to
improve productivity, and to improve plant performance (Florida and Davison, 2001).Obviously,
the EMS plays a critical role in the firms efforts not only to improve environmental performance
but also overall performance (Melnyk, Sroufe and Calantone, 2003). Operations performance, like
the environmental options considered, consists of multiple measures (Melnyk, Sroufe and
Calantone, 2003). These measures focus on elements of production competence such as lead time,
quality and cost, that generate value for the customer and that can create a strategic advantage for
the firm (Vickery et al., 1993 as cited in Melnyk, Sroufe and Calantone, 2003). Other attributes
involve areas including corporate reputation (Wood, 1991; Pava and Krausz, 1996 as mentioned
in Melnyk, Sroufe and Calantone, 2003), the ability to design and deliver better products and
service (Sroufe et al., 2000), the ability to reduce waste and the relative costs/benefits associated
with the initiatives. In other words, the presence of an EMS allows a firm to evaluate environmental
performance against policy, objectives, and performance targets while seeking performance
improvements where appropriate (Melnyk, Sroufe and Calantone, 2003). Performance is lowest
when EMS is not present, intermediate when EMS is present but not ISO 14001 certified, and
highest when EMS is present and ISO 14001 certified (Melnyk, Sroufe and Calantone, 2003).
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Firms may have lures to voluntarily improve their environmental performance because it can lead to
private benefits in the form of direct or indirect payoffs (see Segerson and Li, 1999; Lyon and
Maxwell, 1999 as mentioned in Khanna and Anton, 2002). These benefits could emerge from the
potential to preempt the threat of mandatory standards (Segerson and Micelli, 1998 as cited in
Khanna and Anton, 2002) and to shape future mandatory standards by voluntarily over-complying
(Lutz, Lyon and Maxwell, 2000 as mentioned in Khanna and Anton, 2002).Many firms have taken
the decision to participate in voluntary programs established by the USEPA such as the 33/50
program (Arora and Cason, 1995,1996; Khanna and Damon, 1999), Green Lights, Waste Wise
(Videras and Alberini, 2000) and the Climate Challenge Program in the U.S (Karamanos, 2000) that
provide visible benefits to participants through public recognition and technical assistance.
Even though the potentially high costs of compliance with existing and anticipated regulations as
well as the threat of liabilities are inducing firms to be more proactive about managing their
environmental impacts, these pressures are not as strong as the non-regulatory pressures, from
consumers, investors and communities (Khanna and Anton, 2002). Amongst these, it is dependence
on capital markets, concerns about public reputation and the adverse effects on it of information
about environmental performance and high costs of disposing of waste off-site that provide stronger
incentives to adopt a broad-based EMS than consumer pressure and pressure from global
competition (Khanna and Anton, 2002). But does stronger environmental performance really lead to
better financial performance or is the observed relationship the result of some other underlying firm
attribute (King and Lenox, 2008)?In the last 20 years a growing number of researchers have
challenged this assumption (King and Lenox, 2008). In the field of industry ecology, scholars argue
that there are situations where beyond compliance behavior by firms is a win-win for both the
environment and the firm (Nelson 1994; Panayotou and Zinnes 1994; Esty and Porter 1998;
Reinhardt 1999 as cited in king and Lenox, 2008). In other words they suggest that firms may be
both "green and competitive" (Porter and van der Linde 1995; Reinhardt 1999 as mentioned in King
and Lenox, 2008). In fact, many scholars argue that discretionary improvements in environmental
performance frequently provide financial benefit (e.g. Hart 1997 as cited in King, Lenox, 2008).
There are many ways that improving a companys environmental performance can lead to better
economic or financial performance, and not necessarily to an increase in cost (Ambec and Lanoie,
2008). Supporters of a causal link between environmental and financial performance argue that
pollution reduction provides future cost savings by reducing compliance costs, increasing efficiency,
and minimizing future liabilities (Porter and van der Linde 1995; Reinhardt 1999 as mentioned in
King and Lenox, 2008). ). Several studies show that investors react negatively to public disclosures
about poor environmental performance reported in the TRI, resulting in significant abnormal stock
market returns for firms (Hamilton, 1995; Khanna et al., 1998 as cited in Khanna and Anton, 2002).
Bankers are conceding that they might be held legally responsible for environmental mistakes of
their corporate borrowers (Khanna and Anton, 2002). As a consequence, they are beginning to
include environmental considerations in their lending decisions and viewing poor environmental
performers as financially risky (Hoffman, 1997 as mentioned in Khanna and Anton, 2002). Klassen
and McLaughlin (1996) noted that strong environmental management, as indicated by
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environmental performance awards resulted in significant positive financial performance, as
measured by stock market performance. Furthermore, Deutsch (1998) noticed that eco-efficient
companies reward stockholders with good financial performance. Nielsen in 1999 observed that at
least one investment firm back then, Innovest Strategic Value Advisors, recommended stocks based
on the firms environmental record. Therefore, better environmental performance can improve the
value of the firm and attract new stockholders (Melnyk, Sroufe and Calantone, 2003).
Firms are facing growing pressure to become greener (Ambec and Lanoie, 2008). Various
stakeholders press companies to reduce their negative impact on the environment (Ambec and
Lanoie, 2008). One important way that companies can reduce outside tension is by involving key
stakeholder groups in environmental activities and initiatives (Florida and Davison, 2001). By
stakeholders we mean individuals, groups, and formal organizations who have either a perceived
interest or impact on a particular resource (Selin and Chavez, 1995).EMS plants were almost three
times as likely to involve neighbors and citizen groups in their environmental initiatives and more
than twice as likely to involve local government (Florida and Davison, 2001). They can be divided
into primary and secondary stakeholders (Kolk, 2000). On the one hand, primary stakeholders play
an active role in the companys survival (Kolk, 2000). On the other hand, secondary stakeholders
affect and are affected by the company but are not essential for the survival of the company (Kolk,
2000). Nevertheless, secondary stakeholders, as media and NGOs, have a considerable influence
on environmental reporting (Kolk, 2000). Collaboration in the environmental management field is
increasingly evident as managers supplement centralized decision-making methods by using
standing committees, associations, negotiated settlements, and friends groups to assist in setting
policy, planning, and managing the resource (Selin and Chavez, 1995). EMS appear to be an
effective and useful tool for managing environmental risk outside the plant (Florida and Davison,
2001). The potential for adverse public pressure in response to information about poor
environmental performance and the high costs or other barriers to waste treatment and disposal at
the end-of-the-pipe are motivating firms to be more innovative about managing their environmental
impacts (Khanna and Anton, 2002). Public policy can influence adoption of comprehensive EMSs
by firms by providing information about the environmental performance of firms to the public,
public recognition to firms with EMSs, and educating the public about the adverse effects of various
pollutants, while maintaining stringency of the regulatory framework that imposes high costs of
pollution on firms (Khanna and Anton, 2002).
The stakeholders, in specific, that influence the adoption of management practices are the below:
Government pressures
Legislation authorizes agencies to declare and enforce regulations, a form of coercive power
(Delmas, Toffel, 2004). Governments play an important role in firms decision to adopt ISO 14001
(Delmas, 2002 as mentioned in Delmas, Toffel, 2004). They can act as a coercive force by sending a
clear signal of their endorsement of ISO 14001 by enhancing, for instance, the reputation of
adopters (Delmas, Toffel, 2004). Governments can also facilitate adoption by reducing information
and search costs linked to the adoption of the standard by providing technical assistance to potential
adopters (Delmas, Toffel, 2004).
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Customer pressures
Concerns about the adverse impacts on a firms reputation, if perceived as environmentally
unfriendly, are becoming important for firms (Khanna and Anton, 2002). Public opinion polls
indicate growing environmental consciousness among consumers (Cairncross, 1995; Gutfield, 1991
as mentioned in Khanna and Anton, 2002). Therefore, firms respond to customer requirements
(Delmas, Toffel, 2004). The customersupplier relationship is possibly the primary mechanism
through which quality management standards have promulgated (Anderson et al., 1999 as cited in
Delmas and Toffel, 2004). It has been found by several studies that firms that adopted
environmental management practices were motivated by customer concerns (Delmas, Toffel,
2004).As an illustration, a survey of the largest Canadian firms showed that customer pressure was
the second most cited source of pressure to adopt an environmental management plan, after
government pressure (Henriques and Sadorsky, 1996 as mentioned in Delmas and Toffel, 2004).In
addition, Khanna and Anton in 2002 found that US companies that sell final goods adopt more
comprehensive EMSs than companies that sell intermediate goods (Delmas, Toffel, 2004). This
means that retail consumers exert more pressure on companies to adopt environmental management
practices than commercial and industrial customers (Delmas and Toffel, 2004).Finally, Christmann
and Taylor in 2001 displayed that customers in developed countries have influenced companies in
China to improve their environmental compliance and adopt the ISO 14001 EMS standard (Delmas
and Toffel, 2004).
Community and environmental interest group pressures
Do environmental management systems enable plants to better manage their emission and waste
streams in ways that pose less environmental risk to the communities in which they are located
(Florida and Davison, 2001)? Local communities can impose coercive pressure on companies
through their vote in local and national elections, via environmental activism within environmental
nongovernment organizations (NGOs) and by filing citizen lawsuits (Delmas and Toffel, 2004).
Several studies have found that company decisions to adopt environmental management practices
are influenced by the desire to improve or maintain relations with their communities (Delmas and
Toffel, 2004 ).For instance, Henriques and Sadorsky surveyed 700 firms in 1992, which indicated
that community group pressure influenced them to adopt an environmental plan (Delmas, Toffel,
2004). The adoption of these programs was positively associated with firms active engagement
with community stakeholders (Florida and Davison, 2001 as mentioned in Delmas and Toffel, 2004).
Another study based on a survey of ISO 14001 certified companies across 15 countries found that
one of the strongest motivating factors to pursue certification was the desire to be a good neighbor
(Raines, 2002 as cited in Delmas and Toffel, 2004). Greater declines in toxic emissions have been
observed among plants located in communities with higher voting rates (Hamilton, 1999 as cited in
Delmas and Toffel, 2004) and in states with higher membership in environmental interest groups
(Maxwell et al., 2000 as mentioned in Delmas and Toffel, 2004). Higher environmental interest
group membership levels indicate a communitys pro-environmental stance and greater propensity
to use these organizations to lobby for more stringent regulation (Maxwell et al., 2000 as cited in
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Delmas, Toffel, 2004). Hence, higher membership rates provide a credible threat of increased
regulation, which in turn drives firms to self-regulate (Delmas, Toffel, 2004). For example, after
Mitsubishi Corporation was subject to a protracted consumer boycott led by the Rainforest Action
Network (RAN), Mitsubishi announced that it would no longer use old-growth forest products
(World Rainforest Movement, 1998 as cited in Delmas and Toffel, 2004).
Industry pressure
Several studies have indicated that industry associations have motivated firms to adopt
environmental management practices (Delmas and Toffel, 2004). Kollman and Prakash in 2002
observed that the decision of whether to pursue certification, and which standard to certify against
(ISO 14001 or the European Unions Eco-Audit and Management Scheme), was strongly affected
by stakeholder pressures from industry associations additionally to regional chambers of commerce,
suppliers and regulators (Delmas and Toffel, 2004).
Interactions
The pressure from environmental groups may encourage the formulation of more stringent
regulations, which can induce industry leaders to encourage laggard firms to adopt environmental
practices (Delmas, Toffel, 2004). For instance, following its chemical disaster in Bhopal in 1984,
Union Carbide faced mounting public pressure for more stringent safety and environmental
regulations. In reply to that, the chemical industry developed and promoted a set of environment,
health and safety (EHS) management practices the Responsible Care program to chemical
industry associations in Canada and the United States (King and Lenox, 2000; Prakash, 2000 as
mentioned in Delmas and Toffel, 2004).
The moderating effects of firm characteristics
EMSs are mainly relative for medium and large companies, as smaller companies might prefer a
more informal type of improvement cycle (Kolk, 2000).Multinational corporations are often held to
higher standards for social and environmental responsibility than national companies because they
are subject to the additional pressure of stakeholders from foreign countries (Zyglidopoulos, 2002
as cited in Delmas and Toffel, 2004).Particularly, social and environmental activists have targeted
Nike, McDonalds, Starbucks and Home Depot in part because of their market leadership position
(Roberts, 2003; Rowley and Berman, 2000 as mentioned in Delmas and Toffel, 2004).
Multinational companies, market leaders and firms with poor environmental records may have more
to gain by developing sophisticated mechanisms to anticipate and manage external pressures
(Delmas and Toffel, 2004). EMS is associated with factories that are larger, more committed to total
quality management, and more innovative in general (Florida and Davison, 2001 as mentioned in
Florida and Davison, 2001). Green companies tend to be more innovative in general and adoption
of advanced environmental practices stems from a deep commitment to finding innovative solutions
to reduce waste and improve efficiency (see Florida 1995; Florida, Atlas and Cline 1999).
To sum up better environmental performance may make the relations between the firm and its
external stakeholders easier and reduce the risk correlated with these relations (Ambec and Lanoie,
2008).
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The substantial nature of environmental protection costs indicates that strategies that affect these
costs are an important determinant of a firm's competitive position (Christmann, 2000). Firms can
improve their competitive position and at the same time reduce the negative effects of their
activities on the natural environment by applying certain "best practices" of environmental
management (Cairncross, 1992; Hart, 1995; Schmidheiny, 1992; Smart, 1992; Shrivastava, 1995b
as mentioned in Christmann, 2000). "Best practices" enable firms to simultaneously protect the
environment and reduce costs (Christmann, 2000). Adopting "best practices" that focus on firms'
production processes can result to cost advantage (Hart, 1995; Stead & Stead, 1995 as cited in
Christmann, 2000). These process-focused "best practices" comprise redesigning production
processes to be less polluting, substituting less polluting inputs, recycling byproducts of the process,
and innovating less polluting processes (Ashford, 1993; Dechant & Altman; 1994; Florida, 1996;
Hart, 1995; Porter & van der Linde, 1995a, 1995b as mentioned in Christmann, 2000). All of the
above are intended to reduce the cost of production by increasing the efficiency of production
processes and by reducing input and waste-disposal costs (Newman & Breeden, 1992; Smart, 1992;
Hart, 1995; Shrivastava, 1995a, 1995b; Stead & Stead, 1995 as cited in Christmann, 2000). The
environmental impact of firms' operations throughout the entire life-cycle of its products from
product design through manufacturing, use, and disposal can also contribute to cost advantage
(Christmann, 2000). Nevertheless, the cost advantages from implementing these "best practices"
depend on environmental government regulations, which have not yet been instituted in many
countries (Christmann, 2000). For example, firms are required to bear the environmental costs
associated with the disposal of their products only if government regulations require them to
internalize the entire life-cycle costs of their products (Christmann, 2000). Additionally to
manufacturing costs, "best practices" can also lower a range of other costs such as potential liability
costs, legal fees (Shrivastava, 1995 as cited in Christmann, 2000), and potential product-take back
costs.
Producing greener products through a differentiation strategy may enhance workers commitment
toward a company, and this could facilitate recruiting and retaining workers (Ambec and Lanoie,
2008). In the same spirit, reducing the material or energy costs of a product may facilitate the
incorporation of environmental features into the product, helping to develop a differentiation
strategy (Ambec and Lanoie, 2008). Moreover it may improve the overall image or prestige of a
company, and thus increase customers loyalty or support sales efforts (Ambec and Lanoie, 2008). It
is possible that better environmental performance through greener products or services can allow
companies to use a differentiation strategy so as to exploit niches in environmentally conscious
market segments (Ambec and Lanoie, 2008). Differentiation advantage creates the potential for
increasing product prices, which results in higher revenues (Christmann, 2000). Even if green
products or services are more expensive to produce, the extra cost can likely be transferred to
consumers who are willing to pay more for more environmentally friendly products or services
(Ambec and Lanoie, 2008). Consumers willingness to buy green products in general is important
(Ambec and Lanoie, 2008). For instance, 80% of French adults say they favor the purchase of
eco-products, while 10% say they actually make such purchases regularly (Guilloux, 2006 as
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mentioned in Ambec and Lanoie, 2008). Among the classic examples is Patagonia, an American
sport Garments Company, which in the 1990s launched new lines of clothing made of recycled PET
(polyethylene terephthalate) and organic cotton. This was a commercial success in spite of the
higher price of these products (Reinhardt, 2000 as cited in Ambec and Lanoie, 2008). Most
companies expect that when goods are comparably priced, environmental attributes can break the
tie (Khanna and Anton, 2002). As a consequence, companies are increasingly using
environmentalism as a marketing tool (Hoffman, 1997 as mentioned in Khanna and Anton, 2002).
Generally speaking, a differentiation strategy is more likely to work when: (a) the information about
the environmental features of the product is credible, (b) consumers are willing to pay for extra
environmental features, and (c) there is a barrier to imitation from competitors (Ambec and Lanoie,
2008). Notably, Hart (1995) suggested that firms will only be able to successfully adopt
product-stewardship strategies and achieve differentiation through environmentally responsible
products if they have first made significant progress in the implementation of pollution-prevention
technologies, which is a process-focused "best practice"(Christmann, 2000).
Firms, in their search for better environmental performance, are led to do research and development
in the area of pollution-control/prevention technologies, in order to optimize their manufacturing or
waste management processes (Ambec and Lanoie, 2008). This can lead to technological
breakthroughs that potentially can be attractive for others (Ambec and Lanoie, 2008).In particular,
pollution can be reduced through prevention or through control (Hart 1995 as mentioned in
Christmann, 2000). In the one hand, pollution prevention aspires to reduce, change, or prevent
emissions and effluent discharges through better material substitution, housekeeping, recycling, or
changes in the production process (Willig, 1994; Stead & Stead, 1995 as cited in Christmann, 2000).
Pollution-prevention technologies, which are also named as source-reduction technologies or clean
technologies, minimize the creation of pollution and wastes in the production process (Christmann,
2000 Hence, the use of pollution-prevention technologies has the potential to increase the efficiency
of production (Schmidheiny, 1992; Smart, 1992 as mentioned in Christmann, 2000). Efficiency
increases result from reduction of input costs by means of better utilization of inputs or substitution
of less costly inputs, savings from recycling or reusing materials, and reduction of waste disposal
costs (Christmann, 2000). Pollution prevention in production processes may as well reduce cycle
time by simplifying or removing unnecessary steps in the operations or reduce downtime via
higher-quality monitoring equipment (Porter & van der Linde, 1995b as cited in Christmann, 2000).
Additionally, pollution-prevention technologies may cut emissions well below required levels,
resulting in reduced compliance and liability costs (Christmann, 2000). On the other hand, pollution
control aims to trap, store, treat, and dispose of emissions and effluents using pollution-control
equipment (Christmann, 2000). Pollution control technologies are investments in non-productive
assets; added costs with no potential to increase the efficiency of production (Christmann, 2000). In
brief, for cost advantage from environmental technologies to be sustainable, these technologies
must be difficult to imitate by the firm's competitors (Lippman & Rumelt, 1982; Wernerfelt, 1984;
Barney, 1991 as mentioned in Christmann, 2000).
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Conclusion
Pollution is a manifestation of economic waste and involves unnecessary or incomplete utilization
of resources. Reducing pollution is often coincident with improving productivity with which
resources are used (Porter & van der Linde, 1995, p. 99 as cited in Ambec and Lanoie, 2008).
EMS are effective management tools which enable firms to better anticipate and proactively address
potential environmental risks, community concerns, or regulatory issues before they become more
substantial programs (Florida and Davison, 2001). Firms in possession of a formal EMS perceive
impacts well beyond pollution abatement and see a critical positive impact on many dimensions of
operations performance (Melnyk, Sroufe and Calantone, 2003). The results also show that firms
having gone through EMS certification experience a greater impact on performance than do firms
that have not certified their EMS (Melnyk, Sroufe and Calantone, 2003). In particular, concerns
about environmental liabilities and the threat of high costs of compliance with anticipated and
existing mandatory regulations have a statistically significant influence on the incentives for
corporate environmental management (Khanna and Anton, 2002). The extent and relative
importance of external pressures from consumers, investors, competitive markets, and of regulatory
pressures from existing and anticipated mandatory regulations faced by firms in inducing them to
undertake an environmental management approach (Khanna and Anton, 2002) are also factors that
influence corporate environmental decision making.
Bibliography
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Four Factors to Influence Organization & Employee Commitment to
Change within Pakistan
Hafiz Muhammad Nasir,
1
, Ali Fazal Abbas
2
, Dr. Fareeha Zafar
3
2
MS Management. Institute of Business & Management, UET, Lahore
Email id: mr.muhammad.nasir@gmail.com
2
MS Management. Institute of Business & Management, UET, Lahore
Email id: alifazalabbas@gmail.com
3
University of Derby currently working in GCU Lahore, Pakistan.
Email id: Dr.F.Zafar@gcu.edu.pk
Abstract
Change plays a vital role in the success and failure for an organization. Commitment to change is considered
to be one of most important factors for the successful implementation of change initiatives. The purpose of
this study is to define the importance of change in an organization and also describe those factors which are
essential for the commitment to change in the organization. The purpose of the present research is to identify
stressors and facilitators that could potentially have a bearing on employees commitment to change as well
as factors that could alleviate the adverse effects of these stressors on commitment to change. The paper
also discusses how those factors can bring about change in the organization. The research also highlights
those attributes which may reduce the dissatisfaction of employees and outlines how the employees can be
driven towards change.
Key words:
Management, Change management, commitment to change, commitment factor.
1.0 Introduction
According to the implementation of organizational change it depends on workers.
Managers, leaders and HR professionals, it is important to understand the history and
consequences of commitment to change. Managers must face the issue of change in all
types of organizations. The ability to change the organization often determines its long
existence. Environmental organizations pose a constant threat to the market and therefore
these organizations will always need to change themselves to adapt to their environments.
Increasing pressure for change in the organizations growth and competitiveness in the
global market needed. The main focus of change is in efficiency and effectiveness of
organizational development.
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1.1 Management, Change & change management
Management in business and organizations means to coordinate the efforts of people to
accomplish goals and objectives using available resources efficiently and effectively.
Management comprises planning, organizing, staffing, leading or directing, and controlling
an organization or initiative to accomplish a goal. Simply it can be define as the process of
dealing with or controlling things or people.
Change is often described as a process that goes through a series of different stages that
required a considerable length of time.
Change is defined as an effort that comprises of actual physical changes to procedures and
different emotional stimulation [1] is painful in the workplace, going from what is sure and
well-known to the otherwise. Employees lose the ease of the known and, the sense of
proficiency they used to possess, the prestige and/or financial security they once enjoyed
and systems they have gone at length to form. Since change is widely accepted as almost
always top-down and induced by the management, those being managed would also
almost always resist changing.
Change management has been defined as the process of continually renewing an
organizations direction, structure, and capabilities to serve the ever-changing needs of
external and internal customers. [2]
Change is a ubiquitous part of the organizations life, both at operational and strategic levels.
Therefore, it should not give its ability to identify as to the importance of each organization, doubt
where it should be in the future, and how to perform the necessary changes In order to come here.
Failure of change is frequently due to a lack of commitment and motivation of the employees who
have to implement the change.
1.2 Importance of Change Management
The change is for the individuals, the organizations and the society like the technological
inevitable changes,
The values and the thoughts, the intentions and he needs change modifications of the
availability of source, amendment, political control of the government of changes.
Management of the change, it is to tackle the systematical one that, to face in return in the
perspective of an organization, as well as at the individual level.
Changes in the organization, we can define the change management includes activities
such as:
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Set and payment of new values, beliefs, norms and ways of doing things in an organization
that supports new ways of working and overcoming resistance to change;
Building unity between customers and employees on the specific changes that are designed
to better meet their needs.
Planning, monitoring, and implementation of all aspects of the transition from an
organization or company to another process.
1.3 Commitment and Importance of Commitment
Mowday, Porter and Steers "(1982) definition, has already indicated that the commitment"
is the relative strength of the identification of a person and connecting to a specific
organization "
Three characteristics of the obligation are addressed:
A strong belief and recognition of the organization's goals and ethics
A willingness to exert to considerable effort on behalf of the organization; and
A considerable effort will for the organization of a strong desire to lead, membership
organization (Mowday et al., 1982) maintain. [3]
1.4 Importance of Commitment
Committed employees contribute greatly to organizations since they perform and behave
on achieving organizational goals, Furthermore, commitment to organizations has been
found to be positively related to such organizational aftermaths as job satisfaction,
motivation and presence (Bennett & Durkin, 2000). The adverse effects are linked with a
lack of organizational commitment include absenteeism and labor turnover (Bennett &
Durkin, 2000). [4]
The main objective of this study was to explore the possible factors affecting the
Change the employee engagement represent our first objective was to examine the history
of Factors of human resource management (i.e., for changing and modifying information
input) and individual provisions (i.e., coping with change and employment). It's all good
study examines the organizational factors relating to the field of research, but research a
commitment to change is less common .Our second objective was to go beyond volume
and change in context and examine the traditional role of the supervisor " s commitment
change the employee commitment to change. These changes in the context and
commitment to change immediate supervisor of employees, both of which are feedback to
change employees the likely impact .However, very few studies
change employee engagement with its potential impact on research .These ,as well as
therefore, these variables were included in the study to investigate the relationship to
change the obligations of employees and supervisors and commitment to change. We have
collected the data from employees as well as from employer.
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2.0 Literature review
Organizational change is a change or process changes to the structure of the Organization,
intentions, technology or work, including tasks. The budgetary commitment an organization
is a complex problem, which has been shown that the congestion of the definitions used in
the literature have been used for many years. An overview of the definitions is followed by a
discussion on the properties of the commitment, the importance, presented by the
commitment and the level of involvement in an organization.
2.1 Definition of commitment
Attach an employee for the entire organization, an organizational subunit, a supervisor, or
even a change program (Ford, Weissbein & Plamondon, 2003, Herscovitch & Meyer,
2002).[5] Due to increase dynamic environments, organizations are constantly faced with
the need to implement changes in strategy, structure, process, and culture. Many factors
contribute to the efficiency with which these organizational changes have been
implemented. One such factor is the readiness for change. Ready reflected the beliefs of
the organization members ' attitudes and intentions regarding the extent to which changes
and the body's ability to make these changes successfully. It is the cognitive precursor to
the behavior of either the resistance or support for, a change effort (Amenakis, et al., 1993).
[6] There are seven aspects of change readiness , according to surveys , including the
perception of the efforts for change, the vision for change, mutual trust and respect, the
change initiatives , management support , acceptance , and how the organization manage
the process of change. Commitment to change reflects not just a positive attitude toward
change but is conceptually different from readiness for change (Armenakis, Harris, &
Mossholder, 1993), openness to change (Wanberg & Banas, 2000) [7] and coping with
change (Judge et al., 1999) commitment or resistance to change depends upon the level of
involvement in the change process. The more a person is involved, the lesser the
resistance and vice versa. According to this view, the three stages of commitment are
preparation (how employees are uncovered to change and their level of awareness),
acceptance (the employee understanding and perception of change) and commitment
(internalization of change). London and Howat (1979) [8] define in term of the
identification with organizational goals, participation with ones role, and a feeling of loyalty
to and warmth for the organization. Mowday, Porter and Steers (1982) definition, previously
explained states that commitment is the comparative strength of an individuals
identification with and connection in a particular organization (p.27). Within this definition
three characteristics of commitment are discussed:
A strong belief in and acceptance of the organizations goals and values;
A willingness to exert to considerable effort on behalf of the organization; and
A strong desire to maintain membership with the organization(Mowday et al., 1982,p.27)
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2.2 Issues affecting commitment
There are four broad categories of issues that affect commitment: personal characteristics,
role-related characteristics, structural characteristics, and work experience (Mowday et al.,
1982). These characteristics are embodied in the organizational commitment definition
described by Mowday (1982). Morries et al. (1983) argued that personal characteristics do
not bear significant relevance in determining commitment compared with the other
attributes that affect commitment.
Robbins (1996) [9] discussed role-related characteristics in terms of job characteristics,
which refer to skill variety, task identity, task significance, autonomy and feedback. If a job
contains these elements they are refer to as high involvement jobs. Robbins and Langton
(2001) discuss the concept of high involvement jobs and how they can help ease stress
during organizational change. If employees feel that they have the ability to influence what
happens with their job and with the organization because they have given the opportunity to
participate in the decision-making process, then they will understand and cope with change
more successfully than employees who have not had such opportunities. [10]
According to Mowday et al. (1982) decentralization and participation in decision-making are
the most important structural characteristics that influence commitment. Allen and Meyer
(1990) [11] continue to develop the notion of emotional attachment to an organization as
expressed by employees through various attitudes. Fry, Hattwick and stoner (1998)
suggests that commitment will increase in flat organization where co-ordination and control
are based more on shared goals than on rules and procedures where employee
participation is encouraged. [12]
Work experience are viewed as a major socializing force and as such represent an
important influence on the extent to which psychological attachments are formed with the
organization (Mowday et al., 1982, p. 34).there are several work experience variables that
have been found to be related to organizational commitment such as personal importance
to the organization, positive attitudes towards organization, social involvement, leadership
style and group norms regarding hard work (Mowday et al., 1982).
Models of Commitment to Change
Conner (1992)
Coetsee (1999)
Herscovitch & Meyer (2002)
Conner (1992) and Coetsee (1999) presented theoretical models which were not tested
empirically. [13][14]
Three-component model of Commitment to Change
The Herscovitch and Meyer (2002) Three-component Model of Commitment to Change is
based on Meyer and Herscovitch (2001) [15] general model of workplace commitment. In
their model, Herscovitch and Meyer (2002) presented a multidimensional conceptualization
of commitment to change which had earlier been regarded as uni-dimensional and defined
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it as a mindset that binds an individual to a course of action deemed necessary for the
successful implementation of a change initiative (p. 475). Affective commitment to change
is a desire to provide support for change based on its inherent benefits (Herscovtich &
Meyer, 2002, p. 475)
Accordint to Meyer and Allen (1997, p.8), the meaning of commitment has two different
connotations. The first involves efforts to explain that the nature of commitment that defines
the relatioship between an individual and some object can vary. The second involves
attempts to distinguish among the objects to which an individual becomes commited.
Organizational commitment has been studied extensively during the past three decades.
Studies have found strong positive relationship between organizational commitment and
desireable work outcomes such as performance, adaptability, and job satisfaction (Angle
and Perry. 1981; Hunt et al., 1985; Mowday et al., a974; Porter et al., a974 ; Steers, 1977).
Other studies have also found negativly relationships between organizational commitment
and potentially costly work outcomes such as absenteesim and turnover (Angle and perry,
1981; Hom et al., 1979; Hunt et al., 1985). [16] [17]
3.0 Factor Influencing Commitment to Change In Pakistan.
Commitnent to change can be discussed under two perspectives.
a. Commitment to change regarding employee perspective.
b. Commitment to change regarding organization perspective.
Keeping in view the commitment to change regarding pakistan we have observed that four
types of factors really influence the commitment to change in Pakistan.
1. External Factors
2. Political Factors
3. Personal Factors
4. Internal Factors
Developed a model of four factors which influence commitment to organizational change
and as well as employee commitment to change. The authors have derived under
mentioned four factors model called EIPP Model.
International Journal of Information, Business and Management
3.ternal
3 < 3.ternal Factors
I < Internal Factors
+ <+ersonal Factors
+ < +olitical Factors
External and political factors are strongly affected commitment regarding organizational
change. If these two factors are favorable then organization will go for change and
remaining two relating to employee commitment to change. Without
organizational commitment factors, management will not initiate to change. After satisfying
these factors, organization will go for change and then employee stage will be start. Both
are interlinked with each other in Pakistan.
Below diagram defines the how factors chronologically affects to commitment to change.
The below diegram shows that commitment start from organizational commitment and it
ends with employee commitment. Building blocks shows that how commitment from start to
end step by step can be achieved.
Figure: 1
The above diagram shows that employee commitment and organization commitment
depend on each other. Moreover employee commitment is more important rather than
organizational commitment.
This process start from organizational commitment and ends with employee commitment.
For changing the organization regarding structure and processes, the government cope
International Journal of Information, Business and Management, Vol. 6, No.4, 2014
3.ternal
Factors
+olitical
Factors
Internal
Factors
+ersonal
Factors
External and political factors are strongly affected commitment regarding organizational
change. If these two factors are favorable then organization will go for change and
remaining two relating to employee commitment to change. Without
organizational commitment factors, management will not initiate to change. After satisfying
these factors, organization will go for change and then employee stage will be start. Both
are interlinked with each other in Pakistan.
ines the how factors chronologically affects to commitment to change.
The below diegram shows that commitment start from organizational commitment and it
ends with employee commitment. Building blocks shows that how commitment from start to
p can be achieved.
The above diagram shows that employee commitment and organization commitment
depend on each other. Moreover employee commitment is more important rather than
This process start from organizational commitment and ends with employee commitment.
For changing the organization regarding structure and processes, the government cope
External and political factors are strongly affected commitment regarding organizational
change. If these two factors are favorable then organization will go for change and
remaining two relating to employee commitment to change. Without satisfying
organizational commitment factors, management will not initiate to change. After satisfying
these factors, organization will go for change and then employee stage will be start. Both
ines the how factors chronologically affects to commitment to change.
The below diegram shows that commitment start from organizational commitment and it
ends with employee commitment. Building blocks shows that how commitment from start to
The above diagram shows that employee commitment and organization commitment
depend on each other. Moreover employee commitment is more important rather than
This process start from organizational commitment and ends with employee commitment.
For changing the organization regarding structure and processes, the government cope
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ISSN 2076-9202
190
these factors first political and external factors. In organization employee wants personal
needs, after accepting what will be our reward, if employees who are participating in
change will feel their benefit then they entered happily and excitedly in the change process.
Otherwise it will create shock and denial situation at the start of change.
As for as external factors are concerned there are main four factors which influence the
commitment to change those are as under.
These factors will influence commitment to organizational change in Pakistan:-
3.1 External Factors:-
3.1.1 Technology:
Moderinization of this world only become possible due to change in techonology , it has
been observed that in old days many organizations works manually because of lack of
machines and equipments due to which production as well as administrative control was
weak but revolution in techonology inspire the whole world to change their set ups and to
update themselves for the survival. With globalization , technological innovation , and a
growing number of links between people , activities and events , and today's pace of
change is relentless . Peoples of the world to mix and mingle as never before , and to
establish new partnerships and create workplaces more culturally diverse . Increasingly ,
groups of companies to cooperate in the search for new opportunities and exploit new
markets . Technology brings new surprises every day , and some that can shake the entire
industry in a matter of months . With the advent of the Internet and social media ,
consumers have gained the media and other stakeholders of incredible power , and they
use easily to reward or punish companies often at lightning speed. Oragnizations should
concentrate to adapt new technology for competing the others within the country and as
well as out of the boundary. As in Pakistan, loadshedding is affecting organization badly, in
steel sector organizations should adopt tachnology at the right time. Some organizations
started to produce gas by using coal and poer plant. If those who did not do this, no more in
Pakistan.
3.1.2 Government Pressure:
Country like pakistan is very unsecure due to security conditions , terrorism and it is very
diffucult to cope with international trade openly because Govt put the whole pressure on
traders regarding sharing of debt .So this pressure urge the traders as well as organizations
to change their set up to cope with Govt Pressure and to meet the governmental
requirement.This is also main factor which influence the change in pakistan , this change
may be indivisual as well as organizational. Perfect Competition.
Not all government announcements focus on the mere provision of information ; oftendraw
on more sophisticated techniques of persuasion . Nevertheless , giving information has
become an important part of policy making "kit s tool , and importance is set to grow
further.Around the world , politicians give citizens more and more information about the
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performance of schools , hospitals and other public services , be mashed and re- released
in a myriad of innovative and personalized ways.
In Pakistan sometimes government announced to stop the gas and electricity for
organization then under this situation organzation should change itself and cope these type
of the issued by the givernment.
3.1.3 Perfect Competition:
Perfect compitition is a purelly economic term in which many producer of same products
compete in market with each others . it is also main tool which infuence the commitment to
change , beacause everyone in business wants to get more share of market and for this
purpose organizations change their policies,rules,products attrites etc.
Examples: what price to charge or how
output to produce a quarter.The details of the competition in the market may have
significant influence on the types and levels of commitment that companies make. When
successful, these commitments can shape their opponents' expectations and behavior alter
competitors commission business advantage. Organization observe the market trend and
make plans and change its product for survival and getting the maximum market share.
3.1.4 Globel Trade:
Globel trade urges the traders as well as indiviuals to change their set ups for coping with
international trade.Through the agenda of global trade , business leaders can contribute to
concrete proposals to strengthen the multilateral trading system based on rules , stressing
that the company is committed to achieving the goals of the World in the World Trade
Organization (WTO).
About the agenda of the World Summit of the shows for the International Criminal Court ,
which was hosted by Qatar Chamber on April 22 in 2013 , organized at the initiative of the
agenda of the WTO consultations with CEOs and senior executives in all major regions of
the world for data collection and validation recommendations. These priorities for action
issued at the summit.
The final set of recommendations today's business has seen governments before the next
G20 summit in Russia in September 2013, and the Ministerial Conference of the World
Trade Organization next in Bali , Indonesia , in December 2013 . The initiative to mobilize
senior executives all over the world to make the case to the national governments to the
agenda of the new business[18] . The procedures, policies and trading style are
standaradize and for an organization who works out side the border of country,
Organizations should follow and be aware with the international policies and procedures to
survive globally and also change organization according to international laws and rules.
Pakistans share inglobal trade have declined, it puts impact negativly on organizationa
commitment. Organizations in Pasitan move away from pakistan because of this and
shifted in Sri Lanka, Bangladesh etc..
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3.2 Political Factors:-
3.2.1 Ideology of Ruling Party:
At the simplest level ideology is a political statement; however, every political statement
cannot be described as an ideology. It is very important to repeat it. If you find newspapers
explanation invented by political leaders, statement by political parties and senior
government officials President, PM and Cabinet ministers. They rely on the social
economic and political issues and all these political statements. But none of these can be
described as an ideology, that ideology is. Ideology is a set of beliefs, values and ideals of a
group or a nation endorse, this set of principles or ideals over a period of time to be
captured in the social consciousness of society. Therefore it is a part of the spirit and part of
a social heritage of a group and a nation. In other words, ideology is a set of principles,
but it is a framework of action and a support system that gives order and meaning to life
and human action. It endorses a nation or a group with a sense of purpose, a sense of
commitment , a sense of identity , a desire to work for the achievement of certain objectives
and purpose thus plays ideology a very dynamic role in the lives of nations and groups
because it shows them the way and the destination they want to reach . Country like
Pakistan ruling by political party and as Pakistan law shows that after every five years
elections will be held to elect new government .So every ruling party impose his own
ideology to run governmental affairs as current government in Pakistan launch youth
business loan scheme which effects the commitment to change of youth of Pakistan and
everyone who is employee of any organization is thinking to get advantage of this youth
scheme to change his life and to start his own business. This is also main factor which
influence the commitment to change it may apply to organization or individual. [19]
Ideology of ruling party also having both positive and negative effects, if these ideas are
favorable for organization now and in future then organization will show commitment to
change by the management and vice versa.
3.2.2 Technocrats versus politicians
Shaukat Aziz, the manager, who was a banker free service to the country, was due to be
sworn in on August 28, 2004, Prime Minister of Pakistan. Its high elevation brings an
exciting and gratifying in many ways, the sub - continent, the symmetry of the two
nuclear-armed giants control. And now the technocrats who will be prime minister by Mr.
Aziz hail from Citibank, India, Man Mohan Singh was a respected academic economist.
Both men before getting the top job as finance ministers made into politics late in life. What
is a politician in the conventional sense? Mr. Singh has never won a democratic election, he
sits in the upper house of India nominated and elected indirectly.
In Pakistan, these two types of authority directly affect the organizational change broadly.
Both try to win from one another and also cross their limits. Because of that organization
suffers their behavior. Technocrats are intelligent and educated in Pakistan and always try
to implement those policies which are favorable for organization but politician also
interrupts them. This act leads to instability and it is not suitable for organizational change.
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Stability should be there then management will show commitment to change and it
supports the economy of Pakistan.
Table: 1.0
Country name GDP Population Literacy rate Exp to GDP
Bangladesh $673 149m 56% 19%
China $4393 1036m 94% 29%
India $1477 1026m 62% 18%
Iran $4520 74m 85% 32%
Pakistan $1007 174m 56% 15%
Both technocrats proved a huge success in their financial portfolios. Mr. Singh, in 1990,
was not credited with being the brains behind India's reformist government. Now we
elaborate some observations of both types of governments.
Figure: 2
Per Capita GDP
Pakistan's 7.0 percent annual growth on average for the period 2000-07 and was one of the
fastest growing economies in the Asian region to four. As a result of strong economic
growth, Pakistan, almost halving the debt burden of the country's 13 million to create jobs,
increase foreign exchange reserves to a comfortable position and propping the country's
exchange rate, restoring investors' confidence, and one - half to achieve poverty reduction
and, most importantly, taking Pakistan out of the IMF program [20].
Now turns towards political government by elected party Pakistan peoples party from 2008
to 2013 and see the growth as compare to similar countries like, India, China, Iran, and
Bangladesh.Table.1.0 [21]
We have observed that spread for influencing the commitment to change lies in both
regimes in political as well as technocrats regime, because both have their own approach
towards economy growth but technocrats perform well as compare to political government.
3.2.3 Anarchy:
Possible alternative governance mechanism for a country to fail the ideal conditions for a
political one or more of the above institutional, this control does not respond, it depends on
the institutional environment. There are limitations to effective political actors in the country,
with options available equipped with the state police and the state courts, but the
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government has another difficulty in the production of public goods, for example, different
failed to provide a variety of options available to a country or even mandatory restrictions
Political actors[22].
Nearly all social science Hobbes' characterization coincided with as a solution to the
dilemma of the prescription social anarchy and the government. However, the failure of
governments casts doubt on a wide range of the above. The consensus accuracy of States
has the incredible success of minority. Most of them are in danger of imminent failure or in
the shade fail. As a result, the political economists' attention was diverted from the rule
except to create the false impression that the experiments government as a solution to the
social dilemma. Pakistans government also suffering from anarchy due to which everyone
in Pakistan wants change as last election was also campaigned with the slogan of change
this shows that anarchy is also a big factor to influence the commitment to change.
Businessman or investor never ever support or like anarchy situation in country. Anarchy
means total instability in country. With the presence of this, organization commitment to
change will not be achievable and economy of country will be suffered. Investors will not be
agree to change with this situation and not make investment.
3.2.4 Legislations and regulations:
Businesses also need to take into account the government's more general political
ambitions. The current coalition government in Pakistan is cutting jobs in the public sector
and the private sector to create new jobs and grow the economy that is the hope. Pakistan
telecommunication company limited is owned by the private sector as well as the owner of
a small (sometimes known as sole traders) businesses, partnerships and companies, are
Leads to a more buoyant economy and the government's focus on the development of the
private sector can provide opportunities for youth of Pakistan to eliminate the
unemployment in Pakistan. Islamabad, Nov 19 (Associated Press of Pakistan): Minister of
State for Commerce and privatization of state -owned enterprises Engineer Khuram Dastgir
Khan (DM) the first phase of privatization will be completed by the end of 2014.
Privatization of state enterprises Pakistan Muslim League ( PML - N ) have been taken to
implement the government's economic reform agenda , it is the first stage , around 12
state-owned enterprises identified for the strategic private partners to increase their
efficiency , the Cabinet Committee on Privatization ( CCOP ) has compiled a list of 65 such
state-owned enterprises .
The list of state-owned enterprises to improve the efficiency of the insertion loss and gain
earning organizations was approved by the Board to convert public interest , he added Out
of 65 SOEs , CCOP speed he said , SOE privatization process for tracking the state-owned
CCOP 10 12 enterprises again send the list of 32 individuals and the privatization
commission agreed to privatize .Once this is confirmed , the privatization commission will
complete their privatization by the end of next year .Commission has to make the process
transparent.
Currently, the annual losses incurred by these individuals, which is a huge burden on the
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national treasury touched about Rs 500 billion .Government has accumulated losses of
Pakistan Steel Mills, Pakistan International Airlines had ( PSM ), which was Rs 108 billion ,
but reached Rs 250 billion .
The Government will continue with the losses of these organizations, if any, education,
health, agriculture will be unable to raise funds for the development and infrastructure. The
privatization of state enterprises PML-N government's top priority and for socio-economic
development of the country's economic reform agenda of these organizations for capacity
said that part of the building. These policies of privatization also influence the commitment
to change because many of the employees of Pakistan International Airlines and Pakistan
Steel Mills are thinking to switch off to some secure jobs. Regulations and legislations play
very active role to influence the commitment to change [23].
Political and external factors strongly put affects on commitment to change regarding
organization perspective.
Internal and personal factors strongly support employee commitment to change.
3.3 Personal Factors:
Change is very important and it is the change of employees mind and employees
commitment to change, before change, employee will analyze and find out his benefits. In
Pakistan, employee finds out these benefits as under below.
3.3.1 Career growth:
Career growth is the most desirable need in professional environment. If there is no career
growth, it means no commitment to change. And it leads to de-motivation of employees.
3.3.2 Uniqueness:
Adaptation of new techniques, skills make employee unique and employee will feel better
and will devote full time and energy to accept it and after that commitment will be
enhanced.
3.3.3 Greed & contentment:
In Pakistan context, employees demand rewards in form of money from the management
before and may be after the change. And now their greed is involved in this phase and
employee will show commitment to change. If organization will stop his reward then
commitment to change will be affected.
3.3.4 Gaining Confidence:
With new skills, employee will be more confidants and if he thinks confidence gained by this
change will be very helpful in professional environment, then commitment by employee will
be found.
3.4 Internal factors:
Internal factors are also very necessary for the commitment of employees. Some internal
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factors within the organization are discussed below:-
3.4.1 Pat & appreciation by change leaders and management
Appreciation to employees is valuable during change process. Change leaders, agents and
management should come and make an appreciation to employee with a clapping.
Employees will be motivated and ready for accepting change successfully and this
appreciations outcome will be in the form of employee commitment.
3.4.2 Leadership styles:
There are lots of leadership styles which are being practiced in organization, it depends that
style of leadership which is adapted by change agents or managers is worthy. If it clashes
then commitment will not be the result.
3.4.3 Rewards & recognition:
Recognize the input / participation of employees through proper reward and incentives
leads towards change.
3.4.4 Participation by management:
Involvement of management in change is mandatory and it also shows the importance and
need for the business as well as management.
3.4.5 Uniformity in policies:
Balanced policies for equal designation will also motivate the employees. If management
will show discrimination then employee will show de-motivation and change will be affected
badly. Management should decide that rewards benefits anything else will be granted to
same ranked employees. It will lead to employee commitment [24].
Some others factors internally support commitment to change and vice versa.
Vision clarity
Quality of information
Team building
Awareness & education
Skills & Knowledge
Way to implement the change
Culture !nside & "utside the organi#ation$
4.0 Conclusion
Change for organization and as well as for employee are most important with the passage
of time. During change a lots of factors are involved, if those factors will be control
positively then commitment to change for employee and organization too will be achieved
and investment on change will show better results and vice versa.
International Journal of Information, Business and Management
According to graph, In Pakistan people before going to change him fir
benefits. After adapting what are for me in this change or practice? In Pakistan personal
benefits are ever necessary because its personal benefits will support to change then after
employee thinks about internal factors. Employee are ag
factors are weak then it will create anxiety, depression. And political factors will be involved
from the organization side. It will be handled and monitored by the organization positively.
Figure: 3
Organization will focus more on external and political factors rather than internal and
personal factors (Discussed with the director operation of steel industry in Pakistan)
Employee will be more excited for personal benefits and with internal factors. I
factors will not controlled then it will be same like castle in air(Interviewed by accounts,
production and HR department of same industry).
When these factors will be positively controlled then employees commitment to change will
be increasing continuously. As shown in the figure 3. All factors are dependent with each
other. In Pakistani culture with the removing of one factor creates problems for getting
commitment to change.
Figure: 4
0
$0
20
30
%0
&0
'0
(0
International Journal of Information, Business and Management, Vol. 6, No.4, 2014
According to graph, In Pakistan people before going to change him first secure his own
benefits. After adapting what are for me in this change or practice? In Pakistan personal
benefits are ever necessary because its personal benefits will support to change then after
employee thinks about internal factors. Employee are agree to accept change but internal
factors are weak then it will create anxiety, depression. And political factors will be involved
from the organization side. It will be handled and monitored by the organization positively.
Organization will focus more on external and political factors rather than internal and
personal factors (Discussed with the director operation of steel industry in Pakistan)
Employee will be more excited for personal benefits and with internal factors. I
factors will not controlled then it will be same like castle in air(Interviewed by accounts,
production and HR department of same industry).
When these factors will be positively controlled then employees commitment to change will
sing continuously. As shown in the figure 3. All factors are dependent with each
other. In Pakistani culture with the removing of one factor creates problems for getting
Oragni)ation * +mployee
Commitment
=rg > 3mpl
Commitment
st secure his own
benefits. After adapting what are for me in this change or practice? In Pakistan personal
benefits are ever necessary because its personal benefits will support to change then after
ree to accept change but internal
factors are weak then it will create anxiety, depression. And political factors will be involved
from the organization side. It will be handled and monitored by the organization positively.
Organization will focus more on external and political factors rather than internal and
personal factors (Discussed with the director operation of steel industry in Pakistan)
Employee will be more excited for personal benefits and with internal factors. If internal
factors will not controlled then it will be same like castle in air(Interviewed by accounts,
When these factors will be positively controlled then employees commitment to change will
sing continuously. As shown in the figure 3. All factors are dependent with each
other. In Pakistani culture with the removing of one factor creates problems for getting
International Journal of Information, Business and Management
The authors also linked these factors with Beckhar
curve too as shown above in graph. It
factors with BeckhardHarris change Model & change curve as well. How important these
factors for employee commitment. To suppo
these results resistance. After achieving commitment to change
become an old employee but with the new skills.
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International Journal of Information, Business and Management, Vol. 6, No.4, 2014
The authors also linked these factors with Beckhard-Harris change Model and with change
curve too as shown above in graph. It showed that linkage of personal factors and internal
Harris change Model & change curve as well. How important these
factors for employee commitment. To support these factors leads to success and to stop
fter achieving commitment to change, an employee will also
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[18] ICC WFC 8
Th
world chamber congress held at Doha city of Qatar from 22 to 25 April 2013.
[19]National Bank of Pakistan
Head Office NBP Building, I.I. Chandigarh Road Karachi, Pakistan. Phone: +92 -21- 99220100 (30 lines)
Phone: +92 -21- 99062000 (60 lines)
[20] South Asia Investor review Published in 2010.pp-1-12
[21]Source: World Bank Country Data, http://data.worldbank.org/country [Accessed November 15, 2011].
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[23] Privatization Commission
5-A EAC Building Constitution Avenue
Islamabad Pakistan Voice: +92-51-9205146, 47, 49, 52,53,56,58, 9208525-7
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Fax: +92-51-9203076 - 9211692
Email: info@privatisation.gov.pk
[24] Director Operations, Fine Steel Mills, 17 Km Sheikhupura Road Lahore, Pakistan. Voice:
+92-42-37971613